FUTURE DCB BANK Notes to Accounts

1. ACCOUNTING FOR PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS


Provisions are recognized when there is a present legal or statutory obligation as a result of past events leading to probable outflow of resources, where a reliable estimate can be made of the amount required to settle the obligation.


Contingent Liabilities are recognized only when there is a possible obligation arising from past events due to occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Bank, or where there is a present obligation arising from a past event which is not recognized as it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Contingent assets are not recognized in the financial statements.


2. EMPLOYEE SHARE BASED PAYMENTS


Measurement and disclosure of employee share-based employment plans is done in accordance with the Securities and Exchange Board of India ( Share Based Employee Benefits) Regulations, 2014 / Guidance Note on Accounting for the Employee Share-based Payments issued by The Institute of Chartered Accountants (‘ICAI'''') of India. The Bank measures compensation cost relating to employee stock options using the intrinsic value method. Deferred compensation expense is amortized over the vesting period of the option.


3. EARNINGS PER SHARE


Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year.


For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effect of dilutive potential equity shares.


4 CASH AND CASH EQUIVALENTS


Cash and cash equivalents include cash in hand and ATMs, balances with the Reserve Bank of India, balances with other banks and money at call and short notice (including effect of changes in exchange rates on cash and cash equivalents in foreign currency).


5. LEASES


Leases where the Less or effectively retains substantially all risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a straight-line basis over the lease term.


6. SEGMENT REPORTING


As per the RBI guidelines on Segment Reporting, the Bank has classified its activity into Treasury Operations, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations.


Treasury Operations includes 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.


7 SUB-ORDINATED DEBT THROUGH PRIVATE PLACEMENT OF BONDS


During the year the Bank raised Rs,150.00 crore (Previous year: Rs,86.60 crore) of subordinated debt. The subordinated debts raised through private placement of bonds are Unsecured Redeemable Non-Convertible Basel III Compliant Subordinated Tier II bonds in the nature of Debenture to augment capital adequacy.


8 Sale and Transfers to / from HTM Category


During the years ended March 31, 2017 and March 31, 2016, the Bank has not sold and transferred securities to or from HTM category exceeding 5% of the book value of investment held in HTM category at the beginning of the year. The 5% threshold referred to above does not include one-time transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks as per the extant RBI guidelines, sale of securities under pre-announced Open Market Operation (OMO) auction to the RBI and sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM.


9 Disclosures on risk exposure in derivatives: a) Qualitative Disclosures


Management of Risk in Derivatives Trading


The Bank''''s market risk unit plays a key role in setting up of the limits and laying down of the risk assessment and monitoring methods. The policies of the Bank include setting limits upon the notional principal value of product specific gaps, maximum tenor, overall outstanding and the setting-up of counter party-wise, tenor-wise limits.


All limits are monitored on a daily basis by the Bank''''s Treasury Back Office and Mid Office. Exposure reports are submitted to the Treasurer as well as the Head-Market Risk and any limit excesses are brought to the notice of the management immediately for further action.


Policies for Hedging Risk


All transactions undertaken by the Bank for trading purposes are classified under the Trading Book. All other transactions are classified as a part of the Banking Book. The Banking Book includes transactions concluded for the purpose of providing structures to customers on a back-to-back basis. It also consists of transactions in the nature of hedges based on identification of supporting trades, with appropriate linkages done for matching amounts and tenor within the approved tolerance limits.


The accounting for all derivative trades is done for the notional amount on the trade date. The valuation of all outstanding trades is done category wise. The valuation for outstanding trades under the Trading portfolio is done on a daily basis and the net marked to market (‘MTM’) is accounted in the Profit and Loss Account. The valuation for outstanding trades under the hedged portfolio is done on a monthly basis and the residual MTM, if any, is accounted in the Profit and Loss Account on a monthly basis. Valuation of the outstanding hedged Forex Options is done on a monthly basis and the net MTM is zero as all customer trades are hedged on identical basis with counter party banks.


The MTM position on all outstanding trades of individual corporate customers is reported on a monthly basis to Credit Risk department for exposure monitoring.


10. Disclosures on the scheme for sustainable Structuring of Stressed Assets (S4A), as at 31st March, 2017


There were no accounts during the year where S4A has been applied.


11. Disclosures on Flexible Structuring of Existing Loans


There were no borrowers taken up for flexibility structuring during the year.


12. Disclosures on Strategic Debt Restructuring Scheme (accounts which are currently under the stand-still period)


There were no accounts during the year where SDR has been invoked.


13. Disclosures on change in Ownership outside SDR Scheme (accounts which are currently under the stand-still period)


There were no accounts during the year where Bank has decided to effect change in ownership.


14. Disclosures on change in Ownership of Projects Under Implementation (accounts which are currently under the stand-still period)


There were no project loan accounts during the year where Bank has decided to effect change in ownership.


15. Details of financial assets (including written off accounts) sold to Securitisation / Reconstruction Company for Asset Reconstruction


The Bank has sold certain assets to an asset reconstruction company (ARC) in terms of the guidelines issued by the RBI. For the purpose of the valuation of the underlying security receipts issued by the underlying trusts managed by ARC, the security receipts are valued at their respective NAVs as advised by the ARC. The details of the assets sold are given in the table below:


16. Working funds have been considered as the average of total monthly assets (excluding accumulated losses, if any) as reported to the Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949 during the financial year.


17. For the purpose of this ratio, Operating Profit is net profit for the year before provisions and contingencies.


18. Assets have been considered as the average of total monthly assets (excluding accumulated losses, if any) as reported to the Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949.


19. For the purpose of this ratio, employees have been considered as the average of the total employees at the end of each month of the year.


20. For the purpose of this ratio, business per employee has been recorded as deposits plus advances (excluding interbank deposits).


(B) Qualitative Disclosures


The Bank maintains Liquidity Coverage Ratio (LCR) which is a ratio of High Quality Liquid Assets (HQLA) to expected net cash outflow over the next 30 calendar days, as per the RBI guidelines. The requirements start with minimum LCR of 60% with effect from January 1,


2015, reaching the minimum required level of 100% by January 1, 2019. The LCR requirement effective January 1, 2017 is 80%.


The objective of the LCR is to ensure that the 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 specified by supervisors. Further 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.


The numerator, High Quality Liquid Assets comprises mainly of excess SLR securities, cash, excess CRR balances, Marginal Standing Facility (‘MSF’) to the extent of 2 per cent of Net Demand and Time Liabilities (‘NDTL’) and government securities up to another 9 per cent of NDTL while the denominator i.e. cash outflow over next 30 days comprises mainly of the deposit maturities in next 30 day period and other cash outflows net of the cash inflows in next 30 day period. As a part of its strategy to manage the liquidity requirements, the Bank has been consistently investing in SLR securities of about 2% to 4% of its NDTL, over and above the regulatory SLR requirement.


In compliance with the RBI guidelines, the Bank has started computing LCR from January 2015 onwards. The aforementioned table provides the quarterly LCR computation for the four quarters of the Financial Year 2016-17. The LCR is being monitored on daily basis effective January 01, 2017. Accordingly, daily average figures are reported for the last quarter of the FY 2016-17 while for the first three quarters, the monthly average figures are reported.


HQLA of the Bank comprises of mainly level 1 assets as per the RBI guidelines i.e. government securities apart from cash and excess CRR.


The major source of funding for the Bank is deposits from customers. The Bank does not rely significantly on interbank borrowings. However, refinance from NABARD and NHB is occasionally availed against the eligible assets. Further, the Bank has committed lines of credit from a few public sector banks.


The Bank does not have any derivative exposure other than the forward contracts entered by the Bank which does not affect LCR of the Bank significantly.


Apart from computing the LCR in the domestic currency, the Bank is also required to compute LCR in the currency in which aggregate liabilities denominated in that currency amount to 5 per cent or more of the Bank’s total liabilities. To comply with the said requirement, the Bank computes the LCR in USD as the dollar denominated liabilities are more than 5% of the Bank’s total liabilities. During the financial year 2016-17, the cash inflows in next 30 days denominated in the USD were usually higher than the cash outflows in next 30 days denominated in USD.


The liquidity management of the Bank is centralised at Treasury. Treasury Front Office shall, depending upon the expected outflows and inflows for the day, decide to borrow or lend to maintain optimal liquidity. Treasury Back Office monitors the expected inflows and outflows by way of maintaining a register which records the expected outflows and inflows that are informed in advance by the branches as well as by Treasury Front Office before making any investment. For this purpose, branches are required to inform the Treasury Back Office in advance of any expected large flows above Rs,5 crore. Also, Treasury Back Office takes into account the deposits that are scheduled to mature in order to arrive at the expected cash outflows for that particular day. As a part of effective liquidity management, Bank always maintains excess SLR securities which can be pledged to meet the shortfall in the intraday liquidity, if any.


Note: Advances reported above include both funded and non-funded loan exposure with limits or outstanding whichever is higher, for other than fully drawn term loans and NPAs. In case of fully drawn term loans and NPAs, the outstanding amount has been considered for this purpose. The Advances figure above also includes non-inter bank credit exposure on derivatives including forward exchange contracts.


Note: Exposures reported above include both funded and non-funded exposures [including advances and investments (other than SLR Investments)] with limits or outstanding whichever is higher, for other than fully drawn term loans and NPAs. In case of fully drawn term loan and NPAs, the outstanding amount has been considered for this purpose. The exposure figure above also includes non-inter bank credit exposure on derivatives.


21. Credit Default Swaps


The Bank has not transacted in credit default swaps during the year ended March 31, 2017 (Previous year: NIL).


22. Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the Bank


As per regulatory guidelines, the Bank should restrict its exposure to 15% of its capital funds to any Single Borrower, defined as Single Borrower Limit and 40% as Group Borrower Limit. Additionally, the Bank can lend 5% to infrastructure projects and a further 5% with the specific approval of its Board.


During the years ended March 31, 2017 and March 31, 2016, the Bank has not exceeded the prudential exposure limits as laid down by the RBI guidelines for the Single Borrower Limit (SBL) and Group Borrower Limit (GBL).


23 Unsecured Advances


Details of advances included in Schedule 9 where intangibles like rights, licenses, authorisations, etc. are charged to the Bank as collateral:


As per directions from the RBI, these advances are treated as Unsecured Advances in Schedule 9.


24 COMPLIANCE WITH ACCOUNTING STANDARDS, READ WITH THE RBI GUIDELINES 11.1 Employee Benefits (Accounting Standard 15)


The contribution to employees Provident Fund included under Payments to and Provisions for Employees in Schedule 16 amounted to Rs,9.24 crore for the year ended March 31, 2017 (Previous year Rs,7.08 crore).


The Bank has a gratuity trust approved by Income Tax Department namely “DCB Bank Limited Staff Gratuity Fund”. Every employee who has completed 5 years or more of service gets gratuity on separation at half month’s last drawn salary for each completed year of service, subject to a cap of Rs,10.00 lakhs for employees who joined after April 1, 2006 and without any such limit for other employees.


All the plan assets are invested by the gratuity trust namely “DCB Bank Limited Staff Gratuity Fund” in Government securities (CY about 52%, PY about 50%), high rated corporate bonds (CY about 31%, PY about 24%), units of mutual funds/ insurance companies (CY about 13%, PY about 13%) and others (CY about 4%, PY about 13%) set up as dedicated funds for management of gratuity funds.


Estimated rate of return on plan assets is based on the Bank''''s expectation of the average long-term rate of return expected on investments of the Fund during the estimated term of the obligations.


The contribution expected to be paid to the plan during the annual period beginning after the Balance Sheet date is Rs,5.91 crore (Previous year: Rs,4.74 crore) .


The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.


In computing the above information, certain estimates have been made by the Bank''''s management which have been relied upon by the auditors.


25 Earnings Per Share (‘EPS’)


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


Dilution of equity is on account of 5,661,866 (Previous year 4,136,326) stock options.


26 Employees’ Stock Option Plan


The Shareholders of the Bank had approved an ESOP plan Phase I in November 2005, enabling the Board and /or the Nomination Committee to grant such number of equity shares and/or equity linked instruments, including options of the Bank not exceeding 4% of the Issued Capital or 60,00,000 Equity Shares of the Bank. The Shareholders, at the Annual General Meeting held on September 11, 2006 had approved an additional 3% of the Issued Capital, aggregating the total Equity Share Capital reserved for all ESOPs to 7% of the Issued Capital from time to time. As the shares of the Bank were subsequently listed, confirmation of shareholders was obtained at the Extraordinary General Meeting held on December 15, 2006 in line with the guidelines of the Securities & Exchange Board of India. Pursuant thereto, during the year the Nomination and Remuneration Committee of the Board granted the following options.


Any Option granted pursuant to the Plan shall become exercisable in full upon the retirement of the employee.


Method used for accounting for ESOP


The Bank has applied the intrinsic value method to account for the compensation cost of ESOP to the employees of the Bank. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the options.


*Includes 46,200 (Previous year: 113,250) employee stock options exercised, pending for allotment.


The weighted average share price in respect of options exercised and allotted during the year ended 31 March, 2017 is Rs,121.32 (Previous year Rs,109.55).


There were 2,423,800 stock options exercised during the year ended March 31, 2016.


Fair value Methodology


The fair value of options used to compute proforma net income and earnings per equity share have been estimated using the binomial option-pricing model. The Bank estimated the volatility based on the historical share prices.


The various assumptions considered in the pricing model for ESOPs granted during the year ended March 31, 2017 and March 31, 2016 were:


The expected volatility was determined based on historical volatility data; historical volatility includes data since listing.


The weighted average fair value of options granted during the year ended 31 March, 2017 is Rs,30.96 (Previous year Rs,47.04).


In computing the above information, certain estimates/assumptions have been made by the Bank’s management which have been relied upon by the auditors.


Impact of Fair Value Method on Net Profit and EPS


Had the compensation cost for the Bank’s stock option plans outstanding been determined based on the fair value approach, the Bank’s net profit and earnings per share would have been as per the proforma amounts indicated below:


27. Revenue i.e. Total Revenue includes inter-segment revenue of Rs,595.13 crore (Previous year Rs,679.25 crore). Inter-segment revenue represents the transfer price received from and paid to the treasury unit respectively. Excluding this, the revenue for the Bank is Rs,2,325.60 crore (Previous year: Rs,1,918.92 crore).


28. Includes Capital and Reserves.


29. Excluding depreciation and provision for taxes.


30. 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.


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


Part B: Geographic Segments


The Bank does not have overseas branches and the operations are entirely domestic. Therefore, no separate reporting is done based on geographic segments.


32 Related Party Transactions


Related Parties in terms of AS-18 on “Related Party Disclosures” are disclosed below:


Mr. Murali M. Natrajan : Key Management Personnel


The details of transactions entered into with the Key Management Personnel of the Bank are as under:


33 Deferred Tax


a. At each Balance Sheet date, the Bank re-assesses unrecognized Deferred Tax Assets. The Bank recognises previously unrecognized deferred tax assets to the extent that it has become reasonably certain that sufficient future taxable income will be available against which such deferred tax assets can be realised.


b. The composition of Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL) is as under:


The lease rents are paid by the Bank for premises leased for its business operations. The above contingent rents have been determined based on terms of individual lease agreements over the lease period. 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.


34 Revaluation of Fixed Assets


The Bank revalued its owned premises as at December 31, 2016 which resulted in a revaluation gain of Rs,208.69 crore which has been credited to Revaluation Reserve as at that date. The Bank computes depreciation on such revalued premises over its estimated remaining useful life.


During the financial year 2016-17 an amount of Rs,2.41 crore (Previous year: Rs,2.37 crore) has been charged to Profit and Loss Account in line with requirements of the Guidance Note on Accounting for Depreciation in Companies in the Context of Schedule II to the Companies Act, 2013 issued by the Institute of Chartered Accountants of India and this amount has been transferred from Revaluation Reserve to “Balance in Profit and Loss Account”.


35 Provisioning Coverage Ratio


In accordance with the RBI guidelines, the Bank’s Provision Coverage Ratio at March 31, 2017 is 73.80% (Previous year: 77.55%).


36 Unhedged Foreign Currency Exposure(UFCE)


In accordance with the RBI guidelines on banks’ exposures to entities with Unhedged Foreign Currency Exposure (‘UFCE’), the Bank has put in place a mechanism to seek information from its borrowers and to evaluate the currency induced credit risk. In the case of listed entities, the Bank obtains information relating to unhinged positions based on the latest available audited / reviewed financial statements; whilst in the case of unlisted / private companies, the Bank obtains the aforesaid information based on the latest available audited financial statements (not exceeding a financial year)so as to estimate the extent of likely loss and to provide for incremental capital or to recognize incremental provision in accordance with the aforesaid guidelines. Further, as per the above-mentioned guidelines, the Bank obtains audited and certified UFCE information from the statutory auditors of the borrowers on an annual basis. In the case of smaller entities i.e. entities with exposure to banking industry of less than Rs,25 crore and as identified by the Bank as having any foreign exchange exposure, the Bank recognizes an incremental provision at 10 basis points on all such exposures.


37 Letters of Comfort


The Bank has issued letters of comfort to other banks. Outstanding letters of comfort as on March 31, 2017 aggregate Rs,102.31 crore (Previous year: Rs,76.28 crore). In the Bank’s assessment, no financial impact is likely to arise.


38 Small and Micro Industries


Under the Micro, Small and Medium Enterprises Development Act, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. There have been no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays in such payments. The above is based on the information available with the Bank which has been relied upon by the auditors.


39 OTHER MATTERS 13.1 Disclosure of penalties imposed by RBI


No penalties have been imposed by the RBI on the Bank during the year ended March 31, 2017 (Previous year: NIL).


40 Corporate Social Responsibility (CSR)


The Bank was required to spend Rs,2.87 crore (Previous year: Rs,1.01 crore) during the financial year 2016-17 towards Corporate Social Responsibility (CSR), in accordance with Companies Act, 2013.


The Bank has spent an amount of Rs,0.98 crore (Previous year: Rs,0.41 crore) in respect of its CSR activities which focused on Water and protection of water sources. The activities namely were: rain water harvesting and usage of natural bio water filters in village schools in water starved areas. Another initiative is the creation of water reservoirs, trenches and ponds in water starved locations in tribal villages. None of the CSR expenditure incurred by the Bank is to entities controlled by related parties identified by the Bank as per Accounting Standard 18, Related Party Disclosures.


41 Remuneration


a) Qualitative disclosures


Nomination and Remuneration Committee


The Nomination and Remuneration Committee of the Board consists of Independent Directors with one member from the Risk Management Committee of the Board.


The main objectives of the Nomination & Remuneration Committee of the Board are:


- Deciding the size and composition of the Board and appointment of persons for the same.


- Recommending to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees.


- Evaluation of every director’s performance and making recommendations for remuneration for Non-Executive Directors and the Key Managerial Personnel.


- Approving the ESOP and creation, subscription and allotment of shares to the eligible employees under this approved ESOP.


- Review appointments, promotions, demotions, terminations and review performance appraisals of CEO and direct reports.


- Review and approve succession plans for CEO, CFO and Company Secretary and CEO’s direct senior management reportees.


Objectives of Compensation Policy


The Bank has put in place a Board approved Compensation Policy.


An important objective of the Compensation Policy is to provide all relevant internal and external parties with appropriate information and transparency thereby promoting a thorough understanding of the Bank''''s compensation practices.


The Bank''''s objective is to maintain a Compensation Policy that:-


- Is able to attract, retain talent and motivate them to perform at high standards.


- Facilitates a performance culture in the Bank by balancing a mix of fixed pay with variable pay.


- Supports the Bank''''s risk management practices and takes into account long-term performance of the Bank.


- Is compliant with regulatory requirements and is approved by the Board''''s Nomination and Remuneration Committee.


The Nomination and Remuneration Committee of the Board works in close coordination with the Risk Management Committee of the Board to ensure effective alignment of remuneration and risks.


Risk adjustments in remuneration


The methodologies for adjusting remuneration to risk and performance are consistent with the general risk management and corporate governance framework. Risk adjustments take into account the nature of the risks involved and the time horizons over which they could emerge. The Bank is adhering to the guidelines mentioned in the Basel Committee on Banking Supervision report on Range of Methodologies for Risk and Performance Alignment of Remuneration and Financial Stability Board (FSB) Implementation standards on sound compensation practices.


The Bank shall ensure that there is proper risk alignment with the compensation of MD & CEO and other Whole Time Directors such that no undue risks are being taken against the interest of the Bank. In general, the review of Risk Management framework shall be the integral part of the annual performance review.


The Risk Management Unit of the Bank shall independently provide inputs for assessment under these areas.


Performance linked variable compensation


The variable compensation offered is linked to the Bank''''s performance and could be even zero during a year of poor performance. Variable compensation of all Whole Time Directors (‘WTD'''') / Chief Executive Officer (‘CEO'''') will not be more than 70% of the fixed compensation. Any variable compensation above 50% of the Fixed Compensation is to be deferred over a period of 3 years. The same will vest at 40%, 30% and 30% at the end of 1st, 2nd and 3rd year. The Bank reserves the right to prevent any deferred variable compensation from vesting in a year of negative performance. The deferred variable compensation shall lapse if the employment is terminated prior to vesting.


The Bank utilises performance payout / bonus as the form of variable remuneration. The Bank shall give performance payouts to promote a healthy financial performance by its staff.


42 Disclosure on remuneration to Non-Executive Directors


The Non-Executive Directors are paid remuneration by way of sitting fees for attending meetings of the Board and its committees. An amount of Rs,0.80 crore (Previous year: Rs,0.74 crore) was paid as sitting fees to the Non-Executive Directors during the year.


43 DRAW DOWN FROM RESERVES


The Bank has not undertaken any draw down of reserves during the year ended March 31, 2017 and in the previous year.


44 Net overnight open position outstanding as on March 31, 2017 was Rs,(5.50) crore (Previous year: Rs,13.59 crore).


45 The Bank’s pending litigations comprise of claims against the Bank by the clients and proceedings pending with Income Tax authorities. The Bank has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Management believes that the possibility of an outflow of resources embodying economic benefits in these cases is possible but not probable and hence no provision is required in these cases. However, a contingent liability has been disclosed with respect to these cases. Refer note 11.9 for details on contingent liabilities.


46 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 ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts) has been made in the books of account.


47 The Board of Directors have recommended a dividend of Rs,0.50 per share (5.00%) for the year ended March 31, 2017 (Previous year: NIL) subject to approval of the members in the ensuing Annual General Meeting.


48 Previous year’s figures have been regrouped / reclassified, wherever considered necessary, in order to make them comparable with figures for the current year.


49 These are the notes appended to and forming part of the financial statements for the year ended March 31, 2017.