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Notes to Accounts of IDBI Bank Ltd.

Mar 31, 2015

A DISCLOSURE REQUIREMENTS AS PER ACCOUNTING STANDARDS

1. FIXED ASSETS (AS-10)

i. Premises include Leasehold Land (revalued) of Rs. 1339 70 11 thousand (Rs. 1339 70 11 thousand) which was revalued in the year 2006-07.

ii. The Bank has revalued its Freehold Land & Residential/ Office building based on valuations made by independent valuers during the year 2006-07. The net appreciation of Rs. 2063 91 00 thousand arising on revaluation, being the difference between the Net Book Value of Rs. 529 02 00 thousand and revalued amount of Rs. 2592 93 00 thousand as on March 31,2007, was credited to Revaluation Reserve. The balance in revaluation reserve as at March 31, 2015 after adjusting depreciation on same is Rs. 1662 85 04 thousand (Rs. 1712 83 66 thousand).

2. EMPLOYEE BENEFITS (AS-15) (REVISED)

i. Defined Contribution Schemes

The Bank''s employees, excluding those who have opted for pension, who have joined Bank before March 31, 2008 are covered by Provident Fund Scheme (PFS). The Bank makes a defined contribution measured as a fixed percentage of basic salary to the PFS. The Provident Fund Scheme is administered by "The Committee of Administrators of IDBI Bank Employees'' Provident Fund (Fund)". In respect of employees of IDBI Home Finance Limited (IHFL) and IDBI Gilts Limited (IGL), provident fund contributions were made to Regional Provident Fund Commissioner up to May 2011 and thereafter contributions have been made to the aforementioned Fund. During the year, Rs. 4 99 43 thousand (Rs. 5 03 22 thousand) has been contributed to PFS and charged to Profit and Loss Account.

The Bank''s employees who have joined after April 1,2008 are covered by Defined Contribution Pension Scheme (DCPS) to which the Bank makes a defined contribution as a fixed percentage of Pay and Dearness Allowance. During the year, Rs. 44 23 39 thousand (Rs. 35 05 85 thousand) has been contributed to DCPS and charged to Profit and Loss Account.

ii. Defined Benefit Schemes

The Bank makes contributions for the gratuity liability of the employees to the ''IDBI Bank Employees Gratuity Fund Trust''.

a. Some of the employees of the Bank are also eligible for pension which is administered by the ''IDBI Pension Fund Trust''.

b. The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method by an independent actuary at each balance sheet date.

The following table sets out the status of the defined benefit schemes and the amounts recognised in the Bank''s financial statements as per Accounting Standard 15(R).

iii. Other long term benefits

Employees of the Bank are entitled to accumulate their earned/ privilege leave up to a maximum of 180 days for officers and 300 days for other staff. A maximum of 15 days leave is eligible for encashment in each year.

Employees of the Bank are eligible for Disability Assistance which is borne by the Bank as and when the disability events occur.

Some employees of the Bank are eligible for Voluntary Health Scheme which is borne by the Bank as and when the liability events occur.

Actuarial valuation of these benefits have been carried out using the Projected Unit Credit Method and Rs. 98 71 87 thousand (Rs. 8 76 81 thousand) has been charged to Profit and Loss Account during the year.

3. KHII''I (W-17) / SEGMENT REPORTING (AS-17)

The Bank primarily operates in three business segments as under:

Treasury

Treasury operations include trading portfolio of investments, money market operations, derivative trading, foreign exchange operations on the proprietary account and for customers.

Retail Banking

Retail Banking broadly includes credit and deposit activities that are primarily oriented towards individuals & small business including Priority Sector Lending. Retail Banking also encompasses payment and alternate channels like ATMs, POS machines, internet banking, mobile banking, credit cards, debit cards, travel/ currency cards, third party distribution and transaction banking services._

Corporate / Wholesale Banking

Includes corporate relationship covering deposit and credit activities other than retail. It also covers corporate advisory / syndication, project appraisal and investment portfolio including strategic investments other than those covered under Treasury.

The Bank primarily operates in India, hence, the Bank has considered that its operations are predominantly in the domestic segment and as such there are no reportable geographical segments.

Related Party Disclosures (AS-18)

A. List of related party as per AS-18

i. Subsidiaries

IDBI Capital Market Services Ltd.

IDBI Intech Ltd.

IDBI MF Trustee Company Ltd.

IDBI Asset Management Company Ltd.

IDBI Trusteeship Services Limited.

ii. Jointly controlled entity

IDBI Federal Life Insurance Co Ltd.

iii. Key management personnel of the Bank

Shri M.S. Raghavan, Chairman & Managing Director

Shri Balkrishan Batra, Deputy Managing Director

Shri Melwyn Rego, Deputy Managing Director

B. i. Parties with whom transaction were entered into during the year

No disclosure is required in respect of related parties, which are "State-controlled Enterprises" as per paragraph 9 of Accounting Standard 18. All the subsidiaries of the Bank are State-controlled Enterprises, hence no disclosure is made for transaction with subsidiary Companies. Further, in terms of paragraph 5 of Accounting Standard 18, transactions in the nature of banker-customer relationship have not been disclosed in respect of relatives of Key Management Personnel.

Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (ATM)s, which are either cancellable at the option of the Bank or non-cancellable operating lease.

During the year Rs. 256 35 54 thousand (Rs. 213 43 28 thousand) has been charged to the Profit and Loss Account towards lease charges paid/ payable on cancellable/ non-cancellable operating lease.

Investments include Rs. 384 crore (Rs. 384 crore) representing the Bank''s interest in the following Joint Venture.

As required by Accounting Standard 27, the aggregate amount of each of the assets, liabilities, income, expenses, contingent liabilities and commitments related to the Bank''s interests in jointly controlled entity are disclosed as under:

Claims against the Bank not acknowledged as debts

This item represents certain demands made in legal matters against the Bank in the normal course of business and customer claims arising in operational issues and fraud cases. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank''s financial conditions, results of operations or cash flows.

II Liability on account of Outstanding forward exchange contracts

The Bank enters into foreign exchange contracts in its normal course of business to exchange currencies at a pre-fixed price at a future date. This item represents the notional principal amount of such contracts, which are derivative instruments. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a large value of gross notional principal of the portfolio, while the net market risk is lower.

III Guarantees given on behalf of constituents in India and outside India

As a part of its banking activities, the Bank issues guarantees on behalf of its customers. Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of customer failing to fulfill its financial or performance obligations.

IV Acceptances, endorsements and other obligations

This item represents the documentary credits issued by the Bank in favour of third parties on behalf of its customers, as part of its trade finance banking activities with a view to augment the customers'' credit standing. Through these instruments, the Bank undertakes to make payments for its customers'' obligations, either directly or in case the customer fails to fulfil their financial or performance obligations.

Liability in respect of interest rate and currency swaps and credit default swaps.

This item represents the notional principal amount of various derivative instruments which the Bank undertakes in its normal course of business. The Bank offers these products to its customers to enable them to transfer, modify or reduce their foreign exchange and interest rate risks. The Bank also undertakes these contracts to manage its own interest rate and foreign exchange positions. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a large value of gross notional principal of the portfolio, while the net market risk is lower.

The Bank underwrites Credit Default Swap (CDS) transaction for managing credit risks associated with Indian Corporate Bonds._

VI Liability in respect of other derivative contracts.

This item represents the notional principal amount of various currency options which the Bank undertakes in its normal course of business. The Bank offers these products to its customers to enable them to reduce their foreign exchange risks. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, while the net market risk is lower.

VII Liability on account of disputed Income tax, interest tax, penalty and Interest demands

The Bank is a party to various taxation matters in respect of which appeals are pending. The Bank expects the outcome of the appeals to be favorable based on decisions on similar issues in the previous years by the appellate authorities, based on the facts of the case and the provisions of Income Tax Act, 1961.

Other items for which the Bank is contingently liable

This item represents the guarantees issued by the Bank in favour of statutory authorities and others on its own behalf as part of normal business activity.

b. Long term contracts

The Bank has a process whereby periodically all long term contracts including derivative contracts are assessed for material foreseeable losses. At the year end, the Bank has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made in the books of account.

c. Pending litigations

The Bank''s pending litigations comprise of claims against the Bank primarily by the borrowers, customers and proceedings pending with Income Tax authorities. The Bank has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements.

*Also refer Schedule-12 - Contingent Liabilities

Sales and transfers of securities to/ from Held to Maturity (HTM) category

a. During the year ended March 31, 2015, 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 and sale to RBI under pre-announced Open Market Operation auctions) have exceeded 5% of the book value of the investments held in HTM category at the beginning of the year.

Total book value and market value of HTM portfolio as of March 31,2015 is Rs. 90,643.66 crore and Rs. 90,959.34 crore respectively.

b. In terms of RBI circular DBOD.BP.BC.No.42/21.04.141/2014-15 dated October 7, 2014, banks have been advised to bring down the ceiling on SLR securities under the HTM category from 24.0% of NDTL to 23.5% by January 10, 2015 and to 22.0% in graduated manner. Accordingly, the Bank has transferred SLR securities with book value of Rs. 2672.13 crore from HTM category to HFT category as per the extant RBI guidelines.

a. Concentration of credit risk (current exposure to the Bank) to top 5 corporate clients as at March 31,2015 is at 64.23% (57.25 %) of the total current exposure from corporate clients to the Bank.

Disclosures on risk exposure in derivatives- Qualitative disclosures

The Bank uses derivatives for Hedging as well as for Trading purposes. The use of such derivatives gives rise to various risks like credit risk, market risk, operational risk, legal risk etc.

(ii) The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organisation structure, risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent Risk Management Department, headed by a Chief General Manager. The Risk Management Department is functionally responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes, parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management Committee of the Board as well as to the Board.

(iii) Risk exposures in derivatives transactions are measured/ assessed, in both quantitative and qualitative terms, to capture credit risk, market risk and operational & legal risk. Prior to the execution of derivative transaction, it is ensured that credit risk exposure to the client/ counterparty, measured in terms of Loan Equivalent Risk (LER), is within the approved limit and the client/ counterparty has the necessary understanding of the transaction. Market risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, PV01, gaps, Greeks, stop loss etc. Operational risks are addressed by having adequate system infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal agreements and documentation.

The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, the details of which are contained in Schedule No.17 "Significant Accounting Policies of the Bank".

Working funds are reckoned as average of total assets (excluding accumulated losses, if any) as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949, during the 12 months of the financial year.

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

For the purpose of computation of business per employee (deposits plus advances) interbank deposits are excluded.

Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken as Rs. Nil (Rs. Nil) and the estimated value of intangible security as on March 31,2015 is Rs. Nil (Rs. Nil)

As a policy, the Bank does not make any floating provision for bad and doubtful advances and investments.

a. During the year ended March 31,2015, the Bank has not securitised any pools of retail loans.

The Bank has not issued any letter of comfort during the year Rs. Nil (Rs. NIL).

XVIII. Fees and Remuneration Received in respect of Bancassurance Business

Disclosure on Penalty

During the year following penalties were imposed by regulatory authorities.

XXVII Credit Default Swaps

The Bank is using standard model for marking to market the CDS contracts as per FIMMDA published daily CDS curve and day count convention to value their CDS positions. FIMMDA is publishing the CDS curves for this purpose on daily basis.

The Bank, as detailed in its Credit Policy, monitors the Unhedged Foreign Currency Exposure of its borrower and pursues its clients to hedge their forex exposure to minimize the losses due to adverse exchange rate fluctuation.

The Bank obtains the information based on an internally developed system on Unhedged Foreign Currency Exposure from its clients on a periodic basis and follows the methodology for computation of likely loss on account of exchange rate movement. The incremental provisioning for the year ending March 31,2015 towards this exposure amounts to Rs. 102.38 crore and capital held towards the risk is Rs. 308 crore as on March 31,2015.

As per RBI disclosure requirement, the LCR for the year 2014-15 is disclosed for the Q4 of 2014-15. The average values disclosed above are calculated as simple average of monthly observations during the quarter.

Qualitative disclosure around Liquidity Coverage Ratio ( LCR ) :

In the backdrop of the global financial crisis that started in 2007, the Basel Committee on Banking Supervision (BCBS) proposed certain reforms to strengthen global capital and liquidity regulations with the objective of promoting a more resilient banking sector. In this direction BCBS published guidelines on ''Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools'' in January 2013 and the ''Liquidity Coverage Ratio Disclosure Standards'' in January 2014. Accordingly, Reserve Bank of India, vide its circular dated June 09, 2014, issued guidelines on Liquidity Coverage Ratio (LCR).

The LCR promotes short-term resilience of banks to potential liquidity disruptions by ensuring that they have sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days. The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered HQLAs that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified by supervisors.

Definition of LCR :

The LCR requirement are binding on banks from January 1,2015. However, with a view to provide a transition time for banks, the requirement is minimum 60% for the calendar year 2015 i.e. with effect from January 1,2015, and rise in equal steps of 10% over a period of 4 years to reach the minimum required level of 100% on January 1,2019.

High Quality Liquid Assets

Under the standard, banks must hold a stock of unencumbered HQLA to cover the total net cash out flows over a 30- day period under the prescribed stress scenario. In order to qualify as HQLA, assets should be liquid in markets during times of stress and, in most cases, be eligible for use in central bank operations. The HQLA of the Bank mainly comprise of SLR investments over and above mandatory requirement, liquidity available by way of borrowing under Marginal Standing Facility (2% of NDTL), Facility to Avail Liquidity for Liquidity Coverage Ratio (5% of NDTL) & other securities issued by PSEs or non-financial corporates.

Total net cash outflows :

Total expected cash outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities and off-balance sheet commitments by the rates at which they are expected to run off or be drawn down. Total expected cash in flows are calculated by multiplying the outstanding balances of various categories of contractual receivables by the rates at which they are expected to flow in.

Liquidity Management:

The Bank has well organised liquidity risk management structure as enumerated in ALM Policy which is approved by the Board. The Asset Liability Management Committee (ALCO) of the Bank monitors & manages liquidity and interest rate risk in line with the business strategy. ALM activity including liquidity analysis & management is conducted through coordination between various ALCO support groups residing in the functional areas of Balance Sheet Management, Treasury Front Office, Budget and Planning etc. ALCO directives and ALM actions are implemented by the business groups and verticals.

As per the regulatory guidelines, at present, the Bank maintains LCR in domestic currency only. The average LCR of the Bank for the Q4 of 2014-15 was at 76.74%.

The Bank had created Staff Welfare Fund for the purpose of staff welfare activities expenses. Subsequently the staff welfare activities expenses are debited to Profit and Loss Account of the Bank. Hence, the Management has decided to transfer the Staff Welfare Fund of Rs. 29.01 crore to General Reserve.

iii. Notes to Corporate Social Responsibility (CSR) expenditure:

a. Gross amount required to be spent by the Bank during the year Rs. 26.29 crore

Pursuant to the provisions of Micro, Small and Medium Enterprises Development Act, 2006, certain disclosures are required to be made relating to Micro, Small & Medium enterprise. The Bank is in the process of compiling relevant information from its suppliers about their coverage under the said Act. In view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

vi. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 528 05 51 thousand (Rs. 338 35 35 thousand).

Figures of the previous year, are disclosed in brackets and are regrouped / rearranged, so as to confirm with the presentation made for the current year.


Mar 31, 2014

I. Contingent Assets are not recognized.

A DISCLOSURE REQUIREMENTS AS PER ACCOUNTING STANDARDS

1. FIXED ASSETS (AS-10)

i. Premises include Leasehold Land (revalued) of Rs. 1339 70 11 Thousand (Rs. 1339 70 11 Thousand) which was revalued in the year 2006-07.

ii. The Bank has revalued its Freehold Land & Residential/ Office building based on valuations made by independent values during the year 2006-07. The net appreciation of Rs. 2063 91 00 Thousand arising on revaluation, being the difference between the net book value of Rs. 529 02 00 Thousand and revalued amount of Rs. 2592 93 00 Thousand as on March 31, 2007, was credited to Revaluation Reserve. The balance in revaluation reserve as at March 31, 2014 after adjusting depreciation on same is Rs. 1712 83 66 Thousand (Rs. 1762 78 10 Thousand).

2. EMPLOYEE BENEFITS (AS-15) (REVISED)

i. The Bank''s employees, excluding those who have opted for pension, who have joined Bank before March 31, 2008 are covered by Provident Fund Scheme (PFS). The Bank makes a defined contribution measured as a fixed percentage of basic salary to the PFS. The Provident Fund Scheme is administered by "The Committee of Administrators of IDBI Bank Employees'' Provident Fund (Fund)". In respect of employees of IDBI Home Finance Limited (IHFL) and IDBI Gilts Limited (IGL), provident fund contributions were made to Regional Provident Fund Commissioner up to May 2011 and thereafter contributions have been made to the aforementioned Fund. During the year, Rs. 5 03 22 Thousand (Rs. 6 36 88 Thousand) has been contributed to PFS and charged to Profit and Loss Account.

The Bank''s employees who have joined after April 1, 2008 are covered by Defined Contribution Pension Scheme (DCPS) to which Bank makes a defined contribution as a fixed percentage of Pay and Dearness Allowance. During the year, Rs. 35 05 85 Thousand (Rs. 13 73 80 Thousand) has been contributed to DCPS and charged to Profit and Loss Account.

ii. Defined Benefit Schemes

a. The Bank makes contributions for the gratuity liability of the employees to the ''IDBI Bank Employees Gratuity Fund Trust''.

b. Some of the employees of the Bank are also eligible for Pension which is administered by the ''IDBI Pension Fund Trust''.

The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method by an independent actuary

iii. Other long term benefits at each balance sheet date.

Employees of the Bank are entitled to accumulate their earned/ privilege leave up to a maximum of 180 days for officers and 300 days for other staff. A maximum of 15 days leave is eligible for encashment in each year.

Employees of the Bank are eligible for Disability Assistance which is borne by the Bank as and when the disability events occur.

Some employees of the Bank are eligible for Voluntary Health Scheme which is borne by the Bank as and when the liability events occur.

Actuarial valuation of these benefits have been carried out using the Projected Unit Credit Method and Rs. 8 76 81 Thousand (Rs. 56 88 75 Thousand) has been charged to Profit and Loss Account during the year.

3. Related Party Disclosures (AS-18)

i. IDBI Capital Market Services Ltd.

IDBI Intech Ltd.

IDBI MF Trustee Company Ltd.

IDBI Asset Management Company Ltd.

IDBI Trusteeship Services Limited.

ii. Jointly controlled entity

IDBI Federal Life Insurance Co Ltd.

iii. Key management personnel of the Bank

Shri R.M. Malla, Chairman & Managing Director (up to May 31, 2013)

Shri M.S. Raghavan, Chairman & Managing Director (w.e.f. July 05, 2013)

Shri Bal Krishan Batra, Deputy Managing Director

Shri Melwyn Rego, Deputy Managing Director (w.e.f. August 30, 2013)

iv. Parties with whom transaction were entered into during the year

No disclosure is required in respect of related parties, which are "State-controlled Enterprises" as per paragraph 9 of Accounting Standard (AS) 18. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker-Customer relationship have not been disclosed in respect of relatives of Key Management Personnel.

4. LEASES( AS-19)

Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (ATMs), which are either cancellable at the option of the Bank or non-cancellable operating lease.

During the year Rs. 213 43 28 Thousand (Rs. 187 41 29 Thousand) has been charged to the Profit and Loss Account towards lease charges paid/payable on cancellable/non-cancellable operating lease.

b. Deferred Tax Liability on Special Reserve created under section 36 (1) (viii) of the Income Tax Act, 1961

The Bank creates Special Reserve through appropriations of profits, in order to avail tax deductions as per section 36(1)(viii) of the Income Tax Act, 1961. The Reserve Bank of India, though its circular dated December 20, 2013, had advised banks to create deferred tax liability (DTL) on the amount outstanding in Special Reserve, as a matter of prudence. In accordance with these RBI guidelines, during the three months ended December 31, 2013, the bank created DTL of Rs. 279.96 crore on Special Reserve outstanding at March 31, 2013, by reducing the reserves. Had this amount been charged to the Profit & Loss Account in accordance with the generally accepted accounting principles in India, the amount of Profit for the year would have been lower by such amount.

5. Description of Contingent Liabilities

Contingent Liability

I. Claims against the Bank not acknowledged as debts

Brief description

This item represents certain demands made in legal matters against the Bank in the normal course of business and customer claims arising in operational issues and fraud cases. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank''s financial conditions, results of operations or cash flows.

II.Liability on account of Outstanding forward exchange contracts

The Bank enters into foreign exchange contracts in its normal course of business, to exchange currencies at a pre-fixed price at a future date. This item represents the notional principal amount of such contracts, which are derivative instruments. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a large value of gross notional principal of the portfolio, while the net market risk is lower.

III. Guarantees given on behalf of constituents in India and outside India

As a part of its banking activities, the Bank issues guarantees on behalf of its customers. Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of customer failing to fulfill its financial or performance obligations.

IV. Acceptances, endorsements and other obligations

This item represents the documentary credits issued by the Bank in favor of third parties on behalf of its customers, as part of its trade finance banking activities with a view to augment the customers'' credit standing. Through these instruments, the Bank undertakes to make payments for its customers'' obligations, either directly or in case the customer fails to fulfill their financial or performance obligations.

V. Liability in respect of interest rate and currency swaps and credit default swaps

This item represents the notional principal amount of various derivative instruments which the Bank undertakes in its normal course of business. The Bank offers these products to its customers to enable them to transfer, modify or reduce their foreign exchange and interest rate risks. The Bank also undertakes these contracts to manage its own interest rate and foreign exchange positions. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a large value of gross notional principal of the portfolio, while the net market risk is lower.

The bank underwrites Credit default Swap (CDS) transaction for managing credit risks associated with Indian Corporate Bonds.

VI. Liability in respect of other derivative contracts

This item represents the notional principal amount of various currency options which the Bank undertakes in its normal course of business. The Bank offers these products to its customers to enable them to reduce their foreign exchange risks. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, while the net market risk is lower.

VII. Liability on account of disputed Income tax, interest tax, penalty and Interest demands

The Bank is a party to various taxation matters in respect of which appeals are pending. The Bank expects the outcome of the appeals to be favorable based on decisions on similar issues in the previous years by the appellate authorities, based on the facts of the case and the provisions of Income Tax Act, 1961.

VIII. Others items for which the bank is contingently liable

This item represents the guarantees issued by the Bank in favor of statutory authorities and others on its own behalf, as part of normal business activity.

* Also refer Schedule-12- Contingent Liabilities

V. Sales and transfers of securities to/from Held to Maturity (HTM) category

a. During the year ended March 31, 2014, 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 and sale to RBI under preannounced Open Market Operation auctions) have not exceeded 5% of the book value of the investments held in HTM category at the beginning of the year.

b. In terms of RBI circular DBOD.BP.BC. No. 41/21.04.141/2013-14 dated August 23, 2013, as a one-time measure, RBI permitted the Banks to transfer SLR securities from AFS/HFT category to HTM category. Accordingly, the Bank has transferred SLR securities with face value of Rs. 849.31 crore from AFS category to HTM category and has recognised a resulting loss from the said transfer of Rs. 16.84 crore in the Profit and Loss Account for the year.

6. Disclosures on risk exposure in derivatives- Qualitative disclosures

(i) The Bank uses derivatives for Hedging as well as for Trading purposes. The use of such derivatives gives rise to various risks like credit risk, market risk, operational risk, legal risk etc.

(ii) The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organization structure, risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent Risk Management Department, headed by a Chief General Manager. The Risk Management Department is functionally responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes, parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management Committee of the Board as well as to the Board.

(iii) Risk exposures in derivatives transactions are measured / assessed, in both quantitative and qualitative terms, to capture credit risk, market risk and operational & legal risk. Prior to the execution of derivative transaction, it is ensured that credit risk exposure to the client/counterparty, measured in terms of Loan Equivalent Risk (LER), is within the approved limit and the client/counterparty has the necessary understanding of the transaction. Market risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, PV01, gaps, Greeks, stop loss etc. Operational risks are addressed by having adequate system infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal agreements and documentation.

(iv) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, the details of which are contained in Schedule No.17 "Significant Accounting Policies of the Bank".

XIII. Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken is Rs. Nil and the estimated value of intangible security as on March 31, 2014 is Rs. Nil

XV. In terms of RBI circular DBOD.No.BP.BC.77/21.04.018/2013-14 dated December 20, 2013, during the year, the Bank has created a Deferred Tax Liability (DTL) of Rs. 279.96 Crores on Special Reserve under Section 36(1)(viii) of Income Tax Act, 1961, claimed and allowed till March 2013, by reducing the Reserves (previous year Rs. Nil).

XX. During the year a penalty of Rs. one crore has been imposed by Reserve Bank of India for certain deficiencies observed in compliance to the RBI instructions on KYC/AML (Previous year Rs. Nil) and a penalty Rs. two lakh by Securities Exchange Board of India for violation of Takeover Regulations and PIT Regulations (Previous year Rs. Nil). Both the penalties have been paid to the respective authorities.

XXVIII. The Bank is using standard model for marking to market the CDS contracts as per FIMMDA published daily CDS curve and day count convention to value their CDS positions. FIMMDA is publishing the CDS curves for this purpose on daily basis.

7. Others

(a) During the year, 27 11 66 013 (5 43 21 230) Equity Shares (Face Value Rs. 10 per share) were allotted to Government of India on preferential basis on December 30, 2013 at a premium of Rs. 56.38 (Rs. 92.71) per share, aggregating an amount of Rs. 1800 Crore (Rs. 555 Crore).

(b) 24 900 (45 455) equity shares allotted during the year against ESOPs exercised by the employees.

iii. Based on the information to the extent received from ''enterprises'' regarding their status under the ''Micro, Small & Medium Enterprises Development Act, 2006'' there is no micro, small & medium enterprise to which the bank owes dues, which are outstanding for more than 45 days as at March 31, 2014 and hence no disclosure relating to amounts unpaid as at the year ended together with interest paid/payable

iv. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 338 35 35 Thousand (Rs. 155 38 59 Thousand).

v. Figures of the previous year, are disclosed in brackets and are regrouped / rearranged, so as to confirm with the presentation made for the current year.


Mar 31, 2013

1 FIXED ASSETS (AS-10)

i. Premises include Leasehold Land (revalued) of Rs. 1339 70 11 Thousand (Rs. 1339 70 11 Thousand) which was revalued in the year 2006-07.

ii. The Bank has revalued its Freehold Land & Residential/ Office building based on valuations made by independent valuers during the year 2006-07. The net appreciation of Rs. 2063 91 00 Thousand arising on revaluation, being the difference between the net book value of Rs. 529 02 00 Thousand and revalued amount of Rs. 2592 93 00 Thousand as on March 31, 2007, was credited to Revaluation Reserve. The balance in revaluation reserve after adjusting depreciation on same is Rs. 1762 78 10 Thousand (Rs.1853 92 65 Thousand).

2 EMPLOYEE BENEFITS (AS-15) (REVISED)

i. Defined Contribution Schemes

The Bank''s employees, excluding those who have opted for pension, who have joined Bank before March 31, 2008 are covered by Provident Fund Scheme (PFS). The Bank makes a defined contribution measured as a fixed percentage of basic salary to the PFS. The Provident Fund Scheme is administered by "The Committee of Administrators of IDBI Bank Employees'' Provident Fund (Fund)". In respect of employees of IDBI Home Finance Limited (IHFL) and IDBI Gilts Limited (IGL), provident fund contributions were made to Regional Provident Fund Commissioner up to May 2011 and thereafter contributions have been made to the aforementioned Fund. During the year, Rs. 6 36 88 Thousand (Rs. 4 54 73 Thousand) has been contributed to PFS and charged to Profit and Loss Account.

The Bank''s employees who have joined after April 1, 2008 are covered by Defined Contribution Pension Scheme (DCPS) to which Bank makes a defined contribution as a fixed percentage of Pay and Dearness Allowance. During the year, Rs. 13 73 80 Thousand (Rs. 32 04 76 Thousand) has been contributed to DCPS and charged to Profit and Loss Account.

ii. Defined Benefit Schemes

a. The Bank makes contributions for the gratuity liability of the employees to the ''IDBI Bank Employees Gratuity Fund Trust''.

b. Some of the employees of the Bank are also eligible for Pension which is administered by the ''IDBI Pension Fund Trust''.

The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method by an independent actuary at each balance sheet date.

3 SEGMENT REPORTING (AS-17)

The Bank has disclosed business segment as the primary segment, The Bank primarily operates in India, hence the Bank has considered that its operations are predominantly in the domestic segment and as such there are no reportable geographical segments,

4. RELATED PARTY DISCLOSURES (AS-18)

i. Subsidiaries

IDBI Capital Market Services Ltd.

IDBI Intech Ltd.

IDBI MF Trustee Company Ltd.

IDBI Asset Management Company Ltd.

IDBI Trusteeship Services Limited.

ii. Jointly controlled entity

IDBI Federal Life Insurance Co Ltd.

iii. Key management personnel of the Bank

Shri R.M Malla, Chairman & Managing Director

Shri Bal Krishan Batra, Deputy Managing Director

iv. Parties with whom transaction were entered into during the year

No disclosure is required in respect of related parties, which are "State-controlled Enterprises" as per paragraph 9 of Accounting Standard (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 and relatives of Key Management Personnel.

5. LEASES( AS-19)

Operating leases primarily comprise office premises, staff residences and ATMs, which are cancellable at the option of the Bank. During the year Rs. 187 41 29 Thousand (Rs. 157 59 29 Thousand) has been charged to the Profit and Loss Account towards lease charges paid/payable on cancellable operating lease.

I Prudential Exposure limits

During the year ended March 31, 2013, the Bank''s exposure to single borrowers and group borrowers were within the prudential exposure limits prescribed by RBI, except in one case where single borrower limit of 15% was exceeded with the approval of the Board of Directors, In respect of this case, the sanctioned limit and outstanding as % of capital funds (including non-funded exposure) were as follows, as on March 31,2013 :

II unsecured Advances

Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc, has been taken is Rs. Nil and the estimated value of intangible security as on March 31, 2013 is Rs. Nil on Pari - passu basis ,

III Draw Down from Reserves

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

IV The bank has not issued any letter of comfort during the year (Previous year NIL).

V During the year the Reserve Bank of India has not imposed any penalty on the Bank (Previous year Nil).

VI Credit Default Swaps

The Bank is using standard model for marking to market the CDS contracts as per FIMMDA published daily CDS curve and day count convention to value their CDS positions, FIMMDA is publishing the CDS curves for this purpose on daily basis,

VII. Based on the information to the extent received from ''enterprises'' regarding their status under the ''Micro, Small & Medium Enterprises Development Act, 2006'' there is no micro, small & medium enterprise to which the bank owes dues, which are outstanding for more than 45 days as at March 31, 2013 and hence no disclosure relating to amounts unpaid as at the year ended together with interest paid/payable as required under the said act is given (previous year Nil).

VIII. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 155 38 59 Thousand (Rs. 180 43 38 Thousand).

IX. Figures of the previous year, are disclosed in brackets and are regrouped / rearranged, so as to confirm with the presentation made for the current year.


Mar 31, 2012

1. SEGMENT REPORTING (AS-17)

The Bank operates in three segments wholesale banking, retail banking and treasury services. These segments have been identified in line with AS-17 on segment reporting after considering the nature and risk profile of the products and services, the target customer profile, the organization structure and the internal reporting system of the Bank. The Bank has disclosed business segment as the primary segment. The Bank primarily operates in India, hence the Bank has been considered to operate predominantly in the domestic segment and as such there are no reportable geographical segments.

ii. Segment revenue, results, assets and liabilities include the amounts identifiable to each of the segments as also amounts allocated, as estimated by the management. Assets and liabilities that cannot be allocated to identifiable segments are grouped under unallocated assets and liabilities.

2. RELATED PARTY DISCLOSURES (AS-18)

i. Jointly controlled entity

IDBI Federal Life Insurance Co Ltd.

ii. Key management personnel of the Bank

Shri R.M Malla, Chairman & Managing Director

Shri B.P.Singh, Deputy Managing Director (up to January 31, 2012)

Shri Bal Krishan Batra, Deputy Managing Director (w.e.f January 13, 2012)

iii. Transactions/balances with related parties:

3. OPERATING LEASE ( AS-19)

Amount of Rs. 157,59,29 Thousand (Rs. 161,25,46 Thousand) has been charged to the Profit and Loss Account during the year towards lease charges paid/payable on cancellable operating lease.

Hitherto, Deferred Tax Liability (DTL) as stipulated under Accounting Standard (AS- 22) dealing with "Accounting for Taxes on Income" was created on "Special Reserve created and maintained under section 36(1)(viii) of the Income Tax Act, 1961" (Special Reserve). However the Board of Directors of the Bank has passed a resolution that there is no intention to withdraw any amount from the Special Reserve. Taking this into consideration, as well as an expert opinion obtained by the Bank, the amount of Special Reserve for which deduction has been claimed and/ or allowed in computing taxable income in the earlier years and the current year is considered as a "permanent difference" under AS-22 instead of '' timing difference ''.

In view of the above, DTL of Rs. 183.64 crore created on such Special Reserve in the earlier years has been reversed and DTL of Rs. 65 crore has not been created in respect of Special Reserve appropriated out of the profits for the current year.

iii. Provision of Taxation for current year

Income Tax of Rs. 1104,93,20 Thousand has been provided for the year ended March 31, 2012 (Rs. 734,93,58 Thousand).

4. JOINT VENTURES (AS-27)

Investments include Rs. 384 crores (Rs. 336 crores) representing Bank's interest in the following joint venture.

5. IMPAIRMENT OF ASSETS (AS-28)

Fixed assets acquired by the bank are treated as 'Corporate Assets' and are not 'Cash Generating Unit' as defined by AS-28. In the opinion of the management there is no impairment of any of the fixed assets of the Bank.

6.OTHER DISCLOSURES

EMPLOYEES' STOCK OPTION SCHEME (ESOP)

3 Disclosures on risk exposure in derivatives- Qualitative disclosures

The Bank uses derivatives for hedging as well as for trading purposes. The use of such derivatives gives rise to various risks like credit risk, market risk, operational risk, legal risk etc.

(ii) The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organisation, risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent Risk Management Department, headed by a Chief General Manager. The Risk Management Group is functionally responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes, parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management Committee of the Board as well as to the Board.

(iii) Risk exposures in derivative transactions are measured/ assessed in both quantitative and qualitative terms to capture credit risk, market risk, operational and legal risk. Prior to the execution of derivative transactions, it is ensured that credit risk exposure to the client/counterparty, measured in terms of Loan Equivalent Risk (LER), is within the approved limit and the client/counterparty has the necessary understanding of the transaction. Market risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, gaps, greeks, stop loss etc. Operational risks are addressed by having adequate system infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal agreements and documentation.

(iv) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, the details of which are contained in Schedule No 17 "Significant Accounting Policies of the Bank".

Working funds are reckoned as average of total assets (excluding accumulated losses, if any) as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949, during the 12 months of the financial year.

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

For the purpose of computation of business per employee (deposits plus advances) inter bank deposits are excluded.

During the year ended March 31, 2012, the Bank's exposure to single borrowers and group borrowers were within the prudential exposure limits prescribed by RBI, except in one case where single borrower limit of 15% was exceeded with the approval of the Board of Directors. In respect of this case, the sanctioned limits and outstanding as % of capital funds (including non-funded exposure) were as follows, as on March 31, 2012:

Unsecured Advances:

Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken is Rs. 2,56 crore and the estimated value of intangible security as on March 31, 2012 is Rs. 18,34 crore on Pari - passu basis.

SECURITISATION

During the year ended March 31, 2012, the Bank has not securitized any pools of retail loans.

(a) The figures of the previous period include the working results of the two erstwhile wholly owned subsidiary of the bank namely IDBI Home Finance Ltd. and IDBI Gilts Ltd. for the period from 01.01.2011 to 31.03.2011 consequent on merging with the bank. Accordingly, the fi gures of the previous year are not strictly comparable. Figures for the previous year have been regrouped and rearranged wherever considered necessary to make them comparable with current year's fi gures.

b) Figures in brackets pertain to the previous year.

Compiled by : Dion Global Solutions Limited

ANNEXURE - A (Contd.)

Proper classification, valuation and accounting of the transactions in various portfolios.

Adequate and proper reporting of the transactions related to derivative, investment and foreign exchange products.

Effective control over the operation and execution of market related transactions.

Compliance with regulatory requirements.

The Market Risk Group (MRG), is responsible for Identification, assessment, monitoring and reporting of market risk in Treasury operations. The group also recommends changes in policies and methodologies for measuring market risk. The main strategies and processes of the group are

1. Delegation: Appropriate delegation of powers has been put in place for treasury operations. Investment decisions are vested with Investment Committee of the Board. MRG monitors the various limits, which have been laid down in the policies.

Controls: The systems have adequate data integrity controls. The controls are used for audit purpose.

Exception handling processes: The limits set in the policies have been inserted in the system for ensuring that the same is being enforced to minimize exceptions. The limit breaches/exceptions, if any, are ratifi ed immediately from the concerned authorities.

The MRG periodically reports on the forex, investment and derivative product related risk measures to the senior management and the committees of the Board. The Bank also reports to regulators as per the reporting requirements.

The Bank has devised various risk parameters for different products in line with the guidelines issued by RBI from time to time. These risk parameters are measured and reported to the senior management independently by MRG.


Mar 31, 2011

A Disclosure Requirements as per Accounting Standards

1. PREMISES (AS-10)

i. Premises include Leasehold Land (revalued) ofRs 1339,70,11 Thousand (Rs 1339,70,11 Thousand) which was revalued in the year 2006-07.

2. AMALGAMATION (AS-14)

Pursuant to the scheme of amalgamation of the erstwhile, wholly owned subsidiary of Bank namely IDBI Home Finance Ltd.(IHFL) a housing finance company and IDBI Gilts Ltd. (IGL), a Primary Dealer in securities. (hereinafter referred as 'transferor' Companies) approved by the Ministry of Corporate Affairs, Government of India on April 8, 2011 all assets and liabilities of transferor Companies were transferred and vested in IDBI Bank Ltd. (hereinafter referred as 'transferee' Bank) effective 01.01.2011.

The amalgamation has been accounted for under the 'Pooling of Interest' method as prescribed by the Accounting Standard -14 'Accounting for Amalgamations' issued by the Institute of Chartered Accountants of

India. Accordingly, assets and liabilities of transferor Companies as at January 1, 2011 have been incorporated in the financial statements of transferee Bank in the same manner and form as they appear in the financial statements of the transferor Companies. However the accumulated losses of a transferor Company namely IDBI Gilts Ltd. of Rs 39,70,93 Thousand has been adjusted against reserve of the transferee Bank.

In terms of Scheme of Amalgamation no shares of the transferee Bank are required to be issued to the shareholders of the transferor Companies as the amalgamation has been effected of the wholly owned subsidiaries of the Bank.

Some of the investments and title deeds held by transferor Companies are in the process of being transferred in the name of the transferee Bank.

3. Employee benefits (AS-15) (Revised):

i. Transitional Liability

The transitional liability arising on account of adoption of Accounting Standard-15 (Revised 2005) on "Employee Benefits" is Rs 63,22,00 Thousand (Pension - Rs 31,09,00 Thousand, Gratuity - Rs 16,41,00 Thousand, Disability Assistance - Rs 13,28,00 Thousand and Leave encashment - Rs 2,44,00 Thousand) (Rs 63,22,00 Thousand). Out of this, an amount of Rs 12,50,00 Thousand (Rs 12,50,00 Thousand) has been charged to Profit & Loss Account during the year. The balance unrecognized liability ofRs 12,50,00 Thousand (Rs 25,00,00 Thousand) have been carried forward and the same will be charged off in the next year.

ii. * Defined Contribution Scheme

Bank's employees are covered by Provident Fund to which the Bank makes a defined contribution measured as a fixed percentage of basic salary. The Provident Fund plan in the case of Bank is administered by the Administrators of 'IDBI Provident Fund Trust'/'IDBI Bank Employees Provident Fund Trust'. In respect of the employees of IHFL and IGL provident fund contributions are made to Regional Provident Fund Commissioner.

During the year an amount of Rs 4,26,73 Thousand (Rs 2,34,09 Thousand) has been charged to Profit and Loss Account.

iii. 'Defined Benefit Schemes

a. The Bank makes contributions for the gratuity liability of the employees, to the 'IDBI Bank Employees Gratuity Fund Trust'. The Gratuity Fund of employees of IHFL and IGL is continued with LIC under Group Gratuity Scheme.

b. Some of the employees of the Bank are also eligible for Pension which is administered by the 'IDBI Pension Fund Trust'.

The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method with actuarial valuation being carried out at each balance sheet date.

iv. Other long term benefits

Employees of the Bank are entitled to accumulate their earned/ privilege leave upto a maximum of 180 days for officers and 300 days for other staff. A maximum of 15 days leave is eligible for encashment in each year. Some of the employees are eligible for Disability Assistance which is borne by the bank as and when the disability events occur.

In respect of IHFL the employees are entitled to accumulate leave upto maximum of 180 days/240 days based on their cadre and in respect if IGL leave upto 240 days can be accumulated.

Actuarial valuation of these benefits has been carried out using the Projected Unit Credit Method and an amount of Rs 39,54,98 Thousand (Rs 36,13,93 Thousand) has been charged to Profit and Loss Account during the year.

3. SEGMENT REPORTING (AS-17)

The bank operates in three segments wholesale banking, retail banking and treasury services. These segments have been identified in line with AS-1 7 on segment reporting after considering the nature and risk profile of the products and services, the target customer profile, the organization structure and the internal reporting system of the bank. The bank has disclosed business segment as the primary segment. The bank primarily operates in India, hence the bank has been considered to operate predominantly in the domestic segment and as such there are no reportable geographical segments.

ii. Segment revenue, results, assets and liabilities include the amounts identifiable to each of the segments as also amounts allocated, as estimated by the management. Assets and liabilities that cannot be allocated to identifiable segments are grouped under unallocated assets and liabilities.

18) RELATED PARTY DISCLOSURES (AS-18)

i. jointly controlled entity

ii. IDBI Federal Life Insurance Co Ltd.

Key management personnel of the bank

Shri R.M Malla, Chairman & Managing Director (w.e.f July 9, 2010)

Shri Yogesh Agarwal, Chairman & Managing Director (upto June 5, 2010)

Shri B.P.Singh, Deputy Managing Director

8. JOINT VENTURES (AS-27)

Investments includeRs 336 crores (Rs 216 crores) representing Bank's interest in the following joint venture.

9. IMPAIRMENT OF ASSETS (AS-28)

Fixed assets acquired by the bank are treated as "Corporate Assets' and are not "Cash Generating Unit' as defined by AS-28. In the opinion of the management there is no impairment of any of the fixed assets of the Bank.

10.2 OTHERS

Government of India has infused capital ofRs 3119.04 crores by way of preferential allotment of 259509110 equity share at a premium of Rs 110.19 per share on July 31, 2010.

ii. 197068 (80497) equity shares allotted during the year against ESOPs exercised.

iii. The Bank is reimbursed differential interest by Government of India (GOI) in respect of certain borrowings from Banks/Institutions which has since been discontinued on availment of the entire sanctioned amount. Accordingly, the interest charged to Profit & Loss Account is after considering Nil credit (Rs 3,26,35 Thousand) on account of reimbursement towards differential interest for the year.

iv. The status as at March 31, 2011 of the following schemes as formulated by Government of India is as under.

V. Based on the information to the extent received from 'enterprises' regarding their status under the 'Micro, Small & Medium Enterprises Development Act, 2006' there is no Micro, Small & Medium enterprise to which the Bank owes dues, which are outstanding for more than 45 days during the year ended March 31, 2011 and hence disclosure relating to amounts unpaid as at the year end together with interest paid/payable as required under the said Act have not been given.

vi. Estimated amount of contracts remaining to be executed on capital amount (net of advances) and not provided for is Rs85,45,97 Thousand (Previous YearRs 149,01,02 Thousand)

a) Margin by way of cash deposit/Collateral is required to be maintained by clients, in case Mark to Market (MTM) loss exceed the approved limit (set by the Bank)

b) Concentration of credit risk (Current exposure to the Bank) to top 5 corporate clients as at March 31 2011 is at 74.40% (72.71 %) of the total current exposure from Corporate Clients to the bank.

c) Terms of the forward rate agreement/ interest rate swap are upto 10 years.

3 Disclosures on risk exposure in derivatives- Qualitative disclosures

(i) The Bank uses derivatives for Hedging as well as for Trading purposes. The use of such derivatives gives rise to various risks like credit risk, market risk, operational risk, legal risk etc.

(ii) The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organisation, risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent Risk Management Group, headed by a Chief General Manager. The Risk Management Group is functionally responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes, parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management Committee of the Board as well as to the Board.

(iii) Risk exposures in derivatives transactions are measured/assessed in both quantitative and qualitative terms to capture credit risk, market risk and operational & legal risk. Prior to the execution of derivative transaction, it is ensured that credit risk exposure to the client/counterparty, measured in terms of Loan Equivalent Risk (LER), is within the approved limit and the client/counterparty has the necessary understanding of the transaction. Market risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, gaps, Greeks, Value-at-Risk, stop loss etc. measures. Operational risks are addressed by having adequate system infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal agreements and documentation.

(iv) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, the details of which are contained in Schedule No.1 7 "Significant Accounting Policies of the Bank".

Prudential Exposure Limits

During the year ended March 31, 2011, the Bank's exposure to single borrowers and group borrowers were within the prudential exposure limits prescribed by RBI, except in two cases where single borrower limit of 15% was exceeded with the approval of the Board of Directors. In respect of these cases, the sanctioned limits and outstanding (including non-funded exposure) were as follows, as on March 31, 2011:

XI Unsecured Advances:

Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken is Rs 50 crore and the estimated value of intangible security as on March 31, 2011 is Rs 1257.82 crore on Pari - passu basis.

XXIV In terms of RBI Circular dated May 11, 2009 Nil amount (Rs 64,88 thousand ) has been credited to Profit and Loss account in respect of credit balance (net) towards unreconciled entries in nostra and mirror account. Further, these amounts have been appropriated to General Reserve and are not made available for declaration of dividend.

XXV (a) The figures of the current period include the working results of the two erstwhile wholly owned subsidiary of the bank namely IDBI Home Finance Ltd. and IDBI Gilts Ltd. for the period from 01.01.2011 to 31.03.2011 consequent on merging with the bank. Accordingly, the figures of the previous year are not strictly comparable. Figures for the previous year have been regrouped and rearranged wherever considered necessary to make them comparable with current year's figures.


Mar 31, 2010

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