Canara Bank

1 Investments:
 
 The percentage of investments under Held to Maturity category – SLR
 as on 31.03.2009 was 20.43% of Demand and Time Liability of the Bank
 (Previous year 16.04%), which is within the permissible limit as per
 RBI guidelines.
 
 2 Inter-Branch Transactions:
 
 The initial matching of entries received at Head Office for the purpose
 of reconciliation under Inter-Branch transactions up to 31.03.2009 has
 been done. Bank is continuing its efforts to reconcile and reduce the
 remaining outstanding entries.
 
 3 Premises:
 
 Premises include certain properties of Rs.196.31Crore 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.2168.16 Crore (Previous
 year Rs. 2204.85 Crore).
 
 4.  Risk exposure in derivatives:
 
 INTEGRATED TREASURY - Qualitative Disclosures
 
 The Treasury Risk Management Policy, approved by the Board of
 Directors, on the use of derivative instruments to hedge /trade is in
 place.
 
 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
 option. The policy permits hedging the interest rate risk on this
 liability as well.
 
 Bank is permitted to use FRA and IRS and 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 FC liabilities also. Options and swaps are also
 undertaken on behalf of clients on back to back basis. Bank is yet to
 start Option book running.
 
 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
     
 Hedge Positions
 
 Accrual on account of interest expenses/ income on the IRS are
 accounted and recognized as income/expense.
 
 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 ie. relevant G
 SEC yield + Corporate bonds spread for arriving at the fair value of
 the underlying Assest/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 Positions
 
 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 expenses under the above head.
 
 
 5.  Related Party Disclosures – Accounting Standard-18:
         
 Names of Related parties and their relationship with the Bank-
 
 6 Key Management Personnel
                  
 i)   Shri A .C .Mahajan, Chairman & Managing Director (from 01/07/2008)
 ii)  Shri M B N Rao, Chairman & Managing Director ( upto 30/06/2008) 
 iii) Shri Jagadish Pai. K.L, Executive Director (from  04/02/2009)
 iv)  Shri H. S. Upendra Kamath, Executive Director (from  26/03/2009)
 v)   Shri D L Rawal, Executive Director (upto 31/12/2008)
 vi)  Shri G S Vedi, Executive Director ( upto 15/10/2008)
 
 7 Subsidiaries
 
 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
 Corpn.Ltd)
 vii) Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd
 
 8 Joint Ventures
 
 i)   Commercial Bank of India LLC., Moscow
 
 9 Associates
 
 i)   Canfin Homes Ltd.
 ii)  Commonwealth 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
 
 10 Disclosure about transactions with Key Management Personnel is as
 under:
 
 Remuneration to Key Management Personnel Rs.31,34,164.41
 (Previous Year: Rs. 35,80,511.17)
      
 11 Financial Reporting of Interests in Joint Ventures – Accounting
 Standard 27
 
 Investments include Rs.31.53 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.
 
 12 Contingent Liabilities:
 
 Contingent liabilities as mentioned in Schedule No. 12 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. No reimbursement is expected in such cases.
 
 13. Issuance of Letters of Comfort/Guarantee regarding their
 subsidiaries:
 
 Bank has issued letter of Guarantee to China Banking Regulatory
 Commission, China while opening of the Shanghai branch.
 
 14.  Disclosures as per Basel II norms enclosed herewith will form part
 of the Notes on accounts.
 
 15.  Figures of the previous year have been regrouped / rearranged /
 reclassified wherever necessary.