City Union Bank

(Rs. in thousands)
                                                     AS ON    AS ON
                                                31.03.2009 31.03.2009
 CONTINGENT LIABILITIES
 i Claims aganist Bank not acknowledged as debts      28,86   19,25
 ii Additionsduring the year                          88,90 2,76,80
 iii Sales / adjustments during the year              42,55    Nil
 
 1.  DERIVATIVES
 
 1.1 The bank has not entered into any Forward Rate Agreements/ Interest
 Rate Swaps and hence no disclosure is given. (Previous year- Nil)
 
 1.2 The bank has not entered into any Exchange Traded Interest Rate
 Derivatives and hence no disclosure is given. (Previous year- Nil)
 
 1.3 Disclosures on risk exposure in derivatives:
 
 1.3.1 -Qualitative Disclosure:
 
 The Banks treasury department operates under three functional areas
 namely Front Office, Mid Office and Back Office. The operations are
 conducted in terms of the policy guidelines issued by Reserve Bank of
 India from time to time and as approved by the Board of the Bank. The
 policy, interalia, stipulates various risk parameters like open
 position, VAR and AGL, Stop Loss etc., While the front office confines
 to dealing activities, the mid office reports to Risk Management
 Department as to the adherence of risk limits set in the policy. The
 Back Office is involved in settlement, reconciliation and accounting.
 The accounting of derivatives is done in strict conformity with RBI
 Guidelines. The Bank undertakes foreign exchange forward contracts for
 its customers and hedges them with other banks. The bank also deals
 with other banks in proprietary trading duly adhering to risk limits
 set in the policy and is monitored by mid office. The contracts entered
 into on behalf of customers are backed by collateral securities and
 cash margins. The Mark to Market values are monitored on monthly basis
 for foreign exchange forward contracts. The credit equivalent is
 computed undercurrent exposure method.
 
 2.1 Penalities imposed by RBI
 
 No penalty was imposed by the Reserve Bank of India during the year.
 
 2.2 Drawdown from Reserves
 
 The Bank has not drawn any amount from Reserves during the year.
 
 3.  DISCLOSURES AS PER ACCOUNTING STANDARDS
 
 The bank has complied with the Accounting Standards (AS) issued by the
 Institute of Chartered Accountants of India and the following
 disclosures are made in accordance with RBIs guidelines.
 
 i) Prior Period Items - AS 5
 
 There are no material prior period items of income / expenditure during
 the year requiring disclosure.
 
 ii) Revenue Recognition - AS 9
 
 Income / Expenditure of certain items recognised on cash basis (AS 9)
 are not considered to be material.
 
 iii) Retirement benefits -AS 15
 
 The liability towards Leave encashment and Gratuity is provided on
 actuarial basis.  The contributory pension liability is provided on
 accrual basis.
 
 v) Related Party disclosures -AS 18 • Key Management Personnel
 
 Sri S. Balasubramanian, MD & CEO - Remuneration paid - Rs. 17,62,258/-
 
 vi) Accounting for Taxes on Income - AS 22
 
 The Bank has complied with the provisions of Accounting Standard 22 on
 accounting for taxes on income issued by the Institute of Chartered
 Accountants of India.
 
 vii) Intangible Assets - AS 26
 
 The Bank has followed the AS 26 - Intangible Assets issued by ICAI
 and the guidelines issued by RBI and has been consistent with the
 compliance.
 
 viii) Impairment of Assets-AS 28
 
 In the opinion of the management there is no impairment to the assets
 to which AS 28 -  Impairment of Assets applies.
 
 ix) Provisions & Contingencies - AS 29
 
 The details of the provisions and contingencies, contingent
 liabilities, the movement of provisions on NPAs and on depreciation on
 investments which are considered material are disclosed elsewhere under
 the appropriate headings as per RBI guidelines.
 
 4. INTER BRANCH RECONCILIATION
 
 Reconciliation of Central Office accounts maintained by branches has
 been completed upto 31.03.2009.  Adjustment of outstanding entries in
 Inter Branch Reimbursement account, Clearing Difference Receivable,
 Funds in Transit and other similar accounts is in progress. In the
 opinion of the management, consequential impact on the above is not
 material.
 
 5. OTHER DISCLOSURES
 
 5.1 Income Tax
 
 Provision for income tax in the current year has been arrived at in
 consistence with earlier years after considering various judicial
 decisions on certain disputed issues.
 
 With regard to taxes on issues under dispute for the earlier years
 aggregating to Rs.11813 lakhs which are pending before the Tax
 authorities, no provision is considered necessary based on the
 decisions of the appellate authorities in favour of the bank.
 
 5.2 Agricultural Debt Waiver Scheme
 
 In terms of Agricultural Debt Waiver and Debt Relief Scheme 2008,
 framed by the Government of India, the Bank has received Rs.4.17 crs
 from the Reserve Bank of India on account out of the eligible debt
 waiver amount of Rs.10.19
 
 The claims made under the scheme will be verified by the Statutory
 Auditors.
 
 5.3 Employees Stock Option
 
 As per the CUB ESOS 2008 of the Bank, issue of 5,00,00,000 equity stock
 options of Re.1/- each was approved by the Board of Directors at their
 meeting held on 28.03.2008 and by the shareholders at the
 Extra-ordinary General meeting held on 26.04.2008. A total of
 2,25,00,000 equity stock options of Re. 1/- each was earmarked under
 the scheme to be allotted during the period (extended or otherwise) by
 the Compensation committee on 06.12.2008. The options will vest in a
 graded manner over a period of 5 years from the date of grant, at an
 exercise price of Rs. 13/- per option. As on 31.03.2009, the options in
 force are 2,02,50,000.