The percentage of investments under Held to Maturity category - SLR
as on 31.03.2012 was 22.67% of Demand and Time Liability of the Bank
(Previous year 22.78%), which is within the permissible limit as per
2 Inter-Branch Transactions:
The initial matching of entries received at Head Office for the purpose
of reconciliation under Inter- Branch transactions upto 31.03.2012 has
been done. However, Bank is continuing its efforts to reconcile and
reduce the remaining out standing entries.
Premises include certain properties having original cost of Rs=215.70
Crore (Previous year Rs=193.02 Crore) in respect of which conveyance
deeds are pending execution.
Certain properties of the bank are stated at revalued amounts. The gross
amount of revaluation is Rs 2310.91 Crore (Previous year Rs=2310.91 Crore)
and net of depreciation is Rs 2065.14 Crore (Previous year Rs 2098.36Crore).
(*) Provision for Depreciation - Rs 510.39 Crore (Previous Year Rs=255.48
Crore), Provision for NPI- Rs 111.81 Crore (Previous year Rs 127.25 Crore)
and Exchange fluctuation -=Rs=7.70 Crore (Previous year Rs=0.85 Crore)
(*)Provision for Depreciation of Rs300.49Crore (Previous Year-Rs=89.52
Crore), Provision for NPI of Rs=_6.88 Crore (Previous Year - Rs=11.93
Crore), Exchange Fluctuation of Rs=P.70 Crore (Previous Year-Rs=0.85
(**)Write back of excess provision for Depreciation of Rs=44.70 Crore
(Previous Year - Rs=4.53 Crore), Provision for NPI of Rs 34.05 Crore
(Previous Year-Rs=8.21 Crore).
4.1 Sale and transfers to/from HTM Category:
The value of sale and transfers of securities to/from HTM category
during the year does not exceed five percent of the book value of the
investment held in HTM category as on 01.04.2011.
4.2 Disclosure on risk exposure in derivatives:
I Qualitative Disclosure
The Treasury Risk Management Policy for using Derivative Instruments to
hedge bank''s Assets/Liabilities has been approved by the Board of
A. The Investment Portfolio of the Bank consists of assets with
characteristics such as fixed interest rate, zero coupon and floating
interest rates and is subject to interest rate risk. The Bank also has
Tier II bonds hedged for interest rate swaps which do not have exit
options. The policy permits hedging the interest rate risk on this
liability as well.
Bank is permitted to use FRA and IRS (only plain vanilla transactions
are permitted). These instruments are used not only for hedging the
interest rate risk in the investment portfolio but also
for market making.
Bank has been undertaking derivatives trades like IRS, FRAs, etc for the
purpose of hedging Foreign Currency liabilities. Options and Swaps are
also undertaken on behalf of clients on back to back basis. The Bank
is yet to start Option book running.
During the year Bank has not undertaken derivative trades in Interest
Rate Swaps (IRS) of the Investment Portfolio and Trading Swaps /
Currency Derivative / Forward Rate Agreements (FRA) were also not
B. The risk management policies and major control limits like stop
loss limits, counterparty exposure limits, PV01,etc. approved by the
Board of Directors are in place. These risk limits are monitored and
reviewed regularly. MIS/Reports are submitted periodically to Risk
Management Committee. The hedge effectiveness of the outstanding
derivative deals are monitored in relation to the underlying
asset/liability on an ongoing basis.
C. Accounting Policy
- Accrual on account of interest expenses/ income on the IRS are
accounted and recognized as expense/income.
- Hedge effectiveness of the outstanding derivative deals are
monitored in relation to the fair value of the swap and underlying
asset/liability. Bank has used the FIMMDA pricing method i.e. relevant
G SEC yield corporate bonds spread for arriving at the fair value of
the underlying Asset/ Liability. If the hedge is not effective, hedge
swaps is accounted as trading swaps. If swap is terminated before
maturity, the MTM loss / gain and accruals till such date are accounted
as expense/income under Interest Paid / received on IRS.
- Trading swaps are marked to market at frequent intervals and
changes are recorded in the income statements.
- Accrual on account of interest expenses/income on the IRS are
accounted and recognized as expense/income.
- Gains or losses on termination of swaps are recorded as immediate
income or expense under the above head.
4.3 Details of Single Borrower Limit (SGL) / Group Borrower Limit
(GBL) exceeded by the Bank:
The Bank has not exceeded the prudential credit exposure limits
prescribed for group accounts and single borrower engaged in
infrastructure projects or for Oil Companies. In respect of the
following single borrower accounts, the exposure ceiling of 15% of
Capital Funds has been exceeded:
4.4 Disclosure of Penalties imposed by RBI
Duringthefinancialyear2011-12,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.
5. Accounting Standards:
In compliance with the guidelines issued by the RBI regarding disclosure
requirements of the various Accounting Standards issued by ICAI, the
following information is disclosed:
5.1 Accounting Standard 5 - Net Profit/Loss for the period, prior
period items and changes in accounting policies:
There are no material prior period items
5.2 Accounting Standard 9- Revenue Recognition
Revenue is recognised as per accounting policy No.9 of Schedule 17 to the
Financial Statement. Certain items of income are recognised on the
basis other than accrual. However, the said income is not considered to
5.3 Accounting Standard 15-EmployeeBenefits:
The actuarial assumptions in respect of gratuity, pension and privilege
leave, for determining the present value of obligations and
contributions of the bank, have been made by fixing various parameters
- Salary escalation by taking into account inflation, seniority,
promotion and other factors mentioned in Accounting Standard 15(Revised)
issued by ICAI.
- Attrition rate by reference to past experience and expected future
experience and includes all types of withdrawals other than death but
including those due to disability.
5.4 Accounting Standard-18 - Related Party Disclosures:
Names of Related parties and their relationship with the Bank-
5.5. Key Management Personnel -
i) Shri S Raman, Chairman & Managing Director
ii) Shri Jagdish Pai. K.L, Executive Director (till 30.06.2011)
iii) Smt. Archana S Bhargava, Executive Director (from 01.04.2011)
iv) Shri. Ashok Kumar Gupta, Executive Director (from 28.07.2011)
i) Canara Bank
i) Canbank Financial Services Ltd.
ii) Canbank Venture Capital Fund Ltd.
iii) Canbank Factors Ltd.
iv) Canara Robecco Asset Management Company Ltd.
v) Canbank Computer Services Ltd.
vi) Canara Bank Securities Ltd. (formerly GILT Securities Trading
vii) Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd
5.8 Joint Ventures
i) Commercial Bank of lndia LLC., Moscow
i) Canfin Homes Ltd.
ii) Common wealth Trust(India)Ltd.
iii) CARE Ltd
iv) Regional Rural Banks sponsored by the Bank
a) Pragati Gramin Bank
b) South Malabar Gramin Bank
c) Shreyas Gramin Bank
5.10 Disclosure about transactions with Key Management Personnel is as
Remuneration to Key Management Personnel Rs 58, 92,007*
(Previous Year: Rs=64, 92,995/-)
(*) including incentives paid to Ex-key Management Personnel of Rs=7,
5.11 Accounting Standard-22-Accounting for Taxes on Income:
The Bank has recognized Deferred Tax Assets / Liabilities (DTA / DTL)
and has accounted for the Net Deferred Tax as on 31.03.2012as under:
Major components of Deferred Tax Assets and Deferred Tax Liabilities areas
5.12 Accounting Standard 27 - Financial Reporting of Interests in Joint
Investments include Rs=§1.53 Crore (at the exchange rate of the
transaction date) in the Commercial Bank of India LLC (Incorporated in
Russia) wherein the Bank owns 40% of the equity.
As required by AS 27 the aggregate amount of the assets, liabilities,
income and expenses (Bank''s interest at 40% in jointly controlled
entity) is disclosed as under:
The above figures have been translated at:
Assets and liabilities: @ spot rate: 31/03/2012 USD 1= = 50.8750 and
31/03/2011=JSD 1= Rs 44.595
Income & Expenditure: @ Average rate: 31/03/2012 USD 1= Rs 47.9138 and
31/03/2011 USD 1= Rs 45.5706
The above figures are as per audited accounts of the joint
Venture for the year ended 31/03/2012
5.13 Accounting Standard 28 - Impairment of Assets:
In the opinion of the Management, there is no impairment of its Fixed
Asset to any material extent as at 31.03.2012 requiring recognition in
terms of Accounting Standard 28 issued by the Institute of Chartered
Accountants of India.
6.1 Draw Down from Reserves:
A sum of Rs 92.79 Crore has been withdrawn from Investment Reserve
Account net off of Statutory Reserve & tax and adjusted against
depreciation on Investments as per RBI guidelines.
6.2 Issuance of Letters of Comfort:
Bank has issued 1196 no. of Letters of Comfort to the tune of Rs 14711.59
Crore during the financial year. The cumulative outstanding position of 675
no. of LOC as on 31.03.2012 is Rs 5563.93 Crore. Apart from this, Bank
has also issued Letter of Comfort to the following regulators:
LOC issued during the year 2011-2012:
- LOC issued by the bank was in favour of South African Reserve Bank
for the proposed branch at Johannesburg, South Africa.
LOC issued in the past:
- China Banking Regulatory Commission, China (During 2008-09,for
- Central Bank of the UAE (During 2009-10, for Representative Office,
- Central Bank of Bahrain (During 2009-10 for Manama Branch,
Presently, there is no such financial impact on LOCs issued favoring
Centra lBank of UAE (for Sharjah Representative Office) & South African
Reserve Bank (yet toopen).
- The impact of issue of letter of guarantee/ comfort by the Bank
exists only in case of Shanghai, China and Manama, Bahrain branches.
- The total outside liabilities of Shanghai branch is USD 27.06 Mn
(=Rs=137.67 crore) and Manama branch, Bahrain is USD 75.025 Mn ( Rs
- The total impact ofthe LOCs issued by the bank to overseas regulators
comes to USD 102.085 Mn (approx Rs=519.36 crore).
6.3 Provision Coverage Ratio is 67.57% as on 31.3.2012 (Previous year
6.4 In accordance with the guidelines issued by Reserve Bank of India
vide their Circular No.DBOD.BP.BC.80/21.04.018/2010-11 dated
09.02.2011, the Bank has debited Profit & Loss Account a sum of Rs
370.71 Crore during the year ended 31.03.2012 on proportionate basis
towards unamortized liability of Rs=1482.86 Crore (being amortized over
5 years beginning from 31st March 2011) on account of reopening of
pension option during 2010-11 for existing employees who had not opted
for pension earlier. The balance amount of =Rs 1112.15 Crore will be
dealt as per guidelines of RBI.
The Bank has debited Profit & Loss Account a sum of Rs 135.90Croreduring
The year ended 31.03.2012on proportionate basis towards unamortized
liability of Rs=543.62 Crore (being amortized over 5 years beginning
from 31st March 2011) on account of enhancement of gratuity limit. The
balance amount of Rs=407.72 Crore will be dealt as per guidelines of
7. Figures of the previous year have been regrouped / rearranged /
reclassified wherever necessary.