State Bank of India

1.  Share capital:
 
 a) The bank has kept in abeyance the allotment of 88,278 Equity Shares
 of Rs.10/- each issued as part of Rights Issue last year, since they
 are subject matter of title disputes or are subjudice.
 
 b) During the year, , the Bank has issued 34,09,846 equity shares of
 Rs. 10/- each for cash at a premium of Rs. 1580/- per equity share i.e.
 at Rs. 1590/- per equity share aggregating to Rs.542.17 crores to its
 employees under SBI Employees Share Purchase Scheme - 2008 (SBI ESPS -
 2008). The issue of equity shares under SBI ESPS-2008 has been
 accounted in accordance with SEBI (Employee Stock Option Scheme and
 Employee Stock Purchase Scheme) guidelines 1999.Accordingly, an amount
 of Rs. 21.41 crores has been charged as Employee expenses and
 transfered to Share Premium Account.
 
 c) The Government of India had, during the year ended 31.3.08,
 subscribed to 6,28,68,000 Equity Shares of Rs.10/- each at a premium of
 Rs.1580 per share as part of Rights Offer of the bank. The Government
 of India has discharged the total consideration of Rs.9996.01 crores by
 issue of 8.35% SBI Rights Issue GOI Special Bonds 2024. Certain
 restrictions have been placed by the Government on the sale of these
 bonds.
 
 d) Expenses in relation to the issue of Equity Shares under the
 Employees Share Purchase Scheme 2008 amounting to Rs.1.21 crores is
 debited to Share Premium Account.
 
 2. Disclosure Requirements as per Accounting Standards
 
 a) Changes in Accounting Policy
 
 The Bank has been making annual contributions to the pension fund
 administered by trustees based on an independent actuarial valuation
 carried out at the year end. The Bank has decided to make its
 contribution to the Pension Fund at 10% of the basic salary in terms of
 SBI pension Fund Rules. The balance amount as per actuarial liability
 is fully provided for and kept in a special provision account for
 settlement to pensioners.  Consequent to this change, the profit after
 tax has gone up by Rs. 296 crores after considering the deferred tax
 asset of Rs. 508 crores.
 
 b) Investments / Commitments in Subsidiaries, Joint Ventures,
 Associates
 
 1.  SBI has established a wholly owned subsidiary, SBI Custodial
 Services Pvt. Ltd., with a capital of Rs. 13.76 crores. A joint venture
 agreement has been entered with Societe Generale, France, with the bank
 having 65% stake. RBI has approved the said joint venture and the bank
 is awaiting approval from SEBI. The authorised share capital of the
 joint venture is envisaged at Rs. 100 crores.
 
 2.  The Bank’s subsidiary, Indian Ocean International Bank (IOIB)
 amalgamated with SBI International (Mauritius) Ltd, another subsidiary
 of the Bank and the amalgamated entity’s name has been changed to SBI
 (Mauritius) Ltd. and converted as a Public Limited Company from its
 erstwhile status as a Private Limited Company. The Scheme of Merger has
 been sanctioned by Bank of Mauritius from 1st April 2008, being the
 appointed date. Consequently, the Bank’s stake in SBI (Mauritius) has
 reduced from a 98% holding (pre-merger) to 93.40% holding as at 31st
 March 2009 (post-merger).
 
 3.  The bank has incorporated SBI General Insurance Company Limited,
 with authorised share capital of Rs. 20 crores, for providing General
 Insuarance subject to regulatory approvals. The Bank has signed a joint
 venture agreement with Insurance Australia Group (IAG) for conducting
 the General Isuarance business. The bank will hold 74% equity in the
 JV, while IAG will hold 26% equity.
 
 4.  The bank has signed a joint venture with Macquarie Capital
 Group,Australia and IFC,Washington for setting up an Infrastructure
 fund of USD 3 billion for investing in various infrastructure projects
 in India for which RBI and Government approval have been received.
 
 5.  The bank has signed an MOU with State General Reserve Fund (SGRF)
 of Oman, a Sovereign Fund of that country with an objective to set up a
 general fund to invest in various sectors in India.While the RBI
 approval has been received , the Government of India approval is
 awaited.
 
 6.  The Boards of the Bank and SBI Capital Markets Ltd. (SBICAP) have
 approved takeover of SBICAP Securities Limited (SSL) by SBI as its
 subsidiary from SSL’s holding company - SBICAP, subject to necessary
 regulatory approval.
 
 d) Segment Reporting:
 
 1.  Segment identification
 
 A) Primary (Business Segment)
 
 The following are the primary segments of the Bank :
 
 - Treasury
 
 - Corporate / Wholesale Banking
 
 - Retail Banking
 
 - Other Banking Business
 
 The present accounting and information system of the Bank does not
 support capturing and extraction of the data in respect of the above
 segments separately. However, based on the present internal,
 organisational and management reporting structure and the nature of
 their risk and returns, the data on the primary segments have been
 computed as under:
 
 a) Treasury - The Treasury Segment includes the entire investment
 portfolio and trading in foreign exchange contracts and derivative
 contracts. The revenue of the treasury segment primarily consists of
 fees and gains or losses from trading operations and interest income on
 the investment portfolio.
 
 b) Corporate / Wholesale Banking - The Corporate / Wholesale Banking
 segment comprises the lending activities of Corporate Accounts Group,
 Mid Corporate Accounts Group and Stressed Assets Management Group.
 These include providing loans and transaction services to corporate and
 institutional clients and further include non treasury operations of
 foreign offices.
 
 c) Retail Banking - The Retail Banking Segment comprises of branches in
 National Banking Group, which primarily includes personal Banking
 activities including lending activities to corporate customers having
 Banking relations with branches in the National Banking Group. This
 segment also includes agency business and ATM’s
 
 d) Other Banking business - Segments not classified under (a) to (c)
 above are classified under this primary segment.
 
 B) Secondary (Geographical Segment)
 
 i) Domestic Operations - Branches/Offices having operations in India
 ii) Foreign Operations - Branches/Offices having operations outside
 India and offshore Banking units having operations in India
 
 C) Pricing of Inter-segmental transfers
 
 The Retail Banking segment is the primary resource mobilising unit. The
 Corporate/Wholesale Banking and Treasury segments are recipient of
 funds from Retail Banking. Market related Funds Transfer Pricing
 (MRFTP) is followed under which a separate unit called Funding Centre
 has been created. The Funding Centre notionally buys funds that the
 business units raise in the form of deposits or borrowings and
 notionally sell funds to business units engaged in creating assets.
 
 D) Allocation of Expenses, Assets and liabilities
 
 Expenses incurred at Corporate Centre establishments directly
 attributable either to Corporate / Wholesale and Retail Banking
 Operations or to Treasury Operations segment, are allocated
 accordingly. Expenses not directly attributable are allocated on the
 basis of the ratio of number of employees in each segment/ratio of
 directly attributable expenses.  The Bank has certain common assets and
 liabilities which cannot be attributed to any segment and the same are
 treated as unallocated.
 
 ii) Operating Lease
 
 A.  Operating lease comprise of Office Premises/Staff Quarters
 
 i.  Minimum Lease Rent Payable* (Rs. in Crores)
 
 a.  Payable not later than 1 year i.e.  2009-10 30.38
 
 b.  Payable later than 1 year and not later than 5 years i.e.  2010-11
 to 2013-14 100.60
 
 c.  Payable later than 5 years i.e. after 2013-14 23.38 * in respect of
 Non Cancellable lease only
 
 ii.  Amount of lease charges debited to charges account during the year
 385.13
 
 iii. The lease agreements provide for an option to the the Bank to
 renew the lease period at the end of non- cancellable period. There are
 no exceptional/restrictive covenants in the lease agreements.
 
 B.  The Bank has no assets given on non cancellable Operating Leases as
 on 31st March 2009. No contingent rents have been recognised in the
 Profit & Loss Account. The cancellable Leases are of insignificant
 value.
 
 k) Provisions, Contingent Liabilities & Contingent Assets a) Break-up
 of Provisions
 
 Particulars                                 Current Year Previous Year
 
 Provision for Taxation
 
 Current Tax                                     5971.52     3823.50
 
 Fringe Benefit Tax                               142.00      105.00
 
 Deferred Tax                                   -1055.10     -219.43
 
 Other Tax                                          1.00        0.70
 
 Provision for Depreciation on Investments        707.16      -88.68
 
 Provision on Non-Performing Assets              2474.96     2000.94
 
 Provision for Agricultural Debt Waiver
 & Relief Scheme                                  140.00         -
 
 Provision on Standard Assets                     234.82      566.97
 
 Provision for Other Assets                       177.64      189.43
 
 Total                                           8794.00     6378.43
 
 3. Agricultural Debt Waiver and Debt Relief Scheme 2008
 
 As per the Agricultural Debt Waiver and Debt Relief Scheme 2008, the
 amount receivable from the Central Government on account of debt waiver
 is Rs. 5506 crores and on account of debt relief is Rs. 322 crores,
 which is treated as part of advances and other assets respectively in
 accordance with the scheme. For the Debt Waiver, the Government of
 India has agreed to provide interest on the amount receivable from it
 from the date of payment of the first instalment and accordingly no
 provision for loss of interest on present value terms has been made.
 Further, the first instalment of Rs. 2168 crores has been received on
 24 December 2008. In respect of Debt Relief, the Bank has made
 provision of Rs. 140 crores towards present value of loss of interest
 on amount receivable from eligible farmers, which is reversible to
 General Reserve upon complete settling of the account after receipt of
 claim from the Government. The figures of debt relief are subject to
 payment of dues by the farmers.
 
 4. Acquisition of State Bank of Saurashtra
 
 The Govt. of India has notified the acquisition by the Bank of the
 State Bank of Saurashtra (SBS), a wholly owned subsidiary of the Bank,
 with effect from 14th August 2008. Pursuant to the said notification,
 the entire undertaking of the erstwhile SBS stands acquired by the
 Bank. The acquisition of SBS has been accounted using pooling of
 interest method as per Accounting Standard 14. The goodwill arising on
 acquisition amounting to Rs. 0.65 crores has been charged off to the
 revenue during the period.
 
 5. Inter Office Account
 
 Inter Office Accounts between branches, controlling offices and local
 head offices and corporate centre establishments have been reconciled
 upto December 2008. Further, reconciliation is being done on an ongoing
 basis and no material effect is expected on the profit and loss account
 of the current year.
 
 6. Pending Wage Agreement
 
 The Eighth Bipartite Settlement entered into by the Indian Banks’
 Association on behalf of the member Banks with the All India Unions of
 Workmen expired on 31st October 2007. Pending the execution of a new
 agreement a provision of Rs.1414 crores (Previous Year Rs. 575 crores)
 has been made during the year in the accounts for the Bank’s estimated
 liability in respect of wage revision to be effective from 1st November
 2007.  The total provision held on account of wage revision as on 31st
 March 2009 is Rs.  2010.55 crores (including Rs. 21.55 crores
 transferred from eSBS).
 
 7. Proposed Merger
 
 Pursuant to a Scheme of Amalgamation approved by the Central Board at
 its meeting held on 25th June 2008, SBI Commercial and International
 Bank Ltd, a wholly owned subsidiary of the Bank is to be merged with
 the Bank. The relevant scheme is yet to be approved by the Government
 of India, RBI and other authorities. Pending such approvals no effect
 has been given to the said scheme in the accounts.
 
 8. The figures of the current period include the working results of
 the branches of erstwhile State Bank of Saurashtra (SBS) for the period
 from 14th August 2008 consequent to merger of e-SBS with the Bank.
 Accordingly, the figures of the previous period are strictly not
 comparable. Previous period figures have been regrouped/reclassified,
 wherever necessary, to conform to current period classification. In
 cases where disclosures have been made for the first time in terms of
 RBI guidelines / Accounting Standards, previous year’s figures have not
 been mentioned.