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State Bank of India

BSE: 500112|NSE: SBIN|ISIN: INE062A01020|SECTOR: Banks - Public Sector
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Notes to Accounts Year End : Mar '19

A. Basis of Preparation:

The Bank’s financial statements are prepared under the historical cost convention, on the accrual basis of accounting on Going Concern basis, 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), Banking Regulation Act, 1949, Accounting Standards issued by 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 on the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

1. Share Capital

a) The Bank received application money of Rs. 0.38 crore including share premium of Rs. 0.38 crore by way of the issue of 24,000 equity shares of Rs. 1 each kept in abeyance due to various title disputes or third party claims out of the Right Issue closed on 18.03.2008. The equity shares kept in abeyance were allotted on 31.01.2019.

b) Expenses in relation to the issue of shares: Rs. 9.12 crore (Previous Year Rs. 17.60 crore) is debited to Share Premium Account.

2. Innovative Perpetual Debt Instruments (IPDI)

The details of IPDI issued which qualify for Hybrid Tier I Capital and outstanding are as under:

‘Includes Rs. 2,000 crore raised during the F.Y. 2009-10, of which Rs. 550 crore invested by SBI Employee Pension Fund, not reckoned for the purpose of Tier I Capital as per RBI instructions.

Notes:

a. Provisions made during the previous year includes the receipt from erstwhile Associate Banks (ABs) and Bharatiya Mahila Bank Limited (BMBL) on acquisition.

b. Securities amounting to Rs. 21,219.41 crore (Previous Year Rs. 40,992.04 crore) are kept as margin with Clearing Corporation of India Limited (CCIL)/ NSCCL/MCX/ NSEIL/ BSE towards Securities Settlement.

c. During the year, the Bank infused additional capital in its subsidiaries and associates viz. i) SBI Cards & Payments Services Private Ltd. Rs. 347.80 crore, ii) SBI Infra Management Solutions Pvt. Ltd. Rs. 30.00 crore, iii) SBI Payment Services Pvt. Ltd. Rs. 2.50 crore, iv) State Bank of India (UK) Ltd. Rs. 1,604.43 crore, v) Jio Payments Bank Ltd. Rs. 30.00 crore, vi) Utkal Grameen Bank Rs. 63.14 crore, vii) Madyanchal Gramin Bank Rs. 57.63 crore, viii) Rajasthan Marudhara Gramin Bank Rs. 7.28 crore, ix) Nagaland Rural Bank Rs. 0.65 crore and after infusion there is no change in Bank’s stake.

d. During the year, the Bank has sold its 4% stake in SBI General Insurance Company Ltd. at a profit of Rs. 473.12 crore. Thus, the Bank stake has reduced from 74.00% to 70.00%.

e. The Bank exited from an RRB as per details given below: -

(Figures in brackets are for Previous Year)

* Investments in Equity, Equity Oriented Mutual Funds, Venture Capital, Rated Assets Backed Securities, Central and State Government Securities and ARCIL are not segregated under these categories as these are exempt from rating/listing guidelines. ** Investments in Subsidiaries/Joint Ventures have not been segregated into various categories as these are not covered under relevant RBI Guidelines.

3. Sales and Transfers of Securities To/From HTM Category

The value of sales and transfers of securities to/from HTM Category does not exceed 5% of the book value of investment held in HTM category at the beginning of the year.

C. Risk Exposure in Derivatives

(A) Qualitative Risk Exposure

i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in Interest Rate Futures and Exchange Traded Currency Derivatives. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate agreements, cap, floor and collars. Currency derivatives dealt by the Bank are currency swaps, rupee dollar options and cross-currency options. The products are offered to the Bank’s customers to hedge their exposures and the Bank also enters into derivatives contracts to cover off such exposures. Derivatives are used by the Bank both for trading as well as hedging balance sheet items. The Bank also runs option position in USD/INR, which is managed through various types of loss limits and Greek limits.

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 and credit risk i.e. the probable loss the Bank may incur if the counterparties fail to meet their obligations. The Bank’s “Policy for Derivatives” approved by the Board prescribes the market risk parameters (Greek limits, Loss Limits, cut-loss triggers, open position limits, duration, modified duration, PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship, limits and customer appropriateness and suitability of policy (CAS) 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 counterparty.

iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks. The Bank’s 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 regular intervals.

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 2018-19.

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 banks.

viii. Derivative transactions comprise of swaps which are disclosed as contingent liabilities. The swaps are categorised as trading or hedging.

ix. Derivative deals are entered into with only those interbank participants for whom counterparty exposure limits are sanctioned. Similarly, derivative deals entered into with only those corporates for whom credit exposure limit is sanctioned. Collateral requirements for derivative transactions are laid down as a part of credit sanctions terms on a case by case basis. Such collateral requirements are determined based on usual credit appraisal process. The Bank retains the right to terminate transactions as a risk mitigation measure in certain cases.

@ The swaps amounting to Rs. 245.10 crore (Previous Year Rs. 2,870.26 crore) entered with the Bank’s 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. 19,022.25 crore (Previous Year Rs. 2,988.82 crore) entered with the Bank’s 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. 427.12 crore (Previous Year ‘Nil) and Interest Rate Derivatives ‘Nil (Previous Year ‘Nil).

1. The outstanding notional amount of derivatives done between Global Markets Unit and International Banking Group as on 31st March, 2019 amounted to Rs. 19,694.47 crore (Previous Year Rs. 5,859.08 crore) and the derivatives done between SBI Foreign Offices as on 31st March, 2019 amounted to Rs. 8,929.28 crore (Previous Year Rs. 12,056.81 crore).

2. The outstanding notional amount of interest rate derivatives which are not marked -to-market (MTM) where the underlying Assets/Liabilities are not marked to market as on 31st March, 2019 amounted to Rs. 45,661.89 crore (Previous Year Rs. 45,442.82 crore).

Notes:-

i. Opening and closing balances of provision for NPAs include ECGC/CGFMU claims received and held pending adjustment of Rs. 8.72 crore (Previous Year Rs. 1.97 crore) and Rs. 235.61 crore (Previous Year Rs. 8.72 crore) respectively.

ii. Additions/Provisions made during the previous year include receipt from erstwhile ABs and BMBL on acquisition.

b) As per RBI circular No. DBR.BP.BC.No.32/21.04.018/2018-19 dated 1st April, 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 separate disclosure is made in respect of divergence for the financial year 2017-18 as the same is not beyond the above-mentioned thresholds.

c) Risk Category wise Country Exposure

As per the extant RBI guidelines, the country exposure of the Bank is categorised into various risk categories listed in the following table. The country exposure (net funded) of the Bank for any country does not exceed 1% of its total assets except on USA, hence provision for the country exposure on USA has been made.

d) Single Borrower and Group Borrower exposure limits exceeded by the Bank

The Bank had taken single borrower exposure & Group Borrower exposure within the prudential limit prescribed by RBI.

4.1. Miscellaneous

a. Disclosure of Penalties

- Reserve Bank of India has imposed a penalty of Rs. 1.00 crore on the Bank for not monitoring the end use of funds in respect of one of its borrowers.

- Reserve Bank of India has imposed a penalty of Rs. 1.00 crore on the Bank for non-compliance with the directions issued by RBI on the SWIFT related operational controls.

- The Central Bank of Bahrain (CBB) has imposed a penalty of Rs. 0.92 crore (BHD 50,000) on Bahrain Branches for non-compliance of USD Parity stipulations in 5 deals. The Bank has filed an appeal before Central Bank of Bahrain and the final decision from CBB is still awaited.

b. Penalty for Bouncing of SGL forms

No penalty has been levied on the Bank for bouncing of SGL Forms.

4.2. Disclosure Requirements as per the Accounting Standards

a) Accounting Standard - 15 “Employee Benefits”

i. Defined Benefit Plans

1. Employee’s 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. The said estimates and assumptions have been relied upon by the auditors.

With a view to further strengthen the Pension Fund, it was decided to upwardly revise some of the assumptions.

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. 2018-19.

There is a guaranteed return applicable to liability under SBI Employees Provident Fund which shall not be lower of either:

(a) one half percent above the average standard rate (adjusted up or down to the interest one quarter per cent) quoted by the bank for new deposits fixed for twelve months in the preceding year (ending on the preceding the 31st day of March); or

(b) three percent per annum, subject to approval of Executive Committee.

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. 2018-19, the Bank has contributed Rs. 451.39 crore (Previous Year Rs. 390.00 crore).

iii. Long Term Employee Benefits (Unfunded Obligation):

(A) Accumulating Compensated Absences (Privilege Leave)

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

(B) Other Long Term Employee Benefits

Amount of Rs. 21.53 crore (Previous Year ‘(63.95) crore) is provided / (written back) towards Other 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 Account.

b) Accounting Standard - 17 “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, Commercial Clients Group and Stressed Assets Resolution Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

iii. Retail Banking -

The Retail Banking Segment comprises of retail branches, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with these branches. 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.

c) Accounting Standard - 18 “Related Party Disclosures”

1. Related Parties

A. SUBSIDIARIES

i. FOREIGN BANKING SUBSIDIARIES

1. Commercial Indo Bank LLC, Moscow

2. Bank SBI Botswana Limited

3. SBI Canada Bank

4. State Bank of India (California)

5. State Bank of India (UK) Limited

6. SBI (Mauritius) Ltd.

7. PT Bank SBI Indonesia

8. Nepal SBI Bank Ltd.

ii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBICAP Securities Ltd.

3. SBICAP Trustee Company Ltd.

4. SBICAP Ventures Ltd.

5. SBI DFHI Ltd.

6. SBI Global Factors Ltd.

7. SBI Infra Management Solutions Pvt. Ltd.

8. SBI Mutual Fund Trustee Company Pvt. Ltd.

9. SBI Payment Services Pvt. Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI Life Insurance Company Ltd.

12. SBI General Insurance Company Ltd.

13. SBI Cards and Payment Services Pvt. Ltd.

14. SBI Business Process Management Services Pvt. Ltd.

15. SBI - SG Global Securities Services Pvt. Ltd.

16. SBI Funds Management Pvt. Ltd.

17. SBI Foundation.

iii. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (Singapore) Ltd.

2. SBICAP (UK) Ltd.

3. SBI Funds Management (International) Pvt. Ltd.

4. State Bank of India Servicos Limitada

5. Nepal SBI Merchant Banking Ltd.

B. JOINTLY CONTROLLED ENTITIES

1. C-Edge Technologies Ltd.

2. SBI Macquarie Infrastructure Management Pvt. Ltd.

3. SBI Macquarie Infrastructure Trustee Pvt. Ltd.

4. Macquarie SBI Infrastructure Management Pte. Ltd.

5. Macquarie SBI Infrastructure Trustee Ltd.

6. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

7. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

8. Jio Payments Bank Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Chhattisgarh Rajya Gramin Bank

4. Ellaquai Dehati Bank

5. Langpi Dehangi Rural Bank

6. Madhyanchal Gramin Bank

7. Meghalaya Rural Bank

8. Mizoram Rural Bank

9. Nagaland Rural Bank

10. Purvanchal Bank

11. Saurashtra Gramin Bank

12. Utkal Grameen Bank

13. Uttarakhand Gramin Bank

14. Vananchal Gramin Bank

15. Rajasthan Marudhara Gramin Bank

16. Telangana Grameena Bank

17. Kaveri Grameena Bank

18. Malwa Gramin Bank (upto 31.12.2018).

ii. Others

1. SBI Home Finance Ltd.(under liquidation)

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

D. Key Management Personnel of the Bank

1. Shri Rajnish Kumar, Chairman

2. Shri P. K. Gupta, Managing Director (Retail & Digital Banking)

3. Shri Dinesh Kumar Khara, Managing Director (Global Banking & Subsidiaries)

4. Shri B. Sriram, Managing Director (Corporate & Global Banking) upto 29.06.2018

5. Shri Arijit Basu, Managing Director (Commercial Clients Group & IT) from 25.06.2018

6. Smt. Anshula Kant, Managing Director (Stressed Assets, Risk & Compliance) from 07.09.2018.

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.

d) Accounting Standard - 19 “Leases”

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) Liability for Premises taken on Non-Cancellable operating lease are given below

(ii) Amount of lease payments recognised in the P&L Account for operating leases is Rs. 3,309.41 crore (Rs. 3,244.23 crore).

e) Accounting Standard -20 “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 the year.

f) Accounting Standard - 22 “Accounting for Taxes on Income”

a. Current Tax :-

During the year the Bank has credited to Profit & Loss Account Rs. 208.87 crore (Previous Year Rs. 673.54 crore debited) 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. 954.12 crore has been debited to Profit and Loss Account (Previous Year Rs. 9,654.33 crore credited) on account of deferred tax.

The Bank has a net DTA of Rs. 10,420.16 crore (Previous Year net DTA of Rs. 11,365.99 crore), which comprises of DTL of Rs. 2.33 crore (Previous Year Rs. 2.80 crore) included under ‘Other Liabilities and Provisions’and Deferred Tax Assets (DTA) of Rs. 10,422.49 crore (Previous Year Rs. 11,368.79 crore) included under ‘Other Assets’. The major components of DTA and DTL is given below:

h) Accounting Standards - 28 “Impairment of Assets”

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.

i) Accounting Standard - 29 “Provisions, Contingent Liabilities and Contingent Assets”

3. Draw down from Reserves

During the year, no draw down has been made from reserves.

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.

5. Letter of Comfort

The Bank has not issued any letter of comfort which are not recorded as contingent liabilities during the year ended 31st March, 2019 and 31st March, 2018.

6. Provisioning Coverage Ratio (PCR):

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on 31st March, 2019 is 78.73 % (Previous Year 66.17%).

5. Unhedged Foreign Currency Exposure

The Bank in accordance with RBI Circular No. DBOD.No.BP.BC.85/21.06.200/2013-14 dated 15th January 2014 on ‘Capital and Provisioning Requirements for Exposure to entities has provided for Unhedged Foreign Currency Exposure’.

An amount of Rs. 98.13 crore (Previous Year Rs. 86.44 crore) was held as on 31st March 2019 for towards Currency Induced Credit Risk and Capital allocated for Currency Induced Credit Risk amounting to Rs. 43.19 crore (Previous Year Rs. 66.49 crore).

6. Liquidity Coverage Ratio (LCR):

a) Standalone LCR

Liquidity Coverage Ratio (LCR) standard has been introduced with the objective 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.

LCR has been defined as :

Stock of high quality liquid assets (HQLAs)

Total net cash outflow over the next 30 calendar days

Liquid assets comprise of high quality assets that can be readily encashed or used as collateral to obtain cash in a range of stress scenarios. There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets. While Level 1 assets are with 0% haircut, Level 2A and Level 2B assets are with 15% and 50% haircuts respectively. The total net cash outflow is the total expected cash outflows minus total expected cash inflows for the subsequent 30 calendar days. Total expected cash outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities and off-balance sheet commitments by the rates at which they are expected to run off or be drawn down. Total expected cash inflows are calculated by multiplying the outstanding balances of various categories of contractual receivables by the rates at which they are expected to flow in up to an aggregate cap of 75% of total expected cash outflows.

The LCR position is above the minimum 100% prescribed by RBI. Bank’s LCR comes to 125.79% based on daily average of three months (Q4 FY18-19). The average HQLA for the quarter was Rs. 6,99,153 crore, of which, Level 1 assets constituted 93.26% of total HQLA. Government securities constituted 96.77% of Total Level 1 Assets. Level 2A Assets constitutes 5.59% of total HQLA and Level 2B Assets constitutes 1.15% of total HQLA. The net cash outflow position has slightly gone up on account of increase in wholesale deposits where run-off rate is 40%-100%. Derivative exposures are considered insignificant due to almost matching inflows and outflows position. During the quarter, LCR for USD (significant Foreign Currency constituting more than 5% of the Balance Sheet of the Bank) was 49.34% on average.

Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The Domestic and International Treasuries are reporting to the Asset Liability Management Committee (ALCO). The ALCO has been empowered by the Bank’s Board to formulate the Bank’s funding strategies to ensure that the funding sources are well diversified and is consistent with the operational requirements of the Bank. All the major decisions of ALCO are being reported to the Bank’s Board periodically. In addition to daily/monthly LCR reporting, Bank prepares daily Structural Liquidity statements to assess the liquidity needs of the Bank on an ongoing basis.

The Bank has been maintaining HQLA mainly in the form of SLR investments over and above the mandatory requirements. Retail deposits constitute major portion of total funding sources, which are well diversified. Management is of the view that the Bank has sufficient liquidity cover to meet its likely future short term requirements.

b. Consolidated LCR

The RBI through a supplementary guideline issued on 31st March 2015 had stipulated the implementation of LCR at a consolidated level from January 1, 2016. Accordingly, SBI Group has been computing the Consolidated LCR.

The entities covered in the Group LCR are State Bank of India and eight Overseas Banking Subsidiaries: Bank SBI Botswana Ltd, Commercial Indo Bank LLC, Moscow, Nepal SBI Bank Ltd., State Bank of India (California), SBI Canada Bank, SBI (Mauritius) Ltd., PT Bank SBI Indonesia and State Bank of India (UK) Ltd.

SBI Group LCR comes out to 125.96% as on 31st March, 2019 based on average of three months January, February and March, 2019.

The Group has been maintaining HQLA mainly in the form of SLR investments over and above the mandatory requirements. Retail deposits constitute major portion of total funding sources, and such funding sources are well diversified. Management is of the view that the Bank has sufficient liquidity cover to meet its likely future short term requirements.

7. Fraud Reported and provision made during the year:

Out of the total frauds of Rs. 12,387.13 crore in 2,616 cases (Previous year Rs. 2,532.24 crore in 1,789 cases) reported during the year, an amount of Rs. 12,310.90 crore in 581 cases (Previous year Rs. 2,359.61 crore in 539 cases) represents advances declared as frauds. Full provision has been made for the outstanding balance as on 31st March, 2019 in respect of frauds reported during the year.

8. Inter Office Accounts

Inter Office Accounts between branches, controlling offices, 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.

9. Sale of Assets to Reconstruction Companies

Shortfall on account of sale of assets to reconstruction companies during the year amounting to Rs. 173.37 crore (Previous Year Rs. 9.07 crore) has been fully charged in the current year.

10. Priority Sector Lending Certificate (PSLC)

The Bank has purchased the following PSLCs during the year:-

11. Counter Cyclical Provisioning Buffer (CCPB)

RBI vide Circular No. DBR.No.BP.BC.79/21.04.048/2014-15 dated 30th March 2015 on ‘Utilisation of Floating Provisions/ Counter Cyclical Provisioning Buffer’ has allowed the banks, to utilise up to 50 per cent of CCPB held by them as on 31st December 2014, for making specific provisions for NonPerforming Assets (NPAs) as per the policy approved by the Bank’s Board of Directors.

During the year, the Bank has not utilized the CCPB for making specific provision for NPAs.

12. RBI vide Circular no. DBR.No.BP.BC.108/21.04.048/2017-18 dated 6th June 2018 permitted banks to continue the exposures to MSME borrowers to be classified as standard assets. Accordingly, the bank has retained advances of Rs. 242.32 crores as standard asset as on 31st March 2019. In accordance with the provisions of the circular, the bank has not recognized interest on these accounts and is maintaining a standard asset provision of Rs. 12.12 crores as on 31st March 2019 in respect of such borrowers.

13. As per RBI letter no. DBR.No.BP.15199/21.04.048/2016-17 and DBR. No. BP. 1906/21.04.048/ 2017-18 dated 23rd June 2017 and 28th August 2017 respectively, for the accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the bank is holding total provision of Rs. 34,554 crores (89.66% of total outstanding) as on 31st March, 2019.

14. The bank has made a provision of Rs. 3,984.00 crore (Total Rs. 5,643.41 crore) for the year ended 31st March, 2019 towards arrears of wages due for revision w.e.f 1st November, 2017.

15. a) Profit / (loss) on sale of investment (net) under schedule 14 “Other Income” includes Rs. 473.12 crore on sale of partial investment in SBI General Insurance Company Limited (Previous year Rs. 5,436.17 crore on sale of partial investment in SBI Life Insurance Company Limited) .

b) Miscellaneous Income under schedule 14 “Other Income” includes Rs. 1,087.43 crore on transfer of the bank’s merchant acquiring business (MAB) to a wholly owned subsidiary SBI Payment Services Private Limited (SBIPSPL) pursuant to a business transfer agreement dated 29th September, 2018 for a consideration of Rs. 1,250 crore.

16. Previous year figures have been regrouped/reclassified, wherever necessary, to confirm to current year 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.

Source : Dion Global Solutions Limited
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