Corporation Bank
BSE: 532179 | NSE: CORPBANK | ISIN: INE112A01015 | Banks - Public Sector
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Notes to Accounts | Year End : Mar '09 |
1. Investments
1.1 In view of the guidelines of the Reserve Bank of India,
a) Premium of Rs.73.60 crore (previous year Rs.80.05 crore) has been
amortized in respect of securities under Held to Maturity category.
b) Depreciation of Rs. NIL crore (previous year Rs.24.89 crore) has
been reversed for investments under the Available for Sale category.
c) Depreciation of Rs.43.68 crore (previous year Rs. 11.66 crore) has
been provided for investments under the Held For Trading category.
d) During the year the Bank as a one-time measure, transferred
securities of book value of Rs.455.73 crore (P.Y.I312.11 crore) from
Available for Sale category to Held to Maturity.
e) No provision (previous year Rs.1.19 crore) has been reversed in
respect of Non-performing investments in the non-SLR portfolio/overdue
investments in the SLR portfolio.
1.2 Margin Trading
The Bank has not given any finance for Margin Trading during the year.
2.1 Disclosure on Risk Exposure in Derivatives: Qualitative Disclosure:
(i) The market risk arising out of the forward contract business is
being monitored by the bank based on the VaR amount generated on a
daily basis. The bank is using FEDAI model for the calculation of VaR,
wherein the VaR rates published by FEDAI for various maturities are
applied on the bucketed currency-wise position gaps. The daily VaR is
monitored with respect to the limits set by the Board by the
independent Mid-Office and daily reporting is made to the Integrated
Risk Management Division. The Board is also appraised on a monthly
basis as to the maximum and minimum VaR during the mondi.
The bank controls and monitors credit risk associated with forward
contracts by setting up separate counter party limits both for the
corporates and for the counter party banks.
(ii) Structure and organization for management of risk in derivatives
trading, scope and nature of risk measurement, risk reporting and risk
monitoring systems and strategies and processes for monitoring the
continuing effectiveness of hedges/mitigants:
The Bank enters into derivative transactions basically for hedging and
trading purposes. The derivatives policy defines the framework for
carrying out the Derivative business and lays down the policies and
process adopted to measure, monitor and report risk arising from
derivative transactions.
The Asset - liability Management Committee (ALCO)/ Board of Directors
is responsible for approving the derivatives policy.
The Risk department of the Bank is responsible for reporting and
monitoring of risk arising out of Derivative transactions independent
of the Treasury.
The Risk Management function comprises of the following activities:
* Monitoring derivatives operations against the set out policies and
limits.
* Report MIS to the Risk Department on a periodic basis as well as
exception reporting.
* Monitor the continuing effectiveness of derivative deals identified
as hedges having regard to the terms of the hedging instruments and the
underlying hedged risk.
(iii) Accounting policy for recording hedge and non-hedge transactions,
recognition of income, premiums and discounts, valuation of outstanding
contracts:
* The accounting policy on derivatives have been drawn up in accordance
with RBI guidelines.
(iv) Provisioning, collateral and credit risk mitigation:
The derivative limit sanctioned to clients is part of the overall limit
sanctioned post credit appraisal. The bank conforms to Reserve Bank of
India guidelines on provisioning.
3. Asset Quality
3.1 Adavances
a) In the case of unaudited branches, the classification of advances,
as certified by the Branch Managers has been incorporated.
b) Out of the total provision of Rs.414.96 crore (previous year
Rs.450.34 crore) required for NPAs in line with RBI guidelines as of
31.03.2009, provision of Rs.170 crore (previous year Rs.123 crore) has
been made during the year after taking into consideration provision of
Rs.244.96 crore (previous year Rs.327.84 crore) held already in books
of account.
c) Provision on standard advances amounting to Rs.246.26 crore
(including Rs.237.26 crore created in earlier years) is shown as per
RBI guidelines, under Other Liabilities and Provisions - others in
Schedule No. 5 of the Balance Sheet.
4.1 Disclosure of Penalties imposed by RBI
No penalty has been imposed by RBI on the Bank and this disclosure is
pursuant to RBI guidelines.
5. Inter-branch transactions
Reconciliation of transactions between Branches, Controlling offices
and Head office has been done up to 31st March, 2009. Steps for
adjustments/elimination of outstanding entries are in progress.
Further, pipeline transactions in respect of Foreign Exchange between
die branches and Investments & International Banking Division are under
reconciliation.
6. Balancing of Books
a) Books of account have been balanced and tallied up to 31st March,
2009.
b) Other Assets and Other Liabilities include a few old entries
pending reconciliation and adjustments.
c) The accounts with other banks/institutions have been reconciled upto
31st March, 2009. Elimination of outstanding items is in progress.
7. The Bank has waived the amounts due from small and marginal
farmers pursuant to the Agricultural Debt Waiver and Debt Relief Scheme
2008 and the final claim of Rs. 114.47 crores of the Bank (of which
Rs.47.25 crores has been received), as per the books of account is
under verification by the Statutory Central Auditors. In respect of the
Agricultural Debt Relief, the scheme, which is under implementation die
loan account of other farmers (i.e. farmers other than small and
marginal farmers) who have given their consent to the scheme, have been
classified as standard.
8. In the opinion of the management all sub-standard advances, in
respect of which application for restructuring were received, but
restructuring packages were not implemented as on 31.03.2009, have been
classified as sub-standard assets as on 31.03.2009.
9. Fixed Assets
a) Premises include properties costing Rs. 1.6.1 crore (previous year
Rs.3.06 crore) for which registration formalities are pending.
b) Fixed Assets include Rs. 0.76 crore (previous year Rs.0.29 crore) in
respect of Capital Work in Progress and Rs.1.75 crore (previous year
Rs.0.61 crore) towards Capital Advances.
c) During the year 2008-2009, cost of software acquired is Rs.6.77
crore (previous year Rs.4.98 crore) and the amount amortised is Rs.6.29
crore (previous year Rs.6.33 crore).
d) Premises include buildings of Rs.3.59 crore (previous year Rs.3.59
crore) which are subject to previous owners right of redemption.
e) Contracts pending executions on Capital account and not provided for
is Rs.20.40 crore (previous year - Rs.22.38 crore).
f) Based on physical verification carried on for moveable assets —
furniture, fixtures etc., at all the branches/offices of the Bank, in
the last quarter ended March 2009, shortages/
excesses/breakages/damages/etc. determined at Rs.3.11 crores have been
written off to the Profit & Loss Account.
10. Cash Flow Statement (AS 3)
The Cash Flow Statement for the year is given separately.
11. Net Profit or Loss for the period, Prior Period items and changes
in accounting policies - NIL
12. Employee Benefits
12.1 The Bank has accounted for Employee Benefits as per Accounting
Standard 15 issued by the Institute of Chartered Accountants of India.
13. Segment Reporting
In terms of AS 17 - Segment Reporting, issued by the Institute of
Chartered Accountants of India, the Segment Report has been given for
the Consolidated Financial Statements.
14. Related Party Disclosure
In compliance with Accounting Standard 18 - Related Party Disclosures,
issued by the Institute of Chartered Accountants of India read along
with the Reserve Bank of India guidelines, the details pertaining to
Related Party transactions are disclosed as under:
Names of Related Party and their Relationship with the Bank:
Subsidiaries: - Corpbank Securities Ltd
Associate (RRB): - Chikmagalur Kodagu
Grameena Bank
(Chiko Bank) Key Management Personnel: - Mr. B. Sambamurthy
Chairman & Managing Director
(From 1.4.2008 to 31.10.2008)
Mr. J. M. Garg
Chairman & Managing Director
(From 6.11.2008)
Mr. Asit Pal
Executive Director
(From 15.10.2008)
15. Draw Down from Reserves : NIL (Previous Year Nil)
16. Disclosure of letter of Comforts (LOCs) issued by the Bank: NIL
(Previous Year Nil)
17. The Bank has raised Tier-I Bonds ofRs.237.50 crore and Tier-II
Bonds of Rs. 1700 crore during the year.
18. The Bank has made an adhoc provision of Rs.10 crore during the
quarter (Rs.45 crore for the year ended 31.3.2009) towards wage
revision pending outcome of ongoing negotiation at Industry level.
19. The Bank has recommended a final dividend of 80% i.e. Rs.8/- per
share of the face value of Rs.10/- each.
20. Previous years figures have been regrouped/rearranged wherever
necessary. |
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| Source : Religare Technova | |
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