Mar 31, 2023
All figures are in ? Crore unless specifically stated, figures in brackets relate to previous year.
NOTES FORMING PART OF ACCOUNTS
The following information is disclosed in terms of guidelines issued by RBI:
1. Capital (As per BASEL-III):
The said computation of Capital to Risk weighted asset Ratio & Leverage ratio is arrived at after considering the effect of Net Present Value of non-interest bearing recapitalization bond infused as capital by the Government of India during the FY ended 31.03.2021.
Pursuant to RBI Circular No. DBR.No.BP.BC.83/21.06.201/2015-16 dated March 1, 2016, the Bank has considered revaluation reserve, foreign currency translation reserve and deferred tax assets in calculation of Capital Adequacy Ratios as on March 31, 2023.
*Includes ? 3,000 received from Government of India on March 31, 2021 towards preferential allotment of equity shares for which the Bank has issued and allotted 42,11,70,854 equity shares of ? 10 each fully paid up at an issue price of ? 71.23 per share on June 11, 2021. In terms of RBI communication reference no. DOR.CAP.S82/21.01/002/ 2021-22 dated April 30, 2021, the share application money of ? 3,000 has been considered for computation of CET 1 capital as on March 31, 2021.
* The Bank has raised Equity Share Capital of ? 2550.01 through Qualified Institutional Placement on August 31, 2021. The Bank has issued and allotted 40,54,71,866 equity shares of face value ? 10 each at a premium of ? 52.89 per share to the investors
Bank has redeemed Tier II Bonds Series XIII & Series XIV amounting to ? 1,500 & ? 1,000 by exercising call option on July 7, 2021 and March 25, 2022 respectively.
During the year ended March 31, 2023, there has been no drawdown from reserves to the Profit and Loss Account.
(a) Maturity pattern of certain items of assets and liabilities as on 31st March, 2023
Qualitative disclosures with regard to LCR
W.e.f. 1st January 2015, the Bank has implemented guidelines on Liquidity Coverage Ratio (LCR) as directed by Reserve Bank of India.
The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until next 30 calendar days under a severe liquidity stress scenario.
High Quality Liquid Assets (HQLA)
LCR =
Total net cash outflows over the next 30 calendar days
Here,
- HQLA comprises of level 1 and level 2 assets, in other words these are cash or near to cash items which can be easily used / discounted in the market in case of need.
- Net cash outflows are excess of total inflows over total outflows under stressed situation as defined by Basel / RBI. While arriving at the net cash outflow, the inflows are taken with pre-defined hair-cuts and the outflows are taken at pre-defined run-off factors.
- In case stressed inflows are more than the stressed outflows, 25% of total outflows shall be taken as total net cash outflows to arrive at the LCR.
- With effect from 01.01.2015, Banks are required to maintain minimum 60% LCR on an ongoing basis. The same shall reach 100% as on 01.01.2019 with incremental increase of 10% each year.
Main Drivers of LCR: The main drivers of the LCR are adequacy of High Quality Liquid Assets (HQLA) and lower net cash outflow on account of higher funding sources from retail customers. Sufficient stock of HQLA helped the Bank to maintain adequate LCR.
Composition of HQLA: The composition of High Quality Liquid Assets (HQLA) mainly consists of cash balances, excess SLR, excess CRR and FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).
Concentration of funding sources: Majority of Bank''s funding sources are from retail customers (about 60%) therefore the stressed outflows are comparatively lower. However, in absence of any non-callable option for term deposits, the Bank has considered almost all deposits under outflow section as per RBI guidelines. Bank also does not have funding concentration from any significant counterparty. A significant counterparty is defined as a single counterparty or group of connected or affiliated counter parties accounting in aggregate for more than 1% of the bank''s total liabilities.
Derivative Exposures and potential collateral calls: Bank has very little exposure in derivative business which is not very significant.
Currency mismatch in the LCR: In terms of RBI guidelines, a significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank''s total liabilities.
Description of the degree of centralization of liquidity management and interaction between the group''s units:
The liquidity management of the Bank at enterprise level is a Board level function and a separate sub-committee of the Board (R.Com.) keeps close watch on that. The periodical monitoring of the liquidity management is being monitored by the ALCO on regular intervals. The entire liquidity management process of the Bank is being governed by ALM Policy of the Bank.
The liquidity management for domestic operations is the central function, being managed at Head Office level. The overseas liquidity management is being handled at each centre, jurisdiction wise to keep close monitoring and control and also to comply with the local regulatory requirements as well. International Division of the Bank keeps watch on the overseas liquidity position and the overall liquidity monitoring is done at Head Office level centrally.
The objective of the Net Stable Funding Ratio (NSFR) is to promote the resilience of bank''s liquidity risk profiles and to incentivize a more resilient banking sector over a longer time horizon. The NSFR will require banks to maintain a stable funding profile in the form of Capital & liabilities in relation to the composition of their assets and off-balance sheet activities.
NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.
Available Amount Of Stable Funding (ASF)
NSFR = > 100%
Required Amount Of Stable Funding (RSF)
RBI issued the regulations on the implementation of the Net Stable Funding Ratio in May 2018 with minimum requirement of equal to at least 100%. The implementation is effective from
1st October, 2021. NSFR is applicable to Bank''s domestic operations as well as overseas operations and computed at standalone and consolidated level.
Available Stable Funding (ASF) is defined as the portion of capital and liabilities expected to be reliable which is determined by various factor weights according to the nature and maturity of liabilities with liabilities having maturity of 1 year or more receiving 100 weight.
Required Stable Funding (RSF) is defined as the portion of on balance sheet and off-balance sheet exposures which requires to be funded on an ongoing basis. The amount of such stable funding required is a function of the liquidity characteristics and residual maturities of the various assets held.
The main drivers of the Available Stable Funding (ASF) are the capital base, retail deposit base, and funding from non-financial companies and long-term funding from institutional clients. The capital base formed around 11%, retail deposits (including deposits from small sized business customers) formed 64% and wholesale funding formed 5% of the total Available Stable Funding, after applying the relevant weights.
The Required Stable Funding primarily comprised lending to corporates, retail clients and financial institutions which constituted 61% of the total RSF after applying the relevant weights. The stock of High-Quality Liquid Assets which majorly includes cash and reserve balances with the RBI, government debt issuances attracted no or low amount of stable funding due to their high quality and liquid characteristic. Accordingly, the HQLA constituted only 2% of the Required Stable Funding after applying the relevant weights. Other assets and Contingent funding obligations, such as committed credit facilities, guarantees and letters of credit constituted 36% of the Required Stable Funding.
Bank has maintained comfortable stable funding buffers with Available Stable Funding at consolidated level of '' 608,355.10 against '' 470,530.29 of Required Stable Funding, resulting in a consolidated NSFR of 129.29% as on 31st March, 2023.
(i) Government Securities (Face Value) amounting to ? 32,964.87 (previous year ? 36,705.27) are kept as margin with RBI, CCIL, Clearing House and Exchange towards margin/security settlement.
(ii) Bank has invested ? 675.63 (share application money pending allotment) in one of its subsidiary namely, PT Bank of India Indonesia TBK. Further, the Bank also acquired additional stake of 10.04% (for ? 529.97) in the said subsidiary which resulted in goodwill on consolidation of ? 304.78, and the same has been adjusted and written off during the year.
(iii) Bank has infused additional capital of ? 57.92 in its joint venture namely, Star Union Dai-ichi Life Insurance Company Limited and ? 4.63 in one of its subsidiary namely, Bank of India Investment Managers Private Limited during the year.
(iv) During the year, Bank has been allotted shares of ? 270.24, by one of its associate Regional Rural Bank namely, Vidharbha Konkan Gramin Bank.
(v) Bank has infused additional proportionate capital in FY 2022-23 in the following associate Regional Rural Banks:
a. ? 110.09 in Vidharbha Konkan Gramin Bank (pending allotment)
b. ?152.04 in Aryavart Bank (pending allotment)
c. ?139.08 in Madhya Pradesh Gramin Bank (pending allotment)
(c) Sale and transfers to/from HTM category during the financial year 2022-23:
The total value of sale and transfers of securities from HTM category during April 1, 2022 to March 31, 2023 has not exceeded 5% of the book value of investments held in HTM category as on March 31, 2022. The 5 per cent threshold referred to above will exclude:
(a) The one-time transfer of securities to/from HTM category with the approval of Board of Director permitted to be undertaken by banks at the beginning of the accounting year.
(b) Sale to the Reserve Bank of India under preannounced OMO auctions.
(c) Repurchase of Government Securities by
Government of India from banks.
(d) Sale of securities or transfer to AFS/HFT consequent to the reduction of ceiling on SLR securities under HTM, in addition to the shifting permitted at the beginning of the accounting year.
(e) Divergence in asset classification and provisioning:
As per RBI Master Direction No. RBI/DOR/2021-22/83 DOR.ACC.REC.No.45/21.04.018/2021-22 dated August 30, 2021 (updated as on 13.12.2022) on Financial statements - Presentation and Disclosures, divergence in the asset classification and provisioning, Banks should disclose divergences, if either or both of the following conditions are satisfied:
(a) the additional provisioning for non-performing assets (NPAs) assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period, and;
(b) the additional Gross NPAs identified by the RBI exceeds 10% of reported incremental Gross NPAs for the reference period.
Divergences are within threshold limits in the Bank as specified above. Hence, no disclosure is required with respect to Divergence in Asset Classification and Provisioning.
(f) Disclosure of transfer of loan exposures:
Disclosure of Transfer of Loan Accounts (SMAs & NPAs) in terms of RBI Circular No. DOR.STR. REC.51/21.04.048/2021-22 dated September 24, 2021:
a. The Bank has not transferred any loans not in default or Special Mention Accounts (SMA) during the year ended March 31,2023.
c. During the year ended March 31, 2023 the Bank has not acquired any stressed (Non-Performing) Assets.
In terms of RBI Circular No. DOR. BP.BC/3/21.04.048/2020-21 dated August 6, 2020
(Resolution Framework 1.0) and DOR. STR. REC.11/21.04.048/2021-22 dated May 5, 2021 (Resolution Framework 2.0), the details of resolution plan as on March 31, 2023:
Bank has not taken any Export Factoring on non-recourse basis exposure during the financial year 2022-23.
The bank has a policy with regard to capital and provisioning requirements for exposure to entities with unhedged foreign currency exposure (UFCE) which is based on RBI Circulars.
As on 31.03.2023, based on available data and declaration from the borrowers, wherever received in accordance with the policy, the additional RWA on this exposure is ? 134.46 (Previous Year ? 414.81). As against this, additional minimum capital requirement is ? 15.46 (Previous Year ? 47.70).
viii. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank:
The Bank had taken single borrower exposure and Group Borrower exposure within the prudential limit prescribed by RBI.
There was no default and penalty imposed by Reserve Bank of India in Repo/Reverse Repo transactions and in RRC Account with RBI during the Financial year 2022-23.
(c) Disclosures on risk exposure in derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate derivatives, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions, the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.
Risk management is an integral part of bank''s business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by the Chairman.
The hedge/non-hedge (market making) transactions are recorded separately. Income/expenditure on hedging derivatives is accounted on accrual basis.
Forex forward contracts are marked to market and the resultant gains and losses are recognized in the profit and loss account.
Interest rate derivatives and currency derivatives other than exchange traded derivatives for trading purpose are marked to market and the resulting losses, if any, are recognised in the Profit & Loss account. Net Profit, if any, is ignored.
Exchange traded derivatives entered into for trading purposes are valued at prevailing market rates based on rates given by the Exchange and the resultant gains and losses are recognized in the Profit & Loss account.
Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure. Any gain/loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.
Option fees/premium is amortised over the tenor of the option contract.
Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and corporate entities. The deals are done under approved exposure limits. The Bank has adopted the Current Exposure method prescribed by Reserve Bank of India for measuring Credit Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.
The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.
Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant addon factors as under according to the nature and residual maturity of the instrument.
While computing the credit exposure, âsold optionsâ are excluded wherever the entire premium/fee or any other form of income is received / realized.
As per the extant RBI guidelines, credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the âStandardâ category, of the concerned counterparty. At present, the provision is to be maintained at 0.40% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in the books.
The bank has not dealt with any Credit Default Swap.
8. Disclosures relating to Securitisation
The Bank has not floated any Special purpose Vehicle (SPV) during the Financial Year 2022-23.
The Bank has purchased Priority Sector Lending Certificate (PSLCs) for Agriculture portfolio amounting to ? 3,000 during the year ended March 31, 2023 costing ? 23.73 to bridge the gap in Agriculture portfolio. The Bank also sold PSLCs for Small Farmer & Marginal Farmer portfolio amounting to ? 4,800 and earned commission of ? 64.76.
(f) Implementation of IFRS converged Indian Accounting Standards (Ind AS):
RBI vide its circular DBR.BP.BC.No.29/21.07.001/2018-19 dated March 22, 2019, deferred implementation of Ind AS till further notice as the legislative amendments in Banking Regulation Act, 1949 as recommended by RBI are under consideration of the Government of India. However, RBI requires all banks to submit Proforma Ind AS Financial Statements (PFS) every half year. Accordingly, the Bank has been preparing and submitting to RBI Proforma Ind AS Financial Statements (PFS) half-yearly with effect from September-2021, after seeking approval of Steering Committee formed for monitoring of implementation of Ind-AS in the Bank. The PFS are also presented to Audit Committee of Board and Board for information and reporting.
(i) Disclosure on amortisation of expenditure on account of enhancement in family pension of employees of banks
Reserve Bank of India vide its Circular No. RBI/2021-22/105 DOR.ACC.REC.57/21.04.018/2021-22 dated
October 4, 2021, permitted Banks to amortise the additional liability on account of revision in family pension over a period not exceeding five years beginning with the financial year ending March 31, 2022, subject to a minimum of 1/5th of the total amount being expensed every year. The Bank recognised the additional liability on account of revision in family pension amounting to ? 612.09 and has opted to amortise the said liability over a period not exceeding five years, beginning financial year ending March 31, 2022.
Accordingly, Bank has recognised ? 306.04 (? 122.42) as an expense in the Profit and Loss account, for the year ended March 31, 2023 and the balance unamortised liability of ? 183.63 (?489.67) has been carried forward. If the unamortised liability had been fully recognised in the Profit & Loss account by the Bank, the Net Profit (after tax) for the quarter and year ended March 31, 2023 would have been lower by ? 119.46 (? 318.56).
(k) Disclosure of Letters of Comfort (LoCs) issued by bank for Subsidiaries (As compiled by the management):
During the year 2022-23, the bank has not issued any Letter of Comfort on behalf of Subsidiaries.
During the year 2010-11, the bank had issued parental guarantee in favour of Royal Bank of New Zealand, for its wholly owned subsidiary, Bank of India (New Zealand) Ltd. to meet its financial obligations, if they fall due.
As on 31.03.2023, no financial obligations have arisen on the above commitments.
i. Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/interest tax liabilities of ? 355.86 (previous year ? 529.03) for which no provision is considered necessary based on various judicial decisions in respect of past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).
ii. Provision for taxes has been arrived at after due consideration of the provisions of the applicable tax laws and relevant judicial decisions on certain disputed issues.
(m) The Bank has Details of Number of Investors complaints for the year ended March 31, 2023: Pending at Beginning: Nil; Received: 140; Disposed off: 140 and Pending at the end: Nil.
(n) Bank was holding 100% provision in a particular account,
recovery of which is under dispute with another PSU Bank. The account has been reported as fraud to RBI. RBI vide its communication ref. no. DoS. Co. SSM (BOI)/6557/13.37.007/2019-20 dated April 13, 2020
permitted the Bank to maintain provision of 50% of the disputed amount on an ongoing basis subject to certain conditions. Accordingly, the Bank holds provision of ?144.03 (being 50% of the outstanding amount) for the said disputed amount.
(o) In accordance with the RBI guidelines, during the year ended March 31, 2023, Bank has shifted Central Government securities with a book value of ? 2,887.84 and State Government securities with a book value of ? 5,054.58 from HTM to AFS category. Further, Bank has shifted from AFS to HTM category, Central Government securities with a book value of ? 656.41 after charging shifting loss of ? 21.62. Venture Capital Fund for an amount of ? 7.65 has been shifted from HTM to AFS category.
(p) In respect of RBI referred NCLT accounts (List 1 & 2) as on March 31, 2023, Bank holds 100% provision of the outstanding value of ? 3,403.66.
(q) Bank has made provision of ? 268 for the year ended March 31, 2023 towards arrears of wages, on ad-hoc basis, due for revision with effect from November 1, 2022.
The COVID-19 virus, a global pandemic has affected the world economy over the last three years. The extent to which any new wave of COVID-19 will impact the Bank''s operations and financial results will depend on ongoing as well as future developments, including, among other things, any new information concerning the severity of the COVID-19 pandemic, and any action to contain its spread or mitigate its impact whether government- mandated or elected by us.
(s) Other Income includes commission and brokerage income, profit/loss on sale of assets, profit/loss on revaluation of investments (net) (including depreciation on performing investments), earnings from foreign exchange and derivative transactions, recoveries from accounts previously written off, dividend income, etc.
(t) The Board of Directors has recommended a dividend of ?
2.00 per equity share (20%) for the year ended March 31, 2023 subject to requisite approvals.
(u) Balancing of Subsidiary Ledger Accounts, confirmation/ reconciliation of balances with foreign branches, Interoffice accounts, NOSTRO Accounts, Suspense, Draft Payable, Clearing Difference, other office accounts, etc.
is in progress on an on-going basis. In the opinion of the management, the overall unadjusted impact on the financial statements, if any, of pending final clearance/ adjustment of the above, is not likely to be significant.
(v) Advances covered by Bank / Government Guarantees
under Schedule 9 - Advances includes advances
guaranteed by CGTMSE amounting to ? 844.17.
(w) Other Income / Expenditure exceeding 1% of total income
6.1 Accounting Standard - 5 Net Profit / loss for the period, Prior Period Items and changes in accounting policies:
(i) Prior Period Items:
During the year, there were no material prior period income / expenditure items.
(ii) Change in accounting policy:
There is no change in the Significant Accounting Policies followed during the year ended March 31, 2023 as compared to those followed in the previous financial year ended March 31,2022.
6.2 Accounting Standard 9 - Revenue recognition Certain items of income are recognised on realisation basis as per Accounting Policy para 3 of Schedule 17: Significant Accounting Policies. However, the said income is not considered to be material.
The Bank has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.
Primary Segment: Business Segments
a) Treasury: âTreasury'' segment includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations including Derivative contracts.
b) Wholesale Banking: Wholesale Banking includes all lending activities which are not included under Retail Banking.
c) Retail Banking: Retail Banking segment comprises of Digital Banking and Other Retail Banking.
Digital Banking includes digital banking products acquired by DBUs.
Other Retail Banking includes all housing loan accounts and borrower accounts having exposure up to ? 7.50 crore.
Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits and borrowings incurred by it.
Allocation of Costs:
a) Expenses directly attributed to particular segment are allocated to the relative segment.
b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/business managed.
Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
6.5 Accounting Standard 18 - Related Party Transactions (As compiled by the management and relied upon by the Auditors):
6.6 Accounting Standard 19 - Leases: - Operating leases are cancellable at the option of the Bank. The amount of lease expenses recognized in the Profit & Loss Account for such operating lease is ? 676.84 (Previous Year: ? 618.36).
Government of India has pronounced section 115BAA of Income Tax Act 1961 through Taxation Laws (Amendment) Act, 2019. The Bank has evaluated the options available under section 115BAA of the Act and opted to continue to recognise the taxes on income for the year ended 31st March, 2023 as per the earlier provisions of Income-tax Act.
6.9 Accounting Standard 24 - Discontinuing Operations: NilB. Contingent Liabilities:
Such liabilities are dependent upon, the outcome of court order/arbitration/out of court settlement, disposal of appeals and the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such cases.
7. Figures of the previous period have been regrouped / reclassified, wherever considered necessary to conform to the current period''s classification.
Mar 31, 2022
Pursuant to RBI Circular No. DBR.No.BP.BC.83/21.06.201/2015-16 dated March 1, 2016, the Bank has considered revaluation reserve, foreign currency translation reserve and deferred tax assets in calculation of Capital Adequacy Ratios as on March 31, 2022.
During the year ended 31st march, 2022, the Bank has redeemed Tier - II Bonds Series XIII amounting to ''1,500 by exercising call option on July 7, 2021. The Bank has also redeemed Tier-II Bonds Series XIV amounting to ''1,000 by exercising call option on March 25, 2022. Further, Bank has raised Tier II Bonds Series XV amounting to ''1,800 on September 30, 2021.
During the year ended March 31, 2022, as per RBI Circular DBR.No.BP.BC.92/21.04.048/ 2015-16 dated April 18, 2016, the Bank has opted to provide the liability towards fraud declared during the quarter ended 31.03.2022, amounting to ''273.99 over a period of four quarters. Accordingly, an amount of ''68.50 has been charged to Profit & Loss account during the quarter ended 31.03.2022 and the remaining unamortised amount of ''205.49 has been debited to âOther Reservesâ and will be amortised in the next financial year.
2. Asset Liability Management
(a) Maturity pattern of certain items of assets and liabilities as on 31st March, 2022
Qualitative disclosures with regard to LCR
W.e.f. 1st January 2015, the Bank has implemented guidelines on Liquidity Coverage Ratio (LCR) as directed by Reserve Bank of India.
The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until next 30 calendar days under a severe liquidity stress scenario.
High Quality Liquid Assets (HQLA)
LCR =
Total net cash outflows over the next 30 calendar days
Here,
- HQLA comprises of level 1 and level 2 assets, in other words these are cash or near to cash items which can be easily used / discounted in the market in case of need.
- Net cash outflows are excess of total inflows over total outflows under stressed situation as defined by Basel / RBI. While arriving at the net cash outflow, the inflows are taken with pre-defined hair-cuts and the outflows are taken at pre-defined run-off factors.
- In case stressed inflows are more than the stressed outflows, 25% of total outflows shall be taken as total net cash outflows to arrive at the LCR.
- With effect from 01.01.2015, Banks are required to maintain minimum 60% LCR on an ongoing basis. The same shall reach 100% as on 01.01.2019 with incremental increase of 10% each year.
Main Drivers of LCR: The main drivers of the LCR are adequacy of High Quality Liquid Assets (HQLA) and lower net cash outflow on account of higher funding sources from retail customers. Sufficient stock of HQLA helped the Bank to maintain adequate LCR.
Composition of HQLA: The composition of High Quality Liquid Assets (HQLA) mainly consists of cash balances, excess SLR, excess CRR and FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).
Concentration of funding sources: Majority of Bank''s funding sources are from retail customers (about 60%) therefore the stressed outflows are comparatively lower. However, in absence of any non-callable option for term deposits, the Bank has considered almost all deposits under outflow section as per RBI guidelines. Bank also does not have funding concentration from any significant counterparty. A significant counterparty is defined as a single counterparty or group of connected or affiliated counter parties accounting in aggregate for more than 1% of the bank''s total liabilities.
Derivative Exposures and potential collateral calls: Bank has very little exposure in derivative business which is not very significant.
Currency mismatch in the LCR: In terms of RBI guidelines, a significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank''s total liabilities.
Description of the degree of centralization of liquidity management and interaction between the group''s units: The liquidity management of the Bank at enterprise level is a Board level function and a separate sub-committee of the Board (R.Com.) keeps close watch on that. The periodical monitoring of the liquidity management is being monitored by the ALCO on regular intervals. The entire liquidity management process of the Bank is being governed by ALM Policy of the Bank.
The liquidity management for domestic operations is the central function, being managed at Head Office level. The overseas liquidity management is being handled at each centre, jurisdiction wise to keep close monitoring and control and also to comply with the local regulatory requirements as well. International Division of the Bank keeps watch on the overseas liquidity position and the overall liquidity monitoring is done at Head Office level centrally.
(c) Net Stable Funding Ratio
The objective of the Net Stable Funding Ratio (NSFR) is to promote the resilience of bank''s liquidity risk profiles and to incentivize a more resilient banking sector over a longer time horizon. The NSFR will require banks to maintain a stable funding profile in the form of Capital & liabilities in relation to the composition of their assets and off-balance sheet activities.
NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.
RBI issued the regulations on the implementation of the Net Stable Funding Ratio in May 2018 with minimum requirement of equal to at least 100%. The implementation is effective from 1st October, 2021. NSFR is applicable to Bank''s domestic operations as well as overseas operations and computed at standalone and consolidated level.
Available Stable Funding (ASF) is defined as the portion of capital and liabilities expected to be reliable which is determined by various factor weights according to the nature and maturity of liabilities with liabilities having maturity of 1 year or more receiving 100 weight.
Required Stable Funding (RSF) is defined as the portion of on balance sheet and off-balance sheet exposures which requires to be funded on an ongoing basis. The amount of such stable funding required is a function of the liquidity characteristics and residual maturities of the various assets held.
Brief about NSFR of the Bank
The main drivers of the Available Stable Funding (ASF) are the capital base, retail deposit base, and funding from non-financial companies and long-term funding from institutional clients. The capital base formed around 9%, retail deposits (including deposits from small sized business customers) formed 81% and wholesale funding formed 10% of the total Available Stable Funding, after applying the relevant weights.
The Required Stable Funding primarily comprised lending to corporates, retail clients and financial institutions which constituted 68% of the total RSF after applying the relevant weights. The stock of High-Quality Liquid Assets which majorly includes cash and reserve balances with the RBI, government debt issuances attracted no or low amount of stable funding due to their high quality and liquid characteristic. Accordingly, the HQLA constituted only 2% of the Required Stable Funding after applying the relevant weights. Other assets and Contingent funding obligations, such as committed credit facilities, guarantees and letters of credit constituted 32% of the Required Stable Funding.
Bank has maintained comfortable stable funding buffers with Available Stable Funding at consolidated level of ''6,48,357 against ''4,39,901 of Required Stable Funding, resulting in a consolidated NSFR of 147.39% as on 31st March, 2022.
(i) Government Securities (Face Value) amounting to ''24,555.27 (previous year '' 36,705.27) are kept as margin with RBI, CCIL, Clearing House and Exchange towards margin/security settlement.
(ii) During the year ended March 31, 2022 Bank has acquired additional stake of 47.71% (for ''7.79) in âBOI Star Investment Managers Private Limited'' (formerly known as BOI AXA Investment Managers Private Limited) and 49.00% (for '' Nil) in âBOI Star Trustee Services Private Limited'' (formerly known as BOI AXA Trustee Services Private Limited). Consequently, these subsidiaries have become wholly owned subsidiaries of the Bank.
(iii) Bank has infused capital (pending allotment) of '' 530.65 in one of its existing overseas subsidiary, namely PT Bank of Indonesia TBK.
(iv) Bank has infused additional proportionate capital in FY 2021-22 in the following associate Regional Rural Banks:
a. ''296.60 in Madhya Pradesh Gramin Bank
b. ''270.24 in Vidharbha Konkan Gramin Bank (pending allotment)
c. ''54.60 in Aryavrat Bank (pending allotment)
(b) Movement of Provisions for Depreciation and Investment Fluctuation Reserve
(c) Sale and transfers to/from HTM category during the financial year 2021-22:
The total value of sale and transfers of securities from HTM category during April 1, 2021 to March 31, 2022 has not exceeded 5% of the book value of investments held in HTM category as on March 31, 2021. The 5 per cent threshold referred to above will exclude:
(a) The one-time transfer of securities to/from HTM category with the approval of Board of Director
permitted to be undertaken by banks at the beginning of the accounting year.
(b) Sale to the Reserve Bank of India under preannounced OMO auctions.
(c) Repurchase of Government Securities by Government of India from banks.
(d) Sale of securities or transfer to AFS/HFT consequent to the reduction of ceiling on SLR securities under HTM, in addition to the shifting permitted at the beginning of the accounting year.
(e) Divergence in asset classification and provisioning:
As per RBI Master Direction No.DOR.ACC.REC. No.45/21.04.018/2021-22 dated August 30, 2021 (updated as on November 15, 2021) on Financial statements -Presentation and Disclosures, divergence in the asset classification and provisioning, Banks should disclose divergences, if either or both of the following conditions are satisfied:
(a) the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies for the reference period, and;
(b) the additional Gross NPAs identified by RBI as part of its supervisory process exceeds 15% of published incremental Gross NPAs for the reference period.
Divergences are within threshold limits in the Bank as specified above. Hence, the need for additional disclosure does not apply.
(f) Disclosure of transfer of loan exposures:
Disclosure of Transfer of Loan Accounts (SMAs & NPAs) in terms of RBI Circular No. DOR.STR. REC.51/21.04.048/2021-22 dated September 24, 2021:
a. The Bank has not transferred and acquired any loans not in default or Special Mention Accounts (SMA) during the year ended March 31, 2022.
b. During the year ended March 31, 2022 the Bank has not acquired any stressed (Non-Performing) Assets.
(h) Disclosure under Resolution Framework for COVID-19-related Stress
(i) There were 28,815 borrower accounts having an aggregate exposure of '' 670.99 to the Bank, where the resolution plan has been implemented under RBI''s Resolution Framework 1.0 dated August 6, 2020 and now modified under RBI''s Resolution Framework 2.0 dated May 5, 2021 for Individuals and Small Businesses.
The bank has a policy with regard to capital and provisioning requirements for exposure to entities with unhedged foreign currency exposure (UFCE) which is based on RBI Circulars.
As on 31.03.2022, based on available data and declaration from the borrowers, wherever received in accordance with the policy, the additional RWA on this exposure is ''414.81 (Previous Year ''431.80). As against this, additional minimum capital requirement is ''47.70 (Previous Year '' 46.96).
(h) Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank:
The Bank had taken single borrower exposure and Group Borrower exposure within the prudential limit prescribed by RBI.
(c) Disclosures on risk exposure in derivatives i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate derivatives, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions, the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.
Risk management is an integral part of bank''s business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the
Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by the Chairman.
The hedge/non-hedge (market making) transactions are recorded separately. Income/expenditure on hedging derivatives is accounted on accrual basis.
Forex forward contracts are marked to market and the resultant gains and losses are recognized in the profit and loss account.
Interest rate derivatives and currency derivatives other than exchange traded derivatives for trading purpose are marked to market and the resulting losses, if any, are recognised in the Profit & Loss account. Net Profit, if any, is ignored.
Exchange traded derivatives entered into for trading purposes are valued at prevailing market rates based on rates given by the Exchange and the resultant gains and losses are recognized in the Profit & Loss account.
Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure. Any gain/loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.
Option fees/premium is amortised over the tenor of the option contract.
Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and corporate entities. The deals are done under approved exposure limits. The Bank has adopted the Current Exposure method prescribed by Reserve Bank of India for measuring Credit Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts. The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.
Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant addon factors as under according to the nature and residual maturity of the instrument.
RBI vide its circular DBR.BP.BC.
No.29/21.07.001/2018-19 dated March 22, 2019, deferred implementation of Ind AS till further notice as the legislative amendments in Banking Regulation Act, 1949 as recommended by RBI are under consideration of the Government of India. The Bank has been submitting quarterly Proforma Ind AS Financial Statements (PFS) from June-2018 after discussion/approval by Steering Committee. The PFS are also presented to Audit Committee of Board along-with the overall progress report regarding Ind AS implementation.
(h) Facilities granted to Directors and their relatives
Applicable only to UCBs
(i) Disclosure on amortisation of expenditure on account of enhancement in family pension of employees of banks
Reserve Bank of India vide its Circular
No. RBI/2021-22/105 DOR. ACC. REC. 57/21.04.018/2021-22 dated October 4, 2021,
permitted Banks to amortise the additional liability on account of revision in family pension over a period not exceeding five years beginning with the financial year ending March 31, 2022, subject to a minimum of 1/5th of the total amount being expensed every year. The Bank has recognised additional liability on account of revision in family pension amounting to ''612.09 and has opted to amortise the said liability
over a period not exceeding five years, beginning financial year ending March 31, 2022. Accordingly, Bank has recognised ''61.21 and ''122.42 as an expense in the Profit and Loss account, for the quarter and year ended March 31, 2022 respectively and the balance unamortised liability of ''489.67 has been carried forward. If the unamortised liability had been fully recognised in the Profit & Loss account by the Bank, the Net Profit (after tax) for the quarter and year ended March 31, 2022 would have been lower by ''318.56.
(j) In accordance with RBI circular no.DBRNo. BP.BC.18/21.04.048/2018-19 dated January 1, 2019, on âMicro, Small and Medium Enterprises (MSME) sector - Restructuring of Advancesâ, as amended from time to time, the details of MSME restructured accounts as on March 31,2022 is as under:
No. of accounts restructured Amount
_64,725_1,761.85
(k) Disclosure of Letters of Comfort (LoCs) issued by bank for Subsidiaries (As compiled by the management):
During the year 2020-21, the bank has not issued any Letter of Comforts on behalf of Subsidiaries.
During the year 2010-11, the bank had issued parental guarantee in favour of Royal Bank of New Zealand Ltd., for its wholly owned subsidiary, BOI (New Zealand) Ltd. to meet its financial obligations, if they fall due.
As on 31.03.2022, no financial obligations have arisen on the above commitments.
l) Income Tax:
a) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/interest tax liabilities of ''529.03 (previous year ''1,186.47) for which no provision is considered necessary based on various judicial decisions in respect of past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).
b) Provision for taxes has been arrived at after due consideration of the provisions of the applicable tax laws and relevant judicial decisions on certain disputed issues.
(n) The Bank has Details of Number of Investors complaints for the year ended March 31, 2022: Pending at Beginning: Nil; Received: 2; Disposed off: 2 and Pending at the end: Nil.
(o) In terms of Bank''s approved revaluation policy, during the year ended March 31, 2022 the immovable properties are revalued based on the revaluation reports of Bank''s approved valuers and the net surplus arising from revaluation amounts to ''667.71 has been added to âRevaluation Reserveâ.
(p) Bank was holding 100% provision in a particular account,
recovery of which is under dispute with another PSU Bank. The account has been reported as fraud to RBI. RBI vide its communication ref. no. DoS. Co. SSM (BOI)/6557/13.37.007/2019-20 dated April 13, 2020
permitted the Bank to maintain provision of 50% of the disputed amount on an ongoing basis subject to certain conditions. Accordingly, the Bank holds provision of ''145.82 (being 50% of the outstanding amount) for the said disputed amount.
(q) In accordance with the RBI guidelines, during the year ended March 31, 2022, Bank has shifted Central Government securities with a book value of ''8,109.09 and State Government securities with a book value of ''7,495.41 from HTM to AFS category. Further, Bank has shifted from AFS to HTM category, Central Government securities with a book value of ''2,640.87 after providing for shifting loss of ''80.84. Venture Capital Fund for an amount of ''12.53 has been shifted from HTM to AFS category.
(r) In respect of RBI referred NCLT accounts (List 1 & 2) as on March 31, 2022, Bank holds 100% provision of the outstanding value of ''3,533.75.
(s) In accordance with RBI circular No. DOR.STR. REC.12/21.04.048/2021-22 dated May 5, 2021 & RBI Circular No. DOR.STR.REC.21/21.04.048/2021-22 dated June 4, 2021 on Resolution Framework 2.0 -Resolution of COVID-19 related stress of Micro, Small and Medium Enterprises (MSMEs), the details of accounts restructured is as under:
(''in Crore except number of accounts)
No. of Accounts Amount as on Provision 31.03.2022 Held
1,20,443 3,433.04 343.30
(t) In accordance with RBI Circular No. DOR.STR.
REC.11/21.04.048/2021-22 dated May 5, 2021 on
âResolution Framework- 2.0: Resolution of COVID-19
related stress of Individuals and Small Businessesâ, the number of borrower accounts where modification were sanctioned and implemented and the aggregate exposure to such borrowers are as under:
No. of accounts Aggregate Exposure as
restructured on 31.03.2022 ('' in Crore)
_28,815_670.99_
(u) As per RBI notification RBI/2021-22/28 DOR.STR. REC.10/21.04.048/2021-22 dated May 5, 2021, Banks are permitted to utilize 100 percent of Floating Provisions/ Counter Cyclical Provisioning Buffer held by them on December 31, 2020 for making specific provisions for nonperforming assets with the approval of their respective Boards. The Bank has obtained requisite prior approval from its Board of Directors and has utilized floating provision amounting to ''232.22 against the requirement for specific provision for non-performing assets during the quarter and year ended March 31,2022.]
(v) The Bank has migrated the existing CBS system from âFinacle 7â to an improved version of CBS i.e. âFinacle 10â. The Bank does not expect any material impact on account of such migration on the financial statements.
(w) Impact of Covid 19 impact:
The impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activities. The disruptions following the outbreak, impacted loan originations and the efficiency in collection efforts resulting in increase in the number of customer defaults and consequently an increase in provisions there against. India is emerging from the COVID-19 pandemic. The extent to which any new wave of COVID-19 will impact the Bank''s operations and financial results will depend on ongoing as well as future developments, including, among other things, any new information concerning the severity of the COVID-19 pandemic, and any action to contain its spread or mitigate its impact whether government- mandated or elected by us.
(x) Other Income includes commission and brokerage income, profit/loss on sale of assets, profit/loss on revaluation of investments (net) (including depreciation on performing investments), earnings from foreign exchange and derivative transactions, recoveries from accounts previously written off, dividend income, etc.
(y) The Board of Directors has recommended a dividend of ''2.00 per equity share (20%) for the year ended March 31, 2022 subject to requisite approvals.
(z) Balancing of Subsidiary Ledger Accounts, confirmation/ reconciliation of balances with foreign branches, Interoffice accounts, NOSTRO Accounts, Suspense, Draft Payable, Clearing Difference, other office accounts, etc. is in progress on an on-going basis. In the opinion of the management, the overall impact on the financial statements, if any, of pending final clearance/adjustment of the above, is not likely to be significant.
6.1 Accounting Standard - 5 Net Profit / loss for the period, Prior Period Items and changes in accounting policies:
(i) Prior Period Items:
During the year, there were no material prior period income / expenditure items.
(ii) Change in accounting policy:
There is no change in the Significant Accounting Policies followed during the quarter and year ended March 31, 2022 as compared to those followed in the previous financial year ended March 31, 2021 except for share issue expenses debited to Share premium account as permitted by RBI, which were earlier charged to Profit and Loss account. The change in accounting policy has resulted in increase in profit before tax by ''18.22 for the year ended March 31, 2022.
6.2 Accounting Standard 9 - Revenue recognition
Certain items of income are recognised on realisation basis as per Accounting Policy para 3 of Schedule 17: Significant Accounting Policies. However, the said income is not considered to be material.
The Bank has recognised Business Segments as Primary reporting segment and Geographical Segments as Secondary segment in line with RBI guidelines in compliance with Accounting Standard 17.
Primary Segment: Business Segments
a) Treasury Operations: âTreasury'' for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.
c) Retail Banking : Retail Banking includes exposures which fulfil following two criteria:
i) Exposure - The maximum aggregate
exposure up to ''5.
ii) The total annual turnover is less than ''50 i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.
Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.
Allocation of Costs:
a) Expenses directly attributed to particular segment are allocated to the relative segment.
b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/business managed.
Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
6.5 Accounting Standard 18 - Related Party Transactions (As compiled by the management and relied upon by the Auditors):
I) List of Related Parties:
a. Key Managerial Personnel:
Managing Director & CEO: Shri Atanu Kumar Das Executive Directors: Shri P R Rajagopal
Shri Swarup Dasgupta Shri M. Karthikeyan Smt. Monika Kalia
6.8.2 Amount of Provisions made for Income-tax during the yearParticulars 2021-22 2020-21
Current Tax (-)1,901.16 138.31
Deferred Tax 4063.22 938.10
Total Tax Expense 2,162.05 1,076.41
Government of India has pronounced section 115BAA of Income Tax Act 1961 through Taxation Laws (Amendment) Act, 2019. The Bank has evaluated the options available under section 115BAA of the Act and opted to continue to recognise the taxes on income for the year ended 31st March, 2022 as per the earlier provisions of Income-tax Act.
6.9 Accounting Standard 24 - Discontinuing Operations:
In consonance with the Government of India directives and as a part of strategic initiatives for rationalisation of overseas operations in FY 2019-20, the Bank has sold its overseas subsidiary i.e. Bank of India (Botswana Ltd. for a consideration of ''14.64 and remaining cost of improvement of ''19.18 has been fully provided.
6.10 Accounting Standard 27 - Investments in Joint Venture
Investments include ''75 (Previous year ''75) representing Bank''s interest in the following jointly controlled entity:
Sr. Name of the Company Amount Country of Holding % No. Residence
1 Star Union DaiâIchi Life 75 India 28.96%
Insurance Company Ltd.
Such liabilities are dependent upon, the outcome of court order/arbitration/out of court settlement, disposal of appeals and the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such cases.
7. Figures of the previous period have been regrouped / reclassified, wherever considered necessary to conform to the current period''s classification.
Mar 31, 2019
SCHEDULE 1:
All figures are in Rs. crore unless specifically stated, figures in brackets relate to previous year.
NOTES FORMING PART OF ACCOUNTS
1. During the year, Government of India has infused Rs. 14,724 capital for fresh equity shares, out of which bank has made preferential allotment of 95,37,58,865 equity shares of Rs. 10 each, in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The details are as under:-
* In terms of RBI letter no. DBR.CO.BP.No. 8307/21.01.002/2018-19 dated April 2, 2019, the share application money of Rs. 4,638 received on February 21, 2019 has been considered for computation of CET-1 capital as on March 31, 2019.
Further, the Bank under Bank of India- Employee Stock Purchase Scheme (ESPS) has raised an amount of Rs. 660.80. Under this scheme, the Bank has allotted 6,25,52,188 new equity shares having face value of Rs. 10/each at a discount of 24.28% on the floor price of Rs. 105.64 per share i.e. at an offer price of Rs. 80/- each. The details are as under:
2. The Govt. of India vide their weekly Gazette Notification dated March 31, 2019 - April 6, 2019 increased the authorised capital from Rs. 3,000 (Rupees Three Thousand) to Rs. 6,000 (Rupees Six Thousand).
3. Balancing of Subsidiary Ledger Accounts, confirmation/ reconciliation of balances with foreign branches, Interoffice accounts, NOSTRO Accounts, Suspense, Draft Payable, Clearing Difference, other office accounts, etc. is in progress on an on-going basis. In the opinion of the management, the overall impact on the financial statements, if any, of pending final clearance/adjustment of the above, is not likely to be significant.
4. The audited financial results for the period have been arrived at on the basis of the same accounting policies as those followed in the preceding financial year ended 31st March, 2018 except appropriation of recovery in NPA accounts as mentioned in para 3(i) of Schedule 17 -Significant Accounting Policies.
5. The following information is disclosed in terms of guidelines issued by RBI:
* The amount includes share application money of Rs. 1,721.92 received during FY 2016-17 and allotted during FY 2017-18.
** In terms of RBI letter no. DBR.CO.BP.No. 8307/21.01.002/201819 dated April 2, 2019, the share application money of Rs. 4,638 received on February 21, 2019 has been considered for computation of CET-1 capital as on March 31, 2019.
Details of outstanding Innovative Perpetual Debt Instruments (IPDI) bonds raised to augment Tier-I capital are as under:
Pursuant to RBI circular No. DBR.
NO.BP.13018/21.04.048/2015-16 dated March 1, 2016, the bank has considered revaluation reserve, foreign currency translation reserve and deferred tax assets in calculation of Capital Adequacy Ratio as on March 31, 2019.
Bank has exercised the regulatory call option and redeemed Additional Tier-1 Bonds amounting Rs. 5,500 (Series 1 to 5) on April 21, 2018 and has also exercised the call option to redeem the Upper Tier-II Bonds amounting to Rs. 500 on October 16, 2018 and IPDI bonds (Tier-1) amounting to Rs. 400 on February 11, 2019.
* Rs. 1,010.76 pertaining to FY2017-18 has been amortised during the year ended March 31, 2019 and Rs. 2.04 has been write-off during the year.
Government Securities (Face Value) amounting to Rs. 25,199.35 (previous year Rs. 24924.35) are kept as margin with RBI, CCIL, Clearing House and Exchange towards margin/security settlement.
During the year, Bank has sold entire stake held by Bank in Central Depository Services Limited (CDSL) and earned profit of Rs. 129.34. Bank has sold 5.41 lakh shares of BSE Ltd. and earned a profit of Rs. 13.02.
During the year ended March 31, 2019, the Bank has earned a profit of Rs. 0.82 under buyback of 1.20 Lakh shares by Acuite Rating & Research Ltd. Post Buyback the investment has reduced to Rs. 0.28 as on March 31, 2019.
* Investment in Equity, Equity Oriented Mutual Funds, Venture Capital, Rated Assets Backed Securities, Central Govt. Securities, Security Receipts, etc. are not segregated under these categories as these are exempt from rating/listing guidelines.
** Investment in Subsidiaries/Joint Ventures/Associates have not been segregated into various categories as these are not covered under relevant RBI guidelines.
$ includes investment in GOI Non-SLR re-capitalisation bonds of Rs. 21,699 (previous year Rs. 6975)
5.1.1. (i) Sale and transfer of securities to/from HTM Category during the financial year 2018-19:
The total value of sale and transfers of securities from HTM category during April 1, 2018 to March 31, 2019 has not exceeded 5% of the book value of investments held in HTM category as on March 31, 2018. The 5 per cent threshold referred to above will exclude
(a) The one-time transfer of securities to/from HTM category with the approval of Board of Director permitted to be undertaken by banks at the beginning of the accounting year.
(b) Sale to the Reserve Bank of India under pre-announced OMO auctions.
(c) Repurchase of Government Securities by Government of India from banks.
(d) Sale of securities or transfer to AFS/HFT consequent to the reduction of ceiling on SLR securities under HTM, in addition to the shifting permitted at the beginning of the accounting year.
5.1.2 Disclosures on risk exposure in derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate derivatives, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions, the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.
Risk management is an integral part of bankâs business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by the Chairman.
The hedge/non-hedge (market making) transactions are recorded separately. Income/expenditure on hedging derivatives is accounted on accrual basis.
Forex forward contracts are marked to market and the resultant gains and losses are recognized in the profit and loss account.
Interest rate derivatives and currency derivatives other than exchange traded derivatives for trading purpose are marked to market and the resulting losses, if any, are recognised in the Profit & Loss account. Net Profit, if any, is ignored.
Exchange traded derivatives entered into for trading purposes are valued at prevailing market rates based on rates given by the exchange and the resultant gains and losses are recognized in the Profit & Loss account.
Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure. Any gain/loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.
Option fees/premium is amortised over the tenor of the option contract.
Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and corporate entities. The deals are done under approved exposure limits. The Bank has adopted the Current Exposure method prescribed by Reserve Bank of India for measuring Credit Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.
The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.
Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant add-on factors as under according to the nature and residual maturity of the instrument.
While computing the credit exposure, âsold optionsâ are excluded wherever the entire premium/fee or any other form of income is received / realized.
As per the extant RBI guidelines, credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the âStandardâ category, of the concerned counterparty. At present, the provision is to be maintained at 0.40% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in the books.
5.2.1 Divergence in Asset Classification, and Provisioning for NPAs:
In compliance with the Risk Assessment Report (RAR) for the year ended 2017-18, non-performing assets as per report have duly been classified and additional provision has been made. In conformity with RBI Circular No. BR.BP.BC.NO.63/21.04.018/2016-17 dated 18th April, 2017 & DBR.BP.BC.No.32/21.04.018/2018-19 dated April 1, 2019 and SEBI Circular No. CIR/CFD/CMD/80/2017 dated July 18, 2017, the required disclosure is detailed below:-
5.2.2 MSME RESTRUCTURING -
RBI vide circular no.DBRNo.BP.BC.18/21.04.048/2018-19 dated 01.01.2019 regarding restructuring of advances wherein onetime restructuring of existing MSME Loan has been classified as âStandardâ under this scheme, are as under:
6. Disclosure requirements as per Accounting Standards (AS) where RBI has issued guidelines in respect of disclosure items for Notes to Accounts:
6.1 Accounting Standard - 5 Net Profit / loss for the period, Prior Period Items and changes in accounting policies:
(i) Prior Period Items:
There are no material prior period items during the year.
(ii) Change in Accounting Policy (AS-5):
During the financial year ended March 31, 2019, bank has changed the method of appropriation of recovery in NPA accounts, where recoveries are now being adjusted against charges, Unrealised Interest (URI), Uncharged Interest (UCI) and lastly against principal as against the earlier method of adjusting recoveries against charges, URI, principal and lastly UCI. This has resulted in increase of interest income by Rs. 598.76, and Profit before tax by Rs. 165.07. The change in accounting policy is not system driven in case of Packing Credit, Bills, and Freezed accounts. The management is in the process of strengthening the system in order to make the process system driven. The management is of the opinion, that the impact, if any, of the same may not be material.
6.2 Accounting Standard 9 - Revenue recognition
Certain items of income are recognised on realisation basis as per Accounting Policy para 3 of Schedule 17: Significant Accounting Policies. However, the said income is not considered to be material.
6.3 Accounting Standard 15 - Employee Benefits:
* The actuarial assumptions for other long term benefits are same which are used for Gratuity.
The bank has recognised contribution to employeesâ Provident Fund/Defined contribution scheme as an expense. During the year, the bank has contributed Rs. 134.80 (Previous Year Rs. 110.99) towards such fund which is a defined contribution plan.
** The bank has been recognising the liability of sick leave to full extent hitherto i.e. entire outstanding leave balance. In line with the Guidance Note on implementation of Employee Benefits (AS-15) - (revised 2005) in respect of Sick Leave, the liability in this regard is recognised based on probability of availing such leaves by employees.
The Bankâs best estimate of contributions expected to be paid during the annual period beginning after the Balance sheet date, towards Pension is Rs. 823.14 (Previous Year Rs. 1,030) and towards Gratuity is Rs. 212.31 (Previous Year: Rs. 517.19)
Primary Segment: Business Segments
a) Treasury Operations: âTreasuryâ for the purpose of Segment Reporting includes the entire investment portfolio i.e. dealing in Government and other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are not included under Retail Banking.
c) Retail Banking : Retail Banking includes exposures which fulfil following two criteria:
i) Exposure - The maximum aggregate exposure up to Rs. 5 crore.
ii) The total annual turnover is less than Rs. 50 crore i.e. the average turnover of the last three years in case of existing entities and projected turnover in case of new entities.
Pricing of Inter-Segmental transfers:
Retail Banking Segment is a Primary resource mobilising unit and Wholesale Segment and Treasury Segment compensates the Retail banking segment for funds lent by it to them taking into consideration the average cost of deposits incurred by it.
Allocation of Costs:
a) Expenses directly attributed to particular segment are allocated to the relative segment.
b) Expenses not directly attributable to specific segment are allocated in proportion to number of employees/business managed.
Secondary Segment: Geographical Segments:
a) Domestic Operations
b) International Operations
6.4. Accounting Standard 18 - Related Party Transactions (As compiled by the management and relied upon by the Auditors):
I) List of Related Parties:
a. Key Managerial Personnel :
Managing Director & CEO : Shri Dinabandhu Mohapatra
Executive Directors : Shri Neelam Damodharan
Shri Atanu Kumar Das Shri C. G. Chaitanya
b. Subsidiaries
i. BOI Shareholding Limited
ii. BOI AXA Investment Managers Private Limited
iii. BOI AXA Trustee Services Private Limited
iv. BOI Merchant Bankers Limited
v. PT Bank of India Indonesia Tbk
vi. Bank of India (Tanzania) Limited
vii. Bank of India (New Zealand) Limited
viii. Bank of India (Uganda) Limited
ix. Bank of India (Botswana) Limited
c. Associates
i. STCI Finance Limited
ii. ASREC (India) Limited
iii. Indo Zambia Bank Limited
d. 4 Regional Rural Banks sponsored by the Bank
i. Gramin Bank of Aryavart
ii. Jharkhand Gramin Bank;
iii. Narmada Jhabua Gramin Bank
iv. Vidharbha Konkan Gramin Bank
e. Joint Venture:
i. Star Union Dai-Ichi Life Insurance Co. Limited
II) a) Transactions with Related Parties (As compiled by Management and relied upon by the Auditors)
The transactions with wholly owned subsidiaries and regional rural banks being state controlled, have not been disclosed in view of Para 9 of AS - 18 on Related Party disclosure issued by ICAI exempting âState Controlled Enterprisesâ from making any disclosure pertaining to their transactions with other related parties which are also âState Controlled Enterprisesâ. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker - Customer relationship have not been disclosed including those with Key Management Personnel and relatives of Key Management Personnel, since the disclosure would conflict with Bankâs duties of confidentiality.
6.5 Accounting Standard 22 - Accounting for Taxes on Income
The major components of Deferred Tax Assets and Deferred Tax Liabilities are as under:
6.6 Accounting Standard 24 - Discontinuing Operations:
In consonance with the Government of India directives and as a part of strategic initiatives for rationalization of Overseas Operations, the Bank has decided to exit from certain foreign operations. During the year 2018-19, the Bank has initiated closure of its subsidiary namely Bank of India (Botswana) Ltd. The impact of closure of operations in this territory on the business of the Bank, is not material.
6.7 Accounting Standard 27 - Investments in Joint Venture
Investments include Rs. 75 (Previous year Rs. 75) representing Bankâs interest in the following jointly controlled entity:
A. Contingent Liabilities
Such liabilities are dependent upon, the outcome of court order/arbitration/out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No reimbursement is expected in such cases.
7. Additional Disclosures
7.1 Provisions and Contingencies
The break-up of âProvisions and Contingenciesâ appearing in the Profit and Loss Account is as under:
7.3 Drawdown from Reserves
There is no drawdown from reserves made during the year ended 31.03.2019.
7.4 Disclosure of complaints
i) Customer Complaints: As compiled by the management
7.5 Disclosure of Letters of Comfort (LoCs) issued by bank for Subsidiaries (As compiled by the management)
During the year 2018-19, the bank has not issued any Letter of Comforts on behalf of Subsidiaries. During the year 2011-12, the bank has issued an undertaking to the governor, Bank of Botswana in respect of its wholly owned subsidiary, Bank of India (Botswana) Ltd to meet its financial commitments if they fall due.
During the year 2010-11, the bank issued parental guarantee in favour of Royal Bank of New Zealand for its wholly owned subsidiary, BOI (New Zealand) Ltd. to meet its financial obligations, if they fall due.
As on 31.03.2019, no financial obligations have arisen on the above commitments.
7.6 Provisioning Coverage Ratio (PCR)
The Provisioning to Gross Non-Performing Assets of the Bank as on 31st March 2019 is 76.95% (Previous year: 65.85%).
7.7 Fees, remuneration received from Bancassurance business
Bank has purchased 20360 units of PSLCs amounting to Rs. 5090.00 during the year ended 31st March 2019, by paying a premium of Rs. 34.09 to bridge the gap under agriculture in reaching 18% of ANBC mandatory target.
7.8 Disclosure relating to Securitisation:
The Bank has not floated any Special purpose Vehicle (SPV) during the Financial Year 2018-19.
7.9 Credit Default Swaps:
The bank has not dealt with any Credit Default Swap.
The bank has duly approved policies by the Board on Capital and Provisioning Requirement for exposures to entities with UFCE which is based on RBI circulars.
As on 31.03.2019, based on available data and declaration from the borrowers, wherever received in accordance with the policy, the additional RWA on this exposure is Rs. 399.69 (Previous Year Rs. 926.37). As against this, additional minimum capital requirement is Rs. 43.47 (Previous Year Rs. 100.74).
@ Disclosure as on 31.03.2019 as well as 31.03.2018 has been done by taking simple average of daily observations over previous 4 quarters (i.e. average for the FY 2018-19 & FY 2017-2018 respectively). This is as per RBI guidelines ref. no. DBR.No.BP.BC.80 /21.06.201/2014-15 dated March 31, 2015.
Qualitative disclosures with regard to LCR:
W.e.f. 1st January 2015, the Bank has implemented guidelines on Liquidity Coverage Ratio (LCR) as directed by Reserve Bank of India.
The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until next 30 calendar days under a severe liquidity stress scenario.
High Quality Liquid Assets (HQLA)
LCR =
Total net cash outflows over the next 30 calendar days
Here,
- HQLA comprises of level 1 and level 2 assets, in other words these are cash or near to cash items which can be easily used / discounted in the market in case of need.
- Net cash outflows are excess of total inflows over total outflows under stressed situation as defined by Basel / RBI. While arriving at the net cash outflow, the inflows are taken with pre-defined hair-cuts and the outflows are taken at predefined run-off factors.
- In case stressed inflows are more than the stressed outflows, 25% of total outflows shall be taken as total net cash outflows to arrive at the LCR.
- With effect from 01.01.2015, Banks are required to maintain minimum 60% LCR on an ongoing basis. The same shall reach 100% as on 01.01.2019 with incremental increase of 10% each year:
Main Drivers of LCR: The main drivers of the LCR are adequacy of High Quality Liquid Assets (HQLA) and lower net cash outflow on account of higher funding sources from retail customers. Sufficient stock of HQLA helped the Bank to maintain adequate LCR.
Composition of HQLA: The composition of High Quality Liquid Assets (HQLA) mainly consists of cash balances, excess SLR, excess CRR and FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).
Concentration of funding sources: Majority of Bankâs funding sources are from retail customers (about 60%) therefore the stressed outflows are comparatively lower. However, in absence of any non-callable option for term deposits, the Bank has considered almost all deposits under outflow section as per RBI guidelines. Bank also does not have funding concentration from any significant counterparty. A significant counterparty is defined as a single counterparty or group of connected or affiliated counter parties accounting in aggregate for more than 1% of the bankâs total liabilities.
Derivative Exposures and potential collateral calls: Bank has very little exposure in derivative business which is not very significant.
Currency mismatch in the LCR: In terms of RBI guidelines, a significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bankâs total liabilities. In our case, USD is the only significant currency. Therefore, Bank also calculates LCR in USD currency.
Description of the degree of centralization of liquidity management and interaction between the groupâs units:
The liquidity management of the Bank at enterprise level is a Board level function and a separate sub-committee of the Board (R.Com.) keeps close watch on that. The periodical monitoring of the liquidity management is being monitored by the ALCO on regular intervals. The entire liquidity management process of the Bank is being governed by ALM Policy of the Bank.
The liquidity management for domestic operations is the central function, being managed at Head Office level. The overseas liquidity management is being handled at each centre, jurisdiction wise to keep close monitoring and control and also to comply with the local regulatory requirements as well. International Division of the Bank keeps watch on the overseas liquidity position and the overall liquidity monitoring is done at Head Office level centrally.
Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile:
No such items as per our notice.
8. Other Notes
a) Income Tax:
(i) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/interest tax liabilities of Rs. 631.93 (previous year Rs.653.42 ) for which no provision is considered necessary based on various judicial decisions in respect of past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).
(ii) Provision for taxes has been arrived at after due consideration of the provisions of the applicable tax laws and relevant judicial decisions on certain disputed issues.
d) The 11th Bipartite Settlement entered into by the Indian Banksâ Association on behalf of the member Banks with the All India Unions of Workmen expired on 31st October, 2017. In accordance with the pending execution of agreement for wage revision, to be effective from 1st November 2017, an ad-hoc sum of Rs. 600 (previous year Rs. 100) has been provided during financial year ended March 31, 2019 towards wage arrears. Cumulative provision held as on March 31, 2019 is Rs. 700.
e) Strategy for Ind-AS implementation and its Progress
Ind AS was initially planned to be implemented in Banks from April 1, 2018, which was deferred by RBI by one year owing to the pending legislative amendments in Banking Regulation Act, 1949 and also the level of preparedness of Banks. RBI vide its Circular No. DBR.BP.BC. No.29/21.07.001/2018-19 dated March 22, 2019, has once again deferred implementation of Ind AS till further notice as the legislative amendments recommended by RBI are under consideration of the Government of India.
The meetings of Steering Committee, headed by Executive Director, are held at regular intervals to discuss the issues in implementation process. As required by RBI, Bank has submitted quarterly Proforma Ind AS Financial Statements (PFS) during FY 2018-19 after being discussed/approved by Steering Committee. The PFS have also been presented to Audit Committee of Board along-with the overall progress report regarding Ind AS implementation.
Since Ind AS is more principle-based compared to present reporting requirements and its implementation involves use of substantial amount of judgments and assumptions, bank is constantly endeavoring in refining such judgements / assumptions. Bank is also evaluating improvements in extracting system based data for Ind AS implementation.
Implementation of Ind AS may entail acquiring new systems and also modifications changes in existing core banking system. Bank is in the process of evaluating such system changes that may have to be made for smooth implementation of Ind AS.
f) During the financial year ended March 31, 2019, bank has made additional provision of Rs. 4,817 in view of uncertainty of recovery and deterioration in value of underlying assets in respect of 213 borrower.
g) In respect of RBI referred NCLT accounts (List 1 & 2), as on March 31, 2019, Bank holds 100% provision of the outstanding value of Rs. 6,150.88.
h) In terms of RBI Circular DBR. No. BP BC. 64/ 21.04.048/ 2016-17 dated April 18, 2017 regarding stressed sectors identified by Bank, the Board of Directors of the Bank has approved standard assets provision of 0.10%, over & above the regulatory minimum, in respect of the Bankâs advances pertaining to Telecommunication, Textile, Iron & Steel, Commercial Real Estate, Other Metal & Metal products, Gem & Jewellery, Roads & ports, Vehicle & Vehicle Parts, Mining & Quarrying and Power Industry. Accordingly, an additional provision of Rs. 59.76 has been held as at March 31, 2019. Further, in respect of one stressed performing asset in aviation sector Bank has made additional provision of Rs. 40.
i) During the period, bank has revalued all premises forming parts of its fixed assets. Surplus arising on such revaluation aggregating to Rs. 689.94 is credited to âRevaluation Reservesâ, under âReserves & Surplusâ. The Revaluation Reserve has been reckoned for CET I capital as per extant RBI guidelines.
j) RBI vide Circular no. DBR.No.BP.BC.108/21.04.048/2017-18 dated June 6, 2018 permitted banks to continue the exposure to MSME borrowers to be classified as standard assets where the dues between September 1, 2017 and December 31, 2018 are paid not later than 180 days from their respective original due dates as per the scheme. Accordingly, the Bank has retained advances of Rs. 190.96 as âstandard assetsâ as on March 31, 2019. In accordance with the provisions of the circular, the Bank has not recognised interest income of Rs. 1.56 and is maintaining a standard asset provision of Rs. 9.55 as on March 31, 2019 in respect of such borrowers.
k) For the year ended 31-03-2019, Bank has shifted Central Government securities with a book value of Rs. 5,923.20 and State Government securities with a book value of Rs. 4,446.83 from HTM to AFS category and has booked depreciation upon such transfer. Further, Bank has shifted, Central Government securities with a book value of Rs. 8,835.95 from AFS to HTM category after charging shifting loss of Rs. 537.42.
For the year ended 31-03-2019, Bank has also shifted portfolio of Venture Capital Fund for an amount of Rs. 43.12 from HTM to AFS category after providing for depreciation of Rs. 9.71.
l) The Bank has received 18 Investor complaints during the financial year ended March 31, 2019 which has been disposed-off. There are no pending investor complaints at the beginning or end of the year.
m) In terms of RBI Press release no.2018-2019/1807 dated January 31, 2019, Bank has been taken out of âPrompt Corrective Action (PCA)â framework.
n) Figures of the previous year have been regrouped/ rearranged, wherever considered necessary, to confirm to current year classification.
Mar 31, 2017
1. During the year, the Bank has made preferential allotment of 23,81,42,640 Equity Shares of Rs.10 each in accordance with the regulation 76(1) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, the details of which are as under:
During the year, the Bank has received Rs.1,500 from the Government of India and Rs.221.92 from the Life Insurance Corporation of India towards share application money for subscription to equity shares on preferential basis. The same is treated as CET 1 capital for CRAR purpose in accordance with RBI letter No.DBR. No.BP.11083/21.01.002/2016-17 dated 22nd March, 2017.
2. Balancing of Subsidiary Ledger Accounts, confirmation/ reconciliation of balances with foreign branches, Inter-office accounts, NOSTRO Accounts, Suspense, Drafts Payable, Clearing Difference, etc. is in progress on an on-going basis. In the opinion of the management, the overall impact on the financial statements, if any, of pending final clearance/ adjustment of the above, is not likely to be significant.
3. During the year under Audit there is no change in accounting policies as those followed in the preceding financial year except in respect of depreciation on fixed assets. Earlier, the Bank was charging depreciation on all fixed assets (other than Computer & Computer Software) as per written down method at the rate determined by the bank which has now been changed to Straight Line Method (SLM) based on the estimated useful life of Fixed assets. Due to such change the excess depreciation, amounting to Rs.313.17 has been written back and credited to Profit & Loss Account during the year.
4. In view of the losses incurred by the Bank, RBI has permitted the Bank to make payment of interest on Additional Tier I Perpetual Basel III Compliant Bonds by debiting the Revenue Reserve. Accordingly, during the year, the Bank has reversed the provision of Rs.177.81 made towards interest payable till 31st March, 2016 by crediting the same to interest expended and an amount equivalent to such provision has been transferred from the Revenue Reserve. Further, Interest expended of Rs.413.22 for the year ended 31st March, 2017 has also been debited to Revenue Reserve.
5. The following information is disclosed in terms of guidelines issued by RBI:
Pursuant to RBI circular No DBR. NO.BP.13018/21.04.048/2015-16 dated 1st March 2016, the bank has considered revaluation reserve, foreign currency translation reserve and deferred tax assets in calculation of Capital Adequacy Ratio as on 31st March 2017.
Government Securities (Face Value) amounting to Rs.4,441.61 (previous year Rs.15,064.56) are kept as margin with RBI, CCIL, Clearing Houses and Exchanges towards margins/security settlement.
During the year the Bank has sold 18% stake in Star Union Dai-ichi Life Insurance Limited, Joint Venture, for Rs.540 and earned profit of Rs.495 (net of tax Rs.323.69). Post sale the Bankâs share has reduced to 28.96% as on 31.03.2017. Further, Rs.20.10 and Rs.6.84 were invested in Bank of India (Tanzania) Ltd. and BOI Axa Investment Managers Pvt. Ltd., respectively, subsidiaries of the Bank. However, Bankâs share in the Equity capital (i.e. 100% and 51% respectively) has remained constant pursuant to such additional investment.
During the year ended 31st March, 2017, the Bank has earned a profit of Rs.5.84 under buyback of 50,000 shares by BOI Shareholding Limited, a wholly owned subsidiary. Post buyback the investment has reduced to Rs.6.65 as on 31.03.2017 (previous year Rs.8.86).
5.1.1. Sale and transfers of securities to/from HTM Category:
During the year ended March 31, 2017, the aggregate book value of investment sold from, and transferred to/from, HTM category was in excess of 5% of the book value of HTM category at the beginning of the year.
The market value of investments (excluding investments in Non SLR bonds) under HTM category as on March 31, 2017 was Rs.81,714.81 which was higher than the book valueas of that date. In accordance with the RBI guidelines, sale from, and transfer to/ from, HTM category excludes:
- One-time transfer of securities permitted to be undertaken by banks at the beginning of the accounting year with approval of the Board of Directors;
- Sales to the RBI under pre-announced open market operation auctions;
- Repurchase of Government securities.
5.1.2 Disclosures on risk exposure in derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate derivatives, currency swaps and currency options to hedge on balance sheet assets and liabilities or to meet client requirements as well as for trading purpose as per policy approved by the Board. These products are used for hedging risk, reducing cost and increasing the yield. In such transactions, the types of risks to which the bank is exposed to, are credit risk, market risk, operational risk etc.
Risk management is an integral part of bankâs business management. Bank has risk management policies designed to identify and analyse risks, to set appropriate risk limits and to monitor these risks and limits on an on-going basis by means of reliable and up to date management information systems. The risk management policies and major control limits are approved by the Board of Directors and they are monitored and reviewed regularly. The organization of the Bank is conducive to managing risks. There is sufficient awareness of the risks and the size of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by the Managing Director& CEO.
The hedge/non hedge (market making) transactions are recorded separately. Income/expenditure on hedging derivatives is accounted on accrual basis.
Forex forward contracts are marked to market and the resultant gains and losses are recognized in the profit and loss account.
Interest rate derivatives and currency derivatives other than exchange traded derivatives for trading purpose are marked to market and the resulting losses, if any, are recognised in the Profit & Loss account. Net Profit, if any, is ignored.
Exchange traded derivatives entered into for trading purposes are valued at prevailing market rates based on rates given by the exchange and the resultant gains and losses are recognized in the Profit & Loss account.
Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure. Any gain/loss on termination of hedging swaps are deferred and recognised over the shorter of the remaining contractual life of the swap or the remaining life of the designated assets/liabilities.
Option fees/premium is amortised over the tenor of the option contract.
Bank has a proper system of submitting periodical reports to Senior and Top Management and Board as well as regulatory authorities as required by RBI and/or as per operational requirements. Bank has clearly spelt derivative guidelines on various aspects approved by the Board of Director. The derivative transactions are subject to concurrent, internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and corporate entities. The deals are done under approved exposure limits. The Bank has adopted the Current Exposure method prescribed by Reserve Bank of India for measuring Credit Exposures arising on account of interest rate and foreign exchange derivative transactions. Current exposure method is the sum of current credit exposure and potential future exposure of these contracts.
The current credit exposure is the sum of positive mark to market value of these contracts i.e. when the Bank has to receive money from the counter party.
Potential future credit exposure is determined by multiplying the notional principal amount of these contracts irrespective of whether the contract has zero, positive or negative mark to market value by the relevant add-on factors as under according to the nature and residual maturity of the instrument.
While computing the credit exposure, âsold optionsâ are excluded wherever the entire premium/fee or any other form of income is received / realized.
As per the extant RBI guidelines, credit exposures computed as per the current Mark to Market value of the contracts, also attracts provisioning requirement as applicable to the loan assets in the âStandardâ category, of the concerned counterparty. At present, the provision is to be maintained at 0.4% of the risk weighted assets. The Bank makes the requisite provision as aforesaid in the books.
6. Disclosure requirements as per Accounting Standards (AS) where RBI has issued guidelines in respect of disclosure items for Notes to Accounts:
6.1 Accounting Standard 9 - Revenue recognition
Certain items of income are recognised on realisation basis as per Accounting Policy no. 3 of Schedule 17: Significant Accounting Policies. However, the said income is not considered to be material.
6.2. Accounting Standard 18 - Related Party Transactions (As compiled by the management and relied upon by the Auditors):
I) List of Related Parties:
a. Key Managerial Personnel :
Managing Director & CEO : Shri Melwyn O. Rego Executive Directors :
Shri B.P. Sharma (Up to 31.07.2016)
Shri Ravindra P. Marathe (Up to 26.09.2016)
Shri R.A.Sankara Narayanan Shri NeelamDamodaran (w.e.f 16.02.2017)
Shri Atanu Kumar Das (w.e.f. 17.02.2017)
b. Subsidiaries
a. BOI Shareholding Ltd.
b. BOI AXA Investment Managers Private Limited
c. BOI AXA Trustee Services Private Limited
d. BOI Merchant Bankers Ltd.
e. PT Bank of India Indonesia Tbk
f. Bank of India (Tanzania) Limited
g. Bank of India (New Zealand) Limited
h. Bank of India (Uganda) Limited
i. Bank of India (Botswana) Limited
c. Associates
a. STCI Finance Limited
b. ASREC (India) Limited
c. Indo-Zambia Bank Limited
d. 4 Regional Rural Banks sponsored by the Bank
i. Gramin Bank of Aryavart (Formerly known as Aryavart Kshetriya Gramin Bank)
ii. Jharkand Gramin Bank;
iii. Narmada Jhabua Gramin Bank
iv. Vidharbha Konkan Gramin Bank
e. Joint Venture:
a. Star Union Dai-Ichi Life Insurance Co. Ltd.
The transactions with the subsidiaries and regional rural banks, being state controlled, have not been disclosed in view of Para 9 of AS-18 on Related party disclosure issued by ICAI exempting âState controlled enterprisesâ from making any disclosure pertaining to their transactions with other related parties which are also âState Controlled Enterprisesâ.
6.3. Accounting Standard 19 - Lease Financing
The contractual maturities of the Bankâs investment in lease financing and its components, which are included in advances, are set out below:
7.1 Drawdown from Reserves
In terms of RBI Circular Ref. DBOD. No. BP.BC.38/21.06.201/2014-15 dated September 1, 2014 on âImplementation of Basel III Capital Regulations in India -Amendmentsâ read with RBI Circular Ref. DBR. No. BP.BC.71/21.06.201/2015-16 dated January 14, 2016 on "Master Circular-Basel III Capital Regulations -Clarificationâ Bank has made a drawdown of Rs.591.03 from Revenue Reserve towards interest of Additional Tier-I Perpetual Basel III Compliant bonds.
Further, in terms of RBI Circular Ref. DBR.No.BP. BC.92/21.04.048/2015-16 dated April 18, 2016 on Provisioning pertaining to Fraud Accounts, Bank has debited âother reservesâ by Rs.65.19, being an amount remaining un-provided at the end of the financial year after considering the provision already made for the fraud during the quarters, by debiting the Profit & Loss account.
7.2 Disclosure of Letters of CoToort (LoCs) issued by bank for Subsidiaries (As compiled by the management)
During current year, the bank has not issued any letter of coToorts on behalf of Subsidiaries.
During the year 2011-12 the bank has issued an undertaking to the governor, Bank of Botswana in respect of its wholly owned subsidiary, Bank of India (Botswana) Ltd to meet its financial commitments if they fall due.
During the year 2010-11 the bank issued parental guarantee in favour of Royal Bank of New Zealand for its wholly owned subsidiary, BOI(New Zealand) Ltd. to meet its financial obligations, if they fall due.
As on 31.03.2017, no financial obligations have arisen on the above commitments.
7.3 Provisioning Coverage Ratio (PCR)
The Provisioning to Gross Non-Performing Assets of the Bank as on 31st March 2017 is 61.47% (Previous year:51.14%).
7.4 Fees, remuneration received from Bancassurance business:
7.5 Concentration of Deposits, Advances, Exposures and NPAs
7.6 Disclosure relating to Securitisation
The Bank has not floated any Special purpose Vehicle (SPV) during the Financial Year 2016-17.
7.7 Credit Default Swaps
The bank has not dealt with any Credit Default Swap.
The bank has duly approved policies by the Board on Capital and Provisioning Requirement for exposures to entities with unhedged foreign currency exposure which is based on RBI circular No.DB0D.No.BP.BC.85/21.06.200/2013-14 dated January 15, 2014 and clarifications received vide RBI Circular No. DB0D.No.BP.BC.116/21.06.200/2013-14 dated June 03, 2014.
Accordingly, it is envisaged that the Bank monitors UFCE on a monthly interval and provisioning and capital requirements on a quarterly basis. As on 31.03.2017, based on available data and declaration from the borrowers, wherever received, the Bank has created total provision of Rs.57.75 (Previous Year Rs.73.58). The additional RWA on this exposure is Rs.1082.37 (Previous Year Rs.1287.83), as against this additional minimum capital requirement is Rs.110.94 (Previous Year Rs.115.90).
Qualitative disclosures with regard to LCR
W.e.f. 1st January 2015, the Bank has implemented guidelines on Liquidity Coverage Ratio (LCR) as directed by Reserve Bank of India.
The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 under a severe liquidity stress scenario.
High Quality Liquid Assets (HQLA)
LCR =
Total net cash outflows over the next 30 calendar days
Here,
- HQLA comprises of level 1 and level 2 assets, in other words these are cash or near to cash items which can be easily used/discounted in the market in case of need.
- Net cash outflows are excess of total inflows over total outflows under stressed situation as defined by BCBS/ RBI. While arriving at the net cash outflow, the inflows are taken with pre-defined hair-cuts and the outflows are taken at pre-defined run-off factors.
- In case stressed inflows are more than the stressed outflows, 25% of total outflows shall be taken as total net cash outflows to arrive at the LCR.
- With effect from 01.01.2015, Banks are required to maintain minimum 60% LCR on an ongoing basis as given below:
Main Drivers of LCR: The main drivers of the LCR are adequacy of High Quality Liquid Assets (HQLA) and lower net cash outflow on account of higher funding sources from retail customers. Sufficient stock of HQLA helped the Bank to maintain adequate LCR.
Composition of HQLA: The composition of High Quality Liquid Assets (HQLA) mainly consists of cash balances, excess SLR, excess CRR and FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).
Concentration of funding sources: Majority of Bankâs funding sources are from retail customers,therefore the stressed outflows are comparatively lower. However, in absence of any non-callable option for term deposits, the Bank has considered almost all deposits under outflow section as per RBI guidelines. Bank also does not have funding concentration from any significant counterparty. A significant counterparty is defined as a single counterparty or group of connected or affiliated counter parties accounting in aggregate for more than 1% of the bankâs total liabilities.
Derivative Exposures and potential collateral calls: Bank has very little exposure in derivative business which is not very significant.
Currency mismatch in the LCR: In terms of RBI guidelines, a significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bankâs total liabilities. In our case, USD is the only significant currency. Therefore, Bank also calculates LCR in USD currency.
Description of the degree of centralization of liquidity management and interaction between the groupâs units:
The liquidity management of the Bank at enterprise level is a Board level function and a separate sub-committee of the Board (R.Com.) keeps close watch on that. The periodical monitoring of the liquidity management is being monitored by the ALCO on regular intervals. The entire liquidity management process of the Bank is being governed by ALM Policy of the Bank.
The liquidity management for domestic operations is the central function, being managed at Head Office level. The overseas liquidity management is being handled at each centre, jurisdiction wise to keep close monitoring and control and also to comply with the local regulatory requirements as well. International Division of the Bank keeps watch on the overseas liquidity position and the overall liquidity monitoring is done at Head Office level centrally.
Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile:
No such items as per our notice.
8. Other Notes
a) Income Tax:
(i) Claims against the Bank not acknowledged as debt under contingent liabilities (Schedule 12) include disputed income tax/interest tax liabilities of Rs.555.42 (previous year Rs.555.07) for which no provision is considered necessary based on various judicial decisions in respect of past assessments on such disputes. Payments/adjustments against the said disputed dues are included under Other Assets (Schedule 11).
(ii) Provision for income tax for the year is arrived at after due consideration of the provisions of the applicable tax laws and relevant judicial decisions on certain disputed issues.
(iii) Income Computation and Disclosure Standards (ICDS) as notified u/s 145(2) of the Income Tax Act, 1961 on 29th September 2016, are applicable for the financial year ended on 31st March, 2017 and accordingly tax provisions and deferred tax for the financial year 2016-17 have been computed after considering its impact.
b) Movement of Reward Points for 2016-17:
c) Disclosure regarding frauds:
d) In compliance with the RBI Guidelines in respect of âScheme for Stressed Assets-Revisionâ, in respect of Standard Facilities under Strategic Debt Restructuring (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A), the bank has during the year ended 31st March, 2017 reversed an amount of Rs.114.43 being unrealised interest in such accounts.
e) During the year the Bank has invoked Sustainable Structuring of Stressed Assets (S4A) in Two borrower accounts (Standard as on 31st March, 2017) having aggregate outstanding of Rs.272.80 as on 31st March, 2017. The required provision will be reckoned by the Bank only upon implementation of the S4A scheme.
f) During the year, in case of one Borrower declared as fraud, an amount of Rs.65.40 has been provided, in terms of RBI circular DBR.No.BP.BC.83/21.04.048/2014-15 dated April 01, 2015 and DBR.No.BP.BC.92/21.04.048/2015-16 dated April 18, 2016. The remaining un-provided as on 31st March, 2017 is Rs.65.19 has been drawn from Revenue Reserve.
g) In compliance with RBI directives, accounts shown under Annex - III of Asset Quality Review (AQR) wherein restructuring was failed due to performance issues or non-fulfilment of certain conditions and necessary provisions was held in those accounts in terms of RBI directives, have been reviewed as on 31st March, 2017 and has now being classified and provision has been made as per the IRAC norms. Incremental provision of Rs.83.22 which was made in terms of RBI directives have been reversed on 31st March, 2017 w.r.t. those accounts which remained standard as on 31st March, 2017.
h) Other Income for the year includes gain of Rs.495.00 on sale of 18% stake held by the Bank in the Joint Venture namely Star Union Dai-ichi Life Insurance Company Limited and Rs.188.13 from sale of investment in CIBIL.
i) In accordance with RBI guidelines, Bank has shifted securities from HTM to AFS category during the year. The book value of securities shifted was Rs.13854.96.
j) Profit on sale of Investments held under âHeld to Maturityâ category amounting to Rs.1146.70 (previous year Rs.243.86) has been taken to the Profit & Loss Account and thereafter an amount Rs.749.85 (previous year Rs.159.47) has been appropriated to the Capital Reserve, net of taxes and transfer to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.
k) The Bank has received 3 Investor complaints during the quarter ended 31st March, 2017 which have been disposed-off. There are no pending investor complaints at the beginning or end of the quarter.
l) Previous yearâs figures have been regrouped/rearranged, wherever considered necessary.
Mar 31, 2015
1. The abridged financial statements do not contain all the
disclosures required by the Accounting Standards applied in the
preparation of the audited financial statements of the Bank. The
abridged financial statements, therefore, is not a substitute of the
audited financial statements of the Bank.
2. The Statutory Auditors of the Bank, without modifying their opinion
have drawn attention to the following notes to the Financial
Statements:
a. Note No.2 of the Standalone Financial Statements and Note No.7 of
consolidated Financial Statements of Schedule 18 which reads as under:
During the year, the Bank has changed its accounting policy of
provisioning in respect of NPAs classified as doubtful category
(Secured Portion) up to one year from 50% (accelerated provision) to
25% (minimum provision) of net outstanding advances. Had the earlier
accounting policy been followed, the provision for NPAs for the year
would have been higher by Rs. 811 crores with consequential decrease in
Net Profit for the year (net of tax) by Rs. 535.34 crores.
b. Note No.4.1.1 of the Standalone Financial Statements and Note No.10
of consolidated Financial Statements of Schedule 18 which reads as
under:
In accordance with the RBI circular no.DBOD.
BP.BC.80/21.04.018/2010-11dated 9th February 2011:
* Rs. 442.42 Crores for the Year has been charged to the Profit & Loss
Account on proportionate basis towards additional liability of
Rs.2212.15 Crores (being amortised over 5 years beginning from 31st
March, 2011) on account of reopening of pension option for existing
employees who had not opted for pension earlier calculated on actuarial
basis. There remains no amount to be amortised in future periods.
* Rs. 85.79Crores for the Year has been charged to the Profit & Loss
Account on proportionate basis towards additional liability of
Rs.428.96 Crores (being amortised over 5 years beginning from 31st
March 2011) on account of the enhancement of gratuity limits in Payment
of Gratuity Act, 1972. There remains no amount to be amortised in
future periods.
c. Note No.7 (f) of the Standalone Financial Statements and Note No.
7(B) of consolidated Financial Statements of Schedule 18 which reads as
under:
Pursuant to Reserve Bank of India Letter No. DBS :CO:SSM:( BOI)
14657:13.37.001:2014-15 dated 20th May, 2015, the bank has deferred
provision of Rs. 709.31 Crores in respect of certain NPAs and loss of
Rs. 403.21 Crores on sale of certain NPAs to be amortized over a period
of 3 quarters commencing from June 2015. Had this dispensation been not
given to the bank, the provision for NPAs for the year would have been
higher by Rs. 1112.52 Crores with consequential decrease in Net Profit
for the year (net of tax) by Rs. 734.37 Crores.
d. Note No.7 (g) of the Standalone Financial Statements and Note No.
7(C) of consolidated Financial Statements of Schedule 18 which reads as
under:
Pursuant to Reserve Bank of India Letter No.
DBR:BP:17252:21.04.048:2014-15 dated 13th May, 2015, the bank has
amortized the shortfall arising out of sale of financial assets to ARCs,
sold between 26th February, 2014 and 31st March, 2015, over a period of
8 quarters from the quarter in which the asset was sold. Consequently,
the bank has charged Rs. 112.66 Crores to Profit & Loss Account for the
year and the balance amount of Rs. 478.91 Crores is being carried
forward to be charged to Profit & Loss Account of future periods
3. Disclosures on risk exposure in derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate swaps,
currency swaps and currency options to hedge on balance sheet assets
and liabilities or to meet client requirements as well as for trading
purpose as per policy approved by the Board. These products are used
for hedging risk, reducing cost and increasing the yield. In such
transactions the types of risks to which the bank is exposed to, are
credit risk, market risk, operational risk etc.
Risk management is an integral part of bank''s business management. Bank
has risk management policies designed to identify and analyse risks, to
set appropriate risk limits and to monitor these risks and limits on an
on-going basis by means of reliable and up to date management
information systems. The risk management policies and major control
limits are approved by the Board of Directors and they are monitored and
reviewed regularly. The organization of the Bank is conducive to
managing risks. There is sufficient awareness of the risks and the size
of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by
the Chairman and Managing Director.
Hedging swaps are accounted for on an accrual basis except for swap
designated with an asset and liability that is carried at market value
or lower of cost/market value. In such cases, the swaps are marked to
market and the resulting gain or loss is recorded as an adjustment to
the market value of the designated asset or liability. Gains or losses
on the termination of swaps are recognised when the offsetting gain or
loss is recognised on the designated asset or liability. This implies
that any gain or loss on the terminated swap would be deferred and
recognised over the shorter of the remaining contracting life of the
swap or the remaining life of the asset/liability.
Trading derivative positions are marked to market (MTM) and the
resulting losses, if any, are recognised in the profit and loss account.
Profit, if any, are not recognised on the settlement date. Gains or
losses on termination of swaps are recorded as immediate income or
expenses.
Bank has a proper system of submitting periodical reports to Senior and
Top Management and Board as well as regulatory authorities as required
by RBI and/or as per operational requirements. Bank has clearly spelt
derivative guidelines on various aspects approved by the Board of
Director. The derivative transactions are subject to concurrent,
internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and
corporate entities. The deals are done under approved exposure limits.
The Bank has adopted the Current Exposure method prescribed by Reserve
Bank of India for measuring Credit Exposures arising on account of
interest rate and foreign exchange derivative transactions. Current
exposure method is the sum of current credit exposure and potential
future exposure of these contracts.
The current credit exposure is the sum of positive mark to market value
of these contracts i.e. when the Bank has to receive money from the
counter party.
Potential future credit exposure is determined by multiplying the
notional principal amount of these contracts irrespective of whether
the contract has zero, positive or negative mark to market value by the
relevant add-on factors as under according to the nature and residual
maturity of the instrument.
i) Primary Segment: Business Segments
a) Treasury Operations:
''Treasury'' for the purpose of Segment Reporting includes the entire
investment portfolio i.e. dealing in Government and other Securities,
Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are
not included under Retail Banking.
c) Retail Banking : Retail Banking includes exposures which fulfil
following two criteria:
i) Exposure - The maximum aggregate exposure up to Rs. 5 Crores.
ii) The total annual turnover is less than ''50 Crores i.e. the average
turnover of the last three years in case of existing entities and
projected turnover in case of new entities.
Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
Allocation of Costs
a) Expenses directly attributed to particular segment are allocated to
the relative segment.
b) Expenses not directly attributable to specific segment are allocated
in proportion to number of employees/business managed.
Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
4. Accounting Standard 18- Related Party Transactions (As compiled by
Management):
I) List of Related Parties
(a) Key Managerial Personnel :
Chairperson &Managing Director : Smt. V.R.Iyer
Executive Directors: Shri B.P.Sharma
Shri Arun Shrivastava
(w.e.f. 05.08.2013)
Shri Koteeshwaran
(w.e.f. 05.08.2013 to
31.12.2014)
Shri R.P. Marathe
(w.e.f.10.03.2015)
b) Subsidiaries :
(i) BOI Shareholding Limited.
(ii) BOI AXA Investment Managers Private Limited
(iii) BOI AXA Trustee Services Private Limited
(iv) BOI Merchant Bankers Ltd.(w.e.f. from 31.10.2014)
(v) PT Bank of India Indonesia Tbk
(vi) Bank of India (Tanzania) Limited
(vii) Bank of India (New Zealand) Limited
(viii) Bank of India (Uganda) Limited
(ix) Bank of India (Botswana) Limited
(c) Associates :
(i) STCI Finance Limited
(ii) ASREC (India) Limited
(iii) Indo-Zambia Bank Limited
(iv) 4 Regional Rural Banks sponsored by the Bank
(a) Gramin Bank of Aryavart (Formerly known as Aryavart Kshetriya
Gramin Bank)
(b) Jharkhand Gramin Bank;
(c) Narmada JhabuaGramin Bank
(d) VidharbhaKonkanGramin Bank
(d) Joint Venture:
(i) Star Union DaiÂIchiLife Insurance Co. Ltd.
5. Impairment of Assets (Accounting Standard 28) : Rs. Nil
6. Accounting Standard 29: "Provisions, Contingent Liabilities and
Contingent Assets":
A. Movement of Provisions for contingent liabilities
Particulars Legal cases/contingencies
2014-15 2013-14
Opening Balance 26.95 26.94
Provided during the year 1.25 0.01
Amounts used during the year 0.00 0.00
Closing Balance 28.20 26.95
Timing of outflow/uncertainties Outflow on Outflow on
settlement / settlement /
Crystallization Crystallization
B. Contingent Liabilities
Such liabilities are dependent upon, the outcome of court
order/arbitration/out of court settlement, disposal of appeals, the
amount being called up, terms of contractual obligations, devolvement
and raising of demand by concerned parties, as the case may be. No
reimbursement is expected in such cases.
Disclosure of Letters of Comfort (LoCs) issued by bank(As compiled
by Management and relied upon by the Auditors)
During current year, the bank has not issued any letter of comforts.
During the year 2011-12 the bank has issued and undertaking to the
governor, Bank of Botswana in respect of its wholly owned subsidiary,
Bank of India (BTW) Ltd., to meet its financial commitments if they
fall due.
During the year 2010-11 the bank issued parental guarantee in favour of
Royal Bank of New Zealand for its wholly owned subsidiary, BOI(New
Zealand) Ltd. to meet its financial obligations, if they fall due.
As on 31.03.2015 no financial obligations have arisen on the above
commitments.
7. Provisioning Coverage Ratio (PCR)
The Provisioning to Gross Non-Performing Assets of the Bank as on 31st
March 2015 is 52.40% (Previous year: 58.68%)
8. Unamortised Pension and Gratuity Liabilities:
During the year ended 31.03.2011, the Bank had re-opened the pension
option for such of its employees who had not opted for the pension
scheme earlier. As a result of exercise of the option by 22,338
employees, the bank had incurred additional liability of Rs. 2,212.15
Crores. Further, during the year ended 31.03.2011, the limit of
Gratuity payable to the employees was also enhanced pursuant to the
amendment to the Payment of Gratuity Act, 1972. As a result the
gratuity liability of the Bank had increased by Rs.428.96 Crores.
As per the Reserve Bank of India circular no. DBOD.
BP.BC.80/21.04.018/2010-11) on Re-opening of Pension Option to
Employees of Public Sector Banks and Enhancement in Gratuity Limits -
Prudential Regulatory Treatment, dated 9thFebruary 2011, the Bank had
opted to defer the additional liability ofRs.2,641.11 Crores as
mentioned above and amortise it over a period of five years commencing
from financial year 2010-11 onwards. Accordingly, unamortised amount of
Rs. NIL(Previous year 528.22 Crores) has been carried forward to be
charged to the Profit and Loss account of future year/s.
9. Disclosure relating to Securitisation
The Bank has not floated any Special purpose Vehicle (SPV) during the
Financial Year 2014-15.
10. Credit Default Swaps
The bank has not started dealing with Credit Default swaps up to end of
the financial year 2014-15.
Note- Data to be entered only in blank & light grey cells For this
quarter i.e. 31.03.2015, Data in the disclosure has been computed by
arriving at an average of January, 2015, February, 2015 and March 2015.
Qualitative disclosures with regard to LCR
W.e.f. 1st January 2015, the Bank has implemented guidelines on
Liquidity Coverage Ratio (LCR) as directed by Reserve bank of India.
The LCR standard aims to ensure that a bank maintains an adequate level
of unencumbered High Quality Liquid Assets (HQLA) that can be converted
into cash to meet its liquidity needs for a 30 calendar day time
horizon under a significantly severe liquidity stress scenario. At a
minimum, the stock of liquid assets should enable the bank to survive
until day 30 under a severe liquidity stress scenario.
High Quality Liquid Assets
LCR =
Total net cash outflows over the next
30 calendar days
Here,
* HQLA comprises of level 1 and level 2 assets, in other words these
are cash or near to cash items which can be easily used / discounted in
the market in case of need.
* Net cash outflows are excess of total inflows over total outflows
under stressed situation as defined by Basel / RBI. While arriving at
the net cash outflow, the inflows are taken with pre-defined hair-cuts
and the outflows are taken at pre-defined run-off factors.
* In case stressed inflows are more than the stressed outflows, 25% of
total outflows shall be taken as total net cash outflows to arrive at
the LCR.
* With effect from 01.01.2015, Banks are required to maintain minimum
60% LCR on an on-going basis. The same shall reach 100% as on
01.01.2019 with incremental increase of 10% each year.
Main Drivers of LCR: The main drivers of the LCR is adequacy of High
Quality Liquid Assets (HQLA) and lower net cash outflow on account of
higher funding sources from retail customers. Adequate stock of HQLA
helped the Bank to improve LCR as the Bank is maintaining significant
amount of excess SLR.
Intra-period changes as well as changes over time: For the March 2015
quarter, the LCR during January 2015 (154.35%) and February 2015
(154.51%) months was consistent. However, in the month of March''2015
(94.26%), there was a fall in LCR on account of decrease in stock of
excess SLR but the same was above the regulatory requirement of 60%.
Composition of HQLA: The composition of High Quality Liquid Assets
(HQLA) mainly consists of cash balances, excess SLR, excess CRR and
FALLCR (Facility to Avail Liquidity for Liquidity Coverage Ratio).
Concentration of funding sources: Majority of Bank''s funding sources
are from retail customers (about 60%) therefore the stressed outflows
are comparatively lower. However, in absence of any non-callable option
for term deposits, the Bank has considered almost all deposits under
outflow section as per RBI guidelines. Bank also does not have funding
concentration from any significant counterparty. A significant
counterparty is defined as a single counterparty or group of connected
or affiliated counterparties accounting in aggregate for more than 1%
of the bank''s total liabilities.
Derivative Exposures and potential collateral calls: Domestic operation
of the Bank has very little exposure in derivative business. However,
there is small derivative business in overseas operations but the same
is not very significant.
Currency mismatch in the LCR:In terms of RBI guidelines, a significant
currency is one where aggregate liabilities denominated in that
currency amount to 5 per cent or more of the banks total liabilities.
In our case, USD is the only significant currency therefore we also
calculate LCR in USD currency. There is no such stipulation given by
the RBI to maintain the LCR in significant currency up to a certain
level. However, Bank is endeavouring to improve its USD denominated LCR
further, which is presently at 39.16%.
Description of the degree of centralisation of liquidity management and
interaction between the group''s units: The liquidity management of the
Bank at enterprise level is a Board level function and a separate
sub-committee of the Board (R.Com.) keeps close watch on that. The
periodical monitoring of the liquidity management is being monitored to
the ALCO on regular intervals. The entire liquidity management process
of the Bank being governed by ALM Policy of the Bank.
The liquidity management for domestic operations is the central
function, being managed at Head Office level. The overseas liquidity
management is being handled at each centre jurisdiction wise to keep
close monitoring and control and also to comply with the local
regulatory requirements as well. International Division of the Bank
keep watch on the overseas liquidity position and the overall liquidity
monitoring is done at Head Office level centrally.
Other inflows and outflows in the LCR calculation that are not captured
in the LCR common template but which the institution considers to be
relevant for its liquidity profile: No such as per our notice.
11. Other Notes
a) Income Tax:
I. Claims against the Bank not acknowledged as debt under contingent
liabilities (Schedule 12) include disputed income tax / interest tax
liabilities of Rs. 961.37 Crores (previous year Rs. 857.58 Crores) for
which no provision is considered necessary based on various judicial
decisions for past assessments on such disputes. Payments/ adjustments
against the said disputed dues are included under Other Assets
(Schedule 11).
II. Provision for income tax for the year is arrived at after due
consideration of the various judicial decisions on certain disputed
issues.
III. During the year, the Bank has written back Provision for Taxation
pertaining to earlier years of Rs.483.55 Crores (previous year Rs.
368.82 Crores) based on orders of Income Tax Authorities.
b) Pending settlement of the wage revision effective from November
2012, provision of Rs.540.06 Crores for the year (Previous year Rs.
269.51 Crores) has been made. The aggregate provision held as on 31st
March, 2015 is Rs. 879.57 Crores (Previous year Rs. 339.51 Crores).
3. The financial statements of the subsidiaries, joint ventures and
associates which are used in the consolidation have been drawn upto the
same reporting date as that of the Parent Bank i.e. 31st March 2015
except for an associate IndoZambia Bank Limited (IZBL). IZBL''s
financial statements were prepared up to 31st December 2014 and
reported no significant transaction for the quarter ended 31st March
2015.
4. In case of Domestic subsidiaries/ joint venture/ associates,
accounting adjustments arising due to different accounting policies
followed by Parent Bank and subsidiaries/ joint venture/ associates
have been carried out on the basis of data provided by subsidiaries/
joint venture/ associates.
5. The Consolidated Financial Statements have been prepared on the
basis of :
(i) Financial statements of PT Bank of India Indonesia Tbkas on
31.03.2015certified by the Management and reviewed by an independent
reviewer as per the local requirements of the country of incorporation.
(ii) Financial statements of Bank of India (Tanzania) Ltd.as on
31.03.2015 certified by the Management and reviewed by an independent
reviewer.The Financial Statements as at 31.12.2014of Bank of India
(Tanzania) Ltd. has been audited as per the local requirements of the
country of incorporation.
(iii) Financial statements of Bank of India (New Zealand) Ltd. as on
31.03.2015 certified by the Management and reviewed by an independent
reviewer.
(iv) Financial statements of Bank of India (Uganda) Ltd. as on
31.03.2015 certified by the Management and reviewed by
an independent revieweras per the local requirements of the country of
incorporation.
(v) Financial statements of Bank of India (Botswana) Ltd. as on
31.03.2015 certified by the Management and reviewed by an independent
reviewer as per the local requirements of the country of incorporation.
(vi) Audited financial statements of BOI Shareholding Ltd., BOI
Merchant Bankers Ltd., BOI AXA Investment Managers Pvt. Ltd., BOI AXA
Trustee Services Pvt. Ltd.,Star UnionDai-ichi Life Insurance Company
Ltd.,STCI Finance Ltd., Jharkhand Gramin Bank for the financial year
ended 31.03.2015and Indo Zambia Bank Ltd.for the nine months ended
31.12.2014.
(vii) Unaudited financial statements of ASREC (India) Ltd., Vidharbha
Konkan Gramin Bank, Narmada JhabuaGramin Bank and Gramin Bank of
Aryavartfor the financial year ended
31.03.2015 certified by their management.
I. Primary Segment: Business Segments
1. Treasury Operations: ''Treasury'' for the purpose of Segment
Reporting includes the entire investment portfolio i.e. dealing in
Government and other Securities, Money Market Operations and Forex
Operations.
2. Wholesale Banking: Wholesale Banking includes all advances which
are not included under Retail Banking.
3. Retail Banking : Retail Banking includes exposures which fulfil
following two criteria:
i) Exposure - The maximum aggregate exposure up to Rs. 5 Crore
ii) The total annual turnover is less than Rs. 50 crore i.e. the
average turnover of the last three years in case of existing entities
and projected turnover in case of new entities.
4. Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
5. Allocation of Costs
- Expenses directly attributed to particular segment are allocated to
the relative segment
- Expenses not directly attributable to specific segment are allocated
in proportion to number of employees / business managed.
II) Secondary Segment: Geographical Segments
b) Domestic Operations
c) International Operations
12. Previous year''s figures have been regrouped/rearranged, wherever
considered necessary.
Mar 31, 2014
1. The abridged financial statements do not contain all the disclosures
required by the Accounting Standards applied in the preparation of the
audited financial statements of the Bank. The abridged financial
statements, therefore, is not a substitute for the audited financial
statements of the Bank.
2. The Statutory Auditors of the Bank, without modifying their
opinion, have drawn attention to the following notes to the Financial
Statements:
3.a. Note No. 3 of Standalone Financial Statements and Note No. 7 of
Consolidated Financial Statements of Schedule 18, which reads as under:
During the year, the Bank has changed its accounting policy of
provisioning in respect of NPAs classified as Sub-Standard (Secured)
from 20%(accelerated provision) to 15%(minimum provision) which has
resulted into write back of provision for NPAs of Rs. 248.71 Crores
provided till 31st March 2013. Had the earlier accounting policy been
followed, the provision for NPAs for the year would have been higher by
Rs. 325.38 Crores with consequential decrease in Net profit for the year
(net of tax) by Rs. 214.78 Crores.
b. Note No. 5.2 of Standalone Financial Statements and Note No. 11 of
Consolidated Financial Statements of Schedule 18, which reads as under:
In accordance with the RBI circular no.DBOD.
BP.BC.80/21.04.018/2010-11dated 9th February 2011:
- Rs. 442.44 Crores for the Year has been charged to the Profit & Loss
Account on proportionate basis towards additional liability of Rs.
2212.15 Crores (being amortised over 5 years beginning from 31st March,
2011) on account of reopening of pension option for existing employees
who had not opted for pension earlier calculated on actuarial basis.
- Rs. 85.79 Crores for the Year has been charged to the Profit & Loss
Account on proportionate basis towards additional liability of Rs. 428.96
Crores (being amortised over 5 years beginning from 31st March 2011) on
account of the enhancement of gratuity limits in Payment of Gratuity
Act, 1972.
c. Note No. 5.5 of Standalone Financial Statements and Note No. 8 of
Consolidated Financial Statements of Schedule 18, which reads as under:
The Bank creates Special Reserve through appropriation of profits, in
order to avail tax deduction as per Section 36(1)(viii) of the
Income-tax Act, 1961. The Reserve Bank of India, vide its circular
dated 20th December 2013, has advised Banks to create a deferred tax
liability (DTL) on outstanding amount in Special Reserve, as a matter
of prudence. Accordingly, during the Year ended 31st March 2014, the
Bank has created a DTL of Rs. 431.67 Crores on Special Reserve
outstanding as at 31st March, 2013, by reducing the General Reserves.
Further, DTL of Rs. 118.96 Crores has been created for the year on such
Special Reserve created during the year. Accordingly, the tax expense
for the year is higher by Rs. 118.96 Crores with corresponding decrease
in net profit for the year.
4. The following information is disclosed in terms of guidelines
issued by RBI:
4.1. Capital:
4.4.3. Disclosures on risk exposure in derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate swaps,
currency swaps and currency options to hedge on balance sheet assets
and liabilities or to meet client requirements as well as for trading
purpose as per policy approved by the Board. These products are used
for hedging risk, reducing cost and increasing the yield. In such
transactions the types of risks to which the bank is exposed to, are
credit risk, market risk, operational risk etc.
Risk management is an integral part of bank''s business management. Bank
has risk management policies designed to identify and analyze risks, to
set appropriate risk limits and to monitor these risks and limits on an
on-going basis by means of reliable and up to date management
information systems. The risk management policies and major control
limits are approved by the Board of Directors and they are monitored
and reviewed regularly. The organization of the Bank is conducive to
managing risks. There is sufficient awareness of the risks and the size
of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by
the Chairman and Managing Director.
Hedging swaps are accounted for on an accrual basis except for swap
designated with an asset and liability that is carried at market value
or lower of cost/ market value. In such cases, the swaps are marked to
market and the resulting gain or loss is recorded as an adjustment to
the market value of the designated asset or liability. Gains or losses
on the termination of swaps are recognised when the offsetting gain or
loss is recognised on the designated asset or liability. This implies
that any gain or loss on the terminated swap would be deferred and
recognised over the shorter of the remaining contracting life of the
swap or the remaining life of the asset/liability.
Trading derivative positions are marked to market (MTM) and the
resulting losses, if any, are recognised in the profit and loss account.
Profit, if any, are not recognised on the settlement date. Gains or
losses on termination of swaps are recorded as immediate income or
expenses.
Bank has a proper system of submitting periodical reports to Senior and
Top Management and Board as well as regulatory authorities as required
by RBI and/or as per operational requirements. Bank has clearly spelt
derivative guidelines on various aspects approved by the Board of
Director. The derivative transactions are subject to concurrent,
internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and
corporate entities. The deals are done under approved exposure limits.
The Bank has adopted the Current Exposure method prescribed by Reserve
Bank of India for measuring Credit Exposures arising on account of
interest rate and foreign exchange derivative transactions. Current
exposure method is the sum of current credit exposure and potential
future exposure of these contracts.
The current credit exposure is the sum of positive mark to market value
of these contracts i.e. when the Bank has to receive money from the
counter party.
Potential future credit exposure is determined by multiplying the
notional principal amount of these contracts irrespective of whether
the contract has zero, positive or negative mark to market value by the
relevant add-on factors as under according to the nature and residual
maturity of the instrument.
While computing the credit exposure, "sold options" are excluded
wherever the entire premium/fee or any other form of income is received
/ realized.
As per the extant RBI guidelines credit exposures computed as per the
current Mark to Market value of the contracts, also attracts
provisioning requirement as applicable to the loan assets in the
"Standard" category, of the concerned counterparty. At present the
provision is to be maintained at 0.4% of the risk weighted assets. The
Bank makes the requisite provision as aforesaid in the books.
The Bank has recognised Business Segments as Primary reporting segment
and Geographical Segments as Secondary segment in line with RBI
guidelines in compliance with Accounting Standard 17.
i) Primary Segment: Business Segments
a) Treasury Operations: ''Treasury'' for the purpose of Segment Reporting
includes the entire investment portfolio i.e. dealing in Government and
other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are
not included under Retail Banking.
c) Retail Banking : Retail Banking includes exposures which fulfill
following two criteria:
i) Exposure  The maximum aggregate exposure up to Rs. 5 Crores
ii) The total annual turnover is less than Rs. 50 Crores i.e. the average
turnover of the last three years in case of existing entities and
projected turnover in case of new entities.
d) Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
e) Allocation of Costs
a) Expenses directly attributed to particular segment are allocated to
the relative segment.
b) Expenses not directly attributable to specific segment are allocated
in proportion to number of employees/business managed.
ii) Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
5.4. Accounting Standard 18- Related Party Transactions (As compiled by
Management):
I) List of Related Parties
a) Key Managerial Personnel :
Chairperson &Managing Director : Smt. V.R.Iyer
Executive Directors: Shri N. Seshadri
(up to 30.04.2013)
Shri M. S. Raghavan (up to 05.07.2013)
Shri B.P.Sharma
Shri Arun Shrivastava (w.e.f.05.08.13)
Shri R. Koteeswaran (w.e.f.05.08.2013)
(b) Subsidiaries:
(i) BOI Shareholding Limited.
(ii) PT Bank of India Indonesia Tbk
(iii) Bank of India (Tanzania) Limited
(iv) Bank of India (New Zealand) Limited
(v) Bank of India (Uganda) Limited
(vi) Bank of India (Botswana) Limited
(vii) BOI AXA Investment Managers Private Limited
(viii) BOI AXA Trustee Services Private Limited
(c) Associates :
(i) STCI Finance Limited
(ii) ASREC (India) Limited
(iii) Indo-Zambia Bank Limited
(iv) Gramin Bank of Aryavart (Formerly Known as AryavartKshetriyaGramin
Bank)
(v) Jharkhand Gramin Bank
(vi) Narmada JhabuaGramin Bank
(vii) VidharbhaKonkanGramin Bank
(d) Joint Venture:
(i) Star Union DaiÂIchi Life Insurance Co. Ltd.
5.7. Impairment of Assets (Accounting Standard 28)
In respect of premises revalued earlier, there is an impairment loss of
Rs. 10.46 crores, which, in accordance with the aforesaid accounting
standard, has been charged to the revaluation surplus available for
these assets.
Pursuant to Reserve Bank of India circular No. DBOD No.
BP.95/21.04.048/2013-14 dated 7th February 2014, the Bank has utilised
Rs. 179.49 Crores of floating provision, being 33% of floating provision
of Rs. 543.92 Crores held on 31st March 2013 towards specific provisions
for NPAs.
6.3. Draw Down from Reserves
The Reserve Bank of India, vide its circular dated 20th December 2013,
has advised Banks to create a deferred tax liability (DTL) on
outstanding amount in Special Reserve, as a matter of prudence.
Accordingly, during the Year ended 31st March 2014, the Bank has made
draw down of Rs. 431.67 Crores from General Reserve towards creation of
DTL on Special Reserve outstanding as at 31st March, 2013.
6.4. Disclosure of complaints
6.5. Disclosure of Letters of Comfort (LoCs) issued by bank(As
compiled by Management)
During current year, the bank has not issued any letter of comforts.
During the year 2011-12 the bank has issued and undertaking to the
governor, Bank of Botswana in respect of its wholly owned subsidiary,
Bank of India (BTW) Ltd., to meet its financial commitments if they fall
due.
During the year 2010-11 the bank issued parental guarantee in favour of
Royal Bank of New Zealand for its wholly owned subsidiary, BOI(New
Zealand) Ltd. to meet its financial obligations, if they fall due.
As on 31.03.2014 no financial obligations have arisen on the above
commitments.
6.6. Provisioning Coverage Ratio (PCR)
The Provisioning to Gross Non-Performing Assets of the Bank as on 31st
March 2014 is 58.68% (Previous year: 60.92%)
6.14. Unamortised Pension and Gratuity Liabilities:
During the year ended 31.03.2011, the Bank had re-opened the pension
option for such of its employees who had not opted for the pension
scheme earlier. As a result of exercise of the option by 22,338
employees, the bank had incurred additional liability of Rs. 2,212.15
Crores. Further, during the year ended 31.03.2011, the limit of
Gratuity payable to the employees was also enhanced pursuant to the
amendment to the Payment of Gratuity Act, 1972. As a result the
gratuity liability of the Bank had increased by Rs. 428.96 Crores.
As per the Reserve Bank of India circular no. DBOD.
BP.BC.80/21.04.018/2010-11) on Re-opening of Pension Option to
Employees of Public Sector Banks and Enhancement in Gratuity Limits Â
Prudential Regulatory Treatment, dated 9th February 2011, the Bank had
opted to defer the additional liability of Rs. 2,641.11 Crores as
mentioned above and amortise it over a period of five years commencing
from financial year 2010-11 onwards. Accordingly, unamortised amount of
Rs. 528.22 Crores (Previous year Rs. 1056.45 Crores) has been carried
forward to be charged to the Profit and Loss account of future year/s.
6.15.Disclosure relating to Securitisation
The Bank has not floated any Special purpose Vehicle (SPV) during the
Financial Year 2013-14.
6.16.Credit Default Swaps
The bank has not started dealing with Credit Default swaps up to end of
the financial year 2013-14.
7. Other Notes
a) i) Claims against the Bank not acknowledged as debt under contingent
liabilities (Schedule 12) include disputed income tax/ interest tax
liabilities of Rs. 857.58 Crores (Previous year 2012-13: Rs. 621.35
Crores) for which no provision is considered necessary based on various
judicial decisions for past assessments on such disputes
Payment/adjustments against the said disputed dues are included under
Other Assets (Schedule 11)
a) iii) Provision of Income tax of Rs. 368.82 Crores (previous year
Rs.603.89 Crores) has been written back during the year on the basis of
favorable decisions of various appellate authorities.
f) Pending settlement of the proposed wage revision effective from
November 2012, an ad-hoc provision of Rs. 269.51 Crores for the year
(Previous year Rs. 70 Crores) has been made. The aggregate provision held
as on 31st March, 2014 is Rs. 339.51 Crores (Previous year Rs. 70 Crores).
3. The financial statements of the subsidiaries, joint ventures and
associates which are used in the consolidation have been drawn up to
the same reporting date as that of the Parent Bank i.e. 31st March 2014
except for an associate Indo Zambia Bank Limited (IZBL). IZBL''s
financial statements were prepared up to 31st December 2013 and reported
no significant transaction for the quarter ended 31st March 2014.
4. In case of Domestic subsidiaries/ joint venture/ associates,
accounting adjustments arising due to different accounting policies
followed by Parent Bank and subsidiaries/ joint venture/ associates
have been carried out on the basis of data provided by subsidiaries/
joint venture/ associates.
5. The Consolidated Financial Statements have been prepared on the
basis of :
(i) Financial statements of PT Bank of India Indonesia Tbk as on
31.03.2014 certified by the Management and reviewed by an independent
reviewer as per the local requirements of the country of incorporation.
(ii) Financial statements of Bank of India (Tanzania) Ltd. as on
31.03.2014 certified by the Management and reviewed by an independent
reviewer. The Financial Statements as at 31.12.2013 of Bank of India
(Tanzania) Ltd. has been audited as per the local requirements of the
country of incorporation.
(iii) Financial statements of Bank of India (New Zealand) Ltd. as on
31.03.2014 certified by the Management and reviewed by an independent
reviewer.
(iv) Financial statements of Bank of India (Uganda) Ltd. as on
31.03.2014 certified by the Management and reviewed by an independent
reviewer as per the local requirements of the country of incorporation.
(v) Financial statements of Bank of India (Botswana) Ltd. as on
31.03.2014 certified by the Management and reviewed by an independent
reviewer as per the local requirements of the country of incorporation.
(vi) Audited financial statements of BOI Shareholding Ltd., Star Union
Dai-ichi Life Insurance Company Ltd., STCI Finance Ltd., Jharkhand
Gramin Bank, Vidharbha Konkan Gramin Bank for the financial year ended
31.03.2014 and Indo Zambia Bank Ltd. for the nine months ended
31.12.2013.
(vii) Unaudited financial statements of BOI AXA Investment Managers Pvt.
Ltd., BOI AXA Trustee Services Pvt. Ltd., ASREC (India) Ltd., Narmada
Jhabua Gramin Bank and Gramin Bank of Aryavart for the financial year
ended 31.03.2014 certified by their management.
The BOI group has recognised Business Segments as Primary reporting
segment and Geographical Segments as Secondary segment in line with RBI
guidelines in compliance with Accounting Standard 17.
i) Primary Segment: Business Segments
a) Treasury Operations: ''Treasury'' for the purpose of Segment Reporting
includes the entire investment portfolio i.e. dealing in Government and
other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are
not included under Retail Banking.
c) Retail Banking : Retail Banking includes exposures which fulfill
following two criteria:
i) Exposure  The maximum aggregate exposure up to Rs. 5 Crores
ii) The total annual turnover is less than Rs. 50 Crores i.e. the average
turnover of the last three years in case of existing entities and
projected turnover in case of new entities.
d) Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
e) Allocation of Costs
a) Expenses directly attributed to particular segment are allocated to
the relative segment.
b) Expenses not directly attributable to specific segment are allocated
in proportion to number of employees/business managed.
ii) Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
G. AS 27 "Financial Reporting of Interests in Joint Ventures":
Aggregate amount of assets, liabilities, income and expenses related to
the group''s interest in jointly controlled entities:
Mar 31, 2012
1. During the year bank has allotted 2,73,00,000 equity shares of Rs
10/- each at a premium of Rs 370.02 per share to Life Insurance
Corporation of India as determined by the Board in terms of the Chapter
VII of the Securities Exchange Board of India (SEBI) Regulations, 2009,
as amended from time to time (the "SEBI ICDR Regulations") on
preferential basis. The total amount of capital received by the bank on
this account is Rs 1037.45 crore and consequently the Government holding
has decreased from 65.86% to 62.72%.
2. Balancing of Subsidiary Ledger Accounts and
confirmation/reconciliation of balances with foreign branches and
NOSTRO Accounts, and Suspense, Drafts Payable, Clearing Difference,
etc. is in progress on an on-going basis. Pending final
clearance/adjustment of the above, including foreign branches, the
overall impact, if any, on the accounts, in the opinion of the
management, is not likely to be significant.
As regards Inter office adjustments, initial matching of debit and
credit outstanding entries has been completed upto 31st March 2012.
Reconciliation of residual entries is in progress. Pending final
clearance/ adjustment of the entries, the overall impact, if any, on
the accounts, in the opinion of the management, is not likely to be
significant.
3. The following information is disclosed in terms of guidelines
issued by RBI:
3.1 Sale and transfers to/from HTM Category:
The value of sales and transfers of securities to/from HTM category has
not exceeded 5% of the book value of investments held in HTM category
at the beginning of the year.
3.2 Disclosures on risk exposure in derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate swaps,
currency swaps and currency options to hedge on balance sheet assets
and liabilities or to meet client requirements as well as for trading
purpose as per policy approved by the Board. These products are used
for hedging risk, reducing cost and increasing the yield. In such
transactions the types of risks to which the bank is exposed to, are
credit risk, market risk, operational risk etc.
Risk management is an integral part of bank's business management. Bank
has risk management policies designed to identify and analyse risks, to
set appropriate risk limits and to monitor these risks and limits on an
ongoing basis by means of reliable and up to date management
information systems. The risk management policies and major control
limits are approved by the Board of Directors and they are monitored
and reviewed regularly. The organization of the Bank is conducive to
managing risks. There is sufficient awareness of the risks and the size
of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by
the Chairman and Managing Director.
Hedging swaps are accounted for on an accrual basis except for swap
designated with an asset and liability that is carried at market value
or lower of cost/ market value. In such cases, the swaps are marked to
market and the resulting gain or loss is recorded as an adjustment to
the market value of the designated asset or liability. Gains or losses
on the termination of swaps are recognised when the offsetting gain or
loss is recognised on the designated asset or liability. This implies
that any gain or loss on the terminated swap would be deferred and
recognised over the shorter of the remaining contracting life of the
swap or the remaining life of the asset/liability.
Trading derivative positions are marked to market (MTM) and the
resulting losses, if any, are recognised in the profit and loss
account. Profit, if any, are not recognised on the settlement date.
Gains or losses on termination of swaps are recorded as immediate
income or expenses.
Bank has a proper system of submitting periodical reports to Senior and
Top Management and Board as well as regulatory authorities as required
by RBI and/or as per operational requirements. Bank has clearly spelt
derivative guidelines on various aspects approved by the Board of
Directors. The derivative transactions are subject to concurrent,
internal, statutory and regulatory audits.
The counter parties to the transactions are banks, primary dealers and
corporate entities. The deals are done under approved exposure limits.
The Bank has adopted the Current Exposure method prescribed by
Reserve Bank of India for measuring Credit Exposures arising on account
of interest rate and foreign exchange derivative transactions. Current
exposure method is the sum of current credit exposure and potential
future exposure of these contracts.
The current credit exposure is the sum of positive mark to market value
of these contracts i.e. when the Bank has to receive money from the
counter party.
Potential future credit exposure is determined by multiplying the
notional principal amount of these contracts irrespective of whether
the contract has zero, positive or negative mark to market value by the
relevant add-on factors as under according to the nature and residual
maturity of the instrument.
While computing the credit exposure, "sold options" are excluded
wherever the entire premium/fee or any other form of income is received
/ realized.
As per the extant RBI guidelines credit exposures computed as per the
current Mark to Market value of the contracts, also attracts
provisioning requirement as applicable to the loan assets in the
"Standard" category, of the concerned counter party. At present the
provision is to be maintained at 0.4% of the risk weighted assets. The
Bank makes the requisite provision as aforesaid in the books.
Exposure is reckoned as Sanctioned Limit or Balance outstanding
whichever is higher. The above position is arrived at after taking into
consideration all exposure such as Interest Rate Swaps, Derivatives and
Forward Exchange Contracts)
Housing Development Finance Corporation Limited has been considered as
NBFC based on RBI's views contained in their report on Annual Financial
Inspection for 2010-11.
Tax expense for the year is after recognising Minimum Alternate Tax
(MAT) credit entitlement of Rs 77.01 crore for earlier years.
3.3 Disclosures of Penalties imposed by RBI
During the financial year 2011-12, bank has not been subjected to any
penalty for contravention or non- compliance with any requirement of
the Banking Regulation Act, 1949, or any rules or conditions specified
by the Reserve Bank of India in accordance with the said Act, except
for a penalty of Rs 1 lakh paid to RBI for bouncing of SGL deal which
was subsequently recovered from the constituent.
4. Disclosure requirements as per Accounting Standards (AS) where RBI
has issued guidelines in respect of disclosure items for Notes to
Accounts:
4.1 Accounting Standard 9 - Revenue recognition
Certain items of income are recognised on realisation basis as per
Accounting Policy no. 2 of Schedule 17: Significant Accounting
Policies. However, the said income is not considered to be material.
i) The effect of transitional liability till 31.03.2007 as required by
the accounting standard has been recognised as an expense on straight
line basis over a period of five years pursuant to limited revision of
Standard on 17.10.2007. Accordingly, an amount of Rs 125.27 Crores has
been charged to the Profit and Loss account for the year ended
31.03.2012 being 1/5th of the total transitional liability.
ii) As per the past practice, the bank has recognised contribution to
employee provident fund as an expense. During the year, the bank has
contributed Rs 28.67 crore (previous year Rs 56.83 crore) towards such
fund which is a defined contribution plan.
iii) During the year ended 31.03.2011, the Bank reopened the pension
option for such of its employees who had not opted for the pension
scheme earlier. As a result of exercise of which by 22,338 employees,
the bank has incurred a liability of Rs 2,212.15 crore. Further, during
the year ended 31.03.2011, the limit of Gratuity payable to the
employees of the banks was also enhanced pursuant to the amendment to
the Payment of Gratuity Act, 1972. As a result the gratuity liability
of the Bank has increased by Rs 428.96 crore.
iv) In terms of the requirements of the Accounting Standard (AS) 15 :
Employee Benefits, the entire amount of Rs 2,641.11 crore (i.e. Rs
2,212.15 crore Rs.428.96 crore) was required to be charged to the
Profit and Loss Account during the year ended 31.03.2011. However, the
Reserve Bank of India issued a circular no.
DBOD.BP.BC.80/21.04.018/2010-11 on re-opening of pension option to
employees of Public Sector Banks and Enhancement in Gratuity limits -
Prudential Regulatory Treatment, dated 9th February 2011. In accordance
with the provisions of the said Circular, the Bank would amortise the
amount of Rs 2,641.11 crore over a period of five years. Accordingly an
amount of Rs 528.22 crore (representing one-fifth of Rs 2,641.11 crore)
has been charged to the profit and loss account for the current year
and the balance of Rs 1,584.67 crore is being carried forward to be
charged to profit and loss account of the bank in the coming years.
1. The Bank has recognised Business Segments as Primary reporting
segment and Geographical Segments as Secondary segment in line with RBI
guidelines in compliance with Accounting Standard 17.
Primary Segment: Business Segments
a) Treasury Operations: 'Treasury' for the purpose of Segment Reporting
includes the entire investment portfolio i.e. dealing in Government and
other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are
not included under Retail Banking.
c) Retail Banking: Retail Banking includes exposures which fulfil
following two criteria:
i) Exposure - The maximum aggregate exposure up to Rs 5 Crores
ii) The total annual turnover is less than Rs 50 Crores i.e. the average
turnover of the last three years in case of existing entities and
projected turnover in case of new entities.
Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
Allocation of Costs
a) Expenses directly attributed to particular segment are allocated to
the relative segment.
b) Expenses not directly attributable to specific segment are allocated
in proportion to number of employees/ business managed.
Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
4.2 Accounting Standard 18 - Related Party Transactions
I) List of Related Parties:
(a) Key Managerial Personnel :
Chairman &
Managing Director : Shri Alok K Misra
Executive Directors : Shri N. Seshadri
Shri. M. S. Raghavan (w.e.f. 01.01.2012)
Shri. B. A. Prabhakar (upto 15.12.2011)
(b) Subsidiaries :
(i) BOI Shareholding Limited.
(ii) PT Bank of India Indonesia Tbk (Formerly known as PT Bank
Swadeshi)
(iii) Bank of India (Tanzania) Ltd.
(iv) Bank of India (New Zealand) Limited.
(v) Bank of India (Uganda) Ltd.
(c) Associates :
(i) STCI Finance Limited.
(Formerly known as Securities Trading Corporation of India Ltd.)
(ii) ASREC (India) Ltd.
(iii) Indo-Zambia Bank Ltd.
(iv) 5 Regional Rural Banks sponsored by the Bank
Aryavart Gramin Bank; Baitarani Gramya Bank; Jharkhand Gramin Bank;
Narmada Malwa Gramin Bank; Wainganga Krishna Gramin Bank;
(d) Joint Venture :
(i) Star Union Dai-Ichi Life Insurance Co. Ltd.
The transactions with the subsidiaries and regional rural banks, being
state controlled, have not been disclosed in view of para 9 of AS-18 on
Related party disclosure issued by the ICAI exempting state controlled
enterprises from making any disclosure pertaining to their transactions
with other related parties which are also state controlled.
4.3 Accounting Standard 27 - Investments in Joint Venture
Investments include Rs 120 crore (Previous year Rs 120 crore)
representing Bank's interest in the following jointly controlled
entity:
4.4 Accounting Standard 19 - Lease Financing
(i) The contractual maturities of the Bank's investment in lease
financing and its components, which are included in advances, are set
out below:
B. Contingent Liabilities
Such liabilities are dependent upon, the outcome of court
order/arbitration/out of court settlement, disposal of appeals, the
amount being called up, terms of contractual obligations, devolvement
and raising of demand by concerned parties, as the case may be. No
reimbursement is expected in such cases.
5.1 Draw Down from Reserves
During the year, the bank has made a draw down of Rs 3.19 crore
(Previous year Rs 1.44 crore) from the Special reserve currency swaps in
terms of the RBI guidelines.
5.2 Disclosure of Letters of Comfort (LoCs) issued by bank
(As compiled by Management)
During the year 2011-2012, the Bank has issued an undertaking to the
Governor, Bank of Botswana in respect of its wholly owned subsidiary,
Bank of India (BTW) Ltd. (yet to be opened) to meet its financial
commitments if they fall due.
During the year 2010-11 the Bank issued parental guarantee in favour of
Royal Bank of New Zealand, for its wholly owned subsidiary, BOI (New
Zealand) Ltd. to meet its financial obligations, if they fall due.
However, as on 31.03.2012 no financial obligations have arisen on the
above commitments.
5.3 Provisioning Coverage Ratio (PCR)
The Provisioning to Gross Non-Performing Assets of the Bank as on 31st
March 2012 is 64.18% (Previous year: 72.18%)
5.4 Unamortised Pension and Gratuity Liabilities:
As per the Reserve Bank of India circular no. DBOD.
BP.BC.80/21.04.018/2010-11) on Re-opening of Pension Option to
Employees of Public Sector Banks and Enhancement in Gratuity Limits -
Prudential Regulatory Treatment, dated 9th February 2011, the Bank
opted to amortise the said liability of Rs 2,641.11 Crores over a period
of five years. Accordingly, Rs 528.22 Crores (representing one- fifth of
Rs 2,641.11 Crores) has been charged to the Profit and Loss Account. In
terms of the requirements of the aforesaid RBI circular, the balance
amount carried forward, i.e., Rs 1,584.67 Crores (Rs 2,641.11 Crores
minus Rs 1056.44 Crores) does not include any amount relating to the
employees separated/retired.
6. Other Notes
a) Income Tax:
I) Claims against the Bank not acknowledged as debt under contingent
liabilities (Schedule 12) include disputed income tax/interest tax
liabilities of Rs 420.67 crore for which no provision is considered
necessary based on various judicial decisions for past assessments on
such disputes. Payments/adjustments against the said disputed dues are
included under Other Assets (Schedule 11).
II) Provision for income tax for the year is arrived at after due
consideration of the various judicial decisions on certain disputed
issues.
b) Shifting of securities:
i) For the year ended 31-03-2012, Bank has shifted securities amounting
to Rs 981.67 crore from HTM to AFS category and Rs 4.83 Crores loss has
been booked as loss on such transfer.
ii) Securities amounting to Rs 7,340.94 Crores were shifted from AFS to
HTM category and loss arised upon such transfer amounting to Rs 200.01
Crores has been provided for during the year.
iii) For the year ended 31.03.2012, bank has shifted portfolio of
Venture Fund amounting Rs 29.55 crores from HTM to AFS and Rs3.11 crores
of loss has arised due to such transfer.
(d) Profit on sale of Investments held under "Held to Maturity"
category amounting to Rs 19.98 crore has been taken to the Profit & Loss
Account and thereafter an amount of Rs 10.12 crore has been appropriated
to the Capital Reserve, net of taxes and transfer to Statutory Reserve
under section 17 of the Banking Regulation Act, 1949.
Mar 31, 2011
1. During the year, the Bank annulled the forfeiture in respect of Nil
(previous year 200) equity shares of face value of Rs. 10 each.
Consequently, an amount of Rs. Nil (previous year Rs. 2000) has been
transferred from forfeited Shares Account to paid up capital.
2. Balancing of Subsidiary Ledger Accounts and confirmation /
reconciliation of balances with foreign branches and NOSTRO Accounts,
and adjustment of entries in Suspense, Drafts Payable, Clearing
Difference, etc. is in progress on an on-going basis. Pending final
clearance/adjustment of the above, the overall impact, if any, on the
accounts, in the opinion of the management, is not likely to be
significant.
Initial matching of debit & credit outstanding entries in various heads
of accounts included in Inter office Adjustments has been completed up
to 15.03.2011 for the purpose of reconciliation, which, is in progress.
Pending final clearance/adjustment of the above, including foreign
branches the overall impact, if any, on the accounts, in the opinion of
the management, is not likely to be significant.
3. The following information is disclosed in terms of guidelines
issued by RBI:
(b) Non-performing assets (NPAs)
The percentage of net NPAs to net advances as at 31st March, 2011 is
0.91% (Previous year 1.31%).
(e) Asset Liability Management
Maturity pattern of certain items of assets and liabilities
During the year, maturity pattern assumptions of assets and liabilities
have been modified based on empirical studies of the data.
The above data has been compiled on the basis of the guidelines of RBI
and above mentioned modified assumptions of the management, which have
been relied upon by Auditors.
The exposure to capital market Rs. 3247.43 crore is within the limit of
Rs. 4982.40 crores (i.e. 40% of Banks Net Worth Rs. 12456.00 crores as
on 31.03.2010). The direct exposure to capital market is Rs. 1078.53
crores and is within 20% of banks Net Worth (Rs. 2491.20 crores as on
31.03.2010)
(r) Derivatives
Forward Rate Agreement/ Interest Rate Swap
Note: The terms of swaps are either to receive fixed interest and pay
floating rate or to pay fixed interest and receive floating rate. A few
floating to floating deals are undertaken to hedge interest rate risk
on interest bearing assets and liabilities/trading purposes.
(A) No collaterals were required for the swaps as counterparty was
either banks or premier corporates.
(B) There is no concentration of credit risk arising from the interest
rate swaps undertaken during the year.
(t) Risk Exposure in Derivatives i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate swaps,
currency swaps and currency options to hedge on balance sheet assets
and liabilities or to meet client requirements as well as for trading
purpose as per policy approved by the Board. These products are used
for hedging risk, reducing cost and increasing the yield. In such
transactions the types of risks to which the bank is exposed to, are
credit risk, market risk, operational risk etc.
Risk management is an integral part of banks business management. Bank
has risk management policies designed to identify and analyse risks, to
set appropriate risk limits and to monitor these risks and limits on an
ongoing basis by means of management information systems. The risk
management policies and major control limits are approved by the Board
of Directors and they are monitored and reviewed regularly. The
organization of the Bank is conducive to managing risks. There is
sufficient awareness of the risks and the size of exposure of the
trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by
the Chairman and Managing Director.
Hedging swaps are accounted for an accrual basis
except for swap designated with an asset and liability that is carried
at market value or lower of cost / market value. In such cases, the
swaps are mark to market and the resulting gain or loss is recorded as
on adjustment to the market value of the designated assets or
liability. Gains or losses on the termination of swaps are recognised
when the offsetting gain or loss is recognised on the designated asset
or liability. This implies that any gain or loss on the terminated swap
would be deferred and recognised over the shorter of the remaining
contracting life of the swap or the remaining life of the asset/
liability.
Trading derivative positions are mark to market (MTM) and resulting
losses, if any, are recognised in the profit or loss account. Profit,
if any, are not recognised. Income and expenses relating to the
derivative contracts are recognised on the settlement date. Gains or
losses on the termination of trading swaps are recorded as immediate
income or expenses.
Bank has a proper system of submitting periodical reports to Senior and
Top Management and Board as well as regulatory authorities as required
by RBI and/or as per operational requirements. The derivative
transactions are subject to concurrent, internal, statutory and
regulatory audits.
The counter parties to the transactions are banks, primary dealers and
corporate entities. The deals are done under approved exposure limits.
The Bank has adopted the Current Exposure method prescribed by Reserve
Bank of India for measuring Credit Exposures arising on account of
derivative transactions.
Under the current exposure method, the credit risk exposure/ credit
equivalent amount of derivative products is computed periodically on
the basis of the market value of the product to arrive at its current
replacement cost. Thus, the credit equivalent of the derivative
contract would be the sum of the following two components.
A) The total replacement cost à obtained by Ãmarking to marketà of all
the contracts with positive value (i.e. when the Bank has to receive
money from the counter party): and
B) An amount for Ãpotential future exposure- calculated by multiplying
the total notional principal amount of the contract by the following
credit conversion factor according to the residual maturity of the
contract.
While computing the credit exposure, Ãsold optionsà are excluded
wherever the entire premium / fee or any other form of income is
received / realized.
As per the extant RBI guidelines credit exposures computed as per the
current Mark to Market value of the contracts, also attracts
provisioning requirement as applicable to the loan assets in the
ÃStandardà category, of the concerned counterparty. At present the
provision is to be maintained at 0.4% of the risk weighted assets. The
Bank makes the requisite provision as aforesaid in our books
(y) Disclosures of Penalties imposed by RBI: During the financial year
2010-11, the Bank has not been subjected to any penalty for
contravention or non- compliance with any requirement of the Banking
Regulation Act, 1949, or any rules or conditions specified by the
Reserve Bank of India in accordance with the said Act.
(z) Draw down from Reserves:
During the year, the bank has drawn down an amount of Rs. 1.44 crores
(Previous year Rs. 1.06 Crores) from special reserve currency swaps in
terms of RBI guidelines
(aa) Income Tax:
I) Claims against the Bank not acknowledged as debt under contingent
liabilities (Schedule 12) include disputed income tax / interest tax
liabilities of Rs. 530.59 crore for which no provision is considered
necessary based on various judicial decisions for past assessments on
such disputes. Payments/adjustments against the said disputed dues are
included under Other Assets (Schedule 11).
II) Provision for income tax for the year is arrived at after due
consideration of the various judicial decisions on certain disputed
issues.
(ab) Letter of comfort issued by Bank in respect of subsidiaries (As
compiled by Management) Ã During the year the Bank has issued parental
guarantee in favour of Royal Bank of New Zealand, for our wholly owned
subsidiary, BOI (New Zealand) Ltd. The financial impact is Nil, as
subsidiary has not yet commenced operation.
(ad) Shifting of securities:
For the year ended 31-03-2011, Bank has shifted securities amounting to
Rs. 4818.27 crores from HTM to AFS category and Rs. 12.56 crores loss
has been booked. Further, securities amounting to Rs. 9016.80 crores
was shifted from AFS to HTM category and Rs. 317.52 crores loss has
been booked upon such transfer
For the year ended 31-03-2011, Bank has shifted securities amounting to
Rs. 100.37 crores from HFT to AFS category and loss on such transfer
amounting to Rs. 16.67 crores has been provided for during the year.
(al) Off-balance Sheet SPVs sponsored (which are required to be
consolidated as per accounting norms)
Name of the SPV sponsored
Domestic Overseas
NIL NIL
(am) Fees, remuneration received from bancassurance business:
For the year ended 31.03.2011, the bank received income of Rs. 33.96
Crore (Previous year Rs 32.36 crores) from Bancassurance business.
(ao) Profit on sale of Investments held under ÃHeld to MaturityÃ
category amounting to Rs. 9.95 crores has been taken to the Profit &
Loss Account and thereafter an amount of Rs. 4.98 crores has been
appropriated to the Capital Reserve, net of taxes and transfer to
Statutory Reserve under section 17 of the Banking Regulation Act, 1949.
(ap) During the year, Bank has sold 3% stake in one of its subsidiary Ã
Star Union Daichi Life Insurance Co. Ltd., resulting which Banks
stake has reduced to 48%. Accordingly, this Company has been
de-recognized as its subsidiary.
4. Other Disclosures required by Accounting standards
The following information is disclosed in terms of Accounting Standards
issued by the Institute of Chartered Accountants of India.
a) Accounting Standard 15 (Revised) Ã Employee Benefits
The effect of transitional liability till 31.03.2007 as required by the
accounting standard has been recognised as an expense on straight line
basis over a period of five years pursuant to limited revision of
Standard on 17.10.2007. Accordingly, an amount of Rs. 125.27 crore has
been charged to the Profit and Loss account for the year ended
31.03.2011 being 1/5th of the total transitional liability. An amount
of Rs. 125.27 crore is being carried forward to be charged to Profit &
Loss account of next year.
ii) As per the past practice, the bank has recognised contribution to
employee provident fund as an expense. During the year, the bank has
contributed Rs. 56.83 crores (previous year Rs. 68.64 crores) towards
such fund which is a defned contribution plan.
iii) During the year, the Bank reopened the pension option for such of
its employees who had not opted for the pension scheme earlier. As a
result of exercise of which by 22,338 employees, the bank has incurred
a liability of Rs. 2,212.15 Crores. Further, during the year, the limit
of gratuity payable to the employees of the banks was also enhanced
pursuant to the amendment to the Payment of Gratuity Act, 1972. As a
result the gratuity liability of the Bank has increased by Rs. 428.96
Crores.
In terms of the requirements of the Accounting Standard (AS) 15,
Employee Benefits, the entire amount of Rs. 2,641.11Crores (i.e. Rs.
2,215.15 Crores + Rs. 428.96 Crores) is required to be charged to the
Profit and Loss Account. However, the Reserve Bank of India has issued
a circular no. DBOD.BPBC.80/21.04.018/2010-11) on Re-opening of Pension
Option to Employees of Public Sector Banks and Enhancement in Gratuity
Limits à Prudential Regulatory Treatment, dated 9th February 2011. In
accordance with the provisions of the said Circular, the Bank would
amortise the amount of Rs. 2,641.11 over a period of five years.
Accordingly Rs. 528.22 Crores (representing one-fifth of Rs. 2,641.11
Crores) has been charged to the Profit and Loss Account. In terms of
the requirements of the aforesaid RBI circular, the balance amount
carried forward, i.e., Rs. 2,112.89 Crores (Rs. 2,641.11 Crores à Rs.
528.22 Crores) does not include any amount relating to the employees
separated/ retired.
Had such a circular not been issued by the RBI, the profit of the bank
would have been lower by Rs. 2112.89 Crores pursuant to application of
the requirements of AS 15.
/ (b) Accounting Standard 17 - Segment Reporting :
1. The Bank has recognised Business Segments as Primary reporting
segment and Geographical Segments as Secondary segment in line with RBI
guidelines in compliance with Accounting Standard 17.
Primary Segment: Business Segments
a) Treasury Operations: ÃTreasury for the purpose of Segment Reporting
includes the entire investment portfolio i.e. dealing in Government and
other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are
not included under Retail Banking.
c) Retail Banking: Retail Banking includes exposures which fulfil
following two criteria:
i) Exposure à The maximum aggregate exposure up to Rs. 5 Crore
ii) The total annual turnover is less then Rs. 50 crore i.e. the
average turnover of the last three years in case of existing entities
and projected turnover in case of new entities.
Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
Allocation of Costs
a) Expenses directly attributed to particular segment are allocated to
the relative segment.
b) Expenses not directly attributable to specific segment are allocated
in proportion to number of employees / business managed.
Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
(c) Accounting Standard 18 - Related Party Transactions:
I) List of Related Parties:
(a) Key Managerial Personnel :
Chairman &
Managing
Director : Shri Alok K Misra
Executive
Directors : Shri B.A. Prabhakar
Shri M. Narendra (till 31.10.2010)
Shri N. Seshadri (from 01.11.2010)
(b) Subsidiaries :
(i) BOI Shareholding Ltd.
(ii) PT Bank Swadesi
(iii) BOI Tanzania Ltd.
(iv) Bank of India (New Zealand) Ltd.
(c) Associates :
(i) Securities Trading Corporation of India Ltd.
(ii) Star Union Dai à ichi Life Insurance Company Ltd.
(iii) ASREC (India) Ltd.
(iv) Indo-Zambia Bank Ltd.
(v) 5 Regional Rural Banks sponsored by the Bank
Aryavart Gramin Bank; Baitarni Gramya Bank; Jharkhand Gramin Bank;
Narmada Malwa Gramin Bank; Wainganga Krishna Gramin Bank;
(b) Key Management Personnel :
The transactions with the Subsidiaries and Regional Rural banks, being
state controlled, have not been disclosed in view of para 9 of AS-18 on
Related party disclosure issued by the ICAI exempting state controlled
enterprises from making any disclosure pertaining to their transactions
with other related parties which are also state controlled.
(d) Accounting Standard 19 Ã Lease Financing:
(ii) Lease income of Nil (Previous year Rs. 0.19 crore) is included
under Interest earned.
(g) Details of movement in provisions in accordance with Accounting
Standard 29, ÃProvisions, Contingent Liabilities and Contingent
AssetsÃ:
B. Contingent Liabilities
Such Liabilities as mentioned are dependent upon, the outcome of court
order/arbitration/out of court settlement, disposal of appeals, the
amount being called up, terms of contractual obligations, devolvement
and raising of demand by concerned parties, as the case may be. No
reimbursement is expected in such case.
5. Previous years figures have been regrouped/rearranged, wherever
considered necessary.
Mar 31, 2010
1. During the year, the Bank annulled the forfeiture in respect of 200
(previous year 500) equity shares of face value of Rs. 10 each.
Consequently, an amount of Rs. 2000 (previous year Rs. 5000) has been
transferred from forfeited Shares Account to paid up capital.
2. Balancing of Subsidiary Ledger Accounts and confi rmation /
reconciliation of balances with foreign branches and NOSTRO Accounts,
and adjustment of entries in Suspense, Drafts Payable, Clearing
Difference, etc. is in progress on an on-going basis. Pending fi nal
clearance / adjustment of the above, the overall impact, if any, on the
accounts, in the opinion of the management, is not likely to be signifi
cant.
Initial matching of debit & credit outstanding entries in various heads
of accounts included in Inter offi ce Adjustments has been completed up
to 15.03.2010 for the purpose of reconciliation, which, is in progress.
Pending fi nal clearance / adjustment of the above, including foreign
branches the overall impact, if any, on the accounts, in the opinion of
the management, is not likely to be signifi cant.
3. The following information is disclosed in terms of guidelines
issued by RBI:
(b) Non-performing assets (NPAs)
The percentage of net NPAs to net advances as at 31st March, 2010 is
1.31% (Previous year 0.44%).
(c) Provisions & Contingencies:
The break-up of ÃProvisions and Contingenciesà appearing
(t) Risk Exposure in Derivatives
i. Qualitative Disclosure
The Bank enters into derivative contracts such as interest rate swaps,
currency swaps and currency options to hedge on balance sheet assets
and liabilities, to meet client requirements or for trading purpose.
These products are used for hedging risk, reducing cost and increasing
the yield. In such transactions the types of risks to which the bank is
exposed to, are credit risk, market risk, operational risk etc.
Risk management is an integral part of bankÃs business management. Bank
has risk management policies designed to identify and analyse risks, to
set appropriate risk limits and to monitor these risks and limits on an
ongoing basis by means of reliable and up to date management
information systems. The risk management policies and major control
limits are approved by the Board of Directors and they are monitored
and reviewed regularly. The organization of the Bank is conducive to
managing risks. There is suffi cient awareness of the risks and the
size of exposure of the trading activities in derivative operations.
The Bank has a Risk Management Committee of Directors presided over by
the Chairman and Managing Director.
Hedging derivatives are accounted for on an accrual basis. Trading
derivative positions are marked to market (MTM) and the resulting
losses, if any, are recognised in the profi t and loss account. Profi
t, if any, are not recognised on the settlement date. Gains or losses
on termination of swaps are recorded as immediate income or expenses.
Bank has a proper system of submitting periodical reports to Senior and
Top Management and Board as well as regulatory authorities as required
by RBI and/ or as per operational requirements. Bank has clearly spelt
derivative guidelines on various aspects approved by the Board of
Directors. The derivative transactions are subject to concurrent,
internal, statutory and regulatory audits.
The counter parties to the transactions are banks and corporate
entities. The deals are done under approved exposure limits. The Bank
has adopted the Current Exposure method prescribed by Reserve Bank of
India for measuring Credit Exposures arising on account of the interest
rate and foreign exchange derivative transactions. Current Exposure
Method is the sum of current credit exposure and potential future
exposure of these contracts.
The current credit exposure is the sum of positive mark to market value
of these contracts i.e. when the bank has to receive money from the
counter party.
(y) Disclosures of Penalties imposed by RBI: During the fi nancial year
2009-10, the Bank has not been subjected to any penalty for
contravention or non-compliance with any requirement of the Banking
Regulation Act, 1949, or any rules or conditions specifi ed by the
Reserve Bank of India in accordance with the said Act.
(z) Provision for wage revision: Pending quantifi cation of wage
revision in pursuance of agreement entered into between Indian BankÃs
Association on behalf of member Banks and union of Workmen/Offi cers,
an estimated provision of Rs. 375.06 crore has been made during the
year. However, the impact of retirement benefi ts has not been
considered in the above provision.
(aa) Draw down from reserves:
During the year, the bank has drawn down an amount of Rs. 1.06 crore
(previous year Rs.0.93 Crore) from special reserve currency swaps in
terms of RBI guidelines.
(ab) Income Tax:
i) Claims against the bank not acknowledged as debt under contingent
liabilities (Schedule 12) include disputed income tax/ interest tax
liabilities of Rs. 236.33 crore which has been paid/ adjusted and
included under Other Assets (schedule 11). In respect of these claims,
provision for tax is not considered necessary based on various judicial
decisions for past assessments on such disputes. Management does not
envisage any liability in respect of such disputed issues.
ii) Provision for income tax for the year is arrived at after due
consideration of the various judicial decisions on certain disputed
issues.
(ae) Un-reconciled Nostro entries taken to General Reserve
During the year ended 31.03.2010, in terms of RBI circular DBOD No.
BP.BC.133/21.04.018/2008-09 Dated 11th May 2009, Bank has credited Rs.
9,57,24,734.16 to the Profi t & Loss account in respect of outstanding
credit entries of individual value of less than USD 2500 or equivalent
in Nostro account originated upto March 31, 2002. The same has been
appropriated to Revenue Reserve and will not be available for
declaration of dividend.
(af) Shifting of securities:
For the year ended 31-03-2010, Bank has shifted securities amounting to
Rs.8882 Crores from HTM to AFS category and no loss has arised upon
such transfer.
For the year ended 31-03-2010, Bank has shifted securities amounting to
Rs.40.14 Lacs from HFT to AFS category and loss arised upon such
transfer amounting to Rs.6.61 Lacs has been provided during the year.
(ao) Fees, remuneration received from bancassurance business:
For the year ended 31.03.2010, the bank received income of Rs. 32.36
Crore from Bancassurance business.
(aq) Agriculture Debt Relief Scheme
In terms of Reserve Bank of India guidelines, the Bank has implemented
the Agriculture Debt relief Scheme under Agriculture Debt Waiver and
Debt Relief Scheme 2008 for which, preliminary claim of Rs. 222.62
crore was preferred with Reserve Bank of India. The Bank has made a
provision for loss in the present value terms in accordance with the
said Reserve Bank Scheme amounting to Rs. 7.58 Crore.
1. The Bank has recognised Business Segments as Primary reporting
segment and Geographical Segments as Secondary segment in line with RBI
guidelines in compliance with Accounting Standard 17.
Primary Segment: Business Segments
a) Treasury Operations: ÃTreasuryà for the purpose of Segment Reporting
includes the entire investment portfolio i.e. dealing in Government and
other Securities, Money Market Operations and Forex Operations.
b) Wholesale Banking: Wholesale Banking includes all advances which are
not included under Retail Banking.
c) Retail Banking : Retail Banking includes exposures which fulfi l
following two criteria:
i) Exposure à The maximum aggregate exposure up to Rs. 5 Crore
ii) The total annual turnover is less than Rs. 50 crore i.e. the
average turnover of the last three years in case of existing entities
and projected turnover in case of new entities.
Pricing of Inter-Segmental transfers
Retail Banking Segment is a Primary resource mobilising unit and
Wholesale Segment and Treasury Segment compensates the Retail banking
segment for funds lent by it to them taking into consideration the
average cost of deposits incurred by it.
Allocation of Costs
a) Expenses directly attributed to particular segment are allocated to
the relative segment.
b) Expenses not directly attributable to specifi c segment are
allocated in proportion to number of employees / business managed.
Secondary Segment: Geographical Segments
a) Domestic Operations
b) International Operations
(c) Accounting Standard 18 - Related Party Transactions:
I) List of Related Parties:
(a) Key Managerial Personnel :
Chairman & Managing Director Shri T. S. Narayanasami - Till 31-05-2009
Shri Alok Kumar Misra - from 05-08-2009 till date
Executive Director
Shri B.A. Prabhakar
Shri M. Narendra
(b) Subsidiaries :
(i) BOI Shareholding Ltd.
(ii) Star Union Dai ÃIchi Life Insurance
Company Ltd.
(iii) PT Bank Swadesi
(iv) BOI Tanzania Ltd.
(c) Associates :
(i) Securities Trading Corporation of India
Ltd.
(ii) Indo-Zambia Bank Ltd.
(iii) 5 Regional Rural Banks sponsored by
the Bank
Aryavart Gramin Bank; Baitarni Gramya Bank;
Jharkhand Gramin Bank; Narmada Malwa
Gramin Bank; Wainganga Krishna Gramin
Bank;
(f) Accounting for Taxes on Income (AS 22):
i) Deferred tax assets are recognised for future tax consequences of
temporary differences arising between the carrying values of assets and
liabilities and their respective tax bases and operating carry forward
losses. Deferred tax assets are recognised only after giving due
consideration to prudence. Deferred tax assets and liabilities are
measured using tax rates and tax laws that have been enacted or
substantively enacted by the Balance Sheet date. The impact on
deferred tax assets and liabilities on account of a change in the tax
rates is also recognised in the income statement.
ii) During the year, an amount of Rs 248.22 crore (net) has been
debited [Previous year Rs. 361.52 crore (net) credited] to the Profi t
and Loss account by way of adjustment to Provision for deferred tax.
B. Contingent Liabilities
Such Liabilities as mentioned are dependent upon, the outcome of court
order/ arbitration/ out of court settlement, disposal of appeals, the
amount being called up, terms of contractual obligations, devolvement
and raising of demand by concerned parties, as the case may be. No
reimbursement is expected in such case.
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