Home  »  Company  »  Indian Bank  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Indian Bank

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.

Find IFSC