A. Basis of Preparation
The Banks financial statements are prepared under the historical cost
convention, on the accrual basis of accounting, unless otherwise stated
and conform in all material aspects to Generally Accepted Accounting
Principles (GAAP) in India, which comprise applicable statutory
provisions, regulatory norms/guidelines prescribed by Reserve Bank of
India (RBI), Accounting Standards issued by the Institute of Chartered
Accountants of India (ICAI), and the practices prevalent in the banking
industry in India.
B. Use of Estimates
The preparation of financial statements requires the management to make
estimates and assumptions considered in the reported amount of assets
and liabilities (including contingent liabilities) as of the date of
the financial statements and the reported income and expenses during
the reporting period. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Future results could differ from these estimates.
1. Share Capital
a) During the year , the Bank has allotted 129,88,697 shares of Rs.
10/- each for cash at a premium of Rs. 2,302.78 per equity share
aggregating to Rs. 3004 crore under Preferential Allotment to GOI. Out
of the total subscription of Rs. 3004 crore received from GOI, an
amount of Rs. 12.99 crore was transferred to Share Capital Account and
Rs. 2991.01 crore to Share Premium Account.
b) The Bank has allotted 436 equity shares of Rs. 10/- each for cash at
a premium of Rs. 1,580/- per equity share aggregating to Rs. 6,93,240/-
out of shares kept in abeyance under Right Issue - 2008. Out of the
total subscription of Rs. 6,93,240/- received, Rs. 4360/- was
transferred to Share Capital Account and Rs. 6,88,880/- to Share
c) The Bank has kept in abeyance the allotment of 83,075 (Previous Year
83,511) Equity Shares of Rs. 10/- each issued as a part of Rights
issue, since they are subject to title disputes or are subjudice.
d) Expenses in relation to the issue of shares: Rs. 3.73 crore debited
to Share Premium Account.
* If the Bank does not exercise call option by 15th May 2017, the
interest rate will be raised and fixed rate will be converted to
# If the Bank does not exercise call option by 27th June 2017, the
interest rate will be raised and fixed rate will be converted to
b. Investments amounting to Rs. 6,070.97 crore (Previous Year Rs.
5520.21 Crore) are kept as margin with Clearing Corporation of India
Limited/NSCCL/ MCX/ USEIL towards Securities Settlement.
d. During the year, GE Capital Business Process Management Services
Private Limited bought back 13,59,598 shares from the Bank at Rs. 141
per share , the Bank continues to hold 40% (previous year 40 %) stake
in the joint venture. The Bank exited from two RRBs as per details
* Investment in Equity, Equity Oriented Mutual Funds, Venture Capital,
Rated Assets Backed Securities, Central Government Securities and ARCIL
are not segregated under these categories as these are exempt from
** Investments in Subsidiaries/Joint Ventures have not been segregated
into various categories as these are not covered under relevant RBI
Guidelines. Others include an amount of Rs. 13,330.20 crore (Previous
Year Rs. 15,942.94) under RIDF Scheme of NABARD.
C. Disclosures on Risk Exposure in Derivatives (A) Qualitative
i. The Bank currently deals in over-the-counter (OTC) interest rate
and currency derivatives as also in Interest Rate and Currency Futures.
Interest Rate Derivatives dealt by the Bank are rupee interest rate
swaps, foreign currency interest rate swaps and forward rate
agreements. Currency derivatives dealt by the Bank are currency swaps,
rupee dollar options, exchange traded options and cross- currency
options. The products are offered to the Banks customers to hedge
their exposures and the Bank enters into derivatives contracts to cover
such exposures. Derivatives are used by the Bank both for trading as
well as hedging on balance sheet items. The Bank also deals in a mix of
these generic instruments. The Bank has done Option deals and
Structured Products with customers.
ii. Derivative transactions carry market risk i.e. the probable loss
the Bank may incur as a result of adverse movements in interest
rates/exchange rates/equity prices and credit risk i.e. the probable
loss the Bank may incur if the counterparties fail to meet their
obligations. The Banks Policy for Derivatives approved by the Board
prescribes the market risk parameters (cut-loss triggers, open position
limits, duration, modified duration, PV01 etc.) as well as customer
eligibility criteria (credit rating, tenure of relationship etc.) for
entering into derivative transactions. Credit risk is controlled by
entering into derivative transactions only with counterparties
satisfying the criteria prescribed in the Policy. Appropriate limits
are set for the counterparties taking into account their ability to
honour obligations and the Bank enters into ISDA agreement with each
iii. The Asset Liability Management Committee (ALCO) of the Bank
oversees efficient management of these risks. The Banks Market Risk
Management Department (MRMD) identifies, measures, monitors market risk
associated with derivative transactions, assists ALCO in controlling
and managing these risks and reports compliance with policy
prescriptions to the Risk Management Committee of the Board (RMCB) at
iv. The accounting policy for derivatives has been drawn-up in
accordance with RBI guidelines, the details of which are presented
under Schedule 17: Significant Accounting Policies (SAP) for the
financial year 2012-13.
v. Interest Rate Swaps are mainly used at Foreign Offices for hedging
of the assets and liabilities.
vi. Apart from hedging swaps, swaps at Foreign Offices consist of back
to back swaps done at our Foreign Offices which are done mainly for
hedging of FCNR deposits at Global Markets, Kolkata.
vii. Majority of the swaps were done with First class counterparty
$ The swaps amounting to Rs. 6,574.73 crore (Previous Year Rs. 7,276.19
crore) entered with the Banks own foreign offices are not shown here
as they are for hedging of FCNB corpus and hence not marked to market.
# IRS/FRA amounting to Rs. 10,338.05 crore(Previous Year Rs. 7,600.95
crore) entered with the Banks own Foreign offices are not shown here
as they are for hedging of FCNB corpus and hence not marked to market.
* The forward contract deals with our own Foreign Offices are not
included. Currency Derivatives - Rs. 4,349.04 crore ( Previous Year Rs.
1,260.56 crore) and Interest Rate Derivatives - Rs. 167.53 crore
(Previous Year Rs. 159.56 crore)
1. The outstanding notional amount of derivatives done between Global
Markets department and International Banking Group department as on
31st March 2013 amounted to Rs. 21,429.35 crore (Previous Year Rs.
16,297.26 crore) and the derivatives done between SBI Foreign Offices
as on 31st March 2013 amounted to Rs. 35,082.63 crore ( Previous Year
Rs. 30,663.90 crore).
2. The outstanding notional amount of interest rate derivatives which
are not marked to market where the underlying Assets/Liabilities are
not marked to market as on 31st March 2013 amounted to Rs. 80,144.28
crore ( Rs. 57,756.33 crore).
3. Credit Default Swap : Outstanding as on 31st March 2013 amounted to
Rs. 54.29 crore (Previous Year Rs. 546.90 crore).
a) Disclosure of Penalties imposed by RBI
Nil (Previous year Rs. 0.10 crore)
b) Penalty for Bouncing of SGL forms
No penalty has been levied on the Bank for bouncing of SGL Forms.
2.2. Disclosure Requirements as per Accounting Standards
a) Employee Benefits
i. Defined Benefit Plans
1. Employees Pension Plan and Gratuity Plan
The following table sets out the status of the Defined Benefit Pension
Plan and Gratuity Plan as per the actuarial valuation by the
independent Actuary appointed by the Bank:-
The estimates of future salary growth, factored in actuarial valuation,
take account of inflation, seniority, promotion and other relevant
factors such as supply and demand in the employment market. Such
estimates are very long term and are not based on limited past
experience / immediate future. Empirical evidence also suggests that in
very long term, consistent high salary growth rates are not possible,
which has been relied upon by the auditors.
2. Employees Provident Fund
Actuarial valuation carried out in respect of interest shortfall in the
Provident Fund Trust of the Bank, as per Deterministic Approach shows
Nil liability, hence no provision is made in F.Y. 2012-13.
The following table sets out the status of Provident Fund as per the
actuarial valuation by the independent Actuary appointed by the Bank:-
ii. Defined Contribution Plan:
The Bank has a Defined Contribution Pension Scheme (DCPS) applicable to
all categories of officers and employees joining the Bank on or after
August 1, 2010. The Scheme is managed by NPS Trust under the aegis of
the Pension Fund Regulatory and Development Authority. National
Securities Depository Limited has been appointed as the Central Record
Keeping Agency for the NPS. During F.Y.2012-13, the Bank has
contributed Rs. 67.73 crore (Previous Year Rs. 52.47crore).
iii. Other Long Term Employee Benefits
Amount of Rs. 502.25 Crore (Previous Year Rs. 531.33 Crore) is provided
towards Long Term Employee Benefits as per the actuarial valuation by
the independent Actuary appointed by the Bank and is included under the
head Payments to and Provisions for Employees in Profit and Loss
b) Segment Reporting:
1. Segment Identification
I. 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:
i. 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.
ii. 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
iii. 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 ATMs.
iv. Other Banking business - Segments not classified under (i) to
(iii) above are classified under this primary segment.
II. 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
III. 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.
IV. 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.
During the year, the Bank has further refined the segmental transfer
pricing mechanism in order to report more relevant segment results.
This change effects the segment results inter se and has no impact on
the financials of the bank. The effect of the change on the segment
results is not fairly determined.
c) Related Party Disclosures:
1. Related Parties
i. DOMESTIC BANKING SUBSIDIARIES
1. State Bank of Bikaner & Jaipur
2. State Bank of Hyderabad
3. State Bank of Mysore
4. State Bank of Patiala
5. State Bank of Travancore
ii. FOREIGN BANKING SUBSIDIARIES
1. SBI (Mauritius) Ltd.
2. State Bank of India (Canada)
3. State Bank of India (California)
4. Commercial Bank of India LLC, Moscow
5. PT Bank SBI Indonesia
6. Nepal SBI Bank Ltd.
iii. DOMESTIC NON-BANKING SUBSIDIARIES
1. SBI Capital Markets Ltd.
2. SBI DFHI Ltd.
3. SBI Mutual Funds Trustee Company Pvt. Ltd.
4. SBICAP Securities Ltd.
5. SBICAPS Ventures Ltd.
6. SBICAP Trustees Company Ltd.
7. SBI Cards and Payment Services Pvt. Ltd.
8. SBI Funds Management Pvt. Ltd.
9. SBI Life Insurance Company Ltd.
10. SBI Pension Funds Pvt. Ltd.
11. SBI - SG Global Securities Services Pvt. Ltd.
12. SBI Global Factors Ltd.
13. SBI General Insurance Company Ltd
14. SBI Payment Services Pvt. Ltd.
iv. FOREIGN NON-BANKING SUBSIDIARIES
1. SBICAP (UK) Ltd.
2. SBI Funds Management (International) Pvt. Ltd.
3. SBICAP (Singapore) Ltd.
B. JOINTLY CONTROLLED ENTITIES
1. GE Capital Business Process Management Services Pvt. Ltd
2. C-Edge Technologies Ltd.
3. Macquarie SBI Infrastructure Management Pte. Ltd.
4. Macquarie SBI Infrastructure Trustees Ltd.
5. SBI Macquarie Infrastructure Management Pvt. Ltd.
6. SBI Macquarie Infrastructure Trustees Pvt. Ltd.
7. Oman India Joint Investment Fund - Management Company Pvt. Ltd.
8. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.
i. Regional Rural Banks
1. Andhra Pradesh Grameena Vikas Bank
2. Arunachal Pradesh Rural Bank
3. Kaveri Grameena Bank
4. Chhattisgarh Gramin Bank
5. Deccan Grameena Bank
6. Ellaquai Dehati Bank
7. Meghalaya Rural Bank
8. Krishna Grameena Bank
9. Langpi Dehangi Rural Bank
10. Madhyanchal Gramin Bank
11. Malwa Gramin Bank
12. Mizoram Rural Bank
13. Marudhara Gramin Bank
14. Nagaland Rural Bank
15. Parvatiya Gramin Bank (upto 14.02.2013)
16. Purvanchal Gramin Bank
17. Samastipur Kshetriya Gramin Bank (upto 14.10.2012)
18. Saurashtra Gramin Bank
19. Utkal Grameen Bank
20. Uttarakhand Gramin Bank
21. Vananchal Gramin Bank
22. Vidisha Bhopal Kshetriya Gramin Bank (upto 07.10.2012)
1. SBI Home Finance Ltd.
2. The Clearing Corporation of India Ltd.
3. Bank of Bhutan Ltd.
D. Key Management Personnel of the Bank
1. Shri Pratip Chaudhuri, Chairman
2. Shri Hemant G. Contractor Managing Director & Group Executive
3. Shri A. Krishna Kumar, Managing Director & Group Executive
4. Shri Diwakar Gupta, Managing Director & Chief Financial Officer
5. Shri S. Vishvanathan, Managing Director & Group Executive
(Associates & Subsidiaries) (from 9.10.2012)
2. Parties with whom transactions were entered into during the year
No disclosure is required in respect of related parties, which are
State-controlled Enterprises as per paragraph 9 of Accounting
Standard (AS) 18. Further, in terms of paragraph 5 of AS 18,
transactions in the nature of Banker-Customer relationship have not
been disclosed including those with Key Management Personnel and
relatives of Key Management Personnel.
e) Earnings per Share
The Bank reports basic and diluted earnings per equity share in
accordance with Accounting Standard 20 - Earnings per Share.
Basic earnings per share is computed by dividing net profit after
tax by the weighted average number of equity shares outstanding during
f) Accounting for Taxes on Income
i. Deferred Tax :-
a. During the year, Rs. 107.97 crore [Previous Year Rs. 455.93 crore
debited] has been credited to Profit and Loss Account on account of
b. During the year, the Bank has recognised deferred tax asset on
provision for leave encashment, which was hitherto not being done.
Accordingly, an amount of Rs. 922.15 crore ( including Rs. 783.62 crore
relating to period upto 31.03.2012) has been accounted for in the
ii. The Bank has net deferred tax liability of Rs. 628.92 crore
(Previous Year net deferred tax asset of Rs. 180.63 crore), which is
included under Other Liabilities and Provisions (Previous Year Other
Assets). The breakup of deferred tax assets and liabilities into major
items is given below:
# Includes tax credit arising out of provision for leave encashment for
employees of Rs. 922.15 crore.
* Includes Rs. 917.04 crore (Previous Year Rs. 536.56 Crore)
transferred from Income Tax Account.
h) Impairment of Assets
In the opinion of the Banks Management, there is no impairment to the
assets during the year to which Accounting Standard 28 - Impairment of
3. With regard to disclosures relating to Micro, Small & Medium
Enterprises under the Micro, Small & Medium Enterprises Development
Act, 2006, there have been no reported cases of delayed payments or of
interest payments due to delay in such payments to Micro, Small &
4. Letter of Comfort issued for Subsidiaries
The Bank has issued letters of comfort on behalf of its subsidiaries.
Outstanding letters of comfort as on 31st March 2013 aggregate to Rs.
477.19 Crore (Previous Year: Rs. 2086.56 Crore). In the Banks
assessment no financial impact is likely to arise.
5. Provisioning Coverage Ratio:
The Provisioning to Gross Non-Performing Assets ratio of the Bank as on
31st March 2013 is 66.58% (Previous Year 68.10%).
6. Unamortised Gratuity Liabilities
In accordance with RBI circular no. DBOD.BP.BC.80/21.04.018/2010-11
dated February 9, 2011 the Bank has opted to amortise the additional
liability on account of enhancement in Gratuity limit over a period of
5 years beginning with the financial year ended March 31, 2011.
Accordingly, the Bank has charged a sum of Rs. 100 crore to the Profit
and Loss Account, being the proportionate amount for the financial year
ended March 31, 2013. The unrecognised liability of Rs. 200 crore as on
March 31, 2013 will be amortised proportionately in accordance with the
7. Inter Office Accounts
Inter Office Accounts between branches, controlling offices and local
head offices and corporate centre establishments are being reconciled
on an ongoing basis and no material effect is expected on the profit
and loss account of the current year.
8. Specific Provision for NPAs
During the year, the Bank has made specific provisions of Rs. 706.26
crore (previous year Rs. 1350 crore) for certain Non- performing
domestic advances to provide for estimated actual loss in collectible
9. Pending Wage Agreement
The Ninth 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 2012. Pending execution of agreement
for wage revision, to be effective from 1st November 2012, a provision
of Rs. 720 Crore has been made during the year.
Further, the Bank has made an adhoc additional provision of Rs. 225
crore towards Superannuation Schemes and other long term employee
benefits, over and above the actuarial valuations.
10. Previous year figures have been regrouped/reclassified, wherever
necessary, to conform to current year classification. In cases where
disclosures have been made for the first time in terms of RBI
guidelines / Accounting Standards, previous years figures have not