1. Adequate provision has been made in respect of Performing and
Non-performing Advances in terms of Reserve Bank of India (RBI)
2.1. (i) Reconciliation and clearance of outstanding entries
in Inter Branch adjustments are in progress and especially initial
matching of debit and credit entries in various heads have been done
upto 31.03.2012. Pending final clearance, the overall impact, if any,
on the accounts, in the opinion of the management will not be
(ii) At some branches, preparation of details / balancing /
reconciliation of accounts relating to Balances with Banks and NOSTRO
Accounts are in progress. Since substantial progress has been made in
the above areas, the management is of the view that the impact of
reconciliation, if any, on the accounts of the Bank will not be
(iii) In terms of RBI directives, old difference in various Personal
and Impersonal Account heads in respect of 330 branches aggregating net
credit of Rs141.39 Crores was transferred to Head Office and kept in
Contingency Account- General. RBI has further permitted not to
report these 330 branches as arrear carrying branches in Bank''s
quarterly statement on Balancing of Books. The management is of the
view that the impact of these items /reconciliation, if any, on the
accounts of the Bank will not be material.
2.2. (i) Certain premises were revalued on the basis of the reports of
the approved valuers during the year ended on 31.03.1997, 31.03.2005
and 31.03.2007 and upward revision amounting to Rs125.99 Crore
(commercial and residential), Rs370.08 Crore (commercial and
residential) and Rs 298.32 Crore (commercial) respectively had been
credited to Revaluation Reserve. Depreciation on Revalued premises is
worked out each year on its written down value. Additional depreciation
of Rs4.24 Crore (previous year Rs4.45 Crore) on account of revaluation
has been transferred from Revaluation Reserve Account and shown in
Miscellaneous Income under the head Other Income included in
Schedule No. 14 item (vii)
(ii) Depreciation has been charged on composite cost of Land and
Building, where separate cost of land is not available.
(iii) Premium on leasehold land has been amortized over the period of
lease, based on cost or written down value, where original cost is not
(iv) For the following properties registration formalities are yet to
a. 2 residential properties purchased during the year 1990 & 1998 at
Kolkata & Bhubaneshwar consisting of 29 & 10 flats respectively with
total original cost of Rs 0.86 Crore (Previous year Rs 0.86 Crore).
b. 1 leasehold property at Anandlok, New Delhi with original cost
amounting to Rs 0.09 Crore (previous year Rs 0.09 Crore).
2.3. (i) In respect of Investments of face value of Rs 61.25 Crore
(Previous year Rs 0.44 Crore), the Bank is yet to receive
(ii) Total Investments made in shares, convertible debentures and units
of equity linked mutual fund/ venture capital funds and also advances
against shares aggregate to Rs 1045.18 Crore (Previous year Rs 770.89
(iii) As per RBI guidelines, an amount of Rs 23.00 Crore (Previous Year
NIL) being an amount equivalent to post Tax profit on sale of ''Held
to Maturity'' category securities is transferred to ''Capital Reserve
(iv) In respect of ''Held to Maturity'' category as stated in
significant Accounting Policy No. 3 (iii), the excess of acquisition
cost over the face value of the security amortized during the year
amounts to Rs 61.26 Crore (Previous year Rs 83.33 Crore) has been
netted-off from Income on Investment shown under the head Interest
Earned of Profit and Loss Account in terms of RBI guidelines.
2.4. The Bank has not made any financing for margin trading during the
year and also not securitised any assets.
2.5. During the year, Bank has issued 2,38,10,771 equity shares of Rs
10/- each at a premium of Rs 182.94 per share amounting to Rs 459.40
Crore (approx.) on preferential allotment basis to Life Insurance
Corporation of India including its various schemes (LIC). Out of
Rs459.40 Crore, Rs 23.81 Crore (approx.) credited to Share Capital
Account and Rs 435.59 Crore (approx.) to Share Premium A/c.
3.1.1 Exchange Traded Interest Rate Derivatives: NIL (Previous year:
3.1.2 Disclosures on risk exposure in derivatives Qualitative
Operation in the Treasury Branch of the Bank are segregated in three
functional areas i.e. Front Office, Mid Office and Back Office, which
are provided with trained officer with defined responsibilities and
back up roles.
The Treasury Policy & Derivative policy of the Bank lays down the type
of financial derivatives instruments, scope of usages, approval process
as also the limits like the open position limits, deal size limits and
stop loss limits besides delegated power for trading in the approved
instruments. The policy also allows purchase / sale of call or put
options to hedge cross currency proprietary trading positions and to
offer derivative products to its customer subject to back to back
covering by the Bank. The Front Office takes positions and executes
the deals while the Mid Office monitors the transactions in the trading
book and deviations of excesses, if any, are brought to the notice of
higher authorities. The Mid office also measures the financial risk for
transactions on a daily basis through measurement tools such as MTM,
VAR, Convexity and modified durations. The figures are reported to
Risk Management division, which appraises the risk profile to the
Assets and Liability Management committee. The Back office settles all
the deals with counter parties.
Interest Rate Swaps which hedge interest bearing assets or liabilities
are accounted for on accrual basis except the Swaps designated with an
asset or liability that is carried at market value or lower of cost or
market value in the financial statements. Gain or Losses on the
termination of Swaps are recognised over the shorter of the remaining
contractual life of the Swap or the remaining life of the
assets/liabilities. Trading Swap transactions are marked to market with
changes recorded in the financial statements. The counterparties to the
transactions are Banks and corporate entities and deals undertaken are
within the approved exposure limits only. The guidelines issued by RBI,
FEDAI & FIMMDA from time to time for recognition of Income, Premium and
Discount are followed.
4.1. Income items recognised on cash basis were either not material or
did not require disclosure under AS 9 on Revenue Recognition.
4.2. The Bank adopted Accounting Standard 15 (Revised)- Employee
Benefits, issued by Institute of Chartered Accountants of India, for
recognition of its liabilities in respect of employee benefits, viz,
Pension, Gratuity, Leave Encashment, LFC and Sick Leave.
4.3.1. Bank''s liabilities in respect of the funded/ non-funded
employee benefits, viz., Pension(ABEPR), Gratuity, Leave Encashment,
LFC and Sick Leave are recognised on the basis of actuarial valuation
carried out by approved Actuary as per
(a) Principles laid down in AS 15 (Revised) issued by the Institute of
Chartered Accountants of India, and
(b) Guidelines GN 26 issued by Institutes of Actuaries of India.
4.4. Segment Reporting - Accounting Standard (AS) 17 Segment
Segment information is given in the Consolidated Financial Statements
in terms of para 4 of the Standard.
4.5. Related Party Disclosures - Accounting Standard (AS) 18 List of
Related Parties and Transactions
a) The names of the related parties, their relationship with the bank
and transaction effected.
Expenses towards gratuity and leave encashment are determined
actuarially on an overall company basis annually and accordingly have
not been considered in the above information.
i) All Bank Finance Limited (wholly owned)
c) Joint Venture:
i) ASREC (India) Ltd.
ii) Universal Sompo General Insurance Company Limited.
i) Allahabad U.P. Gramin Bank:
ii) Sharda Gramin Bank
The Bank is holding 100% share in All Bank Finance Limited, 27.04% share
in ASREC (india) Ltd., 30% share in Universal Sompo General Insurance
Company Limited and 35% share in each of the above mentioned two
Regional Rural Banks.
The transactions with the subsidiary and Regional Rural Banks have not
been disclosed in view of para 9 of the (AS)-18 Related Party
Disclosure, which exempts state controlled enterprises from making any
disclosure pertaining to their transactions with other related parties
which are also state controlled.
e) Transactions with associated company namely Universal Sompo General
Insurance Company Limited are as follows:
4.6. Lease Disclosure:
A) The Bank has various operating leases for office / residential
facilities. Disclosures in this regard are as under:
i) Total of future minimum lease payments under non- cancellable
operating leases for each of the following periods:
ii) The total of future minimum sublease payments expected to be
received under non- cancellable subleases at the balance sheet date:
iii) Lease payments recognised in the statement of profit and loss for
the period: Rs 76.02 Crore (previous year Rs 66.20 Crore)
iv) Sub-lease payments received (or receivable) recognised in the
statement of profit and loss for the period: NIL.
B) Financial Lease:
Bank is not having any assets under Financial Lease.
4.7. Accounting for Taxes on Income: Accounting Standard (AS) 22
During the year, an amount of Rs 18.35 Crore (Net) has been credited
(Previous year Rs 51.94 Crore debited) to the Profit & Loss Account by
way of adjustment of deferred tax. The major components of Deferred Tax
Assets/ Liabilities as on Balance Sheet date are as under:
The Bank does not recognise deferred tax on HTM category of investments
as in Bank''s opinion; there is no timing difference in this regard.
Pursuant to the opinion of the Expert Advisory Committee of the
Institute of Chartered Accountants of India on recognition of deferred
tax on investments, the bank has referred the issue to the Indian
Banks'' Association for their guidance on the matter since there is a
difference in treatment on this subject in the industry.
4.8. Discontinuing Operations: Accounting Standard (AS) 24
Disclosure requirement is not applicable for the year under review.
4.9. A substantial portion of the bank''s assets comprise of
''financial assets'' to which Accounting Standard (AS) 28 ''Impairment
of Assets'' is not applicable. In the opinion of the management, there
is no impairment of other assets of the Bank as at 31.03.2012 to any
material extent requiring recognition in terms of the said standard.
5. Disclosure in terms of Accounting Standard (AS) 29 on
Provisions, Contingent Liabilities and Contingent Assets:
5.1.1. Provisions & Contingencies debited to Profit & Loss Account:
5.2. Provision Coverage Ratio
The provision coverage ratio of the bank in terms of RBI guidelines as
on 31.03.2012 is 74.00% (Previous Year 75.67%)
5.3. Income from Bancassurance business during the year:
Commission received on life & non-life insurance business: Rs 18.87
5.4. Concentration of Deposits, Advances, Exposures & NPAs:
5.5. Off-Balance Sheet SPVs sponsored (which are required to be
consolidated as per accounting norms): NIL.
5.6. Unamortised Pension and Gratuity Liabilities:
A. On re-opening of Pension option to employees under Allahabad Bank
(Employees'') Pension Regulations 1995 and enhancement in Gratuity
limits under the Payment of Gratuity Act 1972 during the financial year
2010-2011, the Bank had incurred huge liability towards additional load
amounting to Rs 708.07 Crore for Pension and Rs 39.63 Crore for Gratuity,
which were amortised in terms of Reserve Bank of India circular DBOD
No.BP.BC.80/ 21.04.018/2010-11 dated 9th February, 2011. As per the
provisions of the said circular, 1/5th of the amortised expenses is to
be absorbed each year and accordingly, Rs149.54 Crore (i.e., Rs141.61 Cr
for Pension Rs 7.93 Cr for Gratuity, representing one-fifth of Rs
747.70 Cr) was charged to the Profit and Loss Account in F.Y. 2010-11,
carrying forward Rs 598.16 Crore as unamortised expenses for future
years. Following the said directive of the Reserve Bank of India,
during the current financial year the Bank has charged a sum of Rs
149.60 Crore (i.e., Rs 141.60 Cr Rs 8.00 Cr respectively) to the Profit
and Loss Account and Rs 448.56 Crore (i.e., Rs 424.86 Cr Rs 23.70 Cr
respectively) is carried forward to next financial year.
B. In implementation of the Defined Contribution Retirement Benefit
Scheme for the employees joining service of the Bank on or after
01.04.2010, the Bank has adopted National Pension System for Corporate
Model of NPS under the regulatory and administrative control of PFRDA
and has joined NPS as Corporate under the purview of employer-employee
relationship for these underlying employees. Estimated amount of
Bank''s contribution for the current year has been provided to debit
of profit and loss account for the year.
6. Contingent Liabilities:
Such liabilities as mentioned at Sl. No.(I) to (VI) in schedule 12 of
Balance Sheet are dependent upon the outcome of court / 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 respectively.
7. Estimated amount of contracts remaining to be executed on capital
account and not provided for (Net of advance) Rs 110.46 Crore (Previous
Year Rs 41.84 Crore).
8. Sector wise break up of provision held under non- performing
advances is deducted on estimated basis from gross advances to arrive
at the balance of net advances as stated in the Schedule-9 of the
9. Advances include Rs 550.00 Crore (previous year NIL) on account of
Inter Bank Participation Certificates with risk taken by the Bank.
Likewise, a sum of Rs 350.00 Crore (previous year NIL) has been reduced
from advances against Inter Bank Participation Certificates with risk
issue by the Bank.
10. During the year, the Bank has transferred a sum of Rs 209.00 Crore
(Previous Year Rs 239.00 Crore) to Special Reserve in terms of section
36 (1) (viii) of the Income Tax Act, 1961.
11. The Board of Directors of the Bank has recommended dividend @60%
of paid-up capital i.e. Rs 6/- per share of face value of Rs 10/- each.
12. Figures of previous year have been regrouped or reclassified
wherever considered necessary.