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Notes to Accounts of State Bank of India

Mar 31, 2016

1. Share Capital

a) During the year, the Bank received application money of Rs. 5,393.00
crore (Previous Year Rs. 2,970.00 crore), including share premium of Rs.
5,373.34 crore (Previous Year Rs. 2,959.95 crore), from Government of
India against preferential issue of 19,65,59,390 ( Previous Year
10,04,77,012) equity shares of Rs. 1 each to Government of India. The
equity shares were allotted on 29.09.2015.

b) The Bank received application money of Rs. 2,970.00 crore, including
share premium of Rs. 2,959.95 crore, from Government of India against
preferential issue of 10,04,77,012 equity shares of Rs. 1 each to
Government of India on 31.03.2015. The equity shares were allotted on
01.04.2015.

c) 9,720 Equity Shares of Rs. 1 each that had been issued as a part of
the Right Issue -2008 but allotment of which was kept in abeyance, were
allotted on 16.07.2015 and amount of Rs. 9,720.00 credited to Capital
Account and Rs. 15,35,760.00 credited to Share Premium Account. Balance
of such shares issued and kept in abeyance is 8,21,030 (Previous Year
8,30,750) of Rs. 1 each, since they are subject to title disputes or are
subjudice.

d) Expenses in relation to the issue of shares: Rs. 8.66 crore (Previous
Year Rs. Nil) is debited to Share Premium Account.

2. Innovative Perpetual Debt Instruments (IPDI)

The details of IPDI issued which qualify for hybrid Tier 1 Capital and
outstanding are as under:

b. Securities amounting to Rs. 2,827.96 crore (Previous Year Rs. 13,779.33
crore) are kept as margin with Clearing Corporation of India
Limited(CCIL) / NSCCL / MCX / uSEIL / NSEIL / BSE towards securities
settlement.

c. During the year the Bank infused additional capital in its
subsidiaries and associates viz. i) State Bank of Patiala Rs. 799.99
crore, ii) SBI Foundation Rs. 1 crore, iii) Nagaland Rural Bank Rs. 0.97
crore and iv) Ellaquai Dehati Bank Rs. 8.90 crore.

d. During the year, State Bank of Travancore allotted 94,81,518 equity
shares of Rs. 10 each at a premium of Rs. 390.00 per share to the Bank
amounting to Rs. 379.26 crore under right issue and thus stake of the
Bank has increased from 78.91% to 79.09%.

e. During the year, the Bank has sold 24,00,000 equity shares of CCIL
at a profit of Rs. 108 crore. Thus, the Bank''s stake reduced from 26.00%
to 21.20%.

3. Repo Transactions (including Liquidity Adjustment Facility - LAF)

The details of securities sold and purchased under Repos and Reverse
Repos including LAF during the year are given below:

(A) Qualitative Risk Exposure

i. The Bank currently deals in over-the-counter (OTC) interest rate and
currency derivatives as also in Interest Rate Futures and Exchange
Traded Currency Derivatives. Interest Rate Derivatives dealt by the
Bank are rupee interest rate swaps, foreign currency interest rate
swaps and forward rate agreements, Cap, Floor and Collars. Currency
derivatives dealt by the Bank are currency swaps, rupee dollar options
and cross-currency options. The products are offered to the Bank''s
customers to hedge their exposures and the Bank enters into derivatives
contracts to cover such exposures. Derivatives are used by the Bank
both for trading as well as hedging balance sheet items. The Bank also
runs option position in uSD/ INR, which is managed through various
types of loss limits and Greek limits.

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

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

iv. The accounting policy for derivatives has been drawn-up in
accordance with RBI guidelines, the details of which are presented
under Schedule 17: Significant Accounting Policies (SAP) for the
financial year 2015-16.

v. Interest Rate Swaps are mainly used at Foreign Offices for hedging
of the assets and liabilities.

vi. Apart from hedging swaps, swaps at Foreign Offices consist of back
to back swaps done at our Foreign Offices which are done mainly for
hedging of FCNR deposits at Global Markets, Kolkata.

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

@ The swaps amounting to Rs. 7,811.17 crore (Previous Year Rs. 8,486.92
crore) entered with the Bank''s own foreign offices are not shown here as
they are for hedging of FCNB corpus and hence not marked to market.

# IRS/FRA amounting to Rs. 11,232.11 crore (Previous Year Rs. 14,072.53
crore) entered with the Bank''s own Foreign offices are not shown here as
they are for hedging of FCNB corpus and hence not marked to market.

* The forward contract deals with our own Foreign Offices are not
included. Currency Derivatives – Nil (Previous Year Rs. 7,757.17 crore)
and Interest Rate Derivatives – Nil (Previous Year Rs. 62.39 crore)

1. The outstanding notional amount of derivatives done between Global
Markets unit and International Banking Group as on 31st March 2016
amounted to Rs. 19,043.28 crore (Previous Year Rs. 30,379.01 crore) and the
derivatives done in- between SBI Foreign Offices as on 31st March 2016
amounted to Rs. 18,071.97 crore (Previous Year Rs. 14,995.17 crore).

2. The outstanding notional amount of interest rate derivatives which
are not marked-to-market (MTM) where the underlying Assets/Liabilities
are not marked to market as on 31st March 2016 amounted to Rs. 66,453.24
crore (Previous Year Rs. 1,29,113.66 crore).

Note :-

1. No breach of Prudential Norms since Exposure on BhEL was well
within the discretion given to banks by RBI for taking additional 5%
exposure over the prudential limits.

2. Exposures on all the Borrower Groups were within the Prudential
Norms during the year (F.Y. 2015-16).

d) Risk Category wise Country Exposure

As per the extant RBI guidelines, the country exposure of the Bank is
categorized into various risk categories listed in the following table.
The country exposure (net funded) of the Bank for any country does not
exceed 1% of its total assets except on uSA, hence provision for the
country exposure on uSA has been made.

4. Miscellaneous

a) Disclosure of Penalties

Rs. Nil (Previous year Rs. Nil) imposed by RBI.

Financial Intelligence unit- India, New Delhi imposed a penalty of Rs.
0.05 crore under Section 12 of the PMLA Act.

During the current year the hong Kong Monetary Authority have taken
disciplinary action under Section 21 of AML ordinance and imposed a
penalty of hKD 75,43,000. (Previous year, the Authority of Prudential
Control and Resolution, Paris, France has imposed a penalty of Euro
3,00,000 on SBI Paris branch).

b) Penalty for Bouncing of SGL forms

No penalty has been levied on the Bank for bouncing of SGL Forms.

5. Disclosure Requirements as per the Accounting Standards a)
Employee Benefits

i. Defned Benefit Plans

1. Employee''s Pension Plan and Gratuity Plan

The following table sets out the status of the Defned Benefit Pension
Plan and Gratuity Plan as per the actuarial valuation by the
independent Actuary appointed by the Bank:-

The estimates of future salary growth, factored in actuarial valuation,
take account of inflation, seniority, promotion and other relevant
factors such as supply and demand in the employment market. Such
estimates are very long term and are not based on limited past
experience / immediate future. Empirical evidence also suggests that in
very long term, consistent high salary growth rates are not possible,
which has been relied upon by the auditors.

2. Employees'' Provident Fund

Actuarial valuation carried out in respect of interest shortfall in the
Provident Fund Trust of the Bank, as per Deterministic Approach shows
"Nil" liability, hence no provision is made in F.Y. 2015-16.

There is a guaranteed return applicable to liability under SBI
Employees Provident Fund. Fund has been crediting the interest at the
rate of interest as declared under Employees Provident Fund and
Miscellaneous Provisions Act 1952 and hence treated as a defned benefit
plan.

ii. Defned Contribution Plan:

The Bank has a Defned Contribution Pension Scheme (DCPS) applicable to
all categories of Officers and employees joining the Bank on or after
August 1, 2010. The Scheme is managed by NPS Trust under the aegis of
the Pension Fund Regulatory and Development Authority. National
Securities Depository Limited has been appointed as the Central Record
Keeping Agency for the NPS. During F.Y.2015-16, the Bank has
contributed Rs. 191.18 crore (Previous Year Rs. 145.51 crore).

iii. Long Term Employee Benefits (Unfunded Obligation):

(a) Accumulating Compensated Absences (Privilege Leave)

The following table sets out the status of Accumulating Compensated
Absences (Privilege Leave) as per the actuarial valuation by the
independent Actuary appointed by the Bank:-


(b) Other Long Term Employee Benefits

Amount of Rs. (-) 7.62 crore (Previous Year Rs. (-)40.05 crore) is (written
back)/ provided towards Other Long Term Employee Benefits as per the
actuarial valuation by the independent Actuary appointed by the Bank
and is included under the head "Payments to and Provisions for
Employees" in Profit and Loss Account.

Details of Provisions made for various Other Long Term Employee Benefits
during the year:

b) Segment Reporting: 1. Segment Identification

I. Primary (Business Segment)

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

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business

The present accounting and information system of the Bank does not
support capturing and extraction of the data in respect of the above
segments separately. however, based on the present internal,
organizational and management reporting structure and the nature of
their risk and returns, the data on the primary segments have been
computed as under:

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

ii. Corporate / Wholesale Banking - The Corporate / Wholesale Banking
segment comprises the lending activities of Corporate Accounts Group,
Mid Corporate Accounts Group and Stressed Assets


Management Group. These include
providing loans and transaction services to corporate and institutional
clients and further include non-treasury operations of foreign offices.

iii. Retail Banking - The Retail Banking Segment comprises of branches
in National Banking Group, which primarily includes Personal Banking
activities including lending activities to corporate customers having
banking relations with branches in the National Banking Group. This
segment also includes agency business and ATMs.

iv. Other Banking business – Segments not classified under (i) to (iii)
above are classified under this primary segment.

II. Secondary (Geographical Segment)

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

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

III. Pricing of Inter-segmental Transfers

The Retail Banking segment is the primary resource mobilizing unit. The
Corporate/ Wholesale Banking and Treasury segments are recipient of
funds from Retail Banking. Market related Funds Transfer Pricing
(MRFTP) is followed under which a separate unit called Funding Centre
has been created. The Funding Centre notionally buys funds that the
business units raise in the form of deposits or borrowings and
notionally sell funds to business units engaged in creating assets.

IV. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly
attributable either to Corporate / Wholesale and Retail Banking
Operations or to Treasury Operations segment, are allocated
accordingly. Expenses not directly attributable are allocated on the
basis of the ratio of number of employees in each segment/ratio of
directly attributable expenses.

The Bank has certain common assets and liabilities, which cannot be
attributed to any segment, and the same are treated as unallocated.

c) Related Party Disclosures:

1. Related Parties

A. SUBSIDIARIES

i. DOMESTIC BANKING SUBSIDIARIES

1. State Bank of Bikaner & Jaipur

2. State Bank of hyderabad

3. State Bank of Mysore

4. State Bank of Patiala

5. State Bank of Travancore

ii. FOREIGN BANKING SUBSIDIARIES

1. SBI (Mauritius) Ltd.

2. SBI Canada Bank

3. State Bank of India (California)

4. Commercial Indo Bank Llc , Moscow

5. PT Bank SBI Indonesia

6. Nepal SBI Bank Ltd.

7. Bank SBI Botswana Limited

iii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBI DFhI Ltd.

3. SBI Mutual Fund Trustee Company Pvt. Ltd.

4. SBICAP Securities Ltd.

5. SBICAP Ventures Ltd.

6. SBICAP Trustee Company Ltd.

7. SBI Cards and Payment Services Pvt. Ltd.

8. SBI Fund Management Pvt. Ltd.

9. SBI Life Insurance Company Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI – SG Global Securities Services Pvt. Ltd.

12. SBI Global Factors Ltd.

13. SBI General Insurance Company Ltd.

14. SBI Payment Services Pvt. Ltd.

15. SBI Foundation

iv. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (uK) Ltd.

2. SBI Funds Management (International) Pvt. Ltd.

3. SBICAP (Singapore) Ltd.

4. State Bank of India Servicos Limitada

B. JOINTLY CONTROLLED ENTITIES

1. GE Capital Business Process Management Services Pvt. Ltd

2. C-Edge Technologies Ltd.

3. Macquarie SBI Infrastructure Management Pte. Ltd.

4. Macquarie SBI Infrastructure Trustee Ltd.

5. SBI Macquarie Infrastructure Management Pvt. Ltd.

6. SBI Macquarie Infrastructure Trustee Pvt. Ltd.

7. Oman India Joint Investment Fund – Management Company Pvt. Ltd.

8. Oman India Joint Investment Fund – Trustee Company Pvt. Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Chhattisgarh Rajya Gramin Bank

4. Ellaquai Dehati Bank

5. Meghalaya Rural Bank

6. Langpi Dehangi Rural Bank

7. Madhyanchal Gramin Bank

8. Mizoram Rural Bank

9. Nagaland Rural Bank

10. Purvanchal Bank

11. Saurashtra Gramin Bank

12. utkal Grameen Bank

13. uttarakhand Gramin Bank

14. Vananchal Gramin Bank

15. Rajasthan Marudhara Gramin Bank

16. Telangana Grameena Bank

17. Kaveri Grameena Bank

18. Malwa Gramin Bank

ii. Others

1. SBI home Finance Ltd.(under liquidation)

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

D. Key Management Personnel of the Bank

1. Smt. Arundhati Bhattacharya, Chairman

2. Shri P. Pradeep Kumar, Managing Director (Corporate Banking Group)
(upto 31.10.2015)

3. Shri V.G. Kannan, Managing Director (Associates & Subsidiaries)

4. Shri B. Sriram, Managing Director (National Banking Group) (upto
01.11.2015) Managing Director (Corporate Banking Group) (from
02.11.2015)

5. Shri Rajnish Kumar, Managing Director (Compliance & Risk) (from
26.05.2015 to 01.11.2015)

Managing Director (National Banking Group) (from 02.11.2015)

6. Shri P. K. Gupta, Managing Director (Compliance & Risk) (from
02.11.2015)

2. Parties with whom transactions were entered into during the year

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

b. Amount of lease payments recognized in the P&L Account for operating
leases is Rs. 2,110.27 crore (Rs. 1,659.09 crore)

e) Earnings per Share

The Bank reports basic and diluted earnings per equity share in
accordance with Accounting Standard 20 - "Earnings per Share". "Basic
earnings" per share is computed by dividing net profit after tax by the
weighted average number of equity shares outstanding during the year.

*Diluted earnings per share is computed taking into consideration the
amount received for equity shares allotted on 1st April 2016.

f) Accounting for Taxes on Income i. Current Tax :- During the year the
Bank has debited to Profit & Loss Account Rs.4,003.27crore (Previous Year
Rs.6,719.11 crore) on account of current tax. The Current Tax in India
has been calculated in accordance with the provisions of Income Tax Act
1961 after taking appropriate relief for taxes paid in foreign
jurisdictions.

ii. Deferred Tax :-

During the year, Rs.245.47 crore has been debited to Profit and Loss
Account (Previous Year Rs.477.56 crore Credited) on account of deferred
tax.

iii. The Bank has a net Deferred Tax Liability (DTL) of Rs.2,212.44 crore
(Previous Year net DTL of Rs.1,987.14 crore), which comprises of DTL of
Rs.2,684.96 crore (Previous Year Rs.2,353.12 crore) included under ''Other
Liabilities and Provisions'' and Deferred Tax Assets (DTA) of Rs.472.52
crore (Previous Year Rs.365.98 crore) included under

d) Liability for Operating Leases

Premises taken on operating lease are given below:

Operating leases primarily comprise Office premises and staff
residences, which are renewable at the option of the Bank.

a. Liability for Premises taken on Non-Cancellable operating lease are
given below

h) Impairment of Assets

In the opinion of the Bank''s Management, there is no indication of
impairment to the assets during the year to which Accounting Standard
28 – "Impairment of Assets" applies.

i) Description of Contingent Liabilities (AS-29)

Sr. Particulars Brief Description

No.

1 Claims against the Bank The Bank is a party to various proceedings in
the normal course of business. The Bank does not acknowledged as not
expect the outcome of these proceedings to have a material adverse
effect on the Bank''s debts financial conditions, results of operations
or cash fows. The Bank is also a party to various taxation matters in
respect of which appeals are pending.

2 Liability on partly paid- This item represents amounts remaining
unpaid towards liability for partly paid investments. up investments/
Venture This also includes undrawn commitments for Venture Capital
Funds.

Funds

3 Liability on account of The Bank enters into foreign exchange
contracts in its normal course of business to exchange outstanding
forward currencies at a pre-fixed price at a future date. Forward
exchange contracts are commitments exchange contracts to buy or sell
foreign currency at a future date at the contracted rate. The notional
amounts are recorded as Contingent Liabilities. With respect to the
transactions entered into with its customers, the Bank generally enters
into off-setting transactions in the interbank market. This results in
generation of a higher number of outstanding transactions, and hence a
large value of gross notional principal of the portfolio, while the net
market risk is lower.

4 Guarantees given on As a part of its commercial Banking activities,
the Bank issues documentary credits and behalf of constituents,
guarantees on behalf of its customers. Documentary credits enhance the
credit standing of acceptances, the customers of the Bank. Guarantees
generally represent irrevocable assurances that the endorsements and
other Bank will make payment in the event of the customer failing to
fulfill its financial or performance obligations.

5 Other items for which The Bank enters into currency options, forward
rate agreements, currency swaps and interest the Bank is contingently
rate swaps with inter-Bank participants on its own account and for
customers. Currency liable. swaps are commitments to exchange cash
fows by way of interest/principal in one currency against another,
based on predetermined rates. Interest rate swaps are commitments to
exchange fixed and foating interest rate cash fows. The notional amounts
that are recorded as Contingent Liabilities, are typically amounts used
as a benchmark for the calculation of the interest component of the
contracts. Further, these also include estimated amount of contracts
remaining to be executed on capital account and not provided for,
letter of comforts issued by the Bank on behalf of Associates &
Subsidiaries, Bank''s Liability under Depositors Education and Awareness
Fund A/c and other sundry contingent liabilities.

The Contingent Liabilities mentioned above are dependent upon the
outcome of Court/ arbitration/out of Court settlements, disposal of
appeals, the amount being called up, terms of contractual obligations,
devolvement and raising of demand by concerned parties, as the case may
be.

5. Payment to Micro, Small & Medium Enterprises under the Micro, Small
& Medium Enterprises Development Act, 2006

As per the information available with the Bank, there has been no
reported cases of delayed payments of the principal amount or interest
due thereon to Micro, Small & Medium Enterprises.

6. Letter of Comfort issued for Subsidiaries

The Bank has issued no letters of comfort outstanding on behalf of its
subsidiaries as on 31st March 2016. (Previous Year: Rs. 715.16 crore).

7. Provisioning Coverage Ratio (PCR):

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on
31st March 2016 is 60.69 % (Previous Year 69.13%).

Foreign Currency Exposure''. An amount of Rs. 161.21 crore (Previous Year
Rs. 293.08 crore) was held as on 31st March 2016 for Currency Induced
Credit Risk and Capital allocated for Currency Induced Credit Risk
amounting to Rs. 237.62 crore ( Previous Year Rs.408.44 crore).

18. Liquidity Coverage Ratio (LCR):

a. Standalone LCR

Liquidity Coverage Ratio (LCR) standard has been introduced with the
objective 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.

Stock of high quality liquid LCR has been assets (hQLAs)

defned as: Total net cash outfows over the next 30 calendar days

Liquid assets comprise of high quality assets that can be readily
encashed or used as collateral to obtain cash in a range of stress
scenarios. There are two categories of assets included in the stock of
hQLAs, viz. Level 1 and Level 2 assets. Level 1 assets are with 0%
haircut while in Level 2, 2A assets are with a minimum 15% haircut and
Level 2B assets, with a minimum 50% haircut. The total net cash
outfows is the total expected cash outfows minus total expected cash
infows for the subsequent 30 calendar days. Total expected cash
outfows are calculated by multiplying the outstanding balances of
various categories or types of liabilities and off-balance sheet
commitments by the rates at which they are expected to run off or be
drawn down. Total expected cash infows are calculated by multiplying
the outstanding balances of various categories of contractual
receivables by the rates at which they are expected to fow in up to an
aggregate cap of 75% of total expected cash outfows.

The above LCR disclosure template shows the average of the un-weighted
and weighted value of LCR components for the State Bank of India
including its Foreign Branches. The averages are computed based on the
month-end values for;

a. the entire Financial Year 2015-16

b. the quarter ended March 2016

Both the positions are above the minimum 70% prescribed by RBI (60%
upto December 2015 and 70% from 1st January 2016). Bank''s LCR comes out
to 75.23% based on average of twelve months (FY15-16) and 76.36% based
on average of last three months (Q4 FY15-16). The average hQLA for the
Q4 FY15-16 was Rs. 250,927 crore, of which Level 1 assets constituted on
an average 92% of total hQLA and cash, excess CRR, and 0% risk weighted
Marketable securities issued/guaranteed by foreign sovereigns.
Government securities consisting of 88% of Total Level 1 Assets. The
net cash outfows position has gone up in the Q4 FY15-16 on account of
growth of Balance Sheet size. Derivative exposures are considered
insignificant due to almost matching infows and outfows position. During
the last quarter USD was the significant Foreign Currency which
constituted more than 5% of the Balance Sheet of the Bank. Average uSD
LCR was 82% for Q4 FY15-16.

Liquidity Management in the Bank is driven by the ALM Policy, approved
by the Bank''s Board. The Domestic and International Treasuries are
reporting to the Asset Liability

Management Committee (ALCO). The ALCO has been empowered by the Bank''s
Board to formulate the Bank''s funding strategies to ensure that the
funding sources are well diversified and is consistent with the
operational requirements of the Bank. All the major decisions of ALCO
are being reported to the Bank''s Board periodically. In addition to
monthly LCR reporting, Bank prepares daily Structural Liquidity
statements to assess the liquidity needs of the Bank on an ongoing
basis. Further, Dynamic Liquidity Reports are also being prepared
periodically to forecast liquidity requirements and to strategize
accordingly.

The Bank has been maintaining hQLA mainly in the form of SLR
investments over and above the mandatory requirements. Retail deposits
constitute major portion of total funding sources, and such funding
sources are well diversified. Management is of the view that the Bank
has suffcient liquidity cover to meet its likely future short term
requirements.

b. Consolidated LCR

The RBI through a supplementary guideline issued on March 31, 2015 had
stipulated the implementation of LCR at a consolidated level from
January 1, 2016. Accordingly, SBI Group has been computing the
Consolidated LCR.

The entities covered in the Group LCR are six Domestic Banking and
seven Overseas Banking Subsidiaries. These are State Bank of India,
State Bank of Bikaner and Jaipur,

The Group has been maintaining hQLA mainly in the form of SLR
investments over and above the mandatory requirements. Retail deposits
constitute major portion of total funding sources, and such funding
sources are well diversified. Management is of the view that the Bank
has sufficient liquidity cover to meet its likely future short term
requirements.

6. Inter Office Accounts

Inter Office Accounts between branches, controlling offices, local head
offices and corporate centre establishments are being reconciled on an
ongoing basis and no material effect is expected on the profit and loss
account of the current year.

7. Sale of Assets to Reconstruction Companies

Shortfall on account of sale of assets to Reconstruction Companies
during the year amounting to Rs. 461.39 crore (previous year Rs. 2,803.19
crore) is being amortized over a period of two years in terms of RBI
Circular DBOD.BP.BC.No.98/21.04.132/2013-14 dated February 26, 2014.
Consequently, Rs. 1,509.79 crore (previous year Rs. 623.78 crore) has been
charged to the Profit & Loss Account for the year ended March 31, 2016.
The amount unamortized as at March 31, 2016 is Rs. 1,131.01 crore
(previous year Rs. 2,179.42 crore).

8. Counter Cyclical Provisioning Buffer (CCPB)

RBI vide Circular No. DBR.No.BP.

BC.79/21.04.048/2014-15 dated March 30, 2015 on ''Utilization of
Floating Provisions/Counter Cyclical Provisioning Buffer'' has allowed
the banks, to utilize up to 50 per cent of CCPB held by them as on
December 31, 2014, for making specific provisions for Non- Performing
Assets (NPAs) as per the policy approved by the Bank''s Board of
Directors. Accordingly, the Bank has utilized the CCPB of Rs. 1149 crore
(previous year Rs. 382 crore) for making specific provision for NPAs, in
accordance with the board approved policy and approval of the Board.

9. Asset Quality Review (AQR)

During the year, as a part of Asset Quality Review (AQR) conducted by
RBI, the Bank has been advised to reclassify/make additional provision
in respect of certain advance accounts over two quarters ending
December 2015 and March 2016. The Bank has accordingly implemented the
RBI directions.

10. Food Credit

In accordance with RBI instruction, the Bank has made a provision of
7.5% amounting to Rs. 543.50 crore against outstanding in the food credit
advance to a State Government pending resolution by stakeholders.

12. Depreciation on Fixed Assets

During the current year, estimated useful life of a few assets such as
ATMs, cash dispensing machines, coin dispensing machine, computer
servers, computer software, networking equipment were changed . The
effect of which on the financial statements is considered not material.

13. Other income includes Rs. 2,033.83 crore on account of exchange gain
on repatriation of funds from foreign offices to India and restatement
of capital funds at historical costs at foreign offices.

14. In accordance with RBI circular dated July 16, 2015 investment in
Rural Infrastructure and Development Fund and other related deposits
have been re-classified to Schedule 11- Other Assets from Schedule 8 –
Investments. Consequently, interest on such deposits have been
re-classified to "Others" from "Income from investments" in Schedule 13
– Interest Earned.

15. Previous year figures have been regrouped/ reclassified, wherever
necessary, to conform to current year classification. In cases where
disclosures have been made for the first time in terms of RBI guidelines
/ Accounting Standards, previous year''s figures have not been mentioned.


Mar 31, 2015

Not Available.


Mar 31, 2013

A. Basis of Preparation

The Banks financial statements are prepared under the historical cost convention, on the accrual basis of accounting, unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms/guidelines prescribed by Reserve Bank of India (RBI), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), and the practices prevalent in the banking industry in India.

B. Use of Estimates

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

1. Share Capital

a) During the year , the Bank has allotted 129,88,697 shares of Rs. 10/- each for cash at a premium of Rs. 2,302.78 per equity share aggregating to Rs. 3004 crore under Preferential Allotment to GOI. Out of the total subscription of Rs. 3004 crore received from GOI, an amount of Rs. 12.99 crore was transferred to Share Capital Account and Rs. 2991.01 crore to Share Premium Account.

b) The Bank has allotted 436 equity shares of Rs. 10/- each for cash at a premium of Rs. 1,580/- per equity share aggregating to Rs. 6,93,240/- out of shares kept in abeyance under Right Issue - 2008. Out of the total subscription of Rs. 6,93,240/- received, Rs. 4360/- was transferred to Share Capital Account and Rs. 6,88,880/- to Share Premium Account.

c) The Bank has kept in abeyance the allotment of 83,075 (Previous Year 83,511) Equity Shares of Rs. 10/- each issued as a part of Rights issue, since they are subject to title disputes or are subjudice.

d) Expenses in relation to the issue of shares: Rs. 3.73 crore debited to Share Premium Account.

* If the Bank does not exercise call option by 15th May 2017, the interest rate will be raised and fixed rate will be converted to floating rate.

# If the Bank does not exercise call option by 27th June 2017, the interest rate will be raised and fixed rate will be converted to floating rate.

b. Investments amounting to Rs. 6,070.97 crore (Previous Year Rs. 5520.21 Crore) are kept as margin with Clearing Corporation of India Limited/NSCCL/ MCX/ USEIL towards Securities Settlement.

d. During the year, GE Capital Business Process Management Services Private Limited bought back 13,59,598 shares from the Bank at Rs. 141 per share , the Bank continues to hold 40% (previous year 40 %) stake in the joint venture. The Bank exited from two RRBs as per details given below

* Investment in Equity, Equity Oriented Mutual Funds, Venture Capital, Rated Assets Backed Securities, Central Government Securities and ARCIL are not segregated under these categories as these are exempt from rating/listing guidelines.

** Investments in Subsidiaries/Joint Ventures have not been segregated into various categories as these are not covered under relevant RBI Guidelines. Others include an amount of Rs. 13,330.20 crore (Previous Year Rs. 15,942.94) under RIDF Scheme of NABARD.

C. Disclosures on Risk Exposure in Derivatives (A) Qualitative Disclosure

i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in Interest Rate and Currency Futures. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate agreements. Currency derivatives dealt by the Bank are currency swaps, rupee dollar options, exchange traded options and cross- currency options. The products are offered to the Banks customers to hedge their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are used by the Bank both for trading as well as hedging on balance sheet items. The Bank also deals in a mix of these generic instruments. The Bank has done Option deals and Structured Products with customers.

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

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

iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details of which are presented under Schedule 17: Significant Accounting Policies (SAP) for the financial year 2012-13.

v. Interest Rate Swaps are mainly used at Foreign Offices for hedging of the assets and liabilities.

vi. Apart from hedging swaps, swaps at Foreign Offices consist of back to back swaps done at our Foreign Offices which are done mainly for hedging of FCNR deposits at Global Markets, Kolkata.

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

$ The swaps amounting to Rs. 6,574.73 crore (Previous Year Rs. 7,276.19 crore) entered with the Banks own foreign offices are not shown here as they are for hedging of FCNB corpus and hence not marked to market.

# IRS/FRA amounting to Rs. 10,338.05 crore(Previous Year Rs. 7,600.95 crore) entered with the Banks own Foreign offices are not shown here as they are for hedging of FCNB corpus and hence not marked to market.

* The forward contract deals with our own Foreign Offices are not included. Currency Derivatives - Rs. 4,349.04 crore ( Previous Year Rs. 1,260.56 crore) and Interest Rate Derivatives - Rs. 167.53 crore (Previous Year Rs. 159.56 crore)

1. The outstanding notional amount of derivatives done between Global Markets department and International Banking Group department as on 31st March 2013 amounted to Rs. 21,429.35 crore (Previous Year Rs. 16,297.26 crore) and the derivatives done between SBI Foreign Offices as on 31st March 2013 amounted to Rs. 35,082.63 crore ( Previous Year Rs. 30,663.90 crore).

2. The outstanding notional amount of interest rate derivatives which are not marked to market where the underlying Assets/Liabilities are not marked to market as on 31st March 2013 amounted to Rs. 80,144.28 crore ( Rs. 57,756.33 crore).

3. Credit Default Swap : Outstanding as on 31st March 2013 amounted to Rs. 54.29 crore (Previous Year Rs. 546.90 crore).

2.1. Miscellaneous

a) Disclosure of Penalties imposed by RBI

Nil (Previous year Rs. 0.10 crore)

b) Penalty for Bouncing of SGL forms

No penalty has been levied on the Bank for bouncing of SGL Forms.

2.2. Disclosure Requirements as per Accounting Standards

a) Employee Benefits

i. Defined Benefit Plans

1. Employees Pension Plan and Gratuity Plan

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

The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Such estimates are very long term and are not based on limited past experience / immediate future. Empirical evidence also suggests that in very long term, consistent high salary growth rates are not possible, which has been relied upon by the auditors.

2. Employees Provident Fund

Actuarial valuation carried out in respect of interest shortfall in the Provident Fund Trust of the Bank, as per Deterministic Approach shows "Nil" liability, hence no provision is made in F.Y. 2012-13.

The following table sets out the status of Provident Fund as per the actuarial valuation by the independent Actuary appointed by the Bank:-

ii. Defined Contribution Plan:

The Bank has a Defined Contribution Pension Scheme (DCPS) applicable to all categories of officers and employees joining the Bank on or after August 1, 2010. The Scheme is managed by NPS Trust under the aegis of the Pension Fund Regulatory and Development Authority. National Securities Depository Limited has been appointed as the Central Record Keeping Agency for the NPS. During F.Y.2012-13, the Bank has contributed Rs. 67.73 crore (Previous Year Rs. 52.47crore).

iii. Other Long Term Employee Benefits

Amount of Rs. 502.25 Crore (Previous Year Rs. 531.33 Crore) is provided towards Long Term Employee Benefits as per the actuarial valuation by the independent Actuary appointed by the Bank and is included under the head "Payments to and Provisions for Employees" in Profit and Loss Account.

b) Segment Reporting:

1. Segment Identification

I. Primary (Business Segment)

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

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business

The present accounting and information system of the Bank does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

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

ii. Corporate / Wholesale Banking - The Corporate / Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

iii. Retail Banking - The Retail Banking Segment comprises of branches in National Banking Group, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with branches in the National Banking Group. This segment also includes agency business and ATMs.

iv. Other Banking business - Segments not classified under (i) to (iii) above are classified under this primary segment.

II. Secondary (Geographical Segment)

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

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

III. Pricing of Inter-segmental Transfers

The Retail Banking segment is the primary resource mobilising unit. The Corporate/Wholesale Banking and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding Centre notionally buys funds that the business units raise in the form of deposits or borrowings and notionally sell funds to business units engaged in creating assets.

IV. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of number of employees in each segment/ratio of directly attributable expenses.

The Bank has certain common assets and liabilities, which cannot be attributed to any segment , and the same are treated as unallocated.

During the year, the Bank has further refined the segmental transfer pricing mechanism in order to report more relevant segment results. This change effects the segment results inter se and has no impact on the financials of the bank. The effect of the change on the segment results is not fairly determined.

c) Related Party Disclosures:

1. Related Parties

A. SUBSIDIARIES

i. DOMESTIC BANKING SUBSIDIARIES

1. State Bank of Bikaner & Jaipur

2. State Bank of Hyderabad

3. State Bank of Mysore

4. State Bank of Patiala

5. State Bank of Travancore

ii. FOREIGN BANKING SUBSIDIARIES

1. SBI (Mauritius) Ltd.

2. State Bank of India (Canada)

3. State Bank of India (California)

4. Commercial Bank of India LLC, Moscow

5. PT Bank SBI Indonesia

6. Nepal SBI Bank Ltd.

iii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBI DFHI Ltd.

3. SBI Mutual Funds Trustee Company Pvt. Ltd.

4. SBICAP Securities Ltd.

5. SBICAPS Ventures Ltd.

6. SBICAP Trustees Company Ltd.

7. SBI Cards and Payment Services Pvt. Ltd.

8. SBI Funds Management Pvt. Ltd.

9. SBI Life Insurance Company Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI - SG Global Securities Services Pvt. Ltd.

12. SBI Global Factors Ltd.

13. SBI General Insurance Company Ltd

14. SBI Payment Services Pvt. Ltd.

iv. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (UK) Ltd.

2. SBI Funds Management (International) Pvt. Ltd.

3. SBICAP (Singapore) Ltd.

B. JOINTLY CONTROLLED ENTITIES

1. GE Capital Business Process Management Services Pvt. Ltd

2. C-Edge Technologies Ltd.

3. Macquarie SBI Infrastructure Management Pte. Ltd.

4. Macquarie SBI Infrastructure Trustees Ltd.

5. SBI Macquarie Infrastructure Management Pvt. Ltd.

6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.

7. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

8. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Kaveri Grameena Bank

4. Chhattisgarh Gramin Bank

5. Deccan Grameena Bank

6. Ellaquai Dehati Bank

7. Meghalaya Rural Bank

8. Krishna Grameena Bank

9. Langpi Dehangi Rural Bank

10. Madhyanchal Gramin Bank

11. Malwa Gramin Bank

12. Mizoram Rural Bank

13. Marudhara Gramin Bank

14. Nagaland Rural Bank

15. Parvatiya Gramin Bank (upto 14.02.2013)

16. Purvanchal Gramin Bank

17. Samastipur Kshetriya Gramin Bank (upto 14.10.2012)

18. Saurashtra Gramin Bank

19. Utkal Grameen Bank

20. Uttarakhand Gramin Bank

21. Vananchal Gramin Bank

22. Vidisha Bhopal Kshetriya Gramin Bank (upto 07.10.2012)

ii. Others

1. SBI Home Finance Ltd.

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

D. Key Management Personnel of the Bank

1. Shri Pratip Chaudhuri, Chairman

2. Shri Hemant G. Contractor Managing Director & Group Executive (International Banking)

3. Shri A. Krishna Kumar, Managing Director & Group Executive (National Banking)

4. Shri Diwakar Gupta, Managing Director & Chief Financial Officer

5. Shri S. Vishvanathan, Managing Director & Group Executive (Associates & Subsidiaries) (from 9.10.2012)

2. Parties with whom transactions were entered into during the year

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

e) Earnings per Share

The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20 - "Earnings per Share". "Basic earnings" per share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year.

f) Accounting for Taxes on Income

i. Deferred Tax :-

a. During the year, Rs. 107.97 crore [Previous Year Rs. 455.93 crore debited] has been credited to Profit and Loss Account on account of deferred tax.

b. During the year, the Bank has recognised deferred tax asset on provision for leave encashment, which was hitherto not being done. Accordingly, an amount of Rs. 922.15 crore ( including Rs. 783.62 crore relating to period upto 31.03.2012) has been accounted for in the current year.

ii. The Bank has net deferred tax liability of Rs. 628.92 crore (Previous Year net deferred tax asset of Rs. 180.63 crore), which is included under Other Liabilities and Provisions (Previous Year Other Assets). The breakup of deferred tax assets and liabilities into major items is given below:

# Includes tax credit arising out of provision for leave encashment for employees of Rs. 922.15 crore.

* Includes Rs. 917.04 crore (Previous Year Rs. 536.56 Crore) transferred from Income Tax Account.

h) Impairment of Assets

In the opinion of the Banks Management, there is no impairment to the assets during the year to which Accounting Standard 28 - "Impairment of Assets" applies.

3. With regard to disclosures relating to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006, there have been no reported cases of delayed payments or of interest payments due to delay in such payments to Micro, Small & Medium Enterprises.

4. Letter of Comfort issued for Subsidiaries

The Bank has issued letters of comfort on behalf of its subsidiaries. Outstanding letters of comfort as on 31st March 2013 aggregate to Rs. 477.19 Crore (Previous Year: Rs. 2086.56 Crore). In the Banks assessment no financial impact is likely to arise.

5. Provisioning Coverage Ratio:

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on 31st March 2013 is 66.58% (Previous Year 68.10%).

6. Unamortised Gratuity Liabilities

In accordance with RBI circular no. DBOD.BP.BC.80/21.04.018/2010-11 dated February 9, 2011 the Bank has opted to amortise the additional liability on account of enhancement in Gratuity limit over a period of 5 years beginning with the financial year ended March 31, 2011. Accordingly, the Bank has charged a sum of Rs. 100 crore to the Profit and Loss Account, being the proportionate amount for the financial year ended March 31, 2013. The unrecognised liability of Rs. 200 crore as on March 31, 2013 will be amortised proportionately in accordance with the above circular.

7. Inter Office Accounts

Inter Office Accounts between branches, controlling offices and local head offices and corporate centre establishments are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

8. Specific Provision for NPAs

During the year, the Bank has made specific provisions of Rs. 706.26 crore (previous year Rs. 1350 crore) for certain Non- performing domestic advances to provide for estimated actual loss in collectible amounts.

9. Pending Wage Agreement

The Ninth Bipartite Settlement entered into by the Indian Banks Association on behalf of the member Banks with the All India Unions of Workmen expired on 31st October 2012. Pending execution of agreement for wage revision, to be effective from 1st November 2012, a provision of Rs. 720 Crore has been made during the year.

Further, the Bank has made an adhoc additional provision of Rs. 225 crore towards Superannuation Schemes and other long term employee benefits, over and above the actuarial valuations.

10. Previous year figures have been regrouped/reclassified, wherever necessary, to conform to current year classification. In cases where disclosures have been made for the first time in terms of RBI guidelines / Accounting Standards, previous years figures have not been mentioned.


Mar 31, 2012

1. Share capital:

a) During the year, the Bank has allotted 3,60,45,243 shares of Rs10/- each for cash at a premium of Rs2,181.69 per equity share aggregating to Rs7,900.00 crores under Preferential Allotment to GOI. Out of the total subscription of Rs7,900.00 crores received from GOI, an amount of Rs36.05 crores was transferred to Share Capital Account and Rs7,863.95 crores to Share Premium Account.

b) The Bank has allotted 604 equity shares of Rs10/- each for cash at a premium of Rs1,580/- per equity share aggregating to Rs9,60,360/- out of shares kept in abeyance under Right Issue - 2008. Out of the total subscription of Rs9,60,360/- received, Rs6,040/- was transferred to Share Capital Account and Rs9,54,320/- to Share Premium Account.

c) The Bank has kept in abeyance the allotment of 83,511 (Previous Year 84,115) Equity Shares of Rs10/- each issued as a part of Rights issue, since they are subject to title disputes or are subjudice.

d) Expenses in relation to the issue of shares : Rs8.79 crores debited to Share Premium Account.

Notes:

a. Investments exclude securities utilised under Liquidity Adjustment Facility (LAF) with RBI Rs40,000 crores. (Previous Year Rs27,000 crores)

b. Investments amounting to Rs5,520.21 Crores are kept as margin with Clearing Corporation of India Limited/NSCCL/ MCX/ USEIL towards Securities Settlement. In the previous year investments amounting to Rs11,117 Crores were kept as margin with RBI/Clearing Corporation of India Limited towards Real Time Gross Settlement / Securities Settlement (RTGS/NDS).

c. In terms of RBI Circular DBOD.No.BP.BC.28/21.04.157/2011-12 dated August 11,2011 the Bank had reversed Rs93.94 crores and Rs39.00 crores from the Profit & Loss A/c to "Suspense A/c - Crystallised Receivables" and " suspense A/c - Profit MTM" respectively on account of derivative contracts.

d. During the year, the Bank has infused additional capital of Rs585.00 Crores in State Bank of Bikaner & Jaipur towards Right Issue.

D) Disclosures on Risk Exposure in Derivatives (A) Qualitative Disclosure

i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in Interest Rate and Currency Futures. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate agreements. Currency derivatives dealt by the Bank are currency swaps, rupee dollar options, exchange traded options and cross-currency options. The products are offered to the Banks customers to hedge their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are used by the Bank both for trading as well as hedging on balance sheet items. The Bank also deals in a mix of these generic instruments. The Bank has done Option deals and Structured Products with customers, but they have been covered on a back to back basis in inter-bank market.

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

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

iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details of which are presented under Schedule 17: Significant Accounting Policies (SAP) for the financial year 2011-12.

v. Interest Rate Swaps are mainly used at Foreign Offices for hedging of the assets and liabilities.

vi. Apart from hedging swaps, swaps at Foreign Offices consist of back to back swaps done at our Foreign Offices which are done mainly for hedging of FCNR deposits at Global Markets, Kolkata.

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

b) Segment Reporting:

1. Segment Identification

I. Primary (Business Segment)

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

— Corporate / Wholesale Banking

— Retail Banking

— Other Banking Business

The present accounting and information system of the Bank does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

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

ii. Corporate/Wholesale Banking - The Corporate/ Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

iii. Retail Banking - The Retail Banking Segment comprises of branches in National Banking Group, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with branches in the National Banking Group. This segment also includes agency business and ATMs.

iv. Other Banking business - Segments not classified under (i) to (iii) above are classified under this primary segment.

II. Secondary (Geographical Segment)

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

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

III. Pricing of Inter-segmental Transfers

The Retail Banking segment is the primary resource mobilising unit. The Corporate/Wholesale Banking and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding Centre notionally buys funds that the business units raise in the form of deposits or borrowings and notionally sell funds to business units engaged in creating assets.

IV. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of number of employees in each segment/ratio of directly attributable expenses.

The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

During the year, the Bank has further refined the segmental transfer pricing mechanism in order to report more relevant segment results. This change effects the segment results inter se and has no impact on the financials of the bank. The effect of the change on the segment results is not fairly determined.

c) Related Party Disclosures:

1. Related Parties

A. SUBSIDIARIES

i. DOMESTIC BANKING SUBSIDIARIES

1. State Bank of Bikaner & Jaipur

2. State Bank of Hyderabad

3. State Bank of Mysore

4. State Bank of Patiala

5. State Bank of Travancore

6. SBI Commercial and International Bank Ltd.

(up to 28.07.2011).

ii. FOREIGN BANKING SUBSIDIARIES

1. SBI (Mauritius) Ltd.

2. State Bank of India (Canada)

3. State Bank of India (California)

4. Commercial Bank of India LLC, Moscow

5. PT Bank SBI Indonesia

6. Nepal SBI Bank Ltd.

iii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBI DFHI Ltd.

3. SBI Mutual Funds Trustee Company Pvt. Ltd.

4. SBI CAP Securities Ltd.

5. SBI CAPS Ventures Ltd.

6. SBI CAP Trustees Company Ltd.

7. SBI Cards and Payment Services Pvt. Ltd.

8. SBI Funds Management Pvt. Ltd.

9. SBI Life Insurance Company Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI - SG Global Securities Services Pvt. Ltd.

12. SBI Global Factors Ltd.

13. SBI General Insurance Company Ltd

14. SBI Payment Services Pvt. Ltd.

iv. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (UK) Ltd.

2. SBI Funds Management (International) Pvt. Ltd.

3. SBICAP (Singapore) Ltd.

B. JOINTLY CONTROLLED ENTITIES

1. GE Capital Business Process Management Services Pvt. Ltd.

2. C-Edge Technologies Ltd.

3. Macquarie SBI Infrastructure Management Pte. Ltd.

4. Macquarie SBI Infrastructure Trustees Ltd.

5. SBI Macquarie Infrastructure Management Pvt. Ltd.

6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.

7. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

8. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Cauvery Kalpatharu Grameena Bank

4. Chhattisgarh Gramin Bank

5. Deccan Grameena Bank

6. Ellaquai Dehati Bank

7. Meghalaya Rural Bank (Formerly known as Ka Bank Nongkyndong Ri Khasi Jaintia)

8. Krishna Grameena Bank

9. Langpi Dehangi Rural Bank

10. Madhya Bharat Gramin Bank

11. Malwa Gramin Bank

12. Marwar Ganganagar Bikaner Gramin Bank

13. Mizoram Rural Bank

14. Nagaland Rural Bank

15. Parvatiya Gramin Bank

16. Purvanchal Kshetriya Gramin Bank

17. Samastipur Kshetriya Gramin Bank

18. Saurashtra Gramin Bank

19. Utkal Gramya Bank

20. Uttaranchal Gramin Bank

21. Vananchal Gramin Bank

22. Vidisha Bhopal Kshetriya Gramin Bank

ii. Others

1. SBI Home Finance Ltd.

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

D. Key Management Personnel of the Bank

1. Shri Pratip Chaudhuri, Chairman (from 07.04.2011)

2. Shri R. Sridharan, Managing Director & Group Executive (A& S) (up to 30.06.2011)

3. Shri Hemant G. Contractor Managing Director & Group Executive (International Banking) (from 07.04.2011)

4. Shri Diwakar Gupta, Managing Director & Chief Financial Officer (from 07.04.2011)

5. Shri A. Krishna Kumar, Managing Director & Group Executive (National Banking) (from 07.04.2011)

6. Shri O. P. Bhatt, Chairman (up to 31.03.2011)

7. Shri S. K. Bhattacharyya, Managing Director (up to 31.10.2010)

2. Parties with whom transactions were entered into during the year

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

2. With regard to disclosures relating to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006, there have been no reported cases of delayed payments or of interest payments due to delay in such payments to Micro, Small & Medium Enterprises.

3. Letter of Comfort issued for Subsidiaries

The Bank has issued letters of comfort on behalf of its subsidiaries. Outstanding letters of comfort as on 31st March 2012 aggregate to Rs 2086.56 Crores (Previous Year: Rs 1,411.20 Crores). In the Banks assessment no financial impact is likely to arise.

4. Provisioning Coverage Ratio:

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on 31st March 2012 is 68.10% (Previous Year 64.95%).

5. Unamortised Gratuity Liabilities

In accordance with RBI circular no. DBOD.BP.BC.80/21.04.018/2010-11 dated February 9, 2011 the Bank has opted to amortise the additional liability on account of enhancement in Gratuity limit over a period of 5 years beginning with the financial year ended March 31, 2011. Accordingly the Bank has charged a sum of Rs 100 crores to the Profit and Loss Account, being the proportionate amount for the financial year ended March 31, 2012. The unpaid liability of Rs 300 crore as on March 31, 2012 will be amortised proportionately in accordance with the above circular.

6. Amalgamation of SBI Commercial and International Bank Limited Consequent to the notification of the "Acquisition of State Bank of India Commercial and International Bank Ltd Order, 2011" issued by the Government of India, the undertaking of State Bank of India Commercial and International Bank Ltd (SBICI) stands transferred to and vests in State Bank of India ("the Bank"), with effect from July 29, 2011, the effective date. The results for the year ended March 31, 2012 include the results of operations of the erstwhile SBICI for the period from July 29, 2011 to the year end March 31, 2012 and the results of the Bank are not comparable to that extent.

The amalgamation of State Bank of India Commercial and International Bank Ltd (SBICI) with the Bank has been accounted for under the pooling of interest method as prescribed in Accounting Standard 14 "Accounting for Amalgamations". Pursuant thereto, all assets and liabilities including reserves of SBICI as on the effective date have been transferred and vested in the Bank. The Bank held 100% of the share capital of the SBICI on the effective date, which stands cancelled. No shares were exchanged to effect the amalgamation.

The Assets and Liabilities of e SBICI Bank Limited taken over are as under:-

7. Inter Office Accounts

Inter Office Accounts between branches, controlling offices and local head offices and corporate centre establishments are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

8. Disbursement of Special Balancing Allowance

During the year, Rs 908 cores of arrears of Special Balancing Allowance was disbursed out of the provision held for Special Balancing Allowance. An amount of Rs 41.11 crores was written back to the Profit & Loss account during the year ended 31st March 2012, being excess amount of provision held for Special Balancing Allowance.

9. Countercyclical Provisioning Buffer

In accordance with the guidelines issued by RBI vide their circular no. DBOD. No. BP.BC.87/21.04.048/2010-11 dated 21st April, 2011 and the dispensation granted to the Bank, the Bank has made an additional provision of Rs 1,100.00 crores for the half year ended September 2011 thus achieving the required Countercyclical Provisioning Buffer of Rs 3,430.00 crores as on September 30, 2011 as per the above circular.

10. Additional Provision for NPAs

During the year, the Bank has voluntarily made an additional provision of Rs 1,350 crores against certain non performing domestic advances to provide for the estimated loss in collectible amount against such advances.

11. Previous period figures have been regrouped/reclassified, wherever necessary, to conform to current period classification. In cases where disclosures have been made for the first time in terms of RBI guidelines/Accounting Standards, previous years figures have not been mentioned.


Mar 31, 2011

1.1 Capital:

1. Capital Adequacy Ratio:

* a. Includes Rs.1,000 crores of bonds raised by erstwhile State Bank of Indore (SBIN) merged with SBI on 26th August 2010.

b. Incudes Rs. 6,497 crores raised vide Public Issue of Bonds in October 2010 and February 2011.

** Includes Rs. 165 crores of Bonds raised by erstwhile State Bank of Indore (e SBIN) merged with SBI on 26th August 2010.

# Includes Rs. 2,000 crores raised during the year 2009-10, of which Rs. 550 crores invested by SBI employee Pension Fund, not reckoned for the purpose of Tier I Capital as per RBI instructions.

2. Share capital:

a) During the year, the authorised share capital of the Bank is increased from Rs.1,000 crores to Rs. 5,000 crores divided into five hundred crores shares of Rs. 10/- each.

b) During the year, the Bank has allotted 1,741 equity shares of Rs. 10/- each for cash at a premium of Rs.1,580 per equity share aggregating to Rs. 27,68,190 out of 85,856 shares kept in abeyance under Right Issue - 2008. Out of the total subscription of Rs. 27,68,190 received, Rs.17,410 was trans- ferred to Share Capital Account and Rs. 27,50,780/- to Share Premium Account. Further, 1,14,606 shares of Rs.10 each were allotted to the share holders of erstwhile State Bank of Indore upon its merger with State Bank of India and Rs. 11,46,060 was transferred to Share Capital Account.

c) The Bank has kept in abeyance the allotment of 84,115 (Previous Year 85,856) Equity Shares of Rs.10 each issued as a part of Rights issue, since they are subject to title disputes or are subjudice.

3. Hybrid Bonds:

* If the Bank does not exercise call option by 15th May 2017, the interest rate will be raised and fixed rate will be converted to floating rate.

# If the Bank does not exercise call option by 27th June 2017, the interest rate will be raised and fixed rate will be converted to floating rate.

These bonds are listed in Singapore stock exchange.

18.2 Investments

Notes:

a. Investments exclude securities utilised under Liquidity Adjustment Facility (LAF) with RBI Rs. 27,000 crores (Previous Year Nil).

b. Investments amounting to Rs. 11,117 crores (Previous Year Rs. 11,000 crores) are kept as margin with RBI/Clearing Corporation of India Limited towards Real Time Gross Settlement / Securities Settlement (RTGS/NDS).

c. Bank sold its stake in SBI DFHI Limited having book value of Rs. 88.53 crores for a sale price of Rs. 176.96 crores.

d. As per RBI Circular Numbered DBOD No. BPBC.58/21.04.141/2010-11 dated 4/11/2010, the Bank with effect from 1st January 2011, changed the method of accounting for investments in Government Securities (Gsec) to "Settlement Date Accounting" as against "Trade Date Accounting" previously. As a result the profits from Gsec is less by Rs. 1,60,000 in Financial Year 2010-11.

e. Effective, 1st April 2010, securities sold under agreements to repurchase (Repos) and securities purchased under agreements to resell (Reverse Repos), excluding transactions conducted under Liquidity Adjustment Facility with RBI, are reflected as borrowing and lending transactions respectively in accordance with RBI guidelines under reference RBI/2009- 10/356 IDMD/4135/11.08.43/2009-10 dated 23rd March 2010 on Uniform Accounting for Repo/ Reverse Repo Transactions. In the previous period, these transactions were recorded under investments as sale and purchase transactions respectively. This change in accounting has no impact on the profitability of the Bank.

* Investment in Equity, Equity Oriented Mutual Funds, Venture Capital, Rated Assets Backed Securities, Central Government Securities and pass through certificates have not been segregated under these categories, as these are not covered under relevant RBI Guidelines.

** Investments in Subsidiaries/Joint Ventures have not been segregated into various categories as these are not covered under relevant RBI Guidelines. Other investments include deposits with NABARD under RIDF Deposit Scheme amounting to Rs. 18,230.00 crores (Previous Year Rs. 17,833.89 crores).

c) Disclosures on Risk Exposure in Derivatives (A) Qualitative Disclosure

i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in Interest Rate and Currency Futures. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate agreements. Currency derivatives dealt with by the Bank are currency swaps, rupee dollar options and cross-currency options. The Bank has also started dealing in Exchange traded options in the current year. The products are offered to the Banks customers to hedge their exposures and the Bank enters into derivatives contracts to cover such exposures. Derivatives are used by the Bank both for trading as well as hedging on balance sheet items. The Bank also deals in a mix of these generic instruments. The Bank has done Option deals and Structured Products with customers, but they have been covered on a back to back basis in inter-bank market.

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

iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks. The Banks Mid-Office and Risk Control (MORC) Department at Treasury,

now Market Risk Management Department (MRMD) independently identifies, measures, monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB) at regular intervals.

iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details of which are presented under Schedule 17: Significant Accounting Policies (SAP) for the financial year 2010-11.

v. Interest Rate Swaps are mainly used at Foreign Offices for hedging of the assets and liabilities.

vi. Apart from hedging swaps, swaps at Foreign Offices consist of back to back swaps done at our Foreign Offices which are done mainly for hedging of FCNR deposits at Global Markets, Kolkata.

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

# IRS/FRA amounting to Rs. 5,035.67 crores entered with the Banks own offices are not shown here as they are for hedging of FCNB corpus and hence not marked to market.

$ The swaps amounting to Rs. 6,865.62 crores entered with the Banks own foreign offices are not shown here as they are for hedging of FCNB corpus and hence not marked to market.

** The forward contract deals with the Banks own offices are not included.

1. The outstanding notional amount of derivatives done between Global Markets department and International Banking Group department as on 31st March 2011 amounted to Rs. 11,901.29 crores and the derivatives done between SBI Foreign Offices as on 31st March 2011 amounted to Rs. 29,379.83 crores.

2. The outstanding notional amount of interest rate derivatives which are not marked to market where the underlying Assets/Liabilities are not marked to market as on 31st March 2011 amounted to Rs. 45,525.15 crores

3. Credit Default Swap : Outstanding as on 31st March 2011 amounted to Rs. 983.30 crores.

4. All Credit Derivatives (CDS, CLN and CDO) were hitherto categorized under Held to Maturity (HTM) category. During the financial year ended 31st March 2011, the entire Credit Derivative portfolio has been re- categorised under Available for Sale (AFS) category and has been marked to market (MTM). MTM loss as on 31st March 2011 amounts to Rs. 184.14 crores which has been fully provided for.

18.4 Asset Quality

b) Provisioning Coverage Ratio:

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on 31st March 2011 is 64.95% (Previous Year 59.23%).

e) With regard to disclosures relating to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006, there have been no reported cases of delayed payments or of interest payments due to delay in such payments to Micro, Small & Medium Enterprises.

g) Penalty for Bouncing of SGL forms

No penalty has been levied on the Bank for bouncing of SGL Forms.

18.7 Employee Benefits

The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market Such estimates are very long term and are not based on limited past experience / immediate future. Empirical evidence also suggests that in very long term, consistent high salary growth rates are not possible, which has been relied upon by the auditors.

ii. Employees Provident Fund

In terms of the guidance on implementing the AS-15 (Revised 2005) issued by the Institute of the Chartered Accountants of India, the Employees Provident Fund set up by the Bank is treated as a defined benefit plan since the Bank has to meet the specified minimum rate of return. As at the year-end, no shortfall remains unprovided for. Accordingly, other related disclosures in respect of Provident Fund have not been made and an amount of Rs. 854.90 crores (Previous Year Rs. 351.59 crores) is recognised as an expense towards the Provident Fund scheme of the Bank included under the head "Payments to and provisions for employees" in Profit and Loss Account.

iii. Defined Contributions

The Bank contributed Rs. 11.75 crores (previous year Nil) to the New Pension Scheme for all officers /employees joining the Bank on or after 1st August 2010.

18.8 Provision for Pension

Consequent to revision in wages in accordance with the Ninth Bipartite Settlement and the proposed amendment to the SBI Pension Fund Rules, the Pension liability of the bank for the year ended March 31, 2011 as determined by the independent actuary amounted to Rs. 11,707 crores. After considering the existing provision of Rs. 1,306.70 crores, the additional pension cost in respect of the liabilities of earlier years amounting to Rs. 7,927.41 crores has been charged to Reserves in accordance with the dispensation granted by Reserve Bank of India to the Bank vide the letter number DBOD/BP/No./16165/21.04.018/2010-11 dated 18th April 2011. The pension cost for the year amounting to Rs. 2,473 crores has been charged to the Profit and Loss account. As per the requirements of AS 15 - Employee Benefits, the entire amount of Rs. 10,400.30 crores is required to be charged to Profit and Loss Account Had such dispensation not been allowed by RBI, the profit of the Bank would have been lower by Rs. 7,927.41 crores pursuant to the application of requirements of AS 15.

18.9 Gratuity

Consequent to the enhancement in limit of gratuity payable under the Payment of Gratuity Act, 1972 and revision in wages in accordance with the Ninth Bipartite Settlement, the cost on account of Gratuity liability of the Bank as determined by the independent actuary for the year ended March 31, 2011 amounted to Rs. 1,965 crores. The incremental liability for the year and the increase in liability consequent to revision in wages amounting to Rs. 865 crores and an amount of Rs. 700 crores on account of enhancement in the limit of gratuity, has been charged to the Profit and Loss account. The balance amount of Rs. 400 crores, not already charged to Profit and Loss account during the year, has not been recognised and will be amortised over the next four years in accordance with RBI circular no. DBOD.BP.BC.80 /21.04.018/2010-11 dated 9th February 2011. As per the requirements of AS 15 - Employee Benefits , the entire amount of Rs. 1,965 crores is required to be charged to Profit and Loss Account Had such circular not been issued by RBI, the profit of the Bank would have been lower by Rs. 400 crores pursuant to the application of requirements of AS 15.

18.10 Segment Reporting:

1. Segment Identification

A) Primary (Business Segment)

The following are the primary segments of the Bank:-

— Treasury

— Corporate / Wholesale Banking

— Retail Banking

— Other Banking Business

The present accounting and information system of the Bank does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

a) Treasury - The Treasury Segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative

contracts. The revenue of the treasury segment primarily consists of fees and gains or losses from trading operations and interest income on the investment portfolio.

b) Corporate / Wholesale Banking - The Corporate / Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

c) Retail Banking - The Retail Banking Segment comprises of branches in National Banking Group, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with branches in the National Banking Group. This segment also includes agency business and ATMs.

d) Other Banking business - Segments not classified under (a) to (c) above are classified under this primary segment.

B) Secondary (Geographical Segment)

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

C) Pricing of Inter-segmental Transfers

The Retail Banking segment is the primary resource mobilising unit. The Corporate/Wholesale Banking and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding Centre notionally buys funds that the business units raise in the form of deposits or borrowings and notionally sell funds to business units engaged in creating assets.

D) Allocation of Expenses, Assets and Liabilities

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

18.11 Related Party Disclosures:

1. Related Parties

A. SUBSIDIARIES

i. DOMESTIC BANKING SUBSIDIARIES

1. State Bank of Bikaner & Jaipur

2. State Bank of Hyderabad

3. State Bank of Indore (up to 25.08.2010)

4. State Bank of Mysore

5. State Bank of Patiala

6. State Bank of Travancore

7. SBI Commercial and International Bank Ltd.

ii. FOREIGN BANKING SUBSIDIARIES

1. SBI (Mauritius) Ltd.

2. State Bank of India (Canada)

3. State Bank of India (California)

4. Commercial Bank of India LLC, Moscow

5. PT Bank SBI Indonesia

6. Nepal SBI Bank Ltd.

iii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBI DFHI Ltd.

3. SBI Mutual Funds Trustee Company Pvt. Ltd.

4. SBI CAP Securities Ltd.

5. SBI CAPS Ventures Ltd.

6. SBI CAP Trustees Co. Ltd.

7. SBI Cards & Payment Services Pvt. Ltd.

8. SBI Funds Management Pvt. Ltd.

9. SBI Life Insurance Company Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI - SG Global Securities Pvt. Ltd.

12. SBI Global Factors Ltd.

13. SBI General Insurance Company Ltd

14. SBI Payment Services Pvt. Ltd.

iv. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (UK) Ltd.

2. SBI Funds Management (International) Pvt. Ltd.

3. SBICAP Singapore Ltd.

B. JOINTLY CONTROLLED ENTITIES

1. GE Capital Business Process Management Services Pvt. Ltd

2. C-Edge Technologies Ltd.

3. Macquarie SBI Infrastructure Management Pte. Ltd.

4. Macquarie SBI Infrastructure Trustees Ltd.

5. SBI Macquarie Infrastructure Management Pvt. Ltd.

6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.

7. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

8. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Cauvery Kalpatharu Grameena Bank

4. Chhattisgarh Gramin Bank

5. Deccan Grameena Bank

6. Ellaquai Dehati Bank

7. Meghalaya Rural Bank (Formerly known as Ka Bank Nongkyndong Ri Khasi Jaintia)

8. Krishna Grameena Bank

9. Langpi Dehangi Rural Bank

10. Madhya Bharat Gramin Bank

11. Malwa Gramin Bank

12. Marwar Ganganagar Bikaner Gramin Bank

13. Mizoram Rural Bank

14. Nagaland Rural Bank

15. Parvatiya Gramin Bank

16. Purvanchal Kshetriya Gramin Bank

17. Samastipur Kshetriya Gramin Bank

18. Saurashtra Gramin Bank

19. Utkal Gramya Bank

20. Uttaranchal Gramin Bank

21. Vananchal Gramin Bank

22. Vidisha Bhopal Kshetriya Gramin Bank

ii. Others

1. SBI Home Finance Ltd.

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

4. S. S. Ventures Services Ltd.( up to 15.03.2011)

D. Key Management Personnel of the Bank

1. Shri O. P. Bhatt, Chairman (up to 31.03.2011)

2. Shri S. K. Bhattacharyya, Managing Director (up to 31.10.2010)

3. Shri R. Sridharan, Managing Director

2. Parties with whom transactions were entered into during the year

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

1. C-Edge Technologies Ltd.

2. GE Capital Business Process Management Services Pvt. Ltd.

3. Macquarie SBI Infrastructure Management Pte. Ltd.

4. Macquarie SBI Infrastructure Trustees Ltd.

5. SBI Macquarie Infrastructure Management Pvt. Ltd.

6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.

7. Bank of Bhutan Ltd.

8. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

9. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

10. SBI Home Finance Ltd.

11. S. S. Ventures Services Ltd (up to 15.03.2011)

12. Shri O. P. Bhatt, Chairman (up to 31.03.2011)

13. Shri S. K. Bhattacharyya, Managing Director (up to 31.10.2010)

14. Shri R. Sridharan, Managing Director

18.14 Accounting for Taxes on Income

i) Current tax expenditure for the year is net of reversal of excess provision for previous year of Rs. 207.60 crores.

ii) During the year, Rs. 976.82 crores [Previous Year Rs. 1,407.75 crores credited ] has been debited to Profit and Loss Account by way of adjustment of deferred tax.

18.15 Investments in Jointly Controlled Entities

Investments include Rs. 38.96 crores (Previous Year Rs. 19.95 crores) representing Banks interest in the following jointly controlled entities

18.16 Impairment of Assets

In the opinion of the Banks Management, there is no impairment to the assets during the year to which Accounting Standard 28 - "Impairment of Assets" applies.

18.19 a) Description of Contingent Liabilities and Contingent Assets

Sr. Particulars Brief Description No.

1 Claims against the Bank The Bank is a party to various not acknowledged as debts proceedings in the normal course of business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Banks financial conditions, results of operations or cash flows.

2 Liability on account of The Bank enters into foreign outstanding forward exchange contracts, currency options, exchange contracts forward rate agreements, currency swaps and interest rate swaps with inter-Bank participants on its own account and for customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest/principal in one currency against another, based on predetermined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts that are recorded as Contingent Liabilities, are typically amounts used as a benchmark for the calculation of the interest component of the contracts.

3 Guarantees given on behalf As a part of its commercial Banking of constituents, acceptances, activities, the Bank issues endorsements and other documentary credits and guarantees obligations on behalf of its customers Documentary credits enhance the credit standing of the customers of the Bank. Guarantees generally represent irrevocable assurances that the Bank will make payment in the event of the customer failing to fulfil its financial or performance obligations.

4 Other items for which The Bank is a party to various the Bank is contingently taxation matters in respect of which liable. appeals are pending. These are being contested by the Bank and not provided for. Further, the Bank has made commitments to subscribe to shares in the normal course of business.

b) The Contingent Liabilities mentioned above are dependent upon the outcome of Court/ arbitration/out of Court settlements, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be.

18.20 Amalgamation of State Bank of Indore

Consequent to the notification of the "Acquisition of State Bank of Indore Order, 2010" issued by the Government of India, the undertaking of State Bank of Indore stands transferred to and vests in State Bank of India("the Bank"), with effect from 26th August 2010, the effective date. The results for the year include the result of operations of the erstwhile State Bank of Indore (eSBIN) for the period from 26th August 2010 to the year end and the results of the Bank are not comparable to that extent.

The amalgamation of State Bank of Indore with the Bank has been accounted for under the pooling of interest method as prescribed in Accounting Standard 14 "Accounting for Amalgamations". Pursuant thereto, all assets and liabilities of State Bank of Indore as on the effective date have been transferred and vested in the Bank and in consideration thereof 1,14,606 fully paid equity shares of Rs. 10/- each of the Bank have been issued and allotted and Rs. 27,85,099/- paid in cash towards fractional entitlements to the non transferee bank shareholders in ratio of 34 equity shares for every 100 shares held . The Bank held 98.05% of the share capital of the State Bank of Indore on effective date which stands cancelled and the difference between the value of net identifiable assets acquired and the consideration amounting to Rs. 0.33 crore is credited to General Reserve.

18.21 Inter Office Accounts

Inter Office Accounts between branches, controlling offices and local head offices and corporate centre establishments are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

18.22 Wage Agreement Implementation

During the year, the disbursement of arrears of wages was finalized in accordance with the ninth Bipartite Settlement. An amount of Rs. 974.29 crores was written back to the Profit & Loss account during the year ended 31st March 2011, being excess amount of provision for wage revision and an amount of Rs. 168.98 crores was provided during the year for ‘Special Balancing Allowance.

18.23 Interest Not Collected and Unrealised Interest of Previous Year

The balances/provisions held as Interest Not Collected and Unrealised Interest of Previous Year for NPAs aggregating Rs. 1,618.02 crores have been reversed to the individual borrower accounts as stipulated by Reserve bank of India. Consequently, the advances and provisions as at 31st March 2011 are lower by Rs. 1,618.02 crores.

18.24 Countercyclical Provisioning Buffer

During the nine month period ended 31st December 2010, the Bank had made higher provision for NPAs over and above the prescribed IRAC norms to achieve the PCR as per RBI dispensation. During the quarter ended 31st March 2011, pursuant to the revised guidelines issued by RBI vide their circular no. DBOD. No. BP.BC.87/21.04.048/2010-11 dated 21st April 2011, the Bank has created countercyclical provisioning buffer of Rs. 2,330.00 crores till 31st March 2011 as against Rs. 3,430 crores, shortfall of which is to be met by 30th September 2011.

18.25 In accordance with RBI approval, the Bank has credited Rs. 42.90 crores to Profit & Loss Account, being the outstanding credit entries in Draft Payable Account which were 10 years or more old as on 30th September 2010, of this amount of Rs. 28.65 crores (net of taxes) has been utilised for additional provision for Provisioning Coverage Ratio.

18.26 During the year, the Bank has contributed Rs. 92.00 crores (previous year Rs. 92.00 crores) to SBI Retired Employees Medical Benefit Trust.

18.27 Previous period figures have been regrouped/reclassified, wherever necessary, to conform to current period classification. In cases where disclosures have been made for the first time in terms of RBI guidelines / Accounting Standards, previous years figures have not been mentioned.

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