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Bank Of Baroda

BSE: 532134|NSE: BANKBARODA|ISIN: INE028A01039|SECTOR: Banks - Public Sector
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Notes to Accounts Year End : Mar '19

Application Money Pending Allotment'' Rs. 5,042 crore represents amount received from Government of India towards share capital to be issued for which RBI approval is obtained vide letter no. DBR.CO.BP No. 9771/21.01.002/2018-19 dated 17.05.2019 for considering the same under CET 1 Capital.

The Bank has sought approval from shareholders through postal ballot to allot 42,85,59,286 equity shares to the President of India acting on behalf of Government of India (GOI), the promoter of the bank, at an issue price of Rs. 117.65 per share (Face value Rs. 2 and premium Rs. 115.65). The price has been determined as per the provisions of Regulation 164 of the SEBI ICDR Regulation 2018 is Rs. 117.65 per equity share of fair value of Rs. 2 each (including premium of Rs. 115.65 per equity share).

In pursuant to the scheme of Amalgamation 2019 of Vijaya Bank and Dena Bank with Bank of Baroda, and based on the Swap Ratio agreed upon between the banks on January 2, 2019. The bank has allotted the following shares to the shareholders to the erstwhile Vijaya Bank and erstwhile Dena Bank on April 1, 2019 as following

a) 52,42,00,772 fully paid up equity shares of face value of Rs. 2/- each of Bank of Baroda aggregating Rs. 104,84,01,544/- be issued and allotted to equity shareholders of Vijaya Bank.

b) 24,84,51,166 fully paid up equity shares of face value of Rs. 2/- each of Bank of Baroda aggregating Rs. 49,69,02,332/- be issued and allotted to equity shareholders of Dena Bank.

After the allotment of the above shares the Share of the Government of India (the promoter shareholder) would increase from 63.26% to 69.23%.

(i) Qualitative Disclosure

The Off Balance Sheet Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transaction. The bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, Value at Risk (VaR) and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:

The hedge/non-hedge (market making) transactions are recorded separately. In cases where the underlying is not subject to mark to market the hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to-market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.2.6.4 Credit Default Swaps (CDS)

Valuation Methodology- As per RBI guidelines on CDS dated 23rd May, 2011 the banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA or any other proprietary model if it results in a more conservative valuation. The Bank uses the FIMMDA curve for valuing our CDS positions, the Bank do not use any internal proprietary model for CDS valuation. However, the Bank do not have any CDS deal outstanding as of 31st March 2019

E. As per RBI circular No. DBR.BPBC.No.32/21.04.018/2018-19 dated April 1, 2019, in case the additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before provisions and contingencies and/or additional Gross NPAs identified by RBI exceeds 15% of published incremental Gross NPAs for the reference period then banks are required to disclose divergences from prudential norms on income recognition, asset classification and provisioning. Accordingly, no disclosure is made in respect of divergence reported for the financial year 2017-18, as the same is not beyond the above mentioned thresholds

Figures in bracket denote previous year numbers

The distribution of Assets and Liabilities has been done as per the “Group Asset Liability Management Policy 2018” of the Bank

- The distribution of provisions, while arriving at the net investments, has been done in proportion to the gross investments

The Distribution of provisions and other deductions, while arriving at the net advances, has been done in proportion to the gross Standard Advances.

The scheme is withdrawn as per RBI circular DBR.No .BP BC.101/21.04.048/2017-18 dated 12.02.2018.

RBI vide letter RBI/2017-18/131: DBR. No.BP BC.101/21.04.048/2017-18 dated February 12, 2018 issued a revised framework on Resolution of Stressed Assets and withdrew the existing guidelines/instructions on resolution of stress assets such as framework for revitalizing Distressed Assets, Corporate Debt Restructuring Scheme, Flexible Structuring of Existing Long Term Project Loans, Strategic Debt Restructuring Scheme (SDR), Change in Ownership outside SDR, and Scheme for Sustainable Structuring of Stressed Assets (S4A), etc. with immediate effect. Accordingly, the Joint Lenders Forum (JLF) as an institutional mechanism for resolution of stressed accounts also stands discontinued. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were revoked and accordingly these accounts have been classified as per the extant RBI prudential norms on Income Recognition and Asset Classification. Further Supreme Court vide its judgement dated 02.04.2019 has held the February 12th Circular “Ultra vires as a whole”. RBI has subsequently not issued any revised instructions / modifications in the matter till date.

As on 31.03.2019, the amount of bank''s credit exposure against Unhedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was Rs.1774.79 Crores. The additional RWA on this exposure is Rs. 440.74 crores against this additional minimum capital requirement is Rs.47.93 crores.

A-3.4 Draw Down from Reserves

During the Financial Year 2018-19, there is no draw down from the reserves (March 31, 2018: Rs Nil).

* Out of total complaints received, 154416 complaints (Previous year 90498) resolved on the same day (D) and on the next day (D 1).

** Out of these, 25855 nos. of complaints (Previous year 13476 nos.) are pending for less than 30 days.

A-5. Status of Letters of Comfort

I Letters of Comfort (LOC’s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators to support the operations of its overseas subsidiaries/ Joint ventures.

II Cumulative position of LOC’s outstanding as on 31.03.2019

The LOC issued by the bank in the past and the cumulative financial obligation is as under:

a) LOC issued during 2008-09 to Reserve Bank of New Zealand guaranteeing entire indebtedness of the wholly owned subsidiary - Bank of Baroda (New Zealand) Ltd. to its depositors and other creditors. As on 31st March 2019 the subsidiary''s Deposits (net of Overdraft and Loan against Bank''s own deposits) are Rs. 306.38 crores and outside liabilities are Rs. 6.27 crore (i.e. total liabilities of Rs. 312.65 Crores). The net worth of the subsidiary as on 31st March 2019 is Rs. 225.71 Crores. The net contingent liability on the Bank is Rs. 86.94 Crores in this regard.

b) LOC was issued during the year 2010-11 to Bank Negara Malaysia upto our Bank''s 40% shareholding in the Joint Venture Bank - ‘India International Bank (Malaysia) Bhd (IIBMB). As on 31st March 2019 the deposits of IIBMB are Rs. 226.66 crore and other liabilities are Rs. 2.45 Crores (i.e. Total liabilities of Rs. 229.10 crore). The net worth of the IIBMB as on 31st March 2019 is Rs. 549.33 crore. As the financial year end of IIBMB is 31st December, figure of 31st March 2019 have been taken from unaudited statements.

A-8.2 Qualitative Disclosure:

From 1st January 2015, the bank has implemented guidelines on Liquidity Coverage Ratio (LCR) of the Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered 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. The LCR and monitoring tools are applicable for Indian banks initially w.e.f. 1st January 2015 at whole bank level only i.e. on a stand-alone basis including overseas operations through branches and subsequently at consolidated basis w.e.f. 1st January 2016 i.e. including domestic and overseas subsidiaries.

The LCR has two components:

(i) The value of the stock of high-quality liquid assets (HQLA) in stressed conditions- the numerator.

(ii) Total net cash outflows: The term Total net cash outflows is defined as Total expected cash outflows minus Total expected cash inflows in the specified stress scenario for the subsequent 30 calendar days (the stressed period) the denominator.

LCR = Stock of High Quality Liquid Assets/Total Net Cash Outflows over the next 30 calendar days >=100%

According to RBI, the LCR will be introduced in a phased manner starting with a minimum requirement of 60% from January 1, 2015 and reaching minimum 100% on January 1, 2019

*As per the RBI guidelines dated 31st March 2014 the Bank has made LCR disclosure on solo basis from the financial year ending March 2016. In terms of extant guideline, disclosure on consolidated basis was applicable to the Indian banking system from 1st January 2016. As starting from January 2017, banks has to disclose LCR on daily average basis, hence bank has computed LCR on daily average basis both for Solo and Consolidated Level for the quarter ended March 2017. Bank has also disclosed LCR for the financial year ending March 2018, which consisted of daily averages for Q1, Q2, Q3 and Q4.

Composition of HQLA

Based on daily averages for the quarter ended March 2019, Facility to avail Liquidity for Liquidity Coverage Ratio constitutes the highest portion of HQLA i.e 52.28% followed by excess SLR securities which constitute 22.88%. Level 2 assets which are lower in quality as compared to Level 1 assets, constitute nominally 0.88% of total stock of HQLA against maximum mandated level of 40%.

Main drivers of LCR:

The Group, during the three months ended March 31, 2019, had maintained average HQLA (after haircut) of Rs.1, 287,811.74 million. As against the average requirement of Rs. 1,033,908.52 million at a minimum LCR requirement of 100%. HQLA is primarily driven by government securities in excess of minimum SLR, the extent allowed under the Marginal Standing Facility (MSF) and the Facility to Avail Liquidity coverage ratio. Also, cash, excess CRR maintained with RBI and other overseas central banks, securities issued by foreign sovereigns are important factors of HQLA. Level 2 HQLA primarily consisted of AA- and above rated corporate bonds and commercial papers.

Intra-period changes as well as changes over time:

LCR on consolidated basis were 121.96%, 121.24% and 120.69% as at the months ended January 2019, February 2019 and March 2019 respectively as against the regulatory requirement of 100%.

Concentration of funding sources

A significant counterparty is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank''s total liabilities. The significant counterparty Deposit as of 31st March 2019 was from “Employees State Insurance Corporation” i.e. 2.53% of Global Liabilities.

A “significant instrument/product” is defined as a single instrument/ product of group of similar instruments/products which in aggregate amount to more than 1% of the bank''s total liabilities. Example of funding instruments/products - wholesale deposits, certificates of deposits, long term bonds, etc. Significant instrument/product as of 31st March 2019 were Wholesale Deposits i.e. 7.55% of Global Liabilities, Long Term Bonds i.e. 1.59% of Global Liabilities and Certificate of Deposits i.e. 1.46% of Global Liabilities.

Top 20 depositors of the bank on solo basis constitute 7.26% of our total deposits.

Derivative exposures and potential collateral calls:

The bank''s derivative exposure as on 31st March 2019 is as under:

Currency mismatch in the LCR:

As per the RBI guidelines while the LCR standard is required to be met on one single currency, in order to better capture potential currency mismatch the LCR in each currency needs to be monitored. Accordingly, Bank is maintaining LCR on daily basis in INR and the same is compared against the regulatory requirement, but on other significant currencies (A significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank''s total liabilities) bank is preparing LCR on monthly basis for the submission to RBI under

“BLR-4 - LCR” and to monitor the same. Bank is not required to maintain LCR as per regulatory limits on each significant currency.

The LCR for the significant foreign currencies as at the month ended March 2019 is as under:

Description of the degree of centralization of liquidity management and interaction between the group’s units:

The liquidity management for the Bank on enterprise wide basis is the responsibility of the Board of Directors. Board of Directors has delegated its responsibilities to a Committee of the Board called as the Risk Management Committee of Board”. The Committee is responsible for overseeing the inter linkages between different types of risk and its impact on liquidity.

Bank has Group ALM Policy which provides the broad guidelines under which all the entities within the Group operate in terms of liquidity and interest rate risk. The bank''s entities operating in foreign countries manage their operational liquidity or liquidity in the short-term on their own on an ongoing basis as per both respective territory''s ALM policy and Group ALM policy. The monitoring of liquidity and interest rate risk management of the overseas operations of the bank is being done by the Bank''s Global Mid-Office (ALM Cell) of Risk Management Department.

The guidelines of the Group ALM policy, unless otherwise specifically exempted, apply to overseas operations as well. All the legal entities of the bank i.e.-subsidiaries, joint ventures and associates manage their operational liquidity on an ongoing basis at their own according to their business models and liquidity requirement. As to the legal entities carrying out banking business, they have their own ALM Policy in line with the host country guidelines as well as RBI guidelines whichever is more stringent.

A-9 Priority Sector Lending Certificate (PSLC)

The banks has purchased & sold the following PSLCs during the year:-

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies (Accounting Standard -5)

No change in accounting policy for the year 2018-19.

B-2 Employee Benefits (Accounting Standard -15)

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI

B-2.2 Gratuity

The Bank pays gratuity to employees who retire or resign from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees

B-2.3 Pension

B-2.3.1.Bank pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund

B-2.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organizations’ on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank, who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-2.4 Provident Fund

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India

B-2.5 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B-2.6 Additional Retirement Benefit (ARB)

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ Death shall be eligible for payment of 6 months emoluments as additional retirement benefit, provided he had completed twenty-five years of service in the Bank and satisfy the conditions mentioned in BOB officer''s service regulations.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

The employees, who joined bank before 01st July, 1979 is eligible for the benefit of additional retirement scheme

B-2.7 Disclosures

II. Long Term Employee Benefits (Unfunded Obligation): Accumulating Compensated Absences (Privilege Leave) & Additional Retirement Benefits (ARB)

The following table sets out the status of Accumulating Compensated Absences (Privilege Leave) & ARB as per the actuarial valuation by the independent Actuary appointed by the Bank:-

a) Reconciliation of opening and closing balance of liability

Mortality Rate: IALM (2006-2008)

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. The said estimates and assumptions have been relied upon by the auditors.

B-3 10.1 Segment Reporting (Accounting Standard - 17)

1. Segment Identification

I. Primary (Business Segment): The following are the primary segments of the Bank:-

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 borrowers having exposure of Rs. 5.00 Crores and above.

iii. Retail Banking

The Retail Banking Segment comprises of borrower accounts having exposure of less than Rs. 5.00 Crores.

iv. Other Banking Operations

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. Segment revenue represents revenue from external customers.

IV. Allocation of Income, Expenses, Assets and Liabilities

The interest income is allocated on the basis of actual interest received from wholesale banking operations. The total interest received less interest of wholesale banking is taken to retail banking operations. Expenses not directly attributable are allocated on the basis Interest income earned by the wholesale banking / retail banking segment. Expenses of treasury operations are as per the details available from treasury operations.

The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated

B-4 Related Party Disclosures (Accounting Standard -18) Names of the Related Parties and their relationship with the Bank:

I. Name of Related Parties & their relationship

a) Subsidiaries

i) Domestic Banking Subsidiary 1. The Nainital Bank Limited

ii) Foreign Banking Subsidiaries

1. Bank of Baroda (Kenya) Limited

2. Bank of Baroda (Uganda) Limited

3. Bank of Baroda (Guyana) Inc.

4. Bank of Baroda (UK) Limited.

5. Bank of Baroda (Tanzania) Limited

6. Bank of Baroda (Trinidad & Tobago) Ltd.

7. Bank of Baroda (Ghana) Ltd.

8. Bank of Baroda (New Zealand) Ltd.

9. Bank of Baroda (Botswana) Limited

iii) Domestic Non- Banking Subsidiaries

1. BOB Capital Markets Limited

2. BOB Financial Solutions Limited (formerly known as BOB Cards Ltd)

3. Baroda Global Shared Services Ltd

4. Baroda Sun Technologies Ltd.

5. Baroda Asset Management India Limited

6. Baroda Trustee India Private Limited

iv) Foreign Non- Banking Subsidiary 1. BOB (UK) Ltd.

v) Foreign Non- Banking Step-down Subsidiary

1. Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

b) Associates

i) Regional Rural Banks

1. Baroda Uttar Pradesh Gramin Bank

2. Baroda Rajasthan Kshetriya Gramin Bank

3. Baroda Gujarat Gramin Bank

ii) Others

1. Indo Zambia Bank Limited

c) Joint Ventures

1. India First Life Insurance Company Limited

2. India International Bank (Malaysia) Bhd.

3. India Infra debt Limited

In terms of RBI circular on notes to accounts, key management personnel are whole time directors of Board for Related Party Disclosure.

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.

B-5 Operating Lease (Accounting Standard -19)

Premises taken on operating lease are given below: Operating leases primarily comprise office premises and staff residences, which are renewable at the option of the Bank.

i) The following table sets forth, for the period indicated, the details of future rental payments on Premises taken on Non-Cancellable operating leases:

ii) Amount of lease payments recognized in the Profit & Loss Account for operating leases is Rs. 516.86 Crores (March 31, 2018: Rs. 498.62 Crores)

The Bank does not have any provisions relating to contingent rent.

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in the agreements.

B-6 Earning per Share (Accounting Standard -20)

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 the year.

* Represents maximum number of shares that can be issued to the Government of India against Share application money received (Refer note no A-1 Capital under Schedule 18). These shares have been considered as a Potential Equity in terms of Accounting Standard 20 “Earning per Share” based on the letter bearing No DBR.CO.BP No. 9771/21.01.002/2018-19 dated 17.05.2019 from Reserve Bank of India to consider the Application Money received for the purpose of calculation of Tier I Capital for the year.

B-7 Accounting for Taxes on Income (Accounting Standard -22)

a) Current Tax:

During the year the Bank has debited to Profit & Loss Account Rs. 1,282.61 Crores (March 31, 2018: Rs. 1,664.24 Crores) on account of current tax. The Current Tax in India has been calculated in accordance with the provisions of Income Tax Act 1961 after taking appropriate relief for taxes paid in foreign jurisdictions.

b) Deferred Tax:

During the year, Rs.1,017.98 has been credited to Profit and Loss Account (March 31, 2018 : Rs. 2,023.17 Crores) on account of deferred tax. The Bank has a net DTA of 7,408.36 Crores (March 31, 2018: net DTA of Rs 6,333.06 Crores), which comprises of DTL of Rs. 2.80 Crores (March 31, 2018: Rs 2,989.77 Crores) included under ‘Other Assets''. The major components of DTA and DTL is given below:

B-8 Discontinuing operations (Accounting Standard- 24)

The Bank has no plan to discontinuing operations of any of its operations, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-9 Disclosure of Interest in Joint Ventures (Accounting Standard -27)

As required by AS 27, the aggregate amount of the assets, liabilities, income, expenses, contingent liabilities and commitments related to the Bank''s interests in jointly controlled entities are disclosed as under:

B-10 Impairment of Assets (Accounting Standard-28)

In the opinion of the Bank''s management, there is no indication of impairment to the assets during the year to which Accounting Standard 28 - “Impairment of Assets” applies.

B-11 Provisions, Contingent Liabilities and Contingent Assets (Accounting Standard-29)

B-11.1 As per the policy of the Bank, provision for the claims not been acknowledged as debt, has been provided for.

Movement of provisions for Claims

a) Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels. Tax paid in advance/tax deducted at source appearing under other Assets amounting to Rs 5,881.92 Crores (March 31, 2018: Rs 2,007.25 Crores) is inclusive of Rs 2,615.40 Crores (March 31, 2018: Rs 1,704.80 Crores) which represents amount adjusted by the department / paid by the bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank''s view, duly supported by counsels opinion and/or judicial pronouncements, additions / disallowances made by the assessing officer are not sustainable.

b) Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgment / arbitration awards / out of court settlement/disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

c) In February 2019, the Honorable Supreme Court of India in its judgment clarified that certain special allowances should be considered to measure obligations under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (the PF Act). The Bank has been legally advised that the said ruling by Supreme Court is not applicable to the Bank since the bank is maintaining its own fund.

d) Contingent Assets are not recognized in the financial statements.

C. Additional Disclosures

C-1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2019, the reconciliation of which is in progress.

C-2 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties, amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries and others.

C-3 Investments

C-3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Investment from HTM category to AFS category. The resultant depreciation of Rs. 3.58 Crores (March31, 2018: Rs. 5.27 Crores) has been charged to the Profit & Loss Account.

RBI circular DBR.No.BP.BC.113/21.04.048/2017-18 dated June 15, 2018 had granted banks an option to spread provisioning for mark to market (MTM) losses on investments held in AFS and HFT categories equally up to four quarters, commencing with the quarter ended June 30, 2018, the Bank has availed the relaxation permitted. An amount of Rs.248.48 crore, was carried forward as at the half year ended September 30, 2018. During the December 2018 and March 2019 quarters the overall portfolio of the bank has a positive MTM as at December 31, 2018 and March 31, 2019, hence no further provision is required. Accordingly, the above circular will not apply to the bank for the quarter.

C-3.2 FCNR (B) Swap with RBI

RBI introduced US Dollar-Rupee concessional swap window for fresh FCNR (B), funds mobilized in any permitted currency for a minimum tenor of three years and above. In this window RBI offered a concessional rate of Swaps to banks only for fresh FCNR (B) deposits mobilized in any of the permitted currencies.

The bank mobilized USD 1710 Million and consequently bank executed concessional rate swaps with RBI for the corresponding tenor. The swaps executed with RBI were done at 3.5% as against the prevailing rate of around 8% and consequently would have distorted profits/loss in the starting year as well as in maturity year. To avoid this inherent distortion, and as prescribed by RBI, we have adopted the method of amortization of swap points to even out expenses throughout the tenor of swaps.

C-3.3 Profit on sale of investment held under “Held to Maturity category amounting to Rs 431.51 crores has been credited to Profit & Loss Account and Rs. 210.36 crore has been apportioned to Capital Reserve Account.

C-4 Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006 There has been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

C-5 Premises

C-5.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs 23.86 Crores (March 31, 2018: Rs 23.86 Crores).

C-5.2 Premises include assets under construction amounting to Rs. 92.13 Crores (March 31, 2018: Rs.178.10 Crores).

C-6 BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court. The matter is still pending before the judiciary.

C-7 The 11th 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 2017. In accordance with the pending execution of agreement for wage revision, to be effective from 1st November 2017, a provision of Rs.524.86 Crores (March 31, 2018: Rs. 100 crore) has been made during the year.

The Reserve Bank of India (RBI) vide DBR.BP.BC. No. 76/21.07.001/2015-16 dated 11th February 2016, has prescribed the roadmap for implementation of Indian Accounting Standards (Ind-AS) in the Banks and the Banks need to disclose the strategy for Ind-AS implementation, including the progress made in this regard. The Bank accordingly, has appointed a consultant to assist in implementation of the Ind-AS. The Bank has also constituted a Steering Committee to oversee the progress made and the Audit Committee of the Board is being apprised of the same from time to time. In terms of the requirement stipulated vide said circular, the Bank has submitted quarterly proforma Ind-AS financial statements to the RBI up to 31st December, 2018. Further, as per RBI circular DBR.BP.BC.No. 29/21.07.001/2018-19 dated 22.03.2019, the implementation of Ind AS on banks has deferred till further notice.

C-9 Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda

a) In exercise of power conferred by section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 (5 of 1970) and section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 (40 of 1980), after consultation with the Reserve Bank of India, The Government of India has notified the scheme of amalgamation of Vijaya Bank and Dena Bank (hereinafter collectively referred to as Transferor Banks) with Bank of Baroda (hereinafter referred to as Transferee Bank) on 02nd January, 2019,. This scheme shall come into force on the 01st April, 2019.

On the commencement of this scheme, the undertakings of the Transferor Banks shall be transferred to and shall vest in the Transferee Bank. Undertakings of the transferor banks shall be deemed to include all business, assets (including tangible and intangible, movable and immovable), liabilities, Reserve & Surplus and all other rights and interests arising out of such property of the transferor Banks in relation to the undertakings as were immediately before the commencement of scheme, in the ownership, possession, power or control of the Transferor Banks within or Outside India.

b) After taking into consideration the recommendation of the respective Audit Committees, Joint Valuation Report and the fairness opinion issued to the respective banks, the Board of the respective banks has approved the Share Exchange Ratio (ranking pari passu in all respects and shall have the same rights attached to them as the then existing equity shares of the Transferee Bank, including, in respect of dividends, if any, that may be declared by the Transferee Bank, on or after the commencement of this scheme) as under:-

i) 402 equity shares of Rs. 2 each of Bank of Baroda of every 1000 equity shares of Rs. 10 each of Vijaya Bank.

ii) 110 equity shares of Rs. 2 each of Bank of Baroda of every 1000 equity shares of Rs. 10 each of Dena Bank.

In respect of entitlements to fraction of equity shares, the consideration shall be paid in cash. Necessary accounting adjustments in regard of amalgamation will be made on the effective date.

C-10 During the year unclaimed dividend amount transferred to the Investor Education and Protection Fund (IEPF) without any delay is Rs 20.58 Crores.

C-11 RBI Circular DBOD.NO.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 on Basel III. : Capital Regulations read together with RBI circular no DBR. NO.BP.BC. 80/21.06.201/2015-15 dated March 31, 2015 on Prudential Guidelines on Capital Adequacy and Liquidity Standards Amendments requires banks to make applicable Pillar 3 disclosures including leverage ratio and liquidity coverage ratio under the Basel- III framework. These details are being made available on our website www.bankofbaroda.com. These disclosures have not been subjected to audit by the auditors.

C-12 Previous year''s figures have been regrouped where necessary to conform to current year classification.

Source : Dion Global Solutions Limited
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