Corporation Bank

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.