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Notes to Accounts of Standard Chartered PLC
Mar 31, 2014
Contingent Liabilities 12 12,284,923,351 12,014,900,080
For the year ended For the year ended
31 March 2014 31 March 2013
(Rsin 000s) (Rs in 000s)
Specific provisions against
advances (net) 27,993,948 2,138,491
General provision against
standard assets 70,000 -
Provision for country risk
exposure 39,181 15,149
Charge / (release) against
Investments 826,668 355,900
Provision on account of tax
- Current tax expense [Refer
note 18 E (8)] 19,301,316 17,112,000
- Deferred tax credit [Refer
note 18 E (7)] (10,803,231) (49,536)
Total provisions and
contingencies 37,427,882 19,572,004
A) Background
The accompanying financial statements for the year ended 31 March 2014
comprise the accounts of India branches of Standard Chartered Bank
(''SCB'' or ''the Bank''), which is incorporated with limited
liability in the United Kingdom. The Bank''s ultimate holding company
is Standard Chartered Plc (''SCPLC''), which is incorporated in the
United Kingdom.
B) Basis of preparation
The financial statements are prepared under the historical cost
convention on the accrual basis of accounting, unless otherwise stated,
and in accordance with Generally Accepted Accounting Principles
(''GAAP'') in India, statutory requirements of the Banking Regulation
Act, 1949, circulars and guidelines issued by the Reserve Bank of India
(''RBI'') from time to time, the Accounting Standards (''AS'')
prescribed by the Companies (Accounting Standards) Rules, 2006 (as
amended) to the extent applicable and current practices prevailing
within the banking industry in India.
The financial statements are presented in Indian Rupees rounded off to
the nearest thousand, unless otherwise stated.
C) Use of estimates
The preparation of the financial statements in conformity with GAAP
requires the management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, income and expenses and
disclosures relating to the contingent liabilities reported in the
financial statements. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognised prospectively in current and future
periods.
(ii) Subordinated Debt
Schedule 4 - Borrowings includes an amount of Rs.29,958 million (previous
year: Rs.27,143 million) pertaining to subordinated debts raised from
Head Office, details of which are given below:
(xiv) Details of non performing financial assets purchased
The amount of non performing financial assets purchased during the year
is nil (2012-13: Nil).
(xv) Details of non performing financial assets sold (other than sold
to Securitisation Company/ Reconstruction Company)
The amount of non performing financial assets sold (other than sold to
Securitisation Company/ Reconstruction Company) during the year is nil
(2012-13: Nil).
(xvii) Unsecured Advances
The Bank has unsecured advances amounting to Rs.2,093 million (previous
year: Rs.1,260 million) for which it holds intangible securities such as
charge over the rights, licenses, authority, etc. and the estimated
value of such intangible collateral is Rs.10,050 million (previous year:
Rs.2,800 million).
(xviii) Overseas Assets, NPA and Revenue
As the Bank is a branch of a foreign bank, this disclosure is
considered as not applicable.
(xxi) Assets Securitised (including assignment)
(a) Securitisation
The Bank has not entered into any securitisation transactions during
the year (2012-13: Nil).
(b) Assignment
In accordance with RBI circular DB0D.N0.BP.BC.60/21.04.048/2005-06
dated 01 February 2006, the details of loan assignments are given
below:
(xxii) Risk Exposure in Derivatives
(a) Exchange traded interest rate derivatives
The Bank has entered into exchange traded interest rate derivatives
during the year (2012-13: Nil) and amount outstanding at the year end
is Rs.300 million (previous year: Nil).
(b) Qualitative Disclosures
Structure and organisation of management of risk in derivatives trading
The derivatives business is managed by the front office with
independent back office for confirmation and settlement of trades. A
separate middle office team validates all the derivative transactions
and the processing and settlement is done by the back office team. The
market risk team is responsible for monitoring market risk limits for
derivative instruments. VAR (Value at Risk) is the primary risk
measure and supplemented by other limits like PV01 as required and
appropriate. There is clear segregation of duties and different
reporting lines to ensure independent monitoring and reporting.
Risk monitoring team
The Bank is exposed to market risk, liquidity risk, operational risk
and credit risk on the derivatives portfolio. The Bank''s risk
management group, compliance group and internal audit group assist in
identifying, assessing and monitoring of these principal risks in
accordance with policies and procedures.
Provisioning, collateral and credit risk mitigation
Counterparties are reviewed by credit officers who set their credit
limits. The Bank does a credit analysis which includes a review of
facility detail, credit grade determination and financial spreading/
ratio analysis. The Bank uses a numerical grading system, for
quantifying the risk associated with counterparty.
The Bank applies the Current Exposure methodology to manage credit risk
associated with derivative transactions. This is calculated by taking
the cost of replacing the contract, where its mark-to-market value, is
positive together with an estimate of the potential future change in
the market value of the contract, reflecting the volatilities that
affect it. The credit risk on contracts with a negative mark-to-market
value is restricted to the potential future change in their market
value. Provisioning on the exposure taken on derivative contracts is
made as prescribed by RBI Circular No.
DBOD.No.BP.BC.1/21.04.048/2013-14 dated 01 July 2013.
(xxiii) Interest Rate Swaps, Interest Rate Options and Forward Rate
Agreements
The notional principal amount of Interest Rate Swaps (''IRS''),
Interest Rate Options (''IRO''), Interest Rate Futures (''IRF'') and
Forward Rate Agreements (''FRA'') are:
The credit risk is the pre-settlement risk which is estimated in
accordance with the Current Exposure Method. All IRS, IRO, IRF and FRA
are monitored for price risks under the Value at Risk approach.
The Bank has taken Rs.3,323 million as collateral from counter parties in
respect of derivative contracts (previous year: Rs.2,008 million).
The gross positive mark to market on the IRS, IRO, IRF and FRA, which
is the potential loss that the Bank would incur in case the counter
parties fail to fulfill their obligations are:
As at 31 March 2014, the exposure on IRS, IRO, IRF and FRA is spread
over various industries. Based on the notional principal amount, the
maximum single industry exposure lies with banks at 88% (previous year:
88%).
(xxiv) Country Risk Exposure
Disclosure for country risk exposure in accordance with RBI Master
Circular No. DBOD.BP.BC No.7/ 21.04.018/2013-14 dated 01 July 2013 is
given under:
(xxv) Prudential Credit Exposure Limits - Single and Group Borrower
Exposure
The Bank''s exposure to single and group borrowers has been within
limits* specified by RBI. The Bank has enhanced the credit exposure by
an additional 5 per cent of capital funds in respect of Reliance
Industries Limited* with the approval of the Management Committee of
the Bank (2012-13: Reliance Industries Limited, Birla Sun Life Mutual
Fund and Clearing Corporation of India Limited).
* During the year, there was a passive breach due to INR currency
depreciation leading to an increase in the INR equivalent of USD
denominated exposure.
(xxvi) Provisions and contingencies
(a) As per AS 29 - Provisions, Contingent Liabilities and Contingent
Assets, movement in provision for reward points awarded to customers
and movement in other provisions are given below:
1 Basis of calculation of provision for reward points is explained in
Note 18 (D) (12). The provision is utilised when actual claims for
redemption are made by customers.
(b) Description of Contingent Liabilities
(i) Claims against the Bank not acknowledged as debts
These represent claims filed against the Bank relating to certain legal
and tax proceedings that are currently in progress.
(ii) Liability on account of outstanding foreign exchange contracts
The Bank enters into foreign exchange contracts on its own account and
for customers. Forward exchange contracts are commitments to buy or
sell foreign currency at a future date at the contracted rate. The Bank
also undertakes currency futures transactions.
(iii) Liability on account of derivative contracts
These include notional principal on outstanding cross currency swaps,
currency options, forward rate agreements, interest rate swaps,
interest rate futures and interest rate options.
(iv) Guarantees given on behalf of constituents, acceptances,
endorsements and other obligations
As a part of its commercial banking activities, the Bank issues
documentary credit and guarantees on behalf of its customers.
Documentary credit such as letters of credit enhances the credit
standing of the customers of the Bank. Guarantees generally represent
irrevocable assurances that the Bank will make payments in the event of
the customer failing to fulfill its financial or performance
obligations. Irrevocable Payment Commitments are included under
guarantees given on behalf of constituents in India.
(v) Other items for which the Bank is contingently liable
These includes capital commitments, recourse obligations representing
credit enhancements in the form of cash collaterals in respect of
securitised loans, forward asset purchase and obligations undertaken on
sell down of certain assets and amount payable on securities purchased.
(d) Floating Provisions
The Bank does not have any floating provision as at 31 March 2014
(previous year: Nil).
(e) Draw down from reserves
During the year ended 31 March 2014, there was a draw down from
Investment Reserve of Rs.562 million (2012-13: Nil), in line with RBI
guidelines.
(xxvii) Retirement Benefits
(a) Defined Benefit Plans
Reconciliation of opening and closing balance of the present value of
the defined benefit obligations for retirement benefits which includes
pension, gratuity and compensated absences is given below:
(xxix) Customer complaints and awards of Banking Ombudsman
In accordance with RBI circulars DBOD No.Leg.BC.22/09.07.006/2013-14
dated 01 July 2013 and DBOD.BP.BC.No.49/21.04.018/2013-14 dated 03
September 2013, details with respect to customer complaints and awards
passed by the Banking Ombudsman are given below:
Note: Previous year numbers are not comparable as current year includes
4,746 complaints pertaining to cases of failed ATM transactions at
other bank ATMs, reported vide aforementioned circular dated 03
September 2013. The Bank has also undertaken enhanced complaint
identification and monitoring mechanism during the year.
(2) Segment reporting
(i) Segment description
The Bank has disclosed its operations under the following segments:
Segment Definition Activities
Treasury Treasury activities include foreign exchange, fixed income,
money market and derivative transactions.
Wholesale Banking Local corporate financing, corporate advisory and all
advances to trusts, partnership firms, companies and statutory bodies,
which are not included under the "Retail Banking" segment, are
reported under Wholesale Banking.
Retail Banking Retail banking serves retail customers through the
branch network and other delivery channels. This
segment raises deposits from customers and makes loans and provides
other services to such customers. This segment also includes activities
relating to credit cards, debit cards, mortgage loans, third party
product distribution and their associated costs. Exposures are
classified under retail banking taking into account the orientation,
product, granularity and individual exposure criteria.
Others Others include Corporate Real Estate Services and other items
not allocable in the aforementioned
segments
The classification of exposures to the respective segments conform to
the guidelines issued by RBI vide DBOD.No.BPBC.81/21.04.018/2006-07
dated 18 April 2007 based on the information available for
classification.
(ii) Segment Accounting Policy
Segment results are determined after considering the following
inter-unit notional charges / recoveries:
a. Fund Transfer Pricing:
Treasury gives notional interest benefit to other divisions for the
funds mobilised by the latter through deposits, and similarly charge
notional interest to other divisions for the funds utilised by them for
lending and investment purposes. Based on tenor of assets /
liabilities and market scenarios, Treasury calculates notional interest
rates used for this purpose.
b. Premises Rental Chargeback:
Individual business segments are charged rent based on notional market
values and the same is credited to ''Others'' (Corporate Real Estate
Services) in respect of the premises occupied by them.
c. Support costs (costs pertaining to Finance, HR, Corporate Real
Estate Services, Legal & Compliance, etc.) are allocated to Treasury,
Wholesale & Retail banking segments based on managements'' estimates of
the benefits accruing to these segments for the costs incurred. This is
similar to the basis used for the internal management reporting.
d. Capital & Reserves and attributable earnings thereon are allocated
to individual business segments based on period end Risk Weighted
Assets.
(iii) Geographic Segments
As the Bank does not have any material earnings or assets originating
outside India, the Bank is considered to operate only in the domestic
segment.
(iv) Segment Reporting
(3) Penalties
a. During the year, no penalty was levied by RBI in exercise of powers
under section 46(4) of the Banking Regulation Act, 1949 (2012-13: Nil).
b. RBI levied penalty of Rs.7 (in 000s) (2012-13: Rs.2,165 (in 000s)) for
shortages / forged / soiled notes deposited by the Currency Chest
branches.
c. Penalty levied by RBI for not providing exchange facility of soiled
notes to customers and public was nil (2012-13: Rs.10 (in 000s)).
(4) Related Party Disclosures
(i) The list of related parties as defined in AS 18 - Related Party
Disclosures and the nature of their relationship with Standard
Chartered Bank - India Branches are given below:
(a) Ultimate Parent Company Standard Chartered Plc
(b) Parent Company
Standard Chartered Holding Ltd.
(c) Head Office
Standard Chartered Bank, UK
(d) Branches of Head Office
- Standard Chartered Bank China
- Standard Chartered Bank USA
- Standard Chartered Bank UK
- Standard Chartered Bank Sri Lanka
- Standard Chartered Bank Bahrain
- Standard Chartered Bank Qatar
- Standard Chartered Bank United Arab Emirates
- Standard Chartered Bank Dubai International Financial Centre
- Standard Chartered Bank Oman
- Standard Chartered Bank Singapore
- Standard Chartered Bank Korea
- Standard Chartered Bank Japan
- Standard Chartered Bank South Africa
- Standard Chartered Bank Philippines
- Standard Chartered Bank Bangladesh
- Standard Chartered Bank Jordan
- Standard Chartered Bank Indonesia
- Standard Chartered Bank Germany
(e) Subsidiaries of Head Office (Standard Chartered Bank, UK)
- Scope International Private Limited
- St Helen''s Nominees India Private Limited
- Standard Chartered (India) Wealth Advisory Services Private Limited
- Standard Chartered Bank (China) Limited
- Standard Chartered Bank (Hong Kong) Limited
- Standard Chartered Bank (Mauritius) Limited
- Standard Chartered Bank (Pakistan) Limited
- Standard Chartered Bank (Taiwan) Limited
- Standard Chartered Bank (Thai) Public Company Limited
- Standard Chartered Bank Nepal Limited
- Standard Chartered Finance Limited
- Standard Chartered Investments and Loans (India) Limited
- Standard Chartered Private Equity (Mauritius) Limited
- Standard Chartered Bank Botswana Limited
- Standard Chartered Bank Ghana Limited
- Standard Chartered Bank Kenya Limited
- Standard Chartered Private Equity Advisory (India) Private Limited
- Standard Chartered Securities (India) Limited
- Standard Chartered Bank Malaysia - Berhad
- Standard Chartered First Bank Korea Limited
- Standard Chartered Strategic Brand Management Limited
- Standard Chartered Bank Sierra Leone Limited
- Standard Chartered Bank Nigeria Limited
- Standard Chartered Bank Cote D''lvoire
- Standard Chartered Bank (Vietnam) Limited
- Standard Chartered Private Equity (Mauritius) II Limited
- Standard Chartered Private Equity (Mauritius) lll Limited
- Standard Chartered Bank Cameroon S.A
- Standard Chartered Bank Gambia Limited
- Standard Chartered Financial Holdings
- Standard Chartered Bank Zimbabwe Limited
- Standard Chartered IL&FS Asia Infrastructure Growth Fund Company
Pte. Limited
- Standard Chartered (Thailand) Company Limited
Note: Categories (d) and (e) above include only those related parties
with whom transactions have occurred during the current / previous
year.
(f) Key Management Personnel
In accordance with the RBI circular DBOD.BP.BC.No.7/21.04.018/2013-14
dated 1 July 2013, only Mr. Sunil Kaushal, the Chief Executive Officer
(''CEO'') of the Bank, falls under the category of key management
personnel for the year 2013- 14, hence, no disclosures pertaining to
him are provided.
(ii) Transactions and balances
In line with the RBI circular DBOD.BP.BC.No.7/21.04.018/2013-14 dated
01 July 2013, related party disclosures exclude transactions in a
category where there is only one related party (i.e. key management
personnel) and where the Bank has an obligation under law to maintain
confidentiality in respect of their customer transactions.
(iii) Material related party transactions are given below:
The following were the material transactions between the Bank and its
related parties for the year ended 31 March 2014. A specific related
party transaction is disclosed as a material related party transaction
wherever it exceeds 10% of all related party transactions in that
category.
Leasing Arrangements
For availing leasing service - payment of rent to Scope International
Private Limited Rs.10 million (2012-13: Rs.9 million) and Standard
Chartered Finance Limited Rs.23 million (2012-13: Rs.12 million).
For providing leasing services - receipt of rent from Standard
Chartered Finance Limited Rs.85 million (2012-13: Rs.86 million) and
Standard Chartered Securities (India) Limited Rs.137 million (2012-13:
Rs.157 million).
Sale of Fixed Assets
Sale of Fixed Assets to Standard Chartered Securities (India) Limited
is nil (2012-13: Rs.5 million).
Employee Share Options
Expenses incurred on employee share options payable to Head Office Rs.443
million (2012-13: Rs.686 million).
Rendering of Services
During the year the Bank provided secondment, amenities and other
services to related parties. The material transactions were with
Standard Chartered Finance Limited Rs.313 million (2012-13: Rs.326 million)
Standard Chartered Private Equity Advisory (India) Private Limited Rs.442
million (2012-13: Rs.422 million), Standard Chartered Bank, Singapore
Rs.371 million (2012-13: Rs.219 million) & Standard Chartered Securities
(India) Limited Rs.269 million (2012-13: Rs.319 million).
Receiving of Services
During the year the Bank availed of back office support, brokerage,
marketing and other services from related parties. The material
transactions were back office support services from Scope International
Private Limited Rs.2,460 million (2012-13: Rs.2,287 million), marketing
services and back office support from Standard Chartered Finance
Limited Rs.1,107 million (2012-13: Rs.1,206 million) and royalty payable to
Standard Chartered Strategic Brand Management Limited Rs.853 million
(2012-13: Rs.782 million).
Interest Paid
Interest on subordinated debt to Head Office Rs.835 million (2012-13:
Rs.829 million), interest on money market borrowings to Head Office Rs.95
million (2012-13: Rs.211 million) and interest on Fixed Deposit to
Standard Chartered Scope International Private Limited is Rs.171 million
(2012-13: Rs.138 million).
Interest Received
Interest on term loan from Standard Chartered Scope International
Private Limited is nil (2012-2013: Rs.9 million), interest working
capital loan from Standard Chartered Investments & Loans Limited Rs.35
million (2012-13: Rs.46 million) and interest on money market lending
from Head Office Rs.13 million (2012-13: Rs.8 million) and interest on
money market lending & bank balances from Standard Chartered Bank, USA
Rs.4 million (2012-13: Rs.16 million).
Foreign Exchange Transactions
Sale of foreign currencies to Head Office Rs.2,193,805 million (2012-13:
Rs.1,957,973 million), Standard Chartered Bank, USA Rs.704,730 million
(2012-13: Rs.660,495 million), Standard Chartered Bank, Singapore
Rs.562,730 million (2012-13: Rs.493,299 million) and Standard Chartered
Bank Japan Rs.504,281 million (2012-13: Rs.64,009 million).
Purchase of foreign currencies from Head Office Rs.2,248,072 million
(2012-13: Rs.1,968,085 million), Standard Chartered Bank, USA Rs.704,172
million (2012-13: Rs.661,526 million), Standard Chartered Bank, Singapore
Rs.583,417 million (2012-13: Rs.489,444 million) and Standard Chartered
Bank Japan Rs.507,326 million (2012-13: Rs.64,004 million).
Fee and Commission Income / Other Income
Receipt of fees from Head Office Rs.2,861 million (2012-13: Rs.4,345
million) and Standard Chartered Bank, Singapore Rs.967 million (2012-13:
Rs.753 million).
Service Fees on Guarantees & Letters of Credit
Receipt of trade fees from Head Office Rs.4 million (2012-13: Rs.2
million), Standard Chartered Bank, Nigeria Rs.3 million (2012-13: Rs.3
million), Standard Chartered Bank, United Arab Emirates Rs.4 million
(2012-13: Rs.3 million), Standard Chartered Bank, Singapore Rs.4 million
(2012-13: Rs.2 million), Standard Chartered Bank Malaysia - Berhad Rs.17
million (2012-13: Rs.0.2 million) and Standard Chartered Bank Bangladesh
Rs.6 million (2012-13: Rs.0.2 million).
Payment of fees to Standard Chartered Bank, United Arab Emirates Rs.0.3
million (2012-13: Rs.0.2 million), Standard Chartered Bank, Sri Lanka
Rs.0.3 million (2012-13: Rs.0.3 million), and Standard Chartered Bank,
Singapore Rs.0.2 million (2012-13: Rs.0.5 million).
Purchase and Sale of Investments
Purchase of investments from Standard Chartered Bank (Mauritius)
Limited Rs.16,613 million (2012-13: Rs.13,860 million) and Standard
Chartered Bank, Singapore Rs.73,890 million (2012-13: Rs.22,880 million).
Sale of investments to Standard Chartered Bank, Singapore Rs.15,324
million (2012-13: Rs.30,853 million) and Standard Chartered Bank
(Mauritius) Limited to Rs.33,467 million (2012-13: Rs.33,828 million).
- There are no provisions relating to contingent rent
- The terms of renewal / purchase options and escalation clauses are
those normally prevalent in similar agreements
- There are no undue restrictions or onerous clauses in the
agreements
- Initial direct costs for leases given are recognised as an expense
in Profit and Loss Account
(7) Deferred Tax
The deferred tax benefit of Rs.10,803 million for the year ended 31 March
2014 (2012-13: Rs.50 million) is included in provision on account of tax
under Schedule 17- Provisions and Contingencies.
The primary components that gave rise to deferred tax assets and
liabilities included in the balance sheet are as follows:
(9) Portfolio Purchase
The Bank has purchased loans (retail loans) amounting to Rs.2,113 million
(2012-13: Rs.15,559 million) from various NBFCs, banks and other
institutions.
(10) Disclosure on remuneration
The Bank''s compensation policies including that of CEO''s, is in
conformity with the Financial Stability Board principles and standards.
In accordance with the requirements of the RBI Circular No. DBOD
No.BC.72/29.67/001/2011-12 dated 13 January 2012, the Regional Office
of the Bank has submitted a declaration to RBI confirming the aforesaid
matter.
(11) Employee Share Based Payment
The eligible employees of the Bank have been granted stock awards as
equity shares of the ultimate holding company, SCPLC, under various
share schemes such as Restricted Share Award (RSA), Deferred Restricted
Share Award (DRSA), Performance Share Award (PSA), Sharesave Plan, etc.
During the year, the Bank has recognised an amount of Rs.443 million
(2012-13: Rs.686 million) under the head ''Payments to and Provisions
for Employees'', as cost on account of share-based payments under
Schedule 16 - Operating Expenses.
(12) Revaluation of Premises
Premises are revalued periodically and are stated at revalued cost less
accumulated depreciation. Valuation of the premises was conducted in
March 2014 by external registered valuers. Out of the total net
revaluation deficit of Rs.3,284 million, amount of Rs.1,077 million has
been transferred to Property Revaluation Reserve under Schedule 2 -
Reserves and Surplus and balance amount of Rs.2,207 million revaluation
loss has been recognised in the Profit and Loss account under Schedule
16 - Operating Expenses.
(13) Prior Year Comparatives
Previous year figures have been reclassified or regrouped wherever
necessary to conform to the current year''s presentation.
Mar 31, 2013
A) Background
The accompanying financial statements for the year ended 31 March 2013
comprise the accounts of India branches of Standard Chartered Bank
(''SCB'' or ''the Bank''), which is incorporated with limited
liability in the United Kingdom. The Bank''s ultimate holding company
is Standard Chartered Plc (''SCPLC''), which is incorporated in the
United Kingdom.
B) Basis of preparation
The financial statements are prepared under the historical cost
convention on the accrual basis of accounting, unless otherwise stated,
and in accordance with Generally Accepted Accounting Principles
(''GAAP'') in India, statutory requirements of the Banking Regulation
Act, 1949, circulars and guidelines issued by the Reserve Bank of India
(''RBI'') from time to time, the Accounting Standards (''AS'')
prescribed by the Companies (Accounting Standards) Rules, 2006 (as
amended) to the extent applicable and current practices prevailing
within the banking industry in India.
The financial statements are presented in Indian Rupees rounded off to
the nearest thousand, unless otherwise stated.
C) Use of estimates
The preparation of the financial statements in conformity with GAAP
requires the management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, income and expenses and
disclosures relating to the contingent liabilities reported in the ||
financial statements. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognised prospectively in current and future
periods.
(1) Specific liabilities of the erstwhile Standard Chartered Grindlays
Bank (''SCGB'')
As per clause 1.7 of the Scheme of Amalgamation of the Indian
Undertaking of SCGB with that of SCB, approved by the RBI in August
2002 under Section 44A of the Banking Regulation Act 1949, certain
''Specified Liabilities'' were excluded from the amalgamation. These
''Specified Liabilities'' are defined in Schedule A to the said Scheme
and comprise the Indian Special Court Exposures and the FERA inquiry /
proceedings in this regard. SCPLC had written to RBI vide letter dated
26 July 2002 stating that SCB will be responsible for all liabilities
of SCGB excluded under clause 1.7 of the Scheme, should these
liabilities crystallise and in the event that SCGB does not fulfill its
obligations in meeting these liabilities either from India or abroad
within the required time under due process of law, as and when such
liabilities become enforceable. An amount of Rs.67 million was ordered as
penalty in the adjudication proceedings in respect of FERA inquiry /
proceedings conducted by the ED and the same was deposited in July
2007. These orders have been challenged before the Appellate Tribunal
and the hearings are not yet completed.
(2) Taxation
Provision on account of tax for the year ended 31 March 2013 is Rs.17,062
million (2011-12: Rs.8,090 million).
Tax liabilities (including interest) of the Bank amounting to Rs.6,043
million (previous year: Rs.5,235 million for the assessment years 1991-92
to 2008-09) (included in Schedule 12 - Contingent Liabilities) for the
assessment years 1991-92 to 2009-10, are pending final outcome of the
appeals filed by the Bank/ Revenue Authorities. The Bank believes that
these demands are largely unsustainable and accordingly, no provisions
have been made.
(xvii) Unsecured Advances
The bank has unsecured advances amounting to Rs.1,260 million (previous
year: Rs.1,191 million) for which it holds intangible securities such as
charge over the rights, licenses, authority, etc. and the estimated
value of such intangible collateral is Rs.2,800 million (previous year:
Rs.2,800 million).
(xviii) Overseas Assets, NPA and Revenue
As the Bank is a branch of a foreign bank, this disclosure is
considered not applicable.
(xxii) Risk Exposure in Derivatives
(a) Exchange traded interest rate derivatives
The Bank has not entered into exchange traded interest rate derivatives
during the year (2011-12: Nil) and there is no amount outstanding at
the year-end (previous year: Nil).
(b) Qualitative Disclosures
Structure and organisation of management of risk in derivatives trading
The derivatives business is managed by the front office with
independent back office for confirmation and settlement of trades. A
separate middle office team validates all the derivative transactions
and the processing and settlement is done by the back office team. The
market risk team is responsible for monitoring market risk limits for
derivative instruments. The limits comprise of PV01, NOP, Vega, spot
volatility matrix and VaR limits. There is clear segregation of duties
and different reporting lines to ensure independent monitoring and
reporting.
Risk monitoring team
The Bank is exposed to market risk, liquidity risk, operational risk
and credit risk on the derivatives portfolio. The Bank''s risk
management group, compliance group and internal audit group assist in
identifying, assessing and monitoring of these principal risks in
accordance with policies and procedures.
Provisioning, collateral and credit risk mitigation
Counterparties are reviewed by credit officers who set their credit
limits. The Bank does a credit analysis which includes a review of
facility detail, credit grade determination and financial spreading/
ratio analysis. The Bank uses a numerical grading system, for
quantifying the risk associated with counterparty.
The Bank applies the Current Exposure methodology to manage credit risk
associated with derivative transactions. This is calculated by taking
the cost of replacing the contract, where its mark-to-market value, is
positive together with an estimate of the potential future change in
the market value of the contract, reflecting the volatilities that
affect it. The credit risk on contracts with a negative mark-to-market
value is restricted to the potential future change in their market
value.
Provisioning on the exposure taken on derivative contracts is made as
prescribed by RBI Circular No. DBOD.No.BP.BC.9/ 21.04.048/2012-13 dated
02 July 2012.
(xxv) Prudential Credit Exposure Limits - Single and Group Borrower
Exposure
The Bank''s exposure to single and group borrowers has been within
limits* specified by RBI. The Bank has enhanced the credit exposure by
an additional 5 per cent of capital funds in respect of Birla Sun Life
Mutual Fund, Clearing Corporation of India Limited (CCIL) and Reliance
Industries Limited with the approval of the Management Committee
("MANCO") of the Bank (2011-12: Birla Sun Life Mutual Fund, CCIL
and Reliance Industries Limited).
With regard to the above information, CCIL has requested the Bank to
clarify that the exposure on trades accepted by CCIL and Settlement
Guarantee Fund (SGF) contributions and margins deposited with the
Central Counterparty (CCP) pursuant to the provisions of the Bye- laws,
Rules and Regulations of CCIL as well as any exposure taken for the
lending in CBLO market, which are governed under the Payment and
Settlement Systems Act, 2007, in the course of Bank''s dealings do not
amount to any borrowing.
*During the year, there was a passive breach due to INR currency
depreciation leading to an increase in the INR equivalent of USD
denominated exposure in one of the above mentioned borrowers.
(b) Description of Contingent Liabilities
(i) Claims against the Bank not acknowledged as debts:
These represent claims filed against the Bank relating to certain legal
and tax proceedings that are currently in progress.
(ii) Liability on account of outstanding foreign exchange contracts:
The Bank enters into foreign exchange contracts on its own account and
for customers. Forward exchange contracts are commitments to buy or
sell foreign currency at a future date at the contracted rate. The Bank
also undertakes currency futures transactions.
(iii) Liability on account of derivative contracts:
These include notional principal on outstanding cross currency swaps,
currency options, forward rate agreements, interest rate swaps and
interest rate options.
(iv) Guarantees given on behalf of constituents, acceptances,
endorsements and other obligations:
As a part of its commercial banking activities, the Bank issues
documentary credit and guarantees on behalf of its customers.
Documentary credit such as letters of credit enhances the credit
standing of the customers of the Bank. Guarantees generally represent
irrevocable assurances that the Bank will make payments in the event of
the customer failing to fulfill its financial or performance
obligations. Irrevocable Payment Commitments are included under
guarantees given on behalf of constituents in India.
(v) Other items for which the Bank is contingently liable:
These includes capital commitments, recourse obligations representing
credit enhancements in the form of cash collaterals in respect of
securitised loans, forward asset purchase and obligations undertaken on
sell down of certain assets and amount payable on securities purchased.
* Transferred to Countercyclical Provisioning Buffer in line with RBI
Circular No. DBOD.No.BPBC.87/21.04.048/2010-11 dated 21 April, 2011 and
the same is shown under Schedule 5 - Other Liabilities & Provisions.
(e) Draw down from Reserves
During the year ended 31 March 2013, there has not been any draw down
from reserves (2011-12: Nil).
(ii) Segment Accounting Policy
Segment results are determined after considering the following
inter-unit notional charges / recoveries:
a. Fund Transfer Pricing:
Treasury gives notional interest benefit to other divisions for the
funds mobilised by the latter through deposits, and similarly charge
notional interest to other divisions for the funds utilised by them for
lending and investment purposes. Based on tenor of assets / liabilities
and market scenarios, Treasury calculates notional interest rates used
for this purpose.
b. Premises Rental Chargeback:
Individual business segments are charged rent based on notional market
values and the same is credited to ''Others'' (Corporate Real Estate
Services) in respect of the premises occupied by them.
c. Support costs (costs pertaining to Finance, HR, Corporate Real
Estate Services, Legal & Compliance etc.) are allocated to Treasury,
Retail & Wholesale banking segments based on Managements'' estimates of
the benefits accruing to these segments for the costs incurred. This is
similar to the basis used for the internal management reporting.
d. Capital & Reserves and attributable earnings thereon are allocated
to individual business segments based on period end Risk Weighted
Assets.
(iii) Geographic Segments
As the Bank does not have any material earnings or assets originating
outside India, the Bank is considered to operate only in the domestic
segment.
(5) Penalties
During the year no penalty was levied by RBI in exercise of powers
under section 46(4) of the Banking Regulation Act, 1949. (2011-12:
Nil)
- A penalty of Rs.10 (in 000s) was imposed on the Kanpur Branch by RBI
on 21 June 2012 under RBI Master circular ref DCM (CC) No.
G-3/03.39.01/2011-12 for not providing exchange facility of soiled
notes to customers and public.
- Penalties were imposed by RBI under Master circular ref DCM (CC)
No. G-3/03.39.01/2012-13 for shortage in cash deposited by Currency
Chest at
a. Delhi - Rs.2,000 (in 000s) on 27 July 2012
b. Kolkata - Rs.152 (in 000s) on 24 September 2012
(6) Related Party Disclosures
(i) The list of related parties as defined in AS 18 - Related Party
Disclosures and the nature of their relationship with Standard
Chartered Bank - India Branches are given below:
(a) Ultimate Parent Company Standard Chartered Plc
(b) Parent Company
Standard Chartered Holding Ltd
(c) Head Office
Standard Chartered Bank, UK
(d) 100% Subsidiary
St Helen''s Nominees India Private Limited
(e) Branches of Head Office
- Standard Chartered Bank China
- Standard Chartered Bank USA
- Standard Chartered Bank UK
- Standard Chartered Bank Sri Lanka
- Standard Chartered Bank Bahrain
- Standard Chartered Bank Qatar
- Standard Chartered Bank United Arab Emirates
- Standard Chartered Bank Dubai International Financial Centre
- Standard Chartered Bank Oman
- Standard Chartered Bank Singapore
- Standard Chartered Bank Korea
- Standard Chartered Bank Japan
- Standard Chartered Bank South Africa
- Standard Chartered Bank Philippines
- Standard Chartered Bank Bangladesh
- Standard Chartered Bank Jordan
- Standard Chartered Bank Indonesia
- Standard Chartered Bank Germany
(f) Subsidiaries of Head Office (Standard Chartered Bank UK)
- Scope International Private Limited
- Standard Chartered (India) Wealth Advisory Services Private Limited
- Standard Chartered Bank (China) Limited
- Standard Chartered Bank (Hong Kong) Limited
- Standard Chartered Bank (Mauritius) Limited
- Standard Chartered Bank (Pakistan) Limited
- Standard Chartered Bank (Taiwan) Limited
- Standard Chartered Bank (Thai) Public Company Limited
- Standard Chartered Bank Nepal Limited
- Standard Chartered Finance Limited
- Standard Chartered Investments and Loans (India) Limited
- Standard Chartered Private Equity (Mauritius) Limited
- Standard Chartered Bank Botswana Limited
- Standard Chartered Bank Ghana Limited
- Standard Chartered Bank Kenya Limited
- Standard Chartered Bank Tanzania Limited
- Standard Chartered Bank Uganda Limited
- Standard Chartered Bank Zambia Pic
- Standard Chartered Private Equity Advisory (India) Private Limited
- Standard Chartered Securities (India) Limited
- Standard Chartered Bank Malaysia - Berhad
- Standard Chartered First Bank Korea Limited
- Standard Chartered Strategic Brand Management Limited
- Standard Chartered Bank Sierra Leone Limited
- Standard Chartered Bank Nigeria Limited
- Standard Chartered Bank Cote D''Ivoire
- Scope International (M) Sdn Bhd
- Standard Chartered Bank (Vietnam) Limited
- Standard Chartered Private Equity (Mauritius) II Limited
- Standard Chartered Private Equity (Mauritius) Ill Limited
- Standard Chartered Bank Cameroon S.A
- Standard Chartered Bank Gambia Limited
- Standard Chartered Financial Holdings
- Standard Chartered Bank Zimbabwe Limited
- Standard Chartered IL&FS Asia Infrastructure Growth Fund Company
Pte. Limited
Note: Categories (e) and (f) above include only those related parties
with whom transactions have occurred during the current / previous
year.
(g) Key Management Personnel
In accordance with the RBI circular DBOD.BP.BC No.14/21.04.018/2012-13
dated 02 July 2012, only Mr. Sunil Kaushal, the Chief Executive Officer
of the Bank, falls under the category of key management personnel for
the year 2012-13, hence, no disclosures pertaining to him are provided.
(iii) Material related party transactions are given below:
The following were the material transactions between the Bank and its
related parties for the year ended 31 March 2013. A specific related
party transaction is disclosed as a material related party transaction
wherever it exceeds 10% of all related party transactions in that
category.
Leasing Arrangements
For availing leasing service - payment of rent to Scope International
Private Limited Rs.9.1 million (2011-12: Rs.8.9 million) and Standard
Chartered Finance Limited Rs.12.1 million (2011-12: Rs.9.1 million).
For providing leasing services - receipt of rent from Standard
Chartered Finance Limited Rs.86.3 million (2011-12: Rs.88.2 million) and
Standard Chartered Securities (India) Limited Rs.156.9 million (2011-12:
Rs.124.5 million).
Sale of Fixed Assets
Sale of Fixed Assets to Standard Chartered Securities (India) Limited
Rs.4.5 million (2011-12: Rs.2.6 million).
Employee Share Options
Expenses incurred on employee share options payable to Head Office Rs.
686.2 million (2011-12: Rs.968.3 million).
Rendering of Services
During the year the Bank provided secondment, amenities and other
services to related parties. The material transactions were with
Standard Chartered Finance Limited Rs.325.8 million (2011-12: Rs.363.9
million) Standard Chartered Private Equity Advisory (India) Private
Limited Rs.421.9 million (2011-12: Rs.464.3 million), Standard Chartered
Bank, Singapore Rs.218.7 million (2011-12: Rs.176.3 million) & Standard
Chartered Securities (India) Limited Rs.318.6 million (2011-12: Rs.147.4
million).
Receiving of Services
During the year the Bank availed of back office support, brokerage,
marketing and other services from related parties. The material
transactions were back office support services from Scope International
Private Limited Rs.2,286.9 million (2011-12: Rs.2,002.5 million), marketing
services and back office support from Standard Chartered Finance
Limited Rs.1,205.5 million (2011- 12: Rs.1,190.3 million) and royalty
payable to Standard Chartered Strategic Brand Management Limited Rs.782.2
million (2011-12: Rs.724.1 million).
Interest Paid
Interest on subordinated debt to Head Office Rs.828.7 million (2011-12:
Rs.684.6 million), interest on money market borrowings to Head Office
Rs.210.7 million (2011-12: Rs.226.7 million).
Interest Received
Interest on term loan from Standard Chartered Scope International
Private Limited Rs.8.7 million (2011-2012: Rs.24.5 million, interest on
commercial paper & working capital loan from Standard Chartered
Investments & Loans Limited Rs.45.5 million (2011-12: Rs.26.4 million) and
interest on money market lending from Head Office Rs.7.7 million
(2011-12: Rs.13.5 million) and interest on money market lending & bank
balances from Standard Chartered Bank, USA Rs.16.2 million (2011-12:
Rs.23.8 million).
Foreign Exchange Transactions
Sale of foreign currencies to Head Office Rs.1,957,973 million (2011-12:
Rs.855,270 million), Standard Chartered Bank, USA Rs.660,495 million
(2011-12: Rs.740,072 million), and Standard Chartered Bank, Singapore
Rs.493,299 million (2011-12: Rs.384,753 million).
Purchase of foreign currencies from Head Office Rs.1,968,085 million
(2011-12: Rs.898,891 million), Standard Chartered Bank, USA Rs.661,526
million (2011-12: Rs.718,152 million) and Standard Chartered Bank,
Singapore Rs.489,444 million (2011-12: Rs.380,311 million).
Fee and Commission Income / Other Income
Receipt of fees from Head Office Rs.4,344.9 million (2011-12: Rs.4,364.3
million) and Standard Chartered Bank, Singapore Rs.753 million (2011-12:
Rs.655.7 million).
Service Fees on Guarantees & Letters of Credit
Receipt of trade fees from Head Office Rs.2.2 million (2011-12: Rs.0.9
million), Standard Chartered Bank, Nigeria Rs.2.8 million (2011- 12: Rs.2.4
million), Standard Chartered Bank, United Arab Emirates Rs.3.4 million
(2011-12: Rs.1.8 million) and Standard Chartered Bank, Singapore Rs.2.3
million (2011-12: Rs.0.5 million).
Payment of fees to Standard Chartered Bank, United Arab Emirates Rs.0.2
million (2011-12: Rs.0.3 million), Standard Chartered Bank, Sri Lanka
Rs.0.3 million (2011-12: Rs.0.1 million), and Standard Chartered Bank,
Singapore Rs.0.5 million (2011-12: Rs.0.2 million).
Purchase and Sale of Investments
Purchase of investments from Standard Chartered Bank (Mauritius)
Limited Rs.13,860 million (2011-12: Rs.10,672 million) and Standard
Chartered Bank, Singapore Rs.22,880 million (2011-12: Rs.21,353 million).
Sale of investments to Standard Chartered Bank, Singapore Rs.30,853
million (2011-12: Rs.42,142 million) and Standard Chartered Bank
(Mauritius) Limited to Rs.33,828 million (2011-12: Rs.54,659 million).
(11) Portfolio Purchase
The Bank has purchased loans (retail loans) amounting to Rs.15,559
million (2011-12: Rs.5,280 million) from various NBFCs, Banks and other
institutions.
(12) Employee Share Based Payment
The eligible employees of the Bank have been granted stock awards as
equity shares of the ultimate holding company, SCPLC, under various
share schemes such as Restricted Share Scheme (RSS), Supplementary
Restricted Share Scheme (SRSS), Performance Share Plan (PSP), Sharesave
Scheme, etc.
During the year, the Bank has recognised an amount of Rs.686 million
(2011-12: Rs.968 million) under the head ''Payments to and provisions
for employees'', as cost on account of share-based payments under
Schedule 16 - Operating Expenses.
(13) Prior Year Comparatives
Previous year figures have been reclassified or regrouped wherever
necessary to conform to the current year''s presentation.
Mar 31, 2012
A) Background
The accompanying financial statements for the year ended 31 March 2012
comprise the accounts of India branches of Standard Chartered Bank
(''SCB'' or ''the Bank''), which is incorporated with limited
liability in the United Kingdom. The Bank''s ultimate holding company
is Standard Chartered Plc (''SCPLC''), which is incorporated in the
United Kingdom.
B) Basis of preparation
The financial statements are prepared under the historical cost
convention on the accrual basis of accounting, unless otherwise stated,
and in accordance with Generally Accepted Accounting Principles
(''GAAP'') in India, statutory requirements of the Banking Regulation
Act, 1949, circulars and guidelines issued by the Reserve Bank of India
(''RBI'') from time to time, the Accounting Standards (''AS'')
prescribed by the Companies (Accounting Standards) Rules, 2006 to the
extent applicable and current practices prevailing within the banking
industry in India.
The financial statements are presented in Indian Rupees rounded off to
the nearest thousand, unless otherwise stated.
C) Use of estimates
The preparation of the financial statements in conformity with GAAP
requires the management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, income and expenses and
disclosures relating to the contingent liabilities reported in the
financial statements. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognised prospectively in current and future
periods.
(1) Claims and Inquiry Proceedings
(i) Claims on the Bank on account of deficiencies in its assets,
arising from transactions in the securities markets relating to the
period from April 1991 to May 1992, involving civil actions against
several banks, financial institutions and individuals to recover
amounts, some of which have been investigated by the Central Bureau of
Investigation. An amount of Rs.322 million (2010-11: Rs.322 million)
excluding interest, if any, has been included in Schedule 12 -
Contingent Liabilities (under ''Claims against the Bank not acknowledged
as debts'').
(ii) Proceedings in relation to securities transactions, vostro
accounts and NRE accounts pertaining to the year 1992 onwards are in
progress. The outcome of such proceedings is uncertain; hence no
provision has been made in these financial statements to reflect the
effect, if any. Certain NRE civil adjudication proceedings were
concluded vide Delhi High Court order dated 18 December 2009 in favour
of SCB setting aside all the Enforcement Directorate (''ED'') penalty
orders. The ED has appealed to the Supreme Court against the Delhi High
Court order dated 18 December 2009 and the matter came up in the
Supreme Court on 10 May 2011 and the appeal has been admitted.
(2) Specific liabilities of the erstwhile Standard Chartered Grindlays
Bank (''SCGB'')
As per clause 1.7 of the Scheme of Amalgamation of the Indian
Undertaking of SCGB with that of SCB, approved by the RBI in August
2002 under Section 44A of the Banking Regulation Act 1949, certain
''Specified Liabilities'' were excluded from the amalgamation. These
''Specified Liabilities'' are defined in Schedule A to the said
Scheme and comprise the Indian Special Court Exposures and the FERA
inquiry / proceedings in this regard. SCPLC had written to RBI vide
letter dated 26 July 2002 stating that SCB will be responsible for all
liabilities of SCGB excluded under clause 1.7 of the Scheme, should
these liabilities crystallise and in the event that SCGB does not
fulfill its obligations in meeting these liabilities either from India
or abroad within the required time under due process of law, as and
when such liabilities become enforceable. An amount of ''67 million was
ordered as penalty in the adjudication proceedings in respect of FERA
inquiry / proceedings conducted by the ED and the same was deposited in
July 2007. These orders have been challenged before the Appellate
Tribunal and the hearings are not yet completed.
(3) Taxation
Provision on account of tax for the year ended 31 March 2012 is Rs.8,090
million (2010-11: Rs.10,661 million).
Tax liabilities (including interest) of the Bank amounting to Rs.5,235
million (2010-11: Rs.2,250 million for the assessment years 1991-92 to
2007-08) (included in Schedule 12 - Contingent Liabilities) for the
assessment years 1991-92 to 2008-09, are pending final outcome of the
appeals filed by the Bank / Revenue Authorities. The Bank believes that
these demands are largely unsustainable and accordingly, no provisions
have been made.
(xvii) Unsecured Advances
The bank has unsecured advances amounting to Rs.1,191 million (2010-11:
Rs.1,150 million) for which it holds intangible securities such as charge
over the rights, licenses, authority, etc. and the estimated value of
such intangible collateral is Rs.2,800 million (2010-11: Rs.2,800 million).
(xviii) Overseas Assets, NPA and Revenue
As the Bank is a branch of a foreign bank, this disclosure is
considered not applicable.
(xix) Accounts Restructured
Particulars of accounts restructured vide RBI Circular No.
DBOD.No.BPBC.12/21.04.048/2011-12 dated 01 July 2011:
(xxii) Risk Exposure in Derivatives
(a) Exchange traded interest rate derivatives
The Bank has not entered into exchange traded interest rate derivatives
during the year (2010-11: Nil) and there is no amount outstanding at
the year-end (2010-11: Nil).
(b) Qualitative Disclosures
Structure and organisation of management of risk in derivatives trading
The derivatives business is managed by the front office with
independent back office for confirmation and settlement of trades. A
separate middle office team validates all the derivative transactions
and the processing and settlement is done by the back office team. The
market risk team is responsible for monitoring market risk limits for
derivative instruments. The limits comprise of PV01, Vega, RHO, spot
volatility matrix and desk-wise VaR limits. There is clear segregation
of duties and different reporting lines to ensure independent
monitoring and reporting.
Risk monitoring team
The Bank is exposed to market risk, liquidity risk, operational risk
and credit risk on the derivatives portfolio. The Bank''s risk
management group, compliance group and internal audit group assist in
identifying, assessing and monitoring of these principal risks in
accordance with policies and procedures.
Provisioning, collateral and credit risk mitigation
Counterparties are reviewed by credit officers who set their credit
limits. The Bank does a credit analysis which includes a review of
facility detail, credit grade determination and financial spreading/
ratio analysis. The Bank uses a numerical grading system, for
quantifying the risk associated with counterparty.
The Bank applies the Current Exposure methodology to manage credit risk
associated with derivative transactions. This is calculated by taking
the cost of replacing the contract, where its mark-to-market value is
positive together with an estimate of the potential future change in
the market value of the contract, reflecting the volatilities that
affect it. The credit risk on contracts with a negative mark-to-market
value is restricted to the potential future change in their market
value.
(xxv) Prudential Credit Exposure Limits - Single and Group Borrower
Exposure
The Bank''s exposure to single and group borrowers has been within
limits specified by RBI. The Bank has enhanced the credit exposure by
an additional 5 per cent of capital funds in respect of Birla Sun Life
Mutual Fund, Clearing Corporation of India Limited and Reliance
Industries Limited with the approval of the Management Committee
("MANCO") of the Bank (2010-11: Reliance Industries Limited and
Birla Sun Life Mutual Fund).
(b) Description of Contingent Liabilities
(i) Claims against the Bank not acknowledged as debts:
These represent claims filed against the Bank relating to certain legal
and tax proceedings that are currently in progress.
(ii) Liability on account of outstanding foreign exchange contracts:
The Bank enters into foreign exchange contracts on its own account and
for customers. Forward exchange contracts are commitments to buy or
sell foreign currency at a future date at the contracted rate. The Bank
also undertakes currency futures transactions.
(iii) Liability on account of derivative contracts:
These include notional principal on outstanding cross currency swaps,
currency options, forward rate agreements, interest rate swaps and
interest rate options.
(iv) Guarantees given on behalf of constituents, acceptances,
endorsements and other obligations:
As a part of its commercial banking activities, the Bank issues
documentary credit and guarantees on behalf of its customers.
Documentary credit such as letters of credit enhances the credit
standing of the customers of the Bank. Guarantees generally represent
irrevocable assurances that the Bank will make payments in the event of
the customer failing to fulfill its financial or performance
obligations. Irrevocable Payment Commitments are included under
guarantees given on behalf of constituents in India.
(v) Other items for which the Bank is contingently liable:
These includes capital commitments, recourse obligations representing
credit enhancements in the form of cash collaterals in respect of
securitised loans, forward asset purchase and obligations undertaken on
sell down of certain assets and amount payable on securities purchased.
(5) Segment reporting
(i) Segment description
The Bank has disclosed its operations under the following segments:
Segment Definition Treasury Activities
Treasury activities include foreign exchange, fixed income, money
market and derivative transactions.
Wholesale Banking
Local corporate financing, corporate advisory and all advances to
trusts, partnership firms, companies and statutory bodies, which are
not included under the "Retail Banking" segment, are reported under
Wholesale Banking.
Retail Banking
Retail banking serves retail customers through the branch network and
other delivery channels. This segment raises deposits from customers
and makes loans and provides other services to such customers. This
segment also includes activities relating to credit cards, debit cards,
mortgage loans, third party product distribution and their associated
costs. Exposures are classified under retail banking taking into
account the orientation, product, granularity and individual exposure
criteria. All mortgage loans below ''5 crore have been classified as
retail exposure and for exposures in SME business segment,
classification as per orientation criterion has been made based on data
available.
Others
Others include Corporate Real Estate Services and other items not
allocable in the forementioned segments
The classification of exposures to the respective segments conform to
the guidelines issued by RBI vide DBOD.No.BPBC.81/21.01.018/2006-07
dated 18 April, 2007 based on the information available for
classification.
(ii) Segment Accounting Policy
Segment revenues stated below are aggregate of Schedule 13 - Interest
earned and Schedule 14 - Other income less Schedule 15 - Interest
expended. Segment results are determined after considering the
following inter-unit notional charges / recoveries:
a. Fund Transfer Pricing:
Treasury gives notional interest benefit to other divisions for the
funds mobilised by the latter through deposits, and similarly charge
notional interest to other divisions for the funds utilised by them for
lending and investment purposes. Based on tenor of assets /
liabilities and market scenarios, Treasury calculates notional interest
rates used for this purpose.
b. Premises Rental Chargeback:
Individual business segments are charged rent based on notional market
values and the same is credited to ''Others'' (Corporate Real Estate
Services) in respect of the premises occupied by them.
c. Support costs (costs pertaining to Finance, HR, Corporate Real
Estate Services, Legal & Compliance etc) are allocated to Treasury,
Retail & Wholesale banking segments based on Managements'' estimates
of the benefits accruing to these segments for the costs incurred. This
is similar to the basis used for the internal management reporting.
d. Capital & Reserves and attributable earnings thereon are allocated
to individual business segments based on period end Risk Weighted
Assets.
(iii) Geographic Segments
As the Bank does not have any material earnings or assets originating
outside India, the Bank is considered to operate only in the domestic
segment.
(6) Penalties
During the year no penalty was levied by RBI in exercise of powers
under section 46(4) of the Banking Regulation Act, 1949.
(Previous year: Penalty of Rs.500 (in 000s) under section 47A (1) (b)
read with section 46 (4) (i) and Rs.1,000 (in 000s) under section 47A (1)
(b) read with Section 46 (4) of Banking Regulation Act, 1949)
(7) Related Party Disclosures
(i) The list of related parties as defined in AS 18 - Related Party
Disclosures and the nature of their relationship with Standard
Chartered Bank - India Branches are given below:
(a) Ultimate Parent Company Standard Chartered Plc
(b) Parent Company
Standard Chartered Holding Ltd
(c) Head Office
Standard Chartered Bank, UK
(d) 100% Subsidiary
St Helen''s Nominees India Private Limited
(e) Branches of Head Office
- Standard Chartered Bank China
- Standard Chartered Bank USA
- Standard Chartered Bank UK
- Standard Chartered Bank Sri Lanka
- Standard Chartered Bank Bahrain
- Standard Chartered Bank Qatar
- Standard Chartered Bank United Arab Emirates
- Standard Chartered Bank Dubai International Financial Centre
- Standard Chartered Bank Oman
- Standard Chartered Bank Singapore
- Standard Chartered Bank Indonesia
- Standard Chartered Bank Thailand
- Standard Chartered Bank Korea
- Standard Chartered Bank Japan
- Standard Chartered Bank Australia
- Standard Chartered Bank South Africa
- Standard Chartered Bank Philippines
- Standard Chartered Bank Bangladesh
- Standard Chartered Bank Jordan
- Standard Chartered Bank Jakarta
(f) Subsidiaries of Head Office (Standard Chartered Bank UK)
- Scope International Private Limited
- Standard Chartered (India) Wealth Advisory Services Private Limited
- Standard Chartered Bank (China) Limited
- Standard Chartered Bank (Hong Kong) Limited
- Standard Chartered Bank (Mauritius) Limited
- Standard Chartered Bank (Pakistan) Limited
- Standard Chartered Bank (Taiwan) Limited
- Standard Chartered Bank (Thai) Public Company Limited
- Standard Chartered Bank Nepal Limited
- Standard Chartered Finance Limited
- Standard Chartered Investments and Loans (India) Limited
- Standard Chartered Private Equity (Mauritius) Limited
- Standard Chartered Bank Botswana Limited
- Standard Chartered Bank Ghana Limited
- Standard Chartered Bank Kenya Limited
- Standard Chartered Bank Tanzania Limited
- Standard Chartered Bank Uganda Limited
- Standard Chartered Bank Zambia Plc
- Standard Chartered Private Equity Advisory (India) Private Limited
- Standard Chartered Securities (India) Limited
- Standard Chartered Bank Malaysia - Berhad
- Standard Chartered First Bank Korea Limited
- Standard Chartered Strategic Brand Management Limited
- Standard Chartered Bank Sierra Leone Limited
- Standard Chartered Bank Nigeria Limited
- Standard Chartered Bank Cote D''lvoire
- Standard Chartered Capital (Saudi Arabia)
Note: Categories (e) and (f) above include only those related parties
with whom transactions have occurred during the current and previous
year.
(g) Key Management Personnel
In accordance with the RBI circular DBOD.BP.BC No.16 /21.04.018/2011-12
dated 01 July 2011, only the Chief Executive Officer of the Bank, falls
under the category of key management personnel for the year 2011-12,
hence, no disclosures pertaining to him are provided.
Chief Executive Officer of the bank:
1. Mr. Sunil Kaushal - since 19 January 2012
2. Mr. Neeraj Swaroop - upto 18 January 2012
(iii) Material related party transactions are given below:
The following were the material transactions between the Bank and its
related parties for the year ended 31 March 2012. A specific related
party transaction is disclosed as a material related party transaction
wherever it exceeds 10% of all related party transactions in that
category.
Leasing Arrangements
For availing leasing service - payment of rent to Scope International
Private Limited Rs.16.3 million (2010-11: Rs.13.5 million) and Standard
Chartered Finance Limited Rs.15.6 million (2010-11: Rs.1 million).
For providing leasing services - receipt of rent from Standard
Chartered Finance Limited Rs.88.2 million (2010-11: Rs.99.7 million) and
Standard Chartered Securities (India) Limited Rs.124.5 million (2010-11:
Rs.18.3 million).
Purchase of Fixed Assets
Purchase of Fixed Assets from Standard Chartered Investments & Loans
India Ltd. Rs.0.05 million (2010-11: Nil).
Sale of Fixed Assets
Sale of Fixed Assets to Standard Chartered Securities (India) Limited
Rs.2.6 million (2010-11: Nil).
Employee Share Options
Expenses incurred on employee share options payable to Head Office
Rs.968.3 million (2010-11: Rs.768.9 million).
Rendering of Services
During the year the Bank provided secondments, amenities and other
services to related parties. The material transactions with Standard
Chartered Finance Limited Rs.363.9 million (2010-11: Rs.329.2 million),
Standard Chartered Private Equity Advisory (India) Private Limited
Rs.464.3 million (2010-11: Rs.539.8 million), Standard Chartered Bank,
Singapore Rs.176.3 million (2010-11: Rs.94.3 million) & Standard Chartered
Securities (India) Limited Rs.147.4 million (2010-11: Rs.85.8 million).
Receiving of Services
During the year the Bank availed of back office support, brokerage,
marketing and other services from related parties. The material
transactions were back office support services from Scope International
Private Limited Rs.2,002.5 million (2010-11: Rs.1,792.5 million), marketing
services and back office support from Standard Chartered Finance
Limited Rs.1,190.3 million (2010-11: Rs.1,218.5 million) and royalty
payable to Standard Chartered Strategic Brand Management Limited Rs.725.6
million (2010-11: Rs.647.3 million).
Interest Paid
Interest on subordinated debt to Head Office Rs.684.6 million (2010-11:
Rs.653.7 million), interest on money market borrowings to Head Office
Rs.226.7 million (2010-11: Rs.196.2 million) and interest on money market
borrowings to Standard Chartered Bank, Japan Rs.123.3 million (2010-11:
Rs.4.4 million).
Interest Received
Interest on term loan from Scope International Private Limited Rs.24.5
million (2010-11: Rs.38.8 million), interest on commercial paper &
working capital loan from Standard Chartered Investments & Loans
Limited Rs.26.4 million (2010-11: Rs.1.6 million) and interest on money
market lending & bank balances from Head Office Rs.13.5 million (2010-11:
Rs.7.5 million) and interest on money market lending & bank balances from
Standard Chartered Bank, USA Rs.23.8 million (2010-11: Rs.0.02 million).
Foreign Exchange Transactions
Sale of foreign currencies to Head Office Rs.855,270 million (2010-11:
Rs.555,317 million), Standard Chartered Bank, USA Rs.740,072 million
(2010-11: Rs.2,134,267 million), and Standard Chartered Bank, Singapore
Rs.384,753 million (2010-11: Rs.363,269 million).
Purchase of foreign currencies from Head Office Rs.898,891 million
(2010-11: Rs.560,129 million), Standard Chartered Bank, USA Rs.718,152
million (2010-11: Rs.2,112,218 million) and Standard Chartered Bank,
Singapore Rs.380,311 million (2010-11: Rs.370,388 million).
Fee and Commission Income / Other Income
Receipt of fees from Head Office Rs.4,364.3 million (2010-11: Rs.3,759.3
million) and Standard Chartered Bank, Singapore Rs.655.5 million
(2010-11: Rs.1,090.1 million).
Service Fees on Guarantees & Letters of Credit
Receipt of trade fees from Standard Chartered Bank USA Rs.4.4 million
(2010-11: Rs.0.5 million), Standard Chartered Bank, Nigeria Rs.2.4 million
(2010-11: Rs.0.5 million), Standard Chartered Bank, United Arab Emirates
Rs.1.8 million (2010-11: Rs.1.8 million).
Payment of fees to Standard Chartered Bank, United Arab Emirates Rs.0.3
million (2010-11: Rs.0.2 million), Standard Chartered Bank, Nepal Rs.0.2
million (2010-11: Rs.0.1 million), Standard Chartered Bank, Singapore
Rs.0.2 million (2010-11: Nil) and Standard Chartered Bank, Bangladesh
Rs.0.1 million (2010-11: Rs.0.1 million).
Purchase and Sale of Investments
Purchase of investments from Standard Chartered Bank (Mauritius)
Limited Rs.3,232 million (2010-11: Rs.17,436 million) and Standard
Chartered Bank, Singapore Rs.16,987 million (2010-11: Rs.680 million).
Sale of investments to Standard Chartered Bank, Singapore Rs.42,142
million (2010-11: Rs.11,141 million) and Standard Chartered Bank
(Mauritius) Limited to Rs.55,237 million (2010-11: Rs.27,671 million).
(12) Portfolio Purchase
The Bank has purchased loans (Retail loans/ credit cards) amounting to
Rs.5,280 million (2010-11: Nil) from various NBFCs; Banks or other
institutions.
(13) Employee Share Based Payment
The eligible employees of the Bank have been granted stock awards as
equity shares of the ultimate holding company, SCPLC, under various
share schemes such as Restricted Share Scheme (RSS), Supplementary
Restricted Share Scheme (SRSS), Performance Share Plan (PSP), Sharesave
Scheme, etc.
During the year, the Bank has recognised an amount of Rs.968 million
(2010-11: Rs.769 million) under the head ''Payments to and provisions
for employees'', as cost on account of share-based payments under
Schedule 16 - Operating Expenses.
(7) Revaluation of Premises
Premises are revalued periodically and are stated at revalued cost less
accumulated depreciation. The most recent valuation of the premises was
conducted in March 2011. The premises were stated at market values as
at that date as determined by an external valuer. The resulting
revaluation surplus amounting to Rs.926 million was transferred to
Property Revaluation Reserve under Schedule 2 - Reserves and Surplus
and revaluation loss of Rs.129 million was recognised in the Profit and
Loss account under Schedule 16 Operating Expenses.
(8 Prior Year Comparatives
Previous year figures have been reclassified or regrouped wherever
necessary to conform to the current year''s presentation.
Mar 31, 2011
1. Contingent Liabilities
Claims against the Bank not
acknowledged as debts 2,572,000 2,225,305
Liability for partly paid
investments in shares - -
Liability on account of
outstanding foreign exchange
contracts 3,955,653,988 3,013,892,212
Liability on account of
derivative contracts 12,890,482,498 9,151,272,543
Guarantees given on behalf
of constituents
- in India 107,904,161 103,582,339
- outside India 75,247,264 47,751,614
Acceptances, endorsements
and other obligations 151,583,799 134,251,574
Other items for which the Bank
is contingently liable 1,853,209 66,934,225
Total contingent liabilities 17,185,296,919 12,519,909,812
(1) Claims and Inquiry Proceedings
(i) Claims on the Bank on account of deficiencies in its assets,
arising from earlier transactions in the securities markets relating to
the period from April 1991 to May 1992, involving civil actions against
several banks, financial institutions and individuals to recover
amounts, some of which have also been investigated by the Central
Bureau of Investigation, continue to be pursued. An amount of Rs.322
million (2009-10: Rs.322 million) excluding interest has been included in
Schedule 12 - Contingent Liabilities (under ''Claims against the Bank
not acknowledged as debts'').
(ii) Proceedings in relation to securities transactions, vostro
accounts and NRE accounts pertaining to the year 1992 onwards are in
progress. The outcome of such proceedings is uncertain; hence no
provision has been made in these financial statements to reflect the
effect, if any, of the outcome of such proceedings. Certain NRE civil
adjudication proceedings were concluded vide Delhi High Court order
dated 18 December 2009 in favour of SCB setting aside all the
Enforcement Directorate (''ED'') penalty orders. The ED has appealed to
the Supreme Court against the Delhi High Court order dated 18 December
2009 and the matter came up in the Supreme Court on 10 May 2011 and the
appeal has been admitted.
(2) Specific liabilities of the erstwhile Standard Chartered Grindlays
Bank (''SCGB'')
As per clause 1.7 of the Scheme of Amalgamation of the Indian
Undertaking of SCGB with that of SCB, approved by the RBI in August
2002 under Section 44A of the Banking Regulation Act 1949, certain
''Specified Liabilities'' were excluded
from the amalgamation. These ''Specified Liabilities'' are defined in
Schedule A to the said Scheme and comprise the Indian Special Court
Exposures and the FERA inquiry / proceedings in this regard. SCPLC had
written to RBI vide their letter Ref. DBOC IBS 145/23.13.116/2002-03
dated 22 July 2002 stating that SCB will be responsible for all
liabilities of SCGB excluded under clause 1.7 of the Scheme, should
these liabilities crystallise and in the event that SCGB does not
fulfill its obligations in meeting these liabilities either from India
or abroad within the required time under due process of law, as and
when such liabilities become enforceable. An amount of Rs.67 million was
ordered as penalty in the adjudication proceedings in respect of the
FERA inquiry / proceedings conducted by the Enforcement Directorate and
the same was deposited between May-July 2007. These orders have been
challenged before the Appellate Tribunal and the hearing is in
progress.
(3) Taxation
Provision on account of tax for the year ended 31 March 2011 is Rs.10,661
million (2009-10: Rs.14,791 million).
Tax liabilities (including interest) of the Bank amounting to Rs.2,250
million (2009-10: Rs.1,903 million for the assessment years 1991-92 to
2006-07) (included in Schedule 12 - Contingent Liabilities) for the
assessment years 1991-92 to 2007- 08, are pending final outcome of the
appeals filed by the Bank / Revenue Authorities. The Bank believes that
these demands are largely unsustainable and accordingly, no provisions
have been made.
The Bank has not issued any Innovative Perpetual Debt Instrument
(''IPDI'').
Capital adequacy has been calculated based on '' Prudential Guidelines
on Capital Adequacy and market discipline - New Capital Adequacy
Framework (''NCAF'')'' (Basel II), issued vide circular
DBOD.No.BPBC.15/21.06.001/2010-11 dated 01 July 2010.
(ii) Subordinated Debt
Schedule 4 - Borrowings include an amount of Rs.22,298 million (2009-10:
Rs.24,450 million) pertaining to subordinated debts raised from Head
Office, details of which are given below:
Note: Total investments include investments in Pass Through
Certificates (''PTCs'') of Rs.11,638 million (2009-10: Rs.10,307 million).
Amounts reported under column (a), (b), (c) and (d) above are not
mutually exclusive.
(xxii) Risk Exposure in Derivatives
(a) Exchange traded interest rate derivatives
The Bank has not entered into exchange traded interest rate derivatives
during the year (2009-10: Rs.3.95 crore) and there is no amount
outstanding at the year end (2009-10: Nil).
(b) Qualitative Disclosures
Risk Management in derivative trading
The Bank enters into derivative contracts in the normal course of
business to meet customer requirements and to manage its own exposures
to fluctuations in price, interest and exchange rates.
The derivatives are primarily subject to market risk, credit risk,
interest rate and foreign exchange risk.
The Bank uses Value at Risk (''VaR'') to measure and monitor all market
risk related activities. VaR models are back tested against actual
results to ensure that pre-determined level of accuracy is maintained.
Additional limits are placed specific to instruments and currency
concentrations where appropriate. In addition to VaR, other sensitivity
measures like PV01 and stress testing are applied as risk management
tools. Option risks are managed through revaluation limits on currency
and volatility shifts and other control limits.
Appropriate internal limits and policies in this regard are set by the
Bank''s Group Risk Committee and Group Market Risk Committee and
exposures against these limits are monitored on a daily basis by an
independent department at the country level, as well as, at the Head
Office level.
Provisioning, collateral and credit risk mitigation
Counterparties are reviewed by credit officers who set their credit
limits. The Bank does a credit analysis which includes a review of
facility detail, credit grade determination and financial spreading /
ratio analysis. The Bank uses a numerical grading system, for
quantifying the risk associated with the counterparty.
The Bank applies the Current Exposure methodology to manage credit risk
associated with derivative transactions. This is calculated by taking
the cost of replacing the contract, where its mark-to-market value is
positive together with an estimate of the potential future change in
the market value of the contract, reflecting the volatilities that
affect it. The credit risk on contracts with a negative mark-to-market
value is restricted to the potential future change in their market
value.
Provisioning on the exposure taken on derivative contracts is made as
prescribed by RBI Circular No. DBOD. No. BP. BC. 21/21.04.048/2010-11
dated 01 July 2010.
1 Computed as per the current exposure method under "New Capital
Adequacy Framework" (Basel II), issued vide circular
DBOD.No.BP.BC.15/21.06.001/2010-11 dated 01 July 2010.
2 Only for INR currency.
(xxiii) Interest Rate Swaps, Interest Rate Options and Forward Rate
Agreements
The notional principal amount of Interest Rate Swaps (''IRS''),
Interest Rate Options (''IRO'') and Forward Rate Agreements (''FRA'')
are:
The credit risk is the pre-settlement risk which is estimated in
accordance with the Bank''s Loan Equivalent Risk approach. All IRS,
IRO and FRA are monitored for price risks under the Value at Risk
approach.
The Bank has not taken any collateral from counterparties in respect of
IRS and FRA contracts.
The gross positive mark-to-market on the IRS, IRO and FRA, which is the
potential loss that the Bank would incur in case the counterparties
fail to fulfill their obligations are:
As at 31 March 2011, the exposure on IRS contracts, IRO and FRA is
spread over various industries. However, based on the notional
principal amount, the maximum single industry exposure lies with banks
at 93% (2009-10: 92%).
The above provision has been included in Schedule 5 - Other Liabilities
and Provisions.
(xxv) Prudential Credit Exposure Limits - Single and Group Borrower
Exposure
The Bank''s exposure to single and group borrowers has been within
limits specified by the RBI. The Bank has enhanced the credit exposure
by an additional 5 per cent of capital funds in respect of Reliance
Industries Limited with the approval of the Management Committee
("MANCO") of the Bank (2009-10: Nil).
If intraday exposure is also considered the exposure to Birla Sun Life
Mutual Fund has exceeded the limit for single borrower under the
prudential norms during the year. MANCO approval for enhancement in
credit exposure by additional 5% was obtained on 01 April 2011.
(xxvi) Provisions and contingencies
a) As per AS 29 - Provisions, Contingent Liabilities and Contingent
Assets, movement in provision for reward points awarded to customers
and movement in other provisions are given below:
(xxvi) Provisions and contingencies (Continued)
(b) Description of Contingent Liabilities
(i) Claims against the Bank not acknowledged as debts:
These represent claims filed against the Bank relating to certain legal
and tax proceedings that are currently in progress.
(ii) Liability on account of outstanding foreign exchange contracts:
The Bank enters into foreign exchange contracts with inter-bank
participants on its own account and for customers. Forward exchange
contracts are commitments to buy or sell foreign currency at a future
date at the contracted rate. The Bank also undertakes currency futures
transactions.
(iii) Liability on account of derivative contracts:
These include notional principal on outstanding cross currency swaps,
currency options, forward rate agreements, interest rate swaps and
interest rate options.
(iv) Guarantees given on behalf of constituents, acceptances,
endorsements and other obligations:
As a part of its commercial banking activities, the Bank issues
documentary credit and guarantees on behalf of its customers.
Documentary credit such as letters of credit enhances the credit
standing of the customers of the Bank. Guarantees generally represent
irrevocable assurances that the Bank will make payments in the event of
the customer failing to fulfill its financial or performance
obligations. Irrevocable Payment Commitments are included under
guarantees given on behalf of constituents in India.
(v) Other items for which the Bank is contingently liable:
These include capital commitments, recourse obligations representing
credit enhancements in the form of cash collaterals in respect of
securitised loans and obligations undertaken on sell down of certain
assets and amount payable on securities purchased.
(xxvii)Retirement Benefits
(a) Defined Benefit Plans
Reconciliation of opening and closing balance of the present value of
the defined benefit obligations for retirement benefits which includes
pension, gratuity and compensated absences is given below:
The estimates of future salary increases in the actuarial valuation
takes into consideration inflation, seniority, promotion and other
relevant factors.
The actuarial assumptions have been made on the basis of legislation
enacted upto the Balance Sheet date.
The Bank''s pension and gratuity funds are managed by its trust and
insurer respectively. Plan assets are invested in the approved
securities.
(b) Defined Contribution Plans
The amount recognised as an expense for the Defined Contribution Plans
is as under:
(Rs. in 000s)
(xxviii)Primary dealership
In line with the RBI circular IDMD.PDRD.01/03.64.00/2010-11 dated 01
July 2010, the details pertaining to net borrowing in call money
markets are as under:
(xxix)Customer complaints and awards of Banking Ombudsman
In accordance with RBI circular DBOD.No.Leg.BC.19/09.07.006/2010-11
dated 01 July 2010, details with respect to customer complaints and
awards passed by the Banking Ombudsman are given below:
(xxxiii)Off - Balance Sheet Special Purpose Vehicles sponsored
The Bank has not sponsored any Special Purpose Vehicle (2009-10: Nil).
(5) Segment reporting
i) Segment description
The Bank has disclosed its operations under the following segments:
Segment Definition Activities
Treasury:
Treasury activities include foreign exchange, fixed income,
money market and derivative transactions.
Wholesale Banking:
Local corporate financing, corporate advisory and all advances to
trusts, partnership firms, companies and statutory bodies,which are not
included under the "Retail Banking" segment, are reported under
Wholesale Banking. Retail Banking Retail banking serves retail
customers through the branch network and other delivery channels.
This segment raises deposits from customers and makes loans and
provides other services to such customers. This segment also includes
activities relating to credit cards, debit cards, mortgage loans,
third party product distribution and their associated costs. Exposures
are classified under retail banking taking into account the orientation,
product, granularity and individual exposure criteria. All mortgage
loans below ''5 crore have been classified as retail exposure and for
exposures in the SME business segment, classification as per orientation
criterion has been made based on data available.
Others:
Others include Corporate Real Estate Services and other items
not allocable in the aforementioned segments.
(ii) Segment Accounting Policy
Segment revenues stated below are aggregate of Schedule 13 - Interest
earned and Schedule 14 - Other income less Schedule 15 - Interest
expended. Segment results are determined after considering the
following inter-unit notional charges / recoveries:
a. Fund Transfer Pricing:
Treasury gives notional interest benefit to other divisions for the
funds mobilised by the latter through deposits, and similarly charge
notional interest to other divisions for the funds utilised by them for
lending and investment purposes. Based on tenor of assets / liabilities
and market scenarios, Treasury calculates notional interest rates used
for this purpose.
b. Premises Rental Chargeback:
Individual business segments are charged rent based on notional market
values and the same is credited to ''Others'' (Corporate Real Estate
Services) in respect of the premises occupied by them.
c. Support costs (costs pertaining to Finance, HR, Corporate Real
Estate Services, Legal & Compliance, etc.,) are allocated to Treasury,
Retail & Wholesale banking segments based on Management''s estimates
of the benefits accruing to these segments for the costs incurred. This
is similar to the basis used for the internal management reporting.
d. Capital & Reserves and attributable earnings thereon, are allocated
to individual business segments based on period end Risk Weighted
Assets.
(iii) Geographic Segments
As the Bank does not have any material earnings or assets originating
outside India, the Bank is considered to operate only in the domestic
segment.
(6) Penalties
On 30 July 2010, a penalty of Rs.500 (in 000s) was imposed on the Bank by
the RBI under section 47A (1) (b) read with section 46 (4) (i) of the
Banking Regulation Act, 1949 for non compliance of instructions issued
by the RBI regarding furnishing of documents relating to a foreign
currency loan.
A penalty of Rs.1,000 (in 000s) was imposed on 26 April 2011 by the RBI
under section 47A (1) (b) read with section 46 (4) of the Banking
Regulation Act, 1949 for non compliance of the RBI directions and
instructions on foreign exchange derivatives.
(7) Related Party Disclosures
(i) The list of related parties as defined in AS 18 - Related Party
Disclosures and the nature of their relationship with Standard
Chartered Bank - India Branches are given below:
(a) Ultimate Parent Company Standard Chartered Plc
(b) Parent Company
Standard Chartered Holding Limited
(c) Head Office
Standard Chartered Bank, UK
(d) 100% Subsidiary
St Helen''s Nominees India Private Limited
(e) Branches of Head Office
- Standard Chartered Bank China
- Standard Chartered Bank USA
- Standard Chartered Bank UK
- Standard Chartered Bank Jersey
- Standard Chartered Bank (Germany) (w.e.f. June 2009)
- Standard Chartered Bank Sri Lanka
- Standard Chartered Bank Bahrain
- Standard Chartered Bank Qatar
- Standard Chartered Bank United Arab Emirates
- Standard Chartered Bank Dubai International Financial Centre
- Standard Chartered Bank Oman
- Standard Chartered Bank Singapore
- Standard Chartered Bank Brunei
- Standard Chartered Bank Indonesia
- Standard Chartered Bank Thailand
- Standard Chartered Bank Vietnam
- Standard Chartered Bank Korea
- Standard Chartered Bank Japan
- Standard Chartered Bank Australia
- Standard Chartered Bank South Africa
- Standard Chartered Bank Philippines
- Standard Chartered Bank Bangladesh
- Standard Chartered Bank Jordan
- Standard Chartered Bank Jakarta
(f) Subsidiaries of Head Office (Standard Chartered Bank UK)
- Scope I nternational Private Limited
- Standard Chartered (India) Wealth Advisory Services Private Limited
- Standard Chartered Bank (China) Limited
- Standard Chartered Bank (Germany) GmbH (till June 2009)
- Standard Chartered Bank (Hong Kong) Limited
- Standard Chartered Bank (Mauritius) Limited
- Standard Chartered Bank (Pakistan) Limited
- Standard Chartered Bank (Taiwan) Limited
- Standard Chartered Bank (Thai) Public Company Limited
- Standard Chartered Bank Nepal Limited
- Standard Chartered Finance Limited
- Standard Chartered Grindlays Pty Limited
- Standard Chartered Investments and Loans (India) Limited
- Standard Chartered Private Equity (Mauritius) Limited
- Standard Chartered Bank Botswana Limited
- Standard Chartered Bank Ghana Limited
- Standard Chartered Bank Kenya Limited
- Standard Chartered Bank Tanzania Limited
- Standard Chartered Bank Uganda Limited
- Standard Chartered Bank Zambia Plc
- Standard Chartered Private Equity Advisory (India) Private Limited
- Standard Chartered (Jersey) Limited
- Standard Chartered Securities (India) Limited
- Standard Chartered Bank Malaysia - Berhad
- Standard Chartered First Bank Korea Limited
- Standard Chartered Strategic Brand Management Limited
- Standard Chartered Bank Sierra Leone Limited
- Standard Chartered Bank Nigeria Limited
- Standard Chartered Bank Cote D''lvoire
Note: Categories (e) and (f) above include only those related parties
with whom transactions have occurred during the current and previous
year.
(g) Key Management Personnel
In accordance with the RBI circular DBOD No BP.BC.3/21.04.018/2010-11
dated 01 July 2010, only Mr. Neeraj Swaroop, the Chief Executive
Officer of the Bank, falls under the category of key management
personnel for the year 2010-11, hence, no disclosures pertaining to him
are provided.
(ii) Transactions and Balances
In line with the RBI circular DBOD.BP.BC No. 3/21.04.018/2010-11 dated
01 July 2010, related party disclosures exclude transactions in a
category where there is only one related party (i.e. key management
personnel) and where the Bank has an obligation under law to maintain
confidentiality in respect of their customer transactions.
(iii) Material related party transactions are given below:
The following were the material transactions between the Bank and its
related parties for the year ended 31 March 2011. A specific related
party transaction is disclosed as a material related party transaction
wherever it exceeds 10% of all related party transactions in that
category.
Leasing Arrangements
For availing leasing service - payment of rent to Scope International
Private Limited Rs.13.5 million (2009-10: Rs.6.6 million) and Standard
Chartered Investments and Loans (India) Limited Rs.1.6 million (2009-10:
Rs.1.6 million).
For providing leasing services - receipt of rent from Standard
Chartered Finance Limited Rs.99.7 million (2009-10: Rs.124.4 million) and
Standard Chartered Securities (India) Limited Rs.18.3 million (2009-10:
Rs.11.4 million).
Purchase of Fixed Assets
Purchase of Fixed Assets from Standard Chartered Finance Limited Rs.1
million (2009-10: Nil).
Sale of Fixed Assets
Sale of Fixed Assets to Scope International Private Limited Rs.0.3
million (2009-10: Rs.125.4 million).
Employee Share Options
Expenses incurred on employee share options payable to Head Office
Rs.768.9 million (2009-10: Rs.695.4 million). Rendering of Services
During the year the Bank provided secondment, amenities and other
services to related parties. The material transactions were with
Standard Chartered Finance Limited Rs.329.2 million (2009-10: Rs.344.6
million), Standard Chartered Private Equity (Mauritius) Limited Rs.539.8
million (2009-10: Rs.239.6 million) and Standard Chartered Bank Singapore
Rs.94.3 million (2009-10: Rs.162.3 million).
Receiving of Services
During the year the Bank availed of back office support, brokerage,
marketing and other services from related parties. The material
transactions were back office support services from Scope International
Private Limited Rs.1,792.5 million (2009-10: Rs.1,307.5 million), marketing
services and back office support from Standard Chartered Finance
Limited Rs.1,218.5 million (2009-10: Rs.1,253.8 million) and Standard
Chartered Bank Singapore: Nil (2009-10: Rs.2,223.9 million) and royalty
payable to Standard Chartered Strategic Brand Management Limited Rs.647.3
million (2009-10: Rs.672.9 million).
Interest Paid
Interest on subordinated debt to Head Office Rs.653.7 million (2009-10:
Rs.827.5 million), interest on money market borrowings to Head Office
Rs.196.2 million (2009-10: Rs.81.9 million)
Interest Received
Interest on term loan from Scope International Private Limited Rs.38.8
million (2009-10: Rs.93.6 million), interest on commercial paper from
Standard Chartered Securities (India) Limited Rs.11.3 million (2009-10:
Rs.21.1 million) and interest on money market lending from Head Office
Rs.7.5 million (2009-10: Rs.3 million).
Foreign Exchange Transactions
Sale of foreign currencies to Standard Chartered Bank USA Rs.2,134,267
million (2009-10: Rs.1,651,674 million), Head Office Rs.555,317 million
(2009-10: Rs.727,189 million) and Standard Chartered Bank Singapore
Rs.363,269 million (2009- 10: Rs.611,823 million).
Purchase of foreign currencies from Standard Chartered Bank USA
Rs.2,112,218 million (2009-10: Rs.1,653,676 million), Head Office Rs.560,129
million (2009-10: Rs.769,476 million) and Standard Chartered Bank
Singapore Rs.370,388 million (2009-10: Rs.651,540 million).
Fee and Commission Income / Other Income
Receipt of fees from Head Office Rs.3,759.3 million (2009-10: Rs.4,339
million) and Standard Chartered Bank Singapore Rs.1,090.1 million
(2009-10: Rs.513.2 million).
Service Fees on Guarantees & Letters of Credit
Receipt of trade fees from Standard Chartered Bank Kenya Limited Rs.2.5
million (2009-10: Rs.1.7 million), Standard Chartered Bank Singapore Rs.2.1
million (2009-10: Rs.1.9 million), Standard Chartered Bank United Arab
Emirates Rs.1.8 million (2009-10: Nil) and Head Office Rs.0.6 million
(2009-10: Rs.37.2 million).
Payment of fees to Standard Chartered Bank Sri Lanka Rs.0.1 million
(2009-10: Rs.1.6 million) and Standard Chartered Bank, United Arab
Emirates Rs.0.2 million (2009-10: Nil).
Assignment of Loans
Assignment of Loans to Standard Chartered Investments and Loans (India)
Limited Rs.346.2 million (2009-10: Nil) Purchase and Sale of Investments
Purchase of investments from Standard Chartered Bank (Mauritius)
Limited Rs.17,436 million (2009-10: Rs.9,841.3 million) and Standard
Chartered Investments and Loans (India) Limited Nil (2009-10: Rs.2,132
million).
Sale of investments to Standard Chartered Bank Singapore Rs.11,140.9
million (2009-10: Nil) and Standard Chartered Bank (Mauritius) Limited
to Rs.27,670.8 million (2009-10: Rs.41,688.9 million).
(8) Leases
Commercial and residential premises are taken on operating leases,
which are cancellable in nature. Information provided herein pertains
to premises taken / given on operating leases:
(9) Disclosure under Micro, Small & Medium Enterprises Development Act,
2006
The following disclosure is made as per the requirement under the
Micro, Small and Medium Enterprises Development Act, 2006 (''MSMED''):
(10) Deferred Tax
The deferred tax benefit of Rs.2,318 million for the year ended 31 March
2011 (2009-10: Rs.833 million) is included in provision on account of tax
under Schedule 17 - Provisions and Contingencies.
The primary components that gave rise to deferred tax assets and
liabilities included in the Balance Sheet are as follows:
(12) Portfolio Purchase
The Bank has not purchased any loan portfolio during the year (2009-10:
Rs.5,602 million) from NBFCs or other institutions.
(13) Employee Share Based Payment
The eligible employees of the Bank have been granted stock awards as
equity shares of the ultimate holding company, SCPLC, under various
share schemes, such as, Restricted Share Scheme (''RSS''),
Supplementary Restricted Share Scheme (''SRSS''), Performance Share
Plan (''PSP''), Sharesave Scheme, etc.
During the year, the Bank has recognised an amount of Rs.769 million
(2009-10: Rs.695 million) under the head ''Payments to and provisions
for employees'', as cost on account of share-based payments under
Schedule 16 - Operating Expenses.
(14) Revaluation of Premises
Premises are revalued periodically and are stated at revalued cost less
accumulated depreciation. During the year revaluation was conducted in
March 2011 by external registered valuers. The revaluation gain (net)
of Rs.926 million was transferred to the Property Revaluation Reserve
under Schedule 2 - Reserves and Surplus and revaluation loss of Rs.129
million has been recognised in the Profit and Loss account under
Schedule 16 - Operating Expenses.
(15) Prior Year Comparatives
Previous year figures have been reclassified or regrouped wherever
necessary to conform to the current year''s presentation.
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FY26 Market Review: Inside Nifty-Sensex's Sharpest Yearly Crash Since COVID; What's Next For Investors? -
Intraday Stocks To Buy Today, March 27: Top Picks By Anand James of Geojit Investments On Friday -
Indian equities open higher as Nifty tops 23,100 and Sensex climbs over 700 points -
Intraday Stocks To Buy Today, March 25: Top Picks By Anand James of Geojit Investments On Wednesday
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Stock Market Today: Nifty Closes Near 23,000, Sensex Up 1.8%: IndiGo, L&T, Eternal, Asian Paints Top Gainers -
Steel Stock Gains 5.14% On Getting NCLT Nod For Key Merger; Do You Own? -
Stock Market Opens Strong: Nifty Up 1.5%, Sensex Rallies 1,516 Pts; Rupee Recovers as Trump Delays Iran Strike -
D-Street Mayhem: Rs 15 Lakh Cr Wiped Out As Nifty-Sensex Close 2.5% Lower, Rupee In Free-Fall Amid Iran-US War -
Indian equities outlook today as Bank Nifty remains weak and Nifty tests support -
Stock Market Crash: Sensex, Nifty Hit 1-Year Low; How US-Israel-Iran War Wiped Out Rs 4,753,333 Crore -
Intraday Stocks To Buy Today, March 23: Top Picks By Anand James of Geojit Investments On Monday
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Nifty, Sensex Down 8% Amid Iran-US War, Crude Oil At Sky High: How Past Geopolitical Crises Have Shaped Market -
Stock Market Weekly Wrap: Sensex, Nifty End In Green Amid Iran-US War, Crude Surge, Rupee Slide -
Nifty Falls as Global Cues Persist and Gulf Tensions Weigh on Indian Markets -
Intraday Stocks To Buy Today, March 20: Top Picks By Anand James of Geojit Investments On Friday
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Nifty, Sensex Stage Sharp Rebound After Biggest Crash; IT Stocks in Green | Why Is Stock Market Rising Today?
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