Mar 31, 2015
1. INVESTMENTS
The Bank''s holding of total SLR securities in ''Held to Maturity''
Category (HTM) is 23.78% (previous year 22.42%) of DTL as on the last
Friday of the second preceding fortnight. The total investment in HTM
category is equal to 80.50% (Previous year 83.02%) of its total
investments and the excess of ''Held to Maturity'' category investments
over 25% of total investments comprises of SLR securities. The Bank''s
holdings in Held to Maturity Category of investments are within the
overall limits stipulated by RBI.
2.1. Sale and Transfer to/from HTM Category
2.1.1. As per RBI guidelines, the profit on sale of investment under
Held to Maturity category amounting to Rs. 17.69 crore (previous year
Rs. 14.67 crore) has been transferred to Capital Reserve.
2.1.2. Income on investment in Schedule 13 of Interest earned para II
is net of amortization of premium on HTM Investments Rs.40.88 Crore
(Previous year Rs.43.12 Crore).
2.1.3. RBI vide Circular DBOD.BPBC. NO.41/21.04.141/2013-14 Dated
2308-2013 has, as a one time measure, allowed banks to transfer SLR
Securities from ''AFS/HFT'' TO ''HTM'' categories up to a limit of 24.50%
of Net Demand and Time Liabilities. Further vide the same circular
banks are allowed to distribute the net depreciation of the entire AFS/
HFT portfolio as measured on the valuation date over the current
financial year in equal installments. Consequently the bank has
transferred SLR securities with a book value of Rs 95.38crore from AFS
to HTM category at the lower of book value or market value as of 9th
June 2014, and no provisioning was done at the time of transfer since
market value was higher than book value.
2.1.4. Also the Bank has shifted securities of Rs. 11.95 crore from
''HTM to AFS'' Category at Book Value
3.1 Disclosure on risk exposure in derivatives
3.1.1 Qualitative Disclosures
Forward Contracts are the only derivatives held in the books of the
Bank. The Bank enters into forward contracts with the customers and
covers the resultant position in the inter-bank market. The Bank also
trades in Inter Bank forward contracts on its own with a view to derive
profits. The Bank does not have any un-hedged foreign exchange exposure
other than the open overnight position.
The Bank has put in place Board approved policy for monitoring various
risks associated with the above mentioned transactions. The risks are
managed by prescribing various limits and ensuring that the exposures
are within the limits. Such limits are prescribed in the following
areas:
a) Overnight Exposure Limits
b) Daylight exposure Limits
c) Aggregate and currency-wise gap Limits
d) Stop Loss Limits
e) VaR Limits
f) Limit on Proprietary Trading
g) Limit on Counter Party Bank
In terms of Board approved policy, the limits are monitored by Mid
Office and discretionary power is vested with functionaries at various
levels to ratify / approve the breaches, if any.
3.1.2.1 Provision for Diminution in Fair Value of Restructured Loan
Assets
During the current year ended 31st March 2015, provision for diminution
in fair value of Restructured Accounts is made and the amount provided
for in FY 2014-15 is Rs. 142.69 Crore.
3.1.2.2 Provision on Restructured Loan Accounts:
The bank has made provision at the rate of 4.25% (previous year @
3.50%) on the stock of restructured accounts as at 31st May 2013 in
line with the guidelines issued by RBI.
On the stock of accounts restructured from 1st June 2013, the bank has
made provision at the rate of 5.00% in line with the RBI guidelines.
3.1.3 Details of financial assets sold to Securitization/reconstruction
company for Asset Reconstruction
* As per Prudential norms;
I. 15% of the capital funds as on
31.03.2014, for a single Borrower works out to Rs.769.01 crores
(previous year Rs. 785.05 crore) and 40% for Group borrowers works out
to Rs.2050.70 crores (previous year Rs. 2,093.46 crore).
II. Additional 5% Rs.256.34
crore (previous year Rs. 261.68 crore) of the capital funds as on
31.03.2014, for single Borrower provided the additional credit exposure
is on account of extension of credit to Infrastructure Projects.
III. Additional 10% Rs.512.68
crore (previous year Rs. 523.36 crore) of the capital funds as on
31.03.2014, for Group borrowers provided the additional credit exposure
is on account of extension of credit to Infrastructure Projects.
IV. Additional 10% Rs.512.68 crores (previous year Rs. 523.36 crore)
of the capital funds as on 31.03.2014, for Oil Companies who have been
issued Oil bonds (which do not have SLR Status) by the Govt of India.
Exposure to NBFCs:
* As per Prudential Norms;
I. 10% of the capital funds as on 31.03.2014, for single borrower
(NBFC) works out to Rs.512.68 crores (previous year Rs. 523.36 crore).
II. 15% of the capital funds as on 31.03.2014, for a single borrower
(NBFC-AFC (Asset financing Company) works out to Rs.769.01 crores
(previous year Rs. 785.05 crore).
III. 20% of the capital funds as on 31.03.2014, on account of funds
lent by NBFC - AFC to infrastructure sector works out to Rs.1025.35
crores (previous year Rs. 1046.73 crore).
The above statement is exclusive of Food Credit, which is outside the
purview of prudential norms.
3.1 Penalties imposed by the Reserve Bank of india during the year
2014-15- Rs 4.48 lakh (Previous year Rs 2.20 lakh).
4. disclosure requirements as per accounting standards
The Bank has generally complied with all the applicable Accounting
Standards issued by the Institute of Chartered Accountants of India
(ICAI) read with the relevant guidelines of Reserve Bank of India. The
following disclosures (not made elsewhere in the financial statements
including Significant Accounting Policies and Notes on Accounts) are
made hereunder in accordance with the provisions of the applicable
mandatory Accounting Standards, issued by the Institute of Chartered
Accountants of India.
4.1 Cash Flow Statements (AS 3 Revised)
In terms of para 45 of the Standard, the amount of significant cash and
cash equivalent balances held by the enterprise that are not available
for use by it, are Rs. NIL (excluding balances required to be
maintained for the purpose of Cash Reserve Ratio).
4.2 Net Profit or Loss for the period, prior period items and changes
in Accounting Policies (AS- 5)
4.2.1 In terms of Accounting Standard 5 issued by the Institute of
Chartered Accountants of India read with RBI guidelines, prior period
items are
Other Prior Period Items -
Expenditure - NIL
Income - RS. 0.10 lakhs
4.2.2 Change in Accounting Policy with
respect to Depreciation on Fixed Assets
1. The Bank has changed the method of charging depreciation from
Written Down Value Method (WDV) to Straight Line Method (SLM) except in
case of revalued assets (Buildings) and computers which were
depreciated under SLM.
2. The revised rates are arrived based on the estimate of the
management on the useful life of the asset.
3. Also, the bank has changed the policy* of charging depreciation on
revalued assets, over the remaining useful life of the asset. The
deprecation corresponding to the extent of revaluation was debited to
the Depreciation Reserve and credited to the Revaluation Reserve
Account.
4. Due to the change in accounting policy the impact is as follows -
a) In respect of item 1 above, the book value of Fixed Assets increased
by Rs.10.35 crore and Accumulated Depreciation as on 31st March 2014
reduced by Rs. 13.08 crore. Also, the depreciation for the current year
increased by Rs.2.73 crore.
Had, the bank followed the earlier method the depreciation
for the year would have been Rs. 75.97 crore as against the actual
charge of Rs.78.70 crore.
The depreciation in the profit and loss account is net off the
adjustment due to reversal of accumulated depreciation of Rs. 13.08
crore resulting in net depreciation of Rs. 65.62 crore.
4.4 Revenue Recognition (AS 9)
The revenue has been recognized in terms of AS 9 on Revenue
recognition, the guidelines issued by Reserve Bank of India and the
Accounting Policy of the Bank.
4.5 Employees'' Benefits - Accounting Standards 15 (Revised)
4.5.1 In terms of AS 15 (revised), Bank has made provision for the
following Employee benefits for the year ended
4.6 SEGMENT REPORTING - (AS-17) :
The following segments have been identified:
I. Primary Segment (Business Segment) :
Treasury Operations Corporate / Wholesale Banking Retail Banking
II. The Geographic segment consists of only the Domestic segment as the
Bank does not have any foreign branches.
4.6.1 The Bank has got two main business segments namely Treasury
Operations and Banking Operations. Banking Operations are further
segmented to Corporate / Wholesale Banking and Retail Banking
4.6.2 PRIcING of Inter-Segmental Transfers:
Corporate / Wholesale banking and Retail Banking Operations Segment are
the primary resource mobilising units. The Treasury segment is a
recipient of funds from these operations apart from resource mobilised
by treasury segment from REPO, CBLO, Call Money, IBTM and Export credit
refinance. The cost of funds mobilised by treasury from corporate /
wholesale banking and retail banking is computed at the cost of
deposits of Corporate / Wholesale Banking and Retail banking. Pricing
of Inter Segmental transfer in Treasury is reduced from the operating
profit of Treasury Segment and added to the Operating Profit of
Corporate / Wholesale banking in the ratio of deposits allocated to
these segments.
4.6.3 REVENUE :
All income relating to Treasury Operations are considered under
Treasury operations segment. All interest for all borrowal accounts
with exposures above RS. 5crores are classified as Corporate/ Wholesale
Banking segment. The balance interest is treated as relating to retail
banking segment. The other interest income/other income is allocated
under Corporate/Wholesale and Retail Banking segments in the ratio of
total income of these segments (excluding other interest income/other
income and interest segment revenue).
4.6.4 ALLOCATION OF EXPENSES:
Expenses incurred at Corporate Centre establishment directly
attributable to Treasury Operations are allocated accordingly. As
regards Corporate/ Wholesale and retail banking segment interest paid
on deposits is segregated to these segments in the ratio of deposits to
these segments (deposits are allocated on the basis of outstanding
advances pertaining to these segments). Employees'' expenses are
allocated to the Treasury segment in proportion to the number of
Employees of that segment to the total employees of the Bank. Other
interest paid, provisions relating to employees and other operative
expenditure for Corporate/ Wholesale and Retail Banking segment are
allocated based on the income earned by these segments (excluding inter
segmental revenue). Interest paid on Tier I/Tier II/Subordinated bonds
are classified as ''Unallocated''.
4.6.5 SEGMENT ASSETS:
All assets which are directly attributable to treasury operations are
considered for Treasury Operations Segment. All outstandings in advance
accounts for borrowers with exposures above RS. 5crores is considered
as assets pertaining to Corporate/Wholesale Banking segment. Other
outstanding in advances segments is shown as pertaining to Retail
Banking Segment. All other assets are segregated and added to the
segment advances pertaining to Corporate/Wholesale and Retail Banking
segment in the ratio of outstanding balances of advances in these
segments.
4.6.6 SEGMENT LIABILITIES:
All liabilities which are directly attributable to Treasury Operations
segment are allocated accordingly. Other deposits are allocated and
segregated for Corporate/ Wholesale segment in the ratio of outstanding
balances of advances for the respective segments. With regard to other
liabilities, provisions and contingencies, the allocation to
Corporate/Wholesale and Retail Banking segments are made on the basis
of the outstanding balances of advances under these segments. Tier
I/Tier II/Subordinated bonds are classified as ''Unallocated''.
4.7 RELATED PARTY DISCLOSURES (AS 18)
4.7.1 In accordance with AS 18 issued by the ICAI and the RBI
guidelines, details relating to Related Party transactions are
disclosed hereunder:
4.7.2 All the other related parties are State Controlled enterprises as
defined in AS 18 issued by the Institute of Chartered Accountants of
India as such transactions with them are not required to be disclosed.
4.8 LEASES (AS 19)
i) The Bank has taken premises only on rental basis and has no long
term operating leases taken/given and hence reporting under AS 19 is
not considered necessary.
ii) No financial lease has been executed after April 1, 2001.
4.10 ACCOUNTING FOR TAXES ON INCOME (AS - 22)
In compliance with AS 22 "Accounting for taxes on income" issued by the
Institute of Chartered Accountants of India, the Bank has recognised
Deferred Tax Assets and Liabilities on the basis of timing difference
by adoption of Profit and Loss Approach . Deferred Tax Asset (net of
liabilities) of RS.203.54 Crores (Previous Year : RS.154.33 Crores) has
been recognised as at March 31, 2015.
4.11 INTANGIBLE ASSETS AS - 26
There are no intangible asset other than application and operating
software, which are depreciated as per Accounting Policy of the Bank
(i.e., Application Software at 100% and Operating Software at 33.33%).
4.12 IMPAIRMENT OF ASSETS AS - 28
There are no impairments identified by the bank in any of its assets.
4.13 continGent liaBilitieS and continGent aSSetS aS - 29
(b) continGent liaBilitieS
As on
31.03.2014 Particulars As on 31.03.2015
1. Claims not acknowledged as debt
0.01 a) Counter suits filed by the borrowers 0
against whom the Bank has initiated legal
action
1.26 b) Cases filed in Consumer / Civil Courts 1.62
for deficiency in services
307.28 c) Any other claims against the Bank not 592.29
acknowledged as debts
2666.99 2. Guarantees issued on behalf of 3036.92
constituents
4170.99 3. Acceptance, endorsements & other 5083.73
obligations*
20733.82 4. Other items for which the Bank is 31335.9
contingently liable
27880.35 Total 40050.46
* Includes Letters of Comfort amounting to ` 1670.52 Crore (Previous
Year- Rs. 874.80 Crores) (details furnished in para 5.5 below)
Demands (comprising of short deduction, late payment, late deduction,
interest, penalty etc) in respect of tax deducted/ deductible as
reported by TRACES (portal of IT Dept) is not provided for as the bank
is in the process of rectification of the same and the amount is not
ascertainable.
5. ADDITIONAL DISCLOSURES
5.1 PROVISIONS AND CONTINGENCIES
5.1.1 In terms of the Reserve Bank of India guidelines, the following
additional disclosures have been made.
5.2 DRAW DOWN FROM RESERVES:
Current year - NIL (Previous year Rs.96.81 crore has been debited to
Revenue Reserve and credited to Deferred Tax Liability in terms of RBI
Circular No. DBOD No.BPBC. 77/2014018/2013-14 dated 20.12.2013 on
account of Reserve under section 36 (1) (viii) of the IT Act 1961)
5.3 DISCLOSURE OF LETTERS OF COMFORT (LOCs) ISSUED BY THE BANK:
The position of Letters of Comfort issued by the Bank during the year
and outstanding Letters of Comfort as at the end of the year is given
hereunder:
Out of the above, Letters of Comfort issued in respect of financing
arrangements from Overseas Banks for availment of Trade Credits (Buyers
Credit) and their Currency wise outstanding, is as under:
5.4 PROVISION COVERAGE RATIO:
The Provision to Gross NPA of the Bank as on 31st March 2015 is 69.34 %
(Previous Year - 59.47%)
5.5 BANCASSURANCE BUSINESS :
During the Financial Year 2014-15, the Bank has earned a sum of Rs
11.08 Crores (Previous Year Rs 9.18 Crores) as fees and remuneration
from Bancassurance Business. The details of the fees / remuneration
earned are as under:
1. Income from SBI Life Business Rs 8.90 Crs (Previous Year Rs 7.54
Crores)
2. Income from General Insurance Business Rs 1.74 Crs (Previous Year Rs
1.06 Crores)
3. Others (SBI Cards, Mutual Funds) Rs 0.45 Crs (Previous Year Rs 0.58
Crores)
5.6. Unamortised Pension and Gratuity Liabilities
During the year 2010-11, 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 the said option by 2947 employees, the Bank
incurred a liability of RS.58.49 crores in respect of the 2616
continuing employees. Further, during the year 2010-11, the limit of
gratuity payable to the employees of the Bank was also enhanced
pursuant to the amendment to the Payment of Gratuity Act, 1972, which
resulted in increase in Gratuity liability of the Bank by RS.74.69
crores.
In terms of the requirements of the Accounting Standard (AS) 15,
Employee Benefits, the entire amount of ''133.18 crores was required to
be charged to the Profit and Loss Account for the year 2010-11.
However, the Reserve Bank of India has issued a circular No.DBOD.
BPBC.80/21.04018/2010-11 on reopening of Pension Option to Employees of
Public Sector Banks and Enhancement in Gratuity Limits -Prudential
Regulatory Treatment, dated 9th February 2011. In accordance with the
guidelines of the Reserve Bank of India, the Bank opted to amortise an
amount of RS.133.18 crores over the period of five years. Accordingly,
RS.26.64 crores (representing one-fifth of RS.133.18 crores) has been
amortised and charged to the Profit & Loss Account for the year and the
balance un-amortised amount carried forward is NIL.
Had such circular not been issued by Reserve Bank of India, the profits
of the Bank would have been higher by RS.26.64 crores.
5.7 Disclosures on Remuneration -NOT APPLICABLE
5.8 Disclosures relating to Securitisation
The Notes to Accounts of the originating banks should indicate the
outstanding amount of securitised assets as per books of the SPVs
sponsored by the bank and total amount of exposures retained by the
bank as on the date of balance sheet to comply with the Minimum
Retention Requirements (MRR). These figures should be based on the
information duly certified by the SPV''s auditors obtained by the
originating bank from the SPV. These disclosures should be made in the
format given below.
5.9 Unhedged Foreign Currency Exposure (UFCE)
In terms of RBI circulars No. RBI/2013-14/448 DBOD.No.BP.BC.85
/21.06.200/ 2013-14dtd.15.01.2014 and Circular No.RBI /2013-14, DBOD.
No.BP.BC.116/21.06.200/201 3-14 dated 3.06.2014 on requirements of
incremental capital and provisions for Banks on account of Unhedged
Foreign Currency Exposure of borrowers, we have implemented the
provisions with effect from 1.04.2014.The total provisions comes to
Rs.6.99 crore and the same has been provided for as on 31.03.2015.
6. Qualitative disclosure around LCR:
Reserve Bank of India had issued LCR reporting and monitoring
guidelines on June 9, 2014 vide circular No.DBOD. BPB.C.No.120/
21.04.098/2013-14,giving new guidelines on LCR, Risk Monitoring Tools
and LCR Disclosure standards effective from Jan 1, 2015. These
guidelines are issued under Basel-III framework.RBI wants ''Banks to
maintain an adequate level of unencumbered high quality liquid assets
(HQLAs) that can be converted into cash to meet its liquidity needs for
a 30 calendar day time horizon under severe liquidity stress scenario.
High Quality Liquid Assets (HQLAs):
The HQLAs are categorized into Level
1 and Level 2 assets and sub-divided into Level 2A and Level 2B assets
on the basis of their price-volatility as under.
Level 1 assets of banks would comprise of the following and these
assets can be included in the stock of liquid assets without any limit
as also without applying any haircut:
i. Cash including cash reserves in excess of required CRR.
ii. Government securities in excess of the minimum SLR requirement.
iii.Within the mandatory SLR requirement, Government securities to the
extent allowed by RBI, under Marginal Standing Facility (MSF) at 2% on
NDTL and facility to avail another 5% of NDTL under FALCR ass per RBI
4th bi-monthly Monetary Policy statement 2014-15 dated 30.09.2014.
iv. Marketable securities issued or guaranteed by foreign sovereigns
satisfying all the conditions referred in RBI circular.
Level 2 assets (comprising Level 2A assets and Level 2B assets) can be
included in the stock of liquid assets, subject to the requirement that
they comprise no more than 40% of the overall stock of HQLAs after
haircuts have been applied. The portfolio of Level 2 assets held by the
bank should be well diversified in terms of type of assets, type of
issuers and specific counterparty or issuer.
Total net cash outflows :
The total net cash outflows is defined as the total expected cash
outflows minus total expected cash inflows for the next 30 calendar
days.
LCR is the ratio of stock of high quality liquid assets (HQLAs) to
Total Net Cash Outflows (TNCO) over next 30 days period expressed in
percentage.
7. TAX LIABILITIES:
7.1 The disputed Income tax demands as at 31st March, 2015 amounting to
RS.592.01 crores (Previous Year - RS.307.04 crores) out of which
RS.412.78 crores (Previous Year - RS.247.54 crores) has been paid /
adjusted by the Income Tax Dept against refund orders.
7.2 The Bank has considered the provisions of Section 115JB (MAT) and
it is found that MAT is not applicable to the Bank for the current
financial year since the TAX Computed under regular provision of Income
Tax Act is higher than the Tax Computed under section 115JB.
8 RECONCILIATION:
I. INTER BRANCH:
1. Inter Branch Reconciliation is an ongoing process and is under
progress. In terms of RBI guidelines, the Banks are required to close
inter-branch reconciliation within six months. The Inter Branch
Reconciliation upto 31.03.2015 has been closed after reconciliation of
all the debit entries.
2. A sum of Rs.157.15 Lacs was transferred to Profit & Loss Account in
2005-06 being the net credit balance in the Inter Branch Drafts
Accounts upto 31st March 1999 pending reconciliation, in terms of
RBI letter No.DBS/CO.SMC. No.8809/22.09.001/2005-06 dated 19.12.2005.
Out of this, a claim of Rs.3.01 lacs was preferred and debited
during the earlier years, leaving a balance of Rs.154.14 lacs as
on 31.03.2015.
3. The bank has transferred all outstanding unreconciled credit
entries from 01.04.1999 to 31.03.2005 to a blocked account as per RBI
guidelines vide letter No.BP/BC/73/21.04.018/98 dated 27.07.1998. The
balance in Blocked accounts in respect of both BCG and Drafts as on
31.03.2015 is Rs.9.77 crores.
4. Unclaimed liabilities where amount due has been transferred to DEAF
account (other credits - Drafts) as per RBI Circular No.RBI/2013-14/527
dated 21.03.2014.
INTER BANK:
Reconciliation of Accounts under SBI Agency Clearing Scheme and
Associate Bank Settlement of Transactions (ABSOT) Scheme is an on-going
process and is under progress.
5. Other Fixed assets include assets jointly owned by the Bank, State
Bank of India and Other Associate Banks as on 31.03.2015
6. REVALUATION OF FIXED ASSETS
The Premises (Land & Building) of the Bank consisting of Land &
Building were revalued on 01-04-2008 on the basis of reports of
approved valuers and upward revision in value amounting to RS.607.97
crores was credited to Revaluation Reserve Account. The bank has
changed the policy of charging depreciation on revalued amount, over
the remaining useful life of the asset. The deprecation corresponding
to the extent of revaluation was debited to the Depreciation Reserve
and credited to the Revaluation Reserve Account
7. SHARE HOLDING:
7.1 The shareholding of State Bank of India in the Bank''s Paid up
Capital as at 31st March 2015 is 90.00% (Previous year 90.00%).
7.2 EMPLOYEE STOCK OPTION: Nil
8. Advances shown in the Balance Sheet are net of provision for
diminution in fair value, as such advances shown are less to the extent
of RS.262.78 crore (PY- RS. 202.82 crore) (Refer Accounting Policy
No3.6 Schedule17).
9. The management and Officer''s Association/Workmen Union have entered
into an agreement on wages on 23rd February 2015. As a part of
agreement the wage revision shall be effective from 1st November 2012
and the wage increase shall be @ 15% of the current average salary &
allowances per annum. Bank has provided Rs. 105.28 Crores towards the
same.
10. The figures of the previous years have been regrouped/ re-arranged,
wherever considered necessary.
Mar 31, 2013
1.1. Sale and Transfer to/from HTM Category
1.2.1 The Bank has not undertaken any sale of investments held under
Held To Maturity category which needs disclosure in terms of RBI
circular No.DBOP.BP.BC 34/21.04.141/2010-11 dated 6th April 2010
wherein the Bank has to disclose the excess of book value over the
market value for which provision is not made, excluding onetime
transfer of security to/from HTM and pre- announced OMO auctions.
1.2.2 As per RBI guidelines, an amount of Rs.19.86 crores (Previous
year Nil) being the balance amount of Profit on Sale of securities [net
of applicable taxes and Statutory Reserve] in "Held to Maturity''
category has been transferred to Capital Reserve.
1.2.3 Income on Investments in Schedule 13 of Interest earned para II
is net of amortization of premium on HTM Investments Rs.47.40 Crores
(Previous Year Rs.56.22 Crores).
2.1 Disclosure on risk exposure in derivatives
2.1.1 Qualitative Disclosures :
Forward Contracts are the only derivatives held in the books of the
Bank. The Bank enters into forward contracts with the customers and
covers the resultant position in the inter bank market. The Bank also
trades in Inter Bank forward contracts on its own with a view to derive
profits. The Bank does not have any unhedged foreign exchange exposure
other than the open overnight position.
The Bank has put in place Board approved policy for monitoring various
risks associated with the above mentioned transactions. The risks are
managed by prescribing various limits and ensuring that the exposures
are within the limits. Such limits are prescribed in the following
areas.
a) Overnight Exposure Limits
b) Daylight exposure Limits
c) Aggregate and currency-wise gap Limits
d) Stop Loss Limits
e) VaR Limits
f) Limit on Proprietary Trading
g) Limit on Counter Party Bank
In terms of Board approved policy, the limits are monitored by Mid
Office and discretionary power is vested with functionaries at various
levels to ratify/ approve the breaches, if any.
2.2.1.1 Provision on Restructured Loan Assets
During the current year ended 31st March'' 2013, provision for
diminution in fair value of Restructured Accounts irrespective of
amounts have been individually calculated at all the branches and
provision thereof made at Head Office.
2.3.5 Unsecured Advances against collaterals like Rights, licences,
authorizations etc charged to the bank in respect of projects
(including infrastructure projects) financed by the Bank.
3. Disclosure requirements as per Accounting Standards
The Bank has generally complied with all the applicable Accounting
Standards issued by the Institute of Chartered Accountants of India
(ICAI) read with the relevant guidelines of Reserve Bank of India. The
following disclosures (not made elsewhere in the financial statements
including Significant Accounting Poiicies and Notes on Accounts) are
made hereunder in accordance with the provisions of the applicable
mandatory Accounting Standards, issued by the Institute of Chartered
Accountants of India.
4.1 Cash Flow Statements (AS 3 Revised)
In terms of Para 45 of the Standard, the amount of significant cash and
cash equivalent balances held by the enterprise that are not available
for use by it, are Rs. Nil. (excluding balances required to be
maintained for the purpose of Cash Reserve Ratio).
4.2 Net Profit or Loss for the period, prior period items and changes
in Accounting Policies (AS - 5)
4.2.1 In terms of Accounting Standard 5 issued by the Institute of
Chartered Accountants of India read with RBI guidelines, prior period
items are Other Prior Period Items Expenditure - NIL Income - NIL.
4.2.2 The Bank during the year has changed its method of depreciation
of Fixed Assets except revalued assets and computers, from Straight
Line Method to Written Down Value Method w.e.f. 01.04.2012, and surplus
amounting to Rs.47.33 crores, arising from retrospective computation is
accounted and disclosed under Other Incomes. This change in method of
depreciation and consequently increase in tax expense (deferred tax) of
Rs.43.56 crores has resulted in increase in Net Profit for the year by
Rs.3.77 crores. Further, due to the change in method of depreciation,
charge on account of depreciation for the year is lower by Rs.12.28
crores and correspondingly increase in profit (Net of Tax) for the year
to the extent of Rs.8.30 crores.
4.3 Revenue Recognition (AS 9)
The revenue has been recognized in terms of AS 9 on Revenue
recognition, the guidelines issued by Reserve Bank of India and the
Accounting Policy of the Bank.
4.4 Employees'' Benefits - Accounting Standards 15 (Revised)
4.4.1 In terms of AS 15 (revised),
Bank has made provision for the following Employee benefits for the
year 2012-13 as per Actuarial valuation.
4.5 Segmental Reporting - (AS-17):
The following segments have been identified:
I. Primary Segment (Business Segment):
Treasury Operations CorporateA/Vholesale Banking Retail Banking
II- The Geographic segment consists of only the Domestic segment as the
Bank does not have any foreign branches.
4.5.1 The Bank has got two main business segments namely Treasury
Operations and Banking Operations. Banking Operations are further
segmented to Corporate/Wholesale Banking and Retail Banking and there
is no ''Other Banking Operations''
4.5.2 PRICING OF INTER-SEGMENTAL TRANSFERS:
Corporate/Wholesale banking and Retail Banking Operations Segment are
the primary resource mobilising units. The Treasury segment is a
recipient of funds from these operatons apart from resource mobilized
by treasury segment from REPO, CBLO, Call Money, IBTM and Export credit
refinance. The cost of funds mobilized by treasury from corporate/
wholesale banking and retail banking is computed at the cost of
deposits of Corporate/Wholesale Banking and Retail banking. Pricing of
Inter Segmental transfer in Treasury is reduced from the operating
profit of Treasury Segment and added to the Operating Profit of
Corporate/Wholesale banking in the ratio of deposits allocated to these
segments.
4.5.3 REVENUE :
All income relating to Treasury Operations are considered under
Treasury operations segment. All interest as furnished by ITS
Department and as certified by the Management for all borrowal accounts
with exposures above Rs.5crores are classified as Corporate/Wholesale
Banking segment. The balance interest is treated as relating to retail
banking segment. The other interest income/other income is allocated
under Corporate/Wholesale and Retail Banking segments in the ratio of
total income of these segments (excluding other interest income/other
income and interest segment revenue).
4.5.4 ALLOCATION OF EXPENSES:
Expenses incurred at Corporate Centre establishment directly
attributable to Treasury Operations are allocated accordingly. As
regards Corporate/ Wholesale and retail banking segment interest paid
on deposits is segregated to these segments in the ratio of deposits to
these segments (deposits are allocated on the basis of outstanding
advances pertaining to these segments). Employees'' expenses are
allocated to the Treasury segment in proportion to the number of
Employees of that segment to the total employees of the Bank. Other
interest paid, provisions relating to employees and other operative
expenditure for Corporate/Wholesale and Retail Banking segment are
allocated based on the income earned by these segments(excluding inter
segmental revenue). Interest paid on Tier I/Tier 11/ Subordinated bonds
are classified as ''Unallocated''.
4.5.5 SEGMENT ASSETS:
All assets which are directly attributable to treasury operations are
considered for Treasury Operations Segment. All outstandings in advance
accounts for borrowers with exposures above Rs. 5 crores as furnished
by ITS Department and as certified by the Management is considered as
assets pertaining to Corporate/Wholesale Banking segment. Other
outstandings in advances segments is shown as pertaining to Retail
Banking Segment. All other assets are segregated and added to the
segment advances pertaining to Corporate/ Wholesale and Retail Banking
segment in the ratio of outstanding balances of advances in these
segments.
4.5.6 SEGMENT LIABILITIES:
All liabilities which are directly attributable to Treasury Operations
segment are allocated accordingly. Other deposits are allocated and
segregated for Corporate/ Wholesale segment in the ratio of outstanding
balances of advances for the respective segments. With regard to other
liabilities, provisions and contingencies, the allocation to
Corporate/Wholesale and Retail Banking segments are made on the basis
of the outstanding balances of advances under these segments. Tier
I/Tier 11/ Subordinated bonds are classified as ''Unallocated''.
(iii) The credit exposure to the above key managerial personnel and
their relatives during the year is NIL.
4.6.2 All the other related parties are State Controlled enterprises as
defined in AS 18 issued by the Institute of Chartered Accountants of
India as such Transactions with them are not required to be disclosed.
4.7 Leases (AS 19)
(i) The Bank has taken premises only on rental basis and has no
long-term operating leases taken/given and hence reporting under AS 19
is not considered necessary.
(ii) No financial lease has been executed after April 1, 2001.
4.9 Accounting for Taxes on income (AS 22)
In compliance with AS 22 "Accounting for taxes on income" issued by
the Institute of Chartered Accountants of India, the Bank has
recognised deferred tax assets and liabilities on the basis of timing
difference by adoption of Profit and Loss Approach. Deferred Tax Asset
(net of liabilities) of Rs.115.75 Crores (Previous Year - Rs. 129.31
Crores) has been recognised as at March 31, 2013, the major components
of which are as under:
4.10 : INTANGIBLE ASSETS AS -26
There are no intangible asset other than application and operating
software, which are depreciated as per Accounting Policy of the Bank
(i.e., Application Software at 100% and Operating Software at 33.33%).
4.11 IMPAIRMENT OF ASSETS AS-28
There is no impairment in any of the assets of the Bank.
5.1. PROVISION COVERAGE RATIO:
The Provision to Gross NPA of the Bank as on 31st March 2013 is 60.10%
(Previous Year 65.22%)
5.2. BANCASSURANCE BUSINESS:
During the financial year 2012 -13, the Bank has earned a sum of Rs.
8.95 Crores (Previous Year Rs. 8.77 Crores as fees and remuneration
from Bancassurance business. The details of the fees / remuneration
earned are as under:
1. Income from SBI life business Rs. 6.90 Crores (Previous Year Rs.
6.48 Crores)
2. Income from General Insurance business Rs. 0.86 Crores (Previous
Year Rs. 1.67 Crores)
3. Others (SBI Cards, SBI Mutual Funds) Rs. 1.19 crores (Previous Year
Rs. 0.62 crores)
5.3. Unamortised Pension and Gratuity Liabilities
During the year 2010-11, 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 the said option by 2947 employees, the Bank
incurred a liability of Rs.58.49 crores in respect of the 2616
continuing employees. Further, during the year 2010-11, 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, which
resulted in increase in Gratuity liability of the Bank by Rs.74.69
crores.
In terms of the requirements of the Accounting Standard (AS) 15,
Employee Benefits, the entire amount of Rs.133.18 crores was required
to be charged to the Profit and Loss Account for the year 2010-11.
However, the Reserve Bank of India has issued a circular
No.DBOD.BP.BC.80/21.04018/2010-11 on Re-opening of Pension Option to
Employees of Public Sector Banks and Enhancement in Gratuity Limits -
Prudential Regulatory Treatment, dated 9th February 2011. In accordance
with the guidelines of the Reserve Bank of India, the Bank opted to
amortise an amount of Rs.133.18 crores over the period of five years.
Accordingly, Rs.26.64 crores (representing one-fifth of Rs.133.18
crores) has been amortised and charged to the Profit & Loss Account for
the year and the balance unamortised amount carried forward is Rs.53.27
crores.
Had such circular not been issued by Reserve Bank of India, the profits
of the Bank would have been higher by Rs.26.64 crores.
6.1 The disputed Income tax demands as at 31st March, 2013 amounting to
Rs.296.58 crores ( Previous Year - Rs.238.42 crores) out of which
Rs.248.96 crores ( Previous Year - Rs.223.03 crores) has been paid /
adjusted by the Income Tax Dept against refund orders. The Bank has
received favourable decisions for appeal petitions filed before various
Appellate Authorities regarding demands raised disclosed in the
Contingent Liability amounting to
6.2 The Bank has considered the provisions of Section 115JB (MAT) and
it is found that MAT is not applicable to the Bank for the current
financial year since the TAX Computed under regular provision of Income
Tax Act is higher than the Tax Computed under section 115JB.The Bank
had created MAT Credit amounting to Rs.61.55 crores during the
financial year 2010-11 which is eligible for reversal in subsequent
financial years. An amount of Rs.27.70 crores has been reversed till
date and the residual balance of MAT Credit is Rs.33.85 crores.
7. RECONCILIATION:
I. Inter Branch:
1. Inter Branch Reconciliation is an ongoing process and is under
progress. In terms of RBI guidelines, the Banks are required to close
inter-branch reconciliation within six months. The Inter Branch
Reconciliation up to 31.12.2012 has been closed after reconciliation of
all the debit entries.
2. A sum of Rs.157.15 lacs was transferred to Profit & Loss Account in
2005-06 being the net credit balance in the inter branch accounts upto
31st March 1999 pending reconciliation, in terms of RBI letter No. DBS/
CO.SMC.No.8809/22.09.001/2005-06 dated 19.12.2005. Out of this, a claim
of Rs.2.98 lacs was preferred and debited during the earlier years,
leaving a balance of T154.17 lacs as on 31.03.2012. There was a claim
in Inter Branch Drafts A/c for Rs.2500.00 during the year 2012-13, thus
reducing the amount of unreconciled entries in Inter Branch account up
to 31.03.1999 to 54.14 lacs as on 31.03.2013.
3. The Bank has transferred all outstanding unreconciled credit
entries from 01.04.1999 to 31.03.2005 to a blocked account as per RBI
guidelines vide letter No BP/.BC/73/21.04.018/98 dated 27.07.1998. The
balance in Blocked accounts in respect of both BCG & Drafts as on 31st
December, 2012 is Rs.18.87 crores.
4. The Core Inter Branch Account being maintained in CBS is reconciled
automatically by the system as per yearly statement of affairs as on
31st March, 2013.
II. Inter-Bank: Reconciliation of Accounts under SBI Agency Clearing
Scheme and Associate Bank Settlement of Transactions (ABSOT) Scheme is
an on-going process and is under progress.
III Others: The reconciliation of various accounts including National &
Local Clearing Account, Branch System Suspense Account, FCNR Account,
PCFC Account, Currency Transactions Account, ATM Transactions and IBIT
Account is an on going process and is under progress.
IV Impact of the above, if any, on the Profit & Loss Account and
Balance Sheet is not material.
8. Other Fixed assets include assets jointly owned by the Bank, State
Bank of India and Other Associate Banks as on 31.03.2013
9. REVALUATION OF FIXED ASSETS
The Premises (Land & Building) of the Bank consisting of Land &
Building were revalued on 01-04-2008 on the basis of reports of
approved valuers and upward revision in value amounting to Rs.607.97
crores was credited to Revaluation Reserve Account. The depreciation
for the year on incremental value amounting to Rs.8.04 crores is
withdrawn from Revaluation Reserve, as such there is no impact on the
profits for the year. The Revaluation Reserve as at 31st March 2013
stands at Rs.567.76 crores (Previous Year Rs.575.81 crores).
10. SHAREHOLDING:
10.1 The shareholding of State Bank of India in the Bank''s Paid up
Capital as at 31st March 2013 is 92.33 % (Previous year 92.33%).
10.2 EMPLOYEE STOCK OPTION: Nil
11. Advances shown in the Balance Sheet are net of provision for
diminution in fair value, as such advances shown are less to the extent
of Rs.194.20 crores (Refer Accounting Policy No3.6 Schedule17).
12. The current Bipartite settlement between IBA & employees/officers
union on wage has expired on 31.10.2012. IBA has advised the Bank to
make provision towards any wage increase effective from 01.11.2012.
Accordingly, the Bank has provided a sum of Rs.31 crores towards wage
revision, representing 15% of the current average salary and allowance
per annum.
13. Investment includes Equity Shares having book value of Rs.14.89
crores and Compulsory Convertible Debentures(CCD) of Rs.13.50 crores
against which allotment is yet to be made. Further the Bank has
invested Rs.8.50 crores in Equity shares of Kaveri Grameeena Bank at
face value of Rs.10 per share in order to acquire Vishvesharaya
Grameeena Bank sponsored by Vijaya Bank and Cnikmagalur-Kodagu Grameena
Bank sponsored by Corporation Bank, however the relative Equity Shares
from Kaveri Grameena Bank are yet to be issued.
14. With regard to disclosures relating to Micro, Small & Medium
Enterprises under the Micro, Small & Medium Enterprises Development
Act, 2006, there have been no reported cases of delayed payments or of
interest payments due to delay in such payments to Micro, Small &
Medium Enterprises.
15. The figures of the previous years have been regrouped/re-arranged,
wherever considered necessary.
Mar 31, 2012
1. The Bank operates gratuity and pension schemes which are defined
benefit plans.
2. The Bank provides for gratuity to all eligible employees. The
benefit is in the form of lump sum payments to vested employees on
retirement, on death while in employment, or on termination of
employment. Vesting occurs upon completion of five years of service.
The bank makes annual contributions to a fund administered by trustees
for the deficit in plan assets based on an independent external
actuarial valuation carried out annually.
3. The Bank provides for pension to all eligible employees. The
benefit is in the form of monthly payments as per rules and regular
payments are made to vested employees on retirement, on death while in
employment, or on termination of employment. Vesting occurs at
different stages as per the rules. The pension liability is reckoned
based on an independent actuarial valuation carried out annually.
4. The cost of providing defined benefits is determined using the
projected unit credit method, with actuarial valuations being carried
out at each balance sheet date. Actuarial gains/ losses are recognized
in the statement of Profit and Loss Account.
5.1.1 Defined Contribution Plan
The Bank operates a new pension scheme(NPS) for all officers/ employees
joining the bank on or after 1st April, 2010, which is a defined
contribution plan, such new joinees not being entitled to become
members of the existing Pension Scheme. Pending finalization of the
detailed scheme, the employees covered under the scheme contribute 10%
of their basic pay plus dearness allowance to the scheme together with
a matching contribution from the Bank. These contributions are retained
as savings deposits in the Bank and earn interest at the same rate as
that is applicable to other savings bank accounts. The Bank recognizes
such annual contributions and interest as an expense in the year to
which they relate.
5.1.2 0ther Long Term Employee benefits
All eligible employees of the Bank are entitled for leave encashment,
sick leave, silver jubilee award, leave travel concession, resettlement
expenses. The costs of such long term employee benefits are internally
funded by the Bank. The cost of providing other long term benefits is
determined using the projected unit credit method with actuarial
valuations being carried out at each balance sheet date.
5.2 Consequent on the re-opening of Pension option to employees and
enhancement in Gratuity Limit due to amendment in the Payment of
Gratuity Act, the Bank has opted to amortize the incremental liability,
as per RBI Circular, over a period of five years (subject to a minimum
of 1 /5th every year) beginning with the financial year ending 31st
March 2011.
6. TAXES ON INCOME
6.1 Income tax expense is the aggregate amount of current tax and
deferred tax. Current taxes are determined in accordance with the
provisions of tax laws prevailing in India. Deferred tax adjustments
comprise of changes in the deferred tax assets or liabilities during
the period and Deferred Tax is determined in terms of Accounting
Standard-22 issued by ICAI
6.2 Deferred tax assets and liabilities are measured using tax rates
and tax laws that have been enacted or substantially enacted prior to
the balance sheet date. Deferred tax assets and liabilities are
recognised on a prudent basis for future tax consequences of timing
differences by adoption of Profit and Loss approach with their
respective tax bases. The impact of changes in the deferred tax assets
and liabilities is recognized in the profit and loss account.
6.3 Deferred tax assets are recognised at each reporting date, based
upon management's judgement as to whether realisation is considered
reasonably certain. Deferred tax assets are recognized on carry forward
of unabsorbed depreciation and tax losses only if there is virtual
certainty that such deferred tax assets can be realised against future
profits.
6.4 No withdrawal is made from the Special Reserve created and
maintained under the provisions of section 36(1 ){viii) of the Income
Tax Act 1961.
7. EARNING PER SHARE
7.1 The Bank reports basic and diluted earnings per share in
accordance with AS 20 -'Earnings per Share' issued by the ICAI. Basic
earnings per share are computed by dividing the net profit after tax by
the weighted average number of equity shares outstanding for the year.
7.2 Diluted earnings per share reflect the potential dilution that
could occur if securities or other contracts to issue equity shares
were exercised or converted during the year. Diluted earnings per share
are computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding at year end.
8. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
8.1 In conformity with AS 29, "Provisions, Contingent Liabilities and
Contingent Assets", issued by the ICAI, the Bank recognises provisions
only when it has a present obligation as a result of a past event, it
is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, and when a reliable estimate
of the amount of the obligation can be made.
8.2 No provision is recognised for
i. any possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Bank; or
ii. any present obligation that arises from past events but is not
recognised because
a. it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation; or
b. a reliable estimate of the amount of obligation cannot be made.
Such obligations are recorded as Contingent Liabilities. These are
assessed at regular intervals and only that part of the obligation for
which an outflow of resources embodying economic benefits is probable,
is provided for, except in the extremely rare circumstances where no
reliable estimate can be made.
8.3 Contingent Assets are not recognised in the financial
statements.
9. SHARE ISSUE EXPENSES
Share issue expenses are charged to the Share Premium Account.
10. NET PROFIT:
The net profit disclosed in the Profit and ; Loss Account is after:
(i) Provisions as per RBI guidelines for bad and doubtful Advances and
Investments.
(ii) Transfer to/from contingency funds.
(iii) Provisions for taxes in accordance with the statutory
requirements.
(iv) Other usual and necessary provisions.
1. INVESTMENTS
(i) The Bank's holding of total SLR securities in "Held to
Maturity" Category (HTM) is 23.62% (previous year 22.66%) of DTL as
on the last Friday of the second preceeding fortnight. The total
investment in HTM category is equal to 89.51% (Previous year 86.90%) of
its total investments and the excess of "Held to Maturity" category
investments over 25% of total investments comprises of SLR securities.
The Bank's holdings in Held to Maturity Category of investments are
within the overall limits stipulated by RBI.
(ii) As per RBI guidelines, an amount of NIL (Previous year Rs4.47
Crores) being the balance amount of Profit on Sale of securities [net
of applicable taxes and Statutory Reserve] in "Held to Maturity"
category has been transferred to Capital Reserve.
2.2 Disclosure on risk exposure in derivatives
2.2.1 Qualitative Disclosures:
Forward Contracts are the only derivatives held in the books of the
Bank. The Bank enters into forward contracts with the customers and
covers the resultant position in the inter bank market. The Bank also
trades in Inter Bank forward contracts on its own with a view to derive
profits. The Bank does not have any unhedged foreign exchange exposure
other than the open overnight position.
The Bank has put in place Board approved policy for monitoring various
risks associated with the above mentioned transactions. The risks are
managed by prescribing various limits and ensuring that the exposures
are within the limits. Such limits are prescribed in the following
areas.
a) Overnight Exposure Limits
b) Daylight exposure Limits
c) Aggregate and currency-wise gap Limits
d) Stop Loss Limits
e) VAR Limits
f) Limit on Proprietary Trading
g) Limit on Counter Party Bank
In terms of Board approved policy, the limits are monitored by Mid
Office and discretionary power is vested with functionaries at various
levels to ratify/ approve the breaches, if any.
2.2.1.1 Provision on Restructured Loan Assets
During the current year ended 31st March' 2012, provision for
diminution in fair value of Restructured Accounts irrespective of
amounts have been individually calculated at all the branches and
provision thereof made at Head Office.
Prudential norm at 15% of the capital funds as on 31.03.2011 for a
Single Borrower is Rs 701.92 Crores and 40% for Group borrowers is Rs
1871.79 crores.
Prudential norm of additional 5% (Rs 233.97crores) of the capital funds
as on 31.03.2011 for Single borrower provided the additional credit
exposure is on account of extension of credit to Infrastructure
Projects.
Prudential norm of additional 10% (Rs 467.95crores) of the capital funds
as on 31.03.2011 for Oil Companies who have been issued Oil bonds
(which do not have SLR Status) by the Govt of India.
Prudential Norms for single NBFC is 10% of the bank's capital funds as
on 31.03.2011 - Rs 467.95 crores.
Prudential Norms for a single NBFC - AFC (Asset Financing Company) is
15% of the bank's capital funds as on 31.03.2011 Rs 701.92 crores.
Prudential norms on account of funds lent by NBFC - AFC to
infrastructure sector are 20% of the Bank's capital funds as on
31.03.2011 - Rs 935.90 crores.
The above statement is exclusive of Food Credit, which is outside the
purview of prudential norms.
2.2.2 The disputed Income tax demands as at 31st March, 2012 amount to
Rs 238.42 crores (Previous Year - Rs 218.54 crores) out of which Rs223.03
crores ( Previous Year - Rs 218.33 crores) has been paid / adjusted by
the Income Tax Dept against refund orders. Considering the various
judicial pronouncements on similar issue in favour of the Bank and the
appeals filed by the Bank for earlier Assessment Years and pending
before various Appellate authorities, no provision is considered
necessary.
2.2.3 The Bank during the preceding year (2010-11) determined tax
liability amounting to Rs 232.68 crores as per the provisions of Section
115 JB (MAT), and after considering the eligible MAT credit of Rs 61.55
crores, Rs 171.13 crores was charged to Profit & Loss Account.
However, in view of the proposed amendment, as per the Finance Bill
2012, in section 115 JB of the Income Tax Act 1961 from the assessment
year 2013-14, to take profit and loss account in accordance with the
provisions of the Regulatory Act as a basis for computing the book
profit, the management is of the view that provisions of Section 115 JB
are not applicable to the Bank for the current financial year, as such
MAT as per the provisions of Section 115 JB has not been computed and
considered in the financial statements.
2.4 Penalties imposed by the Reserve Bank of India during the year
2011-12 -NIL- 3.10 RECONCILIATION:
I. Inter Branch:
1. Inter Branch Reconciliation is an ongoing process and is under
progress.
In terms of RBI guidelines, the Banks are required to close
inter-branch reconciliation within six months. The Inter Branch
Reconciliation up to 30.09.2011 has been closed after reconciliation of
all the debit entries.
2. A sum of Rs 157.15 lacs was transferred to Profit & Loss Account in
2005 - 06 being the net credit balance in the inter branch accounts
upto 31st March 1999 pending reconciliation, in terms of RBI letter No.
DBS/CO.SMC.No.8809/ 22.09.001/2005-06 dated 19.12.2005.
Out of this, a claim of Rs 2.36 lacs was preferred and debited during the
earlier years, leaving a balance of Rs 154.79 lacs as on 31.03.2011.
There was a claim in Inter Branch Drafts Ale for Rs 0.62 lacs during the
year 2011-12, thus reducing the amount of unreconciled entries in Inter
Branch account up to 31.03.1999 to Rs 154.17 lacs as on 31.03.2012.
3. The Bank has transferred all outstanding unreconciled credit
entries from 01.04.1999 to 31.03.2005 to a blocked account as per RBI
guidelines vide letter No BP.BC/73/21.04.018/98 dated 27.07.1998. The
balance in Blocked accounts in respect of both BCG & Drafts as on 31st
March, 2012 is Rs 18.87 crores.
4. The Core Inter Branch Account being maintained in CBS is reconciled
automatically by the system as per yearly statement of affairs as on
31st March, 2012.
II. Inter-Bank: Reconciliation of Accounts under SBI Agency Clearing
Scheme and Associate Bank Settlement of Transactions (ABSOT) Scheme is
an on-going process and is under progress.
III Others: The reconciliation of various other accounts including
National & Local Clearing Account, Branch System Suspense Account, FCNR
Account, PCFC Account, Currency transactions accounts, ATM transactions
and IBIT Account is an on going process and is under progress.
IV Impact of the above, if any, on the Profit & Loss Account and
Balance Sheet, in the opinion of the management, is not material.
3.1 Income on Investments in Schedule 13 of Interest earned para II is
net of amortization of premium on HTM Investments Rs 56.22 Crores
(Previous Year Rs 54.92Crores).
3.2. REVALUATION OF FIXED ASSETS
The premises (Land & Building) of the Bank consisting of Land &
Building were revalued on 01-04-2008 on the basis of reports of
approved valuers and upward revision in value amounting to Rs 607.97
crores was credited to Revaluation Reserve Account. The depreciation
for the year on incremental amount amounting to Rs 8.04 crores is
withdrawn from Revaluation Reserve. There is thus, no impact on the
profits for the year. The Revaluation Reserve as at 31st March 2012
stands at Rs 575.81 crores (Previous Year Rs 583.85 crores)
4. Disclosure requirements as per Accounting Standards
The Bank has generally complied with all the applicable Accounting
Standards issued by the Institute of Chartered Accountants of India
(ICAI) read with the relevant guidelines of Reserve Bank of India. The
following disclosures (not made elsewhere in the financial statements
including Significant Accounting Policies and Notes on Accounts) are
made hereunder in accordance with the provisions of the applicable
mandatory Accounting Standards, issued by the Institute of Chartered
Accountants of India.
4.1 Cash Flow Statements (AS 3 Revised)
In terms of Para 45 of the Standard, the amount of significant cash and
cash equivalent balances held by the enterprise that are not available
for use by it, are Rs Nil. (excluding balances required to be maintained
for the purpose of Cash Reserve Ratio).
4.2 Net Profit or Loss for the period, prior period items and changes
in Accounting Policies (AS - 5)
In terms of Accounting Standard 5 issued by the Institute of Chartered
Accountants of India read with RBI guidelines, prior period items are
(i) Other Prior Period Items - Expenditure - Rs 0.01 Crores. Income -
NIL.
4.3 Revenue Recognition (AS 9)
The revenue has been recognized in terms of AS 9 on Revenue
recognition, the guidelines issued by Reserve Bank of India and the
Accounting Policy of the Bank.
4.4 Employees' Benefits - Accounting Standards 15 (Revised)
4.4.1 During the year 2010-11, 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 the said option by 2947 employees, the Bank
incurred a liability of Rs 58.49 crores in respect of the 2616
continuing employees. Further, during the year 2010-11, 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, which
resulted in increase in Gratuity liability of the Bank by Rs 74.69
crores.
In terms of the requirements of the Accounting Standard (AS) 15,
Employee Benefits, the entire amount of Rs 133.18 crores was required to
be charged to the Profit and Loss Account for the year 2010-11.
However, the Reserve Bank of India has issued a circular
No.DBOD.BP.BC.80/21.04, 018/2010-11 on Re-opening of Pension Option to
Employees of Public Sector Banks and Enhancement in Gratuity Limits
-Prudential Regulatory Treatment, dated 9th February 2011. In
accordance with the guidelines of the Reserve Bank of India, the Bank
opted to amortise an amount of Rs 133.18 crores over the period of five
years. Accordingly, Rs 26.64 crores (representing one-fifth of Rs 133.18
crores) has been amortised and charged to the Profit & Loss Account for
the year and the balance unamortised amount carried forward is Rs79.90
crores.
Had such circular not been issued by Reserve Bank of India, the profits
of the Bank would have been higher by Rs 26.64 crores.
4.4.2 Contributions made to the Retired Employee Medical Benefit
Scheme, being at the sole discretion of the Management, is not
recognized by the Management as a Long Term Employee Benefit and
therefore no provision has been considered necessary for this liability
on actuarial basis.
4.5 Segmental Reporting - (AS-17):
The following segments have been identified:
I. Primary Segment (Business Segment):
Treasury Operations Corporate/Wholesale Banking Retail Banking
II- The Geographic segment consists of only the Domestic segment as the
Bank does not have any foreign branches.
1. The Bank has got two main business segments namely Treasury
Operations and Banking Operations. Banking Operations are further
segmented to Corporate/Wholesale Banking and Retail Banking and there
is no 'Other Banking Operations'
2. PRICING OF INTER-SEGMENTAL TRANSFERS:
Corporate/Wholesale banking and Retail Banking Operations Segment are
the primary resource mobilising units. The Treasury segment is a
recipient of funds from these operatons apart from resource ' mobilized
by treasury segment from REPO, CBLO, Call Money, IBTM and Export credit
refinance. The cost of funds mobilized by treasury from corporate/
wholesale banking and retail banking is computed at the cost of
deposits of Corporate/Wholesale Banking and Retail banking. Pricing of
Inter Segmental transfer in Treasury is reduced from the operating
profit of Treasury Segment and added to the Operating Profit of
Corporate/Wholesale banking in the ratio of deposits allocated to these
segments.
3. REVENUE :
All income relating to Treasury Operations are considered under
Treasury operations segment. All interest as furnished by ITS
Department and as certified by the Management for all borrowal accounts
with exposures above Rs5crores are classified as Corporate/Wholesale
Banking segment. The balance interest is treated as relating to retail
banking segment. The other interest income/other income is allocated
under Corporate/Wholesale and Retail Banking segments in the ratio of
total income of these segments (excluding other interest income/other
income and interest segment revenue).
4. ALLOCATION OF EXPENSES:
Expenses incurred at Corporate Centre establishment directly
attributable to Treasury Operations are allocated accordingly. As
regards Corporate/ Wholesale and retail banking segment interest paid
on deposits is segregated to these segments in the ratio of deposits to
these segments (deposits are allocated on the basis of outstanding
advances pertaining to these segments). Employees' expenses are
allocated to the Treasury segment in proportion to the number of
Employees of that segment to the total employees of the Bank. Other
interest paid, provisions relating to employees and other operative
expenditure for Corporate/Wholesale and Retail Banking segment are
allocated based on the income earned by these segments(excluding inter
segmental revenue). Interest paid on Tier I/Tier 11/ Subordinated bonds
are classified as 'Unallocated'.
5. SEGMENT ASSETS:
All assets which are directly attributable to treasury operations are
considered for Treasury Operations Segment. All outstandings in advance
accounts for borrowers with exposures above Rs 5 crores as furnished by
ITS Department and as certified by the Management is considered as
assets pertaining to Corporate/Wholesale Banking segment. Other
outstandings in advances segments is shown as pertaining to Retail
Banking Segment. All other assets are segregated and added to the
segment advances pertaining to Corporate/ Wholesale and Retail Banking
segment in the ratio of outstanding balances of advances in these
segments.
6. SEGMENT LIABILITIES:
All liabilities which are directly attributable to Treasury Operations
segment are allocated accordingly. Other deposits are allocated and
segregated for Corporate/ Wholesale segment in the ratio of outstanding
balances of advances for the respective segments. With regard to other
liabilities, provisions and contingencies, the allocation to
Corporate/Wholesale and Retail Banking segments are made on the basis
of the outstanding balances of advances under these segments. Tier
I/Tier 11/ Subordinated bonds are classified as 'Unallocated'.
4.6 Related party transactions (AS 18)
4.6.1 In accordance with AS 18 issued by the ICAI and the RBI
guidelines, details relating to Related Party transactions are
disclosed hereunder:
(iii) The credit exposure to the above key managerial personnel and
their relatives during the year is NIL.
4.6.2 All the other related parties are State Controlled enterprises as
defined in AS 18 issued by the Institute of Chartered Accountants of
India as such Transactions with them are not required to be disclosed.
4.7 Leases (AS 19)
(i) The Bank has taken premises only on rental basis and has no
long-term operating leases taken/given and hence reporting under AS 19
is not considered necessary.
(ii) No financial lease has been executed after April 1, 2001.
4.8 Accounting for Taxes on income (AS 22)
In compliance with AS 22 "Accounting for taxes on income" issued by
the Institute of Chartered Accountants of India, the Bank has
recognised deferred tax assets and liabilities on the basis of timing
difference by adoption of Profit and Loss Approach. Deferred Tax Asset
(net of liabilities) of Rs 129.31 Crores (Previous Year - Rs 15.79 Crores)
has been recognised as at March 31, 2012, the major components of which
are as under:
4.9 : INTANGIBLE ASSETS AS-26
There are no intangible asset other than application and operating
software, which are depreciated as per Accounting Policy of the Bank
(i.e., Application Software at 100% and Operating Software at 33.33%).
4.10 IMPAIRMENT OF ASSETS AS-28
(I) During the current year, the Bank's policy on Impairment of Fixed
assets is put in place for the first time. Total amount of fixed assets
got impaired during the year is Rs 27,32,566 against which the claim
settled during the year is Rs 2,16,964. Rest of the claim filed with the
insurance company is being pursued for early settlement. All these
assets have been restored to normalcy before the year end. Total
expenditure incurred on restoration of impaired assets to normal usable
condition has been charged to Expenditure Account. There are no
impaired fixed assets as at 31.3.2012. (Previous year NIL).
(ii) In the opinion of the Management, there is no impairment in any of
the other assets of the Bank.
* Provision for depreciation, impairment of assets and doubtful debts
are adjusted to carrying amount of assets and these have not been
included above in terms of para 7 of the Accounting Standard(AS 29).
Provision against standard assets has already been disclosed in para
3.4.5 above.
b) CONTINGENT LIABILITIES
(Rs in Crores)
2010-11 Particulars 2011-12
Claims not acknowledged as debt :
Counter Suits filed by the Borrowers
against whom Bank has initiated legal
0.01 action 0.01
Cases filed in Consumer/Civil Courts
1.30 for deficiency in services 1.30
221.10 Any other claims against the Bank not
acknowledged as debts 238.78
1816.72 Guarantees issued on behalf of
constituents 2131.18
Acceptances, endorsements and other
obligations* 4309.86
11294.63 Other items, for which the bank is
contingently liable 11288.68
16966.51 Total 17969.81
Includes Letters of Comfort amounting to Rs 853.47 Crores (Previous Year
Rs 557.27 Crores) (detail furnished in para 8 below)
Note : The above provision has been deducted from 'Loans and Advances'
as per RBI guidelines.
8. Disclosure of Letters of Comforts (LOCs) issued by the Bank The
position of Letters of Comfort issued by the bank during the year and
outstanding Letters of Comfort as at the end of the year is given
hereunder: Out of the above, Letters of Comfort issued in respect of
financing arrangements from overseas Banks for availment of Trade
Credits (Buyers Credit) and their Currency wise outstanding, is as
under:
9. PROVISION COVERAGE RATIO:
The Provision to Gross NPA of the Bank as on 31st March 2012 is 65.22%
(Previous Year - 67.60%)
10. SHARE HOLDING:
10.1 The shareholding of State Bank of India in the Bank's Paid up
Capital as at 31st March 2012 is 92.33 % (Previous year 92.33%).
10.2 EMPLOYEE STOCK OPTION: Nil
11. PROVISIONS AND CONTINGENCIES
11.1 In terms of the Reserve Bank of India guidelines, the following
additional disclosures have been made and the data as computed by the
management are relied upon by the auditors:
Notes: Provision for income tax for the year is arrived at after
consideration of past assessments, decisions of the appellate
authorities and advice of counsels. In the opinion of the management,
no provision is required in respect of the earlier years.
12. The Bank during the year has changed the following Accounting
Policies, in order to align the same with the Accounting Policies of
State Bank of India :
12.1 Accounting of Zero Coupon securities on constant yield method
instead of straight line method resulting in decrease in profit for the
year of the Bank to the extent of Rs 34.87 lakhs (refer Accounting
Policy no.1.4 Schedule 17)
12.2 Accounting of dividend on investment in shares on accrual basis
where the right to receive is established instead of on receipt basis,
resulting increase in profit for the year of the Bank to the extent of
Rs 12.38 lakhs, (refer Accounting Policy no.1.5 Schedule 17),
12.3 Advances shown in the Balance Sheet are net of provision for
diminution in fair value, as such advances shown are less to the extent
of Rs 83.34 crores (Refer Accounting Policy No 3.6 Schedule 17).
12.4 The Bank has not undertaken any sale of investments held under
Held To Maturity category which needs disclosure in terms of RBI
circular No.DBOP.BP.BC 34/21.04.141/2010-11 dated 6th April 2010
wherein the Bank has to disclose the excess of book value over the
market value for which provision is not made, excluding onetime
transfer of security to/from HTM and pre- announced OMO auctions.
13. Reserve Bank of India vide their letter
no.DBOD.No.BC.87/21.04.048/ 2010-11 dated 21.04.2011 advised that Banks
have to maintain a Provision Coverage Ratio (PCR) of 70% latest by 30th
September 2011 with reference to Gross NPA Position as on 30.09.2010.
The Bank during the year provided Rs 65 crores by way of Counter
Cyclical Provisioning Buffer to cover the gap between the specific loan
loss provisions, other provisions like Floating Provision etc., and the
PCR.
14. During the year, the Bank has written back provision of Deferred
Tax Liability to the extent of Rs 60.04 crores as the Bank has decided
not to withdraw any amount created and maintained as a Special Reserve
under the provisions of Section 36 (1) (viii) of Income Tax Act. This
has resulted in increase in profit of the Bank for the year to that
extent.
15. The figures of the previous years have been regrouped/re-arranged,
wherever considered necessary.
Mar 31, 2011
1. INVESTMENTS
(i) The Banks holding of total SLR securities in "Held to Maturity"
Category (HTM) is 22.66% (previous year 22.56%) of DTL as on the last
Friday of the second preceeding fortnight. The total investment in HTM
category is equal to 86.90% (Previous year 86.56%) of its total
investments and the excess of "Held to Maturity" category investments
over 25% of total investments comprises of SLR securities. The Banks
holdings in Held to Maturity Category of investments are within the
overall limits stipulated by RBI.
(ii) As per RBI guidelines, an amount of Rs.4.47 Crores (Previous year
Rs. 13.11 Crores) being the balance amount of Profit on Sale of
securities [net of applicable taxes and Statutory Reserve] in "Held to
Maturity" category has been transferred to Capital Reserve.
2.0 Disclosure on risk exposure in derivatives
2.1.1 Qualitative Disclosures:
Forward Contracts are the only derivatives held in the books of the
Bank. The Bank enters into forward contracts with the customers and
covers the resultant position in the inter bank market. The Bank also
trades in Inter Bank forward contracts on its own with a view to derive
profits. The Bank does not have any unhedged foreign exchange exposure
other than the open overnight position.
The Bank has put in place Board approved policy for monitoring various
risks associated with the above mentioned transactions. The risks are
managed by prescribing various limits and ensuring that the exposures
are within the limits. Such limits are prescribed in the following
areas.
a) Overnight Exposure Limits
b) Daylight exposure Limits
c) Aggregate and currency-wise gap Limits
d) Stop Loss Limits
e) VaR Limits
f) Limit on Proprietary Trading
g) Limit on Counter Party Bank
In terms of Board approved policy, the limits are monitored by Mid
Office and discretionary power is vested with functionaries at various
levels to ratify/ approve the breaches, if any.
3.4.2.1 Provision on Small Restructured Loan Assets
Considering the difficulties in computing the diminution in fair value
of Restructured Accounts below Rs.1 Crore individually, the Bank, in
terms of RBI circular no.DBOD.No. BP.BC.No. 37/ 21.04.132/2008-09 dated
the 271" August, 2008, had opted to provide 5% of these advances, as
provision for diminution in fair value of receivables, in all branches,
other than top 20 branches audited by Statutory Central Auditors till
the year ended 31st March2010. During the current year ended 31s1
March2011, provision for diminution in fair value of Restructured
Accounts irrespective of amounts have been individually calculated at
all the branches.
Prudential norm at 15% of the capital funds as on 31.03.2010 for a
Single Borrower is Rs. 546.54crores and 40% for Group borrowers is Rs.
1457.45crores.
Prudential norm of additional 5% (Rs.182.18crores) of the capital funds
as on 31.03.2010 for Single borrower provided the additional credit
exposure is on account of extension of credit to Infrastructure
Projects.
Prudential norm of additional 10% (Rs. 364.36crores) of the capital
funds as on 31.03.2010 for Group borrowers provided the additional
credit exposure is on account of extension of credit to Infrastructure
Projects.
Prudential norm of additional 10% (Rs. 364.36crores) of the capital
funds as on 31.03.2010 for Oil Companies who have been issued Oil bonds
(which do not have SLR Status) by the Govt of India.
Prudential Norms for single NBFC is 10% of the banks capital funds as
on 31.03.2010 - Rs.364.36crores.
Prudential Norms for a single NBFC - AFC (Asset Financing Company) is
15% of the banks capital funds as on 31.03.2010 - Rs.546.54crores.
Prudential norms on account of funds lent by NBFC - AFC to
infrastructure sector are 20% of the Banks capital funds as on
31.03.2010 - Rs.728.72crores.
The above statement is exclusive of Food Credit, which is outside the
purview of prudential norms.
3.8.2 The disputed Income tax demands as at 31st March, 2011 amount to
Rs. 218.33 crores (Previous Year - Rs. 182.12crores) out of which Rs.
218.33crores (Previous Year - Rs. 182.12crores) has been paid /
adjusted by the Income Tax Dept against refund orders. Considering the
various judicial pronouncements on similar issue in favour of the Bank
and the appeals filed by the Bank for earlier Assessment Years and
pending before various Appellate authorities, no provision is
considered necessary.
3.8.3 The Tax liability on- Book Profits under the provisions of
Section 115 JB of the Income Tax Act, 1961 amounts to Rs. 232.68
Crores. The Bank has recognised eligible MAT credit as an asset in the
current year amounting to Rs. 61.55crores available for future set off
under section 115JAA of Income Tax Act and accordingly Rs 171.13 crores
has been charged to Profit & Loss account.
3.9 Penalties imposed by the Reserve Bank of India during the year
2010-11
- NIL-
3.10 RECONCILIATION: I. Inter Branch:
1. Inter Branch Reconciliation is an ongoing process and is under
progress. In terms of RBI guidelines, the Banks are required to close
inter-branch reconciliation within six months. The Inter Branch
Reconciliation upto 31.12.2010 has been closed after reconciliation of
all the debit entries.
2. A sum of Rs. 157.15 lacs was transferred to Profit & Loss Account
in 2005 - 06 being the net credit balance in the inter branch accounts
upto 31st March 1999 pending reconciliation, in terms of RBI letter No.
DBS/ CO.SMC.No.8809/22.09.001/2005-06 dated 19.12.2005. Out of this,a
claim of Rs. 2.36 lacs was preferred and debited during the earlier
years There was no claim during the year 2010-11 and the amount of
unreconciled entries of Inter Branch Accounts stands at Rs. 154.79 lacs
as on 31st March2011.
3. The Bank has transferred all outstanding unreconciled credit
entries from 01.04.1999 to 31.03.2005 to a blocked account as per RBI
guidelines vide letter No BP.BC/73/21.04.018/98 dated 27.07.1998. The
balance in Blocked accounts in respect of both BCG & Drafts as on 31st
March, 2011 is Rs. 18.87 Crores.
4. The Core Inter Branch Account being maintained in CBS is reconciled
automatically by the system as per yearly statement of affairs as on
31st March, 2011.
II. Inter-Bank: Reconciliation of Accounts under SBI Agency Clearing
Scheme and Associate Bank Settlement of Transactions (ABSOT) Scheme is
an on-going process and is under progress.
Ill Others: The reconciliation of various other accounts including
National & Local Clearing Account, Branch System Suspense Account,
Forex Clearing
Account, ATM transactions and IBIT Account is an on going process and
is under progress.
IV Impact of the above, if any, on the Profit & Loss Account and
Balance Sheet, in the opinion of the management, is not material.
3.11 Income on Investments in Schedule 13 of Interest earned para II is
net of amortization of premium on HTM Investments Rs. 54.92 Crores
(Previous Year Rs. 63.22Crores).
3.12 Other Fixed assets include assets jointly owned by the Bank, State
Bank of India and Other Associate Banks.
3.13. REVALUATION OF FIXED ASSETS
The premises (Land & Building) of the Bank consisting of Land and
Building were revalued on 01.04.2008 on the basis of reports of
approved valuers and upward revision in value amounting to Rs. 609.97
Crores was credited to Revaluation Reserve Account. The depreciation
for the year on incremental amount amounting to Rs. 8.04 Crores is
withdrawn from Revaluation Reserve. There is thus, no impact on the
profits for the year. The Revaluation Reserve as at 31st March 2011
stands at Rs. 583.85 Crores.
4. Disclosure requirements as per Accounting Standards
The Bank has generally complied with all . the applicable Accounting
Standards issued by the Institute of Chartered Accountants of
India(ICAI) read with the relevant guidelines of Reserve Bank of India.
The following disclosures (not made elsewhere in the financial
statements including Significant Accounting Policies and Notes on
Accounts) are made hereunder in accordance with the provisions of the
applicable mandatory Accounting Standards, issued by the Institute of
Chartered Accountants of India.
4.1 Cash Flow Statements (AS 3 Revised):
In terms of para 45 of the Standard, the amount of significant cash and
cash equivalent balances held by the enterprise that are not available
for use by it, are Rs. Nil (excluding balances required to be
maintained for the purpose of Cash Reserve Ratio).
4.2 Net Profit or Loss for the period, prior period items and changes
in accounting policies (AS-5)
In terms of Accounting Standard 5 issued by the Institute of Chartered
Accountants of India read with RBI guidelines, prior period items are
(i) Other Prior Period Items - expenditure - Rs. 21.56 Crores and
income - Rs 0.70 Crores.
4.3 Revenue Recognition (AS 9)
The revenue has been recognized in terms of AS 9 on Revenue
recognition, the guidelines issued by Reserve Bank of India and the
Accounting Policy of the Bank.
4.4 Employees Benefits- Accounting Standards -15 (Revised):
4.4.1 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 the said option by 2947 employees, the Bank has
incurred a liability of Rs 58.49 Crores in respect of the 2616
continuing employees. 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 which resulted in
increase in gratuity liability of the Bank by Rs.74.69 Crores.
In terms of the requirements of the Accounting Standard (AS) 15,
Employee Benefits, the entire amount of Rs133.18 Crores is required to
be charged to the Profit and Loss Account for the year. However the
Reserve Bank of India has issued a circular no.
DBOD.BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to
Employees of Public Sector Banks and Enhancement in Gratuity Limits-
Prudential Regulatory Treatment, dated 9th February 2011. In accordance
with the guidelines of the Reserve Bank of India, the Bank has opted to
amortise an amount of Rs.133.18 Crores over the period of five years.
Accordingly, Rs. 26.64 Crores (representing one-fifth of Rs. 133.18
Crores) has been charged to the Profit and Loss Account. In compliance
of the aforesaid RBI guidelines, the balance amount carried forward
i.e., Rs. 106.54 Crores does not include any amount relating to
separated/retired employees.
Had such a circular not been issued by the Reserve Bank of India, the
Profits of the Bank would have been lower by Rs106.54 Crores pursuant
to application of the requirements of AS 15.
4.4.2 In terms of AS 15 (revised), Bank has made provision for the
following Long Term Employee benefits for the year 2010-11.
4.4.3 Contributions made to the Retired Employee Medical Benefit
Scheme, being at the sole discretion of the Management, is not
recognized by the Management as a Long Term Employee Benefit and
therefore no provision has been considered necessary for this liability
on actuarial basis.
4.5 Segmental Reporting - (AS-17):
The following segments have been identified:
i. Primary Segment (Business Segment):
Treasury Operations
Corporate/Wholesale Banking
Retail Banking
II. The Geographic segment consists of only the Domestic segment as the
Bank does not have any foreign branches.
1. The Bank has got two main business segments namely Treasury
Operations and Banking Operations. Banking Operations are further
segmented to Corporate/Wholesale Banking and Retail Banking and there
is no Other Banking Operations
2. PRICING OF INTER-SEGMENTAL TRANSFERS:
Corporate/Wholesale banking and Retail Banking Operations Segment are
the primary resource mobilising units. The Treasury segment is a
recipient of funds from these operatons apart from resource mobilized
by treasury segment from REPO, CBLO, Call Money, IBTM and Export credit
refinance. The cost of funds mobilized by treasury from corporate/
wholesale banking and retail banking is computed at the cost of
deposits of Corporate/Wholesale Banking and Retail banking. Pricing of
Inter Segmental transfer in Treasury is reduced from the operating
profit of Treasury Segment and added to the Operating Profit of
Corporate/Wholesale banking in the ratio of deposits allocated to these
segments.
3. REVENUE :
All income relating to Treasury Operations are considered for the said
segment. All interest as furnished by ITS Department and as certified
by the Management for all borrowal accounts with exposures above Rs.5
crores are classified as Corporate/Wholesale Banking segment. The
balance interest is treated as relating to retail banking segment. The
other interest income/other income is allocated under
Corporate/Wholesale and Retail Banking segments in the ratio of total
income of these segments(excluding other interest income/other income
and interest segment revenue).
4. ALLOCATION OF EXPENSES:
Expenses incurred at Corporate Centre establishment directly
attributable to Treasury Operations are allocated accordingly. As
regards Corporate/ Wholesale and retail banking segment interest paid
on deposits is segregated to these segments in the ratio of deposits to
these segments (deposits are allocated on the basis of outstanding
advances pertaining to these segments). Employees expenses are
allocated to the Treasury segment in proportion to the number of
Employees of that segment to the total employees of the Bank. Other
interest paid, provisions relating to employees and other operative
expenditure for Corporate/Wholesale and Retail Banking segment are
allocated based on the income earned by these segments(excluding inter
segmental revenue). Interest paid on Tier I/Tier 11/ Subordinated bonds
are classified as Unallocated.
5. SEGMENTAL ASSETS:
All assets which are directly attributable to treasury operations are
considered for Treasury Operations Segment. All outstandings in advance
accounts for borrowers with exposures above Rs.5 crores as furnished by
ITS Department and as certified by the Management is considered as
assets pertaining to Corporate/Wholesale Banking segment. Other
outstandings in advances segments is shown as pertaining to Retail
Banking .Segment. All other assets are segregated and added to the
segment advances pertaining to Corporate/ Wholesale and Retail Banking
segment in the ratio of outstanding balances of advances in these
segments.
6. SEGMENTAL LIABILITIES:
All liabilities which are directly attributable to Treasury Operations
segment are allocated accordingly. Other deposits are allocated and
segregated for Corporate/ Wholesale segment in the ratio of outstanding
balances of advances for the respective segments. With regard to other
liabilities, provisions and contingencies, the allocation to
Corporate/Wholesale and Retail Banking segments are made on the basis
of the outstanding balances of advances under these segments. Tier
I/Tier 11/
Subordinated bonds are classified as Unallocated.
4.6 Related party transactions (AS 18)
4.6.1 In accordance with AS 18 issued by the ICAI and the RBI
guidelines, details relating to Related Party transactions are
disclosed hereunder:
4.6.2 All the other related parties are State Controlled enterprises as
defined in AS 18 issued by the Institute of Chartered Accountants of
India as such Transactions with them are not required to be disclosed.
4.7 Leases (AS 19)
(i) The Bank has taken premises only on rental basis and has no
long-term operating leases taken/given and hence reporting under AS 19
is not considered necessary.
(ii) No financial lease has been executed after April 1, 2001.
4.10 INTANGIBLE ASSETS (AS-26)
The present practice of depreciating software which forms integral part
of hardware @ 33.33% (on straight line method) and depreciating other
software @ 100% irrespective of date of purchase is consistently
followed by the bank in line with AS 26 issued by ICAI.
4.11 IMPAIRMENT OF ASSETS (AS-28)
In the opinion of the management, there is no impairment of any of the
fixed assets of the Bank.
4.12 Provisions, Contingent Liabilities & Contingent Assets (AS-29)
Rs. in Crores)
Particulars Provisions Remarks
as Additions Amount Unused Provision
at the during used as at the
beginning the year amounts close
of reversed of the
year
the year during
the
year
Other
Provisions
including
adhoc
provision
Provision
for Wage
Arrears 165.11 0.00 113.4 51.27 Nil Nil
Provision
for Interest
sacrifice on
restructured
standard
advances 80.61 0.00 0.00 2.50 78.11 Nil
Provision
for Frauds 11.40 5.39 0.00 0.00 16.79 Nil
* Provision for depreciation, impairment of assets and doubtful debts
are adjusted to carrying amount of assets and these have not been
included above in terms of para 7 of the Accounting standards.
Provision against standard assets has already been disclosed in para
3.4.5 above.
b) CONTINGENT LIABILITIES
(Rs. in Crores)
2009-10 Particulars 2010-11
Claims not acknowledged as debt :
0.01 Counter Suits filed by the Borrowers
against whom Bank has initiated
legal action 0.01
1.02 Cases filed in Consumer/Civil Courts
for deficiency in services 1.30
184.37 Any other claims against the Bank
not acknowledged as debts 221.10
1610.22 Guarantees issued on behalf of
constituents 1816.72
2884.45 Acceptances, endorsements and
other obligations* 3632.75
15377.39 Other items, for which the bank
is contingently liable 11294.63
20057.46 Total 16966.51
6. DRAW DOWN FROM RESERVES
In the year 2009-10, an amount of Rs. 18.23 Crores (net of applicable
tax and statutory reserve) being excess in the provision for
depreciation arising as a result of valuation of AFS Category was
transferred to Investment Reserve. Out of the above, Rs. 4.68 Crores
(net of applicable tax and Statutory Reserve) has been utilized to the
extent of the depreciation in the value of investments held in AFS
Category during the year.
9. PROVISION COVERAGE RATIO:
The Provision to Gross NPA of the Bank as on 31st March 2011 is 67.60%
(Previous Year - 66.93%)
10. BANCASSURANCE BUSINESS :
During the financial year 2010 -11, the Bank has earned a sum of Rs.
11.85 Crores (Previous Year- Rs. 6.51 Crores as fees and remuneration
from Bancassurance business. The details of the fees / remuneration
earned are as under:
1. Income from SBI life business
Rs. 9.29 Crores (Previous Year
- Rs. 5.49 Crores)
2. Income from General Insurance business
Rs. 1.77 Crores (Previous Year
- Rs. 1.02 Crores)
3. Others (SBI Cards, SBI Mutual Funds)
Rs. 0.79crores (Previous Year - Nil)
11. SHARE HOLDING:
11.1 The shareholding of State Bank of India in the Banks Paid up
Capital as at 31st March 2011 is 92.33 % (Previous year 92.33%).
11.2 The Bank has issued 1,07,99,790 Rights Equity Shares of Rs 10/-
each at a premium of Rs 530/- per share aggregating Rs 583,18,86,600 to
its existing shareholders on 9th October 2010 thus increasing the
Equity Share Capital to Rs 46,79,97,900.
11.3 EMPLOYEE STOCK OPTION: Nil
12. PROVISIONS AND CONTINGENCIES
12.1 In terms of the Reserve Bank of India guidelines, the following
additional disclosures have been made and the data as computed by the
management are relied upon by the auditors:
Exposures computed based on credit and investment exposure as
prescribed in RBI Master Circular on Exposure Norms DBOD.No.Dir.BC.
14/13.03.00/2010-11 dated July 1, 2010.
14. In terms of the Reserve Bank of India guidelines, the Bank has
reversed unrealized income represented by Funded Interest Term Loan on
Restructured Accounts. Accordingly, the Bank has reversed unrealized
interest amounting to Rs. 46.54 Crores (which includes Rs. 21.51 Crores
pertaining to earlier years) by debit to the Interest Income of the
current year. Interest pertaining to earlier years has been shown under
Prior Period Items in Note No 4.2.
15. During the year the Bank has evolved a policy of Prudential/
Technical write off of Non-Performing Advances (NPAs) at the Head
Office level while retaining the NPA status of these advances at the
branches. In terms of the said policy, the Bank has technically written
off NPAs amounting to Rs.229.14 Crores during the Financial Year 2010-
11 and made an additional provision of Rs. 16.34 Crores in respect of
these advances to cover 100% outstanding.
16. During the year the Bank has changed its accounting procedure
regarding recording of interest already charged and not collected on
Advances turning NPA. The uncollected interest has earlier been kept
in separate accounts i.e. Interest not collected Account (INCA)^/
Unrealised Interest of earlier years (URIPY) and reversed to the
respective Advance accounts. This change of procedure, however will not
have any impact on the Profits of the Bank for the year.
17. Other Assets include Rs. 22.07 Crores recoverable from Govt of
India towards claims under Agriculture Debt Waiver and Debt Relief
Scheme 2008 for its extended period. The Bank is under the process of
submitting the said claims with the Govt of India. Further, the
provision of Rs. 11.17 Crores made during the previous years towards
diminution in the present value of the receivables is continued till
the final settlement of the claims by the Govt of India.
18. The figures of the previous years have been regrouped/re-arranged,
wherever considered necessary.
Mar 31, 2010
1. INVESTMENTS
(i) The Banks holding of total SLR securities in "Held to Maturity"
Category (HTM) is 22.56% (previous year 21.87%) of DTL as on the last
Friday of the second preceeding fortnight. The total investment in HTM
category is equal to 86.56% (Previous year 69.98%) of its total
investments and the excess of "Held to Maturity" category investments
over 25% of total investments comprises of SLR securities. The Banks
holdings in "Held to Maturity" Category of investments are within the
overall limits stipulated by RBI.
(ii) As per RBI guidelines, an amount of Rs.13.11 Crores (Previous year
Rs. 65.33 crores) being the balance amount of Profit on Sale of
securities [net of taxes and transfer to Statutory Reserve] in "Held to
Maturity" category has been transferred to Capital Reserve.
2.1 Disclosure on Risk exposure in derivatives
2.1.1 Qualitative Disclosures:
Forward Contracts are the only derivatives held in the books of the
Bank. The Bank enters into forward contracts with the customers and
covers the resultant position in the inter bank market. The Bank also
trades in Inter Bank forward contracts on its own with a view to
deriving profits. The Bank does not have any unhedged foreign exchange
exposure other than the open overnight position.
The Bank has put in place Board approved policy for monitoring the
various risks associated with the above mentioned transactions. The
risks are managed by prescribing various limits and ensuring that the
exposures are within the limits. Such limits are prescribed in the
following areas.
a) Overnight Exposure Limits
b) Daylight exposure Limits
c) Aggregate and currency-wise gap Limits
d) Stop Loss Limits
e) VaR Limits
f) Limit on Proprietary Trading
g) Limit on Counter Party Bank
In terms of Board approved policy, the limits are monitored by Mid
Office and discretionary power is vested with functionaries at various
levels to ratify/ approve the breaches, if any.
2.1.1.1 Provision on Small Restructured Loan Assests
Considering the difficulty in computing the diminution in fair value of
Restructured Accounts below Rs. 1 Crore individually, the Bank, in
terms of RBI circular No. DBOD. BP.BC. No. 37/21.04.132/2008- 09 dated
the 27th August, 2008, has opted to provide a sum of Rs. 17.92 Crores,
being 5% of the exposure in such advances, as provision for diminution
in fair value of receivables, in all branches, other than top 20
branches audited by Satutory Central Auditors.
3. Disclosure requirements as per Accounting Standards
The Bank has generally complied with all the applicable Accounting
Standards issued by the Institute of Chartered Accountants of
India(ICAI) read with the relevant guidelines of Reserve Bank of India.
The following disclosures (not made elsewhere in the financial
statements including Significant Accounting Policies and Notes on
Accounts) are made hereunder in accordance with the provisions of the
applicable mandatory Accounting Standards issued by the Institute of
Chartered Accountants of India.
4.1 Cash Flow Statements (AS 3 Revised):
In terms of para 45 of the Standard, the amount of significant cash and
cash equivalent balances held by the enterprise that are not available
for use by it, are Rs. Nil (excluding balances required to be
maintained for the purpose of Cash Reserve Ratio).
4.2 Net Profit or Loss for the period, prior period items and changes
in accounting policies (AS-5)
In terms of Accounting Standard 5 issued by the Institute of Chartered
Accountants of India read with RBI guidelines, prior period items are
(i) Other Prior Period Items - expenditure - Rs. 0.73 Crores and income
- Rs 0.64 Crores.
4.3 Revenue Recognition (AS 9)
The revenue has been recognized in terms of AS 9 on Revenue
recognition, the guidelines issued by Reserve Bank of India and the
Accounting Policy of the Bank.
4.4 Employees Benefits- Accounting Standards -15 (Revised):
In terms of AS 15 (revised), Bank has made provision for the following
Long Term Employee benefits for the year 2009-10.
Contributions made to the Retired Employee Medical Benefit Scheme,
being at the sole discretion of the Management, is not recognized by
the Management as a Long Term Employee Benefit and therefore no
provision has been considered necessary for this liability on actuarial
basis.
(e) Segmental Reporting - (AS-17):
The following segments have been identified:
I. Primary Segment (Business Segment):
Treasury Operations
Corporate/Wholesale Banking
Retail Banking
II. The Geographic segment consists of only the Domestic segment as
the Bank does not have any foreign branches.
1. The Bank has got two main business segments namely Treasury
Operations and Banking Operations. Banking Operations are further
segmented to Corporate/Wholesale Banking and Retail Banking.
2. PRICING OF INTER-SEGMENTAL TRANSFERS:
Corporate/Wholesale banking and Retail Banking Operations Segment are
the primary resource mobilising units. The Treasury segment is a
recipient of funds from these operatons apart from resource mobilized
by treasury segment from REPO, CBLO, Call Money, IBTM and Export credit
refinance. The cost of funds mobilized by treasury from corporate/
wholesale banking and retail banking is computed at the cost of
deposits of Corporate/WholesaleBanking and Retail banking. Pricing of
Inter Segmental transfer in Treasury is reduced from the operating
profit of Treasury Segment and added to the Operating Profit of
Corporate/Wholesale banking in the ratio of deposits allocated to these
segments.
3. REVENUE :
All income relating to Treasury Operations are considered for the said
segment. All interest as furnished by ITS Department and as certified
by the Management for all borrowal accounts with exposures above Rs.5
crores are classified as Corporate/Wholesale Banking segment. The
balance interest is treated as relating to retail banking segment. The
other interest income/other income is allocated under
Corporate/Wholesale and Retail Banking segments in the ratio of total
income of these segments(excluding other interest income/other income
and inter segment revenue).
4. ALLOCATION OF EXPENSES:
Expenses incurred at Corporate Centre establishment directly
attributable to Treasury Operations are allocated accordingly. As
regards Corporate/ Wholesale and retail banking segment interest paid
on deposits is segregated to these segments in the ratio of deposits to
these segments (deposits are allocated on the basis of outstanding
advances pertaining to these segments). Employees expenses are
allocated to the Treasury segment in proportion to the number of
Employees of that segment to the total employees of the Bank. Other
interest paid, provisions relating to employees and other operative
expenditure for Corporate/Wholesale and Retail Banking segment are
allocated based on the income earned by these segments(excluding inter
segmental revenue). Interest paid on Tier I/Tier 11/ Subordinated bonds
are classified as Unallocated.
5. SEGMENTAL ASSETS:
All assets which are directly attributable to treasury operations are
considered for Treasury Operations Segment. All outstandings in advance
accounts for borrowers with exposures above Rs.5 crores as furnished by
ITS Department and as certified by the Management is considered as
assets pertaining to Corporate/Wholesale Banking segment. Other
outstandings in advances segments is shown as pertaining to Retail
Banking Segment. All other assets are segregated and added to the
segment advances pertaining to Corporate/ Wholesale and Retail Banking
segment in the ratio of outstanding balances of advances in these
segments.
6. SEGMENT LIABILITIES:
All liabilities which are directly attributable to Treasury Operations
segment are allocated accordingly. Other deposits are allocated and
segregated for Corporate/ Wholesale segment in the ratio of outstanding
balances of advances for the respective segments. With regard to other
liabilities, provisions and contingencies, the allocation to
Corporate/Wholesale and Retail Banking segments are made on the basis
of the outstanding balances of advances under these segments. Tier
I/Tier 11/
Subordinated bonds are classified as Unallocated.
4.6 Related party transactions (AS 18)
In accordance with AS 18 issued by the ICAI and the RBI guidelines,
details relating to Related Party transactions are disclosed hereunder:
This Bank is Subsidiary of State Bank of India.
4.7 Leases (AS 19)
(i) The Bank has taken premises only on rental basis and has no
long-term operating leases taken/given and hence reporting under AS 19
is not considered necessary.
(ii) No financial lease has been executed after April 1, 2001.
4.9 Accounting for Taxes on income (AS 22)
In compliance with AS 22 "Accounting for taxes on income" issued by the
Institute of Chartered Accountants of India, the Bank has recognised
deferred tax assets and liabilities. Deferred tax assets (net of
liabilities) of Rs.85.05 crores has been recognised as on March 31,
2010, the major components of which are as under:
4.10 INTANGIBLE ASSETS (AS-26)
The present practice of depreciating software which forms integral part
of hardware @ 33.33% (on straight line method) and depreciating other
software @ 100% irrespective of date of purchase is consistently
followed by the bank in line with As 26 issued by ICAI.
4.11 IMPAIRMENT OF ASSETS (AS-28)
In the opinion of the management there is no impairment of any of the
fixed assets of the Bank.
4.12 Provisions, Contingent Liabilities & Contingent Assets (AS-29)
b) CONTINGENT LIABILITIES
Rs. in Crores)
Previous Year
As at
31.03.2009 Particulars Current Year
as at
31.03.2010
1. Claims not acknowledged as debts:
0.16 (a) Counter Suits filed by the Borrowers
against whom Bank has initiated
legal action 0.01
1.02 Cases filed in Consumer/Civil Courts
for deficiency in services 1.02
171.74
1304.39 2. Guarantees issued on behalf of
constituents 1610.22
2040.38 3. Acceptances, endorsements and
other obligations* 2884.45
15596.70 4. Other items, for which the bank
is contingently liable 15377.39
19114.40 Total 20057.46
7. SHARE HOLDING:
The shareholding of State Bank of India in the Banks Paid up capital
as at 31st March 2010 is 92.33 % (Previous year 92.33%)
8. EMPLOYEE STOCK OPTION: NIL
9. MISCELLANEOUS
9.1 In terms of the Reserve Bank of India guidelines, the following
additional disclosures have been made and the data as computed by the
management are relied upon by the auditors:
9.2 RECONCILIATION
I. Inter Branch:
In terms of RBI guidelines, the Banks are required to close
inter-branch reconciliation within six months. The Inter Branch
Reconciliation upto 30.09.2009 has been closed after reaching
reconciliation of 99.99% of total value of transactions. The Bank has
transferred the credit entries outstanding for a period of more than 5
(five) years to a blocked account as per RBI guidelines.
The Bank has transferred a sum of Rs.157.15 Lacs to Profit & Loss
Account in 2005 - 06 being the net credit balance in the inter branch
accounts upto 31st March 1999 pending reconciliation, in terms of RBI
letter No. DBS/ CO.SMC.No.8809/22.09.001/2005-06 dated 19.12.2005. Out
of this, Rs 0.57 Lacs was debited during the earlier years and the
resultant balance as at the beginning of the year was Rs. 156.58 lacs.
The Bank, however , during the financial year 2009 - 10, has made
payment of claims amounting to Rs.1.79 lacs to the debit of Profit and
loss account thus reducing the amount of unreconciled entries of Inter
Branch Accounts to Rs.154.79 lacs.
The Core Inter Branch Account being maintained in CBS is reconciled
automatically by the system. The account is reconciled as on
31.03.2010.
II. Inter-Bank:
Reconciliation of Accounts under SBI Agency Clearing Scheme and
Associate Bank Settlement of Transactions (ABSOT) Scheme is an on going
process and is under progress.
III Others:
The reconciliation of various other accounts including National & Local
Clearing Account, Branch System Suspense Account, Forex Clearing
General Account, FCNR Account, PCFC Account, ATM Cash Balances and IBIT
Account is an on going process and is under progress.
IV Impact of the above, if any, on the Profit & Loss Account and
Balance Sheet, in the opinion of the management, is not material.
9.3 Income on Investments in Schedule 13 of Interest Earned para II is
net of amortization of premium on HTM Investments Rs. 63.22 Crores
(Previous Year Rs. 37.94 Crores).
9.5 REVALUATION OF FIXED ASSETS
The premises (Land & Building) of the bank consisting of Land and
Building were revalued on 01.04.2008 (i.e. previous year) on the basis
of reports of approved valuers and upward revision in value amounting
to Rs. 607.97 Crores was credited to Revaluation Reserve Account. The
depreciation on incremental amount amounting to Rs.8.04 Crores has been
adjusted to Revaluation Reserve during the year. There is thus, no
impact on the profit and loss during the year.
11. AGRICULTURAL DEBT WAIVER AND DEBT RELIEF SCHEME 2008
As regards Agricultural Debt Waiver and Debt Relief Scheme, 2008
formulated by the Government of India (GOI) and various circulars
issued by Reserve Bank of India from time to time, the Bank has, out of
the amount identified as Relief for Other Farmers under Agriculture
Debt Relief Scheme 2008, a sum of Rs. 61.21 Crores as Receivable from
GOI. The amount yet to be recovered from farmers on account of this
scheme is Rs. 168.03 Crores. Provision of Rs. 11.17 Crores is also
held for diminution in present value of these receivables. These
figures are subject to review and final certification by the Statutory
Central Auditors.
12. The Bank, during the year 2009 -10, in terms of RBI guidelines
contained in circular no. DBOD.BP. BC.NO.133/ 21.04.018/2008-09 dated
11th May 2009, has transferred a sum of Rs. 6.05 Crores, being
outstanding unreconciled credit entries (unclaimed deposit) of value
less than US $ 2500/- or equivalent, originated upto 31.03.2002, to
Profit & Loss Account..
13. The bank, during the year 2009 -10, has credited an amount of Rs.
9.65 Crores to the Profit and Loss account under the head "Other
Income" by Writing Back from "Contingent General" under the head "Other
Liabilities and Provisions".
14. An amount of Rs. 39.06 Lacs expended on issue of Right Shares has
been charged off, by the bank, to revenue as the same was considered
not material.
15. The figures of the previous years have been regrouped/re-arranged,
wherever considered necessary.