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Notes to Accounts of Central Bank of India

Mar 31, 2023

The average LCR for the quarter ended March 31, 2023 was at 285.51% as against 311.32% for the quarter ended March 31, 2022 and well above the regulatory prescribed minimum requirement of 100%. The average HQLA for the quarter ended March 31,2023 was '' 106,207.00 crore as against '' 1,28,085.00 crore for the quarter ended March 31, 2022.

The average LCR for the year ended March 31,2023 was at 302.34 % as against 360.81% for the year ended March 31, 2022.

c) Net Stable Funding ratio (NSFR): (This has not been audited by Statutory Central Auditor)

Reserve Bank of India vide its circular no. BR.BPBC.No.106/21.04.098/2017-18 May 17, 2018 had issued guidelines on “Basel III Framework on Liquidity Standards - Net Stable Funding Ratio (NSFR)”. The guidelines for NSFR were effective from October 1,2021.

The objective of NSFR is ensure reduction in funding risk over a longer time horizon extending to one year by requiring banks to fund their activities in relation to the composition of their assets and off balance sheet activities, with sufficiently stable sources of funding on an on-going basis. A sustainable funding structure is intended to reduce the probability of erosion of a bank''s liquidity position due to disruptions in the regular sources of funding. NSFR limits over-reliance on short term wholesale funding, encourages better assessment of funding risk across all on and off balance sheet items, and promotes funding stability.

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. “Available Stable Funding” (ASF) is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year. The amount of stable funding required (“Required Stable Funding”) (RSF) is a function of the liquidity characteristics and residual maturities of the various assets held by the Bank as well as those of its off-balance sheet (OBS) exposures. The Available Stable Funding (ASF) is primarily driven by the total regulatory capital as per Basel III Capital Adequacy guidelines stipulated by RBI and deposits from retail customers, small business customers and non-financial corporate customers. Under the Required Stable Funding (RSF), the primary drivers are unencumbered performing loans with residual maturities of one year or more.

The runoff factors for the stressed scenarios are prescribed by the RBI, for various categories of liabilities (viz., deposits, unsecured and secured wholesale borrowings), undrawn commitments, derivative-related exposures, and offset with inflows emanating from assets maturing within the same time period. The minimum NSFR requirement set out in the RBI guideline is 100% on an on-going basis.

The Liquidity Risk Management of the Bank is governed by the Asset Liability Management (ALM) Policy approved by the Board. The Asset Liability Committee (ALCO) is a decision-making unit responsible for implementing the liquidity and interest rate risk management strategy of the Bank in line with its risk management objectives and ensures adherence to the risk tolerance/limits set by the Board.

Central Bank of India on standalone basis maintained Available Stable Funding (ASF) of '' 3,44,387.62 Crore against the RSF requirement of '' 2,13,238.27 Crore as on 31st March 2023. The NSFR for the quarter ended Mar 2023 is at 161.50%.

c) Sale and transfer to / from HTM category

During the year ended March 31, 2023 the value of sales and transfers of securities to/from HTM category (excluding one-time transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year, sale to RBI under pre-announced Open Market Operation auctions and repurchase of Government securities by the government of India) had not exceeded 5% of the Book Value of the Investment held in HTM category at the beginning of the year.

Profit on sale/redemption of HTM securities amounted to '' 257.27 crore for the financial year ended 31 March 2022.

Divergence in asset classification and provisioning:

No disclosure on divergence in asset classification and provision for NPAs is required with respect to RBI''s supervisory process for the year ended March 31,2022, based on the conditions mentioned in RBI circular No. DOR.ACC.REC. No.74/21.04.018/2022-23 dated 11th October 2022.

Disclosure of Transfer of Loan Accounts (SMAs & NPAs) in terms of RBI Circular No. DOR.STR.REC.51/21.04.048/ 2021-22 dated 24th September 2021 (as amended)

The outbreak of Corona virus (COVID-19) pandemic globally including India has resulted in slowdown of economic activities and increased volatility in financial markets. The extent to which the COVID-19 pandemic will impact the Bank’s financial results will depend on future developments, which are highly uncertain. Given the uncertainty, because of COVID-19 pandemic, the Bank is continuously monitoring any material change in future economic condition which may impact the Bank’s operations and its financial results in future depending on the developments which may differ from that estimated as at the date of approval of the financial statements.

i. Disclosure with respect to NCLT provisions:

As per RBI circular No. DBR No. BP 15199/21.04.048/2016-17 and DBR No. BP.1906/21.04.048/2017-18 dated June 23, 2017 and August 28, 2017 respectively, for the accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank is holding total provision of '' 6316.13 crore as at 31 March 2023 ('' 6406.10 crore for March 31, 2022) (including FITL of '' 127.90 crore) @ (100 % of total outstanding including Investment) as at March 31,2023.

j. Resolution of Stressed Assets:

RBI vide their circular no. RBI/ 2018-19/ 203 DBR. No.BPBC. 45/21.04.048/2018-19 dated June 7, 2019 on Prudential Framework for Resolution of Stressed Asset issued guidelines for implementation of Resolution Plan, also containing requirements of additional provision as per Para 17 of this RBI circular. The outstanding in such cases as at March 31,2023 is '' 1602.59 crore ('' 1757.84 crore for March 31,2022) and in compliance of the above RBI circular, the Bank has held additional provision of '' 251.26 crore ('' 435.37 crore for March 31,2022) as at March 31,2023 and hold total provision of '' 1116.67 crore ('' 1092.32 crore for March 31,2022) as at March 31,2023.

g) Unhedged Foreign Currency exposure:

The Bank has put in place a Board approval policy and process for managing currency induced credit risk. The credit appraisal memorandum (Executive Brief) prepared at the time of origination and review of a credit facility covers the required details viz. Total Foreign Exchange exposure, of which hedged position & if un-hedged, how the borrower plans to cover.

Provision on the un-hedged portion of foreign portion of currency exposures of customers is made on quarterly basis.

As per the Board approval policy, all Advances involving foreign currency lending of USD 1 million or equivalent and above is mandatory to be hedged unless specially permitted by the competent authorities. However hedging need not be insisted in the following cases

• Where Forex loans are extended to finance exports, hedging need not be insisted. However it should be ensured that such customers have uncovered receivables to cover the loan amount.

• Where Forex loans are extended for meeting forex expenditure.

• In respect of advances involving foreign currency loans below USD 1 million or equivalent:

• In case of corporates who are rated “A” and above, Competent Authority may permit allowing advances involving foreign currency loans without insisting for hedging.

• Customers who do not satisfy the conditions stipulated above will be required to provide cash margin, if they prefer to keep exposure open, to the extent of the forward premium prevailing for the tenor of un-hedged exposure.

In accordance with RBI guidelines, as at March 31,2023, the amount of bank''s credit exposure against un-hedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was ''. 4604.40 Crore. The additional RWA on this exposure is '' 87.04 Crore against this additional minimum capital requirement is '' 10 Crore.

Based on the available financial statements and the declarations from borrowers, the Bank has estimated the liability for Un-hedged Foreign Currency in terms of RBI circular RBI/2022-23/131 DOR.MRG.REC.76/00-00-007/2022-23 dated October 11,2022 and is holding a provision of ''. 7.61 Crore as on March 31 2023 (Previous Year ''. 4.18 Crore)

c) Disclosures on risk exposure in derivatives:

I) Qualitative Risk Exposure

i. The Bank currently deals in over the counter (OTC) interest rate and currency derivatives as also in Interest Rate Futures and Exchange Traded Currency Derivatives. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps and foreign currency interest rate swaps. Currency derivatives dealt by the Bank are USD/INR currency swaps and cross currency swaps. The products are offered to the Bank''s customers to hedge their exposures and the Bank also enters into derivatives contracts to cover off such exposures. Derivatives are used by the Bank both for trading as well as hedging balance sheet items.

ii. Derivative transactions carry market risk i.e., the probable loss the Bank may incur as a result of adverse movements in interest rates/exchange rates and credit risk i.e. the probable loss the Bank may incur if the counterparties fail to meet their obligations. The Bank''s “Policy for Derivatives” approved by the Board prescribes the market risk parameters (Greeks limits, Loss Limits, cut-loss triggers, open position limits, duration, modified duration, PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship, limits and customer appropriateness and suitability of policy (CAS) etc.) for entering into derivative transactions. Credit risk is controlled by entering into derivative transactions only with counterparties satisfying the criteria prescribed in the Policy. Appropriate limits are set for the counterparties taking into account their ability to honor obligations and the Bank enters into ISDA agreement with each counter party.

iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks. The Bank''s Market Risk Management Department (MRMD) identifies, measures, monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB) at regular intervals.

iv. Interest Rate Swaps are mainly used for hedging of the assets and liabilities.

v. Majority of the swaps were done with First class counterparty banks.

vi. Derivative transactions comprise of swaps which are disclosed as contingent liabilities. The swaps are categorized as trading or hedging.

vii. Derivative deals are entered with only those interbank participants for whom counterparty exposure limits are sanctioned. Similarly, derivative deals entered with only those corporates for whom credit exposure limit is sanctioned. Collateral requirements for derivative transactions are laid down as a part of credit sanctions terms on a case-by-case basis. Such collateral requirements are determined based on usual credit appraisal process. The Bank retains the right to terminate transactions as a risk mitigation measure in certain cases.

ii. Credit Default Swaps

Bank has not taken any position in Credit Default Swap in the financial year 2022-23.

8) Disclosure Relating to securitization

Policy on Securitization of Standard Assets in line with RBI Guidelines has been approved by our Bank''s Board. At present our Bank has no exposure under this segment.

9) Off-Balance Sheet SPVs sponsored

The Bank had not floated any off Balance Sheet SPV.

The Bank has not purchased PSLC during FY 2021-22 and FY 2022-23.

e) Provisions and Contingencies: Refer note no 15 (i) of Disclosure made as per the Accounting Standard-29 hereinafter in this schedule.

f) Implementation of IFRS converged Indian Accounting Standards (Ind AS)

RBI vide Circular DBR.BPBC.No.29/21.07.001/2018-19 dated March 22, 2019 deferred implementation of Ind AS till further notice. However, RBI requires all banks to submit Proforma Ind AS financial statements every half year. Accordingly, the Bank is preparing and submitting to RBI Proforma Ind AS financial statements every half year after approval by Management.

Disclosure on amortization of expending on account of enhancement in family pension of employees of Banks :-

RBI vide their Circular No.: RBI/2021-22/105 DORACC.REC.57/21.04.018/2021-22 dated 4th October 2021, has permitted Banks to amortize the additional liability on account of revision in family pension for employees over a period of not exceeding 5 (five) years, beginning with financial year ended 31st March 2022, subject to a minimum of 1/5th of the total amount being expensed every year. Based on the Actuarial Valuation report obtained by the Bank the additional liability on account of revision in family pension for employees is arrived at '' 821.95 crore. Bank has opted to amortize the same as per the said circular of RBI and has charged an amount of '' 544.52 crore out of '' 821.95 crore to the Profit & Loss account during the financial year ended 31st March, 2022. During the year ended March 31st, 2023, the Bank has charged '' 164.40 crore to the Profit and Loss account. The balance unamortized expense of ''.113.03 crore has been carried forward to subsequent years. The consequential impact of unamortised pension liability on net profit for the current financial year is '' 73.53 crores (net of taxes).

. Disclosure Requirements as per the Accounting Standards

The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI):

a) Accounting Standard - 5 “Net Profit or Loss for the period, Prior Period Items, and Changes in Accounting Policies”

The financial statements for the year ended March 31,2023 have been prepared following the Accounting Policies and practices as those followed in the annual financial statements for the year ended March 31, 2022 except for accounting of Performance Linked Incentives (PLI). Until the financial year 2021-22, PLI was accounted for on cash basis and from financial year 2022-23 the PLI is accounted for on accrual basis. This change in accounting policy has resulted in decrease in profit before tax by '' 104.24 crore for year ended March 31,2023.

The expected contribution to the Pension and Gratuity fund for next year is '' 245.08 crore and '' 14.30 Crore respectively.

ii. Defined Contribution Plan:

The bank has a defined contribution pension scheme (DCPS) applicable to all categories of officers and employees joining bank on or after 01/04/2010. The scheme is managed by NPS trust under the aegis of the Pension Fund Regulatory and Development Authority. National Securities Depositary Limited (NSDL) has been appointed as the Central Record Keeping Agency for the NPS. During 2021-22, the bank has contributed '' 244.48 crore (Previous year '' 146.97 crore).

iii. Employees'' Provident Fund:-

During the year bank has recognized expenses of '' 0.96 Crore and corresponding year '' 1.12 Crore on account of employer contribution for the employees covered under PF option Scheme i.e. PF Optees.

iv. Long Term Employee Benefits (Unfunded Obligation):

During the year bank has recognized expenses of '' 78.70 crore (Previous Year '' 43.24 crore) towards leave encashment expenses based on actuarial valuation.

Accounting Standard 17 -

Segment Reporting

As per the revised guidelines of Reserve Bank of India the Bank has recognized Treasury Operations Corporate/ Wholesale Banking Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

The following are the primary segments of the Bank:- Treasury

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business.

The present accounting and information system of the Bank based on the present internal, organizational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

i. Treasury -

The Treasury Segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists of fees and gains or losses from trading operations and interest income on the investment portfolio.

ii. Corporate / Wholesale Banking -

The Corporate / Wholesale Banking segment comprises the lending activities of Corporate Accounts, Trust / Partnership Firms Companies and statutory bodies which are not included under Retail Banking and Stressed Assets Management Branch. These include providing loans and transaction services to corporate and institutional clients.

iii. Retail Banking -

The Retail Banking Segment comprises of retail branches, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with these branches. The Retail Banking Segment consists of all exposures up to a limit of '' 7.50 crore (including Fund Based and Non Fund Based exposures) subject to orientation product granularity criteria and individual exposures. This segment also includes agency business and ATMs.

iv. Other Banking business -

Segments not classified under (i) to (iii) above are classified under this primary segment.

Secondary (Geographical Segment)

i) Domestic Operations - Branches/Offices having operations in India

ii) Foreign Operations - Bank has only one Joint Venture in Zambia.

e) Accounting Standard - 19 “Leases”

i. The premises of the Bank were revalued to reflect the market value as on 31.03.2021 based on valuation reports of external independent valuers'' and approved by the Board of Directors and '' 881.96 crore increase in value thereof have been credited to Revaluation Reserve Account.

ii. In case of assets, which have been revalued, the depreciation is provided on the revalued amount charged to Profit & Loss Account and the amount of incremental depreciation attributable to the revalued amount '' 65.36 crore for March 2023 (previous year 2021-22 '' 54.12 crore) is transferred from ‘Revaluation Reserves'' and credited to “Revenue and Other Reserves”.

iii. Land obtained on lease by bank includes market value as on 31.03.2021 is '' 8.99 crore (previous year '' 8.02 crore) with written down value as NIL (previous year '' NIL), the lease period of which has expired and the bank is still having its offices/building on these lands and vacant land obtained on lease by the Bank includes market value as on as on 31.03.2021 is '' 13.72 crore with written down value as NIL, where the lease period is expired, perusing with authorities for lease renewals.

iv. As per AS-19, operating leases primarily comprise office premises and staff residences, which are renewable at the option of the Bank.

i) Liability for Premises taken on non-Cancellable operating lease are NIL as on 31.03.2023.

ii) Amount of lease payments recognized in the P&L Account for operating leases is '' 392.02 crore as on 31.03.2023 (Previous Year '' 357.07 crore).

v. Additional Disclosure:

Premises obtained by the bank include own property of '' 37.13 crore for which registration formalities are still under progress.

The title of property amounting to '' 37.13 crore acquired on disposal of security are not in favor of bank as the matter is sub-judice.

g) Accounting Standard 22 -Accounting for Taxes on Income

Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial

decisions on disputed issues.

i. Claims against the bank not acknowledged as debt under contingent liabilities (schedule 12) includes '' 5726.89 crore (previous year '' 6050.22 crore) towards disputed Income Tax liability of the parent Bank. It includes Income tax appeals at various levels by bank and Income tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial pronouncements and favorable decisions in Bank''s own case. Payments/ adjustments against the said disputed dues are included under Other Assets (schedule 11). Disputed service tax matter as on March 31st, 2023 is '' 7.64 crore.

ii. Government of India has inserted Section 115BAA in the Income Tax Act 1961 (“Act”) vide the Taxation Laws (Amendment) Ordinance 2019 dated September 20, 2019 which provides a non-reversible option to domestic companies to pay corporate tax at a reduced rate effective from April 01,2019 subject to certain conditions.

The Bank has assessed the applicability of the act and opted to continue the existing tax rate (i.e. 34.944%) for the financial year ended March 31st, 2023.

j) Additional Disclosures:-

i. Details of Letter of Comfort issue by Banks and outstanding as on 31.03.2023 - There are no Letter of Comfort issued during the year as well as in previous year by Bank.

ii. Payment to Micro, Small & Medium Enterprises under the Micro, Small and Medium enterprises under the Micro, Small & Medium Enterprises Development Act,2006: There has been no reported cases of the delayed payments of the principal amount or interest due to Micro, Small & Medium Enterprises.

iii. Implementation of the Guidelines on Information Security Electronic Banking Technology Risk Management and Cyber Frauds

The bank has formulated policies as per RBI circular RBI/2010-11/494 DBS.CO.ITC.BC.No. 6/31. 02.008/2010-11 dated April 29, 2011. These policies are being reviewed by the management of the bank on periodical basis. The policies were last reviewed by the Board of Directors in the meeting held on 17.03.2023.

k) Reserve Bank of India vide their letter dated June 13, 2017, has put the Bank under Prompt (PCA) Corrective Action in view of high net NPA and negative Return on Assets. Bank had complied with the PCA framework norms meticulously. Reserve Bank of India vide its communication CO.DOS.SED.No.S3988/14.01.040/2022-23 dated

September 20, 2022 has removed our Bank from the Prompt Corrective Action (PCA) framework.

l) Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006

There has been no reported case of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

m) In terms of RBI guidelines DBOD No.BPBC.57/62-88 dated December 31,1988, Inter-Bank Participation Certificates (IBPC) Lending of '' NIL has been undertaken. Accordingly, these have been adjusted from the advances of the Bank. Interest income of '' NIL has been recognized against these borrowings.

n) Disclosure with respect to spreading of MTM losses in AFS and HFT:

This has reference to RBI circular RBI/2017-18/200 DBR No BPBC.113/21.04.048/2017-18 dated 15 June 2018 regarding the option to spread provisioning for mark to market (MTM) losses on investments held in AFS and HFT on account of sharp increase in the yields on Government Securities: NIL

o) Previous year''s figures have been re-grouped / re-classified wherever considered necessary to conform current year''s classification.


Mar 31, 2022

1. Regulatory Capital:

a) Paid up Equity Share Capital of the Bank as on 31.03.2022 is T 8,680.94 crore, which is increased from T 5,875.56 crore of previous year by issuance and allotment of fresh 280,53,76,972 equity shares of T 10 each to President of India (Government of India) on preferential basis at an issue price of T 17.11 per equity share including premium of T 7.11 per equity share on 29.05.2021. With this allotment, shareholding of President of India (Government of India) in the Bank has increased from 89.78% to 93.08%.

Note: 1. The said computation of Capital to Risk weighted asset Ratio & Leverage ratio is arrived at after considering the effect of Net Present Value of non-interest bearing recapitalization bond infused as capital by the Government of India during the FY ended 31.03.2021. Without considering the said adjustment, CET 1 ratio is 13.39%, Tier 1 ratio is 13.39%, Tier 2 ratio 2.36% , CRAR is 15.75% and Leverage ratio is 4.98% as on 31-03-2022.

Note: 2. capital funds of T 4,800 crores was received from Government of India on 31.03.2021 towards preferential allotment of equity shares. The amount was kept in share application money account pending allotment and considered as part of CET1 capital for financial year ended on 31.03.2021 with the prior approval of Reserve Bank of India. The resultant 280,53,76,972 equity shares of T 10 each was allotted to President of India (Government of India) at an issue price of T 17.11 per equity share including premium of T 7.11 per equity share on 29.05.2021. Though the paid up equity share capital of the Bank was increased in financial year ended on 31.03.2022, the increase in CET 1 capital was factored in previous financial year ended on 31.03.2021. Therefore, no fresh capital infusion was shown in the financial year ended on 31.03.2022.

Note: 3. Capital ratios as assessed by RBI (considering interalia effect of NPV of non interest bearing recapitalization bond) in its Risk Assessment Report for the FY ended 31st March 2021 are CRAR - 12.78% and CET 1&Tier 1 Ratio -10.79%

## The said computations of Capital to Risk Weighted Average Ratio and Leverage Ratio has been reckoned after taking into effect of the present value of non-interest carrying recapitalization bond.

c) Draw down from reserves

During the financial year 2021-22, Bank has not drawn down any Reserves.

Note: - # Excluding those considered under Tier II Capital.

The above data has been compiled on the basis of the Guidelines of RBI and certain assumptions made by the Management,

b) Liquidity coverage ratio (LCR)

LCR Qualitative Disclosures:

The Liquidity Coverage Ratio (LCR) standard has been introduced with the objective that a Bank maintains an adequate level of unencumbered High Quality Liquidity Assets(HQLAs) that can be converted into cash to meet its liquidity needs for a 30 calendar date and horizon under significantly severe liquidity stress scenario.

LCR has been defined as : Stock of high quality liquid assets fHQLAst

Total net cash outflow over the next 30 calendar days

The Liquidity Coverage Ratio (LCR) is one of the Basel Committee’s key reforms to develop a more resilient banking sector. The LCR is expected to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, thus reducing the risk of spill over from the financial sector to the real economy. The Liquidity Risk Management of the Bank is governed by the Asset Liability Management (ALM) Policy approved by the Board.

NOTE: In accordance with RBI Circular no. RBI/2014-15/529 DBR No. BP.BC.80/21.06.201/2014-15 dated 31st March 2015 guidelines; the LCR is calculated by dividing a Bank’s stock of HQLA by its total net cash outflows over a 30-day- stress period. The line items significant to LCR are:

The average LCR for the quarter ended March 31, 2022 was at 311.32% as against 417.10% for the quarter ended March 31,2021 and well above the present prescribed minimum requirement of 100%.

The average HQLA for the quarter ended March 31,2022 was 1,28,085 crore as against 1,29,693 crore for the quarter ended March 31,2021.

The average LCR for the year ended March 31,2022 was at 360.81 % as against 386.91% for the year ended March 31, 2021.

c) Net Stable Funding ratio (NSFR):

DISCLOSURE ON NET STABLE FUNDING RATIO (NSFR) AS ON 31.03.2022

Reserve Bank of India vide its circular no. BR.BP.BC.No.106/21.04.098/2017-18 May 17, 2018 had issued guidelines on “Basel III Framework on Liquidity Standards - Net Stable Funding Ratio (NSFR)”. The guidelines for NSFR were effective from October 1,2021.

NSFR indicates institution''s resilience to have a stable funding profile over a time horizon of one year. It is defined as the amount of available stable funding relative to the amount of required stable funding. “Available stable funding” (ASF) is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year.

The amount of stable funding required (“Required stable funding”) (RSF) of a specific institution is a function of the liquidity characteristics and residual maturities of the various assets held by that institution as well as those of its off-balance sheet (OBS) exposures.

e. During the year ended Mar 31, 2022 the value of sales and transfers of securities to/from HTM category (excluding one-time transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year, sale to RBI under pre-announced Open Market Operation auctions and repurchase of Government securities by the government of India had not exceeded 5% of the Book Value of the Investment held in HTM category at the beginning of the year.

n) Disclosure with respect to NCLT provisions:-

As per RBI circular No. DBR No. BP15199/21.04.048/2016-17 and DBR No. BP1906/21.04.048/2017-18 dated June 23, 2017 and August 28, 2017 respectively, for the accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank is holding total provision of ? 6406.10 crore (including FITL of ? 127.90 crore) @ (100 % of total outstanding including Investment) as on March 31,2022.

o) Resolution of Stressed Assets

RBI vide their circular no. RBI/ 2018-19/ 203 DBR. No.BPBC. 45/21.04.048/2018-19 dated June 7, 2019 on Prudential Framework for Resolution of Stressed Asset issued guidelines for implementation of Resolution Plan, also containing requirements of additional provision as per Para 17 of this RBI circular. The outstanding in such cases as on March 31,2022 is ? 1757.84 crore and in compliance of the above RBI circular, the Bank has made additional provision of ? 435.37 crore during the quarter ended March 31,2022 and hold total provision of ? 1092.32 crore as on March 31,2022.

r) Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers'' assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

e) Qualitative Disclosures Qualitative Risk Exposure

The Bank currently deals in over the counter (OTC) interest rate and currency derivatives as also in Interest Rate Futures and Exchange Traded Currency Derivatives. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps. Currency derivatives dealt by the Bank are USD, INR & cross currency swaps. The products are offered to the Bank''s customers to hedge their exposures and the Bank also enters into derivatives contracts to cover off such exposures. Derivatives are used by the Bank both for trading as well as hedging balance sheet items.

i. Derivative transactions carry market risk i.e., the probable loss the Bank may incur as a result of adverse movements in interest rates/exchange rates and credit risk i.e. the probable loss the Bank may incur if the counterparties fail to meet their obligations. The Bank''s “Policy for Derivatives” approved by the Board prescribes the market risk parameters (Loss Limits, cut-loss triggers, open position limits, duration, modified duration, PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship, limits and customer appropriateness and suitability of policy (CAS) etc.) for entering into derivative transactions. Credit risk is controlled by entering into derivative transactions only with counterparties satisfying the criteria prescribed in the Policy. Appropriate limits are set for the counterparties taking into account their ability to honor obligations and the Bank enters into ISDA agreement with each counterparty.

ii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks. The Bank''s Risk Management Department (RMD) identifies, measures, monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB) at regular intervals.

iii. Interest Rate Swaps are mainly used for hedging of the assets and liabilities.

iv. Majority of the swaps were done with good rated counterparty banks.

v. Derivative transactions comprise of swaps which are disclosed as contingent liabilities. The swaps are categorized as trading or hedging.

vi. Derivative deals are entered with only those interbank participants for whom counterparty exposure limits are sanctioned. Similarly, derivative deals entered with only those corporates for whom credit exposure limit is sanctioned. Collateral requirements for derivative transactions are laid down as a part of credit sanctions terms on a case-by-case basis. Such collateral requirements are determined based on usual credit appraisal process. The Bank retains the right to terminate transactions as a risk mitigation measure in certain cases.

vii. Hedge Positions:

» Accrual on account of interest expenses/ income on the Interest Rate Swap (IRS) are accounted and recognized as income/expenses.

» If the swap is terminated before maturity, mark-to-market (MTM) loss/gain and accrual till such date are accounted as expenses/ income under interest paid/ received on IRS.

viii. Trading Position:

» Currency futures and interest rate futures are marked to market on daily basis as per exchange guidelines of MCX-SX (MSEL) and NSE.

» MTM profit/loss is accounted by credit/debit to the margin account on daily basis and the same is accounted in Bank''s profit and loss account in final settlement.

» Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains, if any are ignored.

» Gains or losses on termination of Swaps are recorded as immediate income/expenses under the above head.

11. The outbreak of Corona virus (COVID-19) pandemic globally including India has resulted in slowdown of economic activities and increased volatility in financial markets. The extent to which the COVID-19 pandemic will impact the Bank''s financial results will depend on future developments, which are highly uncertain. Given the uncertainty, because of COVID-19 pandemic, the bank''s is continuously monitoring any material change in future depending on the developments which may differ from that estimated as at the date of approval of the financial statements.

13. Disclosure of Penalties imposed by the Reserve Bank of India

i. Penalties imposed by RBI

a) Reserve Bank India has levied penalties of ? 0.36 crore (previous year ? NIL) in terms of clause (c) of subsection (1) of section 47(A) read with clause (i) of sub-section (4) of section 46 and section (1) of section 51 of the Banking Regulation Act 1949 for non-compliance with the controversial of the failed to credit (Shadow reversal) the amount involved in the unauthorized electronic transaction to the customers'' accounts.

b) RBI has imposed a penalty of ? 1.00 crore (previous year ? NIL crore) in terms of clause (c) of section (1) of section 41 (A) of the act, Read with clause I (i) of section (4) of section 46 & sub-section (1) of section 51 of the Act for the contra version of section 20 (1) of the act entering in to commitment with the borrower company for guaranteeing loans to it, despite commonality of director.

c) RBI has imposed a penalty of ? NIL crore (previous year ? 0.50 crore) to our bank due to non-compliance of RBI circular dated 03.09.2013 on few housings loan accounts.

d) RBI has imposed a penalty of T NIL crore (previous year T 0.31 crore) in terms of section 47A (1) (a) read with section 46(4) (i) of the Banking Regulation Act 1949 for non-compliance of RBI norms on currency chest operation.1 2 3 4

*As complied by the Management and relied by the Auditors.

e) Penalties imposed by Financial Intelligence Unit - India

The Earlier version FIU-India imposed penalty of T 0.02 Crore for delay in submission of Report - 1 & nonsubmission of Report-2 under Alert No.5, General Election (Lok Sabha)-2019 as per FIU-India order dated 2312-2020. The said penalty was paid by Bank on 15th January 2021. Since there is no penalty this year, it may be treated as NIL.

Note: Keeping in line with para 9 of the AS - 18 - “Related Party Disclosure” issued by ICAI, the transactions with the Subsidiaries and Associates Enterprises have not been disclosed which exempts the State Controlled Enterprises from making any disclosures pertaining to transactions with other related State Controlled Enterprises.

Further, transactions in the nature of Banker-Customer relationship including those with KMP and relatives of KMP have not been disclosed in terms of Para 5 of AS-18.

ii. Bancassurance Business:

The details of fees / brokerage earned in respect of insurance broking, agency and bancassurance business undertaken by them shall be disclosed for both the current year and previous year.

v. Disclosure on amortization of expending on account of enhancement in family pension of employees of Banks :-

RBI vide their Circular No.:RBI/2021-22/105 DORACC.REC.57/21.04.018/2021-22 dated 4th October 2021, has permitted Banks to amortize the additional liability on account of revision in family pension for employees over a period of not exceeding 5 (five) years, beginning with financial year ending 31st March, 2022 subject to a minimum of 1/5th of the total amount being expensed every year. Based on the Actuarial Valuation report obtained by the Bank the additional liability on account of revision in family pension for employees is arrived at T 82,195.00 lakh. Bank has opted to amortize as per the said circular of RBI and has charged an amount of T 54,452.00 lakh out of T 82,195.00 lakh to the Profit & Loss account during the financial year ended 31st March 2022. The balance unamortized expense of T 27,743.00 lakh has been carried forward to subsequent years. The consequential impact of unamortized pension liability on net profit for the current year is T 18,048.00 lakh (Net of Taxes).

16. Income Tax:

a) Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

b) Other Assets [Schedule 11 (ii)] includes T 2405.58 crore (previous year T 1771.51 crore) towards disputed Income Tax liability of the parent Bank. It includes Income tax appeals at various levels by bank and Income tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial pronouncements and favorable decisions in Bank''s own case. Disputed service tax matter as on March 31st, 2022 is T 7.64 crore.

c) Government of India has inserted Section 115BAA in the Income Tax Act 1961 (“Act”) vide the Taxation Laws (Amendment) Ordinance 2019 dated September 20, 2019 which provides a non-reversible option to domestic companies to pay corporate tax at a reduced rate effective from April 01,2019 subject to certain conditions. The Bank has assessed the applicability of the act and opted to continue the existing tax rate (i.e. 34.944%) for the financial year ended March 31st, 2022.

17. Premises:

a) Premises obtained on Lease by the Bank include properties costing T 1.45 crore (previous year T 1.45 crore) for which registration formalities are still under progress.

b) The premises of the Bank were revalued to reflect the market value as on 31.03.2021 based on valuation reports of external independent valuers'' and approved by the Board of Director and T 881.96 crore increases in value thereof have been credited to Revaluation Reserve Account.

c) In the case of assets, which have been revalued, the depreciation is provided on the revalued amount charged to Profit & Loss Account and the amount of incremental depreciation attributable to the revalued amount T 54.12 crore (previous year T 58.85 crore) is transferred from ‘Revaluation Reserve'' and credited to “Revenue and Other Reserves”.

d) Land obtained on lease by bank includes T 8.02 crore (previous year T 8.02 crore) with written down value as NIL (previous year T NIL), the lease period of which has expired and the bank is still having its offices/building on these lands and perusing with authorities for lease renewals.

18. In terms of RBI guidelines DBOD No.BP.BC.57/62-88 dated December 31, 1988, Inter-Bank Participation Certificates

(IBPC) Lending of T NIL has been undertaken. Accordingly, these have been adjusted from the advances of the Bank.

Interest income of T NIL has been recognized against these borrowings.

19. Amount lying in Blocked accounts pertaining to old NOSTRO/MIRROR Credit entries are carried at historical cost using

the exchange rate on the date of the crystallization.

The Bank maintains 15 Nostro Accounts for 8 different currencies. These Nostro accounts are operated by one ‘A''

category Branch (Integrated Treasury Branch) and Sixty two ‘B'' category branches.

Reconciliation of these Nostro accounts is done by Integrated Treasury Branch. Reconciliation is an ongoing process and

is done on daily basis.

Progress Report on Reconciliation and outstanding entries in Nostro Accounts is placed before audit Committee of the Board at quarterly intervals.

20. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 5 “Net Profit or Loss for the period, Prior Period Items, and Changes in Accounting Policies”

- During the year, there were no material prior period income / expenditure items.

- There is no change in the Significant Accounting Policies adopted during the year ended 31st March 20220 as compared to those followed in the previous financial year 2020-21.

b) Accounting Standard - 9

Certain items of income are recognized on realization basis as per significant accounting policy No. D-1. However, the said income is not considered to be material.

c) Accounting Standard-15 “Employee Benefits”:

i. Defined Benefit Plans, Employee''s pension plan and Gratuity plan

ii. Defined Contribution Plan:

The bank has a defined contribution pension scheme (DCPS) applicable to all categories of officers and employees joining bank on or after 01/04/2010. The scheme is managed by NPS trust under the aegis of the Pension Fund Regulatory and Development Authority. National Securities Depositary Limited (NSDL) has been appointed as the Central Record Keeping Agency for the NPS. During 2021-22, the bank has contributed T 146.97 crore (Previous year T 103.67 crore).

iii. Long Term Employee Benefits (Unfunded Obligation):

During the year bank has recognized expenses of T 43.24 crore (Previous Year T 131.20 crore) towards leave encashment expenses based on actuarial valuation.

d) Accounting Standard 17 -

Segment Reporting

As per the revised guidelines of Reserve Bank of India the Bank has recognized Treasury Operations Corporate/ Wholesale Banking Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

The following are the primary segments of the Bank:- Treasury

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business.

The present accounting and information system of the Bank based on the present internal, organizational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

i. Treasury -

The Treasury Segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists of fees and gains or losses from trading operations and interest income on the investment portfolio.

ii. Corporate / Wholesale Banking -

The Corporate / Wholesale Banking segment comprises the lending activities of Corporate Accounts, Trust / Partnership Firms Companies and statutory bodies which are not included under Retail Banking and Stressed Assets Management Branch. These include providing loans and transaction services to corporate and institutional clients.

iii. Retail Banking -

The Retail Banking Segment comprises of retail branches, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with these branches. The Retail Banking Segment consists of all exposures up to a limit of T 5 crore (including Fund Based and Non Fund Based exposures) subject to orientation product granularity criteria and individual exposures. This segment also includes agency business and ATMs.

c. The vendors whose services are utilized are selected in compliance with Government of India guidelines regarding MSME sector and Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

j) Implementation of the Guidelines on Information Security Electronic Banking Technology Risk Management and Cyber Frauds

The bank has formulated policies as per RBI circular RBI/2010-11/494 DBS.CO.ITC.BC.No. 6/31. 02.008/2010-11 dated April 29, 2011. These policies are being reviewed by the management of the bank on periodical basis. The policies were last reviewed by the Board of Directors in the meeting held on 30.03.2022.

k) Reserve Bank of India vide their letter dated June 13, 2017, has put the Bank under Prompt (PCA) Corrective Action in view of high net NPA and negative Return on Assets. Bank is complying the PCA framework norms meticulously. Bank has prepared an action plan and also taken various steps to reduce NPA and improve the profitability.

l) Previous year figures have been re-grouped / re-classified wherever considered necessary to confirm current year''s classification.

1

Working funds to be reckoned as average of total assets (excluding accumulated losses, if any) as reported to Reserve Bank of India in Form X for Commercial Banks and Form IX for UCBs, during the 12 months of the financial year.

2

Net Interest Income/ Average Earning Assets. Net Interest Income= Interest Income - Interest Expense

3

Return on Assets would be with reference to average working funds (i.e. total of assets excluding accumulated losses, if any)

4

For the purpose of computation of business per employee (deposits plus advances), inter-bank deposits shall be excluded.


Mar 31, 2019

1. Capital:

Paid up Equity Share Capital of the Bank as on 31.03.2019 is Rs. 4047.20 crore increased from Rs. 2618.16 crore of previous year by issue of fresh 1429045682 equity shares of Rs. 10 each in three allotments.

a. 354357970 Equity Share of Rs. 10 each allotted to Government of India on Preferential Basis at premium of Rs. 56.43 on 13.11.2018

b. 387439390 Equity Share of Rs. 10 each allotted to Government of India on Preferential Basis at premium of Rs. 33.31 on 28.02.2019.

c. 687248322 Equity Share of Rs. 10 each allotted to Government of India on Preferential Basis at premium of Rs. 27.25 on 28.03.2019.

2. Balancing of Books / Reconciliation:

The reconciliation of the following items are in progress :

- Inter Branch Office Balance

- Inter Bank Accounts

- Suspense Accounts

- Clearing & other Adjustment Accounts

- Certain balances in nominal account

- NOSTRO Accounts

- Balances related to ATM

- Mirror Accounts maintained by Central Card Department

- Data/System updation of Agricultural and Priority Sector Advances

The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs. 2569.16 crore (previous year Rs. 2979.91 crore) towards disputed Income Tax paid by the Bank or adjusted by the Income Tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial pronouncements and favourable decisions in Bank’s own case.

4. Premises:

4.1 Premises obtained on Lease by the Bank includes properties costing Rs. 0.75 Crore (previous year Rs. 0.75 Crore) for which registration formalities are still under progress.

4.2 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount charged to Profit & Loss Account and the amount of incremental depreciation attributable to the revalued amount Rs. 64.80 Crore (previous year Rs. 75.13 Crore) is transferred from ‘Revaluation Reserve’ and credited to “Revenue and Other Reserves”.

5. Advances / Provisions

5.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers’ assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

5.2 In accordance with the guidelines issued by Reserve Bank of India, the Bank has netted the balance Floating Provision amount of Rs. 100.56 crores (previous year Rs. 100.56 crore) and Countercyclical Provision amount of Rs. 47.34 Crore (previous year. Rs. 47.34 Crore) from gross NPAs to arrive at net NPAs.

6. The following information is disclosed in terms of guidelines issued by Reserve Bank of India :

a. (i) Capital

*Includes capital funds of Rs. 2354.00 crore received from Government of India on 19.09.2018 and the same was kept in the “Central Bank of India Share Application Money Account”. Bank allotted (35,43,57,970) equity shares of Rs. 10 each at premium Rs. 56.43 to President of India (Government of India) on 13.11.2018.

Further, capital funds of Rs. 1678.00 crore received from Government of India on 31.12.2018 and the same was kept in the “Central Bank of India Share Application Money Account”. Bank allotted (38,74,39,390) equity shares to President of India (Government of India) on 28.02.2019.

Further, capital funds of Rs. 2560.00 crore received from Government of India on 21.02.2019 and the same was kept in the “Central Bank of India Share Application Money Account”. Bank allotted (68,72,48,322) equity shares of Rs. 10 each at premium Rs. 27.25 to President of India (Government of India) on 28.03.2019.

Capital funds of Rs. 212.54 crore received against valid applications from eligible employees under Central Bank of India Employee Stock Purchase Scheme, 2019 on 30.03.2019 and the same was kept in the “Central Bank of India Share Application Money Account”. Allotment of Equity shares is in process.

b. (i) Investments

(v) Qualitative Disclosures

- Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/trade is in place.

- Policy for Forward Rate Agreement, Interest Rate Swaps, Currency Futures and Interest Rate Futures for Hedging the Interest Rate Risk in the Investment Portfolio and also for Market Making is in place.

- The risk management policies and major control limits like stop loss limits, counter party exposure limits etc. as approved by the Board of Directors are in place.

Hedge Positions

- Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/ expense.

- If the swap is terminated before maturity, the Mark to Market (MTM) loss/gain and accrual till such date are accounted as expense/income under interest paid/received on IRS.

Trading positions

- Currency Future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

- MTM profit/loss is accounted by credit/debit to the margin account on daily basis and the same is accounted in bank’s profit & loss account on final settlement.

- Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

- Gains or losses on termination of swaps are recorded as immediate income/expense under the above head

b. Group Borrower Limit exceeded by Bank : NIL

(v) Statement of Loans and Advances secured by Intangible Assets viz. Rights Licenses Authorizations etc. which is shown as unsecured in Schedule-9.

Advances amounting to Rs. Nil (previous year Rs. Nil) against charge over intangible security such as Rights Licences Authorization etc. are considered as unsecured.

The value of intangible security is Rs. Nil (previous year Rs. Nil)

(vi) In terms of RBI guidelines DBOD No.BP.BC.57/62-88 dated December 31, 1988, Inter-Bank Participation Certificates (IBPC) of Rs. Nil as on March 31, 2019 (Previous year Rs. 2,115.52 crore were issued on risk sharing basis for a maximum period of 120 days ending July 30, 2018, thereby reducing the Bank’s Total Advances as on March 31, 2018 to same extent.)

(vii) Sale and transfer to / from HTM category

During the year ended Mar 31, 2019 the value of sales and transfers of securities to/from HTM category (excluding one-time transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year sale to RBI under pre-announced Open Market Operation auctions and repurchase of Government securities by the government of India) had exceeded 5% of the book value of the investments held in HTM category at the beginning of the year. The market value of investments held in the HTM category was Rs. 75022 crore whose book value is Rs. 74570 crore as on March 31, 2019 which includes investments in subsidiaries/joint ventures carried at cost. The book value of such investments being lower than market value, no provision is required to be made.

7. Disclosure of penalties imposed by RBI

RBI has imposed a penalty of Rs. 1.16 crore (pevious year Rs. 0.91 crore) in terms of Section 47A(1)(a) read with Section 46(4)(i) of the Banking Regulation Act 1949 for non-compliance of RBI norms.

8. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 9

Certain items of income are recognized on realization basis as per significant accounting policy No. 8. However the said income is not considered to be material.

b) Accounting Standard - 15 (Revised)

Defined Contribution Plan:

National Pension Scheme (NPS):-

During the year Bank has recognized Rs. 79.62 crore (Previous year Rs. 67.82 crore) as contribution to NPS in profit & loss account.

Other long term benefits:

During the year bank has recognized expenses of Rs. 84.09 crore (Pervious year Rs. 72.94) towards leave encashment expenses based on actuarial valuation.

c) Accounting Standard 17 - Segment Reporting

As per the revised guidelines of Reserve Bank of India the Bank has recognised Treasury Operations Corporate/ Wholesale Banking Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

* Segment Revenue and Expenses have been apportioned on the basis of the segment assets wherever direct allocation is not possible. Figures have been regrouped wherever considered necessary to conform to current year classification.

ii) Treasury Operations include dealing in Government and Other Securities Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs. 5 crore (including Fund Based and Non Fund Based exposures) subject to orientation product granularity criteria and individual exposures.

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms Companies and statutory bodies which are not included under Retail Banking.

v) The other Banking Segment includes all other Banking operations not covered under the above three categories.

vi) Retail Banking Segment is the Primary resource mobilizing unit and Treasury Segment compensates the Retail Banking Segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

Note: Keeping in line with para 9 of the AS - 18 - “Related Party Disclosure” issued by ICAI, the transactions with the Subsidiaries and Associates Enterprises have not been disclosed which exempts the State Controlled Enterprises from making any disclosures pertaining to transactions with other related State Controlled Enterprises.

f) Accounting Standard 22 -Accounting for Taxes on Income

Keeping in view the significant provisioning requirements and revision in guidelines of Deferred Tax Assets (DTA) in CET1 calculation by RBI tax review based on management’s estimate of possible tax benefits against timing difference has been carried out and Rs. 7894.01 Crore has been recognized as Deferred Tax Assets as at 31st March 2019. Component of deferred tax assets/ liabilities as on 31st March 2019 are as under:

Net increase in Deferred Tax Assets for the year 2018-19 is Rs. 2525.98 crore (Previous year Rs. 3014.35 crore) has been recognized in profit & loss account.

g) Accounting Standard - 28 -Impairment of Assets

A substantial portion of Bank’s assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the Management there is no material impairment on Other Assets other than financial assets as at March 31, 2019 requiring recognition in terms of the Standard.

9. Provisioning Coverage Ratio (PCR)

The PCR (ratio of Provisioning to Gross NPA) stood at 76.60 % (Previous Year 63.31%)

10. As per the information complied by the Management the Vendors whose services are utilized and from whom purchases were made by the Bank are not registered under Micro Small and Medium Enterprises Development Act 2006. This is relied upon by the Auditors.

11. Unhedged Foreign Currency exposure:

Unhedged Foreign Currency exposure as on 31.03.2019: Rs. 5612.12 Crores (As on 31.03.2018 Rs. 4310.81 crore)

Bank has taken into consideration the exchange risks arising out of volatility in the forex market and accordingly has made suitable provisions to reduce the risks. Bank has also taken into consideration credit risks arising out of unhedged Foreign currency exposure and accordingly Bank has put in place risk mitigation measures. Total Provision made for exposures to entities with UFCE for the year ended March 31, 2019 is Rs. 1.62 crores (Previous Year: Rs. 3.00 Crore)

12. Provision for Frauds :

In terms of RBI circular RBI/2015-16/376/DBR.No.BP.BC.92/21.04.048/2016-16 dated 18.04.2016 details of Fraud and Provision are as below:-

13. Credit Default Swaps

Bank has not taken any position in Credit Default Swap in the financial year 2018-19(Previous Year-Nil).

14. Implementation of the Guidelines on Information Security Electronic Banking Technology Risk Management and Cyber Frauds

The bank has formulated policies as per RBI circular RBI/2010-11/494 DBS. CO. ITC. BC. No. 6/31. 02.008/2010-11dated April 29 2011. These policies are being reviewed by the management of the bank on periodical basis. The policies were last reviewed by the Board of Directors in the meeting held on 28.03.2019.

15. Disclosure with respect to NCLT provisions:-

As per RBI circular No. DBR No.BP.15199/21.04.048/2016-17 and DBR No.BP. 1906/21.04.048/2017-18 dated June 23, 2017 and August 28, 2017 respectively, for the accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank is holding total provision of Rs. 6,479.59 crores (86.34% of total outstanding) as on March 31, 2019.

16. Disclosure of Divergence in Asset Classification and Provisioning for NPAs

As the additional provisioning requirements assessed by RBI for FY 2017-18 exceeded threshold limit of 10% of the reported profit before provisions and contingencies, the following disclosure is made pursuant to RBI circular no. DBR. BP.BC.No. 32/21.04.018/2018-19 dated 01.04.2019 regarding Divergence in Asset Classification and Provisioning:

17. The RBI had permitted Banks vide its Circular DBR.No.BP.BC.108/21.04.048/2017-18 dated 6th June 2018 to continue the exposures to MSME borrowers to be classified as standard assets. Accordingly, the bank has retained advances of Rs.241.68 crores as standard assets as on 31.03.2019. In accordance with the provisions of the circular, the bank has not recognized un-realized interest on these accounts and maintained a standard assets provision of Rs.12.08 crores (@ 5% on Rs.241.68 crores) as on March 31, 2019 in respect of such borrowers. Further, in accordance with RBI vide circular no. DBR.No.BP.BC.18/21.04.048/2018-19 dated 1st January 2019, on “Relief for MSME borrowers registered under Goods and Service Tax (GST)” the details of MSME restructured accounts as on 31.03.2019 as under:-

18. Disclosure with respect to spreading of MTM Losses

The RBI had permitted Banks vide its Circular DBR.No.BP.BC.113/21.04.048/2018-19 dated 15th June 2018, to spread MTM losses on investments held in AFS and HFT category for the quarter ended 30th June 2018, over four quarters commencing from that quarter, in which loss has been incurred such loss amounting to Rs. 74.81Crore during the quarter ended 30th June, 2018 and provided % of such loss each in June and September 2018 quarters by availing the benefit permitted for staggering of provision and un-amortised balance was Rs. 37.40 Crore. Since Bond rate has eased as on 31.12.2018 deferred provision was not required. Consequent to the above, entire MTM Losses stands fully covered as on 31.03.2019.

19. Draw Down from Reserves

During the Financial Year 2018-19, there has been no draw down from the reserves (Previous Year - NIL).

20. Previous year figures have been re-grouped / re-classified wherever considered necessary to confirm to current year’s classification.


Mar 31, 2018

1. Capital:

Paid up Equity Share Capital of the Bank as on 31.03.2018 is Rs.2618.16 crore increased from Rs.1902.17 crore of previous year by issue of fresh 715984791 equity shares of Rs.10 each in three allotments.

a. 9601536 Equity Share of Rs.10 each allotted to Government of India on Preferential Basis at premium of Rs.94.15 on 18.08.2017

b. 55976956 Equity Share of Rs.10 each allotted to Government of India on Preferential Basis at premium of Rs.94.15 on 16.11.2017 against Share Application Money of Rs.583.00 crore, arising on extinguishment of 5830 Innovative Perpetual Debt Instruments (IPDI) of the face value of Rs.10.00 lakh each held by Government of India on 31.03.2017

c. 38845460 Equity Share of Rs.10 each at premium of Rs.73.15 and 611560839 Equity Share of Rs.10 each at premium of Rs.69.06 allotted to Government of India on Preferential Basis on 27.03.2018.

2. Balancing of Books / Reconciliation:

The reconciliation of the following items are in progress :

- Inter Branch Office Balance

- Inter Bank Accounts

- Suspense Accounts

- Clearing & other Adjustment Accounts

- Certain balances in nominal account

- NOSTRO Accounts

- Balances related to ATM

- Mirror Accounts maintained by Central Card Department

- Data/System updation of Agricultural and Priority Sector Advances

The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs.2979.91 crore (previous year Rs.3298.14 crore) towards disputed Income Tax paid by the Bank or adjusted by the Income Tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial pronouncements and favourable decisions in Bank’s own case.

4. Premises:

4.1 Premises owned by the Bank includes properties costing ‘ Nil (previous year Rs.1.63 Crore) for which registration formalities are still under progress.

4.2 Premises obtained on Lease by the Bank includes properties costing Rs.0.64 Crore (previous year Rs.0.64 Crore) for which registration formalities are still under progress.

4.3 In the case of assets, which have been revalued, the depreciation is provided on the revalued amount charged to Profit & Loss Account and the amount of incremental depreciation attributable to the revalued amount Rs.75.13 Crore (previous year Rs.86.97 Crore) is transferred from ‘Revaluation Reserve’ and credited to “Revenue and Other Reserves”.

5. Advances / Provisions

5.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers’ assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

5.2 In accordance with the guidelines issued by Reserve Bank of India, the Bank has netted the balance Floating Provision amount of Rs.100.56 crores (previous year Rs.100.56 crore) and Countercyclical Provision amount of Rs.47.34 Crore (previous year. Rs.47.34 Crore) from gross NPAs to arrive at net NPAs.

6. The following information is disclosed in terms of guidelines issued by Reserve Bank of India :

a. (i) Capital

*Includes capital funds of Rs.100.00 crore received from Government of India on 31.03.2017 and the same has been kept in the newly opened Bank account namely, “ Central Bank of India Share Application Money Account”. Bank allotted the said shares to Government of India on 18th August 2017.

*Further, it also include equity capital of Rs.583.00 crore, arising out of extinguishment of 5830 Innovative Perpetual Debt Instruments (IPDI) of face value of Rs.10.00 Lakh each held by Government of India and kept into Share Application Money Account pending allotment of shares. Bank allotted the said shares to Government of India on 16th November 2017.

b. (i) Investments

(ii)) Repo Transactions (in face value terms)

(iii) Non SLR Investment Portfolio

Issuer wise composition of Non SLR Investments

Note: Amounts reported under Columns 4, 5, 6 and 7 above may not be mutually exclusive

(iv) Non Performing Non-SLR Investments (including Matured Investments)

Disclosures on risk exposure in Derivatives

(v) Qualitative Disclosures

- Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/trade is in place.

- Policy for Forward Rate Agreement, Interest Rate Swaps, Currency Futures and Interest Rate Futures for Hedging the Interest Rate Risk in the Investment Portfolio and also for Market Making is in place.

- The risk management policies and major control limits like stop loss limits, counter party exposure limits etc. as approved by the Board of Directors are in place.

Hedge Positions

- Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/ expense.

- If the swap is terminated before maturity, the Mark to Market (MTM) loss/gain and accrual till such date are accounted as expense/income under interest paid/received on IRS.

Trading positions

- Currency future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

- MTM profit/loss is accounted by credit/debit to the margin account on daily basis and the same is accounted in bank’s profit & loss account on final settlement.

- Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

- Gains or losses on termination of swaps are recorded as immediate income/expense under the above head

(iv) Details of Single borrower limit/Group Borrowers Limit exceeded by the Bank for which necessary Board approval has been obtained.

a. Single Borrower Limit exceeded by Bank

b. Group Borrower Limit exceeded by Bank : NIL

(v) Statement of Loans and Advances secured by Intangible Assets viz. Rights Licenses Authorizations etc. which is shown as unsecured in Schedule-9.

Advances amounting to ‘ Nil (previous year ‘ Nil) against charge over intangible security such as Rights Licences Authorization etc. are considered as unsecured.

The value of intangible security is ‘ Nil (previous year ‘ Nil)

(vi) In terms of RBI guidelines DBOD No.BP.BC.57/62-88 dated December 31, 1988, Inter-Bank Participation Certificates (IBPC) of Rs.2,115.52 crore (Previous year Rs.22,991.22 crore) were issued on risk sharing basis for a maximum period of 120 days ending July 30, 2018, thereby reducing the Bank’s Total Advances as on March 31, 2018 to same extent.

(vii) Sale and transfer to / from HTM category

During the year ended Mar 312018 the value of sales and transfers of securities to/from HTM category (excluding one-time transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year sale to RBI under pre-announced Open Market Operation auctions and repurchase of Government securities by the government of India) had exceeded 5% of the book value of the investments held in HTM category at the beginning of the year. The market value of investments held in the HTM category was Rs.69226 crore whose book value is Rs.69556 crore as on March 31 2018 which includes investments in subsidiaries/ joint ventures carried at cost. Hence excess of book value over market value is Rs.330 crore for which provision has not been made.

7. Disclosure of penalties imposed by RBI

RBI has imposed a penalty of Rs.0.91 crore (pevious year Rs.0.12 crore) in terms of Section 47A(1)(a) read with Section 46(4)(i) of the Banking Regulation Act 1949 for non-compliance of RBI norms.

8. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 9

Certain items of income are recognized on realization basis as per significant accounting policy No. 8. However the said income is not considered to be material.

b) Accounting Standard - 15 (Revised)

Defined Contribution Plan:

National Pension Scheme (NPS):-

During the year Bank has recognized Rs.18.06 crore ( Previous year Rs.15.49 crore) as contribution to NPS in profit & loss account.

Defined Benefit Plan:

Reconciliation of opening and closing balance of the present value of the defined benefit obligation for pension and gratuity benefits as per actuarial valuations is given below:

Other long term benefits:

During the year bank has recognized expenses of Rs.72.94 crore (Pervious year ‘ NIL) towards leave encashment expenses based on actuarial valuation.

c) Accounting Standard 17 - Segment Reporting

As per the revised guidelines of Reserve Bank of India the Bank has recognised Treasury Operations Corporate/ Wholesale Banking Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

* Segment Revenue and Expenses have been apportioned on the basis of the segment assets wherever direct allocation is not possible. Figures have been regrouped wherever considered necessary to conform to current year classification.

ii) Treasury Operations include dealing in Government and Other Securities Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs.5 crore (including Fund Based and Non Fund Based exposures) subject to orientation product granularity criteria and individual exposures.

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms Companies and statutory bodies which are not included under Retail Banking.

v) The other Banking Segment includes all other Banking operations not covered under the above three categories.

vi) Retail Banking Segment is the Primary resource mobilizing unit and Treasury Segment compensates the Retail Banking Segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

f) Accounting Standard 22 -Accounting for Taxes on Income

Keeping in view the significant provisioning requirements and revision in guidelines of Deferred Tax Assets (DTA) in CET1 calculation by RBI tax review based on management’s estimate of possible tax benefits against timing difference has been carried out and Rs.5368.03 Crore has been recognized as Deferred Tax Assets as at 31st March 2018. Component of deferred tax assets/ liabilities as on 31st March 2018 are as under:

Net increase in Deferred tax assets for the year 2017-18 is Rs.3014.35 crore (Previous year Rs.1265.40 crore) has been recognized in profit & loss account.

g) Accounting Standard - 28 -Impairment of Assets

A substantial portion of Bank’s assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the Management there is no material impairment on Other Assets other than financial assets as at March 31 2018 requiring recognition in terms of the Standard.

h) Accounting Standard - 29 on Provisions Contingent Liabilities and Contingent Assets (i) Provisions and Contingencies

9. Provisioning Coverage Ratio (PCR)

The PCR (ratio of Provisioning to Gross NPA) stood at 63.31 % (Previous Year 58.43%)

10. As per the information compiled by the Management the Vendors whose services are utilized and from whom purchases were made by the Bank are not registered under Micro Small and Medium Enterprises Development Act 2006. This is relied upon by the Auditors.

11. Unhedged Foreign Currency exposure:

Unhedged Foreign Currency exposure as on 31.03.2018: Rs.4310.81 Crores (As on 31.03.2017 Rs.18322.28 crore)

Provisions held as on 31.03.2018: Rs.3.00 Crore (As on 31.03.2017 Rs.41.53 Crore)

12. Credit Default Swaps

Bank has not taken any position in Credit Default Swap in the financial year 2017-18.

13. Implementation of the Guidelines on Information Security Electronic Banking Technology Risk Management and Cyber Frauds

The bank has formulated policies as per RBI circular RBI/2010-11/494 DBS.CO.ITC.BC.No.6/31.02.008/2010-11dated April 29 2011. These policies are being reviewed by the management of the bank on periodical basis. The policies were last reviewed by the Board of Directors in the meeting held on 17.03.2018.

14. RBI vide its circular DBR.No.BP.BC.101/21.01.18/2017-18 dated February 12 2018 issued a revised framework for resolution of Stressed Assets which supersedes the existing guidelines of SDR, Corporate Debt Restructuring Scheme, Flexible Structuring of existing long term project loans, Change in Ownership Outside SDR and S4A with immediate effect. Under the revised framework, the benefits for accounts where any of these Schemes had been invoked but not yet fully implemented were revoked and accordingly, all accounts have been downgraded as per extant RBI norms on Income Recognition and Asset Classification.

S4A scheme was invoked and implemented in six accounts with outstanding balance of Rs.559.18 crore. As such bank has kept provision of Rs.105.84 crore against such six S4A implemented borrower accounts as on 31.03.2018.

15. Disclosure with respect to NCLT provisions:-

As per RBI Circular Nos. DBR No. BP.15199/21.04.048/2016-17 and DBR No.BP.1906/ 21.04.048/2017-18 dated 23.06.2017 and 28.08.2017 respectively in respect of NPA Accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC) the Bank has made additional provision of Rs.1435 crore during the year ended March 31, 2018. Further as per RBI communication No. BP.8756/21.04.048/2017-18 dated April 2, 2018 with respect to spreading of the provisions in accounts covered in 1 & 2 list covered under the Insolvency and Bankruptcy Code (IBC) the Bank has availed the option of dispensation available and additional provisions of Rs.627.46 crore will be provided in the quarter ending June 2018.

16. Disclosure of Divergence in Asset Classification and Provisioning for NPAs

As the additional provisioning requirements and additional Gross NPA assessed by RBI for FY 2016-17 exceeded 15% of the published Net Loss after Tax and incremental Gross NPA respectively the following disclosure is made pursuant to RBI circular no. DBR.BP.BC.No. 63/21.04.018/2016-17 dated 18.04.2017 regarding Divergence in Asset Classification and Provisioning for NPAs:

The Bank had duly recorded the impact of the above in its working results for the year ended March 31, 2018.

17. In respect of two Gems and Jewellery borrower group where fraud was declared by some banks, the Bank has classified these accounts as NPA and fully provided for the entire funded exposure of Rs.378.96 crore during the year ended March 31, 2018.

18. Disclosure with respect to spreading of MTM Losses

As per RBI Circular No.DBR.No.BP.BC.102/21.04.048/2017-18 dated April 2, 2018 RBI grants the banks an option to spread provisioning for MTM Losses on investments in AFS and HFT portfolio for the quarters ended 31st December 2017 and 31st March 2018 equally over the four quarters commencing with the quarter in which the loss has been incurred. The bank has availed this option and accordingly the Bank has charged depreciation of Rs.346.21 crore related to quarter ended December 31, 2017 and March 31, 2018 and MTM losses to the tune of Rs.450.82 crore is spread over to the subsequent quarters of ensuing financial year.

19. Previous year figures have been re-grouped / re-classified wherever considered necessary to confirm to current year’s classification.


Mar 31, 2015

(000''s Omitted)

PARTICULARS AS AT 31/03/2015 AS AT 31/03/2014

SCHEDULE 1 : CONTINGENT LIABILITIES

I. (a) Claims against the Bank not 1,094,250 1,196,346 acknowledged as Debts

(b)Disputed income tax demands under appeals, 18,134,088 14,005,895 revisions, etc

II. Liability for partly paid Investments

III. Liability on account of outstanding forward exchange contracts 667,746,178 640,602,389

IV. Guarantees given on behalf of constituents

a) In India 104,223,884 103,363,304

b) Outside India 10,854,478 5,673,489

115,078,362 109,036,793

V. Acceptances, Endorsements and Other 99,123,833 112,332,617 Obligations

VI. Other item for which the bank is contingently 7,750,000 8,351,107 liable

TOTAL 908,926,711 885,525,147

1. Capital:

Paid up Equity Share Capital of the Bank as on 31.03.2015 is Rs.1658.27 crore increased from Rs. 1350.44 crore of previous year by issue of fresh equity shares of Rs. 10/- each as detailed below:

1. Issue of equity share for Rs. 71.08 crore at a premium of Rs. 71.83 per share on 1st August 2014.

2. Issue of equity share for Rs. 82.89 crore at a premium of Rs. 65.55 per share on 1st January 2015.

3. Issue of equity shares for Rs. 153.86 crore at a premium of Rs. 95.09 per share to Government of India on 24th March 2015 by conversion of 1617000000 Perpetual Non-cumulative Preference Shares of the value of Rs. 10/- each held by Government of India aggregating up to Rs. 1617.00 crores

2. Balancing of Books / Reconciliation:

- The reconciliation of the following items are in progress :

- Inter Branch/Office Balance

- Inter Bank Accounts

- System Suspense Account

- Suspense Accounts

- Clearing & other Adjustment Accounts

- Balances related to ATM

- Certain balances in nominal account

- NOSTRO Accounts

- Mirror Accounts maintained by Centralcard Department

The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax / Deferred Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs. 1813.41 crore (previous year Rs. 1400.59 crore) towards disputed Income Tax paid by the Bank or adjusted by the Income Tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial pronouncements and favourable decisions in Bank''s own case.

4. Premises:

Premises owned by the Bank include properties costing Rs. 32.06 crore (Previous Year Rs. 55.22 crore) for which registration formalities are still in progress.

5. Advances / Provisions:

5.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers'' assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

5.2 In accordance with the guidelines issued by Reserve Bank of India, the Bank has utilized the Floating Provision of Rs. 100.56 crore (previous year Rs. 103.09 crore) and Countercyclical Provision of Rs. 47.34 crore (previous year Rs. 46.63 crore) being 50% (previous year 33%) of amount outstanding in these accounts towards specific provision for NPAs. The Bank has netted the balance Floating Provision amount of Rs. 100.56 crores (previous year Rs. 209.34 crore) and Countercyclical Provision amount of Rs. 47.34 crore (previous year Rs. 94.67 crore) from gross NPAs to arrive at net NPAs.

6. The following information is disclosed in terms of guidelines issued by Reserve Bank of India :

Disclosures on risk exposure in Derivatives

iii) Qualitative Disclosures

- Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/trade is in place.

- The investment portfolio of the Bank consists of assets with characteristics of fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank has also Tier II bonds hedged for coupon swaps. The policy permits hedging the interest rate risk on this liability as well.

- Policy for Forward Rate Agreement, Interest Rate Swaps, currency futures and Interest Rate Futures for hedging the interest rate risk in the investment portfolio and also for market making is in place.

- The risk management policies and major control limits like stop loss limits, counter party exposure limits etc. as approved by the Board of Directors are in place. The risks are monitored and reviewed regularly. MIS reports are submitted periodically to Risk Management Committee.

Hedge Positions

- Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/expense.

- If the swap is terminated before maturity, the Mark to Market (MTM) loss/gain and accrual till such date are accounted as expense/income under interest paid/received on IRS.

Trading positions

- Currency future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

- MTM profit/loss is accounted by credit/debit to the margin account on daily basis and the same is accounted in bankRs.s profit & loss account on final settlement.

- Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

- Gains or losses on termination of swaps are recorded as immediate income/expense under the above head

(v) Statement of Loans and Advances secured by Intangible Assets viz., Rights, Licenses, Authorizations etc. which is shown as unsecured in Schedule-9.

Advances amounting to Rs. Nil (previous year Rs. Nil) against charge over intangible security such as Rights, Licences, Authorisation etc. are considered as unsecured..

The value of intangible security is Rs. Nil (previous year Rs. Nil)

7. Disclosure of penalties imposed by RBI

RBI has imposed a penalty of Rs. 4.92 crore in terms of Section 47A(1)(a) read with Section 46(4)(i) of the Banking Regulation Act 1949 for non-compliance of RBI norms.

8. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 5

There is no change in the accounting policy of the Bank during the year.

b) Accounting Standard - 9

Certain items of income are recognized on realization basis as per principal accounting policy No. 8. However, the said income is not considered to be material.

c) Accounting Standard - 15 (Revised)

In the year 2010-11, in accordance with circular No. DBOD No. BP.BC.80/21.04.018/2010-11, dated 09-02-2011 issued by Reserve Bank of India, the Bank had opted to amortize the additional liability on account of re-opening of Pension option for existing employees who had not opted for pension earlier, as well as the liability on enhancement in Gratuity limit, over a period of five years beginning with the financial year ended 31st March, 2011. Accordingly, out of the unamortized amount of Rs.295.38 crore as on 1st April, 2014, the Bank has fully amortized Rs.239.98 crore for Pension and Rs.55.40 crore for Gratuity being the balance amount during the year ended March 31,2015.

d) Accounting Standard 17 - Segment Reporting

i) As per the revised guidelines of Reserve Bank of India, the Bank has recognised Treasury Operations, Corporate/ Wholesale Banking, Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

ii) Treasury Operations include dealing in Government and Other Securities, Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs. 5 crore (including Fund Based and Non Fund Based exposures) subject to orientation, product, granularity criteria and individual exposures

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms, Companies and statutory bodies, which are not included under Retail Banking.

v) The other Banking Segment includes all other Banking operations not covered under the above three categories.

vi) General Banking operations are the main resource mobilizing unit and Treasury Segment compensates the former for funds lent to it by taking into consideration the average funds used.

vii) Allocation of Costs:

a) Expenses directly attributable to a particular segment are allocated to the relative segment

b) Expenses not directly attributable to a specific segment are allocated on rational basis.

(C) No disclosure is required in respect of related parties, which are state controlled enterprises as per Paragraph 9 of AS- 18. Further, in terms of Paragraph 5 of AS-18, transactions in the nature of banker-customer relationship have not been disclosed including those with Key Managerial Personnel & relatives of Key Managerial Personnel.

c) Accounting Standard 22 -Accounting for Taxes on Income

The Bank has recognized Deferred Tax Assets/ Liabilities.

Major components of Deferred Tax Assets and Deferred Tax Liabilities are as under:

d) Accounting Standard - 28 -Impairment of Assets

A substantial portion of Bank''s assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the management, there is no material impairment on Other Assets other than financial assets as at March 31,2015, requiring recognition in terms of the Standard.

e) Accounting Standard - 29 on Provisions, Contingent Liabilities and Contingent Assets

9. Provisioning Coverage Ratio (PCR)

The PCR (ratio of Provisioning to Gross NPA) stood at 55.16% (Previous Year 50.68%)

10. As per the information compiled by the Management, the Vendors, whose services are utilized and from whom purchases were made by the Bank, are not registered under Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

11. Implementation of the Guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds

The Bank has formulated policies on Cyber Frauds in CBS system as per RBI circular RBI/2010-11/494 DBS.CO.ITC. BC.No.6/31.02.008/2010-11 dated April 29, 2011. These policies are being reviewed by the management of the bank on periodical basis.

12. Previous year figures have been re-grouped/ re-classified wherever considered necessary to conform to current year''s classification.


Mar 31, 2014

1. Capital:

Paid up Equity Share Capital of the Bank as on 31.03.2014 is Rs. 1350.44 crore increased from Rs. 1044.58 crore of previous year by issue of fresh equity shares of Rs. 305.86 crore at a premium of Rs. 58.85/- per share to Government of India.

2. Balancing of Books / Reconciliation:

The reconciliation of the following items is in progress : Inter Branch/Office Balance

Accounts for Govt. transactions (Central & State)

Inter Bank Accounts

System Suspense Account

Suspense Account

Clearing & other Adjustment Accounts

Balances related to ATM

Certain balances in nominal account

NOSTRO Accounts

Mirror Accounts maintained by Central card Department

Disclosure on particulars of restructured accounts Note No. 6d (ii) The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax / Deferred Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs. 1400.59 crore (previous year Rs. 912.60 crore) towards disputed Income Tax paid by the Bank or adjusted by the Income Tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial decisions/ counsel''s opinion on such issues.

3.3 Out of Rs. 1400.59 crore (previous year Rs. 912.60 crore)of tax paid under dispute which relate to various Assessment Years, involving tax element of Rs. 490.98 crore (previous year Rs. 5.98 crore)have been decided by the Appellate authorities in favor of the Bank. The appeal effect for the same is pending.

4. Premises:

Premises owned by the Bank include properties costing Rs. 55.22 crore (Previous Year Rs. 39.93 crore) for which registration formalities are still in progress.

5. Advances / Provisions:

5.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers'' assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

5.2 In accordance with the guidelines issued by Reserve Bank of India, the Bank has utilized the Floating Provision of Rs. 103.09 crore and Countercyclical Provision of Rs. 46.63 crore being 33% of amount outstanding in these accounts towards specific provision for NPAs. The Bank has netted the balance Floating Provision amount of Rs. 209.34 crores (previous year Rs. 312.43 crore) and Countercyclical Provision amount of Rs. 94.67 crore (previous year Rs. 141.30 crore ) from gross NPAs to arrive at net NPAs.

5.3 Advances considered good and secured includes investment of Rs. 2200 crore (Previous Year Rs. 2515 crore) in IBPCs (Inter Bank Participation Certificate) governed by the Uniform Code Governing Inter Bank Participations issued by IBA (Non Priority Sector) and investment in IBPCs issued by RRBs aggregating Rs. 2200 crore (Previous Year Rs. 2515 crore) of Priority Sector Advance/ Direct Agriculture.

Disclosures on Risk Exposure in Derivatives

iii) Qualitative Disclosures

- Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/ trade is in place.

- The investment portfolio of the Bank consists of assets with characteristics of fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank has also Tier II bonds hedged for coupon swaps. The policy permits hedging the interest rate risk on this liability as well.

- Policy for Forward Rate Agreement, Interest Rate Swaps, currency futures and Interest Rate Futures for hedging the interest rate risk in the investment portfolio and also for market making is in place.

- The risk management policies and major control limits like stop loss limits, counter party exposure limits etc. as approved by the Board of Directors are in place. The risks are monitored and reviewed regularly. MIS reports are submitted periodically to Risk Management Committee.

Hedge Positions

- Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/ expense.

- If the swap is terminated before maturity, the Mark to Market (MTM) loss/gain and accrual till such date are accounted as expense/income under Interest paid/received on IRS.

Trading positions

- Currency future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

- MTM profit/loss is accounted by credit/debit to the margin account on daily basis and the same is accounted in bank''s profit & loss account on final settlement.

- Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

- Gains or losses on termination of swaps are recorded as immediate income/expense under the above head.

(v) Statement of Loans and Advances secured by Intangible Assets viz., Rights, Licenses, Authorizations etc. which is shown as unsecured in Schedule-9.

Advances amounting to Rs. Nil (previous year Rs. 495.74 crore) against charge over intangible security such as Rights, Licences, Authorisation etc. are considered as unsecured.

The value of intangible security is Rs. NIL (previous year Rs. 232.74 crore)

6. Disclosure of penalties imposed by RBI

RBI has imposed a penalty of Rs. 305.27 lacs in terms of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act 1949 for non-compliance of RBI norms.

7. Disclosure regarding concentration of Deposits, Advances, Exposures and NPAs:

8. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 5 Recovery in NPA:

- Due to change in accounting policy No. 5.2 regarding appropriation of recoveries in NPAs frost towards principal irregularity as against first towards interest w.e.f. 01.07.2013, the interest income for the year and advances are lower and loss for the year is more by Rs. 223.50 crore.

- In view of the RBI circular No. RBI/2013-14/502 dated 26.02.2014, in case of sale to SCRC for a value higher than NBV, the excess provision to the extent of cash recovery amounting to Rs. 77 crore has been taken to the credit of profit & Loss Account which as per the extant accounting policy would have been retained in excess provision. The resultant impact is that the profit for the year is more by Rs. 77 crore and provision is less to that extent.

b) Accounting Standard - 9

Certain items of income are recognized on realization basis as per principal accounting policy No. 8. However, the said income is not considered to be material.

c) Accounting Standard - 15 (Revised)

In the year 2010-11, in accordance with circular No. DBOD No. BP.BC.80/21.04.018/2010-11, dated 09-02-2011 issued by Reserve Bank of India, the Bank had opted to amortize the additional liability on account of re-opening of Pension option for existing employees who had not opted for pension earlier, as well as the liability on enhancement in Gratuity limit, over a period of five years beginning with the financial year ended 31st March, 2011. Accordingly, out of the unamortized amount of Rs. 590.77 crore as on 1st April, 2013, the Bank has amortized Rs. 239.99 crore for Pension and Rs. 55.40 crore for Gratuity being proportionate amount during the year ended March 31, 2014. The balance amount to be amortized in future periods for Pension is Rs. 239.98 crore and for Gratuity is Rs. 55.40 crore.

ii) Treasury Operations include dealing in Government and Other Securities, Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs. 5 crore (including Fund Based and Non Fund Based exposures) subject to orientation, product, granularity criteria and individual exposures

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms, Companies and statutory bodies, which are not included under Retail Banking.

v) The other Banking Segment includes all other Banking operations not covered under the above three categories.

vi) General Banking operations are the main resource mobilizing unit and Treasury Segment compensates the former for funds lent to it by taking into consideration the average funds used.

vii) Allocation of Costs:

a) Expenses directly attributable to a particular segment are allocated to the relative segment

b) Expenses not directly attributable to a specific segment are allocated on rational basis.

e) Related Party disclosures as per Accounting Standard 18 - Related Party

(b) Subsidiaries -

i) Cent Bank Home Finance Ltd.

ii) Cent Bank Financial & Custodial Services Ltd.

(c) Associates

(I) Regional Rural Banks –

i) Central Madhya Pradesh Gramin Bank ii) Uttar Bihar Gramin Bank, Muzzaffarpur iii) Uttarbanga Kshetriya Gramin Bank, Cooch Behar

(II) Indo – Zambia Bank Ltd.

Pursuant to Reserve Bank of India''s (RBI''s) circular No. DBOD No.BP.BC.77/ 21.04.018/2013-14 dated 20.12.2013, the bank has created Deferred Tax Liability on the Special Reserve under Section 36(1)(viii) of the Income Tax Act, 1961. As required by said RBI Circular, the expenditure amounting to Rs. 33.99 crore due to the creation of DTL on Special Reserve as at March 31, 2013 not previously charged to the profit and Loss Account has now been adjusted directly from the Reserves.

h) Accounting Standard – 28 –Impairment of Assets

A substantial portion of Bank''s assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the management, there is no material impairment on Other Assets other than financial assets as at March 31, 2014, requiring recognition in terms of the Standard.

9. Provisioning Coverage Ratio (PCR)

The PCR (ratio of Provisioning to Gross NPA) stood at 50.68% (Previous Year 40.62%)

10. As per the information compiled by the Management, the Vendors, whose services are utilized and from whom purchases were made by the Bank, are not registered under Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

11. Implementation of the Guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds

The bank has formulated policies on Cyber Frauds in CBS system as per RBI circular RBI/2010-11/494 DBS.CO.ITC. BC.No.6/31.02.008/2010-11 dated April 29, 2011. These policies are being reviewed by the management of the bank on periodical basis.



(000''s Omitted) PARTICULARS AS AT 31/03/2014 AS AT 31/03/2013 Rs. Rs.

SCHEDULE 12 : CONTINGENT LIABILITIES

I. (a) Claims against the Bank not acknowledged 1,196,346 635,671 as Debts

(b) Disputed income tax demands under 14,005,895 9,126,021 appeals, revisions, etc

II. Liability for partly paid Investments

III. Liability on account of outstanding forward

exchange contracts 640,602,389 357,696,828

IV. Guarantees given on behalf of constituents

a) In India 103,363,304 92,483,533

b) Outside India 5,673,489 8,313,332

109,036,793 100,796,865

V. Acceptances, Endorsements and Other 112,332,617 126,372,490 Obligations

VI. Other item for which the bank is contingently 8,351,107 562,464 liable

TOTAL 885,525,147 595,190,339



13. Previous year figures have been re-grouped/ re-classified wherever considered necessary to conform to current year''s classification.


Mar 31, 2013

1. Capital:

Paid up Equity Share Capital of the Bank as on 31.03.2013 is Rs. 1044.58 crore increased from Rs. 736.11 crore of previous year by issue of fresh equity shares of Rs. 308.47 crore at a premium of Rs. 68/- per share to Government of India.

2. Balancing of Books / Reconciliation:

The reconciliation of the following items is in progress :

- Inter Branch/Office Balance

- Accounts for Govt. transactions (Central & State)

- Inter Bank Accounts

- System Suspense Account

- Suspense Account

- Clearing & other Adjustment Accounts

- Balances related to ATM

- Certain balances in nominal account

- NOSTRO Accounts

The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax / Deferred Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs. 912.60 crore (previous year Rs.1424.58 crore) towards disputed Income Tax paid by the Bank or adjusted by the Income Tax department. Provision for disputed amount of taxation is not considered necessary by the Bank on the basis of various judicial decisions/ counsel''s opinion on such issues.

3.3 Out of Rs.912.60 crore of tax paid under dispute which relate to various Assessment Years, involving tax element of Rs.5.98 crore have been decided by the Appellate authorities in favour of the Bank. The appeal effect for the same is pending.

4. Premises:

Premises owned by the Bank include properties costing Rs. 39.93 crore (Previous Year Rs. 9.95 crore) revalued value Rs. 130.02 crore (Previous Year Rs. 122.31 crore) for which registration formalities are still in progress.

5. Advances / Provisions:

5.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers'' assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

5.2 In accordance with the guidelines issued by Reserve Bank of India, the Bank has netted the Floating Provision amounting to Rs.312.42 crore (previous year Rs. 312.42 crore) and Countercyclical Provisioning Buffer amounting to Rs. 141.30 (previous year Rs. 141.30 crore) from Gross NPAs to arrive at Net NPAs.

5.3 Advances considered good and secured includes investment of Rs. 2515 crore (Previous Year Rs. 3000 crore) in IBPCs (Inter Bank Participation Certificate) governed by the Uniform Code Governing Inter Bank Participations issued by IBA (Non Priority Sector) and investment in IBPCs issued by RRBs aggregating Rs. 2515 crore (Previous Year Rs. 2080 crore) of Priority Sector Advance/ Direct Agriculture.

6. Innovative Perpetual Debt Instruments:

During the year, Bank has raised Rs. 500 crore by issue of Innovative Perpetual Debt Instruments taking the balance to Rs.1083.00 crore.

The above data has been compiled on the basis of guidelines of Reserve Bank of India and estimates in respect of certain Off Balance Sheet items, made by the management and relied upon by the Auditors. In respect of Basel II, the system deficiencies/ data errors noticed / reported were addressed at Central Office. Based on the extensive exercise undertaken, Bank is of the view that, unrectified deficiencies, if any, will not have a significant impact on the overall reported Capital Adequacy.

Disclosures on Risk Exposure in Derivatives

iii) Qualitative Disclosures

- Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/ trade is in place.

- The investment portfolio of the Bank consists of assets with characteristics of fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank has also Tier II bonds hedged for coupon swaps. The policy permits hedging the interest rate risk on this liability as well.

- Policy for Forward Rate Agreement, Interest Rate Swaps, currency futures and Interest Rate Futures for hedging the interest rate risk in the investment portfolio and also for market making is in place.

- The risk management policies and major control limits like stop loss limits, counter party exposure limits etc. as approved by the Board of Directors are in place. The risks are monitored and reviewed regularly. MIS reports are submitted periodically to Risk Management Committee.

- Hedge Positions

- Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/ expense.

- If the swap is terminated before maturity, the Mark to Market (MTM) loss/gain and accrual till such date are accounted as expense/income under Interest paid/received on IRS.

- Trading positions

- Currency future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

- MTM profit/loss is accounted by credit/debit to the margin account on daily basis and the same is accounted in bank''s profit & loss account on final settlement.

Figures of Movement of Net NPAs as on 31.03.2012 has been recasted.

- after netting Rs. 84.00 crores held in nominal towards amount received from ECGC and Court Borrowers pending adjustment

-- excluding floating provision of Rs. 312.43 crore (previous year Rs. 312.43crore) & Countercyclical provision of Rs. 141.30 crore (previous year Rs.141.30 crore)

(v) Statement of Loans and Advances secured by Intangible Assets viz., Rights, Licenses, Authorizations etc. which is shown as unsecured in Schedule-9.

Advances amounting to Rs. 495.74 crore (previous year Rs. 291.52 crore) against charge over intangible security such as Rights, Licences, Authorisation etc. are considered as unsecured.

The value of intangible security is Rs. 232.74 crore.

7. Disclosure of Penalties imposed by RBI

RBI has imposed a penal interest of Rs.28.85 lacs on the Bank under Section 46(4) of the Banking Regulation Act, 1949.

8. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 5

Accounting for LAF Repo with Reserve Bank of India

Hitherto the bank was following the policy of deducting the net amount of borrowings under LAF repo from gross value of investments for the purpose of year end accounting. Due to change in accounting policy effective from the current accounting year, bank has shown net amount due to RBI under LAF repo as borrowing from RBI. In case the accounting treatment of the preceding year had been followed, the loans and investments would have been less by Rs.5500 crores. There is no impact on the profit for the year due to this change.

b) Accounting Standard - 9

Certain items of income are recognized on realization basis as per principal accounting policy No. 8. However, the said income is not considered to be material.

c) Accounting Standard - 15 (Revised)

In the year 2010-11, in accordance with circular No. DBOD No. BP.BC.80/21.04.018/2010-11, dated 09-02- 2011 issued by Reserve Bank of India, the Bank had opted to amortize the additional liability on account of re- opening of Pension option for existing employees who had not opted for pension earlier, as well as the liability on enhancement in Gratuity limit, over a period of five years beginning with the financial year ended 31st March, 2011. Accordingly, out of the unamortized amount Rs.886.15 crore as on 1st April, 2012, the Bank has amortized Rs.239.98 crore for Pension and Rs. 55.40 crore for Gratuity being proportionate amount during the year ended March 31, 2013. The balance amount to be amortized in future periods for Pension is Rs.479.97 crore and for Gratuity is Rs. 110.80 crore.

ii) Treasury Operations include dealing in Government and Other Securities, Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs. 5 crore (including Fund Based and Non Fund Based exposures) subject to orientation, product, granularity criteria and individual exposures.

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms, Companies and statutory bodies, which are not included under Retail Banking.

iv) The other Banking Segment includes all other Banking operations not covered under the above three categories.

v) General Banking operations are the main resource mobilizing unit and Treasury Segment compensates the former for funds lent to it by taking into consideration the average funds used.

vii) Allocation of Costs:

a Expenses directly attributable to a particular segment are allocated to the relative segment. b Expenses not directly attributable to a specific segment are allocated on rational basis. e) Related Party disclosures as per Accounting Standard 18 - Related Party 1 List of Related Parties:

(a) Key Managerial Personnel -

(b) Subsidiaries -

i) Cent Bank Home Finance Ltd.

ii) Cent Bank Financial & Custodial Services Ltd.

(c) Associates -

(I) Regional Rural Banks -

i) Central Madhya Pradesh Gramin Bank,

ii) Surguja Kshetriya Gramin Bank, Ambikapur

ii) Uttar Bihar Gramin Bank, Muzzaffarpur

iv) Vidharbha Konkan Gramin Bank,

v) Ballia Etawah Gramin Bank, Ballia

vi) Hadoti Kshetriya Gramin Bank, Kota

vii) Uttarbanga Kshetriya Gramin Bank, Cooch Behar

(II) Indo - Zambia Bank Ltd.

Note: Vide notification No. F.No. 7/9/2011-RRB (Maharashtra) dated February 28, 2013 issued by Government of India, Ministry of Finance, approved the amalgamation of Vidarbha KGB sponsored by Central Bank of India with Wainganga Krishna Gramin Bank sponsored by Bank of India. Also, vide notification dated April 01, 2013 issued by Government of India, Ministry of Finance, approved amalgamation of Balia Etawah KGB sponsored by Central Bank of India with Purvanchal Gramin Bank sponsored by State Bank of India.

Pending completion of merger formalities and financial transactions, the said investments continue to be shown in our books of accounts.

(c) No disclosure is required in respect of related parties, which are state controlled enterprise as per Paragraph 9 of AS-18. Further, in terms of Paragraph 5 of AS-18, transactions in the nature of banker-customer relationship have not been disclosed including those with Key Management Personnel & relatives of Key Management Personnel.

h) Accounting Standard - 28 -Impairment of Assets

A substantial portion of Bank''s assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the management, there is no material impairment on Other Assets other than financial assets as at March 31, 2013, requiring recognition in terms of the Standard.

9. Provisioning Coverage Ratio (PCR)

The PCR (ratio of Provisioning to Gross NPA) stood at 47.75% (Previous Year 40.62%)

10. As per the information compiled by the Management, the Vendors, whose services are utilized and from whom purchases were made by the Bank, are not registered under Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

11. Implementation of the Guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds as required in terms of Para F of RBI Circular DBS.CO.IT.BC.No.6/31.02.008/2010-11 dated April 29, 2011.

The bank has formulated policies on Cyber Frauds in CBS system as per RBI circular RBI/2010-11/494 DBS.CO.ITC. BC.No.6/31.02.008/2010-11 dated April 29, 2011. These policies are being reviewed by the management of the bank on periodical basis.

12. Acceptances, Endorsements and other Obligations under contingent liabilities include certain invocation of Stand by Letters of Credit before the actual due date of the relevant Letter of Credit extended to Merchant Exporters and manufacturers of Diamond/Jewellery. In the opinion of the Management, there is no indication as on date that there would be any consequential financial impact on the Bank.

13. Previous year figures have been re-grouped/ re-classified wherever considered necessary to conform to current year''s classification.


Mar 31, 2012

1. Capital:

The Authorized Capital of the Bank is Rs.3000 crore.

The paid-up Capital of the Bank is Rs.2353.11 crore increased from Rs.2021.14 crore by issue of equity shares by way of Rights issue to the tune of Rs.242.46 crores to the existing share holders at a premium of Rs.93/- per share, which was allotted to the share holders in April 2011. Further, the Bank raised equity by way of Preferential Issue of Equity Shares to Government of India and Life Insurance Corporation of India on March 31, 2012 to the tune of Rs.89.51 crore at a premium of Rs.95.61 per share.

2. Balancing of Books / Reconciliation:

The reconciliation of the following items is in progress :

- Inter Branch/Office Balance

- Accounts for Govt. transactions (Central & State)

- Inter Bank Accounts

- System Suspense Account

- Suspense Account

- Clearing & other Adjustment Accounts

- Balances related to ATM

- Certain balances in nominal account

The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax / Deferred Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues, net of reversal of excess provision of earlier years Rs.112.38 crore (Refer Note 8(b)).

3.2 Other Assets [Schedule 11 (ii)] includes Rs.1424.58 crore (previous year Rs.601.64 crore) towards disputed Income Tax paid by the Bank or adjusted by the Income Tax department. Provision for disputed amount of taxation is not considered necessary by the Bank in respect of above disputed demands based on various judicial decisions/ counsel's opinion on such disputed issues.

3.3 Out of Rs.1424.58 crore of tax paid under dispute, disputes relating to various Assessment Years, involving tax element of Rs.4.82 crore have been decided by the Appellate authorities in favour of the Bank. The appeal effect for the same is pending.

4. Share Issue Expenses:

Unamortized amount of Rs.1.31 crore (Previous Year Rs.6.72 crore) towards share issue expenses are included in Other Assets.

5. Premises:

5.1 The premises of the Bank were revalued during financial year 2007-08 to reflect the market value as at March 31, 2008. The appreciation amounting to Rs.1565.97 crore is included in Revaluation Reserve Account.

5.2 Premises owned by the Bank include properties costing Rs.9.95 crore (Previous Year Rs.12.21 crore) revalued at Rs.122.31 crore (Previous Year Rs.198.46 crore) for which registration formalities are still in progress.

6. Advances / Provisions:

6.1 Advances to units which have become sick including those under nursing / rehabilitation / restructuring programme and other advances classified as doubtful / loss assets have been considered secured / recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers' assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

6.2 In the current year, in accordance with the guidelines issued by Reserve Bank of India, the Bank has netted the Floating Provision amounting to Rs.312.42 crore (previous year Rs.312.42 crore) from Gross NPAs to arrive at Net NPAs.

6.3 Advances considered good and secured includes investment of Rs.3000 crore (Previous Year Rs.2000 crore) in IBPCs (Inter Bank Participation Certificate) governed by the Uniform Code Governing Inter Bank Participations issued by IBA (Non Priority Sector) and investment in IBPCs issued by RRBs aggregating Rs.2080 crore (Previous Year Rs.1440 crore) of Priority Sector Advance / Direct Agriculture.

7. Subordinated Debt:

During the year, Bank has raised Rs.500 crore by issue of Unsecured Redeemable Bonds under Tier II Capital (Subordinate Debt) taking the balance to Rs.2637.30 crore (Previous Year Rs.2137.30 crore) and Upper Tier II Bonds stands at Rs.2885.00 crore (Previous Year Rs.2885.00 crore)

The above data has been compiled on the basis of guidelines of Reserve Bank of India and estimates in respect of certain Off Balance Sheet items, made by the management and relied upon by the Auditors. In respect of Basel II, the system deficiencies / data errors noticed / reported were addressed at Central Office. Based on the extensive exercise undertaken, Bank is of the view that, unrectified deficiencies, if any, will not have a significant impact on the overall reported Capital Adequacy.

b. Provisions and Contingencies:

The break up of 'Provisions and Contingencies' appearing in the Profit and Loss Account is as under:

Disclosures on Risk Exposure in Derivatives

iii) Qualitative Disclosures

- Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/trade is in place.

- The investment portfolio of the Bank consists of assets with characteristics of fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank has also Tier II bonds hedged for coupon swaps. The policy permits hedging the interest rate risk on this liability as well.

- Policy for Forward Rate Agreement, Interest Rate Swaps, currency futures and Interest Rate Futures for hedging the interest rate risk in the investment portfolio and also for market making is in place.

- The risk management policies and major control limits like stop loss limits, counter party exposure limits etc approved by the Board of Directors are in place. The risks are monitored and reviewed regularly. MIS reports are submitted periodically to Risk Management Committee.

- Hedge Positions

- Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/ expense.

- If the swap is terminated before maturity, the Mark to Market (MTM loss/gain and accrual till such date are accounted as expense/income under Interest paid/received on IRS.

- Trading positions

- Currency future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

- MTM profit/loss are accounted by credit/debit to the margin account on daily basis and the same is accounted in bank's profit & loss account on final settlement.

- Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

- Gains or losses on termination of swaps are recorded as immediate income/expense under the above head.

(v) Statement of Loans and Advances secured by Intangible Assets viz., Rights, Licenses, Authorizations etc. which is shown as unsecured in Schedule-9.

Advances amounting to Rs. 291.52 crore (previous year Rs.231.22 crore) for which charge over intangible security such as Rights, Licences, Authorisation etc. has been considered as unsecured.

(vi) Balance outstanding under credit exposure to telecom companies as at the year-end amounts to Rs.2038.15 crore and in the opinion of the management the same are considered good for recovery. There are no credit exposures towards acquisition of 2G Licences. In addition, investment in the form of Shares, Bonds, Debentures etc. of the bank in telecom companies aggregates Rs.1355.51 crore as at the year-end.

8. Disclosure of Penalties imposed by RBI

RBI has not imposed any penalty on the Bank under Section 46(4) of the Banking Regulation Act, 1949.

9. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 9

Certain items of income are recognized on realization basis as per principal accounting policy No. 8. However, the said income is not considered to be material.

b) Accounting Standard - 15 (Revised)

In previous year, in accordance with circular No. DBOD No. BP.BC.80/21.04.018/2010-11, dated 09-02-2011 issued by Reserve Bank of India, the Bank had opted to amortize the additional liability on account of re-opening of Pension option for existing employees who had not opted for pension earlier, as well as the liability on enhancement in Gratuity limit, over a period of five years beginning with the financial year ended 31st March, 2011. Accordingly, out of the unamortized amount Rs.1181.53 crore as on 1st April, 2011, the Bank has amortized Rs.239.98 crore for Pension and Rs.55.40 crore for Gratuity being proportionate amount during the year ended March 31, 2012. The balance amount to be amortized in future periods for Pension is Rs. 719.95 crore and for Gratuity is Rs.166.20 crore. Had such an accounting treatment not been approved by the RBI, the profit of the bank would have been lower by Rs.886.15 crore pursuant to application of the requirements of AS-15.

Employee Benefits:

Reconciliation of opening and closing balance of the present value of the defined benefit obligation for pension and gratuity benefits as per actuarial valuations is given below:

b) Accounting Standard 17 - Segment Reporting

i) As per the revised guidelines of Reserve Bank of India, the Bank has recognised Treasury Operations, Corporate/ Wholesale Banking, Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

ii) Treasury Operations include dealing in Government and Other Securities, Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs.5 crore (including Fund Based and Non Fund Based exposures) subject to orientation, product, granularity criteria and individual exposures.

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms Companies and statutory bodies, which are not included under Retail Banking.

iv) The other Banking Segment includes all other Banking operations not covered under the above three categories.

v) General Banking operations are the main resource mobilizing unit and Treasury Segment compensates the former for funds lent to it by taking into consideration the average funds used.

vii) Allocation of Costs:

a Expenses directly attributable to a particular segment are allocated to the relative segment.

b Expenses not directly attributable to a specific segment are allocated in proportion to the funds employed.

(e) Accounting Standard - 28 -Impairment of Assets

A substantial portion of Bank's assets comprise financial assets to which Accounting Standard-28 on Impairment of Assets is not applicable. In the opinion of the management, there is no material impairment on Other Assets other than financial assets as at March 31, 2012, requiring recognition in terms of the Standard.

The above mentioned Letters of Comfort are issued within the sanctioned Trade Credit Limits.

10. As per the information compiled by the Management, the Vendors, whose services are utilized and from whom purchases were made by the Bank, are not registered under Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

11. Previous year figures have been re-grouped / re-classified wherever considered necessary to conform to current year's classification.


Mar 31, 2011

These Financial Statements which were approved by the Board of Directors on 06th May 2011 and authenticated by the Auditors have undergone a change due to appropriation of additional amount towards proposed dividend for the shares allotted under Rights Issue which was opened on March 24, 2011 and closed on April 07, 2011. The allotment was made on April 19, 2011 on pari passu basis. The effect of this change in Financial Statements is an increase in proposed dividend on equity capital by Rs. 36.37 crore and dividend tax by Rs. 5.90 crore and consequent decrease in Revenue reserve by Rs. 42.27 crore.

1.1 Capital:

The Authorised Capital of the Bank is Rs. 3000 crore.

The paid-up Capital of the Bank is Rs. 2021.14 crore i.e. increased from Rs. 1771.14 crore to Rs. 2021.14 crore by issue of Perpetual Non-cumulative Preference Shares [PNCPS] to the tune of Rs. 250 crore to Government of India.

During the year, the Bank has come out with Right Issue of Rs. 2497.38 Crore comprising of 24,24,84,876 nos fully paid up equity shares of Rs. 10 each at premium of Rs. 93. The issue opened on 24th March 2011 and was closed on 7th April 2011. A sum of Rs. 2025.68 Crore has been received till 31st March 2011 and the same has been shown as Share Application Money. The said money is parked in account with Reserve Bank of India maintained by our Bank.

1.2 The proposed dividend of Rs. 137.41 crore on Equity Capital includes Rs. 36.37 crore payable on shares allotted under Rights Issue, subject to approval by AGM. Proposed dividend includes interim dividend paid Rs. 40.41 crore as declared by the Board on October 26, 2010, on the existing Capital, on the relevant record date.

2. Balancing of Books / Reconciliation:

The reconciliation of the following items is in progress at various stages on ongoing basis and consequential impact arising on account of such reconciliation is unascertained.

- Inter Branch/Office Balance

- Accounts for Govt. transactions (Central & State)

- Inter Bank Accounts

- System Suspense Account

- Suspense Account

- Clearing & other Adjustment Accounts

The management is of the opinion that the overall impact, if any, on the accounts will not be significant.

3. Income Tax / Deferred Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs. 601.64 crore (previous year Rs. 1507.45 crore) towards disputed Income Tax paid by the Bank/ adjusted by the authorities. Provision for taxation is not considered necessary by the Bank in respect of above disputed demands based on various judicial decisions/ counsels opinion on such disputed issues.

3.3 Out of Rs. 601.64 crore of tax paid under dispute, disputes relating to various Assessment Years, involving tax element of Rs. 21.46 crore have been decided by the Appellate Authorities in favour of the Bank. The appeal effect for the same is pending.

4. Share Issue Expenses:

Unamortized amount of Rs. 6.72 crore towards share issue expenses are included in Other Assets.

5. Premises:

5.1 The premises of the Bank were revalued during financial year 2007-08 to reflect the market value as at March 31, 2008. The additional appreciation amounting to Rs. 1565.97 crore have been credited to Revaluation Reserve Account.

5.2 Premises owned by the Bank include properties costing Rs. 12.21 crore revalued at Rs. 198.46 crore for which registration formalities are still in progress.

7. Advances / Provisions:

7.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

7.2 In the current year, in accordance with the guidelines issued by Reserve Bank of India, the Bank has opted to utilize the Floating Provision amounting to Rs. 312.42 crore (previous year Rs. 312.42 crore) for netting off from Gross NPAs to arrive at Net NPAs.

7.3 Advances considered good and secured includes investment of Rs. 2000 crore in IBPCs governed by the Uniform Code Governing Inter Bank Participations issued by IBA (Non Priority Sector) and investment in IBPCs issued by RRBs aggregating Rs. 1440 crore (Priority Sector Advance/ Direct Agriculture).

8 Agricultural Debt Waiver and Debt Relief Scheme, 2008

In terms of the Reserve Bank of India Circular Ref RBI:2009-10/371/ DBOD.No.BP.BC.82/21.04.048/2009-10 dated March 30, 2010 and vide Government of India Notification No.3/3/208-AC dated April 5, 2010, Bank has extended the Debt Relief Scheme to all eligible farmers upto June 30, 2010. Banks claim of Rs. 147.77 crore under Debt Relief Scheme for the period ended 31/12/2009 is fully reimbursed during the month of February 2011. Claim for the extended period i.e. 1/01/2010 to 30/06/2010 (grievance redressal up to 31/07/2010) of Rs. 54.26 crore is pending to be lodged with Reserve Bank of India up to 30/06/2011 as per Reserve Bank of India guidelines.

9. Upper Tier II Debt Instrument:

During the year, Bank has raised Upper Tier II Debt to the tune of Rs.1300.00 crore (previous year Rs. 1000.00 crore) by issue of Unsecured Redeemable Bonds under Upper Tier II Debt and the amount is shown in Schedule 4 "Borrowings" of the Balance Sheet.

The above data has been compiled on the basis of guidelines of Reserve Bank of India and estimates in respect of certain Off Balance Sheet items, made by the management and relied upon by the Auditors. In respect of Basel II, the system deficiencies/ data errors noticed / reported were addressed at Central Office. Based on the extensive exercise undertaken, Bank is of the view that, unrectified deficiencies, if any, will not have a significant impact on the overall reported Capital Adequacy.

Disclosures on Risk Exposure in Derivatives

iii) Qualitative Disclosures

. Risk Management Policy approved by the Board of Directors for the use of derivative instruments to hedge/ trade is in place.

. The investment portfolio of the Bank consists of assets with characteristics of fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank has also Tier II bonds hedged for coupon swaps. The policy permits hedging the interest rate risk on this liability as well.

. Policy for Forward Rate Agreement, Interest Rate Swaps, currency futures and Interest Rate Futures for hedging the interest rate risk in the investment portfolio and also for market making is in place.

. The risk management policies and major control limits like stop loss limits, counter party exposure limits etc approved by the Board of Directors are in place. The risks are monitored and reviewed regularly. MIS reports are submitted periodically to Risk Management Committee.

a) Accounting policy. Hedge Positions

. Accrual on account of interest expenses/income on the IRS are accounted and recognized as income/ expense.

. If the swap is terminated before maturity, the Marked to Market (MTM loss/gain and accrual till such date are accounted as expense/income under Interest paid/received on IRS.

Trading positions

. Currency future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX, NSE and United Stock Exchange.

. MTM profit/loss are accounted by credit/debit to the margin account on daily basis and the same is accounted in Banks Profit & Loss Account on final settlement.

. Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

. Gains or losses on termination of swaps are recorded as immediate income/expense under the above head.

(b) During the year, 219 accounts under SME were subjected to Restructuring and the balance outstanding as on March 31, 2011 was Rs. 27.45 crore (Previous Year 349 accounts – Amount Rs. 170.95 crore).

12 b Gold Coins - During the year the Bank has sold 61.612 kgs. and the total sale consideration is Rs. 1337 lacs. The Profit accrued on the sale of Gold Coins is Rs. 46.00 lacs and is accounted for in Misc. Income.

12 c The Provisioning Coverage Ratio (PCR) of the Bank is 67.64%.

13. Disclosure of Penalties imposed by RBI

RBI has not imposed any penalty on the Bank under Section 46(4) of the Banking Regulation Act, 1949.

14. The following information is disclosed in terms of Accounting Standards issued by The Institute of Chartered Accountants of India:

a) Accounting Standard - 15 (Revised)

During the year, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier. In accordance with RBI circular No.DBOD No. BP.BC.80/21.04.018/2010-11, dated 09-02-2011, for second option for pension, one-fifth of additional liability of Rs. 239.98 crore towards pension fund for 13494 serving employees and 100% of such liability of Rs. 569.62 crore for 4046 retired/separated employees aggregating to Rs. 809.60 crore has been charged to Profit & Loss Account for the year. The unrecognized pension liability for second option for pension for serving employees is Rs. 959.93 crore.

In accordance with RBI circular No.DBOD No. BP.BC.80/21.04.018/2010-11, dated 09/02/2011, an amount of Rs. 55.40 crore has been charged to Profit & Loss Account for the year, being 1/5th of additional Gratuity liability due to amendment of Payment of Gratuity Act 1972. The unrecognized Gratuity liability is Rs. 221.60 crore.

Had such a circular not been issued by the RBI, the profit of the bank would have been lower by Rs. 1181.53 crore pursuant to application of the requirements of AS-15.

b) Accounting Standard 17 – Segment Reporting

i) As per the revised guidelines of Reserve Bank of India, the Bank has recognised Treasury Operations, Corporate/ Wholesale Banking, Retail Banking and other Banking business as primary reporting segments. There are no secondary reporting segments.

ii) Treasury Operations include dealing in Government and Other Securities, Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs. 5 crore (including Fund Based and Non Fund Based exposures) subject to orientation, product, granularity criteria and individual exposures.

iv) The Corporate/ Wholesale Segment consist of all advances to Trusts/ Partnership Firms Companies and statutory bodies, which are not included under Retail Banking.

iv) The other Banking Segment includes all other Banking operations not covered under the above three categories.

v) General Banking operations are the main resource mobilizing unit and Treasury Segment compensates the former for funds lent to it by taking into consideration the average funds used.

vii) Allocation of Costs:

a Expenses directly attributable to a particular segment are allocated to the relative segment.

b Expenses not directly attributable to a specific segment are allocated in proportion to the funds employed.

(b) Subsidiaries –

i) Cent Bank Home Finance Ltd.

ii) Centbank Financial Services Ltd.

(c) Associates –

(I) Regional Rural Banks -

i) Satpura Narmada Kshetriya Gramin Bank, Chhindwara

ii) Surguja Kshetriya Gramin Bank, Ambikapur

iii) Uttar Bihar Gramin Bank, Muzzaffarpur

iv) Vidharbha Kshetriya Gramin Bank, Akola

v) Ballia Etawah Gramin Bank, Ballia

vi) Hadoti Kshetriya Gramin Bank, Kota

vii) Uttarbanga Kshetriya Gramin Bank, Cooch Behar

(e) Accounting Standard – 28 –Impairment of Assets

A substantial portion of Banks assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the management, there is no material impairment on Other Assets other than financial assets as at March 31, 2011, requiring recognition in terms of the Standard.

17 As per the information compiled by the Management, the Vendors, whose services are utilized and from whom purchases were made by the Bank, are not registered under Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

18. Previous year figures have been re-grouped / re-classified wherever considered necessary to conform to current years classification.


Mar 31, 2010

1. Capital:

The Authorised Capital of the Bank was Rs.1500 crore as on April 01, 2009. The Board of Directors vide Resolution dated July 27, 2009 recommended to increase the Authorized Capital of the Bank from the present Rs.1500 crore to Rs.3000 crore for the approval of shareholders of the Bank and the shareholders in the Annual General Meeting held on August 4, 2009 approved the same.

The Government of India by its official Gazette Notification dated November 27, 2009 increased the authorized Capital from Rs.1500 crore to Rs.3000 crore.

The paid-up Capital of the Bank is increased from Rs.1321.14 crore to Rs.1771.14 crore by issue of Perpetual Non- cumulative preference shares (PNCPS) to the tune of Rs.450 crore to Government of India.

2. Balancing of Books / Reconciliation:

Reconciliation of Inter-Branch Accounts is in progress. Balancing of Subsidiary Ledgers and reconciliation with General Ledger is also in progress at some branches. Pending final clearance of the above, the overall impact, if any, on the accounts, in the opinion of the management will not be significant.

The bank is in the process covering all of its branches under the CBS platform. During the year, an additional 324 branches have come under the CBS platform. Certain migration errors in the master data and inherent bugs in the system were noticed in branches remedial action was initiated by the banks IT department and the service provider. The management is of the opinion that this does not have any material impact on the Financial Statements.

3. Income Tax / Deferred Tax:

3.1 Provision for Income Tax for the year is arrived at after due consideration of relevant statutory provisions and judicial decisions on disputed issues.

3.2 Other Assets [Schedule 11 (ii)] includes Rs.1507.45 crore (previous year Rs.1366.17 crore) towards disputed Income Tax paid by the Bank/ adjusted by the authorities. Provision for taxation is not considered necessary by the Bank in respect of above disputed demands based on various judicial decisions/ counsels opinion on such disputed issues.

3.3 Out of Rs. 1507.45 crore of tax paid under dispute, disputes relating to various Assessment Years, involving tax element of Rs.7.06 crore have been decided by the Appellate authorities in favour of the Bank. The appeal effect for the same is pending.

4. Share Issue Expenses:

Unamortized amount of Rs. 12.12 crore towards share issue expenses are included in Other Assets.

5. Premises:

5.1 The premises of the Bank were revalued during financial year 2007-08 to reflect the market value as at March 31, 2008. The additional appreciation amounting to Rs.1565.97 crore have been credited to Revaluation Reserve Account.

5.2 Premises owned by the Bank include properties costing Rs.10.94 crore revalued at Rs.306.85 crore for which registration formalities are still in progress.

6.2 in terms of the Guidelines of Reserve Bank of India, the profit of Rs.46.62 crore (net of taxes and statutory reserves) on sale/ redemption of investments in the "Held to Maturity" category has been appropriated to the Investment Reserve.

7. Advances / Provisions:

7.1 Advances to units which have become sick including those under nursing/ rehabilitation/ restructuring programme and other advances classified as doubtful/ loss assets have been considered secured/ recoverable to the extent of estimated realizable value of securities carrying first or second charge based on valuers assessment of properties/ assets mortgaged to the Bank and other data available with the Bank.

7.2 Last year the Bank considered the Floating Provision of Rs.312.43 crore as part of Tier II Capital. In the current year, in accordance with the guidelines issued by Reserve Bank of India the Bank has opted to utilize the Floating Provision for netting off from Gross NPAs to arrive at Net NPAs.

8 Agricultural Debt Waiver and Debt Relief Scheme, 2008

8.1 Government of India has notified "Agricultural Debt Waiver & Debt Relief Scheme 2008" for Debt Waiver to marginal and small farmers and Relief to other farmers, which has been implemented by the bank. Claims have been preferred with RBI for Agricultural Debt Waiver amounting to Rs.978.54 crore (inclusive of additional claim of Rs.3.71 crore). The Bank has received Rs.631.06 crore being 64.49% of the Claim amount.

8.2 In terms of Government of India, Ministry of Finance, Department of Financial Services, Notification dated October 16, 2008 and Reserve Bank of India circular dated November 11, 2008, Interest amounting to Rs.38.05 crore (previous year Rs.15.33 crore) on the amount outstanding under Agricultural Debt Waiver Scheme, 2008, for the period April 2009 to March, 2010, have been accounted in the books as Interest Income.

8.3 In terms of the Reserve Bank of India Circular Ref RBI:2009-10/371/ DBOD.No.BP.BC.82/21.04.048/2009-10 dated March 30, 2010 and vide Government of India Notification No.3/3//208-AC dated April 5, 2010, Bank has extended the Debt Relief Scheme to all eligible farmers upto June 30, 2010. Provision of Rs.6.17 crore is made by the Bank for the loss in present value terms for all receivables from the Borrowers. Claim for reimbursement of 25% Government share is subject to verification by the Statutory Central Auditors.

9. Upper Tier II Debt Instrument:

During the year, Bank has raised Upper Tier II Debt to the tune of Rs.1000.00 crore (previous year Rs.585.00 crore) by issue of Unsecured Redeemable Bonds under Upper Tier II Debt and the amount is shown in Schedule 4 "Borrowings" of the Balance Sheet.

Disclosures on Risk Exposure in Derivatives (iii) Qualitative Disclosures

The Treasury Risk Management Policy, approved by the Board of Directors, on the use of derivative instruments to hedge/ trade is in place.

a) The Investment Portfolio of the Bank consists of assets with characteristics of fixed interest rate, zero coupon and floating interest rates and is subject to interest rate risk. The Bank has also Tier II bonds hedged for Interest rate swaps which do not have exit option. The policy permits hedging the interest rate risk on this liability as well.

Forward Rate Agreement, Interest Rate Swaps, Currency Futures and Interest Rate Futures are used not only for hedging the interest rate risk in the investment portfolio but also for market making.

b) The risk management policies and major control limits like stop loss limits, counter party exposure limits etc. approved by the Board of Directors are in place. These risks are monitored and reviewed regularly. MIS/ Reports are submitted periodically to Risk Management Committee. The hedge effectiveness of the outstanding derivative deals is monitored in relation to the underlying asset/ liability on an ongoing basis.

c) Accounting Policy

Hedge Positions

- Accrual on account of interest expenses/ income on the IRS are accounted and recognised as income/ expense.

- Hedge effectiveness of the outstanding derivative deals is monitored in relation to the fair value of the swap and underlying asset/ liability. If the hedge is not effective, hedge swaps is accounted as trading swaps. If the swap is terminated before maturity, the Marked to Market (MTM) loss/ gain and accrual till such data are accounted as expense/ income under Interest paid/ received on IRS.

- Trading positions

- Currency Future and Interest Rate Future are marked to market on daily basis as per exchange guidelines of MCX-SX and NSE.

- MTM profit/ loss are accounted by credit/ debit to our margin account on daily basis and the same is accounted in banks Profit & Loss account on daily basis.

- Trading swaps are marked to market at frequent intervals. Any MTM losses are booked and gains if any are ignored.

- Gains or losses on termination of swaps are recorded as immediate income expense under the above head.

(Iv) Nostro/Mirror Credit Balances:

The Bank has transferred Rs. 20.01 Crores to Profit & Loss account during the financial year 2009-10 as net credit balances from unreconciled Nostro/Mirror accounts and appropriated Rs. 9.91 Crores(Net of Tax and Statutory Reserves) towards General Reserves.

10 a Fees/ remunerations received in respect of the Bancassurance Business during the current year is Rs. 15.56 crores.

10 b Miscellaneous Income includes Rs.31.51 crore being write back of excess depreciation made in the earlier years on Premises.

10 c Gold Coins - During the year the Bank has sold 37,900 Gold Coins along with velvet boxes for a total price of Rs.6746.52 lakhs. The cost of the coins with boxes amounted to Rs.6663.61 lakhs inclusive of Rs.0.95 lakhs VAT paid on purchase of boxes. The Profit accrued on the sale of Gold Coins is Rs.82.91 lakhs, and is accounted for in misc. income.

11. Wage Revision -

The Bank has made a Provision of Rs.200 crore during the current year on adhoc basis towards Wage Revision of Employees.

12. Disclosure of Penalties imposed by RBI

RBI has not imposed any penalty on the Bank under Section 46(4) of the Banking Regulation Act, 1949.

ii) Treasury Operations include dealing in Government and Other Securities, Money Market operations and Forex operations.

iii) The Retail Banking Segment consists of all exposures upto a limit of Rs.5 crore (including Fund Based and Non Fund Based exposures) subject to orientation, product, granularity criteria and individual exposures.

iv) The Corporate/ Wholesale Segment consists of all advances to Trusts/ Partnership Firms Companies and statutory bodies, which are not included under Retail Banking.

iv) The other Banking Segment includes all other Banking operations not covered under the above three categories.

v) General Banking operations are the main resource mobilizing unit and Treasury Segment compensates the former for funds lent to it by taking into consideration the average funds used.

vii) Allocation of Costs:

a. Expenses directly attributable to a particular segment are allocated to the relative segment.

b. Expenses not directly attributable to a specific segment are allocated in proportion to the funds employed.

(b) Subsidiaries -

i) Cent Bank Home Finance Ltd.

ii) Cent Bank Financial Services Ltd.

(c) Associates -

(I) Regional Rural Banks -

0 Satpura Narmada Kshetriya Gramin Bank, Chhindwara.

ii) Surguja Kshetriya Gramin Bank, Ambikapur.

iii) Uttar Bihar Gramin Bank, Muzzaffarpur

iv) Vidharbha Kshetriya Gramin Bank, Akola

v) Ballia Etawah Gramin Bank, Ballia.

vi) Hadoti Kshetriya Gramin Bank, Kota.

vii) Uttarbanga Kshetriya Gramin Bank, Cooch Behar

(e) Accounting Standard - 28 -Impairment of Assets

A substantial portion of Banks assets comprise financial assets to which Accounting Standard-28 on impairment of assets is not applicable. In the opinion of the management, there is no material impairment on Other Assets other than financial assets as at March 31, 2010, requiring recognition in terms of the Standard.

13. As per the information compiled by the Management, the Vendors, whose services are utilized and from whom purchases were made by the Bank, are not registered under Micro, Small and Medium Enterprises Development Act, 2006. This is relied upon by the Auditors.

14. Previous year figures have been re-grouped/ re-classified wherever considered necessary to conform to current years classification.

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