1. FIXED ASSETS (PROPERTY, PLANT & EQUIPMENTS AS-10)
i. Premises include Leasehold Land (revalued) of Rs.2177.16 Crore (Rs.2177.16 Crore) which was revalued at the end of business hours, on 31st March 2016. The net appreciation of Rs.1129.05 Crore arising on revaluation, was credited to Revaluation Reserve on March 31, 2016.
ii. The Bank has revalued its Freehold Land & Residential/ Office building at the end of business hours, on 31st March 2016 based on valuations made by independent valuers. The net appreciation of Rs.2807.29 Crore arising on revaluation, being the difference between the net book value of Rs.1202.71 Crore and revalued amount of Rs.4010 Crore was credited to Revaluation Reserve on March 31, 2016.
iii. The balance in Revaluation Reserve as at March 31, 2017 is Rs.541775 Crore (Rs.560783 Crore).
2. EMPLOYEE BENEFITS (AS-15) (REVISED)
i. Defined Contribution Schemes
The Bank’s employees, excluding those who have opted for pension, who have joined Bank before March 31, 2008 are covered by Provident Fund Scheme (PFS). The Bank makes a defined contribution measured as a fixed percentage of basic salary to the PFS. The Provident Fund Scheme is administered by “The Committee of Administrators of IDBI Bank Employees’ Provident Fund (Fund)’.’ In respect of employees of IDBI Home Finance Limited (IHFL) and IDBI Gilts Limited (IGL), provident fund contributions were made to Regional Provident Fund Commissioner up to May 2011 and thereafter contributions have been made to the aforementioned Fund. During the year, Rs.4.68 Crore (Rs.4.85 Crore) has been contributed to PFS and charged to Profit and Loss Account.
The Bank’s employees who have joined after April 1, 2008 are covered by Defined Contribution Pension Scheme (DCPS) to which Bank makes a defined contribution as a fixed percentage of Pay and Dearness Allowance. During the year, Rs.63.95 Crore (Rs.53.83 Crore) has been contributed to DCPS and charged to Profit and Loss Account.
ii. Defined Benefit Schemes
The Bank makes contributions for the gratuity liability of the employees to the ‘IDBI Bank Employees Gratuity Fund Trust.
a. Some of the employees of the Bank are also eligible for Pension which is administered by the ‘IDBI Pension Fund Trust.
b. The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method by an independent actuary at each balance sheet date.
The following table sets out the status of the defined benefit schemes and the amounts recognised in the Bank’s financial statements as at March 31, 2017 which is per AS-15(R).
iii. Other long term benefits
Employees of the Bank are eligible for Disability Assistance which is borne by the Bank as and when the disability events occur.
Some employees of the Bank are eligible for Voluntary Health Scheme which is borne by the Bank as and when the liability events occur.
Actuarial valuation of these benefits have been carried out using the Projected Unit Credit Method and Rs.73.07 Crore (Rs.20.29 Crore) has been charged to Profit and Loss Account during the year.
3. RELATED PARTY DISCLOSURES (AS-18)
A. List of related party as per AS-18
IDBI Capital Market Services Ltd.
IDBI Intech Ltd.
IDBI MF Trustee Company Ltd.
IDBI Asset Management Company Ltd.
IDBI Trusteeship Services Limited
II. Jointly controlled entity
IDBI Federal Life Insurance Co. Ltd.
III. Key management personnel of the Bank
Shri Kishor P Kharat, Managing Director & CEO
Shri Balkrishan Batra, Deputy Managing Director (April 01, 2016 to July 31, 2016)
Shri Krishna Prasad Nair, Deputy Managing Director (From September 15, 2016 to March 31, 2017)
Shri G.M.Yadwadkar, Deputy Managing Director (From September 15, 2016 to March 31, 2017)
Shri N.S.Venkatesh, Executive Director & CFO (From April 01, 2016 to June 30, 2016)
Shri R.K. Bansal, Executive Director & CFO (From July 01, 2016 to August 15, 2016)
Smt. Padma Betai, CFO (From August 16, 2016 to March 31, 2017)
Shri Pawan Agrawal, Company Secretary
B. Details of transactions with Related Parties
Parties with whom transaction 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. All the subsidiaries of the Bank are State-controlled Enterprises, hence no disclosure is made for transaction with subsidiary Companies. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker-Customer relationship have not been disclosed in respect of relatives of Key Management Personnel.
4. LEASES (AS-19)
Operating leases primarily comprise office premises, staff residences and Automated Teller Machines(ATM)s, which are either cancellable at the option of the Bank or non-cancellable operating lease.
During the year Rs.310.50 Crore (Rs.291.04 Crore) has been charged to the Profit and Loss Account towards lease charges paid/payable on cancellable/non-cancellable operating lease.
5. ACCOUNTING FOR TAXES ON INCOME (AS-22)
The Component of Deferred Assets and Deferred Liability arising out of timing difference is as follows:
6. JOINT VENTURES (AS-27)
Investments include Rs.384 Crore (Rs.384 Crore) representing Bank’s interest in the following joint venture.
As required by AS-27, the aggregate amount of each of the assets, liabilities, income, expenses, contingent liabilities and commitments related to the Bank’s interests in jointly controlled entity are disclosed as under:
a. 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 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.
b. Pending litigations
The Bank’s pending litigations comprise of claims against the Bank primarily by the borrowers, customers 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.
*Refer Schedule-12- Contingent Liabilities for quantitative disclosure.
I. Sales and transfers of securities to/from Held to Maturity (HTM) category
a. During the year ended March 31, 2017, the value of sales and transfers of securities to/from HTM category (excluding onetime transfer to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year and sale to RBI under pre-announced Open Market Operation auctions) have exceeded 5% of the book value of the investments held in HTM category at the beginning of the year. The same is in regard to RBI extant guidelines for compliance with SLR requirements. The details of guidelines are given below.
In terms of RBI circular DBOD.BP.BC.No.42/21.01.141/2014-15 dated 7th October, 2014, the banks were advised to bring down the ceiling on SLR securities under the HTM category from 24 per cent of NDTL to 22 per cent by September 19, 2015 in a graduated manner. Further in terms of RBI Circular DBR.NO.BP.B.C.65/21.04.141/2015-16 dated December 10, 2015, the banks were advised to bring down the ceiling on SLR securities under the HTM category from 22 per cent of NDTL to 21.5 percent by January 9, 2016, 21.25% from April 2, 2016, 21% from July 9, 2016, 20.75% from October 1, 2016 and to 20.50 per cent by January 7, 2017 in a graduated manner.
Accordingly, during the current financial year the Bank has transferred SLR securities with book value of Rs.3339.96 crore from HTM category to HFT/AFS category as per the extant RBI guidelines to comply with the aforesaid requirements.
7. Disclosures on risk exposure in derivatives- Qualitative disclosures
(i) The Bank uses derivatives for Hedging as well as for Trading purposes. The use of such derivatives gives rise to various risks like credit risk, market risk, operational risk, legal risk etc.
(ii) The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organization, risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent Risk Management Department, headed by a Chief General Manager designated also as Chief Risk Officer. The Risk Management Group is functionally responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes, parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management Committee of the Board as well as to the Board.
(iii) Risk exposures in derivatives transactions are measured/ assessed, in both quantitative and qualitative terms, to capture credit risk, market risk and operational & legal risk. Prior to the execution of derivative transaction, it is ensured that credit risk exposure to the client/counterparty, measured in terms of Loan Equivalent Risk (LER), is within the approved limit and the client/counterparty has the necessary understanding of the transaction. Market risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, gaps, greeks, stop loss etc. Operational risks are addressed by having adequate system infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal agreements and documentation.
The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, the details of which are contained in Schedule No.17 “Significant Accounting Policies of the Bank”.
8. Disclosure of Investment in SRs -
The following disclosures pertaining to investments in security receipts by the Bank as per RBI Circular RBI/2016-17/56 DBR.No.BP.BC.9/21.04.048/2016-17 dated September 1, 2016 is shown below.
9. As per RBI Circular RBI/2015-16/423 DBR.No.BP.BC.102/21.04.048/2015-16 dated June 13, 2016 Bank has made the following disclosure in Notes to Accounts with regard to the quantum of provision made during the year to meet the shortfall in sale of NPAs to SCs/RCs and the quantum of unamortised provision debited to ‘other reserves’ as at the end of the year.
i) a) quantum of provision made during the year to meet the shortfall in sale of NPAs to SCs/RCs- Nil
b) quantum of unamortised provision debited to ‘other reserves’ as at the end of the year.- Nil
10. Divergence in Asset Classification and Provisioning for NPAs - (ref DBR.BP.BC. No.63/21.04.018/2016-17 dated April 18, 2017)
Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken is Rs.486.38 Crore (Rs.596.30 Crore) and the estimated value of intangible security as on March 31, 2017 is Rs.NIL on pari-passu basis (Rs.NIL).
a. During the year ended March 31, 2017, the Bank has not securitized any pools of retail loans.
The detail of securitisation activity of the Bank is given below :
b. There are no SPVs sponsored by the Bank for securitisation transactions.
II. Credit Default Swaps
The Bank is using standard model for marking to market the CDS contracts as per FIMMDA published daily CDS curve and day count convention to value their CDS positions. FIMMDA is publishing the CDS curves for this purpose on daily basis.
III. The Bank, as detailed in its Credit Policy, monitors the Unhedged Foreign Currency Exposure of its borrower and pursues its clients to hedge their forex exposure to minimize the losses due to adverse exchange rate fluctuation.
The Bank obtains information on Un-hedged Foreign Currency Exposure from its customers on a periodic basis and maintains the same in an internally developed system and follows the methodology for computation of likely loss on account of exchange rate movement. The incremental provisioning for the year ending 31-03-2017 towards this exposure worked out to Rs.100.62crore (Rs.47.62crore) and capital held towards the risk stood at Rs.588.99crore (Rs.415.76crore) as on 31-03-2017.
Qualitative disclosure around Liquidity Coverage Ratio ( LCR ) :
In the backdrop of the global financial crisis that started in 2007, the Basel Committee on Banking Supervision (BCBS) proposed certain reforms to strengthen global capital and liquidity regulations with the objective of promoting a more resilient Banking sector. In this direction BCBS published guidelines on ‘Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools’ in January 2013 and the ‘Liquidity Coverage Ratio Disclosure Standards’ in January 2014. Accordingly, Reserve Bank of India, vide its circular dated June 09, 2014, issued guidelines on Liquidity Coverage Ratio (LCR).
The LCR promotes short-term resilience of Banks to potential liquidity disruptions by ensuring that they have sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days. The LCR standard aims to ensure that a Bank maintains an adequate level of unencumbered HQLAs that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified by supervisors.
Definition of LCR :
Stock of high quality liquid assets (HQLAs)
Total net cash outflows over the next 30 calendar days
The LCR requirement are binding on Banks from January 1, 2015. However, with a view to provide a transition time for Banks, the requirement is minimum 60% for the calendar year 2015 i.e. with effect from January 1, 2015, and rise in equal steps of 10% over a period of 4 years to reach the minimum required level of 100% on January 1, 2019.
High Quality Liquid Assets
Under the standard, Banks must hold a stock of unencumbered HQLA to cover the total net cash outflows over a 30-day period under the prescribed stress scenario. In order to qualify as HQLA, assets should be liquid in markets during times of stress and, in most cases, be eligible for use in central Bank operations. The HQLA of the Bank mainly comprise of SLR investments over and above mandatory requirement, liquidity available by way of borrowing under Marginal Standing Facility (2% of NDTL), Facility to Avail Liquidity for Liquidity Coverage Ratio (8% of NDTL) & other securities issued by PSEs or non-financial corporates.
Total net cash outflows :
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.
The Bank has well organised liquidity risk management structure as enumerated in ALM Policy which is approved by the Board. The Asset Liability Management Committee (ALCO) of the Bank monitors & manages liquidity and interest rate risk in line with the business strategy. ALM activity including liquidity analysis & management is conducted through coordination between various ALCO support groups residing in the functional areas of Balance Sheet Management, Treasury Front Office, Budget and Planning etc. ALCO directives and ALM actions are implemented by the business groups and verticals.
As per the regulatory guidelines, presently Bank maintains LCR in domestic currency only. The average LCR of the Bank for the year 2016-17 was at 114.17% ( 88.59%)
1. EMPLOYEES’ STOCK OPTION SCHEME (ESOP)
i. In terms of the ESOP, as amended, pursuant to the approval of the shareholders, 1,31,98,965 options (1,31,98,965 options) granted to eligible employees as detailed herein below:
ii. Nil (1095) equity shares allotted during the year against ESOPs exercised by the employees
I. The Government of India (GoI), Ministry of Finance, Department of Financial Services vide its letter dated 5th September 2016, advised the Bank to surrender securities of Rs.106427 lakhs to the GoI representing net impact of the asset exchange of Stressed Assets Stabilisation Fund (SASF) done by the Bank in 2006. These securities form part of Rs.900000 lakhs of such securities issued to the Bank by GoI in September 2004 against SASF. These are 20 years securities maturing in September 2024. The Bank has sought dispensation from the Appropriate Authorities to surrender these securities in 11 quarters commencing from quarter ended September 30, 2016 and accounted the same accordingly. Pending approval, the Bank has so far surrendered securities of Rs.29025 lakhs to the GoI and the balance securities of Rs.77402 lakhs are carried forward as Investments. The Bank is confident that it will get the approval to surrender the balance of securities of Rs.77402 lakhs in the remaining eight quarters
II. Notes to Corporate Social Responsibility (CSR) expenditure:
a. Gross amount required to be spent by the Bank during the year; Rs.NIL
b. Amount spent during the year:
III. Pursuant to the provisions of Micro, Small and Medium Enterprises Development Act, 2006, certain disclosures are required to be made relating to Micro, small & medium enterprise. The Bank is in the process of compiling relevant information from its suppliers about their coverage under the said Act. In view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.
IV. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs.205.94 Crores (Rs.288.84 Crores).
V. Pursuant to RBI Circular DBR.BP.BC.No.31/21.04.018/2015-16 dated July 16, 2015, the Bank has, effective from quarter ended June 30, 2015, included its deposits placed with NABARD, SIDBI and NHB on account of shortfall in lending to priority sector under ‘Other Assets. Hitherto these were included under ‘Investments. Interest income on these deposits has been included under ‘Interest Earned-Others. Hitherto such interest income was included under ‘Interest earned-Income on Investments. Figures for the previous periods have been regrouped / reclassified to conform to current period’s classification. The above change in classification has no impact on the profit/ loss of the Bank for the year ended March 31, 2017 or the previous year presented.
VI. In term of RBI circular no. FMRD.DIRD.10/14.03.002/2015-16 dated May 19, 2016, repo and reverse repo transactions with RBI under LAF/ MSF are accounted for as borrowing and lending respectively as against the earlier practice of including the same under Investments. Previous period figures have been regrouped and reclassified to conform to current period’s classification. The aforesaid change has no impact on the loss of the Bank for the year ended March 31, 2017 or the previous year.
VII. The Bank believes that the MCA notification G.S.R. 308(E) dated March 30, 2017 regarding holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 is not applicable to banking companies. Accordingly, the disclosures prescribed under the said notification are not required to be made by the Bank.
VIII. Figures of the previous year, are disclosed in brackets and are regrouped/ rearranged, so as to confirm with the presentation made for the current year.