Union Bank of India
BSE: 532477 | NSE: UNIONBANK | ISIN: INE692A01016 | 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. HOUSEKEEPING i) Confirmation / reconciliation of balances with foreign and other banks has generally been obtained / carried out except in a few cases. Adjustment of outstanding entries in Suspense Accounts, Sundry Deposits, Clearing Adjustments, Bank Reconciliation statements and various inter- branch/office accounts is in progress. Reconciliation of Central Office Accounts maintained by branches has been completed up to 31st March 2009. Pending final clearance of (i) and (ii) above, the overall impact, if any, on the accounts, in the opinion of the management will not be significant. 2. INVESTMENTS i) As per RBI guidelines, an amount of Rs. 217.08 crore (previous year Rs.141.86 crore), being an amount equivalent to the profit on sale of Held to Maturity category securities is transferred to Capital Reserve Account. ii) In respect of Held to Maturity category, as stated in significant Accounting Policy No.3 (ii)(a), the excess of acquisition cost over face value of the securities amortised during the year amounted to Rs. 111.55 crore (previous year Rs.145.71 crore). iii) Total investments made in shares, convertible debentures and units of equity linked mutual funds / venture capital funds and also advances against shares aggregate to Rs.951.07 crore (previous year Rs.831.88 crore). 3. FIXED ASSETS Documentation formalities are yet to be completed in respect of certain immovable properties held by the Bank at written down value of Rs. 7.20 crore in respect of which steps have already been initiated (previous year Rs.7.57 crore). Land and Buildings revalued as on 31st March,1995 at fair market value as determined by an approved valuer, have further been revalued as on 30th November, 2007 at fair market value by approved valuers. The resultant increase in value thereof on such revaluations amounting to Rs.456.59 crore as on 31st March, 1995 and Rs.1290.68 crore as on 30th November, 2007 have been credited to Revaluation Reserve and depreciation amounting to Rs.38.42 crore (previous year Rs.22.87 crore) attributable thereto has been deducted there from. 4. INCOME TAX The Bank considers that provision for Income tax held in its accounts is adequate on the following basis: Provision for income tax for the year is arrived at after due consideration of the various judicial decisions on certain disputed issues. Pending determination of final liability in respect of such disputed issues, an adhoc provision of Rs.53 Crore (Previous year - Rs. 40 crore) has been made during the year. Disputed taxes paid net of provision amount to Rs. 493 crore (previous year Rs.593 crore)for which the provision is not considered necessary based on various judicial decisions and past assessments on such disputed issues. Management does not envisage any liability in respect of the disputed issues. 5. FUNDS RAISED RANKING FOR TIER I AND TIER II CAPITAL During the year, the Bank has raised additional funds ranking for Tier - I and Tier -II capital by way of issue of Perpetual Bonds of Rs.340 crore and subordinated Bonds of Rs. 800 crore respectively (Perpetual Bonds of Rs.200 crore and sub-ordinated Bonds of Rs.400.00 crore in the previous year) and the amount is reflected under Other Liabilities and Provisions in Schedule 5 of the Balance Sheet. 6. PROVISION ON STANDARD ADVANCES Provision for Standard Advances and credit risk exposure on derivatives at 0.40% in India and at 1% for advances in Hong Kong Branch amounts to Rs. 495.11 crore (previous year Rs. 415.00 crore). For certain category of standard advances such as loans for consumer durables, educational loans, loans through credit cards and other personal loans, additional provision of 2% amounting to Rs.39.61 crore over and above the statutory requirement of 0.40% has been made. 7. Disclosures on risk exposures in derivatives A. QUALITATIVE DISCLOSURE: Operations in the Treasury Branch are segregated into three functional areas, i.e., Front Office, Mid Office and Back Office, equipped with necessary infrastructure and trained officers, whose responsibilities are well defined. The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usages, approval process as also the limits like the open position limits, deal size limits and stop loss limits for trading in approved instruments. The Mid Office monitors the transactions in the trading book and any excesses noticed are reported to the Risk management Department for necessary action. The Mid Office also measures the financial risks for the transactions in the trading book on a daily basis, by way of calculating MTM positions. Daily MTM position is reported to Risk Management Department, who, in turn, appraises the risk profile to the Directors Committee on the assets and liability management. The Bank ensures that the transactions with the corporate clients are undertaken only after the inherent credit exposures are quantified and approved in terms of the approval process laid down in the Treasury Policy for customer appropriateness and suitability and necessary documents like ISDA agreements etc., are duly executed. The bank has adopted Current Exposure Method for monitoring the credit exposures. The Bank also uses financial derivative transactions for hedging it’s on or off Balance Sheet exposures. The Treasury Policy of the Bank spells out the approval process for hedging the exposures. The hedge transactions are monitored on a regular basis and the notional profits or losses are calculated on MTM basis, PV01 and VAR on these deals are reported to the ALCO every month. The hedged/Non-hedged transactions are recorded separately. The hedged transactions are accounted for on accrual basis. All trading contracts are marked-to-market and resultant gross loss is accounted for, ignoring the gain on a prudence basis. In case of Option contracts, guidelines issued by FEDAI from time to time for recognition of income, premium and discount are being followed. While sanctioning the limit, the competent authority may stipulate condition of obtaining collaterals/margin as deemed appropriate. The derivative limits are reviewed periodically alongwith other credit limits. The customer related derivative transactions for Notional value of Rs 2620.39 crores are covered with counterparty banks, on back-to-back basis for identical amount and tenure and the bank does not have any market risk. During the year, the Bank has become Trading & Clearing member of 3 Currency Futures Exchanges namely National Stock Exchange (NSE), Bombay Stock Exchange (BSE) & MCX- SX Stock Exchange (MCX-SX) as permitted by Reserve Bank of India. The Bank started proprietary trading as well as trading on behalf of customers in currency futures on these exchanges. The Bank has set up the necessary infrastructure for Front, Mid and Back office operations. Daily Mark to Market (MTM) and Margin obligations are settled with the Exchanges as per guidelines issued by the regulators. 8. Disclosure as per Accounting Standards issued by Institute of Chartered Accountants of India (ICAI): 8.1 There were no material prior period Income / Expenditure requiring disclosure under AS - 5 on Net Profit or Loss for the Period, Prior Period and Extraordinary items and changes in Accounting Policies. 8.2 Income items recognized on cash basis were neither material nor require disclosure under AS - 9 on Revenue Recognition. 8.3 The following information is disclosed in terms of Accounting Standards issued by the Institute of Chartered Accountants of India. 8.4 The Bank has identified the following persons to be the Key Management Personnel as per AS-18 on Related Party Disclosures: i. Shri. M.V. Nair, Chairman & Managing Director. ii. Shri. R. S. Reddy, Executive Director. (till 02.08.2008) iii. Shri. T.Y. Prabhu, Executive Director. iv. Shri. S. Raman, Executive Director. (from 15.10.2008) 8.5 The bank carries on distribution of life insurance products of “Star Union Dai-ichi Life Insurance Company Limited” in which it holds 23 % of the shares as strategic investment by contributing Rs. 2.30 crore (Previous Year Rs. 2.30 crores). 8.6 Earnings Per Share – Accounting Standard - 20 The Bank reports basic earnings per equity share in accordance with Accounting Standard 20 on “Earnings per Share”. Basic Earning per Share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year. 8.7 (a) In the opinion of the Management, there is no indication for impairment during the year with regard to the assets to which Accounting Standard 28 applies. (b) Refer Schedule-12 on contingent liabilities: Such liabilities at S.No.(i),(ii),(iii),(iv), (v) and (vi) are dependent upon, the outcome of court/arbitration/out of court settlement, the amount being called up, terms of contractual obligations, devolvement and raising of demand by parties concerned, disposal of appeals respectively. 9. Penalties imposed on the bank by Reserve Bank of India: Nil 10. Draw Down from Reserve The bank has not made any draw down from the reserves during the year. 14. Wage Revision Pending finalization of the wage agreement, an adhoc provision of Rs. 173.00 crore (previous year 20.00 crore) towards the revision in employee cost / benefits has been made for the year 2008 – 09. 11. In line with the Reserve Bank of India guidelines, the bank has implemented the Agricultural Debt Waiver and Debt Relief Scheme, 2008 and an amount of Rs. 744.47 crore had been waived for which preliminary claim was preferred with RBI in the month of October 2008 against which the bank has received the first instalment amounting to Rs. 305.23 crore. Pending certification of the claims by the statutory central auditors, provision to the extent of Rs. 8.81 crore has been made in the accounts. 12. The figures of the previous year have been regrouped / rearranged wherever considered necessary. |
|
![]() | |
| Source : Religare Technova | |
![]() | |




Online










