Notes to Accounts of State Bank Of Bikaner and Jaipur

Mar 31, 2014

1. Investments amounting to Rs.7477.00 crores (previous year Rs. 5400.00 crores) are kept as margin with the Reserve Bank of India/Clearing Corporation of India Limited towards Real Time Gross Settlement (RTGS)/REPO/CBLO transactions.

2. (a) In respect of premises having gross value of Rs 0.42 crore (Previous year: Rs 0.42 crore) pending completion of certain legal formalities/ procedural actions, title deeds are yet to be executed/ registered in favour of the Bank.

(b) Fixed Assets : Gross Value of fixed assets (other than premises) includes Rs. 734.05 crores (previous year Rs.715.81 crores ) representing 10% of Bank''s share jointly owned by State Bank of India and other Associate Bank''s towards hardware & software.

3. (a) In case of restructured loans as standard assets under CDR/Non-CDR, classification of advances and consequent income recognition have been done based on major compliances of terms and conditions of restructured package including extension period wherever applicable.

(b) The classification of advances in respect of unaudited branches having substantial agriculture loans is system driven and based on certificate of the branch manager. In the opinion of the management there is no material impact on the accounts.

(c) In terms of the RBI guidelines on provision for the sacrifice amount on restructured / rescheduled advances, erosion in fair value of advances has been provided amounting to Rs.212.50 crores (previous year Rs.127.03 crores).

4. The Board of Directors declared a interim dividend of 143% i.e Rs.14.30 per share (face value of share Rs.10/ per share) during the FY 2013-14

5. Unamortised Pension and Gratuity Liabilities

During the FY 2010-11, the Bank has incurred a liability amount Rs.384.45 crores, on account of reopening of pension option (Rs.234.45 crores) and enhancement of Gratuity Ceiling (Rs.150.00 crores). The Bank has amortised the said liability over a period of five years commencing from FY 2010-11 in terms of RBI circular No.DBOD.BP.BC. 80/21.04.018/2010- 11 dated 9th February 2011. Accordingly Rs.76.89 crores (Representing one fifth of Rs384.45 crores) has been charged to Profit & Loss Account during the current FY 2013-14. The detailed break up is as under:-

6. Inter Office adjustment Accounts are subjected to reconciliation, which is an ongoing exercise. On completion of matching/reconciliation in respect of the above accounts, the management does not anticipate any material impact on the financial statement.

7. Provision of Rs.115.70 crores (Previous year Rs.35.00 crores) has been made during the year towards arrears for wage revision, which will be effective from 01st November, 2012, pending negotiation by IBA.

DISCLOSURES REQUIRED AS PER RBI GUIDELINES

8. Capital

(a) Capital adequacy :

Bank''s Capital to Risk-weighted Asset Ratio (''Capital Adequacy Ratio'') under Basel II and Basel III are calculated in accordance with the RBI''s ''Guidelines on Capital Adequacy and Market Discipline – Implementation of the New Capital Adequacy Framework'' and ''Basel III Capital Regulations'' respectively. Under the both the frameworks, Bank is required to maintain a minimum capital adequacy ratio of 9% on an ongoing basis for credit risk, market risk and operational risk. For Basel II, however, Bank has to maintain a minimum Tier I Capital Ratio of 6% whereas, as per Basel III, Bank has to keep a minimum Common Equity Tier 1 (CET 1) Ratio of 5% and a Tier 1 Ratio of 6.5% as on 31.03.2014.

9. Derivatives

Qualitative Disclosure

(a) The Bank has well defined structure and organization for management of risk in derivatives, with clear role of Front, Mid and Back office for Risk Management.

(b) For risk measurement and monitoring, Integrated Risk Management Department is periodically monitoring risk on account of outstanding forward contracts and outstanding forward contracts of top 20 borrower account is advised to the user department.

(c) Bank is not undertaking Exchange Traded Interest Rate Derivatives, Forward Rate Agreement, Interest Rate Swaps and Credit Default Swaps.

(d) Bank is not undertaking any trading in derivative transaction in its own account. The Bank undertakes Forward contracts with counter parties only on behalf of its constituents in order to hedge their on balance-sheet/ off-balance- sheet assets and liabilities as per the RBI directives.

(e) Forward contracts so booked are covered back to back with counter parties.

(f) All outstanding forward contracts are marked to market as per the RBI directives and are shown in the balance-sheet as contingent liabilities.

10. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the bank

The Bank has not exceeded the Single Borrower Limit and Group Borrower Limit during the year.

11. Disclosure of Penalties Imposed by RBI

No penalty was imposed during the year as per Section 46 (4) of the Banking Regulation Act, 1949, for contraventions of any of the provisions of the Act or non-compliance with any other requirement of the Banking Regulation Act, 1949.

12. Draw Down from Reserves

1. There has been no draw down from Investment Reserve during the current Financial Year (Previous year Rs.2.29 crores).

2. There has been a draw down of Rs.32.11 crores (previous year NIL) from "Revenue & Other Reserves" for creation of Deferred Tax Liability (DTL) on Special Reserve created under U/S 36(1)(VIII) of the Income Tax Act, 1961, as per RBI guidelines.

13. AS-5 ( Net Profit or Loss for the period, prior period items and changes in accounting policies)

There are no material prior period income/expenditure items require disclosure under AS-5.

14. AS- 9 Revenue Recognition

In line with the Accounting Policy followed, items of income / expenditure accounted on cash basis are considered not material, in terms of RBI guidelines, hence do not require disclosure.

15. AS-17 : Segmental Reporting

In terms of RBI Cir. No. BP.BC.81/21.04.018/2006-07 dated 18th April 2007, the Bank has identified following segments as Primary / Business Segment:

(a) Treasury Operations

(b) Corporate/Wholesale Banking

(c) Retail Banking

(d) Other Banking Operations

Pricing of Inter-segmental transfers:

The Corporate / wholesale Banking and Retail Banking Operations are the primary resource mobilizing unit. The treasury segment receives funds from the other two Banking Operations unit at a cost, which is computed on cost of deposits of Other Banking Operations plus operating expense incurred for mobilizing funds.

16. AS-18 : Related party disclosures

As per para 9 of the Accounting Standard 18 issued by the ICAI on "Related party disclosures" the Bank, being a state controlled enterprise is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. However, the Bank has considered the following as related parties for the purpose of disclosure under AS-18 issued by the ICAI:

17. AS-19: Leases:

The company''s significant leasing arrangements are in respect of operating leases for premises like operational units, officers residences etc. These leases, which are not non-cancelable are generally for more than one year or for longer periods (except expired leases) and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent to P&L accounts.

18. AS-21: Consolidated Financial Statement

Bank has no Subsidiary/Associates hence the information in this regard is ''NIL''.

19. AS-23 : Accounting for Investments in Associates in consolidated Financial Statements Bank has no Subsidiary/Associates hence the information in this regard is ''NIL''.

20. AS-24: Discontinuing Operations

There has been no discontinuation of operations that has resulted in shedding of liability and realization of the assets by the Bank or decision to discontinue an operation, which will have the above effect, has been finalized by the Bank.

21. AS-26: Intangible Assets

There are no intangible assets except Software forming integral part of hardware included under Fixed Assets amounting to Rs.4.69 crore (previous Year Rs. 0.56 crore)

22. AS-28: Impairment of Assets

In the opinion of the management, there is no impairment to the Assets during the year to which Accounting Standard 28 – "Impairment of Assets" applies.

23. AS-29: Statement of Provisions, Contingent liability & Contingent Assets

a) Movement of provisions for contingent liabilities

(Rs. in crore)

Particulars Current Year Previous Year

Opening Balance 34.89 36.37

Provided during the year 1.55 2.18

Amount used during the year 2.84 0.00

Reversed during the year 8.14 3.66

Closing Balance 25.46 34.89

b) Under Schedule 12 on Contingent Liabilities

Such liabilities are dependent upon the outcome of Court/arbitration/out of Court settlement, disposal of appeals and the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties.

During the year Income tax department has raised the demand of Rs. 189.02 Crores in different assessment years on the issue of disallowance of Broken Period Interest. The Bank has filed appeal against the said orders before different appellate authorities and has included the figure of Rs.189.02 Crores in its contingent liabilities on account of Income Tax cases. No provision has been considered necessary against the said demand in view of the decision of Hon''ble Supreme Court.

24. Previous year''s figures have been regrouped and reclassified wherever necessary to make these comparable with the current year''s figures.

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Mar 31, 2013

1. Investments amounting to Rs. 5400.00 crores (previous year Rs. 4940.00 crores) are kept as margin with the Reserve Bank of India/Clearing Corporation of India Limited towards Real Time Gross Settlement (RTGS)/REPO/CBLO transactions.

2. (a) In respect of premises having gross value of Rs. 0.42 crore (Previous year: Rs. 0.42 crore) pending completion of certain legal formalities/ procedural actions, title deeds are yet to be executed/ registered in favour of the Bank

(b) Fixed Assets : Gross Value of fixed assets ( other than premises) includes Rs.. 71.58 crores (previous year Rs.. 70.64 crores ) representing 10% of Bank''s share jointly owned by State Bank of India and other Associate Bank''s amounts to Rs.. 715.81 Crores (previous year Rs.. 706.47 crores)

3. (a) In terms of the RBI guidelines on provision for the sacrifice amount on restructured / rescheduled advances, erosion in fair value of advances has been provided amounting to Rs. 127.03 crores (previous year Rs. 36.13 crores).

(b) In case of restructured loans as standard asset, classification of advances and consequent income recognition have been done based on major compliances of terms and conditions of restructured package.

(c) The classification of advances in respect of unaudited branches having substantial agriculture loans has been done as per certificate of the branch manager. In the opinion of the management there is no material impact on the accounts.

4. The Board of Directors have declared a interim dividend of 161% i.e. Rs.. 16.10 per share ( face value of share Rs.. 10/- per share) during the FY 2012-13.

5. Unamortised Pension and Gratuity Liabilities

During the FY 2010-11, the Bank has incurred a liability amounting Rs. 384.45 Crores on account of reopening of pension option Rs. 234.45 Crores and enhancement of Gratuity Ceiling Rs.. 150.00 crores. The Bank has amortised the said liability over a period of five years commencing from FY 2010-11 in terms of RBI circular no. DBOD. BP.BC.80/21.04.018/2010-11 dated 9th February 2011. Accordingly, Rs. 76.89 Crores (Representing one fifth of Rs. 384.45 Crores) has been charged to Profit & Loss Account during the current FY 2012-13. The detailed break-up is as under:-

DISCLOSURES REQUIRED AS PER RBI GUIDELINES

6. Capital

a) Capital adequacy

The Bank''s Capital to Risk-weighted Asset Ratio (''Capital Adequacy Ratio'') is calculated in accordance with the RBI''s ''Prudential Guidelines on Capital Adequacy and Market Discipline - Implementation of the New Capital Adequacy Framework'' (''Basel II''). Under the Basel II framework, the Bank is required to maintain a minimum capital adequacy ratio of 9% on an ongoing basis for credit risk, market risk and operational risk, with a minimum Tier I capital ratio of 6%. The Prudential Floor is higher of "minimum capital is required to be maintained as per BASEL - II framework or as a percentage (prescribed as 80% for the financial year ending 31st March 2013) of minimum capital requirement computed as per BASEL - I framework" for credit and market risks.

The Bank''s capital adequacy ratio, calculated in accordance with the RBI guidelines under both Basel I and Basel II frameworks, is as follows :

The Bank''s capital funds as on March 31, 2013 are higher than the minimum required under the Basel I and Basel II framework.

The difference between risk weighted assets under the Basel I and Basel II framework is a net impact of the following key changes :

Under the Basel II framework, risk weights are applicable to claims on corporates corresponding to their external rating or in the absence of it ranging from 20% to 150%, compared to a uniform 100% under Basel I.

Exposures qualifying for inclusion in the regulatory retail portfolio under Basel II framework attracts a risk weight of 75%, against 100% under Basel I.

The Basel II framework recognises risk mitigation techniques in the form of eligible financial collaterals such as cash margins, deposits, bonds, gold, debt mutual funds, etc., whilst under Basel I only cash margins and deposits are considered as eligible financial collateral.

Restructured assets attract a risk weight of 125% under the Basel II framework compared to 100% under Basel I. Operational risk is subject to a capital charge under the Basel II framework.

Under the Basel II framework, capital is subjected to a charge for valuation adjustment for illiquid position of derivative and non derivative portfolio.

iii. The value of sales and transfer of securities to/from HTM category does not exceeds 5% of the book value of Investments held in HTM category at the beginning of the year.

7. DERIVATIVES

Qualitative Disclosure

a. The Bank has well defined structure and organization for management of risk in derivatives, with clear role of Front, Mid and Back office for Risk Management.

b. For risk measurement and monitoring, Integrated Risk Management Department is periodically monitoring risk on account of outstanding forward contracts and outstanding forward contracts of top 20 borrower account is advised to the user department.

c. Bank is not undertaking Exchange Traded Interest Rate Derivatives , Forward Rate Agreement, Interest Rate Swaps and Credit Default Swaps.

d. Bank is not undertaking any trading in derivative transaction in its own account. The Bank undertakes Forward contracts with counter parties only on behalf of its constituents in order to hedge their on balance-sheet/ off-balance- sheet assets and liabilities as per the RBI directives.

e. Forward contracts so booked are covered back to back with counter parties.

f. All outstanding forward contracts are marked to market as per the RBI directives and are shown in the balance-sheet as contingent liabilities.

ii) Provisioning Coverage Ratio

Provisioning to Gross Non-Performing Assets of the Bank as on 31st March, 2013 is 58.64%. (prev. year 58.26%), including AUCA.

8. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the bank

The Bank has not exceeded the Single Borrower Limit and Group Borrower Limit during the year.

9. Disclosure of Penalties Imposed by RBI

No penalty was imposed during the year as per section 46(4) of the Banking Regulation Act 1949 for contraventions of any of the provisions of the Act or non compliance with any other requirement of the Banking Regulation Act 1949.

10. Draw Down from Reserves

There has been a draw down of Rs.2.29 crores (previous year Rs.11.12 crores) from Investment Reserve during the year.

11. AS-5 ( Net Profit or Loss for the period, prior period items and changes in accounting policies)

There are no material prior period income/expenditure items require disclosure under AS-5.

12. AS- 9 Revenue Recognition

In line with the Accounting Policy followed, items of income / expenditure accounted on cash basis are considered not material, in terms of RBI guidelines, hence do not require disclosure.

13. AS - 15 Employee Benefits (Revised 2005)

The Bank has adopted Accounting Standard 15(R) - Employee Benefits, issued by the Institute of Chartered Accountants of India (ICAI), with effect from 1st April 2007.

The Bank recognizes in its books of accounts the liability arising out of Employee Benefits as the sum of the present value of obligation as reduced by fair value of plan assets on the Balance Sheet date.

In case of Other Long term employee benefits (LFC, Sick leave, etc.) the transitional liability outstanding for these benefits as on 31.03.2013 was Rs. 178.76 crores.

14. AS-17 : Segmental Reporting

In terms of RBI Cir. No. BP.BC.81/21.04.018/2006-07 dated 18th April 2007, the Bank has identified following segments as Primary / Business Segment:

(a) Treasury Operations

(b) Corporate/Wholesale Banking

(c) Retail Banking

(d) Other Banking Operations

Pricing of Inter-segmental transfers:

The Corporate / wholesale Banking and Retail Banking Operations are the primary resource mobilizing unit. The treasury segment receives funds from the other two Banking Operations unit at a cost, which is computed on cost of deposits of Other Banking Operations plus operating expense incurred for mobilizing funds.

Allocation of Income and Expenses and Assets/Liabilities:

a) Income and Expenses and Assets/Liabilities directly attributed to particular segment are allocated to the relative segment.

b) Items that are not directly attributable to segments are allocated to retail and wholesale segments in proportion to the business managed / ratio of number of employees/ ratio of directly attributable income.

The bank has certain common assets /liabilities and income / expense that cannot be attributed to any particular segment and hence the same are treated as unallocated.

PART B: GEOGRAPHIC SEGMENT

The entire Indian Operations are being treated as a single reportable segment and hence secondary / geographic segment is not considered necessary.

15. AS-18 : Related party disclosures

As per para 9 of the Accounting Standard 18 issued by the ICAI on "Related party disclosures" the Bank, being a state controlled enterprise is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. However, the Bank has considered the following as related parties for the purpose of disclosure under AS-18 issued by the ICAI:

16. AS-19: Leases:

The company''s significant leasing arrangements are in respect of operating leases for premises like operational units, offices, residences etc. These leases, which are not non-cancelable are generally for more than one year or for longer periods (except expired leases) and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent to P&L accounts.

17. AS-21: Consolidated Financial Statement

Bank has no Subsidiary/Associates hence the information in this regard is ''NIL''.

18. AS-22: Deferred Taxes

The components of deferred tax asset/liability as on 31.03.2013 are as under:

19. AS-23 : Accounting for Investments in Associates in consolidated Financial Statements Bank has no Subsidiary/Associates hence the information in this regard is ''NIL''.

20. AS-24: Discontinuing Operations

There has been no discontinuation of operations that has resulted in shedding of liability and realization of the assets by the Bank or decision to discontinue an operation, which will have the above effect, has been finalized by the Bank.

21. AS-26: Intangible Assets

There are no intangible assets except Software forming integral part of hardware included under Fixed Assets amounting to Rs.. 0.56 crore ( prev. Year Rs.. 0.97 crore)

22. AS-28: Impairment of Assets

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

b) Under Schedule 12 on Contingent Liabilities

Such liabilities are dependent upon the outcome of Court/arbitration/out of Court settlement, disposal of appeals and the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties.

23. Previous year''s figures have been regrouped and reclassified wherever necessary to make these comparable with the current year''s figures.

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Mar 31, 2012

1. Investments amounting to Rs 4940.00 crores (previous year Rs 2720.00 crores) are kept as margin with the Reserve Bank of India/Clearing Corporation of India Limited towards Real Time Gross Settlement (RTGS)/REPO/CBLO transactions.

2. (a) In respect of premises having gross value of Rs 0.42 crore (Previous year: Rs 0.42 crore) pending completion of certain legal formalities/ procedural actions, title deeds are yet to be executed/ registered in favour of the Bank. (b) Fixed Assets : Gross Value of fxed assets ( other than premises) includes Rs 70.63 crores (previous year Rs. 64.25 crores ) representing 10% of Bank's share jointly owned by State Bank of India and other Associate Bank's amounts to Rs 706.47 Crores (previous year Rs. 642.62 crores)

3. In terms of the RBI guidelines on provision for the sacrifce amount on restructured / rescheduled advances, erosion in fair value of advances has been provided amounting to Rs 36.13 crores (previous year Rs 43.19 crores).

4. Pursuant to the guidelines of the RBI in respect of Agriculture Debt Waiver and Debt Relief Scheme 2008 :

a) The bank has made a fnal claim from the Government of India for Rs 14.00 Crores towards waiver of Debts and Rs 22.63 Crores towards Debt Relief. The entire amount Rs 36.63 crores is received from Government of India during the year.

b) A sum of Rs 38.50 Crore toward Interest from the Government of India in respect of balance amount of claims towards debt waiver and debt relief for the period 16.12.2008 to 28.01.2012 received and taken as a income during the year.

5. To augment Tier I Capital of Bank, a right issue of 2,00,00,000 equity shares at a price of Rs 390/- per share including a premium of Rs 380/- aggregating Rs 780.00 crore to the existing share holders on right basis in the ratio of 2 right equity shares for every 5 equity shares was issued. Consequently, the Capital and Share Premium Account of the Bank has been increased by Rs 20 crores and Rs 760 crores respectively.

6. The Board of Directors have declared an interim dividend of 145% i.e. Rs 14.50 per share ( face value of share Rs 10/- per share) during the FY 2011-12.

7. Unamortised pension and Gratuity Liabilities

During the FY 2010-11, the Bank has incurred a liability amounting Rs 384.45 Crores on account of reopening of pension option Rs 234.45 Crores and enhancement of Gratuity Ceiling Rs 150.00 crores. The Bank has amortised the said liability over a period of fve years commencing from FY 2010-11 in terms of RBI circular no. DBOD.BP.BC.80/21.04.018/2010- 11 dated 9th February 2011. Accordingly, Rs 76.89 Crores (Representing one ffth of Rs 384.45 Crores) has been charged to Proft & Loss Account during the current FY 2011-12. The detailed break-up is as under:-

iii) The value of sales and transfer of securities to/from HTM category does not exceeds 5% of the book value of Investments held in HTM category at the beginning of the year.

8. Derivatives

Qualitative Disclosure

a. The Bank has well defned structure and organization for management of risk in derivatives, with clear role of Front, Mid and Back offce for Risk Management.

b. For risk measurement and monitoring, Integrated Risk Management Department is periodically monitoring risk on account of outstanding forward contracts and outstanding forward contracts of top 20 borrower account is advised to the user department.

c. Bank is not undertaking Exchange Traded Interest Rate Derivatives and Forward Rate Agreement/ Interest Rate Swaps

d. Bank is not undertaking any trading in derivative transaction in its own account. The Bank undertakes Forward contracts with counter parties only on behalf of its constituents in order to hedge their on balance-sheet/ off- balance-sheet assets and liabilities as per the RBI directives.

e. Forward contracts so booked are covered back to back with counter parties.

f. All outstanding forward contracts are marked to market as per the RBI directives and are shown in the balance- sheet as contingent liabilities.

9. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the bank

The Bank has not exceeded the Single Borrower Limit and Group Borrower Limit during the year.

10. Draw Down from Reserves

There has been a draw down of Rs.11.12 crores (previous year Rs 1.70 crores) from Investment Reserve during the year.

11. AS-5 (Net Proft or Loss for the period, prior period items and changes in accounting policies)

There are no material prior period income/expenditure items require disclosure under AS-5.

12. AS- 9 Revenue Recognition

In line with the Accounting Policy followed, items of income / expenditure accounted on cash basis are considered not material, in terms of RBI guidelines, hence do not require disclosure.

13. AS - 15 Employee Benefts (Revised 2005)

1) Defned Beneft Pension Plan and Gratuity

a) The following table sets out the status of the defned beneft Pension Plan and Gratuity Plan as required under AS 15:

14. AS-17 : Segmental Reporting

In terms of RBI Cir. No. BP.BC.81/21.04.018/2006-07 dated 18th April 2007, the Bank has identifed following segments as Primary / Business Segment:

(a) Treasury Operations

(b) Corporate/Wholesale Banking

(c) Retail Banking

(d) Other Banking Operations

pricing of Inter-segmental transfers:

The Corporate / wholesale Banking and Retail Banking Operations are the primary resource mobilizing unit. The treasury segment receives funds from the other two Banking Operations unit at a cost, which is computed on cost of deposits of Other Banking Operations plus operating expense incurred for mobilizing funds.

Allocation of Income and Expenses and Assets/Liabilities:

a) Income and Expenses and Assets/Liabilities directly attributed to particular segment are allocated to the relative segment.

b) Items that are not directly attributable to segments are allocated to retail and wholesale segments in proportion to the business managed / ratio of number of employees/ ratio of directly attributable income.

The bank has certain common assets /liabilities and income / expense that cannot be attributed to any particular segment and hence the same are treated as unallocated.

PART B: GEOGRAPHIC SEGMENT

The entire Indian Operations are being treated as a single reportable segment and hence secondary / geographic segment is not considered necessary.

15. AS-18 : Related party disclosures

As per para 9 of the Accounting Standard 18 issued by the ICAI on "Related party disclosures" the Bank, being a state controlled enterprise is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. However, the Bank has considered the following as related parties for the purpose of disclosure under AS-18 issued by the ICAI:

16. AS-19: Leases:

The company's signifcant leasing arrangements are in respect of operating leases for premises like operational units, offces, residences etc. These leases, which are not non-cancelable are generally for more than one year or for longer periods (except expired leases) and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent to P&L accounts.

17. AS-24: Discontinuing Operations

There has been no discontinuation of operations that has resulted in shedding of liability and realization of the assets by the Bank or decision to discontinue an operation, which will have the above effect, has been fnalized by the Bank.

18. AS-26: Intangible Assets

There are no intangible assets except Software forming integral part of hardware included under Fixed Assets amounting to Rs. 0.97 crore ( prev. Year Rs. 0.58 crore)

19. AS-28: Impairment of Assets

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

20. AS-29: Statement of provisions, Contingent liability & Contingent Assets

21. Previous year's fgures have been regrouped and reclassifed wherever necessary to make these comparable with the current year's fgures.

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Mar 31, 2011

1. Investments amounting to Rs. 2720.00 crores (previous year Rs. 1755.00 crores) are kept as margin with the Reserve Bank of India/Clearing Corporation of India Limited towards Real Time Gross Settlement (RTGS)/REPO/CBLO transactios.

2. (a) In respect of premises having gross value of Rs. 0.42 crore (Previous year Rs. 0.42 crore) pending completion of certain legal formalities/ procedural actions, title deeds are yet to be executed/ registered in favour of the Bank.

(b) Fixed Assets : Gross Value of fixed assets (other than premises) includes Rs.. 64.25 crores (previous year Rs.. 57.62 crores ) representing 10% of Banks share jointly owned by State Bank of India and other Associate Banks amounts to Rs.. 642.62 crores ( previous year Rs.. 576.57 crores)

3. In terms of the RBI guidelines on provision for the sacrifice amount on restructured / rescheduled advances, erosion in fair value of advances has been provided amounting to Rs. 43.19 crores (previous year Rs. 46.16 crores).

4. In terms of RBI guidelines, the bank has accounted for Purchase/Sales and Profit/Loss of transactions in Government Securities on "Settlement Date" instead of "Trade Date" w.e.f. 01/01/2011.The bank has adopted the aforesaid system for other securities also.

5. Pursuant to the guidelines of the RBI in respect of Agriculture Debt Waiver and Debt Relief Scheme 2008 :

a) The Bank has received the balance amount of claim from the Govt of India for Rs.. 141.81 crores ( prev. year Rs.. 260.49 crore) towards debt waiver during the year. Further, a sum of Rs.. 238.80 crores is received from Govt, of India in respect of farmers covered under Debt Relief, under the aforesaid scheme during the year.

b) The Bank has made an aggregate provision of Rs.. Nil ( prev. Year Rs.. 6.69 crore) on account of loss based on Net Present Value in respect of the amount receivable from the farmers under the aforesaid Debt Relief Scheme.

c) Balance amount Rs.. 37.24 crore receivable from the Govt of India under the aforesaid scheme towards Debt Waiver & Debt Relief has been included in the total amount of advances in Schedule-9 Advances, of the Balance Sheet.

d) A sum of Rs.. 22.77 crore towards Interest receivable from the Govt of India in respect of balance amount of claims towards debt waiver for the period 16.12.2008 to 31.01.2011 has been recognised as Income during the year.

6. To augment Tier I Capital of Bank, a right issue of 2,00,00,000 equity share at a price of Rs.. 390/- per share including a premium ofRs.. 380/- aggregating X. 780.00 crore to the existing share holders on right basis in the ratio of 2 right equity shares for every 5 equity shares held on record date March17, 2011 has been offered for subscription. The issue has opened on 28th March 2011 and closed on 11th April 2011. The subscription received towards share application money up to 31st March 2011 amounting to X. 1.39 crores has been disclosed in the Balance Sheet under the head Other Liabilities.

7. The Board of Directors has proposed to declare a final dividend of 164% (including interim dividend of 72% i.e.Rs. 7.20 per share already paid by the Bank during the year) i.e. Rs.16.40 per share (face value of share Rs.10/- per share) for the year ended 31st March 2011 (144% in the previous year i.e. Rs.14.40 per share) and dividend @ 9.20 per share on 2.00 crores new shares issued under Rights Offer.

8. (a) During the year, the bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of which by 3126 employees, the bank has incurred a liability of Rs.. 234.45 crores. Further, during the year, the limit of gratuity payable to the employees of the banks was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result the gratuity liability of the Bank has increased by Rs.. 150.00 crores.

(b) In terms of requirement of the Accounting Standard (AS)15, the entire amount of Rs.. 384.45 crores is required to be charged to the Profit and Loss account. However, in accordance with the provision of Reserve Bank of India circular no. DBOD.BRBC.80/21.04.018/2010-11 dated 9th February 2011, the Bank has amortized the amount of Rs.. 384.45 crores over a period of five years. Accordingly Rs..76.89 crores (representing one-fifth of Rs.. 384.45 crores) has been charged to the Profit and Loss Account. The balance amount carried forward i.e. Rs.. 307.56 crores does not include any employees relating to separated/ retired employees. Had such a circular not been issued by the RBI, the profit of the Bank would have been lower by Rs.. 307.56 crores pursuant to application of the requirement of AS-15.

9. Nostra accounts with various banks are at different stages of reconciliation and on the basis of matching reconciliation exercise in respect of the above, the management does not anticipate any material provisions for the year.

10. Derivatives

Qualitative Disclosure

a. The Bank has well defined structure and organization for management of risk in derivatives, with clear role of Front, Mid and Back office for Risk Management.

b. For risk measurement and monitoring, Integrated Risk Management Department is periodically monitoring risk on account of outstanding forward contracts and outstanding forward contracts of top 20 borrower accounts are advised to the user department.

c. Bank is not undertaking Exchange Traded Interest Rate Derivatives and Forward Rate Agreement/ Interest Rate Swaps

d. Bank is not undertaking any trading in derivative transaction in its own account. The Bank undertakes Forward contracts with counter parties only on behalf of its constituents in order to hedge their on balance-sheet/ off- balance-sheet assets and liabilities as per the RBI directives.

e. Forward contracts so booked are covered back to back with counter parties.

f. All outstanding forward contracts are marked to market as per the RBI directives and are shown in the balance- sheet as contingent liabilities.

ii) Provisioning Coverage Ratio

Provisioning to Gross Non-Performing Assets of the Bank as on 31st March, 2011 is 71.74%. ( prev. year 68.81 %), including AUCA.

11. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the bank

The Bank has not exceeded the Single Borrower Limit and Group Borrower Limit during the year.

12. Details of Provisions & Contingencies in Profit & Loss Account are as under: (Rs. in crore)

Particulars Current Previous Year Year

Provision for Depreciation/Amortisation on investments 3.67 (-)32.69

Provision for Non Performing Assets 298.39 141.91

Floating provision towards NPAs 0.00 0.00

Provision on Standard Assets 28.59 0.00 Provision for Taxation:

(i) Income Tax 230.43 245.22

(ii) Interest Tax 0.00 0.00

(iii) Wealth Tax: 0.33 (-)0.61

13. Disclosure of Penalties Imposed by RBI

No penalty was imposed during the year as per Section 46 (4) of the Banking Regulation Act, 1949, for contraventions of any of the provisions of the Act or non-compliance with any other requirement of the Banking Regulation Act, 1949.

14. Draw Down from Reserves

There has been a draw down of Rs..1.70 crores (previous year Nil)from Investment Reserve during the year 2010-11.

15. Transfer of balance from blocked/unclaimed deposit to P & L Account

As per RBI guidelines the Bank has transferred a sum of Rs.. Nil ( Prev. Year Rs.. 2.85 crore) from blocked/unclaimed deposits in Nostra Accounts and appropriated the same to General Reserve and has not considered the same for declaration of dividend. Any future claim in respect of these entries will be honoured.

DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS)

16. AS-5 ( Net Profit or Loss for the period, prior period items and changes in accounting policies)

There are no material prior period income/expenditure items require disclosure under AS-5.

17. AS- 9 Revenue Recognition

In line with the Accounting Policy followed, items of income / expenditure accounted on cash basis are considered not material, in terms of RBI guidelines, hence do not require disclosure.

18. AS-17 : Segmental Reporting

In terms of RBI Cir. No. BRBC.81/21.04.018/2006-07 dated 18th April 2007, the Bank has identified following segments as Primary / Business Segment:

(a) Treasury Operations

(b) Corporate/Wholesale Banking

(c) Retail Banking

(d) Other Banking Operations

Pricing of Inter-segmental transfers:

The Corporate / wholesale Banking and Retail Banking Operations are the primary resource mobilizing unit. The treasury segment receives funds from the other two Banking Operations unit at a cost, which is computed on cost of deposits of Other Banking Operations plus operating expense incurred for mobilizing funds.

Allocation of Income and Expenses and Assets/Liabilities:

a) Income and Expenses and Assets/Liabilities directly attributed to particular segment are allocated to the relative segment.

b) Items that are not directly attributable to segments are allocated to retail and wholesale segments in proportion to the business managed / ratio of number of employees/ ratio of directly attributable income.

The bank has certain common assets /liabilities and income / expense that cannot be attributed to any particular segment and hence the same are treated as unallocated.

PART B: GEOGRAPHIC SEGMENT

The entire Indian Operations are being treated as a single reportable segment and hence secondary / geographic segment is not considered necessary.

19. AS-18 : Related party disclosures

As per para 9 of the Accounting Standard 18 issued by the ICAI on "Related party disclosures" the Bank, being a state controlled enterprise is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. However, the Bank has considered the following as related parties for the purpose of disclosure under AS-18 issued by the ICAI:

20. AS-19: Leases:

The companys significant leasing arrangements are in respect of operating leases for premises like operational units, offices, residences etc. These leases, which are not non-cancelable are generally for more than one year or for longer periods (except expired leases) and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are charged as rent to P&L accounts.

21. AS-21: Consolidated Financial Statement

Bank has no Subsidiary/Associates hence the information in this regard is NIL.

22. AS-23 : Accounting for Investments in Associates in consolidated Financial Statements

Bank has no Subsidiary/Associates hence the information in this regard is NIL.

23. AS-24: Discontinuing Operations

There has been no discontinuation of operations.that has resulted in shedding of liability and realization of the assets by the Bank or decision to discontinue an operation, which will have the above effect, has been finalized by the Bank.

24 AS-26: Intangible Assets

There are no intangible assets except Software forming integral part of hardware included under Fixed Assets amounting to Rs.. 0.58 crore ( prev. Year Rs.. 0.41 crore) -

25. AS-28: Impairment of Assets

There is no impairment to the Assets during the year to which Accounting Standard 28 - "Impairment of Assets" applies.

26. AS-29: Statement of Provisions, Contingent liability & Contingent Assets

A) Movement of provisions for contingent liabilities (Rs. in crore)

Particulars Current Year Previous Year

Opening Balance 182.66 94.07

Provided during the year 0.71 90.92

Amount used during the year 136.03 0.11

Reversed during the year 24.37 2.22

Closing Balance 22.97 182.66

B) Under Schedule 12 on Contingent Liabilities

Such liabilities are dependent upon the outcome of Court/arbitration/out of Court settlement, disposal of appeals and the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties.

27. Previous years figures have been regrouped and reclassified wherever necessary to make these comparable with the current years figures.

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Mar 31, 2010

1. Investments amounting to Rs. 1755.00 crores (previous year Rs. 1495.00 crores) are kept as margin with the Reserve Bank of India/Clearing Corporation of India Limited towards Real Time Gross Settlement (RTGS)/REPO/CBLO transactions.

2. In respect of premises having gross value of Rs.0.42 crore (Previous year: Rs.9.48 crore) pending completion of certain legal formalities/procedural actions, title deeds are yet to be executed/ registered in favour of the Bank.

3. In terms of the RBI guidelines on provision for the sacrifice amount on restructured / rescheduled advances, erosion in fair value of advances has been provided amounting to Rs. 46.16 crores (previous year Rs. 19.87 crores).

4. Pursuant to the guidelines of the RBI in respect of Agriculture Debt Waiver and Debt Relief Scheme 2008 :

(i) The Bank has made a claim from the Govt of India for Rs.402.30 crores towards waiver of debts. Out of such claim a sum of Rs. 260.49 crores has been received till date. Further, a sum of Rs.236.84 crores is receivable from Govt of India in respect of farmers covered under Debt Relief, under the aforesaid scheme, for which claim will be lodged with the Govt of India.

(ii) The Bank has made an aggregate provision of Rs.6.69 crores on account of loss based on Net Present Value in respect of the amount receivable from the farmers under the aforesaid Debt Relief scheme.

(iii) Balance amount receivable from the Govt of India under the aforesaid scheme towards Debt Waiver & Debt Relief has been included in the the total amount of advances in Schedule-9 Advances, of the Balance Sheet.

(iv) Interest receivable from the Govt of India in respect of balance amount of claims towards waiver of debt has been recognised from the date of receipt of first instalment at the rate equivalent to "yield to maturity of 364 days Treasury Bill" prevailing at the year end.

5. Certain accounting policies such as S.No.3 (b) iv, v, 3(h), 5,6, 9,11,14 and 15 are specifically disclosed in the Principal Accounting Policies during the year. However, same accounting policies were also followed consistently in the previous year.

6. Derivatives

Bank has not entered into any derivative transaction either for hedging or trading purpose during the year 2009-10. Accordingly, qualitative and quantitative disclosure under RBI guidelines with respect to derivative transactions is not required.

ii) Provisioning Coverage Ratio

Provisioning to Gross Non-Performing Assets of the Bank as on 31 st March, 2010 is 68.81 %.

7. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL), Exceeded by the Bank.

The Bank has not exceeded the single Borrower Limit and Group Borrower Limit during the year.

8. Disclosure of Penalties Imposed by RBI

No penalty was imposed during the year as per Section 46(4) of the Banking Regulation Act, 1949, for contraventions of any of the provisions of the Act or non-compliance with any other requirement of the Banking Regulation Act, 1949.

9. Bank assurance Business:

Details of fees/remuneration received in respect of the bancassurance business forthe year ended 31st March, 2010.

10. Draw Down from Reserves

There is no drawdown from Reserves during the year 2009-10.

11. Transfer of balance from blocked/unclaimed deposit to P&L Account

As per RBI guidelines the Bank has transferred a sum of Rs. 2.85 crore from blocked/unclaimed deposits in Nostra Accounts and appropriated the same to General Reserve and has not considered the same for declaraton of dividend. Any future claim in respect of these entries will be honoured.

DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS (AS)

12. AS- 9 Revenue Recognition

In line with the Accounting Policy followed, items of income /expenditure accounted on cash basis are considered not material, in terms of RBI guidelines, and hence do not require disclosure.

13. AS-17: Segmental Reporting

In terms of RBI Cir, No. BRBC.81/21.04.018/2006-07 dated 18th April 2007, the Bank has identified following segments as Primary/Business Segment:

(a) Treasury Operations

(b) Corporate/Wholesale Banking

(c) Retail Banking.

(d) Other Banking Operations

Pricing of Inter-segmental transfers:

The Corporate/wholesale Banking and Retail Banking Operations are the primary resource mobilising unit. The treasury segment receives funds from the other two Banking Operations unit at a cost, which is computed on cost of deposits of Other Banking Operations plus operating expense incurred for mobilizing funds.

Allocation of Income and Expenses and Assets/Liabilities:

a) Income and Expenses and Assets/Liabilities directly attributed to particular segment are allocated to the relative segment.

b) Items that are not directly attributable to segments are allocated to retail and wholesale segments in proportion to the business managed/ratio of number of employees/ratio of directly attributable income.

The bank has certain common assets/liabilities and income/expense that cannot be attributed to any particular segment and hence the same are treated as unallocated.

PART B: GEOGRAPHIC SEGMENT

The entire Indian Operations are being treated as a single reportable segment and hence secondary / geographic segment is not considered necessary.

14. AS-18: Related party disclosures

As per para 9 of the Accounting Standard 18 issued by the ICAI on "Related party disclosures" the Bank, being a state controlled enterprise is not required to make disclosures of related party relationships with other state controlled enterprises and transactions with such enterprises. However, the Bank has considered the following as related parties for the purpose of disclosure under AS-18 issued by the ICAI:

15. AS-21 : Consolidated Financial Statement

Bank has no Subsidiary/associates hence the information in this regard is NIL.

16. AS-22: Deferred Taxes

The Bank recognises the deferred tax assets/liabilities (DTA/DTL) for future tax consequences for temporary differences arising between the carrying value of assets and liabilities and their respective tax bases. DTA is recognized on the basis of managements judgement that sufficient future taxable income will be available against which deferred tax assets can be realized. After giving due consideration to prudence, DTA/DTL are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date.

17. AS-23: Accounting for Investments in associates in consolidated financial Statements Bank has no Subsidiary/Associates hence the information in this regard is NIL1.

18. AS-24 Discontinuing Operations

There has been no discontinuation of operations that has resulted in shedding of liability and realization of the assets by the Bank or decision to discontinue an operation which will have the above effect has been finalized by the Bank.

19. AS-26: Intangible Assets

The present practice of depreciating software which forms integral part of hardware @ 60% (on WDV basis) and depreciating other software @ 100% consistently followed by the Bank is in line with AS-26 issued by ICAI.

20. AS-28: Impairment of Assets

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

21. AS-29: Statement of Provisions, Contingent liability & Contingent Assets

a) Movement of provisions for contingent liabilities

(Rs. in crore)

Particulars Current Year Previous Year

Opening Balance 94.07 43.71

Provided during the year 90.92 51.81

Amount used during the year 0.11 0.56

Reversed during the year 2.22 0.89

Closing Balance 182.66 94.07

b) Under Schedule 12 on Contingent Liabilities

Such liabilities are dependent upon the outcome of Court/arbitration/out of Court settlement, disposal of appeals, and the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties.

22. Previous years figures have been regrouped and reclassified wherever necessary to make these comparable with the current years figures.