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Notes to Accounts of YES Bank Ltd.

Mar 31, 2017

Note:

1) Denotes absolute value of loss which the Bank could suffer on account of a change in interest rates by 1% which however doesn''t capture the off-setting exposures between interest rate and currency derivatives.

2) PV01 exposures reported above may not necessarily indicate the interest rate risk the Bank is exposed to, given that PV01 exposures in Investments (which may offset the PV01 reflected above) do not form part of the above table.

3) The notional principal amount of foreign exchange contracts classified as trading at March 31, 2017 amounted to Rs,1,631,110.62 million (previous year: Rs,1,752,326.72 million). For these trading contracts, at March 31, 2017, marked to market position was asset of Rs,35,428.99 million (Previous year: Rs,18,477.52 million) and liability of Rs,40,014.63 million (Previous Year: Rs,18,406.34 million).The notional principal amount of foreign exchange contracts classified as hedging at March 31, 2017 amounted to Rs,2,329.98 million (previous year: Rs,13,583.12 million). Credit exposure on forward exchange contracts at March 31, 2017 was Rs,66,733.58 million (Previous Year: Rs,54,081.82 million) of which exposure on CCIL is Rs,35,132.52 million (Previous Year: Rs,33,307.68 million).

The Bank does not have any advances which are outstanding in the books of the branches, but have been written-off (fully or partially) at Head Office level.

4. PROVISION COVERAGE RATIO

The provision coverage ratio of the Bank as at March 31, 2017 computed as per the RBI guidelines is 46.88% (previous year 62.02%)

The table above is in conformity with RBI circular issued on April 18, 2017 and as per approval from Board of Directors at its Board meeting held on April 19, 2017, the audited financial statements of the Bank for the year ended March 31, 2017, duly incorporates the current impact of divergences observed recently by RBI

a) With ongoing remedial actions undertaken by the Bank during FY 16-17, there have been several reductions / exits / improvement in account conduct which has reduced the overall Gross NPA outstanding to Rs,10,399.76 million as on March 31, 2017.

After duly factoring the provision impact of divergences, Banks credit cost for FY 17 is at 53 basis points

5. DETAILS OF SINGLE BORROWER LIMIT (SBL) AND GROUP BORROWER LIMIT (GBL)

During the year ended March 31, 2017 and March 31, 2016, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank, with the approval of the Board of Directors, can enhance exposure to a single borrower or borrower group by a further 5 percent of capital funds.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Nirma Limited within the ceiling of 20% of Capital Funds. As on March 31, 2017, the exposure to Nirma Limited as a percentage of capital funds was 0.1%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Reliance Ports and Terminals Limited within the ceiling of 25% of Capital Funds. As on March 31, 2017, the exposure to Reliance Ports and Terminals Limited as a percentage of capital funds was 4.6%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in group borrower limit for Reliance Group within the ceiling of 55% of Capital Funds. As on March 31, 2017, the exposure to Reliance Group as a percentage of capital funds was 21.0%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in group borrower limit for Tata Group within the ceiling of 55% of Capital Funds. As on March 31, 2017, the exposure to Tata Group as a percentage of capital funds was 18.3%.

During the year ended March 31, 2016, the Bank has not exceeded regulatory single borrower or group borrower exposure limit.

6. DETAILS OF FACTORING EXPOSURE

The factoring exposure of the Bank as on March 31, 2017 is Rs,4,426.83 million (previous year: Rs,1,289.26 million)

7. DISCLOSURE OF PENALTIES IMPOSED BY RBI

During the financial year ended March 31, 2017 and March 31, 2016, there were no penalties imposed on the Bank by RBI.

8. FEES/ REMUNERATION RECEIVED FROM BANCASSURANCE

Bank has earned Rs,1,003.58 million from banc assurance business during year ended March 31, 2017 (previous year: Rs,564.96 million).

9. CONCENTRATION OF DEPOSITS

As at March 31, 2017, the deposits of top 20 depositors aggregated to Rs,158,244.68 million (previous year: Rs,131,000.94 million) (excluding certificate of deposits, which are tradable instruments), representing 11.08% (previous year: 11.73%) of the total deposit base.

10. CONCENTRATION OF ADVANCES

As at March 31, 2017 the top 20 advances aggregated to Rs,330,579.80 million (previous year Rs,276,325.91 million), representing 12.38% (previous year 13.79%) of the total advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DBR.No.Dir.BC.12/13.03.00/2015-16 dated July 1, 2015.

11. CONCENTRATION OF EXPOSURES

As at March 31, 2017 the top 20 exposures aggregated to Rs,361,516.54 million (previous year Rs,287,740.91 million), representing 12.55% (previous year 13.24%) of the total exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DBR.No.Dir.BC.12/13.03.00/2015-16 dated July 1, 2015.

12. OVERSEAS ASSETS, NPAS AND REVENUE

The below table shows total assets, NPAs and revenue for the overseas branches of the Bank

13. SPONSORED SPVS

The Bank has not sponsored any SPV and hence there is no consolidation due to SPVs in Bank''s books.

14. CREDIT / DEBIT CARD REWARD POINTS

During financial year ending March 31, 2017, the Bank has provided Rs,34.42 million for accumulated rewards points on credit and debit card (previous year nil) using an actuarial valuation method by employing an independent actuary.

15. CORPORATE SOCIAL RESPONSIBILITY (CSR)

a) Amount required to be spent by the Bank on CSR during the year Rs,600.17 million (previous year Rs,477.47 million)

16. STAFF RETIREMENT BENEFITS

The following table sets out the funded status of the Gratuity Plan and the amounts recognized in the Bank''s financial statements as of March 31, 2017 and March 31, 2016:

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Net gratuity cost for the year ended March 31, 2017 and March 31, 2016 comprises the following components:

The Bank is yet to determine future contribution to Gratuity fund for Financial Year 2017-18

17. SEGMENT RESULTS

Pursuant to the guidelines issued by RBI on AS-17 (Segment Reporting) - Enhancement of Disclosures dated

April 18, 2007, effective from period ending March 31, 2008, the following business segments have been reported.

- Treasury: Includes investments, all financial markets activities undertaken on behalf of the Bank''s customers, Proprietary trading, maintenance of reserve requirements and resource mobilisation from other banks and financial institutions.

- Corporate / Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.

- Retail Banking: Includes lending, deposit taking and other services offered to retail customers.

- Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc.

NOTES FOR SEGMENT REPORTING:

1. The business of the Bank is concentrated largely in India. Accordingly, geographical segment results have not been reported in accordance with AS-17 (Segment Reporting).

2. In computing the above information, certain estimates and assumptions have been made by the Management and have been relied upon by the auditors.

3. I ncome, expense, assets and liabilities have been either specifically identified with individual segment or allocated to segments on a systematic basis or classified as unallocated.

4. The unallocated assets includes tax paid in advance/tax deducted at source and deferred tax asset.

5. The unallocated liabilities include Share Capital and Reserves and Surplus.

6. I nter-segment transactions have been generally based on transfer pricing measures as determined by the Management.

7. The Bank has refined the allocation methodology and has allocated certain items that were previously classified as unallocated, to various segments. The same have been applied to segment information for previous periods also.

18. RELATED PARTY DISCLOSURES

The Bank has transactions with its related parties comprising of subsidiary, key management personnel and the relative of key management personnel per AS 18 "Related Party Disclosures”, notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014, the Bank''s related parties for the year ended March 31, 2017 are disclosed below:

SUBSIDIARY

- Yes Securities (India) Limited

INDIVIDUALS HAVING SIGNIFICANT INFLUENCE:

- Mr. Rana Kapoor, Managing Director & CEO

* Represents outstanding as of March 31, 2016

# In Financial Year 2015-16 there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 “Guidance on compliance with the accounting standards by banks”.

19 OPERATING LEASES

Lease payments recognized in the profit and loss account for the year ended March 31, 2017 was Rs,3,334.71 million (Previous year: Rs,2,653.83 million).

As at March 31, 2017 and March 31, 2016 the Bank had certain non-cancellable outsourcing contracts for information technology assets and branches on rent. The future minimum lease obligations against the same were as follows:

The Bank does not have any provisions relating to contingent rent.

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in the agreements.

20. EARNINGS PER SHARE (‘EPS’)

The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, “Earnings Per Share”. The dilutive impact is mainly due to stock options granted to employees by the Bank.

The difference between weighted average number of equity shares outstanding between basic and diluted in the above mentioned disclosure is on account of outstanding ESOPs.

21. ESOP DISCLOSURES

Statutory Disclosures Regarding Joining Stock Option Scheme:

The Bank has Five Employee Stock Option Schemes viz.

- Joining Employee Stock Option Plan II (JESOP II),

- Joining Employee Stock Option Plan III (JESOP III),

- YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I)

- YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/PESOP II -2010).

The schemes include provisions for grant of options to eligible employees of the Bank and its subsidiaries/ affiliates. All the aforesaid schemes have been approved by the Nomination and Remuneration Committee (N&RC) and the Board of Directors and were also approved by the members of the Bank. All these schemes are administered by the N&RC.

JESOP II and JESOP III were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively.

YBL JESOP V is in force for employees joining the Bank from time to time. Under JESOP V, 50% options vest takes place at the end of three years and remaining 50% at the end of five years from the date of Grant.

PESOP I, PESOP II and PESOP II - 2010 are Performance Stock Option Plans. Under PESOP I, 25% of the options granted would vest at the end of each year from the date of grant. Under PESOP II, 30% of the granted options vest at the end of first year, 30% vest at the end of second year and balance 40% vest at the end of third year. Under YBL PESOP II - 2010, 30% of the granted options vest at the end of the third year, 30% vest at the end of the fourth year and balance 40% vest at the end of the fifth year.

Further, grants under PESOP II had been discontinued with effect from January 20, 2010.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

The Bank has charged Nil amount, being the intrinsic value of the stock options granted for the year ended March 31, 2017 and March 31, 2016. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by Rs,464.49 million (Previous year: Rs,414.23 million), the basic earnings per share would have been Rs,77.79 (Previous year: Rs,59.63) per share instead of Rs,78.89 (Previous year: Rs,60.62) per share; and diluted earnings per share would have been Rs,75.70 (Previous year: Rs,58.34) per share instead of Rs,76.77 (Previous year: Rs,59.31) per share.

The following assumptions have been made for computation of the fair value of ESOP granted for the year ended March 31, 2017 and March 31, 2016.

In computing the above information, certain estimates and assumptions have been made by the Management.

22. DEFERRED TAXATION

The deferred tax asset of Rs,6,029.82 million as at March 31, 2017 and Rs,4,774.50 million as at March 31, 2016, is included under other assets and the corresponding credits have been taken to the profit and loss account.

23. OTHER DISCLOSURES

24. DISCLOSURE ON REMUNERATION

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

The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. The N&RC shall comprise a minimum of 3 non-executive Directors, majority being Independent Directors.

Composition of the N&RC of the Bank as on March 31, 2017 is as follows:

- Mr. Brahm Dutt, Independent Director (Chairman)

- Mr. Mukesh Sabharwal, Independent Director

- Mr. Ajai Kumar, Non-Executive NonIndependent Director (appointed w.e.f. October 30, 2016)

The roles and responsibilities of the N & RC are as under-

- Reviewing the current Board composition, its governance framework and determine future requirements and making recommendations to the Board for approval;

O Examining the qualification, knowledge, skill sets and experience of each director vis-a-vis the Bank''s requirements and their effectiveness to the Board on a yearly basis and accordingly recommend to the Board for the induction of new Directors;

- To review the composition of the existing Committees of the Board and to examine annually whether there is any need to have a special committee of directors to meet the business requirements of the Bank and accordingly recommend to the Board for formation of a special committee;

- To scrutinize nominations for Independent/ Non Executive Directors with reference to their qualifications and experience and making recommendations to the Board for appointment/filling of vacancies;

- To identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal;

-Formulating the criteria for evaluation of performance of independent directors and the board of directors;

- Carrying out evaluation of every director''s performance;

- To evaluate whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors;

- To validate ‘fit and proper'' status of all Directors on the Board of the Bank in terms of the Guidelines issued by the RBI or other regulatory authorities;

- To develop and recommend to the Board Corporate Governance guidelines applicable to the Bank for incorporating best practices;

- To implement policies and processes relating to Corporate Governance principles;

- To formulate the criteria for determining qualifications, positive attributes and independence of a director;

- To devise a Policy on Board diversity;

- To recommend to the Board a policy relating to, the remuneration for the directors, key managerial personnel and other employees;

- Reviewing the Bank''s overall compensation structure and related polices with a view to attract, motivate and retain employees and review compensation levels vis-a-vis other Banks and the industry in general;

- Ensuring the following while formulating the policy on the aforesaid matters:

- the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors, key managerial personnel and senior management of the quality required to run the company successfully;

- relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

- remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long- term performance objectives appropriate to the working of the company and its goals,

- To formulate and determine the Bank''s policies on remuneration packages payable to the Directors and key managerial personnel including performance/achievement bonus, perquisites, retrials, sitting fee, etc.;

- To consider grant of Stock Options to employees including employees of subsidiaries and administer and supervise the Employee Stock Option Plans;

- To function as the Compensation Committee as prescribed under the SEBI (Share Based Employee Benefits) Regulations, 2014 and is authorized to allot shares pursuant to exercise of Stock Options by employees;

- Performing any other function or duty as stipulated by the Companies Act, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges and any other regulatory authority or under any applicable laws as may be prescribed from time to time.

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

The Bank has framed Compensation and benefit policy based on the guidelines contained in the RBI circular DBOD No. BC.72/29.67.001/2011-12 dated January 13, 2012 which is approved by the Nomination and Remuneration Committee on January 7, 2013. The remuneration of MD & CEO/Whole time Directors will be in accordance with the above mentioned circular and shall be reviewed basis RBI guidelines issued from time to time and approved by N&RC before obtaining Regulatory approvals.

The compensation philosophy of the Bank is aligned to the organizational values aimed at encouraging Professional Entrepreneurship and reinforcing a strong culture promoting meritocracy, performance, potential and prudent risk taking.

The Bank''s Remuneration policy is to position its pay structure competitively in relation to the market to be able to attract and retain critical talent. The compensation strategy clearly endeavors to differentiate performance significantly and link the same with quality and quantum of rewards. The Bank also strives to create long term wealth creation opportunities through stock option schemes.

Human Capital Management shall review the policy annually or as required, based on changes in statutory, regulatory requirements and industry practices pertaining to Compensation and Benefits.

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

The broad factors taken into account for the Annual Review /revision of Fixed Compensation (TCC) & Performance Bonus are:

1. Individual performance based on the Annual Performance Review (APR) process of the Bank.

2. Business Unit performance in terms of financial outcomes, productivity, etc.

3. Consideration of all types of risk factors and shall be symmetrical with risk outcomes as well as sensitive to the time horizon of risk.

4. Profitability of the Bank.

5. Industry Benchmarking and consideration towards cost of living adjustment/inflation

The Bank subscribes to a ''Sum-of-Parts'' compensation methodology, which is reflective of the Bank''s commitment and philosophy of creating and sharing value with its employee partners.

The sum-of-parts compensation comprises: FIXED COMPENSATION

Variable Compensation in the form of Performance Bonus

EMPLOYEE STOCK OPTION PLANS (ESOP) The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. Human Capital Management under the guidance of MD & CEO shall administer the Compensation and Benefits structure in line with Industry practices and statutory requirements as applicable from time to time.

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

The Bank ensures that the compensation remains adjusted for all types of risk, symmetrical with risk outcomes as well as sensitive to the time horizon of risk. Further, the compensation in all forms will be consistent with the risk alignment.

One of the key factors to be considered for the Annual Review /revision of Fixed Compensation (TCC) & Performance Bonus includes individual performance based on the Annual Performance Review (APR) process of the Bank. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weight age. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

For the services pertaining to financial year 2015-16 where variable pay is 50% or more, 40-60% shall be deferred over minimum period of 3 years. In the event of a negative contribution, deferred compensation shall be subject to appropriate malus/claw back arrangements as decided by the N&RC . Guaranteed bonus shall not be a part of the compensation plan.

The compensation for executives in Risk Control and Compliance functions shall be independent of the business areas they oversee.

The Bank shall not provide any facility or funds or permit employees to insure or hedge their compensation structure to offset the risk alignment effects embedded in their compensation arrangement.

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

The Bank subscribes to a ''Sum-of-Parts'' compensation methodology, which is reflective of the commitment and philosophy of creating and sharing value with the employee partners. The sum-of-parts compensation for executives comprises:

Fixed Compensation (Total Cost to Company-TCC) - Includes value of perquisites.

Variable compensation in the form of Performance /Deferred Bonus - Variable pay shall be in the form of Performance Bonus which will be calculated as a percentage of Fixed Pay. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weightage. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

Employee Stock Options Plans - These are formulated on a mid to long term basis by the Bank in accordance with SEBI and other Regulatory guidelines. The grant of ESOP shall be under approval from MD & CEO, which shall be subsequently ratified by the N&RC.

f. Quantitative Disclosures on Remuneration for MD & CEO and other risk takers

There were 4 meetings of the N&RC held during the year ended March 31, 2017. The Bank had paid a remuneration of '' 0.60 million* to the members of the N&RC for attending the meetings of the N&RC.

Note:

1. Amounts disclosed represents variable pay paid during the year ended March 31,2017 and March 31,2016 is for services rendered by the risk takers during the year March 31, 2016 and March 31,2015 respectively, since the bonus pool for the year ended March 31, 2017 has not yet been allocated and accordingly, the deferred component for the risk takers is yet to be determined.

2. Compensation for MD & CEO is as approved by the RBI and paid by the Bank to the MD & CEO. Compensation for other risk takers is as approved by the Bank.

3. For the Financial Year ended March 31, 2017, 15,000 ESOPs were issued to 1 risk takers (previous year 285,000 ESOPs to 4 risk takers)

26. MOVEMENT IN FLOATING PROVISIONS

The Bank has not created or utilized any floating provisions during the financial year ended March 31, 2017 and

financial year ended March 31, 2016. The floating provision as at March 31, 2017 was '' Nil (Previous year: '' Nil).

27. DRAWDOWN ON RESERVES

During the financial year ended March 31, 2017, the Bank has not drawn down any reserve. (Previous year: '' Nil).

28. LIQUIDITY COVERAGE RATIO (LCR)

Below mentioned is a position of Liquidity Coverage Ratio. The Bank has moved from annual disclosures in the previous year to quarterly disclosures in the current financial year in lines with the LCR disclosure standards notified by RBI.

LIQUIDITY COVERAGE RATIO (LCR):

The Bank measures and monitors the LCR in line with the Reserve Bank of India''s circular dated June 09, 2014 and November 28, 2014 on "Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards” as amended for "Prudential Guidelines on Capital Adequacy and Liquidity Standards” dated March 31, 2015. The LCR guidelines aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain High Quality Liquid Assets of a minimum of 100% of its Net Cash Outflows by January 01, 2019. However, with a view to provide transition time, the guidelines mandate a minimum requirement of 60% w.e.f. January 01, 2015 and a step up of 10% every year to reach the minimum requirement of 100% by January 01, 2019. Currently, the LCR applicable is 80%. The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank towards complying with LCR mandate ahead of the stipulated timelines. The maintenance of LCR, both on end of period and on a average basis, has been on account of multiple factors viz. increase in excess SLR, existing eligibility in Corporate Bond Investments, increase in Retail deposits and increase in non callable deposits.

Board of Directors of the Bank has empowered ALCO (Top Management Executive Committee) to monitor and strategize the Balance Sheet profile of the Bank. In line with the business strategy, ALCO forms an Interest Rate/Liquidity view for the bank with the help of the economic analysis provided by the in-house economic research team of the bank. ALCO of the Bank channelizes various business segments of the Bank to target good quality asset and liability profile to meet the Bank''s profitability as well as Liquidity requirements with the help of robust MIS and Risk Limit architecture of the Bank.

Funding strategies are formulated by the ALCO of the Bank. The objective of the funding strategy is to achieve an optimal funding mix which is consistent with prudent liquidity, diversity of sources and servicing costs. Accordingly, BSMG (Balance Sheet Management Group) of the Bank estimates daily liquidity requirement of the various business segments and manages the same on consolidated basis under ALCO guidance. With the help of Structural and Liquidity Statement prepared by the Bank, BSMG evaluates liquidity requirement and takes necessary action. Periodical reports are also placed before the ALCO for perusal and review.

The Bank''s HQLA comprises of Excess CRR, Excess SLR, eligible foreign sovereign investments, Marginal Standing Facility (MSF) and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) as permitted under prudential guidance and eligible Level 2 investments. The Bank has a very limited exposure to liquidity risk on account of its Derivatives portfolio. Further, the Bank believes that all inflows and outflows which might have a material impact under the liquidity stress scenario have been considered for the purpose of LCR. Further, SLR investments as well as Corporate Bond portfolio of the Bank considered for HQLA is also well diversified across various instruments and Liquid Asset Type Mix and should provide the Bank with adequate and timely liquidity.

The daily average LCR for quarter ending March 31, 2017 is 88.1% which is comfortably above RBI prescribed minimum requirement of 80%.

Further for the financial year ending 2016 and 2017, the Bank has considered nil operational deposit pending approval from RBI.

29. INVESTOR EDUCATION AND PROTECTION FUND

There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Bank as on March 31, 2017.

30. UNHEDGED FOREIGN CURRENCY EXPOSURE OF BANK’S CUSTOMER

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers. The objective of this policy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion. In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage. Additionally, at the time of sanctioning limits for all clients, the Bank stipulates a limit on the unhedged foreign currency exposure of the client (as a % of total foreign currency exposure sanctioned by the

Bank) after considering factors such as internal rating of the borrower, size, possibility of natural hedging, sophistication of borrower and maturity of borrower''s financial systems, relative size of unhedged foreign currency exposure with respect to total borrowings of the client, etc. Further, the Bank reviews the unhedged foreign currency exposure across its portfolio on a periodic basis. The Bank also maintains incremental provision and capital towards the unhedged foreign currency exposures of its borrowers in line with the extant RBI guidelines.

The Bank has maintained provision of Rs,558.08 million (previous year of Rs,586.87 million) and additional capital of Rs,2,413.54 million (previous year of Rs,2,485.69 million) on account of Unheeded Foreign Currency Exposure of its borrowers as at March 31, 2017.

31. PROVISIONING PERTAINING TO FRAUD ACCOUNTS

The Bank has reported 61 cases of fraud in the financial year ended March 31, 2017 amounting to Rs,160.77 million (Previous Year: 35 cases amounting to Rs,16.01 million). The Bank has expensed off/ provided for the expected loss arising from these frauds and does not have any unamortized provision.

32. DUES TO MICRO AND SMALL ENTERPRISES

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October

2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been no reported cases of interest payments due to delays in such payments to Micro, Small and Medium enterprises. Auditors have relied upon the above management assertion.

33. SECURITIZATION TRANSACTIONS

The Bank has not done any securitization transactions during the year ended March 31, 2017 and March 31, 2016.

34. LETTER OF COMFORT

The Bank has not issued any letter of comfort during the year ended March 31, 2017 and March 31, 2016.

35. DESCRIPTION OF CONTINGENT LIABILITIES

Contingent Liabilities Brief

No.

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

2. Liability on account The Bank enters into foreign exchange contracts, currency options, forward rate of forward exchange agreements, currency swaps and interest rate swaps with interbank participants and derivative and customers. Forward exchange contracts are commitments to buy or sell foreign contracts. 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 of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank''s exposure to credit or price risks. The derivative instruments become favorable (assets) or unfavorable (liabilities) as a result of fluctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favorable or unfavorable and, thus the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly.

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

4. Other items for - Value dated purchase of securities which the Bank is - Capital commitments contingently liable - Amount deposited with RBI under Depositor Education Awareness Fund - Foreign Exchange Contracts (Tom & Spot)

Refer Schedule 12 for amounts relating to contingent liability

36. PROVISION FOR LONG TERM CONTRACTS

The Bank has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) in the books of account and disclosed the same under the relevant notes in the financial statements.

37. DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)

The Bank believes that the MCA notification G.S.R. 308(E) dated March 30, 2017 regarding holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 is not applicable to banking companies. RBI has expressed a similar view in response to the Bank''s question. Accordingly, the disclosures prescribed under the said notification are not required to be made by the Bank.

38. PSLCs SOLD AND PURCHASED DURING THE YEAR ENDED MARCH 31, 2017

39. AUDIT OF FINANCIAL STATEMENTS-

The figures for the year ended March 31, 2016 were audited by previous statutory auditors.

40. PRIOR PERIOD COMPARATIVES

Previous year''s figures have been regrouped where necessary to conform to current year classification.


Mar 31, 2015

1.1.1 Segment Results

Pursuant to the guidelines issued by RBI on AS-17 (Segment Reporting) - Enhancement of Disclosures dated ApriL 18, 2007,effective from period ending March 31,2008,the foLLowing business segments have been reported.

Treasury: IncLudes investments, aLL financial markets activities undertaken on behaLf of the Bank''s customers, proprietary trading, maintenance of reserve requirements and resource mobiLization from other banks and financial institutions.

Corporate / Wholesale Banking: IncLudes Lending, deposit taking and other services offered to corporate customers.

Retail Banking: IncLudes Lending, deposit taking and other services offered to retail customers.

Other Banking Operations: IncLudes para banking activities Like third party product distribution, merchant banking etc.

1.1.2 Related Party Disclosures

The Bank has transactions with its reLated parties comprising of subsidiary, key management personneL and the reLative of key management personneL

As per AS 18 "ReLated Party DiscLosures", prescribed by notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) RuLes 2014, the Bank''s reLated parties for the year ended March 31,2015 are discLosed beLow:

Subsidiary

Yes Securities (India) Limited.

IndividuaLs having significant influence:

- Mr. Rana Kapoor, Managing Director & CEO

Key Management PersonneL (''KMP'') (WhoLe time Director)

Mr. Rana Kapoor, Managing Director & CEO

As per AS 18"ReLated Party Disclosures", prescribed by the Companies (Accounting Standards) RuLes, 2006,the Bank''s reLated parties for the year ended March 31,2014 are discLosed beLow:

Subsidiary

Yes Securities (India) Limited.

Individuals having significant influence:

Mr. Rana Kapoor, Managing Director & CEO

Key Management Personnel (''KMP'') (WhoLe time Director)

Mr. Rana Kapoor, Managing Director & CEO

1.2.1 Operating Leases

Lease payments recognized in the profit and Loss account for the year ended March 31, 2015 was Rs.2,206,079 thousands (Previous year:Rs. 1,976,918 thousands).

As at March 31,2015 and March 31,2014 the Bank had certain non-canceLLabLe outsourcing contracts for information technology assets and branches on rent. The future minimum Lease obLigations against the same were as foLLows:

The Bank does not have any provisions reLating to contingent rent.

The terms of renewal/purchase options and escaLation cLauses are those normaLLy prevaLent in simiLar agreements. There are no undue restrictions or onerous clauses in the agreements.

1.1.5 Earnings Per Share (''EPS'')

The Bank reports basic and diLuted earnings per equity share in accordance with AS-20, "Earnings Per Share". The diLutive impact is mainLy due to stock options granted to empLoyees by the Bank.

1.1.6 ESOP disclosures

Statutory Disclosures Regarding Joining Stock Option Scheme:

The Bank has Five EmpLoyee Stock Option Schemes viz.

Joining Stock Option PLan I (JSOP I),

Joining EmpLoyee Stock Option PLan II (JESOP II),

Joining EmpLoyee Stock Option PLan III (JESOP III),

YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I)

YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP ll/PESOP II -2010).

The schemes incLude provisions for grant of options to eLigibLe empLoyees of the Bank and its subsidiaries/ affiliates. ALL the aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were aLso approved by the members of the Bank. ALL these schemes are administered by the Board Remuneration Committee.

JSOP I was for empLoyees joining the Bank on or before March 31,2005. ALL the grants under JSOP I were made before the IPO of the Bank. JESOP II and JESOP III were in force for empLoyees joining the Bank up to March 31, 2006 and March 31,2007 respectively.

YBL JESOP V is in force for empLoyees joining the Bank from time to time. Under JESOP V, 50% options vest takes pLace at the end of three years and remaining 50% at the end of five years from the date of Grant.

PESOP I, PESOP II and PESOP II - 2010 are Performance Stock Option PLans. Under PESOP 1,25% of the options granted wouLd vest at the end of each year from the date of grant. Under PESOP II, 30% of the granted options vest at the end of first year, 30% vest at the end of second year and baLance 40% vest at the end of third year. Under YBL PESOP II - 2010, 30% of the granted options vest at the end of the third year, 30% vest at the end of the fourth year and baLance 40% vest at the end of the fifth year.

Further, grants under PESOP II had been discontinued with effect from January 20,2010.

Options under aLL the aforesaid pLans are granted for a term of 10 years (inclusive of the vesting period) and are settLed with equity shares being aLLotted to the beneficiary upon exercise.

The Bank has charged NiL, being the intrinsic vaLue of the stock options granted for the year ended March 31, 2015 and March 31, 2014. Had the Bank adopted the Fair VaLue method (based on BLack- SchoLes pricing modeL),for pricing and accounting of options, net profit aftertaxwouLd have been Lower byRs. 353,234thousands

(Previous year: Rs.341,904 thousands), the basic earnings per share wouLd have been Rs.48.47 (Previous year: Rs. 43.97) per share instead of Rs.49.34 (Previous year: Rs. 44.92) per share; and diLuted earnings per share wouLd have been Rs. 47.16 (Previous year: Rs. 43.42) per share instead of Rs. 48.01 (Previous year:Rs. 44.35) per share

The foLLowing assumptions have been made for computation of the fair vaLue of ESOP granted for the year ended March 31,2015 and March 31,2014.

In computing the above information, certain estimates and assumptions have been made by the Management.

1.7.7 Deferred Taxation

The deferred tax asset of Rs. 3,554,425 thousands as at March 31,2015 and Rs. 2,493,325 thousands as at March 31,2014, is included under other assets and the corresponding credits have been taken to the profit and Loss account.

1.8 Other Disclosures

1.8.1 Disclosure on Remuneration

a. Information reLating to the composition and mandate ofthe Remuneration Committee.-

The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) shaLL exercise oversight & effective governance over the framing and implementing of the Compensation poLicy. The BRC shaLL comprise a minimum of 3 Board members, of which two wouLd be independent directors, besides the MD and CEO.

Composition of the Nomination & Remuneration Committee (N&RC) of the Bank as on March 31, 2015 is as follows:

Mr. Brahm Dutt, Independent Director (Chairman)

Ms. Radha Singh, Non-Executive Chairperson

Mr. Mukesh SabharwaL, Independent Director

The roLes and responsibilities of the Nomination and Remuneration Committee (N&RC) are as under-

to review the Bank''s overaLL Compensation Structure and reLated poLicies with a view to attract, motivate and retain employees and review compensation LeveLs vis-a-vis other banks and the industry in general;

to determine the Bank''s poLicies on remuneration packages payabLe to the Directors incLuding performance/achievement bonus, perquisites, retriaLs,sitting fee, etc;

consider grant of stock options to empLoyees and administer and supervise the EmpLoyee Stock Option PLans with particular reference to:

- determination of quantum of options to be granted;

- determination of grant price, vesting scheduLe, exercise period, etc

- procedure for making fair and reasonable adjustments to the number of options granted in case of a corporate action such as rights issues, bonus,share spLit, mergers, etc.

- conditions under which options wouLd Lapse in case oftermination due to mis-conduct;

- procedure for cashless exercise of options, if any;

- to frame suitabLe poLicies to ensure compliance with aLL appLicabLe Laws, regulations.

Perform any other act, duty as stipulated by the Companies Act, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges, and any other reguLatory authority, as prescribed from time to time.

b. Information reLating to the design and structure of remuneration processes and the key features and objectives of remuneration poLicy-

The Bank has framed Compensation and benefit poLicy based on the guidelines contained in the RBI circuLar DBOD No. BC.72/29.67.001/2011- 12 dated January 13, 2012 which is approved by the Nomination and Remuneration Committee on January 7, 2013. The remuneration of MD&CEO/ WhoLetime Directors wiLL be in accordance with the above mentioned circuLar and shaLL be reviewed basis RBI guidelines issued from time to time and approved by N&RC before obtaining ReguLatory approvals.

The compensation phiLosophy of the Bank is aligned to the organizational values aimed at encouraging Professional Entrepreneurship and reinforcing a strong cuLture promoting meritocracy, performance, potentiaLand prudent risk taking.

The Bank''s Remuneration poLicy is to position its pay structure competitively in relation to the market to beabLeto attract and retain criticaLtaLent. The compensation strategy clearly endeavors to differentiate performance significantLy and Link the same with quaLity and quantum of rewards. The Bank aLso strives to create Long term weaLth creation opportunities through stock option schemes.

Human CapitaL Management shaLL review the poLicy annuaLLy or as required, based on changes in statutory, reguLatory requirements and industry practices pertaining to Compensation and Benefits.

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

The broad factors taken into account for the AnnuaL Review /revision of Fixed Compensation (TCC) & Performance Bonus are:

1. Individual performance based on the AnnuaL Performance Review (APR) process of the Bank.

2. Business Unit performance in terms of financial outcomes, productivity,etc.

3. Consideration of aLL types of risk factors and shaLL be symmetrical with risk outcomes as weLL as sensitive to the time horizon of risk.

4. Profitability oftheBank.

5. Industry Benchmarking and consideration towards cost of Living adjustment/inflation

The Bank subscribes to a ''Sum-of-Parts'' compensation methodoLogy, which is reflective of the Bank''s commitment and phiLosophy of creating and sharing vaLue with its empLoyee partners.

The sum-of-parts compensation comprises:

Fixed Compensation

VariabLe Compensation in the form of Performance Bonus

EmpLoyee Stock Option PLans (ESOP)

The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) shaLL exercise oversight & effective governance over the framing and implementing of the Compensation poLicy. Human CapitaL Management under the guidance of MD & CEO shaLL administer the Compensation and Benefits structure in Line with Industry practices and statutory requirements as appLicabLe from time to time.

d. Description of the ways in which the bank seeks to Link performance during a performance measurement period with Levels of remuneration and a discussion of the bank''s poLicy and criteria for adjusting deferred remuneration before vesting and after vesting.

The Bank ensures that the compensation remains adjusted for aLL types of risk, symmetricaL with risk outcomes as weLL as sensitive to the time horizon of risk. Further, the compensation in aLL forms wiLL be consistent with the risk aLignment.

One of the key factors to be considered for the AnnuaL Review /revision of Fixed Compensation (TCC) & Performance Bonus incLudes individuaL performance based on the AnnuaL Performance Review (APR) process of the Bank. The evaLuation on risk management parameters is an integraL part of the AnnuaL Performance Review process, forming part of Key ResuLt Areas of the executives with suitabLe weightage. The inputs for assessment on these parameters wiLL be independentLy provided by the Risk Management function ofthe Bank.

For the services pertaining to FY 2014-15 where variabLe pay is 50% or more, 40-60% shaLL be deferred over minimum period of 3 years. In the event of a negative contribution, deferred compensation shaLL be subject to appropriate maLus/cLaw back arrangements as decided by the Board Remuneration Committee. Guaranteed bonus shaLL not be a part ofthe compensation pLan.

The compensation for executives in Risk ControL and CompLiance functions shaLL be independent of the business areas they oversee.

The Bank shaLL not provide any faciLity or funds or permit empLoyees to insure or hedge their compensation structure to offset the risk aLignment effects embedded in their compensation arrangement.

e. Description of the different forms of variabLe remuneration (i.e. cash, shares, ESOPs and other forms) that the bank utiLizes and the rationaLe for using these different forms.

The Bank subscribes to a ''Sum-of-Parts'' compensation methodoLogy, which is reflective of the commitment and phiLosophy of creating and sharing vaLue with the empLoyee partners. The sum-of-parts compensation for executives comprises:

Fixed Compensation (Total Cost to Company-TCC) -

IncLudes vaLue of perquisites.

Variable compensation in the form of Performance /Deferred Bonus - VariabLe pay shaLL be in the form of Performance Bonus which wiLL be caLcuLated as a percentage of Fixed Pay. The evaLuation on risk management parameters is an integraL part ofthe AnnuaL Performance Review process, forming part of Key ResuLt Areas of the executives with suitabLe weightage. The inputs for assessment on these parameters wiLL be independentLy provided by the Risk Management function of the Bank.

Employee Stock Options Plans - These are formuLated on a mid to Long term basis by the Bank in accordance with SEBI and other ReguLatory guideLines. The grant of ESOP shaLL be under approvaL from MD & CEO, which shaLL be subsequentLy ratified by the Board Remuneration Committee.

f. Quantitative DiscLosures on Remuneration for MD & CEO and other risk takers

There were 3 meetings of the erstwhiLe Board Remuneration & Human CapitaL Management committee (now known as Nomination & Remuneration Committee) heLd during the year ended March 31, 2015. The Bank had paid a remuneration of Rs.160 thousands to the members ofthe remuneration committee.

1.8.2 Movement in Floating Provisions

The bank has not created or utiLized any floating provisions during the financial, year ended March 31,2015 and financial.year ended March 31,2014.The floating provision as at March 31,2015 was Rs.NiL (Previous year:Rs. NiL).

1.8.3 Drawdown on Reserves

During the financial, year ended March 31,2015,the Bank has not drawn down any reserve. (Previous year:Rs. NiL).

1.8.4 Liquidity Coverage Ratio (LCR)

BeLow mentioned is a position of Liquidity Coverage Ratio computed based on simpLe average of month end position during the quarter ended March 31,2015.

Liquidity Coverage Ratio (LCR):

The Bank measures and monitors the LCR in Line with the Reserve Bank of India''s circuLar dated June 9, 2014 on "Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards". The LCR guidelines aims to ensure that a bank maintains an adequate LeveL of unencumbered High OuaLity Liquid Assets (HOLAs) that can be converted into cash to meet its Liquidity needs for a 30 caLendar daytime horizon under a significantLy severe Liquidity stress scenario. At a minimum, the stock of Liquid assets shouLd enabLe the bank to survive until day 30 ofthe stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain High OuaLity Liquid Assets of a minimum of 100% of its Net Cash Outflows by January 1, 2019. However, with a view to provide transition time, the guidelines mandate a minimum requirement of 60% w.e.f. January 1,2015 and a step up of 10% every year to reach the minimum requirement of 100% by January 1,2019.

The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank towards complying with LCR mandate ahead of the stipulated timeLines. The maintenance of LCR, both on end of period and on a average basis, has been on account of muLtipLe factors viz. increase in excess SLR, existing eligibility in Corporate Bond Investments, increase in RetaiL deposits and increase in non caLLabLe deposits.

The Bank has been maintaining HOLA primariLy in the form of SLR investments over and above mandatory requirement; Corporate NCDs issued by non financiaL entities with rating AA- and above apart from reguLatory dispensation aLLowed upto 7% of NDTL in the form of borrowing Limit avaiLabLe through MarginaL Standing FaciLity (MSF) and FaciLity to AvaiL Liquidity for Liquidity Coverage Ratio (FALLCR). SLR investments as weLL as Corporate Bond portfoLio of the Bank considered for HOLA is aLso weLL diversified across various instruments and Liquid Asset Type Mix and shouLd provide the Bank with adequate and timeLy Liquidity.

The Bank has a diversified Liability mix. The deposits of the Bank are diversified, granuLar and the Bank has sticky deposit mix from muLtipLe sources. The Bank has witnessed continuing growth in number of Liability accounts from both retaiL as weLL as corporate customers. CASA deposits of the Bank increased by 29.0% year-on-year from Rs. 163,447 miLLion as at March 31, 2014 to Rs. 210,790 miLLion as on March 31, 2015. Continued investment in retaiL branches and retaiL saLes force has resuLted in achieving consistent CASA growth. This represents a steady improvement in the share of granuLar and retaiL deposits with widespread geographic national coverage.

The Bank has not been maintaining HOLA in FCY given the Lack of reguLatory options as weLL as Limited caLLabLe FCY Liabilities. Further the Bank has a very Limited exposure to Liquidity on account of its Derivatives portfoLio. Further, the Bank beLieves that aLL inflows and outflows which might have a materiaL impact under the Liquidity stress scenario have been considered for the purpose of LCR.

Board of Directors of the Bank has empowered ALCO (Top Management Executive Committee) to monitor and strategize the BaLance Sheet profiLe ofthe Bank. In Line with the business strategy,ALCO forms an Interest Rate/ Liquidity view forthe bankwiththe heLp ofthe economic anaLysis provided by the in-house economic research team ofthe bank. ALCO ofthe Bank channelizes various business segments of the Bank to target good quaLity asset and Liability profiLe to meet the Bank''s profitability as weLL as Liquidity requirements with the heLp of robust MIS and Risk Limit architecture ofthe Bank.

Funding strategies are formuLated by the BaLance sheet management group (BSMG) in accordance with the ALCO guidance. The objective of the funding strategy is to achieve an optimaL funding mix which is consistent with prudent Liquidity, diversity of sources and servicing costs. Accordingly, BSMG ofthe Bank estimates daily Liquidity requirement of the various business segments and manages the same on consolidated basis. With the heLp of Structural and DaiLy Liquidity Statement prepared by the Bank, BSMG evaluates current and future Liquidity requirement and takes necessary action.

1.8.6 Transfers to Depositor Education and Awareness Fund (DEAF)

The Bank has not transferred any funds to Depositor Education and Awareness Fund during financial, year ended March 31,2015.

1.8.7 Unhedged Foreign Currency Exposure of Bank''s Customer

The Bank has in pLace a poLicy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers. The objective of this poLicy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion. In Line with the poLicy,assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken whiLe proposing Limits or at the review stage. AdditionaLLy, at the time of sanctioning Limits for aLL cLients, the Bank stipuLates a Limit on the unhedged foreign currency exposure of the cLient (as a % of totaL foreign currency exposure sanctioned by the Bank) after considering factors such as internaL rating of the borrower, size, possibiLity of naturaL hedging, sophistication of borrower and maturity of borrower''s financiaL systems, reLative size of unhedged foreign currency exposure with respect to totaL borrowings of the cLient, etc. Further, the Bank reviews the unhedged foreign currency exposure across its portfoLio on a periodic basis. The Bank aLso maintains incrementaL provision towards the unhedged foreign currency exposures of its borrowers in Line with the extant RBI guidelines.

The Bank has maintained provision of Rs. 443,939 thousands and additionaL capitaL of Rs. 1,483,954 thousands on account of Unhedged Foreign Currency Exposure of its borrowers as at March 31,2015.

1.8.9 Dues to Micro and Small Enterprises

Underthe Micro and SmaLL Enterprises Development Act, 2006 which came into force from October 2,2006, certain disclosures are required to be made reLating to Micro and SmaLL enterprises. On the basis of information and records avaiLabLe with the management and confirmation sought by the management from suppLiers on their registration with the specified authority under the said Act, there have been no reported cases of deLays in payments to micro and smaLL enterprises or of interest payments due to deLays in such payments.

1.8.10 Securitization Transactions

The Bank has not done any securitization transactions during the year ended March 31,2015 and March 31,2014.

1.8.11 Letter of comfort

The Bank has not issued any Letter of comfort during the year ended March 31,2015 and March 31,2014.

1.8.12 Fixed Assets

The software capitalized under Fixed Asset was Rs.200,409 thousands and Rs.215,448 thousands as at March 31,2015 and March 31,2014 respectively.

1.8.13 Description of contingent liabilities

Sr. No. Contingent Liabilities Brief

1. Claims against the Bank not acknowledged as debts The Bank is a party to various Legal and tax 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 Bank''s financial conditions, results of operations or cash flows.

2. Liability on account of forward exchange and derivative The Bank enters into foreign exchange contracts, currency contracts. options, forward rate agreements, currency swaps and interest rate swaps with interbank participants and 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 of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank''s exposure to credit or price risks.

Liability on account of forward exchange and derivative The derivative instruments become favorable (assets) or contracts. unfavorable (liabilities) as a result of fluctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favorable or unfavorable and,thus the aggregate fairvalues of derivative financial assets and liabilities can fluctuate significantly.

3. Guarantees given on behalf of constituents, As a part of its commercial banking activities the Bank issues acceptances,endorsements and other obligationsdocumentary credit and guarantees on behalf of its customers.

Documentary credits such as letters of credit enhance the credit standing of the customers of the Bank. Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfill its financial or performance obligations.

4. Other items forwhich the bank is contingently liable -Value dated purchase ofsecurities

- Capital commitments

- Foreign Exchange Contracts (Tom & Spot)

Refer Schedule 12 for amounts relating to contingent liability

1.8.14 Provision for Long Term contracts

The Bank has a process whereby periodically aLL Long term contracts (incLuding derivative contracts) are assessed for materiaL foreseeable Losses. At the year end,the Bank has reviewed and recorded adequate provision as required under any Law / accounting standards for materiaL foreseeable Losses on such Long term contracts (incLuding derivative contracts) in the books of account and discLosed the same under the reLevant notes in the financial statements.

1.8.15 Prior period comparatives

Previous period''s figures have been regrouped where necessary to conform to current year classification.


Mar 31, 2014

Notes for segment reporting:

1. The business of the Bank is concentrated in India. Accordingly, geographical segment results have not been reported.

2. In computing the above information, certain estimates and assumptions have been made by the Management and have been relied upon by the auditors.

3. Income, expense, assets and liabilities have been either specifically identified with individual segment or allocated to segments on a systematic basis or classified as unallocated.

4. Fixed assets and related depreciation on fixed assets, non treasury related bank balances at branches, Bills payable, Tax related accounts, Tier II instruments, IPDI instruments and relevant interest and rent expenses which cannot be allocated to any segments have been classified as unallocated. The unallocated liabilities include Share Capital and Reserves and Surplus.

5. Inter-segment transactions have been generally based on transfer pricing measures as determined by the Management.

6. Related party Disclosures

The Bank has transactions with its related parties comprising of subsidiary, key management personnel and the relative of key management personnel

a) As per AS 18 "Related Party Disclosures", prescribed by the Companies (Accounting Standards) Rules, 2006, the Bank''s related parties for the year ended March 31, 2014 are disclosed below:

Subsidiary

- Yes Securities (India) Limited.

Individuals having significant influence:

- Mr. Rana Kapoor, Managing Director & CEO

b) As per AS 18 "Related Party Disclosures", prescribed by the Companies (Accounting Standards) Rules, 2006, the Bank''s related parties for the year ended March 31, 2013 are disclosed below:

Subsidiary

- Yes Securities (India) Limited. Individuals having significant influence:

- Mr. Rana Kapoor, Managing Director & CEO

key Management personnel (''kMp'') (Whole time Director)

- Mr. Rana Kapoor, Managing Director & CEO

7. Operating Leases

Lease payments recognized in the profit and loss account for the year ended March 31, 2014 was Rs.1,976,918 thousands (Previous year: Rs.1,550,742 thousands).

8. earnings per Share (''epS'')

The Bank reports basic and diluted earnings per equity share in accordance with AS-20, "Earnings Per Share". The dilutive impact is mainly due to stock options granted to employees by the Bank.

9. eSOp disclosures

Statutory Disclosures Regarding Joining Stock Option Scheme:

The Bank has Five Employee Stock Option Schemes viz.

- Joining Stock Option Plan I (JSOP I),

- Joining Employee Stock Option Plan II (JESOP II),

- Joining Employee Stock Option Plan III (JESOP III),

- YBL ESOP (consisting of JESOP IV and PESOP I)

- YBL JESOP V/PESOP II (consisting JESOP V, PESOP II and PESOP II - 2010).

The schemes include provisions for grant of options to eligible employees of the Bank and its subsidiaries. All the aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were also approved by the members of the Bank. All these schemes are administered by the Board Remuneration Committee.

JSOP I was for employees joining the Bank on or before March 31, 2005. All the grants under JSOP I were made before the IPO of the Bank. JESOP II and JESOP III were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively.

YBL JESOP V is in force for employees joining the Bank from time to time. Under JESOP V, 50% options vest takes place at the end of three years and remaining 50% at the end of five years from the date of Grant.

PESOP I, PESOP II and PESOP II - 2010 are Performance Stock Option Plans. Under PESOP I, 25% of the options granted would vest at the end of each year from the date of grant. Under PESOP II, 30% of the granted options vest at the end of first year, 30% vest at the end of second year and balance 40% vest at the end of third year. Under YBL PESOP II – 2010, 30% of the granted options vest at the end of the third year, 30% vest at the end of the fourth year and balance 40% vest at the end of the fifth year.

Further, grants under PESOP II had been discontinued with effect from January 20, 2010.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

10. Other Disclosures

11. Disclosure on Remuneration

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

The Board of Directors of the Bank through its Board Remuneration Committee (BRC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. The BRC shall comprise a minimum of 3 Board members, of which two would be independent directors, besides the MD and CEO.

Composition of the Board Remuneration Committee (BRC) of the Bank as on March 31, 2014 is as follows:

- Lt Gen (Retd.) Mukesh Sabharwal

- Mr. Diwan Arun Nanda – Chairman

- Mr. Rana Kapoor

The roles and responsibilities of the Remuneration Committee are as under-

- to review the Bank''s overall Compensation Structure and related policies with a view to attract, motivate and retain employees and review compensation levels vis-à- vis other banks and the industry in general;

- to determine the Bank''s policies on remuneration packages payable to the Directors including performance/achievement bonus, perquisites, retirals, sitting fee, etc;

- consider grant of stock options to employees and administer and supervise the Employee Stock Option Plans with particular reference to:

- determination of quantum of options to be granted;

- determination of grant price, vesting schedule, exercise period, etc

- procedure for making fair and reasonable adjustments to the number of options granted in case of a corporate action such as rights issues, bonus, share split, mergers, etc.

- conditions under which options would lapse in case of termination due to mis-conduct;

- procedure for cashless exercise of options, if any;

- to frame suitable policies to ensure compliance with all applicable laws, regulations.

- Perform any other act, duty as stipulated by the Companies Act, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges, and any other regulatory authority, as prescribed from time to time.

b. Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy- The Bank has framed Compensation and benefit policy based on the guidelines contained in the RBI circular DBOD No. BC.72/29.67.001/2011-12 dated January 13, 2012 which is approved by the Board Remuneration committee on January 7, 2013. The remuneration of MD & CEO/Wholetime Directors will be in accordance with the above mentioned circular and shall be reviewed basis RBI guidelines issued from time to time and approved by BRC before obtaining Regulatory approvals.

The compensation philosophy of the Bank is aligned to the organizational values aimed at encouraging Professional Entrepreneurship and reinforcing a strong culture promoting meritocracy, performance, potential and prudent risk taking.

The Bank''s Remuneration policy is to position its pay structure competitively in relation to the market to be able to attract and retain critical talent. The compensation strategy clearly endeavours to differentiate performance significantly and link the same with quality and quantum of rewards. The Bank also strives to create long term wealth creation opportunities through stock option schemes.

Human Capital Management shall review the policy annually or as required, based on changes in statutory, regulatory requirements and industry practices pertaining to Compensation and Benefits.

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

The broad factors taken into account for the Annual Review/revision of Fixed Compensation (TCC) & Performance Bonus are:

1. Individual performance based on the Annual Performance Review (APR) process of the Bank.

2. Business Unit performance in terms of financial outcomes, productivity, etc.

3. Consideration of all types of risk factors and shall be symmetrical with risk outcomes as well as sensitive to the time horizon of risk.

4. Profitability of the Bank.

5. Industry Benchmarking and consideration towards cost of living adjustment/inflation

The Bank subscribes to a ''Sum-of-Parts'' compensation methodology, which is reflective of the Bank''s commitment and philosophy of creating and sharing value with its employee partners.

The sum-of-parts compensation comprises:

- Fixed Compensation

- Variable Compensation in the form of Performance Bonus

- Employee Stock Option Plans (ESOP)

The Board of Directors of the Bank through its Board Remuneration Committee (BRC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. Human Capital Management under the guidance of MD & CEO shall administer the Compensation and Benefits structure in line with Industry practices and statutory requirements as applicable from time to time.

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

The Bank ensures that the compensation remains adjusted for all types of risk, symmetrical with risk outcomes as well as sensitive to the time horizon of risk. Further, the compensation in all forms will be consistent with the risk alignment.

One of the key factors to be considered for the Annual Review/revision of Fixed Compensation (TCC) & Performance Bonus includes individual performance based on the Annual Performance Review (APR) process of the Bank. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weightage. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

For the services pertaining to financial year 2013-14 where variable pay is 50% or more, 40-60% shall be deferred over minimum period of 3 years. In the event of a negative contribution, deferred compensation shall be subject to appropriate malus/claw back arrangements as decided by the Board Remuneration Committee. Guaranteed bonus shall not be a part of the compensation plan.

The compensation for executives in Risk Control and Compliance functions shall be independent of the business areas they oversee.

The Bank shall not provide any facility or funds or permit employees to insure or hedge their compensation structure to offset the risk alignment effects embedded in their compensation arrangement.

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

The Bank subscribes to a ''Sum-of-Parts'' compensation methodology, which is reflective of the commitment and philosophy of creating and sharing value with the employee partners. The sum-of-parts compensation for executives comprises:

- Fixed Compensation (Total Cost to Company-TCC) - Includes value of perquisites.

- Variable compensation in the form of Performance/ Deferred Bonus -

Variable pay shall be in the form of Performance Bonus which will be calculated as a percentage of Fixed Pay. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weightage. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

Employee Stock Options Plans - These are formulated on a mid to long term basis by the Bank in accordance with SEBI and other Regulatory guidelines. The grant of ESOP shall be under approval from MD & CEO, which shal be subsequently ratified by the Board Remuneration Committee.

12. Movement in Floating provisions

The bank has not created or utilized any floating provisions during the financial year ended March 31, 2014 and financial year ended March 31, 2013. The floating provision as at March 31, 2014 was H Nil (Previous year: H Nil).

13. Drawdown on Reserves

During the financial year ended March 31, 2014, the Bank has not drawn down any reserve. (Previous year: H Nil).

14. Dues to Micro and Small enterprises

Under the Micro and Small Enterprises Development Act, 2006 which came into force from October 02, 2006, certain disclosures are required to be made relating to Micro and Small enterprises. On the basis of information and records available with the management and confirmation sought by the management from suppliers on their registration with the specified authority under the said Act, there have been no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays in such payments.

15 Securitization Transactions

The Bank has not done any securitization transactions during the year ended March 31, 2014 and March 31, 2013.

16 Letter of comfort

The Bank has not issued any letter of comfort during the year ended March 31, 2014 and March 31, 2013.

17 Description of contingent liabilities

1. Claims against the Bank not acknowledged as debts

The Bank is a party to various legal 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 Bank''s financial conditions, results of operations or cash flows.

2. Liability on account of forward exchange and derivative contracts.

The Bank enters into foreign exchange contracts, currency options, forward rate agreements, currency swaps and interest rate swaps with interbank participants and 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 of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank''s exposure to credit or price risks. The derivative instruments become favorable (assets) or unfavorable (liabilities) as a result of fluctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favourable or unfavourable and, thus the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly.

Guarantees given on behalf of constituents, acceptances, endorsements and other obligations

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

Other items for which the bank is contingently liable

- Value dated purchase of securities

- Capital commitments

- Foreign Exchange Contracts (Tom & Spot)

Refer Schedule 12 for amounts relating to contingent liability

18. Fixed assets

The software capitalized under Fixed Asset was Rs.215,448 thousands and Rs.261,194 thousands as at March 31, 2014 and March 31, 2013 respectively.

19. prior period comparatives

Previous period''s figures have been regrouped where necessary to conform to current year classification.


Mar 31, 2013

1.1 Background

YES BANK Limited (the ''Bank'' or ''YES BANK'') is a private sector Bank promoted by the late Mr. Ashok Kapur and Mr. Rana Kapoor. YES BANK Limited is a publicly held bank engaged in providing a wide range of banking and financial services. YES BANK Limited is a banking company governed by the Banking Regulation Act, 1949. The Bank was incorporated as a limited company under the Companies Act, 1956 on November 21, 2003. The Bank received the licence to commence banking operations from the Reserve Bank of India (''RBI'') on May 24, 2004. Further, YES BANK was included to the Second Schedule of the Reserve Bank of India Act, 1934 with effect from August 21, 2004.

1.2 Basis of preparation

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

1.3 Use of estimates

The preparation of financial statements requires the management to make estimates and assumptions that are considered while reporting amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and 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. Any revision to accounting estimates is recognised prospectively in current and future periods.

1.4.1 Capital

1.4.1.1 Equity Issue

During the financial year ended March 31, 2013, the Bank has issued 5,634,865 shares (previous year: 5,840,300 shares) pursuant to the exercise of stock option aggregating to Rs. 813,123 thousands (previous year: Rs. 696,190 thousands).

1.4.1.2 Capital Reserve

Profit on sale of investments in the HTM category is credited to the profit and loss account and thereafter appropriated to capital reserve (net of applicable taxes and transfer to statutory reserve requirements). During the year Rs. 348,646 thousands (previous year: Rs. 253,337 thousands) was transferred to capital reserve.

1.4.1.3 Investment Reserve

The Bank has transferred Rs. 97,136 thousands (Previous year: Rs. 228 thousands) (net of applicable taxes and transfer to statutory reserve requirements) towards Investment Reserve on provisions for depreciation on investments credited to profit and loss account.

As at March 31, 2013 the Bank is required to maintain minimum capital which is higher of the minimum capital requirement under Basel II framework or 80% (80% as at March 31, 2012) of the minimum capital requirement under Basel I framework. As at March 31, 2013, the capital funds of the Bank are higher than the minimum capital requirement.

1.4.1.5 Tier I and Tier II Capital

During the financial year 2012-13, the Bank has raised Tier II Debt instruments amounting to Rs. 17,638,000 thousands and Innovative Perpetual Debt Instruments (IPDI) amounting to Rs. 1,400,000 thousands. Details of the same are as follows:

*Borrowings in foreign currency converted at the rate prevalent on the date of borrowing for the purpose of capital adequacy.

**Of which amount qualified for Tier I Capital as of March 31, 2012 was Rs. 1,423,193 thousands.

c) As at March 31, 2013 the Bank had non performing Non SLR investments of Rs. 145,367 thousands against which the Bank carried a provision of Rs. 145,367 thousands as at March 31, 2013 (Previous year - Nil).

d) The Bank has not sold and transferred securities to or from HTM category exceeding 5% of the book value of investment held in HTM category at the beginning of the year. The 5% threshold referred to above does not include onetime transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the year and sale of securities under pre-announced Open Market Operation (OMO) auction to the RBI.

1.4.5 Derivatives 18.5.5.1 Forward Rate Agreement/ Interest Rate Swap

The details of Forward Rate Agreements / Interest Rate Swaps outstanding as at March 31, 2013 are provided in accordance with the RBI guidelines on Forward Rate Agreements and Interest Rate Swaps (MPD. BC.187/07.01.279/1999-2000) as applicable to Indian Rupee transactions. These contracts are subject to the risk of changes in market interest rates as well as credit risk with counterparties.

1.4.5.2 Unhedged / uncovered foreign currency exposure

The Bank''s foreign currency exposures as at March 31, 2013 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the RBI. NOOP at March 31, 2013 is Rs. 519,379 thousands (March 31, 2012 Rs. 366,454 thousands).

1.4.5.3 Exchange Traded Interest Rate Derivatives

The Bank has not dealt in exchange traded interest rate derivatives during the financial year ended March 31, 2013 (Previous Year: NIL)

1.4.5.4 Currency Futures

As on March 31, 2013, there were NIL open contracts. As at March 31, 2012 the open contracts on the exchange were USD 403,000 (Rs. 20,642,667) for April 2012 expiry.

1.4.5.5 Disclosures on risk exposure in derivatives

As per RBI Master circular DBOD.No.BP BC.16/21.06.001/2012-13 dated July 2, 2012, the following disclosures are being made with respect to risk exposure in derivatives of the Bank:

a) Purpose: The Bank uses Derivatives including Forwards & swaps for various purposes viz. hedging its currency and interest rate risk in its balance sheet, customer offerings and proprietary trading. The management of these products and businesses is governed by the Market Risk Policy, Investment Policy, Derivatives Policy, Derivatives Appropriateness Policy, Hedging Policy and ALM policy.

b) Structure: The Board of Directors of the Bank have constituted a Board level sub-committee, the Risk Monitoring Committee (''RMC'') and delegated to it all functions and responsibilities relating to the risk management policy of the Bank and its supervision thereof.

c) As part of prudent business and risk management practice, the Bank has also instituted a comprehensive limit and control structure encompassing Value-at-Risk (VAR), Stop loss & credit limits for derivative transactions. The Bank has an elaborate internal reporting mechanism providing regular reports to the RMC.

d) The Bank has an independent Middle Office, which is responsible for monitoring, measurement and analysis of derivative related risks, among others. The Bank has a Credit Risk Management unit which is responsible for setting up counterparty limits and also a treasury operation unit which is responsible for managing operational aspects of derivatives control function and settlement of transactions. The Bank is subject to a concurrent audit for all treasury transactions, including derivatives, a monthly report of which is periodically submitted to the Audit & Compliance Committee of the Bank.

e) In addition to the above, the Bank independently evaluates the potential credit exposure on account of all derivative transactions, wherein risk limits are specified separately for each product, in terms of both credit exposure and tenor. As mandated by the Credit Policy of the Bank, the Bank has instituted an approval structure for all treasury/derivative related credit exposures. Wherever necessary, appropriate credit covenants are stipulated as trigger events to call for collaterals or terminate a transaction and contain the risk.

f) The Bank reports all trading positions to the management on a daily basis. The Bank revalues its trading position on a daily basis for Management and Information System (''MIS'') and control purposes and records the same in the books of accounts on a monthly basis.

g) For derivative contracts in the banking book designated as hedge, the Bank documents at the inception of the relationship between the hedging instrument and the hedged item, the risk management objective for undertaking the hedge.

h) Refer Note 18.4.6 for accounting policy on derivatives.

1. Forwards, Options, cross currency swaps and currency futures are included in currency derivatives

2. Currency Derivatives excludes notional amount of option sold of Rs. 4,072,253 thousands and Rs. 27,086,499 thousands as on March 31, 2013 and March 31, 2012 respectively.

3. Trading portfolio including accrued interest.

4. Mark to Market for credit exposure includes accrued interest. Does not include Forward exchange contracts of original maturity of 14 days or less, Swap facility entered with RBI under Expansion of Export Credit in Foreign currency and forward contracts settling through CCIL under Forex Forward Segment (however includes 100% of Margin under Settlement Guarantee Fund and Default Fund with CCIL).

Note:

1) Denotes absolute value of loss which the Bank could suffer on account of a change in interest rates by 1% which however doesn''t capture the off-setting exposures between interest rate and currency derivatives.

2) PV01 exposures reported above may not necessarily indicate the interest rate risk the bank is exposed to, given that PV01 exposures in Investments (which may offset the PV01 reflected above) do not form part of the above table.

1.4.6.2 Provision coverage Ratio

The provision coverage ratio of the Bank as at March 31, 2013 computed as per the RBI guidelines is 92.59% (previous year 79.18%) (excluding technical write-offs).

1.4.6.3 Concentration of NPAs

Exposure (Funded Non Funded) of the Bank to top four NPA is Rs. 558,250 thousands as at March 31, 2013 (previous year Rs. 586,371 thousands) and the Bank has provided for Rs. 558,250 thousands (previous year Rs. 522,545 thousands) for the same.

1.4.6.4 Sector-wise NPAs

The details of Sector-wise NPAs as at March 31, 2013 and March 31, 2012 are given below:

1.4.8 Non-performing financial assets purchased/ sold from/ to other bank

The Bank has not purchased/sold any non performing financial assets from/to bank during the year ended March 31, 2013 and March 31, 2012.

1.4.9 Provisions for Standard Assets

Provision on standard advances is Rs. 2,655,326 thousands and Rs. 2,107,828 thousands as at March 31, 2013 and March 31, 2012 respectively.

1 Working funds represents the average of total assets as reported in Return Form X to RBI under Section 27 of the Banking Regulation Act, 1949.

2 For the purpose of computation of business per employee (deposits plus advances), interbank deposits have been excluded and average employees have been considered.

1.4.11 Asset Liability Management

In compiling the information of maturity pattern (refer 18.5.11 (a) and (b) below), estimates and assumptions have been made by the management and have been relied upon by the auditors. For Investment Securities, the Bank buckets HFT portfolio and related depreciation in 29-90 days bucket or actual maturity whichever is earlier.

*For the purpose of disclosing the maturity pattern, loan and advances that have been subject to risk participation vide Inter-Bank Participation Certificates (''IBPCs'') have been classified in the maturity bucket corresponding to the original maturity of such loans and advances gross of any risk participation. Correspondingly, the balances have been reported net of IBPC maturities falling due in the respective buckets.

1.4.12 Exposures

The Bank has lending to sectors, which are sensitive to asset price fluctuations. Such sectors include capital market, real estate and commodities.

1.4.12.3 Risk Category wise Country Exposure

As per the extant RBI guidelines, the country exposure of the Bank is categorised into various risk categories listed in the following table. As at March 31, 2013, the Bank''s funded exposure to any individual country did not exceed 1% of the total funded assets of the Bank

1.4.12.4 Details of Single Borrower Limit (SBL) and Group Borrower Limit (GBL)

During the year ended March 31, 2013, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank, with the approval of the Board of Directors, can enhance exposure to a single borrower or borrower group by a further 5 percent of capital funds. During the year ended March 31, 2013, with the prior approval of the Board of Directors, the Bank exceeded the single borrower limit of 15% of capital funds to Tata Steel and Hindalco Industries. At March 31, 2013, the exposure to Tata Steel as a percentage of capital funds was 11.68% and exposure to Hindalco Industries as a percentage of capital funds was 5.32%.

ii) The Bank nets off the Income tax provision with Advance and tax deducted at source. This net position is reflected in Other Assets (Schedule 11) as at March 31, 2012 and in Other Liabilities (Schedule 5) as at March 31, 2013.

1.5.2 Disclosure of penalties imposed by RBI

No penalty has been imposed by RBI on the Bank during the financial year ended March 31, 2013.

For the financial year ended March 31, 2012, pursuant to the show cause notice received by the Bank in October 2010 relating to contravention of directions and guidelines on derivative transactions, RBI has levied penalty of Rs. 1,500 thousand under section 47A (1) (b) read with section 46(4) of Banking Regulation Act, 1949.

1.5.3 Fees/ Remuneration received from bancassurance

Bank has earned Rs. 200,049 thousands from bancassurance business during year ended March 31, 2013 (previous year: Rs. 148,458 thousands).

1.5.4 Concentration of Deposits

As at March 31, 2013, the deposits of top 20 depositors aggregated to Rs. 100,431,510 thousands (previous year: Rs. 86,463,978 thousands) (excluding certificate of deposits, which are tradable instruments), representing 15.01% (previous year: 17.59%) of the total deposit base.

1.5.5 Concentration of Advances

As at March 31, 2013 the top 20 advances aggregated to Rs. 140,002,772 thousands (previous year Rs. 116,461,727 thousands), representing 13.38% (previous year 13.02%) of the total advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DB0D.No.Dir.BC.3/13.03.00/2012-13 dated July 2, 2012.

1.5.6 Concentration of Exposures

As at March 31, 2013 the top 20 exposures aggregated to Rs. 193,299,61 1 thousands (previous year Rs. 139,821,108 thousands), representing 15.55% (previous year 13.80%) of the total exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DB0D.No.Dir.BC.3/13.03.00/2012- 13 dated July 2, 2012.

1.5.7 Overseas Assets, NPAs and Revenue

For the year ended March 31, 2013 and March 31, 2012, the Bank has not earned any revenue from overseas branches. The Bank does not have any assets or NPA from overseas branches as at March 31, 2013 and March 31, 2012.

1.5.8 Sponsored SPVs

The Bank has not sponsored any SPV and hence there is no consolidation in Bank''s books.

1.6.1 Staff retirement benefits

The following table sets out the funded status of the Gratuity Plan and the amounts recognised in the Bank''s financial statements as of March 31, 2013 and March 31, 2012:

1.6.2 Segment Reporting

Pursuant to the guidelines issued by RBI on AS-17 (Segment Reporting) - Enhancement of Disclosures dated April 18, 2007, effective from period ending March 31, 2008, the following business segments have been reported.

- Treasury: Includes investments, all financial markets activities undertaken on behalf of the Bank''s customers, proprietary trading, maintenance of reserve requirements and resource mobilisation from other banks and financial institutions.

- Corporate / Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.

- Retail Banking: Includes lending, deposit taking and other services offered to retail customers.

- Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc.

Notes for segment reporting:

1. The business of the Bank is concentrated in India. Accordingly, geographical segment results have not been reported.

2. In computing the above information, certain estimates and assumptions have been made by the Management and have been relied upon by the auditors.

3. Income, expense, assets and liabilities have been either specifically identified with individual segment or allocated to segments on a systematic basis or classified as unallocated.

4. Fixed assets and related depreciation on fixed assets, non treasury related bank balances at branches, Bills payable, Tax related accounts, Tier II instruments, IPDI instruments and relevant interest and rent expenses which cannot be allocated to any segments have been classified as unallocated. The unallocated liabilities include Share Capital and Reserves and Surplus.

5. Inter-segment transactions have been generally based on transfer pricing measures as determined by the Management.

1.6.3 Related Party Disclosures

The Bank has transactions with its related parties comprising of subsidiary, key management personnel and the relative of key management personnel

a) As per AS 18 "Related Party Disclosures", prescribed by the Companies (Accounting Standards) Rules, 2006, the Bank''s related parties for the year ended March 31, 2013 are disclosed below:

Subsidiary

- Yes Securities (India) Limited.

Individuals having significant influence:

- Mr. Rana Kapoor, Managing Director & CEO

Key Management Personnel (''KMP'') (Whole time Director)

- Mr. Rana Kapoor, Managing Director & CEO

* Represents outstanding as of March 31, 2013

# In Financial Year 2012-13 there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 "Guidance on compliance with the accounting standards by banks".

b) As per AS 18 "Related Party Disclosures", prescribed by the Companies (Accounting Standards) Rules, 2006, the Bank''s related parties for the year ended March 31, 2012 are disclosed below:

Individuals having significant influence:

- Mr. Rana Kapoor, Managing Director & CEO

Key Management Personnel (''KMP'') (Whole time Director)

- Mr. Rana Kapoor, Managing Director & CEO

# In Financial Year 2011-12 there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 "Guidance on compliance with the accounting standards by banks"

1.6.4 Operating Leases

Lease payments recognised in the profit and loss account for the year ended March 31, 2013 was Rs. 1,550,742 thousands (Previous year: Rs. 1,203,222 thousands).

The Bank does not have any provisions relating to contingent rent.

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in the agreements.

1.6.5 Earnings Per Share (''EPS'')

The Bank reports basic and diluted earnings per equity share in accordance with AS-20, "Earnings Per Share". The dilutive impact is mainly due to stock options granted to employees by the Bank.

1.6.6 ESOP disclosures

Statutory Disclosures Regarding Joining Stock Option Scheme:

The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I) , Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes) and YBL JESOP V/ PESOP II (consisting of three sub schemes). The schemes include provisions for grant of options to eligible employees. All the aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were also approved by the members of the Bank.

JSOP I is administered by the Board Remuneration Committee of the Bank and was in force for employees joining the Bank on or before March 31, 2005. All the grants under JSOP I were made before the IPO of the Bank.

JESOP II and JESOP III are administered by the Board Remuneration Committee of the Bank and were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively.

YBL ESOP (JESOP IV), a sub scheme of YBL ESOP and YBL JESOP V, a sub scheme of YBL JESOP V/ PESOP II are also administered by the Board Remuneration Committee of the Bank and are in force for employees joining the Bank from time to time.

Under the above Plans, vesting takes place at the end of three years from the grant date for 50% of the options granted and at the end of five years for the balance. Options under all these plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

YBL ESOP (PESOP I), a sub scheme of YBL ESOP YBL PESOP II and YBL PESOP II - 2010, sub schemes of YBL JESOP V/ PESOP II are Performance Stock Option Plans and are also administered by the Board Remuneration Committee of the Bank. Under YBL ESOP (PESOP I) vesting takes place at the end of each year from the grant date for 25% of the options granted and are settled with equity shares being allotted to the beneficiary upon exercise. Under YBL PESOP II, 30% of the granted options vest at the end of first year, 30% vest at the end of second year and balance 40% vest at the end of third year. Further grants under PESOP II had been discontinued with effect from January 20, 2010. Under YBL PESOP II - 2010, 30% of the granted options vest at the end of the third year, 30% vest at the end of the fourth year and balance vest at the end of the fifth year.

The Bank has charged Nil, being the intrinsic value of the stock options granted for the year ended March 31, 2013. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by Rs. 292,207 thousands, the basic earnings per share would have been Rs. 35.71 per share instead of Rs. 36.53 per share; and diluted earnings per share would have been Rs. 34.75 per share instead of Rs. 35.55 per share.

The Bank has charged Nil, being the intrinsic value of the stock options granted for the year ended March 31, 2012. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by Rs. 294,869 thousands, the basic earnings per share would have been Rs. 27.03 per share instead of Rs. 27.87 per share; and diluted earnings per share would have been Rs. 26.31 per share instead of Rs. 27.13 per share.

1.6.7 Deferred Taxation

The net deferred tax asset of Rs. 1,794,222 thousands as at March 31, 2013 and Rs. 1,367,098 thousands as at March 31, 2012, is included under other assets and the corresponding credits have been taken to the profit and loss account.

1.7 Other Disclosures

1.7.1 Disclosure on Remuneration

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

The Board of Directors of the Bank through its Board Remuneration Committee (BRC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. The BRC shall comprise a minimum of 3 Board members, of which two would be independent directors, besides the MD and CEO.

Composition of the Board Remuneration Committee (BRC) of the Bank as on March 31, 2013 is as follows:

- Mr. Arun Mago (Retired)

- Mr. Wouter Kolff (Retired)

- Lt Gen (Retd.) Mukesh Sabharwal

- Mr. Diwan Arun Nanda - Chairman

- Mr. Rana Kapoor

The roles and responsibilities of the Remuneration Committee are as under-

- to review the Bank''s overall Compensation Structure and related policies with a view to attract, motivate and retain employees and review compensation levels vis-a-vis other banks and the industry in general;

- to determine the Bank''s policies on remuneration packages payable to the Directors including performance/achievement bonus, perquisites, retirals, sitting fee, etc;

- consider grant of stock options to employees and administer and supervise the Employee Stock Option Plans with particular reference to:

- determination of quantum of options to be granted;

- determination of grant price, vesting schedule, exercise period, etc

- procedure for making fair and reasonable adjustments to the number of options granted in case of a corporate action such as rights issues, bonus, share split, mergers, etc.

- conditions under which options would lapse in case of termination due to mis- conduct;

- procedure for cashless exercise of options, if any;

- to frame suitable policies to ensure compliance with all applicable laws, regulations.

- Perform any other act, duty as stipulated by the Companies Act, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges, and any other regulatory authority, as prescribed from time to time.

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

The Bank has framed Compensation and benefit policy based on the guidelines contained in the RBI circular DBOD No. BC.72/29.67.001/2011-12 dated January 13, 2012 which is approved by the Board Remuneration committee on January 7, 2013. The remuneration of MD&CEO/Wholetime Directors will be in accordance with the above mentioned circular and shall be reviewed basis RBI guidelines issued from time to time and approved by BRC before obtaining Regulatory approvals.

The compensation philosophy of the Bank is aligned to the organisational values aimed at encouraging Professional Entrepreneurship and reinforcing a strong culture promoting meritocracy, performance, potential and prudent risk taking.

The Bank''s Remuneration policy is to position its pay structure competitively in relation to the market to be able to attract and retain critical talent. The compensation strategy clearly endeavours to differentiate performance significantly and link the same with quality and quantum of rewards. The Bank also strives to create long term wealth creation opportunities through stock option schemes.

Human Capital Management shall review the policy annually or as required, based on changes in statutory, regulatory requirements and industry practices pertaining to Compensation and Benefits.

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

The broad factors taken into account for the Annual Review /revision of Fixed Compensation (TCC) & Performance Bonus are:

1. Individual performance based on the Annual Performance Review (APR) process of the Bank.

2. Business Unit performance in terms of financial outcomes, productivity, etc.

3. Consideration of all types of risk factors and shall be symmetrical with risk outcomes as well as sensitive to the time horizon of risk.

4. Profitability of the Bank.

5. Industry Benchmarking and consideration towards cost of living adjustment/inflation

The Bank subscribes to a ''Sum-of-Parts'' compensation methodology, which is reflective of the Bank''s commitment and philosophy of creating and sharing value with its employee partners.

The sum-of-parts compensation comprises:

Fixed Compensation

Variable Compensation in the form of Performance Bonus

Employee Stock Option Plans (ESOP)

The Board of Directors of the Bank through its Board Remuneration Committee (BRC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. Human Capital Management under the guidance of MD & CEO shall administer the Compensation and Benefits structure in line with Industry practices and statutory requirements as applicable from time to time.

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

The Bank ensures that the compensation remains adjusted for all types of risk, symmetrical with risk outcomes as well as sensitive to the time horizon of risk. Further, the compensation in all forms will be consistent with the risk alignment.

One of the key factors to be considered for the Annual Review /revision of Fixed Compensation (TCC) & Performance Bonus includes individual performance based on the Annual Performance Review (APR) process of the Bank. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weightage. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

For the services pertaining to financial year 2012- 13 where variable pay is 50% or more, 40-60% shall be deferred over minimum period of 3 years. In the event of a negative contribution, deferred compensation shall be subject to appropriate malus/claw back arrangements as decided by the Board Remuneration Committee. Guaranteed bonus shall not be a part of the compensation plan.

The compensation for executives in Risk Control and Compliance functions shall be independent of the business areas they oversee.

The Bank shall not provide any facility or funds or permit employees to insure or hedge their compensation structure to offset the risk alignment effects embedded in their compensation arrangement.

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

The Bank subscribes to a ''Sum-of-Parts'' compensation methodology, which is reflective of the commitment and philosophy of creating and sharing value with the employee partners. The sum- of-parts compensation for executives comprises:

Fixed Compensation (Total Cost to Company-TCC)

- Includes value of perquisites.

Variable compensation in the form of Performance /Deferred Bonus -

Variable pay shall be in the form of Performance Bonus which will be calculated as a percentage of Fixed Pay. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weightage. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

Employee Stock Options Plans - These are formulated on a mid to long term basis by the Bank in accordance with SEBI and other Regulatory guidelines. The grant of ESOP shall be under approval from MD & CEO, which shall be subsequently ratified by the Board Remuneration Committee.

f. Quantitative Disclosures on Remuneration for MD & CEO and other risk takers

There were 2 meetings of the Board remuneration committee held during the year ended March 31, 2013. The Bank had paid a remuneration of Rs. 80 thousands to the members of the remuneration committee.

Note:

1. Amounts disclosed represents variable pay paid during the year ended March 31, 2013 for services rendered by the risk takers during the year March 31, 2012, since the bonus pool for the year ended March 31, 2013 has not yet been allocated and accordingly, the deferred component for the risk takers is yet to be determined.

2. Amounts disclosed represents only fixed component paid during the year ended March 31, 2013 to the risk takers since the bonus pool for the year ended March 31, 2013 has not yet been allocated and accordingly, the deferred component for the risk takers is yet to be determined.

3. Compensation for MD & CEO is as approved by the RBI and paid by the Bank to the MD & CEO. Compensation for other risk takers is as approved by the Bank.

4. ESOPs have not been considered as per the extant RBI guidelines.

1.7.1 Movement in Floating Provisions

The bank has not created or utilised any floating provisions during the financial year ended March 31, 2013 and financial year ended March 31, 2012. The floating provision as at March 31, 2013 was Rs. Nil (Previous year: Rs. Nil).

1.7.2 Drawdown on Reserves

During the financial year ended March 31, 2013, the Bank has not drawn down any reserve. (Previous year: Rs. Nil).

1.7.3 Dues to Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 02, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of information and records available with the management and confirmation sought by the management from suppliers on their registration with the specified authority under MSMED, there have been no reported cases of delays in payments to micro, small and medium enterprises or of interest payments due to delays in such payments.

1.7.4 Securitisation Transactions

The Bank has not done any securitisation transactions during the year ended March 31, 2013 and March 31, 2012.

1.7.5 Letter of comfort

The Bank has not issued any letter of comfort during the year ended March 31, 2013 and March 31, 2012.

1.7.6 Fixed Assets

The software capitalised under Fixed Asset was Rs. 261,194 thousands and Rs. 110,866 thousands as at March 31, 2013 and March 31, 2012 respectively.

1.7.5 Prior period comparatives

Previous period''s figures have been regrouped where necessary to conform to current year classification.


Mar 31, 2011

1.1 Background

Yes Bank Limited (the Bank or Yes Bank) is a private sector Bank promoted by the late Mr. ashok kapur and Mr. Rana kapoor. Yes Bank Limited is a publicly held Bank engaged in providing a wide range of banking and financial services. Yes Bank Limited is a banking company governed by the Banking Regulation act, 1949. The Bank was incorporated as a limited company under the Companies act, 1956 on november 21, 2003. The Bank received the licence to commence banking operations from the Reserve Bank of India (RBI) on May 24, 2004. Further, Yes Bank was included to the second schedule of the Reserve Bank of India act, 1934 with effect from august 21, 2004.

1.2 Basis of preparation

The financial statements have been prepared in accordance with requirements prescribed under the Third schedule (Form a and Form B) of the Banking Regulation act, 1949. The accounting and reporting policies of the Bank used in the preparation of these financial statements conform to Generally accepted accounting Principles in India (Indian GaaP), the guidelines issued by the Reserve Bank of India (RBI) from time to time, the accounting standards (as) prescribed by the Companies (accounting standards) Rules, 2006 to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the accrual method of accounting (except where otherwise stated), and the historical cost convention.

1.3 Use of estimates

The preparation of financial statements requires the management to make estimates and assumptions that are considered while reporting amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and 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. any revision to accounting estimates is recognized prospectively in current and future periods.

1.3.1 Segment Reporting

Pursuant to the guidelines issued by RBI on as-17 (segment Reporting) - enhancement of Disclosures dated april 18, 2007, effective from period ending March 31, 2008, the following business segments have been reported.

- Treasury: Includes investments, all financial markets activities undertaken on behalf of the Banks customers, proprietary trading, maintenance of reserve requirements and resource mobilisation from other Banks and financial institutions.

- Corporate - Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.

- Retail Banking: Includes lending, deposit taking and other services offered to retail customers.

- Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc.

1.3.2 Related Party Disclosures

a) as per as 18 "Related Party Disclosures", prescribed by the Companies (accounting standards) Rules, 2006, the Banks related parties for the year ended March 31, 2011 are disclosed below:

Individuals having significant infuence:

- Mr. Rana Kapoor, Managing Director & CEO

Key Management Personnel (KMP) (Wholetime Director)

- Mr. Rana Kapoor, Managing Director & CEO

# In Financial Year 2010-11, there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 "Guidance on compliance with the accounting standards by banks."

b) as per as 18 "Related Party Disclosures", prescribed by the Companies (accounting standards) Rules, 2006, the Banks related parties for the year ended March 31, 2010 are disclosed below:

Individuals having significant infuence:

- Mr. Rana Kapoor, Managing Director & CEO

Key Management Personnel (KMP) (Wholetime Director)

- Mr. Rana Kapoor, Managing Director & CEO

1.3.4 Operating Leases

Lease payments recognised in the Profit and loss account for the year ended March 31, 2011 was Rs. 833,371 thousands (Previous year: Rs. 823,443 thousands).

1.3.5 Earnings Per Share (EPS)

The Bank reports basic and diluted earnings per equity share in accordance with as-20, "earnings per share". The dilutive impact is mainly due to stock options granted to employees by the Bank.

1.3.6 ESOP disclosures

statutory Disclosures Regarding Joining stock Option scheme:

The Bank has fve employee stock Option schemes viz. Joining stock Option Plan I (JsOP I) , Joining employee stock Option Plan II (JesOP II), Joining employee stock Option Plan III (JesOP III), YBL esOP (consisting of two sub schemes) and YBL JesOP V- PesOP II (consisting of three sub-schemes). The schemes include provisions for grant of options to eligible employees. all the aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were also approved by the members of the Bank.

JSOP I is administered by the Board Remuneration Committee of the Bank and was in force for employees joining the Bank on or before March 31, 2005. all the grants under JsOP I were made before the IPO of the Bank.

JESOP II and JESOP III are administered by the Board Remuneration Committee of the Bank and were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively.

YBL ESOP (JESOP IV), a sub scheme of YBL esOP and YBL JESOP V, a sub-scheme of YBL JesOP V- PesOP II are also administered by the Board Remuneration Committee of the Bank and are in force for employees joining the Bank from time to time.

Under the above Plans, vesting takes place at the end of three years from the grant date for 50% of the options granted and at the end of fve years for the balance. Options under all these plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the benefciary upon exercise.

YBL ESOP (PESOP I), a sub scheme of YBL ESOP, YBL PESOP II and YBL PESOP II - 2010, sub-schemes of YBL JESOP V- PESOP II are Performance stock Option Plans and are also administered by the Board Remuneration Committee of the Bank. Under YBL esOP (PESOP I) vesting takes place at the end of each year from the grant date for 25% of the options granted and are settled with equity shares being allotted to the benefciary upon exercise. Under YBL PESOP II, 30% of the granted options vest at the end of frst year, 30% vest at the end of second year and balance 40% vest at the end of third year. Further grants under PESOP II had been discontinued with effect from January 20, 2010. Under YBL PESOP II – 2010, 30% of the granted options vest at the end of the third year, 30% vest at the end of the fourth year and balance vest at the end of the ffth year.

1.3.7 Provisions and Contingencies

The breakup of provisions of the Bank for the year ended March 31, 2011 and March 31, 2010 are given below:

(Rs. in thousands) March 31, 2011 March 31, 2010

Provision for taxation 3,650,407 2,487,461

Provision for investments (71,892) 154,103

Provision for standard advances 520,976 388,655

Provision made- write off for non performing advances- off balance sheet exposure 392,628 876,039

Other provisions 140,408 (50,335)

TOTAL 4,632,527 3,855,923

1.4 Other Disclosures

1.4.1 Movement in Floating Provisions

The bank has not created or utilized any foating provisions during the financial year ended March 31, 2011 and financial year ended March 31, 2010. The foating provision as at March 31, 2011 was Rs. nil (Previous year: Rs. nil).

1.4.2 Drawdown on Reserves

During the financial year ended March 31, 2011, the Bank has charged to share Premium account, an amount of Rs. 54,457 thousands on account of the possible disallowance of tax beneft on certain expenses incurred in the financial year ended March 31, 2006, in connection with the Initial Public Offering. In the Financial Year ended March 31, 2006, these expenses were charged net of taxes to the share premium account.

In financial year ended March 31, 2010 the Bank has utilized the share premium received from issue of shares under QIP to meet the share issue expenses of Rs. 146,065 thousands .

1.4.3 Disclosure of complaints

A. Customer Complaints

Year ended March 31, 2011 i) no. of Complaints pending at the beginning of the year 5

ii) no. of Complaints received during the year 629

iii) no. of Complaints redressed during the year 628

iv) no. of Complaints pending at the end of the year 6

B. Awards passed by the Banking Ombudsman

Year ended March 31, 2011 i) no. of unimplemented awards at the beginning of the year nil

ii) no. of awards passed by the Banking Ombudsman during the year nil

iii) no. of awards implemented during the year nil

iv) no. of unimplemented awards at the end of the year nil

1.4.3 Dues to Micro, Small and Medium Enterprises

Under the Micro, small and Medium enterprises Development act, 2006 (MsMeD) which came into force from October 02, 2006, certain disclosures are required to be made relating to Micro, small and Medium enterprises. On the basis of information and records available with the management and confrmation sought by the management from suppliers on their registration with the specifed authority under MsMeD, there have been no reported cases of delays in payments to micro, small and medium enterprises or of interest payments due to delays in such payments.

1.4.4 Letter of comfort

The Bank has not issued any letter of comfort during the year ended March 31, 2011 and March 31, 2010.

1.4.5 Description of contingent liabilities

1. Claims against the Bank not acknowledged as debts

The Bank is a party to various legal 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 fows.

2. Liability on account of forward exchange and derivative contracts.

The Bank enters into foreign exchange contracts, currency options, forward rate agreements, currency swaps and interest rate swaps with interbank participants and 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 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 of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash fows involved or the current fair value of the instruments and, therefore, do not indicate the Banks exposure to credit or price risks. The derivative instruments become favorable (assets) or unfavorable (liabilities) as a result of fuctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favourable or unfavourable and, thus the aggregate fair values of derivative financial assets and liabilities can fuctuate significantly.

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

4. Other items for which the Bank is contingently liable

- Value dated purchase of securities

- Capital commitments

- Foreign exchange Contracts (Tom and spot)

1.4.6 Prior period comparatives

Previous periods fgures have been regrouped where necessary to conform to current year Classification.


Mar 31, 2010

1.1 Background

YES BANK Limited (the Bank orYES BANK) is a private sector Bank promoted by the late Mr Ashok Kapur and Mr Rana KapoorYES BANK Limited is a publicly held Bank engaged in providing a wide range of banking and financial services.YES BANK Limited is a banking company governed by the Banking Regulation Act, 1949.The Bank was incorporated as a limited company under the Companies Act, 1956, on November 21,2003.The Bank received the licence to commence banking operations from the Reserve Bank of India (RBI) on May 24, 2004. Further, YES BANK was included to the Second Schedule of the Reserve Bank of India Act, 1934 with effect from August 21, 2004.

1.2.1 Segment Reporting

Pursuant to the guidelines issued by RBI on Accounting Standard - 17 (Segment Reporting) - Enhancement of Disclosures dated April 18,2007, effective from period ending March 31, 2008, the following business segments have been reported.

- Treasury: Includes all financial markets activities undertaken on behalf of the Banks customers, proprietary trading, maintenance of reserve requirements and resource mobilisation from other banks and financial institutions.

- Corporate/Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.

- Retail Banking: Includes lending, deposit taking and other services offered to retail customers.

- Other banking operations: Includes para-banking activities like third party product distribution, merchant banking etc.

1.2.2 Related Party Disclosures

a) As per AS 18 "Related Party Disclosures", prescribed by the Companies (Accounting Standards) Rules, 2006, the Banks related parties for the year ended March 31,2010 are disclosed below:

Individuals having significant influence:

- Mr, Rana Kapoor, Managing Director & CEO

Key Management Personnel (KMP) (Wholetime Director)

- Mr. Rana Kapoor, Managing Director & CEO

b) As per AS 18 "Related Party Disclosures", prescribed by the Companies (Accounting Standards) Rules, 2006, the Banks related parties for the year ended March 31,2009 are disclosed below:

Individuals having significant influence:

- Mr Rana Kapoor Managing Director & CEO

- Mr H. Srikrishnan, Executive Director ( Up to April 25,2008) Key Management Personnel (KMP) (Wholetime Director)

- Mr Rana Kapoor Managing Director & CEO

- Mr H. Srikrishnan, Executive Director ( Up to April 25,2008)

1.3.1 Operating Leases

Lease payments recognised in the profit and loss account for the year ended March 31, 2010 was Rs. 823,443 thousands (Previous year: Rs. 581,105 thousands).

1.3.2 Earnings Per Share (EPS)

The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20, "Earnings per Share". The dilutive impact is mainly due to stock options granted to employees by the Bank.

1.3.3 ESOP disclosures

Statutory Disclosures Regarding Joining Stock Option Scheme:

The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP lll),YBL ESOP (consisting of two sub schemes) and YBL JESOP V/ PESOP II (consisting of two sub schemes).The schemes include provisions for grant of options to eligible employees. All the aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were also approved by the members of the Bank.

JESOP I is administered by the Board Remuneration Committee of the Bank and was in force for employees joining the Bank on or before March 3 1, 2005. Ail the grants under JESOP I were made before the IPO of the Bank.

JESOP II and JESOP III are administered by the Board Remuneration Committee of the Bank and were in force for employees joining the Bank up to March 31, 2006, March 31, 2007 and March 31,2008.

YBL ESOP GESOP IV), a sub scheme of YBL ESOP and YBL JESOP V, a sub scheme of YBL JESOP V/ PESOP II are also administered by the Board Remuneration Committee of the Bank and are in force for employees joining the Bank from time to time.

Under the above Plans, vesting takes place at the end of three years from the grant date for 50% of the options granted and at the end of five years for the balance, Options under all these plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

YBL ESOP (PESOP I), a sub scheme ofYBL ESOP and YBL PESOP II, a sub scheme ofYBL JESOP V/ PESOP II are Performance Stock Option Plans and are also administered by the Board Remuneration Committee of the Bank. UnderYBL ESOP (PESOP I) vesting takes place at the end of each year from the grant date for 25% of the options granted and are settled with equity shares being allotted to the beneficiary upon exercise. UnderYBL PESOP II, 3096 of the granted options vest at the end of first year; 30 % vest at the end of second year and balance 4096 vest at the end of third year

1.4.1 Deferred Taxation

The net deferred tax asset of Rs. 652,928 thousands as at March 31,2010, is included under other assets and the corresponding credits have been taken to the profit and loss account.

1,5 Other Disclosures

1.5.1 Movement in Floating Provisions

The Bank has not created or utilised any floating provisions during the year ended March 31, 2010 and year ended March 31, 2009.The floating provision as at March 31, 2010 was Nil (Previous year: Nil).

1.5.2 Drawdown on Reserves

The Bank has utilised the share premium received from issue of shares under Qualified Institutions Placements (QIP) to meet the share issue expenses of Rs. 146,065 thousands (Previous year: NIL).

1.5.3 Dues to Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) which came into force from October 02, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of information and records available with the management and confirmation sought by the management from suppliers on their registration with the specified authority under MSMED, there have been no reported cases of delays in payments to micro, small and medium enterprises or of interest payments due to delays in such payments.

1.5.4 Letter of comfort

The Bank has not issued any letter of comfort during the year ended March 31, 2010 and March 31, 2009.

1.5.5 Description of contingent liabilities

Sr. No. Contingent Liabilities Brief

1. Claims against the Bank not The Bank is a party to various legal proceedings in the normal course of business. The acknowledged as debts 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 forward The Bank enters into foreign exchange contracts, currency options, forward rate exchange and derivative contracts agreements, currency swaps and interest rate swaps with interbank participants and 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 of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognised on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore. do not indicate the Banks exposure to credit or price risks.The derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favourable or unfavourable and, thus the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly.

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

4. Other items for which the Bank is -Value dated purchase of securities contingently liable

- Capital commitments

- Foreign Exchange Contracts (Tom & Spot)

1.6.1 Priorperiod comparatives

Previous periods figures have been regrouped where necessary to conform to current year classification.

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