Mar 31, 2019
1. GENERAL
1.1 BASIS OF ACCOUNTING
The financial statements are prepared under âgoing concernâ concept on historical cost convention and on accrual basis of accounting unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms/guidelines prescribed by Reserve Bank of India (RBI), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable and generally the practices prevailing in the banking industry in India.
In respect of foreign offices/branches, statutory provisions and accounting practices prevailing in the respective foreign countries are complied with, except as specified elsewhere.
1.2 use of estimates
The preparation of financial statements in conformity with GAAP requires the Management to make estimates and assumptions while reporting assets and liabilities (including contingent liabilities) as at the date of the financial statements and income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. However, actual results could differ from these estimates. Any revision to the accounting estimates is recognized prospectively in the current and future periods.
2. ADVANCES
2.1 Loans and advances are classified as performing and non-performing based on the guidelines issued by the RBI and provisions for advances are made as per prudential norms of the Reserve Bank of India.
Non-performing advances in India are ascertained as per the prudential norms and provisions are made upon classifying the same into âSub-Standardâ, âDoubtfulâ, and âLossâ assets after considering the claims Received / Receivable from ECGC and advances are stated after netting of provisions.
2.2 Provision on Non-performing advances of foreign branches is made on the basis of regulatory requirement prevailing at the respective foreign countries or RBI guidelines whichever is higher.
2.3 Provision on standard restructured assets and project loans have been made as per RBI prudential norms and directives. A general provision on Standard Assets is made on global portfolio basis as per prudential norms of RBI.
2.4 The credit facilities backed by the guarantee of the Central Government though overdue is treated as NPA only when Government repudiates its guarantee when invoked.
2.5 In respect of Compromise and Settlement Proposals, write-off is done on complete realization.
2.6 Partial prudential write-off of accounts is done upto unsecured portion level on a case to case basis on approval by the Competent Authority.
2.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI, which require the difference between the fair value of loan before and after restructuring is provided, in addition to provisions for NPAs. The provision for diminution in fair value (DFU) and interest sacrifice arising out of the above is reduced while arriving at net advance.
2.8 Amount recovered against debts written off in earlier years are recognized as revenue in the year of recovery.
2.9 Sale of Financial asset to Securitized Company (SC) / Reconstruction Company (RC) is done on the basis of Board approved Policy in line with the RBI guidelines.
3. INVESTMENTS
3.1 Bank follows the prudential norms formulated by Reserve Bank of India for classification, valuation and operation of investment portfolio.
3.2 Investments are classified into three categories viz. Held to Maturity, Available for Sale and Held for Trading and are further classified into Investments in Government Securities, Other Approved Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures and Others.
3.3 (i) Investments classified as Held to Maturity are carried at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity as per effective interest rate method. Profit on sale is initially taken to Profit and Loss Account and then appropriated to Capital Reserve Account net of taxes and amount required to be transferred to Statutory Reserve. Loss on sale is charged to the Profit and Loss Account.
(ii) Investments classified as Available for Sale, are marked to market. Scrip-wise appreciation/depreciation is aggregated for each classification. While net depreciation in respect of each classification is charged to Profit & Loss Account, net appreciation in respect of any classification is ignored. These investments are shown, net of depreciation, in the Balance Sheet.
(iii) Investments classified as Held for Trading are marked to market. Scrip-wise appreciation/depreciation is aggregated for each classification. While net depreciation in respect of each classification is charged to Profit & Loss Account, net appreciation in respect of any classification is ignored. These investments are shown, net of depreciation, in the Balance Sheet.
3.3 Investments in Regional Rural Banks, Commercial Papers and Treasury Bills are valued at carrying cost.
3.4 In respect of traded/quoted Investments, Market price is taken from the quotes available in the stock exchanges. Government securities are valued at Market price or price declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).
3.5 In respect of unquoted investments:- at breakup value (without considering Revaluation Reserve, if any) as per the latest Balance sheet (not more than 12 months old) otherwise Rs.1 per company.
3.6 Security receipts issued by securitization / reconstruction company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are carried in the books at lower of redemption value of the security receipt and the Net Book Value of the financial assets. Valuation, classification and other norms applicable to investment in non-SLR Investments prescribed by RBI are applied to Bankâs investment in Security Receipts issued by SC/RC.
3.7 Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction. Broken period interest paid/received on debt instruments are excluded from cost/sale consideration.
3.8 The bank follows the prudential norms for recognition income from investments and for ascertaining and provisioning nonperforming investments.
4. property, plant & equipment
4.1 Items of property, plant & equipment except land and building are stated at historical cost less accumulated depreciation using cost model. Land and building are stated at revalued amount less accumulated depreciation using revaluation model. Surplus arising on revaluation is credited to Revaluation Reserve.
4.2 The rates of depreciation and method of charging depreciation as considered appropriate by the management in respect of fixed assets situated in India are as below:-
4.3 Depreciation in respect of fixed assets situated outside India is provided on straight line/written down value method as per the local laws of respective country.
4.4 Equivalent amount of additional depreciation arising out of revaluation is transferred from Revaluation Reserve to Revenue Reserve.
4.5 Items of property, plant and equipment of small value costing upto Rs.1000 each are charged off whereas items costing between Rs.1001 and Rs.5000 each are depreciated @ 100% in the quarter in which the same are purchased.
4.6 Depreciation is provided at full rate on additions made upto 30th September and at half the rate on additions made thereafter.
5. EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
5.1 FOREIGN CURRENCY TRANSACTIONS
i) Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of transaction.
ii) Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India (FEDAI) closing/ spot rate.
iii) Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction
iv) Contingent Liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at rates different from those at which they were initially recorded are recognised as income or as expense in the period in which they arise.
vi) Outstanding forward exchange contracts are revalued every month as per month end FEDAI rates applicable based on maturity date of the forward contracts and the resultant gain/loss is taken to profit and loss at the end of each month.
vii) The foreign exchange swaps which are not held for trading are not marked to market. The premium paid or received on such swaps are amortized as expense or accreted as income over the life of the swap.
5.2 FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been classified as non-integral operations.
Translation
i) Both monetary and non-monetary foreign currency assets and liabilities including contingent liabilities of non-integral foreign operations are translated at closing exchange rates notified by FEDAI at the balance sheet date.
ii) Income and expenditure of non-integral foreign operations are translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral foreign operations are accumulated in Foreign Currency Translation Reserve until the disposal of the net investment.
6. EMPLOYEE BENEFITS
6.1 Short Term Employee Benefits
Short-term employee benefits, such as medical benefits, casual leave etc. which are paid in exchange for the services rendered by employees are recognized during the period when the employee renders the service.
6.2 Long Term Employee Benefits
- Post-employment Benefits
Defined Contribution Plan
Contributions to Defined Contribution Schemes such as NPS, Provident Fund etc., are charged to the Profit & Loss Account as and when incurred. In respect of certain employees who have not opted for Pension Benefits, Provident Fund Contributions are made to a Trust administered by the Bank.
b) The employees joining the services of the bank on or after 1st April 2010 are covered by a defined contributory pension scheme where the employees contribute 10% of pay plus DA and the bank makes a matching contribution. The scheme is governed by the provisions of the contributory pension scheme introduced for the employees of central government w.e.f 1st January 2004 and modified from time to time.
B) Defined Benefit Plan
The bank operates gratuity and pension schemes which are defined benefit plans.
The bank operates gratuity and pension schemes which are defined benefit plans.
The Bank provides for gratuity to all eligible employees. The benefit is in the form of lump sum / onetime payment to vested employees on retirement, on death while in employment, or on termination of employment, for an amount equivalent to
(i) 15 days salary (Basic DA) payable for each completed year of service, subject to a maximum amount of Rs.20,00,000 or
(ii) 15 days salary (Basic only) for each completed year of service, whichever is higher. Vesting occurs upon completion of five years / ten years (as applicable) of service. The Bank makes annual contributions to a fund administered by Trustees based on an independent external actuarial valuation carried out at regular intervals.
The Bank provides for pension to all eligible employees. The benefit is in the form of monthly payments as per rules and regular payments to vested employees on retirement, on death while in employment, or on termination of employment as provided under regulation. Vesting occurs at different stages as per rules. The Bank makes additional annual contributions to funds administered by trustees based on an independent external actuarial valuation carried out at regular intervals besides monthly contribution @ 10% of pay per month.
The cost of providing defined benefits is determined by actuarial valuation using the projected unit credit method which is normally carried out on quarterly basis. Net liabilities are immediately recognized in the statement of profit and loss and are not deferred.
C) Other Long Term Employee benefits
All eligible employees of the bank are entitled to compensated absences; leave travel concession. The costs of such long-term employee benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by actuarial valuation using the projected unit credit method which is normally carried out on quarterly basis. Past service cost is immediately recognized in the statement of profit and loss and is not deferred.
Medical benefits are extended to full time Directors, after their retirement as post-retirement medical benefits. The cost is ascertained and determined by actuarial valuation using the projected unit credit method and such valuation is carried out on quarterly basis for retired as well as in service full time Directors. The liability is immediately recognized in the statement of profit & loss and not deferred.
6.3 Employee benefits relating to employees employed at foreign branches and offices are valued and accounted for as per the respective local laws/regulations.
7. INTEREST RATE SWAPS
7.1 The Interest Rate Swap transactions undertaken for hedging are accounted for on accrual basis and transactions for trading are marked to market and net depreciation is provided for whereas appreciation, if any, is ignored.
7.2 Gain or loss on terminated interest rate swap transactions undertaken for hedging is deferred and recognized over the shorter of the remaining contractual life of the swap or remaining life of the asset or liability.
7.3 Income and expenses relating to the trading swaps are recognized on the settlement date.
7.4 Gain or losses on the termination of the trading swaps are recorded as income or expense immediately.
8. IMPAIRMENT OF ASSETS
Items of property, plant and equipment are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment, to be recognized, is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
9. NON-BANKING ASSETS
Non-Banking Assets are stated at cost.
10. REVENUE RECOGNITION
10.1 Income is recognized on accrual basis, unless otherwise stated.
10.2 In respect of foreign offices, income is recognized as per local laws/ standards of respective country.
10.3 Income from non-performing assets/investments is recognized on realization basis in terms of RBI guidelines.
10.4 Commission on issuance of Letters of Credit/ Bank Guarantees is recognized over the tenure of LC/BG. Dividend is accounted when the right to receive the same is established.
10.5 Locker Rent, Rental Income, Income on Units of Mutual Funds and Service Charges on various Deposit Accounts are recognized on realization basis.
10.6 Interest on Income-tax refund is recognized in the year it was actually received.
10.7 Profit or loss on sale of investments is recognized as per RBI guidelines.
10.8 Recoveries in Written off Advances / Investments are accounted for as âMiscellaneous Incomeâ.
11. LEASE
In accordance with AS 19 - Leases, lease payments for assets taken on operating lease are recognized in the profit & loss account over the period of lease and in respect of assets taken on finance lease, the asset is recognized in the books taking the lease premium as the cost and the same is amortized over the period of the lease.
12. TAXES ON INCOME
12.1 Current Tax
Current tax is provided using applicable tax rates on the taxable income determined on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.
12.2 Deferred Tax
Deferred Tax is recognized subject to consideration of prudence, on timing difference, representing the difference between the taxable income and accounting income that originated in one period and are capable of reversal in one or more subsequent periods.
Deferred tax asset or liability is recognized using the tax rates that have been enacted or substantially enacted by the Balance Sheet date as per Accounting Standard 22 Accounting for Taxes on Income.
Deferred tax assets/liabilities are re-assessed at each reporting date, based upon managementâs judgement as to whether their realisation is considered as reasonably certain.
Deferred Tax Assets on carry forward of unabsorbed depreciation and tax losses are recognized only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits.
13. EARNINGS PER SHARE
13. The Bank reports basic and diluted earnings per share in accordance with AS 20 - âEarnings per Shareâ. Basic earnings per share computed by dividing the net profit after tax and dividend on preferential shares by weighted average number of equity shares outstanding for the year.
13.2 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.
14. Derivatives
The Bank rarely deals in derivatives i e Forex Forward Contracts, interest rate and currency derivatives. The interest rate derivatives dealt with by the Bank are Rupee Interest Rate Swaps, Foreign Currency Interest Rate Swaps, Forward Rate Agreements and Interest Rate Futures. Currency Derivatives dealt with by the Bank are Options, Currency Swaps and Currency Futures. Based on RBI guidelines, Derivatives are valued as under:
Income/expenditure on hedging derivatives are accounted on accrual basis.
Forex forward contracts are Marked to market and the resultant gains and losses are recognized in the profit and loss account.
Exchange Traded Contracts entered into for trading purposes are valued at prevailing market rates based on rates given by the Exchange and the resultant gains and losses are recognized in the Profit and Loss Account.
Gains/ losses on termination of the trading swaps are recorded on the termination date as income/ expenditure. Any gain/ loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.
Premium paid and received on currency options is accounted when due in the profit and loss account.
15. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
In conformity with Accounting Standard AS 29, âProvisions, Contingent Liabilities and Contingent Assetsâ, the Bank recognizes 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 a reliable estimate of the amount of the obligation can be made. Contingent Assets are not recognized in the financial statements.
16. Segment Reporting
The Bank recognizes the Business segment as the Primary reporting segment and Geographical segment as the Secondary reporting segment, in accordance with the RBI guidelines and in compliance with the Accounting Standard 17 issued by ICAI.
Mar 31, 2018
1. GENERAL
1.1 BASIS OF ACCOUNTING
The financial statements are prepared under âgoing concernâconcept on historical cost convention and on accrual basis of accounting unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms/guidelines prescribed by Reserve Bank of India (RBI), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable and generally the practices prevailing in the banking industry in India.
In respect of foreign offices/branches, statutory provisions and accounting practices prevailing in the respective foreign countries are complied with, except as specified elsewhere.
1.2 USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires the Management to make estimates and assumptions while reporting assets and liabilities (including contingent liabilities) as at the date of the financial statements and income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. However, actual results could differ from these estimates. Any revision to the accounting estimates is recognized prospectively in the current and future periods.
2. ADVANCES
2.1 Loans and advances are classified as performing and non-performing based on the guidelines issued by the RBI and provisions for advances are made as per prudential norms of the Reserve Bank of India.
Non-performing advances in India are ascertained as per the prudential norms and provisions are made upon classifying the same into âSub-Standardâ, âDoubtfulâ, and âLossâassets after considering the claims Received / Receivable from ECGC and advances are stated after netting of provisions.
2.2 Provision on Non-performing advances of foreign branches is made on the basis of regulatory requirement prevailing at the respective foreign countries or RBI guidelines whichever is higher.
2.3 Provision on standard restructured assets and project loans have been made as per RBI prudential norms and directives. A general provision on Standard Assets is made on global portfolio basis as per prudential norms of RBI.
2.4 The credit facilities backed by the guarantee of the Central Government though overdue is treated as NPA only when Government repudiates its guarantee when invoked
2.5 In respect of Compromise and Settlement Proposals, write-off is done on complete realization.
2.6 Partial prudential write-off of accounts is done upto unsecured portion level on a case to case basis on approval by the Competent Authority.
2.7 For restructured/rescheduled assets, provisions are made in accordance with the guidelines issued by RBI, which require the difference between the fair value of loan before and after restructuring is provided, in addition to provisions for NPAs. The provision for diminution in fair value (DFU) and interest sacrifice arising out of the above is reduced while arriving at net advance.
2.8 Amount recovered against debts written off in earlier years are recognized as revenue in the year of recovery.
2.9 Sale of Financial asset to Securitized Company (SC) / Reconstruction Company (RC) is done on the basis of Board approved Policy in line with the RBI guidelines.
3. INVESTMENTS
3.1 Bank follows the prudential norms formulated by Reserve Bank of India for classification, valuation and operation of investment portfolio.
3.2 Investments are classified into three categories viz. Held to Maturity, Available for Sale and Held for Trading and are further classified into Investments in Government Securities, Other Approved Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures and Others.
3.3 Investments classified as Held to Maturity are carried at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity as per effective interest rate method. Profit on sale is initially taken to Profit and Loss Account and then appropriated to Capital Reserve Account net of taxes and amount required to be transferred to Statutory Reserve. Loss on sale is charged to the Profit and Loss Account.
(ii) Investments classified as Available for Sale, are marked to market. Scrip-wise appreciation/depreciation is aggregated for each classification. While net depreciation in respect of each classification is charged to Profit & Loss Account, net appreciation in respect of any classification is ignored. These investments are shown, net of depreciation, in the Balance Sheet.
(iii) Investments classified as Held for Trading are marked to market. Scrip-wise appreciation/depreciation is aggregated for each classification. While net depreciation in respect of each classification is charged to Profit & Loss Account, net appreciation in respect of any classification is ignored. These investments are shown, net of depreciation, in the Balance Sheet.
3.3 Investments in Regional Rural Banks, Commercial Papers and Treasury Bills are valued at carrying cost.
3.4 In respect of traded/quoted Investments, Market price is taken from the quotes available in the stock exchanges. Government securities are valued at Market price or price declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).
3.5 In respect of unquoted investments:- at breakup value (without considering Revaluation Reserve, if any) as per the latest Balance sheet (not more than 12 months old) otherwise Rs.1 per company.
3.6 Security receipts issued by securitization / reconstruction company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are carried in the books at lower of redemption value of the security receipt and the Net Book Value of the financial assets. Valuation, classification and other norms applicable to investment in non-SLR Investments prescribed by RBI are applied to Bankâs investment in Security Receipts issued by SC/RC.
3.7 Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction. Broken period interest paid/received on debt instruments are excluded from cost/sale consideration.
3.8 The bank follows the prudential norms for recognition income from investments and for ascertaining and provisioning nonperforming investments.
4. PROPERTY, PLANT & EQUIPMENT
4.1 Items of property, plant & equipment except land and building are stated at historical cost less accumulated depreciation using cost model. Land and building are stated at revalued amount less accumulated depreciation using revaluation model. Surplus arising on revaluation is credited to Revaluation Reserve.
4.2 The rates of depreciation and method of charging depreciation as considered appropriate by the management in respect of fixed assets situated in India are as below:-
4.3 Depreciation in respect of fixed assets situated outside India is provided on straight line/written down value method as per the local laws of respective country.
4.4 Equivalent amount of additional depreciation arising out of revaluation is transferred from Revaluation Reserve to Revenue Reserve.
4.5 Items of property, plant and equipment of small value costing upto Rs.1000 each are charged off whereas items costing between Rs.1001 and Rs.5000 each are depreciated @ 100% in the quarter in which the same are purchased.
4.6 Depreciation is provided at full rate on additions made upto 30th September and at half the rate on additions made thereafter.
5. effect of changes in foreign exchange rate
5.1 FOREIGN CURRENCY TRANSACTIONS
i) Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of transaction.
ii) Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India (FEDAI) closing/ spot rate.
iii) Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.
iv) Contingent Liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at rates different from those at which they were initially recorded are recognised as income or as expense in the period in which they arise.
vi) Outstanding forward exchange contracts are revalued every month as per month end FEDAI rates applicable based on maturity date of the forward contracts and the resultant gain/loss is taken to profit and loss at the end of each month.
vii) The foreign exchange swaps which are not held for trading are not marked to market. The premium paid or received on such swaps are amortized as expense or accreted as income over the life of the swap.
5.2 FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been classified as non-integral operations.
Translation
i) Both monetary and non-monetary foreign currency assets and liabilities including contingent liabilities of non-integral foreign operations are translated at closing exchange rates notified by FEDAI at the balance sheet date.
ii) Income and expenditure of non-integral foreign operations are translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral foreign operations are accumulated in Foreign Currency Translation Reserve until the disposal of the net investment.
6. EMPLOYEE BENEFITS
6.1 Short Term Employee Benefits
Short-term employee benefits, such as medical benefits, casual leave etc. which are paid in exchange for the services rendered by employees are recognized during the period when the employee renders the service.
6.2 Long Term Employee Benefits
Post-employment Benefits
Defined Contribution Plan
Contributions to Defined Contribution Schemes such as NPS, Provident Fund etc., are charged to the Profit & Loss Account as and when incurred. In respect of certain employees who have not opted for Pension Benefits, Provident Fund Contributions are made to a Trust administered by the Bank.
The employees joining the services of the bank on or after 1st April 2010 are covered by a defined contributory pension scheme where the employees contribute 10% of pay plus DA and the bank makes a matching contribution. The scheme is governed by the provisions of the contributory pension scheme introduced for the employees of central government w.e.f 1st January 2004 and modified from time to time.
Defined Benefit Plan
The bank operates gratuity and pension schemes which are defined benefit plans.
The Bank provides for gratuity to all eligible employees. The benefit is in the form of lump sum / onetime payment to vested employees on retirement, on death while in employment, or on termination of employment, for an amount equivalent to (i) 15 days salary (Basic DA) payable for each completed year of service, subject to a maximum amount of Rs.20,00,000 or (ii) 15 days salary (Basic only) for each completed year of service, whichever is higher. Vesting occurs upon completion of five years / ten years (as applicable) of service. The Bank makes annual contributions to a fund administered by Trustees based on an independent external actuarial valuation carried out at regular intervals.
The Bank provides for pension to all eligible employees. The benefit is in the form of monthly payments as per rules and regular payments to vested employees on retirement, on death while in employment, or on termination of employment as provided under regulation. Vesting occurs at different stages as per rules. The Bank makes additional annual contributions to funds administered by trustees based on an independent external actuarial valuation carried out at regular intervals besides monthly contribution @ 10% of pay per month.
The cost of providing defined benefits is determined by actuarial valuation using the projected unit credit method which is normally carried out on quarterly basis. Net liabilities are immediately recognized in the statement of profit and loss and are not deferred.
All eligible employees of the bank are entitled to compensated absences; leave travel concession. The costs of such longterm employee benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by actuarial valuation using the projected unit credit method which is normally carried out on quarterly basis. Past service cost is immediately recognized in the statement of profit and loss and is not deferred.
Medical benefits are extended to full time Directors, after their retirement as post-retirement medical benefits. The cost is ascertained and determined by actuarial valuation using the projected unit credit method and such valuation is carried out on quarterly basis for retired as well as in service full time Directors. The liability is immediately recognized in the statement of profit & loss and not deferred.
6.3 Employee benefits relating to employees employed at foreign branches and offices are valued and accounted for as per the respective local laws/regulations.
7. interest rate swaps
7.1 The Interest Rate Swap transactions undertaken for hedging are accounted for on accrual basis and transactions for trading are marked to market and net depreciation is provided for whereas appreciation, if any, is ignored.
7.2 Gain or loss on terminated interest rate swap transactions undertaken for hedging is deferred and recognized over the shorter of the remaining contractual life of the swap or remaining life of the asset or liability.
7.3 Income and expenses relating to the trading swaps are recognized on the settlement date.
7.4 Gain or losses on the termination of the trading swaps are recorded as income or expense immediately.
8. IMPAIRMENT OF ASSETS
Items of property, plant and equipment are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment, to be recognized, is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
9. NON-BANKING ASSETS
Non-Banking Assets are stated at cost.
10. REVENUE RECOGNITION
10.1 Income is recognized on accrual basis, unless otherwise stated.
10.2 In respect of foreign offices, income is recognized as per local laws/ standards of respective country.
10.3 Income from non-performing assets/investments is recognized on realization basis in terms of RBI guidelines.
10.4 Commission on issuance of Letters of Credit/ Bank Guarantees is recognized over the tenure of LC/BG. Dividend is accounted when the right to receive the same is established.
10.5 Locker Rent, Rental Income, Income on Units of Mutual Funds and Service Charges on various Deposit Accounts are recognized on realization basis.
10.6 Interest on Income-tax refund is recognized in the year it was actually received.
10.7 Profit or loss on sale of investments is recognized as per RBI guidelines.
10.8 Recoveries in Written off Advances / Investments are accounted for as âMiscellaneous Incomeâ.
11. LEASE
In accordance with AS 19 - Leases, lease payments for assets taken on operating lease are recognized in the profit & loss account over the period of lease and in respect of assets taken on finance lease, the asset is recognized in the books taking the lease premium as the cost and the same is amortized over the period of the lease.
12. TAXES ON INCOME
12.1 Current Tax
Current tax is provided using applicable tax rates on the taxable income determined on the basis of applicable tax laws, judicial pronouncements / legal opinions and the past assessments.
12.2 Deferred Tax
Deferred Tax is recognized subject to consideration of prudence, on timing difference, representing the difference between the taxable income and accounting income that originated in one period and are capable of reversal in one or more subsequent periods.
Deferred tax asset or liability is recognized using the tax rates that have been enacted or substantially enacted by the Balance Sheet date as per Accounting Standard 22 Accounting for Taxes on Income.
Deferred tax assets/liabilities are re-assessed at each reporting date, based upon managementâs judgement as to whether their realisation is considered as reasonably certain.
Deferred Tax Assets on carry forward of unabsorbed depreciation and tax losses are recognized only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realised against future profits.
13. EARNINGS PER SHARE
13.1 The Bank reports basic and diluted earnings per share in accordance with AS 20 - âEarnings per Shareâ. Basic earnings per share computed by dividing the net profit after tax and dividend on preferential shares by weighted average number of equity shares outstanding for the year.
13.2 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.
14. Derivatives
The Bank rarely deals in derivatives i e Forex Forward Contracts, interest rate and currency derivatives. The interest rate derivatives dealt with by the Bank are Rupee Interest Rate Swaps, Foreign Currency Interest Rate Swaps, Forward Rate Agreements and Interest Rate Futures. Currency Derivatives dealt with by the Bank are Options, Currency Swaps and Currency Futures. Based on RBI guidelines, Derivatives are valued as under:
Income/expenditure on hedging derivatives are accounted on accrual basis.
Forex forward contracts are Marked to market and the resultant gains and losses are recognized in the profit and loss account.
Exchange Traded Contracts entered into for trading purposes are valued at prevailing market rates based on rates given by the Exchange and the resultant gains and losses are recognized in the Profit and Loss Account.
(d) Gains/ losses on termination of the trading swaps are recorded on the termination date as income/ expenditure. Any gain/ loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.
(e) Premium paid and received on currency options is accounted when due in the profit and loss account.
15. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
In conformity with Accounting Standard AS 29, âProvisions, Contingent Liabilities and Contingent Assetsâ, the Bank recognizes 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 a reliable estimate of the amount of the obligation can be made. Contingent Assets are not recognized in the financial statements.
16. Segment Reporting
The Bank recognizes the Business segment as the Primary reporting segment and Geographical segment as the Secondary reporting segment, in accordance with the RBI guidelines and in compliance with the Accounting Standard 17 issued by ICAI.
Mar 31, 2017
Schedule 17 - SIGNIFICANT ACCOUNTING POLICIES
GENERAL
BASIS OF ACCOUNTING
The financial statements are prepared under ''going concern'' concept on historical cost convention and on accrual basis of accounting unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms/guidelines prescribed by Reserve Bank of India (RBI), Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable and generally the practices prevailing in the banking industry in India.
USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires the Management to make estimates and assumptions while reporting assets and liabilities (including contingent liabilities) as at the date of the financial statements and income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable.
ADVANCES
Loans and advances are classified as performing and non-performing based on the guidelines issued by the RBI. Non-performing advances in India are ascertained as per the prudential norms and provisions are made upon classifying the same into ''Sub Standard'', ''Doubtful'', and ''Loss'' assets after considering the claims Received / Receivable from ECGC and advances are stated after netting of provisions.
Provision on Non-performing advances of foreign branches is made on the basis of local requirements or RBI guidelines whichever is higher.
Provision on standard restructured assets and project loans have been made as per RBI prudential norms and directives. A general provision on Standard Assets is made on global portfolio basis as per prudential norms of RBI.
The credit facilities backed by the guarantee of the Central Government though overdue is treated as NPA only when Government repudiates its guarantee when invoked
In respect of Compromise and Settlement Proposals, write-off is done on complete realization.
Partial prudential write-off of accounts is done up to unsecured portion level on a case to case basis on approval by the Competent Authority.
Sale of Financial asset to Securitized Company (SC) / Reconstruction Company (RC) is done on the basis of Board approved Policy in line with the RBI guidelines.
Bank follows the prudential norms formulated by Reserve Bank of India for classification, valuation and operation of investment portfolio.
Investments are classified into three categories viz. Held to Maturity, Available for Sale and Held for Trading and are further classified into Investments in Government Securities, Other Approved Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures and Others.
Investments classified as Held to Maturity are carried at cost. Wherever the cost is higher than the face value, the premium is amortized over the remaining period of maturity as per effective interest rate method. Profit on sale is initially taken to Profit and Loss Account and then appropriated to Capital Reserve Account net of taxes and amount required to be transferred to Statutory Reserve. Loss on sale is charged to the Profit and Loss Account.
Investments classified as Available for Sale, are marked to market. Scrip-wise appreciation/depreciation is aggregated for each classification. While net depreciation in respect of each classification is charged to Profit & Loss Account, net appreciation in respect of any classification is ignored. These investments are shown, net of depreciation, in the Balance Sheet.
Investments classified as Held for Trading are marked to market. Scrip-wise appreciation/depreciation is aggregated for each classification. While net depreciation in respect of each classification is charged to Profit & Loss Account, net appreciation in respect of any classification is ignored. These investments are shown, net of depreciation, in the Balance Sheet.
Investments in Regional Rural Banks, Commercial Papers and Treasury Bills are valued at carrying cost.
In respect of traded/quoted Investments, Market price is taken from the quotes available in the stock exchanges. Government securities are valued at Market price or price declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA).
Security receipts issued by securitization / reconstruction company (SC/RC) in respect of financial assets sold by the Bank to the SC/RC are carried in the books at lower of redemption value of the security receipt and the Net Book Value of the financial assets. Valuation, classification and other norms applicable to investment in non-SLR Investments prescribed by RBI are applied to Bank''s investment in Security Receipts issued by SC/RC.
Commission, brokerage, broken period interest on investment transactions are debited and /or credited to Profit and Loss Account in the year of transaction. Broken period interest paid/received on debt instruments are excluded from cost/sale consideration.
The bank follows the prudential norms for recognition income from investments and for ascertaining and provisioning non-performing investments.
PROPERTY, PLANT & EQUIPMENT
Items of property, plant & equipment except land and building are stated at historical cost less accumulated depreciation using cost model. Land and building are stated at revalued amount less accumulated depreciation using revaluation model. Surplus arising on revaluation is credited to Revaluation Reserve.
The rates of depreciation and method of charging depreciation as considered appropriate by the management in respect of fixed assets situated in India are as below:-
Depreciation in respect of fixed assets situated outside India is provided on straight line/written down value method as per the local laws of respective country.
Equivalent amount of additional depreciation arising out of revaluation is transferred from Revaluation Reserve to Revenue Reserve.
Items of property, plant and equipment of small value costing up to Rs,1000 each are charged off whereas items costing between Rs,1001 and Rs,5000 each are depreciated @ 100% in the quarter in which the same are purchased.
Depreciation is provided at full rate on additions made up to 30th September and at half the rate on additions made thereafter.
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of transaction.
Foreign currency monetary items are reported using the Foreign Exchange Dealers Association of India (FEDAI) closing/ spot rate.
Foreign currency non-monetary items, which are carried in terms at historical cost, are reported using the exchange rate at the date of the transaction.
Contingent Liabilities denominated in foreign currency are reported using the FEDAI closing spot rates.
Exchange differences arising on settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expense in the period in which they arise.
Outstanding forward exchange contracts are revalued every month as per month end FEDAI rates applicable based on maturity date of the forward contracts and the resultant gain/loss is taken to profit and loss at the end of each month.
The foreign exchange swaps which are not held for trading are not marked to market. The premium paid or received on such swaps are amortized as expense or accreted as income over the life of the swap.
Foreign Branches and representative offices of the Bank have been classified as non-integral operations. n±n-5TncT1yTranslation
Both monetary and non-monetary foreign currency assets and liabilities including contingent liabilities of non-integral foreign operations are translated at closing exchange rates notified by FEDAI at the balance sheet date.
Income and expenditure of non-integral foreign operations are translated at quarterly average closing rates.
Exchange differences arising on net investment in non-integral foreign operations are accumulated in Foreign Currency Translation Reserve until the disposal of the net investment.
EMPLOYEE BENEFITS
6.1 Short Term Employee Benefits
Short-term employee benefits, such as medical benefits, casual leave etc. which are paid in exchange for the services rendered by employees are recognized during the period when the employee renders the service.
Long Term Employee Benefits
Post-employment Benefits
/ Defined Contribution Plan
Contributions to Defined Contribution Schemes such as NPS, Provident Fund etc., are charged to the Profit & Loss Account as and when incurred. In respect of certain employees who have not opted for Pension Benefits, Provident Fund Contributions are made to a Trust administered by the Bank.
The employees joining the services of the bank on or after 1st April 2010 are covered by a defined contributory pension scheme where the employees contribute 10% of pay plus DA and the bank makes a matching contribution. The scheme is governed by the provisions of the contributory pension scheme introduced for the employees of central government w.e.f 1st January 2004 and modified from time to time.
The bank operates gratuity and pension schemes which are defined benefit plans.
The Bank provides for gratuity to all eligible employees. The benefit is in the form of lump sum / onetime payment to vested employees on retirement, on death while in employment, or on termination of employment, for an amount equivalent to
(i) 15 days salary (Basic DA) payable for each completed year of service, subject to a maximum amount of Rs,10,00,000 or
(ii) 15 days salary (Basic only) for each completed year of service, whichever is higher. Vesting occurs upon completion of five years / ten years (as applicable) of service. The Bank makes annual contributions to a fund administered by Trustees based on an independent external actuarial valuation carried out at regular intervals.
The Bank provides for pension to all eligible employees. The benefit is in the form of monthly payments as per rules and regular payments to vested employees on retirement, on death while in employment, or on termination of employment as provided under regulation. Vesting occurs at different stages as per rules. The Bank makes additional annual contributions to funds administered by trustees based on an independent external actuarial valuation carried out at regular intervals besides monthly contribution @ 10% of pay per month.
The cost of providing defined benefits is determined by actuarial valuation using the projected unit credit method which is normally carried out on quarterly basis. Net liabilities are immediately recognized in the statement of profit and loss and are not deferred.
Other Long Term Employee benefits
All eligible employees of the bank are entitled to compensated absences; leave travel concession. The costs of such long-term employee benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by actuarial valuation using the projected unit credit method which is normally carried out on quarterly basis. Past service cost is immediately recognized in the statement of profit and loss and is not deferred.
Medical benefits are extended to full time Directors, after their retirement as post-retirement medical benefits. The cost is ascertained and determined by actuarial valuation using the projected unit credit method and such valuation is carried out on quarterly basis for retired as well as in service full time Directors. The liability is immediately recognized in the statement of profit & loss and not deferred.
Employee benefits relating to employees employed at foreign branches and offices are valued and accounted for as per the respective local laws/regulations.
Mar 31, 2015
GENERAL
The financial statements are prepared under 'going concern' concept
on historical cost basis, except as otherwise stated, and conform to
Generally Accepted Accounting Principles (GAAP) in India, the
prevailing practices and statutory provisions including directives of
Reserve Bank of India (RBI).
2. EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
2.1 FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of transaction.
ii) Foreign currency monetary items are reported using the Foreign
Exchange Dealers Association of India (FEDAI) closing/spot rate.
iii) Foreign currency non-monetary items, which are carried in terms at
historical cost, are reported using the exchange rate at the date of
the transaction.
iv) Contingent Liabilities denominated in foreign currency are reported
using the FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at
rates different from those at which they were initially recorded are
recognised as income or as expense in the period in which they arise.
vi) Outstanding foreign exchange contracts and bills are revalued as
per FEDAI Rates and the resultant gain/loss is taken to revenue at the
end of each month.
vii) The foreign exchange swaps which are not held for trading are not
marked to market. The premium paid or received on such swaps are
amortized as expense or accreted as income over the life of the swap.
2.2FOREIGN operations
Foreign Branches and representative offices of the Bank have been
classified as Non-integral Operations.
Translation
i) Both monetary and non-monetary foreign currency assets and
liabilities including contingent liabilities of non-integral foreign
operations are translated at closing exchange rates notified by FEDAI
at the balance sheet date.
ii) Income and expenditure of non-integral foreign operations are
translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral
foreign operations are accumulated in Foreign Currency Translation
Reserve until the disposal of the net investment.
3.INVESTMENTS
3.1
Investments are classified into three categories viz. Held to Maturity,
Available for Sale and Held for Trading and are further classified into
Investments in Government Securities, Other Approved Securities,
Shares, Debentures & Bonds, Subsidiaries and Joint Ventures and Others.
3.2 (i)
Investments classified as Held to Maturity are carried at cost.
Wherever the cost is higher than the face value, the premium is
amortised over the remaining period of maturity as per effective
interest rate method. Profit on sale is initially taken to Profit and
Loss Account and then appropriated to Capital Reserve Account net of
taxes and amount required to be transferred to Statutory Reserve. Loss
on sale is charged to the Profit and Loss Account.
(ii)
Investments classified as Available for Sale, are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
(iii)Investments classified as Held for Trading are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
3.3 In respect of securities, included in any of the above three
categories where interest/ principal is in arrears for more than 90
days, income is not recognized and appropriate provision on the value
of such Investments is made as per prudential norms.
3.4 Investments in Regional Rural Banks, Commercial Papers and Treasury
Bills are valued at carrying cost.
3.5 In respect of traded/quoted Investments, Market price is taken from
the quotes available in the stock exchanges. Government securities are
valued at Market price or price declared by Primary Dealers Association
of India (PDAI) jointly with Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
3.6 Broken period interest paid / received on debt instruments is
treated as interest expense/income and is excluded from cost/sale
consideration.
3.7 Security receipts issued by securitisation / reconstruction company
(SC/RC) in respect of financial assets sold by the Bank to the SC/RC
are valued at the lower of the redemption value of the security receipt
and the Net Book Value of the financial assets. The Investment is
carried in the books at the price determined as above and the sale /
realization if any, is reduced from Investment and the net book value
is shown.
The value, classification and other norms applicable to investment in
non-SLR Investments prescribed by RBI are applied to Bank's investment
in Security Receipts issued by SC/RC.
4. sira n® /interest rate swaps
4.1 The Interest Rate Swap transactions undertaken for hedging are
accounted for on accrual basis and transactions for trading are marked
to market and net depreciation, if any, is provided for, whereas
appreciation if any is ignored.
4.2 Gain or loss on terminated interest rate swap transactions
undertaken for hedging is deferred and recognized over the shorter of
the remaining contractual life of the swap or remaining life of the
asset or liability.
4.3 Income and expenses relating to the trading swaps are recognized on
the settlement date.
4.4 Gain or losses on the termination of the trading swaps are recorded
as income or expense immediately.
5.FOREIGN EXCHANGE CONTRACTS
Outstanding forward exchange contracts are revalued every month as per
month end FEDAI rates applicable based on maturity date of the forward
contracts and the resultant gain/loss is taken to profit and loss at
the end of the each month.
6.ADVANCES
6.1 Loans and advances are classified as performing and non-performing
based on the guidelines issued by the RBI. Non-performing advances in
India are ascertained as per the Prudential Norms and Provisions are
made upon classifying the same into 'Sub- Standard',
'Doubtful', and 'Loss' assets after considering the claims
Received / Receivable from ECGC and advances are stated after netting
of provisions.
6.2 Provision on Non-performing advances of foreign branches is made on
the basis of local requirements or RBI guidelines whichever is higher.
6.3 A general provision on Standard Assets is made on global portfolio
basis.
6.4 The credit facilities backed by the guarantee of the Central
Government though overdue may be treated as NPA only when Government
repudiates its guarantee when invoked
6.5 In respect of Compromise and Settlement Proposals, write-off is
done on complete realisation.
6.6 Partial prudential write-off of accounts is done upto unsecured
portion level on a case to case basis on approval by the Competent
Authority.
6.7 Sale of Financial asset to Securitised Company (SC) /
Reconstruction Company (RC) is done on the basis of Board approved
Policy in line with the RBI guidelines.
7.1 Fixed assets are stated at historical cost/revalued amount less
accumulated depreciation. Surplus arising on revaluation is credited to
Revaluation Reserve.
7.2 Advance payments/part payments made towards acquisition of fixed
assets are included under other Assets.
7.3 The rates of depreciation and method of charging depreciation as
considered appropriate by the management in respect of fixed assets
situated in India are as below :-
7.4 Depreciation in respect of fixed assets situated outside India is
provided on straight line/written down value method as per the local
laws of respective country.
7.5 Additional depreciation arising out of revaluation is set off
against Revaluation Reserve.
7.6 In respect of leasehold properties, the lease premium is amortized
over the period of the lease.
7.7 Fixed Assets items of small value, costing of Rs 1000/- or less each,
are charged off fully in the same quarter of purchase and items,
costing Rs 1001/- to Rs 5000/- each, are depreciated at the rate of 100% in
the same quarter of purchase.
7.8Depreciation is provided at full rate on additions made upto 30th
September and at half the rate on additions made thereafter.
8.EMPLOYEE BENEFITS
8.1Short Term Employee Benefits
The short-term employee benefits, such as medical benefits, casual
leave etc. which are paid/credited in exchange for the services
rendered by employees are recognised during the 12 month period when
the employee renders the service.
8.2 Long Term Employee Benefits Post Employment Benefits
Defined Contribution Plan
Contributions to Defined Contribution Schemes such as NPS, Provident
Fund etc., are charged to the Profit & Loss Account as and when
incurred. In respect of certain employees who have not opted for
Pension Benefits, Provident Fund Contributions are made to a Trust
administered by the Bank.
The employees joining the services of the bank on or after 1st April
2010 are covered by a defined contributory pension scheme where the
employees contribute 10% of pay plus DA and the bank makes a matching
contribution. The scheme is governed by the provisions of the
contributory pension scheme introduced for the employees of central
government w.e.f 1st January 2004 and modified from time to time.
The bank operates gratuity and pension schemes which are defined
benefit plans.
The Bank provides for gratuity to all eligible employees. The benefit
is in the form of lump sum/one time payment to vested employees on
retirement, on death while in employment, or on termination of
employment, for an amount equivalent to i) 15 days salary (Basic DA)
payable for each completed year of service, subject to a maximum amount
of Rs 10,00,000 or ii) 15 days salary (Basic only) for each completed
year of service, whichever is higher. Vesting occurs upon completion of
five years/ ten years (as applicable) of service. The Bank makes annual
contributions to a fund administered by Trustees based on an
independent external actuarial valuation carried out at regular
intervals.
The Bank provides for pension to all eligible employees. The benefit is
in the form of monthly payments as per rules and regular payments to
vested employees on retirement, on death while in employment, or on
termination of employment as provided under regulation. Vesting occurs
at different stages as per rules. The Bank makes additional annual
contributions to funds administered by trustees based on an independent
external actuarial valuation carried out at regular intervals besides
monthly contribution @ 10% of pay per month.
The cost of providing defined benefits is determined by actuarial
valuation using the projected unit credit method which is normally
carried out on quarterly basis. Net liabilities are immediately
recognised in the statement of profit and loss and are not deferred.
All eligible employees of the bank are entitled to compensated
absences; leave travel concession. The costs of such long term employee
benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by
actuarial valuation using the projected unit credit method which is
normally carried out on quarterly basis. Past service cost is
immediately recognised in the statement of profit and loss and is not
deferred.
Medical benefits are extended to full time Directors, after their
retirement as post retirement medical benefits. The cost is ascertained
and determined by actuarial valuation using the projected unit credit
method and such valuation is carried out on quarterly basis for retired
as well as in service full time Directors. The liability is immediately
recognized in the statement of profit & loss and not deferred.
In accordance with the guidelines given by Reserve Bank of India vide
its Circular No. DBOD.BP.BC.80/21.04.018/2010-11 dated 09.02.2011 on
"Re-opening of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits - Prudential Regulatory Treatment",
Bank has decided to amortize the additional liability on account of -
Re-opening of pension option for existing employees who did not opt for
pension earlier; and Payment of gratuity to existing employees as per
the enhanced limit of Rs 10.00 lakh increased from Rs 3.50 lakh) pursuant
to the amendment of the Payment of Gratuity Act, 1972, as an expense on
a straight line basis over a period of five years from the financial
year 2010 -11.
9. EFETE/REVENUE RECOGNITION
9.1 Items of Income and Expenditure are accounted for on accrual basis,
except as otherwise stated.
9.2 Income for the following items are recognised on realization basis:
10.taxes on income
Current tax is determined on the amount of tax payable in respect of
taxable income for the year and accordingly provision for tax is made
including Minimum Alternate Tax (MAT).
The deferred tax asset or liability is recognised using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date, in terms of notified Accounting Standard 22. Deferred Tax
Assets/Liabilities are reviewed at each Balance Sheet date based on
developments during the year.
11.IMPAIRMENT OF ASSETS
Fixed Assets are reviewed for impairment whenever events or changes in
circumstances warrant that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net
discounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment, to be recognized,
is measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
12.EARNINGS PER SHARE
The Bank reports basic and diluted earnings per share in accordance
with AS 20 - 'Earnings per Share'. Basic earnings per share computed
by dividing the net profit after tax and dividend on preferential
shares by weighted average number of equity shares outstanding for the
year.
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.
13. SIEETE, ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND
CONTINGENT ASSETS
In conformity with AS 29, "Provisions, Contingent Liabilities and
Contingent Assets" issued in this regard 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.
Contingent Assets are not recognised in the financial statements as
this may result in the recognition of income that may never be
realized.
a) During the year, Bank allotted 6,08,82,550 equity Shares of Rs 10/-
each to Life Insurance Corporation of India at an issue price of Rs 70.21
per Share and received Rs 4,27,45,63,836 against allotment of the above
equity Shares. Out of this, Rs 60,88,25,500/- is transferred to Share
Capital Account and Rs 366,57,38,336/- is transferred to Share Premium
Account.
Mar 31, 2014
1. GENERAL
1.1 The financial statements are prepared under ''going concern'' concept on
historical cost basis, except as otherwise stated, and conform to
Generally Accepted Accounting Principles (GAAP) in India, the
prevailing practices and statutory provisions including directives of
Reserve Bank of India (RBI).
2. EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
2.1 FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of transaction.
ii) Foreign currency monetary items are reported using the Foreign Exchange
Dealers Association of India (FEDAI) closing/spot rate.
iii) Foreign currency non-monetary items, which are carried in terms at
historical cost, are reported using the exchange rate at the date of
the transaction.
iv) Contingent Liabilities denominated in foreign currency are reported
using the FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at rates
different from those at which they were initially recorded are
recognised as income or as expense in the period in which they arise.
vi) Outstanding foreign exchange contracts and bills are revalued as per
FEDAI Rates and the resultant gain/loss is taken to revenue at the end
of each month.
vii) The foreign exchange swaps which are not held for trading are not
marked to market. The premium paid or received on such swaps are
amortized as expense or accreted as income over the life of the swap.
2.2. FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been
classified as Non-integral Operations.
i) Both monetary and non-monetary foreign currency assets and liabilities
including contingent liabilities of non-integral foreign operations are
translated at closing exchange rates notified by FEDAI at the balance
sheet date.
ii) Income and expenditure of non-integral foreign operations are
translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral
foreign operations are accumulated in Foreign Currency Translation Reserve
until the disposal of the net investment.
3. INVESTMENTS
3.1 Investments are classified into three categories viz. Held to
Maturity, Available for Sale and Held for Trading and are further
classified into Investments in Government Securities, Other Approved
Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures
and Others.
3.2 Investments classified as Held to Maturity are carried at cost.
Wherever the cost is higher than the face value, the premium is
amortised over the remaining period of maturity as per effective
interest rate method. Profit on sale is initially taken to Profit and
Loss Account and then appropriated to Capital Reserve Account net of
taxes and amount required to be transferred to Statutory Reserve. Loss
on sale is charged to the Profit and Loss Account.
(ii) Investments classified as Available for Sale, are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
(iii) Investments classified as Held for Trading are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
3.3 In respect of securities, included in any of the above three categories
where interest/ principal is in arrears for more than 90 days, income is
not recognized and appropriate provision on the value of such
Investments is made as per prudential norms.
3.4 Investments in Regional Rural Banks, Commercial Papers and Treasury
Bills are valued at carrying cost.
3.5 In respect of traded/quoted Investments, Market price is taken from
the quotes available in the stock exchanges. Government securities are
valued at Market price or price declared by Primary Dealers Association
of India (PDAI) jointly with Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
3.6 Broken period interest paid / received on debt instruments is treated
as interest expense/income and is excluded from cost/sale
consideration.
3.7 Security receipts issued by securitisation / reconstruction company
(SC/RC) in respect of financial assets sold by the Bank to the SC/RC
are valued at the lower of the redemption value of the security receipt
and the Net Book Value of the financial assets. The Investment is
carried in the books at the price determined as above and the sale /
realization if any, is reduced from Investment and the net book value
is shown.
The value, classification and other norms applicable to investment in
non-SLR Investments prescribed by RBI are applied to Bank''s investment
in Security Receipts issued by SC/RC.
4. INTEREST RATE SWAPS
4.1 The Interest Rate Swap transactions undertaken for hedging are
accounted for on accrual basis and transactions for trading are marked
to market and net depreciation, if any, is provided for, whereas
appreciation if any is ignored.
4.2 Gain or loss on terminated interest rate swap transactions undertaken
for hedging is deferred and recognized over the shorter of the
remaining contractual life of the swap or remaining life of the asset
or liability.
4.3 Income and expenses relating to the trading swaps are recognized on the
settlement date.
4.4 Gain or losses on the termination of the trading swaps are recorded as
income or expense immediately.
5. Outstanding forward exchange contracts are revalued every month as per
month end FEDAI rates applicable based on maturity date of the forward
contracts and the resultant gain/loss is taken to profit and loss at
the end of the each month.
6. ADVANCES
6.1 Loans and advances are classified as performing and non-performing
based on the guidelines issued by the RBI. Non-performing advances in
India are ascertained as per the Prudential Norms and Provisions are
made upon classifying the same into ''Sub- Standard'', ''Doubtful'', and
''Loss'' assets after considering the claims Received / Receivable from
ECGC and advances are stated after netting of provisions.
6.2 Provision on Non-performing advances of foreign branches is made on
the basis of local requirements or RBI guidelines whichever is higher.
6.3 A general provision on Standard Assets is made on global portfolio
basis.
6.4 The credit facilities backed by the guarantee of the Central
Government though overdue may be treated as NPA only when Government
repudiates its guarantee when invoked
6.5 In respect of Compromise and Settlement Proposals, write-off is done
on complete realisation.
6.6 Partial prudential write-off of accounts is done upto unsecured
portion level on a case to case basis on approval by the Competent
Authority.
6.7 Sale of Financial asset to Securitised Company (SC) / Reconstruction
Company (RC) is done on the basis of Board approved Policy in line with
the RBI guidelines. In case of financial assets sold to the SC/RC, if
the sale is at a price below the Net Book Value (NBV), the shortfall
amount is debited to the Profit & Loss Account. If the sale is for a
value higher than the NBV, the excess provision is not reversed but is
utilized to meet the shortfall/loss on account of sale of other
non-performing financial assets. Additional considerations realized
over and above the Security Receipt (SR) value in respect of accounts
transferred earlier is recognized as profit and booked as income from
investment.
7. FIXED ASSETS
7.1 Fixed assets are stated at historical cost/revalued amount less
accumulated depreciation. Surplus arising on revaluation is credited to
Revaluation Reserve.
7.2 Advance payments/part payments made towards acquisition of fixed
assets are included under other Assets.
7.3 Depreciation on Premises (including cost of land wherever
inseparable/not segregated) and other fixed assets (excepting computer
including software and AC machine, Aqua guard, Refrigerator,
Photo-copying machine, Fax machine, etc.) in India is provided o
written down value method at the rates prescribed in Schedule XIV to
the Companies Act, 1956. Depreciation on computer including software is
provided at the rate of 33.33% on Straight Line Method in terms of RBI
guidelines and on AC machine Aqua guard, Refrigerator, Photo-copying
machine, Fax machine, etc. is provided at the rate of 20% on Written
Down Value (WDV) Method. Depreciation is provided at full rate on
additions made upto 30th September and at half the rate on addition
made thereafter.
7.4 Depreciation in respect of fixed assets situated outside India is
provided on straight line/written down value method as per the local
laws of respective country.
7.5 Additional depreciation arising out of revaluation is set off against
Revaluation Reserve.
7.6 In respect of leasehold properties, the lease premium is amortized
over the period of the lease.
7.7 Fixed Assets items of small value, costing of Rs.1000/- or less each,
are charged off fully in the same quarter of purchase and items, costing
Rs.1001/- to Rs.5000/- each, are depreciated at the rate of 100% in the
same quarter of purchase.
8. EMPLOYEE BENEFITS
8.1 Short Term Employee Benefits
The short-term employee benefits, such as medical benefits, casual
leave etc. which are paid/credited in exchange for the services
rendered by employees are recognised during the 12 month period when
the employee renders the service.
8.2 Long Term Employee Benefits Post Employment Benefits
Contributions to Defined Contribution Schemes such as NPS, Provident
Fund etc., are charged to the Profit & Loss Account as and when
incurred. In respect of certain employees who have not opted for
Pension Benefits, Provident Fund Contributions are made to a Trust
administered by the Bank.
The employees joining the services of the bank on or after 1st April
2010 are covered by a defined contributory pension scheme where the
employees contribute 10% of pay plus DA and the bank makes a matching
contribution. The scheme is governed by the provisions of the
contributory pension scheme introduced for the employees of central
government w.e.f 1st January 2004 and modified from time to time.
B) Defined Benefit Plan
The bank operates gratuity and pension schemes which are defined
benefit plans.
The Bank provides for gratuity to all eligible employees. The benefit
is in the form of lump sum/one time payment to vested employees on
retirement, on death while in employment, or on termination of
employment, for an amount equivalent to i) 15 days salary (Basic DA)
payable for each completed year of service, subject to a maximum amount
of Rs.10,00,000 or ii) 15 days salary (Basic only) for each completed
year of service, whichever is higher. Vesting occurs upon completion of
five years/ ten years (as applicable) of service. The Bank makes annual
contributions to a fund administered by Trustees based on an
independent external actuarial valuation carried out at regular
intervals.
The Bank provides for pension to all eligible employees. The benefit is
in the form of monthly payments as per rules and regular payments to
vested employees on retirement, on death while in employment, or on
termination of employment as provided under regulation. Vesting occurs
at different stages as per rules. The Bank makes additional annual
contributions to funds administered by trustees based on an independent
external actuarial valuation carried out at regular intervals besides
monthly contribution @ 10% of pay per month.
The cost of providing defined benefits is determined by actuarial
valuation using the projected unit credit method which is normally
carried out on quarterly basis. Net liabilities are immediately
recognised in the statement of profit and loss and are not deferred.
Other Long Term Employee benefits
All eligible employees of the bank are entitled to compensated
absences; leave travel concession. The costs of such long term employee
benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by
actuarial valuation using the projected unit credit method which is
normally carried out on quarterly basis. Past service cost is
immediately recognised in the statement of profit and loss and is not
deferred.
Medical benefits are extended to full time Directors, after their
retirement as post retirement medical benefits. The cost is ascertained
and determined by actuarial valuation using the projected unit credit
method and such valuation is carried out on quarterly basis for retired
as well as in service full time Directors. The liability is immediately
recognized in the statement of profit & loss and not deferred.
In accordance with the guidelines given by Reserve Bank of India vide
its Circular No. DBOD.BP.BC.80/21.04.018/2010-11 dated 09.02.2011 on
"Re-opening of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits  Prudential Regulatory Treatment", Bank
has decided to amortize the additional liability on account of Â
Re-opening of pension option for existing employees who did not opt for
pension earlier; and
Payment of gratuity to existing employees as per the enhanced limit of
Rs.10.00 lakh increased from Rs.3.50 lakh) pursuant to the amendment of the
Payment of Gratuity Act, 1972, as an expense on a straight line basis
over a period of five years from the financial year 2010 -11.
9. REVENUE RECOGNITION
9.1 Items of Income and Expenditure are accounted for on accrual basis,
except as otherwise stated.
9.2 Income for the following items are recognised on realization basis:
10. TAXES ON INCOME
Current tax is determined on the amount of tax payable in respect of
taxable income for the year and accordingly provision for tax is made
including Minimum Alternate Tax (MAT).
The deferred tax asset or liability is recognised using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date, in terms of notified Accounting Standard 22. Deferred Tax
Assets/Liabilities are reviewed at each Balance Sheet date based on
developments during the year.
11. MPAIRMENT OF ASSETS
Fixed Assets are reviewed for impairment whenever events or changes in
circumstances warrant that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net
discounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment, to be recognized,
is measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
12. EARNINGS PER SHARE
The Bank reports basic and diluted earnings per share in accordance
with AS 20 Â ''Earnings per Share''. Basic earnings per share computed by
dividing the net profit after tax and dividend on preferential shares
by weighted average number of equity shares outstanding for the year.
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.
13. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
In conformity with AS 29, "Provisions, Contingent Liabilities and
Contingent Assets" issued in this regard 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.
Contingent Assets are not recognised in the financial statements as
this may result in the recognition of income that may never be
realized.
Mar 31, 2013
1. GENERAL
The financial statements are prepared under ''going concern''concept on
historical cost basis, except as otherwise stated, and conform to
Generally Accepted Accounting Principles (GAAP) in India, the
prevailing practices and statutory provisions including directives of
Reserve Bank of India (RBI).
2. EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
2.1 FOREIGN CURRENCY TRANSACTIONS
i) Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of transaction.
Foreign currency monetary items are reported using the Foreign Exchange
Dealers Association of India (FEDAI) closing spot rate.
iii) Foreign currency non-monetary items, which are carried in terms at
historical cost, are reported using the exchange rate at the date of
the transaction.
iv) Liabilities denominated in foreign currency are reported using the
FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at
rates different from those at which they were initially recorded are
recognised as income or as expense in the period in which they arise.
vi) Outstanding foreign exchange contracts and bills are revalued as
per FEDAI Rates and the resultant gain/loss is taken to revenue at the
end of each month.
2.2. FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been
classified as Non-integral Operations.
Translation
i) Both monetary and non-monetary foreign currency assets and
liabilities including contingent liabilities of non-integral foreign
operations are translated at closing exchange rates notified by FEDAI
at the balance sheet date.
ii) Income and expenditure of non-integral foreign operations are
translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral
foreign operations are accumulated in Foreign Currency Translation
Reserve until the disposal of the net investment.
3. INVESTMENTS
3.1 Investments are classified into three categories viz. Held to
Maturity, Available for Sale and Held for Trading and are further
classified into Investments in Government Securities, Other Approved
Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures
and Others.
3.2 Investments classified as Held to Maturity are carried at cost.
Wherever the cost is higher than the face value, the premium is
amortised over the remaining period of maturity as per effective
interest rate method. Profit on sale is initially taken to Profit and
Loss Account and then appropriated to Capital Reserve Account net of
taxes and amount required to be transferred to Statutory Reserve. Loss
on sale is charged to the Profit and Loss Account.
(ii) investments classified as Available for Sale, are marked to
market. Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
(iii) Investments classified as Held for Trading are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
3.3 In respect of securities, included in any of the above three
categories where interest/ principal is in arrears for more than 90
days, income is not recognized and appropriate provision on the value
of such Investments is made as per prudential norms.
3.4 Investments in Regional Rural Banks, Commercial Papers and Treasury
Bills are valued at carrying cost.
3.5 In respect of traded/quoted Investments, Market price is taken from
the quotes available in the stock exchanges. Government securities are
valued at Market price or price declared by Primary Dealers Association
of India (PDAI) jointly with Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
3.6 period interest paid / received on debt instruments is treated as
interest expense/income and is excluded from cost/sale consideration.
3.7 Security receipts issued by securitisation / reconstruction company
(SC/RC) in respect of financial assets sold by the Bank to the SC/RC
are valued at the lower of the redemption value of the security receipt
and the Net Book Value of the financial assets. The Investment is
carried in the books at the price determined as above and the sale /
realization if any, is reduced from Investment and the net book value
is shown. value, classification and other norms applicable to
investment in non-SLR Investments prescribed by RBI are applied to
Bank''s investment in Security Receipts issued by SC/RC.
4. INTEREST RATE SWAPS
4.1 The Interest Rate Swap transactions undertaken for hedging are
accounted for on accrual basis and transactions for trading are marked
to market and net depreciation, if any, is provided for, whereas
appreciation if any is ignored.
4.2 Gain or loss on terminated interest rate swap transactions
undertaken for hedging is deferred and recognized over the shorter of
the remaining contractual life of the swap or remaining life of the
asset or liability.
4.3 Income and expenses relating to the trading swaps are recognized on
the settlement date.
4.4 Gain or losses on the termination of the trading swaps are recorded
as income or expense immediately.
5. FOREIGN EXCHANGE CONTRACTS
Outstanding forward exchange contracts are revalued every month as per
month end FEDAI rates applicable based on maturity date of the forward
contracts and the resultant gain/loss is taken to profit and loss at
the end of the each month.
6. WADVANCES
6.1 Loans and advances are classified as performing and non-performing
based on the guidelines issued by the RBI. Non-Performing advances in
India are ascertained as per the Prudential Norms and provisions are
made upon classifying the same into ''Sub- Standard'', ''Doubtful''
and ''Loss''assets after considering the claims Received/Receivable
from ECGC and advances are stated after netting of provisions.
6.2 Provision on Non-performing advances of foreign branches is made on
the basis of local requirements or RBI guidelines whichever is higher.
6.3 A general provision on Standard Assets is made on global portfolio
basis.
6.4 In respect of Central Government Guarantees invoked and suit filed
by the bank, wherever the Government does not repudiate, the dues are
considered good.
6.5 In respect of Compromise and Settlement Proposals, write-off is
done on complete realisation.
6.6 Partial prudential write off of accounts is done upto unsecured
portion level on a case to case basis on approval by the Competent
Authority.
7. FIXED ASSETS
7.1 Fixed assets are stated at historical cost/revalued amount less
accumulated depreciation. Surplus arising on revaluation is credited to
Revaluation Reserve.
7.2 Advance payments/part payments made towards acquisition of fixed
assets are included under other Assets.
7.3 Depreciation on Premises (including cost of land wherever
inseparable/not segregated) and other fixed assets (excepting computers
including software and AC machine, Aquaguard, Refrigerator,
Photo-copying machine, Fax machine, etc.) in India is provided on
written down value method at the rates prescribed in Schedule XIV to
the Companies Act, 1956. Depreciation on computers including software
is provided at the rate of 33.33% on Straight Line Method in terms of
RBI guidelines and on AC machine, Aquaguard, Refrigerator,
Photo-copying machine, Fax machine, etc. is provided at the rate of 20%
on Written Down Value (WDV) Method. Depreciation is provided at full
rate on additions made upto 30th September and at half the rate on
additions made thereafter.
7.5 Additional depreciation arising out of revaluation is set
off against Revaluation Reserve.
7.6 In respect of leasehold properties, the lease premium is amortized
over the period of the lease.
7.7 Fixed Assets items of small value, costing of Rs.1000/- or less
each, are charged off fully in the same quarter of purchase and items,
costing Rs.1001/- to Rs.5000/- each, are depreciated at the rate of
100% in the same quarter of purchase.
8. EMPLOYEE BENEFITS
8.1 The short-term employee benefits, such as medical benefits, casual
leave etc. which are paid/credited in exchange for the services
rendered by employees are recognised during the 12 month period when
the employee renders the service.
8.2 Long Term Employee Benefits Post Employment Benefits
A) Defined Contribution Plan
Defined Contribution Plan Contribution to Defined Contribution Schemes
such as Provident Fund etc., are charged to the Profit & Loss Account
as and when incurred. In respect of certain employees who have not
opted for Pension Benefits, Provident Fund Contributions are made to a
Trust administered by the Bank.
B) Defined Benefit Plan
The bank operates gratuity and pension schemes which are defined
benefit plans.
Bank provides for gratuity to all eligible employees. The benefit is in
the form of lump sum/one time payment to vested employees on
retirement, on death while in employment, or on termination of
employment, for an amount equivalent to i) 15 days salary (Basic DA)
payable for each completed year of service, subject to a maximum amount
of Rs.10,00,000 or ii) 15 days salary (Basic only) for each completed
year of service, whichever is higher. Vesting occurs upon completion of
five years/ ten years (as applicable) of service. The Bank makes annual
contributions to a fund administered by Trustees based on an
independent external actuarial valuation carried out at regular
intervals.
The Bank provides for pension to all eligible employees. The benefit is
in the form of monthly payments as per rules and regular payments to
vested employees on retirement, on death while in employment, or on
termination of employment as provided under regulation. Vesting occurs
at different stages as per rules. The Bank makes additional annual
contributions to funds administered by trustees based on an independent
external actuarial valuation carried out at regular intervals besides
monthly contribution @ 10% of pay per month.
The cost of providing defined benefits is determined by actuarial
valuation using the projected unit credit method which is normally
carried out at each balance sheet date. Net liabilities are immediately
recognised in the statement of profit and loss and are not deferred.
All eligible employees of the bank are entitled to compensated
absences; leave travel concession. The costs of such long term employee
benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by
actuarial valuation using the projected unit credit method which is
normally carried out at each balance sheet date. Past service cost is
immediately recognised in the statement of profit and loss and is not
deferred.
Medical benefits are extended to full time Directors, after their
retirement as post retirement medical benefits. The cost is ascertained
and determined by actuarial valuation using the projected unit credit
method and such valuation is carried out at balance sheet date for
retired as well as in service full time Directors. The liability is
immediately recognized in the statement of profit & loss and not
deferred.
In accordance with the guidelines given by Reserve Bank of India vide
its Circular No. DB0D.BP.BC.80/21.04.018/2010-11 dated 09.02.2011 on
"Re-opening of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits - Prudential Regulatory Treatment",
Bank has decided to amortize the additional liability on account of -
Re-opening of pension option for existing employees who did not opt for
pension earlier; and Payment of gratuity to existing employees as per
the enhanced limit of Rs.10.00 lakh (increased from Rs. 3.50 lakh)
pursuant to the amendment of the Payment of Gratuity Act, 1972, as
an expense on a straight line basis over a period of five years
from the financial year 2010 -11.
9. REVENUE RECOGNITION
9.1 Items of Income and Expenditure are accounted for on accrual basis,
except as otherwise stated.
9.2 Income for the following items are recognised on realization basis:
a) Interest on usuance bill.
10. TAXES ON INCOME
Current tax is determined on the amount of tax payable in respect of
taxable income for the year and accordingly provision for tax is made
including Minimum Alternate Tax (MAT).
The deferred tax asset or liability is recognised using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date, in terms of notified Accounting Standard 22. Deferred Tax
Assets/Liabilities are reviewed at each Balance Sheet date based on
developments during the year.
11. IMPAIRMENT OF ASSETS
Fixed Assets are reviewed for impairment whenever events or changes in
circumstances warrant that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net
discounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognised
is measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
12. EARNINGS PER SHARE
The Bank reports basic and diluted earnings per share in accordance
with AS 20 - ''Earnings per Share''. Basic earnings per share
computed by dividing the net profit after tax and dividend on
preferential shares by weighted average number of equity shares
outstanding for the year.
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.
13. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
ASSETS
In conformity with AS 29, "Provisions, Contingent Liabilities and
Contingent Assets" issued in this regard 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.
Assets are not recognised in the financial statements as this may
result in the recognition of income that may never be realized.
Mar 31, 2012
1. GENERAL
1.1 The financial statements are prepared under going concern'
concept on historical cost basis, except as otherwise stated, and
conform to Generally Accepted Accounting Principles (GAAP) in India,
the prevailing practices and statutory provisions including
directives of Reserve Bank of India (RBI).
2. ET IPTR / EFFECT OF CHANGES IN FOREIGN EXCHANGE RAT
FOREIGN CURRENCY TRANSACTIONS
i) Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of transaction.
ii) Foreign currency non-monetary items, which are carried in terms at
historical cost, are reported using the exchange rate at the date of
the transaction.
iii) Foreign currency non-monetary items, which are carried in items at
historical cost, are reported using the exchange rate at the date of
the transaction.
iv) Contingent Liabilities denominated in foreign currency are reported
using the FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at
rates different from those at which they were initially recorded are
recognized as income or as expense in the period in which they arise.
vi) Outstanding foreign exchange contracts and bills are revalued as
per FEDAI Rates and the resultant gain/loss is taken to revenue at the
end of each month.
2.1.FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been
classified as Non-integral Operations.
Translation
i)Both monetary and non-monetary foreign currency assets and
liabilities including contingent liabilities of non-integral foreign
operations are translated at closing exchange rates notified by FEDAI
at the balance sheet date.
ii) Income and expenditure of non-integral foreign operations are
translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral
foreign operations are accumulated in Foreign Currency Translation
Reserve until the disposal of the net investment.
3.INVESTMENTS
3.1 Investments are classified into three categories viz. Held to
Maturity, Available for Sale and Held for Trading and are further
classified into Investments in Government Securities, Other Approved
Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures
and Others.
3.2 (i) Investments classified as Held to Maturity are carried at cost.
Wherever the cost is higher than the face value, the premium is
amortized over the remaining period of maturity as per effective
interest rate method. Profit on sale is initially taken to Profit and
Loss Account and then appropriated to Capital Reserve Account net of
taxes. Loss on sale is charged to the Profit and Loss Account.
(iii) Investments classified as Available for Sale, are marked to
market. Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation
in respect of any classification is ignored. These investments are
shown, net of depreciation, in the Balance Sheet.
(iii) Investments classified as Held for Trading are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
3.3 In respect of securities, included in any of the above three
categories where interest/ principal is in arrears for more than 90
days, income is not recognized and appropriate provision on the value
of such Investments is made as per prudential norms.
3.4 Investments in Regional Rural Banks, Commercial Papers and Treasury
Bills are valued at carrying cost.
3.5 In respect of traded/quoted Investments, Market price is taken from
the quotes available in the stock exchanges. Government securities are
valued at Market price or price declared by Primary Dealers Association
of India (PDAI) jointly with Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
3.6 Broken period interest paid / received on debt instruments is
treated as interest expense/income and is excluded from cost/ sale
consideration.
3.7 Security receipts issued by securitization / reconstruction company
(SC/RC) in respect of financial assets sold by the Bank to the SC/RC
are valued at the lower of the redemption value of the security receipt
and the Net Book Value of the financial assets. The Investment is
carried in the books at the price determined as above and the sale /
realization if any, is reduced from Investment and the net book value
is shown.
The value, classification and other norms applicable to investment in
non-SLR Investments prescribed by RBI are applied to Bank's investment
in Security Receipts issued by SC/RC.
4.INTEREST RATE SWAPS
4.1 The Interest Rate Swap transactions undertaken for hedging are
accounted for on accrual basis and transactions for trading are marked
to market and net depreciation, if any, is provided for, whereas
appreciation if any is ignored.
4.2 Gain or loss on terminated interest rate swap transactions
undertaken for hedging is deferred and recognized over the shorter of
the remaining contractual life of the swap or remaining life of the
asset or liability.
4.3 Income and expenses relating to the trading swaps are
recognized on the settlement date.
4.4 Gain or losses on the termination of the trading swaps are recorded
as income or expense immediately.
5. FOREIGN EXCHANGE CONTRACTS
Outstanding forward exchange contracts are revalued every month as per
month end FEDAI rates applicable based on maturity date of the
forward contracts and the resultant gain/loss is taken to profit and
loss at the end of the each month.
6. WADVANCES
6.1 Loans and advances are classified as performing and non-performing
based on the guidelines issued by the RBI. Non-Per- forming advances in
India are ascertained as per the Prudential Norms and provisions are
made upon classifying the same into Sub-Standard', Doubtful' and Loss'
assets after considering the claims Received/Receivable from ECGC and
advances are stated after netting of provisions.
6.2 Provision on Non-performing advances of foreign branches is made on
the basis of local requirements or RBI guidelines whichever is higher.
6.3 A general provision on Standard Assets is made on global portfolio
basis.
6.4 In respect of Central Government Guarantees invoked and suit filed
by the bank, wherever the Government does not repudiate, the dues are
considered good.
6.5 In respect of Compromise and Settlement Proposals, write-off is
done on complete realization.
6.6 Partial prudential write off of accounts is done up to unsecured
portion level on a case to case basis on approval by the Competent
Authority.
7. FIXED ASSETS
7.1 Fixed assets are stated at historical cost/revalued amount less
accumulated depreciation. Surplus arising on revaluation is credited to
Revaluation Reserve.
7.2 Advance payments/part payments made towards acquisition of fixed
assets are included under other Assets.
7.3 Depreciation on Premises (including cost of land wherever
inseparable/not segregated) and other fixed assets (excluding
computers) in India is provided on written down value method at the
rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on computers is provided at the rate of 33.33% on Straight
Line Method in terms of RBI guidelines. Depreciation is provided at
full rate on additions made up to 30th September and at half the rate on
additions made thereafter.
7.4 Depreciation in respect of fixed assets situated outside India is
provided on straight line/written down value method as per the local
laws of respective country.
7.5 Additional depreciation arising out of revaluation is set off
against Revaluation Reserve.
7.6 In respect of leasehold properties, the lease premium is amortized
over the period of the lease.
8. EMPLOYEE BENEFITS
8.1 Short Term Employee Benefits
The short-term employee benefits, such as medical benefits, casual
leave etc. which are paid/credited in exchange for the services
rendered by employees are recognized during the 12 month period when
the employee renders the service.
8.2 Long Term Employee Benefits
Post Employment Benefits
Defined Contribution Plan
Contribution to Defined Contribution Schemes such as Provident Fund
etc., are charged to the Profit & Loss Account as and when incurred. In
respect of certain employees who have not opted for Pension Benefits,
Provident Fund Contributions are made to a Trust administered by the
Bank.
Defined Benefit Plan
a. The bank operates gratuity and pension schemes which are defined
benefit plans.
b. The Bank provides for gratuity to all eligible employees. The
benefit is in the form of lump sum/one time payment to vested employees
on retirement, on death while in employment, or on termination of
employment, for an amount equivalent to i) 15 days salary (Basic DA)
payable for each completed year of service, subject to a maximum amount
of Rs.10,00,000 or ii) 15 days salary (Basic only) for each completed
year of service ,whichever is higher. Vesting occurs upon completion of
five years/ ten years (as applicable) of service. The Bank makes annual
contributions to a fund administered by Trustees based on an
independent external actuarial valuation carried out at regular
intervals.
c. The Bank provides for pension to all eligible employees. The
benefit is in the form of monthly payments as per rules and regular
payments to vested employees on retirement, on death while in
employment, or on termination of employment as provided under
regulation. Vesting occurs at different stages as per rules. The Bank
makes additional annual contributions to funds administered by trustees
based on an independent external actuarial valuation carried out at
regular intervals besides monthly contribution @ 10% of pay per month.
d. The cost of providing defined benefits is determined by actuarial
valuation using the projected unit credit method which is normally
carried out at each balance sheet date. Net liabilities are immediately
recognized in the statement of profit and loss and are not deferred.
(C) All eligible employees of the bank are entitled to compensated
absences; leave travel concession. The costs of such long term employee
benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by
actuarial valuation using the projected unit credit method which is
normally carried out at each balance sheet date. Past service cost is
immediately recognized in the statement of profit and loss and is not
deferred.
Medical benefits are extended to full time Directors, after their
retirement as post retirement medical benefits. The cost is ascertained
and determined by actuarial valuation using the projected unit credit
method and such valuation is carried out at balance sheet date for
retired as well as in service full time Directors. The liability is
immediately recognized in the statement of profit & loss and not
deferred
In terms of Limited Revision to AS-15 Employee Benefits (Revised 2005)
and guidance note thereon, the Bank has decided to amortize the
increase in transitional liability over the liability that could have
been recognized as per the pre revised AS-15 as on 31.03.2007 in
respect of long term employee benefits like Pension, Gratuity, Leave
Encashment, Sick Leave, LFC/LTC, etc., as an expense on a straight-line
basis over 5 years from financial year 2007-08.
In accordance with the guidelines given by Reserve Bank of India vide
its Circular No. DBOD.BP.BC.80/21.04.018/2010-11 dated 09.02.2011 on
"Re-opening of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits - Prudential Regulatory Treatment,
Bank has decided to amortize the additional liability on account of -
Re-opening of pension option for existing employees who did not opt for
pension earlier; and Payment of gratuity to existing employees as per
the enhanced limit of Rs 10.00 lakhs (increased from Rs 3.50 lakhs)
pursuant to the amendment of the Payment of Gratuity Act, 1972, as an
expense on a straight line basis over a period of five years from the
financial year 2010 -11.
9. REVENUE RECOGNITION
9.1 Items of Income and Expenditure are accounted for on accrual basis,
except as otherwise stated.
9.2 Income for the following items are recognized on realization basis:
Income from non-performing assets in terms of RBI guidelines.
Commission earned on Letter of Credit and Guarantees issued.
10.TAXES ON INCOME
Current tax is determined on the amount of tax payable in respect of
taxable income for the year and accordingly provision for tax is made
including Minimum Alternate Tax (MAT).
The deferred tax asset or liability is recognized using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date, in terms of notified Accounting Standard 22. Deferred Tax
Assets/Liabilities are reviewed at each Balance Sheet date based on
developments during the year.
11.IMPAIRMENT OF ASSETANCE
Fixed Assets are reviewed for impairment whenever events or changes in
circumstances warrant that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net
discounted cash flows expected to be generated by the asset. If such
assts are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
11 EARNINGS PER SHARE
The Bank reports basic and diluted earnings per share in accordance
with AS 20 - Earnings per Share'. Basic earnings per share computed
by dividing the net profit after tax and dividend on preferential
shares by weighted average number of equity shares outstanding for the
year.
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.
12. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
ASSETS
In conformity with AS 29, Provisions, Contingent Liabilities and
Contingent Assets issued in this regard by the ICAI, the Bank
recognizes 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.
Contingent Assets are not recognized in the financial statements as
this may result in the recognition of income that may never be
realized.
Mar 31, 2011
1.GENERAL
1.1 The financial statements are prepared under going concern concept
on historical cost basis, except as otherwise stated, and conform to
Generally Accepted Accounting Principles (GAAP) in India, the
prevailing practices and statutory provisions including directives of
Reserve Bank of India (RBI).
2.EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
2.1 FOREIGN CURRENCY TRANSACTIONS
i)Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of transaction.
ii) Foreign currency monetary items are reported using the Foreign
Exchange Dealers Association of India (FEDAI) closing spot rate.
iii) Foreign currency non-monetary items, which are carried in terms at
historical cost, are reported using the exchange rate at the date of
the transaction.
iv) Contingent Liabilities denominated in foreign currency are reported
using the FEDAI closing spot rates.
v) Exchange differences arising on settlement of monetary items at
rates different from those at which they were initially recorded are
recognised as income or as expense in the period in which they arise.
vi) Outstanding foreign exchange contracts and bills are revalued as
per FEDAI Rates and the resultant gain/loss is taken to revenue at the
end of each month.
2.2 FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been
classified as Non-integral Operations.
Translation
i) Both monetary and non-monetary foreign currency assets and
liabilities including contingent liabilities of non-integral foreign
operations are translated at closing exchange rates notified by FEDAI
at the balance sheet date.
ii) Income and expenditure of non-integral foreign operations are
translated at quarterly average closing rates.
iii) Exchange differences arising on net investment in non-integral
foreign operations are accumulated in Foreign Currency Translation
Reserve until the disposal of the net investment.
3. INVESTMENTS
3.1 Investments are classified into three categories viz. Held to
Maturity, Available for Sale and Held for Trading and are further
classified into Investments in Government Securities, Other Approved
Securities, Shares, Debentures & Bonds, Subsidiaries and Joint Ventures
and Others.
3.2 (i) Investments classified as Held to Maturity are carried at cost.
Wherever the cost is higher than the face value, the premium is
amortised over the remaining period of maturity as per effective
interest rate method. Profit on sale is initially taken to Profit and
Loss Account and then appropriated to Capital Reserve Account net of
taxes. Loss on sale is charged to the Profit and Loss Account.
(ii) Investments classified as Available for Sale, are marked to
market. Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
(iii) Investments classified as Held for Trading are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These investments are shown,
net of depreciation, in the Balance Sheet.
3.3 In respect of securities, included in any of the above three
categories where interest/ principal is in arrears for more than 90
days, income is not recognized and appropriate provision on the value
of such Investments is made as per prudential norms.
3.4 Investments in Regional Rural Banks, Commercial Papers and Treasury
Bills are valued at carrying cost.
3.5 In respect of traded/quoted Investments, Market price is taken from
the quotes available in the stock exchanges. Government securities are
valued at Market price or price declared by Primary Dealers Association
of India (PDAI) jointly with Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
3.6 Broken period interest paid / received on debt instruments is
treated as interest expense/income and is excluded from cost/sale
consideration.
3.7 Security receipts issued by securitisation / reconstruction company
(SC/RC) in respect of financial assets sold by the Bank to the SC/RC
are valued at the lower of the redemption value of the security receipt
and the Net Book Value of the financial assets. The Investment is
carried in the books at the price determined as above and the sale /
realization if any, is reduced from Investment and the net book value
is shown.
4. INTEREST RATE SWAPS
4.1 The Interest Rate Swap transactions undertaken for hedging are
accounted for on accrual basis and transactions for trading are marked
to market and net depreciation, if any, is provided for, whereas
appreciation if any is ignored.
4.2 Gain or loss on terminated interest rate swap transactions
undertaken for hedging is deferred and recognized over the shorter of
the remaining contractual life of the swap or remaining life of the
asset or liability.
4.3 Income and expenses relating to the trading swaps are recognized on
the settlement date.
4.4 Gain or losses on the termination of the trading swaps are recorded
as income or expense immediately.
5. FOREIGN EXCHANGE CONTRACTS
Outstanding forward exchange contracts are revalued every month as per
month end FEDAI rates applicable based on maturity date of the forward
contracts and the resultant gain/loss is taken to profit and loss at
the end of the each month.
6. ADVANCES
6.1 Loans and advances are classified as performing and non-performing
based on the guidelines issued by the RBI. Non-Performing advances in
India are ascertained as per the Prudential Norms and provisions are
made upon classifying the same into Sub-
Standard, Doubtful and Loss assets after considering the claims
Received/Receivable from ECGC and advances are stated after netting of
provisions.
6.2 Provision on Non-performing advances of foreign branches is made on
the basis of local requirements or RBI guidelines whichever is higher.
6.3 A general provision on Standard Assets is made on global portfolio
basis.
6.4 In respect of Central Government Guarantees invoked and suit filed
by the bank, wherever the Government does not repudiate, the dues are
considered good.
6.5 In respect of Compromise and Settlement Proposals, write-off is
done on complete realisation.
6.6 Partial prudential write off of accounts is done upto unsecured
portion level on a case to case basis on approval by the Competent
Authority.
7. FIXED ASSETS
7.1 Fixed assets are stated at historical cost/revalued amount less
accumulated depreciation. Surplus arising on revaluation is credited to
Revaluation Reserve.
7.2 Advance payments/part payments made towards acquisition of fixed
assets are included under other Assets.
7.3 Depreciation on Premises (including cost of land wherever
inseparable/not segregated) and other fixed assets (excluding
computers) in India is provided on written down value method at the
rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on computers is provided at the rate of 33.33% on Straight
Line Method in terms of RBI guidelines. Depreciation is provided at
full rate on additions made upto 30th September and at half the rate on
additions made thereafter.
7.4 Depreciation in respect of fixed assets situated outside India is
provided on straight line/written down value method as per the local
laws of respective country.
7.5 Additional depreciation arising out of revaluation is set off
against Revaluation Reserve.
7.6 In respect of leasehold properties, the lease premium is amortized
over the period of the lease.
8. EMPLOYEE BENEFITS
8.1 Short Term Employee Benefits
The short-term employee benefits, such as medical benefits, casual
leave etc. which are paid/credited in exchange for the services
rendered by employees are recognised during the 12 month period when
the employee renders the service.
8.2 Long Term Employee Benefits
Post Employment Benefits
A) Defined Contribution Plan
Contribution to Defined Contribution Schemes such as Provident Fund
etc., are charged to the Profit & Loss Account as and when incurred. In
respect of certain employees who have not opted for Pension Benefits,
Provident Fund Contributions are made to a Trust administered by the
Bank.
B) Defined Benefit Plan
a. The bank operates gratuity and pension schemes which are defined
benefit plans.
b. The Bank provides for gratuity to all eligible employees. The
benefit is in the form of lump sum/one time payment to vested employees
on retirement, on death while in employment, or on termination of
employment, for an amount equivalent to i) 15 days salary (Basic+DA)
payable for each completed year of service, subject to a maximum amount
of Rs.10,00,000 or ii) 15 days salary (Basic only) for each completed
year of service ,whichever is higher. Vesting occurs upon completion of
five years/ ten years (as applicable) of service. The Bank makes annual
contributions to a fund administered by Trustees based on an
independent external actuarial valuation carried out at regular
intervals.
c. The Bank provides for pension to all eligible employees. The benefit
is in the form of monthly payments as per rules and regular payments to
vested employees on retirement, on death while in employment, or on
termination of employment as provided under regulation. Vesting occurs
at different stages as per rules. The Bank makes additional annual
contributions to funds administered by trustees based on an independent
external actuarial valuation carried out at regular intervals besides
monthly contribution @ 10% of pay per month.
d. The cost of providing defined benefits is determined by actuarial
valuation using the projected unit credit method which is normally
carried out at each balance sheet date. Net liabilities are immediately
recognised in the statement of profit and loss and are not deferred.
C) Other Long Term Employee benefits
a. All eligible employees of the bank are entitled to compensated
absences; leave travel concession. The costs of such long term employee
benefits are internally funded by the Bank.
b. The cost of providing these other long term benefits is determined
by actuarial valuation using the projected unit credit method which is
normally carried out at each balance sheet date. Past service cost is
immediately recognised in the statement of profit and loss and is not
deferred.
c. Medical benefits are extended to full time Directors, after their
retirement as post retirement medical benefits. The cost is ascertained
and determined by actuarial valuation using the projected unit credit
method and such valuation is carried out at balance sheet date for
retired as well as in service full time Directors. The liability is
immediately recognized in the statement of profit & loss and not
deferred.
In terms of Limited Revision to AS-15 Employee Benefits (Revised 2005)
and guidance note thereon, the Bank has decided to amortise the
increase in transitional liability over the liability that could have
been recognised as per the pre revised AS-15 as on 31.03.2007 in
respect of long term employee benefits like Pension, Gratuity, Leave
Encashment, Sick Leave, LFC/LTC, etc., as an expense on a straight-line
basis over 5 years from financial year 2007-08.
In accordance with the guidelines given by Reserve Bank of India vide
its Circular No. DBOD.BP.BC.80/21.04.018/2010- 11 dated 09.02.2011 on
"Re-opening of Pension Option to Employees of Public Sector Banks and
Enhancement in Gratuity Limits à Prudential Regulatory Treatment", Bank
has decided to amortize the additional liability on account of Ã
a) Re-opening of pension option for existing employees who did not opt
for pension earlier; and
b) Payment of gratuity to existing employees as per the enhanced limit
of Rs. 10.00 lakhs (increased from Rs. 3.50 lakhs)
pursuant to the amendment of the Payment of Gratuity Act, 1972, as an
expense on a straight line basis over a period of five years from the
financial year 2010 -11.
9. REVENUE RECOGNITION
9.1 Items of Income and Expenditure are accounted for on accrual basis,
except as otherwise stated.
9.2 Income for the following items are recognised on realization basis:
a) Income from non-performing assets in terms of RBI guidelines.
b) Commission earned on Letter of Credit and Guarantees issued.
10. TAXES ON INCOME
Current tax is determined on the amount of tax payable in respect of
taxable income for the year and accordingly provision for tax is made
including Minimum Alternate Tax (MAT).
The deferred tax asset or liability is recognised using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date, in terms of notified Accounting Standard 22. Deferred Tax
Assets/Liabilities are reviewed at each Balance Sheet date based on
developments during the year.
11. IMPAIRMENT OF ASSETS
Fixed Assets are reviewed for impairment whenever events or changes in
circumstances warrant that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net
discounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognised
is measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
12. EARNINGS PER SHARE
The Bank reports basic and diluted earnings per share in accordance
with AS 20 Ã Earnings per Share. Basic earnings per share computed by
dividing the net profit after tax and dividend on preferential shares
by weighted average number of equity shares outstanding for the year.
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.
13. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
ASSETS
In conformity with AS 29, "Provisions, Contingent Liabilities and
Contingent Assets" issued in this regard 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.
Contingent Assets are not recognised in the financial statements as
this may result in the recognition of income that may never be
realized.
Mar 31, 2010
GENERAL
The financial statements are prepared under going concern concept on
historical cost basis, except as otherwise stated, and conform to
Generally Accepted Accounting Principles (GAAP) in India, the
prevailing practices and statutory provisions including prevailing
Practices and statutory provision including directives of Reserve Bank
of India (RBI).
EFFECT OF CHANGES IN FOREIGN EXCHANGE RATE
FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the date of transaction.
Foreign currency monetary items are reported using the Foreign Exchange
Dealers Association of India (FEDAI) closing spot rate.
Foreign currency non-monetary items, which are carried in terms at
historical cost, are reported using the exchange rate at the date of
the transaction.
Contingent Liabilities denominated in foreign currency are reported
using the FEDAI closing spot rates.
Exchange differences arising on settlement of monetary items at rates
different from those at which they were initially recorded are
recognised as income or as expense in the period in which they arise.
Outstanding foreign exchange contracts and bills are revalued as per
FEDAI Rates and the resultant gain/loss is taken to revenue
FOREIGN OPERATIONS
Foreign Branches and representative offices of the Bank have been
classified as Non-integral Operations. Translation
Both monetary and non-monetary foreign currency assets and liabilities
including contingent liabilities of non-integral foreign operations are
translated at closing exchange rates notified by FEDAI at the balance
sheet date.
Income and expenditure of non-integral foreign operations are
translated at quarterly average closing rates.
Exchange differences arising on net investment in non-integral foreign
operations are accumulated in Foreign Currency Translation Reserve
until the disposal of the net investment.
INVESTMENTS
Investments are classified into three categories viz. Held to Maturity,
Available for Sale and Held for Trading and are further grouped into
Investments in Government Securities, Other Approved Securities,
Shares, Debentures & Bonds, Subsidiaries and Joint Ventures and Others.
Investments classified as Held to Maturity are carried at cost.
Wherever the cost is higher than the face value, the premium is
amortised over the remaining period of maturity as per effective
interest rate method. Profit on sale is initially taken to Profit &
Loss Account and then appropriated to Capital Reserve Account. Loss on
sale is charged to the Profit & Loss Account.
Investments classified as Available for Sale, are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each
classification is charged to Profit & Loss Account, net appreciation in
respect of any classification is ignored. These instruments are shown,
net of depreciation, in the Balance Sheet.
Investments classified as Held for Trading are marked to market.
Scrip-wise appreciation/depreciation is aggregated for each
classification. While net depreciation in respect of each classification
is charged to Profit & Loss Account, net appreciation in respect of any
classification is ignored. These instruments are shown, net of
depreciation, in the Balance Sheet.
In respect of securities, included in any of the above three categories
where interest/ principal is in arrears for more than 90 days, income
is not recognized and appropriate provision on the value of such
Investments is made as per prudential norms.
In respect of traded/quoted Investments, Market price is taken from the
quotes available in the stock exchanges. Government securities are
valued at Market price or price declared by Primary Dealers Association
of India (PDAI) jointly with Fixed Income Money Market and Derivatives
Association of India (FIMMDA).
Broken period interest paid / received on debt instruments is treated
as interest expense/income and is excluded from cost/sale
consideration.
Security receipts issued by securitisation / reconstruction company
(SC/RC) in respect of financial assets sold by the Bank to the SC/ RC
are valued at the lower of the redemption value of the security receipt
and the Net Book Value of the financial assets. The Investment is
carried in the books at the price determined as above and the sale /
realization if any, is reduced from Investment and the net book value
is shown.
The value, classification and other norms applicable to investment in
non-SLR Investments prescribed by RBI are applied to Banks investment
in Security Receipts issued by SC/RC.
INTEREST RATE SWAPS
The Interest Rate Swap transactions undertaken for hedging are
accounted for on accrual basis and transactions for trading are marked
to market and net depreciation, if any, is provided for, whereas
appreciation if any is ignored.
Gain or loss on terminated interest rate swap transactions undertaken
for hedging is deferred and recognized over the shorter of the
remaining contractual life of the swap or remaining life of the asset
or liability.
Income and expenses relating to the trading swaps are recognized on the
settlement date.
Gain or losses on the termination of the trading swaps are recorded as
income or expense immediately.
FOREIGN EXCHANGE CONTRACTS
Outstanding foreign exchange contracts are revalued as per FEDAI rates
and the resultant gain/loss is taken to revenue .at the end of each
month.
ADVANCES
Loans and advances are classified as performing and non-performing
based on the guidelines issued by the RBI. Non-Performing advances in
India are ascertained as per the Prudential Norms and provisions are
made upon classifying the same into Sub- Standard, Doubtful and
Loss assets after considering the claims Received/Receivable from
ECGC and advances are stated after netting of provisions.
Provision on Non-performing advances of foreign branches is made on the
basis of local requirements or RBI guidelines whichever is higher.
A general provision on Standard Assets is made on global portfolio
basis.
In respect of Central Government Guarantees invoked and suit filed by
the bank, wherever the Government does not repudiate, the dues are
considered good.
In respect of Compromise and Settlement Proposals, write-off is done on
complete realisation.
Partial prudential write off of accounts is done upto unsecured portion
level on a case to case basis on approval by the Competent Authority.
FIXED ASSETS
Fixed assets are stated at historical cost/revalued amount less
accumulated depreciation. Surplus arising on revaluation is credited to
Revaluation Reserve.
Advance payments/part payments made towards acquisition of fixed assets
are included under other Assets.
Depreciation on Premises (including cost of land wherever
inseparable/not segregated) and other fixed assets (excluding
computers) in India is provided on written down value method at the
rates prescribed in Schedule XIV to the Companies Act, 1 956.
Depreciation on computers is provided at the rate of 33.33% on Straight
Line Method in terms of RBI guidelines. Depreciation is provided at
full rate on additions made upto 30th September and at half the rate on
additions made thereafter.
Depreciation in respect of fixed assets situated outside India is
provided on straight line/written down value method as per the local
laws of respective country.
Additional depreciation arising out of revaluation is set off against
Revaluation Reserve.
In respect of leasehold properties, the lease premium is amortized over
the period of the lease.
The short-term employee benefits, such as medical benefits, casual
leave etc. which are paid/credited in exchange for the services
rendered by employees are recognised during the 1 2 month period when
the employee renders the service.
Defined Contribution Plan
Contribution to Defined Contribution Schemes such as Provident Fund
etc., are charged to the Profit & Loss Account as and when incurred. In
respect of certain employees who have not opted for Pension Benefits,
Provident Fund Contributions are made to a Trust administered bv the
Bank.
Defined Benefit Plan
a. The bank operates gratuity and pension schemes which are defined
benefit plans.
b. The Bank provides for gratuity to all eligible employees. The
benefit is in the form of lump sum/one time payment to vested employees
on retirement, on death while in employment, or on termination of
employment, for an amount equivalent to i) 15 days salary (Basic + DA)
payable for each completed year of service, subject to a maximum amount
of Rs.3,50,000 or ii) 1 5 days
salary (Basic only) for each completed year of service ,whichever is
higher. Vesting occurs upon completion of five years/ ten years (as
applicable) of service. The Bank makes annual contributions to a fund
administered by Trustees based on an independent external actuarial
valuation carried out at regular intervals.
c. The Bank provides for pension to all eligible employees. The benefit
is in the form of monthly payments as per rules and regular payments to
vested employees on retirement, on death while in employment, or on
termination of employment as provided under regulation. Vesting occurs
at different stages as per rules. The Bank makes additional annual
contributions to funds administered by trustees based on an independent
external actuarial valuation carried out at regular intervals besides
monthly contribution @ 1 0% of pay per month.
d. The cost of providing defined benefits is determined by actuarial
valuation using the projected unit credit method which is normally
carried out at each balance sheet date. Net liabilities are immediately
recognised in the statement of profit and loss and are not deferred.
All eligible employees of the bank are entitled to compensated
absences; leave travel concession. The costs of such long term employee
benefits are internally funded by the Bank.
The cost of providing these other long term benefits is determined by
actuarial valuation using the projected unit credit method which is
normally carried out at each balance sheet date. Past service cost is
immediately recognised in the statement of profit and loss and is not
deferred.
Medical benefits are extended to full time Directors, after their
retirement as post retirement medical benefits. The cost is ascertained
and determined by actuarial valuation using the projected unit credit
method and such valuation is carried out at balance sheet date for
retired as well as in service full time Directors. The liability is
immediately recognized in the statement of profit & loss and not
deferred.
In terms of Limited Revision to AS-15 Employee Benefits (Revised 2005)
and guidance note thereon, the Bank has decided to amortise the
increase in transitional liability over the liability that could have
been recognised as per the pre revised AS-1 5 as on 31.03.2007 in
respect of long term employee benefits like Pension, Gratuity, Leave
Encashment, Sick Leave, LFC/LTC, etc., as an expense on a straight-line
basis over 5 years from financial year 2007-08.
REVENUE RECOGNITION
Items of Income and Expenditure are accounted for on accrual basis,
except as otherwise stated.
Income for the following items are recognised on realisation basis:
TAXES ON INCOME
Current tax is determined on the amount of tax payable in respect of
taxable income for the year and accordingly provision for tax is made
including Minimum Alternate Tax (MAT).
The deferred tax asset or liability is recognised using the tax rates
that have been enacted or substantially enacted by the Balance Sheet
date, in terms of notified Accounting Standard 22. Deferred Tax
Assets/Liabilities are reviewed at each Balance Sheet date based on
developments during the year.
IMPAIRMENT OF ASSETS
Fixed Assets are reviewed for impairment whenever events or changes in
circumstances warrant that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net
discounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognised
is measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset.
EARNINGS PER SHARE
The Bank reports basic and diluted earnings per share in accordance
with AS 20 - Earnings per Share. Basic earnings per share computed by
dividing the net profit after tax and dividend on preferential shares
by weighted average number of equity shares outstanding for the year.
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.
ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
In conformity with AS 29, "Provisions, Contingent Liabilities and
Contingent Assets", 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.
Contingent Assets are not recognised in the financial statements as
this may result in therecognition of income that may never be
realised.