Notes to Accounts of Bank of Baroda

Mar 31, 2022

. RBI vide circular No. DBR.No.BPBC.83/21.06.201/2015-16 f dated 1 March 2016 has given discretion to Banks to consider _f Revaluation reserve, foreign currency translation reserve and _r Deferred tax asset for the purpose of computation of Capital f Adequacy as CET-I capital ratio. The Bank has exercised this option in above computation.

*During the FY 2020-21, the Bank had issued and allotted f

55,07,95,593 equity shares having face value of '' 2 each at an ^ issue price of '' 81.70 per equity shares (including premium '' of '' 79.70 per equity share), under Qualified Institutional * Placement (QIP) in accordance with the provisions of SEBI > (ICDR) Regulations, 2009 aggregating to '' 4,500.00 Crores ! for augmenting Bank''s Tier I capital to support growth plans f of the Bank and for other general corporate purposes. The f allotment of equity shares under QIP is approved by the committee in its meeting held on 03.03.2021.

A-2 b)(ii) Qualitative Disclosure:

From 1st January 2015, the bank has implemented guidelines on Liquidity Coverage Ratio (LCR) of the Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered 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. The LCR and monitoring tools are applicable for Indian banks initially w.e.f. 1st January 2015 on a stand-alone basis including overseas operations through branches and subsequently at consolidated basis w.e.f. 1st January 2016 i.e. including domestic and overseas subsidiaries.

The LCR has two components:

(i) The value of the stock of high-quality liquid assets (HQLA) in stressed conditions.

(ii) Total net cash outflows: The term “Total net cash outflows” is defined as “Total expected cash outflows” minus “Total expected cash inflows” in the specified stress scenario for the subsequent 30 calendar days (the stressed period).

Stock of high quality liquid assets (HQLAs)

LCR = > 100%

Total net cash outflows over the next 30 calendar days

As per the RBI guidelines dated 31st March 2014, the Bank has made LCR disclosure on solo basis from the financial year ending March 2016. In terms of extant guidelines, disclosure on consolidated basis was applicable to the Indian banking system from 1st January 2016. Starting from January 2017, the bank had to disclose LCR on daily average basis .Hence the bank has computed LCR on daily average basis both for Solo and Consolidated Level since March 2017. As per the RBI guidelines on LCR dated 9th June 2014, the bank has to maintain minimum LCR of 100% with effect from January 01,2019.

Composition of HQLA

Based on daily averages for the quarter ended March 2022, Facility to Avail Liquidity for Liquidity Coverage Ratio constitutes the highest portion of HQLA i.e. 59.59% followed by Government Securities in excess of minimum SLR requirement which constitute 21.18%. Level 2 assets which are lower in quality as compared to Level 1 assets, constitute nominally 0.00% of total stock of HQLA against maximum mandated level of 40%.

Main drivers of LCR:

The Bank on a consolidated basis, during the three months ended March 31,2022, had maintained average HQLA (after haircut) of '' 22,82,444.15 million as against the average

requirement of '' 14,98,039.83 million at a minimum LCR requirement of 100%. The HQLA is primarily driven by government securities in excess of minimum SLR, Government securities within the mandatory SLR requirement, to the extent allowed by RBI under MSF and the Facility to Avail Liquidity for Liquidity Coverage Ratio. Also, cash, excess CRR maintained with RBI and other overseas central banks, securities issued by foreign sovereigns are important factors of HQLA. Level 2 HQLA primarily consisted of AA- and above rated corporate bonds and commercial papers.

Intra-period changes as well as changes over time:

LCR on consolidated basis were 153.84%, 154.71% and 128.20% for the months ending January 2022, February 2022 and March 2022 respectively as against the regulatory requirement of 100%.

Concentration of funding sources

A significant counterparty is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank''s total liabilities. There was no significant counterparty Deposit as of 31st March 2022.

A "significant instrument/product" is defined as a single instrument/product of group of similar instruments/products which in aggregate amount to more than 1% of the bank''s total liabilities. Example of funding instruments/products -wholesale deposits, certificates of deposits, long term bonds, etc. Significant instrument/product of Domestic Operations as of 31st March 2022 were Wholesale Deposits i.e. 6.86% of Global Liabilities, Retail Term Deposits i.e. 31. 70% of Global Liabilities, Demand Deposits i.e. 5.38% of Global Liabilities, Savings Deposits i.e. 26.71% of Global Liabilities and Certificate of Deposits i.e. 1.88% of Global Liabilities.

Top 20 depositors of the bank at domestic operations constitute 4.35% of our total deposits of Global Operations.

Currency mismatch in the LCR:

As per the RBI guidelines while the LCR standard is required to be met on one single currency, in order to better capture potential currency mismatch the LCR in each currency needs to be monitored. Accordingly, Bank is maintaining LCR on daily basis in INR and the same is compared against the regulatory requirement, but on other significant currencies (A significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank''s total liabilities) bank is preparing LCR on monthly basis for the submission to RBI under “BLR-4 - LCR” and to monitor the same. Bank is not required to maintain LCR as per regulatory limits on each significant currency.

Description of the degree of centralization of liquidity management and interaction between the group''s units:

The liquidity management for the Bank on enterprise wide basis is the responsibility of the Board of Directors. Board of Directors has delegated its responsibilities to a Committee of the Board called as the "Risk Management Committee of Board”. The Committee is responsible for overseeing the inter linkages between different types of risk and its impact on liquidity.

Bank has Group ALM Policy which provides the broad guidelines under which all the entities within the Group operate in terms of liquidity and interest rate risk. The bank''s entities operating in foreign countries manage liquidity in the short-term on their own on an ongoing basis as per both respective territory''s ALM policy and Group ALM policy.

The guidelines of the Group ALM policy, unless otherwise specifically exempted, apply to overseas operations as well. All the legal entities of the bank i.e.-subsidiaries, joint ventures and associates manage their operational liquidity on an ongoing basis their own according to their business models and liquidity requirement. As to the legal entities carrying out banking business, they have their own ALM Policy in line with the host country guidelines as well as RBI guidelines whichever is more stringent.

c) Net Stable Funding Ratio (NSFR)

The RBI guidelines stipulated the implementation of NSFR effective from 1st October 2021 at a consolidated level with disclosure from quarter ended December 2021. Accordingly, the bank is computing the Consolidated NSFR. The NSFR is defined as the amount of Available Stable Funding relative to the amount of Required Stable Funding.

NSFR= Available Stable Funding (ASF)

Required Stable Funding (RSF)

Available stable funding (ASF) is measured based on the broad characteristics of relative stability of funding sources, including contractual maturity of its liabilities and the differences in the tendency of different types of funding providers to withdraw their funding. Required Stable Funding (RSF) is a function of the liquidity characteristics and residual maturities of the various assets held by the bank including Off-Balance Sheet (OBS) exposures.

The table attached herewith sets out the un-weighted and weighted value of the NSFR components as on 31st March 2022 based on audited financials.

At a consolidated level, the NSFR of the bank comes out to 126.51 % as on 31st March 2022 against the requirement of 100% as per RBI guidelines.

Triparty repo / reverse repo transactions are repo / reverse repo transactions where a triparty agent acts as an intermediary between the two parties to the repo / reverse repo to facilitate services such as collateral selection, payment and settlement and custody and management during the life of the transaction. The details of triparty repo / reverse repo transactions undertaken by the Bank during the year ended March 31, 2022 are given below. Amount of funds borrowed or lent have been reckoned for the purpose of the below table.

Particulars of resolution plan and restructuring

Disclosure relating to Resolution Plans implemented during the year in terms of RBI Circular DBR.No.BP BC.45/21.04.048/2018-19 dated June 7, 2019:

As per directions of RBI vide letter no 10655/21.04.048/2018-19 dated 21.06.2019 disclosure with respect to accounts kept as standard due to the Court order, three accounts are classified as Standard by the Bank as per Court orders, with aggregate outstanding of '' 282.29 Crores against which the Bank is holding provision of '' 70.79 Crores as on March 31, 2022 as per IRACP norms, including provision for unrealized interest.

Apart from above, the Bank is holding additional provision of '' 598.88 Crores as of 31.03.2022 over and above the IRACP norms in certain stressed standard advances on prudent basis.

Acquisition of shares due to conversion of debt to equity during a restructuring process.

As per RBI Circular on Prudential Framework for Resolution of Stressed Assets vide letter RBI/2018-19/203 DBR.No.BP BC.45/21.04.048/2018-19 dated 07.06.2019, Details of Acquisition of shares due to conversion of debt to equity during a restructuring process is as under:

RBI vide their Circular no DBR.No.BP BC.45/21.04.048/2018-19 dated 7th June 2019 on Prudential Framework for Resolution of Stressed Assets guidelines for implementation of Resolution Plan , also containing requirements of additional Provisions as per para 17 of this RBI circular. The outstanding in such cases as on March 31, 2022 is '' 10,221.09 Crores (Previous Year '' 12,265.33 Crores) and in compliance with the above RBI circular, The Bank is holding additional provision of '' 1,947.65 Crores (Previous Year '' 4,441.26 Crores) as on March 31,2022.

e) Divergence in asset classification and provisioning

As per RBI circular No. DBR.BPBC.

No.32/21.04.018/2018-19 dated April 1,2019, in case the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies and/or additional Gross NPAs identified by RBI exceeds 15% of published incremental Gross NPAs for the reference period then banks are required to disclose divergences from prudential norms on income recognition, asset classification and provisioning. Divergence from prudential norms assessed by the RBI for the year ended 31st March, 2021 are within threshold limits specified above hence the need for additional disclosure does not apply.

Disclosure of transfer of Loan exposures

Disclosure as per the RBI Master directions ref no RBI/

DOR/2021-22/86

DOR.STR.REC.51/21.04.048/2021-22 “Master Direction -Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021” dated 24.09.2021 is as under:

In respect of "Loans not in default" @, that are transferred or acquired

As per the Reserve bank of India (RBI) circular no. DBR No. BPBC.92/21.04.048/2015-16 dated April 18, 2016 the Bank has opted to provide the liability for frauds over a period of four quarters.

Accordingly, the carry forward provision as on March 31, 2022 is '' 87.02 Crores (Previous Year '' 162.91 Crores) which is to be amortized in the subsequent quarters by the bank.

Details of Resolution plan implemented under Resolution Framework for COVID 19 related stress as per RBI circular RBI/2020-21/16 DOR.No.BP BC/3/21.04.048/2020-21 dated 06.August 2020 (RF 1.0) and 05.05.2021 (RF 2.0) as of March 31, 2022.

The exposure to Capital Market of '' 4,027.58 Crores is within the limit of ''22,076.40 Crores (i.e. 40% of Bank''s Net worth of '' 55,191 Crores as on March 31,2021).

The direct exposure to Capital Market of '' 4,027.58 Crores is within the limit of '' 11,038.20 Crores (i.e. 20% of the Bank''s net worth of '' 55,191 Crores as on March 31,2021).

For restructuring of dues in respect of listed companies, lenders may be ab initio compensated for their loss / sacrifice (diminution in fair value of account in net present value terms) by way of issuance of equities of the company upfront, subject to the extant regulations and statutory requirements.

- If such acquisition of equity shares results in exceeding the extant regulatory Capital Market Exposure (CME) limit, details of the same is as under- NA

- details of conversion of debt into equity as part of a strategic debt restructuring which are exempt from CME limits are as under .

Risk Category wise Country Exposure

Total Net Funded Exposure as on 31.03.2022 is ''1,40,376.04 Crores. Total assets of the bank as on 31.12.2021 were '' 11,97,053.70 Crores, 1% of which comes to '' 11,970.54 Crores. Total net funded exposure of three countries namely USA, UK and UAE are amounting to '' 42,202.27 Crore, '' 12,642.38 crores & '' 31,064.21 Crores respectively, is more than 1% of the total assets of the Bank as on 31.12.2021. In case, total net funded exposure as on 31.03.2022 of the bank on USA, UK and UAE happens to be more than 1% of total assets of the Bank. Provision of '' 42.26 Crores for USA, '' 26.92 crores for UK and '' 51.54 crores for UAE

has been made in terms of RBI guidelines. USA and UK are rated “BOBSOV1” and UAE is rated “BOBSOV2” by BoB internally. As per Export Credit Guarantee Corporation of India (ECGC) classification, USA and UK are in the “Insignificant Risk Category” i.e. ‘A1'' and UAE is in the “Low Risk Category” i.e. ‘A2''.

Unhedged Foreign Currency Exposure

The Bank has in place a policy and process for managing currency induced credit risk. The credit appraisal memorandum prepared at the time of origination and review of a credit facility is required to discuss the exchange risk that the customer is exposed to from all sources, including trade related, foreign currency borrowings and external commercial borrowings. It could cover the natural hedge available to the customer as well as other hedging methods adopted by the customer to mitigate exchange risk. For foreign currency loans granted by the Bank beyond a defined threshold the customer is encouraged to enter into appropriate risk hedging mechanisms with the Bank. Alternatively, the Bank satisfies itself that the customer has the financial capacity to bear the exchange risk in the normal course of its business and / or has other mitigants to reduce the risk. The Bank has a policy of monthly review of information on the unhedged portion of foreign currency exposures of customers during the periods of high volatility in exchange rates. A Board approved credit risk rating linked limit on unhedged foreign currency position of customers is applicable when extending credit facilities to a customer. The compliance with the limit is assessed by estimating the extent of drop in a customer''s annual Earnings Before Interest and Depreciation (‘EBID'') due to a potentially large adverse movement in exchange rate impacting the unhedged foreign currency exposure of the customer. Where a breach is observed in such a simulation, the customer is advised to reduce its unhedged exposure.

In accordance with RBI guidelines, as at March 31, 2022, the amount of bank''s credit exposure against Unhedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was '' 2,544.97 Crores. The additional RWA on this exposure is '' 886.12 crores against this additional minimum capital requirement is '' 101.91 Crores.

Based on the available financial statements and the declarations from borrowers, the Bank has estimated the liability for Unhedged Foreign Currency in terms of RBI circular DBOD.No.BPBC.85/21.06.200/2013-14 dated January 15, 2014 and is holding a provision of ''196.58 Crores as on March 31, 2022 (Previous Year: '' 184.10 Crores).

i Disclosures on risk exposure in derivatives ) Qualitative Disclosure

a) Foreign exchange risk management & Gold, Derivative management policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transaction. The bank uses financial derivative transactions for hedging, it''s on or off balance sheet exposure as well as for market making .Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

b) The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, Value at Risk (VaR) and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

Conversion factor to be applied on notional principal amount

The hedge/non-hedge (market making) transactions are recorded separately. In cases where the underlying is not subject to mark to market the hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to-market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/ expenditure.

The following sections outline the nature and terms of the derivative transactions generally undertaken by the Bank.

Interest rate contracts

Forward rate agreements give the buyer the ability to determine the underlying rate of interest for a specified period commencing on a specified future date (the settlement date). There is no exchange of principal and settlement is effected on the settlement date. The settlement amount is the difference between the contracted rate and the market rate prevailing on the settlement date.

Interest rate swaps involve the exchange of interest obligations with the counterparty for a specified period without exchanging the underlying (or notional) principal.

Interest rate caps and floors give the buyer the ability to fix the maximum or minimum rate of interest. The writer of the contract pays the amount by which the market rate exceeds or is less than the cap rate or the floor rate respectively. A combination of interest rate caps and floors can create structures such as interest rate collar, cap spreads and floor spreads.

Interest rate futures are standardised interest rate derivative contracts traded on a recognised stock exchange to buy or sell a notional security or any other interest bearing instrument or an index of such instruments or interest rates at a specified future date, at a price determined at the time of the contract.

Exchange rate contracts

Forward foreign exchange contracts are agreements to buy or sell fixed amounts of currency at agreed rates of exchange on future date. These instruments are carried at fair value, determined based on either FEDAI rates or market quotations.

Cross currency swaps are agreements to exchange principal amounts denominated in different currencies. Cross currency swaps may also involve the exchange of interest payments on one specified currency for interest payments in another specified currency for a specified period.

Currency options (including Exchange Traded Currency Option) give the buyer, on payment of a premium, the right but not an obligation, to buy or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.

Currency futures contract is a standardized contract traded on an exchange, to buy or sell a certain underlying asset or an instrument at a certain date in the future, at a specified price. The underlying instrument of a currency future contract is the rate of exchange between one unit of foreign currency and the INR.

The Bank''s derivative transactions relate to sales and trading activities. Sale activities include the structuring and marketing of derivatives to customers to enable them to hedge their market risks (both interest rate and exchange risks), within the framework of regulations as applicable from time to time. The Bank deals in derivatives on its own account (trading activity) principally for the purpose of generating a profit from short term fluctuations in price yields or implied volatility. The Bank also deals in derivatives to hedge the risk embedded in some of its Balance Sheet assets or liabilities.

Constituents involved in derivative business

The Treasury front-office enters into derivative transactions with customers and inter-bank counterparties. The Bank has an independent backoffice and mid-office as per regulatory guidelines.

Provisioning, collateral and credit risk mitigation

The Bank enters into derivative transactions with counter parties based on their business ranking and financial position. The Bank sets up appropriate limits upon evaluating the ability of the counterparty to honor its obligations in the event of crystallization of the exposure. Appropriate credit covenants are stipulated where required, as trigger events to call for collaterals or terminate a transaction and contain the risk

Credit Default Swaps (CDS)

Valuation Methodology- As per RBI guidelines on CDS dated 23rd May, 2011 the banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA Or any other proprietary model if it results in a more conservative valuation. The Bank uses the FIMMDA curve for valuing CDS positions; the Bank does not use any internal proprietary model for CDS valuation. However, the Bank does not have any CDS deal outstanding as on 31st March 2022.

efinitions of certain items in Business ratios / information:

Working funds to be reckoned as average of Total Assets (Excluding accumulated losses, if any) as reported to Reserve Bank of India in Form X, during the 12 months of the Financial Year.

Net Interest Income/ Average Earning Assets. Net Interest Income= Interest Income - Interest Expense

Return on Assets would be with reference to average working funds (i.e. total of assets excluding accumulated losses, if any).

For the purpose of computation of Business per Employee (Deposit plus Advances) inter Bank Deposits are excluded.

) Disclosure Regarding Bancassurance Business

Income earned for marketing third party products

Implementation of IFRS Converged Indian Accounting standards (Ind AS)

The Reserve Bank of India (RBI) vide DBR.BPBC. No. 76/21.07.001/2015-16 dated 11th February 2016, has prescribed the roadmap for implementation of Indian Accounting Standards (Ind-AS) in the Banks and the Banks need to disclose the strategy for Ind-AS implementation, including the progress made in this regard. The Bank accordingly, has appointed a consultant to assist in implementation of the Ind-AS. The Bank has also constituted a Steering Committee to oversee the progress made and the Audit Committee of the Board is being apprised of the same from time to time. As on date the Bank has fully complied with the requirement.

Disclosure on amortization of expenditure on account of enhancement in family pension of employees of Banks

Bank has estimated the additional liability on account of revision in family pension for employees as per IBA Joint Note dated November 11, 2020, amounting to '' 1,454.41 Crores. However, RBI vide their Circular RBI/2021 -22/105 DOR. ACC. REC.57/21.04.018/2021 -22 dated 4th October 2021, has permitted Banks to amortize the said additional liability over a period of not exceeding 5 (five) years, beginning with financial year 2021-22, subject to a minimum of 1/5th of the total amount being expensed every year. Bank has opted the said provision, and accordingly charged an amount of '' 72.72 Crores & ''290.88 Crores to the Profit & Loss account for the quarter and FY ended 31st March 2022 respectively and the balance unamortized expense of ''1,163.53 Crores has been carried forward. Had the Bank charged the entire additional liability to the Profit and Loss Account, the net profit (after tax) for the quarter and FY ended March 31,2022 would have been lower by '' 870.67 Crores.

Reserves and Surplus Statutory Reserve

The Bank has made an appropriation of '' 1,814.34 Crores (Previous Year: '' 207.22 Crores) out of profits for the year ended March 31, 2022 to the Statutory Reserve pursuant to the requirements of Section 17 of the Banking Regulation Act, 1949 and RBI guidelines dated September 23, 2000

Capital Reserve

Capital Reserve includes appreciation arising on revaluation of immovable properties, amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries and others.

During the year ended March 31, 2022, the Bank appropriated '' 523.35 Crores (Previous Year: '' 676.90 Crore), being the profit from sale of investments under HTM category and profit on sale of immovable properties, net of taxes and transfer to statutory reserve, from the Profit and Loss Account to the Capital Reserve.

Investment Fluctuation Reserve

In accordance with RBI guidelines, banks are required to create an Investment Fluctuation Reserve (IFR) equivalent to 2% of their HFT and AFS investment portfolios, within a period of three years starting fiscal 2019, subject to profit availability after statutory appropriation. During the year ended March 31,2022, the Bank has made '' 2,368.42 Crores appropriation to the Investment Fluctuation Reserve from the Profit and Loss Account. (Previous Year: NIL)

Share Premium

The Bank has set off accumulated losses amounting to '' 11,048.44 Crores by utilizing an equivalent amount standing to the credit of share premium account of Bank as on the date of set off during the year ended 31.03.2022 after obtaining approval from shareholders as well as Reserve Bank of India.

Status of Letters of Comfort

Letters of Comfort (LOC’s) issued during the Year

LOC issued on 25th October 2021 to the regulator viz. international Financial Services Centres Authority (IFSCA) for IFSC, Gift city Branch - As on 31st March 2022, IFSC branch''s total deposits (net of overdraft and loan against Bank''s own deposits) are '' 12,388.55 Crores and outside liabilities are '' 8,390.02 Crores (i.e. Total Liabilities of ''20,778.57 Crores). The net worth of the Branch as on 31st March 2022 is '' 408.31 Crores. IFSCBU is treated as overseas branch of Bank of Baroda and assets and liabilities of the overseas branch are reflected in Bank''s standalone balance sheet. Therefore, there is no requirement to recognise the Letter of Comfort, issued for IFSC Gift City Branch, as contingent liability of Bank.

Cumulative position of LOC’s outstanding as on March 31,2022

The LOC issued by the bank in the past and the cumulative financial obligation is as under:

a) LOC issued during 2008-09 to Reserve Bank of

New Zealand guaranteeing entire indebtedness of the wholly owned subsidiary - Bank of Baroda (New Zealand) Ltd. to its depositors and other creditors. As on 31st March 2022 the subsidiary''s Deposits (net of Overdraft and Loan against Bank''s own deposits) are '' 473.01 Crores and outside liabilities are '' 7.03 Crores (i.e. total liabilities of '' 480.04 Crores). The net worth of the subsidiary as on 31st March 2022 is '' 270.46 Crores. The net contingent liability on the Parent Bank is '' 209.58 Crores in this regard. However, the Bank does not foresee possibility of crystallization of liability under the above letter of comfort/guarantee for the present.

b) LOC was issued during the year 2010-11 to Bank Negara Malaysia upto Bank''s 40% shareholding in the Joint Venture Bank - ‘India International Bank (Malaysia) Bhd (IIBMB). As on 31st March 2022 the deposits of IIBMB (net of Overdraft and Loan against Bank''s own deposits) are '' 150.63 Crore and other liabilities are '' 3.94 Crores (i.e. Total liabilities of '' 154.57 Crores). The net worth of the IIBMB as on 31st March 2022 is '' 582.84 Crores. The net contingent liability on parent Bank is Nil in this regard.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies (Accounting Standard -5)

(i) Prior Period Items:

During the year, there were no material prior period income / expenditure items.

(ii) Accounting policy:

During the year the Bank has refined the accounting policy relating to computer software not forming integral part of hardware. Such items having estimated life more than 2 years and in excess of original cost of '' 50,000/- were hitherto included with Other Fixed Assets and amortised as computers. These items are now classified as intangibles and amortised over a period of 3 years. There is no material impact of the above refinement on the profit of the year. The carrying value of software as at 31.03.2022 is '' 223.19 Crores.

B-2 - AS 11- Changes in foreign exchange rates:

Movement of foreign currency translation reserve

B-3 Employee Benefits (Accounting Standard -15)

B-3.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI.

B-3.2 Gratuity

The Bank pays gratuity to employees who Exit from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an inhouse trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes (BOBOSR,1979 /BPS, Gratuity Act,1972 and Bank of Baroda Gratuity Fund Rules) and the entitlement is based on what is most beneficial to employees.

B-3.3 Pension

B-3.3.1 Bank pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund. At the time of cessation, those eligible for pension are paid commutation of Pension as provided by the said Regulations. While the Bank contributes its contribution at 10% of eligible employees'' Basic and certain allowances, additional contribution is also made based on the Actuarial calculations.

B-3.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organizations'' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010 similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank, who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution is made by the Bank and remitted to the NSDL which maintains the accounts. Funds are managed by the Pension Fund Manager. However, in terms of 11th BPS / 8th Joint Note, Bank''s contribution is increased from 10% to 14 % w.e.f. November 2020.

B-3.4 Provident Fund

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee who is member of PF contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the PF in case of PF optee. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B-3.5 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B-3.6 Additional Retirement Benefit (ARB)

The scheme for additional retirement benefit provides that an officer who had joined the Bank prior to 01.07.1979 on his Retirement/ Voluntary retirement/ Death shall be eligible for payment of 6 months emoluments as additional retirement benefit, provided he had completed twenty-five years of service exclusively in Bank of Baroda (excluding eVB/eDB) and satisfy the conditions mentioned in BOB officer’s service regulations.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank of Baroda.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.”

B-3.7 Disclosures

I. Defined Benefit Plans (Gratuity and Pension)

a) Change in present value of Defined Benefit Obligation

Mortality Rate: IALM (2012-2014) ULT

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

B-4 Segment Reporting (Accounting Standard - 17)

B-4.1 Segment Identification

I. Primary (Business Segment): The following are the primary segments of the Bank:-

i. Treasury

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

ii. Corporate / Wholesale Banking

The Corporate / Wholesale Banking segment comprises the lending activities of borrowers having exposure of '' 7.50 Crores above.

iii. Retail Banking

The Retail Banking Segment comprises of borrower accounts having exposure of upto '' 7.50 Crores.

iv. Other Banking Operations

Segments not classified under (i) to (iii) above are classified under this primary segment.

II) Secondary (Geographical Segment)

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

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

III. Segment revenue represents revenue from external customers.

IV. Allocation of Income, Expenses, Assets and Liabilities

Treasury banking operation is separate unit. The income and expenses of treasury operations are directly attributable to treasury segment.

The income and expense of other segments are recognised as under:

a) The interest income and interest expense are allocated on the basis of actual interest received for wholesale banking operations and on the basis of advances of wholesale banking operations respectively.

b) After allocation of above interest income and expense, the residual interest received/ paid is attribute to retail banking operations.

c) Other income/ other expenses are allocated in the proportion of Interest income earned by the wholesale banking / retail banking segment. Capital employed for each segment has been allocated proportionately to the assets of the respective segment.

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

B-5 Related Party Disclosures (Accounting Standard -18)

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

I. Name of Related Parties & their relationship

a) Subsidiaries

i) Domestic Banking Subsidiary 1. The Nainital Bank Limited

ii) Foreign Banking Subsidiaries

1. Bank of Baroda (Kenya) Limited

2. Bank of Baroda (Uganda) Limited

3. Bank of Baroda (Guyana) Inc.

4. Bank of Baroda (UK) Limited.

5. Bank of Baroda (Tanzania) Limited

6. Bank of Baroda (New Zealand) Ltd.

7. Bank of Baroda (Botswana) Limited

iii) Domestic Non- Banking Subsidiaries

1. BOB Capital Markets Limited

2. BOB Financial Solutions Limited (formerly known as BOB Cards Ltd)

3. Baroda Global Shared Services Ltd

4. Baroda Sun Technologies Ltd.

5. Baroda Asset Management India Limited*

6. Baroda BNP Paribas Asset Management India Private Limited

7. Baroda BNP Paribas Trustee India Private Limited (formerly known as Baroda Trustee India Private Limited)

8. IndiaFirst Life Insurance Company Limited#

(#The Bank has increased its stake in India First Life Insurance Company Limited from 44% to 65% after receiving all statutory and regulatory approvals. Hence the same will be considered as subsidiary w.e.f 31.03.2022)

*During the year, ‘Baroda Asset Management India Limited'' (Transferor Company) was merged with ‘BNP Paribas Asset Management India Pvt. Ltd'' (Transferee Company) which was renamed as ‘Baroda BNP Paribas Asset Management India Private Limited''. Bank of Baroda being the sole shareholder of the transferor company, has been allotted 10,81,50,783 shares of the transferee company pursuant to the NCLT order. After fulfilling the conditions mentioned in NCLT order, the merger was effected on 14th March 2022. Accordingly, Bank of Baroda holds 50.10% stake in the transferee company after completion of merger.

iv) Foreign Non- Banking Step-down Subsidiary

1. Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

b) Associates

i) Regional Rural Banks

1. Baroda U P Bank

2. Baroda Rajasthan Kshetriya Gramin Bank

3. Baroda Gujarat Gramin Bank

ii) Others

1. Indo Zambia Bank Limited

c) Joint Ventures

1. India International Bank (Malaysia) Bhd.

2. India Infra debt Limited

d) Key Management Personnel

Accounting Standard -19 - “Lease”

Premises taken on operating lease are given below:

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

The following table sets forth, for the period indicated, the details of future rental payments on Premises taken on Non-Cancellable operating leases:

Amount of lease payments recognized in the Profit & Loss Account for operating leases is '' 768.07 Crores (Previous Year: '' 792.40 Crores)

Earning per Share (Accounting Standard -20)

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

During the FY 2020-21, the Bank had issued and allotted 55,07,95,593* equity shares having face value of '' 2 each at an issue price of '' 81.70 per equity shares (including premium of '' 79.70 per equity share), under Qualified Institutional Placement (QIP) in accordance with the provisions of SEBI (ICDR) Regulations, 2009 aggregating to '' 4,500.00 Crores for augmenting Bank''s Tier I capital to support growth plans of the Bank and for other general corporate purposes.

B-8 Accounting for Taxes on Income (Accounting Standard -22)

Amount of Provisions for Taxation during the year

a) Current Tax:

During the year the Bank has debited to Profit & Loss Account '' 625.42 Crores (Previous Year '' 959.04 Crores) on account of current tax. The Current Tax in India has been calculated in accordance with the provisions of Income Tax Act 1961 after taking appropriate relief for taxes paid in foreign jurisdictions.

b) Deferred Tax:

During the year, ''874.24 Crore has been Debited to Profit and Loss Account (Previous Year: '' 4,297.20 Crores Credited) on account of deferred tax. The Bank has a Net Deferred Tax Asset (DTA) of '' 9,348.63 Crores (Previous year: Net DTA of ''10,209.84 Crores).

The major components of DTA and DTL is given below:

Tax Paid in advance/ Tax deducted at source appearing under Other Assets includes disputed amount adjusted by the department/ paid by the Bank in respect tax demands for various assessment years. No provision is considered necessary in respect of disputed Income Tax demands of '' 6,539.29 Crores (previous year'' 6,187.58 Crores) as in the bank''s view, duly supported by Tax Consultant view and/or decision in bank''s own appeals on same issues, additions / disallowances made are not sustainable.

B-9 AS 23 - Accounting for Investments in Associates in Consolidated financial Statements since Investments of the bank in its Associates are participative in nature and the Bank having the power to exercise significant influence on their activities, such Investments are recognized in the Consolidated Financial Statements of the Bank.

B-10 Discontinuing operations (Accounting Standard- 24)

During the Financial year 2021-22, the Bank has closed the overseas territories/ subsidiaries:

1. Bank''s wholesale Branch in Hong Kong on 14.05.2021.

2. Bank''s operations in South Africa on 24.08.2021

3. Bank''s Local Representative office in Hong Kong on 10.03.2022

B-11 Disclosure of Interest in Joint Ventures (Accounting Standard -27)

As required by AS 27, the aggregate amount of the assets, liabilities, income, expenses, contingent liabilities and commitments related to the Bank''s interests in jointly controlled entities are disclosed as under:

Note: March 31, 2021 figures above includes assets, liabilities, income, expenditure, etc pertaining to India First Life Insurance Company Limited which became subsidiary of the Bank during the financial year.

B-12 Impairment of Assets (Accounting Standard-28)

In terms of AS - 28 “Impairment of Assets” '' 10.55 Crores has been debited to Profit & Loss account wherein current value is less than cost of the property.

B-13 Provisions, Contingent Liabilities and Contingent Assets (Accounting Standard-29)

B-13.1 As per the policy of the Bank, provision for the claims not been acknowledged as debt, has been provided for.

a) Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgment / arbitration awards / out of court settlement/disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

b) Contingent Assets are not recognized in the financial statements.

B-13.2 Description of contingent liabilities. (Also Refer Schedule 12)

a) Claims against the Bank not acknowledged as debts;

These represent claims filed against the Bank in the normal course of business relating to various legal cases currently in progress. These also include demands raised by income tax authorities and disputed by the Bank.

b) Liability for partly paid investments

This represents amounts remaining unpaid towards liability for partly paid investments.

Liability for partly paid investments of $ 15.28 Crores represents amounts remaining unpaid towards liability for partly paid investments of Central Ware Housing Corporation and IL&FS infrastructure debt fund.

c) Liability on account of forward exchange and derivative contracts:

The Bank enters into foreign exchange contracts, currency options/swaps, interest rate/currency futures and forward rate agreements on its own account and for customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest/principal in two currencies, based on ruling spot rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardized, exchange-traded contracts that represent a pledge to undertake a certain interest rate transaction at a specified price, on a specified future date. Forward rate agreements are agreements to pay or receive a certain sum based on a differential interest rate on a notional amount for an agreed period.

A foreign currency option is an agreement between two parties in which one grants to the other the right to buy or sell a specified amount of currency at a specific price within a specified time period or at a specified future time. An Exchange Traded Currency Option contract is a standardized foreign exchange derivative contract, which gives the owner the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date on the date of expiry. Currency Futures contract is a standardized, exchange-traded contract, to buy or sell a certain underlying currency at a certain date in the future, at a specified price. The amount of contingent liability represents the notional principal of respective forward exchange and derivative contracts.

d) Guarantees given on behalf of constituents

As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfill its financial or performance obligations.

e) Acceptances, endorsements and other obligations

These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank''s customers that are accepted or endorsed by the Bank.

f) And other items for which Bank is contingently liable.

C. Additional Disclosures

C-1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2022, the reconciliation of which is in progress. Balancing of Subsidiary Ledger Accounts, confirmation/ reconciliation of Inter-office accounts, Migration accounts, other office accounts, etc. is in progress on an on-going basis. In the opinion of the management, the overall impact on the financial statements, if any, of the above, is not likely to be material.

C-2 Investments

In terms of RBI Guidelines, during the year, the bank has transferred a portion of Investment from HTM category to AFS category and AFS to HTM Category. The resultant depreciation of '' 4.99 Crores (Previous Year: '' 1.61 Crores) has been charged to the Profit & Loss Account.

C-3 Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006

There have been no reported cases of delayed payments of the principal amount or interest due thereon to Micro & Small Enterprises and hence disclosure for payment of interest on delayed payments to MSME is not applicable. The details regarding Micro, Small and Medium Enterprises has been provided by the Management and relied upon by us.

C-4 Premises

C-4.1 Execution of conveyance deeds is pending in respect of certain properties amounting to '' 168.72 Crores (Previous Year: '' 168.72 Crores).

C-4.2 Depreciation on Revalued Portion: '' 729.70 Crores depreciation charged for FY 2021-22 (Previous year: '' 657.65 Crores) and Total depreciation charged during FY 2021-22 is '' 1,389.72 Crores (Previous Year: '' 1,314.54 Crores) .

C-4.3 In terms of Banks approved revaluation policy, The immovable properties are revalued based on the revaluation reports of Bank''s approved valuers and the surplus arising from revaluation amounts to '' 2,670.00 Crores has been added to “Revaluation Reserve” during the current year. Also in terms of AS - 28 “Impairment of Assets” '' 10.55 Crores has been debited to Profit & Loss account wherein current value is less than cost of the property.

C - 5 Disclosure on provisioning pertaining to Land/Asset held under ‘Non-Banking assets acquired in satisfaction of claims''

Appropriation of Recoveries in Non-Performing Assets is first appropriated towards charges, then interest income and last in principal outstanding.

C-6 BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court. The matter is still pending before the judiciary.

C-7 During the year unclaimed dividend amount transferred to the Investor Education and Protection Fund (IEPF) without any delay is '' 4.69 Crores (Previous Year: '' 13.89 Crores).

C-8 As per RBI letters no. DBR.No.BP15199/21.04.048/2016-17 and DBR.No.BP1906/21.04.048/2017-18 dated

June 23, 2017 and August 28, 2017 respectively, for the accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank is holding total provision of ''7,656.31 Crores (100% of total outstanding) as on March 31, 2022 (Previous Year ''8,173.78 Crores being 100% of total outstanding).

C-9 Corporate social responsibility

Operating expenses include '' 8.29 Crores (previous year: '' 6.90 Crores) for the year ended March 31,2022 towards Corporate Social Responsibility (CSR), in accordance with Companies Act, 2013.

The Bank has spent total amount of '' 8.29 Crores being 1% of the published profit of the Bank for the previous year, as part of its CSR for the year ended March 31, 2022. As a responsible bank, it has approached the mandatory requirements of CSR spends positively by laying a foundation on which it would build and scale future projects and partnerships. The Bank continues to evaluate strategic avenues for CSR expenditure in order to deliver maximum impact. In the years to come, the Bank will further strengthen its processes as per requirement.

The details of amount spent during the respective year towards CSR are as under: '' 8.29 Crores consist of '' 8.29 Crores is 1% of published Net profit of previous year and '' Nil being appropriation of residual CSR fund lying in Sundry Deposit A/c.

C - 10 Disclosure on remuneration to Non-Executive Directors

Remuneration by way of sitting fees to the Non-Executive Directors for attending meetings of the Board and its committees during the year ended March 31, 2022 amounted to '' 1.22 Crores (Previous year: '' 1.07 Crores).

C-11 In terms of Reserve Bank of India (RBI) guidelines, Pillar 3 disclosures including leverage ratio, liquidity coverage ratio and Net stable funding ratio (NSFR) under the Basel-III framework are being made available on our website “https://www. bankofbaroda.in/shareholders-corner/ disclosures-under-basel-iii''''. These disclosures have not been subjected to audit by Statutory Central Auditors of the Bank.

C-12 The spread of COVID-19 has earlier led to a regional lockdown which in turn resulted into significant volatility in Global and Indian financial markets and decrease in global and local economic activities during the first wave of Covid-19 pandemic. During FY2022, India has witnessed two more waves of covid-19 pandemic. Currently, the number of new Covid-19 cases have reduced significantly and the Government has withdrawn most of the Covid-19 related restrictions.

Further, the extent to which the COVID pandemic and its future waves if any may impact the Bank''s operation and asset quality are uncertain. The bank is however keeping a close watch on developments on an ongoing basis and taking proactive measures continuously to maintain and improve asset quality. The bank, therefore, believes that there may not be any significant impact on Bank''s future financial results.

Mar 31, 2019

Application Money Pending Allotment'' Rs. 5,042 crore represents amount received from Government of India towards share capital to be issued for which RBI approval is obtained vide letter no. DBR.CO.BP No. 9771/21.01.002/2018-19 dated 17.05.2019 for considering the same under CET 1 Capital.

The Bank has sought approval from shareholders through postal ballot to allot 42,85,59,286 equity shares to the President of India acting on behalf of Government of India (GOI), the promoter of the bank, at an issue price of Rs. 117.65 per share (Face value Rs. 2 and premium Rs. 115.65). The price has been determined as per the provisions of Regulation 164 of the SEBI ICDR Regulation 2018 is Rs. 117.65 per equity share of fair value of Rs. 2 each (including premium of Rs. 115.65 per equity share).

In pursuant to the scheme of Amalgamation 2019 of Vijaya Bank and Dena Bank with Bank of Baroda, and based on the Swap Ratio agreed upon between the banks on January 2, 2019. The bank has allotted the following shares to the shareholders to the erstwhile Vijaya Bank and erstwhile Dena Bank on April 1, 2019 as following

a) 52,42,00,772 fully paid up equity shares of face value of Rs. 2/- each of Bank of Baroda aggregating Rs. 104,84,01,544/- be issued and allotted to equity shareholders of Vijaya Bank.

b) 24,84,51,166 fully paid up equity shares of face value of Rs. 2/- each of Bank of Baroda aggregating Rs. 49,69,02,332/- be issued and allotted to equity shareholders of Dena Bank.

After the allotment of the above shares the Share of the Government of India (the promoter shareholder) would increase from 63.26% to 69.23%.

(i) Qualitative Disclosure

The Off Balance Sheet Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transaction. The bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, Value at Risk (VaR) and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:

The hedge/non-hedge (market making) transactions are recorded separately. In cases where the underlying is not subject to mark to market the hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to-market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.2.6.4 Credit Default Swaps (CDS)

Valuation Methodology- As per RBI guidelines on CDS dated 23^rd May, 2011 the banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA or any other proprietary model if it results in a more conservative valuation. The Bank uses the FIMMDA curve for valuing our CDS positions, the Bank do not use any internal proprietary model for CDS valuation. However, the Bank do not have any CDS deal outstanding as of 31^st March 2019

E. As per RBI circular No. DBR.BPBC.No.32/21.04.018/2018-19 dated April 1, 2019, in case the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies and/or additional Gross NPAs identified by RBI exceeds 15% of published incremental Gross NPAs for the reference period then banks are required to disclose divergences from prudential norms on income recognition, asset classification and provisioning. Accordingly, no disclosure is made in respect of divergence reported for the financial year 2017-18, as the same is not beyond the above mentioned thresholds

Figures in bracket denote previous year numbers

The distribution of Assets and Liabilities has been done as per the “Group Asset Liability Management Policy 2018” of the Bank

- The distribution of provisions, while arriving at the net investments, has been done in proportion to the gross investments

The Distribution of provisions and other deductions, while arriving at the net advances, has been done in proportion to the gross Standard Advances.

The scheme is withdrawn as per RBI circular DBR.No .BP BC.101/21.04.048/2017-18 dated 12.02.2018.

RBI vide letter RBI/2017-18/131: DBR. No.BP BC.101/21.04.048/2017-18 dated February 12, 2018 issued a revised framework on Resolution of Stressed Assets and withdrew the existing guidelines/instructions on resolution of stress assets such as framework for revitalizing Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long Term Project Loans, Strategic Debt Restructuring Scheme (SDR), Change in Ownership outside SDR, and Scheme for Sustainable Structuring of Stressed Assets (S4A), etc. with immediate effect. Accordingly, the Joint Lenders Forum (JLF) as an institutional mechanism for resolution of stressed accounts also stands discontinued. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were revoked and accordingly these accounts have been classified as per the extant RBI prudential norms on Income Recognition and Asset Classification. Further Supreme Court vide its judgement dated 02.04.2019 has held the February 12^th Circular “Ultra vires as a whole”. RBI has subsequently not issued any revised instructions / modifications in the matter till date.

As on 31.03.2019, the amount of bank''s credit exposure against Unhedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was Rs.1774.79 Crores. The additional RWA on this exposure is Rs. 440.74 crores against this additional minimum capital requirement is Rs.47.93 crores.

A-3.4 Draw Down from Reserves

During the Financial Year 2018-19, there is no draw down from the reserves (March 31, 2018: Rs Nil).

* Out of total complaints received, 154416 complaints (Previous year 90498) resolved on the same day (D) and on the next day (D 1).

** Out of these, 25855 nos. of complaints (Previous year 13476 nos.) are pending for less than 30 days.

A-5. Status of Letters of Comfort

I Letters of Comfort (LOC’s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators to support the operations of its overseas subsidiaries/ Joint ventures.

II Cumulative position of LOC’s outstanding as on 31.03.2019

The LOC issued by the bank in the past and the cumulative financial obligation is as under:

a) LOC issued during 2008-09 to Reserve Bank of New Zealand guaranteeing entire indebtedness of the wholly owned subsidiary - Bank of Baroda (New Zealand) Ltd. to its depositors and other creditors. As on 31^st March 2019 the subsidiary''s Deposits (net of Overdraft and Loan against Bank''s own deposits) are Rs. 306.38 crores and outside liabilities are Rs. 6.27 crore (i.e. total liabilities of Rs. 312.65 Crores). The net worth of the subsidiary as on 31^st March 2019 is Rs. 225.71 Crores. The net contingent liability on the Bank is Rs. 86.94 Crores in this regard.

b) LOC was issued during the year 2010-11 to Bank Negara Malaysia upto our Bank''s 40% shareholding in the Joint Venture Bank - ‘India International Bank (Malaysia) Bhd (IIBMB). As on 31^st March 2019 the deposits of IIBMB are Rs. 226.66 crore and other liabilities are Rs. 2.45 Crores (i.e. Total liabilities of Rs. 229.10 crore). The net worth of the IIBMB as on 31^st March 2019 is Rs. 549.33 crore. As the financial year end of IIBMB is 31^st December, figure of 31^st March 2019 have been taken from unaudited statements.

A-8.2 Qualitative Disclosure:

From 1^st January 2015, the bank has implemented guidelines on Liquidity Coverage Ratio (LCR) of the Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered 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. The LCR and monitoring tools are applicable for Indian banks initially w.e.f. 1^st January 2015 at whole bank level only i.e. on a stand-alone basis including overseas operations through branches and subsequently at consolidated basis w.e.f. 1^st January 2016 i.e. including domestic and overseas subsidiaries.

The LCR has two components:

(i) The value of the stock of high-quality liquid assets (HQLA) in stressed conditions- the numerator.

(ii) Total net cash outflows: The term "Total net cash outflows" is defined as "Total expected cash outflows" minus "Total expected cash inflows" in the specified stress scenario for the subsequent 30 calendar days (the stressed period) the denominator.

LCR = Stock of High Quality Liquid Assets/Total Net Cash Outflows over the next 30 calendar days >=100%

According to RBI, the LCR will be introduced in a phased manner starting with a minimum requirement of 60% from January 1, 2015 and reaching minimum 100% on January 1, 2019

*As per the RBI guidelines dated 31^st March 2014 the Bank has made LCR disclosure on solo basis from the financial year ending March 2016. In terms of extant guideline, disclosure on consolidated basis was applicable to the Indian banking system from 1^st January 2016. As starting from January 2017, banks has to disclose LCR on daily average basis, hence bank has computed LCR on daily average basis both for Solo and Consolidated Level for the quarter ended March 2017. Bank has also disclosed LCR for the financial year ending March 2018, which consisted of daily averages for Q1, Q2, Q3 and Q4.

Composition of HQLA

Based on daily averages for the quarter ended March 2019, Facility to avail Liquidity for Liquidity Coverage Ratio constitutes the highest portion of HQLA i.e 52.28% followed by excess SLR securities which constitute 22.88%. Level 2 assets which are lower in quality as compared to Level 1 assets, constitute nominally 0.88% of total stock of HQLA against maximum mandated level of 40%.

Main drivers of LCR:

The Group, during the three months ended March 31, 2019, had maintained average HQLA (after haircut) of Rs.1, 287,811.74 million. As against the average requirement of Rs. 1,033,908.52 million at a minimum LCR requirement of 100%. HQLA is primarily driven by government securities in excess of minimum SLR, the extent allowed under the Marginal Standing Facility (MSF) and the Facility to Avail Liquidity coverage ratio. Also, cash, excess CRR maintained with RBI and other overseas central banks, securities issued by foreign sovereigns are important factors of HQLA. Level 2 HQLA primarily consisted of AA- and above rated corporate bonds and commercial papers.

Intra-period changes as well as changes over time:

LCR on consolidated basis were 121.96%, 121.24% and 120.69% as at the months ended January 2019, February 2019 and March 2019 respectively as against the regulatory requirement of 100%.

Concentration of funding sources

A significant counterparty is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank''s total liabilities. The significant counterparty Deposit as of 31^st March 2019 was from “Employees State Insurance Corporation” i.e. 2.53% of Global Liabilities.

A “significant instrument/product” is defined as a single instrument/ product of group of similar instruments/products which in aggregate amount to more than 1% of the bank''s total liabilities. Example of funding instruments/products - wholesale deposits, certificates of deposits, long term bonds, etc. Significant instrument/product as of 31^st March 2019 were Wholesale Deposits i.e. 7.55% of Global Liabilities, Long Term Bonds i.e. 1.59% of Global Liabilities and Certificate of Deposits i.e. 1.46% of Global Liabilities.

Top 20 depositors of the bank on solo basis constitute 7.26% of our total deposits.

Derivative exposures and potential collateral calls:

The bank''s derivative exposure as on 31^st March 2019 is as under:

Currency mismatch in the LCR:

As per the RBI guidelines while the LCR standard is required to be met on one single currency, in order to better capture potential currency mismatch the LCR in each currency needs to be monitored. Accordingly, Bank is maintaining LCR on daily basis in INR and the same is compared against the regulatory requirement, but on other significant currencies (A significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank''s total liabilities) bank is preparing LCR on monthly basis for the submission to RBI under

“BLR-4 - LCR” and to monitor the same. Bank is not required to maintain LCR as per regulatory limits on each significant currency.

The LCR for the significant foreign currencies as at the month ended March 2019 is as under:

Description of the degree of centralization of liquidity management and interaction between the group’s units:

The liquidity management for the Bank on enterprise wide basis is the responsibility of the Board of Directors. Board of Directors has delegated its responsibilities to a Committee of the Board called as the "Risk Management Committee of Board”. The Committee is responsible for overseeing the inter linkages between different types of risk and its impact on liquidity.

Bank has Group ALM Policy which provides the broad guidelines under which all the entities within the Group operate in terms of liquidity and interest rate risk. The bank''s entities operating in foreign countries manage their operational liquidity or liquidity in the short-term on their own on an ongoing basis as per both respective territory''s ALM policy and Group ALM policy. The monitoring of liquidity and interest rate risk management of the overseas operations of the bank is being done by the Bank''s Global Mid-Office (ALM Cell) of Risk Management Department.

The guidelines of the Group ALM policy, unless otherwise specifically exempted, apply to overseas operations as well. All the legal entities of the bank i.e.-subsidiaries, joint ventures and associates manage their operational liquidity on an ongoing basis at their own according to their business models and liquidity requirement. As to the legal entities carrying out banking business, they have their own ALM Policy in line with the host country guidelines as well as RBI guidelines whichever is more stringent.

A-9 Priority Sector Lending Certificate (PSLC)

The banks has purchased & sold the following PSLCs during the year:-

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies (Accounting Standard -5)

No change in accounting policy for the year 2018-19.

B-2 Employee Benefits (Accounting Standard -15)

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI

B-2.2 Gratuity

The Bank pays gratuity to employees who retire or resign from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees

B-2.3 Pension

B-2.3.1.Bank pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund

B-2.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organizations’ on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank, who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-2.4 Provident Fund

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India

B-2.5 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B-2.6 Additional Retirement Benefit (ARB)

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ Death shall be eligible for payment of 6 months emoluments as additional retirement benefit, provided he had completed twenty-five years of service in the Bank and satisfy the conditions mentioned in BOB officer''s service regulations.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

The employees, who joined bank before 01^st July, 1979 is eligible for the benefit of additional retirement scheme

B-2.7 Disclosures

II. Long Term Employee Benefits (Unfunded Obligation): Accumulating Compensated Absences (Privilege Leave) & Additional Retirement Benefits (ARB)

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

a) Reconciliation of opening and closing balance of liability

Mortality Rate: IALM (2006-2008)

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

B-3 10.1 Segment Reporting (Accounting Standard - 17)

1. Segment Identification

I. Primary (Business Segment): The following are the primary segments of the Bank:-

i. Treasury

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

ii. Corporate / Wholesale Banking

The Corporate / Wholesale Banking segment comprises the lending activities of borrowers having exposure of Rs. 5.00 Crores and above.

iii. Retail Banking

The Retail Banking Segment comprises of borrower accounts having exposure of less than Rs. 5.00 Crores.

iv. Other Banking Operations

Segments not classified under (i) to (iii) above are classified under this primary segment.

II) Secondary (Geographical Segment)

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

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

III. Segment revenue represents revenue from external customers.

IV. Allocation of Income, Expenses, Assets and Liabilities

The interest income is allocated on the basis of actual interest received from wholesale banking operations. The total interest received less interest of wholesale banking is taken to retail banking operations. Expenses not directly attributable are allocated on the basis Interest income earned by the wholesale banking / retail banking segment. Expenses of treasury operations are as per the details available from treasury operations.

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

B-4 Related Party Disclosures (Accounting Standard -18) Names of the Related Parties and their relationship with the Bank:

I. Name of Related Parties & their relationship

a) Subsidiaries

i) Domestic Banking Subsidiary 1. The Nainital Bank Limited

ii) Foreign Banking Subsidiaries

1. Bank of Baroda (Kenya) Limited

2. Bank of Baroda (Uganda) Limited

3. Bank of Baroda (Guyana) Inc.

4. Bank of Baroda (UK) Limited.

5. Bank of Baroda (Tanzania) Limited

6. Bank of Baroda (Trinidad & Tobago) Ltd.

7. Bank of Baroda (Ghana) Ltd.

8. Bank of Baroda (New Zealand) Ltd.

9. Bank of Baroda (Botswana) Limited

iii) Domestic Non- Banking Subsidiaries

1. BOB Capital Markets Limited

2. BOB Financial Solutions Limited (formerly known as BOB Cards Ltd)

3. Baroda Global Shared Services Ltd

4. Baroda Sun Technologies Ltd.

5. Baroda Asset Management India Limited

6. Baroda Trustee India Private Limited

iv) Foreign Non- Banking Subsidiary 1. BOB (UK) Ltd.

v) Foreign Non- Banking Step-down Subsidiary

1. Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

b) Associates

i) Regional Rural Banks

1. Baroda Uttar Pradesh Gramin Bank

2. Baroda Rajasthan Kshetriya Gramin Bank

3. Baroda Gujarat Gramin Bank

ii) Others

1. Indo Zambia Bank Limited

c) Joint Ventures

1. India First Life Insurance Company Limited

2. India International Bank (Malaysia) Bhd.

3. India Infra debt Limited

In terms of RBI circular on notes to accounts, key management personnel are whole time directors of Board for Related Party Disclosure.

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

B-5 Operating Lease (Accounting Standard -19)

Premises taken on operating lease are given below: Operating leases primarily comprise office premises and staff residences, which are renewable at the option of the Bank.

i) The following table sets forth, for the period indicated, the details of future rental payments on Premises taken on Non-Cancellable operating leases:

ii) Amount of lease payments recognized in the Profit & Loss Account for operating leases is Rs. 516.86 Crores (March 31, 2018: Rs. 498.62 Crores)

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.

B-6 Earning per Share (Accounting Standard -20)

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

* Represents maximum number of shares that can be issued to the Government of India against Share application money received (Refer note no A-1 Capital under Schedule 18). These shares have been considered as a Potential Equity in terms of Accounting Standard 20 “Earning per Share” based on the letter bearing No DBR.CO.BP No. 9771/21.01.002/2018-19 dated 17.05.2019 from Reserve Bank of India to consider the Application Money received for the purpose of calculation of Tier I Capital for the year.

B-7 Accounting for Taxes on Income (Accounting Standard -22)

a) Current Tax:

During the year the Bank has debited to Profit & Loss Account Rs. 1,282.61 Crores (March 31, 2018: Rs. 1,664.24 Crores) on account of current tax. The Current Tax in India has been calculated in accordance with the provisions of Income Tax Act 1961 after taking appropriate relief for taxes paid in foreign jurisdictions.

b) Deferred Tax:

During the year, Rs.1,017.98 has been credited to Profit and Loss Account (March 31, 2018 : Rs. 2,023.17 Crores) on account of deferred tax. The Bank has a net DTA of 7,408.36 Crores (March 31, 2018: net DTA of Rs 6,333.06 Crores), which comprises of DTL of Rs. 2.80 Crores (March 31, 2018: Rs 2,989.77 Crores) included under ‘Other Assets''. The major components of DTA and DTL is given below:

B-8 Discontinuing operations (Accounting Standard- 24)

The Bank has no plan to discontinuing operations of any of its operations, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-9 Disclosure of Interest in Joint Ventures (Accounting Standard -27)

As required by AS 27, the aggregate amount of the assets, liabilities, income, expenses, contingent liabilities and commitments related to the Bank''s interests in jointly controlled entities are disclosed as under:

B-10 Impairment of Assets (Accounting Standard-28)

In the opinion of the Bank''s management, there is no indication of impairment to the assets during the year to which Accounting Standard 28 - “Impairment of Assets” applies.

B-11 Provisions, Contingent Liabilities and Contingent Assets (Accounting Standard-29)

B-11.1 As per the policy of the Bank, provision for the claims not been acknowledged as debt, has been provided for.

Movement of provisions for Claims

a) Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels. Tax paid in advance/tax deducted at source appearing under "other Assets" amounting to Rs 5,881.92 Crores (March 31, 2018: Rs 2,007.25 Crores) is inclusive of Rs 2,615.40 Crores (March 31, 2018: Rs 1,704.80 Crores) which represents amount adjusted by the department / paid by the bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank''s view, duly supported by counsels opinion and/or judicial pronouncements, additions / disallowances made by the assessing officer are not sustainable.

b) Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgment / arbitration awards / out of court settlement/disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

c) In February 2019, the Honorable Supreme Court of India in its judgment clarified that certain special allowances should be considered to measure obligations under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (the PF Act). The Bank has been legally advised that the said ruling by Supreme Court is not applicable to the Bank since the bank is maintaining its own fund.

d) Contingent Assets are not recognized in the financial statements.

C. Additional Disclosures

C-1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2019, the reconciliation of which is in progress.

C-2 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties, amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries and others.

C-3 Investments

C-3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Investment from HTM category to AFS category. The resultant depreciation of Rs. 3.58 Crores (March31, 2018: Rs. 5.27 Crores) has been charged to the Profit & Loss Account.

RBI circular DBR.No.BP.BC.113/21.04.048/2017-18 dated June 15, 2018 had granted banks an option to spread provisioning for mark to market (MTM) losses on investments held in AFS and HFT categories equally up to four quarters, commencing with the quarter ended June 30, 2018, the Bank has availed the relaxation permitted. An amount of Rs.248.48 crore, was carried forward as at the half year ended September 30, 2018. During the December 2018 and March 2019 quarters the overall portfolio of the bank has a positive MTM as at December 31, 2018 and March 31, 2019, hence no further provision is required. Accordingly, the above circular will not apply to the bank for the quarter.

C-3.2 FCNR (B) Swap with RBI

RBI introduced US Dollar-Rupee concessional swap window for fresh FCNR (B), funds mobilized in any permitted currency for a minimum tenor of three years and above. In this window RBI offered a concessional rate of Swaps to banks only for fresh FCNR (B) deposits mobilized in any of the permitted currencies.

The bank mobilized USD 1710 Million and consequently bank executed concessional rate swaps with RBI for the corresponding tenor. The swaps executed with RBI were done at 3.5% as against the prevailing rate of around 8% and consequently would have distorted profits/loss in the starting year as well as in maturity year. To avoid this inherent distortion, and as prescribed by RBI, we have adopted the method of amortization of swap points to even out expenses throughout the tenor of swaps.

C-3.3 Profit on sale of investment held under “Held to Maturity" category amounting to Rs 431.51 crores has been credited to Profit & Loss Account and Rs. 210.36 crore has been apportioned to Capital Reserve Account.

C-4 Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006 There has been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

C-5 Premises

C-5.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs 23.86 Crores (March 31, 2018: Rs 23.86 Crores).

C-5.2 Premises include assets under construction amounting to Rs. 92.13 Crores (March 31, 2018: Rs.178.10 Crores).

C-6 BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30^th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court. The matter is still pending before the judiciary.

C-7 The 11th Bipartite Settlement entered into by the Indian Banks'' Association on behalf of the member Banks with the All India Unions of Workmen expired on 31st October 2017. In accordance with the pending execution of agreement for wage revision, to be effective from 1st November 2017, a provision of Rs.524.86 Crores (March 31, 2018: Rs. 100 crore) has been made during the year.

The Reserve Bank of India (RBI) vide DBR.BP.BC. No. 76/21.07.001/2015-16 dated 11th February 2016, has prescribed the roadmap for implementation of Indian Accounting Standards (Ind-AS) in the Banks and the Banks need to disclose the strategy for Ind-AS implementation, including the progress made in this regard. The Bank accordingly, has appointed a consultant to assist in implementation of the Ind-AS. The Bank has also constituted a Steering Committee to oversee the progress made and the Audit Committee of the Board is being apprised of the same from time to time. In terms of the requirement stipulated vide said circular, the Bank has submitted quarterly proforma Ind-AS financial statements to the RBI up to 31st December, 2018. Further, as per RBI circular DBR.BP.BC.No. 29/21.07.001/2018-19 dated 22.03.2019, the implementation of Ind AS on banks has deferred till further notice.

C-9 Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda

a) In exercise of power conferred by section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 (5 of 1970) and section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 (40 of 1980), after consultation with the Reserve Bank of India, The Government of India has notified the scheme of amalgamation of Vijaya Bank and Dena Bank (hereinafter collectively referred to as Transferor Banks) with Bank of Baroda (hereinafter referred to as Transferee Bank) on 02^nd January, 2019,. This scheme shall come into force on the 01^st April, 2019.

On the commencement of this scheme, the undertakings of the Transferor Banks shall be transferred to and shall vest in the Transferee Bank. Undertakings of the transferor banks shall be deemed to include all business, assets (including tangible and intangible, movable and immovable), liabilities, Reserve & Surplus and all other rights and interests arising out of such property of the transferor Banks in relation to the undertakings as were immediately before the commencement of scheme, in the ownership, possession, power or control of the Transferor Banks within or Outside India.

b) After taking into consideration the recommendation of the respective Audit Committees, Joint Valuation Report and the fairness opinion issued to the respective banks, the Board of the respective banks has approved the Share Exchange Ratio (ranking pari passu in all respects and shall have the same rights attached to them as the then existing equity shares of the Transferee Bank, including, in respect of dividends, if any, that may be declared by the Transferee Bank, on or after the commencement of this scheme) as under:-

i) 402 equity shares of Rs. 2 each of Bank of Baroda of every 1000 equity shares of Rs. 10 each of Vijaya Bank.

ii) 110 equity shares of Rs. 2 each of Bank of Baroda of every 1000 equity shares of Rs. 10 each of Dena Bank.

In respect of entitlements to fraction of equity shares, the consideration shall be paid in cash. Necessary accounting adjustments in regard of amalgamation will be made on the effective date.

C-10 During the year unclaimed dividend amount transferred to the Investor Education and Protection Fund (IEPF) without any delay is Rs 20.58 Crores.

C-11 RBI Circular DBOD.NO.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 on Basel III. : Capital Regulations read together with RBI circular no DBR. NO.BP.BC. 80/21.06.201/2015-15 dated March 31, 2015 on Prudential Guidelines on Capital Adequacy and Liquidity Standards Amendments requires banks to make applicable Pillar 3 disclosures including leverage ratio and liquidity coverage ratio under the Basel- III framework. These details are being made available on our website "www.bankofbaroda.com". These disclosures have not been subjected to audit by the auditors.

C-12 Previous year''s figures have been regrouped where necessary to conform to current year classification.

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Mar 31, 2018

As per letter RBI/2017-18/147:DBR No. BPBC 102/21.04.048/2017-18 dated 02.04.2018, RBI has permitted banks to opt for spread over provisioning for Mark to Market (MTM) losses on investment held in AFS and HFT for the quarters ended December 31, 2017 and March 31, 2018. The losses can be spread over four quarters, commencing from the quarter in which the loss has been incurred. However, Bank has not incurred any MTM loss during the year 2017-18.

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Off Balance Sheet Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transaction. The bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, Value at Risk (VaR) and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank’s Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:

The hedge/non-hedge (market making) transactions are recorded separately. In cases where the underlying is not subject to mark to market the hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to-market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/ losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.1.1.2 Credit Default Swaps (CDS)

Valuation Methodology- As per RBI guidelines on CDS dated 23^rd May, 2011 the banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA Or any other proprietary model if it results in a more conservative valuation. The Bank uses the FIMMDA curve for valuing our CDS positions, The Bank do not use any internal proprietary model for CDS valuation. However, the Bank do not have any CDS deal outstanding as of 31^st March 2018

E. As per the RBI letter DBR.BPBC.No.53/21.04.018/2016-17 dated April 18, 2017 banks are required to disclose the divergence in the asset classification and provisioning if the additional provisioning requirements assessed by RBI exceeds 15% of published net profit after tax or additional Gross NPAs identified by RBI exceed 15% of published incremental Gross NPA during reference period.

During the year, RBI has assessed divergence in respect of financial year 2016-17. Reclassification of standard loans as Non-Performing and reclassification of NPAs amounting to Rs.42,718.71 crore and additional provision on account of short provisions on existing NPAs net of tax amounting to Rs.429.95 crore (Before tax Rs.657.50 crores) have been annexed. Details of such divergences are as below:

A-1.2.1 Disclosure of penalties imposed by RBI / Overseas Regulators

During the year, penalties of Rs.71201329/- (93 cases) [Previous Year Total Rs.54051869] were imposed by RBI on account of irregularities in currency chest.

Total penalties of Rs.58727000/- [Previous Year Total Rs.7241000] were levied on overseas territories by their respective regulator for non-compliances as under:-

RBI vide letter RBI/2017-18/131: DBR. No.BP BC.101/21.04.048/2017-18 dated February 12, 2018 issued a revised framework on Resolution of Stressed Assets and withdrew the existing guidelines/instructions on resolution of stresses assets such as framework for revitalizing Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long Term Project Loans, Strategic Debt Restructuring Scheme (SDR), Change in Ownership outside SDR, and Scheme for Sustainable Structuring of Stressed Assets (S4A), etc. with immediate effect. Accordingly, the Joint Lenders Forum (JLF) as an institutional mechanism for resolution of stressed accounts also stands discontinued. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were revoked and accordingly these accounts have been classified as per the extant RBI prudential norms on Income Recognition and Asset Classification.

A-1.3 Accounts under Insolvency and Bankruptcy Code (IBC)

As per RBI directions for initiating Insolvency Process - Provisioning Norms vide letter No. DBR. No. BO. 15199/21.04.048/2016-17 dated June 23, 2017 in respect of 10 borrower accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank was required to make additional provision. Similarly, as per RBI direction vide letter No. DR.No.BP 1906/21.04.049/2017-18 dated August 28, 2017 in respect of 18 borrower accounts covered under the process of IBC, the Bank was required to make additional provision. As per RBI vide letter DBR. No. BP 8756/21.04.048/2017-18 dated 02.04.2018, the provisioning requirements in respect of NCLT accounts is reduced from 50% of secured portion as at March 31, 2018 to 40%. Bank has availed the relaxation permitted and provided at 40%. As per the above RBI communication with respect to spreading the provisions covered in Ist and IInd list under the provisions of IBC, the Bank has availed the option of dispensation available, and as a result the additional provision of Rs.309.37 crores has been made as on March 31, 2018. Had the Bank not opted for the relaxation, the provision requirement would have been Rs.829.23 crore.

As on 31.03.2018, the amount of bank’s credit exposure against Unhedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was Rs.2925.35 Crores. The additional RWA on this exposure is Rs.595.02 crores against this additional minimum capital requirement is Rs.64.71crores.

A-2.1 Draw Down from Reserves

During the Financial Year 2017-18, there has been no draw down from the reserves (Previous Year - NIL).

A-3 Disclosure of complaints

I. Customer Complaints

II. ATM Complaints

A-4. Status of Letters of Comfort

I Letters of Comfort (LOC’s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators to support the operations of its overseas subsidiaries/ Joint ventures.

II Cumulative position of LOC’s outstanding as on 31.03.2018

The Bank has issued the following Letter of Comforts

(i) LOC issued during 2008-09 to Reserve Bank of New Zealand guaranteeing entire indebtedness of the wholly owned subsidiary - Bank of Baroda (New Zealand) Ltd to its depositors and other creditors. As on 31^st March 2018 the subsidiary’s deposits (net of overdraft and loan against Bank’s own deposits) are Rs.269.35 crore and outside liabilities are Rs.4.95 crores (i.e. total liabilities of Rs.274.30 crore). The net worth of the subsidiary as on 31^st March 2018 is Rs.221.57 crore (Previous year Rs.208.50 crores). The net contingent liability on Bank is Rs.52.73 crore in this regard.

(ii) LOC was issued during the year 2010-11 to Bank Negara Malaysia upto our bank’s 40% shareholding in the Joint Venture Bank - ‘India Internation Bank (Malaysia) Bhd. (IIBMB). As on 31^st March, 2018, the deposits of IIBMB are Rs.193.93 crore and other liabilities are Rs.11.61 crore (i.e. Total liabilities of Rs.205.54 crore). The net worth of the IIBMB as on 31^st March 2018 is Rs.540.45 crore. As the financial year end of IIBMB is 31^st December, figures of 31^st March 2018 have been taken from unaudited statement.

A-5.1 Qualitative Disclosure:

From 1st January 2015, the bank has implemented guidelines on Liquidity Coverage Ratio (LCR) of the Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered 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. The LCR and monitoring tools are applicable for Indian banks initially w.e.f. 1^st January 2015 at whole bank level only i.e. on a stand-alone basis including overseas operations through branches and subsequently at consolidated basis w.e.f. 1^st January 2016 i.e. including domestic and overseas subsidiaries.

The LCR has two components:

(i) The value of the stock of high-quality liquid assets (HQLA) in stressed conditions- the numerator.

(ii) Total net cash outflows: The term "Total net cash outflows" is defined as "Total expected cash outflows" minus "Total expected cash inflows" in the specified stress scenario for the subsequent 30 calendar days (the stressed period) the denominator.

LCR = Stock of High Quality Liquid Assets/Total Net Cash Outflows over the next 30 calendar days > = 100%

According to RBI, the LCR will be introduced in a phased manner starting with a minimum requirement of 60% from January 1, 2015 and reaching minimum 100% on January 1, 2019

*As per the RBI guidelines dated 31^st March 2015, the Bank has made LCR disclosure on solo basis for the financial year ending March 2016. In terms of extant guideline disclosure on consolidated basis is applicable to the Indian banking system from 1^st January 2016 and onwards. As starting from January 2017, banks has to disclose LCR on daily average basis, hence bank has computed LCR on daily average basis both for Solo and Consolidated Level since March 2017. Bank has also disclosed LCR for the financial year ending March 2017, which consisted of monthly averages for Q1, Q2, Q3 and daily averages for Q4.

Composition of HQLA

Based on daily averages for the quarter ended March 2018, Facility to avail Liquidity for Liquidity Coverage Ratio constitutes the highest portion of HQLA i.e 40.02% followed by excess SLR securities which constitute 34.51%. Level 2 assets which are lower in quality as compared to Level 1 assets, constitute nominally 0.74% of total stock of HQLA against maximum mandated level of 40%.

Intra-period changes as well as changes over time:

LCR were 91.84%, 124.90% and 107.44% as at the months ended January 2018, February 2018 and March 2018 respectively as against the minimum regulatory requirement of 90%

Concentration of funding sources

There has been no undue concentration of funding sources and no counterparty is significant in terms of concentration risk in sources of funds. No counterparty contributes more than 1% of the bank’s total liabilities. A significant counterparty is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank’s total liabilities.

Similarly no instrument/product constitutes more than 1% of the bank’s total liabilities. A "significant instrument/product" is defined as a single instrument/product of group of similar instruments/products which in aggregate amount to more than 1% of the bank’s total liabilities. Example of funding instruments/products - wholesale deposits, certificates of deposits, long term bonds, etc. Top 20 depositors of the bank on solo basis constitute 4.85% of our total deposits.

Currency mismatch in the LCR:

Bank calculates currency wise LCR for all significant currencies. A significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank’s total liabilities viz USD, EURO, GBP and others.

Description of the degree of centralization of liquidity management and interaction between the group’s units:

The liquidity management for the Bank on enterprise wide basis is the responsibility of the Board of Directors. Board of Directors has delegated its responsibilities to a Committee of the Board called as the "Risk Management Committee of Board”. The Committee is responsible for overseeing the inter linkages between different types of risk and its impact on liquidity.

Bank has Group ALM Policy which provides the broad guidelines under which all the entities within the Group operate in terms of liquidity and interest rate risk. The bank’s entities operating in foreign countries manage their operational liquidity or liquidity in the short-term on their own on an ongoing basis as per both respective territory’s ALM policy and Group ALM policy. The monitoring of liquidity and interest rate risk management of the overseas operations of the bank is being done by the Bank’s Global Mid-Office (ALM Cell) of Risk Management Department.

The guidelines of the Group ALM policy, unless otherwise specifically exempted, apply to overseas operations as well. All the legal entities of the bank i.e.-subsidiaries, joint ventures and associates manage their operational liquidity on an ongoing basis at their own according to their business models and liquidity requirement. As to the legal entities carrying out banking business, they have their own ALM Policy in line with the host country guidelines as well as RBI guidelines whichever is more stringent

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1 AS-5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies

Change in Accounting Policy (AS-5)

During the year, the bank has changed the method of appropriation of recovery in NPA accounts, where recoveries are now being adjusted against charges, interest reversed, unapplied interest and lastly against principal as against the earlier method of adjusting recoveries against principal, expenses and unapplied interest. This has resulted in increase of Gross NPA by Rs.1496.71 crore, increase of interest income by Rs.1496.71 crore and increase in provision and tax approximately by Rs.1085.65 crore. This has resulted in the loss for the year being lower by Rs.411.06 crore.

B-2 AS-15 Employee Benefits

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

B-2.2 Gratuity

The Bank pays gratuity to employees who retire or resign from Bank’s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees

B-2.3 Pension

B-2.3.1Bank pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank’s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees’) Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees’) Pension Regulations, 1995 are not eligible for Bank’s contribution to Provident fund

B-2.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organizations’ on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank’s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank, who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-2.4 Provident Fund

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank’s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B-2.5 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B-2.6 Additional Retirement Benefit (ARB)

The scheme for additional retirement benefit provides that an officer on Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officers satisfy the conditions mentioned in BOB officer’s service regulations.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

2.8 RBI vide letter DBR No. BP 9730/21.04.018/2017-18 dated 27.04.2018 permitted Banks to spread the additional liability on account of the enhancement in gratuity limits over four quarters beginning with the quarter ended March 31, 2018. The bank has availed the relaxation permitted and has provided an amount of Rs.97 crore being one fourth of the liability during the quarter ended March 31, 2018. The balance of Rs.291 crore has been deferred to the subsequent three quarter

B-7 AS-24 Discontinuing operations

As a part of strategic initiatives for rationalization of International Operations, which is also in consonance with the Government of India directives, the Bank has decided to exit from certain geographies. During the year 2017-18, the Bank has initiated closure of its operations in the Kingdom of Bahrain, Bahamas and Republic of South Africa. The closure of these territories is at an advance stage. In the opinion of the Management, adequate provisions have been made in the books and the amounts stated in the financial statements are not less than at their realizable values. The impact of closure of operations in these territories on the business of the Bank, is not material.

B-8 AS-28 Impairment of Assets

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

B-9.1 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgment / arbitration awards / out of court settlement/disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases

C. Other Notes to Accounts

C-1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2018, the reconciliation of which is in progress.

C-2 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects for small / medium scale industries.

C-3 Investments

C-3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Investment from “Available for Sale (AFS)” category to “Held to Maturity (HTM)” category and from HTM to AFS category. The resultant depreciation of Rs.5.27 Crores (previous year Rs.12.38 Crores) has been charged to the Profit & Loss Account.

C-3.2 FCNR (B) Swap with RBI

RBI introduced US Dollar-Rupee concessional swap window for fresh FCNR (B), funds mobilized in any permitted currency for a minimum tenor of three years and above. In this window RBI offered a concessional rate of Swaps to banks only for fresh FCNR (B) deposits mobilized in any of the permitted currencies.

Bank has swapped USD 1,710 Million mobilized with RBI for the corresponding tenor. As the swaps done with RBI were at 3.5% as against the prevailing rate of around 8% there would have been a distortion in profits on the first year as well as on maturity date. To avoid this inherent distortion, and as prescribed by RBI, we have adopted the method of amortization of swap points to even out expenses throughout the tenor of swaps.

C-3.3Profit on sale of investment held under “Held to Maturity” category amounting to Rs.251.61 crores has been transferred to Profit & Loss Account and NIL amount transfer to Capital Reserve due to inadequate profits.

C-4 Provision for Taxes

C-4.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C-4.2 Tax paid in advance/tax deducted at source appearing under “other Assets” amounting to Rs.2007.25 (Previous year Rs.2857.69 Crores) is inclusive of Rs.1704.80 Crores (previous year Rs.2405.95 crores) which represents amount adjusted by the department / paid by the bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank’s view, duly supported by counsels opinion and/or judicial pronouncements, additions / disallowances made by the assessing officer are not sustainable

C-5 Premises

C-5.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs.23.86 Crores (Previous Year Rs.23.86 Crores).

C-5.2 Premises include assets under construction amounting to Rs.178.10 Crores (Previous Year Rs.113.41 Crores).

C-6 BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30^th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court. The matter is still pending before the judiciary.

C-7 Pursuant to the Accounting Standard-10 (revised) on Property Plant & Equipment depreciation of Rs.359 crores for the year on revalued portion of fixed assets has been transferred during the year from the Revaluation Reserve to Revenue Reserve. Accordingly, the depreciation on fixed assets for the year is higher by Rs.359 crores and the loss for the year is also higher to that extent.

C-8 The 11^th Bipartite Settlement entered into by the Indian Banks’ Association on behalf of the member Banks with the All India Unions of Workmen expired on 31^st October 2017. In accordance with the pending execution of agreement for wage revision, to be effective from 1^stNovember 2017, a provision of Rs.100.00 crores (previous year NIL) has been made during the year.

C-9 The Reserve Bank of India (RBI) vide DBR.BPBC. No. 76/21.07.001/2015-16 dated 11^th February 2016, has prescribed the roadmap for implementation of Indian Accounting Standards (Ind-AS) in the Banks and the Banks need to disclose the strategy for Ind-AS implementation, including the progress made in this regard. The Bank accordingly, has appointed a consultant to assist in implementation of the Ind-AS. The Bank has also constituted a Steering Committee to oversee the progress made and the Audit Committee of the Board is being apprised of the same from time to time. In terms of the requirement stipulated vide said circular, the Bank has submitted proforma Ind-AS financial statements to the RBI for the period ended 30^th June, 2017. As per the ‘Statement of Development and Regulatory Policies’ issued by the RBI on 05.04.2018, the implementation of Ind AS is deferred by one year (i.e. earlier from 01.04.2018 to 01.04.2019).

C-10 In compliance with the RBI circular No.DBR.No.BP BC.64/21.04.048/2016-17 dated April 18, 2017, bank has made an additional provision Rs.142.34 Crores for the year ended March 31, 2018, in respect of standard advances to stressed sectors of the economy.

C-11 RBI Circular DBOD.NO.BPBC.1/21.06.201/2015-16 dated July 01, 2015 on Basel III Capital Regulations read together with RBI circular no DBR.NO.BPBC. 80/21.06.201/2014-15 dated March 31, 2015 on Prudential Guidelines on Capital Adequacy and Liquidity Standards Amendments requires banks to make applicable Pillar 3 disclosures including leverage ratio and liquidity coverage ratio under the Basel- III framework. These details are being made available on our website "www.bankofbaroda.com". These disclosures have not been subjected to audit by the auditors.

C-12 Figures of previous year have been regrouped/ rearranged wherever necessary, so as to make them comparable with those of the current period.

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Mar 31, 2017

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions. The Bank uses financial derivative transactions for hedging; it’s on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk. The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, Value at Risk (VaR) and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank’s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

The hedge/ non-hedge (trading) transactions are recorded separately. Derivative contracts designated as hedges are not marked to market unless their underlying is marked to market. Derivative contracts classified as hedge and where underlying is not marked to market are recorded on accrual basis. Trading derivative positions are marked to market and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any, is ignored. Interest income/ expense on interest rate swaps are recognized on daily basis. Gains/ Losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.1.1.2 Credit Default Swaps (CDS)

Valuation Methodology- As per RBI guidelines on CDS dated 23^rd May, 2011 the banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA Or any other proprietary model if it results in a more conservative valuation. Our Bank uses the FIMMDA curve for valuing our CDS positions, we do not use any internal proprietary model for CDS valuation. No CDS swaps have been entered into during the year.

A-1.2.1. Details of non-performing financial assets purchased/sold

A. Details of non-performing financial assets purchased:

B. Details of non-performing financial assets sold:

C. Non Performing Accounts sold to Securitization Companies

A-1.2.2 Amount of Unsecured advances

The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as tangible security is Nil as per RBI Circular No. DBR.BRBC No.23/21.04.018/2015-16 dated 01^st July 2015.

A-1.3 Miscellaneous

A-1.3.1 Amount of Provisions for Taxation during the year

A-1.3.2 Disclosure of penalties imposed by RBI / Overseas Regulators

During the year penalty of Rs.5,00,00,000/- was levied by Reserve Bank of India for FEMA violations related to Import of Goods & Services, penalty of Rs.40,51,869/- was levied by RBI for forged/soiled notes in currency chest.

Penalty of Rs.6,67,000/- was levied on Kenya subsidiary for violation under prudential guidelines for risk classification of Assets and provisioning and violation of prudential guidelines on outsourcing. Penalty of Rs.8,70,000/- was levied in OMAN territory due to delay in Euro Master Visa (EMV) up-gradation project. Rs.57,04,000/- was levied as penalty in Uganda subsidiary for not establishing an in country primary data center and Disaster Recovery Site.

A-1.3.3 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

A-1.4.1 Disclosures on Strategic Debt Restructuring Scheme (accounts which are currently under the stand-still period)

A-1.4.2 Disclosures on Change in Ownership outside SDR Scheme (accounts which are currently under the stand-still period)

A-1.4.3Disclosures on Change in Ownership of Projects Under Implementation (accounts which are currently under the stand-still period)

A-2.1. Provision on Unhedged Foreign Currency Exposure-

The Bank has not prepared any policy with regard to Currency induced Credit Risk. However, the Bank is following regulatory guideline issued by the Reserve Bank of India.

As on 31.03.2017, the amount of bank’s credit exposure against Unhedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was Rs. 6128.02 Crores. The additional RWA on this exposure is Rs. 921.38 crores against this additional minimum capital requirement is Rs. 94.44 crores.

A-2.2 Draw Down from Reserves

During the Financial Year 2016-17, there has been no draw down from the reserves.

A-3 Disclosure of complaints

I. Customer Complaints (Other than ATM)

* Out of these, all 302 nos. of complaints (Previous year 121 nos.) are pending for less than 30 days.

II. ATM Complaints

A-4. Status of Letters of Comfort

I Letters of Comfort (LOC’s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

II Cumulative position of LOC’s outstanding as on 31.03.2017

The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/ opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank’s subsidiary in that country. As on 31.03.2017, the deposits of the Subsidiary are Rs.228.56 Crores and outside liabilities are Rs.3.36 Crores. However, the net worth of the Subsidiary as on 31.03.2017 is Rs.208.50 Crores and therefore it covers the entire deposits and outside liabilities.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank Negara Malaysia to the extent of the Bank’s 40% shareholding in the joint venture Bank - India International Bank (Malaysia) Bhd’ (IIBMB). As on 31.03.2017, the deposits of IiBmB are Rs.198.55 Crores and other liabilities are Rs.2.09 Crores i.e. total of Rs.200.65 Crores. The net worth of the Subsidiary as on 31.03.2017 is Rs.466.79 crores.

A-5.1 Qualitative Disclosure:

From 1^st January 2015, the bank has implemented guidelines on Liquidity Coverage Ratio (LCR) of the Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered 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. The LCR and monitoring tools are applicable for Indian banks initially w.e.f. 1^st January 2015 at whole bank level only i.e. on a stand-alone basis including overseas operations through branches and subsequently at consolidated basis w.e.f. 1^st January 2016 i.e. including domestic and overseas subsidiaries.

The LCR has two components:

(i) The value of the stock of high-quality liquid assets (HQLA) in stressed conditions -the numerator.

(ii) Total net cash outflows : The term “Total net cash outflows” is defined as “Total expected cash outflows” minus “Total expected cash inflows” in the specified stress scenario for the subsequent 30 calendar days (the stressed period).-the denominator.

LCR = Stock of High Quality Liquid Assets/Total Net Cash Outflows over the next 30 calendar days > = 100%

According to RBI, the LCR will be introduced in a phased manner starting with a minimum requirement of 60% from January 1,2015 and reaching minimum 100% on January 1, 2019.

As per the RBI guidelines dated 31^st March 2015, the Bank has made LCR disclosure on solo basis for the financial year ending March 2016. In terms of extant guideline disclosure on consolidated basis is applicable to the Indian banking system from 1^st January 2016 and onwards. As starting from January 2017, banks have to disclose LCR on daily average basis, the bank has computed LCR on daily average basis both for Solo and Consolidated Level for the quarter ended March 2017.

Composition of HQLA

Based on daily averages for the quarter ended March 2017, excess SLR securities constitute the highest portion of HQLA i.e 49.93% followed by Facility to Avail Liquidity for Liquidity Coverage Ratio which constitute 35.50% of HQLA. Level 1 Assets constitute 98.69% of HQLA against minimum 80% mandated by the Reserve Bank of India. Level 2 assets which are lower in quality as compared to level 1 asset as HQLA constitute 1.31% of total HQLA, against the maximum mandated level of 40% and 15% respectively.

Intra-period changes as well as changes over time:

The composition of excess SLR in total HQLA stands high due to demonetization impact, which resulted into accumulation of huge liquidity in form of deposit and was invested in excess SLR securities thereby increasing level of HQLA. The LCR was maximum at 195.28% as on January 2017, 149.46% in February 2017 and 150.91% in March 2017.

Concentration of funding sources

There has been no undue concentration of funding sources and no counterparty is significant in terms of concentration risk in sources of funds. No counterparty contributes more than 1% of the bank’s total liabilities. A significant counterparty is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank’s total liabilities.

Similarly no instrument/product constitutes more than 1% of the bank’s total liabilities. A "significant instrument/product" is defined as a single instrument/product of group of similar instruments/products which in aggregate amount to more than 1% of the bank’s total liabilities. Example of funding instruments/products - wholesale deposits, certificates of deposits, long term bonds, etc. Top 10 depositors of the bank on solo basis constitute 4.19 % of our total deposits.

Currency mismatch in the LCR:

Bank calculates currency wise LCR for all significant currencies. A significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank’s total liabilities viz USD, EURO, GBP and others.

The LCR for the significant foreign currencies is as under:

Description of the degree of centralization of liquidity management and interaction between the group’s units:

The liquidity management for the Bank on enterprise wide basis is the responsibility of the Board of Directors. Board of Directors has delegated its responsibilities to a Committee of the Board called as the "Risk Management Committee of Board”. The Committee is responsible for overseeing the inter linkages between different types of risk and its impact on liquidity.

Bank has Group ALM Policy which provides the broad guidelines under which all the entities within the Group operate in terms of liquidity and interest rate risk. The bank’s entities operating in foreign countries manage their operational liquidity or liquidity in the short-term on their own on an ongoing basis. The monitoring of liquidity and interest risk management of the overseas operations of the bank is being done by the Risk Management Department of the bank.

The guidelines of the Group ALM policy, unless otherwise specifically exempted, apply to overseas operations as well. All the legal entities of the bank i.e.-subsidiaries, joint ventures and associates manage their operational liquidity on an ongoing basis at their own according to their business models and liquidity requirement. As to the legal entities carrying out banking business, they have their own ALM Policy in line with the host country guidelines as well as RBI guidelines whichever is more stringent

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1 AS-5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies

B-1.1 Bank is providing for employee benefits in accordance with the accounting standard (AS) -15 issued by ICAI. The same is calculated by actuarial valuation.

B-2 AS-15 Employee Benefits

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

B-2.2 Gratuity

The Bank pays gratuity to employees who retire or resign from Bank’s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees.

B-2.3 Pension

B-2.3.1Bank pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank’s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees’) Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees’) Pension Regulations, 1995 are not eligible for Bank’s contribution to Provident fund.

B-2.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organizations’ on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank’s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank, who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-2.3 Provident Fund

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank’s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B-2.4 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B-2.5 Additional Retirement Benefit

The scheme for additional retirement benefit provides that an officer on Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officers satisfy the conditions mentioned in BOB officer’s service regulations.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

B-3 Related Party Disclosures (AS-18)

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

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Baroda Global Shared Services Ltd

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited.

(Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(xiv) Bank of Baroda (Botswana) Limited

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Baroda Rajasthan Kshetriya Gramin Bank

(iii) Baroda Gujarat Gramin Bank

(iv) Baroda Pioneer Asset Management Company Limited

(v) Indo Zambia Bank Limited

(vi) Baroda Pioneer Trustee Company Private Limited

(c) Joint Ventures

(i) India First Life Insurance Company Limited

(ii) India International Bank (Malaysia) Bhd.

(iii) India Infradebt Limited

Keeping in line with para 9 of the (AS) -18 Related Party Disclosures issued by ICAI of The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises. For other enterprises, no disclosure has been made as all the transactions are done in the ordinary course of business such as Fixed Deposits, interest thereon etc

B-4 AS-22 Accounting for Taxes on Income

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and has accordingly revalued assets and liabilities @ 34.608% i.e. the rate as per enacted Finance Bill 2016. The net balance of deferred tax Asset as on 31^st March 2017 amounting to Rs.4320.75 Crores consists of the following

* Rs. 540.73 crores out of past reserves and balance out of profit.

B-5 AS-24 Discontinuing operations

During the financial year 2016-17 the Bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-6 AS-28 Impairment of Assets

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

B-7 AS-29 Provisions, Contingent Liabilities and Contingent Assets

B-7.1 Movement of provisions for Liabilities (excluding provisions for others)

As per the policy of the Bank, provision for the claims not been acknowledged as debt, has been provided for.

B-7.2 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgment / arbitration awards / out of court settlement/disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

C-1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2017, the reconciliation of which is in progress.

C-2 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects for small / medium scale industries.

C-3 Investments

C-3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Investment from “Available for Sale (AFS)” category to “Held to Maturity (HTM)” category and from HTM to AFS category. The resultant depreciation of ‘. 12.38 Crores (previous year ‘. 11.05 Crores) has been charged to the Profit & Loss Account.

C-3.2FCNR (B) Swap with RBI

RBI introduced US Dollar-Rupee concessional swap window for fresh FCNR (B), funds mobilized in any permitted currency for a minimum tenor of three years and above. In this window RBI offered a concessional rate of Swaps to banks only for fresh FCNR (B) deposits mobilized in any of the permitted currencies.

Bank has swapped USD 1,710 Million mobilized with RBI for the corresponding tenor. As the swaps done with RBI were at 3.5% as against the prevailing rate of around 8% there would have been a distortion in profits on the first year as well as on maturity date. To avoid this inherent distortion, and as prescribed by RBI, we have adopted the method of amortization of swap points to even out expenses throughout the tenor of swaps.

C-3.3Profit on sale of investment held under “Held to Maturity” category amounting to Rs. 720.99 crores, which has been transferred to Profit & Loss Account initially and thereafter an amount of Rs. 353.65 crores net of tax and transfer to statutory reserve has been appropriated to Capital Reserve.

C-4 Provision for Taxes

C-4.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C-4.2 In terms of Income Computation and Disclosure Standards (ICDS) notified by CBDT which are effective from 01.04.2016 and the clarification issued by CBDT through FAQs, the FCTR balance as on 01.04.2016 pertaining to Exchange difference on monetary items of non-integral operations is required to be recognised in the income computation of the previous year relevant to AY2017-18 to the extent not recognised earlier. The balance in FCTR as on 01.04.2016 amounts to Rs. 2238.55 Crs. Based on legal opinion, bank has not considered the opening balance of FCTR for computing taxable income and consequently tax amounting to Rs. 774.71 Crs has not been provided for. Further this will not impact the profit for the year since deferred tax assets has not been recognised to that extent.

C-4.3 Tax paid in advance/tax deducted at source appearing under “other Assets” amounting to Rs.2857.69 (Previous year Rs.5360.77 Crores) is inclusive of Rs.2405.95 Crores (previous year Rs.3616.78 crores) which represents amount adjusted by the department / paid by the bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank’s view, duly supported by counsels opinion and/or judicial pronouncements, additions / disallowances made buy the assessing officer are not sustainable.

C-5 Premises

C-5.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs.23.86 Crores (Previous Year Rs.64.97 Crores).

C-5.2 Premises include assets under construction/ acquisition amounting to Rs.371.70 Crores (Previous Year Rs.336.09 Crores).

C-6 BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30^th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court.

C-7 Based on RBI’s clarification that the repatriation of accumulated profits shall not be considered as disposal or partial disposal of interest in non-integral foreign operations, the bank has not recognized exchange gain of Rs.193.36 crore as income arising on repatriation of funds from foreign offices during the year. In the previous year, the bank had recognized an amount of Rs.302.97 crores in the profit and loss account being the proportionate exchange gain in FCTR on repatriation of profits from overseas operations. In the opinion of the management, the circular is not retrospective in nature and has applied the same from financial year 2016-17 onwards and hence no adjustment has been made in respect of previous year.

C-8 As per the RBI notification vide RBI/2016-17/283 dated April18, 2017 banks are required to disclose the divergence in the asset classification and provisioning if the additional provisioning requirements assessed by RBI exceeds 15% of published net profit after tax or additional Gross NPAs identified by RBI exceed 15% of published incremental Gross NPA during reference period.

In this regard, no separate disclosure is made as the divergence is not beyond the above mentioned criteria.

C-9 The Bank has made provision @ 20% on the Secured Sub-standard Advance as against the Regulatory requirement of 15%. However on unsecured sub standard advances, the bank has made provision @ 25% as per regulatory requirement.

C-10 The Reserve Bank of India (RBI) vide DBR.BRBC. No. 76/21.07.001/2015-16 dated 11^th February 2016, has prescribed the roadmap for implementation of Indian Accounting Standards (Ind-AS) in the Banks and the Banks needs to disclose the strategy for Ind-AS implementation, including the progress made in this regard. The Bank accordingly, has appointed a consultant to assist in implementation of the Ind-AS. The Bank has also constituted a Steering Committee to oversee the progress made and the Audit Committee of the Board is being apprised of the same from time to time. In terms of the requirement stipulated vide said circular, the Bank has submitted proforma Ind-AS financial statements to the RBI for the half year ended 30^thSeptember 2016.

C-11 Figures of previous year have been regrouped/ rearranged wherever necessary, so as to make them comparable with those of the current period

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Mar 31, 2014

1. Disclosures on risk exposure in derivatives (i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under- Conversion factor to be applied on notional principal amount

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

2. Credit Default Swaps (CDS)

As per RBI guidelines on CDS dated 23rd May, 2011 the Banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA or any other proprietary model if it results in a more conservative valuation. Our Bank uses the FIMMDA curve for valuing our CDS positions, Bank does not use any internal proprietary model for CDS valuation.

3. Disclosure of penalties imposed by RBI

During the financial year 2013-14, the Bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949. However, under various rules of RBI related to Currency chest and non-compliance of KYC norms, the Bank has paid penalty of Rs. 3.34 crores during the financial year 2013-14.

4. Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

5. Status of Letters of Comfort

I Letters of Comfort (LOC''s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

II Cumulative position of LOC''s outstanding as on 31.03.2014 The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank''s subsidiary in that country. As per audited accounts as on 31.03.2014, the deposits of the Subsidiary are Rs. 137.92 Crores and outside liabilities are Rs. 0.83 Crores. The LOC issued by Bank of Baroda covers this entire amount of Rs. 138.75 Crores i.e. deposit and outside liabilities. However, the net worth of the Subsidiary as on 31.03.2014 is Rs. 222.31 Crores and therefore it covers the entire deposits and outside liabilities.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank of Negara Malaysia to the extent of the Bank''s 40% shareholding in the joint venture Bank-India International Bank (Malaysia) Bhd'' (IIBMB). As on 31.03.2014, the deposits of the Bank are Rs. 273.89 Crores and other liabilities are Rs.4.82 Crores i.e. total ofRs. 278.71 Crores. The net worth of the Subsidiary as on 31.03.2014 is Rs. 591.13 crores.

6. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

7. AS-5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies In accordance with new RBI circular DBOD.BP.BC. No. 98/ 21.04.13/2013-14 dated 26th February, 2014, pertaining to financial assets sold to Asset Reconstruction Company (ARC)/ Securitization Company, if the sale is at a price below the net book value (NBV), (i.e. Book value less provisions held) the shortfall is debited to the profit and loss account spread over a period of two years. If the sale value is higher than the NBV, excess provision is reversed to profit & loss account in the year the amounts are received as against the existing policy, if the sale is at price below the Net Book Value (i.e Book Value Less Provision held), the short fall is debited to the profit and loss account and if the sale value is higher than the NBV surplus is carried forward and utilized to meet the short fall/loss on account of subsequent sale of Non Performing financial assets.

During the year the bank has recognized a net gain of Rs.4.26 crores in this transaction as per new RBI guidelines.

8. (AS-15) Employee Benefits

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

9. GRATUITY

The Bank pays gratuity to employees who retire or resign from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees.

10. PENSION

B. 2.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund.

11. New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organisations'' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

12. Prudential Regulatory treatment (reopening of Pension) During the financial year 2010-11, the Bank had reopened the Pension Option for such of its employees who had not opted for the Pension Scheme earlier. As a result of exercise of such option by 18,989 number of employees, the Bank had incurred a liability of Rs.1,829.90 Crores. In terms of the requirements of AS 15 - Employee Benefits, the entire amount of Rs. 1,829.90 Crores was required to be charged to the Profit and Loss Account. However, the RBI had issued a circular no. DBOD.

BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated February 9, 2011, by which such pension amount can be amortised over a period of five year. Accordingly, the Bank has charged an amount of Rs. 1,463.92.Crores (representing four-fifth of Rs.1,829.90 Crores) upto March 31, 2014. During the FY 2013-14, the Bank charged Rs. 365.98 crores to profit and loss account and the unrecognised balance amount of Rs. 365.98 Crores shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employee relating to separated/ retired employees.

13. PROVIDENT FUND

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

14. LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death. However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

15. ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on Retirement/Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officer had completed-twenty five-years of service in Bank. In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank. However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

Notes on Segment Reporting

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, The Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments for the purpose of compliance with AS-17 on segment Reporting issued by ICAI.

2. Segment revenue represents revenue from external customers.

3. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocated proportionate to the assets of the Segment.

5. Results, Revenue and Capital Employed of International operations are included in other banking operations.

16. Related Party Disclosures (AS - 18)

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

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Bank of Baroda (Botswana) Limited

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Baroda Rajasthan Kshetriya Gramin Bank

(iii) Baroda Gujarat Gramin Bank

(iv) Baroda Pioneer Asset Management Company Limited

(v) Indo Zambia Bank Limited

(vi) Baroda Pioneer Trustee Company Private Limited

(c) Joint Ventures

(i) India First Life Insurance Company Ltd. (ii) India International Bank (Malaysia) Bhd. (iii) India Infradebt Limited

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises.

Issue of shares has been made on 18th Jan, 2014 to Government of India. (Resolution dated 15th Jan. 2014 of Share Allotment Committee.)

17. Accounting for Taxes on Income (AS-22)

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax assets as on 31st March 2014 amounting to Rs. 791.84 Crores consists of the following:

18. Discontinuing operations (AS-24)

During the financial year 2013-14 the Bank has discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

19. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

20. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

As per the policy of the Bank, provision for the claims, which has not been acknowledged as debt has provided.

21. Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgement / arbitration awards / out of court settlement / disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

22. Other Notes to Accounts

22.1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2014, the reconciliation of which is in progress.

22.2 Capital

a During the year, the Bank has allotted 81,58,784 equity shares of Rs. 10/- each at a cash premium of Rs. 664.12 per share (total issue price of Rs. 674.12 per share) to Government of India as determined by the Board in accordance with regulation 76 (1) of SEBI Issue of Capital and Disclosures Requirements Regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs. 550.00 Crores. The resolution in this regard was duly passed in Extra Ordinary General Meeting held on 15th January 2014. b During the year, the Bank has also raised tier 2 capital via bond of Rs. 2000 crores in two trenches of Rs. 1000 crores each.

22.3 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries.

22.4 Investments

22.5 In terms of RBI Guidelines, the bank has transferred a portion of Government Securities (SLR) kept in "Available for Sale" category to "Held to Maturity" category during the year. The resultant depreciation of Rs. 18.97 Crores (previous year Rs. 20.69 Crores) has been charged to the Profit & Loss Account.

22.5 Profit on sale of investments held under "Held to maturity" category amounting to Rs. 17.55 Crores, which has been taken to profit and loss account initially and thereafter an amount of Rs. 8.69 crores net of tax has been appropriated to the capital reserve.

23 Provision for Taxes

23.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

23.2 Tax paid in advance /tax deducted at source appearing under "Other Assets" amounting to Rs. 4826.09 Crores (previous year Rs. 3374.52 Crores) represents amount adjusted by the Department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank''s view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

23.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs. 912.06 Crores (previous year Rs. 850 crores) to the corresponding Special Reserve account during the financial year 2013-14 and reported under Other Reserve.

23.4 Pursuant to Reserve Bankof India (RBI) circular no. DBOD. no.BP.BC.77/21.04.018/2013-14 dated 20th December 2013, the Bank has created deferred tax liability (DTL) on the Special Reserve under section 36(1 )(viii) of the Income Tax Act, 1961. As required by the said RBI Circular, the amount of Rs. 818.90 crores being the provision of DTL on Special Reserve as at March 31, 2013, not previously charged to Profit and Loss Account, has now been adjusted directly from Reserves. Had this amount been charged to the Profit and Loss Account in accordance with generally accepted accounting principles in India, the amount of Profit for the year would have been lower by such amount. Further to above, the bank has created DTL of Rs. 310.01 crores out of current year profit on amount transferred to special reserve during the current financial year.

24 Securitisation

During the year bank has sold Non performing financial assets with Net Book Value of Rs. 253.64 crores (Outstanding less Provisions) to Asset Reconstruction companies on cash and security receipt basis in accordance with RBI guidelines. The bank has made investment of Rs. 494.57 crores in security receipts and the security receipts have been valued at Net Book Value of the financial assets. The security receipts are treated as Non SLR investments.

25. Premises

25.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs. 65.30 Crores (Previous Year Rs. 65.30 Crores) - (Original Cost).

25.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of revaluation included in cost of premises as at end of the year is Rs. 1,782.73 Crores (previous year Rs. 1,778.33 crores) including Rs. 35.85 Crores at overseas offices (previous year Rs. 31.45 crores). The revalued amount net of depreciation is Rs. 1,052.61 Crores (Previous Year Rs. 1,104.26 Crores).

25.3 Premises include assets under construction/acquisition amounting toRs. 154.58 Crores (Previous Year Rs. 98.73 Crores).

26. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court.

27. The Bank has taken over specified Assets & Liabilities of The Memon Co-operative Bank Ltd on ~8h April, 2011 as per approval granted by RBI vide letter no. UBD.COMEROER No. 7814/09.16.901/2010.11 dated 04th March 2011. Further, RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25th July, 2011 permitted bank to amortize the net deficit arising out of Transfer of Specific Assets and Liabilities over a period of not exceeding three years starting from financial year 2011 -12. An amount of Rs. 62.20 crores was brought forward from previous year, which bank has charged to profit and loss account during the FY 2013-14. Now, the deficit stands fully charged to profit & loss Account.

28. Pending settlement of the proposed wage revision effective from November 2012, an adhoc provision of. Rs. 425 crores is held as at 31st March 2014 and during the year bank has made a provision of Rs. 300 crores. Management is of the opinion that the said provision is adequate.

29. The Bank has made provision @ 20% on the Secured Sub- standard Advance as against the Regulatory requirement of 15%.

30. Figures of previous year have been regrouped/ rearranged wherever considered necessary to conform to current year''s presentation.

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Mar 31, 2013

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.1.1.2 Credit Default Swaps (CDS)

As per RBI guidelines on CDS dated 23rd May, 2011 the Banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA or any other proprietary model if it results in a more conservative valuation. Our Bank uses the FIMMDA curve for valuing our CDS positions, Bank does not use any internal proprietary model for CDS valuation.

A-1.1.3 Amount of Unsecured Advances

The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as security is Rs. 333.35 crores (previous year Rs. 1,033.30 Crores) and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances are 0.79 % (previous year 2.20%). The intangible collateral valued at Rs. 3268.14 crores as per valuation report dated 31st December 2010.

A-1.1.4 Disclosure of penalties imposed by RBI

During the financial year 2012-13, the Bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949. However, under various rules of RBI related to Currency chest, the Bank has paid penalty of Rs. 0.02 crores during the financial year 2012-13.

A-2.1 Draw Down from Reserves

During the financial year 2012-13, there has been no draw down from Reserves.

A-3. Status of Letters of Comfort

I Letters of Comfort (LOC''s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

II Cumulative position of LOC''s outstanding on 31.03.2013 The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/ opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank''s subsidiary in that country. As per audited accounts as on 31.03.2013, the deposits of the Subsidiary are Rs. 98.56 Crores and outside liabilities are Rs. 0.60 Crores. The LOC issued by Bank of Baroda covers this entire amount of Rs. 99.16 Crores i.e. deposit and outside liabilities. However, the net worth of the Subsidiary as on 31.03.2013 is Rs. 186.80 Crores and therefore it covers the entire deposits and outside liabilities.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank of Negara Malaysia to the extent of the Bank''s 40% shareholding in the joint venture Bank - India International Bank (Malaysia) Bhd'' (IIBMB). As on 31.03.2013, the deposits of the Bank are Rs. 183.71 Crores and other liabilities are Rs. 9.63 Crores i.e. total of Rs. 193.34 Crores. The net worth of the Subsidiary as on 31.03.2013 is Rs. 534.96 crores.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1. (AS-15) Employee Benefits

B- 1.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

B-1.2 GRATUITY

The Bank pays gratuity to employees who retire or resign from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees.

B- 1.3 PENSION

B. 1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund.

B. 1.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organisations'' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-1.3.3 Prudential Regulatory treatment (reopening of Pension)

During the financial year 2010-11, the Bank had reopened the Pension Option for such of its employees who had not opted for the Pension Scheme earlier. As a result of exercise of such option by 18,989 number of employees, the Bank had incurred a liability of Rs.1,829.90 Crores.

In terms of the requirements of AS 15 - Employee Benefits, the entire amount of Rs. 1,829.90 Crores was required to be charged to the Profit and Loss Account. However, the RBI had issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated February 9, 2011, by which such pension amount can be amortised over a period of five year. Accordingly, the Bank has charged an amount of Rs. 1,097.94.Crores (representing three-fifth of Rs.1,829.90 Crores) upto March 31, 2013. The unrecognised balance amount of Rs. 731.96 Crores shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employee relating to separated/ retired employees.

B- 1.4 PROVIDENT FUND

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B- 1.5 LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B- 1.6 ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officer had completed-twenty five-years of service in Bank.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

Notes on Segment Reporting

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, The Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments for the purpose of compliance with AS-17 on segment Reporting issued by ICAI.

2. Segment revenue represents revenue from external customers.

3. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocated proportionate to the assets of the Segment.

5. Results, Revenue and Capital Employed of International operations are included in other banking operations.

B-3. Related Party Disclosures (AS - 18)

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

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Bank of Baroda (Botswana) Limited

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Baroda Rajasthan Kshetriya Gramin Bank

(iii) Baroda Gujarat Gramin Bank

(iv) Baroda Pioneer Asset Management Company Limited

p(v) Indo Zambia Bank Limited

(vi) Baroda Pioneer Trustee Company Private Limited

(c) Joint Ventures

(i) India First Life Insurance Company Ltd.

(ii) India International Bank (Malaysia) Bhd.

(iii) India Infradebt Limited

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises.

B-5. Accounting for Taxes on Income (AS-22)

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax assets as on 31st March 2013 amounting to Rs. 88.81 Crores consists of the following:

B-6. Discontinuing operations (AS 24)

During the financial year 2012-13 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-7. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

The Bank has provided for claims against it, which have not been acknowledged as debt as per the policy framed by it.

B-8.1 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgement / arbitration awards / out of court settlement / disposal of appeals. No reimbursement is expected in such cases.

C. Other Notes to Accounts

C-1. Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2013, the reconciliation of which is in progress.

C-2. Capital

During the year, the Bank has allotted 1,01,32,920 equity shares of Rs. 10/- each at a premium of Rs. 828.85 per share to Government of India as determined by the Board in accordance with regulation 76 (1) of SEBI Issue of Capital and Disclosures Requirements Regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs. 850.00 Crores.

C-3. Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries.

C-4. Investments

C-4.1 In terms of RBI Guidelines, the bank has transferred a portion of Government Securities (SLR) kept in "Available for Sale" category to "Held to Maturity" category during the year. The resultant depreciation of Rs. 20.69 Crores (previous year Rs. 46.64 Crores) has been charged to the Profit & Loss Account.

C-4.2 Profit on sale of investments held under "Held to maturity" category amounting to Rs. 47.45 Crores on redemption of units of Venture Capital funds has been taken to the Profit and Loss Account initially and thereafter an amount of Rs. 24.04 Crores has been appropriated to the Capital Reserve net of taxes and Rs. 8.01 crores has been transferred to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

C-5 Provision for Taxes

C5.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C5.2 Tax paid in advance /tax deducted at source appearing under "Other Assets" amounting to Rs. 3,374.52 Crores (previous year Rs. 1,993.11 Crores) represents amount adjusted by the Department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank''s view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

C-5.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs. 850.00 Crores (previous year Rs. 533.85 crores) to the corresponding Special Reserve account during the financial year 2012-13 and reported under Other Reserve.

C-6. Premises

C-6.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs. 65.30 Crores (Previous Year Rs. 78.37 Crores) - (Original Cost).

C-6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of revaluation included in cost of premises as at end of the year is Rs. 1,778.33 Crores (previous year Rs. 1,777.43 crores) including Rs. 31.45 Crores at overseas offices (previous year Rs. 30.55 crores). The revalued amount net of depreciation is Rs. 1,104.26 Crores (Previous Year Rs. 1,173.68 Crores).

C-6.3 Premises include assets under construction/acquisition amounting to Rs. 98.73 Crores (Previous Year Rs. 51.87 Crores).

C-7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court.

C-8. The Bank has taken over specified Assets & Liabilities of The Memon Co-operative Bank Ltd on 18th April, 2011 as per approval granted by RBI vide letter no. UBD.CO.MEROER No. 7814/09.16.901/2010.11 dated 04th March, 2011. Initially, Rs. 149.25 crores of deficit was calculated considering Rs. 61.10 crores as receivable from DICGC claims. Out of the deficit of Rs. 149.25 Crores on account of the said take over, the Bank has proportionately charged Rs. 49.75 Crores of the said deficit to the Profit and Loss Account during the financial year 2011-12 as approved by RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25th July, 2011 and an amount of Rs. 99.50 crores was carried forward to be charged proportionately during the remaining period till the financial year 2013-14. During the financial year 2012-13, Rs. 23.75 crores has been received by the Bank from DICGC as final settlement and consequently the deficit increased by Rs. 37.35 crores. Accordingly, an amount of Rs. 74.64 crores (Rs. 49.75 crores being 1/3rd of original deficit of Rs. 149.25 crores and Rs. 24.89 crores being 2/3rd of deficit of DICGC claims of Rs. 37.35 crores) is charged to Profit and Loss Account during the current financial year. The balance amount of Rs. 62.20 crores (1 /3rd of original deficit of Rs. 149.25 crores and 1/3rd of deficit of DICGC claim receipt of Rs. 12.45 crores) will be charged during the next financial year 2013-14.

C-9. The Bank has made provision @ 20% on the Secured Sub- standard Advance as against the Regulatory requirement of 15%.

Further the Bank has made an additional ad-hoc provision of Rs.136.75 Crores for the year ended March 31, 2013 (previous year Rs. 342.79 Crores) in certain non performing domestic advance accounts.

C-10.As per the Government of India notification dated 01st November 2012, Jhabua Dhar Kshetriya Gramin Bank and Nainital Almora Kshetriya Gramin Bank sponsored by Bank of Baroda were amalgamated into Narmada Jhabua Gramin Bank under the sponsorship of Bank of India and Uttarakhand Gramin Bank under the sponsorship of State Bank of India respectively, from the date of publication of the notification in the Official Gazette.

Further, as per the Government of India notification dated 1st January 2013, Hadoti Kshetriya Gramin Bank (sponsored by Central Bank of India), and Rajasthan Gramin Bank (sponsored by the Punjab National Bank) were amalgamated with Baroda Rajasthan Gramin Bank (sponsored by Bank of Baroda). On amalgamation, the name of Baroda Rajasthan Gramin Bank was changed to Baroda Rajasthan Kshetriya Gramin Bank from the date of publication of the notification in the Official Gazette.

C-11. Figures of previous year have been regrouped/ rearranged wherever considered necessary to conform to current year''s presentation.

---

Mar 31, 2012

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank's Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

Conversion factor to be applied on notional principal amount

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

Figures in bracket denote previous year numbers

* In respect of one restructured account, the bank shall amortize the provision towards diminution in fair value of the said advance and the additional provision required for restructured standard asset over a period of 8 quarters starting from the first quarter of financial year 2012-2013 as per the directives from Reserve Bank of India vide their letter dated 2nd April 2012.

A-1.1.2 Amount of Unsecured Advances

The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as security is ' 1033.30 Crores and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances are 2.20 %.

One account with unsecured loan of Rs 277.23 Crores has intangible collateral valued at Rs 1099.28 Crores as per valuation report dated 23.04.2010. In respect of other accounts for unsecured outstanding of Rs 756.07 Crores, the estimated value of intangible security is not taken.

A-1.2.1 Disclosure of penalties imposed by RBI

During the financial year 2011-12, the bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949, or any rules or conditions specified by the Reserve Bank of India in accordance with the said Act.

A-2.1 Draw Down from Reserves

During the financial year 2011-12, there has been no draw down from Reserves.

A-3. Status of Letters of Comfort

i Letters of Comfort (LOC's) issued during the Current Financial Year

During the current financial year Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

ii Cumulative position of LOC's outstanding on 31.03.2012 The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/ opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank's subsidiary in that country As per audited accounts as on 31.03.2012, the deposits of the subsidiary are Rs 80.90 Crores and outside liabilities are Rs0.46 Lacs The LOC issued by Bank of Baroda covers this entire amount of Rs 81.36 Crores i.e. deposit and outside liabilities. However, the net worth of the subsidiary is Rs 170.33 Crores and as such there is no liability arising on account of operations of the subsidiary for the period ended 31st March 2012.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank of Negara Malaysia to the extent of the Bank's 40% shareholding in the joint venture Bank - India International Bank (Malaysia) Bhd' (IIBMB)- The Bank is yet to commence operations and therefore no financial liabilities arise to Bank of Baroda.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India:

B-1. Employee Benefits (AS-15)

B- 1.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007. The provisions contained in AS-15 give option to the bank, to charge the transitional liability as an expense in its Profit and Loss Account spread over a period of 5 years. Bank has exercised this option and accordingly made an incremental provision for employee benefits such as pension, gratuity, leave encashment and other retirement benefits to the extent of 1/5th of the total transitional liability commencing from financial year 2007-08, which is crystallized on Actuarial valuation at Rs 901.00 Crores, which has been fully provided as on March 31, 2012

B-1.2 GRATUITY

The Bank pays gratuity to employees who retire or resign from Bank's service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the gratuity fund's rules, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit actuarial method.

The investment of the funds is made according to investment pattern prescribed by the Government of India. The gratuity payable is worked out by way of 3 different schemes and the entitlement is based on what is most beneficial to employees.

B- 1.3 PENSION

B. 1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank's service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from Bank's service in terms of Bank of Baroda (Employees') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees') Pension Regulations, 1995 are not eligible for Bank's contribution to Provident fund.

B. 1.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organisations' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which is introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank's Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the pay and Dearness Allowance from the salary with a matching contribution by Bank is being made.

B-1.3.3 Prudential Regulatory treatment (reopening of Pension)

During the year 2010-11, the Bank had reopened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of which by 18,989 employees, the Bank had incurred a liability of Rs 1829.90 Crores.

In terms of the requirements of AS 15 - Employee Benefits, the entire amount of Rs 1829.90 Crores was required to be charged to the Profit and Loss Account. However, the RBI had issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated February 9, 2011. In accordance with the provisions of the said Circular, the Bank has charged an amount of Rs 731.96.Crores (representing two-fifth of Rs1829.90 Crores) upto March 31, 2012. The unrecognised balance amount of Rs1097.94 Crores shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employees relating to separated/ retired employees.

B- 1.4 PROVIDENT FUND

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank's service on or before 31.03.2010. This fund is administered by a Bank managed trust. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B- 1.5 LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B- 1.6 ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided he had completed-25-years of service in Bank.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided he had completed - 30-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation additional retirement benefit shall not be payable, irrespective of any number of years of service

Notes on Segment Reporting

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, The Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments for the purpose of compliance with AS-17 on segment Reporting issued by ICAI.

2. Segment revenue represents revenue from external customers.

3. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocated proportionate to the assets of the segment.

5. Results, Revenue and Capital Employed of International operations is included in other banking operations.

B-5. Related Party Disclosures (AS - 18)

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

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Bank of Baroda (Botswana) Limited

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Nainital-Almora Kshetriya Gramin Bank

(iii) Baroda Rajasthan Gramin Bank

(iv) Baroda Gujarat Gramin Bank

(v) Jhabua-Dhar Kshetriya Gramin Bank

(vi) Baroda Pioneer Asset Management Co. Ltd.

(vii) Indo Zambia Bank Limited

(c) Joint Ventures

(i) India First Life Insurance Company Ltd.

(ii) India International Bank (Malaysia) Bhd.

B-6. Discontinuing operations (AS 24)

During the financial year 2011-12 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-7. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

B-8. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

The Bank has provided for claims against the bank which have not been acknowledge as debt as per the policy framed by it.

B-8.1 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon, the outcome of court, arbitration, out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

C-1. Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2012, the reconciliation of which is in progress.

C-2. Capital

During the year, the Bank has allotted 1,95,77,304 equity shares of Rs 10/- each at a premium of Rs 830.10 per share to Life Insurance Corporation of India as determined by the Board in accordance with regulation 76 (1) of SEBI Issue of Capital and Disclosures Requirements Regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs1644.69 Crores.

C-3. Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank's Scheme for Export Development Projects for small / medium scale industries.

C-4. Investments

C-4.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in "Available for Sale" category to "Held to Maturity" category. The resultant depreciation of Rs 49.01 Crores (previous year Rs75.80 Crores) has been charged to the Profit & Loss Account.

C-4.2Profit on sale of investments held under "Held to maturity" category amounting to Rs 44.20 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs.22.40 Crores has been appropriated to the Capital Reserve, net of taxes and amount transferred to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

C-5 Provision for Taxes

C5.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C5.2 Tax paid in advance /tax deducted at source appearing under "Other Assets" amounting to Rs1993.11 Crores (previous year Rs1316.28 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank's view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

C-5.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs 533.85 Crores to the corresponding Special Reserve account and reported under Other Reserve.

C-6. Premises

C-6.1 Execution of conveyance deeds is pending in respect of certain properties at Rs 78.37 Crores (Previous Year Rs.88.63 Crores) - (Original Cost).

C-6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year Rs1777.43 Crores (including Rs30.55 Crores at overseas offices) and net of depreciation the revaluation amounts to Rs1173.68 Crores (Previous Year Rs1242.49 Crores).

C-6.3 Premises include assets under construction/acquisition amounting to Rs 51.87 Crores (Previous Year Rs 43.77 Crores).

C-7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same. BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Bank has approved the merger of BOBFSL with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court.

C-8. The Bank has taken over specified Assets & Liabilities of The Memon Co-operative Bank Ltd on 18th April, 2011 as per approval granted by RBI vide letter no. UBD.CO.MEROER No. 7814/09.16.901/2010.11 dated 04th March, 2011. Out of the deficit of Rs 149.25 Crores on account of the said take over, the Bank has proportionately charged Rs 49.75 Crores of the said deficit to the Profit and Loss Account during the year ended March 31, 2012. The balance amount of Rs 99.50 Crores will be charged proportionately during the remaining period till Financial Year 2013-14, as approved by RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25th July, 2011.

C-9. The Bank has made provision @ 20% on the Secured Sub- standard Advance as against the Regulatory requirement of 15%.

Further the Bank has made an additional ad-hoc provision of Rs 342.79. Crores for the year ended March 31, 2012 (previous year Rs 320.08 Crores) in certain non performing domestic advance accounts.

C-10.The Board of Directors has proposed dividend of Rs17/- per share (on face value of Rs10/-) which is subject to compliance of Section 15 of Banking Regulation Act, 1949 and consequential notification to be issued to this effect by the Government of India under Section 53 of Banking Regulation Act, 1949 and approval of the shareholders.

C-11. Previous Year figures have been regrouped/ rearranged wherever considered necessary to conform current year presentation.

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Mar 31, 2011

1.0.0 Disclosures on risk exposure in derivatives :

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank’s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

1.1.1 Amount of Unsecured Advances The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as security is Rs. 832.88 crores and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances are 1.70 %

1.1.2 Disclosure of penalties imposed by RBI

During the financial year 2010-11, the bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949, or any rules or conditions specified by the Reserve Bank of India in accordance with the said Act.

2. Status of Letters of Comfort

A. Letters of Comfort (LOC’s) issued during the Current Financial Year.

During the current financial year Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

B. Cumulative position of LOC’s outstanding on 31.03.2011

During the financial year 2009-10, Bank has issued only one Letter of Comfort to meet the requirements of the overseas / domestic regulators while seeking their approval for establishing subsidiaries / opening of branches. The Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank’s subsidiary in that country.

The subsidiary Bank of Baroda (New Zealand) Ltd. has been registered as a Bank in New Zealand on 01.09.2009.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India:

1. Employee Benefits (AS-15)

1.1 Bank has adopted the Accounting Standard (AS-15) issued by ICAI and effective from 07.12.2006. The standard has been revised and notified on 17.12.2007. The provisions contained in AS-15 give option to the bank, to charge the transitional liability as an expense in its Profit and Loss Account spread over a period of 5 years. Bank has exercised this option and accordingly made an incremental provision for employee benefits such as pension, gratuity, leave encashment and other retirement benefits to the extent of 1/5th of the total transitional liability commencing from financial year 2007-08, which is crystallized on Actuarial valuation at Rs. 901.00 Crores. The unrecognized amount of Rs. 180.20 Crores will be charged by end of March 31, 2012.

1.2 GRATUITY:

The Bank pays gratuity to employees who retire or resign from Bank’s service. The Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the gratuity fund’s rules, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit actuarial method.

The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of 3 different schemes and the entitlement is based on what is most beneficial to employees.

1.3 PENSION

1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank’s service on or after 29.9.1995. The plan provides for a pension on a monthly basis to these employees on their cessation from Bank’s service based on the respective employee’s salary and years of qualifying service with the Bank. Employees covered under Bank of Baroda (Employees’) Pension Regulations, 1995 are not eligible for Bank’s contribution to Provident Fund. Pension fund is managed by in-house trustees.

1.3.2 Prudential Regulatory treatment (reopening of Pension option and enhancement of gratuity)

During the year, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of which by 18989 employees, the Bank has incurred a liability of Rs.1829.90 Crores. Further, during the year, the limit of gratuity payable to the employees of the banks was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank has increased by Rs. NIL.

In terms of the requirements of the AS 15 - Employee Benefits, the entire amount of Rs.1829.90 Crores is required to be charged to the Profit and Loss Account. However, the RBI has issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits – Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank has charged an amount of ` 365.98 Crores (representing one-fifth of Rs.1829.90 Crores) to the Profit and Loss Account. The unrecognised balance amount of Rs.1463.92 Crores (Rs.1829.90 – Rs.365.98 Crores) shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employees relating to separated/ retired employees.

Had the said Circular not been issued by the RBI, the profit of the Bank would have been lower by Rs.1463.92 Crores pursuant to application of the requirements of AS 15.

Consequential financial effect on other components of the financial statements, including on Provision for Taxation, deferred Taxation, the transfer to statutory / other reserves & earning per share has not been ascertained.

The Bank has proposed dividend of Rs.753.35 Crores (Rs.16.50 per share) which is subject to compliance of section 15 and consequential notification to this effect by the Government of India under Section 53 of the Banking Regulation Act, 1949.

1.4 PROVIDENT FUND

Bank of Baroda is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees. This fund is administered by a Bank managed trust. Each employee contributes 10% of their basic salary and eligible allowances and Bank of Baroda contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

1.5 LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

1.6 ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided he had completed-30-years of service in Bank.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided he had completed – 30-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation additional retirement benefit shall not be payable, irrespective of any number of years of service.

Notes on Segment Reporting:

1. As per guidelines of RBI on compliance with Accountin Standards AS-17, Bank has adopted “Treasur Operations”, Wholesale, Retail and “Other Bankin Operations” as Primary business segments an “Domestic” and “International” as secondary / geographi segments.

2. Segment revenue represents revenue from externa customers.

3. In determining the segment results, the funds transfe price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocate proportionate to the assets of the segment.

5. Results, Revenue and Capital Employed of Other Banking operations include figures relating to International Operations.

4. Related Party Disclosures (AS – 18)

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

(a) Subsidiaries:

i) BOB Capital Markets Limited

ii) BOB Cards Limited

iii) The Nainital Bank Limited

iv) Bank of Baroda (Botswana) Limited

v) Bank of Baroda (Kenya) Limited

vi) Bank of Baroda (Uganda) Limited

vii) Bank of Baroda (Guyana) Inc.

viii) Bank of Baroda (UK) Limited

ix) Bank of Baroda (Tanzania) Limited

x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

xi) BOB Trinidad & Tobago Ltd.

xii) Bank of Baroda (Ghana) Ltd.

xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates: (i) Baroda Uttar Pradesh Gramin Bank

(ii) Nainital-Almora Kshetriya Gramin Bank

(iii) Baroda Rajasthan Gramin Bank

(iv) Baroda Gujarat Gramin Bank

(v) Jhabua-Dhar Kshetriya Gramin Bank

(vi) Indo Zambia Bank Limited

(vii) Baroda Pioneer Asset Management Co. Ltd.

(c) Joint Ventures

i) India First Life Insurance Company Ltd.

ii) India International Bank (Malaysia) Bhd.

(D) Key Management Personnel:

* Amount includes arrears on account of VI pay commission and incentives.

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) – 18 Related Parties Disclosure, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled.

7. Discontinuing operations (AS 24)

During the financial year 2010-11 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

8. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of Accounting Standard-28 “Impairment of Assets”, no impairment of fixed assets is required in respect of current financial year.

9. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

9.2 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon, the outcome of court, arbitration, out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

1. Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2011, the reconciliation of which is in progress.

2. Capital

During the year bank has allotted 2,72,79,579 equity shares of Rs.10/- each at a premium of Rs. 892.14 per share to Govt. of India as determined by the Board in accordance with regulation 76 (1) of SEBI ICDR regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs. 2,461.00 Crores and consequently the Government holding have increased from 53.81% to 57.03%.

3. Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects for small / medium scale industries.

4. Investments

4.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in “Available for Sale” category to “Held to Maturity” category. The resultant depreciation of Rs. 75.80 Crores (previous year Rs. 3.25 Crores) has been charged to the Profit & Loss Account.

4.2 Profit on sale of investments held under “Held to maturity” category amounting to Rs..41.92 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs. 20.99 Crores has been appropriated to the Capital Reserve, net of taxes and transferred to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

5 Provision for Taxes

5.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

5.2 Tax paid in advance / tax deducted at source appearing under “Other Assets”

amounting to Rs.1958.16 Crores (previous year Rs.1293.49 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment yeaRs. No provision is considered necessary in respect of the said demands, as in the bank’s view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

5.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax

Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs. 335.39 Crores to the corresponding Special Reserve account and reported under Other Reserve.

6. Premises-

6.1 Execution of conveyance deeds is pending in respect of certain properties at Rs. 88.63 Crores (Previous year Rs..65.30 Crores) - (Original Cost).

6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year Rs. 1747.83 Crores) and net of depreciation the revaluation amounts to Rs.1223.90 Crores (Previous Year Rs. 1321.25 Crores).

6.2 Premises include assets under construction / acquisition amounting to Rs. 43.77 Crores (Previous year Rs. 63.93 Crores).

7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same.

BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f.28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

Bank has approved the merger of M/s. BOB Fiscal Services Limited with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court.

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Mar 31, 2010

1. Balancing of Books and Reconciliation

1.1 The balancing / Reconciliation of control accounts with subsidiary ledgers / registers is in progress in certain branches.

1.2 Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2010, the reconciliation of which is in progress.

1.3 Reconciliation of accounts with banks, Nostro, Drafts / TTs payable, Suspense, dividend / Interest / refund orders paid / payable etc. is in progress.

The impact, if any, on the Profit and Loss Account and the Balance Sheet, though not quantified, in the opinion of the management will not be material.

2. Capital Reserves

2.1 Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects / Industrial Export Projects for small / medium scale industries.

2.2 During the current financial year, the Bank has revalued one foreign immovable property by an amount of Rs. 3.10 Crores. The amount of revaluation has been shown as an addition to Fixed Assets and credited to Revaluation Reserve Account under Capital Reserves as part of Reserves and Surplus.

3. Investments

3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in “Available for Sale” category to “Held to Maturity” category. The resultant depreciation of Rs.3.25 Crores (previous year Rs. 38.22 Crores) has been charged to the Profit & Loss Account.

3.2 Profit on sale of investments held under “Held to maturity” category amounting to Rs.255.43 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs.126.59 Crores has been appropriated to the Capital Reserve, net of taxes and transfer to Statutory Reserve under section 17 of the Banking Regulation Act, 1949

4. Provision for Taxes.

4.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

4.2 Tax paid in advance / tax deducted at source appearing under “Other Assets” amounting to Rs. 1293.49 Crores (previous year Rs 1019.84 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands as in the bank’s view, duly supported by counsels’ opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

4.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs.270 Crores to the corresponding Special Reserve account.

5. During the year, the bank has not annulled the forfeiture of any equity shares (previous year 100 equity shares).-

6. Premises-

6.1 Execution of conveyance deeds is pending in respect of certain properties aggregating to Rs 65.30 Crores (Previous year Rs.79.72 Crores) - (original cost).

6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year-end is Rs.1768.34 Crores (Previous Year Rs.1766.66 Crores) and net of depreciation the revaluation amounts to Rs. 1321.25 Crores (Previous year Rs.1448.34 Crores).

6.3 Premises include assets under construction / acquisition amounting to Rs.96.87 Crores (Previous year Rs.74.79 Crores).

7. During the year ended March 31, 2010, Tier II Bonds amounting to Rs. 320.00 Crores have been redeemed and Tier I Bonds amounting to Rs. 900.00 Crores and Tier II Bonds amounting to Rs. 1000.00 Crores (Previous year Rs.1800.20 Crores) were raised.

8. Other Reserves include an amount of Rs.943.95 Crores (previous year Rs.673.95 Crores) on account of special reserves created under requirements of Income Tax Act.

9. Bank has made a provision of Rs. 300.00 Crores (Previous year Rs 325.00 Crores) for the year on an estimated basis for salary revision of officers & award staff. The accumulated provision on this account is Rs. 725 crores on 31.03.2010 against such revision due w.e.f. November 1, 2007.

10. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same. BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

Bank has approved the merger of M/s. BOB Fiscal Services Limited with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court. Accordingly, the legal formalities for the merger are under process and pending such formalities; no impact of the same is given in accounts.

11. During the year Bank has sold 6.5% stake in UTI AMC Ltd. and UTI Trustee Co Pvt Ltd resulting which Bank’s stake has reduced to 18.5% in both the companies. Accordingly these companies have been derecognized as associates.

12. As per the RBI circular DBOD.No.BP.BC.82/21.04.048/2009- 10 dated 30-03-2010, the last date for payment of 75% of the overdue portion of the other farmers have been extended from 31-12-2009 to 30-06-2010 and the banks are allowed to treat such accounts as standard assets. However, keeping in view of the inherent weakness in such accounts, as a prudent measure, bank has continued to classify such accounts as NPA.

13. Previous year figures have been regrouped / rearranged wherever considered necessary.