1. Sale and transfers to/ from HTM Category
During the current year, the value of sales/transfers of securities
to/from HTM category (excluding one-time transfer of securities and
sales to RBI under OMO auctions) was within 5% of the book value of
investments held in HTM category at the beginning of the year.
The bank uses forward exchange contracts to hedge against its foreign
currency exposures relating to the underlying transactions and firm
commitments. The bank has not entered into any derivative instruments
for trading / speculative purposes either in Foreign Exchange or
domestic treasury operations. Bank does not have any Forward Rate
Agreement or Interest Rate Swaps. The notional principal amount of
foreign exchange contracts classified as trading on March 31, 2016
amounted to Rs.4,705.11 crore (Previous Year Rs.19,452.70 crore). For
these trading contracts, on March 31, 2016, marked to market position
was asset of Rs.46.80 crore (Previous Year Rs.140.63 crore) and
liability of Rs.46.76 crore (Previous Year Rs.140.70 crore). The
notional principal amount of foreign exchange contracts classified as
hedging on March 31, 2016 amounted to Rs.1,444.51 crore (Previous Year
3. Details of Single Borrower Limit (SGL), Group Borrower Limit (GBL)
exceeded by the Bankr
During the year ended 31 March, 2016 and 31 March, 2015, the Bank''s
credit exposure to single borrower and group borrowers was within the
prudential exposure limits prescribed by RBI.
4. Overseas Assets, NPAs and Revenue - Nil
24. Off-balance Sheet SPVs sponsored
The Bank has not sponsored any special purpose vehicle which is
required to be consolidated in the consolidated financial statements as
per accounting norms.
5. Drawdown from Reserves
a) The Bank has drawn down Rs.10.05 crore (Previous Year Rs.6.79 crore)
from Investment Reserve Account in accordance with RBI guidelines on
''Prudential Norms for Classification, Valuation and Operation of
Investment Portfolio by banks''.
b) During the previous year, in accordance with the requirements of
Schedule II of the Companies Act 2013, the Bank has re- assessed the
useful lives of the fixed assets and an amount of Rs.9.38 crore (net of
taxes) has been drawn from the Revenue and Other Reserve in respect of
assets whose useful life is nil as at April 1, 2014.
6. Disclosures on Remuneration
a) Information relating to the composition and mandate of the
Nomination & Remuneration Committee.
The Nomination & Remuneration committee of the Board consists of three
members of which one member from Risk Management Committee of the Board
facilitate effective governance of compensation.
The roles and responsibilities of the Nomination & Remuneration
Committee inter-alia includes the following:
- Scrutinizing the declarations received from persons to be appointed
as Directors as well as from the existing Directors seeking
re-appointment and make references to the appropriate authority/persons
to ensure compliance with the requirements indicated by Reserve Bank of
India vide their directive dated May 23, 201 1 on Fit & Proper Criteria
of the Banks.
- To devise a Succession Planning Policy for the Board and Senior
- To formulate a Nomination policy of the Board to guide the Board in
relation to appointment/re-appointment/ removal of Directors.
- To identify persons who are qualified to become Directors/ KMPs and
who may be appointed in senior management as defined in the Succession
Policy in accordance with the criteria laid down and to recommend to
the Board their appointment and/ or removal.
- To formulate the criteria for evaluation of Independent Directors and
- To devise a policy on Board diversity.
- To carry out any other function as is mandated by the Board from time
to time and / or enforced by any statutory notification, amendment or
modification, as may be applicable.
- To perform such other functions as may be necessary or appropriate
for the performance of its duties.
- To oversee the framing, review and implementation of Bank''s overall
compensation structure and related polices on remuneration packages
payable to the WTDs/MD & CEO and other staff including performance
linked incentives, perquisites, Stock option scheme etc. with a view to
attracting, motivating and retaining employees and review compensation
levels vis-a-vis other Banks and the industry in general.
- The Committee shall work in close coordination with the Risk
Management Committee of the Bank, in order to achieve effective
alignment between remuneration and risks. The Committee will also
ensure that the cost/income ratio of the Bank supports the remuneration
package consistent with maintenance of sound capital adequacy ratio.
- With respect to the Performance Linked Incentive Schemes, the
Committee is empowered to:
(i) Draw up terms and conditions and approve the changes, if any, to
the Performance Linked Incentive schemes;
(ii) Moderate the scheme on an ongoing basis depending upon the
circumstances and link the same with the recommendations of Audit
(iii) Coordinate the progress of growth of business vis -a- vis the
business parameters laid down by the Board and Audit Committee and
effect such improvements in the scheme as considered necessary;
(iv) On completion of the year, finalize the criteria of allotment of
marks to ensure objectivity/equity.
- The Committee shall also function as the Compensation Committee as
prescribed under the SEBI (Share Based Employee Benefits) Regulations,
2014 and is empowered to formulate detailed terms and conditions of the
Scheme, administer, supervise the same and to allot shares in
compliance with the guidelines and other applicable laws.
- To obtain necessary clearances and approvals from regulatory
authorities, appoint Merchant Bankers and do such other things as may
be necessary in respect of the Employees Stock Option Scheme.
- To oversee the administration of Employee benefits, such as,
provident fund, Pension Fund, Gratuity, Compensation for absence on
Privilege/Sick/Casual Leave etc., which are recognized in accordance
with Accounting Standard-15 (revised) specified in the Companies
(Accounting Standards) Rules, 2006.
- The Committee may suggest amendments to any stock option plans or
incentive plans, provided that all amendments to such plans shall be
subject to consideration and approval of the Board;
- Any other matters regarding remuneration to WTDs/MD & CEO and other
staffs of the Bank as and when permitted by the Board.
- To conduct the annual review of the Compensation Policy.
- To fulfill such other powers and duties as may be delegated to it by
b) Information relating to the design and structure of remuneration
processes and the key features and objectives of remuneration policy.
The Bank has formed the compensation policy based on the Reserve Bank
of India guidelines vide its Circular No. DBOD. No.BC.72/29.67.001/201
1-12 dt. January 13, 2012.
The fixed remuneration and other allowances including retirement
benefits of all subordinate, clerical and officers up to the rank of
General Manager (Scale VII) is governed by the industry level wage
settlement under Indian Banks Association (IBA) pattern. In respect of
officers above the cadre of General Manager, the fixed remuneration is
fixed by Board / Committee.
Further, the compensation structure for the Whole Time Directors (WTDs)
/ Managing Director & Chief Executive Officers (MD & CEO) of the bank
are subject to approval of Reserve Bank of India in terms of Section 35
B of the Banking Regulation Act, 1949. The payment of compensation also
requires approval of the shareholders of the Bank in the General
Meeting pursuant to clause 95 of Articles of Association of the Bank
read with Section 197 of the Companies Act, 2013.
c) Description of the ways in which current and future risks are taken
into account in the remuneration processes. It should include the
nature and type of the key measures used to take account of these
The Board of Directors through the NRC shall exercise oversight and
effective governance over the framing and implementation of the
Compensation Policy. Human Resource Management under the guidance of MD
& CEO shall administer the compensation and Benefit structure in line
with the best suited practices and statutory requirements as
d) Description of the ways in which the bank seeks to link performance
during a performance measurement period with levels of remuneration.
The factors taken in to account for the annual review and revision in
the variable pay and performance bonus are:
- The performance of the Bank
- The performance of the business unit
- Individual performance of the employee
- Other risk perceptions and economic considerations.
Further, the Bank has not identified any employee as risk taker for
the purpose of variable pay under this compensation policy.
e) A discussion of the bank''s policy on deferral and vesting of
variable remuneration and a discussion of the bank''s policy and
criteria for adjusting deferred remuneration before vesting and after
- Where the variable pay constitutes a substantial portion of the fixed
pay, i.e., 50% or more, an appropriate portion of the variable pay,
i.e., 40% will be deferred for over a period of 3 years.
- In case of deferral arrangements of variable pay, the deferral period
shall not be less than three years. Compensation payable under deferral
arrangements shall vest no faster than on a pro rata basis.
- The Board may adopt principles similar to that enunciated for WTDs /
CEOs, as appropriate, for variable pay-timing, m''alus / clawback,
guaranteed bonus and hedging.
- Employee Stock Option Scheme / Employee Stock Option Plan as may be
framed by the Board from time to time in conformity with relevant
statutory provisions and SEBI guidelines as applicable will be excluded
from the components of variable pay.
f) Description of the different forms of variable remuneration (i.e.,
cash, shares, ESOPs and other forms) that the bank utilizes and the
rationale for using these different forms.
Variable pay means the compensation as fixed by the Board on
recommendation of the Committee, which is based on the performance
appraisal of an employee in that role, that is, how well they
accomplish their goals. It may be paid as:
(i) Performance Linked Incentives to those employees who are eligible
(ii) Exgratia for other employees who are not eligible for Performance
(iii) Bonus for those staff members who are eligible for bonus under
the Payment of Bonus Act, 1965
(iv) Any other incentives, by whatever name called having the features
similar to the above.
7. Securitisation Transactions
The Bank has not done any securitisation transactions during the year
ended 31 March, 2016 and 31 March, 2015.
8. Credit Default Swaps
The bank has not taken any transactions in credit default swaps during
the year ended March 31, 2016 and March 31, 2015.
9. Letter of Comfort (LoCs) issued by Banks:
The Bank has not issued any reportable Letter of Comfort during the
year ended March 31, 2016 and March 31, 2015 respectively.
10. Unhedged Foreign Currency Exposure
The Bank has in place a policy on managing credit risk arising out of
unhedged foreign currency exposures of its borrowers. The objective of
this policy is to maximize the hedging on foreign currency exposures of
borrowers by reviewing their foreign currency product portfolio and
encouraging them to hedge the unhedged portion. In line with the
policy, assessment of unhedged foreign currency exposure is a part of
assessment of borrowers and is undertaken while proposing limits or at
the review stage.
Further, the Bank reviews the unhedged foreign currency exposure across
its portfolio on a periodic basis. The Bank also maintains incremental
provision towards the unhedged foreign currency exposures of its
borrowers in line with the extant RBI guidelines. The Bank has
maintained provision of Rs.10.07 crore (Previous Year Rs.15.12 crore)
and additional capital of Rs.8.42 crore (Previous Year Rs.17.10 crore)
on account of Unhedged Foreign Currency Exposure of its borrowers as at
March 31, 2016.
11. Qualitative Disclosure around LCR
The Bank measures and monitors the LCR in line with the Reserve Bank of
India''s circular dated June 9, 2014 on Basel III Framework on
Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk
Monitoring Tools and LCR Disclosure Standards. The LCR guidelines aim
to ensure that a bank maintains an adequate level of unencumbered High
Quality Liquid Assets (HQLAs) that can be converted into cash to meet
its liquidity needs for a 30 calendar day time horizon under a
significantly severe liquidity stress scenario. At a minimum, the stock
of liquid assets should enable the bank to survive until day 30 of the
stress scenario, by which time it is assumed that appropriate
corrective actions can be taken. Banks are required to maintain High
Quality Liquid Assets of a minimum of 100% of its Net Cash Outflows by
January 1, 2019. However, with a view to providing transition time, the
guidelines mandate a minimum requirement of 70% w.e.f. January 1, 2016
and a step up of 10% every year to reach the minimum requirement of
100% by January 1, 2019. The adequacy in the LCR maintenance is an
outcome of a conscious strategy of the Bank towards complying with LCR
mandate ahead of the stipulated time lines. The monthly average LCR of
the bank for the quarter March 2016 is 143.94%.
The Bank has been maintaining HQLA primarily in the form of SLR
investments over and above mandatory requirement, regulatory
dispensation allowed upto 2% of NDTL in the form of borrowing limit
available through Marginal Standing Facility (MSF) and 5% of NDTL as
Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR). From
February 2016 onwards, RBI has allowed Banks to reckon an additional 3%
of NDTL as FALLCR. Level 1 asset contributes to 97.99% of the total
high quality liquid assets of the bank of which the major contribution
is from the Government securities.
The principal components of the estimated cash out flows which could
arise in next 30 days are retail deposits (59.36%) and unsecured
wholesale funding (27.75%). The bank intends to fund the short term
cash outflows from extremely liquid Government securities and funding
for estimated cash outflows considered in LCR computation substantially
flows from this source.
Bank has only forward contract as derivative exposure. The bank is
managing its liquidity from the centralized fund management cell
attached to Treasury Department, Mumbai.
12. Intra-Group Exposure - Nil.
13. Inter-bank participation with risk sharing
The aggregate amount of participation purchased by the Bank, shown as
advances as per regulatory guidelines, outstanding as of March 31, 2016
was ''689 crore (Previous Year: Nil).
B: Other Disclosures
1. Fixed Assets
a) Premises of the Bank were revalued as on March 31, 2011 in
accordance with the policy formulated by the Bank based on RBI
guidelines by professionally qualified independent valuers empanelled
by the Bank using the indices based on current market price. The
written down value of the premises has been increased from Rs.192.31
crore to Rs.326.18 crore and the resultant appreciation in the value
amounting to Rs. 133.87 crore has been credited to revaluation reserve
b) The software capitalized under Fixed Asset (Net of depreciation) was
Rs.24.86 crore (PY Rs.13.34 crore) as at March 31, 2016.
(i) Discount rate is based on the prevailing market yields of Indian
Government securities as at the balance sheet date for the estimated
term of obligations.
(ii) Expected rate of return on plan assets is based on the average
long term rate of return expected on investments of the funds during
the estimated term of the obligations.
(iii) The estimates of future salary increases, considered in actuarial
valuation, take account the inflation, seniority, promotion and other
h) Compensation for absence on Privilege / Sick / Casual Leave
The charge on account of compensation for privilege / sick / casual
leave has been actuarially determined and an amount of Rs.25.27 crore
(Previous year Rs.18.98 crore) has been debited to Profit and Loss
The above information is as certified by actuary and relied upon by the
14. The Bank has not received any intimation from Suppliers regarding
their status under the Micro, Small and Medium Enterprises Development
Act, 2006 and hence disclosures, if any, relating to amounts unpaid as
at the year-end together with interest paid/ payable as required under
the said Act have not been given.
15. Segment reporting
Business Segments have been identified and reported taking into