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Notes to Accounts of Bank of Maharashtra

Mar 31, 2016

1. The value of the sales and transfer of securities to / from HTM category during the financial year 2015-16, excluding onetime transfer with the approval of the Board, sales to RBI under pre announced OMO auctions and as permitted by RBI, does not exceed 5 per cent of the book value of the investments in HTM category at the beginning of the year.

profit on sale of investments in HTM category should be first taken to the profit & Loss Account, and thereafter be appropriated to the ''Capital Reserve Account''after netting off taxes and amount required to be transferred to Statutory Reserves as per RBI circular RPCD.CO.RRB. BC.No. 74/03.05.33/2013-14 dated 7th January 2014.

During the current financial year an amount of Rs.28.83 crores (Rs.35.39 crores) net of taxes and transfer to statutory reserves being profit on sale of investment in ''Held to Maturity'' category has been transferred to Capital Reserve

2. The Bank has amortized Rs.52.46 crores during the year (Rs.55.89 crores) for securities classified ''Held to Maturity'' category, and the amount has been charged to profit & Loss account by reducing the value of respective securities to that extent.

3. During the current financial year 2015-16, an amount of Rs.12.96 crores net of taxes and proportionate transfer to Statutory Reserve, has been drawn down from Investment Reserve Account on account of depreciation required to be made for investment held under AFS & HFT categories.

However during 2014-15 an amount Rs.14.06 crores had been appropriated from Net profit, being Investment Reserve on account of write back of depreciation with reference to Mark to Market (MTM) value of Investment, net of tax and proportionate transfer to Statutory Reserve.

4. Disclosures on risk exposure in derivatives

4.1 Qualitative Disclosure

(i) Derivative policy is approved by the Board, which includes measurement of credit & market risk.

(ii) Policy for hedging and processes for monitoring the same are in place.

(iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

(iv) Risk Management of derivative operations is headed by a Top Management Executive who reports to Head Office. The swaps are tracked on regular basis.

(v) Accounting Policy for recording hedge and non hedge transactions is in place, which includes recognition of income, expenditure and valuation of outstanding contracts and credit risk mitigation as given in para 3.5 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

(vi) The Bank has made requisite provision on credit exposure of derivative contracts computed as per current exposure method & as per RBI guidelines.

In accordance with UDAY (Ujwal DISCOM Assurance Yojna) Scheme for operational and financial turnaround of State Power Distribution Companies (DISCOMs) during financial year 2015-16 , the Bank had subscribed to Non- SLR SDL Bonds of Government of Rajasthan, Punjab, Haryana & Uttar Pradesh amounting to Rs.2098.03 crores against settlement of debts amounting to Rs.2307.08 crores (outstanding as of 30.09.2015), pertaining to DISCOMS of above mentioned states.

The bank had made provision for total dues ofRs.134.58 crores not envisaged to be converted into SDL, in accordance with RBI letter DBR.BP NO.11657/21.04.132/2015-16 dated 17.03.2016 as under:

i) Provision at 15% amounting to Rs.20.19 crores & Rs.46.83 crore in respect of advances of Rs.134.58 crores and bonds Rs.312.23 crore respectively

ii) Provision of RS.8.88 crores and Rs.4.28 crore has been made towards Diminution in Fair Value of balance outstanding in advances and bonds respectively.

In compliance with the RBI guidelines, the Bank has made Prudential Provision @ 7.5% amounting to ?45.59 crores on outstanding loan of Rs.607.80 crores as on 31st March 2016 under Food Credit availed by Government of Punjab. The balance provision of 7.5% shall be made during quarter ended June 2016 on amount outstanding as on that date in accordance with such guidelines.

Qualitative

The Liquidity Coverage Ratio (LCR) aims to ensure that a bank has an adequate stock of unencumbered High-Quality Liquid Assets (HQLA) that can be converted into cash easily and immediately to meet its liquidity needs for a 30 calendar day liquidity stress scenario.

The LCR is calculated by dividing the amount of High Quality Liquid unencumbered Assets (HQLA) by the estimated net outflows over a stressed 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed outfow factors to the various categories of liabilities (deposits, unsecured and secured wholesale borrowings), as well as to undrawn commitments and derivative-related exposures, netted by inflows from assets maturing within 30 days.

Average LCR for the year ended 31st March 2016 is 75.61%, above RBI prescribed minimum requirement of 70%.

During the March 2016 quarter, HQLAs have increased due to reckoning government securities held by bank up to 8% of NDTL under FALLCR (as per RBI guidelines) with in mandatory SLR requirement as level 1 assets as against 5% of NDTL up to January 2016.

HQLAs consist of Level 1 assets (Cash, excess CRR balance, Government security in excess of minimum SLR requirement, Government securities with in mandatory SLR requirement up to 2% under MSF and 8% under FALLCR) and other level 2 assets.

Funding sources are concentrated in SLR securities however they constitute major portion of liquid assets possessed by Bank.

a. Method to ascertain the amount of Unhedged Foreign Currency Exposure (UFCE):

The amount of UFCE of the constituents is measured by obtaining the periodical information from the clients having exposure ofRs.10 crores and above. For this purpose, items maturing or having cash flows over the period of next fve years only are considered. Further, items which are effective hedges, financial hedge and / or natural hedge, of each other are set off. (Financial hedge through a derivative contract (e.g. Forward Cover) and Natural hedge may be considered when cash flows arising out of the operations of the company offset the risk arising out of the Foreign Currency Exposure. For the purpose of computing UFCE, an exposure may be considered naturally hedged if the offsetting exposure has the maturity/cash flow within the same accounting year).

b. Method to estimate the extent of likely loss:

The loss to the entity in case of movement in exchange rate is calculated using the annualised volatilities. For this purpose, largest annual volatility seen in the rates during the period of last ten years is taken as the movement of the rate in the adverse direction.

c. Method to estimate the riskiness of unhedged position and provide appropriately:

The likely loss / EBID so arrived at is taken as the base, as per which consolidated UFCE on behalf of the constituents is calculated, based on the model specified by the Bank. Such exposure is subjected to additional provisioning and also incremental capital requirement.

Further, the pricing to such constituents is accordingly re- priced based on the risk profile of the borrower by loading an appropriate premium to cover the UFCE.

5. Unsecured Advances:

Unsecured advances includes Rs.1003.08 crores (Rs.880.15 crores) as on 31.03.2016 which is collaterally secured by intangible securities such as charge over the rights, licenses, authorities etc. The estimated value of such intangible collateral is Rs.1819.83 crores (Rs.1237.33 crores) as on 31.03.2016.

6. Provisioning Coverage Ratio:

The bank has computed the provision coverage ratio (PCR) as required vide circular No.DBOD.No.BP.BC.64/21.04.048/2009- 2010, dated December 1, 2009, which is 45.04%. This ratio has been calculated on the basis of NPA level as on 31.03.2016.

Whereas such provision coverage ratio (PCR) calculated as per RBI circular No. DP.DC.87/21.04.048/2010-11, dated April 21, 2011, based on NPA level as on 30.09.2010 Rs.2049.81 crores and NPA provision as on 31.03.2016 works out to 272.34%, as against minimum required 70%.

7. Fixed Assets:

7.1 As per Bank''s policy, revaluation of 122 eligible properties has been done during the year ended 31.03.2016. The gross amount of such revaluation included in properties/ premises as at the end of the year is Rs.1402.63 crores (Rs.1181.28 crores) and considering the depreciation on revaluation, the closing Revaluation Reserve as on 31.03.2016 is Rs.1295.78 crores (Rs. 1016.14 crores).

7.2 Depreciation for the current year amounting to Rs.106.85 crores (Rs.49.44 crores) on revalued assets has been adjusted against Revaluation Reserve Account.

7.3 The title deeds in respect of 4 (7 ) revalued properties/ premises having cost of Rs.6.54 crores (Rs.7.00 crores) were not yet executed / registered in favour of the Bank due to certain pending / delayed formalities.

7.4 Contingent Liabilities include expired guarantees amounting to Rs.906.11 crores (Rs.693.94 crores) which have not been cancelled because of pending completion formalities.

Claims pending and to be preferred with ECGC amounting to ? 76.57 crores (Rs.43.07 crores) have been considered as realisable for the purpose of computing provisions

7.5 Other Liabilities disclosed in Schedule - 5 include Rs.0.44 crore (Rs.0.44 crore) towards unclaimed Share Application Money.

7.6 RBI had imposed a penalty ofRs.1.50 crores on the Bank for violation of Reserve Bank of India instructions on Know Your Customer/Anti Money Laundering which was provided for during financial year 2014-15.

8. Letters of Comfort (LOCs):

During the current year, 1189 Trade credits amounting to Rs.2360.00 crores (previous year 1347 trade credits amounting to Rs.1767.71 crores) were sanctioned by the Bank and Letters of Comfort issued by the branches in favour of various other Banks for arranging trade credit to corporate clients.

As on 31st March 2016, 360 trade credits amounting to Rs.811.86 crores were outstanding as against 478 trade credits amounting to Rs.748.18 crores as on 31st March, 2015

9. Work is in progress for adjustment/ reconciliation/elimination of inter-branch transactions, transactions with other banks/ institutions, nominal accounts and old entries under other assets and liabilities. Further reconciliation between balances in subsidiary and general ledger in respect of certain deposit accounts, clearing accounts, other assets & liabilities and inter- branch transfer of fixed assets is still under progress. The effect of these including the consequential impact thereof on the revenue is not ascertainable. In the opinion of the management consequential impact thereof on revenue is not material.

10. The Bank has complied with the Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent applicable as under:

10.1 Accounting Standard 5 – Net profit or Loss for the period, prior period items and changes in accounting policies.

As prior period items of income/expenditure are not material, the same have been charged/accounted for in respective heads of accounts

10.2 Accounting Standard 9 - Revenue Recognition

As per Accounting Policy No. 6.1, given in Schedule -17 – Significant Accounting Policies, certain items of income are recognized on realisation basis on account of statutory requirements or on account of materiality.

10.3 Accounting Standard 11 - Effect of Changes in Foreign Exchange Rates

Net income on account of exchange differences credit to in the profit and Loss account for the year is Rs.78.66. crores (Rs.75.12 crores).

10.4 Accounting Standard (AS) 15 (Revised 2005)- "Employee Benefits"

B. Defined Benefit Plans:

a) Pension Plan - This is a post employment benefit, which is 50% of final pay for a maximum of 33 years of pensionable service. This is a funded scheme.

b) Gratuity Plan - This is a post employment benefit and is payable as higher of Gratuity as per Company''s Rules and Gratuity under Payment of Gratuity Act 1972 as amended. This is a funded scheme.

c) Leave Encashment / Compensated Absences -This is a post employment benefit and is payable for a maximum limit of 240 days of accumulated leave based on final pay. This is an unfunded scheme.

a) Treasury segment includes Investment, balances with Banks outside India, Interest accrued on investments and related income there from.

b) Corporate/ Wholesale Banking Segments include all advances to trusts, partnership firms, companies and statutory bodies which are not included in Retail Banking Segments.

c) Retail Banking Segments include exposure to the individual person/s or to a small business where

i. Total average annual turnover less than Rs.50 crores and

ii. No aggregate exposure to one counter party exceeds 0.2% of the overall retail portfolio of the Bank and

iii. The maximum aggregated retail exposure to one counterpart is up to Rs.5 Crores.

d) Other Banking Operations segment includes all other banking transaction not covered under segments, specified above.

Part B: Geographical Segment

Since the operations of the Bank are within India only, Geographical Segment is not applicable.

11. Accounting Standard 18 - Related party disclosures

The details in this regard are as under:

(A) Name of the Related Parties and their relationship:

(a) Subsidiary of the Bank -The Maharashtra Executor & Trustee Co. Pvt. Limited

(b) Associate of the Bank - Maharashtra Gramin Bank

(c) Key Management Personnel-

1) Shri Sushil Muhnot Chairman & Managing Director (from 09.11.2013 to till date )

2) Shri R. Athmaram, Executive Director (from 07.08.2013 to till date)

3) Shri R. K. Gupta, Executive Director (from 31.12.2013 to till date)

12. Accounting Standard 21 - Consolidated Financial Statements

The results of the Associate viz. Maharashtra Gramin Bank has been consolidated with the parent bank and subsidiary viz. Maharashtra Executor & Trustee Company Private Limited in compliance with Accounting Standard 23 and Accounting Standard 21 respectively and consolidation is made on the strength of unaudited financial statements of such associate.

13. Accounting Standard -24- Discontinuing Operations

The Bank, during the financial year 2015-16, has not discontinued any of its business activities/ operations which resulted in discharging of liabilities and realization of the assets and no decision has been finalized to discontinue a business activity in its entirety which will have the above effects.

14. Accounting Standard 26—Accounting for Intangible Assets. Computer Software - other than internally generated:

Useful life - 3 years.

Amortization Rate - 33.33 %

Amortization Method - Straight line at cost

15. Accounting Standard 28- Impairment of Assets

Bank has identified that there is no impairment of fxed assets and as such, no provision is required as per AS-28.

16. Accounting Standard 29- Provisions, Contingent Liabilities and Contingent Assets

In the opinion of the management, no further provision is required against contingent liabilities referred to in Schedule 12.

17. Provision for fraud cases in loans and advances:

In terms of RBI guidelines, the banks are permitted to amortise the provision towards fraud cases in four quarters beginning from the date of detection of fraud and where the provision is made in two different financial years, the unprovided amount has to be charged to Revenue Reserve vide RBI circular DBR. No. BP.BC.92/21.04.048/2015-16 dated 18.04.2016 as on the relevant year end. Accordingly, the bank has made such provision in four quarters; as detailed below:

18. Previous year''s figures have been regrouped / reclassified wherever considered necessary to make them comparable with current year''s figure.


Mar 31, 2015

1.1 As per RBI guidelines, an amount of Rs.35.39 crore (Rs.12.86 Crore) net of taxes and statutory reserves being profit on sale of investment in ''Held to Maturity'' category has been transferred to Capital Reserve.

1.2 The Bank has amortized Rs.55.89 crore during the year (Rs.48.23 Crore) for securities classified ''Held to Maturity'' category, and the amount has been charged to Profit & Loss account by reducing value of the respective securities to that extent.

1.3 An amount of Rs. 14.06 crore (Rs. 11.39 crore) has been appropriated from Net Profit, being Investment Reserve on account of write back of depreciation with reference to Mark to Market (MTM) value of Investment, net of tax and proportionate Statutory Reserve.

2. Derivatives:

2.1 Forward Rate Agreement / Interest Rate Swap

The Bank has in place policy guidelines for IRS/FRAs. The approved ceiling for IRS/ FRAs in terms of notional principal is Rs.2000.00 crore as on March 31, 2015. The bank has 4 (four) outstanding swaps for notional principal Rs.100.00 crore and the terms of Swaps are to receive fixed interest and pay at floating rate. Out of 4 (four), all OIS swaps for notional principal of Rs.100.00 crore were for trading purpose. MTM valuation for outstanding trading swaps is Rs. (-) 0.76 crore.

2.2 Disclosures on risk exposure in derivatives

2.2.1 Qualitative Disclosure

(i) Derivative policy is approved by the Board, which includes measurement of credit & market risk.

(ii) Policy for hedging and processes for monitoring the same are in place.

(iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

(iv) Risk Management of derivative operations is headed by a Top Management Executive who reports to Head Office. The swaps are tracked on regular basis.

(v) Accounting Policy for recording hedge and non hedge transactions is in place, which includes recognition of income, expenditure and valuation of outstanding contracts and credit risk mitigation as given in para

3.1 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

(vi) The Bank has made requisite provision on credit exposure of derivative contracts computed as per current exposure method & as per RBI guidelines.

3.2 Credit Default Swaps (CDS):

The Bank has no credit default swaps during the year 2014-15 or as on March 31,2015 (NIL).

Utilization of Counter Cyclical Buffer :

The bank was holding provision of Rs.264.91 crore as on March 31,2014 towards counter cyclical buffer which was created in terms of RBI guidelines. RBI, vide circular no.DBR.No.BP.BC.79/21.04.048/2014-15 dt 30.03.2015 has permitted the banks to utilize such provision not exceeding 50% of the provision outstanding as on December 31, 2014. Accordingly, the bank has utilized an amount of Rs.132.45 Crore, which works out to 50% of the provision outstanding as on December 31,2014.

4.1 Details of financial assets sold to securitization / Reconstruction Company for Asset Reconstruction

During the year 2014-15, the Bank has sold non-performing assets of the book value of Rs.42.44 crore including Rs.39.74 crore, during the quarter ended March 31,2015 resulting in reduction of NPAs.

Some of the assets were sold for less than the net book value resulting in a deficit of Rs.8.26 crore, during the year 2014-15; such amount has been charged to Profit & Loss account during the year 2014-15.

5.1 Qualitative Disclosure LCR:-

(a) Liquidity Management

The bank has mechanism to monitor its liquidity position on daily basis. It is also using predictive tools to manage the liquidity. Framework on liquidity standards i.e. Liquidity coverage ratio - liquidity risk monitoring tools has become a standard with effect from 01st January 2015. It is complying with these standards prescribed by RBI.

(b) Liquidity Coverage Ratio:

Liquidity coverage ratio aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a 30 calendar day''s time horizon under a significantly severe liquidity stress scenario specified by RBI. At present the minimum requirement of LCR is 60%.

There are two components to calculate the LCR (i) High Quality Liquid Assets (ii) Net Cash outflow over the 30 days time period.

(i) High Quality Liquid Assets (HQLAs) majorly consist of,

- Cash , Investment in SLR securities in excess of minimum SLR requirement,

- Within mandatory SLR requirement , government securities elig ble for RBI''s Marginal Standing Facility and Facility to avail liquidity for liquidity coverage ratio (FALLCR),

- Corporate bonds/commercial papers, not issued by a bank/financial institution/NBFC or any other affiliated entities with the credit rating "AA-" or better by eligible credit rating agencies.

- Equity investment in the entities other than bank/ financial institution/NBFC or any other affiliated entities and included in the NSE CNX Nifty and/or S&P BSE Sensex indices

(ii) Cash outflows have been considered majorly on account of total deposits (irrespective of period) except for small and business customers for which term deposits maturing within 30 days have been considered. Cash outflows are netted off with the contractual cash inflows for 30 days period.

The Banks'' average LCR for the quarter end 31.03.15 was 80.87%. LCR of 80.87% indicates that on an average 80.87% of weighted net cash outflows over period of 30 days are covered by weighted amount of HQLAs.

c) Other monitoring tools for liquidity risk management:

In addition to the LCR, the Bank has employed other monitoring tools for liquidity risk management such as:

1. Contractual maturity mismatch:

The contractual maturity mismatch profile identifies the gaps between the contractual inflows and outflows of liquidity for defined time bands. These liquidity gaps indicates how much liquidity would potentially need to raise in each of these time bands if all outflows occurred at the earliest possible date. This metric provides insight into the extent to which the bank relies on maturity transformation under its current contracts.

The Bank is monitoring this contractual maturity mismatch on daily basis.

2. Concentration of Funding:

This metric is meant to identify that source of funding that is of such significances, the withdrawal of which could trigger liquidity problems. The Bank has put in place a limit on maximum amount for accepting deposit from single customer. It has diversified sources of funding.

3. Available unencumbered assets:

This provides the information on the available unencumbered assets which have the potential to be used as collateral to raise additional secured funding in secondary markets or from RBI.

4. LCR by significant currency;

The Bank does not have significant exposure to foreign currency hence it doesn''t compute LCR for any other foreign currency.

5. Market related monitoring tools:

This includes high frequency market data that can serve as early warning indicators in monitoring potential liquidity difficulties. This includes movement in share prices of the bank, discount rate of certificate of deposits raised by it and prices of bonds issued by it.

6. Intraday liquidity management:

The Bank has developed and adopted intra-day liquidity strategies that allow monitoring and measure expected daily inflows and outflows. This facilitates arrangement to acquire sufficient intraday funding to meet the intraday needs.

7. Concentration of Deposits, Advances, Exposure and NPA

Bank has put in place a policy for management of currency induced credit risk arising out of exposure to its constituents which inter-alia specifies the mechanism to ascertain Unhedged Foreign Currency Exposure (UFCE) and mitigate the same by pricing the exposure as well as incremental provisioning as under -

a. Method to ascertain the amount of Unhedged Foreign Currency Exposure (UFCE):

The amount of UFCE of the constituents is measured by obtaining the periodical information from the clients having exposure of Rs. 10 crore and above. For this purpose, items maturing or having cash flows over the period of next five years only are considered. Further, items which are effective hedges, financial hedge and / or natural hedge, of each other are set off. (Financial hedge through a derivative contract (e.g. Forward Cover) and Natural hedge may be considered when cash flows arising out of the operations of the company offset the risk arising out of the Foreign Currency Exposure. For the purpose of computing UFCE, an exposure may be considered naturally hedged if the offsetting exposure has the maturity/cash flow within the same accounting year).

b. Method to estimate the extent of likely loss:

The loss to the entity in case of movement in exchange rate is calculated using the annualised volatilities. For this purpose, largest annual volatility seen in the rates during the period of last ten years is taken as the movement of the rate in the adverse direction.

c. Method to estimate the riskiness of unhedged position and provide appropriately:

The likely loss / EBID so arrived at is taken as the base, as per which consolidated UFCE on behalf of the constituents is calculated, based on the model specified by the Bank. Such exposure is subjected to additional provisioning and also incremental capital requirement.

Further, the pricing to such constituents is accordingly re- priced based on the risk profile of the borrower by loading an appropriate premium to cover the UFCE.

8.6 Unsecured Advances:

Unsecured advance include Rs.880.15 Crore (Rs.531.53 crore) as on 31.03.2015 which are collaterally secured by intangible securities such as charge over the rights, licenses, authorities etc. The estimated value of such intangible collateral is Rs.1237.33 Crore (Rs. 848.29 crore ) as on 31.03.2015.

Since Bank''s net funded exposure for risk category-wise exposure for each country is less than 1% of bank''s total assets as on 31.03.2015, no provision is required in terms of RBI guidelines.

8.8 Provisioning Coverage Ratio:

The bank has computed the provision coverage ratio (PCR) as required vide circular No.DBOD.No.BP.BC.64/21.04.048/2009- 2010, dated December 1,2009, which is 46.57%. This ratio has been calculated on the basis of NPA level as on 31.03.2015.

Whereas such provision coverage ratio (PCR) calculated as per RBI circular No. DP.DC.87/21.04.048/2010-11, dated April 21,2011, based on NPA level as on 30.09.2010Rs.2049.81crore and NPA provision as on 31.03.2015 works out to 174.57%, as against minimum required 70%.

9.3 Fixed Assets:

9.3.1 Depreciation for the current year amounting to Rs. 49.44 crore (Rs. 54.68 crore) on revalued assets has been adjusted to Revaluation reserve account.

9.3.2 The title deeds in respect of 4 (4 ) revalued properties / premises having cost of Rs. 6.54 crore (Rs. 6.54 crore) were not yet executed / registered in favour of the Bank due to certain long pending legal disputes / formalities

9.4 Contingent Liabilities include expired guarantees amounting to Rs.693.94 Crore (Rs. 801.01 Crore) which have not been cancelled because of pending completion formalities. Claims pending and to be preferred with ECGC amounting to Rs.43.07 Crore (Rs. 71.84 Crore) have been considered as realizable for the purpose of computing provisions

9.5 Other Liabilities disclosed in Schedule - 5 include Rs. 0.44 Crore (Rs. 0.44 cr) towards unclaimed Share Application Money.

9.6 During the year, Reserve Bank of India has not imposed penalty under section 46 (4) of the Banking Regulation Act,1949 on the Bank.

After the Balance Sheet date, Reserve Bank of India imposed penalty of Rs. 1.50 crore on the bank for violation of Reserve Bank of India instructions on Know Your Customer (KYC) / Anti Money Laundering (AML).

During the current year, 1347 Trade credits aggregating to Rs.1767.71 Crore (1518 trade credits aggregating to Rs. 1561.88 Crore) were sanctioned by the Bank and Letters of Comfort issued by the branches in favor of various other Banks for arranging trade credit to corporate clients.

As on 31st March, 2015, 478 trade credits amounting to Rs.748.18 Crore were outstanding as against 488 trade credits amounting to Rs. 628.37 Crore as on 31st March, 2014

9.14 Work is in progress for adjustment/ reconciliation/elimination of inter-branch transactions, transactions with other banks/ institutions, nominal accounts and old entries under other assets and liabilities. Further reconciliation between balances in subsidiary and general ledger in respect of certain deposit accounts, clearing accounts, other assets & liabilities and inter- branch transfer of fixed assets is still under progress. The effect of these including the consequential impact thereof on the revenue is not ascertainable. In the opinion of the management consequential impact thereof on revenue is not material

10. The Bank has complied with the Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent applicable as under:

10.1 Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies.

As prior period items of income/expenditure are not material, the same have been charged/accounted for in respective heads of accounts

10.2 Accounting Standard 9 - Revenue Recognition

As per Accounting Policy No. 6.1, given in Schedule -17 - Significant Accounting Policies, certain items of income are recognized on realization basis on account of statutory requirements or on account of materiality.

10.3 Accounting Standard 11 - Effect of Changes in Foreign Exchange Rates

Net income on account of exchange differences credited in the Profit and Loss account for the year is Rs. 75.12. crore (Rs. 73.48 crore).

10.4 Accounting Standard (AS) 15 (Revised 2005)- "Employee Benefits"

B. Defined Benefit Plans:

a) Pension Plan - This is a post employment benefit, which is 50% of final pay for a maximum of 33 years of pensionable service. This is a funded scheme.

b) Gratuity Plan - This is a post employment benefit and is payable as higher of Gratuity as per Company''s Rules and Gratuity under Payment of Gratuity Act 1972 as amended. This is a funded scheme.

c) Leave Encashment / Compensated Absences -This is a post employment benefit and is payable for a maximum limit of 240 days of accumulated leave based on final pay. This is an unfunded scheme.

D. Unamortized Pension and Gratuity Liability

In accordance with guidelines issued by RBI vide Notification No. DBOD. No. BP. BC. 80 / 21.04. 018 / 2010-11 dated February 9, 2011, balance provision for Rs. 102.48 crore has been made for the year ended 31.03.2015 towards the amortization relating to enhancement in Gratuity limit and re-opening of pension

10.5 Accounting Standard 17- Segment Reporting

Bank has identified its primary reportable segments as under:

a) Treasury segment includes Investment, balances with Banks outside India, Interest accrued on investments and related income there from.

b) Corporate/ Wholesale Banking Segments include all advances to trusts, partnership firms, companies and statutory bodies which are not included in Retail Banking Segments.

c) Retail Banking Segments include exposure to the individual person/s or to a small business where

i. Total average annual turnover less than Rs. 50 crore and

ii. No aggregate exposure to one counter party exceeds 0.2% of the overall retail portfolio of the Bank and

iii. The maximum aggregated retail exposure to one counterpart is up to Rs. 5 Crore.

Part B: Geographical Segment

Since the operations of the Bank are within India only, Geographical Segment is not applicable.

10.6 Accounting Standard 18 - Related party disclosures

A. The details in this regard are as under:

a) Name of the Related Parties and their relationship:

b) Subsidiary of the Bank -The Maharashtra Executor & Trustee Co. Pvt. Limited

c) Associate of the Bank - Maharashtra Gramin Bank

d) Key Management Personnel-

1. Shri Sushil Muhnot Chairman & Managing Director (from 09.11.2013 to till date )

2. Shri R Athmaram, Executive Director (from 07.08.2013 to till date)

3. Shri R K Gupta, Executive Director (from 31.12.2013 to till date)

The transactions with the subsidiary and associate of the bank have not been disclosed in view of para 9 of the AS- 18 Related Parties Disclosures, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other state controlled related parties.

10.9 Accounting Standard -24- Discontinuing Operations

The Bank, during the financial year 2014-15, has not discontinued any of its business activities/ operations which resulted in discharging of liabilities and realization of the assets and no decision has been finalized to discontinue a business activity in its entirety which will have the above effects.

10.10 Accounting Standard 26—Accounting for Intangible Assets.

Computer Software - other than internally generated:

Useful life - 3 years.

Amortization Rate - 33.33 %

Amortization Method - Straight line at cost

10.11.Accounting Standard 28- Impairment of Assets

Bank has identified that there is no impairment of fixed assets and as such, no provision is required as per AS-28.

10.12Accounting Standard 29- Provisions, Contingent Liabilities and Contingent Assets

In the opinion of the management, no further provision is required against contingent liabilities referred to in Schedule 12.

11. Provision for fraud cases in loans and advances:

In respect of loans and advances, which were in standard category as on December 31, 2014 and are detected as fraud during the quarter ended March 31, 2015, such advances are classified as non-performing and the provision is made to the extent of 50% of the outstanding amount. In respect of loans and advances that were classified as non -performing as on December 31,2014 and where such advances are detected as fraud during the quarter ended March 31,2015, provision during the quarter ended March 31,2015 is made to the extent of 50% on the balance of such advances as reduced by the provision already made as on December 31,2014 on those advances. This has been done in term of RBI Circular DBR.No.BP. BC.83/21.04.048/2014-15, dt. April 1,2015 During the quarter ended March 31, 2015 loans and advances amounting to Rs.982.58 crore, were classified as fraud and accordingly, the provision made thereagainst amounting to Rs.619.02 crore. As on March 31, 2015, the loans and advances that are classified as fraud amounting to Rs.1249.51 crore and provision stood thereagainst at Rs.885.95 crore. The provision that will be made during the year 2015-16 would be Rs.363.56 crore in respect of such advances.

12. Previous year''s figures have been regrouped / reclassified wherever considered necessary to make them comparable with current year''s figure


Mar 31, 2014

SCHEDULE - 1 : CONTINGENT LIABILITIES (Rs. in thousands)



As on 31st March 2014 As on 31st March 2013 (Current Year) (Previous Year) Claims against the Bank not acknowledged as debts 1221,82,25 1181,54,34

II. Liability for partly paid investments AF8AXw- AF8AXw-

III.Liability on account of outstanding forward exchange contracts ACo- 13559,63,81 13628,90,10

IV. Guarantees given on behalf of constituents

(a) In India 6138,60,38 5656,57,00

(b) Outside India 1615,16,23 7753,76,61 1177,15,86 6833,72,86

V. Acceptances, endorsements and obligations 2584,61,74 2717,58,26

VI. Other items for which Bank is contingently liable AF8AXw- AF8AXw-

TOTAL (I, II, III, IV, VE3 VI) (I, II, III, IV, V ACY- VI) 25119,84,41 24361,75,56



ACo- Contingent liabilities in respect of forward exchange contracts include both sale and purchase contracts.

2. Conversion of PNCPS into Equity Share Capital:

Government of India (GOI), vide its letter No.F.No.11/17/2013-BOA, dt.16.04.2014, has given approval to convert Perpetual Non-Cumulative Preference Share Capital (PNCPS) of Rs. 588 crore, into equity shares and allot the same in its favor on preferential basis, after obtaining to all necessary approval and compliance.

3. Investments:

The Bank has classified the investment portfolio into three categories i.e. ACI-Held to Maturity ACI-, ACI-Available for Sale ACI-, and ACI- Held for Trading ACI- and valued the investments in terms of the Reserve Bank of India (RBI) guidelines.

2.1 The Total Investments of Bank, as under, are all in India and no Investments are outside India:

ACo- Represents depreciation on shifting of securities from HFT portfolio to AFS portfolio on completion of 90 days, the maximum period available for holding such security in HFT portfolio.

During the year, the Bank has transferred securities from AFS category to HTM category amounting to Rs. 4178.99 crore and from HFT category to HTM category amounting to Rs. 648.51 crore and charged to Profit ACY- Loss account, depreciation amounting to Rs. 114.20 crore (Rs. Nil crore) in terms of RB guidelines DBOD.BP.BC.No.41/21.04.141/2013-14, dated August 23, 2013.

Note:

During the year, the Bank has not shifted securities from AFS and HFT categories to HTM category or vice-a-versa except the transfer of securities from AFS and HFT categories to HTM category as per the RBI circular DBOD.BP.BC.No.41/21.04.141/2013-14, dated August 23, 2013. In the previous year 2012-13, the Bank adjusted provision for depreciation on investment on account of diminution in value, while shifting of securities from AFS category to HTM category Rs. 69.99 Crore and from HFT category to HTM category Rs. 5.87 Crore.

4. As per RBI guidelines, an amount of X 12.86 crore (Rs. 20.63 Crore) net of taxes and statutory reserves being profit on sale of investment in ''Held to Maturity'' category is transferred to Capital Reserve.

5. The Bank has amortized X 48.23 crore during the year (X 32.00 Crore) for securities classified ''Held to Maturity'' category, and the amount has been charged to Profit ACY- Loss account by reducing value of the respective securities to that extent.

6. An amount of X 11.39 crore (X 16.11 crore) has been appropriated from Net Profit, being Investment Reserve on account of write back of depreciation with reference to Mark to Market (MTM) value of Investment, net of tax and proportionate Statutory Reserve.

7. Derivatives:

The Bank has in place policy guidelines for IRS/FRAs. The approved ceiling for IRS/ FRAs in terms of notional principal is Rs. 2000 crore. As on 31st March 2014, the Bank had 4 (four) outstanding swaps for notional principal value of Rs. 100 crore and the terms of swaps are to receive fixed interest and pay floating rate. Out of 4 (four) swaps, all OIS swaps for notional principal of f 100 crore, were for trading purpose. MTM valuation for outstanding trading swaps is Rs. (-)3.75 crore.

7.1 Disclosures on risk exposure in derivatives

A) Qualitative Disclosure

(i) Derivative policy is approved by the Board, which includes measurement of credit ACY- market risk.

(ii) Policy for hedging and processes for monitoring the same are in place.

(iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

(iv) Risk Management of derivative operations is headed by a Top Management Executive who reports to Head Office. The swaps are tracked on regular basis.

(v) Accounting Policy for recording hedge and non hedge transactions is in place, which includes recognition of income. valuation of outstanding contracts and credit risk mitigation as given in para 3.5 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

(vi) The Bank has made requisite provision on credit exposure of derivative contracts computed as per current exposure method ACY- as per RBI guidelines.

Since Bank''s net funded exposure for risk category-wise exposure for each county is less than 1 ACU- of bank''s total assets as on 31.03.2014, no provision is required in terms of RBI Circular No.DBOD.BP.BC.1/21.04.048/2013-14, dated 01.07.2013.

8. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank.

The Bank has not exceeded the prudential exposure limits, in respect of lending to single borrower or group borrower during the Financial Year 2013-2014.

9. Unsecured Advances:

Unsecured advance includes Rs. 531.53 Crore (Rs. 440.85 crore) as on 31.03.2014 which are collaterally secured by intangible securities such as charge over the rights, licenses, authorities etc. The estimated value of such intangible collateral is Rs. 848.29 Crore (Rs. 889.67 crore) as on 31.03.2014.

10 Provisioning Coverage Ratio:

The bank has computed the provision coverage ratio (PCR) as required vide circular No. DBOD. No. BP.BC. 64/21.04.048/2009-2010, dated December 1, 2009, which is 56.15 ACU-. This ratio is calculated on the basis of NPA level as on 31.03.2014.

Whereas such provision coverage ratio (PCR) calculated as per RB circular No. DP.DC.87/21.04.048/2010-11, dated April 21,2011, based on NPA level as on 30.09.2010, Rs. 2049.81 and NPA provision as on 31.03.2014 works out to 113.83 ACU-, as against minimum required 70 ACU-.

11. Miscellaneous:

11.1 Work is in progress for adjustment/ reconciliation/elimination of inter- branch transactions, transactions with other banks/institutions, nominal accounts and old entries under other assets and liabilities. Further reconciliation between balances in subsidiary and general ledger in respect of certain deposit accounts, clearing accounts, other assets ACY- liabilities and inter-branch transfer of fixed assets is still under progress. The effect of these including the consequential impact thereof on the revenue is not ascertainable. In the opinion of the management consequential impact there off on revenue is not material.

11.2 Fixed Assets:

11.2.1 Depreciation for the current year amounting to Rs. 54.68 crore (Rs. 61.02 crore) on revalued assets has been adjusted to Revaluation reserve account.

11.2.2 The title deeds in respect of 4 (4) revalued properties / premises having cost of Rs. 6.54 crore (Rs. 6.54 crore) were not yet executed / registered in favor of the Bank due to certain long pending legal disputes / formalities.

11.3 Contingent Liabilities include expired guarantees amounting to Rs. 801.01 Crore (Rs. 1026.57 Crore) which has not been cancelled because of pending completion formalities. Claims pending and to be preferred with ECGC amounting to Rs. 71.84 Crore (Rs. 23.49 Crore) have been considered as realizable for the purpose of computing provisions

11.4 Other Liabilities disclosed in Schedule - 5 include Rs. 0.44 Crore (Rs. 0.44 cr) towards un-claimed Share Application Money.

11.5 Letters of Comfort (LOCs):

During the current year, 1518 Trade credits aggregating to Rs. 1561.88 Crore (1133 trade credits aggregating to Rs. 1174.44 Crore) were sanctioned by the Bank and Letters of Comfort issued by the branches in favor of various other Banks for arranging trade credit to corporate clients.

As on 31st March, 2014, 488 trade credits amounting to Rs. 628.37 Crore were outstanding as against 432 trade credits amounting to Rs. 509.17 Crore as on 31st March, 2013

12. The Bank has complied with the Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent applicable as under:

13. Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies.

As prior period items of income/expenditure are not material, the same have been charged/accounted for in respective heads of accounts.

14. Accounting Standard 9 - Revenue Recognition

As per Accounting Policy No. 6.1, given in Schedule -17 - Significant

Accounting Policies, certain items of income are recognized on realization basis on account of statutory requirements or on account of materiality.

15. Accounting Standard 11 - Effect of Changes in Foreign Exchange Rates

Net income on account of exchange differences credit to in the Profit and Loss account for the year is Rs. 73.48. crore (Rs. 60.42 crore).

16. Accounting Standard (AS) 15 (Revised 2005)- ACI-Employee Benefits ACI-

B. Defined Benefit Plans:

a) Pension Plan - This is a post employment benefit, which is 50 ACU- of final pay for a maximum of 33 years of pensionable service. This is a funded scheme.

b) Gratuity Plan - This is a post employment benefit and is payable as higher of Gratuity as per Company''s Rules and Gratuity under Payment of Gratuity Act 1972 as amended. This is a funded scheme.

c) Leave Encashment / Compensated Absences - This is a post employment benefit and is payable for a maximum limit of 240 days of accumulated leave based on final pay. This is an unfunded scheme.

D. Unamortized Pension and Gratuity Liability

In accordance with guidelines issued by RBI vide Notification No. DBOD. No. BR BC. 80/21. 04. 018 / 2010-11 dated February 9, 2011, provision for Rs. 102.48 crore has been made for the year ended 31.03.2014 towards the amortization relating to enhancement in Gratuity limit and re-opening of pension option for existing employees (representing 1/5th of the total unamortized liability amounting to f 512.38 i.e Rs. 102.48 crore being the amount of amortized balance to be charged to the profit ACY- loss account during the financial year 2013- 14).

a) Treasury segment includes Investment, balances with Banks outside India, Interest accrued on investments and related income there from.

b) Corporate/ Wholesale Banking Segments include all advances to trusts, partnership firms, companies and statutory bodies which are not included in Retail Banking Segments.

c) Retail Banking Segments include exposure to the individual person/ persons or to a small business where.

Total average annual turnover is less than Rs. 50 Crore and

ii. No aggregate exposure to one counter party exceeds 0.2 ACU- of the overall retail portfolio of the Bank and

iii. The maximum aggregated retail exposure to one counterpart is up to Rs. 5 Crore.

d) Other Banking Operations segment includes all other banking transaction not covered under segments, specified above.

Part B: Geographical Segment

Since the operations of the Bank are within India only, Geographical Segment is not applicable.

17. Accounting Standard 18 - Related party disclosures

The details in this regard are as under:

(A) Name of the Related Parties and their relationship:

(a) Subsidiary of the Bank - The Maharashtra Executor ACY- Trustee Co. Pvt. Limited

(b) Associate of the Bank - Maharashtra Gramin Bank

(c) Key Management Personnel -

1) Shri Sushil Muhnot, Chairman ACY- Managing Director (from 09.11.2013 to till date)

2) Shri Narendra Singh, Chairman ACY- Managing Director (from 17.01.2012 to 30.09.2013)

3) Shri R Athmaram, Executive Director (from 07.08.2013 to til date)

4) Shri R K Gupta, Executive Director (from 31.12.2013 to til date)

5) Shri C.VR.Rajendran, Executive Director (from 01.03.2012 to 13.12.2013)

18. Accounting Standard -24- Discontinuing Operations

The Bank, during the financial year 2013-14, has not discontinued any of its business activities/ operations which resulted in discharging of liabilities and realization of the assets and no decision has been finalized to discontinue a business activity in its entirety which will have the above effects.

19. Accounting Standard 28- Impairment of Assets

Bank has identified that there is no impairment of fixed assets and as such, no provision is required as perAS-28.

20. Accounting Standard 29- Provisions, Contingent Liabilities and Contingent Assets

In the opinion of the management, no further provision is required against contingent liabilities referred to in Schedule 12.

21. Previous year''s figures have been regrouped / reclassified wherever considered necessary to make them comparable with current year''s figure


Mar 31, 2013

1. Investments:

The Bank has classified the investment portfolio into three categories i.e. "Held to Maturity", "Available for Sale", and "Held for Trading" and valued the investments in terms of the Reserve Bank of India (RBI) guidelines.

1.1 Non-SLR Investment Portfolio

i) Issuer composition of Non-SLR Investments

Following is the disclosure as per prudential guidelines of RBI on Investments (Net of Depreciation) in Non-SLR Securities as of 31/03/2013.

* RIDF- Rural Infrastructure Development Fund

Note:

(i) Investments as in (v) & (vi) above are exempted from classification as per RBI guidelines.

(ii) Amounts reported under columns 4, 5, 6 & 7 are not mutually exclusive.

(iii) The total investment of Rs. 6059.97 crore (Rs. 5403.04 crore) includes one GOI Oil Bond of Rs. 2.94 crore (Rs. 2.94 crore). The same has been included as Govt. Securities in Schedule 8 to the Balance Sheet.

1.2 As per RBI guidelines, an amount of Rs. 20.63 crore (Rs. 2.54 Crore) net of taxes and statutory reserves being profit on sale of investment in ''Held to Maturity'' category is transferred to Capital Reserve.

1.3 During the year, Bank has adjusted provision for depreciation on investment on account of diminution in value while shifting of securities from ''Available for Sale'' category to ''Held to Maturity'' category Rs. 69.99 crore (Nil Crore) and from ''Held for Trading'' category to ''Held to Maturity'' category Rs. 5.87 crore (Nil Crore).

1.4 The Bank has amortized Rs. 32.00 crore during the year (Rs. 30.65 Crore) for securities classified under ''Held to Maturity'' category, and the amount has been charged to Profit & Loss account by reducing value of the respective securities to that extent.

The Bank has in place policy guidelines for IRS/ FRAs. The approved ceiling for IRS/FRAs in terms of notional principal is Rs. 2000 crore. As on 31st March 2013, the Bank had 20 outstanding swaps for notional principal Rs. 600 crore and the terms of Swaps are to receive fixed interest and pay floating rate or vice versa. Out of 20 swaps, 5 OIS swaps for Notional Principal of Rs. 125 crore were for hedging and 15 OIS swaps for notional principal of Rs. 475 crore were for trading purpose. MTM valuation for outstanding trading swap is Rs. (-) 3.13 crore (Rs. (-) 5.36 crore).

2.1 Disclosures on risk exposure in derivatives

A) Qualitative Disclosure

(i) As a part of investment policy, derivative policy is approved by the Board, which includes measurement of credit & market risk.

(ii) Policy for hedging and processes for monitoring the same are in place.

(iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

(iv) Risk Management of derivative operations is headed by a Top Management Executive who reports to Head Office. The swaps are tracked on regular basis.

(v) Accounting Policy for recording hedge and non hedge transactions is in place, which includes recognition of income, valuation of outstanding contracts and credit risk mitigation as given in para 3.5 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

(vi) The Bank has made requisite provision on credit exposure of derivative contracts computed as per current exposure method & as per RBI guidelines. ''

Since Bank''s net funded exposure for risk category-wise exposure for each country is less than 1% of bank''s total assets as on 31.03.2013, no provision is required in terms of RBI Circular No. DBOD.BP.BC.9/21.04.048/2012-13 dated July 2, 2012.

3.1 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank.

The Bank has not exceeded the prudential exposure limits, in respect of lending to single borrower or group borrower during the Financial Year 2012-2013.

3.2 Unsecured Advances:

Unsecured advance includes Rs.440.85 Crore (Rs.419.50 crore) as on 31.03.2013 which are collaterally secured by intangible securities such as charge over the rights, licenses, authorities etc. The estimated value of such intangible collateral is Rs.889.67 Crore (Rs.2042.99 crore) as on 31.03.2013.

3.3 Provisioning Coverage Ratio:

The bank has computed the Provisioning Coverage Ratio (PCR) as required vide Circular No. DBOD.No.BP.BC.64/21.04.048/2009-2010 dated December 1, 2009 which is 83.68%. This ratio is calculated on the basis of NPA level as on 31.03.2013

Whereas such Provision Coverage Ratio (PCR) calculated as per RBI Circular No.DP.DC.87/21.04.048/2011-12 dated April 21, 2011, based on NPA level as on 30.09.2010 Rs.2049.81 Crore and NPA provision as on 31.03.2013 works out to 93.02%, as against minimum required 70%.

4.1 Work is in progress for adjustment/ reconciliation/elimination of inter- branch transactions, transactions with other banks/institutions, nominal accounts and old entries under other assets and liabilities. Further reconciliation between balances in subsidiary and general ledger in respect of certain deposit accounts, clearing accounts, other assets & liabilities and inter-branch transfer of fixed assets is still under progress. The effect of these including the consequential impact thereof on the revenue is not ascertainable. In the opinion of the management consequential impact there off on revenue is not material.

4.2 Fixed Assets

4.2.1 Depreciation for the current year amounting to Rs. 61.02 crore (Rs. 70.63 crore) on revalued assets has been adjusted to Revaluation reserve account.

4.2.2 As per Bank''s policy, revaluation of 113 eligible properties has been done as on 31.03.2013. The gross amount of such revaluation included in properties/premises at as on 31st March 2013 is Rs. 1,181.28 crore (Rs. 482.27 crore) and net of depreciation amount is Rs. 1,120.26 crore (Rs. 375.03 crore). Further, the WDV of earlier Revaluation Reserve of Rs. 375.03 crore has been reversed.

4.2.3 On the basis of certificates of approved valuers, depreciation amounting to Rs. 3.35 crore (Nil) has been written back in respect of 21 composite properties by appropriately segregating land and building cost by miscellaneous income.

4.2.4 The title deeds in respect of 4 (7) revalued properties/premises having cost of Rs. 6.54 crore (Rs. 7.00 crore) were not yet executed/registered in favour of the Bank due to long pending legal disputes/formalities.

4.5 Contingent Liabilities include expired guarantees amounting to Rs. 1026.57 Crore (Rs. 714.72 Crore) which has not been cancelled because of pending completion formalities. Claims pending and to be preferred with ECGC amounting to Rs. 23.49 Crore (Rs. 3.29 Crore) have been considered as realizable for the purpose of computing provisions

4.6 Other Liabilities disclosed in Schedule - 5 include Rs. 0.44 Crore (Rs. 0.47 cr.) towards unclaimed Share Application Money.

4.7 During the year, Reserve Bank of India has not imposed any penalty on the Bank under the provisions of Section 46(4) of the Banking Regulation Act, 1949.

4.8 Letters of Comfort (LOCs):

During the current year,1133 trade credits aggregating to Rs. 1174.44 Crore (1051 trade credits aggregating to Rs.1327.92 Crore) were sanctioned by the Bank and Letters of Comfort issued by the branches in favor of various other Banks for arranging trade credit to corporate clients.

As on 31.03.2013, 432 trade credits amounting to Rs. 509.17 Crore were outstanding as against 407 Trade Credits amounting to Rs. 553.81 Crore as on 31st March, 2012.

5. The Bank has complied with the Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent applicable as under:

5.1 Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies.

As prior period items of income/expenditure are not material, the same have been charged/accounted for in respective heads of accounts.

5.2 Accounting Standard 9 ~ Revenue Recognition

As per Accounting Policy No. 6.1, given in Schedule -17 - Significant Accounting Policies, certain items of income are recognized on realization basis on account of statutory requirements or on account of materiality.

5.3 Accounting Standard 11 - Effect of Changes in Foreign Exchange Rates

Net income on account of exchange differences credit to in the Profit and Loss account for the year is Rs.60.42 crore (Rs. 45.19 crore).

(B) Defined Benefit Plans:

a. Pension Plan- This is a post employment benefit, which is 50% of final pay for a maximum of 33 years of pensionable service. This is a funded scheme.

b. Gratuity Plan- This is a post employment benefit and is payable as higher of Gratuity as per Company''s Rules and Gratuity under Payment of Gratuity Act 1972 as amended. This is a funded scheme.

c. Leave Encashment/ Compensated Absences - This is a post employment benefit and is payable for a maximum limit of 240 days of accumulated leave based on final pay. This is an unfunded scheme.

D. Unamortized Pension and Gratuity Liability

In accordance with guidelines issued by RBI vide Notification No. DBOD.No.BP.BC.80/21.04.018/2010-11 dated February 9, 2011, provision for Rs.102.48 crore has been made for the year ended 31.03.2013 towards the amortization relating to enhancement in Gratuity limit and re-opening of pension option for existing employees (representing 1/5th of the total unamortized liability amounting to Rs. 512.38 i.e Rs. 102.48 crore being the amount of amortized balance to be charged to the profit & loss account during the financial year 2012- 13). The unamortized liability relating to enhancement in Gratuity limit and re-opening of pension option for existing employees as on 31.03.2013 is as under:

a) Treasury segment includes Investment, balances with Banks outside India, Interest accrued on investments and related income therefrom.

b) Corporate/Whole sale Banking Segments include all advances to trusts, partnership firms, companies and statutory bodies which are not iQCluded in Retail Banking Segments.

c) Retail Banking Segments include exposure to the individual person/ persons or to a small business where

i. Total average annual turnover is less than Rs. 50 Crore and

ii. No aggregate exposure to one counter party exceeds 0.2% of the overall retail portfolio of the Bank and

iii. The maximum aggregated retail exposure to one counterpart is up toRs. 5 Crore.

d) Other Banking Operations segment includes all other banking transaction not covered under segments, specified above.

Part B: Geographical Segment

Since the operations of the Bank are within India only, Geographical Segment is not applicable.

5.6 Accounting Standard 18 - Related party disclosures

The details in this regard are as under:

(A) Name of the Related Parties and their relationship:

(a) Subsidiary of the Bank - The Maharashtra Executor & Trustee Co. Pvt. Limited

(b) Associate of the Bank - Maharashtra Gramin Bank

(c) Key Management Personnel

(1) Shri Narendra Singh, Chairman & Managing Director (from 01.02.2012)

(2) Shri C.VR. Rajendran, Executive Director (from 01.03.2012)

5.7 Accounting Standard-24 - Discontinuing Operations

The Bank, during the financial year 2012-13, has not discontinued any of its business activities / operations which resulted in discharging of liabilities and realization of the assets and no decision has been finalized to discontinue a business activity in its entirety which will have the above effects.

5.8 Accounting Standard 26 — Accounting for Intangible Assets.

Computer Software - other than internally generated:

Useful life - 3 years

Amortization Rate - 33.33%

Amortization Method - Straight line at cost

5.9 Accounting Standard 28 — Impairment of Assets

Bank has identified that there is'' no impairment of fixed assets and as such, no provision is required as per AS-28.

5.10 Accounting Standard 29 - Provisions, Contingent Liabilities and Contingent Assets

In the opinion of the management, no further provision is required against contingent liabilities referred to in Schedule 12.

6. Previous year''s figures have been regrouped / reclassified wherever considered necessary to make them comparable with current year''s figure.


Mar 31, 2012

1. Investments:

The Bank has classified the investment portfolio into three categories i.e. Held to Maturity, Available for Sale, and Held for Trading and valued the investments in terms of the Reserve Bank of India (RBI) guidelines.

1.1 The Total Investments of Bank, as under, are all in India and no Investments are outside India:

1.3 Non-SLR Investment Portfolio

i) Issuer composition of Non-SLR Investments

Following is the disclosure as per prudential guidelines of RBI on Investments (Net of Depreciation) in Non-SLR Securities as of 31/03/2012.

* RIDF- Rural Infrastructure Development Fund Note:

(i) Investments as in (v) & (vi) above are exempted from classification as per RBI guidelines.

(ii) Amounts reported under columns 4, 5, 6 & 7 are not mutually exclusive.

(iii) The total investment of Rs 5403.04crore (Rs 3941.39 crore) includes one GOI Oil Bond of Rs 2.94 crore (Rs 2.94 crore). The same has been included as Govt. Securities in Schedule 8 to the Balance Sheet.

1.4 As per RBI guidelines, an amount of Rs 2.54 crore (Rs. 1.29 Crore) net of taxes and statutory reserves being profit on sale of investment in Held to Maturity category is transferred to Capital Reserve.

1.5 During the year, Bank has provided depreciation on investment for diminution in value on account of shifting of investments from Available for Sale category to Held to Maturity' category t Nil Crore (Rs 0.07 Crore) and from Held to Maturity category to Available for Sale category Rs Nil (Rs Nil Crore).

1.6 The Bank has amortized Rs 30.65 crore during the year (Rs 36.59Crore) for securities classified under 'Held to Maturity' category, and the amount has been charged to Profit & Loss account by reducing value of the respective securities to that extent.

The Bank has in place policy guidelines for IRS/FRA's. The approved ceiling for IRS/FRAs in terms of notional principal is Rs 2000 crore. As on 31st March, 2012, the Bank had 25 outstanding swaps for notional principal Rs 1100 crores and the terms of Swaps are to receive fixed interest and pay floating rate or vice versa. Out of 25 swaps, 2 swaps were in IRS for notional principal of Rs 400 crore, 5 swaps of 5 years in OIS for notional principal of Rs 125 crore and 6 swaps of 1 year in OIS for Notional Principal of Rs 275 crore are for hedging and 12 swaps for notional principal of Rs 300 crore were for trading purpose. The aggregate MTM Valuation of the 2 outstanding IRS of Rs 400.00 crore notional amount with Axis Bank as of 31st March, 2012 was Rs 14.20 crore (Negative) as against Rs 13.11 crore (Negative) as on 31.03.2011. Bank is also holding position of Rs 700 crore in OIS swap as on 31st March, 2012. MTM valuation for outstanding trading swap is Rs (-) 5.36 crore (previous year Rs Nil).

2.1 Disclosures on risk exposure in derivatives

A) Qualitative Disclosure

(i) As a part of investment policy, derivative policy is approved by the Board, which includes measurement of credit & market risk.

(ii) Policy for hedging and processes for monitoring the same are in place.

(iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

(iv) Risk Management of derivative operations is headed by a Top Management Executive who reports to Central Office. The swaps are tracked on regular basis.

(v) Accounting Policy for recording hedge and non hedge transactions is in place, which includes recognition of income, valuation of outstanding contracts and credit risk mitigation as given in Para 3.5 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

(vi) The Bank has made requisite provision on credit exposure of derivative contracts computed as per current exposure method & as per RBI guidelines.

During the previous year, provision against sub-standard assets was made @15% as per Board approval policy, vis-a-vis regulatory requirement of 10%.

In the month of May 2011, the RBI revised and increased the provision rate on sub standard assets to 15% from 10% and hence thereafter followed regulatory guidelines and provided accordingly.

In view of this revised guidelines the bank discontinued the policy of charging higher provisioning rate on sub standard assets and followed RBI guidelines w.e.f quarter ended June 2011.

3.1 In previous year 2010-11, the Bank changed the accounting policy for provisioning in respect of secured sub-standard assets from 10% to 15% however from 01.04.2011, RBI vide its circular no DBOD. BP.BC.94/21.048/2011-12 dated 18.05.2011 advised the banks to make the provision @15% in respect of secured sub-standard assets. The Bank continued to provide @ 15% on secured sub standard assets which is as per the RBI guidelines.

The cumulative provision towards Standard Assets held by the Bank as at the year end is included under Other Liabilities and Provisions in Schedule 5 to the Balance Sheet.

3.2 In terms of Agriculture Debt Waiver and Debt Relief Scheme, 2008 (ADWDR) Scheme, the bank has received claim amount from Reserve Bank of India (RBI) against claims as certified by Central Statutory Auditors. Details of which are as follows:

The Bank is having general provision of Rs.21.06 crore (Rs. 21.06 crore) which is used by the bank for computing the provision coverage ratio (PCR) as per RBI guidelines.

3.3 Banc assurance Business

The income earned under Banc assurance is Rs. 7.45Crore (Rs. 6.32 crore). The details of Banc assurance income is as under:

Since Bank's net funded exposure for risk category-wise exposure for each country is less than 1% of bank's total assets as on 31.03.2011, no provision is required in terms of RBI Circular No. DBOD.BP.BC.96/21.04.103/2003-04 dated 17.06.2004.

4.1 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank The Bank has not exceeded the prudential exposure limits, in respect of lending to single borrower or group borrower during the Financial Year 2011-2012.

4.2 Unsecured Advances:

Unsecured advances includes Rs 419.50 crore (Rs 349.90 Crore) as on 31.03.2012 which are collaterally secured by intangible securities such as charge over the rights, licenses, authority etc. The estimated value of such intangible collateral is Rs 2042.99 crore (Rs 2208.22 crore) as on 31.03.2012.

4.3 Provisioning Coverage Ratio:

The bank has computed the Provisioning Coverage Ratio (PCR) as required vide Circular No. DBOD.No.BP.BC.64/21.04.048/2009-2010 dated December 1, 2009 which is 80.36%. This ratio is calculated on the basis of NPA level as on 31.03.2012.

Whereas such Provision coverage (PCR) calculated as per RBI Circular No.DP.DC.87/21.04.048/2010-11 dated April 21, 2011, based on NPA level as on 30.09.2010 t 2049.81 and NPA provision as on 31.03.2012 works out to 89.52%.

In RBI circular No.DBOD No.BP.BC.87/21.04.048/2011-11 dated April 21,2011, wherein banks were advised to maintain PCR of 70 percent with reference to the Gross NPAs position as on 30.09.2010 and if there is gap create "counter cyclical provisioning buffer". In this regard, the Bank has made provision to the tune of Rs 264.91 crores during the year 2011-12.

5.1 Work is in progress for adjustment/reconciliation/elimination of inter- branch transactions, transactions with other banks/institutions, nominal accounts and old entries under other assets and liabilities. Further reconciliation between balances in subsidiary and general ledger in respect of certain deposit accounts, clearing accounts, other assets & liabilities and charge of depreciation on fixed assets and inter-branch transfer of fixed assets is still under progress. The effect of these, including the consequential impact thereof on the revenue, is not ascertainable. In the opinion of the management consequential impact thereof on revenue is not material

5.2 Fixed Assets

5.2.1 Depreciation for the current year amounting to Rs 70.63 crore (Rs 12.35 crore) on revalued assets has been adjusted to Revaluation reserve account.

5.2.2 Depreciation charged for the year include Rs 2.45 crore representing net value of adjustment in the net book value of certain assets revalued in the past, change in rate of depreciation to take in to consideration reduced residual life due to revaluation and excess amount amortized in the past on certain leasehold lands.

5.2.3 Deduction during the period from cost of premises and depreciation to date thereon includes Rs 53.28 crores which was amount of addition due to revaluation on a previous occasion and was required to be adjusted from this amount on subsequent revaluation in financial year 2008-09. This has no effect on net book value of respective asset.

5.2.4 Depreciation for the year on the appreciated value of fixed assets on account of past revaluation includes Rs 56.11 crore to harmonize the rate of depreciation on revalued portion with that of cost portion. This does not have any effect on net depreciation provided for the year and consequently there is no effect on profit for the year.

5.2.5 Certain premises of bank are stated at revalued amount. The gross amount of such revaluation included in premises at the end of the year is Rs 482.27 crores and net of depreciation the revaluation amounts to Rs 375.03.

5.2.6 The title deeds in respect of few revalued premises having cost Rs 7.00 crores (Rs 7.00 crore) are not yet executed/registered in favour of the Bank due to certain long pending legal disputes/formalities.

5.3 Contingent Liabilities include expired Guarantees amount to Rs 714.72 Crore (Rs 307.64 Crore) which has not been cancelled because of pending completion formalities. Claims pending and to be preferred with ECGC amounting to Rs 3.29 Crore (Rs 9.74 Crore) have been considered as realizable for the purpose of computing provisions.

5.4 Other Liabilities disclosed in Schedule - 5 include Rs 0.47 Crore (Rs 0.52 cr.) towards unclaimed Share Application Money.

5.6 During the year, Reserve Bank of India has not imposed any penalty on the Bank under the provisions of Section 46(4) of the Banking Regulation Act, 1949.

5.7 Letters of Comfort (LOCs):

During the current year,1051 trade credits aggregating to Rs 1327.92 Crore (Previous year 667 trade credits aggregating to Rs 572.47 Crore) were sanctioned by the Bank and Letters of Comfort issued by the branches in favor of various other Banks for arranging trade credit to corporate clients.

As on 31.03.2012, 407 trade credits amounting to Rs 553.81 Crore were outstanding as against 290 Trade Credits amounting to Rs 272.16 Crore as on 31.03.2011.

5.8 Draw Down from Reserve:

Pursuant to RBI permission vide its letter no. DBOD. BP.No.2861/21.04.018/2011-12 Dt.23.08.2011, the bank has transferred an amount of t 35,416/- (net of tax and net of subsequent reduction in the transfer to the Statutory Reserve) in the current year from the Revenue Reserve to profit and loss, being claims amounting to Rs 71,180/- in respect of demand drafts which pertain to the net credit entries outstanding prior to 31.03.2009 in inter branch account, which was transferred to Profit & Loss account and appropriate to Revenue Reserve in the year 2005-06.

6. The Bank has complied with the Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent applicable as under:

6.1 Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies.

As prior period items of income/expenditure are not material, the same have been charged/accounted for in respective heads of accounts.

6.2 Accounting Standard 9 - Revenue Recognition

As per Accounting Policy No. 6.1, given in Schedule -17 - Significant Accounting Policies, certain items of income are recognized on realization basis on account of statutory requirements or on account of materiality.

6.3 Accounting Standard 11 - Effect of Changes in Foreign Exchange Rates Net income on account of exchange differences credit to in the Profit and Loss account for the year is 143.75 crore (Rs. 31.43 crore).

A. Defined Benefit Plans:

a. Pension Plan - This is a post employment benefit, which is 50% of final pay for a maximum of 33 years of pensionable service. This is a funded scheme.

b. Gratuity Plan - This is a post employment benefit and is payable as higher of Gratuity as per Bank's Rules and Gratuity under Payment of Gratuity Act 1972 as amended. This is a funded scheme.

c. Leave Encashment/Compensated Absences - This is a post employment benefit and is payable for a maximum limit of 240 days of accumulated leave based on final pay. This is an unfunded scheme.

d. Unamortized Pension and Gratuity Liability

In accordance with guidelines issued by RBI vide Notification No. DBOD.No.BP.BC.80/21.04.018/2010-11 dated February 9, 2011, provision for Rs 102.48 crore has been made for the year ended 31.03.2012 towards the amortization relating to enhancement in Gratuity limit and reopening of pension option for existing employees (representing 1/5th of the total unamortized liability amounting to Rs 512.38 crore i.e Rs 102.48 crore being the amount of amortized balance to be charged to the profit & loss account during the financial year 2011-12). The unamortized liability relating to enhancement in Gratuity limit and re-opening of pension option for existing employees as on 31.03.2012 is as under:

a) Treasury segment includes Investment, balances with Banks outside India, Interest accrued on investments and related income there from.

b) Corporate/Whole sale Banking Segments include all advances to trusts, partnership firms, companies and statutory bodies which are not included in Retail Banking Segments.

c) Retail Banking Segments include exposure to the individual person/ persons or to a small business where

i. Total average annual turnover is less than Rs 50 Crore and

ii. No aggregate exposure to one counter party exceeds 0.2% of the overall retail portfolio of the Bank and

iii. The maximum aggregated retail exposure to one counterpart is up to Rs.5 Crore.

d) Other Banking Operations segment includes all other banking transaction not covered under segments, specified above.

The above disclosures made are based on the records/information compiled by the management and relied upon by the auditors.

Part B: Geographical Segment

Since the operations of the Bank are within India only, Geographical Segment is not applicable.

6.4 Accounting Standard 18 - Related party disclosures

The details in this regard are as under:

(A) Name of the Related Parties and their relationship:

(a) Subsidiary of the Bank - The Maharashtra Executor & Trustee

Co. Pvt. Limited

(b) Associate of the Bank - Maharashtra Gramin Bank

(c) Key Management Personnel -

(1) Shri Narendra Singh, Chairman & Managing Director (from 01.02.2012)

(2) Shri Anup Sankar Bhattacharya, Chairman & Managing Director (from 1.10. 2010 to 31.01.2012)

(3) Shri C.VR.Rajendran, Executive Director (from 01.03.2012).

(4) Shri Madhukant G. Sanghvi, Executive Director (from 15.10.2008 to 29.02.2012).

The transactions with the subsidiary and associate of the bank have not been disclosed in view of para 9 of the AS-18 Related Parties Disclosures, which exempts state controlled enterprises from making any disclo-sure pertaining to their transactions with other related parties which are also state controlled.

While making provision for Income tax for the year tax liability due to Minimum Alternate Tax (MAT) as per provisions of section 115 JB of Income Tax Act 1961, has not been considered in view of decision of ITAT, Mumbai regarding non applicability of MAT to Banks.

6.5 a) Accounting Standard -24- Discontinuing Operations

The bank, during the financial year 2011-12, has not discontinued any of its business activities/operations which resulted in discharging of liabilities and realization of the assets and no decision has been finalized to discontinue a business activity in its entirety which will have the above effects.

6.6 Accounting Standard 26 - Accounting for Intangible Assets

Computer Software - other than internally generated:

Useful life - 3 years

Amortization Rate - 33.33%

Amortization Method - Straight line at cost

6.7. Accounting Standard 28 - Impairment of Assets

Bank has identified that there is no impairment of fixed assets and as such, no provision is required as perAS-28.

6.8 Accounting Standard 29 -- Provisions, Contingent Liabilities and Contingent Assets In the opinion of the management, no further provision is required against contingent liabilities referred to in Schedule 12.

7. Previous year's figures have been regrouped/reclassified wherever considered necessary to make them comparable with current year's figures.

BASEL II (PILLAR 3) DISCLOSURE TABLE DF - 1 - SCOPE OF APPLICATION Qualitative Disclosures

a. The name of the top Bank in the group to which the frame work applies: BANK OF MAHARASHTRA

b. An outline of differences in the basis of consolidation for accounting and regulatory purposes, with a brief description of the entities within the group

i) that are fully consolidated

Bank of Maharashtra is the top bank in the group to which the new capital adequacy frame works applies. The bank has only one subsidiary as under:

Name of the subsidiary : The Maharashtra Executor and Trustee Company Pvt. Ltd.

Country of Incorporation : India

Proportion of ownership : 100%

The above subsidiary is consolidated as per Accounting Standard 21 issued by the Institute of Chartered Accountants of India (ICAI).

(ii) that are pro-rata consolidated

There is no entity in the group which is consolidated on pro-rata basis.

(iii) that are given a deduction treatment;

1. Name of the subsidiary : The Maharashtra Executor and Trustee Company Pvt. Ltd.

2. Name of the Associate : Maharashtra Gramin Bank. Country of Incorporation : India

Proportion of ownership : 35%

The above entity is consolidated as per "Accounting Standard 23" issued by ICAI

(iv) that are neither consolidated nor deducted (e.g. where the investment is risk-weighted) - Nil

Quantitative Disclosures

c. The aggregate amount of capital deficiencies in all subsidiaries not included in the consolidation i.e. that are deducted and the name(s) of such subsidiaries - Nil

d. The aggregate amounts (e.g. current book value) of the bank's total interests in insurance entities, which are risk-weighted as well as their name, their country of incorporation or residence, the proportion of ownership interest and, if different, the proportion of voting power in these entities. In addition, indicate the quantitative impact on regulatory capital of using this method versus using the deduction - Nil

TABLE DF - 2 - CAPITAL STRUCTURE Qualitative Disclosures

(a) Summary information on the terms and conditions of the main features of all capital instruments, especially in the case of capital instruments eligible for inclusion in Tier 1 or in Upper Tier 2. The Capital Structure of the Bank comprises Equity, Preference shares, Reserves & Surplus and Innovative Perpetual Bonds. The Bank has raised equity capital of Rs 605.09 crore (including share premium) during the year as under :

In view of the above infusion of share capital, the shareholding of the GOI has reduced to 78.95% as on 31.03.2012.

The Bank has issued Innovative Perpetual Bonds (Tier 1 capital) and also other bonds eligible for inclusion in Tier 2 capital. Some of the important terms and conditions of the bonds are given below:

TABLE DF-3 - CAPITAL ADEQUACY Qualitative Disclosures:

The Bank is subjected to the Capital Adequacy guidelines stipulated by RBI. Adequate capital is maintained by the Bank as a cushion for covering the risk of loss in value of exposure, businesses etc. so as to protect the depositors, general creditors and stakeholders against such losses. The Bank has evolved and put in place a Board approved Internal Capital Adequacy Assessment Process (ICAAP) framework. Assessment and review of Bank's capital requirements are carried out at periodical intervals.

The Bank has a process for assessing its overall Capital Adequacy in relation to its risk profile and the process provides an assurance that the Bank has adequate capital to support all risks in its business and an appropriate capital buffer based on its business profile. The Bank has a policy to maintain capital to take care of the future growth in business so that the minimum capital required is maintained on continuous basis.

In line with the guidelines of the RBI, the Bank has adopted the Standardized Approach for Credit Risk, Basic Indicator Approach for Operational Risk and Standardized Duration Approach for Market Risk for computing Capital Adequacy Ratio under New Capital Adequacy Framework - Basel II.

Bank is in the process of migrating to the Advanced Approaches of the Basel II framework so as to enhance its Risk and Capital Management capabilities. Advanced approaches include Foundation and Advanced Internal Ratings Based Approach ('FIRBA' & 'AIRBA') for Credit Risk, The Standardized Approach and Advanced Measurement Approach ('TSA' & 'AMA') for Operational Risk and Internal Models Approach ('IMA') for Market Risk.

Prudential floor limit for minimum capital requirement:

The guidelines for implementation of the New Capital Adequacy Framework issued by RBI stipulates higher of the following amounts as minimum capital required to be maintained by the Bank.

(a) Minimum capital as per Basel II norms for Credit, Market and Operational Risk.

(b) 80% of Minimum capital as per Basel I norms for Credit and Market risks.

The minimum capital required to be maintained by the Bank as on March 31, 2012 is 80% of the capital requirement under Basel I norms i.e. Rs 4204.92 Crore or capital requirement as per Basel II norms i.e. Rs 4705.87 Crore, whichever is higher.

However, the actual capital (Tier 1 and Tier 2) maintained by the Bank as on March 31, 2012 is Rs 6498.99 Crore, which is above the prudential floor limit.

Table DF-4 - CREDIT RISK: GENERAL DISCLOSURES Qualitative Disclosures:

Credit Risk:

Credit Risk is related to the losses associated with diminution in the credit quality of borrowers or counterparties in a bank's portfolio. Credit risk arises mostly from lending activities of the bank and it emanates from changes in the credit quality/worthiness of the borrowers or counterparties. Credit Risk is an aggregation of Transaction Risk (risk in various credit propositions), Industry and Business line risk wherein advances are lent, Geographic Concentration Risk and types of credit (such as loans, Cash credit, overdrafts etc.).

Policy & Strategy

The Bank has been following a conservative risk philosophy. The important aspects of the risk philosophy are embodied in various policies, circulars, guidelines etc. The business objectives and the strategy of the bank is decided taking into account the profit considerations, the level of various risks faced, level of capital, market scenario and competition. The Bank is conscious of its asset quality and earnings and judiciously matches profit maximization with risk control.

The Bank has put in place the following policies approved by the Board.

i) Lending & Loan Review Policy

ii) Risk Management Policy

iii) Credit Risk Mitigation Techniques & Collateral Management

iv) Investment Management Policy & Investment Risk Management Policy

The Lending & Loan Review Policy, Risk Management Policy documents define organizational structure, role and responsibilities and, the processes and tools whereby the credit risks carried by the Bank can be identified, quantified and managed within the framework that the Bank considers consistent with its mandate and risk appetite. The policies prescribe various prudential and exposure limits, collateral standards, financial benchmarks for the purpose of credit risk management. The policy on Credit Risk Mitigation Techniques & Collateral Management lays down the details of eligible collaterals for credit risk mitigation under Basel II framework. The Investment Management Policy & Investment Risk Management Policy forms an integral part of credit risk in the Bank.

Organizational Structure for Credit Risk Management

The organizational structure of the Bank for Credit Risk Management function has the Board of Directors at the apex level that has the overall oversight of management of risks. The Risk Management Committee of the Board (RMC) devises the policy and strategy for Integrated Risk Management. At operational level, the Credit Risk Management Committee (CRMC) manages the credit risk. The main functions of the CRMC include implementation of the credit risk policy approved by the Board, monitoring credit risk on a bank wide basis and ensure adherence to threshold risk limits approved by the Board/ Risk Management Committee. The Integrated Risk Management Department is headed by the Chief Risk Officer of General Manager rank.

Systems/Process/tools for Credit Risk Management

Credit Appraisal standards: The Bank has in place proactive credit risk management practices like consistent standard for the credit origination, maintenance and documentation for all credit exposures including off balance sheet items. Systems of periodic reviews, periodic inspections and collateral management systems are in place.

Exposure Limits: Credit risk limits including single/group borrower limits, substantial exposure limits, exposure limits in respect of sectors/industries are in place. The exposure vis-a-vis the limits are monitored.

Credit Approval Grids: Credit Approval Grids have been constituted at various levels covering very large branches/Regional offices/Head Office for considering fresh/existing proposals with or without enhancement. A structure namely, New Business Group (NBG) is in place at Head Office level for considering in-principle approval for taking up fresh credit proposal above a specified cut-off.

Sanctioning Powers: Bank follows a well-defined multi-layered discretionary power structure for sanction of loans. Higher sanctioning powers are delegated to sanctioning authorities for sanctioning loans and advances to better rated customers in line with RBI guidelines.

Credit Risk Rating and Appraisal Process: The Bank manages its credit risk through continuous measuring and monitoring of risks at each obligor (borrower) and portfolio level. The Bank has in place an internal credit risk rating framework and well established standardized credit appraisal/approval processes. Credit risk rating enables the Bank to accurately assess the risk in a credit proposition and take a decision to accept or reject the proposal based on the risk appetite of the Bank. It also enables risk pricing of credit facilities for risk return trade off. The Bank has developed and put in place credit risk rating models for retail loans also. The Bank has in-house developed software for undertaking credit risk rating put on the Wide Area Network (WAN) of the Bank facilitating instant access by the Branches/Field Offices for undertaking credit risk rating of borrowers.

As a measure of robust credit risk management practices, the Bank has in place a framework for approval of credit risk ratings. Rating for every borrower is reviewed at least once in a year. Credit portfolio quality is monitored by undertaking bi-annual credit risk rating for high value exposures and inferior rated borrowers. Credit risk rating, as a concept, has been well internalized in the Bank.

Loan review Mechanism: The objectives of the Loan Review Mechanism in place in the Bank are:

i) To ensure that credit decisions by various authorities are in conformity with the Bank's Lending Policy and de-legated lending powers.

ii) To ensure that stipulated terms & conditions of sanction are complied with and various post sanction follow up, monitoring and supervision measures prescribed by the Bank are adhered to.

iii) To ensure that all credit facilities are reviewed/renewed well in time so as to revise the risk perception and take necessary corrective action if necessary, immediately.

iv) To aim at achieving maintenance of standard assets quality and improvement in non-performing assets (NPAs) so as to have a favourable impact on profitability of the Bank through prevention/ reduction/up gradation of NPAs.

v) To assess the health of credit portfolio of the Bank and to apprise the Top Management about the same from time to time.

Checks and balances viz. separation of credit risk management from credit sanctions, system of assigning credit risk rating, vetting of ratings, mechanism to price credit facilities depending of risk rating of customer, credit audit etc. are in place. Minimum entry level rating benchmarks are stipulated. A suitable mechanism is in place to monitor aggregate exposure on other banks and country exposures. A diversified credit portfolio is maintained and a system to conduct regular analysis of portfolio so as to ensure ongoing control of credit concentration is in place.

Loans past due and Impaired:

The regulatory guidelines are adhered to in respect of income recognition, asset classification and provisioning, the Bank considers following categories of loans and advances as Non-performing Assets, wherein:

- Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan

- The account remains 'out of order' in respect of an Overdraft/Cash Credit (OD/CC)

- The bill remains overdue for a period of more than 90 days in the case of Bills Purchased and Discounted

- In case of agricultural advances, interest and/or installment of principal remains overdue for 2 crop seasons (in respect of short duration crops) & 1 crop season (in respect of long duration crops).

- Any amount receivable that remains overdue for a period of more than 90 days in respect of other accounts.

- Out of Order' status: An account is treated as 'out of order' if the

outstanding balance remains continuously in excess of the sanctioned limit/ drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.

Overdue: Any amount due to the bank under any credit facility is overdue if it is not paid on the due date fixed by the bank.

Table DF-5 CREDIT RISK: PORTFOLIOS SUBJECT TO THE STANDARDISED APPROACH

Qualitative Disclosures:

For portfolios under the Standardized Approach:

- Name of the credit rating agencies used:

The Bank has approved the following external credit rating agencies, approved by RBI, for risk weighting claims on entities:

1. Credit Rating Information Services of India Limited (CRISIL),

2. Credit Analysis and Research limited (CARE),

3. FITCH India and

4. ICRA Limited.

- Types of exposure for which each credit rating agency is used: All the above agencies are approved for rating of all types of exposure in excess of Rs 5 Crore.

- A description of the process used to transfer public issue ratings onto comparable assets in the banking book:

- The Bank shall use the ratings assigned by any of these credit rating agencies as solicited and ac-cepted by the borrowers in line with RBI guidelines. External ratings assigned, fresh or reviewed, at least during the previous 15 months only are considered for capital computation by the Bank.

- Wherever available, the Bank uses facility rating or bank loan rating for risk weighting the borrower's exposures. Where issuer rating is available the Bank uses such ratings unless the bank loan is specifically rated.

- The Bank does not simultaneously use the rating of one credit rating agency for one exposure and that of another credit rating agency for another exposure of the same borrower, unless the respective exposures are rated by only one of the chosen credit rating agencies. Further, the Bank does not use rating assigned to a particular entity within a corporate group to risk weight other entities within the same group.

- Running limits such as cash credit are treated as long term exposures and accordingly, long term ratings are used for assigning risk weights for such exposures.

- While mapping/applying the ratings assigned by the credit rating agencies, the Bank is guided by Regulatory guidelines/Bank's Board approved Policy.

Table DF-6 CREDIT RISK MITIGATION Qualitative Disclosures:

- Policies and processes for, and an indication of the extent to which the bank makes use of, on- and off-balance sheet netting In line with RBI guidelines on Advance approach for Credit Risk (FIRB/ AIRB), the Bank has revised the Policy on Credit Risk Mitigation Techniques & Collateral Management, duly approved by the Board.

The collaterals used by the Bank as the risk mitigates comprise of the financial collaterals (i.e. bank deposits, Govt./Postal securities, Life policies with declared surrender value, gold jewellery etc.), where Bank has legally enforceable netting arrangements, involving specific lien. Software is in place for calculation of correct valuation and application of haircut.

- Policies & processes for collateral valuation and management:

Collaterals and guarantees prudently stipulated and managed would serve to:

- Mitigate the risk by providing secondary source of repayment in the event of borrower's default on a credit facility due to inadequacy in expected cash flow

- Gain control on the source of repayment in the event of default;

- Optimize risk weighted assets and to address residual risks adequately.

- In addition to the revised policy on Credit Risk Mitigation Techniques & Collateral Management, Bank has also put in place Lending Policy duly approved by the Board. These policies lay down the types of securities normally accepted by the Bank for lending, and administration/ monitoring of such securities in order to safeguard/protect the interest of the Bank so as to minimize the risk associated with it. Both the fixed and the current assets obtained to secure the loans granted by the Bank as per policy prescription are subjected to valuation by outside valuers empanelled by the Bank.

- Description of the main types of collateral taken by the Bank

The main types of financial collaterals commonly used by the Bank as risk litigants comprise of financial collaterals (i.e. Bank Deposits, Government Securities, KVP, NSC, Life Insurance Policies with declared surrender value, Gold jewellery etc.). Bank also accepts non-financial collateral i.e. stock, book debts, mortgage of residential & commercial property and plant & machinery.

- Main types of guarantor counterparty and their creditworthiness

Wherever required the Bank obtains personal or corporate guarantee as an additional comfort for mitigation of credit risk which can be translated into a direct claim on the guarantor which is unconditional and irrevocable. The Bank also accepts guarantee given by State/Central Government as a security comfort.

- Information about (Market or Credit) risk concentrations within the mitigation taken All types of securities eligible for credit risk mitigation are easily realizable financial securities. As such, no limit/ceiling have been prescribed for the present to address the concentration risk in credit risk litigants'.

Table DF-7 SECURITIZATION Qualitative Disclosures:

The Bank has not securitized any exposure during the year 2011-12. Quantitative Disclosures:

Quantitative Disclosure for Standardized Approaches is Not Applicable Table DF-8 MARKET RISK IN TRADING BOOK Qualitative Disclosures:

a) Market Risk:

Market Risk is defined as the possibility of loss to a bank caused by adverse movements in the market variables such as interest rates, foreign currency exchange rates, equity prices and commodity prices. Bank's exposure to market risk arises from domestic investments (interest related instruments and equities) in trading book (both AFS and HFT categories), the Foreign exchange positions. Bank is not trading in commodities. The objective of the market risk management is to minimize the impact of losses on earnings and equity arising from market risk.

Policies, strategies and processes for management of Market Risk

The Bank has put in place Board approved Investment Management Policy & Investment Risk Management Policy, Risk Management Policy, Market Risk Management Policy and Asset Liability Management (ALM) Policy for effective management of market risk in the Bank. The above policies lay down well- defined organization structure for market risk management functions and processes whereby the market risks carried by the Bank are identified, measured, monitored and controlled within the policy framework consistent with the Bank's risk tolerance. The policies deal with the re-porting framework for effective monitoring of market risk and also set various risk limits such as Overnight Limit, Intra-day limit, Aggregate Gap limit, Stop Loss limit, VaR limit etc. Exposure limits are set for the counterparty banks and the exposures are monitored on daily basis.

The ALM Policy specifically deals with liquidity risk and interest rate risk management framework. As envisaged in the policy, liquidity risk is managed through the Traditional Gap Analysis & Duration Gap Analysis based on the residual maturity/behavioral pattern of assets and liabilities as prescribed by the RBI. The Bank has put in place mechanism of short term dynamic liquidity management and contingency plan for liquidity management. Prudential (Tolerance) limits are set for different residual maturity time buckets for efficient asset liability management. The Bank's contingency plan for liquidity management comprises various contingent measures to deal with any kind of stress on liquidity position. The Bank has put in place Board approved Stress Testing Policy and conducts periodic stress tests on liquidity risk, interest rate risk and foreign exchange risk.

Interest rate risk is managed through use of Gap Analysis of rate sensitive assets and liabilities and monitored through prudential (Tolerance) limits prescribed. The Bank also has put in place Duration Gap Analysis framework for management of interest rate risk. The Bank estimates Earnings at Risk (EaR) and Modified Duration Gap (DGAP) periodically against adverse movement in interest rate for assessing the impact on Net Interest Income (NII) and Economic Value of Equity (EVE).

The Asset Liability Management Committee (ALCO)/Board monitors adherence of prudential limits fixed by the Bank and determines the strategy in light of the market conditions. Dealing room activities are centralized and system is in place to monitor the dealing room activities. The Mid- Office at the Treasury & International Banking Department (TIBD) also monitors adherence of prudential limits on a continuous basis.

Market Risk Management Policy - To ensure that the Bank's operations are in line with Management expectations of return vis-a-vis market risk, it is crucial that the Bank has a defined set of principles and processes in place for articulating how it plans to manage the market risks it faces, in the Trading or Banking Book.

The Bank's Market Risk Management Policy aims to set out the broad outlines of the processes by which the market risks carried by the Bank shall be managed i.e. identified, measured, controlled and monitored in such a way that the risk taken is within the approved risk tolerance limits. The scope of this policy covers market risks arising from the bank's "Trading book" and investment portion of Banking book. Funding liquidity and interest rate risk arising on ac-count of Banking book investments are managed by ALM function in accordance with bank's ALM policy and RBI prescriptions.

The aggregate exposure on country-wise basis is taken for monitoring the country risk. For risk categorization of various countries, the ECGC risk classification is used by the Bank. Exposure on High Risk countries are taken with proper risk mitigation.

Table DF-9 OPERATIONAL RISK Qualitative disclosures:

Operational risk:

Operational Risk is risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Operational risk includes Legal risk but excludes Strategic and Reputation Risk.

Policies on management of Operational Risk:

The Bank has framed Operational Risk Management Policy in line with the RBI Guidelines for the Advanced Approaches for Operational Risk (TSA & AMA) under Basel II framework, duly approved by the Board. The other policies approved by the Board which deal with management of operational risk are (a) Information System Security Policy, (b) Business Continuity Planning Policy, (c) Compliance Policy, (d) Outsourcing Policy and (e) Fraud Risk Management Policy. The Bank has issued guidelines on Know Your Customer (KYC) and 'Anti-Money Laundering (AML) procedures.

Strategies and processes: The Operational Risk Management process of the Bank is driven by a strong organizational culture and sound operating procedures, involving corporate values, internal control culture, effective internal reporting. Policies are put in place for effective management of Operational Risk in the Bank.

The Bank has been constantly reviewing the legal documents to ensure that the legal documents are comprehensive and enforceable. As a measure of risk transfer, the Bank has obtained insurance cover for all the assets owned by the Bank. It is also ensured that the assets financed by the Bank are also adequately insured as a risk mitigation measure. The operational risk management policy outlines the organization structure and detail processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk management system into the day-to-day risk management processes of the Bank by clearly assigning roles for effectively identifying, assessing, monitoring and controlling/mitigating operational risks and by timely reporting of operational risk exposures including material operational losses. Operational risks in the Bank are managed through comprehensive and well-articulated internal control framework.

Approach adopted for capital charge computation for operational risk:

The Bank is following Basic Indicator Approach (BIA) for calculating capital charge for Operational Risk. The Bank is preparing for migrating to The Standardized Approach (TSA) and then for Advanced Measurement Approach (AMA) for calculation of capital risk charge for Operational Risk under Advanced Basel II approaches.

Quantitative Disclosure:

Capital charge for Operational Risk under Basic Indicator approach is Rs 356.03 Crore.

Table DF-10 INTEREST RATE RISK IN THE BANKING BOOK (IRRBB) Qualitative Disclosures:

Interest Rate Risk in the Banking Book:

Interest Rate Risk in the Banking Book (IRRBB) refers to the potential adverse financial impact on the Bank's Banking Book from changes in interest rates. The interest rate risk is measured and monitored through two approaches.

(i) Earnings at Risk: The impact on income (Earning Perspective) is measured through use of Traditional Gap Analysis by applying notional rate shock (parallel shift in the interest rates across assets and liabilities) up to 100 basis point (bps).

(ii) Economic Value of Equity (Duration Gap Analysis): The Bank has adopted Duration Gap Analysis for assessing the impact (as a percentage) on the economic value of equity (Economic Value Perspective) in line with method suggested by RBI. It is done by calculating modified duration of assets and liabilities to finally arrive at modified duration of equity.

- Interest Rate Sensitivity statement as per DGA is prepared.

- The duration of each asset and liability is arrived at taking the midpoint of each time bucket as the maturity date and the average yield as coupon and taking the market rate for discounting purpose. For investments, the actual duration is taken.

- The impact on the Economic Value of Equity is analyzed for a 200 bps rate shock as indicated by RBI.

The Economic Value of Equity is measured and monitored on a quarterly basis.


Mar 31, 2010

1. Investments:

The Bank has classified the investment portfolio into three categories i.e. "Held to Maturity," "Available for Sale" and "Held for Trading" and valued the investments in terms of the Reserve Bank of India (RBI) guidelines.

1.1 As per RBI guidelines, an amount of Rs.30.97 crores (Rs.65.99 crores) net of taxes and statutory reserves being profit on sale of investment in "Held to Maturity" category is transferred to Capital Reserve.

1.2 During the year, Bank has provided depreciation on investment for diminution in value on account of shifting of investments from "Available for Sale" category to "Held to Maturity" category Rs. Nil (Rs.4.35 crores) and from "Held to Maturity" category to "Available for Sale" category Rs. Nil (Rs. 0.47 crores).

1.3 The Bank has amortized Rs.68.65 crores during the year (Rs. 87.37 crores) for securities classified under "Held to Maturity" category, and the amount has been charged to Profit & Loss account by reducing value of the respective securities to that extent.

2.1 Disclosures on risk exposure in derivatives

A) Qualitative Disclosure

i) As a part of investment policy, derivative policy is approved by the Board, which includes measurement of credit & market risk.

ii) Policy for hedging and processes for monitoring the same are in place.

iii) The hedged transactions are undertaken for Balance Sheet management. Proper system for reporting and monitoring of risks is in place.

iv) The Bank uses derivative products for hedging its own Balance Sheet. It has not used derivative product for trading purpose. Risk Management of derivative operations is headed by a Top Management Executive who reports to Central Office. The swaps are tracked on regular basis.

v) Accounting Policy for recording hedge and non hedge transactions is in place, which includes recognition of income, valuation of outstanding contracts and credit risk mitigation as given in para 3.4 (f)(ii) of Schedule 17, viz., Significant Accounting Policies.

2.2 The bank has implemented Agriculture Debt Waiver and Debt Relief Scheme, 2008 framed by the Government of India. In terms of the said scheme, the bank has received Rs. 144.17 crores upto 31st March 2010 from Reserve Bank of India (RBI) against the claim of Rs. 218.32 crores as certified by the Central Statutory Auditors of the bank under the Agriculture Debt Waiver Scheme.

During the year ended 31st March 2009, the bank had opted not to treat the eligible accounts under the Agriculture Debt Relief Scheme as performing assets in terms of Reserve Bank of India Circular No.: DBOD.No.BP.BC.26/21.04.048/2008-09 - dated 30m July 2008 and accordingly, such advances as on 31.03.2010 amount- ing to Rs. 124.87 crores were subjected to IRAC Norms. During the year ended 31.03.2010, the bank had exercised the option to treat the above accounts as performing assets as permitted by RBI which otherwise would have slipped to NPA, thus treating the total amount as Standard Assets and holding a provision of Rs. 10.66 crores for loss in Present Value terms as per the RBI circular. Had the above option been not exercised during the period, the net profit (net of taxes) and reserves would have decreased by Rs. 12.56 crores.

Interest receivable from the Government of India in respect of the balance amount of claims towards waiver of debts has been recognized.

2.3 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank.

The Bank has not exceeded the prudential exposure limits, in respect of lending to Single Borrower or Group Borrower during the Financial Year 2009-10.

2.4 Unsecured Advances:

Unsecured advances includes Rs 338.01 crores as on 31.03.2010 which are col- laterally secured by intangible securities such as charge over the rights, licenses, authority etc. The estimated value of such intangible collateral is Rs 3,164.06 crores as on 31.03.2010.

2.5 Provisioning Coverage Ratio:

The bank has computed the Provisioning Coverage Ratio (PCR) as required vide Circular No. DBOD.No.BP.BC.64/21.04.048/2009-10 dated December 1, 2009 which is 58.38% as on 31.03.2010.

2.6 Steps are in progress for adjustment/ reconciliation/elimination of inter-branch transactions, transactions with other banks/institutions, nominal accounts and old entries etc. under other assets and liabilities, Balancing in subsidiary ledger in respect of certain deposit accounts, clearing differences, other assets & liabilities etc. with general ledger is incomplete in certain branches and reconciliation of inter branch transfer of Fixed assets is pending. The effect of these is not ascertainable and however in the opinion of the management consequential impact thereof on revenue is not material.

2.7 The Bank is using CREAM software for identifying and monitoring of the advances as per the IRAC prudential norms. Though most of the bugs noticed in the software have been rectified, further refinement in the software is in process. The effect of this on the Financial Statements, is not ascertainable. However, in the opinion of the management, the overall impact of above will not be significant.

2.8 In respect of few premises having gross value of Rs.8.02 crores (Rs. 8.02 Crores) revalued at Rs. 41.85 crores (Rs.41.85 crores) the title deeds are yet to be executed / registered in favour of the Bank due to certain pending legal disputes / formalities.

2.9 Certain premises were revalued during the year on the basis of approved Valuers report. The resultant increase in the value of premises amounting to Rs.14.74 crores (Rs. 447.87 Crores) has been credited to Revaluation Reserve Account.

Depreciation on total Revalued Assets for the current year amounting to Rs. 12.35 crores (Rs 11.80 crores) has been adjusted to Revaluation Reserve Account.

2.10 Amount of Guarantees shown under Contingent Liabilities include Rs. 166.83 crores (Rs. 225.63 crores) for expired guarantees, which have not been cancelled pending completion of formalities. Claims pending and to be preferred with ECGC amounting to Rs.4.60 crores (Rs3.29 crores) have been considered as realizable for the purpose of computing provisions.

2.11 Other Liabilities disclosed in Schedule - 5 include Rs 0.57 crores (Rs 0.59 crores) towards unclaimed Share Application Money.

2.12 During the year, Reserve Bank of India has not imposed any penalty on the Bank under the provisions of Section 46(4) of the Banking Regulation Act, 1949.

2.13 The provision for the liability arising from industry level Wage Revision of employees has been made amounting to Rs.98 crores in addition to Rs.55 crores made in the previous year based on estimation pending availability of detailed computation thereof.

2.14 As per RBI Guidelines the bank has transferred a sum of Rs.0.91 crores of unreconciled credit entries originated upto 31st March 2002 and appropriated the same to General Reserve and has not considered the same for declaration of Dividend. Any future claim in respect of these entries will be honoured.

2.15 Letters of Comfort (LOCs):

During the current year, 398 Trade Credits amounting to Rs.582.03 crores were sanctioned by the Bank and Letters of Comfort issued by the branches in favour of various other banks for arranging trade credit to Corporate Clients.

As on 31.03.2010, 186 (109) Trade Credits amounting to Rs. 183.50 crores (Rs 462.07 crores) is outstanding.

2.16 Draw Down from Reserve:

In the year 2007-08, the amount of Rs. 13.60 Crores (net of tax) being profit on sale of investment (HTM securities) was transferred to Capital Reserve without appropriating Rs. 3.40 crores towards statutory reserve. For such excess transfer bank has obtained permission from RBI vide letter no. DBOD No BP.15272/21.4.0182009-10 dated 5.3.2010 the amount of Rs. 3.40 crores is transferred to Revenue Reserve through Profit and Loss account in the current year. 10. The Bank has complied with the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent applicable as under:

3 Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies.

As prior period items of income/expenditure are not material, the same have been charged/accounted for in respective heads of accounts.

3.1 Accounting Standard 9 - Revenue Recognition

As per Accounting Policy No. 6.1, given in Schedule -17 - Significant Accounting Policies, certain items of income are recognized on realisation basis on account of statutory requirements or on accountof materiality.

3.2 Accounting Standard 15- Employees Benefits.

The Bank is following AS 15 (Revised 2005) - "Employee Benefits." The Bank has calculated various benefits provided / recognized to employees as under for FY 2009-10:

Part B: Geographical Segment

Since the operations of the Bank are within India only, Geographical Segment is not applicable.

4 Accounting Standard 18 - Related party disclosures

The details in this regard are mentioned as below:

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

Key Managerial Personnel-

1) Shri Allen C. A. Pereira, Chairman & Managing Director

2) Shri Madhukant G. Sanghvi, Executive Director

Subsidiary of the Bank - The Maharashtra Executors & Trustee Co. Pvt. Limited

Associates of the Bank - Maharashtra Gramin Bank

Transactions with Related parties (Key Managerial Persons)-

4.1 Accounting Standard 28- Impairment of Assets

Bank has identified that there is no impairment of fixed assets and as such, no provision is required as per AS-28.

4.2 Accounting Standard 29- Provisions, Contingent Liabilities and Contingent Assets

In the opinion of the management, no further provision is required against contingent liabilities referred to in Schedule 12.

5. Previous years figures have been regrouped / reclassified wherever considered necessary to make them comparable with currentyears figures.

 
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