1) BASIS OF PREPARATION:
The abridged Standalone and Consolidated Financial Statements have been
prepared from the audited Standalone and Consolidated financial
statements of the Bank of India (''the Bank'') for the year ended 31st
March,2015, which are prepared based on the accounting policies
The financial statements are prepared following the going concern
concept, on historical cost basis unless otherwise stated and conform,
in all material aspects, to the Generally Accepted Accounting
Principles (GAAP) in India, which encompasses applicable statutory
provisions, regulatory norms prescribed by the Reserve Bank of India
(RBI), Accounting Standards (AS) and pronouncements issued by The
Institute of Chartered Accountants of India (ICAI) and accounting
practices prevalent in the banking industry in India. In respect of
foreign offices/branches, statutory provisions and accounting practices
prevailing in the respective foreign countries are complied with,
except as specified elsewhere
In addition to above, for preparation of the consolidated financial
statements applicable statutory provisions and regulatory norms
prescribed by the Insurance Regulatory and Development Authority of
India (IRDA and Companies Act 1956 have been followed to the extent
these are applicable to the Joint ventures/subsidiaries/ associates
2) USE OF ESTIMATES:
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amount of assets
and liabilities (including contingent liabilities) as of date of the
financial statements and the reported income and expenses for the
reporting period. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable.
However actual results can differ from estimates. Any revision to
accounting estimates is recognized prospectively in current and future
3) REVENUE RECOGNITION:
3.1 Banking entities
(a) Income/Expenditure is recognised on accrual basis, unless otherwise
stated. In respect of foreign offices, income is recognised as per
local laws of host country.
(b) Interest income is recognised on time proportion basis except (i)
interest on Non-performing Assets, which is recognised on realisation,
in terms of the RBI guidelines.
(c) Commission on issue of Bank Guarantee and Letter of Credit is
accrued over the tenure of BG/LC.
(d) All other Commission and Exchange, Brokerage, Fees and other
charges are recognised as income on realisation.
(e) Income (other than interest) on investments in Held to Maturity
category acquired at a discount to the face value, is recognised as
1. On Interest bearing securities, it is recognised only at the time
of sale/ redemption.
2. On zero-coupon securities, it is accounted for over the balance
tenor of the security on a constant yield basis.
(f) Profit or loss on sale of investments is recognised in the Profit
and Loss account. However, in case of profit on sale of investments
under ''Held to Maturity'' category, an equivalent amount, net of taxes
and amount required to be transferred to Statutory Reserves, is
appropriated to ''Capital Reserve Account''.
(g) Dividend is recognised when the right to receive the dividend is
(h) Interest on Income-tax refund is recognised in the year of passing
of assessment order.
(i) The recoveries made from NPA accounts are appropriated first
towards unrealised interest/income debited to borrowers accounts,
expenditure/out of pocket expenses incurred, then principal dues and
lastly towards uncharged interest.
3.2 Non Banking entities:
a) Premium Income:
Premium (net of service tax) is recognised as income when due. For
linked business, premium is recognised when the associated units are
created. Top up premiums are considered as single premium. Premium on
lapsed policies is recognised as income when such policies are
b) Income from linked funds:
Income from linked funds which includes policy administrative charges,
mortality charges, fund management charges etc. are recovered from the
linked funds in accordance with the terms and conditions of policy and
recognised when recovered.
c) Reinsurance Premium:
Reinsurance Premium ceded is accounted for at the time of recognition
of premium income in accordance with the terms and conditions of the
relevant treaties with the reinsurers.
d) Benefits paid (including claims):
Benefits paid comprise of policy benefits & claim settlement costs, if
Death, rider & surrender claims are accounted for on receipt of
intimation from the policy holder. Withdrawals & surrenders under
linked policies are accounted for in the respective schemes when the
associated units are cancelled.
Survival benefit claims and maturity claims are accounted for when due.
Reinsurance recoveries on claims are accounted for in the period in
which claims are settled.
e) Acquisition Costs
Acquisition costs are costs that vary with and are primarily related to
acquisition of insurance contracts and are expensed in the period in
which they are incurred.
Claw back in future, if any, for the first year commission paid, is
accounted for in the year in which it is recovered.
f) Liability for life policies:
Actuarial liability for life policies in force and for policies in
respect of which premium has been discontinued but a liability exists,
is determined by the Appointed Actuary using the gross premium method
and in case of group business unearned premium reserve method, in
accordance with accepted actuarial practice, requirements of Insurance
Act, 1938, IRDA regulations and the stipulations of Institute of
Actuaries of India.
Linked liabilities comprise unit liability representing the fund value
of policies and non-unit liability for meeting insurance claims etc.
This is based on an actuarial valuation carried out by the Appointed
Non-Banking Activities - Mutual Fund
Revenue from Operations Management fees from the scheme of mutual fund
are accounted on an accrual basis in accordance with the investment
management agreement and are dependent on the net asset value as
recorded by the schemes of BOI AXA Mutual fund.
Other Income: Interest income is recorded on accrual basis. Profit or
loss on sale of investment is recognised in the P & L Account on the
trade date and determined on weighted average basis for individual
(a) Advances are classified into Performing and Non-Performing
Advances (NPAs) in accordance with the applicable regulatory
(b) NPAs are further classified into Sub-Standard, Doubtful and Loss
Assets in terms of applicable regulatory guidelines.
(c) In respect of domestic branches, Provisions in respect of NPAs is
made as per policy of the bank particularly in accelerated provisioning
for NPAs which is at the rate given as under:
Category of NPAs % of net outstanding
a) Exposures, which are unsecured ab initio 25%
b) Others 15%
a) Secured portion (Period for which advance has
remained in doubtful category)
- Up to one year 25%
- One year to three years 60%
- More than three years 100%
b) Unsecured portion 100%
* on the outstanding advance
(d) In respect of foreign branches, classification of advances as NPAs
and provision in respect of NPAs is made as per the regulatory
requirements prevailing at the respective foreign countries or as per
guidelines applicable to domestic branches, whichever is stringent.
(e) Provisions in respect of NPAs, unrealised interest, ECGC claims
settled, etc., are deducted from total advances to arrive at net
advances as per RBI norms.
(f) In respect of Rescheduled/Restructured advances, provision is made
for the diminution in the fair value of restructured advances measured
in present value terms as per RBI guidelines. The said provision is
reduced to arrive at Net advances.
(g) In case of financial assets sold to Asset Reconstruction Company
(ARC) / Securitisation Company (SC), if the sale is at a price higher
than the NBV, the surplus is retained and utilised to meet the
shortfall/loss on account of sale of other financial assets to SC/ARC.
If the sale is at a price below the net book value (NBV), (i.e.
outstanding less provision held) the shortfall is to be debited to the
Profit and Loss account. However if surplus is available, such shortfall
will be absorbed in the surplus. Any such shortfall arising due to sale
of NPA on or after 26/02/2014 will be amortised over a period of two
years if not absorbed in the surplus.
Excess provision arising out of sale of NPA''s are reversed only when
the cash received (by way of initial consideration only/ or redemption
of SRS/PTC) is higher then the net book value (NBV) of the asset.
Reversal of excess provision will be limited to the extent to which
cash received exceeds the NBV of the asset.
(h) Provision for Standard assets, including restructured advances
classified as standard, is made in accordance with RBI guidelines.
(i) Provision for net funded country exposures is made on a graded
scale in accordance with the RBI guidelines.
5) FLOATING PROVISION:
The bank has a policy for creation and utilisation of floating
provisions. The quantum of floating provisions to be created is
assessed at the end of each financial year. The floating provisions are
utilised only for contingencies under extraordinary circumstances
specified in the policy with prior permission of Reserve Bank of India
or on being specifically permitted by Reserve Bank of India for
6) Debit/Credit Card Reward Points:
Provision for Reward Points on Debit/Credit cards is made based on the
accumulated outstanding points in each category.
Investments are categorised under ''Held to Maturity'', ''Held for
Trading'' and ''Available for Sale'' categories as per RBI guidelines.
For the purpose of disclosure of investments in India, these are
classified, in accordance with RBI guidelines, under six classification
viz. Government Securities, Other Approved Securities, Shares,
Debentures and Bonds, Investment in Subsidiaries and Associates and
Others. In respect of investments outside India, these are classified,
in accordance with RBI guidelines, under four categories viz.
Government Securities (including local authorities), Subsidiaries/
Joint Ventures abroad and Other Investments.
(a) Basis of categorisation
Categorisation of an investment is done at the time of its acquisition.
Transactions in Government Securities are recognised on Settlement Date
and all other investments are recognised on trade date.
i) Held to Maturity
These comprise investments that the Bank intends to hold till maturity.
Investments in subsidiaries, joint ventures and associates are also
categorised under Held to Maturity.
ii) Held for Trading
This comprise investments acquired with the intention to trade by
taking advantage of short term price/interest rate movements. These are
intended to be traded within 90 days from the date of purchase.
iii) Available for Sale
This comprise investments which do not fall under in Held to Maturity
or Held for Trading classification.
(b) Acquisition Cost of Investment
i) Brokerage, commission, securities transaction tax etc. paid on
acquisition of equity investments are included in cost.
ii) Brokerage, commission, broken period interest paid/ received on
debt investments is treated as income/ expense and is excluded from
iii) Brokerage and Commission received on subscription of investments
is credited to Profit and Loss Account.
iv) Cost of investments is determined at weighted average cost method.
(c) Method of valuation
Investments in India are valued in accordance with the RBI guidelines
and investments held at foreign branches are valued at lower of the
value as per the statutory provisions prevailing at the respective
foreign countries or as per RBI guidelines issued from time to time.
Treasury Bills and Commercial Papers are valued at carrying cost.
i) Held to Maturity
1 Investments included in this category are carried at their
acquisition cost, net of amortisation, if any. The excess of
acquisition cost, if any, over the face value is amortised over the
remaining period to maturity using constant yield method. Such
amortisation of premium is adjusted against income under the head
interest on investments.
2 Investments in subsidiaries, joint ventures and associates (both in
India and abroad) are valued at historical cost except for investments
in Regional Rural Banks, which are valued at carrying cost (i.e. book
value). A provision is made for diminution, other than temporary, for
each investment individually.
ii) Held for Trading / Available for Sale
1 Investments under these categories are individually valued at the
market price or fair value determined as per Regulatory guidelines and
only the net depreciation in each classification for each category is
provided for and net appreciation is ignored. On provision for
depreciation, the book value of the individual securities remains
unchanged after marking to market.
2 For the purpose of valuation of quoted investments in Held for
Trading and Available for Sale categories, the market rates / quotes
on the Stock Exchanges, the rates declared by Primary Dealers
Association of India (PDAI) / Fixed Income Money Market and Derivatives
Association (FIMMDA) are used. Investments for which such rates/quotes
are not available are valued as per norms laid down by RBI, which are
Government Securities on Yield to Maturity basis
Other Approved Securities on Yield to Maturity basis
Equity Shares, PSU and At break up value as per the
Trustee shares latest Balance Sheet (not more than
18 months old),
otherwise Rs. 1 per company.
Preference Shares on Yield to Maturity basis
PSU Bonds on Yield to Maturity basis
Units of Mutual Funds at the latest repurchase price/NAV
declared by the Fund in respect of each
Venture Capital Funds Declared NAV or break up NAV as per
(VCF) audited financials which are not more
than 18 months old. If NAV/audited
financials are not available for more
than 18 months
then at Rs. 1/- per VCF.
Security Receipts At NAV as declared by Securitisation
(d) Transfer of Securities between Categories
The transfer of securities between categories are carried out at the
least of acquisition cost / book value /market value on the date of
transfer. The depreciation, if any, on such transfer is fully provided
(e) Non performing Investments (NPIs) and valuation thereof
1 Investments are classified as performing and non- performing, based
on the guidelines issued by the RBI in case of domestic offices and
respective regulators in case of foreign offices.
2 In respect of non performing investments, income is not recognised
and provision is made for depreciation in value of such securities as
per RBI guidelines.
(f) Repo / Reverse Repo
The securities sold and purchased under Repo/ Reverse repo are
accounted as Collateralised lending and borrowing transactions.
However, securities are transferred as in case of normal outright sale/
purchase transactions and such movement of securities is reflected
using the Repo/ Reverse Repo Accounts and Contra entries. The above
entries are reversed on the date of maturity. Costs and revenues are
accounted as interest expenditure/income, as the case may be. Balance
in Repo Account is classified as Borrowings and balance in Reverse Repo
account is classified as Balance with Banks and Money at Call & Short
The Bank presently deals in interest rate and currency derivatives.
The interest rate derivatives dealt with by the Bank are Rupee Interest
Rate Swaps, Foreign Currency Interest Rate Swaps, Forward Rate
Agreements and Interest Rate Futures. Currency Derivatives dealt with
by the Bank are Options, Currency Swaps and Currency Futures. Based on
RBI guidelines, Derivatives are valued as under:
(a) The hedge/non hedge (market making) transactions are recorded
(b) Income/expenditure on hedging derivatives are accounted on accrual
(c) Trading derivative positions are marked to market (MTM) and the
resulting losses, if any, are recognised in the Profit & Loss Account.
Profit, if any, is ignored.
(d) Gains/ losses on termination of the trading swaps are recorded on
the termination date as income/expenditure. Any gain/ loss on
termination of swap is deferred and recognised over the shorter of the
remaining contractual life of the swap or the remaining life of the
(e) Option fees/premium is amortised over the tenor of the option
9) FIXED ASSETS:
(a) Fixed assets are stated at historic cost, except in the case of
assets which have been revalued, which is stated at revalued amount.
The appreciation on revaluation is credited to Revaluation Reserve.
(b) Cost includes cost of purchase and all expenditure such as site
preparation, installation costs, professional fees etc. incurred on
the asset before it is put to use. Subsequent expenditure incurred on
assets put to use is capitalised only when it increases the future
benefits from such assets or their functioning capability.
(c) Cost of premises includes cost of land, both freehold and
10) DEPRECIATION ON FIXED ASSETS:
a) Depreciation on assets is charged on the Written Down Value at the
rates determined by the Bank, except in respect of computers where it
is calculated on the Straight Line Method, at the rates prescribed by
b) In respect of additions, depreciation is provided for the full year,
irrespective of the date on which the assets were put to use whereas,
depreciation is not provided in the year of sale/ disposal of an asset.
c) Depreciation on the revalued portion of assets is adjusted against
the Revaluation Reserve.
d) Where the cost of land and building cannot be separately
ascertained, depreciation is provided on the composite cost, at the
rate applicable to buildings.
e) Premium paid on leasehold land is amortised over the period of
f) Depreciation on assets in respect of domestic are provided as under:
Sr. Particulars Rate of
1. Premises 5.00%
2. Other Fixed Assets
Furniture, Fixtures, Electrical fittings 10.00%
Air-conditioning plants, etc. and business 15.00%
Motor cars, Vans & Motor cycles 20.00%
Computers and Computer Software forming 33.33%
integral part of hardware.
Computer Software, not forming integral 100.00%
part of hardware
g) Depreciation on fixed assets outside India is provided based on the
estimated useful life determined by each centre.
11) TRANSACTIONS INVOLVING FOREIGN EXCHANGE:
Transactions involving foreign exchange are accounted for in accordance
with AS 11, The Effect of Changes in Foreign Exchange Rates.
a) Translation in respect of Integral Foreign operations:
Foreign currency transactions of Indian branches have been classified
as integral foreign operations and foreign currency transactions of
such operations are translated as under:
i) Foreign currency transactions are recorded on initial recognition in
the reporting currency by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
on the weekly average closing rate as advised by Foreign Exchange
Dealers Association of India (FEDAI)
ii) Foreign currency monetary items are reported using the FEDAI
closing spot rates.
iii) Foreign currency non-monetary items, which are carried in terms of
historical cost, are reported using the exchange rate at the date of
iv) Contingent liabilities denominated in foreign currency are reported
using the FEDAI closing spot rates.
v) Outstanding foreign exchange spot and forward contracts held for
trading are revalued at the exchange rates notified by FEDAI for
specified maturities, and the resulting profit or loss is recognised in
the Profit and Loss account.
vi) Outstanding Foreign exchange forward contracts which are not
intended for trading are valued at the closing spot rate. The premium
or discount arising at the inception of such a forward exchange
contract is amortised as expense or income over the life of the
vii) Exchange differences arising on the settlement of monetary items
at rates different from those at which they were initially recorded are
recognised as income or as expense in the period in which they arise.
viii) Gains/Losses on account of changes in exchange rates of open
position in currency futures trades are settled with the exchange
clearing house on daily basis and such gains/losses are recognised in
the Profit and Loss account.
b) Translation in respect of Non-Integral Foreign operations:
Transactions and balances of foreign branches are classified as
non-integral foreign operations and their financial statements are
translated as follows:
i) Assets and Liabilities (monetary and non-monetary as well as
contingent liabilities) are translated at the closing rates notified by
ii) Income and expenses are translated at the quarterly average closing
rates notified by FEDAI.
iii) All resulting exchange differences are accumulated in a separate
account ''Foreign Currency Translation Reserve'' till the disposal of the
net investments by the bank in the respective foreign branches.
iv) The Assets and Liabilities of foreign offices in foreign currency
(other than local currency of the foreign offices) are translated into
local currency using spot rates applicable to that country.
12) EMPLOYEE BENEFITS:
i. Short Term Employee Benefit:
The undiscounted amount of short-term employee benefits, such as
medical benefits etc. which are expected to be paid in exchange for the
services rendered by employees are recognised during the period when
the employee renders the service.
ii. Post Employment Benefit:
A. Defined Benefit Plan
The Bank provides gratuity to all eligible employees. The benefit is
in the form of lump sum payments to vested employees on retirement, on
death while in employment, or on termination of employment, for an
amount equivalent to 15 days basic salary payable for each completed
year of service, subject to a maximum prescribed as per The Payment of
Gratuity Act 1972 or BOI (Employee) Gratuity Regulation whichever is
higher. Vesting occurs upon completion of five years of service. The
Bank makes periodic contributions to a fund administered by trustees
based on an independent external actuarial valuation carried out
The Bank provides pension to all eligible employees. The benefit is in
the form of monthly payments as per rules and payments to vested
employees on retirement, on death while in employment, or on
termination of employment. Vesting occurs at different stages as per
rules. The Bank makes monthly contribution to the pension fund at 10%
of pay in terms of BOI (Employees) Pension regulations. The pension
liability is reckoned based on an independent actuarial valuation
carried out annually and Bank makes such additional contributions
periodically to the Fund as may be required to secure payment of the
benefits under the pension regulations.
B. Defined Contribution Plan:
a) Provident Fund
The Bank operates a Provident Fund scheme. All eligible employees are
entitled to receive benefits under the Bank''s Provident Fund scheme.
The Bank contributes monthly at a determined rate (currently 10% of
employee''s basic pay plus eligible allowance). These contributions are
remitted to a trust established for this purpose and are charged to
Profit and Loss Account. The bank recognises such annual contributions
as an expense in the year to which it relates.
All Employees of the bank, who have joined from 1st April, 2010 are
eligible for contributory pension. Such employees contribute monthly at
a predetermined rate to the pension scheme. The bank also contributes
monthly at a predetermined rate to the said pension scheme. Bank
recognises its contribution to such scheme as expenses in the year to
which it relates. The contributions are remitted to National Pension
System Trust. The obligation of bank is limited to such predetermined
iii. Other Long term Employee Benefit:
c) Leave encashment benefit, which is a defined benefit obligation, is
provided for on the basis of an actuarial valuation in accordance with
AS 15 - Employee Benefits.
d) Other employee benefits such as Leave Fare Concession, Milestone
award, resettlement benefits, etc. which are defined benefit
obligations are provided for on the basis of an actuarial valuation in
accordance with AS 15 - Employee Benefits.
13) EARNINGS PER SHARE:
a) Basic and Diluted earnings per equity share are reported in
accordance with AS 20 Earnings per share. Basic earnings per equity
share are computed by dividing net profit after tax by the weighted
average number of equity shares outstanding during the period.
b) Diluted earnings per equity share are computed using the weighted
average number of equity shares and dilutive potential equity shares
outstanding at the end of the period.
14) TAXES ON INCOME:
a) Income Tax comprises the current tax provision and net change in
deferred tax assets or liabilities during the year, in accordance with
AS 22 Accounting for Taxes on Income. Current taxes are determined in
accordance with the provisions of Accounting Standard 22 and tax laws
prevailing in India after taking into account taxes of foreign offices,
which are based on the tax laws of respective jurisdiction. Deferred tax
adjustments comprise of changes in the deferred tax assets or
liabilities during the period.
b) Deferred Tax is recognised subject to consideration of prudence in
respect of items of income and expenses those arise at one point of
time and are capable of reversal in one or more subsequent years.
c) Deferred tax assets and liabilities are measured using the tax rates
and tax laws that have been enacted or substantively enacted by the
balance sheet date.
d) Deferred tax assets are recognised and reassessed at each reporting
date, based upon management''s judgement as to whether realisation is
considered reasonably certain. Deferred tax assets are recognised on
carry forward of unabsorbed depreciation and tax losses, only if there
is virtual certainty that such deferred tax assets can be realised
against future profits.
15) IMPAIRMENT OF ASSETS:
Impairment losses, if any on Fixed Assets (including revalued assets)
are recognised and charged to Profit and Loss account in accordance
with AS 28 Impairment of Assets.However, an impairment loss on a
revalued asset is recognised directly against any revaluation surplus
for the asset to the extent that the impairment loss does not exceed
the amount held in the revaluation surplus for that same asset.
16) PROVISIONS, CONTINGENT LIABLITIES AND CONTINGENT ASSETS:
As per AS 29 Provisions, Contingent Liabilities and Contingent
Assets, the Bank recognises provisions only when it has a present
obligation as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to
settle the obligation and when a reliable estimate of the amount of the
obligation can be made.
Contingent liability is disclosed unless the possibility of an outflow
of resources embodying economic benefit is remote.
Contingent Assets are not recognised in the financial statements since
this may result in the recognition of income that may never be
17) SHARE ISSUE EXPENSES:
Share issue expenses are charged to the Profit and Loss Account in the
year of issue of shares.