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Yes Bank

BSE: 532648|NSE: YESBANK|ISIN: INE528G01027|SECTOR: Banks - Private Sector
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Notes to Accounts Year End : Mar '18

Note:

1)    Denotes absolute value of loss which the Bank could suffer on account of a change in interest rates by 1% which however doesn’t capture the off-setting exposures between interest rate and currency derivatives.

2)    PV01 exposures reported above may not necessarily indicate the interest rate risk the Bank is exposed to, given that PV01 exposures in Investments (which may offset the PV01 reflected above) do not form part of the above table.

3)    The notional principal amount of foreign exchange contracts classified as trading at March 31, 2018 amounted to Rs,2,999,631.85 millions (previous year: Rs,1,631,110.62 millions). For these trading contracts, at March 31, 2018, marked to market position was asset of Rs,21,147.95 millions (previous year: Rs,35,428.99 millions) and liability of Rs,20,920.03 millions (previous year: Rs,40,014.63 millions). The notional principal amount of foreign exchange contracts classified as hedging at March 31, 2018 amounted to Rs,816.98 millions (previous year: Rs,2,329.98 millions). Credit exposure on forward exchange contracts at March 31, 2018 was Rs,93,577.45 millions (previous year: Rs,66,733.58 millions) of which exposure on CCIL is Rs,56,459.69 millions (previous year: Rs,35,132.52 millions).

The Bank does not have any advances which are outstanding in the books of the branches, but have been written-off (fully or partially) at Head Office level.

4.    Provision coverage Ratio

The provision coverage ratio of the Bank as at March 31, 2018 computed as per the RBI guidelines is 50.02% (previous year: 46.88%).

5.    Divergence in Asset Classification and Provisioning for NPAs

-    The Bank classifies performing and non-performing advances (NPAs) as per the RBI’s Prudential Norms on Income recognition, Asset Classification and Provisioning.

-    Based on application of RBI’s prudential norms as stated above, the Bank classified and made the prescribed provisions against the NPAs as at the end of 31stMarch, 2017.

-    As part of the Risk Based Supervision (RBS) exercise for FY 2016-17 concluded in October 2017, the RBI has pointed out certain retrospective divergence in the Bank’s asset classification and provisioning as on 31st March 2017. In conformity with the RBI circulars DBR.BP.BC.NO.63/21.04.018/2016-17 issued on April 18, 2017, SEBI circular issued on July 18, 2017 and as per approval from the Board of Directors at its Board Meeting held on October 26, 2017,

The net current impact of the aforementioned retrospective slippages due to divergence noted by RBI in October 2017 has been duly reflected in the results for the year ended March 31, 2018.

* includes cash received from ARC for loans sold ** Recorded at Net book value of Rs,5,681.97 millions *** Corresponding provision carried is 40%

6. Concentration of NPAs

Exposure (Funded + Non Funded) of the Bank to top four NPA is Rs,14,510.13 millions as at March 31, 2018 (previous year: Rs,15,553.78 millions).

Notes:-

1.    There are no SME cases which have been restructured during the year ended March 31, 2018.

2.    There have been 3 accounts upgraded of restructured advances during the year ended March 31, 2018.

3.    The outstanding amount and number of borrowers as at March 31, 2018 is after considering recoveries and sale of assets during the year.

4.    The above table pertains to advances and does not include investment in shares of net book value of XT1 millions in the amount outstanding.

5.    The provision in the above table includes general loan loss provision and other provisions held on the restructured advances.

6.    Additional facilities availed by borrowers in existing restructured accounts are disclosed under “Fresh restructuring during the year” and partial repayments in existing restructured accounts are disclosed under “Write-offs/sale/recovery of restructured accounts”, however, for the purpose of arithmetical accuracy, the number of existing borrowers availing additional facility or partial repayments have been ignored for presentation purpose.

7.    For the purpose of arithmetical accuracy as required by Para 3.4.2. (xii) of RBI circular no DBR.BP.BC.No.23/21.04.018/2015-16 movement in provisions in the existing restructured account as compared to opening balance, is disclosed under column fresh restructuring(for increase in provision) and write-off/sale/recovery(for decrease in provision) during the year and are not comparable with the additional facilities availed and partial recovery disclosed under the respective columns.

*As per the extant RBI guidelines, the Bank has not recognized the gains in the financial statements and has recorded the Security Receipts at Net Book Value (NBV). If the sale value is lower than the net book value, the entire loss has been written off in the year of sale.

* Includes all Security Receipts received by Bank on sale of assets as permitted under RBI circular DBOD.BP.BC.No. 98/21.04.132/2013-14 dated February 26, 2014.

Provision on standard advances is Rs,9,493.91 millions and Rs,7,806.48 millions as at March 31, 2018 and March 31, 2017 respectively.

During the year, the Bank has made certain modifications to its Master Rating scale and Credit Labeling mechanism for establishing additional general provision on standard advances and has fully adopted the requirements of RBI’s circular dated April 18, 2017 Ref no RBI/2016-17/282-DBR.No.BP.BC.64/21.04.048/2016-17 that requires banks to make provisions at higher rates in respect of standard advances to stressed sectors of the economy. Also, the Bank has made provision on accounts under the Insolvency and Bankruptcy Code (IBC) as identified by RBI.

Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI.

Maturity profile of foreign currency assets and liabilities is excluding Off Balance Sheet item.

7. Exposures

The Bank has lending to sectors, which are sensitive to asset price fluctuations. Such sectors include capital market and real estate.

8.    Details of Single Borrower Limit (SBL) and Group Borrower Limit (GBL)

During the year ended March 31, 2018 and March 31, 2017, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank, with the approval of the Board of Directors, can enhance exposure to a single borrower or borrower group by a further 5 percent of capital funds.

During the year ended March 31, 2018, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Reliance Industries Limited (Reliance Group) within the ceiling of 20% of Capital Funds. As on March 31, 2018, the exposure to Reliance Industries Limited as a percentage of capital funds was 12.3%.

During the year ended March 31, 2018, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Essar Oil Limited (Rosneft Trafigura-UCP Consortium Group) within the ceiling of 20% of Capital Funds. As on March 31, 2018, the exposure to Essar Oil Limited (Rosneft Trafigura-UCP Consortium Group) as a percentage of capital funds was 10.6%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Nirma Limited within the ceiling of 20% of Capital Funds. As on March 31, 2017, the exposure to Nirma Limited as a percentage of capital funds was 0.1%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Reliance Ports and Terminals Limited (infrastructure company) within the ceiling of 25% of Capital Funds. As on March 31, 2017, the exposure to Reliance Ports and Terminals Limited as a percentage of capital funds was 4.6%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in group borrower limit for Reliance Group within the ceiling of 55% of Capital Funds. As on March 31, 2017, the exposure to Reliance Group as a percentage of capital funds was 21%.

During the year ended March 31, 2017, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in group borrower limit for Tata Group within the ceiling of 55% of Capital Funds. As on March 31, 2017, the exposure to Tata Group as a percentage of capital funds was 18.3%.

9.    Details of factoring exposure

The factoring exposure of the Bank as on March 31, 2018 is Rs,7,362.30 millions (previous year: Rs,4,426.83 millions)

10.    Fees/ Remuneration received from bancassurance

Bank has earned Rs,767.80 millions from bancassurance business during year ended March 31, 2018 (previous year: Rs,1,003.58 millions).

11.    Concentration of Deposits

As at March 31, 2018, the deposits of top 20 depositors aggregated to Rs,244,366.30 millions (previous year: Rs,158,244.68 millions) (excluding certificate of deposits, which are tradable instruments), representing 12.17% (previous year: 11.08%) of the total deposit base.

12.    Concentration of Advances

As at March 31, 2018 the top 20 advances aggregated to Rs,484,353.89 millions (previous year: Rs,330,579.80 millions), representing 12.72% (previous year: 12.38%) of the total advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DBR.No.Dir.BC.12/13.03.00/2015-16 dated July 1, 2015.

13.    Concentration of Exposures

As at March 31, 2018 the top 20 exposures aggregated to Rs,556,575.44 millions (previous year: Rs,361,516.54 millions), representing 13.68% (previous year: 12.55%) of the total exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DBR.No.Dir.BC.12/13.03.00/2015-16 dated July 1, 2015.

14.    Sponsored SPVs

The Bank has not sponsored any SPV and hence there is no consolidation due to SPVs in Bank’s books.

15.    Credit default swaps

The Bank has not transacted in credit default swaps during the year ended March 31, 2018 (previous year: Nil).

16.    Credit/Debit card reward points

During financial year ending March 31, 2018, the Bank has provided Rs,77.70 millions for accumulated rewards points on credit and debit card (previous year: Rs,34.42 millions) using an actuarial valuation method by employing an independent actuary.

17.    Corporate Social Responsibility (CSR)

a) Amount required to be spent by the Bank on CSR during the year was Rs,772.21 millions (previous year: Rs,600.17 millions).

The following table sets out the funded status of the Gratuity Plan and the amounts recognized in the Bank’s financial statements as of March 31, 2018 and March 31, 2017:

The Bank has entire contribution of Gratuity Fund as Investments with Insurance Companies.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Pursuant to the guidelines issued by RBI on AS-17 (Segment Reporting) - Enhancement of Disclosures dated April 18,

2007, effective from period ending March 31, 2008, the following business segments have been reported.

-    Treasury: Includes investments, all financial markets activities undertaken on behalf of the Bank’s customers, Proprietary trading, maintenance of reserve requirements and resource mobilization from other banks and financial institutions.

-    Corporate/Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers.

-    Retail Banking: Includes lending, deposit taking and other services offered to retail customers.

-    Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc.

Other banking operations includes income from banc assurance business '1,003.58 millions during year ended March 31, 2017.

Notes for segment reporting:

1.    The business of the Bank is concentrated largely in India. Accordingly, geographical segment results have not been reported in accordance with AS-17 (Segment Reporting).

2.    I n computing the above information, certain estimates and assumptions have been made by the Management and have been relied upon by the auditors.

3.    Income, expense, assets and liabilities have been either specifically identified with individual segment or allocated to segments on a systematic basis or classified as unallocated.

4.    The unallocated assets Includes tax paid in advance/tax deducted at source and deferred tax asset.

5.    The unallocated liabilities include Share Capital, Reserves & Surplus and Tier 1 bond borrowings.

6.    Inter-segment transactions have been generally based on transfer pricing measures as determined by the Management.

18. Related Party Disclosures

The Bank has transactions with its related parties comprising of subsidiary, key management personnel and the relative of key management personnel

Subsidiary

Yes Securities (India) Limited

Yes Asset Management (India) Limited Yes Trustee Limited

Individuals having significant influence:

Mr. Rana Kapoor, Managing Director & CEO

Key Management Personnel (‘KMP’) (Whole time Director)

Mr. Rana Kapoor, Managing Director & CEO

Related party to key management personnel

Late Mrs. Sheela Kapoor

Mrs. Raakhe Kapoor Tandon (transaction till March 31, 2017)

*    Represents outstanding as of March 31, 2017

#    In Financial Year 2016-17 there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 “Guidance on compliance with the accounting standards by banks”.

19. Operating Leases

Lease payments recognized in the profit and loss account for the year ended March 31, 2018 was Rs,4,041.06 millions (previous year: Rs,3,334.71 millions).

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.

The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, “Earnings Per Share”. The dilutive impact is mainly due to stock options granted to employees by the Bank.

The difference between weighted average number of equity shares outstanding between basic and diluted in the above mentioned disclosure is on account of outstanding ESOPs.

Basic earnings per equity share has been computed by dividing net profit for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding for the year. Diluted earnings per equity share has been computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number of equity shares and dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive. The dilutive impact is on account of stock options granted to employees by the Bank. There is no impact of dilution on the profits in the current year and previous year.

All shares and per share information in the above table are restated at Rs,2 per equity shares to reflect the effect of sub-division for the periods presented.

20. ESOP disclosures

Statutory Disclosures Regarding Joining Stock Option Scheme:

The Bank has Five Employee Stock Option Schemes viz.

-    Joining Employee Stock Option Plan II (JESOP II),

-    Joining Employee Stock Option Plan III (JESOP III),

-    YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I)

YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/PESOP II -2010).

The schemes include provisions for grant of options to eligible employees of the Bank and its subsidiaries/affiliates. All the aforesaid schemes have been approved by the Board Remuneration Committee and the Board of Directors and were also approved by the members of the Bank. All these schemes are administered by the Board Remuneration Committee.

JESOP II and JESOP III were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively.

YBL JESOP V is in force for employees joining the Bank from time to time. Under JESOP V, 50% options vest takes place at the end of three years and remaining 50% at the end of five years from the date of Grant.

PESOP I, PESOP II and PESOP II - 2010 are Performance Stock Option Plans. Under PESOP I, 25% of the options granted would vest at the end of each year from the date of grant. Under PESOP II, 30% of the granted options vest at the end of first year, 30% vest at the end of second year and balance 40% vest at the end of third year. Under YBL PESOP II - 2010, 30% of the granted options vest at the end of the third year, 30% vest at the end of the fourth year and balance 40% vest at the end of the fifth year.

Further, grants under PESOP II had been discontinued with effect from January 20, 2010.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

The Bank has charged Nil amount, being the intrinsic value of the stock options granted for the year ended March 31, 2018 and March 31, 2017. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by Rs,414.98 millions (previous year: Rs,464.49 millions), the basic earnings per share would have been Rs,18.24 (previous year: Rs,15.56) per share instead of Rs,18.43 (previous year: Rs,15.78) per share; and diluted earnings per share would have been Rs,17.88 (previous year: Rs,15.14) per share instead of Rs,18.06 ( previous year: Rs,15.35) per share.

The deferred tax asset of Rs,8,717.59 millions as at March 31, 2018 and Rs,6,029.82 millions as at March 31, 2017, is included

21. OTHER DISCLOSURES

22. Disclosure on Remuneration

a. Information relating to the composition and mandate of the Nomination & Remuneration Committee.-

The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. The N&RC shall comprise a minimum of 3 nonexecutive Directors, majority being Independent Directors.

Composition of the N&RC of the Bank as on March 31, 2018 is as follows:

Mr. Brahm Dutt, Independent Director (Chairman)

Mr. Mukesh Sabharwal, Independent Director

Mr. Ajai Kumar, Non-Executive NonIndependent Director

The roles and responsibilities of the N&RC are as under-

To review the current Board composition, its governance framework and determine future requirements and making recommendations to the Board for approval;

To examine the qualification, knowledge, skill sets and experience of each director

vis-a-vis the Bank’s requirements and their effectiveness to the Board on a yearly basis and accordingly recommend to the Board for the induction of new Directors;

To review:

a.    The composition of the existing Committees of the Board and to examine annually whether there is any need to have a special committee of directors to meet the business requirements of the Bank and accordingly recommend to the Board for formation of a special committee.

b.    Review the Terms of Reference of the Board Level Committees and recommend the changes therein, if any, to the Board;

To scrutinize nominations for Independent/ Non-Executive Directors with reference to their qualifications and experience and making recommendations to the Board for appointment/filling of vacancies;

To identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal;

To Formulate criteria for evaluation of performance of independent directors and the board of directors;

To carry out evaluation of every director’s performance;

Whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors;

To validate ‘fit and proper’ status of all Directors on the Board of the Bank in terms of the Guidelines issued by the RBI or other regulatory authorities;

To develop and recommend to the Board Corporate Governance guidelines applicable to the Bank for incorporating best practices;

To implement policies and processes relating to Corporate Governance principles;

To formulate the criteria for determining qualifications, positive attributes and independence of a director;

To devise a Policy on Board diversity;

To recommend to the Board a policy relating to, the remuneration for the directors, key managerial personnel and other employees including performance/achievement bonus, perquisites, retirals, sitting fee, etc.;

To review the Bank’s overall compensation structure and related polices with a view to attract, motivate and retain employees and review compensation levels vis-a-vis other Banks and the industry in general;

To ensure the following while formulating the policy on the aforesaid matters:

a.    the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors, key managerial personnel and senior management of the quality required to run the company successfully;

b.    relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

c.    remuneration to Whole time directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long- term performance objectives appropriate to the working of the company and its goals.

To consider grant of Stock Options to employees including employees of subsidiaries and administer and supervise the Employee Stock Option Plans;

To function as the Compensation Committee as prescribed under the SEBI (Share Based Employee Benefits) Regulations, 2014 and is authorized to allot shares pursuant to exercise of Stock Options by employees;

To review the Human Capital Capacity Planning on annual basis;

To review the HCM Policies and provide suitable guidance for additions/ modification/ deletions, if any;

To review the Succession Planning; and

To perform any other functions or duties as stipulated by the Companies Act, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges and any other regulatory authority or under any applicable laws as may be prescribed from time to time.

b. Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy-

The Bank has framed Compensation and benefit policy based on the guidelines contained in the RBI circular DBOD No. BC.72/29.67.001/2011-12 dated January 13, 2012 which is approved by the Nomination and Remuneration Committee on January 7, 2013. The remuneration of MD&CEO/Whole time Directors will be in accordance with the above mentioned circular and shall be reviewed basis RBI guidelines issued from time to time and approved by N&RC before obtaining Regulatory approvals.

The compensation philosophy of the Bank is aligned to the organizational values aimed at encouraging Professional Entrepreneurship and reinforcing a strong culture promoting meritocracy, performance, potential and prudent risk taking.

The Bank’s Remuneration policy is to position its pay structure competitively in relation to the market to be able to attract and retain critical talent. The compensation strategy clearly endeavors to differentiate performance significantly and link the same with quality and quantum of rewards. The Bank also strives to create long term wealth creation opportunities through stock option schemes.

Human Capital Management shall review the policy annually or as required, based on changes in statutory, regulatory requirements and industry practices pertaining to Compensation and Benefits.

c. Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks The broad factors taken into account for the Annual Review /revision of Fixed Compensation (TCC) & Performance Bonus are:

1.    Individual performance based on the Annual Performance Review (APR) process of the Bank.

2.    Business Unit performance in terms of financial outcomes, productivity, etc.

3.    Consideration of all types of risk factors and shall be symmetrical with risk outcomes as well as sensitive to the time horizon of risk.

4.    Profitability of the Bank.

5.    Industry Benchmarking and consideration towards cost of living adjustment/ inflation

The Bank subscribes to a ‘Sum-of-Parts’ compensation methodology, which is reflective of the Bank’s commitment and philosophy of creating and sharing value with its employee partners.

The sum-of-parts compensation comprises: Fixed Compensation

Variable Compensation in the form of Performance Bonus

Employee Stock Option Plans (ESOP)

The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) shall exercise oversight & effective governance over the framing and implementing of the Compensation policy. Human Capital Management under the guidance of MD & CEO shall administer the Compensation and

Benefits structure in line with Industry practices and statutory requirements as applicable from time to time.

d. Description of the ways in which the Bank seeks to link performance during a performance measurement period with levels of remuneration and a discussion of the bank’s policy and criteria for adjusting deferred remuneration before vesting and after vesting.

The Bank ensures that the compensation remains adjusted for all types of risk, symmetrical with risk outcomes as well as sensitive to the time horizon of risk. Further, the compensation in all forms will be consistent with the risk alignment.

One of the key factors to be considered for the Annual Review /revision of Fixed Compensation (TCC) & Performance Bonus includes individual performance based on the Annual Performance Review (APR) process of the Bank. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weight age. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

For the services pertaining to financial year 2016-17 where variable pay is 50% or more, 4060% shall be deferred over minimum period of 3 years. In the event of a negative contribution, deferred compensation shall be subject to appropriate malus/claw back arrangements as decided by the Board Remuneration Committee. Guaranteed bonus shall not be a part of the compensation plan.

The compensation for executives in Risk Control and Compliance functions shall be independent of the business areas they oversee.

The Bank shall not provide any facility or funds or permit employees to insure or hedge their compensation structure to offset the risk alignment effects embedded in their compensation arrangement.

e.    Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms) that the Bank utilizes and the rationale for using these different forms.

The Bank subscribes to a ‘Sum-of-Parts’ compensation methodology, which is reflective of the commitment and philosophy of creating and sharing value with the employee partners. The sum-of-parts compensation for executives comprises:

Fixed Compensation (Total Cost to Company-TCC) - Includes value of perquisites.

Variable compensation in the form of Performance /Deferred Bonus - Variable pay shall be in the form of Performance Bonus which will be calculated as a percentage of Fixed Pay. The evaluation on risk management parameters is an integral part of the Annual Performance Review process, forming part of Key Result Areas of the executives with suitable weight age. The inputs for assessment on these parameters will be independently provided by the Risk Management function of the Bank.

Employee Stock Options Plans - These are formulated on a mid to long term basis by the Bank in accordance with SEBI and other Regulatory guidelines. The grant of ESOP shall be under approval from MD & CEO, which shall be subsequently ratified by the Board Remuneration Committee.

f.    Quantitative Disclosures on Remuneration for MD & CEO and other risk takers

There were 4 meetings of the N&RC held during the year ended March 31, 2018. The Bank had paid a remuneration of '0.60 millions to the members of the N&RC for attending the meetings of the N&RC.

Note:

1.    Amounts disclosed represents variable pay paid during the year ended March 31,2018 and March 31,2017 is for services rendered by the risk takers during the year March 31, 2017 and March 31,2016 respectively, as the bonus pool for the year ended March 31, 2018 has not yet been allocated and accordingly, the deferred component for the risk takers is yet to be determined.

2.    Compensation for MD & CEO is as approved by the RBI and paid by the Bank to the MD & CEO. Compensation for other risk takers is as approved by the Bank.

3.    For the Financial Year ended March 31, 2018, 6,50,000 esops were issued to 6 risk takers (previous year: 75,000 esops to 1 risktaker)

23.    Movement in Floating Provisions

The Bank has not created or utilized any floating provisions during the financial year ended March 31, 2018 and financial year ended March 31, 2017. The floating provision as at March 31, 2018 was ' Nil (previous year: ' Nil).

24.    Drawdown on Reserves

During the financial year ended March 31, 2018, the Bank has not drawn down any reserve. (previous year: ' Nil).

The Bank measures and monitors the LCR in line with the Reserve Bank of India’s circular dated June 09, 2014 and November 28, 2014 on “Basel III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR),Liquidity Risk Monitoring Tools and LCR Disclosure Standards” as amended for “Prudential Guidelines on Capital Adequacy and Liquidity Standards” dated March 31, 2015. The LCR guidelines aims to ensure 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. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain High Quality Liquid Assets of a minimum of 100% of its Net Cash Outflows by January 01, 2019. However, with a view to provide transition time, the guidelines mandate a minimum requirement of 60% w.e.f. January 01, 2015 and a step up of 10% every year to reach the minimum requirement of 100% by January 01, 2019. The LCR applicable from January 01, 2018 onwards is 90%.

The adequacy in the LCR maintenance is an outcome of a conscious strategy of the Bank towards complying with LCR mandate ahead of the stipulated timelines. The maintenance of LCR, both on end of period and on a average basis, has been on account of multiple factors viz. increase in excess SLR, existing eligibility in Corporate Bond Investments, increase in Retail deposits and increase in non callable deposits.

The Board of Directors of the Bank has empowered ALCO (Top Management Executive Committee) to monitor and strategize the Balance Sheet profile of the Bank. In line with the business strategy,

ALCO forms an Interest Rate/Liquidity view for the bank with the help of the economic analysis provided by the in-house economic research team of the bank. ALCO of the Bank channelizes various business segments of the Bank to target good quality asset and liability profile to meet the Bank’s profitability as well as Liquidity requirements with the help of robust MIS and Risk Limit architecture of the Bank.

Funding strategies are formulated by the ALCO of the Bank. The objective of the funding strategy is to achieve an optimal funding mix which is consistent with prudent liquidity, diversity of sources and servicing costs. Accordingly, BSMG (Balance Sheet Management Group) of the Bank estimates daily liquidity requirement of the various business segments and manages the same on consolidated basis under ALCO guidance. With the help of Structural and Liquidity Statement prepared by the Bank, BSMG evaluates liquidity requirement and takes necessary action. Periodical reports are also placed before the ALCO for perusal and review.

The Bank’s HQLA comprises of Excess CRR, Excess SLR, eligible foreign sovereign investments, Marginal Standing Facility (MSF) and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) as permitted under prudential guidance and eligible Level 2 investments. The Bank has a very limited exposure to liquidity risk on account of its Derivatives portfolio. Further, the Bank believes that all inflows and outflows which might have a material impact under the liquidity stress scenario have been considered for the purpose of LCR. Further, SLR investments as well as Corporate Bond portfolio of the Bank considered for HQLA are well diversified across various instruments and Liquid Asset Type are likely to provide the Bank with adequate and timely liquidity.

The daily average LCR for quarter ending March 31, 2018 is 102.1% which is above RBI prescribed minimum requirement of 90%.

The Bank has started classifying deposit as operational deposit based on the ALCO approved methodology w.e.f. from January 01, 2018 for the purpose of LCR computation.

The Bank has three subsidiaries viz. “YES Securities (India) Limited, Yes Asset Management (India) Limited and Yes Trustee Limited.” Below mentioned are details of Intra-Group Exposure as of March 31, 2018 and March 31, 2017.

During the year ended 31 March, 2018 and 31 March, 2017, the intra-group exposures were within the limits specified by RBI.

25.    Investor Education and Protection Fund

The unclaimed dividend amount due to be transferred to the Investor Education and Protection Fund (IEPF) during the year ended March 31, 2018 has been transferred without any delay

26.    Unhedged Foreign Currency Exposure of Bank’s Customer

The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers. The objective of this policy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion. In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage. Additionally, at the time of sanctioning limits for all clients, the Bank stipulates a limit on the unhedged foreign currency exposure of the client (as a % of total foreign currency exposure sanctioned by the Bank) after considering factors such as internal rating of the borrower, size, possibility of natural hedging, sophistication of borrower and maturity of borrower’s financial systems, relative size of unhedged foreign currency exposure with respect to total borrowings of the client, etc. Further, the Bank reviews the unhedged foreign currency exposure across its portfolio on a periodic basis. The Bank also maintains incremental provision and capital towards the unhedged foreign currency exposures of its borrowers in line with the extant RBI guidelines.

The Bank has maintained provision of '560.49 millions (previous year: '558.08 millions) and additional capital of '1,710.94 millions (previous year: '2,413.54 millions) on account of Unhedged Foreign Currency Exposure of its borrowers as at March 31, 2018.

27. Provisioning pertaining to Fraud Accounts

The Bank has reported 91 cases of fraud in the financial year ended March 31, 2018 amounting to '9.51 millions (previous year: 61 cases amounting to '160.77 millions). The Bank has expensed off/ provided for the expected loss arising from these frauds and does not have any unamortized provision.

28.    Dues to Micro and Small Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been no reported cases of interest payments due to delays in such payments to Micro, Small and Medium enterprises.

Auditors have relied upon the above management assertion.

29.    Securitization Transactions

The Bank has not done any securitization transactions during the year ended March 31, 2018 and March 31, 2017.

30.    Letter of comfort

The Bank has not issued any letter of comfort which is not recorded as contingent liability during the year ended March 31, 2018 and March 31, 2017.

31. Provision for Long Term contracts

The Bank has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required under any law/accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) in the books of account and disclosed the same under the relevant notes in the financial statements.

 

 

Source : Dion Global Solutions Limited
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