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

Notes to Accounts of Bank of India

Mar 31, 2017

1. During the year, the Bank has made preferential allotment of 23,81,42,640 Equity Shares of Rs.10 each in accordance with the regulation 76(1) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, the details of which are as under:

During the year, the Bank has received Rs.1,500 from the Government of India and Rs.221.92 from the Life Insurance Corporation of India towards share application money for subscription to equity shares on preferential basis. The same is treated as CET 1 capital for CRAR purpose in accordance with RBI letter No.DBR. No.BP.11083/21.01.002/2016-17 dated 22nd March, 2017.

2. Balancing of Subsidiary Ledger Accounts, confirmation/ reconciliation of balances with foreign branches, Inter-office accounts, NOSTRO Accounts, Suspense, Drafts Payable, Clearing Difference, 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 pending final clearance/ adjustment of the above, is not likely to be significant.

3. During the year under Audit there is no change in accounting policies as those followed in the preceding financial year except in respect of depreciation on fixed assets. Earlier, the Bank was charging depreciation on all fixed assets (other than Computer & Computer Software) as per written down method at the rate determined by the bank which has now been changed to Straight Line Method (SLM) based on the estimated useful life of Fixed assets. Due to such change the excess depreciation, amounting to Rs.313.17 has been written back and credited to Profit & Loss Account during the year.

4. In view of the losses incurred by the Bank, RBI has permitted the Bank to make payment of interest on Additional Tier I Perpetual Basel III Compliant Bonds by debiting the Revenue Reserve. Accordingly, during the year, the Bank has reversed the provision of Rs.177.81 made towards interest payable till 31st March, 2016 by crediting the same to interest expended and an amount equivalent to such provision has been transferred from the Revenue Reserve. Further, Interest expended of Rs.413.22 for the year ended 31st March, 2017 has also been debited to Revenue Reserve.

5. The following information is disclosed in terms of guidelines issued by RBI:

Pursuant to RBI circular No DBR. NO.BP.13018/21.04.048/2015-16 dated 1st March 2016, the bank has considered revaluation reserve, foreign currency translation reserve and deferred tax assets in calculation of Capital Adequacy Ratio as on 31st March 2017.

Government Securities (Face Value) amounting to Rs.4,441.61 (previous year Rs.15,064.56) are kept as margin with RBI, CCIL, Clearing Houses and Exchanges towards margins/security settlement.

During the year the Bank has sold 18% stake in Star Union Dai-ichi Life Insurance Limited, Joint Venture, for Rs.540 and earned profit of Rs.495 (net of tax Rs.323.69). Post sale the Bank’s share has reduced to 28.96% as on 31.03.2017. Further, Rs.20.10 and Rs.6.84 were invested in Bank of India (Tanzania) Ltd. and BOI Axa Investment Managers Pvt. Ltd., respectively, subsidiaries of the Bank. However, Bank’s share in the Equity capital (i.e. 100% and 51% respectively) has remained constant pursuant to such additional investment.

During the year ended 31st March, 2017, the Bank has earned a profit of Rs.5.84 under buyback of 50,000 shares by BOI Shareholding Limited, a wholly owned subsidiary. Post buyback the investment has reduced to Rs.6.65 as on 31.03.2017 (previous year Rs.8.86).

5.1.1. Sale and transfers of securities to/from HTM Category:

During the year ended March 31, 2017, the aggregate book value of investment sold from, and transferred to/from, HTM category was in excess of 5% of the book value of HTM category at the beginning of the year.

The market value of investments (excluding investments in Non SLR bonds) under HTM category as on March 31, 2017 was Rs.81,714.81 which was higher than the book valueas of that date. In accordance with the RBI guidelines, sale from, and transfer to/ from, HTM category excludes:

- One-time transfer of securities permitted to be undertaken by banks at the beginning of the accounting year with approval of the Board of Directors;

- Sales to the RBI under pre-announced open market operation auctions;

- Repurchase of Government securities.

5.1.2 Disclosures on risk exposure in derivatives

i. Qualitative Disclosure

The Bank enters into derivative contracts such as interest rate derivatives, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions, the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.

Risk management is an integral part of bank’s business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.

The Bank has a Risk Management Committee of Directors presided over by the Managing Director& CEO.

The hedge/non hedge (market making) transactions are recorded separately. Income/expenditure on hedging derivatives is accounted on accrual basis.

Forex forward contracts are marked to market and the resultant gains and losses are recognized in the profit and loss account.

Interest rate derivatives and currency derivatives other than exchange traded derivatives for trading purpose are marked to market and the resulting losses, if any, are recognised in the Profit & Loss account. Net Profit, if any, is ignored.

Exchange traded derivatives entered into for trading purposes are valued at prevailing market rates based on rates given by the exchange and the resultant gains and losses are recognized in the Profit & Loss account.

Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure. Any gain/loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.

Option fees/premium is amortised over the tenor of the option contract.

Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.

The counter parties to the transactions are banks, primary dealers 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 Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.

The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.

Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant add-on factors as under according to the nature and residual maturity of the instrument.

While computing the credit exposure, “sold options” are excluded wherever the entire premium/fee or any other form of income is received / realized.

As per the extant RBI guidelines, credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the “Standard” category, of the concerned counterparty. At present, the provision is to be maintained at 0.4% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in the books.

6. Disclosure requirements as per Accounting Standards (AS) where RBI has issued guidelines in respect of disclosure items for Notes to Accounts:

6.1 Accounting Standard 9 - Revenue recognition

Certain items of income are recognised on realisation basis as per Accounting Policy no. 3 of Schedule 17: Significant Accounting Policies. However, the said income is not considered to be material.

6.2. Accounting Standard 18 - Related Party Transactions (As compiled by the management and relied upon by the Auditors):

I) List of Related Parties:

a. Key Managerial Personnel :

Managing Director & CEO : Shri Melwyn O. Rego Executive Directors :

Shri B.P. Sharma (Up to 31.07.2016)

Shri Ravindra P. Marathe (Up to 26.09.2016)

Shri R.A.Sankara Narayanan Shri NeelamDamodaran (w.e.f 16.02.2017)

Shri Atanu Kumar Das (w.e.f. 17.02.2017)

b. Subsidiaries

a. BOI Shareholding Ltd.

b. BOI AXA Investment Managers Private Limited

c. BOI AXA Trustee Services Private Limited

d. BOI Merchant Bankers Ltd.

e. PT Bank of India Indonesia Tbk

f. Bank of India (Tanzania) Limited

g. Bank of India (New Zealand) Limited

h. Bank of India (Uganda) Limited

i. Bank of India (Botswana) Limited

c. Associates

a. STCI Finance Limited

b. ASREC (India) Limited

c. Indo-Zambia Bank Limited

d. 4 Regional Rural Banks sponsored by the Bank

i. Gramin Bank of Aryavart (Formerly known as Aryavart Kshetriya Gramin Bank)

ii. Jharkand Gramin Bank;

iii. Narmada Jhabua Gramin Bank

iv. Vidharbha Konkan Gramin Bank

e. Joint Venture:

a. Star Union Dai-Ichi Life Insurance Co. Ltd.

The transactions with the subsidiaries and regional rural banks, being state controlled, have not been disclosed in view of Para 9 of AS-18 on Related party disclosure issued by ICAI exempting ‘State controlled enterprises’ from making any disclosure pertaining to their transactions with other related parties which are also ‘State Controlled Enterprises’.

6.3. Accounting Standard 19 - Lease Financing

The contractual maturities of the Bank’s investment in lease financing and its components, which are included in advances, are set out below:

7.1 Drawdown from Reserves

In terms of RBI Circular Ref. DBOD. No. BP.BC.38/21.06.201/2014-15 dated September 1, 2014 on ‘Implementation of Basel III Capital Regulations in India -Amendments’ read with RBI Circular Ref. DBR. No. BP.BC.71/21.06.201/2015-16 dated January 14, 2016 on "Master Circular-Basel III Capital Regulations -Clarification’ Bank has made a drawdown of Rs.591.03 from Revenue Reserve towards interest of Additional Tier-I Perpetual Basel III Compliant bonds.

Further, in terms of RBI Circular Ref. DBR.No.BP. BC.92/21.04.048/2015-16 dated April 18, 2016 on Provisioning pertaining to Fraud Accounts, Bank has debited ‘other reserves’ by Rs.65.19, being an amount remaining un-provided at the end of the financial year after considering the provision already made for the fraud during the quarters, by debiting the Profit & Loss account.

7.2 Disclosure of Letters of CoToort (LoCs) issued by bank for Subsidiaries (As compiled by the management)

During current year, the bank has not issued any letter of coToorts on behalf of Subsidiaries.

During the year 2011-12 the bank has issued an undertaking to the governor, Bank of Botswana in respect of its wholly owned subsidiary, Bank of India (Botswana) Ltd to meet its financial commitments if they fall due.

During the year 2010-11 the bank issued parental guarantee in favour of Royal Bank of New Zealand for its wholly owned subsidiary, BOI(New Zealand) Ltd. to meet its financial obligations, if they fall due.

As on 31.03.2017, no financial obligations have arisen on the above commitments.

7.3 Provisioning Coverage Ratio (PCR)

The Provisioning to Gross Non-Performing Assets of the Bank as on 31st March 2017 is 61.47% (Previous year:51.14%).

7.4 Fees, remuneration received from Bancassurance business:

7.5 Concentration of Deposits, Advances, Exposures and NPAs

7.6 Disclosure relating to Securitisation

The Bank has not floated any Special purpose Vehicle (SPV) during the Financial Year 2016-17.

7.7 Credit Default Swaps

The bank has not dealt with any Credit Default Swap.

The bank has duly approved policies by the Board on Capital and Provisioning Requirement for exposures to entities with unhedged foreign currency exposure which is based on RBI circular No.DB0D.No.BP.BC.85/21.06.200/2013-14 dated January 15, 2014 and clarifications received vide RBI Circular No. DB0D.No.BP.BC.116/21.06.200/2013-14 dated June 03, 2014.

Accordingly, it is envisaged that the Bank monitors UFCE on a monthly interval and provisioning and capital requirements on a quarterly basis. As on 31.03.2017, based on available data and declaration from the borrowers, wherever received, the Bank has created total provision of Rs.57.75 (Previous Year Rs.73.58). The additional RWA on this exposure is Rs.1082.37 (Previous Year Rs.1287.83), as against this additional minimum capital requirement is Rs.110.94 (Previous Year Rs.115.90).

Qualitative disclosures with regard to LCR

W.e.f. 1st January 2015, the Bank has implemented guidelines on Liquidity Coverage Ratio (LCR) as directed by Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 under a severe liquidity stress scenario.

High Quality Liquid Assets (HQLA)

LCR =

Total net cash outflows over the next 30 calendar days

Here,

- HQLA comprises of level 1 and level 2 assets, in other words these are cash or near to cash items which can be easily used/discounted in the market in case of need.

- Net cash outflows are excess of total inflows over total outflows under stressed situation as defined by BCBS/ RBI. While arriving at the net cash outflow, the inflows are taken with pre-defined hair-cuts and the outflows are taken at pre-defined run-off factors.

- In case stressed inflows are more than the stressed outflows, 25% of total outflows shall be taken as total net cash outflows to arrive at the LCR.

- With effect from 01.01.2015, Banks are required to maintain minimum 60% LCR on an ongoing basis as given below:

Main Drivers of LCR: The main drivers of the LCR are adequacy of High Quality Liquid Assets (HQLA) and lower net cash outflow on account of higher funding sources from retail customers. Sufficient stock of HQLA helped the Bank to maintain adequate LCR.

Composition of HQLA: The composition of High Quality Liquid Assets (HQLA) mainly consists of cash balances, excess SLR, excess CRR and FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).

Concentration of funding sources: Majority of Bank’s funding sources are from retail customers,therefore the stressed outflows are comparatively lower. However, in absence of any non-callable option for term deposits, the Bank has considered almost all deposits under outflow section as per RBI guidelines. Bank also does not have funding concentration from any significant counterparty. A significant counterparty is defined as a single counterparty or group of connected or affiliated counter parties accounting in aggregate for more than 1% of the bank’s total liabilities.

Derivative Exposures and potential collateral calls: Bank has very little exposure in derivative business which is not very significant.

Currency mismatch in the LCR: In terms of RBI guidelines, 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. In our case, USD is the only significant currency. Therefore, Bank also calculates LCR in USD currency.

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

The liquidity management of the Bank at enterprise level is a Board level function and a separate sub-committee of the Board (R.Com.) keeps close watch on that. The periodical monitoring of the liquidity management is being monitored by the ALCO on regular intervals. The entire liquidity management process of the Bank is being governed by ALM Policy of the Bank.

The liquidity management for domestic operations is the central function, being managed at Head Office level. The overseas liquidity management is being handled at each centre, jurisdiction wise to keep close monitoring and control and also to comply with the local regulatory requirements as well. International Division of the Bank keeps watch on the overseas liquidity position and the overall liquidity monitoring is done at Head Office level centrally.

Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile:

No such items as per our notice.

8. Other Notes

a) Income Tax:

(i) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/interest tax liabilities of Rs.555.42 (previous year Rs.555.07) for which no provision is considered necessary based on various judicial decisions in respect of past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).

(ii) Provision for income tax for the year is arrived at after due consideration of the provisions of the applicable tax laws and relevant judicial decisions on certain disputed issues.

(iii) Income Computation and Disclosure Standards (ICDS) as notified u/s 145(2) of the Income Tax Act, 1961 on 29th September 2016, are applicable for the financial year ended on 31st March, 2017 and accordingly tax provisions and deferred tax for the financial year 2016-17 have been computed after considering its impact.

b) Movement of Reward Points for 2016-17:

c) Disclosure regarding frauds:

d) In compliance with the RBI Guidelines in respect of “Scheme for Stressed Assets-Revision”, in respect of Standard Facilities under Strategic Debt Restructuring (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A), the bank has during the year ended 31st March, 2017 reversed an amount of Rs.114.43 being unrealised interest in such accounts.

e) During the year the Bank has invoked Sustainable Structuring of Stressed Assets (S4A) in Two borrower accounts (Standard as on 31st March, 2017) having aggregate outstanding of Rs.272.80 as on 31st March, 2017. The required provision will be reckoned by the Bank only upon implementation of the S4A scheme.

f) During the year, in case of one Borrower declared as fraud, an amount of Rs.65.40 has been provided, in terms of RBI circular DBR.No.BP.BC.83/21.04.048/2014-15 dated April 01, 2015 and DBR.No.BP.BC.92/21.04.048/2015-16 dated April 18, 2016. The remaining un-provided as on 31st March, 2017 is Rs.65.19 has been drawn from Revenue Reserve.

g) In compliance with RBI directives, accounts shown under Annex - III of Asset Quality Review (AQR) wherein restructuring was failed due to performance issues or non-fulfilment of certain conditions and necessary provisions was held in those accounts in terms of RBI directives, have been reviewed as on 31st March, 2017 and has now being classified and provision has been made as per the IRAC norms. Incremental provision of Rs.83.22 which was made in terms of RBI directives have been reversed on 31st March, 2017 w.r.t. those accounts which remained standard as on 31st March, 2017.

h) Other Income for the year includes gain of Rs.495.00 on sale of 18% stake held by the Bank in the Joint Venture namely Star Union Dai-ichi Life Insurance Company Limited and Rs.188.13 from sale of investment in CIBIL.

i) In accordance with RBI guidelines, Bank has shifted securities from HTM to AFS category during the year. The book value of securities shifted was Rs.13854.96.

j) Profit on sale of Investments held under “Held to Maturity” category amounting to Rs.1146.70 (previous year Rs.243.86) has been taken to the Profit & Loss Account and thereafter an amount Rs.749.85 (previous year Rs.159.47) has been appropriated to the Capital Reserve, net of taxes and transfer to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

k) The Bank has received 3 Investor complaints during the quarter ended 31st March, 2017 which have been disposed-off. There are no pending investor complaints at the beginning or end of the quarter.

l) Previous year’s figures have been regrouped/rearranged, wherever considered necessary.


Mar 31, 2015

1. The abridged financial statements do not contain all the disclosures required by the Accounting Standards applied in the preparation of the audited financial statements of the Bank. The abridged financial statements, therefore, is not a substitute of the audited financial statements of the Bank.

2. The Statutory Auditors of the Bank, without modifying their opinion have drawn attention to the following notes to the Financial Statements:

a. Note No.2 of the Standalone Financial Statements and Note No.7 of consolidated Financial Statements of Schedule 18 which reads as under:

During the year, the Bank has changed its accounting policy of provisioning in respect of NPAs classified as doubtful category (Secured Portion) up to one year from 50% (accelerated provision) to 25% (minimum provision) of net outstanding advances. Had the earlier accounting policy been followed, the provision for NPAs for the year would have been higher by Rs. 811 crores with consequential decrease in Net Profit for the year (net of tax) by Rs. 535.34 crores.

b. Note No.4.1.1 of the Standalone Financial Statements and Note No.10 of consolidated Financial Statements of Schedule 18 which reads as under:

In accordance with the RBI circular no.DBOD. BP.BC.80/21.04.018/2010-11dated 9th February 2011:

* Rs. 442.42 Crores for the Year has been charged to the Profit & Loss Account on proportionate basis towards additional liability of Rs.2212.15 Crores (being amortised over 5 years beginning from 31st March, 2011) on account of reopening of pension option for existing employees who had not opted for pension earlier calculated on actuarial basis. There remains no amount to be amortised in future periods.

* Rs. 85.79Crores for the Year has been charged to the Profit & Loss Account on proportionate basis towards additional liability of Rs.428.96 Crores (being amortised over 5 years beginning from 31st March 2011) on account of the enhancement of gratuity limits in Payment of Gratuity Act, 1972. There remains no amount to be amortised in future periods.

c. Note No.7 (f) of the Standalone Financial Statements and Note No. 7(B) of consolidated Financial Statements of Schedule 18 which reads as under:

Pursuant to Reserve Bank of India Letter No. DBS :CO:SSM:( BOI) 14657:13.37.001:2014-15 dated 20th May, 2015, the bank has deferred provision of Rs. 709.31 Crores in respect of certain NPAs and loss of Rs. 403.21 Crores on sale of certain NPAs to be amortized over a period of 3 quarters commencing from June 2015. Had this dispensation been not given to the bank, the provision for NPAs for the year would have been higher by Rs. 1112.52 Crores with consequential decrease in Net Profit for the year (net of tax) by Rs. 734.37 Crores.

d. Note No.7 (g) of the Standalone Financial Statements and Note No. 7(C) of consolidated Financial Statements of Schedule 18 which reads as under:

Pursuant to Reserve Bank of India Letter No. DBR:BP:17252:21.04.048:2014-15 dated 13th May, 2015, the bank has amortized the shortfall arising out of sale of financial assets to ARCs, sold between 26th February, 2014 and 31st March, 2015, over a period of 8 quarters from the quarter in which the asset was sold. Consequently, the bank has charged Rs. 112.66 Crores to Profit & Loss Account for the year and the balance amount of Rs. 478.91 Crores is being carried forward to be charged to Profit & Loss Account of future periods

3. Disclosures on risk exposure in derivatives

i. Qualitative Disclosure

The Bank enters into derivative contracts such as interest rate swaps, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.

Risk management is an integral part of bank''s business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.

The Bank has a Risk Management Committee of Directors presided over by the Chairman and Managing Director.

Hedging swaps are accounted for on an accrual basis except for swap designated with an asset and liability that is carried at market value or lower of cost/market value. In such cases, the swaps are marked to market and the resulting gain or loss is recorded as an adjustment to the market value of the designated asset or liability. Gains or losses on the termination of swaps are recognised when the offsetting gain or loss is recognised on the designated asset or liability. This implies that any gain or loss on the terminated swap would be deferred and recognised over the shorter of the remaining contracting life of the swap or the remaining life of the asset/liability.

Trading derivative positions are marked to market (MTM) and the resulting losses, if any, are recognised in the profit and loss account. Profit, if any, are not recognised on the settlement date. Gains or losses on termination of swaps are recorded as immediate income or expenses.

Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.

The counter parties to the transactions are banks, primary dealers 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 Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.

The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.

Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant add-on factors as under according to the nature and residual maturity of the instrument.

i) Primary Segment: Business Segments

a) Treasury Operations:

''Treasury'' for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

c) Retail Banking : Retail Banking includes exposures which fulfil following two criteria:

i) Exposure - The maximum aggregate exposure up to Rs. 5 Crores.

ii) The total annual turnover is less than ''50 Crores i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

Allocation of Costs

a) Expenses directly attributed to particular segment are allocated to the relative segment.

b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/business managed.

Secondary Segment: Geographical Segments

a) Domestic Operations

b) International Operations

4. Accounting Standard 18- Related Party Transactions (As compiled by Management):

I) List of Related Parties

(a) Key Managerial Personnel :

Chairperson &Managing Director : Smt. V.R.Iyer Executive Directors: Shri B.P.Sharma

Shri Arun Shrivastava (w.e.f. 05.08.2013)

Shri Koteeshwaran (w.e.f. 05.08.2013 to 31.12.2014)

Shri R.P. Marathe (w.e.f.10.03.2015)

b) Subsidiaries :

(i) BOI Shareholding Limited.

(ii) BOI AXA Investment Managers Private Limited

(iii) BOI AXA Trustee Services Private Limited

(iv) BOI Merchant Bankers Ltd.(w.e.f. from 31.10.2014)

(v) PT Bank of India Indonesia Tbk

(vi) Bank of India (Tanzania) Limited

(vii) Bank of India (New Zealand) Limited

(viii) Bank of India (Uganda) Limited

(ix) Bank of India (Botswana) Limited

(c) Associates :

(i) STCI Finance Limited

(ii) ASREC (India) Limited

(iii) Indo-Zambia Bank Limited

(iv) 4 Regional Rural Banks sponsored by the Bank

(a) Gramin Bank of Aryavart (Formerly known as Aryavart Kshetriya Gramin Bank)

(b) Jharkhand Gramin Bank;

(c) Narmada JhabuaGramin Bank

(d) VidharbhaKonkanGramin Bank

(d) Joint Venture:

(i) Star Union Dai—IchiLife Insurance Co. Ltd.

5. Impairment of Assets (Accounting Standard 28) : Rs. Nil

6. Accounting Standard 29: "Provisions, Contingent Liabilities and Contingent Assets":

A. Movement of Provisions for contingent liabilities

Particulars Legal cases/contingencies

2014-15 2013-14

Opening Balance 26.95 26.94

Provided during the year 1.25 0.01

Amounts used during the year 0.00 0.00

Closing Balance 28.20 26.95

Timing of outflow/uncertainties Outflow on Outflow on settlement / settlement / Crystallization Crystallization

B. Contingent Liabilities

Such liabilities are dependent upon, the outcome of court order/arbitration/out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such cases.

Disclosure of Letters of Comfort (LoCs) issued by bank(As compiled by Management and relied upon by the Auditors)

During current year, the bank has not issued any letter of comforts. During the year 2011-12 the bank has issued and undertaking to the governor, Bank of Botswana in respect of its wholly owned subsidiary, Bank of India (BTW) Ltd., to meet its financial commitments if they fall due.

During the year 2010-11 the bank issued parental guarantee in favour of Royal Bank of New Zealand for its wholly owned subsidiary, BOI(New Zealand) Ltd. to meet its financial obligations, if they fall due.

As on 31.03.2015 no financial obligations have arisen on the above commitments.

7. Provisioning Coverage Ratio (PCR)

The Provisioning to Gross Non-Performing Assets of the Bank as on 31st March 2015 is 52.40% (Previous year: 58.68%)

8. Unamortised Pension and Gratuity Liabilities:

During the year ended 31.03.2011, the Bank had re-opened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of the option by 22,338 employees, the bank had incurred additional liability of Rs. 2,212.15 Crores. Further, during the year ended 31.03.2011, the limit of Gratuity payable to the employees was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result the gratuity liability of the Bank had increased by Rs.428.96 Crores.

As per the Reserve Bank of India 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 9thFebruary 2011, the Bank had opted to defer the additional liability ofRs.2,641.11 Crores as mentioned above and amortise it over a period of five years commencing from financial year 2010-11 onwards. Accordingly, unamortised amount of Rs. NIL(Previous year 528.22 Crores) has been carried forward to be charged to the Profit and Loss account of future year/s.

9. Disclosure relating to Securitisation

The Bank has not floated any Special purpose Vehicle (SPV) during the Financial Year 2014-15.

10. Credit Default Swaps

The bank has not started dealing with Credit Default swaps up to end of the financial year 2014-15.

Note- Data to be entered only in blank & light grey cells For this quarter i.e. 31.03.2015, Data in the disclosure has been computed by arriving at an average of January, 2015, February, 2015 and March 2015.

Qualitative disclosures with regard to LCR

W.e.f. 1st January 2015, the Bank has implemented guidelines on Liquidity Coverage Ratio (LCR) as directed by Reserve bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 under a severe liquidity stress scenario.

High Quality Liquid Assets LCR = Total net cash outflows over the next 30 calendar days Here,

* HQLA comprises of level 1 and level 2 assets, in other words these are cash or near to cash items which can be easily used / discounted in the market in case of need.

* Net cash outflows are excess of total inflows over total outflows under stressed situation as defined by Basel / RBI. While arriving at the net cash outflow, the inflows are taken with pre-defined hair-cuts and the outflows are taken at pre-defined run-off factors.

* In case stressed inflows are more than the stressed outflows, 25% of total outflows shall be taken as total net cash outflows to arrive at the LCR.

* With effect from 01.01.2015, Banks are required to maintain minimum 60% LCR on an on-going basis. The same shall reach 100% as on 01.01.2019 with incremental increase of 10% each year.

Main Drivers of LCR: The main drivers of the LCR is adequacy of High Quality Liquid Assets (HQLA) and lower net cash outflow on account of higher funding sources from retail customers. Adequate stock of HQLA helped the Bank to improve LCR as the Bank is maintaining significant amount of excess SLR.

Intra-period changes as well as changes over time: For the March 2015 quarter, the LCR during January 2015 (154.35%) and February 2015 (154.51%) months was consistent. However, in the month of March''2015 (94.26%), there was a fall in LCR on account of decrease in stock of excess SLR but the same was above the regulatory requirement of 60%.

Composition of HQLA: The composition of High Quality Liquid Assets (HQLA) mainly consists of cash balances, excess SLR, excess CRR and FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).

Concentration of funding sources: Majority of Bank''s funding sources are from retail customers (about 60%) therefore the stressed outflows are comparatively lower. However, in absence of any non-callable option for term deposits, the Bank has considered almost all deposits under outflow section as per RBI guidelines. Bank also does not have funding concentration from any significant counterparty. 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.

Derivative Exposures and potential collateral calls: Domestic operation of the Bank has very little exposure in derivative business. However, there is small derivative business in overseas operations but the same is not very significant.

Currency mismatch in the LCR:In terms of RBI guidelines, a significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the banks total liabilities. In our case, USD is the only significant currency therefore we also calculate LCR in USD currency. There is no such stipulation given by the RBI to maintain the LCR in significant currency up to a certain level. However, Bank is endeavouring to improve its USD denominated LCR further, which is presently at 39.16%.

Description of the degree of centralisation of liquidity management and interaction between the group''s units: The liquidity management of the Bank at enterprise level is a Board level function and a separate sub-committee of the Board (R.Com.) keeps close watch on that. The periodical monitoring of the liquidity management is being monitored to the ALCO on regular intervals. The entire liquidity management process of the Bank being governed by ALM Policy of the Bank.

The liquidity management for domestic operations is the central function, being managed at Head Office level. The overseas liquidity management is being handled at each centre jurisdiction wise to keep close monitoring and control and also to comply with the local regulatory requirements as well. International Division of the Bank keep watch on the overseas liquidity position and the overall liquidity monitoring is done at Head Office level centrally.

Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile: No such as per our notice.

11. Other Notes

a) Income Tax:

I. Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax / interest tax liabilities of Rs. 961.37 Crores (previous year Rs. 857.58 Crores) for which no provision is considered necessary based on various judicial decisions for past assessments on such disputes. Payments/ adjustments against the said disputed dues are included under Other Assets (Schedule 11).

II. Provision for income tax for the year is arrived at after due consideration of the various judicial decisions on certain disputed issues.

III. During the year, the Bank has written back Provision for Taxation pertaining to earlier years of Rs.483.55 Crores (previous year Rs. 368.82 Crores) based on orders of Income Tax Authorities.

b) Pending settlement of the wage revision effective from November 2012, provision of Rs.540.06 Crores for the year (Previous year Rs. 269.51 Crores) has been made. The aggregate provision held as on 31st March, 2015 is Rs. 879.57 Crores (Previous year Rs. 339.51 Crores).

3. The financial statements of the subsidiaries, joint ventures and associates which are used in the consolidation have been drawn upto the same reporting date as that of the Parent Bank i.e. 31st March 2015 except for an associate IndoZambia Bank Limited (IZBL). IZBL''s financial statements were prepared up to 31st December 2014 and reported no significant transaction for the quarter ended 31st March 2015.

4. In case of Domestic subsidiaries/ joint venture/ associates, accounting adjustments arising due to different accounting policies followed by Parent Bank and subsidiaries/ joint venture/ associates have been carried out on the basis of data provided by subsidiaries/ joint venture/ associates.

5. The Consolidated Financial Statements have been prepared on the basis of :

(i) Financial statements of PT Bank of India Indonesia Tbkas on 31.03.2015certified by the Management and reviewed by an independent reviewer as per the local requirements of the country of incorporation.

(ii) Financial statements of Bank of India (Tanzania) Ltd.as on 31.03.2015 certified by the Management and reviewed by an independent reviewer.The Financial Statements as at 31.12.2014of Bank of India (Tanzania) Ltd. has been audited as per the local requirements of the country of incorporation.

(iii) Financial statements of Bank of India (New Zealand) Ltd. as on 31.03.2015 certified by the Management and reviewed by an independent reviewer.

(iv) Financial statements of Bank of India (Uganda) Ltd. as on 31.03.2015 certified by the Management and reviewed by an independent revieweras per the local requirements of the country of incorporation.

(v) Financial statements of Bank of India (Botswana) Ltd. as on 31.03.2015 certified by the Management and reviewed by an independent reviewer as per the local requirements of the country of incorporation.

(vi) Audited financial statements of BOI Shareholding Ltd., BOI Merchant Bankers Ltd., BOI AXA Investment Managers Pvt. Ltd., BOI AXA Trustee Services Pvt. Ltd.,Star UnionDai-ichi Life Insurance Company Ltd.,STCI Finance Ltd., Jharkhand Gramin Bank for the financial year ended 31.03.2015and Indo Zambia Bank Ltd.for the nine months ended 31.12.2014.

(vii) Unaudited financial statements of ASREC (India) Ltd., Vidharbha Konkan Gramin Bank, Narmada JhabuaGramin Bank and Gramin Bank of Aryavartfor the financial year ended 31.03.2015 certified by their management.

I. Primary Segment: Business Segments

1. Treasury Operations: ''Treasury'' for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

2. Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

3. Retail Banking : Retail Banking includes exposures which fulfil following two criteria:

i) Exposure - The maximum aggregate exposure up to Rs. 5 Crore

ii) The total annual turnover is less than Rs. 50 crore i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

4. Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

5. Allocation of Costs

- Expenses directly attributed to particular segment are allocated to the relative segment

- Expenses not directly attributable to specific segment are allocated in proportion to number of employees / business managed.

II) Secondary Segment: Geographical Segments

b) Domestic Operations

c) International Operations

12. Previous year''s figures have been regrouped/rearranged, wherever considered necessary.


Mar 31, 2014

1. The abridged financial statements do not contain all the disclosures required by the Accounting Standards applied in the preparation of the audited financial statements of the Bank. The abridged financial statements, therefore, is not a substitute for the audited financial statements of the Bank.

2. The Statutory Auditors of the Bank, without modifying their opinion, have drawn attention to the following notes to the Financial Statements:

3.a. Note No. 3 of Standalone Financial Statements and Note No. 7 of Consolidated Financial Statements of Schedule 18, which reads as under:

During the year, the Bank has changed its accounting policy of provisioning in respect of NPAs classified as Sub-Standard (Secured) from 20%(accelerated provision) to 15%(minimum provision) which has resulted into write back of provision for NPAs of Rs. 248.71 Crores provided till 31st March 2013. Had the earlier accounting policy been followed, the provision for NPAs for the year would have been higher by Rs. 325.38 Crores with consequential decrease in Net profit for the year (net of tax) by Rs. 214.78 Crores.

b. Note No. 5.2 of Standalone Financial Statements and Note No. 11 of Consolidated Financial Statements of Schedule 18, which reads as under:

In accordance with the RBI circular no.DBOD. BP.BC.80/21.04.018/2010-11dated 9th February 2011:

- Rs. 442.44 Crores for the Year has been charged to the Profit & Loss Account on proportionate basis towards additional liability of Rs. 2212.15 Crores (being amortised over 5 years beginning from 31st March, 2011) on account of reopening of pension option for existing employees who had not opted for pension earlier calculated on actuarial basis.

- Rs. 85.79 Crores for the Year has been charged to the Profit & Loss Account on proportionate basis towards additional liability of Rs. 428.96 Crores (being amortised over 5 years beginning from 31st March 2011) on account of the enhancement of gratuity limits in Payment of Gratuity Act, 1972.

c. Note No. 5.5 of Standalone Financial Statements and Note No. 8 of Consolidated Financial Statements of Schedule 18, which reads as under:

The Bank creates Special Reserve through appropriation of profits, in order to avail tax deduction as per Section 36(1)(viii) of the Income-tax Act, 1961. The Reserve Bank of India, vide its circular dated 20th December 2013, has advised Banks to create a deferred tax liability (DTL) on outstanding amount in Special Reserve, as a matter of prudence. Accordingly, during the Year ended 31st March 2014, the Bank has created a DTL of Rs. 431.67 Crores on Special Reserve outstanding as at 31st March, 2013, by reducing the General Reserves. Further, DTL of Rs. 118.96 Crores has been created for the year on such Special Reserve created during the year. Accordingly, the tax expense for the year is higher by Rs. 118.96 Crores with corresponding decrease in net profit for the year.

4. The following information is disclosed in terms of guidelines issued by RBI:

4.1. Capital:

4.4.3. Disclosures on risk exposure in derivatives

i. Qualitative Disclosure

The Bank enters into derivative contracts such as interest rate swaps, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.

Risk management is an integral part of bank''s business management. Bank has risk management policies designed to identify and analyze risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.

The Bank has a Risk Management Committee of Directors presided over by the Chairman and Managing Director.

Hedging swaps are accounted for on an accrual basis except for swap designated with an asset and liability that is carried at market value or lower of cost/ market value. In such cases, the swaps are marked to market and the resulting gain or loss is recorded as an adjustment to the market value of the designated asset or liability. Gains or losses on the termination of swaps are recognised when the offsetting gain or loss is recognised on the designated asset or liability. This implies that any gain or loss on the terminated swap would be deferred and recognised over the shorter of the remaining contracting life of the swap or the remaining life of the asset/liability.

Trading derivative positions are marked to market (MTM) and the resulting losses, if any, are recognised in the profit and loss account. Profit, if any, are not recognised on the settlement date. Gains or losses on termination of swaps are recorded as immediate income or expenses.

Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.

The counter parties to the transactions are banks, primary dealers 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 Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.

The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.

Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant add-on factors as under according to the nature and residual maturity of the instrument.

While computing the credit exposure, "sold options" are excluded wherever the entire premium/fee or any other form of income is received / realized.

As per the extant RBI guidelines credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the "Standard" category, of the concerned counterparty. At present the provision is to be maintained at 0.4% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in the books.

The Bank has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.

i) Primary Segment: Business Segments

a) Treasury Operations: ''Treasury'' for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

c) Retail Banking : Retail Banking includes exposures which fulfill following two criteria:

i) Exposure – The maximum aggregate exposure up to Rs. 5 Crores

ii) The total annual turnover is less than Rs. 50 Crores i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

d) Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

e) Allocation of Costs

a) Expenses directly attributed to particular segment are allocated to the relative segment.

b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/business managed.

ii) Secondary Segment: Geographical Segments

a) Domestic Operations

b) International Operations

5.4. Accounting Standard 18- Related Party Transactions (As compiled by Management):

I) List of Related Parties

a) Key Managerial Personnel :

Chairperson &Managing Director : Smt. V.R.Iyer

Executive Directors: Shri N. Seshadri

(up to 30.04.2013)

Shri M. S. Raghavan (up to 05.07.2013)

Shri B.P.Sharma

Shri Arun Shrivastava (w.e.f.05.08.13)

Shri R. Koteeswaran (w.e.f.05.08.2013)

(b) Subsidiaries:

(i) BOI Shareholding Limited.

(ii) PT Bank of India Indonesia Tbk

(iii) Bank of India (Tanzania) Limited

(iv) Bank of India (New Zealand) Limited

(v) Bank of India (Uganda) Limited

(vi) Bank of India (Botswana) Limited

(vii) BOI AXA Investment Managers Private Limited

(viii) BOI AXA Trustee Services Private Limited

(c) Associates :

(i) STCI Finance Limited

(ii) ASREC (India) Limited

(iii) Indo-Zambia Bank Limited

(iv) Gramin Bank of Aryavart (Formerly Known as AryavartKshetriyaGramin Bank)

(v) Jharkhand Gramin Bank

(vi) Narmada JhabuaGramin Bank

(vii) VidharbhaKonkanGramin Bank

(d) Joint Venture:

(i) Star Union Dai–Ichi Life Insurance Co. Ltd.

5.7. Impairment of Assets (Accounting Standard 28)

In respect of premises revalued earlier, there is an impairment loss of Rs. 10.46 crores, which, in accordance with the aforesaid accounting standard, has been charged to the revaluation surplus available for these assets.

Pursuant to Reserve Bank of India circular No. DBOD No. BP.95/21.04.048/2013-14 dated 7th February 2014, the Bank has utilised Rs. 179.49 Crores of floating provision, being 33% of floating provision of Rs. 543.92 Crores held on 31st March 2013 towards specific provisions for NPAs.

6.3. Draw Down from Reserves

The Reserve Bank of India, vide its circular dated 20th December 2013, has advised Banks to create a deferred tax liability (DTL) on outstanding amount in Special Reserve, as a matter of prudence. Accordingly, during the Year ended 31st March 2014, the Bank has made draw down of Rs. 431.67 Crores from General Reserve towards creation of DTL on Special Reserve outstanding as at 31st March, 2013.

6.4. Disclosure of complaints

6.5. Disclosure of Letters of Comfort (LoCs) issued by bank(As compiled by Management)

During current year, the bank has not issued any letter of comforts. During the year 2011-12 the bank has issued and undertaking to the governor, Bank of Botswana in respect of its wholly owned subsidiary, Bank of India (BTW) Ltd., to meet its financial commitments if they fall due.

During the year 2010-11 the bank issued parental guarantee in favour of Royal Bank of New Zealand for its wholly owned subsidiary, BOI(New Zealand) Ltd. to meet its financial obligations, if they fall due.

As on 31.03.2014 no financial obligations have arisen on the above commitments.

6.6. Provisioning Coverage Ratio (PCR)

The Provisioning to Gross Non-Performing Assets of the Bank as on 31st March 2014 is 58.68% (Previous year: 60.92%)

6.14. Unamortised Pension and Gratuity Liabilities:

During the year ended 31.03.2011, the Bank had re-opened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of the option by 22,338 employees, the bank had incurred additional liability of Rs. 2,212.15 Crores. Further, during the year ended 31.03.2011, the limit of Gratuity payable to the employees was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result the gratuity liability of the Bank had increased by Rs. 428.96 Crores.

As per the Reserve Bank of India 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, the Bank had opted to defer the additional liability of Rs. 2,641.11 Crores as mentioned above and amortise it over a period of five years commencing from financial year 2010-11 onwards. Accordingly, unamortised amount of Rs. 528.22 Crores (Previous year Rs. 1056.45 Crores) has been carried forward to be charged to the Profit and Loss account of future year/s.

6.15.Disclosure relating to Securitisation

The Bank has not floated any Special purpose Vehicle (SPV) during the Financial Year 2013-14.

6.16.Credit Default Swaps

The bank has not started dealing with Credit Default swaps up to end of the financial year 2013-14.

7. Other Notes

a) i) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/ interest tax liabilities of Rs. 857.58 Crores (Previous year 2012-13: Rs. 621.35 Crores) for which no provision is considered necessary based on various judicial decisions for past assessments on such disputes Payment/adjustments against the said disputed dues are included under Other Assets (Schedule 11)

a) iii) Provision of Income tax of Rs. 368.82 Crores (previous year Rs.603.89 Crores) has been written back during the year on the basis of favorable decisions of various appellate authorities.

f) Pending settlement of the proposed wage revision effective from November 2012, an ad-hoc provision of Rs. 269.51 Crores for the year (Previous year Rs. 70 Crores) has been made. The aggregate provision held as on 31st March, 2014 is Rs. 339.51 Crores (Previous year Rs. 70 Crores).

3. The financial statements of the subsidiaries, joint ventures and associates which are used in the consolidation have been drawn up to the same reporting date as that of the Parent Bank i.e. 31st March 2014 except for an associate Indo Zambia Bank Limited (IZBL). IZBL''s financial statements were prepared up to 31st December 2013 and reported no significant transaction for the quarter ended 31st March 2014.

4. In case of Domestic subsidiaries/ joint venture/ associates, accounting adjustments arising due to different accounting policies followed by Parent Bank and subsidiaries/ joint venture/ associates have been carried out on the basis of data provided by subsidiaries/ joint venture/ associates.

5. The Consolidated Financial Statements have been prepared on the basis of :

(i) Financial statements of PT Bank of India Indonesia Tbk as on 31.03.2014 certified by the Management and reviewed by an independent reviewer as per the local requirements of the country of incorporation.

(ii) Financial statements of Bank of India (Tanzania) Ltd. as on 31.03.2014 certified by the Management and reviewed by an independent reviewer. The Financial Statements as at 31.12.2013 of Bank of India (Tanzania) Ltd. has been audited as per the local requirements of the country of incorporation.

(iii) Financial statements of Bank of India (New Zealand) Ltd. as on

31.03.2014 certified by the Management and reviewed by an independent reviewer.

(iv) Financial statements of Bank of India (Uganda) Ltd. as on 31.03.2014 certified by the Management and reviewed by an independent reviewer as per the local requirements of the country of incorporation.

(v) Financial statements of Bank of India (Botswana) Ltd. as on 31.03.2014 certified by the Management and reviewed by an independent reviewer as per the local requirements of the country of incorporation.

(vi) Audited financial statements of BOI Shareholding Ltd., Star Union Dai-ichi Life Insurance Company Ltd., STCI Finance Ltd., Jharkhand Gramin Bank, Vidharbha Konkan Gramin Bank for the financial year ended 31.03.2014 and Indo Zambia Bank Ltd. for the nine months ended 31.12.2013.

(vii) Unaudited financial statements of BOI AXA Investment Managers Pvt. Ltd., BOI AXA Trustee Services Pvt. Ltd., ASREC (India) Ltd., Narmada Jhabua Gramin Bank and Gramin Bank of Aryavart for the financial year ended 31.03.2014 certified by their management.

The BOI group has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.

i) Primary Segment: Business Segments

a) Treasury Operations: ''Treasury'' for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

c) Retail Banking : Retail Banking includes exposures which fulfill following two criteria:

i) Exposure – The maximum aggregate exposure up to Rs. 5 Crores

ii) The total annual turnover is less than Rs. 50 Crores i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

d) Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

e) Allocation of Costs

a) Expenses directly attributed to particular segment are allocated to the relative segment.

b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/business managed.

ii) Secondary Segment: Geographical Segments

a) Domestic Operations

b) International Operations

G. AS 27 "Financial Reporting of Interests in Joint Ventures":

Aggregate amount of assets, liabilities, income and expenses related to the group''s interest in jointly controlled entities:


Mar 31, 2012

1. During the year bank has allotted 2,73,00,000 equity shares of Rs 10/- each at a premium of Rs 370.02 per share to Life Insurance Corporation of India as determined by the Board in terms of the Chapter VII of the Securities Exchange Board of India (SEBI) Regulations, 2009, as amended from time to time (the "SEBI ICDR Regulations") on preferential basis. The total amount of capital received by the bank on this account is Rs 1037.45 crore and consequently the Government holding has decreased from 65.86% to 62.72%.

2. Balancing of Subsidiary Ledger Accounts and confirmation/reconciliation of balances with foreign branches and NOSTRO Accounts, and Suspense, Drafts Payable, Clearing Difference, etc. is in progress on an on-going basis. Pending final clearance/adjustment of the above, including foreign branches, the overall impact, if any, on the accounts, in the opinion of the management, is not likely to be significant.

As regards Inter office adjustments, initial matching of debit and credit outstanding entries has been completed upto 31st March 2012. Reconciliation of residual entries is in progress. Pending final clearance/ adjustment of the entries, the overall impact, if any, on the accounts, in the opinion of the management, is not likely to be significant.

3. The following information is disclosed in terms of guidelines issued by RBI:

3.1 Sale and transfers to/from HTM Category:

The value of sales and transfers of securities to/from HTM category has not exceeded 5% of the book value of investments held in HTM category at the beginning of the year.

3.2 Disclosures on risk exposure in derivatives

i. Qualitative Disclosure

The Bank enters into derivative contracts such as interest rate swaps, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.

Risk management is an integral part of bank's business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an ongoing basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.

The Bank has a Risk Management Committee of Directors presided over by the Chairman and Managing Director.

Hedging swaps are accounted for on an accrual basis except for swap designated with an asset and liability that is carried at market value or lower of cost/ market value. In such cases, the swaps are marked to market and the resulting gain or loss is recorded as an adjustment to the market value of the designated asset or liability. Gains or losses on the termination of swaps are recognised when the offsetting gain or loss is recognised on the designated asset or liability. This implies that any gain or loss on the terminated swap would be deferred and recognised over the shorter of the remaining contracting life of the swap or the remaining life of the asset/liability.

Trading derivative positions are marked to market (MTM) and the resulting losses, if any, are recognised in the profit and loss account. Profit, if any, are not recognised on the settlement date. Gains or losses on termination of swaps are recorded as immediate income or expenses.

Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Directors. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.

The counter parties to the transactions are banks, primary dealers 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 Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.

The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.

Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant add-on factors as under according to the nature and residual maturity of the instrument.

While computing the credit exposure, "sold options" are excluded wherever the entire premium/fee or any other form of income is received / realized.

As per the extant RBI guidelines credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the "Standard" category, of the concerned counter party. At present the provision is to be maintained at 0.4% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in the books.

Exposure is reckoned as Sanctioned Limit or Balance outstanding whichever is higher. The above position is arrived at after taking into consideration all exposure such as Interest Rate Swaps, Derivatives and Forward Exchange Contracts)

Housing Development Finance Corporation Limited has been considered as NBFC based on RBI's views contained in their report on Annual Financial Inspection for 2010-11.

Tax expense for the year is after recognising Minimum Alternate Tax (MAT) credit entitlement of Rs 77.01 crore for earlier years.

3.3 Disclosures of Penalties imposed by RBI

During the financial year 2011-12, 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, except for a penalty of Rs 1 lakh paid to RBI for bouncing of SGL deal which was subsequently recovered from the constituent.

4. Disclosure requirements as per Accounting Standards (AS) where RBI has issued guidelines in respect of disclosure items for Notes to Accounts:

4.1 Accounting Standard 9 - Revenue recognition

Certain items of income are recognised on realisation basis as per Accounting Policy no. 2 of Schedule 17: Significant Accounting Policies. However, the said income is not considered to be material.

i) The effect of transitional liability till 31.03.2007 as required by the accounting standard has been recognised as an expense on straight line basis over a period of five years pursuant to limited revision of Standard on 17.10.2007. Accordingly, an amount of Rs 125.27 Crores has been charged to the Profit and Loss account for the year ended 31.03.2012 being 1/5th of the total transitional liability.

ii) As per the past practice, the bank has recognised contribution to employee provident fund as an expense. During the year, the bank has contributed Rs 28.67 crore (previous year Rs 56.83 crore) towards such fund which is a defined contribution plan.

iii) During the year ended 31.03.2011, 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 22,338 employees, the bank has incurred a liability of Rs 2,212.15 crore. Further, during the year ended 31.03.2011, 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 428.96 crore.

iv) In terms of the requirements of the Accounting Standard (AS) 15 : Employee Benefits, the entire amount of Rs 2,641.11 crore (i.e. Rs 2,212.15 crore Rs.428.96 crore) was required to be charged to the Profit and Loss Account during the year ended 31.03.2011. However, the Reserve Bank of India 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 would amortise the amount of Rs 2,641.11 crore over a period of five years. Accordingly an amount of Rs 528.22 crore (representing one-fifth of Rs 2,641.11 crore) has been charged to the profit and loss account for the current year and the balance of Rs 1,584.67 crore is being carried forward to be charged to profit and loss account of the bank in the coming years.

1. The Bank has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.

Primary Segment: Business Segments

a) Treasury Operations: 'Treasury' for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

c) Retail Banking: Retail Banking includes exposures which fulfil following two criteria:

i) Exposure - The maximum aggregate exposure up to Rs 5 Crores

ii) The total annual turnover is less than Rs 50 Crores i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

Allocation of Costs

a) Expenses directly attributed to particular segment are allocated to the relative segment.

b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/ business managed.

Secondary Segment: Geographical Segments

a) Domestic Operations

b) International Operations

4.2 Accounting Standard 18 - Related Party Transactions

I) List of Related Parties:

(a) Key Managerial Personnel :

Chairman &

Managing Director : Shri Alok K Misra

Executive Directors : Shri N. Seshadri

Shri. M. S. Raghavan (w.e.f. 01.01.2012)

Shri. B. A. Prabhakar (upto 15.12.2011)

(b) Subsidiaries :

(i) BOI Shareholding Limited.

(ii) PT Bank of India Indonesia Tbk (Formerly known as PT Bank Swadeshi)

(iii) Bank of India (Tanzania) Ltd.

(iv) Bank of India (New Zealand) Limited.

(v) Bank of India (Uganda) Ltd.

(c) Associates :

(i) STCI Finance Limited.

(Formerly known as Securities Trading Corporation of India Ltd.)

(ii) ASREC (India) Ltd.

(iii) Indo-Zambia Bank Ltd.

(iv) 5 Regional Rural Banks sponsored by the Bank

Aryavart Gramin Bank; Baitarani Gramya Bank; Jharkhand Gramin Bank; Narmada Malwa Gramin Bank; Wainganga Krishna Gramin Bank;

(d) Joint Venture :

(i) Star Union Dai-Ichi Life Insurance Co. Ltd.

The transactions with the subsidiaries and regional rural banks, being state controlled, have not been disclosed in view of para 9 of AS-18 on Related party disclosure issued by the ICAI exempting state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled.

4.3 Accounting Standard 27 - Investments in Joint Venture

Investments include Rs 120 crore (Previous year Rs 120 crore) representing Bank's interest in the following jointly controlled entity:

4.4 Accounting Standard 19 - Lease Financing

(i) The contractual maturities of the Bank's investment in lease financing and its components, which are included in advances, are set out below:

B. Contingent Liabilities

Such liabilities are dependent upon, the outcome of court order/arbitration/out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such cases.

5.1 Draw Down from Reserves

During the year, the bank has made a draw down of Rs 3.19 crore (Previous year Rs 1.44 crore) from the Special reserve currency swaps in terms of the RBI guidelines.

5.2 Disclosure of Letters of Comfort (LoCs) issued by bank

(As compiled by Management)

During the year 2011-2012, the Bank has issued an undertaking to the Governor, Bank of Botswana in respect of its wholly owned subsidiary, Bank of India (BTW) Ltd. (yet to be opened) to meet its financial commitments if they fall due.

During the year 2010-11 the Bank issued parental guarantee in favour of Royal Bank of New Zealand, for its wholly owned subsidiary, BOI (New Zealand) Ltd. to meet its financial obligations, if they fall due.

However, as on 31.03.2012 no financial obligations have arisen on the above commitments.

5.3 Provisioning Coverage Ratio (PCR)

The Provisioning to Gross Non-Performing Assets of the Bank as on 31st March 2012 is 64.18% (Previous year: 72.18%)

5.4 Unamortised Pension and Gratuity Liabilities:

As per the Reserve Bank of India 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, the Bank opted to amortise the said liability of Rs 2,641.11 Crores over a period of five years. Accordingly, Rs 528.22 Crores (representing one- fifth of Rs 2,641.11 Crores) has been charged to the Profit and Loss Account. In terms of the requirements of the aforesaid RBI circular, the balance amount carried forward, i.e., Rs 1,584.67 Crores (Rs 2,641.11 Crores minus Rs 1056.44 Crores) does not include any amount relating to the employees separated/retired.

6. Other Notes

a) Income Tax:

I) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/interest tax liabilities of Rs 420.67 crore for which no provision is considered necessary based on various judicial decisions for past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).

II) Provision for income tax for the year is arrived at after due consideration of the various judicial decisions on certain disputed issues.

b) Shifting of securities:

i) For the year ended 31-03-2012, Bank has shifted securities amounting to Rs 981.67 crore from HTM to AFS category and Rs 4.83 Crores loss has been booked as loss on such transfer.

ii) Securities amounting to Rs 7,340.94 Crores were shifted from AFS to HTM category and loss arised upon such transfer amounting to Rs 200.01 Crores has been provided for during the year.

iii) For the year ended 31.03.2012, bank has shifted portfolio of Venture Fund amounting Rs 29.55 crores from HTM to AFS and Rs3.11 crores of loss has arised due to such transfer.

(d) Profit on sale of Investments held under "Held to Maturity" category amounting to Rs 19.98 crore has been taken to the Profit & Loss Account and thereafter an amount of Rs 10.12 crore has been appropriated to the Capital Reserve, net of taxes and transfer to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.


Mar 31, 2011

1. During the year, the Bank annulled the forfeiture in respect of Nil (previous year 200) equity shares of face value of Rs. 10 each. Consequently, an amount of Rs. Nil (previous year Rs. 2000) has been transferred from forfeited Shares Account to paid up capital.

2. Balancing of Subsidiary Ledger Accounts and confirmation / reconciliation of balances with foreign branches and NOSTRO Accounts, and adjustment of entries in Suspense, Drafts Payable, Clearing Difference, etc. is in progress on an on-going basis. Pending final clearance/adjustment of the above, the overall impact, if any, on the accounts, in the opinion of the management, is not likely to be significant.

Initial matching of debit & credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 15.03.2011 for the purpose of reconciliation, which, is in progress. Pending final clearance/adjustment of the above, including foreign branches the overall impact, if any, on the accounts, in the opinion of the management, is not likely to be significant.

3. The following information is disclosed in terms of guidelines issued by RBI:

(b) Non-performing assets (NPAs)

The percentage of net NPAs to net advances as at 31st March, 2011 is 0.91% (Previous year 1.31%).

(e) Asset Liability Management

Maturity pattern of certain items of assets and liabilities

During the year, maturity pattern assumptions of assets and liabilities have been modified based on empirical studies of the data.

The above data has been compiled on the basis of the guidelines of RBI and above mentioned modified assumptions of the management, which have been relied upon by Auditors.

The exposure to capital market Rs. 3247.43 crore is within the limit of Rs. 4982.40 crores (i.e. 40% of Banks Net Worth Rs. 12456.00 crores as on 31.03.2010). The direct exposure to capital market is Rs. 1078.53 crores and is within 20% of banks Net Worth (Rs. 2491.20 crores as on 31.03.2010)

(r) Derivatives

Forward Rate Agreement/ Interest Rate Swap

Note: The terms of swaps are either to receive fixed interest and pay floating rate or to pay fixed interest and receive floating rate. A few floating to floating deals are undertaken to hedge interest rate risk on interest bearing assets and liabilities/trading purposes.

(A) No collaterals were required for the swaps as counterparty was either banks or premier corporates.

(B) There is no concentration of credit risk arising from the interest rate swaps undertaken during the year.

(t) Risk Exposure in Derivatives i. Qualitative Disclosure

The Bank enters into derivative contracts such as interest rate swaps, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.

Risk management is an integral part of banks business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an ongoing basis by means of management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.

The Bank has a Risk Management Committee of Directors presided over by the Chairman and Managing Director.

Hedging swaps are accounted for an accrual basis

except for swap designated with an asset and liability that is carried at market value or lower of cost / market value. In such cases, the swaps are mark to market and the resulting gain or loss is recorded as on adjustment to the market value of the designated assets or liability. Gains or losses on the termination of swaps are recognised when the offsetting gain or loss is recognised on the designated asset or liability. This implies that any gain or loss on the terminated swap would be deferred and recognised over the shorter of the remaining contracting life of the swap or the remaining life of the asset/ liability.

Trading derivative positions are mark to market (MTM) and resulting losses, if any, are recognised in the profit or loss account. Profit, if any, are not recognised. Income and expenses relating to the derivative contracts are recognised on the settlement date. Gains or losses on the termination of trading swaps are recorded as immediate income or expenses.

Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.

The counter parties to the transactions are banks, primary dealers 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 Exposures arising on account of derivative transactions.

Under the current exposure method, the credit risk exposure/ credit equivalent amount of derivative products is computed periodically on the basis of the market value of the product to arrive at its current replacement cost. Thus, the credit equivalent of the derivative contract would be the sum of the following two components.

A) The total replacement cost – obtained by “marking to market” of all the contracts with positive value (i.e. when the Bank has to receive money from the counter party): and

B) An amount for ‘potential future exposure- calculated by multiplying the total notional principal amount of the contract by the following credit conversion factor according to the residual maturity of the contract.

While computing the credit exposure, “sold options” are excluded wherever the entire premium / fee or any other form of income is received / realized.

As per the extant RBI guidelines credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the “Standard” category, of the concerned counterparty. At present the provision is to be maintained at 0.4% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in our books

(y) Disclosures 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.

(z) Draw down from Reserves:

During the year, the bank has drawn down an amount of Rs. 1.44 crores (Previous year Rs. 1.06 Crores) from special reserve currency swaps in terms of RBI guidelines

(aa) Income Tax:

I) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax / interest tax liabilities of Rs. 530.59 crore for which no provision is considered necessary based on various judicial decisions for past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).

II) Provision for income tax for the year is arrived at after due consideration of the various judicial decisions on certain disputed issues.

(ab) Letter of comfort issued by Bank in respect of subsidiaries (As compiled by Management) – During the year the Bank has issued parental guarantee in favour of Royal Bank of New Zealand, for our wholly owned subsidiary, BOI (New Zealand) Ltd. The financial impact is Nil, as subsidiary has not yet commenced operation.

(ad) Shifting of securities:

For the year ended 31-03-2011, Bank has shifted securities amounting to Rs. 4818.27 crores from HTM to AFS category and Rs. 12.56 crores loss has been booked. Further, securities amounting to Rs. 9016.80 crores was shifted from AFS to HTM category and Rs. 317.52 crores loss has been booked upon such transfer

For the year ended 31-03-2011, Bank has shifted securities amounting to Rs. 100.37 crores from HFT to AFS category and loss on such transfer amounting to Rs. 16.67 crores has been provided for during the year.

(al) Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

Name of the SPV sponsored

Domestic Overseas

NIL NIL

(am) Fees, remuneration received from bancassurance business:

For the year ended 31.03.2011, the bank received income of Rs. 33.96 Crore (Previous year Rs 32.36 crores) from Bancassurance business.

(ao) Profit on sale of Investments held under “Held to Maturity” category amounting to Rs. 9.95 crores has been taken to the Profit & Loss Account and thereafter an amount of Rs. 4.98 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.

(ap) During the year, Bank has sold 3% stake in one of its subsidiary – Star Union Daichi Life Insurance Co. Ltd., resulting which Banks stake has reduced to 48%. Accordingly, this Company has been de-recognized as its subsidiary.

4. Other Disclosures required by Accounting standards

The following information is disclosed in terms of Accounting Standards issued by the Institute of Chartered Accountants of India.

a) Accounting Standard 15 (Revised) – Employee Benefits

The effect of transitional liability till 31.03.2007 as required by the accounting standard has been recognised as an expense on straight line basis over a period of five years pursuant to limited revision of Standard on 17.10.2007. Accordingly, an amount of Rs. 125.27 crore has been charged to the Profit and Loss account for the year ended 31.03.2011 being 1/5th of the total transitional liability. An amount of Rs. 125.27 crore is being carried forward to be charged to Profit & Loss account of next year.

ii) As per the past practice, the bank has recognised contribution to employee provident fund as an expense. During the year, the bank has contributed Rs. 56.83 crores (previous year Rs. 68.64 crores) towards such fund which is a defned contribution plan.

iii) 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 22,338 employees, the bank has incurred a liability of Rs. 2,212.15 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. 428.96 Crores.

In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of Rs. 2,641.11Crores (i.e. Rs. 2,215.15 Crores + Rs. 428.96 Crores) is required to be charged to the Profit and Loss Account. However, the Reserve Bank of India has issued a circular no. DBOD.BPBC.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 would amortise the amount of Rs. 2,641.11 over a period of five years. Accordingly Rs. 528.22 Crores (representing one-fifth of Rs. 2,641.11 Crores) has been charged to the Profit and Loss Account. In terms of the requirements of the aforesaid RBI circular, the balance amount carried forward, i.e., Rs. 2,112.89 Crores (Rs. 2,641.11 Crores – Rs. 528.22 Crores) does not include any amount relating to the employees separated/ retired.

Had such a circular not been issued by the RBI, the profit of the bank would have been lower by Rs. 2112.89 Crores pursuant to application of the requirements of AS 15.

/ (b) Accounting Standard 17 - Segment Reporting :

1. The Bank has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.

Primary Segment: Business Segments

a) Treasury Operations: ‘Treasury for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

c) Retail Banking: Retail Banking includes exposures which fulfil following two criteria:

i) Exposure – The maximum aggregate exposure up to Rs. 5 Crore

ii) The total annual turnover is less then Rs. 50 crore i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

Allocation of Costs

a) Expenses directly attributed to particular segment are allocated to the relative segment.

b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees / business managed.

Secondary Segment: Geographical Segments

a) Domestic Operations

b) International Operations

(c) Accounting Standard 18 - Related Party Transactions:

I) List of Related Parties:

(a) Key Managerial Personnel :

Chairman & Managing Director : Shri Alok K Misra

Executive Directors : Shri B.A. Prabhakar

Shri M. Narendra (till 31.10.2010)

Shri N. Seshadri (from 01.11.2010)

(b) Subsidiaries :

(i) BOI Shareholding Ltd.

(ii) PT Bank Swadesi

(iii) BOI Tanzania Ltd.

(iv) Bank of India (New Zealand) Ltd.

(c) Associates :

(i) Securities Trading Corporation of India Ltd.

(ii) Star Union Dai – ichi Life Insurance Company Ltd.

(iii) ASREC (India) Ltd.

(iv) Indo-Zambia Bank Ltd.

(v) 5 Regional Rural Banks sponsored by the Bank

Aryavart Gramin Bank; Baitarni Gramya Bank; Jharkhand Gramin Bank; Narmada Malwa Gramin Bank; Wainganga Krishna Gramin Bank;

(b) Key Management Personnel :

The transactions with the Subsidiaries and Regional Rural banks, being state controlled, have not been disclosed in view of para 9 of AS-18 on Related party disclosure issued by the ICAI exempting state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled.

(d) Accounting Standard 19 – Lease Financing:

(ii) Lease income of Nil (Previous year Rs. 0.19 crore) is included under Interest earned.

(g) Details of movement in provisions in accordance with Accounting Standard 29, “Provisions, Contingent Liabilities and Contingent Assets”:

B. Contingent Liabilities

Such Liabilities as mentioned are dependent upon, the outcome of court order/arbitration/out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such case.

5. Previous years figures have been regrouped/rearranged, wherever considered necessary.


Mar 31, 2010

1. During the year, the Bank annulled the forfeiture in respect of 200 (previous year 500) equity shares of face value of Rs. 10 each. Consequently, an amount of Rs. 2000 (previous year Rs. 5000) has been transferred from forfeited Shares Account to paid up capital.

2. Balancing of Subsidiary Ledger Accounts and confi rmation / reconciliation of balances with foreign branches and NOSTRO Accounts, and adjustment of entries in Suspense, Drafts Payable, Clearing Difference, etc. is in progress on an on-going basis. Pending fi nal clearance / adjustment of the above, the overall impact, if any, on the accounts, in the opinion of the management, is not likely to be signifi cant.

Initial matching of debit & credit outstanding entries in various heads of accounts included in Inter offi ce Adjustments has been completed up to 15.03.2010 for the purpose of reconciliation, which, is in progress. Pending fi nal clearance / adjustment of the above, including foreign branches the overall impact, if any, on the accounts, in the opinion of the management, is not likely to be signifi cant.

3. The following information is disclosed in terms of guidelines issued by RBI:

(b) Non-performing assets (NPAs)

The percentage of net NPAs to net advances as at 31st March, 2010 is 1.31% (Previous year 0.44%).

(c) Provisions & Contingencies:

The break-up of “Provisions and Contingencies” appearing

(t) Risk Exposure in Derivatives

i. Qualitative Disclosure

The Bank enters into derivative contracts such as interest rate swaps, currency swaps and currency options to hedge on balance sheet assets and liabilities, to meet client requirements or for trading purpose. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.

Risk management is an integral part of bank’s business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an ongoing basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is suffi cient awareness of the risks and the size of exposure of the trading activities in derivative operations.

The Bank has a Risk Management Committee of Directors presided over by the Chairman and Managing Director.

Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked to market (MTM) and the resulting losses, if any, are recognised in the profi t and loss account. Profi t, if any, are not recognised on the settlement date. Gains or losses on termination of swaps are recorded as immediate income or expenses.

Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/ or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Directors. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.

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 Exposures arising on account of the interest rate and foreign exchange derivative transactions. Current Exposure Method is the sum of current credit exposure and potential future exposure of these contracts.

The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the bank has to receive money from the counter party.

(y) Disclosures of Penalties imposed by RBI: During the fi nancial year 2009-10, 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 specifi ed by the Reserve Bank of India in accordance with the said Act.

(z) Provision for wage revision: Pending quantifi cation of wage revision in pursuance of agreement entered into between Indian Bank’s Association on behalf of member Banks and union of Workmen/Offi cers, an estimated provision of Rs. 375.06 crore has been made during the year. However, the impact of retirement benefi ts has not been considered in the above provision.

(aa) Draw down from reserves:

During the year, the bank has drawn down an amount of Rs. 1.06 crore (previous year Rs.0.93 Crore) from special reserve currency swaps in terms of RBI guidelines.

(ab) Income Tax:

i) Claims against the bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/ interest tax liabilities of Rs. 236.33 crore which has been paid/ adjusted and included under Other Assets (schedule 11). In respect of these claims, provision for tax is not considered necessary based on various judicial decisions for past assessments on such disputes. Management does not envisage any liability in respect of such disputed issues.

ii) Provision for income tax for the year is arrived at after due consideration of the various judicial decisions on certain disputed issues.

(ae) Un-reconciled Nostro entries taken to General Reserve

During the year ended 31.03.2010, in terms of RBI circular DBOD No. BP.BC.133/21.04.018/2008-09 Dated 11th May 2009, Bank has credited Rs. 9,57,24,734.16 to the Profi t & Loss account in respect of outstanding credit entries of individual value of less than USD 2500 or equivalent in Nostro account originated upto March 31, 2002. The same has been appropriated to Revenue Reserve and will not be available for declaration of dividend.

(af) Shifting of securities:

For the year ended 31-03-2010, Bank has shifted securities amounting to Rs.8882 Crores from HTM to AFS category and no loss has arised upon such transfer.

For the year ended 31-03-2010, Bank has shifted securities amounting to Rs.40.14 Lacs from HFT to AFS category and loss arised upon such transfer amounting to Rs.6.61 Lacs has been provided during the year.

(ao) Fees, remuneration received from bancassurance business:

For the year ended 31.03.2010, the bank received income of Rs. 32.36 Crore from Bancassurance business.

(aq) Agriculture Debt Relief Scheme

In terms of Reserve Bank of India guidelines, the Bank has implemented the Agriculture Debt relief Scheme under Agriculture Debt Waiver and Debt Relief Scheme 2008 for which, preliminary claim of Rs. 222.62 crore was preferred with Reserve Bank of India. The Bank has made a provision for loss in the present value terms in accordance with the said Reserve Bank Scheme amounting to Rs. 7.58 Crore.

1. The Bank has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.

Primary Segment: Business Segments

a) Treasury Operations: ‘Treasury’ for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.

b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.

c) Retail Banking : Retail Banking includes exposures which fulfi l following two criteria:

i) Exposure – The maximum aggregate exposure up to Rs. 5 Crore

ii) The total annual turnover is less than Rs. 50 crore i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.

Pricing of Inter-Segmental transfers

Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.

Allocation of Costs

a) Expenses directly attributed to particular segment are allocated to the relative segment.

b) Expenses not directly attributable to specifi c segment are allocated in proportion to number of employees / business managed.

Secondary Segment: Geographical Segments

a) Domestic Operations

b) International Operations

(c) Accounting Standard 18 - Related Party Transactions:

I) List of Related Parties:

(a) Key Managerial Personnel :

Chairman & Managing Director Shri T. S. Narayanasami - Till 31-05-2009 Shri Alok Kumar Misra - from 05-08-2009 till date

Executive Director

Shri B.A. Prabhakar Shri M. Narendra

(b) Subsidiaries :

(i) BOI Shareholding Ltd.

(ii) Star Union Dai –Ichi Life Insurance Company Ltd.

(iii) PT Bank Swadesi

(iv) BOI Tanzania Ltd.

(c) Associates :

(i) Securities Trading Corporation of India Ltd.

(ii) Indo-Zambia Bank Ltd.

(iii) 5 Regional Rural Banks sponsored by the Bank

Aryavart Gramin Bank; Baitarni Gramya Bank; Jharkhand Gramin Bank; Narmada Malwa Gramin Bank; Wainganga Krishna Gramin Bank;

(f) Accounting for Taxes on Income (AS 22):

i) Deferred tax assets are recognised for future tax consequences of temporary differences arising between the carrying values of assets and liabilities and their respective tax bases and operating carry forward losses. Deferred tax assets are recognised only after giving due consideration to prudence. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. The impact on deferred tax assets and liabilities on account of a change in the tax rates is also recognised in the income statement.

ii) During the year, an amount of Rs 248.22 crore (net) has been debited [Previous year Rs. 361.52 crore (net) credited] to the Profi t and Loss account by way of adjustment to Provision for deferred tax.

B. Contingent Liabilities

Such Liabilities as mentioned are dependent upon, the outcome of court order/ arbitration/ out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such case.

Find IFSC