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Notes to Accounts of Indian Bank

Mar 31, 2023

The LCR is designed to promote short-term resilience of a bank’s liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days. As per the RBI guidelines minimum requirement of LCR for FY 2022-23 on a daily basis is 100%. The methodology for estimating the LCR is based on RBI guidelines updated on time to time.

The LCR is calculated by dividing the amount of high quality liquid unencumbered assets (HQLA) by the estimated net outflows over a 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed outflow factors to the various categories of liabilities (deposits viz Retail, Small Business customers (deposits upto Rs. 7.50 crore), unsecured and secured wholesale borrowings) as well as to undrawn commitments and derivatives-related exposures partially offset by inflows from assets maturing within 30 days.

The bank during the quarter ended March 31, 2023 had maintained average HQLA (after haircut) of Rs. 146614.58 crore. HQLA primarily includes SLR securities in excess of minimum Statutory Liquidity Ratio (SLR) requirement the extent allowed under the Marginal Standing Facility (MSF) and the Facility to Avail Liquidity for LCR (FALLCR). Additionally, cash balances in excess of cash reserve requirement with RBI and the overseas central banks form part of level 1 HQLA. The Daily average LCR of the Indian bank for the quarter ended March 31, 2023 was 147.55%.

The main drivers of LCR of the bank are sufficient high quality liquid assets (HQLAs) to meet liquidity needs of the bank at all times. The weighted cash outflows are primarily driven by unsecured wholesale funding which contributed 59.11% of the total weighted cash outflows. Retail deposits including deposits from small business customers contributed 12.44% of the total weighted cash outflows. The other contingent funding obligations primarily include bank guarantees (BGs) and letters of credit (LCs) issued on behalf of the Bank’s clients.

Bank has no significant counterparty (Deposit / Borrowing) as on 31.03.2023. The total contribution of the top 20 largest domestic depositors as on 31.03.2023 is 6.83% of the total deposits. The significant domestic product / instruments includes Savings deposit, Current deposit and Term deposit which are 36.21%, 5.77% and 58.01% of bank’s total deposits respectively, the funding from which are widely spread and there is no major concentration risk under Liquidity front for bank.

The Net Stable Funding Ratio (NSFR) is a significant component of the Basel III reforms. The NSFR promotes resilience over a longer-term time horizon by requiring banks to fund their activities with more stable sources of funding on an ongoing basis. As per the latest RBI Guidelines, NSFR is effective from October 01, 2021.

NSFR is defined as the amount of Available Stable Funding relative to the amount of Required Stable Funding.

Available Stable Funding (ASF)

----------------------------> 100%

Required Stable Funding (RSF)

Available Stable Funding (ASF)

ASF is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered (viz. up to 1 year) by the NSFR. The amount of ASF is measured, based on the broad characteristics of the relative stability of an institution’s funding sources, including the contractual maturity of its liabilities and the differences in the propensity of different types of funding providers to withdraw their funding

Required Stable Funding (RSF)

RSF is the amount of stable funding required based on the liquidity characteristics and residual maturities of various assets held by that institution as well as those of its off-balance sheet (OBS) exposures. RSF is computed by multiplying the outstanding amount of the specified component with the prescribed and associated RSF Factor.

The objective of NSFR is to ensure that banks maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. The 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.

Bank’s NSFR stands at 140.22% as on 31.12.2022 and 143.70% as on 31.03.2023. NSFR is above the minimum regulatory requirement of 100%. As on 31.03.2023, the Available Stable Funding (ASF) was Rs. 538643.53 crore and the Required Stable Funding (RSF) was Rs. 374841.55 crore.

Bank also computes Liquidity Coverage Ratio and prepares Structural Liquidity Statements on a daily basis to assess the liquidity needs of the Bank.

c. Sale and transfers to/from HTM category

The value of sales and transfers of securities to/from HTM category did not exceed 5 per cent of the book value of investments held in HTM category at the beginning of the year as per RBI guidelines.

• Loss on account of sale of securities from HTM category amounting to Rs 37.35 crores (previous year Rs 263.51 crores) has been debited from Profit and Loss Account.

• Shifting of securities:

(i) In the beginning of the year, the Bank shifted:

• SLR securities for Book Value of Rs. 26342.47 crores was shifted from HTM to AFS which has resulted in no additional provision & Non-SLR VCF securities for Book Value of Rs.2.05 crores from HTM category to AFS category and

• SLR securities for Book Value of Rs. 9851.93 crores from AFS category to HTM category which has resulted in adjustment of provision held against depreciation to reduce the book value to the market value.

• In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2022-23, a sum of Rs. 143.25 crores (previous year Rs. 184.00 crores) has been amortized and the same is reflected as a deduction from ‘Income on Investments’.

During the quarter ended March 31, 2023, the Bank has made additional provision of Rs. 363.61 Crores in certain stressed standard accounts in terms of RBI guidelines on ''Prudential Framework for resolution of stressed assets''.

e. Divergence in asset classification and provisioning

In our Bank, divergence are within threshold limit specified in RBI circular no DOR.ACC.REC.No. 45/21/4/018/2021-22 dated 30.08.2021, hence no disclosure on divergence in asset classification and provisioning for NPA is required with respect to RBI’s annual supervisory process for FY 2022.

f. Disclosure of transfer of loan exposures

In accordance with RBI Circular No DOR.STR.REC.51/21.04.048/2022-23 dated September 24, 2021 the details of loans transferred/ acquired during year ended March 31, 2023 are given below:

K. Covid Measures:

The spread of COVID-19 across the globe has resulted in declined economic activity and increased volatility in financial markets. In this situation, though the challenges continue to unfold, the Bank is gearing itself on all fronts to meet the same. The situation continues to be uncertain and the Bank is evaluating the situation on an ongoing basis. The extent to which the COVID-19 pandemic will impact the Bank’s results will depend on future developments, which are highly uncertain. Major challenges for the Bank would be from extended working capital cycle and reduced cash flows. The Bank’s capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.

e. Letter of comfort issued by the Bank:

During the year ended 31.03.2023 branches in India have not issued any letter of comfort for financing of imports. Outstanding as on 31.03.2023 is NIL. Hence no financial impact on outstanding LOC/LOU.

During the year ended 31.03.2023, Letter of Comfort issued by our foreign branches (Singapore and Colombo) is NIL and Outstanding as on 31.03.2023 is NIL.

In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank continues to maintain deposits from FCNR (b) resources to the extent of USD 43.00 Mio (equivalent to INR 353.33 crore) with Singapore Branch to meet the minimum Net Adjusted Capital funds requirement of the Branch.

We have issued LOU for Sri Lankan branches favouring Central Bank of Sri Lanka (CBSL) as per the mandatory requirement of CBSL. We do not anticipate any financial impact in immediate near future on account of LOU issued.

Bank has issued LOC for our IBU/ FBU in IFSC, SEZ Gift City, Gujarat Favouring International Financial Service Centres Authority (IFSCA) as per the mandatory requirement of IFSCA. Bank does not anticipate any financial impact in immediate near future on Account of LOC issued. This has been issued in the month of February 2022.

i. Unhedged foreign currency exposure

The Bank has in place a policy on managing credit risk arising out of Unhedged Foreign Currency Exposures of its borrowers. Where there is no natural hedge, forward cover is suggested to customers in respect of import/ export transactions. The forward cover will act as Unhedged risk mitigation on exchange risk. While sanctioning the facilities, Bank is ensuring that all the exposures (fund based and non-fund based including Letter of comfort/ Letter of undertaking) in foreign currencies are covered by forward cover. Request for considering waiver of forward cover if any is considered only at corporate office level. While reviewing the borrowal accounts, unhedged exposure are captured and impact is analysed in credit proposals.

c) Disclosures on risk exposure in derivatives i) Qualitative disclosures

Bank’s policy permits hedging of asset as well as liability using IRS. The hedging transactions are to be accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Outstanding swap contracts are marked to market.

All swap deals shall be based on the guidelines of International Swaps Dealers’ Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank’s policy permits doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Bank’s Board.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination

of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits, if any, are ignored.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

ii) Quantitative disclosures

The Bank is active in the following products under derivatives:

• Currency Futures

12. Disclosure of penalties imposed by the Reserve Bank of India12.1 Disclosure of penalties imposed by the RBI:

During the year RBI has imposed a penalty of Rs.0.73 Cr (257 instances), of which Rs.0.20 Cr (118 instances) is related to discrepancies in soiled notes remittances, Rs. 0.33 Cr (69 instances) is due to delayed reporting in eKuber and Rs.0.20 Cr (70 instances) is due to irregularities observed in RBI inspection.

12.2 Disclosure of penalties imposed by the GOI / State Govt.:

During the year, Govt. has imposed penalty of 0.11 Cr (11 instances) related to delay in remittances to Govt accounts.

14. Employee Benefits (AS 15)i. Defined Contribution Plans:

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust. During the financial year 2022-23, the Bank has contributed '' 0.91 crores

(previous year '' 1.14 crores).

New Pension Scheme (NPS) is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre-determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account. During the financial year 2022-23, the Bank has contributed '' 288.87 crores (previous year '' 255.18 crores)

ii. Defined Benefit Plans:

The summarized position of Post-employment benefits and long term employee benefits recognised in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard-15 (Revised) are as under:

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market and in tandem with Funding Guidelines for Superannuation Schemes communicated by IBA. Such estimates are very long term and are not based on limited past experience / immediate future. Empirical evidence also suggests that in very long term, consistent high salary growth rates are not possible.

iii. Other Long Term Employee Benefits

Amount of ''73.65 crore (previous year ''48.43 crore) has been provided towards Long Term Employee Benefits as per the actuarial valuation by the independent Actuary appointed by the Bank and is included under the head “Payments to and Provisions for Employees” in Profit and Loss Account.

15. Property, Plant and Equipment (AS-10)

15.1 The premises of the Bank include land and building are stated at revalued amount. In Financial Year 2021-22, bank has revalued immovable properties based on the reports obtained from the external independent valuer. The closing balance of revaluation reserve as on 31.03.2023 (Net of amount transferred to revenue reserve) is Rs 6106.90 crore (Previous year Rs 6211.02 crore).

As per AS-10 in the case of assets, which have been revalued, the depreciation is provided on the revalued amount and the incremental depreciation attributable to the revalued amount is adjusted to the ‘Revaluation Reserve.

For the year 2022-23, depreciation amounting to Rs.110.87 crores (Previous Year Rs.147.27 crore) was charged under expenditure and depreciation on revalued portion amounting to Rs. 104.12 Crore (previous year Rs. 143.42 crore) is transferred to Revenue Reserve from Revaluation Reserve.

15.2 Premises include 9 (7 2*) properties original costing Rs. 8.38 crores having revalued book value of Rs. 65.98 crores (Previous year Rs. 66.74 Crore), net of depreciation of Rs.0.76 Crore (Previous year Rs.1.46 crore) for which registration formalities are pending

*Property at Hyderabad costing Rs.1.61 Crore, where clearance is pending before ULC authority and at Chennai costing Rs.2.32 Crore, where interim stay has been granted by DRAT.

16. Lease (AS 19)

a) The properties taken on lease / rental basis are renewable / cancellable at the option of the Bank.

B) The leases entered into by the Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed calendar month notice in writing.

C) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates. The lease rent recognized during the year is Rs. 399.08 Crore. (Previous year Rs. 417.00 Cr).

d) Finance lease

An asset acquired on finance lease comprises plant and equipment and land. The leases have a primary period, which is fixed and non-cancellable. The bank has an option to renew the lease for a secondary period.

17. Indian Bank Trust for Rural Development

IBTRD has been set up by the Bank in 22.09.2008 to pay focused attention on Rural Development initiatives.As per GoI notification, erstwhile Allahabad Bank has been amalgamated with Indian Bank w.e.f. 01.04.2020, and the process of amalgamation of IBTRD and Allahabad Bank Rural Development Trust (ABRDT) is under progress and all the assets and liabilities of ABRDT will be transferred to IBTRD. The focus area of the Trust has been selfemployment training and imparting Financial Literacy at both district and block level.

As per the direction of Ministry of Rural Development (MoRD), GoI, our Bank has established Rural Self-Employment Training Institutes (RSETIs) in the name of Indian Bank Self-Employment Training Institutes (INDSETIs) through the Trust to impart self-employment training to rural youth.

18. Legal

Contingent liabilities include an A/c M/s Nimbus Communication Ltd., Guarantees were issued by Consortium Banks favouring BCCI aggregating to Rs.1602.44 Crore. BCCI filed suit against Consortium Banks claiming guarantee liability wherein claimed aggregating to Rs.406.47 Cr was made against the Bank. In the suit, conditional leave to defend was granted on making payment of Rs.400 crores, wherein our Bank’s share is Rs.100 crores. Remittance of our Bank’s share of Rs.100 crores was made with the Prothonotary and Senior Master of the Hon’ble High Court of Bombay. The summary suit is pending adjudication before Hon’ble High Court of Bombay.

For this claim against the Bank by BCCI, Bank is having a sum of Rs.15.94 Crore as provision under the head ‘Provision for Other Contingencies’ after taking into consideration a sum of Rs.84.06 Crore held as security-margin money as on 31.03.2023 and a sum of Rs.15.32 Crores as provision under the head ‘Contingent Fund-Claim made against the bank’. Total provision aggregating to Rs. 31.26 Crore.

19. Accounting standard-17 "Segment Reporting"

1. Segment Identification

I. Primary (Business Segment)

The following are the primary segments of the Bank:

- Treasury

- Corporate / Wholesale Banking

- Retail Banking*

- Other Banking Business.

* Further, the Retail Banking segment has been sub-divided into Digital Banking and Other Retail Banking Segment in terms of RBI Circular DOR.AUT.REC.12/22.01.00l/2022-23 dated April 7, 2022.

The present accounting and information system of the Bank does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational 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 Group, Commercial Clients Group and Stressed Assets Resolution Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

iii. Retail Banking -

(i) Digital Banking - In compliance with the RBI Circular dated April 7, 2022, the bank has commenced operations at three DBUs during the year ended March 31, 2023. The segment information pertains to the said DBUs’ operations.

(ii) Other Retail Banking - This Segment comprises of retail branches, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with these branches. 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.

II. Secondary (Geographical Segment)

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

ii. Foreign Operations - Branches/Offices having operations outside India and off-shore Banking units having operations in India.

III. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of segment assets in each segment/ratio of directly attributable expenses. The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

22. Accounting for taxes on income (AS 22):

a) Current Tax: Provision for income tax for domestic operations made during the current year amounts to Rs. 1178.64 Crore including provision for tax on foreign branches relating to earlier years made in the current year amounts to Rs. 8.34 Crore. Provision for income tax made in foreign branches during the current year amounts to Rs. 15.74 Crore. The current tax has been calculated in accordance with the provisions of Income Tax Act 1961.

The disputed income tax demand paid as at 31.03.2023 was Rs. 3953.36 Crore (previous year 3953.36 Crore). The same has also been included under contingent liabilities relating to Income Tax of Rs. 8846.59 Crore (previous year Rs. 9187.03 Crores) relating to disputed tax matters as at 31.03.2023. No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favorable decisions in Bank’s own case except in case of income relating to foreign branches for the earlier periods amounting to Rs. 8.34 Crores for which Bank has provided during the current year.

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

I. As per the directions of RBI vide their letter DBR.BP.BC.No.76/21.07.001/2015-16 dated 11.02.2016, Banks shall comply with Ind AS for standalone and consolidated financial statements for accounting periods beginning from April 1, 2018 onwards with comparative figures for the preceding period ending March 31, 2018

II. RBI also advised the Banks to prepare Proforma Financial Statements as per Ind AS for the half year ended 30.09.2016 with transition date as 01.04.2016 and the same was prepared and submitted to RBI. Similarly proforma Ind AS financials for the quarter ended 30.06.2017 was also submitted to RBI.

III. Subsequently, RBI advised that Banks shall submit Ind AS proforma financial statement for every quarter starting from quarter ending 30th June 2018 onwards. The same has been duly complied with.

IV. From F. Y. 2021-22 onwards, RBI advised to reduce the frequency of Ind AS proforma financial statement submission from quarterly to half yearly. The same has been complied with. The Audit Committee of the Board and Board of Directors have been periodically apprised the progress in this regard.

V. As per RBI notification DBR.BP.BC.No.29/21.07.001/2018-19 dated 22nd March 2019, implementation of Ind AS in Banks has been deferred till further notice. However, submission of proforma Ind AS financials to RBI has been continued and the Bank is complying with the same.

i) None of the item under the subhead “Other expenditure” under the head “Schedule 16-Operating Expenses” exceeds one per cent of total income.

ii) None of the item under the Schedule 5(IV)-Other Liabilities and Provisions-“Others (including provisions)” or Schedule 11(VI)-Other Assets-“Others” exceeds one per cent of the total assets.

j) Reconciliation and Adjustments

I. Reconciliation of Inter Branch Account is completed up to 31.03.2023. except few old entries. The Bank through various effective steps has achieved reduction in the outstanding.

II. In view of the net credit position in respect of un-reconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2023, no provision is required. However, the bank is maintaining 100% provisions on the gross debit balance in inter branch account amounting to Rs. 228.01 Crore including fresh provision of Rs. 5.35 Crore made during the year 2022-23)

III. Old outstanding entries, in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

IV. Balancing of subsidiary/ ledgers, registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above on the accounts will not be significant.

V. Dividend of Rs. 8.60 per equity share i.e. 86% to the paid up capital is proposed by the Bank for FY 202223.

VI. As per information available with the Bank, there is no outstanding dues payable by the Bank of MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMED Act, 2006 and there have been no reported cases of accepted liability of delayed payments of principal amount or interest thereon for such parties during the year.

Previous year’s figures have been regrouped/reclassified, wherever necessary, to confirm to current year’s classification.


Mar 31, 2022

Note: The average weighted and un-weighted amounts are calculated taking simple average based on daily observations for the respective quarter.

Un-weighted values are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows) except where otherwise mentioned in the circular and LCR template.

Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows)

Adjusted values calculated after the application of both (i) haircuts and inflow and outflow rates and (ii) any applicable caps (i.e. cap on Level 2B and Level 2 assets for HQLA and cap on inflows).

The LCR is designed to promote short-term resilience of a bank''s liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days. As per the RBI guidelines minimum requirement of LCR for FY 2021-22 on a daily basis is 100%. The methodology for estimating the LCR is based on RBI guidelines updated on time to time.

The LCR is calculated by dividing the amount of high quality liquid unencumbered assets (HQLA) by the estimated net outflows over a 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed outflow factors to the various categories of liabilities (deposits viz Retail, Small Business customers (deposits upto '' 7.50 crore), unsecured and secured wholesale borrowings) as well as to undrawn commitments and derivatives-related exposures partially offset by inflows from assets maturing within 30 days.

The bank during the quarter ended March 31, 2022 had maintained average HQLA (after haircut) of Rs.158132.09 crore. HQLA primarily includes SLR securities in excess of minimum Statutory Liquidity Ratio (SLR) requirement the extent allowed under the Marginal Standing Facility (MSF) and the Facility to Avail Liquidity for LCR (FALLCR). Additionally, cash balances in excess of cash reserve requirement with RBI and the overseas central banks form part of level 1 HQLA. The Daily average LCR of the Indian bank for the quarter ended March 31,2022 was 181.80%.

The main drivers of LCR of the bank are sufficient high quality liquid assets (HQLAs) to meet liquidity needs of the bank at all times. The weighted cash outflows are primarily driven by unsecured wholesale funding which contributed 59.61% of the total weighted cash outflows. Retail deposits including deposits from small business customers contributed 13.81% of the total weighted cash outflows. The other contingent funding obligations primarily include bank guarantees (BGs) and letters of credit (LCs) issued on behalf of the Bank''s clients.

Bank has one significant counterparty (Deposit / Borrowing) as on 31.03.2022 contributing 1.27% of total deposits. The total contribution of the top 20 largest domestic depositors as on 31.03.2022 is 6.69% of the total deposits. The significant domestic product / instruments includes Savings deposit, Current deposit and Term deposit which are 31.44%, 5.47% and 51.47% of bank''s total liability respectively, the funding from which are widely spread and there is no concentration risk for the bank.

The Net Stable Funding Ratio (NSFR) is a significant component of the Basel III reforms. The NSFR promotes resilience over a longer-term time horizon by requiring banks to fund their activities with more stable sources of funding on an ongoing basis. As per the latest RBI Guidelines, NSFR is effective from October 01,2021.

NSFR is defined as the amount ofAvailable Stable Funding relative to the amount of Required Stable Funding.

Available Stable Funding (ASF)

- > 100%

Required Stable Funding (RSF)

Available Stable Funding (ASF)

ASF is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered (viz. up to 1 year) by the NSFR. The amount ofASF is measured, based on the broad characteristics of the relative stability of an institution''s funding sources, including the contractual maturity of its liabilities and the differences in the propensity of different types of funding providers to withdraw their funding

Required Stable Funding (RSF)

RSF is the amount of stable funding required based on the liquidity characteristics and residual maturities of various assets held by that institution as well as those of its off-balance sheet (OBS) exposures. RSF is computed by multiplying the outstanding amount of the specified component with the prescribed and associated RSF Factor.

The objective of NSFR is to ensure that banks maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. The 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.

Bank''s NSFR stands at 155.66% as on 31.12.2021 and 160.23% as on 31.03.2022. NSFR is above the minimum regulatory requirement of 100%. As on 31.03.2022, the Available Stable Funding (ASF) was Rs. 5,39,132 crore and the Required Stable Funding (RSF) was Rs. 3,36,469 crore.

Bank also computes Liquidity Coverage Ratio and prepares Structural Liquidity Statements on a daily basis to assess the liquidity needs of the Bank.

c. Sale and transfers to/from HTM category

The value of sales and transfers of securities to/from HTM category did not exceed 5 per cent of the book value of investments held in HTM category at the beginning of the year as per RBI guidelines.

• Profit on account of sale of securities from HTM category amounting to Rs 263.51 crores (previous year Rs 85.00 crores) has been taken to Profit and Loss Account and thereafter an amount of Rs.147.90 (previous year Rs.47.71 crores) was transferred to Capital Reserve Account (net of taxes and amount required to be transferred to statutory reserves).

• Shifting of securities:

(i) In the beginning of the year, the Bank shifted:

• SLR securities for Book Value of Rs.24030.56 crores was shifted from HTM to AFS which has resulted in no additional provision & Non-SLRVCF securities for Book Value of Rs.3.18 crores from HTM category toAFS category and

• SLR securities for Book Value of Rs.5623.23 crores from AFS category to HTM category which has resulted in adjustment of provision held against depreciation to reduce the book value to the market value.

• In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2021-22, a sum of Rs 184 crores (previous year Rs 261.43 crores) has been amortized and the same is reflected as a deduction from ''Income on Investments''.

l. Covid Measures:

The spread of COVID-19 across the globe has resulted in declined economic activity and increased volatility in financial markets. In this situation, though the challenges continue to unfold, the Bank is gearing itself on all fronts to meet the same. The situation continues to be uncertain and the Bank is evaluating the situation on an ongoing basis. The extent to which the COVID-19 pandemic will impact the Bank''s results will depend on future developments, which are highly uncertain. Major challenges for the Bank would be from extended working capital cycle and reduced cash flows. The Bank''s capital and liquidity position is strong and would continue to be the focus area for the Bank during this period.

e. Letter of comfort issued by the Bank:

During the year ended 31.03.2022 branches in India have not issued any letter of comfort for financing of imports. Outstanding as on 31.03.2022is NIL. Hence no financial impact on outstanding LOC/LOU

During the year ended 31.03.2022, Letter of Comfort issued by our foreign branches (Singapore, Sri Lankan Branches and GIFT City) is NILand Outstanding as on 31.03.2022 is NIL

In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank continues to maintain deposits from FCNR (B) resources to the extent of USD 43.00 Mio (equivalent to INR 325.90 crore) with Singapore Branch to meet the minimum NetAdjusted Capital funds requirement of the Branch.

Bank has issued LOU for Sri Lankan branches favouring Central Bank of Sri Lanka (CBSL) as per the mandatory requirement of CBSL. Bank does not anticipate any financial impact in immediate near future on account of LOU issued.

Bank has issued LOC for our IBU/ FBU in IFSC, SEZ Gift City, Gujarat Favouring International Financial Service Centres Authority (IFSCA) as per the mandatory requirement of IFSCA. Bank does not anticipate any financial impact in immediate near future on Account of LOC issued. This has been issued in the month of February 2022.

i. Unhedged foreign currency exposure

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers. Where there is no natural hedge, forward cover is suggested to customers in respect of import/export transactions. The forward cover will act as Unhedged risk mitigation on exchange risk. While sanctioning the facilities, bank is ensuring that all the exposures (fund based and non fund based including Letter of Comfort / Letter of Undertaking) in foreign currencies are covered by forward cover. Request for considering waiver of forward cover if any is considered only at corporate office level. While reviewing the borrowal accounts hedged and unhedged exposure are captured and impact is analyzed in credit proposals.

The Bank has provided a provision of'' 3.88 Crore and Capital of'' 16.56 Crore for the year ended 31st March 2022 on Unhedged Foreign Currency Exposure to their constituents in terms of RBI Circular dated January 15, 2014.

c) Disclosures on Risk Exposure in Derivativesi) Qualitative Disclosures:

Bank''s policy permits hedging of asset as well as liability using IRS. The hedging transactions are to be accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Outstanding swap contracts are marked to market.

All swap deals shall be based on the guidelines of International Swaps Dealers'' Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank''s policy permits doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Bank''s Board.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits, if any, are ignored.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

ii) Quantitative disclosures

The Bank is active in the following products under derivatives:-O Currency Futures

12. Disclosure of penalties imposed by the Reserve Bank of India

During the year RBI has imposed a penalty of Rs.265.44 lacs (163 entries), of which

- Rs.24.41 lacs (149 entries) related to Currency Chest Operations for shortages, forgeries in soiled notes remittances, delayed / wrong reporting in eKuber / Non adherence to RBI Guidelines;

- Rs.6.98 lacs (1 entry) is due to delay in NEFT credits,

- Rs.0.50 lacs (1 entry) due to breach of peer group average on customer complaints related to digital transactions

- Rs.6.70lacs (8 entries) due to Non Replenishment ofATM

- Rs.100.00 lacs (1 entry) due to Contravention of RBI directions on Bank Finance to NBFC

- Rs.68.37 lacs (1 entry) imposed by NPCI for delay in NACH returns

- Rs.58.48 lacs (2 entries) imposed by NPCI for delay in completion of reconciliation and updation of TCC/DRC entries in NPCI portal

i. Defined Contribution Plans:

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust. During the financial year 2021-22, the Bank has contributed '' 1.14 crores (previous year'' 1.07 crores).

New Pension Scheme (NPS) is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre-determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account. During the financial year 2021-22, the Bank has contributed f. 255.18 crores (previous year'' 153.31 crores).

ii. Defined Benefit Plans:

The summarized position of Post-employment benefits and long term employee benefits recognised in the Profit & Loss Account and Balance Sheet as required in accordance withAccounting Standard -15 (Revised) areas under:

The following table sets out the basis of the Defined Benefit Pension Plan and Gratuity Plan as per the actuarial valuation by the independent Actuary appointed by the Bank

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market and in tandem with Funding Guidelines for Superannuation Schemes communicated by IBA. Such estimates are very long term and are not based on limited past experience / immediate future. Empirical evidence also suggests that in very long term, consistent high salary growth rates are not possible.

Amount of'' 48.43 crore (previous year'' 50.12 crore) has been provided towards Long Term Employee Benefits as per the actuarial valuation by the independent Actuary appointed by the Bank and is included under the head "Payments to and Provisions for Employees" in Profit and LossAccount.

The Bank has provided for the entire additional liability of Rs.464.59 Crore during the year ended 31.03.2022, on account of revision in family pension for employees covered under XI Bi-partite settlement and Joint note dated November 11th 2020. There is no unamortized expenditure in the balance sheet on account of family pension.

15. Property, Plant and Equipment (AS-10)FixedAssets

1.1. The premises of the Bank include land and building are stated at revalued amount. The Bank revalued its premises in the financial year 2021-22 as on 28.02.2022 at fair market value determined by the approved external valuers. There is an increase of Rs.599.48 Crore in the amount of revaluation of premises, which has been credited to "Revaluation Reserve Account". For the year 2021-22, depreciation amounting to Rs.147.27 crores (Previous Year Rs.149.63 crore) was charged under expenditure and depreciation on revalued portion amounting to Rs.143.42 Crore (previous year Rs.142.87 crore) is adjusted against the "Revaluation Reserve account.

1.2. Registration formalities are yet to be completed for the following properties: -

Premises include 9 (7 2*) properties Original costing T.8.38 Crore (Previous year - 9 (7 2*) Properties costing Rs. 8.38 Crore), having original / revalued book value of Rs. 66.74 Crore (Previous year - Rs. 59.74 Crore), net of depreciation at Rs. 1.46 Crore (Previous year - Rs. 1.40 Crore) for which registration formalities are pending.

* Property at Hyderabad costing Rs.1.61 Crore, where clearance is pending before ULC authority and at Chennai Costing Rs.2.32 Crore, where interim stay has been granted by DRAT.

16. Lease (AS 19)

A) The properties taken on lease / rental basis are renewable / cancellable at the option of the Bank.

B) The leases entered into by the Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed calendar month notice in writing.

C) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates. The lease rent recognized during the year is Rs.417.00 Crore. (Previous year Rs. 440.41 Cr).

D) Finance lease

An asset acquired on finance lease comprises plant and equipment and land. The leases have a primary period, which is fixed and non-cancellable. The bank has an option to renew the lease for a secondary period.

The minimum lease rentals and the present value of minimum lease payments in respect of assets acquired under finance leases are as follows:

17. Indian BankTrustfor Rural Development

Indian Bank Trust for Rural Development (IBTRD) has been set up by the Bank on 22.09.2008 to exclusively focus on rural development and accomplish better results by coordinating with various other players / agencies who are also engaged in the development of rural areas and erstwhile Allahabad Bank has Allahabad Bank Rural Development Trust (ABRDT) for the same purpose.

As perGol notification, erstwhile Allahabad Bank has been amalgamated with Indian Bank w.e.f. 01.04.2020.

The Trust accounts of both IBTRD and ABRDT are duly audited by qualified Chartered Accountants. The process of amalgamation of Indian Bank Trust for Rural Development (IBTRD) and Allahabad Bank Rural Development Trust (ABRDT) is under progress and all the assets and liabilities of ABTRD will be transferred to IBTRD.

Currently, IBTRD is running a total of 37 Rural Self-Employment Training Institutes (RSETIs), 42 Financial Literacy Centres (FLCs) and 59 Centres for Financial Literacy (CFLs) with pan-India presence.

The books of account of the Trust are being subjected to audit, independently by the Chartered Accountants appointed by the Trust.

18. Legal

Contingent liabilities include an A/c M/s Nimbus Communication Ltd., Guarantees were issued by Consortium Banks favouring BCCI. BCCI filed suit against Consortium Banks claiming guarantee liability. In the suit, conditional leave to defend was granted on making payment of'' 400 crores, wherein our Bank share is '' 100 crore. Remittance of our Bank''s share of '' 100 crore was made with the Prothonotary and Senior Master of the Hon''ble High Court of Bombay. The summary suit is pending adjudication before Hon''ble High Court of Bombay.

For this claim against the Bank by BCCI, Bank is having a sum of'' 32.44 Crore as provision under the head ''Provision for Other Contingencies'' and a sum of'' 15.32 Crore as provision under the head ''Contingent Fund - Claim made against the bank'', total provision aggregating to ''47.76 Crore, after taking into consideration a sum of'' 80.22 crore held as security -margin money as on 31.03.2022.

19. Accounting standard-17 "Segment Reporting” a. Segment Identification

I. Primary (Business Segment)

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 does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational 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 Group, Commercial Clients Group and Stressed Assets Resolution Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

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. 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.

II. Secondary (Geographical Segment)

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

ii. Foreign Operations - Branches/Offices having operations outside India and offshore Banking units having operations in India.

III. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of segment assets in each segment/ratio of directly attributable expenses. The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

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 Banker-Customer relationship have not been disclosed including those with Key Management Personnel and relatives of Key Management Personnel.

22. ACCOUNTING FORTAXES ON INCOME (AS 22)

a) Current Tax: During the current year, considering the accumulated losses of erstwhile Allahabad Bank, Bank has not created provision for income tax for domestic operations for the current year. Provision for income tax made in foreign branches amounting to Rs.12.85 Crore during the current year. Provision for tax on foreign branches relating to earlier years made in the current year amounts to Rs.275 Crores. The current tax has been calculated in accordance with the provisions of Income TaxAct 1961.

b) Deferred Tax: The Bank has a net DTA of Rs.3872.91 Crore (Previous year net DTA of Rs.2844.49 Crore), which comprises of Deferred Tax Liabilities (DTL) of Rs.977.15 Crore (Previous Year Rs.949.89 Crore) included under ''Other liabilities and Provisions'' and Deferred Tax Assets (DTA) of Rs.4850.06 Crore (Previous Year Rs.3794.38 Crore) included under ''otherAssets.

The disputed income tax demand paid as at 31.03.2022 was Rs.3953.36 Crore (previous year 3953.36 Crore). The same has also been included under contingent liabilities relating to Income Tax of Rs.9187.03 Crore (previous year 7584.17 Crore) relating to disputed tax matters as at 31.03.2022. No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favorable decisions in Bank''s own case except in case of income relating to foreign branches for earlier periods amounting to Rs.275 Crore for which Bank has provided during the current year.

II. RBI also advised the Banks to prepare Proforma Financial Statements as per Ind AS for the half year ended 30.09.2016 with transition date as 01.04.2016 and the same was prepared and submitted to RBI. Similarly proforma Ind AS financials for the quarter ended 30.06.2017 was also submitted to RBI.

III. Subsequently, RBI advised that Banks shall submit Ind AS proforma financial statement for every quarter starting from quarter ending 30th June 2018 onwards. The same has been duly complied with.

IV. From F.Y 2021-22 onwards, RBI advised to reduce the frequency of Ind AS proforma financial statement submission from quarterly to half yearly. The same has been complied with. The Audit Committee of the Board and Board of Directors have been periodically appraised the progress in this regard.

V. As per RBI notification DBR.BP.BC.No.29/21.07.001/2018-19 dated 22nd March 2019, implementation of Ind AS in Banks has been deferred till further notice. However, submission of proforma Ind AS financials to RBI has been continued and the Bank is complying with the same.

j) Reconciliation andAdjustments

I. Reconciliation of Inter Branch Account is completed up to 31.03.2022. The Bank through various effective steps has achieved reduction in the old outstanding entries in IBGA. Adjustments of the remaining outstanding entries are in progress. As per the Management, 5747 IBGA credit entries aggregating to Rs. 4.86 crores are outstanding pertaining to period before 01.03.2009.

II. In view of the net credit position in respect of un-reconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2022, no provision is required.

III. Old outstanding entries, in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

IV. Balancing of subsidiary/ledgers, registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above on the accounts will not be significant.

V. As per information available with the Bank, there is no outstanding dues payable by the Bank to MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMED Act, 2006 and there have been no reported cases of accepted liability of delayed payments of principal amount or interest thereon for such parties during the year.

k) Adividend of'' 6.50 per equity share i.e. 65% to the paid up capital is proposed by the Bank for FY 2021-22.

l) Previous year''s figures have been regrouped / reclassified, wherever necessary, to conform to current year''s figure.


Mar 31, 2019

1. INVESTMENTS

1.1. In accordance with the RBI guidelines, the Bank’s domestic investment portfolio has been classified into three categories. The figures as at 31.03.19 are given hereunder:

1.1.2 Sale and Transfers to/from HTM Category:

The value of sales and transfers of securities to / from HTM category did not exceed 5 per cent of the book value of investments held in HTM category at the beginning of the year as per RBI guidelines.

- Profit on account of sale of securities from HTM category amounting to Rs. 83.60 crores (previous year Rs. 71.70 crores) has been taken to Profit and Loss Account and thereafter an amount of Rs. 41.00 crores (previous year Rs. 35.20 crores) was transferred to Capital Reserve Account (net of taxes and the amount required to be transferred to statutory reserves).

- Shifting of securities

(i) In the beginning of the year, the Bank shifted

SLR Securities for Book Value of Rs. 2432.02 crores which has resulted in no additional provision & Non-SLR VCF Securities for Book Value ofRs. 4.69 crores with a depreciation provision ofRs. 0.10 cr from HTM category to AFS category and SLR Securities for Book Value ofRs. 7262.27 crores from AFS category to HTM category which has resulted in adjustment of provision held against depreciation forRs. 535.73 crores to reduce the book value to the market value.

(ii) In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2018-19, a sum of Rs.97.18 crore (previous year Rs.108.64 crore) has been amortized and the same is reflected as a deduction from ‘Income on Investments’.

2. DERIVATIVES

2.1 Forward RateAgreements / Interest Rate Swaps (IRS)

The Bank has not entered into Derivative contracts of the nature of Forward Rate Agreements/Interest Rate Swaps (IRS) to hedge on balance sheet assets during the financial year 2018-19

2.2 Disclosures on Risk Exposure in Derivatives

2.2.1 Qualitative Disclosures:

Bank’s policy permits hedging of asset as well as liability using IRS. The hedging transactions are to be accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Outstanding swap contracts are marked to market.

All swap deals shall be based on the guidelines of International Swaps Dealers’Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank’s policy permits doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Bank’s Board.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits, if any, are ignored.

Exchange traded FX Derivatives i.e. Currency Futures, are valued atthe Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

2.2.2 Quantitative Disclosures

The Bank is active in the following products under derivatives:-

- Overnight Index Swaps (OIS)

- Currency Futures

The outstanding OIS position as on 31st March 2019 was Rs.25.00 crores (previous year Rs. 50.00 crores). Outstanding position in Currency futures as on 31.03.2019 is Rs. NIL crores and previous year was Rs. 620.93 crores

3.1.1 MSME DISCLOSURE

RBI vide Circular no DBR.No.BP.BC.108/21.04.048/2017-18 dated June 6,2018 permitted banks to continue the exposure to MSME borrowers to be classified as standard assets where the dues between September 1, 2017 and December31, 2018 are paid notlater than 180 days or less from their respective original due dates. Accordingly, the Bank has retained advances ofRs. 38.29 crore as standard asset as on March 31,2019. In accordance with the provisions of the circular, the Bank has not recognized Interest income ofRs. 1.86 crore and is maintaining a standard asset provision ofRs. 1.91 crore @ 5% as on March 31,2019 in respect of such accounts.

In addition to the above, based on RBI Circular DBR No: BP.BC 18/21.04.048/2018-19 dated January 1, 2019 the Bank has restructured MSME accounts as detailed below:

Bank has treated these accounts as standard assets as on 31.03.2019 and maintained provision on such Standard asset @ 5.25% amounting to Rs. 47.20 crore.

COUNTRY RISK MANAGEMENT:

The Bank has analyzed its net funded exposure to various countries as on 31.03.2019 and such exposure to countries other than Singapore is well within the stipulation of 1% of the total assets of the Bank. In respect of Singapore, which is classified under “Insignificant” risk category by ECGC Ltd, a provision of Rs. 4.32 Cr ( Previous year Rs. 3.07 Cr for ‘Insignificant’ risk category) is available.

4.1 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) if any, exceeded by the Bank

4.2 Unsecured Advances

Out of the total unsecured advances, advances secured by intangible securities such as rights, licenses, authority, etc. charged to the bank as collateral in respect of projects (including infrastructure projects) is NIL. Estimated total value of such intangible collateral is NIL

The disputed income tax demand paid as at 31.03.2019 was Rs. 4348.52 Crores (previous year Rs. 3286.77 Crores). The same has also been included under contingent liabilities ofRs. 5704.41 Crores (previous yearRs. 4031.84 Crores) relating to disputed tax matters as at 31.03.2019. No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favorable decisions in Banks’ own case.

5 Disclosure of Penalties imposed by RBI

During the yearRBI has imposed penalty ofRs. 9.07lakhs (114entries) (Previous Year ending 2017-18 ? 9.88 lakhs-84 entries) for shortages, forgeries in soiled notes remittances and delayed/wrong reporting in ICCOMS/non adherence to RBI guidelines by the currency Chest operations.

Reserve Bank of India imposed a penalty of Rs. 4 Crore on the Bank for non-compliance of directions issued vide RBI circular DBS.(CO).CSITE/4493/31.01.015/2017-18 dated 20.02.2018 on “Time bound Implementation & strengthening of SWIFT - related operstional controls”. The Bank has paid the penalty in line with RBI directions. A detailed note has been placed to the board of Directors on the above. ALLRBI directions on SWIFT related operational controls have been complied with.

5.1 Fixed Assets

5.1.1 The premises of the Bank include land and are stated at revalued amount. The Bank revalued its premises in the financial year 2018-19 at fair market value determined by the approved external valuers. There is an increase ofRs. 555.14 Crore in the amount of revaluation of premises, which has been credited to “Revaluation Reserve Account”. For the year 2018-19, depreciation amounting to Rs. 85.34 crores (Previous YearRs. 82.08 crore) was charged under expenditure and depreciation on revalued portion amounting to Rs. 81.55 Crore (previous year Rs. 78.98 crore) is adjusted against the “Revaluation Reserve account’. As per AS 10 Standard, depreciation on revalued assets amounting to Rs. 81.55 crores was also charged under expenditure for the year 2018-19. The same was adjusted against Revaluation Reserve to the credit of Revenue Reserve A/c.

5.1.2 Premises include 4 properties costing Rs. 3.59 crores (Previous year 4 properties costing Rs.3.59 crores) having revalued book value, net of depreciation atRs. 49.22 Crore (Previous yearRs. 52.28 crore) for which registration formalities are pending.

6.1 Property, Plant and Equipment (AS-10)

During the year, the depreciation on revalued portion of the fixed assets is charged to profit and loss account as against charge to revaluation reserves during the previous financial years to comply with the change in Accounting Standard (AS-10). This has the effect of increase in the expenses by Rs. 81.55 crore and lowering the net profit by Rs. 81.55 crore.

6.2 EMPLOYEE BENEFITS(AS15)

6.2.1 Defined Contribution Plans:

Provident fund is a statutory obligation and in the case of Contributory Provident Fund Optees, the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contributions are charged to Profit and Loss Account. The fund is managed by Indian Bank Staff Provident Fund Trust. During the financial year 2018-19, the Bank has contributed Rs. 0.70 crores (previous yearRs. 0.81 crore).

New Pension Scheme (NPS) is applicable to employees who joined bank on or after 01.04.2010 and it is a defined contribution scheme. Under NPS the Bank pays fixed contribution at pre determined rate and the obligation of the Bank is limited to such fixed contribution. The contribution is charged to Profit and Loss Account. During the financial year 2018-19, the Bank has contributed Rs. 49.71 crores (previous yearRs. 45.95 crores).

6.2.2 Defined Benefit Plans:

The summarized position of Post-employment benefits and long term employee benefits recognised in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard -15 (Revised) are as under:

The following table sets out the basis of the Defined Benefit Pension Plan and Gratuity Plan as per the actuarial valuation by the independent Actuary appointed by the Bank

* Expected Rate of return on Plan Assets not applicable for Leave encashment.

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market and in tandem with Funding Guidelines for Superannuation Schemes communicated by IBA. Such estimates are very longterm and are not based on limited past experience/immediate future. Empirical evidence also suggests that in very long term, consistent high salary growth rates are not possible.

The liabilities of leave encashment are unfunded.

6.2.3 Other Long Term Employee Benefits

Amount ofRs. 2.19 crore (previous yearRs. 1.74 crore) has been provided towards Long Term Employee Benefits as per the actuarial valuation by the independent Actuary appointed by the Bank and is included under the head “Payments to and Provisions for Employees” in Profit and LossAccount.

Details of additional Provisions made/(written back) for various long Term Employee Benefits during the year:

6.3 RELATED PARTYDISCLOSURES (AS18)

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

a) Subsidiaries:

i. Ind BankHousing Ltd.

ii. Indbank Merchant Banking Services Ltd.

b) Associates: (Regional Rural Banks)

i) Pallavan Grama Bank

ii) Saptagiri Grameena Bank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri KishorKharat Managing Director & Chief Executive Officer(upto 13.08.2018)

Ms. Padmaja Chunduru Managing Director & Chief Executive Officer (Wef 21.09.2018)

Shri AS Rajeev Executive Director (upto 30.11.2018)

Shri M K Bhattacharya Executive Director (w.e.f. 18.02.2017)

Shri Shenoy Vishwanath V Executive Director (w e f 01.12.2018)

Parties with whom transactions were entered 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 Banker-Customer relationship have not been disclosed including those with Key Management Personnel and relatives of Key Management Personnel.

6.4 Leases (AS 19)

a) The properties taken on lease/rental basis are renewable/cancellable atthe option of the Bank.

b) The leases entered into by the Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed calendar month notice in writing.

c) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates. The lease rent recognized during the year is Rs.214.63 Crores (Previous year Rs.195.94 Crore).

d) Finance Lease

An asset acquired on finance lease comprises land and building. The leases have a primary period, which is fixed and non-cancellable. The Bank has an option to renew the lease for a secondary period.

The minimum lease rentals and the present value of minimum lease payments in respect of assets acquired under finance lease are as follows:

Note: During the Financial year 2018-19, Bank’s Board has approved to issue 4 crore equity shares to its employees under Employees Share Purchase Scheme in multiple trenches upto 31.03.2021 with a discount upto a maximum of 25%. Necessary approval from SEBI /Stock exchanges for the issue has been received.

7.1 Letter of comfort issued by the Bank:

During the year ended 31.03.2019, branches in India have not issued any letter of comfort for financing of imports. Outstanding as on 31.03.2019 is NIL. Hence no financial impact on outstanding LOC/LOU

During the year ended 31.03.2019,Letter of Comfort issued by our foreign branches(Singapore and Colombo) is NIL and Outstanding as on 31.03.2019 is NIL

In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank continues to maintain deposits from FCNR (B) resources to the extent of USD 43.00 Mio (equivalent to INR 297.37 crore) with Singapore Branch to meet the minimum NetAdjusted Capital funds requirement of the Branch.

We have issued LOU for Sri Lankan branches favoring Central Bank of Sri Lanka(CBSL)as per the mandatory requirement of CBSL. We do not anticipate any financial impact in immediate near future on account of LOU issued

7.2 Provision Coverage Ratio (PCR)

Non Performing Loan Provisioning Coverage Ratio is 65.72% (previous year 64.27%).

7.3 Indian Bank Trust for Rural Development

Indian Bank Trust for Rural Development has been set up by the Bank on 22.09.2008 to exclusively focus on rural development and accomplish better results by coordinating with various other players / agencies who are also engaged in the development of rural areas.

Under the Trust, Indian Bank Self Employment Training Institutes (INDSETIs) have been established in 12 centers, viz. Chittoor (in Andhra Pradesh), Puducherry (in uT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore and Villupuram (in Tamil Nadu) to impart skill oriented training to rural unemployed youth, to enable them to either self /wage employed as per the directions of Ministry of Rural Development, Govt. of India. Financial Literacy Centres (FLCs) have also been established under the Trust in 19 places viz. Chittoor, Machilipatnam (in Andhra Pradesh), Kollam, Chadayamangalam, Parassala(in Kerala), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore, Villupuram (in Tamil Nadu) and Urban FLCs in Chennai, Delhi and Mumbai to provide financial literacy and counseling services to the general public to assist the banks in financial inclusion project.

The books of account of the Trust are being subjected to audit, independently by the Chartered Accountants appointed by the Trust

7.4.1 In accordance with Asset Quality Review (AQR) undertaken by RBI, the Bank has made additional provisions during the year, on certain accounts, as advised by RBI.: NIL

7.5 Disclosures relating to Securitization: NIL

7.6 Credit DefaultSwaps: Nil

7.7 Equity:

Treasury Branch is in receipt of 26,31,591 Shares of M/s Electrosteel Steels Limited with FV of Rs.10/- per share in the Demat account on 13/06/2018. As per New Delhi Main Branch letter dt 28/06/2018, these shares represent the settlement of Debt as ordered by NCLAT vide order 30/05/2018 in lieu of the assets maintained at New Delhi Main Branch, which has taken up with the lead Bank - SBI for appropriation of share valuation. New Delhi Main Branch has made due discussions / correspondence with State Bank of India. After discussions, in line with the decision arrived by the Lead Bank (SBI), accounting of shares was not carried out due to uncertainty in legal technicalities with NCLT

7.8 Intra Group Exposures:

7.9 Contingent liabilities include an A/c M/s Nimbus Communications Ltd., Guarantees were issued by Consortium Banks favouring BCCI. BCCI filed suit against Consortium Banks claiming guarantee liability. In the suit, conditional leave to defend was granted on making payment of R400 crores, wherein our Bank share is R100 crore. Remittance of our Bank’s share of R100 crore was made with the Prothonotary and Senior Master of the Hon’ble High Court of Bombay. The summary suit is pending adjudication before Hon’ble High Court of Bombay.

For this claim against the Bank by BCCI, Bank is having a sum of R32.44 crore as provision under the head ‘Provision for Other Contingencies’ after taking into consideration a sum of R70.74 crore held as security - margin money as on 31.03.2019

7.10 Foreign Currency Exposure:

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers .Where there is no natural hedge, forward cover is suggested to customers in respect of import/export transactions. The forward cover will act as Unhedged risk mitigation on exchange risk. While sanctioning the facilities, bank is ensuring that all the exposures (fund based and non fund based including Letter of Comfort/Letter of Undertaking) in foreign currencies are covered by forward cover. Request for considering waiver of forward cover if any is considered only at corporate office level. While reviewing the borrowal accounts hedged and unhedged exposure are captured and impact is analyzed in credit proposals.

The Bank has provided a provision ofRs. 5.95 crores and Capital of Rs.30.53 crores for the year ended 31st March 2019 on Unhedged Foreign Currency Exposure to their constituents in terms of RBI Circular dated January 15,2014

7.11 Frauds reported during the year:

The Bank has reported 168 cases of fraud amounting to Rs. 808.38 crores during the year 2018-19 as per the details furnished below:

The Bank has reported 112 cases of non advance related frauds amounting to Rs. 3.82 crores during the year 2018-19.

Upto 31.03.2019,747 cases (cumulative) relating to non-advance related frauds are pending involving amount of Rs.131.36 crores and the Bank carries a provision ofRs. 40.65 crores against the same after taking into account recoveries made.

8.1 The LCR is designed to promote short-term resilience of a bank’s liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days.As per the RBI guidelines minimum requirement of LCR as on January 1,2019 is 100%. The methodology for estimating the LCR is based on RBI guidelines.

The LCR is calculated by dividing the amount of high quality liquid unencumbered assets (HQLA) by the estimated net outflows over a stressed 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed outflow factors to the various categories of liabilities (deposits, unsecured and secured wholesale borrowings), as well as to undrawn commitments and derivatives-related exposures, partially offset by inflows from assets maturing within 30 days.

The bank during the quarter ended March 31, 2019 had maintained average HQLA (after haircut) of Rs. 44051.84 Crores as against the average liquidity requirement of Rs. 36795.12 Crores at a minimum LCR requirement of 100%. HQLA primarily included government securities in excess of minimum Statutory Liquidity Ratio (SLR), the extent allowed under the Marginal Standing Facility (MSF) and the Facility to Avail Liquidity for LCR (FALLCR). Additionally cash, balances in excess of cash reserve requirement with RBI and the overseas central banks form part of level 1 HQLA. The Daily average LCR of the Indian bank for the quarter ended March 31,2019 was119.72%.

The main drivers of LCR of the bank are sufficient high quality liquid assets (HQLAs) to meet liquidity needs of the bank at all times. The weighted cash outflows are primarily driven by unsecured wholesale funding which contributed 65.91% of the total weighted cash outflows. Retail deposits including deposits from small business customers contributed 20.40% of the total weighted cash outflows. The other contingent funding obligations primarily include bank guarantees (BGs) and letters of credit (LCs) issued on behalf of the Bank’s clients.

Bank has one significant counterparty in the deposits as on 31.03.2019. The largest depositor contributed 3.07% of total deposits. The total contribution of the top 20 largest domestic depositors as on 31.03.2019 is 10.55% of the total deposits. The significant product / instruments include Savings deposit, Current deposit and Term deposits which are 25.27%, 4.73% and 56.43% of bank’s total liability respectively, the funding from which are widely spread and cannot create concentration riskforthe bank.

Bank’s Liquidity is managed by the Asset Liability Management Committee (ALCO) and contingency funding plan is in place based on the quarterly stress testing results.

9. MISCELLANEOUS

9.1 Reconciliation and Adjustments

9.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2019. The Bank through various effective steps has achieved reduction in the old outstanding entries in IBGA. Adjustments of the remaining outstanding entries are in progress. As per the Management, 5747 IBGA credit entries aggregating to Rs. 4.86 crores are outstanding pertaining to period before 01.03.2009.

9.1.2 In view of the net credit position in respect of un-reconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2019, no provision is required.

9.1.3 Old outstanding entries, in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

9.1.4 Balancing of subsidiary/ledgers, registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above on the accounts will not be significant

9.1.5 As per information available with the Bank, there is no outstanding dues payable by the Bank to MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMEDAct, 2006 and there have been no reported cases of accepted liability of delayed payments of principal amount or interest thereon for such parties during the year.

10. Previous year’s figures have been regrouped/reclassified, wherever necessary, to conform to current year’s figures.


Mar 31, 2018

Note: Actual Contra Balance is R680.34 crore as on 31.03.2018 on account of the following reasons:

a) Claim preferred for R3.28 crore settled by RBI in April 2018

b) Claim received for R0.65 crore relating to FY 2017-18 for which necessary accounting entries were not passed.

** Actual amount transferred during 2017-18 is R 185.05 cr., which includes R1.58 cr. pertaining to the previous year, i.e., 2016-17.

10.19 Foreign Currency Exposure:

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers .Where there is no natural hedge, forward cover is suggested to customers in respect of import/export transactions. The forward cover will act as Unhedged risk mitigation on exchange risk. While sanctioning the facilities, bank is ensuring that all the exposures (fund based and non fund based including Letter of Comfort / Letter of Undertaking) in foreign currencies are covered by forward cover. Request for considering waiver of forward cover, if any, is considered only at corporate office level. While reviewing the borrowal accounts hedged and unhedged exposure are captured and impact is analyzed in credit proposals.

The Bank has provided a provision of R12.91 crores and Capital of R56.01 cr. For the year ended 31st March 2018 on Unhedged Foreign Currency Exposure to their constituents in terms of RBI Circular dated January 15,2014

10.20 Frauds reported during the year:

The bank has reported 94 cases of fraud, amounting to R 27.75 crores during the year 2017-18. As on 31.03.2018, 634 cases relating to non-advance related frauds are pending involving amount of R126.31 crores and the Bank carries a provision of R39.78 crores against the same after taking into account recoveries made.

11.2 The LCR is designed to promote short-term resilience of a bank''s liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days. As per the RBI guidelines minimum requirement of LCR as on January 1, 2018 is 90% which will increase to 100% by January 2019. The methodology for estimating the LCR is based on RBI guidelines.

The LCR is calculated by dividing the amount of high quality liquid unencumbered assets (HQLA) by the estimated net outflows over a stressed 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed outflow factors to the various categories of liabilities (deposits, unsecured and secured wholesale borrowings), as well as to undrawn commitments and derivatives-related exposures, partially offset by inflows from assets maturing within 30 days.

The bank during the quarter ended March 31, 2018 had maintained average HQLA(after haircut) of Rs. 39030.05 Crores as against the average liquidity requirement of R 25422.72 Crores at a minimum LCR requirement of 90%. HQLAprimarily included government securities in excess of minimum Statutory Liquidity Ratio (SLR), the extent allowed under the Marginal Standing Facility (MSF) and the Facility to Avail Liquidity for LCR (FALLCR). Additionally cash, balances in excess of cash reserve requirement with RBI and the overseas central banks form part of level 1 HQLA. The Daily average LCR of the Indian bank for the quarter ended March 31, 2018 was 138.17%.

The main drivers of LCR of the bank are sufficient high quality liquid assets (HQLAs) to meet liquidity needs of the bank at all times. The weighted cash outflows are primarily driven by unsecured wholesale funding which contributed 62.53% of the total weighted cash outflows. Retail deposits including deposits from small business customers contributed 24.06% of the total weighted cash outflows. The other contingent funding obligations primarily include bank guarantees (BGs) and letters of credit (LCs) issued on behalf of the Bank''s clients.

Bank has three significant counterparties in the deposits as on 31.03.2018. The largest depositor contributed 1.99% of total deposits. The total contribution of the top 20 largest domestic depositors as on 31.03.2018 is 10.09% of the total deposits. The significant product / instruments include Savings deposit, Current deposit and Term deposits which are 25.35%, 5.11% and 51.97% of bank''s total liability respectively, the funding from which are widely spread and cannot create concentration risk for the bank.

Bank''s Liquidity is managed by the Asset Liability Management Committee (ALCO) and contingency funding plan is in place based on the quarterly stress testing results.

12. MISCELLANEOUS

12.1 Reconciliation and Adjustments

12.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2018. The Bank through various effective steps has achieved reduction in the old outstanding entries in IBGA. Adjustments of the remaining outstanding entries are in progress. As per the Management, 6244 IBGA credit entries aggregating to R 5.29 crores are outstanding pertaining to period before 01.03.2009.

12.1.2 In view of the net credit position in respect of unreconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2018, no provision is required.

12.1.3 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

12.1.4 Balancing of subsidiary / ledgers, registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above will not be significant

12.1.5 As per information available with the Bank, there is no outstanding dues payable by the Bank to MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMED Act, 2006 and there have been no reported cases of accepted liability of delayed payments of principal amount or interest thereon for such parties during the year

13. Dividend

Equity shares: The Board of Directors have recommended a dividend of R6.00 per share (Face Value Rs.10 per share) i.e. 60% to the shareholders amounting to R 288.17 crore (Previous Year R 288.17 crore) and has not been appropriated from the current year profit

(FY 2017-18) in compliance with Accounting Standard 4 (revised 2016) on Contingencies and event occurring after Balance Sheet date applicable from 1st April, 2017.

14. Previous year s figures have been regrouped / reclassified, wherever necessary, to conform to current year''s figures.


Mar 31, 2015

1.1.1 Sale and Transfers to/ from HTM Category:

The value of sales and transfers of securities to / from HTM category did not exceed 5 per cent of the book value of investments heldinHTM categoryatthe beginningof the yearasper RBI guidelines.

2. DERIVATIVES

2.1 Forward Rate Agreements/Interest Rate Swaps(IRS)

The Bank has not entered into Derivative contracts of the nature of Forward RateAgreements / Interest Rate Swaps (IRS) to hedgeonbalance sheet assets during the financial year 2014-15.

3.1 Risk Exposurein Derivatives

3.1.1 Qualitative Disclosures

Bank has been doing hedging of asset as well as liability using IRS. The hedging transactions have been accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Valuationof outstanding swap contractsisdoneonmark tomarket basis.

All swap deals have been undertaken based on the guidelines of International Swaps Dealers'' Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank is doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governedbythe Derivatives Policy approvedbythe Bank''s Board.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized inthe Profit and Loss account.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits, if any, are ignored.

3.1.1 Profit on account of sale of securities from HTM category amounting to Nil (previous year Rs. 4.77 crore) has been taken to Profit and Loss Account and thereafter an amount of Nil (previous year Rs.2.36 crore) was transferred to Capital Reserve Account (netof taxes and the amount required to be transferred to statutory reserves).

3.1.2 In the beginning ofthe year, the Bank shifted (i) SLR securities for Book Value of Rs.504.71 crores from HTM category to AFS category and (ii) SLR securities for Book Value of Rs.655.54 crores from AFS category to HTM category which has resulted in a adjustment of provision held against depreciation for Rs.16.26 crores to reduce the book value to the market value. InAugust 2014, the Bank shifted SLR securities Rs.1007.41 crores from HFT category toAFS category which resulted inaprovision for MarktoMarket Depreciationof Rs.0.73 croresasper measures announcedbyRBI.

3.1.3 Incaseof securities classified under HTM category, if acquisition cost ismore than the face value, the premiumis amortized over the remaining period to maturity. For the Financial Year 2014-15, a sum of Rs.74.16 crore (previous year Rs.65.48 crore) has been amortized and the same is reflected as adeduction from ''Incomeon Investments''.

4.1. 1 Provision Coverage Ratio (PCR)

Non Performing Loan Provisioning Coverage Ratio is 60.08% (previous year 57.77%). 4.1.2 As per Recovery Policy of the Bank, any recovery should be first appropriated to Book balance (Principal) and then to Unpaid Legal Expenses (MLE) and thereaftertounpaid interest.

COUNTRY RISK MANAGEMENT:

The Bank has analysed its net funded exposure to various countries as on 31.03.2015 and such exposure to countries other than Singapore and Sri Lanka are well within the stipulation of 1% of the total assets of the Bank. In respect of Singapore, which is classified under "Insignificant" risk category by ECGC Ltd, a provision of Rs. 2.65 Cr (Previous year Rs. 5.20 Cr) is available and in respectofSri Lanka whichisclassified under"Low" risk category Rs. 3.20 Cr(Previous year NIL)is available.

5.1 Unsecured Advances

Out of total unsecured advances, advances secured by intangible securities such as rights, licenses, authority, etc charged to the bank as collateral in respect of projects (including infrastructure projects) is Rs.1976.27 Crores. Estimated total value of such intangible collaterals mentioned aboveason31.03.2015isRs.7841.78 Crores.

6. MISCELLANEOUS

6.1 Reconciliation and Adjustments

6.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2015. The Bank through various effective steps has achieved reductioninthe old outstanding entries in IBGA.Adjustmentofthe remaining outstanding entries isinprogress.As per the Management, 7855 IBGAcredit entries aggregatingtoRs.6.23 crore are outstanding.

6.1.2 In view of net credit position in respect of unreconciled entries in the Inter Branch Account outstanding for more than 6 monthsason31.03.2015,noprovision isrequired.

6.1.3 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

6.1.4 Balancing of subsidiary ledgers/registers and reconciliation with general ledgers are in progress at some branches. In the opinionof the management, consequential financial impactofthe aboveonthe accounts will not be significant.

The disputed Income Tax paid as at 31 03 2015 was Rs.1441.98 Crore (previous year Rs.1166.33 Crore). No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favourable decisions in Bank''s own case.

6.3 Disclosure of Penalties imposed by RBI

During the year: i) RBI has imposed penalty of Rs.18.35lakhs (175 entries) (Previous Year Rs.109.30 lakhs -156 entries) for non compliance of KYC / AML guidelines, non-detection of forged notes, shortages in cash remittances and delayed / wrong reporting in ICCOMS in Currency Chest handling operation. ii) Monetary Authority of Singapore has imposed penalty of SGD 350000 (Rs.167.03 lakhs) for breaches under Sec

27(B)ofMAS Act.

6.4 Fixed Assets

6.4.1 The premises of the Bank include land and are stated at revalued amounts. The Bank revalued its premises in the financial year 2013-14 at fair market value determined by the approved external valuers. Depreciation amounting to Rs.59.94 crores ( Previous year-Rs.45.19 crores) was charged on the revalued amount against the "Revaluation ReserveAccount".

6.4.2 Premises include4properties costing Rs.3.59 crores (Previous year-8properties costing Rs.10.80 crores)having book value, netofdepreciationatRs.28.85 crores (Previous year-Rs.192.98 crores) for which registration formalities are pending.

6.5 Letter ofcomfort issuedbythe Bank:

During the year ended 31.03.2015, 842 letters of comfort have been issued by the bank amounting to Rs. 1953.50 Crore. The lettersofcomfort outstandingason31.03.2015 are 437 amounting to Rs. 1215.80 Crore.

6.6 In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank continue to maintain deposits from FCNR (B) resources to the extent of USD 43 Mio (equivalent to INR 268.75 Crore) with Singapore Branchto meet the minimum NetAdjusted Capital Funds requirementofthe Branch.

6.7 Indian Bank Trustfor RuralDevelopment (IBTRD):

Indian Bank Trust for Rural Development has been set up by the Bank on 22.09.2008 to exclusively focus on rural development and accomplish better results by coordinating with various other players / agencies who are also engaged in the developmentofrural areas.

Under the Trust, Indian Bank Self Employment Training Institutes (INDSETIs) have been established in 12 centers, viz.

Chittoor (in Andhra Pradesh), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri,

Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore and Villupuram (in Tamil Nadu) to impart skill oriented training to rural unemployed youth, to enable them to either self / wage employed as per the directions of Ministry of Rural Development, Governmentof India.

Financial Literacy Centres (FLCs) have also been established under the Trust in 19 places viz. Chittoor, Machilipatnam (in Andhra Pradesh), Kollam, Chadayamangalam, Parassala (in Kerala), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Tiruvallur, Vellore, Villupuram (in Tamil Nadu) and Urban FLCs in Chennai, Delhi and Mumbai to provide financial literacy and counseling services to the general public to assist the banks in financial inclusion project.

The books of account of the Trust are being subjected to audit, independently by the Chartered Accountants appointed by the Trust.

6.8 i) Contingent liabilities include an account M/s Nimbus Communications Ltd, guarantees were issued by Consortium Banks favouring BCCI. BCCI filed suit against Consortium Banks claiming guarantee liability and in the suit, conditional leave to defend was granted on making payment of Rs. 400 crores, wherein Bank share is Rs.100 crore. Pursuant to the order of Hon''ble Supreme Court of India in the SLP No. 4832-34 of 2013 filed by BCCI, remittance of our Bank''s share of Rs.100 crore was made with the Prothonotary and Senior Master of the Hon''ble High Court of Bombay. The summary suit is pending adjudication before Hon''ble High CourtofBombay.

ii) The Bank has no direct exposure to the coal blocks / mines cancelled by the Hon''ble Supreme Court of India. However, the impact, if any,ofsuch cancellation on the valuationofsecurity, penalty imposed and consequent viability of the projects financed by the Bank dependantonsuch coal blocks/mines, being unascertainedatthis stage has not been considered.

6.9 Qualitative Note on Liquidity Coverage Ratio(LCR):

The LCR is designed to promote short-term resilience of a bank''s liquidity risk profile by ensuring that it has sufficient high quality liquid resources to survive an acute stress scenario lasting for 30 days. As per the RBI guidelines minimum requirement of LCR as on January 1,2015 is 60% which will increase to100% on January 2019 in a phased manner. The methodology for estimating the LCR isbased on RBI guidelines.

LCR ratio is relation between stock high quality liquid asset (HQLA) and net cash outflow over the next 30 days. The Bank''s HQLAis primarily consist of Government securities in excess of SLR requirement and to the extent allowed by RBI under MSF and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR). The funding source is adequately diversified among retail deposits and unsecured wholesale funding. The LCR computed isasimple averageof monthly observations over the previous quarter ending i.e. 31.03.2015.

*As per RBI circular DBOD.BP.BC.No.8/21.04.018/2014-15 dt 01.07.2014, Liquidity Coverage Ratio is required to be disclosed starting with the Financial Year ending March 31, 2015 with the related information for the quarter ended 31st March, 2015. Serial numbers in the above table is as per LCR templatein the RBI circular.

1. Unweighed values calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows) except where otherwise mentioned in the RBI circular DBOD.BP.BC.No.120/21.04.098/2013-14dt09.06.2014 and LCR template.

2. Weighed values calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows).

3. Adjusted values calculated after the application of both (i) haircuts and inflows and outflow rates and (ii) any applicable caps (ie cap on level 2B and level 2Assets for HQLAand cap on inflows).

7. DISCLOSURES INTERMS OF ACCOUNTING STANDARDS(AS):

7.1 CASH FLOW STATEMENT(AS3)

The Cash Flow statement for the year 2014-15is annexed separately.

7.2 Net Profit orLoss for the period, prior period items and changesinAccounting Policies (AS 5) Current year profitofthe Bank includes prior period incomeofRs.10.39 crores.

7.3 EMPLOYEE BENEFITS(AS15)

7.3.1 During the year 2010-11, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier and the limitof gratuity payable tothe employeesof the bank was also enhanced pursuantto the amendment to the Payment of Gratuity Act, 1972. As a result, the pension liability in respect of existing employees was Rs.813.22 crores and the increase in gratuity liability was Rs.166.00 crores as per actuarial valuation. RBI, vide circular No.DBOD:BP:BC/80/21.04.018/2010-11 dated 09.02.2011, permitted Banks to charge 1/5th of such liability every year. Accordingly, during the current year, a sum of Rs.162.65 crores towards pension and Rs.33.20 crores towards gratuity is chargedtoProfit and Loss account.There isnounrecognized liability pending for amortization.

7.3.2 The provision towards Sick Leave which was hither to actuarially assessed based on the outstanding accumulated entitlement, has been actuarially assessed during the year, considering the past behavioural pattern at Rs. 3.35 crores . Accordingly, the provisionof Rs. 73.74 crores has been reversed during the year.

7.4 Provision of Rs.120 crore has been made during the year towards arrears for wage revision which will be effective from 01.11.2012, pending negotiation by IBA. The Bank has made a provision of Rs.290 crores as on 31.03.2015 (previous year-Rs.170 crore)

7.5 RELATED PARTY DISCLOSURES (AS 18)

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

a) Subsidiaries:

i. Ind Bank Housing Ltd.

ii. Indbank Merchant Banking Services Ltd.

b) Associates : (Regional Rural Banks)

i) Pallavan Grama Bank

ii) Saptagiri Grameena Bank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri T M Bhasin Managing Director & Chief Executive Officer

Shri B Raj Kumar Executive Director

Shri Mahesh Kumar Jain Executive Director

f) The transactions with subsidiaries and associates have not been disclosed in view of para 9 of AS-18 ''Related Party

Disclosure'', which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled enterprises.

7.6 Leases (AS 19)

a) The properties taken on lease/rental basis are renewable/ cancelable at the option of the Bank.

b) The leases entered into by the Bank are for agreed period with an option to terminate the leases even during the currency of lease period by giving agreed calendar months notice in writing.

c) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss account in the year to which it relates. The lease rent recognized during the year is Rs.124.73 crores (Previous year - Rs.103.09 crores).

7.7 Impairment of Assets (AS 28)

Impairment losses (if any) on Fixed Assets (including revalued assets) are recognized in accordance with AS 28 (ImpairmentofAssets) issued bythe ICAI and charged offtoProfit and LossAccount.

7.8 Unhedged Foreign Currency Exposure:

The Bank has in place a policy on managing credit risk place arising out of unhedged foreign currency exposures of its borrowers .Where there is no natural hedge, forward cover is suggested to customers in respect of import/export transactions.The forward cover will actasrisk mitigationonexchange risk. While sanctioning the facilities, bankis ensuring that all the exposures (fund based and non fund based including Letter of Comfort / Letter of Undertaking) in foreign currencies are covered by forward cover. Request for considering waiver of forward cover if any is considered only at corporate office level. While reviewing the borrowal accounts hedged and unhedged exposure are captured and impact is analyzedin credit proposals.

Based on the available financial statement and the declaration from borrowers, the bank has estimated the liability and made provision of Rs. 23.20 crs and allocated capital of Rs. 300.75 crs as on 31.03.2015 on Unhedged Foreign Currency exposurestotheir constituentsintermsofRBI circular dated January15, 2014.

8. Dividend

Equity Shares: Provision for Equity Dividend includes proposed dividend at 42% amounting to Rs. 201.72 crore (previous year Rs.207.96 crore) for the year 2014-15.

9 . Miscellaneous income includes:

i) asumof Rs.159.96 Crore (previous year Rs.102.71 Crore) being recoveryin written-off accounts

ii) Rs.126.71 Crore (previous year Rs.122.92 Crore) being recovery ofprocessing charges during the year.

10. i) The financial results for the year ended 31st March, 2015 have been arrived at following the same Accounting Policies as those followed for the year ended March 31, 2014 excepting for the following change:

Provisioning for all non performing assets classified as substandard (secured exposure) w.e.f. 01.10.2014 onwards has been decreased from 25% to 15%, in line with IRAC norms of Reserve Bank of India (RBI). Due to this change, the provisionis decreasedby Rs.85.04 crore.

ii) Pursuant to Reserve Bank of India circular No.DBR.No.BP.BC.75/21.04.048/2014-15 dt 11th March, 2015, on sale of financial assets regarding treatment of loss and profit made on sale of accounts, excess provision of earlier years of Rs. 31.51 crore has been reversed and hasaconsequential impactonprofit during the year ended 31.03.2015.

11. As per information available with the Bank, there is no outstanding dues payable by the Bank to MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMED Act, 2006 and there have been no reported casesof accepted liabilityofdelayed paymentsofprincipal amount orinterest thereon for such parties during the year.

12. Previous year''s figures have been regrouped/reclassified, wherever necessary,toconform tocurrent year''s figures.


Mar 31, 2014

1. CONTINGENT LIABILITIES (Rs. in Thousands)

PARTICULARS As on 31.03.2014 As on 31.03.2013

I. Claims against the bank not acknowledged as debts 669 39 40 637 51 19

II. Liability for partly paid investments 30 02 66 31 84 63

III. Liability on account of outstanding forward exchange contracts 27809 38 88 20434 51 28

IV. Guarantee given on behalf of constituents

a) In India 10145 30 30 10329 10 99

b) Outside India 80 74 13 133 77 67

V. Acceptance, Endorsements and other obligations 3675 53 94 3363 42 63

VI. Other items for which the bank is contingently liable 1475 02 41 1382 87 44

TOTAL 43885 41 72 36313 05 83

2. Risk Exposure in Derivatives

2.2.1 Qualitative Disclosures

Bank has been doing hedging of asset as well as liability using IRS. The hedging transactions have been accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Valuation of outstanding swap contracts is done on mark to market basis.

All swap deals have been undertaken based on the guidelines of International Swaps Dealers'' Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank is doing proprietary trading in Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Bank''s Board.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits, if any, are ignored.

2.2.2 Profit on account of sale of securities from HTM category amounting to Rs. 4.77 crore (previous year Rs. 58.20 crore) has been taken to Profit and Loss Account and thereafter an amount of Rs. 2.36 crore (previous year Rs. 29.49 crore) was transferred to Capital Reserve Account (net of taxes and the amount required to be transferred to statutory reserves).

2.3 In the beginning of the year, the Bank shifted SLR securities for Book Value of Rs. 4335.74 crores from HTM category to AFS category. In July 2013, the Bank shifted SLR securities Rs. 384.16 crores from HFT category to AFS category and Non-SLR securities Rs. 77.58 crores from HFT category to AFS category. These resulted in a provision for Mark to Market Depreciation of Rs.10.14 crores and Rs. 2.34 crores respectively. After announcement of measures by RBI, the Bank shifted SLR securities of Book Value Rs. 5159.73 crores from AFS & HFT category to HTM category which resulted in depreciation loss of Rs. 86.68 crores. In November 2013, the Bank shifted SLR securities of Rs. 4.66 crores from HFT to AFS category.

2.4 In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2013-14, a sum of Rs. 65.48 crore (previous year Rs. 31.90 crore) has been amortized and the same is reflected as a deduction from ''Income on Investments''.

3. Unsecured Advances

Out of total unsecured advances, advances secured by intangible securities such as rights, licenses, authority, etc charged to the bank as collateral in respect of projects (including infrastructure projects) is Rs. 1734.68 Crores. Estimated total value of such intangible collaterals mentioned above as on 31.03.2014 is Rs. 10515.76 Crores.

4. MISCELLANEOUS

4.1 Reconciliation and Adjustments

4.2.1 Reconciliation of Inter Branch Account is completed up to 31.03.2014. The Bank through various effective steps has achieved reduction in the old outstanding entries in IBGA. Adjustment of the remaining outstanding entries is in progress. As per the Management, 8213 IBGA credit entries aggregating to Rs. 6.33 crore are outstanding.

4.3 In view of net credit position in respect of unreconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2014, no provision is required.

4.4 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

4.5 Balancing of subsidiary ledgers/registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above on the accounts will not be significant.

4.6 Disclosure of Penalties imposed by RBI

During the year, RBI has imposed penalty of Rs. 109.30 lakhs (156 entries) (Previous Year Rs. 6.60 lakhs -122 entries) for non-compliance of KYC/AML guidelines, non-detection of forged notes, shortages in cash remittances and delayed / wrong reporting in ICCOMS in Currency Chest handling operation.

4.7 Fixed Assets

4.1 Premises include properties costing Rs. 10.80 Crore (previous year - Rs. 10.80 Crore), the book value of which is Rs. 192.98 Crore (previous year - Rs. 58.05 Crore), for which registration formalities are in progress.

4.2 Bank re valued its immovable properties during the year 2013-14 at fair market value as determined by approved values and the resultant appreciation of Rs. 1247.06 Crore was credited to "Revaluation Reserve Account". Additional depreciation on the re valued portion amounting to Rs. 45.19 Crore (previous year Rs. 32.24 Crore) has been charged to Profit & Loss Account and an equivalent withdrawal is made from the "Revaluation Reserve Account".

Methodology adopted for Revaluation of Properties:

1. The value of the properties are estimated by Land and Building method and in case of properties like Residential flats / commercial space where there is undivided share of land, the valuation was done by Composite Method.

2. The valuation report indicated the value of land, building, amenities, etc. along with the type and nature of construction.

3. As regards the building, the value is estimated by adopting plinth / built up area and rates per unit area depending on specification and the future life of the building is clearly stated.

4. The fair market value of land is determined on the basis of current market value.

4.4 Letter of comfort issued by the Bank:

During the year ended 31.03.2014, 943 letters of comfort have been issued by the bank amounting to Rs. 3462.48 Crore. The letters of comfort outstanding as on 31.03.2014 are 388 amounting to Rs. 1285.59 Crore.

5. In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank maintains deposit to the extent of USD 43 mio (equivalent to INR 257.90 Crore approx as on 31.03.2014) with Singapore Branch to meet the minimum Net Adjusted Capital Funds requirement of the Branch.

6. Indian Bank Trust for Rural Development (IBTRD):

Indian Bank Trust for Rural Development has been set up by the Bank on 22.09.2008 to exclusively focus on rural development and accomplish better results by coordinating with various other players/ agencies who are also engaged in the development of rural areas.

Under the Trust, Indian Bank Self Employment Training Institutes (INDSETIs) have been established in 12 centers, viz. Chittoor (in Andhra Pradesh), Puducherry (in UT of Puducherry), Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Thiruvallur, Vellore and Villupuram (in Tamil Nadu) to impart skill oriented training to rural unemployed youth, to enable them to either self / wage employed as per the directions of Ministry of Rural Development, Government of India.

7. An account in Bank''s Overseas branch was classified as Sub-standard due to Host country''s norms for reasons other than record of recovery on account of re-structuring. In the Host country, a restructured account is to be classified as sub-standard irrespective of any default in recovery. During the year, the facility was transferred to Indian branch of the Bank by utilizing the FCNR resources. The balance outstanding as on 31.03.2014 is Rs. 144.00 crores.

The Bank is of the view, the account on the date of restructuring was Standard asset had the same been in India. Now, after being transferred to India, the erstwhile Host country norms no longer apply and would now be governed by IRAC norms applicable to a restructured account in India, therefore the account is now considered as Restructured Standard Asset. Confirmation of the above is also being sought from the Reserve Bank of India.

8. DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS):

8.1 CASH FLOW STATEMENT (AS 3)

The Cash Flow statement for the year 2013-14 is annexed separately.

8.2 EMPLOYEE BENEFITS (AS 15)

During the year 2010-11, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier and the limit of gratuity payable to the employees of the bank was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the pension liability in respect of existing employees was Rs. 813.22 crores and the increase in gratuity liability was Rs. 166.00 crores as per actuarial valuation. RBI, vide circular No.DBOD:BP:BC/80/21.04.018/2010-11 dated 09.02.2011, permitted Banks to charge 1/5th of such liability every year. Accordingly, during the current year, a sum of Rs. 162.65 crores towards pension and Rs. 33.20 crores towards gratuity is charged to Profit and Loss account. The unrecognized liability pending for amortization over the remaining period is Rs. 162.64 crores towards pension and Rs. 33.20 crores towards gratuity.

8.3 The summarized position of Post-employment benefits and long term employee benefits recognised in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard – 15 (Revised) are as under:

8.4 RELATED PARTY DISCLOSURES (AS 18)

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

a) Subsidiaries :

i. Ind Bank Housing Ltd.

ii. Indbank Merchant Banking Services Ltd.

b) Associates : (Regional Rural Banks)

i) Pallavan Grama Bank

ii) Saptagiri Grameena Bank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri. T M Bhasin Chairman & Managing Director

Shri B Raj Kumar Executive Director

Shri Mahesh Kumar Jain Executive Director

f) The transactions with subsidiaries and associates have not been disclosed in view of para 9 of AS-18 ''Related Party Disclosure'', which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled enterprises.

8.5 Leases (AS 19)

The properties taken on lease/rental basis are renewable/ cancelable at the option of the Bank. The Bank''s liabilities in respect of disputes pertaining to additional rent / lease rent are recognized on settlement or on renewal.

8.6 Impairment of Assets (AS 28)

Fixed Assets being the non-financial assets possessed by the Bank are treated as "Corporate Assets" and not as Cash generating units, as such there is no impairment of assets and consequently no impairment loss has been recognized.

9. Dividend

Equity Shares: Provision for Equity Dividend includes interim dividend at 30% amounting to Rs. 128.93 crore (previous year – NIL) and proposed final dividend at 17% amounting to Rs. 70.02 crore (Dividend for 2012-13 at 66% amounting to Rs. 283.65 crore)

Perpetual Non-Cumulative Preference Shares: The Preference Dividend proposed for the year is Rs. 26.21 crore at 9.00% p.a. from April 01, 2013 to September 30, 2013 and at 8.50% p.a. from October 01, 2013 to February 28, 2014 (Previous year Rs. 36.50 crore at 9.25% p.a. from April 01, 2012 to September 30, 2012 and at 9.00% p.a. from October 01, 2012 to March 31, 2013).

11. Miscellaneous income includes:

i) a sum of Rs. 102.71 Crore (previous year Rs. 194.80 Crore) being recovery in written-off accounts

ii) Rs. 122.92 Crore (previous year Rs. 132.84 Crore) being recovery of processing charges during the year.

12. There is no outstanding dues payable by the bank to MSME units pending beyond the time limit prescribed under MSMED Act, 2006 as on 31.03.2014.

13. Previous year''s figures have been regrouped / reclassified, wherever necessary, to conform to current year''s figures.


Mar 31, 2012

1. DERIVATIVES

1.1 Forward Rate Agreements / Interest Rate Swaps (IRS)

Singapore branch entered into Derivatives contracts of the nature of Interest Rate Swaps (IRS) to hedge on balance sheet assets. The notional principal value of Swaps was SGD 2.00 Mio (Rs8.10 Crore). IRS was undertaken for hedging purposes. The outstanding swap position was to receive floating rate of interest and pay fixed rate of interest.

1.2 Exchange Traded Interest Rate Derivatives

The bank has not contracted any exchange traded interest derivatives during the year under review.

1.2 Risk Exposure in Derivatives

1.2.1 Qualitative Disclosures

Bank has been doing hedging of asset as well as liability using IRS. The hedging transactions have been accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Valuation of outstanding swap contracts is on marked to market basis.

All swap deals have been undertaken based on the guidelines of International Swaps Dealers' Association. Bank has adequate control systems and also internal approvals prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank is doing proprietary trading in Currency Futures (CF) and Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the Bank's Board.

Exchange traded FX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising there from, if any, are fully provided for while the profits , if any, are ignored.

Quantitative Disclosures

The Bank is active in the following products under derivatives.

-- Overnight Index Swaps

-- Currency Futures

The outstanding OIS position as on 31st March 2012 was Rs 150 crore while no naked positions under Currency Futures was outstanding as on 31st March 2012 (previous year- Nil).

1.3.1 Profit on account of sale of securities from HTM category amounting to Rs 3.32 crore (previous year Rs 2.36 crore) has been taken to Profit and Loss Account and thereafter an amount of Rs 1.68 crore (previous year Rs 1.18 crore) was transferred to Capital Reserve Account (net of taxes and amount required to be transferred to statutory reserves).

1.3.2 During the year, the Bank had transferred a portion of its Government Securities (SLR) held in the AFS category to the HTM category at the least of Cost/Book Value / Market price pursuant to enabling regulatory guidelines. The shifting of securities of Rs 2074.23 crore (previous year Rs 4982.05 crore) resulted in depreciation of Rs 77.19 crore (previous year Rs 176.23 crore). The depreciation provision available as on 31st March 2011 in GOI AFS securities amounting to Rs 43.89 crore was utilized and the balance amount of Rs 33.30 crore was debited to P&L account of current year on account of shifting.

1.3.3 In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2011-12, a sum of Rs 31.73 crore (previous year Rs 43.38 crore) has been amortized and the same is reflected as a deduction from 'Income on Investments'.

During the year, Bank has changed its Accounting Policy in respect of Provisioning for Non-Performing assets as detailed below:

(a) Provisioning for all non performing assets classified as substandard has been increased to 25% from 01.04.2011 in place of 20%.

(b) Provisioning for doubtful assets at the rates prescribed in IRAC Norms in respect of all advances categorized under D1 and D2 from 01.07.2011 as against 100% followed upto 30.06.2011.

Consequent to the above mentioned changes, the Net Profit for the current year is higher by Rs 285.61 crore.

2.1.1 Non Performing Loan Provisioning Coverage Ratio is 70.13% (previous year 84.30%)

2.1.2 As per Recovery Policy of the Bank, any recovery should be first appropriated to Book balance (Principal) and then to Unpaid Legal Expenses (MLE) and thereafter to unpaid interest.

COUNTRY RISK MANAGEMENT:

The Bank has analysed its net funded exposure to various countries as on 31.03.2012 and such exposure to countries other than Singapore is well within the stipulation of 1% of the total assets of the Bank. In respect of Singapore, which is classified under "Insignificant" risk category by ECGC Ltd, a provision of Rs 4.54 Cr (Previous year Rs 3.47 Cr) is available.

3.1 Unsecured Advances

Out of total unsecured advances, advances secured by intangible securities such as rights, licenses, authority, etc, charged to the bank as collateral in respect of projects (including infrastructure projects) is Rs 1465.37 Crore. Estimated total value of such intangible collaterals mentioned above as on 31.03.2012 is Rs 8917.55 Crore.

4. MISCELLANEOUS

4.1 Reconciliation and Adjustments

4.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2012. The Bank through various effective steps has achieved reduction in the outstanding entries. Adjustment of the remaining outstanding entries is in progress. As per the Management, 8577 IBGA credit entries aggregating to Rs 6.45 crore are outstanding.

4.1.2 In view of net credit position in respect of unreconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2012, no provision is required.

4.1.3 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc., and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

4.1.4 Balancing of subsidiary ledgers/registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above on the accounts will not be significant.

a) The disputed Income Tax demand outstanding as at 31.03.2012 amounts to Rs 770.35 Crore (previous year Rs 507.35 Crore), out of which Rs 517.24 Crore (previous year Rs 348.60 Crore) has been paid / adjusted by the Department against refund dues. No provision is considered necessary for the said disputed demands on account of judicial pronouncements and favourable decisions in Bank's own case.

b) Provision for income tax has been made after due consideration of favourable decisions of Appellate Authorities / Opinion of Counsels and is net of reversal of Rs 151.17 crore, being the provision of earlier years considered as no longer required.

4.2 Disclosure of Penalties imposed by RBI

During the year, RBI has imposed penalty of Rs 12.37 lakhs for non-detection of forged notes, shortages in cash remittances and discrepancy in Currency Chest handling operation.

4.3 Fixed Assets

4.3.1 Premises include properties costing Rs 10.80 Crore, the book value of which is Rs 59.96 Crore (previous year Rs 11.11 Crore and Rs 64.50 Crore respectively), for which registration formalities are in progress.

4.3.2 Bank revalued its immovable properties during the year 2008-09 at fair market value by approved valuers and the resultant appreciation of Rs 1057.76 Crore was credited to "Revaluation Reserve Account". Depreciation on the revalued portion amounting to Rs 30.52 Crore (previous year Rs 30.52 Crore) has been charged to Profit & Loss A/c and an equivalent withdrawal is made from the "Revaluation Reserve Account".

4.5 Letter of comfort issued by the Bank:

During the year ended 31.03.2012, 717 letters of comfort have been issued by the bank amounting to Rs 3239.12 Crore. The letters of comfort outstanding as on 31.03.2012 are 394 amounting to Rs 1585.25 Crore.

4.6 In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank maintains deposit to the extent of USD 43 mio (equivalent to INR 218.76 Crore approx as on 31.03.2012) with Singapore Branch to meet the minimum Net Adjusted Capital Funds requirement of the Branch.

4.7 Indian Bank Trust for Rural Development:

Indian Bank Trust for Rural Development has been set up by the Bank on 22.09.08 to exclusively focus on rural development and accomplish perceptibly better results by coordinating with various other players/ agencies who are also engaged in the development of rural areas. Total Contribution committed by the Bank to the Trust is Rs 10.00 Crore.

Under the Trust, Indian Bank Self Employment Training Institutes (INDSETIs) have been established in eight centers (Chittoor, Cuddalore, Dharmapuri, Kancheepuram, Puducherry, Salem, Thiruvallur and Vellore) to impart skill oriented training to rural unemployed youth, to enable them to either self / wage employed.

The Bank has also set up Financial Literacy and Credit Counseling Centers (FLCCs) in Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvallur, Thiruvannamalai, Villupuram and Vellore in Tamil Nadu, Kollam in Kerala, Chittoor and Machilipatnam in Andhra Pradesh, Puducherry in U.T. of Puducherry, to provide financial literacy and Credit Counselling services to the general public free of cost.

5. DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS):

5.1 CASH FLOW STATEMENT (AS 3)

The Cash Flow statement for the year 2011-12 is annexed separately.

5.2 EMPLOYEE BENEFITS (AS 15)

During the current year, a sum of Rs 92 crore has been charged to Profit & Loss Account towards transitional liability arising upon first time implementation of AS 15 made from the financial year 2007-08. The remaining unrecognized transitional liability as on 31.03.2012 is nil.

During the year 2010-11, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier and the limit of gratuity payable to the employees of the bank was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the pension liability in respect of existing employees was Rs 813.22 crore and the increase in gratuity liability was Rs 166.00 crore as per actuarial valuation. RBI, vide circular No.DBOD:BP:BC/80/21.04.018/2010-11 dated 09.02.2011, permitted Banks to charge 1 /5th of such liability every year. Accordingly, during the current year, a sum of Rs 162.65 crore towards pension and Rs 33.20 crore towards gratuity is charged to Profit and Loss account. The unrecognized liability pending for amortization over the remaining period is Rs 487.93 crore towards pension and Rs 99.60 crore towards gratuity

* Expected Rate of return on Plan Assets not applicable for Leave encashment.

The estimates of future salary increases are considered taking into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

5.3 SEGMENT REPORTING (AS 17)

As per the Reserve Bank of India guidelines on Accounting Standards, the Bank's operations are classified into Primary segment i.e. the business segment comprising of 'Treasury', 'Corporate / Wholesale Banking', 'Retail Banking' and 'Other Banking Operations' and Secondary segment being the geographical segment comprising of 'Domestic' and 'International' as follows:

Segmental expenses have been apportioned on the basis of segmental assets, wherever direct allocation is not possible. Previous year figures have been re-grouped wherever necessary.

b) The transactions with subsidiaries and associates have not been disclosed in view of para 9 of AS-18 'Related Party Disclosure', which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled enterprises.

5.4 Leases (AS 19)

The properties taken on lease/rental basis are renewable/ cancelable at the option of the Bank. The Bank's liabilities in respect of disputes pertaining to additional rent / lease rent are recognized on settlement or on renewal.

* No provision for Deferred Tax Liability on deduction claimed under Section 36(1)(viii) of the Income Tax Act, 1961 has been made as the same is considered as permanent difference consequent to the decision of the Bank not to withdraw the reserve.

5.5 Impairment of Assets (AS 28)

Fixed Assets being the non-financial assets possessed by the Bank are treated as "Corporate Assets" and not as Cash generating units, as such there is no impairment of assets and consequently no impairment loss has been recognized.

6 Dividend

Equity Shares: Provision for Equity Dividend represents proposed dividend at Rs 7.50 (75%) per Equity Share amounting to Rs 322.33 crore for the year (previous year at Rs 7.50 (75%) per Equity Share amounting to Rs 322.33 crore).

Perpetual Non-Cumulative Preference Shares: The Preference Dividend proposed for the year is Rs 40.00 crore, reckoned at 10% p.a. from April 01, 2011 to March 31, 2012 (Previous year Rs 40.00 crore at 10% p.a.).

7 Miscellaneous income includes:

i) a sum of Rs133.30 Crore (previous year Rs128.15 Crore) being recovery in written-off accounts.

ii) Rs 52.33 crore being reversal of Deferred Tax Liability created in the earlier years in respect of Special Reserve created U/S 36 (i) (viii) of the Income Tax Act, since in the opinion of the Management it is only a permanent difference and not capable of reversal.

iii) Rs 134.46 Crore (previous year Rs146.42 Crore) being recovery of processing charges during the year.

8. There is no outstanding dues payable by the bank to MSME units pending beyond the time limit prescribed under MSMED Act, 2006 as on 31.03.2012.

9. Previous year's figures have been regrouped / reclassified, wherever necessary, to conform to current year's figures.


Mar 31, 2011

1.0 Exchange Traded Interest Rate Derivatives

The Bank has not contracted any Exchange Traded Interest Rate Derivatives during the year under review.

1.1 Risk Exposure in Derivatives

1.1.1 Qualitative Disclosures :

Bank has been doing hedging of asset as well as liability using IRS. The hedging transactions have been accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Valuation of outstanding swap contracts is on marked to market basis.

All swap deals have been undertaken based on the guidelines of International Swaps Dealers Association. Bank has adequate internal approvals and control systems prior to concluding transactions. There exists a clear functional segregation between (i) trading (Dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

In the derivatives segment, the bank is doing proprietary trading in Currency Futures (CF) and Overnight Index Swaps (OIS). The activities in this segment are governed by the Derivatives Policy approved by the banks Board.

Exchange traded FIX Derivatives i.e. Currency Futures, are valued at the Exchange determined prices and the resultant gains and losses are recognized in the Profit and Loss account.

The gain or loss in OIS transactions is booked in the Profit and Loss account on the maturity or unwinding of the deal whichever is earlier. For the purpose of valuation of outstanding OIS deals, the fair value of the total swap is computed on the basis of the amount that would be receivable or payable on termination of the swap as on the balance sheet date. Losses arising therefrom, if any, are fully provided for while the profits , if any, are ignored.

The Bank is having the following products under derivatives.

- Overnight Index Swaps

- Currency Futures

No naked positions under the said heads were outstanding as on 31 March 2011.

1.1.2 During the year, the Bank had transferred a portion of its Government Securities (SLR) held in the AFS category to the HTM category at the least of Cost / Book Value / Market price pursuant to enabling regulatory guidelines. The shifting of securities of Rs.4982.05 crore (previous year Rs.1710.12 crore ) resulted in depreciation of Rs.176.23 crore (previous year Rs.49.23 crore).The depreciation provision available as on 31st March 2010 in GOI AFS securities amounting to Rs.138.72 crore was utilized and the balance amount of Rs.37.51 crore was debited to P&L account on account of shifting. The Bank also shifted Rs.1718.31 crore ( previous year Rs.1127.08 crore ) of government securities from HTM to AFS with out incurring any depreciation.

1.1.3 In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2010-11, a sum of Rs.43.38 crore (previous year Rs.71.05 crore) has been amortized and the same is reflected as a deduction from Income on Investments.

1.2 Unsecured Advances

Out of total unsecured advances, advances secured by intangible securities such as rights, licenses, authority etc charged to the bank as collateral in respect of projects (including infrastructure projects) is Rs..611.22 Crore. Estimated total value of such intangible collaterals mentioned above as on 31.03.2011 isRs. 12206.28 Crore available for lenders having charge.

2. MISCELLANEOUS

2.1 Reconciliation and Adjustments

2.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2011. The Bank through various effective steps has achieved reduction in the outstanding entries. Adjustment of the remaining outstanding entries is in progress. As per the Management, 10548 entries aggregating to Rs. 7.55 crore are outstanding.

2.1.2 In view of net credit position in respect of unreconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2011, no provision is required.

2.1.3 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

2.1.4 Balancing of subsidiary ledgers/registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential financial impact of the above on the accounts will not be significant.

2.2 Amount of Provision made for Income Tax during the year:

(Rs.. In crore) 2010-11 2009-10

Provision for Taxation (IT 6 WT) 920.39 796.62

a) The disputed Income Tax demand outstanding as at 31 03 2011 amounts to Rs. 507.35 Crore (previous year Rs..574.94 Crore), out of which Rs. 348.60 Crore (previous year Rs..348.34 Crore) has been paid / adjusted by the Department against refund orders. Considering the various judicial pronouncements on similar issues in favour of the Bank and the Appeals filed by the Bank for earlier Assessment Years pending before various appellate authorities, no provision is considered necessary.

The Bank has to pay tax under normal method for the current year. Hence, during the year, MAT entitlement credit to the tune of Rs. 120.00 Crore has been reversed out of the MAT credit entitlement assets created in the earlier years. Balance outstanding under MAT entitlement Credit account as on 31.03.2011 is Rs.436.27 Crore.

2.3 Disclosure of Penalties imposed by RBI

During the year, RBI has imposed penalty of Rs. 7.87 lakhs for shortfall in CRR and Rs. 2.50 lakhs for discrepancy in Currency Chest remittances.

2.4 Fixed Assets

2.4.1 Premises include properties costing Rs.. 11.11 Crore, the book value of which is Rs..64.50 Crore (previous year Rs.. 11.11 Crore and Rs..66.27 Crore respectively), for which registration formalities are in progress.

2.4.2 Bank revalued its immovable properties during the year 2008-09 at fair market value by approved valuers and the resultant appreciation of Rs.. 1057.76 Crore was credited to "Revaluation Reserve Account". Depreciation on the revalued portion amounting to Rs..30.52 Crore (previous year Rs..30.52 Crore) has been charged to Profit & Loss A/c and an equivalent withdrawal is made from the "Revaluation Reserve Account".

2.5 Break-up of Provisions & Contingencies shown under the head Expenditure in Profit and Loss Account:

(Rs.. in crore)

Provision made towards 2010 -11 2009-10

i) Depreciation in the value of Investments 61.431 (95.95)

ii) Non-Performing Advances 719.36 402.14

Investments (5,71) (10.04)

iii) Standard Advances 13.61 (0.38)

Income Tax & FBT 920.39 796.62

v> Restructured Advances 2.50 80.43

vi) Others (128.97) 19.54

Total 1577.61 1192.36

2.6 Floating Provisions : (Rs.. In crore)

Floating Provisions Account 2010-11 2009-10

Opening Balance (1st April) 205.00 105.00

(b) Additions during the year 0.00 0.00

(c) Reduction during the above year 65.42* NIL


*Towards NPA provisioning requirement under Agricultural Debt waiver and Debt Relief Scheme 2008

2.7 Letter of comfort issued by the Bank:

During the year ended 31.03.2011, 573 letters of comfort have been issued by the bank amounting to Rs.3214.98 Crore. The letters of comfort outstanding as on 31.03.2011 are 331 amounting to Rs.1180.94 Crore.

2.8 In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank maintains deposit to the extent of USD 43 mio (equivalent to (NR 191.76 Crore approx as on 31.03.2011) with Singapore Branch to meet the minimum Net adjusted Capital Funds requirement of the Branch.

2.9 Implementation of Agricultural Debt Waiver and Debt Relief Scheme, 2008 notified by Government of India Under Agricultural Debt Waiver to Small and Marginal Farmers, Bank has submitted Final Audited claim to the tune of Rs. 459.01 Crores to RBI on 24.06.2009.The entire claim amount of Rs. 459.01 crores has been reimbursed by RBI. The "Supplementary Claim" under Debt Waiver will be submitted to RBI before cut-off date i.e. 30.06.2011.

The Final Audited claim under Debt Relief to "Other Farmers": has been submitted to RBI for Rs. 57.57 crores on 30.06.2010 and got reimbursed. The "Additional Final Claim" under Debt Relief will be submitted to RBI before the cut- off date i.e. 30.06.2011.

2.10 Indian Bank Trust for Rural Development:

Indian Bank Trust for Rural Development has been set up by the Bank on 22.09.08 to exclusively focus on rural development and accomplish perceptibly better results by coordinating with various other players/ agencies who are also engaged in the development of rural areas. Total Contribution committed by the Bank to the Trust is Rs.10.00Crore. Contribution made by the Bank during the year is Rs.10.00 crores.

3. DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS):

3.1 CASH FLOW STATEMENT (AS 3)

The Cash Flow statement for the year 2010-11 is annexed separately.

3.2 EMPLOYEE BENEFITS (AS 15)

3.2.1 A sum of Rs 92 crore has been charged to Profit & Loss Account towards transitional liability arising upon first time implementation of AS 15 during the financial year 2007-08. The remaining unrecognized transitional liability to be charged to Profit & Loss Account in the remaining one year is Rs. 92 crore

3.2.2 "During the year, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of 12018 employees opting for pension, the bank has incurred a liability of X 961.60 crores (including Rs.148.38 crore for retired / separated employees). Further, during the year, the limit of gratuity payable to the employees of the banks was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the actuarial valuation of such gratuity liability of the Bank has increased by X 166.00 crores..

In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of X 1127.60 crores (ie.Rs. 961.60 crores + Rs. 166.00 crores) is required to be charged to the Profit and Loss Account. In accordance with the RBI circular no DBOD:BP:BC/80/21.04.018/2010-11 dated 09.02.2011, the following amounts have been charged to the Profit & Loss Account:

9.4 RELATED PARTY DISCLOSURES (AS 18)

Names of the Related Parties and their relationship with the Bank : a) Subsidiaries:

i. Ind Bank Housing Ltd.

ii. Indbank Merchant Banking Services Ltd.

iii. Indfund Management Ltd.

b) Associates : (Regional Rural Banks)

i) Pallavan Grama Bank

ii) Saptagiri Grameena Bank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri. T M Bhasin Chairman & Managing Director

Shri. Anup Sankar Bhattacharya Executive Director (upto 30.09.2010)

Shri. V RamaGopal Executive Director

Shri. Rajeev Rishi Executive Director (from 01.10.2010)

9.5 Leases (AS 19)

The properties taken on lease/rental basis are renewable/ cancelable at the option of the Bank. The Banks liabilities in respect of disputes pertaining to additional rent / lease rent are recognized on settlement or on renewal.

9.8 Impairment of Assets (AS 28)

Fixed Assets being the non-financial assets possessed by the Bank are treated as "Corporate Assets" and not as Cash generating units, as such there is no impairment of assets and consequently no impairment loss has been recognized.

10 Dividend

Equity Shares: Provision for Equity Dividend represents proposed dividend at Rs. 7.50 (75%) per Equity Share amounting to Rs.322.33 crore for the year (previous year at Rs..6.50 (65%) per Equity Share amounting to Rs..279.35 crore). Perpetual non-cumulative Preference Shares: The Preference Dividend proposed for the year is Rs. 40.00 crore, reckoned at 10% from April 01, 2010 to March 31, 2011 (Previous year Rs..40.00 crore at 10% p.a.).

11 Miscellaneous income include a sum of Rs.128.15 Crore (previous year Rs..241.30 Crore) being recovery in written-off accounts and Rs.146.42 Crore (previous year Rs.142.84 Crore) being recovery of processing charges during the year.

12 During the year a sum of Rs. 73.78 crore has been retrieved from the provision held for wage arrears which is no longer required.

13 Consequent to the disposal of appeals in favour of the Bank in October 2008 and no further appeals having been filed against such order, in the case relating to a Mutual Fund Scheme managed by one of the subsidiaries of the Bank, a sum of Rs. 73 Crore being the provision made during the financial year 1999-2000 is considered no longer required and accordingly retrieved during this year.

14 Bank has retrieved a provision of Rs. 76.21 Crore, out of provision for depreciation held for its investments in its two subsidiaries.

16 There is no outstanding dues payable by the bank to MSME units pending beyond the time limit prescribed under MSMED Act, 2006 as on 31.03.2011.

17 Previous years figures have been regrouped / reclassified, wherever necessary, to conform to current years figures.


Mar 31, 2010

1. DERIVATIVES

1.1 1.1 Forward Rate Agreements/Interest Rate Swaps (IRS)

In order to align our Bank with the ongoing market scenario and as an additional source of revenue stream besides hedging the risks on the balance sheet, it has been decided to set up a derivative desk in Treasury Branch of the Bank and accordingly derivative policy was approved by Board on 18th June 2009.

Bank started trading in OIS from 16th September 2009 for tenors of 5 years, 2 years, 1 year with various counter parties. The outstanding position of OIS as on 31st March 2010 is NIL.

The Bank also started proprietory trading in Currency Futures from 11th November 2009. There is no outstanding balance as on 31st March 2010. Singapore branch entered into Derivatives contracts of the nature of Interest Rate Swaps (IRS) to hedge on balance sheet assets. The notional principal value of Swaps was SGD 19.05 mio (INR 61.12 Crore) for a tenor ranging from 1-1/2 years to 3-1/2 years. IRS was undertaken for hedging purposes. The outstanding swap position was to receive floating rate of interest and pay Fixed rate of interest.

1.2 Exchange Traded Interest Rate Derivatives

The bank has not contracted any Exchange Traded Interest Rate Derivatives during the year under review.

1.3 Risk Exposure in Derivatives

1.2.1 Qualitative Disclosures :

Bank has been doing hedging of asset as well as liability using IRS. The hedging transactions have been accounted on an accrual basis. Swaps, which hedge interest bearing asset / liability, are accounted for as the asset or liability hedged. Valuation of outstanding swap contracts is on marked to market basis.

All swap deals have been undertaken based on the guidelines of International Swaps Dealers Association. Bank has adequate internal approvals and control systems prior to concluding transactions. There exists a clear functional segregation between (i) trading (dealing) (ii) back office (settlement, monitoring and control) and (iii) accounting sections.

2.2 Profit on account of sale of securities from HTM category amounting to Rs. 30.08 Crore (previous year Rs.24.13 Crore) has been taken to Profit and Loss Account and thereafter appropriated towards Capital Reserve Account.

2.3 During the year, the Bank had transferred a portion of its Government Securities (SLR) held in the AFS category to the HTM category at the least of Cost/Book Value/Market price pursuant to enabling regulatory guidelines. The shifting of securities of Rs.1710.12 Crore (previous year Rs.1763.42 Crore) resulted in depreciation of Rs.49.23 Crore (previous year Rs.37.90 Crore). The depreciation provision available as on 31st March 2009 in GOI AFS securities amounting to Rs.35.49 Crore was utilized and the balance amount of Rs.13.74 Crore was debited to P & L account on account of shifting. The Bank also shifted Rs.1127.08 Crore (previous year Rs.1047.06 Crore) of government securities from HTM to AFS without incurring any depreciation.

2.4 In case of securities classified under HTM category, if acquisition cost is more than the face value, the premium is amortized over the remaining period to maturity. For the Financial Year 2009-10, a sum of Rs.71.05 Crore (previous year Rs.53.72 Crore) has been amortized and the same is reflected as a deduction from Income on Investments.

3.1.b Non Performing Loan Provisioning Coverage Ratio is 93.65% (previous year 95.74%)

3.2 Unsecured Advances

Out of total unsecured advances, advances secured by intangible securities such as rights, licenses, authority etc charged to the bank as collateral in respect of projects (including infrastructure projects) is Rs.756.07 Crore and estimated value of such intangible collaterals mentioned above as on 31.03.2010 is Rs.236.77 Crore.

4. MISCELLANEOUS

4.1 Reconciliation and Adjustments

4.1.1 Reconciliation of Inter Branch Account is completed up to 31.03.2010. The Bank through various effective steps has achieved further reduction in the clearance of outstanding entries. Adjustment of the remaining outstanding entries is in progress.

4.1.2 In view of net credit position in respect of unreconciled entries in the Inter Branch Account outstanding for more than 6 months as on 31.03.2010, no provision is required.

4.1.3 Old outstanding entries in drafts payable, clearing adjustment, sundries receivable, sundry deposit accounts, etc. and in bank reconciliation relating to Reserve Bank of India and other banks are being regularly reviewed for appropriate adjustments.

4.1.4 Balancing of subsidiary ledgers/registers and reconciliation with general ledgers are in progress at some branches. In the opinion of the management, consequential impact of the above on the accounts will not be significant.

4.2 Amount of Provision made for Income Tax during the year:

a) The disputed Income Tax demand outstanding as at 31 03 2010 amounts to Rs. 574.94 Crore (previous year Rs.348.19 Crore), out of which Rs.348.34 Crore (previous year Rs.254.66 Crore) has been paid / adjusted by the Department against refund orders. Considering the various judicial pronouncements on similar issues in favour of the Bank and the Appeals filed by the Bank for earlier Assessment Years pending before various appellate authorities, no provision is considered necessary.

b) The additional tax liability on book profit consequent to the retrospective amendment to Sec 115JA and 115JB of the Income Tax Act, 1961 is Rs.58.02 Crore and the same has been charged to the Profit & Loss Account as current tax. The consequential entitlement to MAT credit under Sec 115JAA of Rs.213.33 Crore has been recognized and credited to Profit & Loss Account.

c) The Bank has to pay tax under normal method from this year. Hence, during the year, MAT entitlement credit to the tune of Rs.232.00 Crore has been reversed out of the MAT credit entitlement assets created in the earlier years. Balance outstanding under MAT entitlement Credit account as on 31.03.2010 is Rs.429.00 Crore.

4.3 Disclosure of Penalties imposed by RBI

No penalty has been imposed by RBI on the Bank and this disclosure is pursuant to RBI guidelines.

4.4 Fixed Assets

4.4.1 Premises include properties costing Rs. 11.11 Crore, the book value of which is Rs.66.27 Crore (previous year Rs. 11.11 Crore and Rs.68.06 Crore respectively), for which registration formalities are in progress.

4.4.2 Bank revalued its immovable properties during the year 2008-09 at fair market value by approved valuers and the resultant appreciation of Rs. 1057.76 Crore was credited to "Revaluation Reserve Account". Depreciation on the revalued portion amounting to Rs.30.52 Crore (previous year Rs.17.37 Crore) has been withdrawn from the "Revaluation Reserve Account".

4.4.3 The rate of depreciation on motor cars has been increased from 9.5% to 20% on Straight Line method from current year and on Cell phones from 15% to 100%. Small value items costing upto Rs.5000/- have been depreciated at 100%. The additional depreciation charged in the current year due to the above changes is Rs.10.58 Crore.

4.5 As against the past practice of charging 20% for secured portion on all D1 category advances 100% provision has been made from this year and the additional provision made during the year is Rs.119.83 Crore.

4.6 Letter of comfort issued by the Bank:

During the year ended 31.03.2010, 436 letters of comfort have been issued by the bank amounting to Rs.2968.85 Crore. The letters of comfort outstanding as on 31.03.2010 are 198 amounting to Rs.916.87 Crore.

4.7 In view of the Letter of Responsibility given by the Bank to the Monetary Authority of Singapore, the Bank maintains deposit to the extent of USD 43 mio (equivalent to INR 193.07 Crore approx as on 31.03.2010) with Singapore Branch to meet the minimum Net adjusted Capital Funds requirement of the Branch.

4.8 Draw down from reserves:

During the year, the bank has drawn down an amount of Rs.30,808/- from Revenue Reserve.

4.9 Implementation of Agricultural Debt Waiver and Debt Relief Scheme, 2008 notified by Government of India

Government of India notified Agricultural Debt Waiver and Debt Relief Scheme, 2008 for giving Debt Waiver to "Small and Marginal Farmers" and Debt Relief to "Other Farmers" who have availed direct agriculture loans. Debt Waiver to Small and Marginal Farmers: Final Audited claim for Debt Waiver to "Small and Marginal Farmers" has been submitted to RBI for Rs.459.01 Crore. Of which, settlement received upto 31.03.2010 was Rs.296.16 Crore. Debt Relief to "Other Farmers": The last date for payment of 75% share by "Other Farmers" has been extended upto 30.06.2010 by GOI. As advised by RBI, Final Claim and Additional Final Claim for Debt Relief will be submitted before 30.06.2010 and 30.06.2011 respectively. As of March 2010, Debt Relief to the tune of Rs.58.58 Crore has been provided to "Other Farmers".

5, DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS):

5.1 CASH FLOW STATEMENT (AS 3)

The Cash Flow statement for the year 2009-10 is annexed separately.

5.2 EMPLOYEE BENEFITS (AS 15)

5.2.1 Provision made for employee benefits viz. pension, gratuity, leave encashment etc., is Rs.230.36 Crore. In addition a sum of Rs.92 Crore has been charged to Profit & Loss Account towards transitional liability. The unrecognized transitional liability to be charged to Profit & Loss Account in the remaining two years is Rs.184 Crore.

5.3 RELATED PARTY DISCLOSURES (AS 18)

Names of the Related Parties and their relationship with the Bank : a) Subsidiaries:

i. Ind Bank Housing Ltd.

ii. Indbank Merchant Banking Services Ltd.

iii. Indfund Management Ltd.

b) Associates : (Regional Rural Banks)

i) Pallavan Grama Bank

ii) Saptagiri Grameena Bank

iii) Puduvai Bharathiar Grama Bank

c) Key Managerial Personnel:

Shri. M S Sundara Rajan* Chairman & Managing Director

Shri. A Subramanian Executive Director (upto 30.06.2009)

Shri. Anup Sankar Bhattacharya Executive Director Shri. V Rama Gopal Executive Director (from 07.12.2009)

*Shri T M Bhasin took charge as CMD w.e.f. 01.04.2010

5.4 Leases (AS 19)

The properties taken on lease/rental basis are renewable/ cancelable at the option of the Bank. The Banks liabilities in respect of disputes pertaining to additional rent / lease rent are recognized on settlement or orj renewal.

5.5 Impairment of Assets (AS 28)

Fixed Assets being the non-financial assets possessed by the Bank are treated as "Corporate Assets" and not as Cash generating units, as such there is no impairment of assets and consequently no impairment loss has been recognized.

6 Dividend

Equity: Provision for equity dividend includes interim dividend paid at 25% amounting to Rs.107.44 Crore (previous year 20% amounting to Rs.85.95 Crore) and proposed final dividend at 40% amounting to Rs.171.91 Crore (previous year 30% amounting to Rs.128.93 Crore).

Perpetual non-cumulative Preference Shares: The preference dividend proposed for the year is Rs.40 Crore reckoned at 10% from 01.04.2009 to 31.03.2010.

7 Miscellaneous income include a sum of Rs.241.30 Crore (previous year Rs.182.81 Crore) being recovery in written-off accounts and Rs.142.84 Crore (previous year Rs.57.70 Crore) being recovery of processing charges during the year.

8 During the year a sum of Rs.121 Crore has been provided towards arrears of employees remuneration/ benefits based on current assessment of the management pending finalization of the settlement. Appropriate adjustments will be carried out in the year of meeting the crystallized commitments.

9 During the current year, the Bank has earned commission etc, to the extent of Rs.18.21 Crore on sale/ marketing of various Bancassurance products (previous year Rs. 15.24 Crore).

10 There is no outstanding dues payable by the bank to MSME units pending beyond the time limit prescribed under MSMED Act, 2006 as on 31.03.2010.

11 Previous years figures have been regrouped / reclassified, wherever necessary, to conform to current years figures.

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