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

Notes to Accounts of South Indian Bank Ltd.

Mar 31, 2016

1. Sale and transfers to/ from HTM Category

During the current year, the value of sales/transfers of securities to/from HTM category (excluding one-time transfer of securities and sales to RBI under OMO auctions) was within 5% of the book value of investments held in HTM category at the beginning of the year.

2. Derivatives

The bank uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. Bank does not have any Forward Rate Agreement or Interest Rate Swaps. The notional principal amount of foreign exchange contracts classified as trading on March 31, 2016 amounted to Rs.4,705.11 crore (Previous Year Rs.19,452.70 crore). For these trading contracts, on March 31, 2016, marked to market position was asset of Rs.46.80 crore (Previous Year Rs.140.63 crore) and liability of Rs.46.76 crore (Previous Year Rs.140.70 crore). The notional principal amount of foreign exchange contracts classified as hedging on March 31, 2016 amounted to Rs.1,444.51 crore (Previous Year Rs.1,072.48 crore).

3. Details of Single Borrower Limit (SGL), Group Borrower Limit (GBL) exceeded by the Bankr

During the year ended 31 March, 2016 and 31 March, 2015, the Bank''s credit exposure to single borrower and group borrowers was within the prudential exposure limits prescribed by RBI.

4. Overseas Assets, NPAs and Revenue - Nil

24. Off-balance Sheet SPVs sponsored

The Bank has not sponsored any special purpose vehicle which is required to be consolidated in the consolidated financial statements as per accounting norms.

5. Drawdown from Reserves

a) The Bank has drawn down Rs.10.05 crore (Previous Year Rs.6.79 crore) from Investment Reserve Account in accordance with RBI guidelines on ''Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by banks''.

b) During the previous year, in accordance with the requirements of Schedule II of the Companies Act 2013, the Bank has re- assessed the useful lives of the fixed assets and an amount of Rs.9.38 crore (net of taxes) has been drawn from the Revenue and Other Reserve in respect of assets whose useful life is nil as at April 1, 2014.

6. Disclosures on Remuneration

a) Information relating to the composition and mandate of the Nomination & Remuneration Committee.

Composition.

The Nomination & Remuneration committee of the Board consists of three members of which one member from Risk Management Committee of the Board facilitate effective governance of compensation.

The roles and responsibilities of the Nomination & Remuneration Committee inter-alia includes the following:

- Scrutinizing the declarations received from persons to be appointed as Directors as well as from the existing Directors seeking re-appointment and make references to the appropriate authority/persons to ensure compliance with the requirements indicated by Reserve Bank of India vide their directive dated May 23, 201 1 on Fit & Proper Criteria of the Banks.

- To devise a Succession Planning Policy for the Board and Senior Management.

- To formulate a Nomination policy of the Board to guide the Board in relation to appointment/re-appointment/ removal of Directors.

- To identify persons who are qualified to become Directors/ KMPs and who may be appointed in senior management as defined in the Succession Policy in accordance with the criteria laid down and to recommend to the Board their appointment and/ or removal.

- To formulate the criteria for evaluation of Independent Directors and the Board/Committees.

- To devise a policy on Board diversity.

- To carry out any other function as is mandated by the Board from time to time and / or enforced by any statutory notification, amendment or modification, as may be applicable.

- To perform such other functions as may be necessary or appropriate for the performance of its duties.

- To oversee the framing, review and implementation of Bank''s overall compensation structure and related polices on remuneration packages payable to the WTDs/MD & CEO and other staff including performance linked incentives, perquisites, Stock option scheme etc. with a view to attracting, motivating and retaining employees and review compensation levels vis-a-vis other Banks and the industry in general.

- The Committee shall work in close coordination with the Risk Management Committee of the Bank, in order to achieve effective alignment between remuneration and risks. The Committee will also ensure that the cost/income ratio of the Bank supports the remuneration package consistent with maintenance of sound capital adequacy ratio.

- With respect to the Performance Linked Incentive Schemes, the Committee is empowered to:

(i) Draw up terms and conditions and approve the changes, if any, to the Performance Linked Incentive schemes;

(ii) Moderate the scheme on an ongoing basis depending upon the circumstances and link the same with the recommendations of Audit Committee;

(iii) Coordinate the progress of growth of business vis -a- vis the business parameters laid down by the Board and Audit Committee and effect such improvements in the scheme as considered necessary;

(iv) On completion of the year, finalize the criteria of allotment of marks to ensure objectivity/equity.

- The Committee shall also function as the Compensation Committee as prescribed under the SEBI (Share Based Employee Benefits) Regulations, 2014 and is empowered to formulate detailed terms and conditions of the Scheme, administer, supervise the same and to allot shares in compliance with the guidelines and other applicable laws.

- To obtain necessary clearances and approvals from regulatory authorities, appoint Merchant Bankers and do such other things as may be necessary in respect of the Employees Stock Option Scheme.

- To oversee the administration of Employee benefits, such as, provident fund, Pension Fund, Gratuity, Compensation for absence on Privilege/Sick/Casual Leave etc., which are recognized in accordance with Accounting Standard-15 (revised) specified in the Companies (Accounting Standards) Rules, 2006.

- The Committee may suggest amendments to any stock option plans or incentive plans, provided that all amendments to such plans shall be subject to consideration and approval of the Board;

- Any other matters regarding remuneration to WTDs/MD & CEO and other staffs of the Bank as and when permitted by the Board.

- To conduct the annual review of the Compensation Policy.

- To fulfill such other powers and duties as may be delegated to it by the Board.

b) Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy.

The Bank has formed the compensation policy based on the Reserve Bank of India guidelines vide its Circular No. DBOD. No.BC.72/29.67.001/201 1-12 dt. January 13, 2012.

The fixed remuneration and other allowances including retirement benefits of all subordinate, clerical and officers up to the rank of General Manager (Scale VII) is governed by the industry level wage settlement under Indian Banks Association (IBA) pattern. In respect of officers above the cadre of General Manager, the fixed remuneration is fixed by Board / Committee.

Further, the compensation structure for the Whole Time Directors (WTDs) / Managing Director & Chief Executive Officers (MD & CEO) of the bank are subject to approval of Reserve Bank of India in terms of Section 35 B of the Banking Regulation Act, 1949. The payment of compensation also requires approval of the shareholders of the Bank in the General Meeting pursuant to clause 95 of Articles of Association of the Bank read with Section 197 of the Companies Act, 2013.

c) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks.

The Board of Directors through the NRC shall exercise oversight and effective governance over the framing and implementation of the Compensation Policy. Human Resource Management under the guidance of MD & CEO shall administer the compensation and Benefit structure in line with the best suited practices and statutory requirements as applicable.

d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration. The factors taken in to account for the annual review and revision in the variable pay and performance bonus are:

- The performance of the Bank

- The performance of the business unit

- Individual performance of the employee

- Other risk perceptions and economic considerations.

Further, the Bank has not identified any employee as "risk taker" for the purpose of variable pay under this compensation policy.

e) A discussion of the bank''s policy on deferral and vesting of variable remuneration and a discussion of the bank''s policy and criteria for adjusting deferred remuneration before vesting and after vesting.

- Where the variable pay constitutes a substantial portion of the fixed pay, i.e., 50% or more, an appropriate portion of the variable pay, i.e., 40% will be deferred for over a period of 3 years.

- In case of deferral arrangements of variable pay, the deferral period shall not be less than three years. Compensation payable under deferral arrangements shall vest no faster than on a pro rata basis.

- The Board may adopt principles similar to that enunciated for WTDs / CEOs, as appropriate, for variable pay-timing, m''alus / clawback, guaranteed bonus and hedging.

- Employee Stock Option Scheme / Employee Stock Option Plan as may be framed by the Board from time to time in conformity with relevant statutory provisions and SEBI guidelines as applicable will be excluded from the components of variable pay.

f) Description of the different forms of variable remuneration (i.e., cash, shares, ESOPs and other forms) that the bank utilizes and the rationale for using these different forms.

Variable pay means the compensation as fixed by the Board on recommendation of the Committee, which is based on the performance appraisal of an employee in that role, that is, how well they accomplish their goals. It may be paid as:

(i) Performance Linked Incentives to those employees who are eligible for incentives.

(ii) Exgratia for other employees who are not eligible for Performance linked Incentives.

(iii) Bonus for those staff members who are eligible for bonus under the Payment of Bonus Act, 1965

(iv) Any other incentives, by whatever name called having the features similar to the above.

7. Securitisation Transactions

The Bank has not done any securitisation transactions during the year ended 31 March, 2016 and 31 March, 2015.

8. Credit Default Swaps

The bank has not taken any transactions in credit default swaps during the year ended March 31, 2016 and March 31, 2015.

9. Letter of Comfort (LoCs) issued by Banks:

The Bank has not issued any reportable Letter of Comfort during the year ended March 31, 2016 and March 31, 2015 respectively.

10. 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. The objective of this policy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion. In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage.

Further, the Bank reviews the unhedged foreign currency exposure across its portfolio on a periodic basis. The Bank also maintains incremental provision towards the unhedged foreign currency exposures of its borrowers in line with the extant RBI guidelines. The Bank has maintained provision of Rs.10.07 crore (Previous Year Rs.15.12 crore) and additional capital of Rs.8.42 crore (Previous Year Rs.17.10 crore) on account of Unhedged Foreign Currency Exposure of its borrowers as at March 31, 2016.

11. Qualitative Disclosure around LCR

The Bank measures and monitors the LCR in line with the Reserve Bank of India''s circular dated June 9, 2014 on "Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards". The LCR guidelines aim to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain High Quality Liquid Assets of a minimum of 100% of its Net Cash Outflows by January 1, 2019. However, with a view to providing transition time, the guidelines mandate a minimum requirement of 70% w.e.f. January 1, 2016 and a step up of 10% every year to reach the minimum requirement of 100% by January 1, 2019. The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank towards complying with LCR mandate ahead of the stipulated time lines. The monthly average LCR of the bank for the quarter March 2016 is 143.94%.

The Bank has been maintaining HQLA primarily in the form of SLR investments over and above mandatory requirement, regulatory dispensation allowed upto 2% of NDTL in the form of borrowing limit available through Marginal Standing Facility (MSF) and 5% of NDTL as Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR). From February 2016 onwards, RBI has allowed Banks to reckon an additional 3% of NDTL as FALLCR. Level 1 asset contributes to 97.99% of the total high quality liquid assets of the bank of which the major contribution is from the Government securities.

The principal components of the estimated cash out flows which could arise in next 30 days are retail deposits (59.36%) and unsecured wholesale funding (27.75%). The bank intends to fund the short term cash outflows from extremely liquid Government securities and funding for estimated cash outflows considered in LCR computation substantially flows from this source.

Bank has only forward contract as derivative exposure. The bank is managing its liquidity from the centralized fund management cell attached to Treasury Department, Mumbai.

12. Intra-Group Exposure - Nil.

13. Inter-bank participation with risk sharing

The aggregate amount of participation purchased by the Bank, shown as advances as per regulatory guidelines, outstanding as of March 31, 2016 was ''689 crore (Previous Year: Nil).

B: Other Disclosures

1. Fixed Assets

a) Premises of the Bank were revalued as on March 31, 2011 in accordance with the policy formulated by the Bank based on RBI guidelines by professionally qualified independent valuers empanelled by the Bank using the indices based on current market price. The written down value of the premises has been increased from Rs.192.31 crore to Rs.326.18 crore and the resultant appreciation in the value amounting to Rs. 133.87 crore has been credited to revaluation reserve during 2010-11.

b) The software capitalized under Fixed Asset (Net of depreciation) was Rs.24.86 crore (PY Rs.13.34 crore) as at March 31, 2016.

Notes:

(i) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.

(ii) Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the funds during the estimated term of the obligations.

(iii) The estimates of future salary increases, considered in actuarial valuation, take account the inflation, seniority, promotion and other relevant factors.

h) Compensation for absence on Privilege / Sick / Casual Leave

The charge on account of compensation for privilege / sick / casual leave has been actuarially determined and an amount of Rs.25.27 crore (Previous year Rs.18.98 crore) has been debited to Profit and Loss account.

The above information is as certified by actuary and relied upon by the auditor.

14. The Bank has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year-end together with interest paid/ payable as required under the said Act have not been given.

15. Segment reporting

Business Segments have been identified and reported taking into


Mar 31, 2015

Background

The South Indian Bank Limited (Rs.SIBRs. or the Rs.BankRs.) was incorporated on January 29, 1929 at Thrissur as a private limited company and was later converted into a public limited company on August 11, 1939. SIB has a network of 842 branches in India and provides retail and corporate banking, Para banking activities such as debit card, third party product distribution, in addition to Treasury and Foreign Exchange Business. SIB is governed by Banking Regulation Act, 1949 and other applicable Acts/Regulations. Its shares are listed in Bombay Stock Exchange and National Stock Exchange. The bank has de-listed its shares from the Cochin Stock Exchange during the year.



As at As at March 31, 2015 March 31,2014 Rs.(''000) Rs.(''000)

SCHEDULE 1 - CONTINGENT LIABILITIES (Refer Schedule 17(11))

I. Claims against the Bank not acknowledged as debts:

(i) Service Tax disputes 211,117 21,600

(ii) Others 71,606 62,542

II. Liability on account of outstanding Forward

Exchange Contracts1 249,159,994 169,284,431

III. Guarantees given on behalf of constituents in India 14,795,637 11,746,807

IV Acceptances, endorsements and other obligations 7,522,969 10,234,262

V. Other items for which the bank is contingently liable:

(i) Capital Commitments 17,580 -

(ii) Transfers to Depositor Education and Awareness Fund (DEAF) 421,800 -

TOTAL 272,200,703 191,349,642

1 Represents notional amount

2. Derivatives

The bank uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. Bank does not have any Forward Rate Agreement or Interest Rate Swaps.

Item (ii) above includes Rs.82.07 crores in respect of sale of certain non-performing financial assets for which, the Bank has, in terms of RBI Circular DBOD.BP.BC.No.9/21.04.048/2014-15 on "Prudential norms on income recognition, asset classification and provisioning pertaining to advances" dated July 1, 2014 spread the net short fall in recovery of net book value of Rs. 8.32 crores included in item (v) above, over a period of two years. Consequently an amount of Rs. 1.66 crores has been charged to the profit and loss account during the year ended March 31, 2015 and the unamortized balance as at March 31,2015 amounts to Rs. 6.66 crores. The shortfall in respect of sale of standard financial assets amounting to Rs. 29.42 crores has been debited to the profit and loss account.

3. Penalties levied by the Reserve Bank of India

The penalty imposed by RBI during the year ended March 31, 2015 was Rs.52,550/- (Previous year Rs.47,830/-)

4. Draw Down from Reserves

a) In accordance with the requirements of Schedule II of the Companies Act, 2013, the Bank has re-assessed the useful lives of the fixed assets and an amount of Rs.9.38 crores (net of taxes) has been drawn from the Revenue and Other Reserve in respect of assets whose useful life is nil as at April 1, 2014.

b) In accordance with Reserve Bank of India guidelines vide circular No. DBOD. No. BP BC. 77/ 21.04.018/ 2013-14 dated December 20, 2013, the Bank has created Deferred Tax Liability amounting to Rs.20.49 crore during the previous year on the Special Reserve under Section 36 (i) (viii) of Income Tax Act. Out of the total DTL created an amount of Rs.14.71 crore pertaining to the Special Reserve outstanding as at March 31,2013 has been drawn from the General Reserve as permitted.

c) During the previous year, in accordance with the exemption from the provisions of Section 13 of Banking Regulation Act, 1949 granted vide Central Government Notification No. S.O.214 (E) dated January 21,2014, the bank had appropriated an amount of Rs.4.49 crore from Share Premium Account towards expenditure incurred in connection with Qualified Institutional Placement Issue as per the provisions of Section 78 of the Companies Act, 1956. There is no such transfer in the current year.

B: OTHER DISCLOSURES

1. Fixed Assets

Premises of the Bank were revalued as on March 31, 2011 in accordance with the policy formulated by the Bank based on RBI guidelines by professionally qualified independent valuers empanelled by the Bank using the indices based on current market price. The written down value of the premises has been increased from Rs.192.31 crore to Rs.326.18 crore and the resultant appreciation in the value amounting to Rs. 133.87 crore has been credited to revaluation reserve during 2010-11.

The software capitalized under Fixed Asset (Net of depreciation) was Rs.13.34 crores. (PY Nil) as at March 31, 2015.

5. Related party disclosure:

a. Key Management Personnel

Sri V. G. Mathew, Managing Director & Chief Executive Officer. (01.10.2014 to 31.03.2015) Dr. V. A. Joseph, Managing Director & Chief Executive Officer. (01.04.2014 to 30.09.2014) Sri C. P. Gireesh, Chief Financial Officer (01.04.2014 to 31.03.2015)

Sri Jimmy Mathew, Company Secretary (01.04.2014 to 31.03.2015)

6. Employee Benefits

a) Retirement Benefits

The bank has recognized the following amounts in the Profit and Loss account towards employee benefits as under:

The employee benefits on account of pension, gratuity and Leave have been ascertained on actuarial valuation in accordance with Accounting Standard - 15 (revised).

During the year ended 31.03.201 1, the Bank had re-opened the pension option for those employees who had joined the Bank prior to 29th September 1995 and had not opted for the pension scheme earlier. Consequently, 2217 employees had exercised their option for the pension scheme and the bank has incurred an extra liability of Rs.135.13 crore. Further, during the year ended 31.03.201 1, the limit of gratuity payable to the employees of the bank was also enhanced from Rs.3.50 Lakhs to Rs.10.00 Lakhs, pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank has increased by Rs. 21.40 crore. The extra cost of pension and gratuity to employees works out to Rs.156.53 crore.

In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of Rs.156.53 crore is required to be charged to the Profit and Loss account for the year ended 31.03.201 1. However, in accordance with the circular issued by Reserve Bank of India vide reference number DBOD.BP.BC.80/21.04.018/2010-11 dated February 9, 2011, and made applicable to our bank vide DBOD No.BP. BC.15896/21.04.018/2010-11 dated April 8, 2011, the Bank would amortize the amount of Rs.156.53 crore over a period of five years. During the current year 2014-15, bank has amortized an amount of Rs.22.49 crore (Rs.20.41 crore towards pension and Rs.2.08 towards gratuity) to complete the amortization. Had the above circular been not issued by the RBI, Net profit of the Bank for the year would have been higher by Rs.14.85 crore pursuant to the application of AS 15.

9. Tier II Bonds

Lower Tier II Bonds outstanding as at March 31,2015 (included under Schedule 14 Borrowings) is Rs.200.00 crore (Previous Year Rs. 200.00 crore).

Amount reckoned for Tier II Capital as per RBI guidelines is Rs.200.00 crore (Previous Year Rs.200.00 crore).

10. Disclosures on Remuneration

a) Information relating to the composition and mandate of the Remuneration Committee.

Composition

The remuneration committee of the Board consists of three members of which one member from Risk Management Committee of the Board facilitate effective governance of compensation.

The roles and responsibilities of the Compensation & Remuneration Committee are as follows:

- To oversee the framing, review and implementation of Bank''s overall compensation structure and related polices on remuneration packages payable to all employees and the WTDs / MD & CEO including performance linked incentives, perquisites, stock option scheme etc., with a view to attract, motivate and retain employees and review compensation levels vis-a-vis other Banks and the industry in general.

- The CRC works in close coordination with the Risk Management Committee of the Bank, in order to achieve effective alignment between remuneration and risks. The CRC also ensures that the cost / income ratio of the Bank supports the remuneration package consistent with maintenance of sound capital adequacy ratio.

- With respect to the performance linked incentive schemes, the CRC is empowered to:

(i) Draw up terms and conditions and approve the changes, if any, to the performance linked incentive schemes;

(ii) Moderate the scheme on an ongoing basis depending upon the circumstances and link the same with the recommendations of Audit Committee;

(iii) Coordinate the progress of growth of business vis -a- vis the business parameters laid down by the Board and Audit Committee and effect such improvements in the scheme as are considered necessary;

(iv) On completion of the year, finalize the criteria of allotment of marks to ensure objectivity / equity.

- The CRC also functions as the Compensation Committee as prescribed under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and is empowered to formulate detailed terms and conditions of the scheme, administer, supervise the same and to allot shares in compliance with the guidelines and other applicable laws.

- To obtain necessary clearances and approvals from regulatory authorities, appoint merchant bankers and do such other things as may be necessary in respect of the Employees Stock Option Scheme.

- To oversee the administration of employee benefits, such as, provident fund, pension fund, gratuity, compensation for absence on privilege / sick / casual leave etc., which are recognized in accordance with Accounting Standard 15 (revised) notified under Section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014.

- The CRC may suggest amendments to any stock option plans or incentive plans, provided that all amendments to such plans shall be subject to consideration and approval of the Board.

- Any other matters regarding remuneration to WTDs / MD & CEO and other staffs of the Bank as and when permitted by the Board.

- To conduct the annual review of the Compensation Policy.

- To fulfill such other powers and duties as may be delegated to it by the Board.

b) Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy.

The Bank has formed the compensation policy based on the Reserve Bank of India guidelines vide its Circular No. DBOD. No.BC.72/29.67.001/2011-12 dt. January 13, 2012.

The fixed remuneration and other allowances including retirement benefits of all subordinate, clerical and officers up to the rank of General Manager (Scale VII) is governed by the industry level wage settlement under Indian Banks Association (IBA) pattern. In respect of officers above the cadre of General Manager, the fixed remuneration is fixed by Board / Committee.

Further, the compensation structure for the Whole Time Directors (WTDs) / Managing Director & Chief Executive Officers (MD & CEO) of the bank are subject to approval of Reserve Bank of India in terms of Section 35 B of the Banking Regulation Act, 1949. The payment of compensation also requires approval of the shareholders of the Bank in the General Meeting pursuant to clause 95 of Articles of Association of the Bank read with Section 197 of the Companies Act, 2013.

c) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks.

The Board of Directors through the CRC shall exercise oversight and effective governance over the framing and implementation of the Compensation Policy. Human Resource Management under the guidance of MD & CEO shall administer the compensation and Benefit structure in line with the best suited practices and statutory requirements as applicable.

d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration. The factors taken in to account for the annual review and revision in the variable pay and performance bonus are:

- The performance of the Bank

- The performance of the business unit

- Individual performance of the employee

- Other risk perceptions and economic considerations.

Further, the Bank has not identified any employee as "risk taker" for the purpose of variable pay under this compensation policy.

e) A discussion of the bankRs.s policy on deferral and vesting of variable remuneration and a discussion of the bankRs.s policy and criteria for adjusting deferred remuneration before vesting and after vesting.

- Where the variable pay constitutes a substantial portion of the fixed pay, i.e., 50% or more, an appropriate portion of the variable pay, i.e., 40% will be deferred for over a period of 3 years.

- In case of deferral arrangements of variable pay, the deferral period shall not be less than three years. Compensation payable under deferral arrangements shall vest no faster than on a pro rata basis.

- The Board may adopt principles similar to that enunciated for WTDs / CEOs, as appropriate, for variable pay-timing, mRs.alus / clawback, guaranteed bonus and hedging.

- Employee Stock Option Scheme / Employee Stock Option Plan as may be framed by the Board from time to time in conformity with relevant statutory provisions and SEBI guidelines as applicable will be excluded from the components of variable pay.

f) Description of the different forms of variable remuneration (i.e., cash, shares, ESOPs and other forms) that the bank utilizes and the rationale for using these different forms.

- Variable pay means the compensation as fixed by the Board on recommendation of the Committee, which is based on the performance appraisal of an employee in that role, that is, how well they accomplish their goals. It may be paid as:

I. Performance Linked Incentives to those employees who are eligible for incentives.

II. Exgratia for other employees who are not eligible for Performance linked Incentives.

III. Bonus for those staff members who are eligible for bonus under the Payment of Bonus Act, 1965

IV. Any other incentives, by whatever name called having the features similar to the above.

12. Credit Default Swaps: The bank has not taken any credit default swaps during the year and the balance outstanding as at March 31, 2015 is nil.

NO Contingent liability Brief Description

1 Claims not acknowledged as debts This includes liability on account of Service tax, and other legal cases filed against the bank. The bank is a party to various legal proceedings in the ordinary course of business and these are contested by the Bank and are therefore subjudice. The bank does not expect the outcome of these proceedings to have a material adverse impact on the bankRs.s financial position.

2 Liability on account of outstanding The bank enters into foreign exchange contracts with interbank participants on its own forward contracts account and for its customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contract rate.

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

4 Acceptances, endorsements and As a part of banking activities, the Bank issues documentary credit on behalf of its other obligations customers. Documentary credits such as letters of obligations, enhancing the credit standing of the customers of the bank which generally represent irrevocable assurances that the bank will make payments in the event of customer failing to fulfill its financial obligations

5 Other items for which the bank is These include amounts which may become payable in respect of capital commitments. contingently liable

* Also refer schedule - 12

17. 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. The objective of this policy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion. In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage.

Further, the Bank reviews the unhedged foreign currency exposure across its portfolio on a periodic basis. The Bank also maintains incremental provision towards the unhedged foreign currency exposures of its borrowers in line with the extant RBI guidelines. The Bank has maintained provision of Rs.15.12crores (PY Nil) and additional capital of Rs.17.10 crores (PY Nil) on account of Unhedged Foreign Currency Exposure of its borrowers as at March 31,2015.

19. Qualitative Disclosure around LCR

The Bank measures and monitors the LCR in line with the Reserve Bank of IndiaRs.s circular dated June 9, 2014 on "Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards". The LCR guidelines aim to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain High Quality Liquid Assets of a minimum of 100% of its Net Cash Outflows by January 1, 2019. However, with a view to provide transition time, the guidelines mandate a minimum requirement of 60% w.e.f. January 1, 2015 and a step up of 10% every year to reach the minimum requirement of 100% by January 1, 2019. The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank towards complying with LCR mandate ahead of the stipulated time lines. The monthly average LCR of the bank for the quarter ended March 2015 is 107.06%.

The Bank has been maintaining HQLA primarily in the form of SLR investments over and above mandatory requirement, regulatory dispensation allowed upto 2% of NDTL in the form of borrowing limit available through Marginal Standing Facility (MSF) and 5% of NDTL as Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR). Level 1 asset contributes to 98.27% of the total high quality liquid assets of the bank of which the major contribution is from the Government securities.

The principal components of the estimated cash out flows which could arise in next 30 days are retail deposits (47.15%) and unsecured wholesale funding (28.84%). The bank intends to fund the short term cash outflows from extremely liquid Government securities and funding for estimated cash outflows considered in LCR computation substantially flows from this source.

Bank has only forward contract as derivative exposure. The bank is managing its liquidity from the centralized fund management cell attached to Treasury Department, Mumbai.

20. Figures of the previous year have been regrouped to confirm to the current year presentation wherever necessary.


Mar 31, 2014

1. Derivatives

The bank uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. Bank does not have any Forward Rate Agreement or Interest Rate Swaps.

2. Details of Single Borrower Limit (SGL), Group Borrower Limit (GBL) exceeded by the bank

During the year the bank had sanctioned credit limits, with the approval of the Board, to the following borrowers which were in excess of prudential exposure limits as indicated hereunder.

3. Penalties levied by the Reserve Bank of India

The penalty imposed by RBI during the year ended March 31, 2014 was Rs.47,830 (Previous year Nil)

4. Provisions and Contingencies debited to Profit and Loss Account (Rs. in Crore)

Break up of ''Provisions and Contingencies'' (Rs. in Crore) shown under the head Expenditure in Profit and Loss Account 31.03.2014 31.03.2013

Provision for NPA/NPIs 136.92 131.90

Provision for taxes (Net)* 242.41 182.97

Deferred Tax (Net) (20.97) (29.38)

Provision for Standard Assets 31.09 32.49

Provision for Restructured Advances 9.70 18.63

Provision for depreciation in the value of investments (28.47) 11.23

Others 6.]6 (1.53)

TOTAL 376.84 346.31

* Includes Wealth Tax Rs.0.03 Crore (Rs.0.02 Crore).

5. Draw Down from Reserves

a) In accordance with Reserve Bank of India guidelines vide Circular No. DBOD. No. BP. BC. 77/21.04.018/2013-14 dated December 20, 2013, the Bank has created Deferred Tax Liability amounting to Rs.20.49 Crore during the current year on the Special Reserve under Section 36 (1) (viii) of Income Tax Act. Out of the total DTL created an amount of Rs.14.71 Crore pertaining to the Special Reserve outstanding as at March 31, 2013 has been drawn from the General Reserve as permitted.

b) In accordance with the exemption from the provisions of Section 13 of Banking Regulation Act, 1949 granted vide Central Government Notification No. S.0.214 (E) dated January 21, 2014, the bank had appropriated an amount of Rs.4.49 Crore from Share Premium Account towards expenditure incurred in connection with QIP Issue as per the provisions of Section 78 of the Companies Act, 1956.

B. OTHER DISCLOSURES

1. Fixed Assets

Premises of the Bank were revalued as on 31.03.2011 in accordance with the policy formulated by the Bank based on RBI guidelines by professionally qualified independent valuers empanelled by the Bank using the indices based on current market price. The written down value of the premises has been increased from Rs.192.31 Crore to Rs.326.18 Crore and the resultant appreciation in the value amounting to Rs.133.87 Crore has been credited to revaluation reserve during 2010-11.

Note: In FY 2012-13, the Board of Directors of the Bank passed a resolution to not withdraw any amount in the future from the Special Reserve created under Section 36(1)(Viii) of the Income Tax Act 1961. Accordingly, the Bank treated the tax difference arising on account of the special reserve as a permanent difference and reversed the deferred tax liability previously created in March 31, 2012 in respect of such Special Reserve.

Pursuant to a Notification No. DBOD. No. BP.BC.77 / 21.04.018 / 2013-14 dated December 20, 2013 issued by the Reserve Bank of India, all banks are now required to create deferred tax liability in respect of the Special Reserve created under Section 36(1)(Viii) of the Income Tax Act 1961 on a prudent basis. Accordingly, the Bank has created a deferred tax liability of Rs.20.49 Crores as at March 31, 2014. Out of this amount, an amount of Rs.14.71 Crores which pertains to periods prior to March 31, 2013 has been debited to the general reserve and the amount of Rs.5.78 Crores which pertains to the year ended March 31, 2014 has been debited to the profit and loss account in accordance with the accounting treatment prescribed by the Reserve Bank of India through the above notification. Had the Bank debited the opening deferred tax liability for financial years up to March 31, 2013 to the profit and loss account in accordance with accounting principles generally accepted in India, the profit after tax of the Bank for the year ended March 31, 2014 would have been lower by Rs.14.71 Crores.

6. Related Party Disclosure:

a. Key Management Personnel

Dr. V. A. Joseph, Managing Director & Chief Executive Officer.

b. Gross Remuneration paid Rs.79.24 Lakhs (Previous year Gross Rs.70.40 Lakhs).

Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits as they are determined on an actuarial basis for the bank as a whole.

The employee benefits on account of pension, gratuity and leave have been ascertained on actuarial valuation in accordance with Accounting Standard 15 (revised).

During the year ended 31.03.2011, the Bank had re-opened the pension option for those employees who had joined the Bank prior to 29th September, 1995 and had not opted for the pension scheme earlier. Consequently, 2217 employees had exercised their option for the pension scheme and the bank has incurred an extra liability of Rs.135.13 Crore. Further, during the year ended 31.03.2011, the limit of gratuity payable to the employees of the bank was also enhanced from Rs.3.50 Lakhs to Rs.10.00 Lakhs, pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank has increased by Rs.21.40 Crore. The extra cost of pension and gratuity to employees works out to Rs.156.53 Crore.

In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of Rs.156.53 Crore is required to be charged to the Profit and Loss account for the year ended 31.03.2011. However, in accordance with the Circular issued by Reserve Bank of India vide reference number DBOD.BPBC.80 / 21.04.018 / 2010- 11 dated February 9, 2011, and made applicable to our bank vide DBOD No.BP.BC.15896 / 21.04.018 / 2010- 11 dated April 8, 2011, the Bank would amortize the amount of Rs.156.53 Crore over a period of five years. During the current year 2013-14, bank has amortized an amount of Rs.28.23 Crore (Rs.24.72 Crore towards pension and Rs.3.51 Crore towards gratuity) and balance unamortized amount to be carried forward as on 31.03.2014 is Rs.22.49 Crore. Had the above circular been not issued by the RBI, Net Profit of the Bank for the year would have been higher by Rs.18.63 Crore pursuant to the application of AS 15 and the reserve would have been lower by Rs.22.49 Crore.

h) Compensation for absence on Privilege / Sick / Casual Leave

The charge on account of compensation for privilege / sick / casual leave has been actuarially determined and a charge of Rs.11.52 Crore (Previous year Rs.10.97 Crore) has been debited to Profit and Loss account.

7. The Bank has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year-end together with interest paid / payable as required under the said Act have not been given.

8. Tier II Bonds

Lower Tier II Bonds outstanding as at March 31, 2014 is Rs.200.00 Crore (Previous Year Rs.265.00 Crore). Amount reckoned for Tier II Capital as per RBI guidelines is Rs.200.00 Crore (Previous Year Rs.200.00 Crore).

9. Disclosures on Remuneration

(a) Information relating to the composition and mandate of the Remuneration Committee.

The Board of Directors of Bank through the Compensation and Remuneration Committee (CRC) of the Board oversee the framing, review and implementation of compensation policy. The CRC comprise 4 independent directors including the non-executive chairman.

CRC of the Bank as on March 31, 2014 is having the following independent directors:

- Mr. Amitabha Guha, Chairman

- Mr. Paul Chalissery

- Mr. Mohan E. Alapatt

- Dr. John Joseph Alapatt

The roles and responsibilities of the CRC are as follows:

- To oversee the framing, review and implementation of Bank''s overall compensation structure and related polices on remuneration packages payable to all employees and the WTDs / MD & CEO including performance linked incentives, perquisites, stock option scheme etc., with a view to attract, motivate and retain employees and review compensation levels vis-a-vis other Banks and the industry in general.

- The CRC works in close coordination with the Risk Management Committee of the Bank, in order to achieve effective alignment between remuneration and risks. The CRC also ensures that the cost/income ratio of the Bank supports the remuneration package consistent with maintenance of sound capital adequacy ratio.

- With respect to the performance linked incentive schemes, the CRC is empowered to:

a) Draw up terms and conditions and approve the changes, if any, to the performance linked incentive schemes;

b) Moderate the scheme on an ongoing basis depending upon the circumstances and link the same with the recommendations of Audit Committee;

c) Coordinate the progress of growth of business vis-a-vis the business parameters laid down by the Board and Audit Committee and effect such improvements in the scheme as are considered necessary;

d) On completion of the year, finalize the criteria of allotment of marks to ensure objectivity / equity.

- The CRC also functions as the Compensation Committee as prescribed under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and is empowered to formulate detailed terms and conditions of the scheme, administer, supervise the same and to allot shares in compliance with the guidelines and other applicable laws.

- To obtain necessary clearances and approvals from regulatory authorities, appoint merchant bankers and do such other things as may be necessary in respect of the Employees Stock Option Scheme.

- To oversee the administration of employee benefits, such as, provident fund, pension fund, gratuity, compensation for absence on privilege / sick / casual leave etc., which are recognized in accordance with Accounting Standard 15 (revised) specified in the Companies (Accounting Standards) Rules, 2006.

- The CRC may suggest amendments to any stock option plans or incentive plans, provided that all amendments to such plans shall be subject to consideration and approval of the Board.

- Any other matters regarding remuneration to WTDs/MD&CEO and other staffs of the Bank as and when permitted by the Board.

- To conduct the annual review of the Compensation Policy.

- To fulfill such other powers and duties as may be delegated to it by the Board.

(b) Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy.

The Bank has formed the compensation policy based on the Reserve Bank of India guidelines vide its Circular No. DBOD. No. BC. 72/29.67.001 /2011-12 dtd. 13/01 /2012.

The fixed remuneration and other allowances including retirement benefits of all subordinate, clerical and officers up to the rank of General Manager (Scale VII) is governed by the industry level wage settlement under Indian Banks Association (IBA) pattern. In respect of officers above the cadre of General Manager, the fixed remuneration is fixed by Board / Committee.

Further, the compensation structure for the Whole Time Directors (WTDs) / Managing Director & Chief Executive Officers (MDSCEO)of the bank are subject to approval of Reserve Bank of India in terms of Section 35 B of the Banking Regulation Act, 1949. The payment of compensation also requires approval of the shareholders of the Bank in the General Meeting pursuant to Clause 95 of Articles of Association of the Bank read with the Section 309 (1) of the Companies Act, 1956.

(c) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks.

The Board of Directors through the CRC shall exercise oversight and effective governance over the framing and implementation of the Compensation policy. Human Resource Management under the guidance of MD & CEO shall administer the compensation and Benefit structure in line with the best suited practices and statutory requirements as applicable.

(d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration and a discussion of the bank''s policy on deferral and vesting of variable remuneration and a discussion of the bank''s policy and criteria for adjusting deferred remuneration before vesting and after vesting.

The factors taken in to account for the annual review and revision in the variable pay and performance bonus are:

- The performance of the Bank

- The performance of the business unit

- Individual performance of the employee

- Other risk perceptions and economic considerations.

Further, the Bank has not identified any employee as "risk taker" for the purpose of variable pay under this compensation policy.

(e) Description of the different forms of variable remuneration (i.e., cash, shares, ESOPs and other forms) that the bank utilizes and the rationale for using these different forms.

- Variable pay means the compensation as fixed by the Board on recommendation of the Committee, which is based on the performance appraisal of an employee in that role, that is, how well they accomplish their goals. It may be paid as:

i. Performance Linked Incentives to those employees who are eligible for incentives.

ii. Ex-gratia for other employees who are not eligible for Performance linked Incentives.

iii. Bonus for those staff members who are eligible for bonus under the Payment of Bonus Act, 1965.

iv. Any other incentives, by whatever name called having the features similar to the above.

- Where the variable pay constitutes a substantial portion of the fixed pay, i.e., 50% or more, an appropriate portion of the variable pay, i.e., 40% will be deferred for over a period of 3 years.

- In case of deferral arrangements of variable pay, the deferral period shall not be less than three years. Compensation payable under deferral arrangements shall vest no faster than on a pro rata basis.

- The Board may adopt principles similar to that enunciated for WTDs /CEOs, as appropriate, for variable pay-timing, malus/clawback, guaranteed bonus and hedging.

- Employee Stock Option Scheme / Employee Stock Option Plan as may be framed by the Board from time to time in conformity with relevant statutory provisions and SEBI guidelines as applicable, will be excluded from the components of variable pay.

10. Credit Default Swaps: NIL.

11. Description of contingent liabilities

Sl. Contingent liability * Brief Description No.

1. Claims not acknowledged as This includes liability on account of Service tax, and other legal cases filed against the bank. The debts bank is a party to various legal proceedings in the ordinary course of business and these are contested by the Bank and are therefore sub judice. The bank does not expect the outcome of these proceedings to have a material adverse impact on the bank''s financial position.

2. Liability on account of The bank enters into foreign exchange contracts with inter-bank participants on its own account outstanding forward contracts and for its customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contract rate.

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

4. Acceptances, endorsements and As a part of banking activities, the Bank issues documentary credit on behalf of its customers, other obligations Documentary credits such as letters of obligations, enhancing the credit standing of the customers of the bank which generally represent irrevocable assurances that the bank will make payments in the event of customer failing to fulfil its financial obligations.

5. Other items for which the bank These include amounts which may become payable in respect of capital commitments, is contingently liable

* Also refer Schedule - 12

12. Figures of the previous year have been regrouped to confirm to the current year presentation wherever necessary.

SCHEDULE 13 - CONTINGENT LIABILITIES

I. Claims against the Bank not acknowledged as debts:

(i) Service Tax disputes 21,600 21,600

(ii) Others 62,542 65,830

II. Liability on account of outstanding Forward

Exchange Contracts1 169,284,431 72,584,035

III. Guarantees given on behalf of constituents in India 11,746,807 25,339,493

IV. Acceptances, endorsements and other obligations 10,234,262 7,538,973

V. Other items for which the bank is contingently liable:

Capital Commitments - - 283,700

TOTAL 191,349,642 105,833,631


Mar 31, 2013

General

The South Indian Bank Limited (SIB) was incorporated on January 29, 1929 at Trichur as a private limited company and was later converted into a public limited company on August 11, 1939. SIB has a network of 750 branches in India and provides retail and corporate banking, para banking activities such as debit card, third party product distribution, in addition to Treasury and Foreign Exchange Business. SIB is governed by Banking Regulation Act, 1949 and other applicable Acts / Regulations. Its shares are listed in leading stock exchanges in India.

Basis of Preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting and reporting policies of SIB used in the preparation of these financial statements conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 as amended to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting, and the historical cost convention, except where otherwise stated.

The preparation of financial statements requires the management to make estimates and assumptions in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statement and the reported income and expenses during the reporting period. Management believes that the estimates and assumptions used in preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates.

1. Derivatives

The bank uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. Bank does not have any Forward Rate Agreement or Interest Rate Swaps.

2. Details of Single Borrower Limit (SGL), Group Borrower Limit (GBL) exceeded by the bank

During the current and previous year the bank had not sanctioned credit limits which were in excess of prudential exposure limits.

3. Penalties Levied by the Reserve Bank of India

No penalties were levied by the Reserve Bank of India during the financial years ended March 31, 2013 and March 31, 2012.

1. The provision has been made in accordance with prudential norms on Income recognition, asset classification and provisioning pertaining to advances, in respect of non-performing advances and investments and a special dispensation issued by Reserve Bank of India (RBI) vide their letter No. DBS (T) No.674/02.05.06/2012-13 dated December 31, 2012, for an advance of Rs. 150.00 Crore. Accordingly, the bank has recognized a provision of Rs. 90.00 Crore up to March 31, 2013 in respect of the above advance and the remaining provision is proposed to be made as permitted by RBI taking in to account the outcome of ongoing negotiations for settlement with the borrower.

2. Includes Wealth Tax Rs. 0.02 Crore (Rs.. 0.02 Crore)

3. The bank has adopted a board resolution that it has no intention to make withdrawal from the special reserve created and maintained under Section 36(1)(viii) of the Income Tax Act , the special reserve created and maintained is not capable of being reversed and thus it becomes a permanent difference. Accordingly the bank does not create any deferred tax liability on the said reserve and has reversed the deferred tax liability amounting to Rs. 9.82 Crore created during earlier years.

4. Draw Down from Reserves

In accordance with Reserve Bank of India guidelines, an amount net of taxes and net of transfer to statutory reserves of Rs. 5.69 Crore (Previous Year Rs. 7.13 Crore), has been drawn from Investment Reserve Account and credited to Profit and Loss account to the extent of provisions made during the year towards depreciation in investments in AFS and HFT categories.

A. OTHER DISCLOSURES 1. Fixed Assets

Premises of the Bank were revalued as on 31.03.2011 in accordance with the policy formulated by the Bank based on RBI guidelines by professionally qualified independent valuers empanelled by the Bank using the indices based on current market price. The written down value of the premises has been increased from Rs. 192.31 Crore to Rs. 326.18 Crore and the resultant appreciation in the value amounting to Rs. 133.87 Crore has been credited to revaluation reserve during 2010-11.

5. Related Party Disclosure

a. Key Management Personnel

Dr. V A. Joseph, Managing Director & Chief Executive Officer.

b. Gross Remuneration paid Rs. 70.40 Lakhs (Previous year Gross Rs. 56.79 Lakhs).

Note: The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits as they are determined on an actuarial basis for the bank as a whole.

The employee benefits on account of pension, gratuity and Leave have been ascertained on actuarial valuation in accordance with Accounting Standard - 15 (revised).

During the year ended 31.03.2011, the Bank had re-opened the pension option for those employees who had joined the Bank prior to 29th September 1995 and had not opted for the pension scheme earlier. Consequently, 2217 employees had exercised their option for the pension scheme and the bank has incurred an extra liability of Rs. 135.13 Crore. Further, during the year ended 31.03.2011, the limit of gratuity payable to the employees of the bank was also enhanced from Rs.3.50 Lakhs to Rs.10.00 Lakhs, pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank has increased by Rs. 21.40 Crore. The extra cost of pension and gratuity to employees works out to Rs. 156.53 Crore.

In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of Rs. 156.53 Crore is required to be charged to the Profit and loss account for the year ended 31.03.201 1. However, in accordance with the circular issued by Reserve Bank of India vide reference number DBOD.BP.BC.80/21.04.018/2010-11 dated February 9, 2011, and made applicable to our bank vide DBOD No.BP.BC.15896/21.04.018/2010-11 dated April 8, 2011, the Bank would amortize the amount of Rs.156.53 Crore over a period of five years. During the current year 2012-13, bank has amortized an amount of Rs. 33.59 Crore (Rs.. 28.74 Crore towards pension and Rs. 4.85 Crore towards gratuity) and balance unamortized amount to be carried forward as on 31.03.2013 is Rs. 50.72 Crore. Had the above circular been not issued by the RBI, Net profit of the Bank for the year would have been higher by Rs. 22.69 Crore pursuant to the application of AS 15 and the reserve would have been lower by Rs. 50.72 Crore.

Notes:

(i) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.

(ii) Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the funds during the estimated term of the obligations.

(iii) The estimates of future salary increases, considered in actuarial valuation, take account the inflation, seniority, promotion and other relevant factors.

h) Compensation for absence on Privilege / Sick / Casual Leave

The charge on account of compensation for privilege / sick / casual leave, has been actuarially determined and a charge of Rs. 10.97 Crore (Previous year write-back of Rs. 2.55 Crore) has been debited to Profit and Loss account.

(Note: The above information is as certified by Actuary and relied upon by Auditors.)

6. The Bank has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year-end together with interest paid/payable as required under the said Act have not been given.

7. Tier II Bonds

Lower Tier II Bonds outstanding as at March 31, 2013 is Rs. 265.00 Crore (Previous Year Rs. 265.00 Crore).

Amount reckoned for Tier II Capital as per RBI guidelines is Rs. 200.00 Crore (Previous Year Rs. 213.00 Crore).

8. Disclosures on Remuneration

(a) Information relating to the composition and mandate of the Remuneration Committee.

The Board of Directors of Bank through the Compensation and Remuneration Committee (CRC) of the Board oversee the framing, review and implementation of compensation policy. The CRC comprise 4 independent directors including the non executive chairman.

CRC of the Bank as on March 31, 2013 is having the following independent directors:

- Mr. Amitabha Guha, Chairman

- Mr. Paul Chalissery

- Mr. Mohan E. Alapatt

- Dr. John Joseph Alapatt

The roles and responsibilities of the CRC are as follows:

- To oversee the framing, review and implementation of Bank''s overall compensation structure and related polices on remuneration packages payable to all employees and the WTDs/MD & CEO including performance linked incentives, perquisites, stock option scheme etc. with a view to attract, motivate and retain employees and review compensation levels vis-a-vis other Banks and the industry in general.

- The CRC works in close coordination with the Risk Management Committee of the Bank, in order to achieve effective alignment between remuneration and risks. The CRC also ensures that the cost/income ratio of the Bank supports the remuneration package consistent with maintenance of sound capital adequacy ratio.

- With respect to the performance linked incentive schemes, the CRC is empowered to:

a. Draw up terms and conditions and approve the changes, if any, to the performance linked incentive schemes;

b. Moderate the scheme on an ongoing basis depending upon the circumstances and link the same with the recommendations of Audit Committee;

c. Coordinate the progress of growth of business vis -a- vis the business parameters laid down by the Board and Audit Committee and effect such improvements in the scheme as are considered necessary;

d. On completion of the year, finalize the criteria of allotment of marks to ensure objectivity/equity.

- The CRC also functions as the Compensation Committee as prescribed under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and is empowered to formulate detailed terms and conditions of the scheme, administer, supervise the same and to allot shares in compliance with the guidelines and other applicable laws.

- To obtain necessary clearances and approvals from regulatory authorities, appoint merchant bankers and do such other things as may be necessary in respect of the Employees Stock Option Scheme.

- To oversee the administration of employee benefits, such as, provident fund, pension fund, gratuity, compensation for absence on privilege/sick/casual leave etc., which are recognized in accordance with Accounting Standard-15 (revised) specified in the Companies (Accounting Standards) Rules, 2006.

- The CRC may suggest amendments to any stock option plans or incentive plans, provided that all amendments to such plans shall be subject to consideration and approval of the Board;

- Any other matters regarding remuneration to WTDs/MD&CEO and other staffs of the Bank as and when permitted by the Board.

- To conduct the annual review of the Compensation Policy

- To fulfill such other powers and duties as may be delegated to it by the Board.

(b) Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy.

The Bank has formed the compensation policy based on the Reserve Bank of India guidelines vide its circular no. DBOD.No.BC.72/29.67.001/2011-12 dtd. 13/01/2012.

The fixed remuneration and other allowances including retirement benefits of all subordinate, clerical and officers up to the rank of General Manager (Scale VII) is governed by the industry level wage settlement under Indian Banks Association (IBA) pattern. In respect of officers above the cadre of General Manager, the fixed remuneration is fixed by Board/Committee.

Further, the compensation structure for the Whole Time Directors (WTDs)/ Managing Director & Chief Executive Officers (MD & CEO) of the bank are subject to approval of Reserve Bank of India in terms of Section 35 B of the Banking Regulation Act, 1949. The payment of compensation also requires approval of the shareholders of the Bank in the General Meeting pursuant to Clause 95 of Articles of Association of the Bank read with the Section 309 (1) of the Companies Act, 1956.

(c) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks.

The Board of Directors through the CRC shall exercise oversight and effective governance over the framing and implementation of the Compensation policy. Human Resource Management under the guidance of MD & CEO shall administer the compensation and Benefit structure in line with the best suited practices and statutory requirements as applicable.

(d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration and a discussion of the bank''s policy on deferral and vesting of variable remuneration and a discussion of the bank''s policy and criteria for adjusting deferred remuneration before vesting and after vesting.

The factors taken in to account for the annual review and revision in the variable pay and performance bonus are:

- The performance of the Bank

- The performance of the business unit

- Individual performance of the employee,

- Other risk perceptions and economic considerations

Further, the Bank has not identified any employee as "risk taker" for the purpose of variable pay under this compensation policy.

(e) Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms) that the bank utilizes and the rationale for using these different forms.

- Variable pay means the compensation as fixed by the Board on recommendation of the Committee, which is based on the performance appraisal of an employee in that role, that is, how well they accomplish their goals. It may be paid as:

i. Performance Linked Incentives to those employees who are eligible for incentives.

ii. Ex-gratia for other employees who are not eligible for Performance linked Incentives.

iii. Bonus for those staff members who are eligible for bonus under the Payment of Bonus Act, 1965

iv. Any other incentives, by whatever name called having the features similar to the above.

- Where the variable pay constitutes a substantial portion of the fixed pay, i.e. 50% or more, an appropriate portion of the variable pay, i.e. 40% will be deferred for over a period of 3 years.

- In case of deferral arrangements of variable pay, the deferral period shall not be less than three years. Compensation payable under deferral arrangements shall vest no faster than on a pro rata basis.

- The Board may adopt principles similar to that enunciated for WTDs/CEOs, as appropriate, for variable pay-timing, malus/clawback, guaranteed bonus and hedging.

- Employee Stock Option Scheme/Employee Stock Option Plan as may be framed by the Board from time to time in conformity with relevant statutory provisions and SEBI guidelines as applicable, will be excluded from the components of variable pay.

9. Other Assets includes Rs. 5.12 Crore representing expenses incurred in relation to the Qualified Institutional Placement (QIP) issue of equity shares in excess of the amount permissible under Section 13 of the Banking Regulation Act, 1949. The bank has applied to the Central Government for necessary approval and pending receipt of the same has held such amount in Escrow account, not debited/charged such expense to the share premium account.

10. Figures of the previous year have been regrouped to confirm to the current year presentation wherever necessary.


Mar 31, 2012

General

The South Indian Bank Limited (SIB) was incorporated on January 29, 1929 at Trichur as a private limited company and was later converted into a public limited company on August 11, 1939. SIB has a net work of 700 branches in India and provides retail and corporate banking, para banking activities such as debit card, third party product distribution, in addition to Treasury and Foreign Exchange Business. SIB is governed by Banking Regulation Act, 1949 and other applicable Acts / Regulations. Its shares are listed in leading stock exchanges in India.

Basis of Preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the Banking Regulation Act, 1949. The accounting and reporting policies of SIB used in the preparation of these financial statements conform to Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by Reserve Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 as amended to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting, and the historical cost convention, except where otherwise stated.

The preparation of financial statements requires the management to make estimates and assumptions in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statement and the reported income and expenses during the reporting period. Management believes that the estimates and assumptions used in preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates.

Note:-

*Amount subjected to restructuring as on the date of approval of restructuring proposal.

Outstanding in the above restructured loans as at March 31, 2012 are Rs 52.58 Crore, Rs 1.52 Crore and Rs 505.37 Crore under CDR mechanism, SME Debt restructuring and others respectively.

1. Derivatives

The bank uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations. Bank does not have any Forward Rate Agreement or Interest Rate Swaps

* includes net credit of Rs 14.49 Crores in respect of earlier years (previous year -Nil)

(b) Disputed Tax for earlier years

The following deductions under the Income Tax Act, 1961 are considered in computing the income chargeable to tax

(i) Bad Debts written off u/s 36 (1) (vii) pertaining to non rural branches.

(ii) Provision for Bad and Doubtful debts u/s 36(1)(viia) subject to limits prescribed under the Act.

The above deductions were under dispute before the Supreme Court through Special Leave Petition (SLP). The earlier decision of Division Bench of Kerala High Court in favour of the Bank, have been reversed by the Full Bench of the Kerala High Court subsequently and the matter was pending before the Supreme Court. The total estimated liability on account of this dispute has been disclosed as contingent liability (refer Schedule 12) for the year ended 31.03.2011. During the current year, Honorable Supreme Court upheld the decision of the Division Bench in respect of that matter, relating to Bad Debts written off u/s 36(1)(iii) and accordingly, the contingent liability stands extinguished. Management continues to be confident of a favorable outcome in respect of the issues relating to Sec 36(1)(viia) and Sec 14A pending before the Supreme Court.

2. Penalties Levied by the Reserve Bank of India

No penalties were levied by the Reserve Bank of India during the financial years ended March 31, 2012 and March 31, 2011.

3. Draw Down from reserves

In accordance with Reserve Bank of India guidelines, an amount net of taxes and net of transfer to statutory reserves of Rs 7.13 Crore (Previous Year Rs 4.69 Crore), has been drawn from Investment Reserve Account and credited to Profit and Loss account to the extent of provisions made during the year towards depreciation in investments in AFS and HFT categories.

A : OTHER DISCLOSURES

1. Fixed Assets

Premises of the Bank were revalued as on 31.03.2011 in accordance with the policy formulated by the Bank based on RBI guidelines by professionally qualified independent valuers empanelled by the Bank using the indices based on current market price. The written down value of the premises has been increased from Rs 192.31 crore to Rs 326.18 crore and the resultant appreciation in the value amounting to Rs 133.87 crore has been credited to revaluation reserve during 2010-11.

4. Related party disclosure:

a) Key Management Personnel

Dr. V A Joseph, Managing Director & Chief Executive Officer.

b) Gross Remuneration paid Rs 56.79 Lakhs (Previous year Gross Rs 54.15 Lakhs).

Note: - The remuneration to the key managerial personnel does not include the provisions made for gratuity and leave benefits as they are determined on an actuarial basis for the bank as a whole

The employee benefits on account of pension, gratuity and Leave have been ascertained on actuarial valuation in accordance with Accounting Standard - 15 (revised).

During the year ended 31.03.2011, the Bank had re-opened the pension option for those employees who had joined the Bank prior to 29th September 1995 and had not opted for the pension scheme earlier. Consequently, 2217 employees had exercised their option for the pension scheme and the bank has incurred an extra liability of Rs 135.13 crore. Further, during the year ended 31.03.201 1, the limit of gratuity payable to the employees of the bank was also enhanced from Rs 3.50 lakh to Rs 10.00 Lakh, pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank has increased by Rs 21.40 crore. The extra cost of pension and gratuity to employees works out to Rs 156.53 crore.

In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of Rs 156.53 crore is required to be charged to the Profit and loss account for the year ended 31.03.2011. However, in accordance with the circular issued by Reserve Bank of India vide reference number DBOD.BPBC.80/21 .04.018/2010-11 dated February 9, 2011, and made applicable to our bank vide DBOD No.BP.BC.15896/21.04.018/2010-11 dated April 8, 2011, the Bank would amortise the amount of Rs 156.53 crore over a period of five years. Accordingly, Rs 31.31 crore (representing one-fifth of Rs 156.53 crore) has been charged to the profit and loss account of the previous year and the balance amount of Rs 125.22 crore has been carried forward for write off in next four years. During the current year 2011-12, bank has amortised an amount of Rs 40.91 crores (Rs 34.23 Crore towards pension and Rs 6.68 towards gratuity) and balance unamortized amount to be carried forward as on 31.03.2012 is Rs 84.31 Crore. Accordingly, as a consequence of the above circular, profit of the Bank for the year is lower by Rs 40.91 crores and the reserves are higher by Rs 84.31 Crore.

Notes:

(i) Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.

(ii) Expected rate of return on plan assets is based on the average long term rate of return expected on investments of the funds during the estimated term of the obligations.

(iii) The estimates of future salary increases, considered in actuarial valuation, take account the inflation, seniority, promotion and other relevant factors.

a) Compensation for absence on Privilege / Sick / Casual Leave

The charge on account of compensation for privilege / sick / casual leave, has been actuarially determined and excess provision of Rs 2.55 crore (Previous year charge of Rs 0.69 Crore) has been credited to Profit and Loss account.

(Note: The above information is as certified by Actuary and relied upon by Auditors.)

5. The Bank has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/ payable as required under the said Act have not been given.

6. Tier II Bonds

Lower Tier II Bonds outstanding as at March 31, 2012 is Rs 265.00 Crore (Previous Year Rs 265.00 Crore). Amount reckoned for Tier II Capital as per RBI guidelines is Rs 213.00 Crore (Previous Year Rs 226.00 Crore).

7. The figures of previous year were audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates.

8. Figures of the previous year's have been regrouped to confirm to the current year presentation wherever necessary.


Mar 31, 2010

1. SEGMENT REPORTING

Business Segments have been identified and reported taking into account, the target customer profile, the nature of product and services, the differing risks and returns, the organization structure, the internal business reporting system and guidelines issued by RBI vide notification dated April 18, 2007. The Bank operates in the following segments;

a) Treasury

The treasury services segment primarily consists of interest earnings on investments portfolio of the bank, gains or losses on investment operations and earnings from foreign exchange business. The principal expenses of the segment consist of interest expense on funds borrowed and other expenses.

b) Corporate / Whole sale Banking

The Corporate / Whole sale Banking segment provides loans and other banking services to corporate segment identified on the basis of RBI guidelines. Revenues of this segment consist of interest earned on Loans made to Corporate customers and the charges / fees earned from other banking services. The principal expenses of the segment consist of interest expense on funds borrowed and other expenses.

c) Retail banking

The Retail Banking segment provides loans and other banking services to non corporate customers identified on the basis of RBI guidelines. Revenues of this segment consist of interest earned on Loans made to non corporate customers and the charges / fees earned from other banking services. The principal expenses of the segment consist of interest expense on funds borrowed and other expenses.

d) Other Banking Operations

This segment includes income from para banking activities such as debit cards, third party product distribution and associated costs.

Geographic segment

The Bank operates only in domestic segment.

2. EARNINGS PER SHARE (EPS)

The Bank reports Basic and Diluted Earnings per Equity Share in accordance with Accounting Standard 20, specified in Companies (Accounting Standards) Rules, 2006. Basic EPS has been computed by dividing Net Profit for the year by the weighted average number of Equity Shares outstanding for the period. Diluted EPS has been computed using the weighted average number of Equity Shares and dilutive potential equity shares outstanding as on the Balance Sheet date except where the results are anti dilutive.

3. TAXES ON INCOME

The income tax expense comprises current tax and deferred tax. Current tax is measured at the amount expected to be paid in respect of taxable income for the year in accordance with the Income Tax Act. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax asset is recognised subject to prudence and judgment that realization is more likely than not. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted before the balance sheet date. Changes in deferred tax assets / liabilities on account of changes in enacted tax rates are given effect to in the profit and loss account in the period of the change.

4. IMPAIRMENT OF ASSETS

The bank assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. Impairment loss, if any, is provided in the Profit and Loss Account to the extent the carrying amount of assets exceeds their estimated recoverable amount.

5. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance with Accounting Standard 29, Provisions, Contingent Liabilities and Contingent Assets specified in Companies (Accounting Standards) Rules, 2006, the Bank recognizes provisions when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

Provisions are determined based on management estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of loss can not be reasonably estimated, a disclosure is made in the financial statements.

Contingent assets, if any, are not recognized in the financial statements since this may result in the recognition of Income that may never be realized.

6. NET PROFIT

Net Profit is arrived at after provisions for contingencies, which include Provision for:

i) Depreciation on Investments;

ii) Standard Assets and Non-Performing Advances and investments;

iii) Taxation in accordance with statutory requirements.

7. Asset quality

Percentage of net NPAs to net advances works out to 0.39 % (1.13% as on 31.03.2009).

Provision for Non-Performing Advances and unrealised interest thereon are deducted from various categories of advances on a proportionate basis except the Provision for Standard Assets, which is included under "Other Liabilities".

8. Derivatives

The bank uses forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The bank has not entered into any derivative instruments for trading / speculative purposes either in Foreign Exchange or domestic treasury operations.

9. Penalties Levied by the Reserve Bank of India

No penalties were levied by the Reserve Bank of India during the financial years ended March 31, 2010 and March 31, 2009.

10. Reconciliation

Identification of items pending adjustment in inter branch accounts (including Extension counters), demand drafts paid and payable, sundries, inter bank and clearing have been completed upto March 31, 2010. Elimination of pending items in the above is in progress and in the opinion of the management, its consequential impact in the accounts will not be material.

In accordance with the guidelines issued by Reserve Bank of India vide Notification dated May 11, 2009, an amount of Rs. 0.25 Crore being the un-reconciled entries of individual value less than USD 2500 in nostro accounts originated upto March 31, 2002 have been credited to the Profit & Loss Account for the current year and is included in the amount appropriated to the Revenue and Other Reserves.

B: Other Disclosures

1. Fixed Assets

Some of the Banks Premises were revalued as on 31.03.2000 and as on 31.03.2005. The resultant appreciation in value has been credited to Revaluation Reserve.

2. Accounting for Employee Share Based Payments.

The Shareholders of the Bank approved Employees Stock Option Scheme ESOS 2008 on August 18, 2008. Under the terms of the scheme, the Bank had granted Stock Options equivalent to 30,72,500 Equity Shares to the Employees of the Bank. Compensation Committee of the Board (CCB) granted the options on November 21, 2009 at a discount of 10% on the closing price of the shares quoted on NSE on November 20, 2009.

The Bank had elected to use intrinsic value method to account the compensation cost of ESOS. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

3. Related party disclosure:

a) Key Management Personnel

Dr. V A Joseph, Managing Director & Chief Executive Officer.

b) Remuneration paid Rs. 41.58 Lakhs (Previous year Rs. 36.67 Lakhs).

4. Employee Benefits

The employee benefits on account of pension, gratuity and Leave have been ascertained on actuarial valuation and provided for in accordance with Accounting Standard - 15 (revised).

a. Compensation for absence on Privilege / Sick / Casual Leave

The charge on account of compensation for privilege / sick / casual leave, has been actuarially determined and the excess provision of Rs. 3.57 Crore (Previous year shortfall of provision Rs. 18.77 Crore) has been credited / (debited) to Profit and Loss account.

(Note: The above information is as certified by Actuary and relied upon by Auditors.)

4. Expenditure on VRS.

The proportionate expenditure on VRS amounting to Rs 1.81 Crore (Previous year Rs. 1.80 Crore) has been charged to revenue and the balance expenditure to be amortised is NIL (Previous year Rs. 1.81 Crore).

5. Wage revision

Based on the recently concluded industry level settlement of wage revision, a sum of Rs. 29.50 Crore (Previous year Rs. 21.25 Crore) has been provided / paid towards arrears for the period from November 1, 2007 on an estimated basis and included under payments to and provision for employees.

6. The Bank has not received any intimation from "Suppliers" regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/ payable as required under the said Act have not been given.

7. Description of contingent liabilities

1 Claims not acknowledged This includes liability on account of Service tax, FERA and legal cases filed as debts against the bank. The bank is a party to various legal proceedings in the ordinary course of business and these are contested by the Bank and are therefore subjudice. The bank does not expect the outcome of these proceedings to have a material adverse impact on the banks financial position.

2 Liability on account of The bank enters into foreign exchange contracts with inter bank outstanding forward participants on its own account and for its customers. Forward exchange contracts contracts are commitments to buy or sell foreign currency at a future date at the contract rate.

3 Guarantees on behalf of As a part of banking activities, the Bank issues documentary credit and constituents in India guarantees on behalf of its customers. Documentary credits such as letters of obligations, enhancing the credit standing of the customers of the bank. Guarantees generally represent irrevocable assurances that the bank will make payments in the event of customer failing to fulfill its financial or performance obligations.

4 Acceptances, endorsements These include contingent liabilities on account of bills sent for collection. and other obligations

5 Other items for which These include amounts payable in respect of capital commitments. the bank is contingently liable * Also refer schedule - 12

12. Previous years figures have been regrouped / given in brackets, wherever necessary to conform to the current year classification.



 
Subscribe now to get personal finance updates in your inbox!