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Transcript of THE FEDERAL BANK LIMITED - BSE
Placement Document
Not for Circulation and Strictly Confidential
Serial Number:
THE FEDERAL BANK LIMITED Registered and Corporate Office: Federal Towers, P B No. 103, Aluva, Ernakulam 683 101, Kerala, India
Tel: +91 484 2622 263 | Fax: +91 484 2623 119
E-mail: [email protected] | Website: www.federalbank.co.in | CIN: L65191KL1931PLC000368
Our Bank was incorporated as The Travancore Federal Bank Limited Nedumpram on April 23, 1931 under the Travancore Companies Regulation, 1916. Our Bank’s name was changed to “The Federal
Bank Limited” on December 2, 1949. Subsequently, our Bank was registered under the Companies Act, 1956 on April 1, 1956. Our Bank was licensed under the Banking Regulation Act, 1949, on July
11, 1959 and is a scheduled commercial bank under the Second Schedule of Reserve Bank of India Act, 1934.
The Federal Bank Limited (our “Bank” or the “Issuer”) is issuing up to 215,517,241 equity shares of a face value of `2 each (the “Equity Shares”) at a price of `116.00 per Equity Share (the “Issue
Price”), including a premium of `114.00 per Equity Share, aggregating up to `25,000 million (the “Issue”). For further details, please see the section entitled “Summary of the Issue” on page 33.
ISSUE IN ACCORDANCE WITH CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009, AS AMENDED (THE “SEBI ICDR REGULATIONS”) AND SECTIONS 42 AND 62 OF THE COMPANIES ACT, 2013, AS AMENDED, AND THE RULES
MADE THEREUNDER (“COMPANIES ACT, 2013”)
THE ISSUE, AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL BUYERS AS DEFINED UNDER THE SEBI
ICDR REGULATIONS (“QIBs”) IN RELIANCE UPON CHAPTER VIII OF THE SEBI ICDR REGULATIONS AND SECTIONS 42 AND 62 OF THE COMPANIES ACT. THIS
PLACEMENT DOCUMENT IS PERSONAL TO EACH BIDDER AND DOES NOT CONSTITUTE AN OFFER OR INVITATION TO OFFER OR SOLICITATION OF AN OFFER TO
THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA OTHER THAN TO QIBs.
YOU ARE NOT AUTHORISED TO, AND MAY NOT, (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS PLACEMENT
DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION, OR REPRODUCTION OF, THIS PLACEMENT DOCUMENT IN WHOLE OR IN PART IS
UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI ICDR REGULATIONS OR OTHER APPLICABLE LAWS
OF INDIA AND OTHER JURISDICTIONS.
INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND BIDDERS SHOULD NOT INVEST IN THIS ISSUE UNLESS THEY ARE PREPARED TO TAKE THE
RISK OF LOSING ALL, OR PART, OF THEIR INVESTMENT. BIDDERS ARE ADVISED TO CAREFULLY READ “RISK FACTORS” ON PAGE 41 BEFORE MAKING AN
INVESTMENT DECISION RELATING TO THIS ISSUE. EACH BIDDER IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES OF AN
INVESTMENT IN THE EQUITY SHARES BEING ISSUED PURSUANT TO THIS ISSUE. BIDDERS OF THE EQUITY SHARES OFFERED SHOULD CONDUCT THEIR OWN DUE
DILIGENCE ON THE EQUITY SHARES. IF YOU DO NOT UNDERSTAND THE CONTENTS OF THIS PLACEMENT DOCUMENT, YOU SHOULD CONSULT AN AUTHORISED
FINANCIAL ADVISER.
The Equity Shares are listed on the National Stock Exchange of India Limited (“NSE”) and the BSE Limited (“BSE”, together with NSE, the “Stock Exchanges”). The closing price of the outstanding
Equity Shares on BSE and NSE on June 20, 2017 was `119.00 and `118.80 per Equity Share, respectively. In-principle approvals under Regulation 28(1) of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “SEBI Listing Regulations”) for listing of the Equity Shares have been received from each of BSE and NSE on
June 21, 2017. Applications shall be made for obtaining the final listing and trading approvals for Equity Shares to be issued pursuant to the Issue on the Stock Exchanges. The Stock Exchanges
assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to be issued pursuant to the Issue for trading on the
Stock Exchanges should not be taken as an indication of the merits of the business of our Bank or the Equity Shares.
A copy of the Preliminary Placement Document and this Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter)) has been delivered to the Stock
Exchanges and the Registrar of Companies, Kerala at Ernakulam (the “RoC”). Our Bank shall also make the requisite filings with the RoC and the Securities and Exchange Board of India (“SEBI”)
within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended. This Placement Document has not been
reviewed by SEBI, the Reserve Bank of India (“RBI”), the Stock Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by QIBs. This Placement Document has
not been and will not be registered as a prospectus with the RoC, will not be circulated or distributed to the public in India or any other jurisdiction, and will not constitute a public offer in India or any
other jurisdiction.
Invitations for subscription of Equity Shares to be issued pursuant to this Issue shall only be made pursuant to the Preliminary Placement Document and this Placement Document together with the
Application Form (as defined hereinafter). For further details, please see the section entitled “Issue Procedure” on page 170. The distribution of this Placement Document or the disclosure of its
contents without our Bank’s prior consent to any person, other than QIBs and persons retained by QIBs to advise them with respect to their subscription to Equity Shares, is unauthorised and
prohibited. Each Bidder, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents referred
to in this Placement Document.
The information on our Bank’s website or any website directly or indirectly linked to our Bank’s website does not constitute nor should form part of this Placement Document and Bidders should not
rely on such information contained in, or available through, any such websites.
The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons (as defined in Regulation S (“Regulation S”) under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons who are
qualified institutional buyers (as defined in Rule 144A under the Securities Act (“Rule 144A”) and referred to in this Placement Document as “U.S. QIBs”) pursuant to applicable exemptions under the
Securities Act, and (b) outside the United States in an “offshore transaction” in reliance on Regulation S. Prospective purchasers in the United States are hereby notified that our Bank is relying on the
exemption under Section 4(a)(2) of the Securities Act. The Equity Shares are transferable only in accordance with the restrictions described under “Transfer Restrictions and Purchaser
Representations” on page 186. For the avoidance of doubt, the term U.S. QIBs does not refer to a category of institutional investors defined under applicable Indian regulations and referred to in this
Placement Document as “QIBs”.
BOOK RUNNING LEAD MANAGERS
Citigroup Global Markets India Private Limited Deutsche Equities India Private Limited IIFL Holdings Limited* Kotak Mahindra Capital Company
Limited
*One of the Directors of our Bank is also a director of IIFL Holdings Limited. In compliance with Regulation 21A of the Securities and Exchange Board of India (Merchant Bankers) Regulations,
1992, as amended, IIFL Holdings Limited would be involved only in the marketing of the Issue.
This Placement Document is dated June 27, 2017.
(i)
TABLE OF CONTENTS
NOTICE TO INVESTORS ..................................................................................................................................................................................... 2
REPRESENTATIONS BY INVESTORS .............................................................................................................................................................. 5
OFFSHORE DERIVATIVE INSTRUMENTS ................................................................................................................................................... 10
DISCLAIMER CLAUSE ...................................................................................................................................................................................... 11
PRESENTATION OF FINANCIAL AND OTHER INFORMATION ............................................................................................................. 12
INDUSTRY AND MARKET DATA .................................................................................................................................................................... 13
AVAILABLE INFORMATION ........................................................................................................................................................................... 14
FORWARD-LOOKING STATEMENTS ........................................................................................................................................................... 15
ENFORCEMENT OF CIVIL LIABILITIES ..................................................................................................................................................... 16
EXCHANGE RATE INFORMATION ................................................................................................................................................................ 17
DEFINITIONS AND ABBREVIATIONS ........................................................................................................................................................... 18
DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 UNDER THE COMPANIES ACT, 2013 ......................................................... 26
SUMMARY OF BUSINESS ................................................................................................................................................................................. 29
SUMMARY OF THE ISSUE ............................................................................................................................................................................... 33
SELECTED FINANCIAL INFORMATION ...................................................................................................................................................... 35
RISK FACTORS ................................................................................................................................................................................................... 41
MARKET PRICE INFORMATION ................................................................................................................................................................... 68
USE OF PROCEEDS ............................................................................................................................................................................................ 71
CAPITALISATION STATEMENT..................................................................................................................................................................... 72
CAPITAL STRUCTURE ...................................................................................................................................................................................... 73
DIVIDENDS ........................................................................................................................................................................................................... 77
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .................... 78
SELECTED STATISTICAL INFORMATION ................................................................................................................................................ 100
INDUSTRY OVERVIEW ................................................................................................................................................................................... 113
BUSINESS ............................................................................................................................................................................................................ 124
REGULATIONS AND POLICIES .................................................................................................................................................................... 149
BOARD OF DIRECTORS AND SENIOR MANAGEMENT ......................................................................................................................... 157
PRINCIPAL SHAREHOLDERS ....................................................................................................................................................................... 166
ISSUE PROCEDURE ......................................................................................................................................................................................... 170
PLACEMENT...................................................................................................................................................................................................... 179
SELLING RESTRICTIONS .............................................................................................................................................................................. 180
TRANSFER RESTRICTIONS AND PURCHASER REPRESENTATIONS ................................................................................................ 186
THE SECURITIES MARKET OF INDIA ........................................................................................................................................................ 189
DESCRIPTION OF THE EQUITY SHARES .................................................................................................................................................. 192
STATEMENT OF TAX BENEFITS .................................................................................................................................................................. 194
LEGAL PROCEEDINGS ................................................................................................................................................................................... 212
STATUTORY AUDITORS ................................................................................................................................................................................ 217
LEGAL MATTERS ............................................................................................................................................................................................ 218
GENERAL INFORMATION ............................................................................................................................................................................. 219
FINANCIAL STATEMENTS ............................................................................................................................................................................ 220
DECLARATION ................................................................................................................................................................................................. 221
2
NOTICE TO INVESTORS
Our Bank has furnished, and accepts full responsibility for all of the information contained in this Placement Document and
confirms that to the best of its knowledge and belief, having made all reasonable enquiries, this Placement Document contains all
information with respect to our Group and the Equity Shares which our Bank considers material in the context of the Issue. The
statements contained in this Placement Document relating to our Group and the Equity Shares are, in all material respects, true
and accurate and are not misleading, and the opinions and intentions expressed in this Placement Document with regard to our
Group and the Equity Shares are honestly held, have been reached after considering all relevant circumstances and are based on
reasonable assumptions and information presently available to us. There are no other facts in relation to our Group and the Equity
Shares, the omission of which would, in the context of the Issue, make any statement in this Placement Document misleading in
any material respect. Further, our Bank has made all reasonable enquiries to ascertain such facts and to verify the accuracy of all
such information and statements.
Citigroup Global Markets India Private Limited, Deutsche Equities India Private Limited, IIFL Holdings Limited and Kotak
Mahindra Capital Company Limited (collectively, the “Book Running Lead Managers” or the “BRLMs”), have not separately
verified the information contained in this Placement Document (financial, legal or otherwise). Accordingly, none of the BRLMs
or any of their respective shareholders, employees, counsel, officers, directors, representatives, agents, associates or affiliates
make any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted by the BRLMs
or any of their respective shareholders, employees, counsel, officers, directors, representatives, agents, associates or affiliates as to
the accuracy or completeness of the information contained in this Placement Document or any other information supplied in
connection with the Issue or the distribution of the Equity Shares. Each person receiving this Placement Document acknowledges
that such person has neither relied on the BRLMs nor any of their respective shareholders, employees, counsel, officers, directors,
representatives, agents, associates or affiliates other than our Bank in connection with such person’s investigation of the accuracy
of such information or such person’s investment decision, and each such person must rely on its own examination of our Group
and the merits and risks involved in investing in the Equity Shares.
No person is authorised to give any information or to make any representation not contained in this Placement Document and any
information or representation not so contained must not be relied upon as having been authorised by or on behalf of the BRLMs.
The delivery of this Placement Document at any time does not imply that the information contained in it is correct as of any time
subsequent to its date.
The Equity Shares to be issued pursuant to the Issue have not been approved, disapproved or recommended by the U.S.
Securities and Exchange Commission, any other federal or state authorities in the United States or the securities
authorities of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority. No authority has passed on or
endorsed the merits of this Issue or the accuracy or adequacy of this Placement Document. Any representation to the
contrary is a criminal offence in the United States and may be a criminal offence in other jurisdictions.
The distribution of this Placement Document and the issue of the Equity Shares in certain jurisdictions may be restricted by law.
As such, this Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by
anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make
such offer or solicitation. In particular, no action has been taken by our Bank or the BRLMs which would permit an offering of the
Equity Shares or distribution of this Placement Document in any jurisdiction other than India where action for that purpose is
required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document
nor any Issue materials in connection with the Equity Shares may be distributed or published in or from any country or
jurisdiction that would require registration of the Equity Shares in such country or jurisdiction. For further information, see
“Selling Restrictions” on page 180. The Equity Shares are trasferable only in accordance with the restrictions described in
“Transfer Restrictions and Purchaser Representations” on page 186.
The Equity Shares have not been and will not be registered under the Securities Act, and may not be offered or sold within the
United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws.
Within the United States, this Placement Document is being provided only to persons who are U.S. QIBs. Distribution of this
Placement Document to any person other than the offeree specified by the BRLMs or their respective representatives, and those
persons, if any, retained to advise such offeree with respect thereto, is unauthorised, and any disclosure of its contents, without
prior written consent of our Bank, is prohibited. Any reproduction or distribution of this Placement Document in the United
States, in whole or in part, and any disclosure of its contents to any other person is prohibited.
Notice to Investors in Canada
Prospective Canadian investors are advised that the information contained within this Placement Document has not been prepared
with regard to matters that may be of particular concern to Canadian investors. Accordingly, prospective Canadian investors
should consult with their own legal, financial and tax advisers concerning the information contained within the Placement
Document and as to the suitability of an investment in the Equity Shares in their particular circumstances.
3
The offer and sale of the Equity Shares in Canada will only be made in the provinces of Alberta, British Columbia, Ontario and
Québec or to residents thereof and not in, or to the residents of, any other province or territory of Canada. Such offers and sales
will be made only under exemptions from the requirement to file a prospectus in the above mentioned provinces.
The Equity Shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited
investors, as defined in National Instrument 45-106 Prospectus Exemptions (“NI-45-106”) or subsection 73.3(1) of the Securities
Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and
Ongoing Registrant Obligations. Any resale of the Equity Shares must be made in accordance with an exemption from, or in a
transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or
damages if this Placement Document (including any amendment thereto) contains a misrepresentation, provided that the remedies
for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the
purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the
purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the BRLMs are not required to
comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with the Issue.
We hereby notify prospective Canadian purchasers that: (a) we may be required to provide personal information pertaining to the
purchaser as required to be disclosed in Schedule I of Form 45-106F1 under NI 45-106 (including its name, address, telephone
number and the aggregate purchase price of any Equity Shares purchased) (“personal information”), which Form 45-106F1 may
be required to be filed by us under NI 45-106, (b) such personal information may be delivered to the Ontario Securities
Commission (the “OSC”) in accordance with NI 45-106, (c) such personal information is collected indirectly by the OSC under
the authority granted to it under the securities legislation of Ontario, (d) such personal information is collected for the purposes of
the administration and enforcement of the securities legislation of Ontario, and (e) the public official in Ontario who can answer
questions about the OSC’s indirect collection of such personal information is the Administrative Support Clerk at the OSC, Suite
1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8, Telephone: (416) 593-3684. Prospective Canadian purchasers
that purchase Equity Shares in the Issue will be deemed to have authorized the indirect collection of the personal information by
the OSC, and to have acknowledged and consented to its name, address, telephone number and other specified information,
including the aggregate purchase price paid by the purchaser, being disclosed to other Canadian securities regulatory authorities,
and to have acknowledged that such information may become available to the public in accordance with requirements of
applicable Canadian laws.
Upon receipt of this offering circular, each Canadian purchaser hereby confirms that it has expressly requested that all documents
evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase
confirmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque acheteur canadien
confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que
ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout
avis) soient rédigés en anglais seulement.
In making an investment decision, investors must rely on their own examination of our Bank and the terms of the Issue, including
the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or
investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related
matters concerning the Issue. In addition, neither our Bank nor the BRLMs are making any representation to any offeree or
subscriber of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or subscriber under
applicable laws or regulations.
Each subscriber of the Equity Shares in the Issue is deemed to have acknowledged, represented and agreed that it is a QIB
and is eligible to invest in India and in our Bank under Indian laws, including Chapter VIII of the SEBI ICDR Regulations
and Section 42 of the Companies Act, 2013 and the rules and regulations made thereunder and is not prohibited by SEBI
or any other regulatory authority from buying, selling or dealing in securities. Each subscriber of the Equity Shares also
acknowledges that it has been afforded an opportunity to request from our Bank and review information pertaining to our
Bank and the Equity Shares. This Placement Document contains summaries of certain terms of certain documents, which
are qualified in their entirety by the terms and conditions of such documents and disclosures included in the section
entitled “Risk Factors” on page 41.
The information on our Bank’s website at www.federalbank.co.in or any website directly or indirectly linked to our Bank’s
website or the website of each of the BRLMs, their associates or their affiliates, does not constitute or form part of this Placement
Document. This Placement Document contains summaries of certain terms of certain documents, which summaries are qualified
in their entirety by the terms and conditions of such documents.
4
Intimation to Investors
This is with reference to the Preliminary Placement Document filed by our Bank with the Stock Exchanges in relation to the Issue.
The Investors may note the following:
The term “Review Committee” is deleted from the section entitled “Definitions and Abbreviations” beginning on page 17
of the Preliminary Placement Document;
The following amnedments have been made under the section titled “Capital Structure” on page 72 of the Preliminary
Placement Document is amended as follows:
- The "Issued Capital before the Issue" disclosed in the table on page 72 of the Preliminary Placement Document is
amended from `3,450,788,918 to `3,456,240,852; and
- The following row is added to the table setting forth details of allotments of Equity Shares beginning on page 72 of
the Preliminary Placement Document:
Date of Allotment No. of Equity
Shares
Face Value
(`)
Issue price
(`) unless
stated
otherwise
Nature of Consideration Cumulative number of
Equity Shares
April 27, 2017 658,940 2 42.07 Cash 1,725,293,574
5
REPRESENTATIONS BY INVESTORS
References herein to “you” or “your” is to Bidders in the Issue.
By bidding for, or subscribing to, any Equity Share under the Issue, you are deemed to have represented, warranted,
acknowledged and agreed with our Bank and the BRLMs, as follows:
1. You are a QIB as defined under Regulation 2(1)(zd) of the SEBI ICDR Regulations and not excluded pursuant to
Regulation 86(1)(b) of the SEBI ICDR Regulations, having a valid and existing registration under the applicable laws
and regulations, and undertake to acquire, hold, manage or dispose of any Equity Shares that are Allotted to you in
accordance with Chapter VIII of the SEBI ICDR Regulations, the Companies Act and undertake to comply with the
SEBI ICDR Regulations and all other applicable laws including any reporting obligations;
2. If you are not a resident of India, but a QIB, you are an Eligible FPI (including a sub-account other than a sub-account
which is a foreign corporate or a foreign individual) having a valid and existing registration with SEBI under the
applicable laws in India or a multilateral or bilateral development financial institution, and are eligible to invest in India
under applicable law, including the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
Outside India) Regulations, 2000, as amended, and any notifications, circulars or clarifications issued thereunder, and
have not been prohibited by SEBI or any other regulatory authority, from buying, selling or dealing in securities. You
confirm that you are not an FVCI;
3. You will make all necessary filings with appropriate regulatory authorities, including the RBI, as required pursuant to
applicable laws;
4. If you are Allotted the Equity Shares pursuant to the Issue, you shall not, for a period of one year from the date of
Allotment, sell the Equity Shares so acquired except on the floor of the Stock Exchanges (additional restrictions apply if
you are within the United States), please see the section entitled “Transfer Restrictions and Purchaser Representations”
on page 186;
5. You are aware that the Equity Shares have not been and will not be registered through a prospectus under the Companies
Act, SEBI ICDR Regulations or under any other law in force in India. This Placement Document has not been reviewed,
verified or affirmed by RBI, SEBI, the Stock Exchanges or any other regulatory or listing authority and will not be
registered with the Registrar of Companies as a prospectus, and is intended only for use by QIBs. The Preliminary
Placement Document and this Placement Document have been filed with the stock exchanges for record purposes only
and has been displayed on the websites of the Bank and the Stock Exchanges;
6. You are entitled to subscribe for and acquire the Equity Shares under the laws of all relevant jurisdictions which apply to
you, you have the necessary capacity and that you have fully observed such laws and obtained all such governmental and
other consents in each case which may be required thereunder and complied with all necessary formalities, to enable you
to commit to participation in the Issue and to perform your obligations in relation thereto (including, without limitation,
in the case of any person on whose behalf you are acting, all necessary consents and authorizations to agree to the terms
set out or referred to in this Placement Document), and will honour such obligations;
7. You confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by our Bank
or its agents with regard to our Bank, the Equity Shares or the Issue (“Bank’s Presentations”); or (ii) if you have
participated in or attended any Bank’s Presentations: (a) you understand and acknowledge that the BRLMs may not have
knowledge of the statements that our Bank or its agents may have made at such Bank’s Presentations and are therefore
unable to determine whether the information provided to you at such Bank’s Presentations may have included any
material misstatements or omissions, and, accordingly you acknowledge that the BRLMs have advised you not to rely in
any way on any information that was provided to you at such Bank’s Presentations, and (b) confirm that, to the best of
your knowledge, you have not been provided any material information that was not publicly available;
8. Neither our Bank, nor the BRLMs or any of their respective shareholders, directors, officers, employees, counsel,
representatives, agents, associates or affiliates is making any recommendations to you or advising you regarding the
suitability of any transactions it may enter into in connection with the Issue and that participation in the Issue is on the
basis that you are not and will not, up to the Allotment, be a client of any of the BRLMs. Neither the BRLMs nor any of
their respective shareholders, employees, counsel, officers, directors, representatives, agents, associates or affiliates have
any duties or responsibilities to you for providing the protection afforded to their clients or for providing advice in
relation to the Issue and are in no way acting in a fiduciary capacity to you;
9. You are aware that if you are Allotted more than 5% of the Equity Shares in the Issue, our Bank shall be required to
disclose your name and the number of Equity Shares Allotted to you to the Stock Exchanges, and the Stock Exchanges
will make the same available on their website and you consent to such disclosures;
6
10. You are aware that in accordance with Section 12B of the Banking Regulation Act read with the Reserve Bank of India
(Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015, dated November 19,
2015, (“RBI Acquisition Circular”) no person can make an acquisition which will/is likely to take the aggregate
holding of such person (as defined in the RBI Acquisition Circular), together with shares, voting rights, compulsorily
convertible debentures or bonds held by him or his relatives, associate enterprise (as defined in the Banking Regulations
Act) and persons acting in concert with him (“Holding”) to 5% or more of the total paid-up share capital of our Bank, or
be entitled to exercise 5% or more of the total voting rights of our Bank, without prior approval of the RBI. Accordingly,
you hereby represent that your (direct or indirect) aggregate holding in the paid-up share capital of our Bank,
whether beneficial or otherwise:
(i). after subscription to the Equity Shares in the Issue by your relatives, your associate enterprises (as defined in the
Banking Regulations Act) or persons acting in concert with you, aggregated with your pre-Issue Holding; or
(ii). after subscription to the Equity Shares in the Issue by you aggregated with your pre-Issue Holding;
shall not amount to 5% or more of the total paid-up share capital of our Bank or would not entitle you to exercise 5% or
more of the total voting rights of our Bank, except with the prior approval of the RBI. All shareholders Holding more
than 5% of the total paid-up capital who intend to participate in the Issue are required to submit details of the source of
funds for such acquisition of Equity Shares and obtain “no-objection” certificate from our Bank. In the event already
existing shareholder(s) Holding more than 5% of the total paid-up capital subscribes to Equity Shares offered in the Issue
such that their total Holding in our Bank goes beyond 10% of the total paid-up capital, prior approval of the RBI shall be
obtained by such existing shareholder participating in the Issue. The RBI, when considering whether to grant an
approval, may take into account all matters that it considers relevant to the application, including ensuring that
shareholders whose Holdings are above specified thresholds meet fit and proper criteria prescribed by RBI.
11. All statements other than statements of historical fact included in this Placement Document, including, without
limitation, those regarding our financial position, business strategy, plans and objectives of management for future
operations (including development plans and objectives relating to our business), are forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause
actual results to be materially different from future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present
and future business strategies and environment in which our Bank will operate in the future. You should not place undue
reliance on forward-looking statements, which speak only as of the date of this Placement Document. Our Bank assumes
no responsibility to update any of the forward-looking statements contained in this Placement Document;
12. You have been provided a serially numbered copy of the Preliminary Placement Document and this Placement Document
and have read them in their entirety, including, in particular, the section entitled “Risk Factors” on page 41;
13. You are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to the
general public and that the Allotment shall be on a discretionary basis, in consultation with the BRLMs;
14. You have made, or are deemed to have made, as applicable, the representations set forth under the sections entitled
“Selling Restrictions” and “Transfer Restrictions and Purchaser Representations” on pages 180 and 186, respectively;
15. You understand that the Equity Shares have not been and will not be registered under the Securities Act or with any
securities regulatory authority of any state of the United States and accordingly, may not be offered or sold within the
United States, except in reliance on an exemption from the registration requirements of the Securities Act.;
16. If you are within the United States, you are a U.S. QIB, and are acquiring the Equity Shares for your own account or for
the account of an institutional investor who also meets the definition of a U.S. QIB, for investment purposes only, and
not with a view to, or for resale in connection with, the distribution (within the meaning of any United States securities
laws) thereof, in whole or in part and are not an affiliate of our Bank or a person acting on behalf of such an affiliate;
17. If you are outside the United States, you are subscribing for the Equity Shares in an offshore transaction within the
meaning of Regulation S, and are not our Bank’s or the BRLMs’ affiliate or a person acting on behalf of such an affiliate;
18. You are not acquiring or subscribing for the Equity Shares as a result of any general solicitation or general advertising (as
those terms are defined in Regulation D) or directed selling efforts (as defined in Regulation S) and you understand and
agree that offers and sales are being made in reliance on an exemption to the registration requirements of the Securities
Act provided by Section 4(a)(2) of the Securities Act or Regulation S or another available exemption from registration
under the Securities Act and the Equity Shares may not be eligible for resale under Rule 144A thereunder. You
understand and agree that the Equity Shares are transferable only in accordance with the restrictions described under
“Selling Restrictions” and “Transfer Restrictions and Purchaser Representations” on pages 180 and 186, respectively;
7
19. In making your investment decision, you have (i) relied on your own examination of our Bank and the terms of the Issue,
including the merits and risks involved, (ii) made and will continue to make your own assessment of our Bank, the
Equity Shares and the terms of the Issue based solely on the information contained in the Preliminary Placement
Document and this Placement Document, (iii) consulted your own independent advisors or otherwise have satisfied
yourself concerning without limitation, the effects of local laws, (iv) relied solely on the information contained in the
Preliminary Placement Document and this Placement Document and no other disclosure or representation made by our
Bank, its Directors and affiliates, or any other party, (v) received all information that you believe is necessary or
appropriate in order to make an investment decision in respect of our Bank and the Equity Shares and (vi) relied upon
your own investigation and resources in deciding to invest in the Issue;
20. You are a sophisticated investor and have such knowledge and experience in financial, business and investment matters
as to be capable of evaluating the merits and risks of an investment in the Equity Shares. You and any accounts for which
you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares;
(ii) will not look to our Bank or any of the BRLMs or any of their respective shareholders, employees, counsel, officers,
directors, representatives, agents, associates or affiliates for all or part of any such loss or losses that may be suffered;
(iii) are able to sustain a complete loss on the investment in the Equity Shares; (iv) have no need for liquidity with respect
to the investment in the Equity Shares; and (v) have no reason to anticipate any change in your or their circumstances,
financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity
Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity
Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in the Issue for your
own investment and not with a view to resale or distribute;
21. You agree that in terms of Section 42(7) of the Companies Act, 2013, we shall file the list of QIBs (to whom this
Placement Document has been circulated) along with other particulars with the RoC and SEBI within 30 days of
circulation of the Preliminary Placement Document and other filings required under the Companies Act, 2013;
22. The BRLMs or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or
affiliates have not provided you with any tax advice or otherwise made any representations regarding the tax
consequences of the purchase, ownership and disposal of the Equity Shares (including but not limited to the Issue and the
use of the proceeds from the Equity Shares). You will obtain your own independent tax advice and will not rely on the
BRLMs or any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or
affiliates or our Bank when evaluating the tax consequences in relation to the Equity Shares (including but not limited to
the Issue and the use of the proceeds from the Equity Shares). You waive and agree not to assert any claim against the
BRLMs or our Bank with respect to the tax aspects of the Equity Shares or the Issue or as a result of any tax audits by tax
authorities, wherever situated;
23. That where you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that you
are authorised in writing, by each such managed account to acquire the Equity Shares for each managed account; and to
make the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to
“you” to include such accounts;
24. The Bid made by you would not result in triggering a tender offer under the Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the “Takeover Regulations”);
25. You have no right to withdraw your Application after the Bid/Issue Closing Date (as defined hereinafter);
26. You are eligible to apply for and hold Equity Shares so Allotted and together with any securities of our Bank held by you
prior to the Issue. You further confirm that your holding upon the issue and allotment of the Equity Shares shall not
exceed the level permissible as per any applicable law;
27. To the best of your knowledge and belief, your aggregate holding together with other Bidders in the Issue that belong to
the same group or are under common control as you, pursuant to the Allotment under the Issue shall not exceed 50% of
the Issue Size. For the purposes of this representation:
the expression ‘belongs to the same group’ shall derive meaning from the concept of ‘companies under the same
group’ as provided under Section 372(11) of the Companies Act, 1956; and
‘control’ shall have the same meaning as is assigned to it under Regulation 2(1)(e) of the Takeover Regulations.
28. You shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time that the final
listing and trading approvals for the Equity Shares are issued by the Stock Exchanges;
29. You are aware and understand that the BRLMs have entered into a placement agreement with our Bank, whereby the
BRLMs have, subject to the satisfaction of certain conditions set out therein, severally and not jointly, agreed to manage
8
the Issue and use reasonable efforts to procure subscriptions for the Equity Shares on the terms and conditions set forth
therein;
30. The contents of this Placement Document are exclusively the responsibility of our Bank and that neither the BRLMs nor
any person acting on their behalf or any of their counsel or advisor has or shall have any liability for any information,
representation or statement contained in this Placement Document or any information previously published by or on
behalf of our Bank and will not be liable for your decision to participate in the Issue based on any information,
representation or statement contained in the Preliminary Placement Document and this Placement Document or
otherwise. The only information you are entitled to rely on, and on which you have relied in committing yourself to
acquire the Equity Shares is contained in this Placement Document, such information being all that you deem necessary
to make an investment decision in respect of the Equity Shares. By participating in the Issue, you agree to the same and
confirm that you have neither received nor relied on any other information, representation, warranty or statement made
by or on behalf of the BRLMs or our Bank or any other person and none of the BRLMs, our Bank or any other person
will be liable for your decision to participate in the Issue based on any other information, representation, warranty or
statement that you may have obtained or received;
31. You understand that the Equity Shares will, when issued, be credited as fully paid and will rank pari-passu in all respects
with the Equity Shares including the right to receive all dividend and other distributions declared, made or paid in respect
of the Equity Shares after the date of issue of the Equity Shares;
32. You agree to indemnify and hold our Bank and the BRLMs harmless from any and all costs, claims, liabilities and
expenses (including legal fees and expenses) arising out of or in connection with any breach of your representations,
warranties, acknowledgements and undertakings in this Placement Document including this section. You agree that the
indemnity set forth in this section shall survive the resale of the Equity Shares Allotted under this Issue by or on behalf of
the managed accounts;
33. You are eligible to invest in India and in the Equity Shares under applicable law, including the Foreign Exchange
Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended and have
not been prohibited by SEBI or any other regulatory or statutory authority or otherwise from buying, selling or dealing in
securities;
34. You understand that none of the BRLMs has any obligation to purchase or acquire all or any part of the Equity Shares
which are subscribed by you in the Issue or to support any losses directly or indirectly sustained or incurred by you for
any reason whatsoever in connection with the Issue, including non-performance by us of any of our respective
obligations or any breach of any representations or warranties by us, whether to you or otherwise;
35. You are aware that (i) applications for in-principle approval, in terms of Regulation 28(1) of the SEBI Listing
Regulations for listing and admission of the Equity Shares and for trading on BSE and NSE, were made and such
approvals have been received from BSE and NSE, and (ii) the application for the final listing and trading approval will
be made only after Allotment. There can be no assurance that the final approvals for listing of the Equity Shares will be
obtained in time or at all. Our Bank or the BRLMs shall not be responsible for any delay or non-receipt of such final
approvals or any loss arising from such delay or non-receipt;
36. You are a sophisticated investor who is seeking to purchase the Equity Shares for your own investment and not with a
view to distribution. In particular, you acknowledge that (i) an investment in the Equity Shares involves a high degree of
risk and that the Equity Shares are, therefore, a speculative investment, (ii) you have sufficient knowledge, sophistication
and experience in financial and business matters so as to be capable of evaluating the merits and risk of the purchase of
the Equity Shares, and (iii) you are experienced in investing in private placement transactions of securities of companies
in a similar stage of development and in similar jurisdictions and have such knowledge and experience in financial,
business and investments matters that you are capable of evaluating the merits and risks of your investment in the Equity
Shares;
37. You agree that any dispute arising in connection with the Issue will be governed by and construed in accordance with the
laws of India, and the courts in Mumbai, India shall have exclusive jurisdiction to settle any disputes which may arise out
of or in connection with the Preliminary Placement Document and this Placement Document;
38. Unless survival is specifically provided for, each of the representations, warranties, acknowledgements and agreements
set out above shall continue to be true and accurate at all times, up to and including the Allotment, listing and trading of
the Equity Shares in the Issue;
39. You have made, or are deemed to have made, as applicable, the representations set forth in this section entitled
“Representations by Investors”; and
9
40. Our Bank, the BRLMs, their respective affiliates and others will rely on the truth and accuracy of the foregoing
representations, warranties, acknowledgements and undertakings which are given to the BRLMs on their own behalf and
on behalf of our Bank and are irrevocable.
10
OFFSHORE DERIVATIVE INSTRUMENTS
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines, and approvals in terms of Regulation 22 of
the SEBI FPI Regulations, FPIs (other than a Category III Foreign Portfolio Investor and unregulated broad based funds which are
classified as Category II FPIs by virtue of their investment manager being appropriately regulated), may issue, subscribe, or
otherwise deal in offshore derivative instruments, as defined under SEBI FPI Regulations (referred to herein as “P-Notes”), for
which they may receive compensation from the purchasers of such instruments. You should ensure that any P-Notes issued by you
have been issued in compliance with all applicable laws (including Regulation 22 of the SEBI FPI Regulations and relevant
circulars issued by SEBI). P-Notes have not been and are not being offered or sold pursuant to this Placement Document. This
Placement Document does not contain any information concerning P-Notes or the issuer(s) of any P-notes, including any
information regarding any risk factors relating thereto.
Any P-Notes that may be issued are not securities of our Bank and do not constitute any obligation of, claims on, or interests in,
our Bank. Our Bank has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the
preparation of any disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are the sole obligations
of, third parties that are unrelated to our Bank. Our Bank and the BRLMs do not make any recommendation as to any investment
in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are
not securities of the BRLMs and do not constitute any obligations of, or claims on, the BRLMs. Affiliates of the BRLMs which
are FPIs may purchase the Equity Shares in the Issue, and may issue P-Notes in respect thereof, in each case, to the extent
permissible under law.
Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures as to the
issuers of such P-Notes and the terms and conditions of any such P-Notes from the issuers of such P-Notes. Neither SEBI
nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Bidders are
urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-
Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.
11
DISCLAIMER CLAUSE
Disclaimer Clause of the Stock Exchanges
As required, a copy of the Preliminary Placement Document and this Placement Document have been submitted to the Stock
Exchanges. The Stock Exchanges do not in any manner:
1. warrant, certify or endorse the correctness or completeness of any of the contents of the Preliminary Placement
Document and this Placement Document;
2. warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or
3. take any responsibility for the financial or other soundness of our Bank, its management or any scheme or project of our
Bank;
and it should not for any reason be deemed or construed to mean that this Placement Document has been cleared or approved by
the Stock Exchanges. Every person who desires to apply for or otherwise acquire any Equity Shares may do so pursuant to an
independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever, by reason
of any loss which may be suffered by such person consequent to or in connection with such subscription or acquisition, whether
by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.
12
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Certain Conventions
In this Placement Document, unless otherwise specified or the context otherwise indicates or implies, references to “you”, “your”,
“offeree”, “purchaser”, “subscriber”, “recipient”, “investors”, “prospective investors” and “potential investor” are to the Bidders
of Equity Shares in the Issue and references to the “Issuer”, “Federal Bank”, “Bank”, “our Bank” refers to The Federal Bank
Limited and references to “we”, “us”, or “our” are to our Group.
References in this Placement Document to “India” are to the Republic of India and its territories and possessions and the
“Government” or the “Central Government” or the “state government” are to the Government of India (“GoI”), or the
governments of any state in India, as applicable and as the case may be. All references herein to the “U.S.” or the “United States”
are to the United States of America and its territories and possessions. References to the singular also refers to the plural and one
gender also refers to any other gender, wherever applicable.
Financial and Other Information
In this Placement Document, references to “USD”, “$”, “U.S.$” and “U.S. dollars” are to the legal currency of the United States
and references to, “`”, “Rs.”, “INR” and “Rupees” are to the legal currency of India.
Our Bank publishes its Financial Statements in Indian Rupees. The audited standalone and consolidated financial statements as at
and for the years ended March 31, 2017, March 31, 2016 and March 31, 2015 that have been included in this Placement
Document have been prepared in accordance with Indian GAAP and the provisions of Banking Regulation Act, read with relevant
guidelines and directions issued by the RBI and the Companies Act, 2013 read along with rules thereunder. The underlying
financial statements of the Subsidiary and Associate of our Bank are prepared in accordance with Indian GAAP as applicable to
the Subsidiary and Associate under their regulatory framework. The audited standalone and consolidated financial statements as
of and for the years ended March 31, 2017 have been jointly audited by BSR & Co. LLP, Chartered Accountants and M.M.
Nissim & Co., Chartered Accountants, while the audited standalone and consolidated financial statements as at and for the years
ended March 31, 2016 and March 31, 2015 have been jointly audited by Deloitte Haskins & Sells, Chartered Accountants and M
P Chitale & Co., Chartered Accountants in accordance with the applicable standards on auditing in India prescribed by the ICAI.
Our audited financial statements as of and for the year ended March 31, 2017 included in this Placement Document are to be
placed before the shareholders at the next AGM to be held on July 14, 2017. Our Bank does not quantify the impact of U.S.
GAAP or International Financial Reporting Standards (“IFRS”) on the financial data included in this Placement Document, nor
does our Bank provide a reconciliation of its financial statements to U.S. GAAP or IFRS. Each of U.S. GAAP and IFRS differ in
certain significant respects from Indian GAAP. Accordingly, the degree to which the standalone and consolidated financial
statements prepared in accordance with Indian GAAP included in this Placement Document will provide meaningful information
is entirely dependent on the reader’s familiarity with the respective accounting practices. Any reliance by persons not familiar
with Indian accounting practices on the financial disclosures presented in this Placement Document should accordingly be limited.
Our Bank is required to prepare its financial statements in accordance with Ind AS from April 1, 2018. For further details see
“Risk Factors – Banking companies in India, including us, are required to prepare financial statements under the IND-AS for
periods beginning from April 1, 2018. The transition to IND-AS is recent and there is no clarity on the effect of such transition on
the Bank.” on page 55.
The Financial Year of our Bank commences on April 1 of each calendar year and ends on March 31 of the succeeding calendar
year. Unless otherwise stated, references in this Placement Document to a particular year are to the calendar year ended on
December 31, and to a particular “Financial” or “Financial Year” or “FY” are to the financial year ended on March 31.
All amounts are in INR Millions, Thousands, or Crores except share data which are given in absolute numbers.
All figures appearing in this Placement Document have been rounded off to two decimal places. Accordingly, the figure shown as
totals herein may be not be an arithmetic aggregation of the figures which precede them.
13
INDUSTRY AND MARKET DATA
Information regarding market position, growth rates, other industry data and certain industry forecasts pertaining to our business
contained in this Placement Document consists of estimates based on data reports compiled by Reserve Bank of India,
government bodies, data from other external sources and knowledge of the markets in which our Bank and our Subsidiary
compete. Unless stated otherwise, the statistical information included in this Placement Document relating to the industry in
which we operate has been reproduced from various trade, industry and government publications and websites.
This data is subject to change and cannot be verified with certainty due to limits on the availability and reliability of the raw data
and other limitations and uncertainties inherent in any statistical survey. Neither our Bank nor any of the BRLMs have
independently verified the industry and market data and do not make any representation regarding accuracy or completeness of
such data. Our Bank takes responsibility for accurately reproducing such information but accepts no further responsibility in
respect of such information and data. In many cases, there is no readily available external information (whether from trade or
industry associations, government bodies or other organizations) to validate market-related analysis and estimates, so our Bank
has relied on internally developed estimates. Similarly, while our Bank believes its internal estimates to be reasonable, such
estimates have not been verified by any independent sources and neither our Bank nor any of the BRLMs can assure Bidders as to
their accuracy.
The extent to which the market and industry data used in this Placement Document is meaningful depends on the reader’s
familiarity with and understanding of the methodologies used in compiling such data.
14
AVAILABLE INFORMATION
Our Bank has agreed that, for so long as any Equity Shares are “restricted securities” within the meaning of Rule 144(a)(3) under
the Securities Act, our Bank will, during any period in which it is neither subject to Section 13 or 15(d) of the U.S. Securities
Exchange Act of 1934, as amended nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or
beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such
holder or beneficial owner, upon the request of such holder, beneficial owner or prospective purchaser, the information required to
be provided by Rule 144A(d)(4) under the Securities Act, subject to compliance with applicable provisions of Indian law.
15
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Placement Document that are not statements of historical fact constitute “forward-looking
statements”. Investors can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”,
“continue”, “can”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”,
“should”, “will”, “would”, or other words or phrases of similar import. Similarly, statements that describe the strategies,
objectives, plans or goals of our Bank are also forward-looking statements. However, these are not the exclusive means of
identifying forward-looking statements.
All statements regarding our expected financial conditions, results of operations, business plans and prospects are forward-looking
statements. These forward-looking statements include statements as to our business strategy, planned projects, revenue and
profitability (including, without limitation, any financial or operating projections or forecasts), new business products or services
and other matters discussed in this Placement Document that are not historical facts. These forward-looking statements contained
in this Placement Document (whether made by us or any third party), are predictions and involve known and unknown risks,
uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of our Group to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about our
Group that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement.
Important factors that could cause the actual results, performances and achievements of our Group to be materially different from
any of the forward-looking statements include, among others:
Risks associated with having geographically concentrated operations;
Risks associated with borrower and industry concentrations, default by any large borrower and a deterioration in the
performance of any of the industry sectors in which we have significant exposure;
Decline in NRI deposits;
Increase in our portfolio of non-performing assets;
A decline in collateral values or an inability on our part to enforce collateral value;
Macro-economic developments and other market factors;
Inability to secure longer-term funding for our operations when we need it or at a competitive cost;
Inablility to access capital as and when we need it for growth;
Any worldwide financial instability that may influence the Indian economy and affect our business; and
Our ability to restructure our loans and NPAs and enforce collateral and security;
Additional factors that could cause actual results, performance or achievements of our Group to differ materially include, but are
not limited to, those discussed under the sections entitled “Risk Factors”, “Industry Overview”, “Business” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” on pages 41, 113, 124 and 78, respectively.
The forward-looking statements contained in this Placement Document are based on the beliefs of the management, as well as the
assumptions made by, and information currently available to, the management of our Bank. Although we believe that the
expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such
expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such
forward-looking statements. In any event, these statements speak only as of the date of this Placement Document or the respective
dates indicated in this Placement Document, and we undertake no obligation to update or revise any of them, whether as a result
of new information, future events or otherwise. If any of these risks and uncertainties materialize, or if any of our Bank’s
underlying assumptions prove to be incorrect, the actual results of operations or financial condition of our Group could differ
materially from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements
attributable to us are expressly qualified in their entirety by reference to these cautionary statements.
16
ENFORCEMENT OF CIVIL LIABILITIES
Our Bank is a public limited liability company incorporated under the laws of India. All our Directors, the Senior Management
Personnel named herein are residents of India and all or a substantial portion of the assets of our Bank and such persons are
located in India. As a result, it may be difficult or may not be possible for investors outside India to effect service of process upon
our Bank or such persons in India, or to enforce judgments obtained against such parties outside India.
Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil
Procedure, 1908, as amended (the “Civil Procedure Code”), on a statutory basis. Section 13 of the Civil Procedure Code
provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon between the same parties or
parties litigating under the same title, except: (i) where the judgment has not been pronounced by a court of competent
jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the
proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognise the law of India in
cases in which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural
justice; (v) where the judgment has been obtained by fraud; or (vi) where the judgment sustains a claim founded on a breach of
any law then in force in India.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section
44A of the Civil Procedure Code provides that a foreign judgment rendered by a superior court (within the meaning of that
section) in any jurisdiction outside India which the Government of India has by notification declared to be a reciprocating
territory, may be enforced in India by proceedings in execution as if the judgment had been rendered by a competent court in
India. However, Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of any
amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalties and does not include
arbitration awards.
Among other jurisdictions, the United Kingdom of Great Britain and Northern Ireland, Republic of Singapore and Hong Kong
have been declared by the Government to be reciprocating territories for the purposes of Section 44A of the Civil Procedure Code,
but the United States of America has not been so declared. A judgment of a court in a jurisdiction which is not a reciprocating
territory may be enforced only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be brought in
India within three years from the date of the foreign judgment in the same manner as any other suit filed to enforce a civil liability
in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in
India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages
awarded as excessive or inconsistent with public policy of India. Further, any judgment or award in a foreign currency would be
converted into Rupees on the date of such judgment or award and not on the date of payment. A party seeking to enforce a foreign
judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered, and any such
amount may be subject to income tax in accordance with applicable laws.
17
EXCHANGE RATE INFORMATION
Fluctuations in the exchange rate between the Rupees and the U.S. dollar will affect the U.S. dollar equivalent of the Rupee price
of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. dollar of any cash
dividends paid in Rupees on the Equity Shares.
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the
U.S. dollar (in Rupees per U.S. dollar) based on the reference rates released by the RBI. No representation is made that the Rupees
amounts actually represent such amounts in U.S. dollar or could have been or could be converted into USD at the rates indicated,
any other rates, or at all.
As of June 23, 2017, the exchange rate (RBI reference rate) was `64.54 to US$ 1.00.
(` Per US$)
Period end Average* High Low
Financial Year:
2017 64.84 67.09 68.72 64.84
2016 66.33 65.46 68.78 62.16
2015 62.59 61.15 63.75 58.43
Quarter ended:
March 31, 2017 64.84 67.01 68.23 64.84
December 31, 2016 67.95 67.46 68.72 66.43
September 30, 2016 66.66 66.96 67.50 66.36
Month ended:
May 31, 2017 64.55 64.42 64.99 64.02
April 30, 2017 64.22 64.51 65.04 64.00
March 31, 2017 64.84 65.88 66.85 64.84
February 28, 2017 66.74 67.08 67.65 66.72
January 31, 2017 67.81 68.08 68.23 67.79
December 31, 2016 67.95 67.9 68.37 67.43
*Average of the official rate for each working day of the relevant period.
(Source: www.rbi.org.in)
Note: If the RBI reference rate is not available on a particular date due to a public holiday, exchange rates of the previous
working day has been disclosed.
18
DEFINITIONS AND ABBREVIATIONS
This Placement Document uses the definitions and abbreviations set forth below, which you should consider when reading the
information contained herein. References to any legislation, act or regulation shall be to such term as amended from time to time.
Bank related terms
Term Description
Our “Bank”, the “Bank”, the
“Issuer”, “TFBL” or “we”, “us” or
“our”
The Federal Bank Limited, a public limited company incorporated under the Travancore
Companies Regulation, 1916 and subsequently registered under the Companies Act, 1956
and having its registered office at Federal Towers, P B No. 103, Aluva, Ernakulam 683 101,
Kerala, India
Articles or Articles of Association The Articles of Association of our Bank, as amended from time to time
Associate / Joint Venture IDBI Federal Life Insurance Company Limited
Audit Committee The Audit Committee constituted by the Board of our Bank
Auditors BSR & Co. LLP, Chartered Accountants and M.M. Nissim & Co., Chartered Accountants,
being the joint statutory auditors of our Bank
Board of Directors / Board The board of directors of our Bank, including any duly constituted committee thereof
Consolidated Financial Statements The audited consolidated financial statements as at and for the years ended March 31, 2017,
March 31, 2016 and March 31, 2015 prepared in accordance with the provisions of Banking
Regulation Act, 1949, read with relevant guidelines and directions issued by the RBI, the
Companies Act read along with rules thereunder and Indian GAAP
Credit Committee The Credit Committee & Investment and Raising Capital Committee constituted by the
Board of our Bank
CSR Committee The Corporate Social Responsibility Committee constituted by the Board of our Bank
Customer Service Committee The Customer Service & Marketing Strategy Committee constituted by the Board of our
Bank
Directors The directors of our Bank
Equity Shares The equity shares of our Bank of a face value of `2 each
ESOS 2010 Federal Bank – Employee Stock Option Scheme 2010
Financial Statements Collectively, the Consolidated Financial Statements and the Standalone Financial
Statements
Group Collectively, our Bank, its Subsidiary and Associate
HR Committee The Committee for Human Resources Policy constituted by the Board of our Bank
Investor Grievance Committee The Investor Grievance, Share Transfer and Stakeholders Relationship Committee
constituted by the Board of our Bank
IT Committee The Information Technology & Operations Committee constituted by the Board of our Bank
Memorandum or Memorandum of
Association
The Memorandum of Association of our Bank, as amended from time to time
Nomination and Remuneration
Committee
The Nomination, Remuneration, Ethics and Compensation Committee constituted by the
Board of our Bank
Registered and Corporate Office The registered and corporate office of our Bank, being, Federal Towers, P B No. 103,
Aluva, Ernakulam 683 101, Kerala, India
Review Committee of the Board on
Non-Cooperative Borrowers
The review committee for non-cooperative borrowers constituted by the Board of our Bank
Review Committee of the Board for
Wilful Defaulters
The review committee for wilful defaulters constituted by the Board of our Bank
Risk Management Committee The Risk Management Committee constituted by the Board of our Bank
SCBF Committee The Special Committee of the Board for monitoring and following up of cases of Frauds
19
Term Description
constituted by the Board of our Bank
Senior Management Personnel The key management personnel of our Bank in accordance with the provisions of the
Companies Act, 2013 and SEBI ICDR Regulations. For details, please see the section
entitled “Board of Directors and Senior Management” on page 157
Shareholders Shareholders of our Bank
Standalone Financial Statements The audited standalone financial statements as at and for the years ended March 31, 2017,
March 31, 2016 and March 31, 2015 prepared in accordance with the provisions of Banking
Regulation Act, 1949, read with relevant guidelines and directions issued by the RBI, the
Companies Act, 2013 read along with rules thereunder and Indian GAAP
Subsidiary Fedbank Financial Services Limited
Issue related terms
Term Description
Allocated/ Allocation The allocation of Equity Shares, by our Bank in consultation with the BRLMs, following the
determination of the Issue Price to QIBs on the basis of the Application Form submitted by
them, and in compliance with Chapter VIII of the SEBI ICDR Regulations, the Companies
Act and other applicable laws
Allot/ Allotment/ Allotted Unless the context otherwise requires, the issue and allotment of Equity Shares to be issued
pursuant to the Issue
Allottees QIBs to whom Equity Shares are issued and Allotted pursuant to the Issue
Application Form The form (including any revisions thereof) pursuant to which a QIB shall submit a Bid for
the Equity Shares in the Issue
Bid(s) An indication of interest of a Bidder, including all revisions and modifications thereto, as
provided in the Application Form, to subscribe for Equity Shares in the Issue
Bid/Issue Closing Date June 27, 2017, which is the last date up to which Application Forms shall be accepted by
our Bank or the BRLMs on behalf of our Bank
Bid/Issue Opening Date June 21, 2017
Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date, inclusive
of both days, during which Bidders can submit their Bids
Bidder Any prospective investor, being a QIB, who makes a Bid pursuant to the terms of the
Preliminary Placement Document and the Application Form
CAN or Confirmation of Allocation
Note
Note or advice or intimation to the QIBs confirming Allocation of Equity Shares to such
QIBs after determination of the Issue Price and requesting payment for the entire applicable
Issue Price for all Equity Shares Allocated to such QIBs
Closing Date The date on which Allotment of Equity Shares pursuant to the Issue shall be made, i.e. on or
about June 29, 2017
Cut-off Price The Issue Price of the Equity Shares to be issued pursuant to the Issue which shall be
finalised by our Bank in consultation with the BRLMs
Designated Date The date of credit of Equity Shares to the demat accounts of the Bidders, as applicable, to
the respective QIBs
Escrow Account The bank account opened by our Bank with the Escrow Agent, where any money received
towards the subscription of the Equity Shares is to be deposited, subject to the terms of the
Escrow Agreement
Escrow Agent Federal Bank Limited
Escrow Agreement Agreement dated June 21, 2017 entered into amongst our Bank, the Escrow Agent and the
BRLMs for collection of the Bid Amounts and for remitting refunds, if any, of the amounts
collected, to the Bidders
Floor Price The floor price of `117.04 per Equity Share which has been calculated in accordance with
20
Term Description
Chapter VIII of the SEBI ICDR Regulations, subject to a discount of not more than five per
cent on the Floor Price in terms of Regulation 85 of the SEBI ICDR Regulations and in
accordance with our Shareholders’ approval pursuant to the resolution dated June 7, 2017
BRLMs Citigroup Global Markets India Private Limited, Deutsche Equities India Private Limited,
IIFL Holdings Limited and Kotak Mahindra Capital Company Limited
Issue The offer, issue and Allotment of up to 215,517,241 Equity Shares to QIBs pursuant to
Chapter VIII of the SEBI ICDR Regulations and the provisions of the Companies Act, 2013
Issue Price `116.00 per Equity Share
Issue Size The issue of up to 215,517,241 Equity Shares aggregating up to `25,000 million
Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996
Mutual Fund Portion The Equity Shares proposed to be Allotted in the Issue, being at least 10% of the Issue,
which is available for Allocation to Mutual Funds
Pay-in Date The last date specified in the CAN for payment of application monies by the successful
Bidders
Placement Agreement Placement agreement dated June 21, 2017 entered into by our Bank and the BRLMs
Placement Document This Placement document dated June 27, 2017 issued by our Bank in accordance with
Chapter VIII of the SEBI ICDR Regulations and Sections 42 and 62 of the Companies Act,
2013
Preliminary Placement Document The preliminary placement document dated June 21, 2017 issued in accordance with
Chapter VIII of the SEBI ICDR Regulations and Sections 42 and 62 of the Companies Act,
2013
QIBs or Qualified Institutional
Buyers
Qualified institutional buyers, as defined under Regulation 2(1)(zd) of the SEBI ICDR
Regulations
QIP Qualified institutions placement under Chapter VIII of the SEBI ICDR Regulations
Regulation D Regulation D under the Securities Act
Regulation S Regulation S under the Securities Act
Relevant Date June 21, 2017, the date on which our Board of Directors or any authorised committee of our
Board of Directors decided to open the Issue
Rule 144A Rule 144A under the Securities Act
Securities Act The U.S. Securities Act of 1933, as amended
Stock Exchanges NSE and BSE
U.S. QIB A qualified institutional buyer, as defined under Rule 144A
Industry Related Terms
Term Description
AML Anti-money laundering
ANBC Adjusted net bank credit
ATMs Automated teller machines
Basel Committee Basel Committee on Banking Supervision
Basel II Revised framework on “International Convergence of Capital Measurement and Capital
Standards” by RBI for International Settlements
Basel III A global regulatory framework for more resilient banks and banking systems (December
2010 (rev. June 2011)) published by the Bank for International Settlements. RBI issued
guidelines on the implementation of Basel III capital regulations in India on May 2, 2012
21
Term Description
and revised as per notification issued by the RBI on March 27, 2014
BCBS Basel Committee on Banking Supervision
BPLR The benchmark prime lending rate, based on cost of funds, cost of business operations,
provisions and yield curve expectations
CAR Capital adequacy ratio
CASA Current account (demand deposit) saving account
CASA Ratio The ratio of current account and savings account deposits to total deposits
CB Mid-corporate advances such as commercial banking clients
CBS Core Banking Solution
CCB Capital conservation buffer
Cost to income ratio The ratio of total operating expenses to the sum total of Net Interest Income and other
income
Customer Deposit Deposits and time deposits other than Banks
CRAR Capital to risk-weighted asset ratio
CRR Cash reserve ratio
General provision Contingent provisions against standard assets
ICAAP Internal Capital Adequacy Assessment Process
IMPS Interbank mobile payment service
Interest expense Interest expended
Interest coverage ratio Interest coverage ratio means net profit before interest and depreciation divided by the
interest expenses for the same period
Interest income Interest earned
IT Information technology
KYC Know your customer
LC Letter of credit
LCR Liquidity coverage ratio as provided under the Basel III Framework on Liquidity Standards
– Liquidity Coverage Ratio, Liquidity Risk Monitoring Tools and LCR Disclosure
Standards bearing number RBI/2013-14/635
DBOD.BP.BC.No.120/21.04.098/2013-14 dated June 9, 2014
MSF Marginal standing facility
MSMEs Micro, small and medium-sized enterprises
NABARD National Bank for Agricultural and Rural Development
NBFC Non-banking financial company registered with the RBI
NDTL Net demand and time liabilities
Net interest income Interest income/earned less interest expense/expended
Net interest margin Net interest margin is the difference between interest earned and interest expended divided
by average interest-earning assets
Net NPA Net non-performing assets
NPA Non-performing asset
NRI Non-Resident Indian
NSFR Net stable funding ratio
Other debt securities Other debt securities comprises investments in bonds, commercial papers and certificate of
22
Term Description
deposits and debentures
RIDF Rural Infrastructure Development Fund
ROA Return on assets
SARFAESI Act The Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, as amended
Savings accounts Savings bank deposits
SMA Special Mentioned Accounts
SMA2 All borrowers classified as standard and having exposure of ` 50 million or more, wherein
the principal sum or the interest due is overdue between 61 and 90 days
SLR Statutory liquidity ratio (as per requirements of the RBI)
SME Small and medium enterprises
Tier I capital Tier I capital is the going-concern capital. From regulatory capital perspective, going-
concern capital is the capital which can absorb loses without triggering bankruptcy of a
bank. Tier I capital is comprised of the CET I capital and the Additional Tier I capital.
Tier I capital comprises of Equity Share Capital, Reserves and Surplus excluding Investment
Revaluation Reserve, 75% of foreign currency translation reserve and innovative perpetual
debt instruments.
Tier II capital Tier II capital is the gone-concern capital. From regulatory capital perspective, gone-concern
capital is the capital which will absorb losses only in a situation of liquidation of a bank.
Tier II capital is comprised of eligible debt capital instruments as specified under regulatory
requirements, general provisions and loss reserves as prescribed by the RBI (up to a
maximum of 1.25% of total credit risk-weighted assets), revaluation reserves at a discount of
55.00%, as reduced by regulatory adjustments/ deductions applied in the calculation of the
Tier II capital as prescribed in extant RBI guidelines.
Tier II capital comprises of upper tier II capital, lower tier II capital, investment revaluation
reserve and eligible standard asset provision.
VaR Value-at-risk
Yield on investments Yield to investments is the ratio between interest income on investments to average interest-
earning investments
Conventional and general terms
Term Description
AGM Annual General Meeting
Banking Regulation Act The Banking Regulation Act, 1949
BSE BSE Limited
CAGR Compound annual growth rate
Calendar Year Year ending on December 31
Category III Foreign Portfolio
Investor
An FPI registered as a category III foreign portfolio investor under the SEBI FPI
Regulations
CCI Competition Commission of India
CDR Corporate Debt Restructuring
CDSL Central Depository Services (India) Limited
CESTAT Customs, Excise and Service Tax Appellate Tribunal
CIN Corporate Identity Number
Civil Procedure Code The Code of Civil Procedure, 1908
23
Term Description
Companies Act The Companies Act, 1956 or the Companies Act, 2013, as applicable
Companies Act, 1956 The Companies Act, 1956 (without reference to the provisions thereof that have ceased to
have effect upon notification of the sections of the Companies Act, 2013) along with the
relevant rules made thereunder
Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the notification of sections of
the Companies Act, 2013, along with the relevant rules made thereunder
Competition Act The Competition Act, 2002
Consolidated FDI Policy The Consolidated FDI Policy (effective from June 7, 2016), issued by the Department of
Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India
CPI Consumer Price Index
Cr.P.C The Code of Criminal Procedure, 1973
Depositories CDSL and NSDL
Depositories Act The Depositories Act, 1996
Depository Participant or DP A depository participant as defined under the Depositories Act
DP ID Number Depository participant identification number
DTA Deferred Tax Asset
ECB External Commercial Borrowing
ECS Electronic clearing service
EGM Extraordinary general meeting
Eligible FPIs FPIs that are eligible to participate in this Issue, excluding Category III Foreign Portfolio
Investors
EPS Earnings per share
EU European Union
FDI Foreign Direct Investment
FEMA The Foreign Exchange Management Act, 1999, together with rules and regulations issued
thereunder
FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
Outside India) Regulations, 2000
FIIs Foreign Institutional Investors as defined under the SEBI FPI Regulations
Financial Year or Fiscal Year or
Fiscal
The period of 12 months ended March 31 of that particular year, unless otherwise stated
Form PAS-4 Form PAS-4 as prescribed under the Companies (Prospectus and Allotment of Securities)
Rules, 2014
FPIs Foreign portfolio investors as defined under the SEBI FPI Regulations and includes a person
who has been registered under the SEBI FPI Regulations.
Any foreign institutional investor or qualified foreign investor who held a valid certificate of
registration was deemed to be a foreign portfolio investor till the expiry of the block of three
years for which fees had been paid as per the Securities and Exchange Board of India
(Foreign Institutional Investors) Regulations, 1995
FVCI Foreign Venture Capital Investors ,as defined under the Securities and Exchange Board of
India (Foreign Venture Capital Investors) Regulations, 2000, registered with SEBI
GAAP Generally Accepted Accounting Principles
GDP Gross Domestic Product
GDR Global Depository Receipt
24
Term Description
General Meeting AGM or EGM
GoI or Government Government of India
GST Goods and Services Tax
GVA Gross Value Added
HUF Hindu Undivided Family
ICAI Institute of Chartered Accountants of India
IFC International Finance Corporation
IFRS International Financial Reporting Standards
Indian GAAP Indian Generally Accepted Accounting Principles (GAAP) as applicable to the respective
entities in accordance with the regulations under which they operate and in relation to our
Bank, as applicable to banking companies in India.
Insider Trading Regulations The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,
2015
IPC The Indian Penal Code, 1860
IPO Initial Public Offering
IRDAI Insurance Regulatory and Development Authority of India
I.T. Act The Income-tax Act, 1961
MAT Minimum Alternate Tax
MCA Ministry of Corporate Affairs, GoI
MoF Ministry of Finance, GoI
MoU Memorandum of Understanding
NEFT National Electronic Fund Transfer
Net Worth Net worth shall mean the aggregate of the paid-up share capital, share premium account, and
reserves and surplus (excluding revaluation reserve) as reduced by the aggregate of
miscellaneous expenditure (to the extent not adjusted or written off) and the debit balance of
the profit and loss account
NRI Non-resident Indian, as defined under applicable law
Non-Resident or NR A person resident outside India, as defined under the FEMA
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
OCB or Overseas Corporate Body A company, partnership, society or other corporate body owned directly or indirectly to the
extent of at least 60% by NRIs including overseas trusts in which not less than 60% of the
beneficial interest is irrevocably held by NRIs directly or indirectly and which was in
existence on October 3, 2003 and immediately before such date was eligible to undertake
transactions pursuant to the general permission granted to OCBs under the FEMA. OCBs
are not allowed to invest in the Issue
Official Gazette The official gazette issued by the Government of India, including any state
P.A. or p.a. Per annum
PAN Permanent Account Number allotted under the I.T. Act
PMLA Prevention of Money Laundering Act, 2002
RBI Reserve Bank of India
RBI Act The Reserve Bank of India Act, 1934
RoC or Registrar Registrar of Companies, Kerala at Ernakulam
25
Term Description
RoE Return on Equity
`, Rs., INR, Rupees Indian Rupees
RTGS Real Time Gross Settlement
SBI State Bank of India
SCRA The Securities Contracts (Regulation) Act, 1956
SCRR The Securities Contracts (Regulation) Rules, 1957
SCR (SECC) Regulations The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations),
Regulations, 2012
SEBI The Securities and Exchange Board of India established under the SEBI Act
SEBI Act The Securities and Exchange Board of India Act, 1992
SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014
SEBI Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015
SEBI ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009
Stock Brokers Regulations Securities and Exchange Board of India (Stock-Brokers and Sub-Brokers) Regulations,
1992
Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011
U.S. United States of America
U.S. GAAP Generally accepted accounting principles in the United States of America
VCF A venture capital fund as defined under the erstwhile Securities and Exchange Board of
India (Venture Capital Funds) Regulations, 1996
Notwithstanding the foregoing, defined terms in the sections entitled “Statement of Tax Benefits” and “Financial Statements” on
pages 194 and 220, respectively, shall have the meaning given to such terms in such sections.
26
DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 UNDER THE COMPANIES ACT, 2013
The table below sets out the disclosure requirements as provided in Form PAS-4 and the relevant pages in this Placement
Document where these disclosures, to the extent applicable, have been provided.
Sr. No. Disclosure Requirements Relevant Page of this
Placement Document
1. GENERAL INFORMATION
a. Name, address, website and other contact details of the company indicating both registered
office and corporate office;
Cover Page
b. Date of incorporation of the company; Cover Page, 219
c. Business carried on by the company and its subsidiaries with the details of branches or units,
if any;
29 - 32; 124 - 148
d. Brief particulars of the management of the company; 157 - 159
e. Names, addresses, DIN and occupations of the directors; 157 - 159
f. Management’s perception of risk factors; 41 – 67
g. Details of default, if any, including therein the amount involved, duration of default and
present status, in repayment of –
216
(i) statutory dues;
(ii) debentures and interest thereon;
(iii) deposits and interest thereon;
(iv) loan from any bank or financial institution and interest thereon.
h. Names, designation, address and phone number, email ID of the nodal/ compliance officer of
the company, if any, for the private placement offer process;
223
2. PARTICULARS OF THE OFFER
a. Date of passing of board resolution; 33
b. Date of passing of resolution in the general meeting, authorizing the offer of securities; 33
c. Kinds of securities offered (i.e. whether share or debenture) and class of security; 33
d. price at which the security is being offered including the premium, if any, along with
justification of the price;
Cover page, 33
e. name and address of the valuer who performed valuation of the security offered; Not applicable
f. Amount which the company intends to raise by way of securities; Cover page, 33
g. Terms of raising of securities: Not applicable
(i) Duration, if applicable;
(ii) Rate of dividend;
(iii) Rate of interest;
(iv) Mode of payment; and
(v) Repayment.
h. Proposed time schedule for which the offer letter is valid; Not applicable
i. Purposes and objects of the offer; 71
j. Contribution being made by the promoters or directors either as part of the offer or separately
in furtherance of such objects;
71
k. Principle terms of assets charged as security, if applicable; Not applicable
3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION
ETC.
27
Sr. No. Disclosure Requirements Relevant Page of this
Placement Document
a. Any financial or other material interest of the directors, promoters or key managerial
personnel in the offer and the effect of such interest in so far as it is different from the
interests of other persons.
165
b. details of any litigation or legal action pending or taken by any Ministry or Department of the
Government or a statutory authority against any promoter of the offeree company during the
last three years immediately preceding the year of the circulation of the offer letter and any
direction issued by such Ministry or Department or statutory authority upon conclusion of
such litigation or legal action shall be disclosed
Not Applicable
c. remuneration of directors (during the current year and last three financial years); 160 – 162
d. Related party transactions entered during the last three financial years immediately preceding
the year of circulation of offer letter including with regard to loans made or, guarantees given
or securities provided
165
e. Summary of reservations or qualifications or adverse remarks of auditors in the last five
financial years immediately preceding the year of circulation of offer letter and of their impact
on the financial statements and financial position of the company and the corrective steps
taken and proposed to be taken by the company for each of the said reservations or
qualifications or adverse remark
93
f. Details of any inquiry, inspections or investigations initiated or conducted under the
Companies Act or any previous company law in the last three years immediately preceding
the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if
there were any prosecutions filed (whether pending or not) fines imposed, compounding of
offences in the last three years immediately preceding the year of the offer letter and if so,
section-wise details thereof for the company and all of its subsidiaries
216
g. Details of acts of material frauds committed against the company in the last three years, if
any, and if so, the action taken by the company.
213 - 216
4. FINANCIAL POSITION OF THE COMPANY
a. the capital structure of the company in the following manner in a tabular form- 73
(i)(a) the authorised, issued, subscribed and paid up capital (number of securities,
description and aggregate nominal value);
(b) size of the present offer;
(c) paid up capital
(A) after the offer;
(B) after conversion of convertible instruments (if applicable)
(d) share premium account (before and after the offer)
(ii) the details of the existing share capital of the issuer company in a tabular form, indicating
therein with regard to each allotment, the date of allotment, the number of shares allotted, the
face value of the shares allotted, the price and the form of consideration
Provided that the issuer company shall also disclose the number and price at which each of
the allotments were made in the last one year preceding the date of the offer letter separately
indicating the allotments made for considerations other than cash and the details of the
consideration in each case;
b. Profits of the company, before and after making provision for tax, for the three financial years
immediately preceding the date of circulation of offer letter;
36, 39
c. Dividends declared by the company in respect of the said three financial years; interest
coverage ratio for last three years (Cash profit after tax plus interest paid/interest paid)
77
d. A summary of the financial position of the company as in the three audited balance sheets
immediately preceding the date of circulation of offer letter;
35, 38
e. Audited Cash Flow Statement for the three years immediately preceding the date of 37, 40
28
Sr. No. Disclosure Requirements Relevant Page of this
Placement Document
circulation of offer letter;
f. Any change in accounting policies during the last three years and their effect on the profits
and the reserves of the company.
99
5. A DECLARATION BY THE DIRECTORS THAT -
a. the company has complied with the provisions of the Act and the rules made thereunder; 221
b. the compliance with the Act and the rules does not imply that payment of dividend or interest
or repayment of debentures, if applicable, is guaranteed by the Central Government;
c. the monies received under the offer shall be used only for the purposes and objects indicated
in the Offer letter;
29
SUMMARY OF BUSINESS
Overview
We are a leading private sector bank in India. We were originally incorporated in 1931 as the ''Travancore Federal Bank Limited
Nedumpram under the Travancore Companies Regulation. On December 2, 1949, the name was changed to The Federal Bank
Limited. In 1959, we were licensed under the Banking Regulation Act, 1949, and thereafter we became a scheduled commercial
bank under the Second Schedule of Reserve Bank of India Act, 1934.
We offer a wide range of products and services to retail, small and medium scale enterprises (''SME'') agricultural and corporate
customers through a variety of delivery channels. As of March 31, 2017, we had 1,252 bank branches and 1,667 ATMs. Our
consolidated balance sheet size has increased from `853,418.93 million as of March 31, 2015 to `1,154,857.35 million as of
March 31, 2017. Our total consolidated deposits have grown from `708,226.87 million as of 31 March 2015 to `976,620.76
million as of March 31, 2017. Our total consolidated advances have increased from `515,291.87 million as on March 31, 2015 to
`740,862.30 million as on March 31, 2017.
While we were historically focused largely on the state of Kerala, we have expanded our presence throughout India with 1,252
bank branches across India. Our robust practice across India is complemented by our international presence. We are developing
our international presence by building a network outside India to cater to the NRI market, with representative offices in Dubai and
Abu Dhabi. We have also obtained approval to open a further representative office in Bahrain and a branch in the Dubai
International Financial Centre ("DIFC"). We have also recently opened an international banking unit in the Gujarat International
Finance Tec-City ("GIFT City").
We offer banking products and services in the Retail, SME, Agricultural and Corporate and Wholesale banking sectors. Our retail
asset products include home loans, personal loans, auto loans, educational loans, mortgage loans, business loans as well as
security-backed loans of various types. Our SME portfolio consists primarily of loans and advances to manufacturing and food
processing enterprises, educational institutions, healthcare providers, the services sector, traders and professionals. Our loans to
the agricultural sector include loans to individual farmers, group of farmers, agriculture businesses and agriculture corporates. For
the corporate and wholesale banking sector, we offer various loan and fee-based products and services to large corporations,
medium-sized enterprises and certain specified sectors, including the agriculture sector which includes an assortment of banking
products and services including working capital, term finance, trade finance, structured financial services, foreign exchange and
syndication services.
We offer a number of liability products to our retail customers, including NRIs, such as saving accounts, time deposits and
recurring deposits. These products are offered with certain variations as customized products to certain target groups such as
senior citizens, students and salaried employees. We also offer other products and services such as debit and credit cards, online
bill payment services and cash management services. We market third-party products, such as mutual funds and general and life
insurance policies such as the IDBI-Federal Life insurance policy. A wide range of liability and asset products and services are
also offered specifically to NRIs.
We also provide a number of digital offerings including the "Fedbook Selfie" application for digital account opening and the
'Lotza' application, which is a unified payment interface application, to take advantage of the increasing availability of internet
access and broadband connectivity across India. Our investment into our digital strategy will see the introduction of more products
and the enhancement in the security features of our existing products. We believe that our comprehensive suite of secure digital
products will enhance our competitiveness.
Our principal business activities are divided into five segments, namely retail banking, SME banking, agricultural banking,
corporate and wholesale banking, treasury and other banking operations, with a balanced portfolio mix across these segments,
including non-resident Indians (''NRI''). As of March 31, 2017, our retail advances accounted for 30.41% of total gross advances,
SME advances accounted for 23.57% of total gross advances, agriculture advances accounted for 10.02% of total gross advances
and corporate advances accounted for 36.01% of total gross advances.
Strengths
Our key strengths are as follows:
Pan India network with presence in Abu Dhabi and Dubai to complement a strong NRI franchise
As of March 31, 2017, we had 1,252 bank branches and 1,667 ATMs. These branches are distributed across metro, urban, semi
urban and rural locations. 600 bank branches are located in the state of Kerala and the remainder are spread across the rest of
India. We have been steadily growing our network across India, having added 227 branches and 347 ATM to our network outside
of the state of Kerala between April 1, 2012 and March 31, 2016. We have undertaken focused expansion in key states such as
Punjab, Haryana, NCR, Maharashtra, Tamil Nadu and Kerala. This expansion has contributed in growing the total standalone
advances from `512,849.91 million as on 31 March 2015 to `733,362.72 million as on March 31, 2017. The investment made by
us in expanding the network provides us access to customers across our target segments and allows us to focus on customers in
30
local geographies.
In addition to this physical infrastructure, we believe we have also developed and launched an extensive digital footprint to enable
customer acquisition and retention. Further, we also have a network outside India catering to the NRI market, with representative
offices in Dubai and Abu Dhabi and tie-ups with 85 exchange houses to assist our customers in remitting money into India. For
the nine months ended December 31, 2016, we had a 15.44% market share of all foreign inward remittances made for personal
purposes into India. 21 of our officers have been posted to various geographies in the Gulf Cooperation Council ("GCC") to serve
as single point contacts and relationship managers for our customer base in the GCC. We believe that a relationship manager
model is essential in the development of our business where the relationship manager engages with our customers and offers
relevant solutions and products to such customers.
We also have a strong NRI franchise, which provides us with a low cost source of funding. Our NRI franchise has contributed to
our development in our deposits and current accounts and saving accounts ("CASA") ratio. The deposits from NRIs constituted
36.62%, 41.17% and 39.50% of total standalone deposits in the corresponding periods of fiscal 2015, fiscal 2016 and fiscal 2017.
The contribution towards the standalone savings accounts from NRIs was 45.40%, 47.60% and 45.27% in fiscal 2015, fiscal 2016
and fiscal 2017 respectively. We attribute the rapid growth in our NRI accounts to our presence in the GCC, where our
relationship managers attract new NRI customers to utilise our financial services.
Strong liability profile with a wide spectrum of products
Over the years, we have built a strong base of distributed clientele, which has provided us with a low cost of funding and has been
a source of strength for our liability portfolio. The ratio of retail deposits to total standalone deposits in the fiscal years ending
March 31, 2015, 2016 and 2017 was 95.3%, 97.9% and 94.1%, respectively. A large part of our deposit base is retail and the lack
of bulk deposits provides us with a deposit base with a lower concentration risk, increasing the spread of our liability portfolio.
Our total deposits have increased in the last three financial years. Our standalone total deposits in the fiscal years ending March
31, 2015, 2016 and 2017 were `708,249.93 million, `791,717.07 million and `976,645.62 million respectively. Despite not
offering higher interest rates for our savings accounts, our CASA ratio increased from 30.43% in fiscal 2015 to 32.47% in fiscal
2016 and 32.60% on fiscal 2017.
We provide a wide spectrum of products to cater to the needs of our customers be it Retail, SME, Agriculture or Corporate. We
are able to provide this wide range of products across our branch network. Our diversified product mix is able to cater to retail
customers from the urban, semi urban and rural areas. Our strength in serving mid-market clients has contributed to the
development of our bank in these locations.
Innovation and Digital focus
We are committed to digital banking and we have upgraded our systems to ensure a smooth integration between our existing
infrastructure and our new digital banking products. Our Digital Centre of Excellence is an exclusive division set up to develop
digital innovations and technological value-adds. This has resulted in new products such as the mobile passbook (Fedbook),
account opening application (Fedbook Selfie), UPI mobile app for payments (Lotza), SMS based transactions and the Be Your
Own Master Loans (BYOM – algorithm based, on-line, self-service loans).
We believe "Launchpad" is one of our unique initiatives to support fintech startups. Launchpad offers counselling and guidance on
key aspects involved in setting up of a start up like registration, regulatory compliances, investments and accounting, intellectual
property protection, trading and taxation.
We continuously strive to increase reliance for transactions on digital channels which are more cost effective than physical
channels. In order to enable a smooth transition, we have ensured that our digital banking channels are updated and reliable.
Our suite of digital offerings has won numerous awards in India. These awards include, the Banking Frontier's Finnoviti 2016
Award, the Banking Frontier's Finnoviti 2015 Award, the Skoch Award 2015, IDRBT Award for Digital Banking, Analytics and
Big Data amongst mid-sized banks in 2015-16 and other IDRBT Awards relating to technology and digital banking in the years
2010-11, 2011-12, 2012-13, 2014-15 for pioneering steps taken in digital banking.
Well Defined Business Architecture and Robust Credit Management Framework
We continuously revise our business architecture to ensure that it remains current and competitive. We have introduced the
relationship manager model where relationship managers work with our customers to understand their needs and offer them the
relevant products and services to address such needs. We have also encouraged the specialization of our internal teams to improve
their efficiency. We now have specialized teams to handle sourcing and sanctioning, credit administration, recovery, operations,
technology, service quality management, and digital products. These initiatives have improved the overall efficiency of the Bank.
We are focused on maintaining a high level of asset quality. Our standalone gross NPAs as a percentage of gross advances stood
at 2.04% in fiscal year 2015, 2.84% in fiscal year 2016 and 2.33% as of fiscal year 2017. Our standalone net NPAs as a
percentage of net advances stood at 0.73% in fiscal year 2015, 1.64% in fiscal year 2016 and 1.28% as of fiscal year 2017. Our
31
NPA increase in fiscal year 2016 was due to weak economy conditions, which affected the asset quality of India's banking
industry in general. The weak oil prices in fiscal year 2016 also affected our NPAs due to our large customer base in the GCC.
Being cognizant of these challenges to our asset quality, we have addressed these issues by strengthening our recovery
mechanisms and improving our credit management procedures. Our concerted efforts to identify stressed assets at an early stage
have resulted in a reduction in our NPAs in fiscal year 2017.
We are also established in the SME, corporate and wholesale banking industries across India. Our strength lies in our diverse
portfolio that generates both interest and non-interest income. We provide diversified solutions to meet the financial and banking
needs of our corporate customers, including project loans, term loans, short term loans, cash credit, export credit, bill discounting
facilities, letters of credit and guarantees. We also engage in cross-selling multiple products to our clients. We believe that our
combination of diverse product offerings and a relationship-driven approach has enabled us to structure solutions to meet our
customers’ commercial needs, resulting in sustained revenue generation for our bank. Our non-interest income has broadly grown
in line with the growth in our total net income and accounted for 26.33%, 23.95% and 25.72% of our total net income for the
fiscal years 2015, 2016 and 2017, respectively.
Experienced Board of Directors and management team
Our Board of Directors consists of experienced professionals with significant experience in their respective fields. We believe
their experience is instrumental in driving our business successfully through periods of global financial crisis and economic
downturn, as well as through periods of volatility in markets and interest rates.
We have a committed senior management team driving our strategy and execution. The senior management team is a blend of
home grown executives with some having an experience of over three decades. We believe our team has helmed our growth and
risk management strategies, through the worldwide economic crisis, an economic slowdown and volatile interest rate environment
in India. We believe our team's focus on executing growth strategies while maintaining profitability, setting measurable targets
benchmarked to market leaders and monitoring performance against such targets, anticipating customer demand and adding new
products and services, investing in technology and building our brand have contributed to an overall improvement in our key
metrics since 2010, including net interest margin, cost to income, net NPAs, return on assets and return on equity, as well as our
CASA ratio.
In addition to the Board and the senior management, our employees at various levels of the bank come from ethnically and
culturally diverse backgrounds across India. The average age of our employees is less than 37 years. We believe the demographic
profile of our employees is another factor that contributes significantly to the growth of our business.
Strategy
The key elements of our strategy are:
Strong, sustainable and high quality growth in advances with low risk
We believe that robust credit risk management policies and controls are critical for long-term, sustainable growth in our business.
Our goal is to continually improve our credit risk management procedures, credit evaluation, rating methodology, monitoring and
control mechanisms to maintain the quality of our loan and investment portfolios. Further, we intend to continuously focus on
maintaining the mix of our loans and advances between the customer segments of corporate, SME and retail. We believe that there
is an opportunity for us to selectively acquire loan portfolios from other banks and financial institutions in key market segments to
grow our total loan and advances portfolio. We also believe that our regional credit underwriting hubs combined with the
technological platform that our network has, will enable us to target customers across the key segments to grow our loan and
advances, whilst reducing overall risk.
Continue to strengthen our liability profile
Retail deposits in India are an important source of low-cost funding for us and we believe that the Indian retail financial services
market will continue to experience growth. We aim to continue to expand our retail banking business by growing our customer
base, providing a convenient banking experience to customers and offering differentiated products and solutions to meet the
specific needs of particular customer demographics. We believe these initiatives will help us build a strong liabilities profile,
which will expand our pool of low-cost funding. In addition, we seek to leverage our position in the NRI segment by looking to
expand our service offerings linked to remittances into India. Our NRI deposits also provide us with a natural cushion against high
funding costs and therefore we seek to continuously maintain our market position and also increase our number of NRI customers.
Continue to focus on our home market and gain market share in the rest of India
Apart from developing our home market in Kerala, we have also sought to increase our presence in the rest of India. We believe
our strategy has allowed us to reap significant rewards in the 25 states, Delhi NCT and in the four union territories which we
operate in. We intend to continue developing our market share in India with the following multi-pronged strategy:
32
Focus on maintaining the significant advantage we enjoy in the Kerala sub-market and in relationship with NRI customers.
We are the one of the largest private sector banks in the state of Kerala in terms of total number of branches, total deposits
and NRI deposits as of December 31, 2016, and for nine months ended December 31, 2016, we had a 15.44% market share of
all foreign inward remittances made for personal purposes into India. We aim to continue to maintain this leadership position
in the Kerala sub-market and also amongst NRI customers.
We have an established presence in most centres across the country, and we aim to strengthen this presence in key
geographies such as Maharashtra, Gujarat, NCR, Tamil Nadu, Punjab and Karnataka in addition to our home state, Kerala.
This expansion would be through a slew of measures including opening new branches selectively in the chosen geographies,
increasing digital reach, increasing the strength of local-geography employees in respective states and focussing on fresh
customer acquisition and retention.
We will continuously assess the needs of markets and clients and widen the spectrum of products and offerings continuously
while ensuring that our products and offerings satisfy such needs in a competitive manner. We believe we will tap into
various retail channels such as home sales, tie-ups for allied products, digital offerings, strategic partnerships and alliances to
create more value for our various business segments.
Transformation through technology with continuous investments in digital banking
We believe the increased availability of internet access and broadband connectivity across India calls for a comprehensive digital
strategy to proactively develop new methods of reaching our customers and running our businesses. As mentioned earlier, we
follow a business philosophy of "Digital at the Fore, Human at the Core". Under this guiding philosophy we seek to provide our
customers with a user friendly digital experience that will allow us to increase our customer engagement. For example, we have
launched the ''Fedbook Selfie" application for digital account opening and "Lotza" application which is a unified payment
interface application.
We are continuously investing in technology as a means of improving our customers' experience, offering them a range of
products tailored to their financial needs and making it easier for them to interact with us. We have launched internet and mobile
based applications across most of our product and service portfolios, and we believe we will continue to invest in creating a
superior technology infrastructure to support our digital strategy. We believe additional investments in our technology
infrastructure to further develop our digital strategy will allow us to cross-sell a wider range of products on our digital platform in
response to our customers' needs and thereby expand our relationship with our customers across a range of customer segments.
We believe a comprehensive digital strategy will provide benefits in developing long-term customer relationships by allowing
customers to interact with us, access and operate their accounts wherever and whenever they desire.
On the operational side, we believe that investments in internal systems and security technology lead to enhanced customer
satisfaction, and therefore enhance our competitiveness. We are also continuing to invest in our cyber security network and
privacy protection systems, in order to supplement our growth and increase the robustness of our data security framework. We
believe these operational initiatives will also provide us with insights into our customers enabling us to cater to their financial
needs in a customised manner.
Building the Federal Brand
We believe that our "Federal" brand is well recognized across the country, especially in the state of Kerala. We intend to develop
our brand throughout the other states. In order to achieve this objective, we will execute marketing campaigns using a variety of
media vehicles including television, print, radio, and digital mediums. We believe that the key to differentiation is innovation.
Hence, we intend to have innovative marketing campaigns to distinguish our brand from our competitors.
33
SUMMARY OF THE ISSUE
The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information appearing elsewhere in this Placement Document, including the sections entitled
“Risk Factors”, “Use of Proceeds”, “Placement”, “Issue Procedure” and “Description of the Equity Shares” on pages 41, 71, 179,
170 and 192, respectively.
Issuer The Federal Bank Limited
Face Value `2 per Equity Share
Issue Size Issue of up to 215,517,241 Equity Shares, aggregating up to `25,000 million.
A minimum of 10% of the Issue Size i.e. up to 21,551,724 Equity Shares shall be available for
Allocation to Mutual Funds only, and the balance of up to 193,965,517 Equity Shares shall be
available for Allocation to all QIBs, including Mutual Funds. If no Mutual Fund is agreeable to take
up the minimum portion mentioned above, such minimum portion or part thereof may be Allotted
to other eligible QIBs.
Date of Board Resolution April 28, 2017
Date of Shareholders’
Resolution
June 7, 2017
Floor Price `117.04 per Equity Share which has been calculated in accordance with Chapter VIII of the SEBI
ICDR Regulations, subject to a discount of not more than five per cent on the Floor Price in terms
of Regulation 85 of the SEBI ICDR Regulations and in accordance with our Shareholders’ approval
pursuant to the resolution dated June 7, 2017
Issue Price `116.00 per Equity Share
Eligible Investors QIBs as defined in regulation 2(1)(zd) of the SEBI ICDR Regulations and not excluded pursuant to
Regulation 86 of the SEBI ICDR Regulations to whom the Preliminary Placement Document and
the Application Form was circulated and who were eligible to bid and participate in the Issue. For
further details, please see the section entitled “Issue Procedure – Qualified Institutional Buyers”
and “Transfer Restrictions and Purchaser Representations” on pages 173 and 186
Equity Shares issued and
outstanding immediately
prior to the Issue
1,728,120,426 Equity Shares
Equity Shares issued and
outstanding immediately
after the Issue
Immediately after the Issue, up to 1,943,637,667 Equity Shares will be issued and outstanding
Listing Our Bank has received in-principle approvals, dated June 21, 2017 from BSE and NSE in terms of
Regulation 28(1) of the SEBI Listing Regulations. Our Bank shall apply to the Stock Exchanges for
the listing approvals and the final listing and trading approvals, after the Allotment and after the
credit of Equity Shares to the beneficiary account with the Depository Participant, respectively
Lock-up For details in relation to lock-up, please see the section entitled “Placement – Lock-up” on page 179
for a description of restrictions on our Bank in relation to Equity Shares
Transferability
Restrictions
The Equity Shares being Allotted pursuant to this Issue shall not be sold for a period of one year
from the date of Allotment, except on the floor of the Stock Exchanges. For further details, please
see the section entitled “Transfer Restrictions and Purchaser Representations” on page 186
Use of Proceeds The gross proceeds from the Issue will be approximately `25,000 million.
The net proceeds from the Issue, after deducting fees, commissions and expenses of the Issue, will
be approximately `24,650 million. For details, please see the section entitled “Use of Proceeds” on
page 71.
Risk Factors For details, please see the section entitled “Risk Factors” on page 41 for a discussion of risks you
34
should consider before deciding whether to subscribe for the Equity Shares.
Pay-In Date The last date specified in the CAN sent to the QIBs for payment of application money.
Closing Date The Allotment is expected to be made on or about June 29, 2017.
Ranking The Equity Shares being issued pursuant to the Issue shall be subject to the provisions of the
Memorandum of Association and Articles of Association and shall rank pari passu in all respects
with the existing Equity Shares, including rights in respect of dividends. Our Shareholders will be
entitled to participate in dividends and other corporate benefits, if any, declared by our Bank after
the Closing Date, in compliance with the Companies Act, 2013, the SEBI Listing Regulations and
other applicable laws and regulations. Our Shareholders may attend and vote in shareholders’
meetings on the basis of one vote for every Equity Share held.
For details, please see the section entitled “Description of the Equity Shares” on page 192.
Security Codes for the
Equity Shares
ISIN: INE171A01029
BSE Code: 500469
NSE Code: FEDERALBNK
35
SELECTED FINANCIAL INFORMATION
The following selected financial data as of and for the years ended March 31, 2017, March 31, 2016 and March 31, 2015 have
been derived from our Standalone Financial Statements and Consolidated Financial Statements included elsewhere in this
Placement Document. The financial data set forth below should be read in conjunction with the sections entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” on page 78 and “Financial Statements” on page 220,
including the schedules and notes thereto, included elsewhere in this Placement Document. Our Standalone Financial Statements
and Consolidated Financial Statements were prepared in accordance with Indian GAAP and provisions of Banking Regulation
Act, 1949, read with relevant guidelines and directions issued by RBI, the Companies Act read along with rules thereunder. The
historical results do not necessarily indicate results expected for any future period.
Indian GAAP differs in certain material respects from US GAAP and IFRS. Neither the information set forth below nor the format
in which it is presented should be viewed as comparable to information prepared in accordance with IFRS or other accounting
principles.
Standalone Summary Balance Sheet
(` in million)
As at
March 31, 2017
As at
March 31, 2016
As at
March 31, 2015
CAPITAL AND LIABILITIES
Capital 3,448.09 3,437.89 1,713.31
Reserves and Surplus 85,975.73 77,474.28 75,668.04
Deposits 9,76,645.62 7,91,717.07 7,08,249.93
Borrowings 58,973.23 51,145.66 47,418.41
Other Liabilities and Provisions 24,726.65 22,038.81 19,791.11
Total 11,49,769.32 9,45,813.71 8,52,840.80
ASSETS
Cash and Balances with Reserve Bank of India 45,765.68 37,745.39 33,795.43
Balances with banks and money at call and short
notice
28,756.06 16,452.71 14,004.54
Investments 2,81,960.89 2,51,554.94 2,30,024.17
Advances 7,33,362.72 5,80,901.45 5,12,849.91
Fixed assets 4,894.69 5,199.75 4,666.31
Other assets 55,029.29 53,959.47 57,500.44
Total 11,49,769.32 9,45,813.71 8,52,840.80
Contingent liabilities 2,32,351.37 2,02,535.74 1,72,148.24
Bills for collection 25,683.45 15,168.30 12,216.60
36
Standalone Profit and Loss Account
(` in million)
Year ended
March 31, 2017
Year ended
March 31, 2016
Year ended
March 31, 2015
I. INCOME
Interest earned 86,773.84 77,481.59 74,266.44
Other income 10,818.07 8,081.90 8,711.30
Total 97,591.90 85,563.49 82,977.74
II. EXPENDITURE
Interest expended 56,247.44 52,404.48 50,390.59
Operating expenses 22,095.34 18,921.20 16,309.33
Provisions and contingencies 10,941.25 9,481.33 6,220.31
Total 89,284.02 80,807.01 72,920.23
III. PROFIT/LOSS
Net profit for the year 8,307.88 4,756.48 10,057.51
Profit brought forward from Previous Year 10,569.81 10,923.68 7,873.60
18,877.70 15,680.16 17,931.11
IV. APPROPRIATIONS
Transfer to Revenue Reserve 1,314.29 454.01 1,098.71
Transfer to Statutory Reserve 2,076.97 1,189.12 2,516.65
Transfer to Capital Reserve 658.46 63.37 287.56
Transfer to/(from) Investment Reserve Account (144.93) (82.12) 462.77
Transfer to Special Reserve 460.00 320.00 350.00
Dividend (including tax/cess thereon) pertaining to
previous year paid during the year
0.24 1.51 0.21
Proposed dividend - 1,203.29 1,884.64
Tax on proposed dividend - 245.28 383.70
Transfer to Share capital pursuant to issue of Bonus
shares
- 1,715.89 -
Depreciation on Expired assets - - 23.19
Balance carried over to Balance Sheet 14,512.67 10,569.81 10,923.68
Total 18,877.70 15,680.16 17,931.11
Earnings per Share (Face value of `2/- each)
Basic (in `) 4.83 2.77 5.87
Diluted(in `) 4.76 2.75 5.82
37
Standalone Summary Cash Flow Statement
(` in million)
Year ended
March 31,
2017
Year ended
March 31,
2016
Year ended
March 31,
2015
Cash Flow from Operating Activities
Net Profit before taxes 13,064.98 7,196.48 15,210.41
Adjustments for:
Depreciation on Bank's Property 1,221.73 1,054.47 745.95
Depreciation on Investments 242.01 167.43 (934.73)
Amortisation of Premium on Held to Maturity Investments 476.53 353.41 321.11
Provision for Non Performing Investments 53.50 634.19 128.60
Provision / Charge for Non-Performing Assets 4,051.25 5,553.17 2,043.46
Provision on Standard Assets 785.00 295.00 541.00
Withdrawal from floating provision for standard asset - - (127.50)
(Profit)/Loss on sale of fixed assets (net) (0.96) 3.41 (2.43)
Provision for Restructured assets 67.56 (208.60) (552.30)
Provision for Other Contingencies 984.83 600.13 (31.12)
20,946.43 15,649.09 17,342.45
Adjustments for working capital changes:-
(Increase)/ Decrease in Investments (excluding Held to Maturity
Investments)
(8,264.66) (44,185.99) 13,367.86
(Increase)/ Decrease in Advances (1,56,512.51) (73,604.71) (80,532.34)
(Increase)/ Decrease in Other Assets (1,811.78) 1,083.01 (3,151.99)
Increase/ (Decrease) in Deposits 1,84,928.55 83,467.14 1,10,937.11
Increase/ (Decrease) in Other liabilities and provisions 2,299.01 2,775.90 (287.66)
Direct taxes paid (4,015.14) (377.01) (6,038.66)
Net Cash Flow from / (Used in) Operating Activities 37,569.90 (15,192.55) 51,636.76
Cash Flow from Investing Activities
Purchase of Fixed Assets (940.00) (1,602.53) (1,207.82)
Proceeds from Sale of Fixed Assets 24.29 11.22 12.40
(Increase)/ Decrease in Held to Maturity Investments (22,913.32) 21,500.19 (9,014.31)
Net Cash generated / (Used in) Investing Activities (23,829.03) 19,908.88 (10,209.73)
Cash Flow from Financing Activities
Proceeds from Issue of Share Capital (ESOS) 10.20 8.69 2.69
Proceeds from Share Premium 198.17 215.63 107.00
Repayment of Subordinate Debt (2,000.00) - (300.00)
Increase/(Decrease) in Borrowings (Excluding Subordinate Debt) 9,827.57 3,727.26 (36,929.17)
Dividend Paid (Including Tax on Dividend) (1,448.80) (2,269.85) (1,801.38)
Net Cash generated from financing Activities 6,587.13 1,681.72 (38,920.86)
Effect of exchange fluctuation on translation reserve (4.36) 0.09 -
Net Increase in Cash and Cash Equivalents 20,323.64 6,398.13 2,506.18
Cash and Cash Equivalents at the beginning of year 54,198.10 47,799.96 45,293.79
Cash and Cash Equivalents at the end of year 74,521.74 54,198.10 47,799.96
38
Consolidated Balance Sheet
(` in million)
As at
March 31, 2017
As at
March 31, 2016
As at
March 31, 2015
CAPITAL AND LIABILITIES
Capital 3,448.09 3,437.89 1,713.31
Reserves and Surplus 86,065.61 77,203.36 75,289.42
Deposits 9,76,620.76 7,91,709.00 7,08,226.88
Borrowings 63,454.93 52,363.17 48,265.80
Other Liabilities and Provisions 25,267.98 22,343.90 19,923.52
Total 11,54,857.35 9,47,057.32 8,53,418.93
ASSETS
Cash and Balances with Reserve Bank of India 45,782.69 37,769.59 33,819.84
Balances with banks and money at call and short notice 28,763.72 16,461.84 14,024.60
Investments 2,79,122.59 2,49,204.69 2,27,830.36
Advances 7,40,862.30 5,84,197.74 5,15,291.87
Fixed assets 4,923.44 5,236.39 4,726.84
Other assets 55,402.62 54,187.07 57,725.41
Total 11,54,857.35 9,47,057.32 8,53,418.93
Contingent liabilities 2,32,356.85 2,02,541.22 1,72,151.46
Bills for collection 25,683.45 15,168.30 12,216.60
39
Consolidated Profit and Loss Account
(` in million)
Year ended
March 31, 2017
Year ended
March 31, 2016
Year ended
March 31, 2015
I. INCOME
Interest earned 87,832.72 78,262.76 74,949.49
Other income 10,837.71 8,083.58 8,713.66
Total 98,670.44 86,346.34 83,663.15
II. EXPENDITURE
Interest expended 56,525.79 52,593.52 50,563.30
Operating expenses 22,525.01 19,315.97 16,752.09
Provisions and contingencies 11,086.45 9,557.83 6,226.84
Total 90,137.26 81,467.32 73,542.23
III. NET PROFIT FOR THE YEAR 8,533.18 4,879.02 10,120.92
Share in Profit/ (Loss) of Associate 135.49 (14.84) 457.22
IV. CONSOLIDATED NET PROFIT ATTRIBUTABLE TO
GROUP
8,668.67 4,864.19 10,578.14
Balance in Profit and Loss Account brought forward from
previous year
10,224.03 10,494.69 6,936.66
V. AMOUNT AVAILABLE FOR APPROPRIATION 18,892.70 15,358.87 17,514.80
VI. APPROPRIATIONS
Transfer to Revenue Reserve 1,314.29 454.01 1,098.71
Transfer to Statutory Reserve 2,076.97 1,189.12 2,516.65
Transfer to Capital Reserve 658.46 63.37 287.56
Transfer to/(from) Investment Reserve Account (144.93) (82.12) 462.77
Transfer to Special Reserve 460.00 320.00 350.00
Transfer to Reserve under Sec 45 IC of RBI Act 45.06 24.51 12.68
Dividend (including tax/cess thereon) pertaining to previous year
paid during the year
0.24 1.51 0.21
Proposed dividend - 1,203.29 1,884.64
Tax on proposed dividend - 245.27 383.70
Transfer to Share capital pursuant to issue of Bonus shares - 1,715.89 -
Depreciation on Expired assets - - 23.19
Balance carried over to Consolidated Balance Sheet 14,482.61 10,224.02 10,494.69
Total 18,892.70 15,358.87 17,514.80
Earnings per Share (Face value of `2/- each)
Basic (`) 5.04 2.83 6.17
Diluted (`) 4.96 2.82 6.12
40
Consolidated Cash Flow Statement
(` in million)
Year ended
March 31, 2017 Year ended
March 31, 2016 Year ended
March 31,
2015 Cash Flow from Operating Activities
Net Profit before taxes 13,555.25 7,370.26 15,752.95
Adjustments for:
Depreciation on Bank's Property 1,239.13 1,081.72 794.89
Depreciation on Investments 242.01 167.43 (934.73)
Amortisation of Premium on Held to Maturity Investments 476.53 353.41 321.11
Provision for Non Performing Investments 53.50 634.19 128.60
Provision / Charge for Non-Performing Assets 4,051.63 5,555.17 2,039.41
Provision on Standard Assets 800.35 302.34 543.42
Withdrawal from floating provision for standard asset - - (127.50)
(Profit)/ Loss on sale of fixed assets (net) (0.88) 4.49 3.53
(Income) / Loss From Associate (135.49) 14.84 (457.22)
Provision for Restructured assets 67.56 (208.60) (552.30)
Provision for Other Contingencies 984.83 601.22 (44.87)
21,334.41 15,876.48 17,467.29
Adjustments for working capital changes:-
(Increase)/ Decrease in Investments (7,641.12) (44,044.39) 13,226.26
(Increase)/ Decrease in Advances (1,60,716.18) (74,461.05) (80,293.18)
(Increase)/ Decrease in Other Assets (1,964.22) 1,069.38 (2,914.68)
Increase/ (Decrease) in Deposits 1,84,911.76 83,482.12 1,10,936.49
Increase/ (Decrease) in Other liabilities and provisions 2,519.90 2,940.16 (776.30)
Direct taxes paid (4,137.90) (432.06) (6,063.20)
Net Cash Flow from / (Used in) Operating Activities 34,306.64 (15,569.36) 51,582.69
Cash Flow from Investing Activities
Purchase of Fixed Assets (950.25) (1,610.87) (1,211.41)
Proceeds from Sale of Fixed Assets 24.95 15.10 14.94
(Increase)/ Decrease in Held to Maturity Investments (22,913.32) 21,500.19 (9,014.31)
Net Cash generated / (Used in) Investing Activities (23,838.62) 19,904.42 (10,210.78)
Cash Flow from Financing Activities
Proceeds from Issue of Share Capital 10.20 8.69 2.69
Proceeds from Share Premium 198.17 215.63 107.00
Repayment of Subordinate Debt (2,000.00) - (300.00)
Increase/(Decrease) in Borrowings (Excluding Subordinate Debt) 13,091.76 4,097.37 (36,877.56)
Dividend Paid (Including Tax on Dividend) (1,448.81) (2,269.85) (1,801.38)
Net Cash generated from financing Activities 9,851.32 2,051.83 (38,869.25)
Effect of exchange fluctuation on translation reserve (4.36) 0.09 -
Increase/(Decrease) in Cash & Cash Equivalents 20,314.98 6,386.99 2,502.66
Cash and Cash Equivalents at the beginning of year 54,231.43 47,844.44 45,341.79
Cash and Cash Equivalents at the end of year 74,546.41 54,231.43 47,844.44
41
RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider each of the following risk factors and
all other information set forth in this document, including the risks and uncertainties described below, before making an
investment in the equity shares. You should read this section together with "Industry Overview", "Business", "Selected Financial
Information", "Selected Statistical Information", "Regulatory Overview" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" as well as the financial statements, including the notes thereto, and other
financial information included elsewhere in this Placement Document. You should consult your tax, financial and legal advisors
about the particular consequences to you of an investment in the equity shares.
The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties not
presently known to us or that we currently believe to be immaterial may also materially adversely affect our business, prospects,
financial condition and results of operations and cashflows. If any or some combination of the following risks, or other risks that
we do not currently know about or believe to be material, actually occur, our business, financial condition and results of
operations and cashflows could suffer, the trading price of, and the value of your investment in, our equity shares could decline,
and you may lose all or part of your investment. In making an investment decision, you must rely on your own examination of us
and the terms of this Issue, including the merits and risks involved.
This Placement Document also contains forward-looking statements that involve risks and uncertainties. Our results could differ
materially from such forward-looking statements as a result of certain factors, including the considerations described below and
elsewhere in this document.
Risks Relating to our Business
A substantial portion of our Bank's branches are located in the state of Kerala, making us vulnerable to risks associated with
having geographically concentrated operations.
A substantial portion of our Bank's branches, and consequently deposits and advances, are located in Kerala or from customers in
Kerala. As of March 31, 2017, 47.92% of our Bank's branches were located in the state of Kerala, and 35.43% of our total
advances were given by branches located in Kerala. Though the entire branch network of our Subsidiary is situated outside the
state of Kerala, their branch network is less than 10% of total branches of the Bank.
Because of this concentration in Kerala, the success and profitability of our operations may be disproportionately exposed to
regional factors. These factors include, among others: (i) the growth in population, income levels, and deposits in Kerala, (ii) the
continued attraction of business ventures to Kerala, (iii) general economic conditions in Kerala, (iv) laws and regulations in
Kerala, (v) increased competition in Kerala, and (vi) other developments including political unrest, depreciation of goods, floods
and other natural calamities. Adverse developments in any of the above factors would affect us more than they might affect banks
with greater geographic diversity. Any one of these events may require us to close branches, temporarily shut down operations, or
lower lending levels, and may result in a material adverse change in our business, financial condition, results of operations and
cash flows.
We are exposed to borrower and industry concentrations, and a default by any large borrower, a deterioration in the performance of any of the industry sectors in which we have significant exposure would adversely affect the quality of our portfolio, and our ability to meet capital requirements could be jeopardized.
As of March 31, 2017, aggregate advances (both funded and non-funded) to our Bank's ten largest borrowers amounted to
`72,620.73 million representing 81.09% of our Bank's total Tier I and Tier II capital. Some of our largest borrowers are large
corporates with highly leveraged balance sheets and any default by them would have significant impact on profitability. Our
Bank's aggregate advances (funded and non-funded) to its single largest borrower as of March 31, 2017 amounted to `14,000
million, representing 15.63% of its Tier I and Tier II capital. If any of them were to become non-performing, our net profits would
decline and, due to the magnitude of the exposures, our ability to meet capital requirements could be jeopardised.
As of March 31, 2017, our Bank's largest industry concentration based on outstanding advances included (among others) 4.89% in
infrastructure (including 0.92% in energy), 2.07% in basic metal and metal products (including 1.57% in iron and steel), 1.18% in
textiles and 1.06% in chemicals and chemical products. As of March 31, 2017, our total NPAs in these top industries were 19.23%
in basic metal and metal products (being `2,942.84 million), 10.60% in textiles (being `926.37 million), 2.35% in infrastructure
(being `850.53 million) and 0.58% in chemicals and chemical products (being `45.54 million) and the gross NPA of the Bank
amounted to `17,270.53 million.
Industry specific difficulties in these or other sectors may increase our level of non-performing customer assets. As of March 31,
2017, total advances to priority sector amounted to `205,436.79 million, of which `97,463.96 million was for agricultural
purposes. The government may waive off agricultural loans which may influence future repayment of existing loans and increase
our non-performing assets in our agriculture portfolio. If we experience a downturn in an in which we have concentrated
exposure, our net profits will likely decline significantly and our financial condition may be materially adversely affected.
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A decline in NRI deposits or loan repayments could have a material adverse effect on our business, financial condition, results
of operations, and prospects.
We generate a significant portion of our funding from NRIs, both in the form of deposits as well as loan repayments. As of March
31, 2017, 39.50% of our total deposits were from NRIs. In addition, we also lend to NRIs based on their income abroad. Our NRI
loans include NRI home loans and NRI loans against property, amongst others and such loans expose us to various global
economic factors. If we are unable to continue attracting deposits or loan repayments from NRIs or their family members, it could
have a material adverse effect on our business, financial condition, results of operations, and prospects.
An increase in our portfolio of non-performing assets may materially and adversely affect our business and results of operations.
Our management of credit risk involves having appropriate credit policies, underwriting standards, approval processes, loan
portfolio monitoring, collection and remedial management and an overall architecture for managing credit risk. If the credit
quality of our creditors, the growth of our loan portfolio or our provisioning levels deteriorate due to various factors, this could
have a material adverse effect on our business, results of operations, financial condition and prospects. Although we have credit
monitoring and risk mitigation policies and procedures in place, these policies and procedures may not be accurate, properly
designed, or appropriately implemented, and we could suffer material credit losses. For example, if the value of the collateral
securing our credit portfolio is insufficient (including through a decline in its value after the original taking of such collateral) or if
we face practical or legal impediments in enforcing collateral, then we will be exposed to greater credit risk and an increased risk
of non-recovery if related credit exposures fail to perform. In addition, even if our policies and procedures are accurate and
appropriate, we may not be able to anticipate future economic or financial developments or downturns, which could lead to an
increase in our NPAs.
Due to the Government of India's demonetization policy, the RBI allowed banks to defer the downgrading of an account (across
certain loans) that was standard on November 1, 2016 and would have become sub-standard assets for dues payable during the
period from November 1, 2016 to December 31, 2016 by 60 or 90 days, depending on the kind of loan. The Bank was able to
defer the downgrade of eligible accounts as a result of this dispensation beyond March 31, 2017. The downgrade of such accounts
based on their overdue position would happen for the first time in our financial statements as of June 30, 2017 (which may result
in a material increase in our NPAs reported as of June 30, 2017). Furthermore, our NPA increase in fiscal 2016 was due to weak
economic conditions, which affected the asset quality of India's banking industry in general. The weak oil prices in fiscal 2016
also affected our NPAs due to our large customer base in the Gulf Cooperation Council ("GCC"). An increase in NPAs due to this
or other reasons might require us to increase our provisions, which could materially adversely affect our net profits and financial
position.
Provisions for NPAs are created by a charge to our profit and loss account and are currently subject to minimum provision
requirements, linked to aging of NPAs. In addition to the relevant regulatory minimum provision, we also consider our internal
estimate for loan losses and risks inherent in the credit portfolio when deciding on the appropriate level of provisions. The
determination of an appropriate level of loan losses and provisions involves a degree of subjectivity and requires that we make
estimates of current credit risks and future trends, all of which may be subject to material changes. Any incorrect estimation of
risks may result in our provisions not being adequate to cover any further increase in the amount of NPAs or any further
deterioration in our NPA portfolio.
The following table sets forth the classification of our Bank's gross loan assets as at the dates indicated.
(` in millions)
As of March 31,
2015 2016 2017
Standard Assets 508,936.40 571,228.70 723,636.74
Restructured standard assets 26,047.67 13,820.34 12,823.60
Non-performing assets 10,577.32 16,677.67 17,270.53
Sub-standard assets 4,890.08 7,412.23 6,186.82
Doubtful assets 4,797.25 8,028.07 9,613.38
Loss assets 889.99 1,237.37 1,470.33
The Indian banking industry currently faces asset quality and capitalisation problems. The strategic debt restructuring ("SDR")
initiative, allowed creditors to convert whole or part of their debt into equity and take over the management of defaulting
companies. In terms of the SDR initiative, the existing asset classification of the account, as on the date when the joint lenders
agree to undertake SDR, will continue for a period of 18 months from such date assuming this ‘stand-still’ in asset classification
had not been given. After the expiry of such stand-still period, the asset will be classified in accordance with the norms prescribed
by the RBI. As a result, unless these cases are resolved within the time frame prescribed, we may have to reclassify certain assets
from standard to NPA.
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In February 2014, the RBI issued a circular on revitalizing stressed assets in the economy by selling assets to securitization or
reconstruction companies. To incentivize banks to recover appropriate value in respect of their NPAs promptly, the RBI allowed
banks to reverse the excess provision on sale of NPAs if the sale was for a value higher than the net book value to the profit and
loss account in the year the amounts were received. Further, as an incentive for early sale of NPAs, banks were allowed to spread
over any shortfall due to sale value being lower than the net book value over a period of two years for NPAs sold until March 31,
2016. During the fiscal year ended March 31, 2016, the Bank had assigned certain NPAs to asset reconstruction companies and
charged an amount of `354.10 million and `867.30 million to the profit and loss account for the year ended March 31, 2016 and
March 31, 2017, respectively. Although no unamortised balance was carried forward as on March 31, 2017, any such sale of
NPAs during the current or future financial years will have an impact on our profits. See ‘emphasis of matter’ included in the
auditors’ report on standalone and consolidated financials for financial year ended March 31, 2016 in the section titled, “Financial
Statements” on page 220.
A number of factors outside of our control affect our ability to control and reduce NPAs. These factors include developments in
the Indian and global economy, domestic or global turmoil, competition, changes in interest rates and exchange rates and changes
in regulations, including with respect to regulations requiring us to lend to certain sectors identified by the RBI, or the
Government of India. These factors, coupled with other factors such as volatility in commodity markets, decrease in agriculture
productivity and declining business and consumer confidence and decreases in business and consumer spending, could impact the
operations of our customers and in turn impact their ability to fulfil their obligations under the loans we extended to them. In
addition, the expansion of our business may cause our NPAs to increase and the overall quality of our loan portfolio to deteriorate.
If our NPAs increase, we will be required to increase our provisions, which would result in our net profit being less than it
otherwise would be and could materially adversely affect our financial condition and results of operations.
A decline in collateral values or an inability on our part to enforce collateral value may materially adversely affect the value of our loan portfolio and/or increase our write-offs for credit and other losses.
The recoverability and/or value of assets that have been pledged to us as collateral could decline as a result of a deterioration in
global and regional economic conditions or of asset values, or as a result of adverse changes in the credit quality of our borrowers
and counterparties. Among other factors, we consider a mix of cash flow and availability of collateral when making lending
decisions. Many of our loans are secured by collateral, which consists of liens on inventory, receivables and other current assets,
and charges on fixed assets, such as property, movable assets (such as vehicles) and financial assets (such as marketable
securities). In the event of a decline in any of these sectors, some of our loans may exceed the value of their underlying collateral.
Changes in asset prices may cause the value of our collateral to decline.
The decline of particular asset classes such as gold and real estate might affect our portfolios. We provide loans against gold and
we also have indirect exposure to gold where we lend to NBFCs who lend against gold, where a decline in gold prices might
affect our portfolio. Further, a significant share of collateral we hold as security is in real estate and land and buildings. We have
in the past faced instances where we disbursed loans against gold prior to getting the gold valued, and also where gold accepted by
us as collateral turned out to be specious. A decline in the value of collaterals including real estate and fluctuating gold prices
might also affect our portfolio and materially and adversely affect our business, financial condition and results of operations.
As per the Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, the Bank's
exposure is considered as secured if the realisable value of the security is more than 10% of the outstanding exposure, and all
unsecured exposures attract an additional provision of 10% on the outstanding balance. As of March 31, 2017, 83.9% of our
Bank's loans were secured as per the RBI guidelines. We may not be able to realise the full value of the collateral, due to, among
other things, stock market volatility, changes in economic policies of the Indian government, obstacles and delays in legal
proceedings, borrowers and guarantors not being traceable, our records of borrowers' and guarantors addresses being ambiguous
or outdated, defects in the perfection of collateral, and fraudulent transfers by borrowers. In the event that a specialised regulatory
agency gains jurisdiction over the borrower, creditor actions can be further delayed. In addition, the RBI’s guidelines on corporate
debt restructuring specify that for debt amounts of `100 million and above, 60% of the creditors by number and 75% of creditors
by value can decide to restructure the debt and that such a decision would be binding on the remaining creditors. If we own 25%
or less of the debt of a borrower, we could be forced to agree to an extended restructuring of debt which may not be in our
interests. Further, the value of collateral may be less than we expect or may decline. The fluctuations in the prices of gold and real
estate may impact our recovery amount during the enforcement of security resulting in write-offs in our loan amount. Any decline
in the value of the collateral securing our loans, any inability to obtain additional collateral or our inability to realize the value of
collateral may require us to increase our write-offs for credit and other losses. In such a scenario, our losses will increase and our
net profits will decline.
We are subject to macro-economic developments and other market factors, and our results of operations may fluctuate or
decline from period to period.
Our business is subject to a number of macro-economic factors that are outside of our control, and can lead to business and
financial losses in the future, including growth in GDP, inflation, fiscal deficits, disposable household income in India,
international and domestic political and economic conditions, fiscal and monetary policies of governments and central banks, and
changes in interest rates. As a result of (i) the volatility of these macro-economic factors, including exchange rates and interest
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rates, (ii) provisions we make from period to period for non-performing assets, commitments and contingencies (such as for letters
of credit and bank guarantees), (iii) volatility in our trading operations, our results of operations have varied from period to period
in the past and may fluctuate or decrease in the future due to these and other factors. Such fluctuations may also adversely affect
our liquidity. These factors may also make period-to-period comparisons of our operating results less meaningful than they would
be for a business that is not as significantly affected by such factors. Any adverse development in India or global macro economic
conditions could have a material adverse affect on our business, financial condition, results of operations or prospects.
Our primary source of funding is short-term and medium-term deposits, and we may not be able to secure longer-term funding for our operations when we need it or at a competitive cost. Any pre-payment risk or downgrade in our Bank's or India's credit ratings would also have a material adverse effect on our business, financial condition and cash flow.
We meet most of our funding requirements through short-term and medium-term funding sources, primarily in the form of
customer deposits. A portion of our assets have long-term maturities, which sometimes cause funding mismatches. As of March
31, 2017, 67.72% of our Bank's term deposits had a maturity of up to 12 months and 24.54% of the term deposits had a maturity
of over 12 to 36 months and 7.74% of term deposits had a residual maturity of more than 36 months whereas 43.15% of the non-
revolving loans had a maturity of up to than 12 months and 25.57% of the non-revolving loans had a maturity of over 12 to 36
months while 31.28% of the non revolving loans had a residual maturity of more than 36 months. The proportions given above are
based on contractual residual maturity, without considering the historical roll over or premature withdrawal pattern of deposits,
preclosure of loans and advances and delay in repayment of loans. In the past, a substantial portion of our customer term deposits
has been rolled over upon maturity and has been a stable source of funding. However, if a substantial number of our depositors do
not roll over term deposits upon maturity, our liquidity position will be adversely affected. Though retail deposits constitute a
huge portion of our deposit base, we also accept high value deposits depending on the funding requirements. Further, we face a
concentration within retail deposits, in terms of funding from Non Resident Indians and deposits from the state of Kerala. Any
sudden or large withdrawal of such deposits due to any geography specific issues may impact our liquidity position.
See "Risk Factors - A substantial portion of our branches are located Kerala, making us vulnerable to risks associated with
having geographically concentrated operations" and "Risk Factors - A decline in NRI deposits could have a material adverse
effect on our business, financial condition, results of operations, and prospects."
As a result, we may be required to seek more expensive sources of funding to finance our operations, which would result in a
decline in our net profits and have a material adverse effect on our business, financial condition, results of operations and
prospects.
In addition to short and medium-term customer deposits, our other sources of funding are primarily market borrowings such as
certificate of deposits, interbank term deposits, repos, collateralized borrowing and lending obligation borrowings and refinances.
Failure to obtain these sources of funding or replace them with other deposits or borrowings at competitive rates may materially
and adversely affect our business, financial condition and results of operations.
Our cost of funds is sensitive to interest rate fluctuations, which exposes us to the risk of reduction in spreads (which is the
difference between the returns that we earn on our advances and investments and the amounts that we must pay to fund them) on
account of changing interest rates. See "Risk Factors - We are subject to macro-economic developments and other market factors,
and our results of operations may fluctuate or decline from period to period." We also face pre-payment risk on our loans, which
may result in losing future interest and reduced cash flow if we are unable to re-invest the proceeds at similar interest rates. For
certain products, we may not be able to collect prepayment charges. We are also not permitted by the extant regulatory guidelines
to charge foreclosure charges or prepayment penalties on all floating-rate term loans to individual borrowers.
The pricing on our issuances of debt will also be negatively impacted by any downgrade or potential downgrade in our credit
ratings. This would increase our financing costs, and adversely affect our future issuances of debt and our ability to raise new
capital on a competitive basis.
Similarly, any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may
have a similar effect on our ability to raise additional financing and the terms at which such financing is available. This could have
an adverse effect on our business, profitability and the ability to fund our growth. In addition, attracting customer deposits in the
Indian market is competitive. If we fail to sustain or achieve the growth rate of our deposit base, our business may be adversely
affected. The rates that we must pay to attract deposits are determined by numerous factors, such as the prevailing interest rate
structure, competitive landscape, Indian monetary policy and inflation. For example, in October 2011, the Reserve Bank of India
("RBI") deregulated interest rates on savings bank deposits, which resulted in certain banks increasing their interest rates, leading
to increased competition in this area. In the event that our spreads decrease, it may have a material adverse effect on our business,
financial condition, results and cash flow.
There can be no assurance that we will be able to access capital as and when we need it for growth.
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Unless we are able to access the necessary amounts of additional capital, any incremental capital requirement may adversely
impact our ability to grow our business and may even require us to curtail or withdraw from some of our current business
operations. There can also be no assurance that we will be able to raise adequate additional capital in the future on terms favorable
to us, or at all, and this may hamper our growth plans, apart from those that can be funded by internal accruals.
There can be no assurances that we will be able to leverage our customer base in the GCC and any volatility in the GCC could negatively affect our business.
We are exposed to economic and political conditions in certain countries in the GCC, such countries have experienced heightened
levels of political and economical instability, civil unrest and violence in recent years, including diplomatic issues in certain
countries in the GCC. There can be no assurance that such political instability in the GCC will not escalate in the future and that
political instability will not spread to additional countries in the GCC, that further violent activities will not occur or that the
governments of the GCC will be successful in maintaining domestic order and stability. Such uncertainty and unrest may affect
our plans for leveraging our customer base in the GCC.
Emerging markets such as the GCC are subject to rapid change and that the information set forth in this Placement Document may
become outdated relatively quickly. Specific country and regional risks that may have a material impact on the Bank's business,
operating results, cash flows and financial condition include:
political and economic instability;
loss due to civil strife or acts of war;
geopolitical regional conflicts;
overall market liquidity;
government interventions and protectionism;
potential adverse changes in laws and regulatory practices, including legal structures and tax laws;
difficulties in staffing and managing operations;
legal systems which could make it difficult for the Bank to enforce its intellectual property and contractual rights;
restrictions on the right to convert or repatriate currency or export assets;
greater risk of uncollectible accounts and longer collection cycles;
currency fluctuations;
logistical and communications challenges; and
changes in labour conditions.
If the above mentioned events were to materialize, it might, in turn, have a material adverse effect on the Bank's business,
operating results, cash flows and financial condition.
Our business is particularly vulnerable to interest rate risk, and volatility in interest rates could materially adversely affect our net interest margin and our financial performance.
Our results of operations depend to a large extent on the level of our net interest earned as our primary revenue source is interest
earned. Net interest earned is the difference between the total interest earned that we receive on our interest-bearing assets and the
total interest expense that we pay on our interest-bearing liabilities. The differential between the interest rates that we charge on
interest-earning assets and the interest rates that we pay on interest-bearing liabilities, and the volume of such assets and liabilities,
tend to have a significant impact on our results of operations. During fiscal year 2017, 2016 and 2015, interest earned represented
89.02%, 90.64% and 89.58% of our total income (interest earned plus other income) on a consolidated basis. Our loan to deposit
ratio as of March 31, 2017, 2016 and 2015 was 75.86%, 73.79% and 72.76%, respectively. Changes in market interest rates affect
the interest rates we charge on our interest-earning assets differently from the interest rates we pay on our interest-bearing
liabilities and also affect the value of our investments. An increase in interest rates could result in an increase in interest expense
relative to interest earned if we are not able to increase the rates charged on our loans and advances or if the volume of our
interest-bearing liabilities is larger or growing faster than the volume of our interest-earning assets. The differences between
repricing maturities of rate sensitive liabilities and rate sensitive assets, called repricing gaps, exposes our business to interest rate
risk. Our business is also exposed to interest rate risk in the form of non-uniform movement in different interest rate benchmarks
that are used for pricing of our assets and liabilities. As the repricing maturities of our liabilities and assets are spread over
different time periods, we are exposed to interest rate risk in the form of non-parallel movement in yield curves. Such scenarios
would lead to a reduction in our net interest earned and net interest margin. Exposure of our business to interest rate risks as
mentioned above would also impact on the long term economic value of our equity. Further, any inability to competitively price
our loans and credit substitutes could negatively affect our targeted volume growth, which could materially adversely affect our
net profits. The quantum of the changes in interest rates for our assets and liabilities may also be different, leading to a decrease in
the interest margin. The Bank charges an interest rate to our borrowers pegged to the MCLR which has been effective since April
1, 2016. In determining the interest rates to be charged to our borrowers, we consider the type of exposure, credit rating and the
tenor of the loan. The Bank has, at times, priced certain loans lower than the MCLR by linking them to external benchmarks due
to market competition, and we have also charged different interest rates to borrowers operating in the same sectors. As a result of
these factors, fluctuations in interest rates could materially and adversely affect our net interest margin and our results of
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operations.
We operate a defined benefit pension scheme in respect of certain eligible employees. The investments of the superannuation
funds are made in government securities, financial institutitons and other financial products. If interest rates were to fall, our
liabilities under the pension plan will increase, which would impact our profits and financial performance.
Moreover, changes in interest rates could affect our fixed income portfolio and treasury income.
Any failure or material weakness of our internal control system could cause significant operational errors, which would
materially and adversely affect our profitability and reputation.
We are responsible for establishing and maintaining adequate internal measures commensurate with our size and complexity of
our operations. Our internal or concurrent audit functions are equipped to make an independent and objective evaluation of the
adequacy and effectiveness of internal controls on an ongoing basis to ensure that business units adhere to our policies,
compliance requirements and internal circular guidelines. While we periodically test and update, as necessary, our internal control
systems, we are exposed to operational risks arising from the potential inadequacy or failure of internal processes or systems, and
our actions may not be sufficient to guarantee effective internal controls in all circumstances. Given our high volume of
transactions, it is possible that errors may repeat or compound before they are discovered and rectified. Our management
information systems and internal control procedures that are designed to monitor our operations and overall compliance may not
identify every instance of non-compliance or every suspicious transaction. If internal control weaknesses are identified, our
actions may not be sufficient to fully correct such internal control weakness. We face operational risks in our business and there
may be losses due to deal errors, deficiencies in the credit sanction process, settlement problems, errors in computation of NAV,
pricing errors, inaccurate financial reporting, fraud and failure of critical systems and infrastructure. We are in the process of
improving our fraud monitoring systems to rectify identified weaknesses in them. There is no guarantee that our improvements
will be successful, nor that we will be able to monitor or detect frauds that occur. In addition, we carry out certain processes
manually, which may increase the risk that human error, tampering or manipulation will result in losses that may be difficult to
detect. As a result, we may suffer material monetary losses. Such instances may also adversely affect our reputation.
We rely on models for risk analysis to guide our managerial decisions, and any mis-specification, deficiencies or inaccuracies
in the models and data may impact our decision-making and operations.
As part of our ordinary decision making-process, we rely on various models for risk and data analysis. These models are based on
historical data and supplemented with managerial input and comments. These models and the data they analyze may not always be
accurate or adequate to guide our strategic and operational decisions and protect us from risks. Any mis-specification, deficiencies
or inaccuracies in the models or the data might have a material adverse effect on our business, financial condition or results of
operation. As we seek to expand the scope of our operations in newer geographies or new product areas, we also face the risk that
we will be unable to develop risk management policies and procedures that are properly designed for those new geographies or
areas or products or to manage the risks associated with the growth of our existing businesses. Implementation and monitoring
may prove particularly challenging with respect to our expansion and the products that we plan on developing.
We may face risks associated with our large number of branches and widespread network of operations which may adversely affect our business, financial condition and results of operations.
We have a large branch network. As of March 31, 2017, the Bank had a branch network comprising 1,252 bank branches and
1,667 ATMs, as well as more than 7.14 million customers. The Bank's wholly-owned subsidiary has 100 branches. As a
consequence of our large branch network, we may be exposed to certain risks, including, amongst others:
preserving our asset quality as our geographical presence increases and our customer profile changes;
developing and improving our products and delivery channels;
recruiting, training and retaining sufficient skilled personnel;
upgrading, expanding and securing our technology platform;
complying with regulatory requirements such as Know Your Customer ("KYC"); Anti Money Laundering ("AML");
Foreign Exchange Management Act ("FEMA") and Foreign Account Tax Compliance Act ("FATCA") norms;
maintaining high levels of customer satisfaction;
difficulties arising from operating a larger and more complex organization;
difficulties arising from coordinating and consolidating corporate and administrative functions;
delay in the transfer of data amongst various locations;
47
higher technology support costs to achieve last mile connectivity;
operational risks including integration of internal controls and procedures;
failure to efficiently and optimally allocate management, technology and other resources across our branch network;
failure to manage third-party service providers in relation to any outsourced services;
difficulties in the integration of new branches with our existing branch network;
difficulties in supervising local operations from our centralized locations;
difficulties in hiring skilled personnel in sufficient numbers to operate the new branches locally and management to
supervise such operations from centralized locations;
failure to maintain the level of client service at all branches; and
unforeseen legal, regulatory, property, labour or other issues
Any of the above reasons may result in our failure to manage a large branch presence, which may materially and adversely affect
our brand, reputation, financial condition and result of operations.
Our business is highly competitive, which creates significant pricing pressures for us to retain existing customers and solicit new business, and our strategy depends on our ability to compete effectively.
The Indian banking industry is highly competitive. We face strong competition in our business from much larger government
controlled public sector banks, Indian and foreign commercial banks, non-banking financial companies, payment banks, small
finance banks and other financial services companies as well. Public sector banks, which generally have a much larger customer
and deposit base, larger branch networks and Government support for capital augmentation, pose strong competition to us.
Mergers among public sector banks, including because of Government efforts to encourage and facilitate such mergers, may result
in enhanced competitive strengths in pricing and delivery channels for the merged entities. For example, the State Bank of India,
India's largest public sector bank, has merged its five associate banks and Bharatiya Mahila Bank with itself, effective from April
1, 2017. Further, a number of private sector banks in India have a larger customer base and greater financial resources than us,
giving them a substantial advantage by enabling economies of scale and improving organisational efficiencies.
The RBI has liberalised the licensing regime for banks in India and intends to issue licences on an ongoing basis, subject to
meeting the RBI's qualification criteria. The RBI is supportive of creating more specialised banks and granting differentiated
banking licenses such as for payment banks and small finance banks. The RBI also has plans to create wholesale and long-term
finance banks in the near future. In April 2014, the RBI issued in-principle banking licences to two non-banking finance
companies, Infrastructure Development and Finance Company ("IDFC") Limited and Bandhan Financial Services Private
Limited. Both of these non-banking finance companies began operations as a bank during fiscal year 2016. In November 2014, the
RBI released guidelines for licensing of payment banks and for licensing of small finance banks in the private sector. On August
19, 2015 the RBI granted in-principle approval to 11 applicants to set up payment banks. In September 2015, the RBI granted in-
principle licences to ten applicants for small finance banks, most of which are microfinance non-banking finance companies. The
RBI has also released guidelines with respect to a continuous licensing policy for universal banks in August 2016. The RBI has
also put in the public domain, on April 7, 2017, a discussion paper on Wholesale and Long-Term Finance banks. These banks will
focus primarily on lending to infrastructure sector and small, medium and corporate businesses. These banks can provide
refinancing to lending institutions and may operate in the capital markets in the form of aggregators. The banks can also act like
market makers in corporate bonds, credit derivatives and take out financing amongst others.
We also compete with foreign banks with operations in India. In November 2013, the RBI released a framework for the setting up
of wholly owned subsidiaries in India by foreign banks. The framework encourages foreign banks to establish a presence in India
by granting rights similar to those received by Indian banks, subject to certain restrictions and safeguards. Under the current
framework, wholly owned subsidiaries of foreign banks are allowed to raise Rupee resources through issue of non-equity capital
instruments. Further, wholly owned subsidiaries of foreign banks may be allowed to open branches in Tier 1 to Tier 6 centres
(except at a few locations considered sensitive on security considerations) without having the need for prior permission from the
RBI in each case, subject to certain reporting requirements. Any growth in the presence of foreign banks or in foreign investments
in Indian banks may increase the competition that we face and as a result may have a material adverse effect on our business.
If the number of scheduled commercial banks, public sector banks, private sector banks, payment banks, small finance banks, and
foreign banks with branches in the country increases, we will face increased competition in the businesses, which could have a
material adverse effect on our financial condition and results of operations.
In addition, we may face attrition and difficulties in hiring at senior management, specialized functions and other levels due to
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competition from existing banking entities, as well as new banks and banking entities entering the market. Due to such intense
competition, we may be unable to execute our growth strategy successfully and offer competitive products and services, which
would have a material adverse effect on our business, financial condition and results of operations.
The rise of digital platforms and payment solutions may adversely impact our floats and impact our fees, and there may be disintermediation in the loan market by fintech companies.
Through our electronically linked branch network, correspondent bank arrangements and centralized processing, we effectively
provide a nationwide collection, disbursement and payment systems for our clients. Disruption from digital platforms could have
an adverse effect on the cash float and fees that we have traditionally received on such services. We also face threat to our loan
market from newer business models that leverage technology to bring together savers and borrowers. We may not be competitive
in facing up to the challenges from such newer entrants. This may, accordingly, have an adverse impact on our business and
growth strategy.
We face the threat of fraud and cyber attacks targeted at disrupting the services of the Bank, such as hacking, phishing and trojans, and/or theft of sensitive internal Bank data or customer information. This may cause damage to our reputation and adversely impact our business and financial results.
Our systemic and operational controls may not be adequate to prevent adverse impact from frauds, errors, hacking and system
failures. Further, our mobile and internet-based customer applications and interfaces are exposed to being hacked or compromised
by third parties, resulting in thefts and losses to our customers and us. Some of these cyber threats from third parties include: (a)
phishing and trojans – targeting our customers, wherein fraudsters send unsolicited mails to our customers seeking account
sensitive information or to infect customer machines to search and attempt ex-filtration of account sensitive information; (b)
hacking – wherein attackers seek to hack into our website with the primary intention of causing reputational damage to us by
disrupting services; (c) data theft – wherein cyber criminals may attempt to intrude into our network with the intention of stealing
our data or information; and (d) advanced persistent threat – a network attack in which an unauthorized person gains access to our
network and remains undetected for a long period of time with an intention to steal our data or information rather than to cause
damage to our network or organization. The frequency of such cyber threats may increase in future with the increased digitisation
of our services. For example, the Bank has, in fiscal year 2017, detected ransomware on one computer at a credit hub and also
faced a Distributed Denial of Service attack. Not only are we exposed to such risks from our own actions or those of our
employees, but from actions of our third-party service providers, whom we do not control. If we become the target of any of such
cyber attacks, it could materially and adversely affect our business, financial condition and results of operations.
A significant system breakdown or system failure caused by intentional or unintentional acts would have an adverse impact on our
revenue-generating activities and lead to financial loss.
There is also the risk of our customers blaming us and terminating their accounts with us for a cyber-incident that might have
occurred on their own system or with that of an unrelated third party. The RBI on June 2, 2016 issued a framework for cyber-
security for banks, prescribing measures to be adopted by banks to address security risks including putting in place a cyber-
security policy and requiring banks to report all unusual cyber-security incidents (whether successful or attempts) to the RBI. Any
cyber-security breach could also subject us to additional regulatory scrutiny and expose us to civil litigation and related financial
liability.
Our reputation could be adversely affected by fraud committed by employees, customers or outsiders, or by our perceived
inability to properly manage fraud-related risks.
The Bank's current core banking application software is a centralized core banking solution that has been purchased from an
information technology company. As the software is marketed as a common solution for Indian banks, there can be functional
requirements specific to us that may not be addressed adequately and we may have to rely on internal resources for developing
alternate solutions. We could incur losses, including losses from errors or fraud if such internally developed customisation proves
to be inadequate. For example, due to logical errors in customisation, there were instances where interest subvention for some
agriculture loan accounts was granted in excess of the eligible amount. The excess paid amount was identified and recovered, and
the bug in the software was rectified. If the software is unable to take care of the new operational requirements prescribed by the
regulators or if employees who have developed skills relating to such application software leave their employment with us, we
may have to rely on third-party software, the cost of which may be significantly higher. In addition, there can be no assurance that
the network infrastructure required for communication with the centralized system can be expanded in scale to meet any increase
in the volume of our transactions
We depend on our brand recognition, and failure to maintain and enhance awareness of our brand would adversely affect our
ability to retain and expand our base of customers.
We believe that the strong reputation of the "Federal" and "Federal Bank" brand names are essential to our business especially in
Kerala where we have been operating since 1931. As such, any damage to our reputation or that of the "Federal" or "Federal
49
Bank" brand names could substantially impair our ability to maintain or grow our business, or have a material adverse effect on
our business, financial condition and results of operations.
If we fail to maintain this brand recognition with our target customers due to any issues with our product offerings, a deterioration
in service quality, or otherwise, or if any premium in value attributed to our business or to the brands under which our services are
provided declines, market perception and customer acceptance of our brands may also decline. We also distribute third party
products via partnerships with external organizations whom we have limited control over. Any negative news affecting such
external organizations might also affect our reputation and brand value. In such an event, we may not be able to compete for
customers effectively, and our business, financial condition and growth prospects may be materially and adversely affected.
In addition, any unauthorized or inappropriate use of our brand, trademarks and other related intellectual property rights by others,
including third party distributors of our products, in their corporate names or product brands or otherwise could harm our brand
image, competitive advantages and business and dilute or harm our reputation and brand recognition. Further, if a dispute arises
with respect to any of our intellectual property rights or proprietary information, we will be required to produce evidence to
defend or enforce our claims, and we may become party to litigation, which may strain our resources and divert the attention of
our management. We cannot assure you that any infringement claims that are material will not arise in the future or that we will be
successful in defending any such claims when they arise.
Our efforts to protect our intellectual property or proprietary information and the measures we take to identify potential
infringement of our intellectual property may not be adequate to detect or prevent infringement, misappropriation or unauthorized
use. The misappropriation or duplication of our intellectual property or proprietary information may disrupt our business, distract
management and employees, reduce revenues and increase expenses. In addition, we may also become subject to infringement
claims. Even if claims against us are not meritorious, any legal, arbitral or administrative proceedings that we may be required to
initiate or defend in this regard may be time-consuming, costly and harmful to our reputation, and there is no assurance that such
proceedings will ultimately be determined in our favour. Furthermore, the application of laws governing intellectual property
rights in India is continuously evolving and there may be instances of infringement or passing-off of our brand in Indian markets.
Our failure to adequately protect our brand, trademarks and other related intellectual property rights may adversely affect our
business, financial condition and results of operations.
Our success depends, in large part, upon our management team and skilled personnel and on our ability to attract and retain such persons.
We are highly dependent on the continued services of our management team, including the efforts of our Managing Director &
CEO and two Executive Directors. We comply with the RBI guidelines on Fit & Proper Criteria for Directors, relevant provisions
of the Banking Regulation Act 1949 regarding Board composition, and other applicable provisions of the Companies Act, 2013
and SEBI Listing Regulations.
We are also dependent on our experienced members of our Board of Directors and Senior Management. See the section "Board of
Directors and Senior Management" for details of our Board of Directors and Senior Management. Our future performance is
dependent on the continued service of these persons. Our Code of Corporate Governance, based on guidelines from the RBI,
recommends a retirement age of 70 years old. The RBI also mandates certain requirements (including qualification and experience
requirements) for directors who sit on the board of banks, such requirements will make it more difficult for us to replace our
directors when we have to. We may not be able to replace our Board of Directors with similarly experienced professionals, which
could materially and adversely impact the quality of our management and leadership team.
Our employment agreements with our management team do not obligate them to work for us for any specified period and do not
contain non-compete or non-solicitation clauses in the event of termination of employment. Further, we do not maintain any "key
man" insurance. If one or more of these key personnel are unwilling or unable to continue in their present positions, we may not
be able to replace them with persons of comparable skills and expertise.
We also face a continuing challenge to hire and assimilate a number of skilled personnel. Competition for management and other
skilled personnel in our industry is intense, and we may not be able to attract and retain the personnel we need in the future. The
loss of key personnel or our inability to replace key personnel may restrict our ability to grow, to execute our strategy, to raise the
profile of our brand, to raise funding, to make strategic decisions and to manage the overall running of our operations, which
would have a material adverse impact on our results of operations and financial position.
Our business and financial results could be impacted materially by adverse results of legal proceedings.
There are outstanding legal proceedings involving our Bank, our Subsidiary and our Directors which are primarily incidental to
our business and operations. These proceedings are pending at different levels of adjudication before various courts, tribunals,
quasi-judicial authorities and appellate tribunals. For further details of material legal proceedings involving our Bank, our
Subsidiary and our Directors, see "Legal Proceedings" on page 212 and for details of our contingent liabilities, see "Financial
Statements" on page 220. If any new developments arise, such as a change in the applicable laws or rulings against us by appellate
courts or tribunals, we may need to make provisions in our financial statements that could increase our expenses and current
50
liabilities.
We cannot assure you that these legal proceedings will be decided in our favour, or that no further liability will arise out of these
proceedings. Further, such legal proceedings could divert management time and attention and consume financial resources. Any
adverse outcome in any of these proceedings may adversely affect our profitability, reputation, business, results of operations and
financial condition.
For more information, please refer to "Legal Proceedings"
We may breach third-party intellectual property rights.
We may be subject to claims by third parties, both inside and outside India, if we breach their intellectual property rights by using
slogans, names, designs, software or other such rights that are of a similar nature to the intellectual property these third parties
may have registered or are using. We might also be in breach of such third-party intellectual property rights due to accidental or
purposeful actions by our employees where we may also be subjected to claims by such third parties.
Any legal proceedings that result in a finding that we have breached third parties' intellectual property rights, or any settlements
concerning such claims, may require us to provide financial compensation to such third parties or stop using the relevant
intellectual property (including by way of temporary or permanent injunction) or make changes to our marketing strategies or to
the brand names of our products, any of which may have a material adverse effect on our business, prospects, reputation, results of
operations and financial condition.
We rely on third-party service providers who may not perform their obligations satisfactorily or in compliance with law.
We enter into outsourcing arrangements with third party vendors, separate employees and independent contractors, in compliance
with the RBI guidelines on outsourcing. These vendors, employees and contractors provide services that include, among others,
cash management services, software services, client sourcing, debt recovery services, certain back office operations and call centre
services. We cannot guarantee that there will be no disruptions in the provision of such services or that these third parties will
adhere to their contractual obligation. If there is a disruption in the third-party services, or if the third-party service providers
discontinue their service agreement with us, our business, financial condition and results of operations will be adversely affected.
In case of any dispute, we cannot assure you that the terms of such agreements will not be breached, which may result in litigation
costs. Such additional cost, in addition to the cost of entering into agreements with third parties in the same industry, may
materially and adversely affect our business, financial condition and results of operations. The "Guidelines on Managing Risks
and Code of Conduct in Outsourcing of Financial Services by Bank" issued by the RBI places obligations on banks, its directors
and senior management for ultimate responsibility for the outsourced activity. Private banks in India are required to ensure that
their service provider employs the same high standard of care in performing the services as would be employed by the banks, if
the activities were conducted within the banks and not outsourced. Banks are also required to provide prior approval for use of
subcontractors by outsourced vendor and to review the subcontracting arrangements and ensure that such arrangements are
compliant with aforementioned RBI guidelines. Legal risks, including actions being undertaken by the RBI, if our third-party
service providers act unethically or unlawfully, could materially and adversely affect our business, financial condition and results
of operations.
We do not own the premises at a majority of our branches, delivery centres or offices from which we operate.
We do not own a majority of the premises in which our branches, delivery centres and other office premises are situated. We
cannot assure you that we will have the right to occupy our leased premises in the future, which may impair our operations and
could materially and adversely affect our business, results of operations and financial condition.
Furthermore, some of our lease agreements and leave and license agreements may not be adequately stamped or registered with
the registering authority of the appropriate jurisdiction. An instrument not duly stamped, or insufficiently stamped, shall not be
admitted as evidence in any Indian court or may attract a penalty as prescribed under applicable law, which could adversely affect
the continuance of our operations and business.
The majority of our offices, branches, ATMs and marketing outlets are located on premises leased from third parties, which
require renewal or escalations in rentals from time to time during the lease period. If we are unable to renew the relevant lease
agreements, or if such agreements are renewed on unfavourable terms and conditions, we may be required to relocate operations
and incur additional costs in such relocation. We may also face the risk of being evicted in the event that our landlords allege a
breach on our part of any terms under these lease agreements. This may cause a disruption in our operations or result in increased
costs, or both, which may materially and adversely affect our business, financial condition and results of operations in respect of
such defaulting premises.
Our insurance coverage may not be adequate to protect us against all potential losses, which may have a material adverse
effect on our business, financial condition and results of operations.
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Our operations are subject to various risks inherent in the banking industry, as well as fire, theft, robbery, earthquake, flood, acts
of terrorism and other force majeure events. Our insurance cover includes, among other things, group savings linked insurance
scheme, group term assurance plan and group personal accident insurance policy. We maintain insurance for our operations in
India through third party insurers in India. None of our insurance policies are assigned in favour of any third party. We may not
have identified every risk and further may not be insured against every risk, including operational risk that may occur and the
occurrence of an event that causes losses in excess of the limits specified in our policies, or losses arising from events or risks not
covered by insurance policies or due to the same being inadequate, could materially harm our financial condition and future
results of operations. There can be no assurance that any claims filed will be honoured fully or timely under our insurance policies.
Also, our financial condition may be affected to the extent we suffer any loss or damage that is not covered by insurance or which
exceeds our insurance coverage. In addition, we may not be able to renew certain of our insurance policies upon their expiration,
either on commercially acceptable terms or at all.
Certain of our historical corporate records in connection with the allotment of our Equity Shares are not traceable.
We are unable to trace corporate records relating to allotments of our Equity Shares made during the period commencing from our
incorporation until 2006 including prescribed forms required to be filed with the Registrar of Companies by us. Accordingly, the
information in relation to such allotments included under the section entitled “Capital Structure” on page 73 of this Placement
Document has not been independently verified. We cannot assure you that these documents will be available in the future or that
we will not be subject to any penalty imposed by the competent regulatory authorities in this respect.
Deficiencies in the accuracy and completeness of information about our customers and counterparties may adversely impact us.
We rely on the accuracy and completeness of information about our customers and counterparties, and on representations by them
or third parties as to the accuracy and completeness of such information, while carrying out transactions with these entities or on
their behalf. For example, when deciding whether or not to extend credit to a customer, we may rely on reports of independent
auditors with respect to the financial statements of the customer and other field verification reports from various agents. We also
rely on credit ratings and bureau scores assigned to our customers. Our financial condition and results of operations could be
negatively impacted by such reliance on information that is inaccurate or materially misleading. This may affect the quality of
information available to us about the credit history of our borrowers, especially individuals and small businesses. As a
consequence, our ability to effectively manage our credit risk may be adversely affected.
Our financial performance may be materially and adversely affected by an inability to generate and sustain other income.
In fiscal year 2017, 2016 and 2015 we generated other income, which includes primarily commission, exchange income, profit on
sale of investments and other miscellaneous income including recoveries in assets written off, of `10,837.71 million, `8,083.58
million and `8,713.66 million respectively. This represents 10.98%, 9.36% and 10.42% of our total income for fiscal year 2017,
2016 and 2015.
We generate a majority of our other income from commission. We are facing various pressures in generating commission income,
which may result in reduced margins going forward. In particular, the premiums and fee structures that we use in our business
may be limited by existing and upcoming regulations, which may result in our being paid less overall for our services and
products. Moreover, the Indian financial services sector is facing increasing competition, which might further reduce the income
that we generate. There can be no assurance that we will be able to sustain current levels of income from, or effectively manage
the risks associated with, our businesses in the future.
Further, as part of our growth strategy, we have been diversifying and expanding our product and service offerings to retail
customers in order to build a more balanced portfolio. New initiatives, products and services entail a number of risks and
challenges, including risks relating to execution, the failure to identify new segments, the inability to attract customers and the
inability to make competitive offerings. If we are unable to successfully diversify our products and services while managing the
related risks and challenges, returns on such products and services may be less than anticipated, which may materially and
adversely affect our business, financial condition and results of operations.
Any worldwide financial instability could influence the Indian economy and affect our business.
A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility in the Indian
financial markets and indirectly in the Indian economy in general. Any worldwide financial instability could have a negative
influence on the Indian economy and on other economies in which our customers are located. For example, the fall in oil prices
has had an adverse impact on the GCC economies which in turn adversely impacted some of our customers and was partially
responsible for an increase in our NPAs from fiscal year 2015 to fiscal year 2016. In response to such developments, legislators
and financial regulators in various jurisdictions, including India, have implemented several policy measures designed to add
stability to the financial markets. On June 14, 2017, the United States Federal Reserve increased interest rates from 1.00% to
1.25%, the third such increase in seven months, which will lead to an increase in borrowing costs in the United States and may in
turn impact global borrowing. Furthermore, in several parts of the world, there are signs of increasing retreat from globalisation of
52
goods, services and people, as pressure for the introduction of a protectionist regime is building and such developments could
adversely affect the Indian economy. However, the overall impact of these and other legislative and regulatory efforts on the
global financial markets is uncertain, and they may not have the intended stabilising effects. In the event that the current adverse
conditions in the global credit markets continue or if there are any significant financial disruption, this could have an adverse
effect on our business, financial condition, results of operations and the trading price of the equity shares.
There is a risk that a systemic shock could occur that causes an adverse impact on domestic or global financial systems. During
the past decade the financial services industry and capital markets have been, adversely affected by market volatility, global
economic conditions and political developments. A global shock could result in currency and interest rate fluctuations and
operational disruptions that negatively impact us. Any such market and economic disruptions could adversely affect financial
institutions and demand for the products and services we provide may decline, thereby reducing our earnings. These conditions
may also affect the ability of our borrowers to repay their loans or our counterparties to meet their obligations, causing us to incur
higher credit losses. These events could also result in the undermining of confidence in the financial system, reducing liquidity,
impairing our access to funding and impairing our customers and counterparties and their businesses. Alternatively, these events
could lead other Indian banks to fail, which could in turn affect our own financial position. If any of the above were to occur, our
business prospects, financial performance or financial condition could be adversely affected. The nature and consequences of any
such event are difficult to predict and there can be no certainty that we could respond effectively to any such event.
Our hedging strategies may not be successful in preventing all risk of losses.
We may utilize a variety of financial instruments, such as derivatives, interest rate swaps, futures and forward contracts to seek to hedge against any declines in our assets as a result of changes in currency exchange rates, certain changes in the equity markets and market interest rates and other events. Hedging transactions may also limit the opportunity for gain if the value of the hedged positions should increase, it may not be possible for us to hedge against a change or event at a price sufficient to fully protect our assets from the decline in value of the positions anticipated as a result of such change. In addition, it may not be possible to hedge against certain changes or events at all. While we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, or the risks posed by the occurrence of certain other events, unanticipated changes in currency or interest rates or the non-occurrence of other events being hedged may result in our poorer overall performance than if we had not engaged in any such hedging transaction. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the position being hedged may vary. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between such hedging instruments and the positions being hedged. Such imperfect correlation may prevent us from achieving the intended hedge or expose us to additional risk of loss.
Our treasury income, debt investment portfolio and derivatives portfolio are exposed to risks relating to mark-to-market
valuation, illiquidity, credit risk and income volatility.
The Bank had a debt investment portfolio available for sale of `79,279.17 million as of March 31, 2017, which mainly comprises
of fixed-rate bonds. We have put in place different limits and controls over investment portfolio exposures, like the modified
duration and price variation per basis point ("PVBP") tests to manage risks in the Bank's investments, but in the event interest
rates rise, our portfolio will be exposed to the adverse impact of the mark-to-market valuation of such bonds. Any rise in interest
rates leading to a fall in the market value of such debentures or bonds may materially and adversely affect our business, financial
condition and results of operations. We face income volatility due to the illiquid market for the disposal of some of debt
investment portfolio.
Income from our sale of investments was 3.16%, 3.78% and 7.72% of our total net income (which comprises net interest income
plus other income) on a standalone basis for fiscal year 2017, 2016 and 2015.
Our income from our treasury operations is subject to volatility due to, among other things, changes in interest rates and foreign
currency exchange rates as well as other market fluctuations. For example, an increase in interest rates may have a negative
impact on the value of certain investments such as Government securities and corporate bonds and may require us to mark down
the value of these investments on our balance sheet and recognize a loss on our income statement. Similarly, our derivative
portfolio is subject to fluctuations in interest rates and foreign exchange rates, and any movement in those rates may require us to
mark down the value of our derivatives portfolio. While we invest in corporate debt instruments as part of our normal business,
we are exposed to risk of the issuer defaulting on its obligations. Changes in corporate bond spreads also affect valuations and
expose us to risk of valuation losses. Although we have risk and operational controls and procedures in place for our treasury
operations, such as sensitivity limits, position limits, stop loss limits and exposure limits, that are designed to mitigate the extent
of such losses, there can be no assurance that we will not lose money in the course of trading on our fixed income book in held
for trading and available-for-sale portfolio. Any such losses could materially and adversely affect our business, financial
condition and results of operations.
Our ability to restructure our loans and NPAs and enforce collateral and security is subject to inter-creditor arrangements with other lenders, various regulations and multiple regulators with concurrent jurisdiction, which may impact the timing of our enforcement actions as well as the total amount we recover.
Our Bank's total gross standard restructured advances as on March 31, 2017, 2016 and 2015 were `12,823.60 million, `13,820.34
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million and `26,047.67 million, respectively, on a standalone basis. We restructure assets based on a borrower’s potential to
restore its financial health. However, there can be no assurance that borrowers will be able to meet their obligations under
restructured advances as per regulatory requirements and certain assets classified as restructured may turn delinquent. Any
resulting increase in delinquency levels from restructured standard assets may adversely impact our business, financial condition
and results of operations. We also have investments in security receipts arising from the sale of non-performing assets to asset
reconstruction companies. There can be no assurance that asset reconstruction companies will be able to recover these assets and
redeem our investments in security receipts and that there will be no reduction in the value of these investments.
In addition to the debt recovery and security enforcement mechanisms available to lenders under DRT Act and the SARFAESI
Act, the RBI provides for various mechanisms that may be adopted by banks to deal with stressed assets. These include, the
Scheme for Sustainable Structuring of Stressed Assets, Corporate Debt Restructuring and Strategic Debt Restructuring Scheme.
The RBI is active in its identification, classification and recovery of NPAs. Very recently, the Indian parliament enacted the
Insolvency and Bankruptcy Code, 2016 to provide a consolidated framework to address the concerns of lenders and to provide
corporate debtors with an exit mechanism. Additionally, the Banking Regulation (Amendment) Ordinance, 2017 promulgated on
May 4, 2017 states that the central Government may by order authorize the RBI to issue directions to banking companies to
initiate insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. Further, the RBI may issue directions to
banking companies for the resolution of stressed assets.
However, there can be no assurance that these regulatory measures will have a favourable impact on our efforts to recover NPAs.
Any failure to recover the expected value of collateral would expose us to potential loss. Banks in India are also required to share
data with each other on certain categories of special mention accounts, set up joint lenders’ forums and formulate action plans for
resolution of these accounts. Failure to do so may result in accelerated provisioning for such cases. Even if an accelerated
provision were made, there is no reassurance that we will be able to recover our NPAs.
A delay in the resolution of stressed assets and increased provisioning norms may adversely affect our business, results of
operations and financial condition.
Resolution of large borrowers' accounts which are facing severe financial difficulties may require coordinated deep financial
restructuring under the SDR/S4A schemes of the RBI, which often involves a substantial write-down of debt and/or making of
large provisions. While the "stand still" clause in asset classification is permitted in both SDR/S4A process in order to provide
reasonable time to lenders to review the processes involved in the resolution plan, if the account fails to get mandate and
resolution within the time frame stipulated under the guidelines relating to SDR/S4A, then the asset classification will be as per
the extant asset classification norms, assuming there was no such "stand still". The failure of these borrowers to perform as
expected or a significant increase in the level of restructured loans in our portfolio could materially and adversely affect our
business, results of operations and financial condition.
The RBI released a discussion paper on the dynamic loan loss provisioning framework in March 2012, with the objective of
limiting the pro-cyclicality in loan loss provisioning during an economic cycle. The framework proposes to replace existing
general provisioning norms and recommends that banks make provisions on their loan books every year based on their historical
loss experience in various categories of loans. In years where the specific provision is higher than the computed dynamic
provision requirement, the existing dynamic provision balance can be drawn down to the extent of the difference, subject to a
minimum specified level of dynamic provision balance being retained. Any further increase by the RBI of the provisioning
requirements may adversely affect our business, results of operations and financial condition.
Our unsecured loan portfolio is not supported by any collateral that could help ensure repayment of the loan, and in the event of non-payment by a borrower of one of these loans, we may be unable to collect the unpaid balance.
We offer unsecured personal loans to the retail customer segment, including salaried individuals and self-employed professionals.
In addition, we offer unsecured loans to corporates, small businesses and individual businessmen. Unsecured loans are at higher
credit risk for us than our secured loan portfolio because they may not be supported by realisable collateral that could help ensure
an adequate source of repayment for the loan. Although we may obtain direct debit instructions or post-dated checks from our
customers for our unsecured loan products, we may be unable to collect in part or at all in the event of non-payment by a
borrower. Further, any increase in delinquency in our unsecured loan portfolio could require us to increase our provision for credit
losses, which would decrease our earnings.
Our contingent liabilities could adversely affect our financial condition.
As of March 31, 2017, we had total contingent liabilities of `232,356.85 million. Our off-balance sheet liabilities consist of,
among other things, liability on account of forward exchange and derivative contracts, guarantees, acceptances, endorsements and
other obligations and claims not acknowledged as debts. In case of derivative contracts, we face potential losses if counterparties
default due to adverse market movements. If any of these contingent liabilities materialize, our business, financial condition and
results of operations may be materially and adversely affected.
Actuarial valuations of retiral benefits are carried out by an independent actuary and if such valuations are incorrect, it could
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have an adverse effect on our financial condition.
We operate a defined benefit schemes such as gratuity and pension for eligible employees. Under the defined benefit plans, there
is an obligation to pay defined future benefits from the time of retirement. The calculation of the net obligation is based on
valuations made by external actuaries who are qualified to do such valuations and estimations. These valuations rely on
assumptions about a number of variables, including discount rate and mortality rates and salary increases. We and our auditors
rely on the valuations done by actuaries. Actuarial risk arises as estimated value of the defined benefit scheme liabilities may
increase due to changes in actuarial assumptions.
Changes in our pension liabilities and obligations could have a materially adverse effect on us.
We operate a defined benefit pension scheme in respect of certain eligible employees. The pension fund is administered by the
board of trustees and managed by a life insurance company. Should the value of assets to liabilities in respect of the defined
benefit scheme operated by us record a deficit, due to either a reduction in the value of the pension fund assets (depending on the
performance of financial markets) and/or an increase in the pension fund liabilities due to changes in legislation, mortality
assumptions, discount rate assumptions, inflation, the expected rate of return on scheme assets, or other factors, this could result in
us having to make increased contributions to reduce or satisfy the deficits which would divert resources from use in other areas of
our business and reduce our capital resources.
Potential employee strikes could have a materially adverse effect on our business and operations.
Some of our workforce is currently unionized. From time to time, the labour unions for the banking employees organize strikes, as
a result of which, we have been and may in the future be affected by strikes, work stoppages or other labour disputes. We have
had past instances of industry wide strikes by the unions which affected all banks and we have also had past instances of strikes
which only affected our Bank. In the event of a labour dispute, protracted negotiations and strike action may impair our ability to
carry on our day-to-day operations, which could materially and adversely affect our business, future financial performance and
results of operations.
We rely extensively on our information technology systems and the telecommunications network in India, which require
significant investment and expenditure for regular maintenance, upgrades and improvements.
Our information technology systems are a critical part of our business that help us manage, among other things, our risk
management, deposit servicing and loan origination functions, as well as our increasing portfolio of products and services. We are
heavily reliant on our technology systems in connection with financial controls, risk management and transaction processing. In
addition, our delivery channels include ATMs, call centres, mobile applications and the internet. Our offline and online business
channel networks are dependent on a dense, comprehensive telecommunications network in India. While deregulation and
liberalisation of telecommunications laws have prompted the steady improvement in local and long-distance telephone services,
telephone network coverage and accessibility is still intermittent in many parts of India. Failure by the Indian telecommunications
industry to improve network coverage to meet the demands of the rapidly growing economy may affect our ability to expand our
customer base, acquire new customers or service existing customers by limiting access to our services and products. This may
materially and adversely affect our business, financial condition and results of operations.
In addition, our digital platform provides both internet and mobile application based banking services which includes multiple
services such as electronic funds transfer, bill payment services, usage of credit cards on-line, requesting account statements, and
requesting cheque books. These services are highly dependent on our ability to efficiently and reliably process a high volume of
transactions across numerous locations and delivery channels. We place heavy reliance on our technology infrastructure for
processing this data; therefore, ensuring system security and availability is of paramount importance.
Our success will depend, in part, on our ability to respond to new technological advances and emerging banking, capital markets,
and other financial services industry standards and practices on a cost-effective and timely basis. The development and
implementation of such technology entails significant technical and business risks. There can be no assurance that we will
successfully implement new technologies or adapt our transaction processing systems to customer requirements or improving
market standards.
We use our information systems and the internet to deliver services to, and perform transactions on behalf of, our customers and
we may need to regularly upgrade our systems, including our software, back-up systems and disaster recovery operations, at
substantial cost so that it remains competitive. Our hardware and software systems are also subject to damage or incapacitation by
human error, natural disasters, power loss, sabotage, computer viruses and similar events or the loss of support services from third
parties such as internet backbone providers. There is no warranty under our information technology licence agreements that the
relevant software or system is free of interruptions, will meet our requirements or be suitable for use in any particular condition.
While we have faced unscheduled downtime of our IT services in the past, we have not experienced widespread disruptions of
service to our customers. There can be no assurance that we will not encounter disruptions in the future due to substantially
increased numbers of customers and transactions, or for other reasons. Any inability to maintain the reliability and efficiency of
our systems could adversely affect our reputation, and our ability to attract and retain customers. In the event we experience
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system interruptions, errors or downtime (which could result from a variety of causes, including changes in customer use patterns,
technological failure, changes to systems, linkages with third-party systems and power failures), we are unable to develop
necessary technology or any other failure occurs in our systems, this may materially and adversely affect our business, financial
condition and results of operations.
Our financial performance may be materially and adversely affected by an inability to respond promptly and effectively to new technology innovations.
Currently, technology innovations in mobilisation and digitisation of financial services require banks to continuously develop new
and simplified models for offering banking products and services. Disruptive technology and new models of banking or other
financial services that utilise such technology, such as micro-financing and peer-to-peer lending, might also materially and
adversely affect our financial performance.
Such technologies could increase competitive pressures on banks, including us, to adapt to new operating models and upgrade
back-end infrastructure on an ongoing basis. There is no assurance that we will be able to continue to respond promptly and
effectively to new technology developments, be in a position to dedicate resources to upgrade our systems and to compete with
new players entering the market. As such, the new technology innovations may result in a material adverse effect on our business,
financial condition and results of operations.
Banking companies in India, including us, are required to prepare financial statements under the IND-AS for periods beginning from April 1, 2018. The transition to IND-AS is recent and there is no clarity on the effect of such transition on the Bank.
The Ministry of Corporate Affairs, in its press release dated January 18, 2016, issued a roadmap for implementation of IND-AS
for scheduled commercial banks, insurers, insurance companies and non-banking financial companies. This roadmap requires
these institutions to prepare IND-AS based financial statements for the accounting periods beginning from April 1, 2018 onwards
with comparatives for the periods ending March 31, 2018. The RBI, by its circular dated February 11, 2016, requires all scheduled
commercial banks to comply with IND-AS for financial statements beginning April 1, 2018 and banks are also required to be in
preparedness to submit proforma IND-AS financial statements to the RBI from the half-year ended September 30, 2016, onwards.
The RBI does not permit banks to adopt IND-AS earlier than the prescribed timelines. In addition, banks shall disclose in the
annual report, the strategy for IND-AS implementation, including the progress made in this regard from fiscal year 2017 onwards.
While we have been discussing, including with the RBI, the possible impact of IND-AS on our financial reporting, the nature and
extent of such impact is still uncertain. Further, the new accounting standards will change, among other things, our methodology
for estimating allowances for expected loan losses and for classifying and valuing our investment portfolio and our revenue
recognition policy. For estimation of expected loan losses, the new accounting standards may require us to calculate the present
value of the expected future cash flows realisable from our advances, including the possible liquidation of collateral (discounted at
the loan's effective interest rate). This may result in us recognising allowances for expected loan losses in the future which may be
higher than under current Indian GAAP. We have made no attempt to quantify the impact of the differences between Indian
GAAP and IND-AS. There can be no assurance, therefore, that our financial condition, results of operations, cash flows or
changes in shareholders' equity will not appear materially different under IND-AS than under Indian GAAP. The mark to market
requirements required under IND-AS may also impact our revenues and profitability. In our transition to IND-AS reporting, we
may encounter difficulties in the ongoing process of implementing and enhancing our management information systems.
Moreover, there is increasing competition for the small number of IFRS-experienced accounting personnel available as more
Indian companies begin to prepare IND-AS financial statements. Further, there is no significant body of established practice on
which to draw in forming judgments regarding the new system's implementation and application. There can be no assurance that
our adoption of IND-AS will not adversely affect our reported results of operations or financial condition and any failure to
successfully adopt IND-AS could materially adversely affect our business, financial condition and results of operations.
Moreover, although we currently have an internal control framework in place in order to report our financial statements under
Indian GAAP, we will have to modify our internal control framework and adopt new internal controls in order to report under Ind
AS. These new internal controls will require, amongst others, a transition to more model-based evaluation of certain items, as well
as staff that are adequately knowledgeable with Ind AS. There is no guarantee that we will be able to implement effective internal
controls under Ind AS in a timely manner or at all, and any failure to do so could materially adversely affect our financial
condition and results of operations.
Significant differences exist between Indian GAAP and other accounting principles, such as U.S. GAAP and International Financial Reporting Standards ("IFRS"), which investors may be more familiar with and may consider material to their assessment of our financial condition.
Our financial statements are prepared and presented in conformity with Indian GAAP. No attempt has been made to reconcile any
of the information given in this document to any other principles or to base it on any other standards. Indian GAAP differs in
certain significant respects from IFRS, U.S. GAAP and other accounting principles with which prospective investors may be
familiar in other countries. If our financial statements were to be prepared in accordance with such other accounting principles,
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our results of operations, cash flows and financial position may be substantially different. Prospective investors should review the
accounting policies applied in the preparation of our financial statements, and consult their own professional advisers for an
understanding of the differences between these accounting principles and those with which they may be more familiar.
We may undertake strategic investments or divestments, acquisitions and joint ventures, which may not perform in line with
our expectations.
We may, depending on our management's view and market conditions, pursue strategic investments or divestments, undertake
acquisitions and enter into joint ventures. For instance, we have historically entered into partnerships and joint ventures to expand
our service offering. We currently operate a joint venture with IDBI Bank and Aegeas called IDBI Federal Life Insurance
Company Limited where we hold 26% of the shares, the joint venture allows us to market our co-branded life insurance products
in India.
We have, in the past and will in the future continue to, enter into various acquisitions including the acquisition of certain
portfolios or accounts, in its entirety or part thereof, from other banks or financial institutions. Since we may only be able to
undertake limited diligence on the security and collateral of such acquired accounts, there are no assurances that the asset quality,
creditworthiness of such borrowers or the security and collateral provided under these portfolios and accounts are of a similar
level to the existing borrowers, portfolios or accounts of our Bank. This may result in difficulties should any of such portfolios or
accounts enter into default, which might materially and adversely affect our business, financial condition and results of operations.
We cannot assure you that we will be able to undertake or continue such strategic investments or divestments, acquisitions
(including by way of a merger, or share or asset acquisition) or joint ventures in the future, either on terms acceptable to us or at
all. Moreover, we require regulatory approval for acquisitions, and we cannot guarantee that we will receive such approvals in a
timely manner, or at all. Any inability to identify suitable acquisition targets or investments or failure to complete such
transactions may adversely affect our competitiveness or growth prospects.
We may have future plans to be involved in new businesses, including complementary businesses, technologies, services and
products, and we may enter into strategic partnerships or joint ventures with parties that we believe can provide access to new
markets, technology, capabilities or assets.
These new businesses subject us to many risks, and we can provide no assurances that any such ventures will be successful or
meet our expectations. In addition, these new ventures may require regulatory approvals, and we cannot assure you that we will be
able to procure such approvals, either in a timely manner or at all. If these new ventures are not successful, we may suffer losses,
dilute value to shareholders or may not be able to take advantage of appropriate investment opportunities or conclude transactions
on terms commercially acceptable to us. These ventures may require significant investments of capital and we may not realize our
expected (or any) returns on these investments. Our management may also need to divert its attention from our operations in order
to integrate such new businesses, which may affect the quality of operational standards and our ability to retain the business of our
existing customers. We could also have difficulty in integrating the acquired products, services, solutions, technologies,
management and employees into our operations. We may face litigation or other claims arising out of our new businesses,
including disputes with regard to additional payments or other closing adjustments. These difficulties could disrupt our ongoing
business, distract our management and employees, and increase our expenses. As a result, our business, financial condition and
results of operations could be materially adversely affected.
Statistical and industry data in this document may be incomplete or unreliable.
Neither we nor the Book Running Lead Managers nor any person related to this offering have independently verified data
obtained from industry publications and other industry sources referred to in this document and therefore, while we believe such
data to be true, we cannot assure you that such data is complete or reliable. Such data may also be produced on different bases
from those used in the industry publications we have referenced. Therefore, discussions of matters relating to India, its economy
and the industries in which we currently operate are subject to the caveat that the statistical and other data upon which such
discussions are based may be incomplete or unreliable and prospective investors are advised not to place undue reliance on such
data. See the section "Industry Overview" at 112.
Risks Relating to Regulations
We operate in a highly regulated environment and there are numerous laws and regulations impacting many aspects of our
operations, including our capital maintenance, lending limits and the types of business in which we can engage. As such, we are
exposed to a number of risks relating to regulations, including these detailed below. Any change to the existing legal framework
or enactment of stricter laws will require us to allocate additional resources, which may increase our regulatory compliance
costs and divert management attention.
It may also impact our ability to undertake certain types of businesses, which may impact our growth and profits.
We operate in a highly regulated environment
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We operate in a highly regulated environment in which we are regulated by SEBI, RBI, IRDAI, PFRDA, and other domestic and
international regulators. Accordingly, legal and regulatory risks are inherent and substantial in our businesses. As we operate
under licences or registrations obtained from appropriate regulators, we are subject to actions that may be taken by such regulators
in the event of any non-compliance with any applicable policies, guidelines, circular, notifications and regulations issued by the
relevant regulators.
Being regulated, we are subject to regular scrutiny and supervision by their respective regulators, such as regular inspections that
may be conducted by the RBI. The requirements imposed by regulators are designed to ensure the integrity of the financial
markets and to protect investors and depositors. Any non-compliance with regulatory guidelines and directions may result in
substantial penalties and reputational impact, which may affect the price of our Equity Shares. Among other things, in the event of
being found non-compliant, we could be fined or prohibited from engaging in certain business activities.
In addition, we are also exposed to the risk of us or any of our employees being non-compliant with insider trading rules or
engaging in front running in securities markets. In the event of any such violations, regulators could take regulatory actions,
including financial penalties against us and the concerned employees. This could have a materially adverse financial and
reputational impact on us.
Any change to the existing legal or regulatory framework will require us to allocate additional resources, which may increase our
regulatory compliance costs and direct management attention and consequently affect our business.
For more information, see "Risk Factors - Changing laws, rules and regulations and legal uncertainties, including adverse
application of tax laws and regulations, across the multiple jurisdictions we operate in may materially adversely affect our
business and financial performance."
Our Bank may become a "foreign owned" company as per the Consolidated FDI Policy and any investment by our Bank in its
Subsidiary may be subject to Indian foreign investment laws.
Indian companies, which are owned or controlled by non-resident entities, are subject to certain downstream investment
restrictions specified in the Consolidated FDI Policy. Under the Consolidated FDI Policy, an Indian company is considered to be
"owned" by a non-resident entity if 50.0% or more of its equity interest is beneficially owned by non-resident entities. If the non-
resident shareholding in our Bank, reaches or exceeds 50.0%, our Bank would be considered as being "owned" by non-resident
entities under the Consolidated FDI Policy. In such an event, any downstream investment by our Bank may, subject to applicable
regulations, be considered as indirect foreign investment and shall be subject to various requirements specified under the
Consolidated FDI Policy for downstream investments, including sectoral investment restrictions, approval or operating
requirements and pricing guidelines.
Changing laws, rules and regulations and legal uncertainties, including adverse application of tax laws and regulations,
across the multiple jurisdictions we operate in may materially adversely affect our business and financial performance.
Our business and financial performance could be materially adversely affected by changes in the laws, rules, regulations or
directions applicable to us and our business, or the interpretations of such existing laws, rules and regulations, or the promulgation
of new laws, rules and regulations, in India or in the other jurisdictions we operate in.
The governmental and regulatory bodies in India and other jurisdictions where we operate may notify new regulations and/or
policies, which may require us to obtain approvals and licenses from the government and other regulatory bodies, or impose
onerous requirements and conditions on our operations, in addition to those which we are undertaking currently. Any such
changes and the related uncertainties with respect to the implementation of new regulations may have a material adverse effect on
our business, financial condition and results of operations. See "Regulations and Policies" at 148.
Banking Regulations
We operate in a highly regulated environment in which the RBI extensively supervises and regulates all banks. Our business could
be directly affected by any changes in policies for banks in respect of directed lending, reserve requirements, provisioning and
other areas. For example, the RBI could change its methods of enforcing directed lending standards so as to require more lending
to certain sectors, which could require us to change certain aspects of our business. In addition, we could be subject to other
changes in laws and regulations, such as those affecting the extent to which we can engage in specific businesses or those that
reduce our margins through a cap on either fees or interest rates chargeable to our customers or those affecting foreign investment
or ownership requirements in the banking industry, as well as changes in other governmental policies and enforcement decisions,
income tax laws, foreign investment laws and accounting principles. Laws and regulations governing the banking sector may
change in the future and any changes may materially adversely affect our business, our future financial performance and the price
of our equity shares.
The global financial regulations and guidelines developed by bodies such as the Basel Committee on Banking Supervision
("BCBS") would be implemented in India by the RBI, with or without customization. The RBI may also bring in other prudent
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regulations as it may deem fit from time to time, for compliance by banks in India. Such regulations may involve higher
compliance costs and require banks to maintain higher capital ratios, prescribe maintenance of capital to cover those risks that are
hitherto not linked to capital requirements, increase capital coverage for those risks covered at present and other prudential
measures, the inability to cover which may result in the RBI placing restrictions on distribution of profits and expansion of
business. This may impact our ability to achieve planned growth and impact our profitability.
Cash Reserve Ratio ("CRR") and Statutory Liquidity Ratio ("SLR") requirements
Under RBI regulations, we are subject to statutory reserve requirements, namely the CRR and SLR. The CRR currently applicable
to banks in India is 4.0% of a bank's total of demand and time liabilities and banks do not earn any interest on those reserves.
Further, the RBI requires banks to maintain a SLR of 20.00%, effective from June 24, 2017. For fiscal year 2017, the majority of
Government securities held by us comprised fixed rate instruments. In an environment of rising interest rates, the value of
Government securities and other fixed income securities may depreciate. Our large portfolio of Government securities may limit
our ability to deploy funds into higher yielding investments.
Further, a decline in the valuation of our trading book as a result of rising interest rates may adversely affect our financial
condition and results of operations. As a result of the statutory requirements imposed on us, we may be more structurally exposed
to interest rate risk as compared to banks in other countries.
Further, the RBI may increase the CRR and SLR requirements to higher proportions as a monetary policy measure. Any increases
in the CRR from the current levels could affect our ability to deploy our funds or make investments, which could in turn have a
negative impact on our results of operations. We are also exposed to the risk of the RBI increasing the applicable risk weight
requirement for different asset classes from time to time. If we are unable to meet the reserve requirements of the RBI, the RBI
may impose penal interest or prohibit us from receiving any further fresh deposits, which may have a material adverse effect on
our business, financial condition and results of operations.
Tax
The application of various Indian and international sales, value-added and other tax laws, rules and regulations to our services,
currently or in the future, may be subject to interpretation by applicable authorities, and if amended/ notified, could result in an
increase in our tax payments (prospectively or retrospectively) and/or subject us to penalties, which could affect our business
operations. Further, we have incomplete income tax assessments for the previous years and we run the risk of the Income Tax
Department assessing our tax liability that may be materially different from the provision that we carry in our books for the past
periods.
The Government has proposed two major reforms in Indian tax laws, namely the goods and services tax ("GST"), and provisions
relating to the General Anti-Avoidance Rule (the “GAAR”).
The goods and service tax is proposed to be implemented with effect from July 1, 2017 and would replace the indirect taxes on
goods and services such as central excise duty, service tax, central sales tax, state VAT and surcharge currently being collected by
the central and state governments. The GST is expected to increase tax incidence and administrative compliance for Banks.
There are several areas where there is ambiguity in interpreting the GST and we may have to change and adapt our systems and
such changes might have a material adverse effect on our business, financial condition and results of operations.
Furthermore, the GST has reduced the taxation threshold such that companies with an aggregate turnover exceeding `2 million are
now liable for GST. Aggregate turnover would be computed on an all-India basis and shall include both exempted and non-
taxable supplies. Import and inter-state supplies shall be taxable without any threshold limit. Further, central registration has been
replaced with state registration, resulting in additional compliance requirements for the SME sector. With the introduction of GST,
any major impact on the SME and MSME sector may have a material effect on our business, results of operations and financial
conditions.
As regards GAAR, the provisions have been introduced in the Finance Act, 2012 with effect from April 1, 2017. The GAAR
provisions intend to catch arrangements declared as “impermissible avoidance arrangements”, which is any arrangement, the main
purpose or one of the main purposes of which is to obtain a tax benefit and which satisfy at least one of the following tests (i)
creates rights or obligations which are not ordinarily created between persons dealing at arm’s length; (ii) results, directly or
indirectly, in misuse, or abuse, of the provisions of the Income Tax Act, 1961; (iii) lacks commercial substance or is deemed to
lack commercial substance, in whole or in part; or (iv) is entered into, or carried out, by means, or in a manner, which are not
ordinarily employed for bona fide purposes. If GAAR provisions are invoked, then the tax authorities have wide powers,
including denial of tax benefit or a benefit under a tax treaty. As the taxation system is intended to undergo significant overhaul,
its consequent effects on the banking system cannot be determined at present and there can be no assurance that such effects
would not adversely affect our business, future financial performance and the trading price of the Equity Shares.
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The Government of India issued a set of Income Computation and Disclosure Standards (“ICDS”) that has been applied in
computing taxable income and the payment of income taxes since April 1, 2016. ICDS apply to all taxpayers following an accrual
system of accounting for the purpose of computation of income under the heads of “Profits and gains of business or profession”
and “Income from other sources”.
The objective of introducing ICDS is to ensure consistency in the computation and in the reporting of taxable income. Currently,
the computation of our total income is in accordance with the provisions of ICDS. There are no assurances that the ICDS will not
be amended by the authorities. If the ICDS is amended, it might have a material adverse effect on our business, financial condition
and results of operations.
Labour Laws
As of March 31, 2017, we have a total of 11,593 employees. Our full-time employees are employed by us and are entitled to
statutory employment benefits, such as the employees' provident fund scheme or the new pension scheme and the employees'
pension scheme, among others. In addition to our employees, we empanel agencies for our outsourcing requirements and also
engage persons on a contractual basis.
We are subject to various labour laws and regulations governing our relationships with our employees and contractors, including
in relation to minimum wages, working hours, overtime, working conditions, hiring and terminating the contracts of employees
and contractors, contract labour and work permits.
A change of law that requires us to increase the benefits to the employees from the benefits now being provided may create
potentially liability for us. Such benefits could also include provisions which reduce the number of hours an employee may work
for or increase in number of mandatory casual leaves, which all can affect the productivity of the employees.
A change of law that requires us to treat and extend benefits to our outsourced personnel, and personnel retained on a contractual
basis, as being full-time employees may create potentially liability for us. If we fail to comply with current and future health and
safety and labour laws and regulations at all times, including obtaining relevant statutory and regulatory approvals, this could
materially and adversely affect our business, future financial performance and results of operations.
Currently, some of our workforce is unionized and it is possible that future calls for work stoppages or other similar actions could
have a material adverse impact on our day-to-day operations, until disputes are resolved. Any changes or amendments in the
industry wide settlement or periodical wage revisions may materially and adversely affect our business, future financial
performance and results of operations.
We depend on various licenses issued by domestic and foreign regulators for our banking and other operations.
We are also required to maintain various licenses issued by domestic regulators and foreign regulators for our banking and other
operations. Domestically, we maintain our licenses with the RBI, IRDA, PFRDA and SEBI. We also maintain our licenses with
the Central Bank of the UAE for our activities in UAE. Any license we have obtained may be revoked if we fail to comply with
any of the terms or conditions relating to such license, or restrictions may be placed on our operations. Any such failure to obtain,
renew or maintain any required approvals, permits or licenses, may result in the interruption of all or some of our operations,
which could materially and adversely affect our business and results of operations.
In the future, we may be required to obtain new registrations, permits and approvals for any of our or our Subsidiary’s or
Associates existing business, as a result of change in current regulations or for any proposed expansion strategy or diversification
into additional business lines or new financial products. There can be no assurance that the relevant authorities will issue any
permits or approvals required by us in a timely manner, or at all, and/or on favourable terms and conditions. If we fail to obtain
any applicable approvals, licenses, registrations or consents in a timely manner, we may not be able to undertake certain
operations of our business which may affect our business or results of operations. The RBI issues instructions and guidelines to
banks on branch authorisation from time to time. With the objective of liberalising and rationalising the branch licensing process,
the RBI, effective May 18, 2017, granted general permission to domestic banks to open branches in Tier 1 to Tier 6 centres. If we
are unable to perform in a manner satisfactory to the RBI in any of the above areas, it may have an impact on the number of
branches we will be able to open and would in turn have an impact on our future growth and may also result in the imposition of
penal measures by the RBI.
In order to support and grow our business, we must maintain a minimum capital adequacy ratio, and a lack of access to the
capital markets may prevent us from maintaining an adequate ratio.
The RBI requires a minimum capital adequacy ratio of 9.0% of our total risk-weighted assets. Basel III capital regulations are
effective in India from April 1, 2013 are required to be fully implemented by March 31, 2019 in a phased manner. Our capital
adequacy ratio, calculated in accordance with RBI's Basel III guidelines, was 12.39%, 13.93% and 15.46%, on a standalone basis
and 12.64%, 14.27% and 15.76% on a consolidated basis as of March 31, 2017, March 31, 2016 and March 31, 2015,
respectively. Our ability to support and grow our business would become limited if the capital adequacy ratio declines. While we
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may access the capital markets to offset declines in our capital adequacy ratio, we may be unable to access the markets at the
appropriate time or the terms of any such financing may be unattractive due to various reasons attributable to changes in the
general environment, including political, legal and economic conditions.
The Basel Committee on Banking Supervision issued a comprehensive reform package entitled "Basel III: A global regulatory
framework for more resilient banks and banking systems" in December 2010. In May 2012, the RBI released guidelines on
implementation of Basel III capital regulations in India and in July 2015, the RBI issued a master circular consolidating all
relevant guidelines on Basel III. The key items covered under these guidelines include: (i) improving the quality, consistency and
transparency of the capital base; (ii) enhancing risk coverage; (iii) graded enhancement of the total capital requirement;
(iv) introduction of capital conservation buffer and countercyclical buffer; and (v) supplementing the risk-based capital
requirement with a leverage ratio. One of the major changes in the Basel III capital regulations is that the Tier I capital will
predominantly consist of common equity ("Common Equity Tier 1") of the banks which includes common shares, reserves and
stock surplus. Innovative perpetual debt instruments and perpetual non-cumulative preference shares will not be considered a part
of Common Equity Tier I capital. Basel III also defines criteria for Additional Tier I and Tier II instruments to improve their loss
absorbency. The guidelines also set-out criteria for loss absorption through conversion/write-down/write-off of all non-common
equity regulatory capital instruments at the point of non-viability. The point of non-viability is defined as a trigger event upon the
occurrence of which non-common equity Tier I and Tier II instruments issued by banks in India under the Basel III rules may be
required to be written off or converted into common equity. The capital requirement, including the capital conservation buffer,
will be 11.5% once these guidelines are fully phased-in. Domestically, systemically important banks would be required to
maintain Common Equity Tier ("CET") I capital requirement ranging from 0.2% to 0.8% of risk weighted assets. Banks will also
be required to have an additional capital requirement increasing linearly up to 2.5% of the risk weighted assets if the RBI
announces the implementation of countercyclical capital buffer requirements. Additionally, the Basel III Liquidity Coverage Ratio
("LCR"), which is a measure of our high quality liquid assets compared to its anticipated cash outflows over a 30 day stressed
period, was applied in a phased manner starting with a minimum requirement of 60.0% from January 1, 2015 and will reach a
minimum of 100.0% on January 1, 2019.
Besides the LCR, the Basel III rules also envisage the Net Stable Funding Ratio ("NSFR"), which aims to direct banks to fund
their activities with more stable sources of funding on an ongoing structural basis. Draft guidelines for the NSFR were laid down
by RBI as part of liquidity risk management on May 28, 2015. RBI proposes to make NSFR applicable to banks in India from
January 1, 2018. This is expected to limit the reliance on short-term wholesale funding and may potentially increase the cost of
funding and impact profits.
In 2015, we were informed by RBI about the deficiencies in stress tests for our regulatory liquidity requirements as required under
the Basel III framework. There were no penalties imposed upon us in this regard and we have started conducting regular stress
tests on our business pursuant to the requirement. If we are unable to meet any existing or new and revised requirements, our
business, future financial performance and the price of our equity shares could be adversely affected.
The Bank is required to undertake directed lending under RBI guidelines, which may require us to invest in lower-yielding
deposits, which could impact our profitability.
The RBI prescribes guidelines on priority sector lending ("PSL") in India. Under these guidelines, our Bank is required to lend
40.0% of their adjusted net bank credit ("ANBC") or the credit equivalent amount of off-balance sheet exposures ("CEOBE"),
whichever is higher, as defined by the RBI, to certain eligible sectors categorised as priority sectors. The priority sector
requirements are monitored on a quarterly basis to arrive at a shortfall or excess lending in each quarter. A simple average of all
quarters will be arrived at and considered for computation of overall shortfall or excess as at the end of the financial year. Of the
total priority sector advances, the RBI specifies sub-targets for lending towards agricultural advances, micro, small and medium
enterprises, advances to weaker sections and the differential rate of interest scheme.
The Bank has not always been able to meet the lending targets of certain sub-targets of the priority sector lending scheme in the
past and may not be able to meet the overall priority sector lending target or certain sub-targets in the future. For example, as of
March 31, 2017 the Bank had a shortfall in lending to small and marginal farmers, whereby our lending was 7.28% as compared
to a target of 8.0%, and also a shortfall in lending to micro enterprises, whereby our lending was 5.16% as compared to a target of
7.5%. Furthermore, the RBI can make changes to the types of loans that qualify under the PSL scheme or the RBI can change the
sub-target requirements. Changes that reduce the types of loans that can qualify toward meeting our PSL targets could increase
shortfalls under the overall target or under certain sub-targets.
In the case of non-achievement of priority sector lending targets, including sub-targets, we are required to invest in the Rural
Infrastructure Development Fund ("RIDF") established with NABARD and other Funds with NHB/SIDBI/MUDRA Limited. as
decided by the Reserve Bank from time to time. The amount to be deposited, interest rates on such deposits and periods of
deposits, and other terms, are determined by the RBI from time to time. The priority sector guidelines do not lay down any
preferential interest rate for priority sector loans. The interest rates on such deposits are lower than the interest rates which we
would have obtained by investing these funds at its discretion. As of March 31, 2017, our total investments as directed by the RBI
in such deposits were `33,890.28 million. Additionally, as per RBI guidelines, non-achievement of priority sector lending target
and sub-targets will be taken into account by the RBI when granting regulatory clearances/approvals for various purposes.
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The Bank may experience a higher level of NPAs in our directed lending portfolio, particularly in loans to the agricultural sector,
small enterprises and weaker sections, where we are less able to control the portfolio quality and where economic difficulties are
likely to affect our borrowers more severely. The Bank's gross NPAs in PSL sectors as a percentage to gross loans were 4.50% as
of March 31, 2017 (as compared to gross NPAs in PSL of 3.58% as of March 31, 2016 and 2.79% as of March 31, 2015). Further
expansion of the PSL scheme could result in an increase of NPAs due to our limited ability to control the portfolio quality under
the directed lending requirements.
In addition to the directed lending requirements, the RBI has encouraged banks in India to have a financial inclusion plan for
expanding banking services to rural and unbanked centres and to customers who currently do not have access to banking services.
The expansion into these markets involves significant investments and recurring costs. The profitability of these operations
depends on our ability to generate business volumes in these centres and from these customers. Future changes by the RBI in the
directed lending norms may result in our inability to meet the priority sector lending requirements as well as require us to increase
our lending to relatively more risky segments and may result in an increase in non-performing loans.
We face restrictions on lending to large borrowers, which may have a material adverse effect on our business, financial
condition and results of operations.
In August 2016, the RBI released the Guidelines on Enhancing Credit Supply for Large Borrowers through Market Mechanism. It
was stated that corporate loans beyond the limit determined for a borrower, as per the guidelines, would attract additional
provisions and higher capital. Further, the RBI has also aligned its limits on single and group borrowers to the Basel III standards.
From April 2019, our limits for single and group borrowers will be 20.0% and 25.0% of our Tier 1 Capital funds as against the
current norm of 15.0% and 40.0% of the Total Capital funds. These limits may be subjected to further changes and revisions in
future. In addition, the RBI has also issued guidelines on enhancing credit supply for large exposures through market mechanism,
which is effective from April 1, 2017. As per the guidelines, from 2017-18, incremental exposure of the banking system to a
specified borrower beyond the Normally Permitted Lending Limit ("NPLL") shall be deemed to carry higher risks which needs be
recognised by way of additional provisioning and higher risk weights. These new regulations may have a material adverse effect
on our business, financial condition and results of operations.
RBI guidelines relating to ownership in private banks and foreign ownership restrictions in private banks and its downstream companies could discourage or prevent acquisition of a majority stake or other business combination involving us.
On May 12, 2016, RBI issued the Master Direction - Ownership in Private Sector Banks, Directions, 2016 (“Master Directions”).
The Master Directions prescribe limits on ownership for all shareholders in the long run based on categorization of shareholders
under two broad categories, namely (i) individuals; and (ii) entities/institutions. Further, in accordance with the Master Directions,
(i) an individual promoter or members of the promoter group cannot own more than 15.0% of the paid-up share capital; (ii) non-
financial entities or institutions (being a promoter or a member of the promoter group cannot own more than 15.0% of the paid-up
share capital; (iii) individuals and non-financial entities or institutions (other than promoter or a member of the promoter group)
cannot own more than 10.0% of the paid-up share capital; (iv) financial entities or institutions, other than those regulated,
diversified or listed cannot own more than 15.0% of the paid-up share capital; (v) regulated, well diversified, listed financial
entities or institutions cannot own more than 40.0% of the paid-up share capital; and (vi) supranational institutions or public sector
undertaking or the Government cannot own more than 40.0% of the paid-up share capital.
There can be higher percentages of holding stakes by promoters or non-promoters through capital infusion by domestic or foreign
entities or institutions if the RBI approves such transactions on a case-by-case basis only in certain circumstances such as for the
rehabilitation and restructuring of weak banks.
If a transaction results in any person acquiring or agreeing to acquire, directly or indirectly, by itself or acting in concert with any
other person, shares of a banking company or voting rights therein which taken together with shares and voting rights, if any, held
by such person or such person’s relative or associate enterprise (as defined by the Banking Regulations) or person acting in
concert with such person, results in such person(s) holding at least 5.0% of the paid-up share capital of a banking company or
entitles such person(s) to exercise at least 5.0% of a banking company's voting rights, RBI's approval is required prior to such a
transaction.
The RBI, when considering whether to grant an approval, may take into account all matters that it considers relevant to the
application, including ensuring that shareholders whose aggregate holdings are above specified thresholds meet fit and proper
criteria.
The Master Directions limit the voting rights to 15.0% currently; which RBI proposes to increase to 26.0% in a phased manner.
There are also foreign ownership restrictions in a private bank which may impact an acquirer's ability to acquire a majority of our
shares or acquire control over us. The implementation of such restrictions could discourage or prevent a change in control, merger,
consolidation, takeover or other business combination involving us, which might be beneficial to our shareholders.
Any substantial stake in us could discourage or prevent another entity from exploring the possibility of a combination with us.
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Any such obstacles to potentially synergistic business combinations could negatively impact our share price and have a material
adverse effect on our ability to compete effectively with other large banks and, consequently, our ability to maintain and improve
our financial condition.
RBI guidelines relating to prompt corrective action could materially and adversely affect our business, future financial performance and results of operations.
On April 13, 2017, the RBI revised the Prompt Corrective Action ("PCA") framework for Banks. The new PCA framework has
stipulated thresholds for capital ratios, non-performing assets, profitability and leverage for banks. When the PCA framework is
triggered, the RBI would have a range of discretionary actions it can take to address the outstanding issues. These discretionary
actions include conducting supervisory meetings, conducting reviews, advising banks’ boards for altering business strategy,
review of capital planning, restricting staff expansion, removing of managerial persons and superseding the Board. If we are
covered under the PCA framework, it could materially and adversely affect our business, future financial performance and results
of operations.
We have previously been subject to penalties imposed by the RBI. Any regulatory investigations, fines, sanctions, and
requirements relating to conduct of business and financial crime could negatively affect our business and financial results, or
cause serious reputational harm across our businesses.
The RBI is empowered under the Banking Regulation Act, to impose penalties on banks for any failure by the banks to comply
with the applicable regulatory requirements. For example, we have previously been subject to penalties imposed by the RBI for
failure to detect fake bank notes and for failure to exchange soiled bank notes.
We cannot predict the initiation or outcome of any further investigations by other authorities or different investigations by the
RBI. Any penalty imposed by the RBI may generate adverse publicity for our business. Such adverse publicity, or any future
scrutiny, investigation, inspection or audit which could result in fines, public reprimands, damage to our reputation, significant
time and attention from our management, costs for investigations and remediation of affected customers, may materially adversely
affect our business and financial results. For details of penalties imposed by RBI on us, see also "Legal Proceedings" at 211.
Any non-compliance with mandatory Anti Money Laundering and Know Your Customer policies could expose us to additional
liability and harm our business and reputation.
In accordance with the requirements applicable to banks, we are mandated to comply with applicable anti-money laundering
(“AML”) and know your client (“KYC”) regulations in India. These laws and regulations require us, among other things, to adopt
and enforce AML and KYC policies and procedures. For further details, see “Regulations and Policies”. While we have adopted
policies and procedures aimed at collecting and maintaining all AML and KYC related information from our customers in order to
detect and prevent the use of our banking networks for illegal money-laundering activities, there may be instances where we may
be used by other parties in attempts to engage in money-laundering and other illegal or improper activities. For instance, the
Ministry of Finance, Department of Revenue, Financial Intelligence Unit – India ("FIU-IND") imposed a penalty of `0.20 million
for the alleged failure of our Bank in detecting and reporting of attempted suspicions transactions related to the Cobra Post sting
operation. While the Bank filed an appeal against the order in the Appellate Tribunal in New Delhi, FIU-IND demanded the
payment of the penalty amount before the appeal results were finalized. The Bank paid the penalty in August 2016.
Although we believe that we have adequate internal policies, processes and controls in place to prevent and detect AML activity
and ensure KYC compliance, and have taken necessary corrective measures, there can be no assurance that we will be able to
fully control instances of any potential or attempted violation by other parties and may accordingly be subject to regulatory
actions including imposition of fines and other penalties by the relevant government agencies to whom we report, including the
FIU-IND. Our business and reputation could suffer if any such parties use or attempt to use us for money-laundering or illegal or
improper purposes and such attempts are not detected or reported to the appropriate authorities in compliance with applicable
regulatory requirements.
See "Legal Proceedings" at 211.
Our customers may engage in certain transactions in or with countries or persons that are subject to U.S. and other sanctions.
U.S. law generally prohibits U.S. persons from directly or indirectly investing or otherwise doing business in or with certain
countries (such as Iran, Myanmar, North Korea Sudan, Syria and the Crimea region) and with certain persons or businesses that
have been specially designated by the OFAC or other U.S. government agencies. Other governments and international or regional
organizations also administer similar economic sanctions.
We provide transfer, settlement and other services to our customers, who may be doing business with, or located in, countries to
which certain OFAC-administered and other sanctions apply, such as Iran. Although we believe we have compliance systems in
place that are sufficient to block prohibited transactions, there can be no assurance that we will be able to fully monitor all of our
transactions for any potential violation. Although we do not believe that we are in violation of any applicable sanctions, if it were
determined that transactions in which we participate violate U.S. or other sanctions, we could be subject to U.S. or other penalties,
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and our reputation and future business prospects in the United States or with U.S. persons, or in other jurisdictions, could be
adversely affected. We rely on our staff to be up-to-date and aware of the latest sanctions in place. Further, investors in the equity
shares could incur reputational or other risks as the result of our customers’ dealings in or with countries or with persons that are
the subject of U.S. sanctions.
RBI may remove any employee, managerial person or may supersede our Board of Directors in certain circumstances.
The Banking Regulation Act confers powers on the RBI to remove from office any directors, chairman, chief executive officer or
other officers or employees of a bank in certain circumstances. RBI also has the powers to supersede the board of directors of a
bank and appoint an administrator to manage the bank for a period of up to 12 months in certain circumstances. The RBI may
exercise powers of supersession where it is satisfied, in consultation with the Central Government that it is in the public interest to
do so, to prevent the affairs of any bank from being conducted in a manner that is detrimental to the interest of the depositors, or
for securing the proper management of any bank. Should any of the steps as explained herein are taken by RBI, our business,
results of operations and financial conditions would be materially and adversely affected.
Non-compliance with RBI inspection/observations may have a material adverse effect on our business, financial condition or
results of operation.
We are subject to periodic inspections by RBI under the Banking Regulation Act. During the course of assessment, the RBI
advises issues related to various risk and regulatory non-compliances, and during such inspections RBI has in the past made
certain observations regarding our business and operations. In relation to the inspection for the financial year ended March 31,
2016 we are yet to comply with (i) one area of regulatory non compliance in relation to installation of new ATMs as talking
ATMs with Braille keypads; and (ii) two risk mitigation plans in relation to (a) updating of rating migration details of loans in the
system; and (b) integration of SWIFT with integrated treasury management software and core banking solutions. In relation to the
inspection for the financial year ended March 31, 2015 we are yet to comply with one area of regulatory non compliance in
relation to non-monitoring of the overall open position limit for the bank on a real time basis. While we have undertaken steps to
comply with these observations and have informed RBI regarding the status of our compliance, there can be no assurance that RBI
will consider such steps to be adequate and treat the observations as being duly complied with. In the event we are not able to
comply with the observations made by the RBI, we could be subject to supervisory actions which may have a material adverse
effect on our reputation, financial condition and results of operations.
Risks Relating to India
India's existing credit information infrastructure may cause increased risks of loan defaults
The majority of our Bank's business is located in India. India's existing credit information infrastructure may pose problems and
difficulties in running a robust credit check on our borrowers. We may also face difficulties in the due diligence process relating to
our customers or to any security or collateral we take in relation to our loans. We may not be able to run comprehensive searches
relating to the security and there are no assurances that any searches we undertake will be accurate or reliable. Hence, our overall
credit analysis could be less robust as compared to similar transactions in more developed economies. Any inability to undertake a
fulsome due diligence or credit check might result in an increase in our NPAs and we may have to increase our provisions
correspondingly. Any of the foregoing may have a material adverse effect on our business, financial condition and results of
operations.
Financial instability in other countries may cause increased volatility in Indian financial markets.
The Indian market and the Indian economy are influenced by economic and market conditions in other countries, particularly
emerging market countries in Asia. Although economic conditions are different in each country, investors' reactions to
developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of
investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets
and, indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the
Indian economy. Financial disruptions may occur again and could harm our business, our future financial performance and the
prices of the equity shares.
Any adverse change in India's credit rating by an international rating agency could materially adversely affect our business and profitability.
Our outstanding debt is mostly domestic and we are rated only by domestic rating agencies. Namely, our fixed deposit and
certificate of deposit schemes maintain A1+ ratings from CRISIL.
Standard and Poor's ("S&P"), Moody's Investors Service Limited ("Moody's") and Fitch Ratings, Inc. ("Fitch") currently have
stable outlooks on their sovereign rating for India. There is no assurance that these stable outlooks would remain and they may
lower their sovereign ratings for India or the outlook on such ratings, which would also impact the rating of our securities. Any
adverse credit rating outlook on India would impact the country’s outlook and cascade into interest rate and currency depreciation.
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In September 2014, S&P affirmed the "BBB minus" sovereign credit rating on India and revised the outlook on India's long-term
rating from "negative" to "stable", citing improvement in the Government's ability to implement reforms and encourage growth,
which in turn would lead to improving the country's fiscal performance. In April 2015, Moody's revised India's sovereign rating
outlook from "stable" to "positive" and retained the long-term rating at "Baa3" as it expected actions of policymakers to enhance
India's economic strength in the medium term. In July 2016, Fitch revised its outlook for the Indian banking sector to "Negative"
from "Stable" due to the increase in non-performing loans.
There can be no assurance that these ratings will not be further revised or changed by S&P, Fitch or Moody's or that any of the
other global rating agencies will not downgrade India's credit rating. Any adverse revisions to India's credit ratings for domestic
and international debt by international rating agencies may adversely impact our ability to raise additional financing and the
interest rates and other commercial terms at which such financing is available. Any of these developments may materially and
adversely affect our business, financial condition and results of operations.
Any volatility in exchange rates may lead to a decline in India's foreign exchange reserves and may affect liquidity and interest rates in the Indian economy, which could adversely impact us.
Foreign inflows into India have remained extremely volatile responding to concerns about the domestic macroeconomic landscape
and changes in the global risk environment. India's current account deficit jumped to a four quarter high of 1.4% of the gross
domestic product in December 2016 as compared to 0.6% in September 2016. The widening current account deficit has been
attributed largely to the surge in gold imports led by the uncertainty stemming from the demonetisation policy.
The Indian rupee also faces challenges in the volatile swings in capital flows. The shifts in capital flows is reflected in the fact that
Indian rupee recorded a high of `64.84 to US dollar and a low of `68.72 to the US dollar during fiscal year 2017. Even though the
Indian rupee has been fairly stable since the start of calendar year 2017, it may come back under pressure given the possibility of
global fund flows from emerging markets to the US markets over the medium term. Additionally, some anxiety about the prospect
of sub-normal monsoons adversely affecting the domestic economy could make investors circumspect of investing in domestic
assets. The weak monsoons of fiscal year 2016 and 2015 weakened the purchasing and investing power in India. Further, there
remains a possibility of intervention in the foreign exchange market to control volatility of the exchange rate. The need to
intervene may result in a decline in India's foreign exchange reserves and subsequently reduce the amount of liquidity in the
domestic financial system. This in turn could cause domestic interest rates to rise.
Further, increased volatility in foreign flows may also affect monetary policy decision making. For instance, a period of net capital
outflows might force the RBI to keep monetary policy tighter than optimal to guard against any abnormal currency depreciation.
Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries would negatively affect the Indian market where our shares trade and lead to a loss of confidence and impair travel, which could reduce our customers' appetite for our products and services.
Terrorist attacks and other acts of violence or war may negatively affect the Indian markets on which our equity shares trade and
also materially adversely affect the global financial markets. These acts may also result in a loss of business confidence, make
travel and other services more difficult and as a result ultimately materially adversely affect our business. In addition, any
deterioration in relations between India and its neighbours might result in investor concern about stability in the region, which
could materially adversely affect the price of our equity shares.
India has also witnessed civil disturbances in recent years and future civil unrest as well as other adverse social, economic and
political events in India could have an adverse impact on us. Such incidents also create a greater perception that investment in
Indian companies involves a higher degree of risk, which could have an adverse impact on our business and the price of our
Equity Shares.
We are subject to regulatory, economic and social and political uncertainties and other factors beyond our control.
We are incorporated in India and we conduct our corporate affairs and our business in India. Our Equity Shares are listed on the
BSE and the NSE. Consequently, our business, operations, financial performance and the market price of our equity shares will be
affected by the following external risks, should any of them materialize:
changes in exchange rates and controls;
macroeconomic factors and central bank regulation, including in relation to interest rates movements which may in turn
adversely impact our access to capital and increase our borrowing costs;
decline in India’s foreign exchange reserves which may affect liquidity in the Indian economy;
political instability, resulting from a change in government or in economic and fiscal policies;
civil unrest, acts of violence, regional conflicts or situations or war may adversely affect the financial markets;
changes in government policies, including taxation policies, social and civil unrest and other political, social and
economic developments in or affecting India; or
natural calamities and force majeure events.
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The Government of India has exercised and continues to exercise significant influence over many aspects of the Indian economy.
Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by relaxing
restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as
producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will
continue. A significant change in India’s policy of economic liberalization and deregulation or any social or political uncertainties
could adversely affect business and economic conditions in India generally and our business and prospects.
India has in the past experienced community disturbances, strikes, riots, epidemics and natural disasters. India has also
experienced natural calamities such as earthquakes, tsunamis, floods and drought in the past few years. For example, the cyclone
that hit Chennai on December 13, 2016 disrupted the functioning of various branches in and around Chennai City. There can be
no assurance that we will not be affected by natural or man-made disasters in India or elsewhere in the future. These acts and
occurrences could have an adverse effect on the financial markets and the economy of India and of other countries, thereby
resulting in a loss of business confidence and a suspension of our operations, which could have a material adverse effect on our
business, financial condition, results of operations and prospects.
Investors may have difficulty enforcing foreign judgments in India against us or our management.
Our Bank and our Subsidiary and Joint Venture are constituted in India. All of our directors and executive officers named herein
for the Bank and the majority for Subsidiary and for Joint Venture are residents of India and a substantial portion of the Bank's
assets and such persons and all of Subsidiary and Joint Venture are located in India. As a result, it may not be possible for
investors outside of India to effect service of process on us or such persons from their respective jurisdictions outside of India, or
to enforce against them judgments obtained in courts outside of India predicated upon our civil liabilities or such directors and
executive officers under laws other than Indian Law.
For more information on the enforcement of civil liabilities in India, see "Enforcement of Civil Liabilities."
A slowdown in economic growth in India would cause us to experience slower growth in our asset portfolio and deterioration in the quality of our assets.
Our performance and the quality and growth of our assets are necessarily dependent on the health of the overall Indian economy,
which in turn is linked to global economic conditions. Below-trend global growth may adversely affect the growth prospects of
the Indian economy. This could adversely affect our business, including our ability to grow our asset portfolio, the quality of our
assets and our ability to implement our strategy. The Indian economy may be adversely affected by volatile oil prices, given
India’s dependence on imported oil for its energy needs, inflationary pressures and weather conditions adversely affecting the
Indian agricultural market or other factors. This may have a cascading impact on our asset portfolio. In addition, the Indian
economy is in a state of transition. The share of the services sector of the economy is rising, while that of the industrial,
manufacturing and agricultural sectors is declining. Finally, India faces major challenges in sustaining its growth, which include
the need for substantial infrastructure development and improving access to healthcare and education. If the Indian economy
deteriorates, our asset base may erode, which would result in a material decrease in our net profits and total assets.
Risks Relating to the Equity Shares
Financial difficulty and other problems in certain financial institutions in India could materially adversely affect our business and the price of our equity shares.
We are exposed to the risks of the Indian financial system by being a part of the system. The financial difficulties faced by certain
Indian financial institutions because the commercial soundness of many financial institutions may be closely related as a result of
credit, trading, clearing or other relationships. Such "systemic risk", may materially adversely affect financial intermediaries, such
as clearing agencies, banks, securities firms and exchanges with which we interact on a daily basis. Any such difficulties or
instability of the Indian financial system in general could create an adverse market perception about Indian financial institutions
and banks and materially adversely affect our business. Our transactions with these financial institutions expose us to various risks
in the event of default by a counterparty, which can be exacerbated during periods of market illiquidity.
An investor will not be able to sell any of the equity shares subscribed in this Issue other than across a recognised Indian stock exchange for a period of 12 months from the date of the issue of the equity shares.
Pursuant to the SEBI ICDR Regulations, for a period of 12 months from the date of the issue of the Equity Shares in this Issue,
Eligible Qualified Institutional Buyers ("QIBs") subscribing to the Equity Shares may only sell their Equity Shares on the NSE or
the BSE and may not enter into any off-market trading in respect of these equity shares. We cannot be certain that these
restrictions will not have an impact on the price of the equity shares. Further, allotments made to Venture Capital Funds ("VCFs")
and Alternative Investment Funds ("AIFs") in the Issue are subject to the rules and regulations that are applicable to them,
including in relation to lock-in requirements. This may affect the liquidity of the equity shares purchased by investors and it is
uncertain whether these restrictions will adversely impact the market price of the equity shares purchased by investors.
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Future issuances or sales of the Equity Shares could significantly affect the trading price of the Equity Shares.
The future issuance of shares by us or the disposal of shares by any of our major shareholders, or the perception that such issuance
or sales may occur, may significantly affect the trading price of the Equity Shares. There can be no assurance that we will not
issue further shares or that the major shareholders will not dispose of, pledge or otherwise encumber their shares.
Investors may be subject to Indian taxes arising out of capital gains on the sale of the equity shares.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally
taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months will not be
subject to capital gains tax in India if Securities Transaction Tax ("STT") has been paid on the transaction. STT will be levied on
and collected by a domestic stock exchange on which the equity shares are sold. Any gain realised on the sale of equity shares
held for more than 12 months to an Indian resident, which are sold other than on a recognized stock exchange and on which no
STT has been paid, will be subject to long-term capital gains tax in India.
The recent Finance Act 2017 amendments provided that where the shares have been acquired on or after October 1, 2004 and on
which STT has not been paid at the time of acquisition, then the exemption of long term capital gains under section 10(38) of the
Income Tax Act 1961 would not be available. This amendment further provides that the Government will notify certain modes of
acquisition to which the recent amendment made by Finance Act 2017 would not be applicable and the shares acquired by such
modes of acquisition would continue to get the benefit of section 10(38) of the Income Tax Act 1961.
Further, any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to short-term
capital gains tax in India. Capital gains arising from the sale of the equity shares will be exempt from taxation in India in cases
where the exemption from taxation in India is provided under a treaty between India and the country of which the seller is
resident. Generally, Indian tax treaties do not limit India's ability to impose tax on capital gains. As a result, residents of other
countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the equity shares.
Additionally, in view of the individual nature of the tax consequences and the changing tax laws, each prospective investor is
advised to consult their own tax consultant with respect to the specific tax implications arising out of their participation in this
Issue.
Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.
Our Articles, the instructions issued by the RBI, and Indian law govern our corporate affairs. Legal principles relating to these
matters and the validity of corporate procedures, directors’ fiduciary duties and liabilities, and shareholders’ rights may differ
from those that would apply to a bank or corporate entity in another jurisdiction. Shareholders’ rights under Indian law may not be
as extensive as shareholders’ rights under the laws of other countries or jurisdictions. Investors may have more difficulty in
asserting their rights as one of our shareholders than as a shareholder of a bank or corporate entity in another jurisdiction.
The market value of the Equity Shares may fluctuate due to the volatility of the Indian securities markets.
Indian securities markets may be more volatile than and not comparable to, the securities markets in certain countries with more
developed economies and capital markets than India. Indian stock exchanges have, in the past, experienced substantial
fluctuations in the prices of listed securities. Indian stock exchanges (including the BSE and the NSE) have experienced problems
which, if such or similar problems were to continue or recur, could affect the market price and liquidity of the securities of Indian
companies, including the Equity Shares. These problems have included temporary exchange closures, broker defaults, settlement
delays and strikes by brokers. In addition, the governing bodies of Indian stock exchanges have, from time to time, imposed
restrictions on trading in certain securities, limitations on price movements and margin requirements. Further, from time to time,
disputes have occurred between listed companies, stock exchanges and other regulatory bodies, which in some cases may have a
negative effect on market sentiment.
You will not, without prior RBI approval, be able to acquire Equity Shares if such acquisition would result in an individual or
group holding 5.00% or more of our share capital or voting rights; you may not be able to exercise voting rights in excess of
10.00% of the total voting rights.
The Banking Regulation Act, as amended on January 18, 2013, read with the Reserve Bank of India (Prior Approvals for
Acquisition of shares or voting rights in Private Sector Banks) Directions, 2015, requires any person to seek prior approval of the
RBI, to acquire or agree to acquire shares or voting rights of a bank, either directly or indirectly, beneficial or otherwise, by
himself or acting in concert with other persons, wherein such acquisition (taken together with shares or voting rights held by him
or his relative or associate enterprise or persons acting in concert with him) results in the aggregate shareholding of such persons
to be 5.00% or more of the paid-up share capital of a bank or entitles him to exercise 5.00% or more of the voting rights in a bank.
The RBI, as per Master Direction – Ownership in Private Sector Banks, Directions, 2016 released on May 12, 2016, laid out
shareholding and voting rights limits in Private Sector Banks. It restricts ownership limits of individuals and non-financial entities
(other than the promoter and promoter group) at 10.00% of the paid-up capital. In the case of entities from the financial sector,
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other than regulated or diversified or listed, the limit is 15.00% of the paid-up capital.
Further, any acquisition of shareholding/voting rights of 5.00% or more of the paid-up capital of the bank or total voting rights of
the bank shall be subject to obtaining prior approval from the RBI. Such approval may be granted by the RBI if it is satisfied that
the applicant meets certain fitness and propriety tests. The RBI may require the proposed acquirer to seek further RBI approval for
subsequent acquisitions. Further, the RBI may, by passing an order, restrict any person holding more than 5.00% of our total
voting rights from exercising voting rights in excess of 5.00%, if such person is deemed to be not fit and proper by the RBI. For
further details, see "Regulations and Policies" on page 149.
Foreign Account Tax Compliance withholding may affect payments on the equity shares.
Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986, commonly known as FATCA, a “foreign financial
institution” may be required to withhold on certain payments it makes (“foreign passthru payments”) to persons that fail to meet
certain certification, reporting, or related requirements. A number of jurisdictions (including India) have entered into, or have
agreed in substance to, intergovernmental agreements with the United States to implement FATCA (“IGAs”), which modify the
way in which FATCA applies in their jurisdictions. Under the provisions of IGAs as currently in effect, a foreign financial
institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it
makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Equity Shares, including
whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as the
Equity Shares, are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA
with respect to payments on instruments such as the Equity Shares, such withholding would not apply prior to 1 January 2019.
Investors should consult their own tax advisors regarding how these rules may apply to their investment in the shares. In the event
any withholding would be required pursuant to FATCA or an IGA with respect to payments on the Equity Shares, no person will
be required to pay additional amounts as a result of the withholding.
The Bank may be classified as a passive foreign investment company for U.S. federal income tax purposes, which could result
in materially adverse U.S. federal income tax consequences to U.S. Holders of the equity shares.
Based on the anticipated market price of the Equity Shares, and the composition of our income, assets and operations, we do not
expect to be treated as a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes for the most recent
taxable year, and do not expect to be a PFIC for the current taxable year or in the foreseeable future. However, the application of
the PFIC rules is subject to uncertainty in several respects, and we cannot assure investors that the U.S. Internal Revenue Service
will not take a contrary position. Furthermore, PFIC status is a factual determination that can only be made annually after the
close of each taxable year. If we are a PFIC for any taxable year during which a U.S. Holder (as defined in "Statement of Tax
Benefits — Certain U.S. Federal Tax Considerations” on page 208) holds the Equity Shares, certain materially adverse U.S.
federal income tax consequences could apply to such U.S. Holder. See Section “Statement of Tax Benefits— Certain U.S. Federal
Income Tax Considerations — Passive Foreign Investment Company Rules” on page 209.
Holders of Equity Shares could be restricted in their ability to exercise pre-emptive rights under Indian law and could thereby
suffer future dilution of their ownership position.
Under the Companies Act, a company incorporated in India must offer holders of its equity shares pre-emptive rights to subscribe
and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new
equity shares, unless the pre-emptive rights have been waived by the adoption of a special resolution by holders of three-fourths of
the equity shares who have voted on such resolution. However, if the law of the jurisdiction that you are in does not permit the
exercise of such pre-emptive rights without us filing an offering document or registration statement with the applicable authority
in such jurisdiction, you will be unable to exercise such pre-emptive rights unless we make such a filing. We may elect not to file
a registration statement in relation to pre-emptive rights otherwise available by Indian law to you. To the extent that you are
unable to exercise pre-emptive rights granted in respect of the Equity Shares, you may suffer future dilution of your ownership
position and your proportional interests in us would be reduced.
68
MARKET PRICE INFORMATION
As at the date of this Placement Document, 1,728,120,426 Equity Shares are issued and outstanding.
On June 20, 2017 the closing price of the Equity Shares on BSE and NSE was `119.00 and `118.80 per Equity Share,
respectively. Since the Equity Shares are actively traded on the Stock Exchanges, the market price and other information for each
of BSE and NSE has been given separately.
(i) The following tables set forth the reported high, low and average market prices and the trading volumes of the Equity
Shares on the Stock Exchanges on the dates on which such high and low prices were recorded for the Financial Years
ended March 31, 2017, March 31, 2016 and March 31, 2015:
BSE
Financial
Year
High (`) Date of high Number
of Equity
Shares
traded on
the date
of high
Total
volume of
Equity
Shares
traded on
date of
high (`
million)
Low
(`)
Date of low Number
of Equity
Shares
traded on
the date
of low
Total
volume of
Equity
Shares
traded on
date of
low (`
million)
Average
price for
the year
(`)
2017 91.35 March 31, 2017 577,809 52.70 42.39 April 7, 2016 338,523 14.70 67.53
2016 77.55 July 13, 2015 521,830 40.70 42.63 February 12, 2016 247,049 10.50 59.53
2015 73.84 December 31, 2014 238,832 18.00 43.36 April 30, 2014 1,510,584 69.20 62.55
(Source: www.bseindia.com)
NSE
Financial
Year
High
(`)
Date of high Number of
Equity
Shares
traded on
the date of
high
Total
volume of
Equity
Shares
traded on
date of
high (`
million)
Low
(`)
Date of low Number
of Equity
Shares
traded on
the date of
low
Total
volume of
Equity
Shares
traded on
date of
low (`
million)
Average
price for
the year
(`)
2017 91.45 March 31, 2017 7,827,606 714.91 42.29 April 7, 2016 4,453,874 193.08 67.54
2016 77.55 July 13, 2015 3,432,781 267.73 42.58 February 12, 2016 3,597,260 154.36 59.52
2015 73.94 November 28, 2014 9,678,876 737.01 43.38 April 30, 2014 15,306,840 703.66 62.56
(Source: www.nseindia.com)
Notes:
1. High, low and average prices are based on the daily closing prices.
2. In the case of a year, average represents the average of the closing prices of all trading days of each year presented.
(ii) The following tables set forth the reported high, low and average market prices and the trading volumes of the Equity
Shares on the Stock Exchanges on the dates on which such high and low prices were recorded during each of the last six
months:
BSE
Month year High
(`)
Date of high Number
of Equity
Shares
traded
on date
of high
Total
volume
of
Equity
Shares
traded
on date
of high
(`
million)
Low
(`)
Date of low Number
of Equity
Shares
traded
on date
of low
Total
volume
of
Equity
Shares
traded
on date
of low (`
million)
Average
price for
the
month
(`)
May 2017 118.30 May 9, 2017 934,323 109.50 107.30 May 24, 2017 1,681,185 183.50 113.07
April 2017 107.45 April 28, 2017 7,231,034 749.30 87.85 April 7, 2017 521,202 46.20 92.73
March 2017 91.35 March 31, 2017 577,809 52.70 84.25 March 8, 2017 591,211 49.80 87.55
69
BSE
Month year High
(`)
Date of high Number
of Equity
Shares
traded
on date
of high
Total
volume
of
Equity
Shares
traded
on date
of high
(`
million)
Low
(`)
Date of low Number
of Equity
Shares
traded
on date
of low
Total
volume
of
Equity
Shares
traded
on date
of low (`
million)
Average
price for
the
month
(`)
February 2017 87.35 February 28, 2017 1,797,542 156.00 79.45 February 1, 2017 846,432 66.50 83.74
January 2017 78.65 January 25, 2017 536,398 42.10 65.80 January 4, 2017 239,986 15.80 73.24
December 2016 71.10 December 9, 2016 523,687 37.20 62.30 December 26, 2016 428,276 27.10 67.90
(Source: www.bseindia.com)
NSE
Month year High
(`)
Date of high Number
of Equity
Shares
traded on
date of
high
Total
volume
of
Equity
Shares
traded
on date
of high
(`
million)
Low
(`)
Date of low Number
of Equity
Shares
traded on
date of
low
Total
volume
of
Equity
Shares
traded
on date
of low (`
million)
Average
price
for the
month
(`)
May 2017 118.55 May 8, 2017 16,344,872 1,939.80 107.30 May 24, 2017 8,820,452 952.53 113.12
April 2017 107.60 April 28, 2017 75,605,938 7,841.54 87.85 April 7, 2017 10,143,140 899.71 92.76
March 2017 91.45 March 31, 2017 7,827,606 714.91 84.30 March 8, 2017 4,694,631 394.99 87.56
February 2017 87.35 February 28, 2017 23,920,035 2,075.45 79.35 February 1, 2017 12,935,817 1,018.81 83.78
January 2017 78.80 January 25, 2017 12,644,279 994.99 65.75 January 4, 2017 3,698,802 244.25 73.24
December 2016 71.20 December 9, 2016 5,115,520 448.06 62.40 December 26, 2016 6,304,513 323.64 67.92
(Source: www.nseindia.com)
Notes: Average price based on average of daily closing price for the period.
Notes:
1. High, low and average prices are based on the daily closing prices.
2. In the case of a month, average represents the average of the closing prices of all trading days of each month presented.
(iii) The following table set forth the details of the number of Equity Shares traded and the turnover during the last six months
and the Financial Years ended March 31, 2017, 2016 and 2015 on the Stock Exchanges:
Period Number of Equity Shares Traded Turnover (In `million)
BSE NSE BSE NSE
Year ended March 31, 2017 219,102,871 2,197,910,849 15,163.33 151,806.77
Year ended March 31, 2016 108,173,420 1,149,471,701 6,668.85 70,059.94
Year ended March 31, 2015 212,782,766 1,994,340,340 13,296.91 127,615.23
May 2017 28,282,598 305,242,957 3,225.70 34,822.85
April 2017 17,315,272 195,339,789 1,676.90 18,849.92
March 2017 15,404,178 183,841,858 1,353.31 16,180.28
February 2017 16,512,750 214,389,777 1,387.20 18,004.21
January 2017 20,509,729 197,543,913 1,513.64 14,742.82
December 2016 18,068,903 138,206,621 1,252.27 9,443.44
(Source: www.bseindia.com and www.nseindia.com)
70
(iv) The following table sets forth the market price on the Stock Exchanges on May 2, 2017, the first working day following
the approval of our Board of Directors for the Issue:
BSE NSE
Open High Low Close Number of
Equity Shares
traded
Volume (`
million)
Open High Low Close Number of
Equity Shares
traded
Volume (`
million)
110.90 115.30 110.00 112.55 5,036,179 571.60 110.00 115.35 110.00 112.50 52,498,477 5,955.87
(Source: www.bseindia.com and www.nseindia.com)
71
USE OF PROCEEDS
The gross proceeds from the Issue are approximately `25,000 million. After deducting the Issue expenses of approximately `350
million, the net proceeds of the Issue will be approximately `24,650 million (the “Net Proceeds”).
Subject to compliance with applicable laws and regulations, our Bank intends to use the Net Proceeds towards augmenting our
Bank’s Tier I Capital to support growth plans and to enhance the business our Bank and for other general corporate purposes.
Since, the Net Proceeds of the Issue are proposed to be utilised towards augmenting our Bank’s Tier I capital and not for
implementing any project, the following disclosure requirements are not applicable:
(i) break-up of cost of the project;
(ii) means of financing such project; and
(iii) proposed deployment status of the proceeds at each stage of the project
None of our Directors are making any contribution either as a part of the Issue or separately in furtherance of the use of proceeds.
72
CAPITALISATION STATEMENT
The following table sets forth our Bank’s capitalization and total debt as at March 31, 2017 on a consolidated and standalone basis
and as adjusted for the Issue. This table should be read in conjunction with the sections entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Financial Statements” on pages 78 and 220, respectively.
Consolidated basis
(in ` million)
Particulars
As at March 31, 2017
(on a standalone basis)
As at March 31, 2017
(on a consolidated basis)
(Audited)
Unadjusted
(Audited)
Adjusted for the Issue
(Audited)
Unadjusted
(Audited)
Adjusted for the
Issue
Shareholders' Funds
- Share Capital 3,448.09 3,879.12 3,448.09 3,879.12
- Reserves and Surplus 85,975.73 110,544.70 86,065.61 110,634.58
Total Shareholders' Funds* (A) 89,423.82 114,423.82 89,513.70 114,513.70
Liabilities
- Deposits 9,76,645.62 976,645.62 9,76,620.76 976,620.76
- Borrowings 58,973.23 58,973.23 63,454.93 63,454.93
- Other Liabilities and Provisions 24,726.65 24,726.65 25,267.98 25,267.98
Total Liabilities (B) 10,60,345.50 1,060,345.50 10,65,343.67 1,065,343.67
Total Capitalisation (A+B) 11,49,769.32 1,174,769.32 11,54,857.37 1,179,857.37
*Notes: (1) As adjusted for the number of Equity Shares issued in the Issue. However, this does not give effect to the Equity Shares issued
and allotted by our Bank post March 31, 2017 and up to the date of this Placement Document, pursuant to exercise of options
granted under its ESOS 2010. (2) As on the date of this Placement Document, 71,802,986 stock options are outstanding under ESOS 2010. (3) Adjustments do not include Issue related expenses.
73
CAPITAL STRUCTURE
The Equity Share capital of our Bank as of the date of this Placement Document is set forth below:
(In `, except share data)
Particulars Aggregate value at face value
A AUTHORISED SHARE CAPITAL
2,500,000,000 Equity Shares 5,000,000,000
B ISSUED CAPITAL BEFORE THE ISSUE
1,728,120,426 Equity Shares 3,456,240,852
C SUBSCRIBED, CALLED-UP AND PAID-UP CAPITAL BEFORE THE ISSUE
1,726,771,381(1) 3,453,542,762
D PRESENT ISSUE IN TERMS OF THIS PLACEMENT DOCUMENT
Up to 215,517,241 Equity Shares(2) 431,034,482
E ISSUED CAPITAL AFTER THE ISSUE
1,943,637,667 Equity Shares 3,887,275,334
F SUBSCRIBED, CALLED-UP AND PAID-UP CAPITAL AFTER THE ISSUE
1,942,288,622 Equity Shares 3,884,577,244
F SECURITIES PREMIUM ACCOUNT
Before the Issue 25,392,687,240.43
After the Issue 49,961,652,714.43
(1) Out of 1,728,120,426 Equity Shares issued by our Bank, 1,349,045 Equity Shares have been kept under abeyance consequent
to injunction orders from various courts.
(2) The Issue has been authorised by our Board of Directors on April 28, 2017 and by our Shareholders pursuant to their
resolution dated June 7, 2017 passed through postal ballot.
The following table sets forth details of allotments of Equity Shares our Bank since the date of inception:
Date of Allotment No. of Equity Shares Face Value
(`)
Issue price
(`) unless
stated
otherwise
Nature of Consideration Cumulative number of
Equity Shares(6)
1949(1) 7,143 20 20 Cash 7,143
1959 6,455 20 20 Cash 13,598
1960 5,688 20 20 Cash 19,286
1962 5,714 20 20 Cash 25,000
January 27, 1965 1,659 20 20 Other than Cash 26,659
1973 26,659 20 20 Cash 53,318
1974 21,682 20 20 Cash 75,000
1975 49,500 20 20 Cash 124,500
1976 500 20 20 Cash 125,000
1977 375,000 20 20 Cash 500,000
1978 125,000 20 20 Cash 625,000
1979 69,286 20 20 Cash 694,286
1980 4,377 20 20 Cash 698,663
1986 464,598 20 20 Cash 1,163,261
1987 18,984 20 20 Cash 1,182,245
1989 317,420 20 20 Cash 1,499,665
1990 335 20 20 Cash 1,500,000
1990 Sub-division of the face value of Equity Shares from `20 to `10 3,000,000
1991 2,050,000 10 10 Cash 5,050,000
June 12, 1993 2,669,913(2) 10 35 Cash 7,719,913
June 12, 1993 377,981(2) 10 35 Cash 8,097,894
June 12, 1993 2,667,000 10 60 Cash 10,764,894
June 12, 1993 333,000 10 60 Cash 11,097,894
May 18, 1994 3,718,100 10 90 Cash 14,815,994
74
Date of Allotment No. of Equity Shares Face Value
(`)
Issue price
(`) unless
stated
otherwise
Nature of Consideration Cumulative number of
Equity Shares(6)
July 4, 1994 250 10 35 Cash 14,816,244
March 16, 1996 7,353,240 10 150 Cash 22,169,484
June 20, 1996 350 10 35 Cash 22,169,834
February 28, 2002 200 10 35 Cash 22,170,034
November 30, 2004 700 10 150 Cash 22,170,734
December 29, 2004 - - - - 21,867,989(3)
December 29, 2004 43,627,490 10 - Other than Cash 65,495,479
March 31, 2005 107,288 10 - Other than Cash 65,602,767
December 8, 2005 200 10 150 Cash 65,602,967
December 8, 2005 400 10 - Other than Cash 65,603,367
January 31, 2006 18,000,000(4) 10 US$3.97 Cash 83,603,367
February 6, 2006 2,000,000(5) 10 US$3.97 Cash 85,603,367
May 4, 2006 100 10 150 Cash 85,603,467
May 4, 2006 200 10 - Other than Cash 85,603,667
February 1, 2008 85,429,763 10 250 Cash 171,033,430
March 11, 2011 14,071 10 10 Cash 171,047,501
January 29, 2013 7,022 10 420.65 Cash 171,054,523
March 22, 2013 4,609 10 420.65 Cash 171,059,132
July 31, 2013 3,225 10 420.65 Cash 171,062,357
October 18, 2013 Sub-division of face value of Equity Shares from `10 to` 2 855,311,785
May 7, 2014 3,000 2 84.13 Cash 855,314,785
June 16, 2014
30,855 2 84.13 Cash 855,349,705
4,065 2 94.80 Cash
July 2, 2014
42,645 2 84.13 Cash 855,399,400
7,050 2 94.80 Cash
July 24, 2014
59,110 2 84.13 Cash 855,468,530
10,020 2 94.80 Cash
August 25, 2014
49,990 2 84.13 Cash 855,518,520
9,535 2 94.80 Cash
August 28, 2014 3,000 2 50.00 Cash 855,531,055
September 17, 2014
36,985 2 84.13 Cash 855,574,155
3,795 2 94.80 Cash
2,320 2 57.25 Cash
October 21, 2014
59,245 2 84.13 Cash 855,678,515
8,735 2 94.80 Cash
36,380 2 57.25 Cash
November 20, 2014
120,385 2 84.13 Cash 855,863,225
19,850 2 94.80 Cash
44,475 2 57.25 Cash
December 15, 2014
160,520 2 84.13 Cash 856,099,054
38,399 2 94.80 Cash
36,910 2 57.25 Cash
January 24, 2015
118,105 2 84.13 Cash 856,285,774
35,315 2 94.80 Cash
33,300 2 57.25 Cash
February 19, 2015
86,486 2 84.13 Cash 856,410,085
17,955 2 94.80 Cash
19,870 2 57.25 Cash
March 27, 2015
179,552 2 84.13 Cash 856,655,197
40,955 2 94.80 Cash
24,605 2 57.25 Cash
April 21, 2015
124,700 2 84.13 Cash 856,820,662
21,095 2 94.80 Cash
19,670 2 57.25 Cash
May 15, 2015
217,970 2 84.13 Cash 857,240,582
47,085 2 94.80 Cash
154,865 2 57.25 Cash
June 25, 2015
487,274 2 84.13 Cash 857,945,206
119,235 2 94.80 Cash
98,115 2 57.25 Cash
July 10, 2015 857,945,206 2 - Bonus 1,715,890,412
August 17, 2015
384,710 2 42.07 Cash 1,716,418,992
74,750 2 47.40 Cash
75
Date of Allotment No. of Equity Shares Face Value
(`)
Issue price
(`) unless
stated
otherwise
Nature of Consideration Cumulative number of
Equity Shares(6)
69,120 2 28.63 Cash
September 3, 2015 50,000 2 42.07 Cash 1,716,468,992
September 23, 2015
643,276 2 42.07 Cash 1,717,438,394
144,845 2 47.40 Cash
177,181 2 28.63 Cash
4,100 2 62.00 Cash
October 19, 2015
179,355 2 42.07 Cash 1,717,793,024
35,310 2 47.40 Cash
123,715 2 28.63 Cash
16,250 2 62.00 Cash
November 9, 2015 21,500 2 42.07 Cash 1,717,814,524
November 25, 2015
240,795 2 42.07 Cash 1,718,350,344
91,615 2 47.40 Cash
198,010 2 28.63 Cash
5,400 2 62.00 Cash
January 2, 2016
142,550 2 42.07 Cash 1,718,611,559
53,765 2 47.40 Cash
63,975 2 28.63 Cash
925 2 62.00 Cash
January 22, 2016
55,110 2 42.07 Cash 1,718,753,684
19,395 2 47.40 Cash
66,820 2 28.63 Cash
800 2 62.00 Cash
February 24, 2016
64,460 2 42.07 Cash 1,718,889,459
17,000 2 47.40 Cash
54,315 2 28.63 Cash
March 28, 2016
23,480 2 42.07 Cash 1,718,946,844
10,230 2 47.40 Cash
22,275 2 28.63 Cash
1,400 2 62.00 Cash
April 18, 2016 128,500 2 42.07 Cash 1,719,075,344
May 18, 2016
38,900 2 42.07 Cash 1,719,211,699
9,935 2 47.40 Cash
86,020 2 28.63 Cash
1,500 2 62.00 Cash
June 17, 2016
55,930 2 42.07 Cash 1,719,375,534
17,870 2 47.40 Cash
89,335 2 28.63 Cash
700 2 62.00 Cash
July 27, 2016
119,225 2 42.07 Cash 1,719,646,709
59,420 2 47.40 Cash
88,130 2 28.63 Cash
4,400 2 62.00 Cash
August 20, 2016
131,560 2 42.07 Cash 1,719,858,659
34,125 2 47.40 Cash
43,515 2 28.63 Cash
2,750 2 62.00 Cash
September 22, 2016
379,225 2 42.07 Cash 1,720,481,609
99,755 2 47.40 Cash
126,420 2 28.63 Cash
17,550 2 62.00 Cash
October 24, 2016
289,476 2 42.07 Cash 1,721,131,975
157,965 2 47.40 Cash
165,925 2 28.63 Cash
37,000 2 62.00 Cash
November 18, 2016
291,210 2 42.07 Cash 1,721,651,625
110,190 2 47.40 Cash
97,150 2 28.63 Cash
21,100 2 62.00 Cash
December 20, 2016
289,290 2 42.07 Cash 1,722,142,605
86,920 2 47.40 Cash
98,595 2 28.63 Cash
16,175 2 62.00 Cash
76
Date of Allotment No. of Equity Shares Face Value
(`)
Issue price
(`) unless
stated
otherwise
Nature of Consideration Cumulative number of
Equity Shares(6)
January 17, 2017
196,280 2 42.07 Cash 1,722,454,150
51,445 2 47.40 Cash
50,935 2 28.63 Cash
12,885 2 62.00 Cash
February 22, 2017
283,405 2 42.07 Cash 1,722,946,968
107,050 2 47.40 Cash
84,138 2 28.63 Cash
18,225 2 62.00 Cash
March 24, 2017
639,130 2 42.07 Cash 1,724,045,414
220,096 2 47.40 Cash
183,470 2 28.63 Cash
55,750 2 62.00 Cash
April 27, 2017
658,940 2 42.07 Cash 1,725,293,574
343,490 2 47.40 Cash
180,080 2 28.63 Cash
65,650 2 62.00 Cash
May 20, 2017
768,210 2 42.07 Cash 1,726,771,381
330,505 2 47.40 Cash
279,652 2 28.63 Cash
99,440 2 62.00 Cash (1) Our Bank was incorporated on April 23, 1931 as a joint stock company and subsequently in 1949 became a company limited by shares
(2) Consisted of an offering of 2,525,000 Equity Shares in the issue 1: 2 to the existing shareholders of our Bank and 525,000 Equity Shares to the employees of our Bank. Of the above 377,981 Equity Shares were allotted to employees of our Bank, and 26,70,713 Equity Shares which included Equity Shares
renounced by the employees were allotted to the existing shareholders of our Bank. (3) Forfeiture of 302,745 Equity Shares as calls in arrears (4) Equity Shares issued pursuant to issue of GDRs (5) Equity Shares issued pursuant to overallotment under GDRs (6) Allotment of 1,349,045 Equity Shares have been kept in abeyance consequent to injunction orders from various courts.
Our Bank has not been able to trace the corporate records in relation to the allotments made prior to 2006. For further details see
“Risk Factors - Certain of our historical corporate records in connection with the allotment of our Equity Shares are not
traceable.” on page 51.
77
DIVIDENDS
The declaration and payment of dividends, if any, will be recommended by our Board of Directors and approved by our
Shareholders at their discretion, subject to the provisions of the Articles of Association, the Companies Act and the Banking
Regulation Act. Our Board has framed a dividend distribution policy in accordance with Regulation 43A of SEBI Listing
Regulations (“Dividend Policy”).
Subject to certain conditions laid down by Section 123 of the Companies Act 2013, no dividend can be declared or paid by a
company for any fiscal, except, among other things, out of the profits of the company for that year, calculated in accordance with
the provisions of the Companies Act 2013 or out of the profits of the company for any previous fiscal arrived at as laid down by
the Companies Act 2013. Further, under the Companies Act 2013, a company is not permitted to declare any dividends unless
carried over previous losses and depreciation not provided in previous year or years are set off against the profit of the company
for the current year.
Our Bank shall be eligible to declare dividends only upon compliance with the following minimum prudential requirements:
(i) Our Bank should have CRAR of at least 9% for preceding two completed years and the accounting year for which we
propose to declare dividend;
(ii) Our Bank should have Net NPA less than 7% (in case our Bank does not meet the above CRAR norm, but has a CRAR
of at least 9% for the accounting year for which it proposes to declare dividend, we would be eligible to declare dividend
provided our Net NPA ratio is less than 5%) ;
(iii) Our Bank should comply with the provisions of Section 15 and 17 of the Baking Regulations Act;
(iv) Our Bank should comply with the prevailing regulations/ guidelines issued by RBI, including creating adequate
provisions for impairment of assets and staff retirement benefits, transfer of profits to statutory reserves, etc;
(v) The proposed dividend should be payable out of the current year’s profit; and
(vi) The RBI has not placed any explicit restrictions on the bank for declaration of dividends
Subject to compliance with the aforementioned eligibility criteria, in terms of the Dividend Policy, our Board shall take into
account the interest of all stakeholders and the following aspects while deciding on the proposal for declaring dividend:
(i) The interim dividend paid, if any;
(ii) The risk based supervision findings of RBI with regard to divergence in identification of NPAs, shortfall in provisioning;
(iii) The auditors’ qualification pertaining to the statement of accounts;
(iv) The Basel III capital requirements; and
(v) Our Bank’s long term growth plans.
The following table sets out, for the periods indicated, the dividends paid / payable by us:
Fiscal Year for which dividend was declared Rate of dividend Dividend per
Equity Share
Total amount of
dividend paid
(Percentage) (`) (` in million) 2015 110 2.20 1,885.92
2016 35 0.70 1,203.75
2017* 45 0.90 1,551.65 *Subject to approval of the shareholders of our Bank
The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if any, in the
future.
For a summary of certain Indian consequences of dividend distributions to shareholders, see the section “Statement of Tax
Benefits” on page 194.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our
Financial Statements for the years ended March 31, 2017, 2016 and 2015 included in this Placement Document. Please also refer
to the sections "Selected Financial Information" and "Selected Statistical Information" included in this Placement Document.
Unless otherwise specified, references herein to the "Bank" or “standalone” are to the Bank on a standalone basis and references
herein to "we", "our", "us" and the "Group" are to the Bank on a consolidated basis. All financial figures presented in this section
are based on our consolidated financial statements unless otherwise specified
We prepare our financial statements in accordance with Indian GAAP. Our financial statements reflect applicable statutory
requirements and regulatory guidelines and accounting practices in India, including the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Paragraph 7 of the Companies (Accounts) Rules, 2014, and Companies
(Accounting Standards) Amendment Rules, 2016, in so far as they apply, and guidelines issued by the Reserve Bank of India
(“RBI”). For the purposes of a comparative analysis in the discussion below, previous years’ figures have been reclassified and
regrouped wherever necessary.
Our fiscal year ends on March 31, of each year. Accordingly, all references to a particular fiscal year are to the 12-month period
ended on March 31, of that year. Unless otherwise specified, all information regarding cost, yield and average balances is based
on the fortnightly average of the Bank's standalone balances outstanding during the relevant period.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial
performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain
factors, including those set forth under the section "Forward-Looking Statements" on page 15, the section "Risk Factors" on page
41 and elsewhere in this Placement Document. Certain portions of the following discussion include information publicly available
from the RBI and other sources.
Introduction
Overview
We are a leading private sector bank in India. We were originally incorporated in 1931 as the ''Travancore Federal Bank Limited
Nedumpram under the Travancore Companies Regulation. On December 2, 1949, the name was changed to The Federal Bank
Limited. In 1959, we were licensed under the Banking Regulation Act, 1949, and thereafter we became a scheduled commercial
bank under the Second Schedule of Reserve Bank of India Act, 1934.
We offer a wide range of products and services to retail, small and medium scale enterprises (''SME'') agricultural and corporate
customers through a variety of delivery channels. As of March 31, 2017, we had 1,252 bank branches and 1,667 ATMs. Our
consolidated balance sheet size has increased from `853,418.93 million as of March 31, 2015 to `1,154,857.35 million as of
March 31, 2017. Our total consolidated deposits have grown from `708,226.87 million as of 31 March 2015 to `976,620.76
million as of March 31, 2017. Our total consolidated advances have increased from `515,291.87 million as on March 31, 2015 to
`740,862.31 million as on March 31, 2017.
While we were historically focused largely on the state of Kerala, we have expanded our presence throughout India with 1,252
bank branches across India. Our robust practice across India is complemented by our international presence. We are developing
our international presence by building a network outside India to cater to the NRI market, with representative offices in Dubai and
Abu Dhabi. We have also obtained approval to open a further representative office in Bahrain and a branch in the Dubai
International Financial Centre ("DIFC"). We have also recently opened an international banking unit in the Gujarat International
Finance Tec-City ("GIFT City").
We offer banking products and services in the Retail, SME, Agricultural and Corporate and Wholesale banking sectors. Our retail
asset products include home loans, personal loans, auto loans, educational loans, mortgage loans, business loans as well as
security-backed loans of various types. Our SME portfolio consists primarily of loans and advances to manufacturing and food
processing enterprises, educational institutions, healthcare providers, the services sector, traders and professionals. Our loans to
the agricultural sector include loans to individual farmers, group of farmers, agriculture businesses and agriculture corporates. For
the corporate and wholesale banking sector, we offer various loan and fee-based products and services to large corporations,
medium-sized enterprises and certain specified sectors, including the agriculture sector which includes an assortment of banking
products and services including working capital, term finance, trade finance, structured financial services, foreign exchange and
syndication services.
We offer a number of liability products to our retail customers, including NRIs, such as saving accounts, time deposits and
recurring deposits. These products are offered with certain variations as customized products to certain target groups such as
senior citizens, students and salaried employees. We also offer other products and services such as debit and credit cards, online
bill payment services and cash management services. We market third-party products, such as mutual funds and general and life
insurance policies such as the IDBI-Federal Life insurance policy. A wide range of liability and asset products and services are
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also offered specifically to NRIs.
We also provide a number of digital offerings including the "Fedbook Selfie" application for digital account opening and the
'Lotza' application, which is a unified payment interface application, to take advantage of the increasing availability of internet
access and broadband connectivity across India. Our investment into our digital strategy will see the introduction of more products
and the enhancement in the security features of our existing products. We believe that our comprehensive suite of secure digital
products will enhance our competitiveness.
Our principal business activities are divided into five segments, namely retail banking, SME banking, agricultural banking,
corporate and wholesale banking, treasury and other banking operations, with a balanced portfolio mix across these segments,
including non-resident Indians (''NRI''). As of March 31, 2017, our retail advances accounted for 30.41% of total gross advances,
SME advances accounted for 23.57% of total gross advances, agriculture advances accounted for 10.02% of total gross advances
and corporate advances accounted for 36.01% of total gross advances.
Factors Affecting our Results of Operations
Numerous factors affect our results of operations and financial condition. The following factors are of particular importance:
India's Macroeconomic Environment
India is one of the fastest growing major economies in the world. Since 2013, India has implemented macroeconomic adjustments,
particularly as it sought to reduce its fiscal deficit and current account deficit. India's economic reforms continued in fiscal year
2017, which was marked by two major domestic policy developments, namely demonetisation of higher-denomination notes and
the passage of a Constitutional amendment paving way for the implementation of a goods and services tax.
Based on data from the Central Statistical Office of India's Ministry of Statistics and Programme Implementation (the "Central
Statistical Office"), India’s GDP growth for fiscal year 2016 increased to 7.9% from 7.2% in fiscal year 2015, and gross value
added ("GVA") for fiscal year 2016 increased to 7.8% from 6.9% for fiscal year 2015. CSO data depicts that this growth was led
by increases in private consumption demand, even as capital formation remained weak.
However, as per advanced estimates from the Central Statistical Office, India's GDP growth slowed in fiscal year 2017 to 7.1%
and GVA growth slowed to 6.7% for fiscal year 2017. On the positive side, implementation of salary increases for central
government employees, based on the recommendations of the Seventh Central Pay Commission, helped to buoy the economy.
Additionally, a strong monsoon season helped to increase agricultural production, also reducing food-based inflation. However,
private investment remained weak in fiscal year 2017, and demonetisation seemed to have further added, albeit marginally, to
slowdown in growth.
India has seen a decline in its inflation since fiscal year 2015, helped by tighter monetary policy, weak domestic demand and
fiscal consolidation. The consumer price index ("CPI") inflation has fallen from a high of 6.0% in fiscal year 2015 to 4.9% in
fiscal year 2016, despite another year of drought. Food inflation declined, aided by a slight increase in minimum support price for
food grains and better food supply management by the government. Inflation fell further in fiscal year 2017, with CPI inflation of
4.5%, largely driven by a sharp decrease in food inflation due to the strong monsoon. Core CPI inflation has picked up to 4.7% in
fiscal year 2017 as against 4.3% in fiscal year 2016. The deflationary effect was more pronounced in the wholesale price index
("WPI"), which decreased by 2.5% for fiscal year 2016 as compared to an increase of 2.0% in fiscal year 2015. WPI inflation
increased in fiscal year 2017 due to reversal of favourable base effect and increases in oil and other commodity prices.
The Reserve Bank of India (RBI) had cut policy rates by 175bps since January 2015 due to steady fall in CPI inflation. However
in December 2016 monetary policy meeting, RBI’s tone turned relatively hawkish and RBI changed its stance from
accommodative to neutral in the February 2017 policy, premised on upside risk to inflation, limited transient growth drag owing
to demonetisation and also global risks.
India has reduced its fiscal deficit over the past few years, as well as shifted expenditures away from current to capital
expenditures. The fiscal deficit has come down from 4.1% of GDP in fiscal year 2015 to 3.5% in fiscal year 2017. In fiscal year
2017, the government was able to stick to the budgeted fiscal deficit target of 3.5% of GDP. This was helped by additional tax
revenues and achievement of estimated non-tax revenues, despite a shortfall in spectrum auction receipts and higher-than-
budgeted expenditure. In its budget presented on 1 February 2017, the government announced that the Fiscal Responsibility and
Budget Management Committee has recommended 3% fiscal deficit for the next three years, keeping in mind the sustainable debt
target and a need for public investment. The fiscal deficit for 2017-18 is targeted at 3.2% of GDP.
Tighter money market liquidity conditions were one of the impediments to transmission of policy rate cuts post 2015. Liquidity
improved during the first half of fiscal year 2016, with average liquidity being in surplus between July and September, but it again
deteriorated sharply in the second half of fiscal year 2016 and by March 31, 2016, the liquidity deficit was `3.02 trillion. In April
2016, RBI announced plans for a new liquidity framework to align liquidity conditions with accommodative monetary stance for
smoother monetary policy transmission over the medium term. Liquidity eased towards surplus by the end of first half of fiscal
year 2017, and demonetisation in November 2016 led to a significant increase in bank deposits and a surge in liquidity surplus.
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The banking system liquidity stood at a surplus of ` 3.13 trillion as of March 31, 2017, as compared to a deficit of `3.02 trillion
deficit as of March 31, 2016. Furthermore, helped by easing policy rates and surplus liquidity, as well as global trends, Indian
government bond yields softened in fiscal year 2017, with the benchmark 10-year paper rate standing at 6.68% to end the fiscal
year, easing around 79bps from fiscal year 2016.
India has come a long way over the past few years in terms of external sector adjustments, with current account deficits decreasing
and balance of payments increasing. Despite moderation in India’s exports, India’s current account deficit has contracted from
US$ 88.2 billion (4.8% of GDP) in fiscal year 2013 to US$26.8 billion in fiscal year 2015 (1.3% of GDP) and further to USS$22.2
billion (1.1% of GDP) in fiscal year 2016. The trend has further continued with the current account deficit further narrowing to
US$11.6 billion (0.7% of GDP) in the first nine months of fiscal year 2017. The balance of payment surplus has remained healthy
owing to better foreign portfolio inflows and steady FDI flows. Foreign exchange reserves have risen to US$370 billion as of
March 31, 2017 from US $356 billion as of March 31, 2016 and US $341.4 billion as of end- March 2015).
The Indian Rupee was largely resilient against the US dollar in fiscal year 2015, and depreciated marginally by an average of
1.1%. However, emerging market sell-offs following global uncertainty owing to the devaluation of the Chinese Yuan and
changes in China's foreign exchange policy, as well as expectations of an interest rate increase by the US Federal Reserve, led the
Rupee to decline against the US dollar overall for fiscal year 2016. In fiscal year 2017, a variety of factors, including India's
improving macroeconomic fundamentals, the outcome of the US presidential election, foreign portfolio investment flows into
India and the passage of India's GST bill, led to volatilities in the Rupee, particularly in the third and fourth quarters, with the
Rupee ending fiscal year 2017 on a strong note. Rupee ended the fiscal year 2017 at 64.85, rallying by 4.7% in end-March 2017
from end-December 2016 and 2.2% from end-March 2016. However on an average, Rupee depreciated 2.4% against US dollar in
fiscal year 2017 from fiscal year 2016.
For more details, please refer to the "Industry Overview" section at 112.
Health of the Indian banking sector
The Indian banking sector is highly regulated and monitored, which contributes to its relative stability during uncertain economic
periods.
According to the RBI's financial stability report, December 2016 ("RBI Financial Stability Report"), global recovery remains
fragile amidst slowdown in trade, rising tendency towards protectionism and slower growth in productivity. Global financial
markets continue to face elevated levels of uncertainty, notwithstanding the resilience exhibited in overcoming the outcomes of
Brexit referendum and the US presidential election. In India, macroeconomic conditions remained stable with significant
moderation in inflation. Moreover, reduced policy uncertainty and legislative and tax reforms such as implementation of goods
and services tax and enactment of bankruptcy laws are expected to reinforce the benefits from the strong macro fundamentals and
the withdrawal of legal tender status of specified bank notes could potentially transform the Indian economy. While the overall
risks to the corporate sector moderated in 2016-17, concerns remain over its recovery. Domestic debt and equity markets
witnessed foreign portfolio investment outflows since October 2016 reflecting expectations of increase in the interest rates by the
U.S. Federal Reserve. Moreover, the recent decision in March 2017 by the U.S. Federal Reserve to again raise interest rates may
result in further foreign portfolio investment outflows.
The RBI Financial Stability Report noted that among financial institutions, asset quality of public sector banks, scheduled urban
co-operative banks and non-banking financial companies has deteriorated. The banking stability indicator showed that risks to the
banking sector remained elevated. Though the capital adequacy of banks was above regulatory requirements, continuous
deterioration in their asset quality, low profitability and liquidity contributed to the high level of overall risk. The gross NPA ratio
of scheduled commercial banks increased to 9.1% in September 2016 from 7.8% in March 2016, pushing the overall stressed
advances ratio to 12.3% from 11.5% during the same period. Large borrowers registered significant deterioration in their asset
quality, whereas the restructured standard advances ratio declined during the same period. The capital to risk (weighted) assets
ratio ("CRAR") of scheduled commercial banks remains unchanged during the first half of fiscal year 2016 while public sector
banks continued to record the lowest CRAR among banks.
Our Bank’s NPAs increased largely in line with the increased NPAs of scheduled commercial banks in fiscal year 2016, before
decreasing again in fiscal year 2017 largely as a result of our efforts to improve our recovery processes. Our Bank’s Net NPAs
were 0.73%, 1.64% and 1.28% in fiscal years 2015, 2016 and 2017, respectively, and our Gross NPAs were 2.04%, 2.84% and
2.33% in fiscal years 2015, 2016 and 2017, respectively. Largely in line with the change in our Bank’s NPAs, our Bank’s annual
credit costs (defined as loan loss provision made during the period divided by the opening gross advances for the period) increased
from 0.46% in fiscal year 2015 to 1.07% in fiscal year 2016 and then decreased to 0.69% in fiscal year 2017.
Regulatory intervention
The banking industry in India is subject to extensive regulation by Governmental organizations and regulatory bodies such as the
RBI and Securities and Exchange Board of India (SEBI). These regulations cover various aspects such as loans and advances,
investments, deposits, risk management, foreign investment, corporate governance and market conduct, customer protection,
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foreign exchange management, capital adequacy, margin requirements, know-your customer and anti-money laundering, and
provisioning for NPAs. The RBI also prescribes required levels of lending to "priority sectors" such as agriculture, which may
expose us to higher levels of risk than we may otherwise face.
In recent years, existing rules and regulations have been modified, new rules and regulations have been enacted and reforms have
been implemented, which are intended to provide tighter control and more transparency in India's banking and securities sectors.
Any changes in the regulatory environment pertaining to the Indian financial services industry could have a significant impact on
our operations and financial condition.
Monetary policy is heavily influenced by the condition of the Indian economy, and changes in the monetary policy affect the
interest rates of our advances and deposits. The RBI responds to fluctuating levels of economic growth, liquidity concerns and
inflationary pressures in the economy by adjusting its monetary policy. A monetary policy designed to combat inflation typically
results in an increase in RBI lending rates.
Further, in addition to having gradually established more stringent capital adequacy requirements, the RBI has also instituted
several prudential measures including an increase in risk weights for capital adequacy computation and general provisioning for
certain types of asset classes. See "Regulation and Policies" on page 149.
In addition, on November 8, 2016, the Government of India announced the demonetisation of all existing `500 and `1000
banknotes. As a result, the Reserve Bank of India has withdrawn all the then prevailing `500 and `1000 banknotes as legal tender
effective from November 9, 2016. This policy was introduced to, among other reasons, (i) lower cash circulation in the country as
a means of counteracting corruption, which is often directly cash-linked and (ii) eliminate counterfeit money.
The immediately ensuing impact of demonetisation on our business was a sharp increase in our current accounts and savings
accounts, and a short-term decrease in loan growth in some of our retail and SME loan books. We also saw an increase in our
various digital channels.
RBI had allowed a 60 to 90 day dispensation on recognition of NPAs during demonetisation. Banks were permitted to defer the
downgrade of accounts (across certain loans) that were standard on November 1, 2016 and would have become a NPA for any
reason during the period from November 1, 2016 to December 31, 2016 by 60 to 90 days. The Bank was able to defer the
downgrade of eligible accounts as a result of this dispensation beyond March 31, 2017. Downgrade of such accounts based on
their overdue position would happen for the first time in our financial statements as of June 30, 2017.
See “Risk Factors—Risks Relating to Regulation”
Provisioning
Our profits are affected by the amounts provided against advances, investments and the related recovery and litigation costs. At a
minimum, we make provisions in accordance with RBI guidelines, though we may provide in excess of RBI requirements to
reflect our internal estimates of actual losses.
Pursuant to the revised "Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions" issued by the
RBI on May 30, 2013, provisioning requirements on all new standard restructured assets increased to 5.00% with effect from June
1, 2013. This increased requirement for existing restructured standard assets has been gradually implemented, from provisioning
of 3.5% with effect from March 31, 2014, to provisioning of 4.25% with effect from March 31, 2015 and to provisioning of 5.00%
with effect from March 31, 2016. These provisions will apply for two years from the date of restructuring and in case of
moratorium on payment of interest and principal after restructuring, such advances will attract provisions for the moratorium
period and two years thereafter. In addition, NPAs when upgraded to standard attract a higher provision in the first year of being
upgraded. The Bank’s net restructured asset considered standard as of March 31, 2017 was `12.82 billion, equivalent to 1.75% of
net advances.
In addition, the RBI in its circular dated April 18, 2017 prescribed additional provisions for standard advances higher than
prescribed rates based on evaluation of risk and stress in various sectors. The Bank has placed a policy in this regard before the
risk management committee of the Board.
Capital Requirements, Reserve Ratios and Liquidity Coverage Ratios
Since April 1, 2013, capital adequacy ratios prescribed by the RBI Basel III Capital Regulations have been implemented in
phases. Under the RBI Basel III Capital Regulations, banks are required to improve the quantity, quality and transparency of their
Tier I capital, enhance risk coverage and supplement the risk-based requirements with a leverage ratio. By March 2019, when the
Basel III norms are fully implemented, the minimum total capital adequacy ratio (including the capital conservation buffer)
required will be 11.5% of risk-weighted assets. The table below summarises the capital requirements under RBI Basel III Capital
Regulations for banks in India:
82
Regulatory Capital
As % of Risk Weighted
Assets
(i) Minimum Common Equity Tier I Ratio ............................................................................................ 5.50
(ii) Capital Conservation Buffer (comprising Common Equity) ............................................................. 2.50
(iii) Minimum Common Equity Tier I Ratio plus Capital Conservation Buffer (i)+(ii) ........................... 8.00
(iv) Additional Tier I capital .................................................................................................................... 1.50
(v) Minimum Tier I capital adequacy ratio (i)+(iv) ................................................................................ 7.00
(vi) Tier II capital .................................................................................................................................... 2.00 (vii) Minimum Total Capital Ratio (MTC) (v)+(vi) ................................................................................. 9.00
(viii) Minimum Total Capital Ratio plus Capital Conservation Buffer (vii)+(ii) ....................................... 11.50
The capital adequacy requirements prescribed by the RBI's Basel III guidelines are more stringent than the requirements
prescribed by the earlier guidelines and compliance with such requirements will have an impact on our financial results, including
certain key indicators of financial performance, such as our return on equity. Banks will also be required to have an additional
capital requirement of up to 2.5% of risk weighted assets if RBI announces the implementation of countercyclical capital buffer
requirements.
Commercial banks in India are required to maintain statutory reserve requirements of Cash Reserve Ratio ("CRR") and Statutory
Liquidity Ratio ("SLR"). As of the date of this Placement Document, the RBI requires a CRR of 4.0% of our net demand and time
liabilities and an SLR of 20.50% of our demand and time liabilities, which will be decreased to 20.00% effective from June 24,
2017. The RBI has the authority to prescribe CRR without any ceiling limits and is not obliged to pay interest payments on CRR
balances. For instance, during the period of demonetisation, the RBI introduced, effective from the fortnight beginning from
November 16, 2016, an incremental CRR of 100% on the increase in net demand and time liabilities between September 16, 2016
and November 11, 2016. The same was withdrawn effective from the fortnight beginning December 10, 2016. RBI does not make
any interest payments on CRR. Any increases in the CRR requirements could affect available funds for deployment in our
operations and, consequently, our results of operations. Regarding the SLR, although it is intended to be a measure to maintain the
bank's liquidity, it has adverse implications for the bank's ability to expand its credit. Changes in interest rates also impact the
valuation of our SLR portfolio and thereby affect our profitability.
The liquidity coverage ratio ("LCR") stipulated by the Basel Committee became effective from January 1, 2015. The LCR is
being implemented in a phased manner, starting with a minimum requirement of 60% from January 1, 2015 and reaching 100% on
January 1, 2019. As of the date of this Placement Document, banks in India are required to maintain liquidity buffers in the form
of high quality liquid assets of 80% with effect from January 1, 2017. This is scheduled to increase to 90% with effect from
January 1, 2018, and to 100% with effect from January 1, 2019. The current requirement is to maintain incremental liquidity
buffer of high quality liquid assets, in addition to the extant reserves requirement.
The LCR regime requires that banks maintain appropriate liquidity buffers to cover for possible outflows over a period of 30 days
under a significant stress scenario. While LCR, in addition to extant reserve requirements, provides higher safety, it also adds the
drag of higher liquidity cost and hence lower profitability. The bank’s average LCR for the latest quarter of fiscal year 2017 was
157.40%, above the current requirement of 80%.
Interest Rates
The magnitude and timing of interest rate changes in the asset and liability markets as well as the relative steepness of the rate
curves, have a significant impact on our net interest margins and our profitability. Movements in short- and long-term interest
rates affect our interest earned and interest expense as well as the level of gains and losses on our securities portfolio. Our yields
and costs are functions of our lending and deposit rates, interbank rates, yields on government and other debt securities, and costs
of term debts and other borrowings, which are generally linked to the interest rate environment. In addition, lending and deposit
rates are significantly influenced by competition in the markets in which we operate.
Prior to April 2016, bank loans were priced by reference to a base rate. With effect from April 1, 2016, RBI guidelines replaced
the base rate-link loan pricing with a new regime based on the marginal cost of funds based lending rate ("MCLR"). Accordingly,
Rupee advances sanctioned or renewed after April 1, 2016 are generally priced with reference to MCLR of different maturities.
Commercial banks must review and publish their MCLR of different maturities every month.
We have historically had a relatively low duration mismatch between our assets and liabilities, largely because the majority of the
Bank's advances were either floating rate advances or short-term fixed rate advances. This low mismatch has helped us to pass on,
in most cases, any changes in interest rates to our customers and broadly maintain our margins.
Policy rates
The following table sets forth the RBI's reverse repo rate, the repo rate and marginal standing facility as of the indicated dates:
Reverse Repo Rate Repo Rate Marginal Standing Facility
(percentages)
As of March 31, 2015 ............................... 6.50 7.50 8.50
As of March 31, 2016 ............................... 5.75 6.75 7.75
83
Reverse Repo Rate Repo Rate Marginal Standing Facility
(percentages) As of March 31, 2017 ............................... 5.75(1) 6.25 6.75(2)
Source: RBI
(1) RBI raised the reverse repo rate 6.00% on April 6, 2017.
(2) RBI raised the marginal standing facility rate to 6.50% on April 6, 2017.
In August 2016, the RBI adopted an inflation target of 4% (with an upper limit of 6% and lower limit of 2%) for the next five
years under its monetary policy framework. The RBI sets interest rates in an effort to keep inflation within the target range, and
Indian banks generally follow the direction of interest rates set by the RBI and adjust both their deposit rates and lending rates
upwards or downwards accordingly. Decreases in the RBI policy rates generally prompt Indian banks to re-examine their lending
rates. Adverse changes in prevailing interest rates may result in a decline in net interest income due to increase in our costs of
funds or deposits without a corresponding increase in our yield on assets, and may also lead to a decline in demand for our loan
products. See "Risk Factors – Risks Relating to Our Business" on page 41. Since fiscal year 2015, the RBI's decrease in policy
rates has been largely responsible for driving a general decreasing interest rate environment in India, which is reflected in
decreased yields on our lending and investing portfolios and decreased rates on our borrowings.
Since mid-June 2016, markets have rallied and yields softened on the back of the Brexit referendum, liquidity conditions
supported by a series of open market operations purchases, lower inflation concerns due to normal monsoons, expectations of a
rate cut and impact of demonetisation. However, after the Sixth Bi-Monthly Monetary Policy Statement for Fiscal Year 2017 in
February 2017, the government security yields increased. As of March 31, 2017, the ten year government security yield was
6.81%, and in fiscal year 2017 the ten year government security yield ranged from 6.18% to 7.54%.
Sources and Cost of Funding
Our primary interest-bearing liabilities are our deposit base, subordinated debt instruments and RBI and inter-bank borrowings.
Adverse economic conditions may also limit or negatively affect our ability to attract deposits, replace maturing liabilities in a
timely manner and at commercially acceptable rates, satisfy statutory liquidity requirements and access funding.
To continue to source low-cost funding through customer deposits, we must, among other things, optimize our branch network,
increase brand recall and develop products and services to distinguish ourselves in an increasingly competitive industry. However,
increasing customer sophistication, competition for funding, any sharp increase in prevailing interest rates and changes to the
RBI's liquidity and reserve requirements may increase the rates that we pay on our deposits 91.67%, 91.38% and 91.22% of our
total liabilities (excluding equity share capital and reserves) were attributable to customer deposits as of March 31, 2017, 2016 and
2015, respectively. As of March 31, 2017, 2016 and 2015, we had total deposits of `976,620.76 million, `791,709.00 million and
`708,226.88 million, respectively, and an advance-to-deposit ratio (calculated as advances divided by deposits) of 75.86%,
73.79% and 72.76%, respectively.
The Bank's CASA ratio has increased from 30.43% in fiscal year 2015 to 32.47% in fiscal year 2016 and 32.60% in fiscal year
2017. We have been able to increase the CASA ratio primarily as a result of our strong position amongst the NRI community.
Deposits at the Bank by NRIs have grown significantly from `259,355.22 million as of March 31, 2015 to `325,970.90 million as
of March 31, 2016 and `385,779.31 million as of March 31, 2017, largely as a result of our focused marketing efforts in the
members states of the Gulf Cooperation Council ("GCC"). Additionally, we had a sharp increase in our CASA during the
demonetisation period, gradually reducing after the RBI relaxed withdrawal restrictions. Our results of operations, funding and
liquidity might be affected if there is any regional or local political or economic instability or uncertainty affecting the GCC and,
consequently, our customers.
The Bank’s liquidity coverage ratio as of March 31, 2017 was 142.88%, which was above the regulatory requirement of 80%
applicable from January 1, 2017. The required liquidity coverage ratio is scheduled to increase to 90% with effect from January 1,
2018 and 100% from January 1, 2019.
Customer and employee relationships
The key drivers of our revenues are the number and quality of customer relationships as well as the range of products and services
we provide to each customer. The number of customers we serve depends on the success of our relationship managers, the reach
and strength of our distribution network, and the demand for, and competitiveness of, our products and services. For our corporate
and wholesale banking business, revenues are driven primarily by the number, as well as quality, of our institutional and corporate
clients, and our ability to grow our share of clients’ business. If we are not successful in developing new customer relationships, or
retaining existing customer relationships, our earnings may be adversely affected.
Employee cost is a large component of our total cost. The Indian financial services sector is highly competitive, and it can be
difficult and expensive to hire and assimilate talented and experienced employees.
Components of Income and Expenditure
84
Interest Earned
Interest earned consists of interest on advances and bills, income from investments, interest on balances with Reserve Bank of
India and other inter-bank funds and other interest earned. Income from investments consists of interest on government securities,
interest on other investments and income by way of dividends from other companies other than subsidiaries. Other interest earned
includes interest on deposits placed with National Bank for Agricultural and Rural Development, Small Industries Development
Bank of India and National Housing Bank and interest on income tax refunds. Our securities portfolio consists primarily of
Government securities, debentures and bonds, equity shares, mutual fund units, certificates of deposit, commercial paper, security
receipts and pass through certificates. On the balances that we maintain with RBI to meet our cash reserve requirements, we do
not receive any interest. See "Risk Factors – Risks Relating to Our Business".
Other Income
Our non-interest income consists principally of (i) commission, exchange and brokerage, (ii) net profit on the sale of investments,
(iii) miscellaneous income, which primarily includes recoveries in assets written off, (iv) net profit on foreign exchange
transactions, (v) dividend income, and (vi) net profit (loss) on the sale of land, buildings and other assets.
Interest Expended
Our interest expended consists of interest on deposits, interest on RBI and inter-bank borrowings and other interest such as interest
on subordinated debt and other borrowings from other financial institutions
Operating Expenses
Our operating expenses consist principally of (i) payments to and provision for employees, (ii) rent, taxes and lighting, (iii)
depreciation on property, (iv) insurance, including deposit insurance premiums that we pay based on the level of deposits at the
Bank, (v) repairs and maintenance, (vi) postage, telegrams, telephones, etc., and (vii) advertisement and publicity.
Provisions and Contingencies (net)
Our provisions and contingencies consist of (i) provision for taxation, (ii) provision for NPAs and contingencies (including write-
offs net of recoveries), (iii) provision for diminution and/or depreciation in the value of investments, (iv) provision for standard
assets, being the provision that RBI requires all banks and NBFCs to maintain on standard assets (v) provision for unhedged
foreign currency exposure of clients and (vi) other provisions.
Fiscal Year Ended March 31, 2016 Compared to Fiscal Year Ended March 31, 2017
Summary of Performance
Fiscal year
2017 2016
% Increase/
(Decrease)
(` in millions, except percentages) Net interest income .............................................................................. 31,306.93 25,669.25 21.96%
Other income ....................................................................................... 10,837.71 8,083.58 34.07%
Operating expenses .............................................................................. 22,525.01 19,315.98 16.61% Provisions and contingencies (excluding tax) ...................................... 6,199.87 7,051.76 (12.08%)
Tax expense ......................................................................................... 4,886.58 2,506.07 94.99%
Net profit for the year ........................................................................ 8,533.18 4,879.02 74.90%
Add: share in profit / (loss) of Associates ............................................ 135.49 (14.84) -
Consolidated profit for the year ........................................................ 8,668.67 4,864.18 78.21%
Net Interest Income
Our net interest income increased by 21.96% from `25,669.25 million in fiscal year 2016 to `31,306.93 million in fiscal year
2017. The Bank's net interest margin increased from 3.15% in fiscal year 2016 to 3.31% in fiscal year 2017, primarily due to a
decrease in the Bank's the cost of funds as described below. The following table sets out the components of net interest income:
Fiscal year
2017 2016
% Increase/
(Decrease)
(` in millions, except percentages)
Interest income
Interest / discount on advances / bills .................................................. 66,561.04 57,481.81 15.79%
Income from investments .................................................................... 17,968.60 17,623.42 1.96% Interest on balances with RBI and other inter-bank funds ................... 989.33 559.63 76.78%
Others ................................................................................................. 2,313.75 2,597.91 (10.94%)
Total interest income ........................................................................ 87,832.72 78,262.77 12.23%
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Fiscal year
2017 2016
% Increase/
(Decrease)
(` in millions, except percentages)
Interest expended
Interest on deposits ............................................................................. 54,035.98 50,612.59 6.76% Interest on RBI / inter-bank borrowings .............................................. 223.89 89.82 149.27%
Others ................................................................................................. 2,265.93 1,891.11 19.82%
Total interest expended .................................................................... 56,525.79 52,593.52 7.48%
Net Interest Income........................................................................... 31,306.93 25,669.25 21.96%
Interest Income
Our total interest income increased by 12.23% from `78,262.77 million in fiscal year 2016 to `87,832.72 million in fiscal year
2017. The increase in total interest income was primarily on account of an increase in interest and discounts on advances and bills,
which increased by 15.79% from `57,481.81 million in fiscal year 2016 to `66,561.04 million in fiscal year 2017. This increase
was primarily due to an increase in average advances of the Bank from `513,344.16 million in fiscal year 2016 to `627,877.03
million in fiscal year 2017. The yield on advances of the Bank dropped from 11.04% in fiscal year 2016 to 10.43% in fiscal year
2017 reflecting the falling interest rate environment in India in line with reduced RBI policy rates. The Bank's net interest
margins, however, increased from 3.15% in fiscal year 2016 to 3.31% fiscal year 2017 due to a reduction in cost of deposits from
6.95% in fiscal year 2016 to 6.25% in fiscal year 2017.
Contributing to the increase in total interest income was a 76.78% increase in interest on balances with RBI and other inter-bank
funds, from `559.63 million in fiscal year 2016 to `989.33 million in fiscal year 2017. This increase was primarily due to an
increase in our repo lending and other interbank balances. During demonetisation we were not able to fully deploy our deposits,
resulting in higher repo lending.
Partially offsetting the increase in total interest income was a 10.94% decrease in other interest earned, from `2,597.91 million in
fiscal year 2016 to `2,313.75 million in fiscal year 2017. This decrease was primarily due to a reduction in interest on deposit
placed by the bank with National Bank for Agricultural and Rural Development (NABARD), Small Industries Development Bank
of India and National Housing Bank to meet the priority sector shortfalls.
Interest Expended
Our total interest expended increased by 7.48% from `52,593.52 million in fiscal year 2016 to `56,525.79 million in fiscal year
2017. The increase in interest expensed was primarily due to increase in the interest paid on deposits by the bank due to the
increase in average deposits from `728,711.79 million in fiscal year 2016 to `865,027.53 million in fiscal year 2017 and interest
on borrowings increased by 149.27% from `89.82 million in fiscal year 2016 to `223.89 million in fiscal year 2017 primarily due
to increase in call money borrowings of the bank. However, the cost of deposits decreased from 6.95% in fiscal year 2016 to
6.25% in fiscal year 2017, reflecting the falling interest rate environment in India in line with reduced RBI policy rates.
Other Income
The following table sets out the components of other income:
Fiscal year
2017 2016
% Increase/
(Decrease)
(` in millions, except percentages)
Commission, exchange and brokerage ................................................. 5,760.61 4,407.50 30.70% Profit on sale of investments (net) ........................................................ 3,086.51 1,275.13 142.05%
Profit (loss) on sale of land, buildings and other assets (net)................ 0.88 (4.49) -
Profit on foreign exchange transactions (net) ....................................... 1,276.83 1,304.91 (2.15%) Miscellaneous income .......................................................................... 712.89 1,100.54 (35.22%)
Recoveries in assets written off (part of miscellaneous income) ....... 552.08 889.32 (37.92%)
Total other income ............................................................................. 10,837.71 8,083.58 34.07%
Our total other income increased by 34.07% from `8,083.58 million in fiscal year 2016 to `10,837.71 million in fiscal year 2017.
The increase in other income was primarily due to the increase in net profits on the sale of investments from `1,275.13 million in
fiscal year 2016 to `3,086.51 million in fiscal year 2017, largely due to our active investment management, a fall in the yield of
Government securities and overall favourable market conditions during fiscal year 2017.
Contributing to the increase in our other income was an increase in commission, exchange and brokerage income from `4,407.50
million in fiscal year 2016 to `5,760.61 million in fiscal year 2017, primarily due to increased processing fees collected, increased
ATM card annual charges and increased service charges.
Partially off-setting these increases was a reduction in the recovery from assets previously written off from `889.32 million in
86
fiscal year 2016 to `552.08 million in fiscal year 2017, primarily due to unfavourable conditions of recovery in the written off
accounts, including the general slowdown in the economy and demonetization efforts by the government.
Operating Expenses
The following table sets out the components of operating expenses:
Fiscal year
2017 2016
% Increase/
(Decrease)
(` in millions, except percentages)
Payments to and provision for employees ........................................... 11,893.38 10,742.15 10.72% Rent, taxes and lighting ....................................................................... 2,222.67 2,081.38 6.79%
Printing and stationery ........................................................................ 273.32 174.91 56.28% Advertisement, publicity and promotion ............................................. 112.00 49.02 128.48%
Depreciation on Group's property ....................................................... 1,239.13 1,081.72 14.55%
Directors' fees, allowances and expenses ............................................ 22.67 20.38 11.24% Auditors' fees and expenses ................................................................ 75.81 74.54 1.70%
Law charges ........................................................................................ 119.18 98.51 20.98%
Postage, telephone etc. ........................................................................ 569.23 481.94 18.11% Repairs and maintenance .................................................................... 621.09 574.39 8.13%
Insurance ............................................................................................. 850.21 739.62 14.95%
Other expenditure ............................................................................... 4,526.33 3,197.42 41.56%
Operating Expenses .......................................................................... 22,525.01 19,315.98 16.61%
Our total operating expenses increased by 16.61% from `19,315.98 million in fiscal year 2016 to `22,525.01 million in fiscal year
2017. This increase was primarily due to an increase in employee costs, which contributed 52.80% of total operating expenses in
fiscal year 2017. Employee costs increased primarily at the Bank as a result of increases in retirement benefits estimates based on
actuarial assumptions. Other expenditures also increased, primarily as a result of an increase in service charges paid by the Bank,
as well as ATM-related expenses.
Provisions (other than tax) and Contingencies
Provisions (other than tax) and contingencies decreased by 12.08% from `7,051.76 million in fiscal year 2016 to `6,199.87
million in fiscal year 2017. This decrease was primarily due to a decrease in provisions for NPAs and investments, which were
partially offset by an increase in provision for standard assets. Provisions for NPAs decreased largely as a result of efforts that we
took to strengthen our recovery processes, which resulted in a decrease in gross NPAs at the Bank from 2.84% in fiscal year 2016
to 2.33% in fiscal year 2017. Provisions for standard assets increased due to increase in advances and provision requirement for
loans under the Scheme for Sustainable Structuring of Stressed Assets (S4A) and the Strategic Debt restructuring (SDR) scheme.
Tax expense
Tax expense increased by 94.99% from `2,506.07 million in fiscal year 2016 to `4,886.58 million in fiscal year 2017. This
increase was primarily due to an increase in profit before tax in fiscal year 2017.
Net Profit
As a result of the above, our net profit for the year increased by 78.21% from `4,864.18 million in fiscal year 2016 to `8,668.67
million in fiscal year 2017.
Fiscal Year Ended March 31, 2015 compared to Fiscal Year Ended March 31, 2016
Fiscal year
2016 2015
% Increase/
(Decrease)
(` in millions, except percentages)
Net interest income .............................................................................. 25,669.25 24,386.20 5.26% Other income ....................................................................................... 8,083.58 8,713.66 (7.23%)
Operating expenses .............................................................................. 19,315.98 16,752.10 15.30%
Provisions and contingencies (excluding tax) ...................................... 7,051.73 1,052.03 570.30%
Tax expense ......................................................................................... 2,506.10 5,174.81 (51.57)%
Net profit for the year ........................................................................ 4,879.02 10,120.92 (51.79%)
Add: share in profit / (loss) of Associates ............................................ (14.84) 457.22 (103.25%)
Consolidated profit for the year ........................................................ 4,864.18 10,578.14 (54.02%)
Net Interest Income
Our net interest income increased by 5.26% from `24,386.20 million for fiscal year 2015 to `25,669.25 million for fiscal year
2016. The Bank’s net interest margin decreased from 3.28% in fiscal year 2015 to 3.15% in fiscal year 2016, primarily due to a
87
decrease in yield on advances resulting from (i) a decrease in the Bank's base rate from 10.20% to 9.95% with effect from June 18,
2015 and 9.63% with effect from December 1, 2015, and (ii) an increase in NPAs during fiscal year 2016. Gross NPAs increased
from 2.04% in fiscal year 2015 to 2.84% in fiscal year 2016, largely in line with a general increase in NPAs across the Indian
banking sector reflecting economic conditions. The following table sets out the components of net interest income:
Fiscal year
2016 2015
% Increase/
(Decrease)
(` in millions, except percentages)
Interest earned Interest / discount on advances / bills ................................................. 57,481.81 55,101.06 4.32%
Income from investments ................................................................... 17,623.42 16,618.89 6.04%
Interest on balances with RBI and other inter-bank funds .................. 559.63 623.60 (10.26%)
Other .................................................................................................. 2,597.91 2,605.94 (0.31%)
Total interest earned ........................................................................ 78,262.77 74,949.49 4.42%
Interest expended
Interest on deposits ............................................................................ 50,612.59 46,273.00 9.38% Interest on RBI / inter-bank borrowings ............................................. 89.82 587.68 (84.72%)
Others ................................................................................................ 1,891.11 3,702.61 (48.92%)
Total interest expended ................................................................... 52,593.52 50,563.30 4.02%
Net Interest Income.......................................................................... 25,669.25 24,386.20 5.26%
Interest earned
Our total interest earned increased by 4.42% from `74,949.49 million for fiscal year 2015 to `78,262.77 million for fiscal year
2016. The increase in interest earned was primarily due to a 4.32% increase in interest and discounts on advances and bills, from
`55,101.06 million for fiscal year 2015 to `57,481.81 million for fiscal year 2016. This increase was primarily due to an increase
in average advances of the Bank from `466,892.43 million in fiscal year 2015 to `513,344.16 million in fiscal year 2016.
However, the average yield on advances of the Bank dropped from 11.67% in fiscal year 2015 to 11.04% in fiscal year 2016,
reflecting the decreasing interest rate environment in India.
Contributing to the increase in total interest income was a 6.04% increase in income from investments from `16,618.89 million in
fiscal year 2015 to `17,623.42 million in fiscal year 2016. This increase was primarily due to an increase in average investments
from `223,152.20 million in fiscal year 2015 to `243,019.59 million in fiscal year 2016.
Interest Expended
Our total interest expended increased by 4.02% from `50,563.30 million for fiscal year 2015 to `52,593.52 million for fiscal year
2016. This increase was primarily due to an increase of 9.38% in interest on deposits. The average deposits increased from
`633,420.40 million in fiscal year 2015 to `728,711.79 million in fiscal year 2016. However, the cost of deposits decreased from
7.31% in fiscal year 2015 to 6.95% in fiscal year 2016, reflecting the falling interest rate environment in India in line with reduced
RBI policy rates.
Other interest expended decreased by 48.92% from `3,702.61 million in fiscal year 2015 to `1,891.11 million in fiscal year 2016
primarily due to a decrease in interest on borrowings resulting from a decrease in the Bank's average borrowings from `41,788.30
million in fiscal year 2015 to `18,839.71 million in fiscal year 2016.
Other Income
The following table sets out the components of other income:
Fiscal year
2016 2015
% Increase/
(Decrease)
(` in millions, except percentages) Commission, exchange and brokerage ................................................. 4,407.50 3,811.50 15.64%
Profit on sale of investments (net) ........................................................ 1,275.13 2,556.67 (50.13%)
Profit (loss) on sale of land, buildings and other assets (net)................ (4.49) (3.53) 27.45%
Profit on foreign exchange transactions (net) ....................................... 1,304.91 1,162.07 12.29%
Miscellaneous income .......................................................................... 1,100.54 1,186.94 (7.28%)
Recoveries in assets written off (part of miscellaneous income) ....... 889.32 1,067.53 (16.69%)
Total other income ............................................................................. 8,083.58 8,713.66 (7.23%)
Our total other income decreased by 7.23% from `8,713.66 million in fiscal year 2015 to `8,083.58 million in fiscal year 2016.
This decrease was primarily due to a 50.13% reduction in net profits on the sale of investments from `2,556.67 million in fiscal
year 2015 to `1,275.13 million in fiscal year 2016, as a result of (i) a high base effect given strong profits on the sale of
investments in fiscal year 2015, and (ii) our view of potential interest rate drops during fiscal year 2017, as a result of which we
actively managed our investments in order to position ourselves to reap the benefits of potential interest rate decreases.
88
Contributing to the decrease in other income was a 16.69% reduction in recovery of assets previously written off from `1,067.53
million in fiscal year 2015 to `889.32 million in fiscal year 2016, as a result of unfavourable conditions of recovery in the written
off accounts, including the general slowdown in the economy amongst others. These decreases were partially off-set by a 15.64%
growth in commission, exchange and brokerage income from `3,811.50 million in fiscal year 2015 to `4,407.50 million in fiscal
year 2016, as a result of increased processing fees, increased sales of third-party products and increases in other service charges.
Operating Expenses
The following table sets out the components of operating expenses:
Fiscal year
2016 2015
% Increase/
(Decrease)
(` in millions, except percentages)
Payments to and provision for employees ........................................... 10,742.15 9,130.52 17.65% Rent, taxes and lighting ....................................................................... 2,081.38 1,894.51 9.86%
Printing and stationery ........................................................................ 174.91 172.86 1.19%
Advertisement, publicity and promotion ............................................. 49.02 393.47 (87.54%) Depreciation on Group's property ....................................................... 1,081.72 794.89 36.09%
Directors' fees, allowances and expenses ............................................ 20.38 22.06 (7.64%)
Auditors' fees and expenses ................................................................ 74.54 69.98 6.51% Law charges ........................................................................................ 98.51 84.16 17.05%
Postage, telephone etc. ........................................................................ 481.94 471.46 2.22%
Repairs and maintenance .................................................................... 574.39 481.66 19.25%
Insurance ............................................................................................. 739.62 625.37 18.27%
Other expenditure ............................................................................... 3,197.42 2,611.16 22.45%
Operating Expenses .......................................................................... 19,315.98 16,752.10 15.30%
Our total operating expenses increased by 15.30% from `16,752.10 million in fiscal year 2015 to `19,315.98 million in fiscal year
2016. This increase was primarily due to a 17.65% increase in employee costs from `9,130.52 million in fiscal year 2015 to
`10,742.15 million in fiscal year 2016 due to (i) dearness allowances linked to inflation and (ii) the 10th bi-partite settlement
between the Indian Bank’s association and trade unions, which resulted in an increase in employee benefits retroactive to
November 2012. Depreciation on our property increased by 36.09% due to reversal of excess depreciation amounting to `243.70,
pursuant to a change in method of depreciation for certain categories of fixed assets from the written down value method to the
straight line method.
Provisions (other than tax) and Contingencies
Provisions (other than tax) and contingencies increased by 570.30% from `1,052.03 million in fiscal year 2015 to `7,051.76
million in fiscal year 2016. This increase was primarily due to an increase in provisions for NPAs from `2,039.41 million in fiscal
year 2015 to `5,555.17 million in fiscal year 2016 and an increase in provision for investments from a reversal of `806.13 million
in fiscal year 2015 to a charge of `801.62 million in fiscal year 2016. Provisions for NPAs increased largely in line with increases
in NPAs across the Indian banking sector, reflecting economic conditions. Gross NPAs at the Bank on a standalone basis
increased from 2.04% in fiscal year 2015 to 2.84% in fiscal year 2016. Provision for standard advances decreased from `415.92
million in fiscal year 2015 to `302.34 million in fiscal year 2016 due to a reduction in our restructuring book, which requires
higher provision as per RBI guidelines.
Tax expense
Tax expense decreased by 51.57% from `5,174.81 million in fiscal year 2015 to `2,506.07 million in fiscal year 2016. This
increase was primarily due to a decrease in profit before tax in fiscal year 2016.
Net Profit
As a result of the above, our net profit for the year decreased by 54.02% from `10,578.14 million for fiscal year 2015 to `4,864.19
million for fiscal year 2016.
Financial Condition
Assets
The following table sets forth the principal components of our assets as of March 31, 2017, 2016 and 2015:
As of March 31,
2017 2016 2015
(` in millions) Cash and balances with the RBI .................................................. 45,782.69 37,769.59 33,819.84
Balances with banks and money at call and short notice ............. 28,763.72 16,461.84 14,024.60
Investments ................................................................................. 279,122.59 249,204.69 227,830.36
89
As of March 31,
2017 2016 2015
(` in millions) Advances .................................................................................... 740,862.30 584,197.74 515,291.87
Fixed assets ................................................................................. 4,923.44 5,236.39 4,726.84
Other assets ................................................................................. 55,402.62 54,187.07 57,725.41
Total ........................................................................................... 1,154,857.35 947,057.32 853,418.93
Assets amounted to `1,154,857.35 million as of March 31, 2017, an increase of 21.94% as compared to `947,057.32 million as of
March 31, 2016. This increase was primarily due to (i) a 26.82% increase in advances, from `584,197.74 million as of March 31,
2016 to `740,862.30 million as of March 31, 2017, (ii) a 12.01% increase in investments, from `249,204.69 million as of March
31, 2016 to `279,122.59 million as of March 31, 2017, and (iii) a 74.73% increase in balances with banks and money at call and
short notice, from `16,461.84 million as of March 31, 2016 to `28,763.72 million as of March 31, 2017.
Assets amounted to `947,057.32 million as of March 31, 2016, an increase of 10.97% as compared to `853,418.93 million as of
March 31, 2015. This increase was primarily due to (i) a 13.37% increase in advances, from `515,291.87 million as of March 31,
2015 to `584,197.74 million as of March 31, 2016, and (ii) a 9.38% increase in investments, from `227,830.36 million as of
March 31, 2015 to `249,204.69 million as of March 31, 2016.
Advances
The following table sets forth a breakdown of our advances as of March 31, 2017, 2016 and 2015:
As of March 31,
2017 2016 2015
(` in millions) Wholesale advances .................................................................... 269,470.01 193,708.53 164,095.84
SME advances ............................................................................ 176,411.30 151,720.70 129,178.40 Agriculture advances .................................................................. 74,972.80 66,362.02 63,118.60
Retail advances ........................................................................... 227,556.84 179,415.15 165,563.43
Gross advances .......................................................................... 748,410.95 591,206.41 521,956.27
NPA provisions ........................................................................... 7,548.65 7,008.67 6,664.40
Net advances .............................................................................. 740,862.30 584,197.74 515,291.87
Gross advances amounted to `748,410.95 million as of March 31, 2017, an increase of 26.59% as compared to `591,206.41
million as of March 31, 2016. The increase was primarily due to increases in the Bank’s retail and wholesale portfolios.
Wholesale advances increased by 39.11% from `193,708.53 million in fiscal year 2016 to `269,470.01 million in fiscal year 2017,
largely as a result of focused growth through our relationship manager model. Retail advances increased by 26.83% from
`179,415.15 million in fiscal year 2016 to `227,556.84 million in fiscal year 2017, largely due to (i) assignment transactions of
`27,877.83 million entered by the Bank in fiscal year 2017 due to the acquisition of various portfolios from other banks, as well as
(ii) the growth in our mortgages and automobile financing portfolios. Contributing to the increase was a 16.27% increase in SME
advances, resulting from the introduction of the relationship manager model.
Gross advances amounted to `591,206.41 million as of March 31, 2016, an increase of 13.27% as compared to `521,956.27
million as of March 31, 2015. The increase was primarily due to growth in the SME segment, which grew by 17.45% from
`129,178.40 million in fiscal year 2015 to `151,720.70 million in fiscal year 2016. SME advances grew mainly due to our launch
of new products, including (i) the Federal Easy Business Loan scheme, which improved our reach amongst the micro and small
business community, (ii) supply chain financing and (iii) an exclusive scheme for commercial vehicle financing. Contributing to
the increase in advances was an 18.05% increase in wholesale advances from `164,095.84 million in fiscal year 2015 to
`193,708.53 million in fiscal year 2016, mainly due to organic growth among chosen corporate clients including mid-corporates,
large corporates and institutional customers. In addition, retail advances increased by 8.37% from `165,563.43 million in fiscal
year 2015 to `179,415.15 million in fiscal year 2016, mainly due to increases in mortgage loans and car loans, which were
partially offset by slower growth in the gold loan market due to volatile gold prices.
90
Investments
The following table sets forth a breakdown of our investments as of March 31, 2017, 2016 and 2015:
As of March 31,
2017 2016 2015
(` in millions)
Investments in India Government securities ............................................................. 215,654.10 199,419.70 193,096.96
Shares ...................................................................................... 2,175.94 1,554.36 1,579.26
Debentures and bonds .............................................................. 14,076.12 16,990.39 8,107.06 Joint ventures........................................................................... 1,765.24 1,629.75 1,644.58
Pass through certificates .......................................................... 1,000.00 63.57 928.78
Certificate of deposits .............................................................. 16,873.22 11,838.29 17,664.32 Commercial paper ................................................................... 19,880.02 11,092.99 -
Venture capital funds ............................................................... 216.94 381.20 392.30
Security receipts ...................................................................... 7,472.06 6,227.57 4,416.76 Others ...................................................................................... 0.18 0.33 0.35
Total investments in India..................................................... 279,113.84 249,198.16 227,830.36
Investments outside India ............................................................ 8.75 6.53 -
Total ........................................................................................... 279,122.59 249,204.69 227,830.36
Investments amounted to `279,122.59 million as of March 31, 2017, an increase of 12.01% as compared to `249,204.69 million
as of March 31, 2016, primarily as a result of increases in government securities, commercial paper and certificates of deposit.
Investments in government securities increased primarily because of an increase in deposits of the Bank, as a result of which we
had to increase our investment in government securities largely to meet our SLR requirements. Investments in commercial paper
increased primarily to take benefit of declining interest rates and to acquire new clients after the necessary due diligence by the
credit department of the Bank. Such commercial papers are issued by various companies, and the commercial papers act as credit
substitutes. Investments in certificates of deposit increased primarily because of excess liquidity in the Bank, the Bank invests
such excess liquidity in certificates of deposits after consideration of the yield and the exposure limit fixed by the Board against
the Investee Bank.
Investments amounted to `249,204.69 million as of March 31, 2016, an increase of 9.38% as compared to `227,830.36 million as
of March 31, 2015, primarily as a result of increase in investments in commercial paper, debentures and bonds, and government
securities, which were partially offset by a decrease in investments in certificates of deposit. Investments in commercial paper
increased primarily to take benefit of declining interest rates and to acquire new clients. Investments in debentures and bonds
increased primarily because of the Ujwal Discom Assurance Yojana Scheme to restructure various power distribution companies.
Under the Ujwal Discom Assurance Yojana Scheme, the Bank's credit exposure to such power distribution companies was
converted into State Government bonds, resulting in a decrease in the Bank's loans and an increase in investments. These bonds
are guaranteed by respective the states and carry less risk. Investments in government securities increased primarily because of an
increase in deposits of the Bank, as a result of which we had to increase our investment in government securities largely to meet
our SLR requirements. Investments in certificates of deposit were reduced as the Bank decided not to invest surplus liquidity into
the certificates of deposit after considering the yield on investments and exposure limits fixed against the Investee Bank.
Balances with banks and money at call and short notice
Balances with banks and money at call and short notice increased by 74.73% from `16,461.84 million as of March 31, 2016 to
`28,763.72 million as of March 31, 2017, primarily as a result of an increase in reverse repo lending.
Balances with banks and money at call and short notice increased by 17.38% from `14,024.60 million as of March 31, 2015 to
`16,461.84 million as of March 31, 2016, primarily as a result of an increase in foreign currency placements outside India.
Liabilities
The following table sets forth the principal components of our liabilities as of March 31, 2017, 2016 and 2015:
As of March 31,
2017 2016 2015
(` in millions)
Deposits .................................................................................. 976,620.76 791,709.00 708,226.88 Borrowings ............................................................................. 63,454.93 52,363.17 48,265.80
Other liabilities and provisions ............................................... 25,267.98 22,343.90 19,923.52
Total ....................................................................................... 1,065,343.66 866,416.07 776,416.20
Liabilities amounted to `1,065,343.66 million as of March 31, 2017, an increase of 22.96% as compared to `866,416.07 million
as of March 31, 2016. The increase was primarily on account of growth in our deposits and borrowings.
Liabilities amounted to `866,416.07 million as of March 31, 2016, an increase of 11.59% as compared to `776,416.20 million as
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of March 31, 2015. The increase was primarily on account of growth in our deposits and borrowings.
Deposits
The following table sets forth a breakdown of our deposits, as well as the percentage of total deposits that each item contributes,
as of March 31, 2017, 2016 and 2015:
As of March 31,
2017 2016 2015
(` in millions, except percentages)
Demand deposits (current account) ......................................... 56,526.90 5.79% 46,303.83 5.85% 40,565.89 5.73% Savings bank deposits ............................................................. 263,976.65 27.03% 214,222.06 27.06% 177,269.07 25.03%
Term deposits.......................................................................... 656,117.20 67.18% 531,183.10 67.09% 490,391.92 69.24%
Total deposits ........................................................................ 976,620.76 100.00% 791,709.00 100.00% 708,226.88 100.00%
An important part of our deposit base are the deposits that we receive from NRIs. NRI deposits were `259,355.22 million as of
March 31, 2015, `325,970.90 million as of March 31, 2016 and `385,779.31 million as of March 31, 2017. Deposits from NRIs
include a mix of demand deposits, savings deposits and term deposits.
Deposits amounted to `976,620.76 million as of March 31, 2017, an increase of 23.36% as compared to `791,709.00 million as of
March 31, 2016. Demand deposits and savings deposits increased by 22.08% and 23.23%, respectively, primarily as a result of
organic growth largely driven by increased marketing efforts as well as the effects of demonetisation. Term deposits increased by
23.52% primarily as a result of a 255.24% increase in inter-bank term deposits, primarily from regional rural banks and co-
operative banks, largely due to our increased marketing efforts. Our CASA ratio remained relatively stable, increasing from
32.47% in fiscal year 2016 to 32.60% in fiscal year 2017.
Deposits amounted to `791,709.00 million as of March 31, 2016, an increase of 11.79% as compared to `708,226.88 million as of
March 31, 2015. The increase was primarily on account of a 20.85% increase in savings deposits from `177,269.07 million as of
March 31, 2015 to `214,222.06 million as of March 31, 2016, which was particularly driven by NRI savings deposits.
Contributing to the increase was an 8.32% increase in term deposits from `490,391.92 million as of March 31, 2015 to
`531,183.10 million as of March 31, 2016. Term deposits increased mainly as a result of growth in NRI term deposits. In addition,
demand deposits increased by 14.14% from `40,565.89 million as of March 31, 2015 to `46,303.83 million as of March 31, 2016.
Demand deposits increased mainly as a result of marketing campaigns and other efforts to grow our demand deposit portfolio. As
a result of the foregoing, our CASA ratio increased from 30.43% in fiscal year 2015 to 32.47% in fiscal year 2016
Borrowings
Borrowings amounted to `63,454.93 million as of March 31, 2017, an increase of 21.18% as compared to `52,363.17 million as
of March 31, 2016. The increase was primarily domestic borrowings to support lending activities, as well as borrowings outside
India to support the functioning of our international banking unit in GIFT City.
Borrowings amounted to `52,363.17 million as of March 31, 2016, an increase of 8.49% as compared to `48,265.80 million as of
March 31, 2015. The increase was primarily on account of borrowings outside India to support the functioning of our international
banking unit in GIFT City.
Other liabilities and provisions
Other liabilities and provisions amounted to ` 25,267.98 million as of March 31, 2017, an increase of 13.09% as compared to
`22,343.90 million as of March 31, 2016. The increase was primarily on account of an increase in interest payable on incremental
deposits and borrowings and an increase in standard asset provisions due to increased advances.
Other liabilities and provisions amounted to `22,343.90 million as of March 31, 2016, an increase of 12.15% as compared to
`19,923.52 million as of March 31, 2015. The increase was primarily on account of an increase in standard asset provisions due to
increased advances.
Capital
We are a banking company within the meaning of the Indian Banking Regulation Act, 1949. We are registered with and subject to
supervision by the RBI. The RBI issued detailed guidelines for implementation of Basel III capital regulations in May 2012. Basel
III Capital Regulations are being implemented in India with effect from April 1, 2013 in a phased manner, which the Bank has
complied with.
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The Bank's regulatory capital and capital adequacy ratios calculated under Basel III as of March 31, 2017 are as follows:
Basel III
March 31, 2017
(` in millions, except percentages)
Tier 1 capital ................................................................................................................................................... 85,392.59
Tier 2 capital ................................................................................................................................................... 4,160.76
Total capital ................................................................................................................................................... 89,553.35
Total risk weighted assets and contingents ................................................................................................. 722,954.32
Capital ratios of the Group: Tier 1 CRAR ................................................................................................................................................... 11.81%
Total CRAR .................................................................................................................................................... 12.39%
Minimum capital ratios required by the RBI: Tier 1 including capital conservation buffer ........................................................................................... 6.75%
Total capital ........................................................................................................................................... 10.25%
Capital Expenditure
Our capital expenditure consists principally of expenditure relating to branch network expansion as well as investment in
technology and communication infrastructure, in each case principally in India. For fiscal years 2017, 2016 and 2015, we spent
`958.42 million, `1,719.08 million and `1,171.80 million on capital expenditures, respectively.
Our planned future capital expenditure relates primarily to branch expansion, maintenance and investments in technology and
communication infrastructure. The approved capital budget by the Board for the fiscal year 2018 is `1,090.00 million. However,
our actual capital expenditure may be higher or lower than our current expectations, and could be material in amount. Moreover,
we may use incur capital expenditure for purposes other than the above, depending on, among other factors, the business
environment prevailing at the time and any change in our business plans.
Contingent Liabilities, Financial Instruments and Cross Border Exposures
Contingent Liabilities
Our contingent liability primarily relate to:
1. Claims not acknowledged as debts.
These represent claims filed against us in the normal course of business relating to various legal cases currently in
progress. These also include demands raised by income tax and other statutory authorities and disputed by us.
2. Liability on account of forward exchange and derivative contracts.
We enter into forward exchange contracts on our own account and on behalf of our customers. Forward exchange
contracts are commitments to buy or sell foreign currency at a future date at the contracted rate.
3. Guarantees given on behalf of constituents.
As a part of our banking activities, we issue guarantees on behalf of our customers to enhance their credit standing.
Guarantees represent irrevocable assurances that we will make payments in the event of the customer failing to fulfil its
financial or performance obligations.
4. Acceptances, endorsements and other obligations.
These include documentary credit issued by us on behalf of our customers and bills drawn by our customers that are
accepted or endorsed by us.
5. Other items for which the bank is contingently liable.
Includes capital commitments and amounts transferred to RBI under the Depositor Education and Awareness Fund
(DEAF).
The following table presents our contingent liabilities:
As of March 31,
2017 2016 2015
(` in millions)
Claims not acknowledged as debts ............................................. 3,810.21 1,114.15 3,240.71
Liability on account of outstanding forward exchange contracts 164,567.63 142,421.17 126,308.29 Guarantees on behalf of constituents .......................................... 47,954.50 43,996.47 32,601.13
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As of March 31,
2017 2016 2015
(` in millions) Acceptances, endorsements and other obligations ..................... 14,175.13 13,205.03 9,004.09
Other items for which we are contingently liable ....................... 1,849.38 1,804.40 997.24
Total .......................................................................................... 232,356.85 202,541.22 172,151.46
Contingent liabilities increased by 17.65% from `172,151.46 million in fiscal year 2015 to `202,541.22 million in fiscal year
2016 and by a further 14.72% to `232,356.85 million in fiscal year 2017. The increase from fiscal year 2015 to fiscal year 2017
was primarily due to (i) an increase in liability on account of outstanding forward exchange contracts resulting from our
relationship manager model and dedicated efforts by our treasury department to sell more products to corporate and SME
customers, and (ii) an increase in guarantees on behalf of constituents on account of additional non-fund limits given to target
corporate customers, as well as new customer acquisitions.
Financial Instruments
Our foreign exchange and derivative product offerings to our customers cover a range of products, including foreign exchange and
interest rate transactions and hedging solutions, such as spot and forward foreign exchange contracts, forward rate agreements,
currency swaps, currency options and interest rate derivatives. These transactions enable our customers to transfer, modify or
reduce their foreign exchange and interest rate risks. A specified group of foreign exchange dealers and relationship managers
from our treasury front office works on such product offerings jointly with the relationship managers across the various customer
groups in the Bank.
We also enter into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate
swaps with inter-bank participants, to support our activities with our clients. We also trade, to a more limited extent, for our own
account. In addition, we also use these instruments for our asset liability management.
We earn profit on customer transactions by way of a margin as a mark-up over the inter-bank exchange or interest rate. We earn
profit on inter-bank transactions by way of a differential between the purchase rate and the sale rate. These profits are recorded as
income from foreign exchange and derivative transactions. The RBI imposes limits on our ability to hold overnight positions in
foreign exchange and derivatives, and we maintain our overnight positions within the limits as per our risk management policies
approved by our Board within the RBI framework.
Cross Border Exposures
The RBI requires banks in India to implement RBI prescribed guidelines on country risk management in respect of those countries
where a bank has net funded exposure in excess of a prescribed percentage of its total assets. In the normal course of business, the
Bank has both direct and indirect exposure to risks related to counter parties and entities in foreign countries. The Bank monitors
such cross-border exposures on an ongoing basis. The Bank's aggregate country risk exposure was 1.70% of its total assets as of
March 31, 2017.
Qualifications, Reservations and Adverse Remarks
There are no reservations, qualifications or adverse remarks highlighted by the auditors in their reports to our financial statements
as of and for the fiscal years ended March 31, 2017, 2016, 2015, 2014 and 2013. The auditors have included the the following
emphasis of matter the fiscal years ended March 31, 2016, 2015, 2014 and 2013:
(a) For Fiscal year ended March 31, 2013 - Emphasis of matter:
Proportionate charge of pension liability of the Bank amounting to `33.68 Crore to the Profit and Loss Account and the
balance unamortised pension liability of `67.36 Crore as at March 31, 2013, included in Schedule 11 to the Financial
Statements to be amortised over the next two years, pursuant to the exemption from the application of the provisions of
the Accounting Standard (AS) 15, Employee Benefits, granted by the Reserve Bank of India and made applicable to the
Bank vide letter no. DBOD No.BP.BC.15896 / 21.04.018 / 2010-11 dated April 8, 2011.
(b) For Fiscal year ended March 31, 2014 – Emphasis of matter:
(i) proportionate charge of pension liability of the Bank amounting to `33.68 Crore to the Profit and Loss Account and the
balance unamortised pension liability of `33.68 Crore as at 31st March, 2014, included in Schedule 11 to the Financial
Statements to be amortised in the next year, pursuant to the exemption from the application of the provisions of the
Accounting Standard (AS) 15, Employee Benefits, granted by the Reserve Bank of India and made applicable to the
Bank vide letter no. DBOD No.BP.BC.15896 / 21.04.018/2010-11 dated 8th April, 2011.
(ii) creation of Deferred Tax Liability in respect of special reserve created under Sec 36 (1) (viii) of the Income Tax Act
1961 for the period upto 31 March 2013 amounting to Rs.53.96 Crore by drawing down the balance from General
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Reserve pursuant to RBI’s Circular No. DBOD. No.BP.BC.77/21.04.018/2013-14 dated 20th December 2013.
(c) For Fiscal year ended March 31, 2015 - Emphasis of matter:
proportionate charge of pension liability of the Bank amounting to `33.68 Crore to the Profit and Loss Account and the
balance unamortised pension liability of Nil, included in Schedule 11 to the Financial Statements, pursuant to the
exemption from the application of the provisions of the Accounting Standard (AS) 15, Employee Benefits, granted by the
Reserve Bank of India and made applicable to the Bank vide letter no. DBOD No.BP.BC.15896 / 21.04.018 / 2010-11
dated April 8, 2011.
(d) For the Fiscal year ended March 31, 2016 – Emphasis of matter:
amortising the shortfall arising from the sale of certain non-performing assets during the year ended March 31, 2016 over
a period of 2 years, in terms of RBI Master Circular DBR. No. BP. BC. 2/21. 04. 048/2015-16 on Prudential Norms on
Income Recognition, Asset Classification and Provisioning pertaining to advances, dated July 1, 2015 and the balance
outstanding of such shortfall as at 31st March, 2016 of `86.73 Crore.
In respect of the above emphasis of matters, there are no corrective steps required.
Critical Accounting Policies
We have set forth below some of our critical accounting policies under Indian GAAP. Our financial statements are prepared in
accordance with Indian GAAP as applicable to banks. The preparation of our financial statements requires us to make estimates
and judgements that affect the reported amounts of assets, liabilities, income and expenses as well as the disclosure of contingent
liabilities. The notes to the financial statements contain a summary of our significant accounting policies. Certain of these policies
are critical to the portrayal of our financial condition, since they require management to make subjective judgements, some of
which may relate to matters that are inherently uncertain. Set forth below are some of our critical accounting policies under Indian
GAAP for fiscal 2017. We base our estimates and judgements on historical experience and other factors that we believe to be
reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. As
a result of changes in applicable statutory requirements, regulatory guidelines and accounting practices in India, our accounting
policies may have undergone changes during the periods covered by this discussion. Accordingly, this discussion should be read
in conjunction with our financial statements and notes as applicable during the respective fiscal year.
Revenue Recognition
Interest income is recognised on an accrual basis except interest income on non-performing assets, loans under Scheme
for Sustainable Structuring of Stressed Assets (S4A) and Strategic Debt restructuring (SDR) scheme of RBI which is
recognised upon receipt in accordance with AS-9, Revenue Recognition as prescribed under Section 133 of the
Companies Act, 2013 and as specified in RBI guidelines.
Interest on income tax refund is recognised in the year of passing of assessment orders.
Recoveries made from NPA accounts are appropriated first towards unrealized interest/income debited to borrowers
accounts, then expenditure/out of pocket expenses incurred and lastly towards principal dues.
Processing fees collected on loans disbursed, along with related loan acquisition costs are recognised at
inception/renewal of the loan.
Income on discounted instruments is recognised over the tenure of the instrument on a straight line basis.
Guarantee commission, commission on letter of credit and annual locker rent fees are recognised on a straight line basis
over the period of contract. Other fees and commission income are recognised when due, except in cases where the bank
is uncertain of ultimate collection.
Dividend on equity shares, preference shares and on mutual funds is recognised as income when the right to receive the
dividend is established.
Loan syndication fee is accounted for on completion of the agreed service and when right to receive is established.
In compromise settlement cases, sacrifice on settlement is accounted upfront.
Unpaid funded interest on term loans are accounted on realisation as per the guidelines of RBI.
The difference between the sale price and purchase cost of gold coins, received on consignment basis is included in other
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income.
Retirement and other employee benefits
The Bank
Provident Fund
The contribution made by the Bank to The Federal Bank Employees Provident Fund, administered by the trustees, is charged to
the consolidated profit and loss account.
Pension Fund
The contribution towards The Federal Bank Employees’ Pension Fund, managed by trustees, is determined on actuarial basis on
projected unit credit method as on the Balance Sheet date and is recognised in the accounts.
Employees who joined the services of the Bank with effect from April 01, 2010 are covered under Defined Contributory Pension
Scheme (DCPS). In respect of such employees, the Bank contributes 10% of the basic pay plus dearness allowance, and the
expenditure thereof is charged to the consolidated profit and loss account.
Gratuity
The Bank makes annual contribution to The Federal Bank Employees’ Gratuity Trust Fund, administered and managed by the
Trustees. The cost of providing such benefits is determined using the projected unit credit method, with actuarial valuations being
carried out at each balance sheet date. Actuarial gains and losses are recognised in the consolidated profit and loss account in the
period in which they occur. The retirement benefit obligation recognised in the balance sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future
contributions to the schemes.
Compensation for absence on privilege / sick / casual leave and leave travel concession
The employees of the bank are entitled to compensated absence on account of privilege / sick / casual leave as per the leave rules.
The bank measures the long term expected cost of compensated absence as a result of the unused entitlement that has accumulated
at the balance sheet date based on actuarial valuation and such costs are recognised in the accounts.
The employees are also eligible for leave travel concession as per the rules. The estimated cost of unused entitlement as on the
Balance Sheet date based on actuarial valuation is provided for.
Other employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by
employees is recognised during the period when the employees render the service. These benefits include performance incentives.
The Subsidiary
The company has defined contribution plans for employees comprising of provident fund and employee state insurance. The
contributions paid/payable to these plans during the year are charged to Profit and Loss Account for the year.
The net present value of the obligation for gratuity benefits, which is a defined benefit plan, as determined on independent
actuarial valuation, conducted annually using projected unit credit method, as adjusted for unrecognized past services cost, if any,
is recognised in the accounts. Actuarial gains and losses are recognised in full in the profit and loss account for the period in
which they occur.
The company has a scheme for compensated absences for employees, the liability of which is determined on the basis of an
independent actuarial valuation carried out at the end of the year, using the projected unit credit method. Actuarial gains and
losses are recognised in full in the profit and loss account for the period in which they occur.
Investments
The Bank
Classification
In accordance with the RBI guidelines, investments are categorised at the time of purchase as:
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held for trading;
available for sale; and
held to maturity.
Investments which are primarily held for sale within 90 days from the date of purchase are classified as “held for trading”. As per
RBI guidelines, held for trading securities which remain unsold for a period of 90 days are classified as available for sale
securities on that date. Investments which the bank intends to hold until maturity are classified as “held to maturity”.
Investments which are not classified in either of the above two categories are classified as “available for sale”.
Under each of these categories, investments are further classified under six groups (hereinafter called groups) - Government
Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries/ Joint Ventures and Other
Investments for the purposes of disclosure in the balance sheet.
Transfer of securities between Categories
Transfer of securities between categories is done at the lower of the acquisition cost / book value / market value on the date of the
transfer and the depreciation, if any, on such transfer is fully provided for, as per RBI guidelines.
Acquisition Cost
In determining the acquisition cost of the investment:
transaction costs including brokerage and commission pertaining to acquisition of investments are charged to the
consolidated profit and loss account.
broken period interest is charged to the consolidated profit and loss account.
cost of investments is computed based on the weighted average cost method.
Valuation
The valuation of investments is made in accordance with the RBI Guidelines as follows:
a) Held for trading and available for sale investments are marked-to-market. The market/fair value of quoted investments
included in the ‘available for sale’ and ‘held for trading’ categories is the market price of the scrip as available from the
trades/quotes on the stock exchanges or prices declared by the Primary Dealers Association of India jointly with the Fixed Income
Money Market and Derivative Associations of India, periodically. Net depreciation, if any, within each category of each
investment classification is recognised in consolidated profit and loss account. The net appreciation, if any, under each category of
each investment is ignored. Except in cases where provision for diminution other than temporary is created, the book value of
individual securities is not changed consequent to the periodic valuation of investments.
b) Held to Maturity investments are carried at their acquisition cost. Any premium on acquisition of government securities
are amortised over the remaining maturity period of the security on a straight line basis. Any diminution, other than
temporary, in the value of such securities is provided for.
c) Treasury bills and certificate of deposits, being discounted instruments, are valued at carrying cost.
d) Units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund.
e) The market value of investments where current quotations are not available is determined as per the norms prescribed by
the RBI as follows:
in case of unquoted bonds, debentures and preference shares where interest/dividend is received regularly (i.e. not
overdue beyond 90 days), the market price is derived based on the yield-to-maturity for government securities as
published by the Fixed Income Money Market and Derivative Associations of India / the Primary Dealers Association of
India and suitably marked up for credit risk applicable to the credit rating of the instrument. The matrix for credit risk
mark-up for each categories and credit ratings along with residual maturity issued by Fixed Income Money Market and
Derivative Associations of India are adopted for this purpose;
in case of bonds and debentures (including pass through certificates) where interest is not received regularly (i.e. overdue
beyond 90 days), the valuation is in accordance with prudential norms for provisioning as prescribed by RBI;
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equity shares, for which current quotations are not available or where the shares are not quoted on the stock exchanges,
are valued at break-up value (without considering revaluation reserves, if any), which is ascertained from the company's
latest balance sheet. In case the latest balance sheet is not available, the shares are valued at Re. 1/- per company;
depreciation on equity shares acquired and held by the Bank under SDR scheme is provided over a period of four
calendar quarters from the date of conversion of debt into equity in accordance with the RBI guidelines.
units of venture capital funds held under the available for sale category where current quotations are not available are
marked-to=market based on the net asset value shown by the venture capital fund as per the latest audited financials of
the fund. In case the audited financials are not available for a period beyond 18 months, the investments are valued at
Re.1/- per venture capital fund. Investment in unquoted venture capital fund after 23rd August, 2006 are categorised
under held to maturity category for the initial period of three years and valued at cost as per RBI guidelines;
investment in security receipts are valued as per the net asset value obtained from the issuing reconstruction
company/securitisation company.
f) Investments in subsidiaries/associates are categorised as held to maturity and assessed for impairment to determine
permanent diminution, if any, in accordance with the RBI guidelines.
g) The Bank follows the trade date method of accounting for purchase and sale of investments, except for Government of
India and State Government securities where the settlement date method of accounting is followed in accordance with
RBI Guidelines.
h) Non-performing investments are identified and valued based on RBI Guidelines.
Disposal of Investments
a) Held for trading and available for sale – Profit or loss on sale / redemption is included in consolidated the profit and loss
account.
b) Held to maturity – profit on sale / redemption of investments is included in the consolidated profit and loss account and is
appropriated to capital reserve after adjustments for tax and transfer to statutory reserve. Loss on sale / redemption is
charged to the consolidated profit and loss account.
Repo and reverse repo transactions
In accordance with the RBI guidelines, repo and reverse repo transactions in government securities are reflected as borrowing and
lending transactions, respectively. Borrowing cost on repo transactions is accounted for as interest expense and revenue on reverse
repo is accounted for as interest income.
Pursuant to RBI Circular FMRD.DIRD.10/14.03.002/2015-16 dated May 19, 2016, as amended, the Bank has considered its
repo/reverse repo transactions under Liquidity Adjustment Facility and Marginal Standing Facility of RBI as borrowings/lending,
as the case may be. Hitherto, the repo/ reverse repo transactions under Liquidity Adjustment Facility and Marginal Standing
Facility of RBI were included under investments.
Short Sales
In accordance with the RBI guidelines, the Bank undertakes short sale transactions in Central Government dated securities. The
Short Sales positions are reflected in ‘Securities Short Sold (‘SSS’) A/C’, specifically created for this purpose. Such short
positions are categorized as held for trading. These positions are marked-to-market along with the other securities under the held-
for-trading portfolio, and resultant mark-to-market gains/losses are accounted for as per the relevant RBI guidelines for valuation
of investments discussed earlier.
The Subsidiary
Investments held as long-term investments are carried at cost comprising of acquisition and incidental expenses. Provision for
diminution in value of investments, if any, is made if in the opinion of management, such diminution is other than temporary. Any
premium on acquisition is amortised over the remaining maturity of the security on a constant yield to maturity basis. Such
amortisation of premium is adjusted against interest income from investments.
The book value of investment is reduced to the extent of amount amortised during the relevant accounting period.
Investments other than long-term investments are classified as current investments and valued at lower of cost or fair value.
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Transactions involving foreign exchange
Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing on the date
of the transaction. Income and expenditure items of non- integral foreign operations (such as the international banking unit at
GIFT city) are translated at quarterly average closing rates.
Foreign currency monetary items of domestic operations are translated at the closing exchange rates notified by the Foreign
Exchange Dealers' Association of India ("FEDAI") as at the balance sheet date, and the resulting net valuation profit or loss is
recognized in the consolidated profit and loss account.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated at closing
exchange rates notified by the FEDAI at the balance sheet date, and the resulting profit/loss arising from exchange differences are
accumulated in foreign currency translation reserve until remittance or the disposal of the net investment in the non-integral
foreign operations in accordance with AS-11.
Foreign exchange spot and forward contracts (other than foreign exchange swaps taken to hedge Federal Rupee plus deposits
denominated in JPY) outstanding as at the balance sheet date are revalued at the closing spot and forward rates, respectively, as
notified by the FEDAI and at interpolated rates for contracts of interim maturities. For valuation of contracts having maturities
greater than one year, the forward points (for rates/tenures not published by the FEDAI) are obtained from Reuters for valuation
of the foreign exchange deals. As directed by the FEDAI to consider profit or loss on a present value basis, the forward profit or
loss on the deals are discounted until the valuation date using the discounting yields. The resulting profit or loss on valuation is
recognised in the consolidated profit and loss account.
Foreign exchange swaps taken to hedge Federal Rupee plus deposits denominated in JPY are translated at the prevailing spot rate
at the time of swap. The premium/discount on the swap arising out of the difference in the exchange rate of the swap date and
maturity date of the underlying forward exchange contract is amortised over the period of the swap and the same is recognised in
the consolidated profit and loss account.
Contingent liabilities on account of foreign exchange contracts, guarantees, letters of credit, acceptances and endorsements are
reported at closing rates of exchange notified by the FEDAI as at the balance sheet date.
Derivative transactions
The Bank recognises all derivative contracts at fair value, on the date on which the derivative contracts are entered into and are re-
measured at fair value as at the balance sheet or reporting dates. Derivatives are classified as assets when the fair value is positive
(positive marked-to-market) or as liabilities when the fair value is negative (negative marked-to-market). Changes in the fair value
of derivatives other than those designated as hedges are recognised in the consolidated profit and loss account.
Advances
Advances are classified into performing assets (standard) and NPAs as per the RBI guidelines, and are stated net of bills
rediscounted, specific provisions made towards NPAs, floating provisions and unrealized interest on NPAs. Interest on NPAs is
transferred to an unrealized interest account and not recognized in profit and loss account until received. Further, NPAs are
classified into sub-standard, doubtful and loss assets based on the criteria stipulated by the RBI. The Bank has made provision for
Non-Performing Assets as stipulated under RBI norms.
The Bank also maintains provisions on loans under Scheme for Sustainable Structuring of Stressed Assets (S4A) and Strategic
Debt restructuring (SDR) scheme as per the RBI guidelines.
Amounts recovered against debts written off are recognised in the profit and loss account and included under “Other Income”.
For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by the RBI, which requires the
diminution in the fair value of the assets to be provided at the time of restructuring. In respect of loans and advances accounts
subjected to restructuring, the account is upgraded to standard only after the specified period i.e. a period of one year after the date
when first payment of interest or of principal, whichever is later, falls due, subject to satisfactory performance of the account
during the period.
Provision for unhedged foreign currency exposure of borrower entities is made in accordance with the guidelines issued by RBI,
which requires the Bank to ascertain the amount of unhedged foreign currency exposure, estimate the extent of likely loss and
estimate the riskiness of unhedged position of those entities. The Provision is classified under Schedule 5 – "Other Liabilities" in
the balance sheet.
The Bank maintains general provision for standard assets including credit exposures computed as per the current marked-to-
market values of interest rate and foreign exchange derivative contracts, in accordance with the guidelines and at levels stipulated
by RBI from time to time – farm credit to agricultural activities and SMEs 0.25%, commercial real estate at 1%, restructured
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advances at 5%, teaser rate housing loans at 2%, commercial real estate- residential housing at 0.75% and for other sectors at
0.40%.
The Bank transfers advances through inter-bank participation with and without risk. In accordance with the RBI guidelines, in the
case of participation with risk, the aggregate amount of the participation issued by the Bank is reduced from advances and where
bank is participating, the aggregate amount of participation is classified under advances. In the case of participation without risk,
the aggregate amount of participation issued by the Bank is classified under borrowings and where the bank is participating, the
aggregate amount of participation is shown as due from banks under advances.
Debit card reward points
The Bank runs a loyalty program, which seeks to recognise and reward customers based on their relationship with the Bank.
Under the program, eligible customers are granted loyalty points redeemable in future, subject to certain conditions. The Bank
estimates the probable redemption of such loyalty/reward points using an actuarial method at the balance sheet date by employing
an independent actuary. Provision for said reward points is then made based on the actuarial valuation report as furnished by the
said independent actuary.
Summary of Changes to Significant Accounting Policies
Accounting for Proposed dividends changed during the year ended March 31, 2017:
In terms of revised Accounting Standard (AS) 4 "Contingencies and Events occurring after the Balance sheet date" as notified by
the Ministry of Corporate affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016 dated
March 30, 2016, we have not accounted for proposed dividends as a liability as at March 31, 2017. Proposed dividends were,
however, accounted as a liability as at March 31, 2016 and March 31 2015, in line with existing accounting standard applicable at
the corresponding period. The change in method of accounting of proposed dividend does not have any impact in the profit and
loss account for the year ended March 31, 2017.
Had we appropriated proposed dividends (including tax), our surplus in profit and loss account would have been lower by
`1,867.50 million and other liabilities would have been higher by `1,867.50 million.
Change in Method of Depreciation during the year ended March 31, 2015:
During the year ended March 31, 2015 pursuant to the notification of Schedule II to the Companies Act, 2013 with effect from
April 1, 2014, the Bank changed its method of depreciation for certain categories of fixed assets from written down value (WDV)
method to straight line method (SLM). Consequent to this change, all assets are now being depreciated under SLM except
Premises which continues to be depreciated at WDV with useful life as mentioned in Schedule II to the Companies Act, 2013. The
Bank also revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II. Further,
assets individually costing `5,000.00 or less that were depreciated fully in the year of purchase are now depreciated based on the
useful life considered by the Bank for the respective category of assets.
Pursuant to the transitional provisions prescribed in Schedule II to the Companies Act, 2013, the Bank has fully depreciated the
carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), net of
residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and has adjusted an
amount of `23.19 million (net of deferred tax of `11.94 million) against the opening Surplus balance in the Statement of Profit
and Loss under Reserves and Surplus.
The bank has changed the method of providing depreciation from written down value method to Straight line method for certain
assets from 1st April, 2014. This change in method has resulted in excess depreciation charge in earlier years amounting to
`243.70 million which has been reversed to Profit and Loss Account for the quarter and nine months ended December 31, 2014.
The depreciation expense in the Profit and Loss Account for the year is lower by `46.92 million consequent to the above change
in the method of depreciation.
Interest Coverage Ratio
For details relating to our interest coverage ratio, see "Selected Statistical Information—Interest Coverage Ratio".
100
SELECTED STATISTICAL INFORMATION
The following information should be read together with our standalone financial statements, including the notes thereto, and the
section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this
Placement Document. Unless otherwise stated, all amounts presented in this section relate to the standalone financial information
of the Bank, and all averages presented in this section are presented on the basis of fortnightly balances outstanding. Figures for
FY2015 and FY2016 have been regrouped and/or reclassified wherever necessary to conform to FY 2017 presentation.
ASSETS AND LIABILITIES
Average Balance Sheet of the Bank
The tables below present the average balances for interest-earning assets and interest-bearing liabilities together with the related
interest revenue and expense amounts, resulting in the presentation of the average yields and cost for each period. The average
balance is the average of quarterly balances outstanding. The average yield on average assets is the ratio of interest revenue to
average interest-earning assets (except that (i) investments include equity investments and (ii) interest revenue with respect to
investments includes dividends on such equity investments). The average cost on average interest-bearing liabilities is the ratio of
interest expense to average interest-bearing liabilities.
Fiscal
2015 2016 2017
(` in millions, except percentages)
Average
Balance*
Interest
Income/
Expense
Avg.
Yield/
Cost
(%)
Average
Balance*
Interest
Income/
Expense
Avg.
Yield/
Cost
(%)
Average
Balance*
Interest
Income/
Expense
Avg.
Yield/
Cost
(%)
Interest-
earning
assets
Advances 481,971.62 54,468.33 11.30 528,153.44 56,693.11 10.73 666,925.28 65,456.78 9.81
Investments 216,652.49 16,568.56 7.65 238,012.41 17,630.94 7.41 258,547.93 18,013.97 6.97
Others 51,965.08 3,229.54 6.21 59,960.08 3,157.54 5.27 58,859.80 3,303.08 5.61
Total
interest-
earning
assets 750,589.19 74,266.43 9.89 826,125.93 77,481.58 9.38 984,333.01 86,773.84 8.82
Non-interest
earning
assets:
Fixed assets 4,457.79 - - 5,015.20 - - 5,061.93 - -
Other assets 52,182.29 - - 53,530.20 - - 62,456.97 - -
-Total non-
interest
earning
assets 56,640.08 - - 58,545.40 - - 67,518.90
- -
Total assets 807,229.27 74,266.43 - 884,671.33 77,481.58 - 1,051,851.91 86,773.84 -
Interest-
bearing
liabilities:
Total deposits 656,886.62 46,275.05 7.04 749,716.54 50,614.00 6.75 893,328.54 54,036.00 6.05
Subordinated
loan 2,000.00 186.41 9.32 2,000.00 185.51 9.28 1,000.00 130.77 13.08
Other
Borrowings 44,063.43 3,929.13 8.92 24,751.82 1,604.97 6.48 40,284.01 2,080.67 5.17
Total
interest-
bearing
liabilities 702,950.05 50,390.59 7.17 776,468.36 52,404.48 6.75 934,612.55 56,247.44 6.02
Non-interest
bearing
liabilities:
Capital and
reserves 74,999.23 - - 80,655.38 - - 85,866.94 - -
Bills payable 123.16 - - 97.43 - - 78.49 - -
Other liabilities 29,156.82 - - 27,450.16 - - 31,293.93 - -
Total non-
interest
bearing
liabilities 104,279.22 - - 108,202.97 - - 117,239.36 - -
Total 807,229.27 50,390.59 - 884,671.33 52,404.48 - 1,051,851.91 56,247.44 -
101
Fiscal
2015 2016 2017
(` in millions, except percentages)
Average
Balance*
Interest
Income/
Expense
Avg.
Yield/
Cost
(%)
Average
Balance*
Interest
Income/
Expense
Avg.
Yield/
Cost
(%)
Average
Balance*
Interest
Income/
Expense
Avg.
Yield/
Cost
(%)
liabilities
* Represents quarterly average
Analysis of Changes in Interest Income and Interest Expense by Volume and Rate
The following table sets forth, for the periods indicated, the allocation of the changes in the Bank’s interest revenue (including,
with respect to equity investments, dividend income) and interest expense between average volume and changes in average rates.
The changes in net interest income between periods have been reflected as attributed either to volume or rate changes. For the
purposes of this table, changes which are due to both volume and rate have been allocated solely to changes in rate.
Fiscal 2015 vs. Fiscal 2016 Fiscal 2016 vs. Fiscal 2017
Net Change
Due to
Change in
Average
Volume
Due to
Change in
Average
rates
Net Change
Due to
Change in
Average
Volume
Due to
Change in
Average
rates
(` in millions, except percentages)
Interest revenue
Advances 2,224.77 5,219.08 (2,994.30) 8,763.67 14,896.06 (6,132.39)
Investments 1,062.38 1,633.51 (571.12) 383.03 1,521.18 (1,138.15)
Others (72.00) 496.88 (568.88) 145.55 (57.94) (203.49
Total interest earned 3,215.15 7,473.92 (4,258.77) 9,292.25 14,838.10 (5,545.84)
Interest expenses
Total interest on deposits(1) 4,338.95 6,539.50 (2,200.55) 3,422.00 9,695.37 (6,273.37)
Subordinated loan (0.90) - (0.90) (54.74) (92.75) 38.01
Other Borrowings (2,324.15) (1,722.01) (602.14) 475.70 1,007.15 (531.44)
Total interest expended 2,013.89 5,270.12 (3,256.23) 3,842.96 10,673.28 (6,830.32)
Net interest revenue 1,201.26 5,449.29
Note:
(1) Includes savings deposits, current deposits and term deposits. * Figures based on average quarterly balances
Yields, Spreads and Margins
The following table sets forth, for the periods indicated, the yields, spreads and interest margins on the Bank’s interest-earning
assets.
Fiscal
2015 2016 2017
(` in millions, except percentages)
Interest income on interest-earning assets 74,266.43 77,481.58 86,773.84
Interest expense on interest-bearing liabilities 50,390.59 52,404.48 56,247.44
Average interest-earning assets 728,754.80 797,160.58 921,851.50
Average interest-bearing liabilities 677,236.70 749,551.50 892,324.69
Average total assets 760,406.30 838,101.44 989,195.30
Average interest-earning assets as a percentage of average total assets 95.84% 95.12% 93.19%
Average interest-bearing liabilities as a percentage of average total assets 88.80% 89.20% 90.21%
Average interest-earning assets as a percentage of average interest-bearing Liabilities 107.93% 106.64% 103.31%
Yield(1) 10.19% 9.72% 9.41%
Cost of funds(2) 7.46% 7.01% 6.30%
Spread(3) 2.73% 2.71% 3.11%
Net interest margin(4) 3.28% 3.15% 3.31%
Notes: (1) Yield is interest income divided by average interest-earning assets.
(2) Cost of funds is interest expense divided by average interest-bearing liabilities.
(3) Spread is the difference between yield and cost of funds. (4) Net interest margin is the difference between interest earned and interest expended divided by the average fortnightly interest-earning assets.
102
Return on Equity and Assets
The following table presents selected financial ratios for the Bank for the periods indicated.
Fiscal
2015 2016 2017
(` in millions, except percentages)
Net profit 10,057.51 4,756.48 8,307.88
Average total assets 760,406.30 838,101.44 989,195.30
Average shareholders’ equity(1) 73,057.15 78,435.47 84,027.20
Net profit as a percentage of average total assets 1.32 0.57 0.84
Net profit as a percentage of average shareholders’ equity 13.77 6.06 9.89
Average shareholders’ equity as a percentage of average total assets 9.61 9.36 8.49
Note:
(1) Calculated as opening shareholders' equity plus closing shareholders' equity, divided by two. Shareholders' equity comprises of share capital plus reserves and
surplus minus intangible assets.
Investment Portfolio
As of March 31, 2015, March 31, 2016 and March 31, 2017, the Bank’s investments comprised 26.97%, 26.60% and 24.52% of
its total Standalone assets, respectively, while total advances were 60.13%, 61.42% and 63.78% of the Bank’s total standalone
assets, respectively. The Bank carries out its investment activities according to various investment and trading policies. These
policies set forth delegation of powers, types of instruments, maximum limits on investments in different types of securities,
position limits, stop loss limits, duration limits, and minimum acceptable credit spreads.
The Bank attempts to achieve the highest risk-adjusted returns on its funds. When there is a lack of customers with good credit
records, the Bank invests in government securities which have low returns but offer good liquidity with low risks. Conversely,
when there is an increase in the number of customers with good credit records, the Bank will reduce its government securities
holding proportionately and provide loans to such customers with good credit records which can generate better returns for the
Bank.
The Bank is required to maintain a minimum holding of 20.50 % of its demand and time liabilities in SLR securities. In addition,
the surplus funds of the Bank’s deposits and advances are invested by the domestic treasury. These investments are in conformity
with the Bank’s policy on investments and the risk limits set by the Bank’s Board.
Total Investment Portfolio
The following tables set forth, as of the dates indicated, information relating to the Bank’s total investment portfolio.
(` in millions)
As of March 31, 2015 As of March 31, 2016 As of March 31, 2017
Book Value Market
Value
Unrealised
gain
Unreali
sed loss Book Value
Market
Value
Unreali
sed gain
Unrealis
ed loss
Book
Value
Market
Value
Unrealise
d Gain
Unreali
sed
Loss
Governmen
t securities 193,142.50 193,940.50 843.50 45.50 199,472.78 200,762.60 1,342.90 53.08 215,801.88 220,524.64 4,870.53 147.78
Other debt
securities 26,599.80 26,871.70 271.90 0.00 40,457.22 40,123.37 76.31 410.16 52,045.53 51,754.33 55.62 346.82
Total debt
securities 219,742.30 220,812.20 1,115.40 45.50 239,930.00 240,885.97 1,419.21 463.24 267,847.41 272,278.97 4,926.15 494.60
Non-debt
securities 6,601.95 6,686.99 85.40 0.00 8,718.04 8,263.79 0.00 454.25 11,502.09 12,392.68 890.59 0.00
Subsidiarie
s and
associates
— at cost
3,980.00 3,980.00 0.00 0.00 3,980.00 3,980.00 0.00 0.00 3,980.00 3,980.00 0.00 0.00
Total 230,324.25 231,479.19 1,200.80 45.50 252,628.04 253,129.76 1,419.21 917.49 283,329.50 288,651.65 5,816.74 494.60
Note: The market value of unquoted non-performing investments is considered the same as the carrying value of such investments.
Available for Sale Investments
The following table sets forth, as of the dates indicated, information related to the Bank’s investments available for sale:
(` in millions)
As of March 31, 2015 As of March 31, 2016 As of March 31, 2017
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss*
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss*
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss*
Government
securities 41328.00 41282.50 0.00 45.50 39323.57 39270.49 0.00 53.08 28365.44 28,217.67 0.00 147.78
Other debt
securities 22185.70 22457.60 271.90 0.00 34588.54 34178.38 0.00 410.16 50913.73 50,566.91 0.00 346.82
103
As of March 31, 2015 As of March 31, 2016 As of March 31, 2017
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss*
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss*
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss*
Total debt
securities 63513.70 63740.10 271.90 45.50 73912.11 73448.87 0.00 463.24 79279.17 78,784.58 0.00 494.60
Non-debt
securities 6264.80 6350.20 85.40 0.00 8447.73 7993.48 0.00 454.25 11341.29 12,208.28 866.99 0.00
Subsidiaries
and
associates —
at cost
Total 69778.50 70090.30 357.30 45.50 82359.84 81442.036 0.00 917.49 90620.46 90,992.86 866.99 494.60
Note: The market value of unquoted non-performing investments is considered the same as the carrying value of such investments.
*All Unrealized losses have been fully reserved.
Held to Maturity Investments
The following tables set forth, as of the dates indicated, information related to the Bank’s investments held to maturity.
(` in millions)
As of March 31, 2015 As of March 31, 2016 As of March 31, 2017
Book
Value
Market
Value
Unrealise
d gain
Unreali
sed loss Book Value
Market
Value
Unrealise
d gain
Unreali
sed loss Book Value
Market
Value
Unrealise
d gain
Unreali
sed loss
Governmen
t securities 149,401.20 150,242.40 841.20 0.00 160,149.21 161,492.10 1,342.90 0.00 187,436.44 192,306.97 4,870.53 0.00
Other debt
securities 0.00 0.00 0.00 0.00 5868.68 5,944.99 76.31 0.00 1,131.80 1,187.42 55.62 0.00
Total debt
securities 149,401.20 150,242.40 841.20 0.00 166,017.90 167,437.10 1,419.20 0.00 188,568.24 193,494.39 4,926.15 0.00
Non-debt
securities 337.15 336.79 0.00 0.00 270.31 270.31 0.00 0.00 160.80 184.40 23.60 0.00
Subsidiarie
s and
associates
— at cost
3,980.00 3,980.00 0.00 0.00 3980.00 3,980.00 0.00 0.00 3,980.00 3,980.00 0.00 0.00
Total 153,718.35 154,559.19 841.20 0.00 170,268.54 171,687.40 1,419.20 0.00 192,709.04 197,658.79 4,949.75 0.00
Note: The market value of unquoted non-performing investments is considered the same as the carrying value of such investments.
Held for Trading Investments
The following table sets forth, as of the dates indicated, information related to the Bank’s investments held for trading.
(` in millions)
As of March 31, 2015 As of March 31, 2016 As of March 31, 2017
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss
Book
Value
Market
Value
Unrealised
gain
Unrealised
loss
Government
securities 2,413.30 2,415.60 2.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other debt
securities 4,414.10 4,414.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total debt
securities 6,827.40 6,829.70 2.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Non-debt
securities 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Subsidiaries
and associates
— at cost
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 6,827.40 6,829.70 2.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Note: The market value of unquoted non-performing investments is considered the same as the carrying value of such investments.
Residual Maturity Profile
Available for sale
The following tables set forth, as of the date indicated, an analysis of the residual maturity profile of the Bank’s investments in
government and other debt securities classified as available for sale securities and their weighted average market yields.
(` in millions, except percentages)
As of March 31, 2017
Up to three months Three months to one
year One to five years More than five years
Amount Yield
(%) Amount
Yield
(%) Amount
Yield
(%) Amount Yield (%)
Government securities 7508.97 6.10% 3020.87 6.27% 7292.74 6.56% 10395.09 6.85%
Other debt securities 9796.64 7.39% 30700.54 7.14% 6985.37 7.88% 3084.35 7.45%
Total debt securities market
value 17305.60 6.95% 33721.41 7.07% 14278.11 7.26% 13479.45 6.98%
104
As of March 31, 2017
Up to three months Three months to one
year One to five years More than five years
Amount Yield
(%) Amount
Yield
(%) Amount
Yield
(%) Amount Yield (%)
Total Book Value 17317.43 6.95% 33691.98 7.06% 14334.83 7.28% 13934.93 7.27%
Note: The market value of unquoted non-performing investments is considered the same as the carrying value of such investments.
Held to maturity
The following tables set forth, as of the date indicated, an analysis of the residual maturity profile of the Bank’s investments in
government and other debt securities classified as held to maturity and their weighted average market yields.
(` in millions, except percentages)
As of March 31, 2017
Up to three months Three months to one
year One to five years More than five years
Amount Yield (%) Amount Yield (%) Amount Yield (%) Amount Yield (%)
Government securities 9566.76 6.04% 5348.49 6.36% 55271.66 6.92% 122120.06 7.39%
Other debt securities 0.00 0.00% 0.00 0.00% 156.38 7.63% 1031.05 7.96%
Total debt securities market value 9566.76 6.04% 5348.49 6.36% 55428.03 6.92% 123151.12 7.39%
Total Book Value 9564.38 6.04% 5322.12 6.32% 54013.16 6.71% 119668.58 7.22%
Note: The market value of unquoted non-performing investments is considered the same as the carrying value of such investments.
Held for trading
As of March 31, 2017 we had no investments classified as held for trading.
Funding
The Bank’s funding operations are designed to ensure stability, low cost of funding and effective liquidity management. The
Bank’s principal sources of funds are deposits from retail and corporate customers, borrowings from the RBI and other financial
institutions, foreign currency borrowings, profits from the purchase and sale of investments, and the public and private issuance of
bonds.
Total Deposits
The following table sets forth, for the periods indicated, the Bank’s average outstanding deposits on a fortnightly average basis
and the percentage composition by each category of deposits. The average cost of deposits was 7.31%, 6.95% and 6.25% in the
years ended March 31, 2015, 2016 and 2017, respectively.
(` in millions except percentages)
As of March 31,
2015 2016 2017
Amounts Percentage of
total Amounts
Percentage of
total Amounts
Percentage of
total
Term deposits 440,435.67 69.53 498,575.46 68.42 576,427.97 66.64
Saving deposits 160,622.69 25.36 192,025.80 26.35 239,759.79 27.72
Current deposits 32,362.02 5.11 38,110.53 5.23 48,839.77 5.65
Total 633,420.39 100.00 728,711.79 100.00 865,027.53 100.00
As of March 31, 2017, individual term deposits of the Bank in excess of ` 5,000,000 had balance to maturity profiles as set out
below.
(` in millions, except percentages)
As of March 31, 2017
Up to 3 months Over 3 months Over 1 year Over 5
Years Total
to 1 Year to 5 Years
Balance to maturity for deposits exceeding `
5,000,000
44,375.26 64,350.39 30,582.73 2,256.59 141,564.97
Borrowings
The following table sets forth, for the periods indicated, information related to the Bank’s borrowings.
105
(` in millions, except percentages)
Year ended March 31,
2015 2016 2017
Period end balance 47,418.41 51,145.67 58,973.23
Average balance during the period(1) 45,423.88 20,985.98 33,355.58
Interest expense during the period 4,115.53 1,790.48 2,211.44
Average interest rate during the period(2) (in percentage)
9.06
8.53
6.63
Notes:
(1) Average daily balances outstanding.
(2) Represents the ratio of interest expense on borrowings to the average of balances of borrowings.
Short-term Borrowings
The following table sets forth, for the periods indicated, information related to the Bank’s borrowings.
(` in millions, except percentages)
Year ended March 31,
2015 2016 2017
Period end balance 30,639.45 42,249.36 19,192.13
Average balance during the period(1) 23,415.48 7,648.18 12,750.16
Interest expense during the period 2,023.93 516.68 540.74
Average interest rate during the period(2) (in percentage) 8.64% 6.76% 4.24%
Notes: (1) Average daily balances outstanding.
(2) Represents the ratio of interest expense on borrowings to the average of balances of borrowings.
Subordinated Debt
From time to time we obtain funds from the issuance of unsecured non-convertible subordinated debt securities, which qualify as
Tier 2 risk-based capital under the RBI’s guidelines for assessing capital adequacy. However, as of March 31, 2017, we did not
have any outstanding subordinated debt.
Interest Coverage Ratio
The following table sets forth information with respect to our interest coverage ratio for the periods indicated. This ratio, however,
is typically used to measure the debt-servicing ability of a corporate and is generally not relevant to a banking company.
(` in millions, except percentages)
Year ended March 31,
2015 2016 2017
(i) Net profit 10,057.51 4,756.48 8,307.88
(ii) Depreciation on the Bank's Property 745.95 1,054.47 1,221.73
(iii) Interest expended 50,390.59 52,404.48 56,247.44
(iv) Total (i)+(ii)+(iii) 61,194.05 58,215.43 65,777.05
(v) Interest coverage ratio (iv)÷(iii) 121.44% 111.09% 116.94%
106
Asset Liability Gap
The following table sets forth our asset liability gap position as March 31, 2017:
(` in millions except percentages)
As of March 31, 2017
1-30 days 31-90 days 3-6 months 6-12 months 1-3 years 3-5 years Over 5 years Total
Cash and bank
balances 36,007.08 4,211.23 3,122.96 6,258.16 15,716.49 1,229.25 7,976.57 74,521.74
Advances 46,094.94 58,937.91 60,733.03 84,583.87 306,396.59 84,655.71 91,960.67 733,362.72
Investments 56,297.78 10,749.91 16,113.34 23,628.15 40,966.81 14,162.62 120,042.28 281,960.89
Fixed assets 0.00 0.00 0.00 0.00 0.00 0.00 4,894.69 4,894.69
Other assets 1.50 12.80 2,877.35 2,889.53 19,301.88 11,697.06 18,249.19 55,029.29
Total assets 138,401.29 73,911.84 82,846.69 117,359.71 382,381.77 111,744.63 243,123.39 1,149,769.32
Capital and reserves 0.00 0.00 0.00 0.00 0.00 0.00 89,423.82 89,423.82
Deposits 56,125.00 93,864.33 79,734.59 159,696.32 379,583.06 14,163.39 193,478.94 976,645.62
Borrowings 12,199.92 4,606.32 7,067.85 6,368.47 18,597.76 10,132.93 0.00 58,973.23
Tier II capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other liabilities 8,018.55 3,193.27 1,394.77 25.00 2,852.73 0.00 9,242.33 24,726.65
Total liabilities 76,343.47 101,663.91 88,197.21 166,089.78 401,033.56 24,296.32 292,145.09 1,149,769.32
Liquidity gap(5) 62,057.82 (27,752.07) (5,350.52) (48,730.07) (18,651.79) 87,448.32 (49,021.69)
Cumulative liquidity gap
62,057.82 34,305.75 28,955.24 (19,774.83) (38,426.62) 49,021.69 0.00
Cumulative
liabilities 76,343.47 178,007.38 266,204.58 432,294.37 833,327.92 857,624.24 114,9769.32
Cumulative liquidity gap as a
percentage of
Cumulative liabilities
81.29% 19.27% 10.88% (4.57%) (4.61%) 5.72% 0.00%
Notes:
(1) Classification methodologies are based on the Asset Liability Management Guidelines issued by the RBI.
(2) Assets and liabilities are classified into categories as per residual maturity. (3) Assets and liabilities that do not mature or have ambiguous maturities are classified as per historical behavioral analysis or management judgment.
(4) Listed equity investments in the available for sale category have been considered in Asset Liability Gap statement at 50.0% haircut, in accordance with RBI
guidelines. (5) Liquidity gap is defined as total assets minus total liabilities.
Maturity and Interest Rate Sensitivity Analysis
The following table sets forth the interest rate sensitivity analysis of the Bank’s advances as of March 31, 2017:
(` in millions)
Interest rate classification
of
assets and liabilities by
re-pricing
As of March 31, 2017
Up to three
months
Three months to
one year One to five years
More than five
years Non-sensitive Total
Cash and Balances with RBI
0.00 0.00 0.00 0.00 45,765.68 45,765.68
Current Balances with
other Banks 25,686.58 0.00 672.10 0.00 2,397.37 28,756.06
Other deposits and
placements with Financial
Institutions
23,497.82 49,289.44 1,165.79 2,861.96 0.00 76,815.01
Investments 28,882.76 37,773.45 69,912.06 134,901.51 13,932.55 285,402.33
Advances 361,473.48 230,972.65 21,790.41 42,311.17 0.00 656,547.71
Other Assets 0.00 5,668.53 19,376.13 8,845.61 26,033.70 59,923.98
Total Assets 439,540.64 323,704.08 112,916.49 188,920.26 88,129.30 1,153,210.77
Borrowings from Financial
Institutions 24,834.08 12,541.39 21,597.77 0.00 0.00 58,973.23
Deposits from other
Accounts 163,046.81 270,353.11 517,072.37 24,872.15 1,301.17 976,645.62
Subordinated Loans 0.00 0.00 0.00 0.00 0.00 0.00
107
Interest rate classification
of
assets and liabilities by
re-pricing
As of March 31, 2017
Up to three
months
Three months to
one year One to five years
More than five
years Non-sensitive Total
Other liability 0.00 0.00 0.00 0.00 24,726.65 24,726.65
Capital and Reserves 0.00 0.00 0.00 0.00 89,423.82 89,423.82
Total Liabilities 187,880.89 282,894.50 538,670.14 24,872.15 115,451.64 1,149,769.32
Concentration of Advances
Pursuant to RBI guidelines, exposure ceilings are 15.0% of capital funds in the case of a single borrower and 40.0% in the case of
a borrower group. The single borrower exposure limit is extendable by another 5.0%, up to 20.0% of capital funds, provided that
the additional exposure is for the purpose of financing infrastructure projects. The borrower group exposure limit is extendable by
another 10.0%, up to 50.0% of capital funds, provided that the additional exposure is for the purpose of financing infrastructure
projects. In addition, a bank may, in exceptional circumstances and with the approval of its board of directors, consider increasing
its exposure to a single borrower up to a maximum of an additional 5.0% of capital funds, subject to the borrower consenting to
the bank making appropriate disclosure about the borrower in the bank’s annual report. RBI also specifies ceilings for credit and
investment to, among others, capital markets, venture capital, NBFCs, factoring, Indian joint ventures and intra group exposures.
In addition to the RBI guidelines, our Bank has also identified major sectors/industries based upon its exposure concentration, and
the ceilings are mapped to the capital fund, net worth and total gross advance of the Bank. The Bank has a Board-approved
exposure policy, and places periodic monitoring reports before the Board for information.
The following table sets forth, at the dates indicated, the Bank’s fund-based loans outstanding categorized sectorwise.
(` in millions, except percentages)
Industry
As of March 31,
2015 2016 2017
Gross advance Percentage
of total Gross advance
Percentage
of total Gross advance
Percentage
of total
Agricultural & Allied Activities 63,135.60 12.15 82,252.40 13.99 97,463.96 13.15
Industry 127,282.40 24.50 104,208.87 17.73 118,177.54 15.95
Services 167,676.00 32.28 213,573.78 36.33 286,076.40 38.61
Personal Loans and Others 161,419.70 31.07 187,871.37 31.95 239,189.36 32.29
Gross Advance 519,513.70 100.00 587,906.42 100.00 740,907.27 100.00
As of March 31, 2017, aggregate exposure to the Bank’s top ten single largest borrowers amounted to `72,620.73 million
representing approximately 81.09% of its total Tier I and Tier II capital. The Bank had an exposure of `14,000 million on such
date for its single largest borrower, representing 15.63% of its Tier I and Tier II capital, as of March 31, 2017.
Priority Sector Lending
As stipulated by the RBI, commercial banks in India are required to lend, through advances or investment, 40% of their adjusted
net bank credit ("ANBC") or credit equivalent amount of off-balance sheet exposures, whichever is higher, to specified sectors
known as “priority sectors,” subject to certain exemptions permitted by RBI from time to time. Priority sector advances include
advances to the agriculture sector, micro and small enterprises, weaker sections, housing and education finance up to certain
ceilings.
We are required to comply with the priority sector lending requirements as of March 31, in each fiscal year. Any shortfall in the
amount required to be lent to the priority sectors may be required to be deposited with the Rural Infrastructure Development Fund
established by NABARD or funds with other financial institutions as specified by the RBI.
A breakdown of our priority sector lending in the form of advances for the periods indicated is as follows:
(` in millions, except percentages)
March 31, 2015 March 31, 2016 March 31, 2017
Amounts Percentage of
total Amounts
Percentage of
total Amounts
Percentage of
total
Agriculture 63,135.70 35.87% 82,252.37 43.71% 97,463.96 47.44%
Industries 34,790.20 19.76% 23,462.20 12.47% 27,017.03 13.15%
Services 37,374.94 21.23% 46,158.90 24.52% 43,309.60 21.08%
Other Priority Sector 40,719.28 23.14% 36,317.77 19.30% 37,646.20 18.33%
Total 176,020.12 100.00% 188,191.24 100.00% 205,436.79 100.00%
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Non-Performing Assets
As a commercial bank operating in India, we recognize NPAs in accordance with the RBI’s guidelines. The guidelines require
Indian banks to classify their NPAs into three categories, as described below, based on the period for which the asset has remained
non-performing and the estimated realization of amounts due in relation to such asset. Further, the NPA classification is at the
borrower level, rather than at the facility level and accordingly, if one of the advances granted to a borrower becomes non-
performing, such borrower is classified as non-performing and all advances due from it are so classified.
A non-performing asset is a loan or an advance where: (i) interest and/or installment of principal remains overdue for a period of
more than 90 days in respect of a term loan; (ii) the account remains “out of order” in respect of an overdraft or cash credit; (iii)
the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted; (iv) the installment of
principal or interest thereon remains overdue for two crop seasons for short duration crops; (v) the installment of principal or
interest thereon remains overdue for one crop season for long duration crops; (vi) the amount of liquidity facility remains
outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines on a securitization
dated February 1, 2006; or (vii) in respect of derivative transactions, the overdue receivables representing positive mark-to-market
value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment. According
to guidelines specified by the RBI in July 2013, an account should be classified as an NPA on the basis of the record of recovery
and not merely on deficiencies which are temporary in nature, such as non-renewal of limits on the due date or non-submission of
stock statements.
Further, the RBI requires the banks to classify an account as a non-performing asset only if the interest due and charged during
any quarter is not serviced fully within 90 days from the end of the quarter.
Assets are classified as described below:
Standard assets A standard asset is one that is not a sub-standard asset.
Sub-standard assets As per income recognition and asset classification norms of RBI, with effect from March 31, 2005, a
substandard asset would be one which has remained non-performing for a period less than or equal to 12
months. Such an asset will have well defined credit weaknesses that jeopardise the liquidation of the
debt and are characterised by the distinct possibility that the banks will sustain some loss, if deficiencies
are not corrected.
Doubtful assets As per Income recognition and asset classification norms of RBI, with effect from March 31, 2005, an
asset would be classified as doubtful if it has remained in the substandard category for a period of 12
months. A loan classified as doubtful has all the weaknesses inherent in assets that were classified as
sub-standard, with the added characteristic that the weaknesses make collection or liquidation in full, –
on the basis of currently known facts, conditions and values – highly questionable and improbable.
Loss assets As per Income recognition and asset classification norms of RBI A loss asset is one where loss has been
identified by the bank or internal or external auditors or the RBI inspection but the amount has not been
written off wholly. In other words, such an asset is considered uncollectible and of such little value that
its continuance as a bankable asset is not warranted although there may be some salvage or recovery
value.
Provisioning and Write-Offs
RBI guidelines on provisioning and write-off are as follows:
Standard assets As per income recognition and asset classification and provisioning norms of RBI:
(a) Farm Credit to agricultural activities and Small and Micro Enterprises (SMEs) sectors at 0.25 per cent;
(b) advances to Commercial Real Estate (CRE) Sector at 1.00 per cent;
(c) advances to Commercial Real Estate – Residential Housing Sector (CRE - RH) at 0.75 per cent
(d) all other loans and advances not included in (a) (b) and (c) above at 0.40 per cent.
Sub-standard
assets A general provision of 15 per cent on total outstanding should be created without making any allowance for
the Export Credit Guarantee Corporation of India Limited ("ECGC") or the Credit Guarantee Fund Trust for
Micro and Small Enterprises ("CGTMSE") guarantee cover and securities available.
10 per cent additional provision shall be created for ‘unsecured exposures’ which are identified
109
as ‘substandard’ i.e., a total of 25 per cent on the outstanding balance.
Doubtful
Assets 100 per cent of the extent to which the advance is not covered by the realizable value of the security
With regard to the secured portion, provision may be made on the following basis, of the secured portion
depending upon the period for which the asset has remained in the doubtful category:-
Period for which the asset has remained in
‘doubtful’ category
Provision
requirement (%)
Up to one year (D1) 25
One to three years (D2) 40
More than three years (D3) 100
The following table sets forth, for the periods indicated, information about the Bank’s NPA position.
(` in millions, except percentages)
As of March 31,
2015 2016 2017
Gross NPAs 10,577.30 16,677.67 17,270.50
Specific provisions 5,282.00 6,313.20 6,852.70
Floating provisions 1,381.80 691.80 691.80
Net NPA 3,732.70 9,500.10 9,412.00
Gross advances 519,513.70 587,906.40 740,907.30
Net advances 512,371.23 580,579.06 732,835.80
Gross NPAs/gross advances (%) 2.04 2.84 2.33
Net NPAs/net advances (%) 0.73 1.64 1.28
Specific provision as a percentage of gross NPAs 49.94 37.85 39.68
Total provisions as a percentage of gross NPAs 63.00 42.00 43.68
The following table sets forth, for periods indicated, information about the Bank’s NPA provisions.
(` in millions, except percentages)
As of March 31,
2015 2016 2017
NPA provision at the beginning of the year 7,211.70 6,663.80 7,005.00
Addition during the year 4,017.00 9,081.70 5,286.30
Reduction during the period on account of 4,564.90 8,740.50 4,746.80
recovery and write-offs
NPA provision at the end of the year 6,663.80 7,005.00 7,544.50
The following table sets forth the Bank’s provisions for possible credit losses at the dates indicated.
(` in millions, except percentages)
As of March 31,
2015 2016 2017
Provision held 6,663.80 7,005.00 7,544.50
Provision held as percentage of gross advances 1.28 1.19 1.02
Provision held as percentage of gross NPAs 63.00 42.00 43.68
The following table sets forth the classification of gross advances of the Bank at the dates indicated.
(` in millions)
As of March 31,
2015 2016 2017
Standard advances 508,936.40 571,228.70 723,636.80
Restructured standard advances 26,047.67 13,820.34 12,823.60
Non-performing assets 10,577.32 16,677.67 17,270.50
Sub-standard advances 4,890.08 7,412.23 6,186.82
Doubtful advances 4,797.25 8,028.07 9,613.38
Loss advances 889.99 1,237.37 1,470.29
Analysis of NPAs by Industry Sector
The following table sets forth, for the periods indicated, the Bank’s domestic NPAs, by borrowers’ industry or economic activity
110
and as a percentage of its loans in the respective industry or economic activities sector. These figures do not include credit
substitutes.
(` in millions except percentages)
Industry
As of March 31,
2015 2016 2017
Gross
advance NPAs
Percentage
of Gross
NPAs to
Total
Advances in
that Sector
Gross
advance NPAs
Percentage
of Gross
NPAs to
Total
Advances in
that Sector
Gross
advance NPAs
Percentage
of Gross
NPAs to
Total
Advances in
that Sector
Agricultural &
Allied Activities 63,135.60 1,262.30 2.00 82,252.40 1,393.10 1.69 97,463.96 2,784.40 2.86
Industry 127,282.40 4,335.30 3.41 104,208.87 6,791.10 6.52 118,177.54 5,944.85 5.03
Services 167,676.00 3,074.50 1.83 213,573.78 5,618.60 2.63 286,076.40 5,117.09 1.79
Personal Loans and Others 161,419.70 1,905.20 1.18 187,871.37 2,874.90 1.53 239,189.36 3,424.19 1.43
Gross Advance 519,513.70 10,577.30 2.04 587,906.42 16,677.70 2.84 740,907.27 17,270.53 2.33
The following table sets forth the Bank’s NPAs for its largest accounts, identified by industry, as of March 31, 2017:
(` in millions)
Industry Segment Gross Principal Outstanding
As of March 31, 2017
Iron and steel 3,541.52
Educational institutions 790.59
Textiles 782.62
Mining 555.17
Wholesale of metals and metal ores 455.26
Hotels 419.00
Food processing 315.39
Roadways 310.06
Retail trade 275.38
Processing of cashew nuts 217.88
Construction 201.43
Contractor 177.46
Personal loan 161.59
Power projects 138.15
Manufacturing 136.16
Jewellery 127.64
Export 108.55
Boilers 76.59
TOTAL 8,790.44
Restructuring of Debts
In respect of restructured or rescheduled accounts, we make provisions for the erosion in fair value of restructured advances in
accordance with the general framework of the restructuring of advances as per the Master Circular on Prudential Norms on
Income Recognition, Asset Classification and Provisioning Pertaining to Advances dated July 1, 2013 issued by the RBI. The
erosion in fair value of advances is computed as the difference between the fair values before and after restructuring.
The fair value before restructuring is computed as the present value of cash flows representing the interest at the existing rate
charged on the advance before restructuring and the principal, discounted at a rate equal to our BPLR or base rate, whichever is
applicable to the borrower, as of the date of restructuring plus the appropriate term premium and credit risk premium for the
borrower category on the date of the restructuring.
The fair value after restructuring is computed as the present value of cash flows representing the interest at the rate charged on the
advance on restructuring and the principal, discounted at a rate equal to our BPLR or base rate, whichever is applicable to the
borrower, as of the date of restructuring plus the appropriate term premium and credit risk premium for the borrower category on
the date of restructuring.
Our total gross standard restructured advances was ` 26,047.67 million (5.01% of gross advances), ` 13,820.34 million (2.35% of
gross advances) and ` 12,823.60 million (1.73% of gross advances) as of March 31, 2015, 2016 and 2017, respectively.
111
The following table sets forth the movement in Restructured advances for the period ended March 31, 2017:
(` in millions except percentages)
As of March 31, 2017
Standard NPA Total
Restructured Accounts as on April 1, 2016 (Opening position) 8,030.72 3906.91 11,937.63
Movement in the Accounts (Includes Closed and Sale Accounts) (1,688.36) (3,223.55) (4,911.91)
Add: Fresh Restructuring 2,030.28 0.62 2,030.91
Add: Up-gradation to restructured standard category 7.48 (7.48) 0.00
Less: Restructured Standard Advances which cease to attract higher provisioning and/or
additional risk weight at the end of the quarter and hence need not be shown as restructured
standard advances at the beginning of the next quarter
(2.84) 0.00 (2.84)
Less: Down-gradations of restructured accounts during the financial year (380.91) 380.91 0.00
Less: Write-offs of restructured accounts during the financial year 0.00 0.00 0.00
Total restructured accounts as on March 31, 2017 (Closing Position) 7,996.37 1,057.42 9,053.79
Financial Ratios
The following table sets forth certain key financial indicators of the Bank, calculated on a standalone basis, as of and for the
periods indicated.
As of March 31,
2015 2016 2017
Return on average equity(1) 13.77 6.06 9.89
Return on average assets(2) 1.32 0.57 0.84
Dividend payout ratio(3) (11) 22.57 30.45 22.48
Cost to average assets(4) 2.14 2.26 2.23
Tier I capital adequacy ratio 14.81 13.36 11.81
Tier II capital adequacy ratio 0.65 0.57 0.58
Total capital adequacy ratio 15.46 13.93 12.39
Net non-performing assets ratio(5) 0.73 1.64 1.28
Allowance as percentage of gross non-performing assets(6) 63.00 42.00 43.68
Average net worth to total average assets(7) 9.61 9.36 8.49
Credit to deposit ratio(8) 72.41 73.37 75.09
Cost to income ratio(9) 50.05 57.06 53.44
Other income to operating income ratio(10) 26.73 24.37 26.17
Notes:
(1) Return on average equity is the ratio of the net profit after tax to the average net worth (capital plus reserves minus intangibles).
(2) Return on average assets is the ratio of the net profit after tax to the average assets. (3) Dividend payout ratio is the ratio of dividend to net profit after tax.
(4) Cost to average assets is the ratio of the operating expenses, to the average assets.
(5) Net non-performing assets ratio is the ratio of net non-performing assets divided by net advances. (6) Allowance as a percentage of gross non-performing assets is the ratio of NPA provisions made to the gross NPAs.
(7) Average net worth to total average assets is the ratio of average capital and reserves minus intangibles divided by total average assets.
(8) Credit to deposit ratio is calculated as a ratio of total advances to total deposits. (9) Cost to income ratio is calculated as a ratio of operating expenses divided by total operating income (total of net interest income and non-interest income).
(10) Other income to operating income ratio is calculated as a ratio of other income divided by total operating income (total of net interest income and non-interest income).
(11) From fiscal year 2017, due to change in reporting standard, dividends declared shall be accounted for in the year of approval by the shareholders and actual
payment.
Capital Adequacy
The following table sets out our capital adequacy ratios as of March 31, 2015, 2016 and 2017:
(` in millions, except percentages)
As of March 31,
2015 2016 2017
Common Equity Tier I (CET I) 75,342.29 77,918.45 85,392.59
Additional Tier I capital 0 0 0
Tier I capital 75,342.29 77,918.45 85,392.59
Tier II capital 3,307.89 3,336.40 4,160.76
Total Capital 78,650.19 81,254.84 89,553.35
Credit Risk – RWA 435,717.75 493,252.72 625,384.90
Market Risk – RWA 29,958.08 37,030.82 40,529.31
Operational Risk – RWA 43,210.50 53,017.49 57,040.11
Total risk weighted assets 508,886.33 583,301.03 722,954.32
112
As of March 31,
2015 2016 2017
CET I Ratio (%) 14.81 13.36 11.81
Capital Adequacy Ratio – Tier I capital (%) 14.81 13.36 11.81
Capital Adequacy Ratio –Tier II capital (%) 0.65 0.57 0.58
Total Capital Adequacy Ratio (%) 15.46 13.93 12.39
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INDUSTRY OVERVIEW
The information in this section has been extracted from publicly available documents from various sources, including officially
prepared materials from the Government and its various ministries, the Reserve Bank of India ("RBI") and the Indian Banks'
Association, and has not been prepared or independently verified by us or any of our BRLMs. Wherever we have relied on figures
published by the RBI, unless stated otherwise, we have relied on the RBI Annual Report 2015-16, Report on Trend and Progress
of Banking in India 2015-16 and the accompanying Explanatory Notes, Financial Stability Report (Including Trend and Progress
of Banking in India 2015-16) December 2016 and Statistical Tables Relating to Banks in India, 2015-16 available at
http://www.rbi.org.in. Industry sources and publications referred to by us state that the information contained therein has been
obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not
guaranteed and their reliability cannot be assured and, accordingly, investment decisions should not be based on such
information. Statements in this section that are not statements of historical fact constitute "forward-looking statements". Such
forward-looking statements are subject to various risks, assumptions and uncertainties and certain factors could cause actual
results or outcomes to differ materially.
Indian Economy
The Indian economy is one of the largest economies in the world with a gross domestic product ("GDP") at market prices of an
estimated `152.5 trillion for fiscal year 2017. (Source: Central Statistical Office of India's Ministry of Statistics and Programme
Implementation, available at http://mospi.nic.in/sites/default/files/press_release/nad_pr_28feb17r.pdf as of April 30, 2017.) It is
one of the fastest growing major economies in the world with private final consumption contributing over half of the overall GDP
growth of 7.9% in 2015-16. (Source: RBI Annual Report 2015-16.) In recent years, India has become a popular destination for
foreign direct investment ("FDI"), owing to its well-developed private corporate sector, large consumer market potential, large
well-educated and English speaking workforce and well-established legal systems. Overall, India attracted FDI of approximately
U.S$55.4 billion in fiscal year 2016 and U.S$45.1 billion in fiscal year 2015 as compared to an average of U.S$23.1 billion from
fiscal year 2001 to fiscal year 2013. (Source: Department of Industrial Policy and Promotion, Ministry of Commerce & Industry,
Government of India – Fact Sheet on FDI from April 2000 to December 2016.)
Fiscal year 2016 was characterised with a moderate recovery for the Indian economy amidst global trade uncertainties.
Maintaining macroeconomic stability and external viability remain key priorities for the Indian economy while stimulating private
investment and reinvigorating the banking sector. Domestic GDP growth showed a marginal improvement from 7.2% in fiscal
year 2015 to 7.9% in fiscal year 2016, primarily attributable to an increase in private final consumption expenditure from 6.2% in
fiscal year 2015 to 7.4% in fiscal year 2016. (Source: RBI Annual Report 2015-16.) However Real GDP growth slowed to 7.1% in
fiscal year 2017. The CSO data depicts that this growth was led by increases in private consumption demand, even as capital
formation remained weak. Gross value added ("GVA") increased from 6.9% for fiscal year 2015 to 7.8% in fiscal year 2016 but
decreased in fiscal year 2017 to 6.7%. (Source: Central Statistical Office of India's Ministry of Statistics and Programme
Implementation, available at http://mospi.nic.in/sites/default/files/press_release/nad_pr_28feb17r.pdf as of April 30, 2017) A
strong monsoon season helped to increase agricultural production, and reduced food-based inflation. The salary increases for
central government employees also contributed to the further development of the Indian economy. However, private investment
remained weak in fiscal year 2017, and demonetisation further added, albeit marginally, to slowdown in growth.
Overall, the domestic growth prospects remain positive based on expectations that the current Government, which took office in
May 2014 with a strong mandate, could spur the reform process to address the structural bottlenecks that have hampered growth
over the past few years. This may in turn help to revive growth prospects in the Indian economy.
India's inflation dynamics have become favourable over the last three years. The consumer price index ("CPI") inflation has fallen
from a high of 6.0% in fiscal year 2015 to 4.9% in fiscal year 2016 and 4.5% in fiscal year 2017. Food inflation declined, aided by
a slight increase in minimum support price for food grains and better food supply management by the government. Measures of
underlying trends, such as core inflation and rural wage growth, remained muted. Core CPI inflation picked up to 4.7% in fiscal
year 2017 as against 4.3% in fiscal year 2016. (Source: RBI Handbook of Statistics on the Indian Economy available at
http://www.rbi.org.in and Economic Survey 2016-17 available at http://indiabudget.nic.in/budget2016-2017/es2014-15/echapter-
vol1.pdf) The Government appears to be firmly committed to fiscal consolidation. The fiscal deficit has been reduced from 4.1%
in fiscal year 2015 to 3.9% in fiscal year 2016 and 3.5% in fiscal year 2017. Despite increasing government expenditure in fiscal
year 2017, the Government was able to achieve its fiscal deficit target of 3.5% of GDP due to better revenue receipts. In its budget
presented on February 1, 2017, the Government announced that the Fiscal Responsibility and Budget Management Committee has
recommended a 3% fiscal deficit for the next three years, keeping in mind the sustainable debt target and a need for public
investment. The Government ultimately decided on targeting fiscal deficit at 3.2% of GDP for fiscal year 2018. (Source: Union
Budget of India, 2017-18 available at http://indiabudget.nic.in/ub2017-18/bag/bag1.pdf)
India has also come a long way over the past few years in terms of external sector adjustments with current account deficits
decreasing and balance of payments increasing. Despite moderation in India’s exports, India’s current account deficit has
increased from US$ 7.1 billion (1.4% of GDP) in Q3 of fiscal year 2016 to US$7.9 billion (1.4% of GDP) in Q3 of fiscal year
2017. (Source: The RBI's Developments in India’s Balance of Payments during the Third Quarter (October - December) of 2016-
17). The balance of payment surplus has been healthy owing to better foreign portfolio inflows and steady FDI flows. Foreign
114
exchange reserves have risen to US$367 billion as of end-March 2017 from US $356 billion as of end-March 2016 and US $341.4
billion as of end-March 2015. (Source: The RBI's Weekly Statistical Supplement)
Domestic macroeconomic stability has also been achieved by a narrowing of fiscal and current account deficits and reducing
inflation which has helped to stabilise the Indian rupee. The Indian Rupee was largely resilient against the US dollar in fiscal year
2015, and depreciated marginally by an average of 1.1% over fiscal year 2015. The Indian Rupee declined overall in fiscal year
2016 due to emerging market sell-offs, expectations of an interest rate increase by the US Federal Reserve, global uncertainty due
to the devaluation of the Chinese Yuan and changes in China's exchange rate policy. In fiscal year 2017, the Indian Rupee
experienced two-way volatility due to India's improving macroeconomic fundamentals, the outcome of the US presidential
election, foreign institutional investment flows into India and the passage of India's GST bill. While the Indian Rupee ended fiscal
year 2017 on a strong note at `64.84 to the US dollar, rallying ~4.7% from end-December 2016, it depreciated on an average of
2.4% against the US dollar between fiscal year 2016 and fiscal year 2017. (Data Source: Bloomberg) (Alternative source: RBI’s
Database on Indian Economy; https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home)
Indian Banking Industry
Until the 1980s, the Indian financial system was strictly controlled. Interest rates were administered by the Government. Formal
and informal parameters governed asset allocation and strict controls limited entry into and expansion within the financial sector.
Bank profitability was low, non-performing assets ("NPAs") were comparatively high, capital adequacy was diminished and
operational flexibility was hindered. The Government's economic reform programme, which began in 1991, encompassed the
financial sector. The first phase of the reform process began with implementation of the recommendations of the Committee on
the Financial System, namely the Narasimham Committee I. Following that, reports were submitted in 1997 and 1998 by other
committees, such as the second Committee on Banking Sector Reform, namely, the Narasimham Committee II, and the Tarapore
Committee on Capital Account Convertibility. This led to the second phase of reforms relating to capital adequacy requirements,
asset classification and provisioning, risk management and merger policies. The deregulation of interest rates, the emergence of a
liberalised domestic capital market and the entry of new private sector banks have progressively intensified the competition
among banks.
Banks in India may be categorised as scheduled banks and non-scheduled banks, where the former are banks which are included
in the second schedule to the RBI Act 1934, as amended. These banks comprise scheduled commercial banks and scheduled
cooperative banks. Scheduled commercial banks may further be classified as the State Bank of India ("SBI") and its associates,
nationalised banks, private sector banks, foreign banks and regional rural banks. (In the RBI reports, regional rural banks are
usually excluded in tables providing details of individual banks and their summary tables at bank group level.) The focus of
commercial banks in India has largely been on meeting the short-term financing needs of industry, trade and agriculture sectors.
As of December 2016, there were 148 scheduled commercial banks in the country and commercial banks had a nationwide
network of 136,412 offices with 62.5% of the offices in rural and semi-urban areas. (Source: RBI, "Progress of Commercial
Banking at a Glance" as of December 2016, available at http://www.rbi.org.in/) As of December 2016, scheduled commercial
banks, not including regional rural banks, had approximately `106.1 trillion of deposits and approximately `74.9 trillion of loans
and advances. Aggregate deposits for all scheduled commercial banks had registered an annual growth rate of 16.4% while the
loans and advances for all scheduled commercial banks had increased by 5.8%. (Source: "Progress of Commercial Banking at a
Glance" as of December 2016, available at http://www.rbi.org.in/) The credit deposit ratio for all scheduled commercial banks
stood at 70.6. (Source: RBI, "Progress of Commercial Banking at a Glance" as of December 2016, available at
http://www.rbi.org.in/)
The RBI Financial Stability Report noted that among financial institutions, the asset quality of public sector banks, scheduled
urban co-operative banks and non-banking financial companies has deteriorated. The banking stability indicator showed that risks
to the banking sector remained elevated. Though the capital adequacy of banks was above regulatory requirements, continuous
deterioration in their asset quality, low profitability and liquidity contributed to the high level of overall risk. The gross NPA ratio
of scheduled commercial banks increased to 9.1% in September 2016 from 7.8% in March 2016, pushing the overall stressed
advances ratio to 12.3% from 11.5% during the same period. Large borrowers registered significant deterioration in their asset
quality, whereas the restructured standard advances ratio declined during the same period. The capital to risk (weighted) assets
ratio ("CRAR") of scheduled commercial banks remains unchanged during the first half of fiscal year 2016 while public sector
banks continued to record the lowest CRAR among banks. The Indian banking sector, as a whole, has maintained its CRAR above
the regulatory requirement of 9.0% under Basel III.
Constituents of the Indian Banking Industry
The Reserve Bank of India
The RBI is the central regulatory and supervisory authority for the Indian banking sector. Besides regulating and supervising the
banking system, the RBI performs the following important functions:
acts as the central bank and the monetary authority;
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issues currency;
manages debt for the central and certain state governments that have entered into agreements with it;
regulates and supervises financial institutions including banking institutions and non banking financial companies
("NBFCs");
manages the country's foreign exchange reserves;
manages the capital account of the balance of payments;
regulates and supervises payment settlement systems;
operates a grievance redress scheme for bank customers through the banking ombudsmen and formulates policies for fair
treatment of banking customers; and
develops initiatives such as financial inclusion and strengthening of the credit delivery mechanisms to priority sectors
and weaker sections, including agricultural entities, small and micro-enterprises and for affordable housing and
education.
The RBI issues guidelines on various issues relating to the financial reporting of entities under its supervision. These guidelines
regulate exposure standards, income recognition practices, asset classification, provisioning for non-performing and restructured
assets, investment valuation and capital adequacy. All the institutions under the purview of the RBI are required to furnish
information relating to their businesses on a regular basis.
Public sector banks
Public sector banks are scheduled commercial banks with a significant Government shareholding and constitute the largest
category in the Indian banking system. These include the SBI, 19 nationalised banks and 56 regional rural banks with 45
sustainable regional rural banks. The regional rural banks were established by the Government of India, the state governments and
sponsoring commercial banks in an effort to develop the rural economy. These regional rural banks are regulated and supervised
by National Bank for Agriculture and Rural Development ("NABARD"). In June 2016, the Government approved the merger of
SBI with its five associate banks. On April 1, 2017, the merger was completed and the SBI now functions as a unified entity.
Public sector banks accounted for 66.2% of gross bank credit and 70.6% of the aggregate deposits of the scheduled commercial
banks as of December 2016. (Source: Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks (SCBs) as on
December 31, 2016.)
Private sector banks
After bank nationalisation was completed in 1969 and 1980, the majority of Indian banks were public sector banks. Some of the
existing private sector banks, which showed signs of an eventual default, were merged with state-owned banks. In July 1993, as
part of the banking reform process and as a measure to induce competition in the banking sector, the RBI permitted entry by the
private sector into the banking system. This resulted in the emergence of private sector banks, collectively known as the "New
Private Sector Banks". As of December 2016, there are a total of 21 private banks. (Source: RBI Report on Trend and Progress of
Banking in India 2015-16.) Private sector banks grew their aggregate deposits by 23.6% and grew their bank credit by 17.7%.
These figures do not include regional rural banks. (Source: Statistical Tables Relating to Banks in India, 2015-16.)
The Union Finance Minister made an announcement in his budget speech for 2010-11 that there was a need to extend the
geographic coverage of banks and improve access to banking services and the RBI considered whether to begin granting
additional banking licences to private sector players.
Following the budget announcement, the New Banks Licensing Guidelines were issued by the RBI in February 2013 specifying
that select entities or groups in the private sector, entities in the public sector and non-banking financial companies with a
successful track record of at least 10 years would be eligible to promote banks. Further, the RBI has published certain criteria for
ascertaining whether a bank is "fit and proper" for the grant of a licence. The new banks can be set up only through a non-
operative financial holding company registered with the RBI and the initial minimum paid-up equity voting capital requirement
for the applicants is ` 5.0 billion, with foreign shareholding not exceeding 49.0% for the first five years.
On April 2, 2014, the RBI granted in-principle approval to two applicants (Infrastructure Development Finance Company (IDFC)
Limited and Bandhan Financial Services Private Limited) to set up banks under the New Banks Licensing Guidelines. Both of
these non-banking finance companies began operations during fiscal year 2016.
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Further, on July 17, 2014, the RBI released the draft guidelines for "Licensing of Payments Banks" and for "Licensing of Small
Banks", which are aimed at expanding the banking space and paving the way for corporate entities to enter these two segments.
The RBI issued its final guidelines in November 2014 on the entry of "Small Finance Banks" and "Payments Banks" into the
private sector in the banking industry, including the eligibility criteria, structure, capital requirements, shareholding structure and
corporate governance practices applicable to such proposed entities. In August 2015, the RBI issued licences to two new private
sector banks and 11 payment banks. Subsequently, ten small finance banks licenses were granted in September 2016. On August
1, 2016, RBI also issued guidelines with respect to an "on tap" (continuous) licensing policy for universal banks. Five of such
small finance banks have started operations in India, they are Capital Small Finance Bank Ltd, Suryoday Small Finance Bank Ltd,
Equitas Small Finance Bank Ltd, Utkarsh Small Finance Bank Ltd and Ujjivan Small Finance Bank Ltd.
Airtel Payments Bank Ltd began operations as India's first payments bank in January 2017. They were subsequently followed by
India Post, FINO PayTech, Jio Payments Bank, PayTM, National Securities Depository Ltd and Aditya Birla Idea Payments
Bank, putting the total number of payments bank in India at 7.
On April 7, 2017, the RBI released a discussion paper on Wholesale and Long-Term Finance banks. These banks will focus
primarily on lending to infrastructure sector and small, medium and corporate businesses. These banks can provide refinancing to
lending institutions and shall be present in the capital markets in the form of aggregators. The banks can also act like market
makers in corporate bonds, credit derivatives and take out financing amongst others.
Foreign banks
As of December 2016, there were 44 foreign banks operating in India with a combined total of 284 branches.
As of fiscal year 2013, there were 43 foreign banks with 327 offices operating in India. (Source: RBI website, data as of
September 30, 2014.) As of fiscal year 2014, foreign banks accounted for approximately 4.1% of deposits and approximately
4.3% of aggregate advances of scheduled commercial banks (not including regional rural banks). (Source: Statistical Tables
Relating to Banks in India, 2013-14.)
In 2009, as part of the liberalisation process that accompanied the second phase of the reform process that began in 2005, the RBI
began permitting foreign banks to operate more freely, subject to requirements largely similar to those imposed on domestic
banks. The primary activity of most foreign banks in India has been in the corporate segment. However, some of the larger foreign
banks have made retail banking a significant part of their portfolios in recent years. Most foreign banks operate in India through
branches of the parent bank. Certain foreign banks also have wholly owned non-banking financial company subsidiaries or joint
ventures for both corporate and retail lending. In 2004, the RBI stipulated that banks, including foreign banks operating in India,
should not acquire any fresh stake in another bank's equity shares if, by such acquisition, the investing bank's holding would
exceed 5.0% of the investee bank's equity capital. In February 2005, the RBI issued a "Roadmap for Presence of Foreign Banks in
India", announcing the following measures to be implemented in two phases:
During the first phase (from March 2005 to March 2009), foreign banks were allowed to establish a presence by setting
up wholly owned subsidiaries or by converting existing branches into wholly-owned subsidiaries.
Also during the first phase, foreign banks were allowed to acquire a controlling stake in private sector banks identified by
the RBI for restructuring. This was only to be done in a phased manner.
For new and existing foreign banks, proposals were made to go beyond the existing World Trade Organisation
commitment of allowing increases of 12 branches per year. A more liberal policy will be followed for areas with a small
number of banks.
During the second phase (from April 2009 onwards) and after a review of the first phase, foreign banks would be allowed
to acquire up to 74.0% in private sector banks in India.
In April 2009, in light of deteriorating global financial markets, the RBI postponed the second phase until greater clarity emerged
as to recovery and reform of the global regulatory and supervisory architecture. In January 2011, the RBI released a draft
discussion paper on the mode of presence of foreign banks in India. The paper indicates a preference for a wholly owned
subsidiary model of presence over a branch model. Other recommendations of the discussion paper include requiring systemically
important foreign banks to convert their Indian operations into wholly-owned subsidiaries, a less restrictive branch expansion
policy and ability to raise Rupee debt through issuance of non-equity capital instruments for such converted subsidiaries, lower
priority sector targets as compared to domestic banks and unified regulation for both Indian and foreign banks with respect to
investments in subsidiaries and associates.
In July 2012, the RBI revised priority sector lending norms and mandated foreign banks with 20 branches or more in India to meet
priority lending norms as prescribed for domestic banks.
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In November 2013, the RBI issued a scheme for setting up wholly owned subsidiaries by foreign banks in India. The scheme
envisages that foreign banks that commenced business in India after August 2010 would be permitted to do so only through
wholly owned subsidiaries if certain specified criteria apply to them. These criteria include incorporation in a jurisdiction which
gives legal preference to home country depositor claims in case of a winding up proceeding, among others.
Further, a foreign bank that has set up operations in India through the branch mode after August 2010 will be required to convert
its operations into a subsidiary if it is considered to be systemically important. A bank would be considered to be systemically
important if the assets on its Indian balance sheet (including credit equivalent of off-balance sheet items) equals 0.25% of the total
assets (inclusive of credit equivalents of off- balance sheet items) for all scheduled commercial banks in India as of March 31 of
the preceding year. Establishment of a subsidiary would require approval of the home country regulator/supervisor and the RBI,
which would be subject to various factors, including economic and political relations with the country of incorporation of the
parent bank and reciprocity with the home country of the parent bank. The regulatory framework for a subsidiary of a foreign
bank would be substantially similar to that applicable to domestic banks, including with respect to priority sector lending and
branch expansion. Wholly-owned subsidiaries of foreign banks may, after further review, be permitted to enter into merger and
acquisition transactions with Indian private sector banks, subject to adherence to the foreign ownership limit of 74.0% that is
currently applicable to Indian private sector banks.
Cooperative banks
Cooperative banks cater to the financing needs of agriculture, small industry and self-employed businessmen in urban, semi-urban
and rural areas of India. The state land development banks and the primary land development banks provide long-term credit for
agriculture. The Banking Regulation (Amendment) and Miscellaneous Provisions Act, 2004, which came into effect from
September 24, 2004, specifies that all multi-state cooperative banks are under the supervision and regulation of the RBI.
Accordingly, the RBI is currently responsible for the supervision and regulation of urban cooperative societies, NABARD, state
cooperative banks and district central cooperative banks. The wide network of cooperative banks, both rural and urban,
supplements the commercial banking network for deepening financial intermediation by bringing a large number of
depositors/borrowers under the formal banking network.
Key Banking Industry Trends in India
Relative to the previous quarters, economic activity in India lost pace in the first half of 2016-2017. Weak domestic demand
coupled with global economic slowdown and financial market turbulence has affected net exports and overall economic activity in
India. However, the Government has sought to change this by increasing public spending, reviving agricultural activity and having
a sizable upward revision in the wages and salaries of the public sector. This should lead to further growth in GDP across the
economy for the rest of 2016-17. The increase in GDP is aided by a gradually recovering global economy, which in turn supports
exports and spurs capital inflows driven by the ongoing search for yields in international financial markets. The inflation outlook
for 2016-17 has improved with the Government setting out its inflation target of 4% with a 6% upper tolerance level and a 2%
lower tolerance level on August 5, 2016. Between a robust domestic consumption with muted private investment and weak global
demand, close vigilance is required for India to achieve its inflation target of 4%. (Source: RBI Monetary Policy Report – October
2016.)
India's macroeconomic performance and the RBI's targeted inflation goals have influenced the domestic banking industry. As the
emerging market economies slow down due to severe domestic imbalances, global economic slowdown and the downturn in
credit growth with rising stresses in corporate and financial sectors, India recorded a higher economic growth due to
improvements in private final consumption in 2015-16. The banking sector was also burdened by its non-performing assets which
increased sharply during the year. A slowdown in credit growth and profit growth was also recorded across the industry. This has
resulted in a decrease in the return on assets and return on equity among the banks. However, the capital adequacy positions
showed an improvement due to the capital infusion by the Government and the closer alignment of India's capital adequacy
framework with the Basel Committee on Banking Supervision's guidelines. (Source: Report on Trend and Progress of Banking in
India 2015-16.)
While the growth of the Indian banking sector moderated further during 2015-16 due to weakening credit growth and an increase
in non-performing assets, the Reserve Bank is committed to pursuing a long-term vision of developing a sound, competitive,
inclusive and customer friendly banking sector. In the pursuit of this goal, the Reserve Bank will explore the possibility of
creating new kinds of differentiated banks, scale up the Business Correspondent model, improve the existing payment
infrastructure and design an appropriate ombudsman scheme for the non-banking financial companies. (Source: Report on Trend
and Progress of Banking in India 2015-16.)
Consumer credit
The consumer credit market in India has undergone a significant transformation over the last decade and has experienced rapid
growth due to consumer credit becoming cheaper, more widely available and increasingly a more acceptable avenue of funding
for consumers. The market has changed dramatically due to the following factors:
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increased focus by banks and financial institutions on consumer credit, resulting in a market shift towards regulated
players from unregulated moneylenders/financiers;
increasing desire by consumers to acquire assets such as cars, goods and houses on credit;
fast emerging middle class and growing number of households in a bank's target segment;
improved terms of credit;
legislative changes that offer greater protection to lenders against fraud and potential default, increasing the incentive to
lend; and
growth in assignment and securitisation arrangements for consumer loans, enabling non-deposit based entities to access
wholesale funding and compete in the market, based on the ability to originate, underwrite and service consumer loans.
Commercial Banking Trends
Credit
As of fiscal year 2016, the credit-deposit ratio for scheduled commercial banks was 77.9 as compared to 77.4 of the previous year.
The aggregate deposits increased by 8.6% while loans and advances increased by 9.3% in fiscal year 2015. (Source: RBI –
Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks, available at http://www.rbi.org.in/.)
Fiscal year 2017 was marked by a slight improvement in the overall growth of credit. While credit to agriculture and allied
activities, the service sector and personal loans showed an improved growth, the industry sector saw a decline in comparison to
fiscal year 2016. The slowdown within the industry sector was mainly seen in the infrastructure, food processing, basic metal &
metal products, and textiles areas. (Source: RBI Data on Sectoral Deployment of Bank Credit – February 2017.)
Fiscal year 2016 saw the Reserve Bank placing a great focus on ensuring adequate credit flow to various segments in the priority
sector. As a result, there was a sharp rise in the growth of priority sector credit in fiscal year 2016 to 16.0% as compared to the
previous year's growth of 9.3%. The growth in priority sector credit well surpassed the growth in overall credit. The growth in
priority sector credit for fiscal year 2016 can be partially attributed to the housing loans credits which increased significantly.
(Source: Report on Trend and Progress of Banking in India 2015-16.)
In fiscal year 2016, credit to priority sectors by public and private sector banks was 39.3% and 45.1% of adjusted net bank credit
or credit equivalent of off-balance sheet exposure, whichever is higher, respectively, indicating a shortfall against the overall
priority sector lending target of 40.0%. (Source: Report on Trend and Progress of Banking in India 2015-16.)
Indian Life Insurance Industry
The size of the Indian life insurance sector was `3.7 trillion on a total premium basis in fiscal year 2016. (Source: Handbook on
Indian Insurance Statistics, Insurance Regulatory and Development Authority of India) The total premium in the Indian life
insurance sector grew by 11.84% in fiscal year 2016. (Source: Annual Report 2015-16, Insurance Regulatory and Development
Authority of India) Despite this, India continues to be an underpenetrated insurance market with a life insurance penetration of
2.7% in fiscal year 2015, as compared to 3.7% in Thailand in calendar year 2015, 7.3% in South Korea in calendar year 2015 and
a global average of 3.5% in calendar year 2015. The insurance density in India also remains very low as compared to other
developed and emerging market economies. (Source: Handbook on Indian Insurance Statistics, Insurance Regulatory and
Development Authority of India)
Interest rates and inflation
Inflation, as measured by the CPI, has seen a secular decline over the past few years. Specifically during fiscal year 2016, CPI
inflation witnessed three phases. In the early months of fiscal year 2016, there were food price pressures stemming from
unseasonal rains and subsequently from a delayed onset of the southwest monsoon. Inflation ebbed to an intra-year low of 3.7% in
August 2015, the lowest since November 2014. The relatively lower inflation is due to a high inflation in the corresponding period
in fiscal year 2015. In the second phase from September 2015, inflation rose month after month to 5.7% in January 2016, albeit
falling below the RBI target of 6% set for that month. In the third phase of February and March 2016, vegetable prices declined
and favourable price corrections and downward adjustments in fuel prices pulled down headline inflation to 4.8% in March 2016.
For the year as a whole, inflation averaged 4.9%, a decrease from 6.0% in the preceding year.
CPI Inflation fell further in fiscal year 2017, averaging 4.5%, largely driven by a sharp decrease in food inflation due to the strong
monsoon. Core CPI inflation has picked up to 4.7% in fiscal year 2017 as against 4.3% in fiscal year 2016. The deflationary effect
was more pronounced in the wholesale price index ("WPI"), which contracted 2.5% for fiscal year 2016 as compared to an
increase of 2.0% in fiscal year 2015 (Source: RBI Handbook of Statistics on the Indian Economy available at
http://www.rbi.org.in.) However, WPI inflation increased to 3.7% in fiscal year 2017 due to a reversal of favourable base effect
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and increases in oil and other commodity prices. (Source: Office of the Economic Adviser, Ministry of Commerce & Industry of
the Government of India available at http://eaindustry.nic.in/)
The monetary policies of the RBI play a major role in managing India's inflation. These policies are largely steered by the
Monetary Policy Framework Agreement entered into on February 20, 2015 between the Government of India and the RBI. The
key agenda for the RBI was to: (i) entrench a durable process to deflate consumer price index inflation; (ii) improve transmission
of the policy rate to bank lending rates by ensuring appropriate liquidity management which is aligned with the monetary policy
stance; and (iii) dampen the volatility of the weighted average call rate and other money market rates around the repo rate.
The RBI has constantly relied on adjustments of the repo rate to meet its policy agenda. Due to a steady fall in CPI inflation, the
RBI had cut policy rates by an aggregate of 175bps since January 2015. The repo rate was first reduced by 25 bps in January 2015
to address the weak investment climate and the need to mitigate supply constraints. In September 2015, the benign cereal prices
and moderation in crude oil prices motivated the RBI to cut the policy repo rate by 50 bps to boost domestic demand and stimulate
investment. In order to bring the CPI inflation rate down to 5%, the RBI further reduced the repo rate by 25 bps to 6.5% in April
2016, which was the lowest the repo rate has been since March 2011. The policy rate corridor was narrowed by reducing the
marginal standing facility ("MSF") rate by 75 bps to 7% and increasing the reverse repo rate by 25 bps to 6% for a finer alignment
of the weighted average call rate with the policy repo rate. (Source: RBI Annual Report 2015-16 available at
http://www.rbi.org.in.)
In the first bi-monthly monetary policy statement for fiscal year 2017 announced on April 5, 2016, the RBI reduced the repo rate
from 6.75% to 6.5%. The minimum daily maintenance of the cash reserve ratio was also reduced to 90% of the requirement in
order to ease liquidity management for banks without abandoning liquidity discipline. In the second bi-monthly monetary policy
statement announced on June 7, 2016, the RBI maintained both the repo rate and the cash reserve ratio rates. Consequently, the
reverse repo rate and the MSF rates were all unchanged. In the third bi-monthly monetary policy statement announced on August
9, 2016, the RBI continued its previous position and kept the repo rate, cash reserve ratio, reverse repo and MSF rates unchanged.
In the fourth bi-monthly monetary policy statement announced on October 4, 2016, the RBI further reduced the repo rate by 25
bps to 6.25% and the reverse repo rate was adjusted to 5.75% with the MSF rate at 6.75%. The repo rate has been maintained at
6.25% ever since the last adjustment on October 4, 2016. However, in the December 2016 and February 2017 policies, the RBI’s
tone turned relatively hawkish and the RBI changed its stance from accommodative to neutral, premised on upside risk to
inflation, limited transient growth drag owing to demonetization and global risks. (Source: Monetary Policy, Reserve Bank of
India available at http://www.rbi.org.in.)
Base rate system and the marginal cost of funds based lending rate
The base rate system, which replaced the benchmark prime lending rate system introduced in 2003, became effective from July
2010 and has contributed to improvement in the pricing of loans, enhanced transparency in lending rates and has improved the
assessment of the transmission of monetary policy. This, combined with freeing of interest rates on export credit in foreign
currency, effective May 5, 2012, has resulted in complete deregulation of interest rates on lending by commercial banks. As
proposed in the RBI Second Quarter Review of Monetary Policy 2010-11 and pursuant to Guidelines on Deregulation of Savings
Bank Deposit Interest Rate, the RBI decided to deregulate the savings bank deposit interest rate, effective October 25, 2011,
subject to the following two conditions:
first, each bank will have to offer a uniform interest rate on savings bank deposits up to ` 100,000, irrespective of the
amount in the account within this limit; and
second, for savings bank balances over ` 100,000, a bank may provide differential rates of interest, if it so chooses.
However, there should not be any differentiation on interest rates between similar deposit amounts accepted on the same
date at any of a bank's branches.
On December 17, 2015, the RBI also released the final guidelines on computing interest rates on advances based on the marginal
cost of funds. These guidelines came into effect on April 1, 2016 with the introduction of the Marginal Cost of Funds based
Lending Rate ("MCLR") system under which new rupee loans and renewal of credit limits would be priced with reference to the
MCLR. Apart from helping to improve the transmission of policy rates into the lending rates of banks, these measures are also
expected to improve transparency in the methodology followed by banks for determining interest rates on advances. The
guidelines are also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the
banks. Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long-run value and
contribution to economic growth.
As per these guidelines issued by the RBI, banks have to publish the MCLR for various tenors which will be the internal
benchmark lending rates. Based on the MCLR, interest rates for different types of customers should be fixed in accordance with
their respective risk profiles.
The MCLR is to be reviewed and published every month. According to these guidelines, banks have to set five benchmark rates
for different tenures or time periods ranging from overnight (one day) rates to one year. The new methodology uses the marginal
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cost or latest cost conditions reflected in the interest rate given by the banks for obtaining funds while setting their lending rate.
(Source: RBI Annual Report 2015-16.)
Asset quality
The gross NPA ratio for scheduled commercial banks increased from 7.8% in March 2016 to 9.1% in September 2016, pushing
the overall stressed advances ratio to 12.3% from 11.5%. This deterioration in NPAs occurred for both public sector banks and
foreign banks. In September 2016, the gross and net NPA ratio for public sector banks stood at 11.8% and 7.4%, respectively.
Private sector banks recorded stable gross and net NPA ratios as 3.2% and 1.6% in September 2016, respectively. (Source: RBI
Financial Stability Report December 2016.)
Across the industry, the banks have been making efforts to reduce the amount of NPA via various legal dispute resolution
channels such as Lok Adalats, Debt Recovery Tribunals and the invocation of SARFAESI. In 2015-16, the recovery rate of all
banks decreased. The scheduled commercial banks recovered `227.68 billion as against `307.92 billion during the previous year
and the public sector banks could only recover `197.57 billion as against `278.49 billion during the previous year. The reduced
recovery rate was largely due to a 52% reduced recovery rate for SARFAESI. Recovery rates for Lok Adalats and Dispute
Recovery Tribunals increased by 127.6% and 51.2%, respectively. Four sub-sectors (Basic metal, construction, textiles and food
processing) had above 20% of the stressed advances for their respective sectors. These four sub-sectors had 30.5% of total
stressed advances of all scheduled commercial banks as of September 2016. (Source: Financial Stability Report December 2016.)
Income and profitability
During fiscal year 2016, there was a 60% decrease in net profits for the banking sector as a whole. The deterioration in asset
quality has led to an increase in the provisioning measures for such non-performing assets. This has adversely impacted revenues
for the scheduled commercial banks. Despite the various issues affecting the banking sector, private banks and foreign banks both
reported net profits. Only the public sector banks incurred losses of ` 180 billion with net profits declining by 148% over the
previous year. Return on assets for the scheduled commercial banks decreased by 61.7% from 0.81 in fiscal year 2015 to 0.31 in
fiscal year 2016 and return on equity for the scheduled commercial banks decreased by 65.5% from 10.42 in fiscal year 2015 to
3.59 in fiscal year 2016. (Source: Report on Trend and Progress of Banking in India 2015-16.)
Indian Life Insurance Industry
The size of the Indian life insurance sector was `3.7 trillion on a total premium basis in fiscal year 2016. (Source: Handbook on
Indian Insurance Statistics, Insurance Regulatory and Development Authority of India) The total premium in the Indian life
insurance sector grew by 11.84% in fiscal year 2016. (Source: Annual Report 2015-16, Insurance Regulatory and Development
Authority of India) Despite this, India continues to be an underpenetrated insurance market with a life insurance penetration of
2.7% in fiscal year 2015, as compared to 3.7% in Thailand in calendar year 2015, 7.3% in South Korea in calendar year 2015 and
a global average of 3.5% in calendar year 2015. The insurance density in India also remains very low as compared to other
developed and emerging market economies. (Source: Handbook on Indian Insurance Statistics, Insurance Regulatory and
Development Authority of India)
Impact of Liberalisation on the Indian Financial Sector
Until 1991, the financial sector in India was heavily controlled and commercial banks and long-term lending institutions, the two
dominant financial intermediaries, had mutually exclusive roles and objectives and operated in a largely stable environment, with
little or no competition. Long-term lending institutions were focused on the achievement of the Government's various socio-
economic objectives, including balanced industrial growth and employment creation, especially in areas requiring development.
Long-term lending institutions were extended access to long-term funds at subsidised rates through loans and equity from the
Government and from funds guaranteed by the Government originating from commercial banks in India and foreign currency
resources originating from multilateral and bilateral agencies.
The focus of the commercial banks was primarily to mobilise household savings through demand and time deposits and to use
these deposits to meet the short-term financial needs of borrowers in industry, trade and agriculture. In addition, the commercial
banks provided a range of banking services to individuals and business entities. However, there have been comprehensive changes
in the Indian financial system since 1991. These changes have transformed the operating environment of banks and long-term
lending institutions. In particular, the deregulation of interest rates, the emergence of a liberalised domestic capital market, and the
entry of new private sector banks, along with the transformation of long-term lending institutions into banks, have progressively
intensified the competition among banks.
Recent Developments in the Indian Banking Industry
As part of the framework for revitalising distressed assets, the RBI introduced the Scheme for Sustainable Structuring of
Stressed Assets for financial restructuring of large accounts on June 13, 2016. The process of selling stressed assets by
banks was further streamlined to facilitate better valuation, price discovery and the creation of a vibrant stressed assets
market.
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After consultation with the Government, the RBI also released a separate framework for the revival of distressed loans in
this sector on March 17, 2016 after considering the difficulties faced by micro, small and medium enterprises in resolving
and restructuring their stressed bank loans.
The RBI has liberalised the banking licensing regime and intends to issue licences on an ongoing basis, subject to the
RBI's qualification criteria. The RBI has issued licences to two new private sector banks, 11 payment banks and ten small
finance banks in fiscal year 2016. On August 1, 2016, the RBI published the Guidelines for "on-tap" Licensing of
Universal Banks in the Private Sector. As these licenses are "on-tap", there is no licensing window and applicants can
apply at any time. While large industrial houses are barred, entities or groups in the private sector that are "owned and
controlled by residents" (as defined in the FEMA Regulations, as amended from time to time) and have a successful track
record for at least ten years are allowed to promote to universal banks, provided that such entity/group has total assets of
`50 billion or more, and the non-financial business of the group does not account for 40% or more in terms of total assets
or gross income.
On April 1, 2016, the RBI replaced the existing base rate regime by pricing new rupee loans and renewal of credit limits
with reference to the MCLR to ensure better transmission of policy rates.
Future Developments in the Banking Sector and Expected Domestic Reforms
Implementation of the Basel III capital regulations
In December 2010, the Basel Committee on Banking Supervision ("BCBS") issued a comprehensive reform package of capital
regulations, Basel III. The objective of the reform package is to improve the banking sector's ability to absorb shocks arising from
financial and economic stress, thus reducing the risk of spill over from the financial sector to the real economy. The RBI issued
the RBI Basel III Capital Regulations and the guidelines became operational from April 1, 2013. However, the reform package
and guidelines will be implemented in a phased manner. On December 31, 2013, the RBI further extended the implementation of
credit valuation adjustment risk to April 1, 2014; and, on March 27, 2014, extended the deadline for full implementation of Basel
III requirements to March 31, 2019. (Source: RBI Circular DBOD.No.BP.BC.81/21.06.201/2013-14 dated December 31, 2013
and RBI Circular DBOD.No.BP.BC.102/21.06.201/2013-14 dated March 27, 2014.)
Under Basel III, total capital of a bank in India must be at least 9.00% of RWAs (8.00% as specified by the BCBS), Tier I capital
must be at least 7.00% of RWAs (6.00% as specified by the BCBS) and Common Equity Tier I capital must be at least 5.50% of
RWAs (4.50% as specified by BCBS). Due to the transitional arrangements, the capital requirements of banks may be lower
during the initial periods and higher during later years. Therefore, banks have been advised to carry out their capital planning
accordingly. In addition to the minimum requirements as indicated above, banks are required to maintain a capital conservation
buffer ("CCB") in the form of common equity of 2.50% of RWAs. Under the RBI Basel III Guidelines, total capital with CCB has
been fixed at 11.50% of RWAs. In July 2014, the RBI released the "Final Report of the Internal Working Group on
Implementation of Counter-cyclical Capital Buffer (CCCB)", which requires banks to maintain a buffer of up to 2.5% of RWAs in
period of high credit growth as precaution for downturn. Further, as per the RBI's release on "Framework for Dealing with
Domestic Systemically Important Banks (D-SIBs)" dated July 22, 2014, D-SIBs must have incremental capital of 0.2% to 0.8%
and the quantum of capital required is dependent upon size, interconnectedness, substitutability and complexity of the bank.
Further, under Basel III, a simple, transparent, non-risk based leverage ratio has been introduced. The BCBS will test a minimum
Tier I leverage ratio of 3.00% during a parallel run period from January 1, 2013 to January 1, 2017. The RBI has prescribed that,
during this parallel run period, banks should strive to maintain their existing leverage ratios, but in no case should a bank's
leverage ratio fall below 4.50%. Banks whose leverage is below 4.50% have been advised to achieve this target as early as
possible. This leverage ratio requirement is yet to be finalised and will be finalised taking into account the final proposals of the
BCBS. (Source: RBI Annual Report 2011-2012.) Additionally, in June 2014, the RBI released guidelines for a LCR as part of the
Basel III framework on liquidity standards, which will require minimum LCRs starting at 60% as of January 1, 2015, increasing in
equal annual steps to 100% by January 1, 2019.
Further, Additional Tier I non-equity capital instruments under Basel III are expected to provide additional features such as full
coupon discretion, and principal loss absorption when the common equity ratio of a bank falls below 6.125% of its risk-weighted
assets. In the case of Tier II non-equity capital instruments, the distinction between Upper Tier II and Lower Tier II instruments
under Basel II is removed and a single class of Tier II instrument eligibility criteria has been prescribed. Additionally, under Basel
III, loss absorption features have been included in the event of the occurrence of the "Point of Non-Viability" trigger. The RBI has
also fixed the base at the nominal amount of capital instruments outstanding on January 1, 2013, and their recognition will be
capped at 90.00% from April 1, 2013, with the cap reducing by 10.00% points in each subsequent year.
On August 31, 2015, the RBI designated the SBI and ICICI Bank Ltd. as domestic systemically important banks ("D-SIB").
Based on the methodology provided in the D-SIB framework and data collected from banks as of March 31, 2015, the SBI and
ICICI Bank Ltd. will have to provide Additional Common Equity Tier 1 ("CET1") requirements as a percentage of risk weighted
assets of 0.6% and 0.2%, respectively. The CET1 requirements applicable to D-SIBs will be applicable from April 1, 2016 in a
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phased manner and would become fully effective from April 1, 2019. The additional CET1 requirements will be in addition to the
CCB.
Dynamic provisioning guidelines
At present, banks generally make two types of provisions; general provisions on standard assets and specific provisions on NPAs.
Since the level of NPAs varies through the economic cycle, the resultant level of specific provisions also behaves cyclically.
Consequently, lower provisions during upturns and higher provisions during downturns have a pro-cyclical effect on the real
economy.
To address the pro-cyclicality of capital and provisioning, efforts at an international level are being made to introduce
countercyclical capital and provisioning buffers. The RBI has prepared a discussion paper on a countercyclical (dynamic)
provisioning (DP) framework.
The DP framework is based on the concept of expected loss, or "EL", which is the average level of losses a bank can reasonably
expect to experience, and is considered the cost of doing business. It is generally covered by provisioning and pricing. The
objective of DP is to soften the impact of incurred losses on the results of operations through the economic cycle, and not to
provide a general provisioning cushion for EL. More specifically, the DP created during a year will be the difference between the
long run average EL of the portfolio for one year and the incremental specific provisions made during the year. The parameters of
the model suggested in the discussion paper are calibrated based on data of Indian banks. Banks that have the capability to
calibrate their own parameters may, with the prior approval of the RBI, introduce a DP framework using the theoretical model
indicated by the RBI. Other banks will have to use the standardised calibration provided by the RBI. (Source: RBI Annual Report
2011-2012 and Discussion Paper on Introduction of Dynamic Loan Loss Provisioning Framework for Banks in India dated
March 30, 2012.)
Finance Sector Legislative Reforms Commission ("FSLRC")
The FSLRC was constituted on March 24, 2011 to redraft and harmonise legislation related to the financial sector. (Source: RBI
Report on Trend and Progress of Banking in India 2011-12.)
In its approach paper released on October 1, 2012, the FSLRC has proposed a two-agency regulatory model; the RBI as the
monetary authority, banking regulator and payment systems regulator, and a single regulator for the rest of the financial sector.
(Source: FSLRC, Ministry of Finance, Approach Paper and Press Release.)
The FSLRC submitted its final report to the Government on March 22, 2013. As per this report, the FSLRC recommended a non-
sectoral, principle-based, legislative architecture for the financial sector by restructuring and/or upgrading existing regulatory
agencies and creating new agencies wherever necessary for better governance. On September 30, 2014, the Government
announced the establishment of four new task forces to lay the roadmap for the upgrade of existing agencies and establishment of
new agencies, namely Financial Sector Appellate Tribunal, Resolution Corporation, Public Debt Management Agency and
Financial Data Management Centre. (Source: Government of India, Ministry of Finance, Department of Economic Affairs Press
Release dated September 30, 2014.)
Financial Holding Company ("FHC")
In June 2010, the RBI set up a working group to examine the different holding company structures prevalent internationally in the
financial sector and to examine the feasibility of introducing an FHC structure in India. FHCs are companies that own or control
one or more banks or NBFCs. Currently, banks in India are organised under a bank-subsidiary model, or "BSM", in which the
bank is the parent of all the subsidiaries of the group. In May 2011, the RBI released the working group's recommendations that
included, among others, that the FHC model should be pursued as a preferred model for the financial sector in India and that the
RBI should be designated as the regulator for FHCs. The recommendations have currently not been implemented. (Source: RBI
Report of the Working Group on Introduction of Financial Holding Company Structure in India and Press Release available at
http://www.rbi.org.in as of November 2, 2014.)
Goods and Service Tax
The goods and service tax ("GST") is proposed to be implemented with effect from July 1, 2017 and would replace the indirect
taxes on goods and services such as central excise duty, service tax, central sales tax, state VAT and surcharge currently being
collected by the central and state governments. The GST is expected to be applied to banking transactions, which will increase the
tax incidence and administrative compliance costs for banks.
Demonetisation and Digitization
Through a notification dated November 8, 2016 issued by the Ministry of Finance, the Government of India and the RBI, `500
and `1,000 denominations of bank notes of the then-existing series ceased to be legal tender. These notes were replaced with a
new series of bank notes of `500 and `2,000 denominations.
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The immediate financial impact of withdrawal of Specified Bank Notes ("SBNs"), announced on November 8, 2016, was a surge
in bank deposits with a commensurate fall in currency in circulation. In terms of macroeconomic impact, there was a dampening
effect on inflation with a temporary loss of momentum in the growth of real gross value added ("GVA"). The RBI also revised the
GVA growth for 2016-17 downwards from 7.6% to 7.1%, partly due to slower activity in general in first half of the year and
partly due to demonetization. However, the precise impact of the same on the economy may be difficult to capture at this stage
and the disruptions in the cash-intensive sectors of the economy are likely to be transitory. In the interim, policy measures to
sterilise the impact of excess liquidity resulted in higher investment in government securities by the banking system. There was
also a fall in the RBI's investments in government securities and in the RBI's credit to commercial banks. Notwithstanding the
short-term disruptions in certain segments of the economy, withdrawal of SBNs is expected to transform significantly the
domestic economy in the long run in terms of greater intermediation and increasing efficiency gains through adoption of digital
modes of payments. (Source: Financial Stability Report – December 2016.)
Future Outlook and Key Trends
Going forward, banks will need to move towards the mandated higher capital standards, stricter liquidity and leverage ratios and a
more cautious approach to risk. This implies that Indian banks will need to improve efficiency even as their costs of doing
business increase. They will need to refine their risk management skills for enterprise-wide risk management. In addition, banks
need to have in place a fair and differentiated risk pricing of products and services, since capital comes at a cost. This involves
costing, a quantitative assessment of revenue streams from each product and service and an efficient transfer-pricing mechanism
that would determine capital allocation.
Due to the demonetization and digitization push by the Government, banks will also need to develop their digital banking
infrastructure to provide mobile and online services to their customers. These services would not only have to facilitate online
payments and transactions, but also the creation of new accounts and the checking of existing accounts.
During fiscal year 2017, NPAs rose sharply across the industry. Banks need to effectively utilise the various measures put in place
by the RBI and the Government for the resolution and recovery of bad loans in order to reduce the NPAs on their books. They
also have to strengthen their due diligence, credit appraisal and post-sanction loan monitoring systems to minimise and mitigate
the problem of increasing NPAs in fiscal year 2018 and beyond.
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BUSINESS
Unless stated otherwise, the financial data in this section is taken from the Bank's consolidated financial statements included in
this Placement Document and prepared in accordance with Indian GAAP and references herein to the "Bank" or “standalone”
are to the Bank on a standalone basis and references herein to "we", "our", "us" and the "Group" are to the Bank on a
consolidated basis. The discussion below may contain forward-looking statements and reflects the current views of the Bank with
respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-
looking statements as a result of certain factors such as those set forth under ''Risk Factors'' and elsewhere in this Placement
Document.
Overview
We are a leading private sector bank in India. We were originally incorporated in 1931 as the ''Travancore Federal Bank Limited
Nedumpram under the Travancore Companies Regulation. On December 2, 1949, the name was changed to The Federal Bank
Limited. In 1959, we were licensed under the Banking Regulation Act, 1949, and thereafter we became a scheduled commercial
bank under the Second Schedule of Reserve Bank of India Act, 1934.
We offer a wide range of products and services to retail, small and medium scale enterprises (''SME'') agricultural and corporate
customers through a variety of delivery channels. As of March 31, 2017, we had 1,252 bank branches and 1,667 ATMs. Our
consolidated balance sheet size has increased from `853,418.93 million as of March 31, 2015 to `1,154,857.35 million as of
March 31, 2017. Our total consolidated deposits have grown from `708,226.87 million as of 31 March 2015 to `976,620.76
million as of March 31, 2017. Our total consolidated advances have increased from `515,291.87 million as on March 31, 2015 to
`740,862.30 million as on March 31, 2017.
While we were historically focused largely on the state of Kerala, we have expanded our presence throughout India with 1,252
bank branches across India. Our robust practice across India is complemented by our international presence. We are developing
our international presence by building a network outside India to cater to the NRI market, with representative offices in Dubai and
Abu Dhabi. We have also obtained approval to open a further representative office in Bahrain and a branch in the Dubai
International Financial Centre ("DIFC"). We have also recently opened an international banking unit in the Gujarat International
Finance Tec-City ("GIFT City").
We offer banking products and services in the Retail, SME, Agricultural and Corporate and Wholesale banking sectors. Our retail
asset products include home loans, personal loans, auto loans, educational loans, mortgage loans, business loans as well as
security-backed loans of various types. Our SME portfolio consists primarily of loans and advances to manufacturing and food
processing enterprises, educational institutions, healthcare providers, the services sector, traders and professionals. Our loans to
the agricultural sector include loans to individual farmers, group of farmers, agriculture businesses and agriculture corporates. For
the corporate and wholesale banking sector, we offer various loan and fee-based products and services to large corporations,
medium-sized enterprises and certain specified sectors, including the agriculture sector which includes an assortment of banking
products and services including working capital, term finance, trade finance, structured financial services, foreign exchange and
syndication services.
We offer a number of liability products to our retail customers, including NRIs, such as saving accounts, time deposits and
recurring deposits. These products are offered with certain variations as customized products to certain target groups such as
senior citizens, students and salaried employees. We also offer other products and services such as debit and credit cards, online
bill payment services and cash management services. We market third-party products, such as mutual funds and general and life
insurance policies such as the IDBI-Federal Life insurance policy. A wide range of liability and asset products and services are
also offered specifically to NRIs.
We also provide a number of digital offerings including the "Fedbook Selfie" application for digital account opening and the
'Lotza' application, which is a unified payment interface application, to take advantage of the increasing availability of internet
access and broadband connectivity across India. Our investment into our digital strategy will see the introduction of more products
and the enhancement in the security features of our existing products. We believe that our comprehensive suite of secure digital
products will enhance our competitiveness.
Our principal business activities are divided into five segments, namely retail banking, SME banking, agricultural banking,
corporate and wholesale banking, treasury and other banking operations, with a balanced portfolio mix across these segments,
including non-resident Indians (''NRI''). As of March 31, 2017, our retail advances accounted for 30.41% of total gross advances,
SME advances accounted for 23.57% of total gross advances, agriculture advances accounted for 10.02% of total gross advances
and corporate advances accounted for 36.01% of total gross advances.
Strengths
Our key strengths are as follows:
Pan India network with presence in Abu Dhabi and Dubai to complement a strong NRI franchise
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As of March 31, 2017, we had 1,252 bank branches and 1,667 ATMs. These branches are distributed across metro, urban, semi
urban and rural locations. 600 bank branches are located in the state of Kerala and the remainder are spread across the rest of
India. We have been steadily growing our network across India, having added 227 branches and 347 ATM to our network outside
of the state of Kerala between April 1, 2012 and March 31, 2016. We have undertaken focused expansion in key states such as
Punjab, Haryana, NCR, Maharashtra, Tamil Nadu and Kerala. This expansion has contributed in growing the total standalone
advances from `512,849.91 million as on 31 March 2015 to `733,362.72 million as on March 31, 2017. The investment made by
us in expanding the network provides us access to customers across our target segments and allows us to focus on customers in
local geographies.
In addition to this physical infrastructure, we believe we have also developed and launched an extensive digital footprint to enable
customer acquisition and retention. Further, we also have a network outside India catering to the NRI market, with representative
offices in Dubai and Abu Dhabi and tie-ups with 85 exchange houses to assist our customers in remitting money into India. For
nine months ended December 31, 2016, we had a 15.44% market share of all foreign inward remittances made for personal
purposes into India. 21 of our officers have been posted to various geographies in the Gulf Cooperation Council ("GCC") to serve
as single point contacts and relationship managers for our customer base in the GCC. We believe that a relationship manager
model is essential in the development of our business where the relationship manager engages with our customers and offers
relevant solutions and products to such customers.
We also have a strong NRI franchise, which provides us with a low cost source of funding. Our NRI franchise has contributed to
our development in our deposits and current accounts and saving accounts ("CASA") ratio. The deposits from NRIs constituted
36.62%, 41.17% and 39.50% of total standalone deposits in the corresponding periods of fiscal 2015, fiscal 2016 and fiscal 2017.
The contribution towards the standalone savings accounts from NRIs was 45.40%, 47.60% and 45.27% in fiscal 2015, fiscal 2016
and fiscal 2017 respectively. We attribute the rapid growth in our NRI accounts to our presence in the GCC, where our
relationship managers attract new NRI customers to utilise our financial services.
Strong liability profile with a wide spectrum of products
Over the years, we have built a strong base of distributed clientele, which has provided us with a low cost of funding and has been
a source of strength for our liability portfolio. The ratio of retail deposits to total standalone deposits in the fiscal years ending
March 31, 2015, 2016 and 2017 was 95.3%, 97.9% and 94.1%, respectively. A large part of our deposit base is retail and the lack
of bulk deposits provides us with a deposit base with a lower concentration risk, increasing the spread of our liability portfolio.
Our total deposits have increased in the last three financial years. Our standalone total deposits in the fiscal years ending March
31, 2015, 2016 and 2017 were `708,249.93 million, `791,717.07 million and `976,645.62 million respectively. Despite not
offering higher interest rates for our savings accounts, our CASA ratio increased from 30.43% in fiscal 2015 to 32.47% in fiscal
2016 and 32.60% on fiscal 2017.
We provide a wide spectrum of products to cater to the needs of our customers be it Retail, SME, Agriculture or Corporate. We
are able to provide this wide range of products across our branch network. Our diversified product mix is able to cater to retail
customers from the urban, semi urban and rural areas. Our strength in serving mid-market clients has contributed to the
development of our bank in these locations.
Innovation and Digital focus
We are committed to digital banking and we have upgraded our systems to ensure a smooth integration between our existing
infrastructure and our new digital banking products. Our Digital Centre of Excellence is an exclusive division set up to develop
digital innovations and technological value-adds. This has resulted in new products such as the mobile passbook (Fedbook),
account opening application (Fedbook Selfie), UPI mobile app for payments (Lotza), SMS based transactions and the Be Your
Own Master Loans (BYOM – algorithm based, on-line, self-service loans).
We believe "Launchpad" is one of our unique initiatives to support fintech startups. Launchpad offers counselling and guidance on
key aspects involved in setting up of a start up like registration, regulatory compliances, investments and accounting, intellectual
property protection, trading and taxation.
We continuously strive to increase reliance for transactions on digital channels which are more cost effective than physical
channels. In order to enable a smooth transition, we have ensured that our digital banking channels are updated and reliable.
Our suite of digital offerings has won numerous awards in India. These awards include, the Banking Frontier's Finnoviti 2016
Award, the Banking Frontier's Finnoviti 2015 Award, the Skoch Award 2015, IDRBT Award for Digital Banking, Analytics and
Big Data amongst mid-sized banks in 2015-16 and other IDRBT Awards relating to technology and digital banking in the years
2010-11, 2011-12, 2012-13, 2014-15 for pioneering steps taken in digital banking.
Well Defined Business Architecture and Robust Credit Management Framework
We continuously revise our business architecture to ensure that it remains current and competitive. We have introduced the
relationship manager model where relationship managers work with our customers to understand their needs and offer them the
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relevant products and services to address such needs. We have also encouraged the specialization of our internal teams to improve
their efficiency. We now have specialized teams to handle sourcing and sanctioning, credit administration, recovery, operations,
technology, service quality management, and digital products. These initiatives have improved the overall efficiency of the Bank.
We are focused on maintaining a high level of asset quality. Our standalone gross NPAs as a percentage of gross advances stood
at 2.04% in fiscal year 2015, 2.84% in fiscal year 2016 and 2.33% as of fiscal year 2017. Our standalone net NPAs as a
percentage of net advances stood at 0.73% in fiscal year 2015, 1.64% in fiscal year 2016 and 1.28% as of fiscal year 2017. Our
NPA increase in fiscal year 2016 was due to weak economy conditions, which affected the asset quality of India's banking
industry in general. The weak oil prices in fiscal year 2016 also affected our NPAs due to our large customer base in the GCC.
Being cognizant of these challenges to our asset quality, we have addressed these issues by strengthening our recovery
mechanisms and improving our credit management procedures. Our concerted efforts to identify stressed assets at an early stage
have resulted in a reduction in our NPAs in fiscal year 2017.
We are also established in the SME, corporate and wholesale banking industries across India. Our strength lies in our diverse
portfolio that generates both interest and non-interest income. We provide diversified solutions to meet the financial and banking
needs of our corporate customers, including project loans, term loans, short term loans, cash credit, export credit, bill discounting
facilities, letters of credit and guarantees. We also engage in cross-selling multiple products to our clients. We believe that our
combination of diverse product offerings and a relationship-driven approach has enabled us to structure solutions to meet our
customers’ commercial needs, resulting in sustained revenue generation for our bank. Our non-interest income has broadly grown
in line with the growth in our total net income and accounted for 26.33%, 23.95% and 25.72% of our total net income for the
fiscal years 2015, 2016 and 2017, respectively.
Experienced Board of Directors and management team
Our Board of Directors consists of experienced professionals with significant experience in their respective fields. We believe
their experience is instrumental in driving our business successfully through periods of global financial crisis and economic
downturn, as well as through periods of volatility in markets and interest rates.
We have a committed senior management team driving our strategy and execution. The senior management team is a blend of
home grown executives with some having an experience of over three decades. We believe our team has helmed our growth and
risk management strategies, through the worldwide economic crisis, an economic slowdown and volatile interest rate environment
in India. We believe our team's focus on executing growth strategies while maintaining profitability, setting measurable targets
benchmarked to market leaders and monitoring performance against such targets, anticipating customer demand and adding new
products and services, investing in technology and building our brand have contributed to an overall improvement in our key
metrics since 2010, including net interest margin, cost to income, net NPAs, return on assets and return on equity, as well as our
CASA ratio.
In addition to the Board and the senior management, our employees at various levels of the bank come from ethnically and
culturally diverse backgrounds across India. The average age of our employees is less than 37 years. We believe the demographic
profile of our employees is another factor that contributes significantly to the growth of our business.
Strategy
The key elements of our strategy are:
Strong, sustainable and high quality growth in advances with low risk
We believe that robust credit risk management policies and controls are critical for long-term, sustainable growth in our business.
Our goal is to continually improve our credit risk management procedures, credit evaluation, rating methodology, monitoring and
control mechanisms to maintain the quality of our loan and investment portfolios. Further, we intend to continuously focus on
maintaining the mix of our loans and advances between the customer segments of corporate, SME and retail. We believe that there
is an opportunity for us to selectively acquire loan portfolios from other banks and financial institutions in key market segments to
grow our total loan and advances portfolio. We also believe that our regional credit underwriting hubs combined with the
technological platform that our network has, will enable us to target customers across the key segments to grow our loan and
advances, whilst reducing overall risk.
Continue to strengthen our liability profile
Retail deposits in India are an important source of low-cost funding for us and we believe that the Indian retail financial services
market will continue to experience growth. We aim to continue to expand our retail banking business by growing our customer
base, providing a convenient banking experience to customers and offering differentiated products and solutions to meet the
specific needs of particular customer demographics. We believe these initiatives will help us build a strong liabilities profile,
which will expand our pool of low-cost funding. In addition, we seek to leverage our position in the NRI segment by looking to
expand our service offerings linked to remittances into India. Our NRI deposits also provide us with a natural cushion against high
funding costs and therefore we seek to continuously maintain our market position and also increase our number of NRI customers.
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Continue to focus on our home market and gain market share in the rest of India
Apart from developing our home market in Kerala, we have also sought to increase our presence in the rest of India. We believe
our strategy has allowed us to reap significant rewards in the 25 states, Delhi NCT and in the four union territories which we
operate in. We intend to continue developing our market share in India with the following multi-pronged strategy:
Focus on maintaining the significant advantage we enjoy in the Kerala sub-market and in relationship with NRI customers.
We are the one of the largest private sector banks in the state of Kerala in terms of total number of branches, total deposits
and NRI deposits as of December 31, 2016 and for nine months ended December 31, 2016, we had a 15.44% market share of
all foreign inward remittances made for personal purposes into India. We aim to continue to maintain this leadership position
in the Kerala sub-market and also amongst NRI customers.
We have an established presence in most centres across the country, and we aim to strengthen this presence in key
geographies such as Maharashtra, Gujarat, NCR, Tamil Nadu, Punjab and Karnataka in addition to our home state, Kerala.
This expansion would be through a slew of measures including opening new branches selectively in the chosen geographies,
increasing digital reach, increasing the strength of local-geography employees in respective states and focussing on fresh
customer acquisition and retention.
We will continuously assess the needs of markets and clients and widen the spectrum of products and offerings continuously
while ensuring that our products and offerings satisfy such needs in a competitive manner. We believe we will tap into
various retail channels such as home sales, tie-ups for allied products, digital offerings, strategic partnerships and alliances to
create more value for our various business segments.
Transformation through technology with continuous investments in digital banking
We believe the increased availability of internet access and broadband connectivity across India calls for a comprehensive digital
strategy to proactively develop new methods of reaching our customers and running our businesses. As mentioned earlier, we
follow a business philosophy of "Digital at the Fore, Human at the Core". Under this guiding philosophy we seek to provide our
customers with a user friendly digital experience that will allow us to increase our customer engagement. For example, we have
launched the ''Fedbook Selfie" application for digital account opening and "Lotza" application which is a unified payment
interface application.
We are continuously investing in technology as a means of improving our customers' experience, offering them a range of
products tailored to their financial needs and making it easier for them to interact with us. We have launched internet and mobile
based applications across most of our product and service portfolios, and we believe we will continue to invest in creating a
superior technology infrastructure to support our digital strategy. We believe additional investments in our technology
infrastructure to further develop our digital strategy will allow us to cross-sell a wider range of products on our digital platform in
response to our customers' needs and thereby expand our relationship with our customers across a range of customer segments.
We believe a comprehensive digital strategy will provide benefits in developing long-term customer relationships by allowing
customers to interact with us, access and operate their accounts wherever and whenever they desire.
On the operational side, we believe that investments in internal systems and security technology lead to enhanced customer
satisfaction, and therefore enhance our competitiveness. We are also continuing to invest in our cyber security network and
privacy protection systems, in order to supplement our growth and increase the robustness of our data security framework. We
believe these operational initiatives will also provide us with insights into our customers enabling us to cater to their financial
needs in a customised manner.
Building the Federal Brand
We believe that our "Federal" brand is well recognized across the country, especially in the state of Kerala. We intend to develop
our brand throughout the other states. In order to achieve this objective, we will execute marketing campaigns using a variety of
media vehicles including television, print, radio, and digital mediums. We believe that the key to differentiation is innovation.
Hence, we intend to have innovative marketing campaigns to distinguish our brand from our competitors.
Overview of Banking Operations
We categorise our business into the following five segments, namely retail banking, SME banking, agricultural banking, corporate
and wholesale banking, treasury and other banking operations. We also have a subsidiary, Fedbank Financial Services Limited,
which provides various financial services and a joint venture in IDBI Federal Life Insurance to provide life insurance for our
customers. We have a strong presence in Kerala and we are developing our business across India. Our geographical diversification
has led to strong growth across our business segments.
Our retail lending business provides loan products targeted primarily at individuals (salaried, self-employed professionals and
other self-employed individuals) for meeting their personal financial requirements, such as housing, consumption, asset creation,
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automobile, education, and other personal needs. We offer well differentiated products that cater specifically to this segment of
customers. We focus on innovating and designing products that address our customers’ needs. Our liability products to retail
customers including NRIs contains saving accounts, time deposits and recurring deposits. These products are offered with certain
variations as customized products to well-defined target groups such as professionals, entrepreneurs, students and salaried
employees. On the asset front, we offer housing loan schemes, auto loans, mortgage loans, rent securitization loans, gold loans
and automated personal loans. We also offer other products and services such as debit cards, on-line bill payment services and
cash management services. We also market need-based investment and both general and life insurance solutions to our customers
through strategic alliances entered with various channel partners.
Our SME banking business provides loans and advances under `250 million. We serve our SME clientele with products like
working capital financing and receivable financing.
Our loans to the agricultural sector include loans to individual farmers, group of farmers, agricultural businesses and corporates.
We extend crop loans to farmers to meet their financial needs for the seasonal agricultural operations and working capital finance
for allied activities. The quantum of funding is broadly based on the land holding, the crops the farmer cultivates, the cropping
pattern and the area of operations. We also extend term loans for land development, minor irrigation, farm mechanisation, hi-tech
farming and allied activities. Our agriculture portfolio consists of loans against warehouse receipts of agricultural commodities
and loans for purchasing agricultural land. We have deployed technically qualified relationship managers and development
officers in potential agriculture clusters across the country. Apart from ensuring a good yield, our agriculture finance portfolio
helps us to meet our priority sector lending obligations, where we are required to lend 40% of our adjusted net bank credit or
credit equivalent amount of off balance sheet exposure, whichever is higher, towards priority sectors and 18% of our adjusted net
bank credit or credit equivalent amount of off balance sheet exposure, whichever is higher, towards agriculture.
Our corporate and wholesale banking business provides loans and other banking services to corporate and other clients where the
value of individual exposure to the customers exceeds `250 million. We provide banking solutions to large corporates, mid
corporates, large companies and financial institutions. An assortment of banking products and services consisting of working
capital, term finance, trade finance, foreign exchange and syndication services are offered to this sector. Recently the business
model was restructured by strengthening and institutionalizing relationship banking in this segment.
Our treasury operations include trading and investments in Government and corporate debt instruments, equity, derivative trading
and foreign exchange operations on proprietary account and for customers. The treasury department also maintains a retail desk to
assist retail customers who wish to open investment accounts for investing in Government securities. Our treasury department
manages our funding position and also manages and maintains our regulatory reserve requirements.
Advances
We offer products and services to our wholesale customers, SMEs, agriculture customers and retail customers. The following
table sets forth a breakdown of our advances as of March 31, 2017, 2016 and 2015:
As of March 31,
2015 2016 2017
(` in millions) Kerala(1)
Wholesale advances................................................................. 32,333.71 40,447.05 40,967.41
SME advances ......................................................................... 71,108.90 80,122.49 83,914.83 Agriculture advances ............................................................... 42,492.19 41,398.93 46,343.58
Retail advances ........................................................................ 78,958.91 82,082.94 91,269.50
Gross Advances in Kerala ..................................................... 224,893.71 244,051.41 262,495.32
Rest of India
Wholesale advances................................................................. 131,762.13 153,261.48 228,502.60 SME advances ......................................................................... 58,069.50 71,598.21 92,496.47
Agriculture advances ............................................................... 20,626.41 24,963.09 28,629.22
Retail advances ........................................................................ 86,604.52 97,332.21 136,287.34
Gross Advances in the rest of India ...................................... 297,062.56 347,154.99 485,915.63
Total Gross Advances ............................................................... 521,956.27 591,206.41 748,410.95
NPA provision 6,664.40 7,008.67 7,548.65
Net Advances 515,291.87 584,197.74 740,862.30
(1) Advances are classified as being in Kerala if the lending branch is located in Kerala. Advances from our head office, being located in Kerala, are therefore classified as in Kerala.
Retail Lending
General
Our retail lending business provides loan products targeted primarily at individuals (salaried, self-employed professionals and
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other self-employed individuals) for meeting their personal financial requirements, such as housing, consumption, asset creation,
automobile, education, and other personal needs. Retail loans are sourced through our branches, dedicated direct retail sales team,
digital channels, partnerships and tie ups and through our subsidiary - Fedbank Financial Services Limited.
Our retail loans and advances portfolio have grown significantly over the last two years. We believe this growth of retail and
consumer lending can be attributed to the growing affluence and changing consumer behaviour of the people of India. We have
identified this sector as one of our core growth areas. Our focused marketing approach, product innovation, risk management
systems and competent back-office processes contribute to the strength of our retail lending strategy. The target market identified
for retail loans are salaried, self-employed professionals and other self-employed individuals.
Retail Loan Products
We offer a variety of retail credit products, including home loans, mortgage loans, automobile loans, two-wheeler loans, personal
loans, education loans, loans against liquid securities, loans against shares and loans against gold ornaments.
Our retail loan product portfolio consists of products that have been tailored to suit different sectors. The total retail loan portfolio
as of March 31, 2017 consisted primarily of residential mortgage loans, gold loans, personal loans and automobile loans. Our
consolidated advances under the various retail loan products are given below.
The following table sets forth a breakdown of our retail loan portfolio by product type as of the dates indicated:
As of March 31,
2015 2016 2017
(` in millions, except percentages)
Housing and mortgage loans ....................................................... 89,735.21 54.20% 106,247.50 59.22% 123,630.95 54.33%
Personal loans ............................................................................. 367.25 0.22% 477.13 0.27% 1,225.95 0.54% Retail gold loans ......................................................................... 33,647.73 20.32% 23,035.03 12.84% 20,640.01 9.07%
Automobile Finance .................................................................... 4,677.31 2.83% 5,918.85 3.30% 8,235.31 3.62%
Others ......................................................................................... 32,918.30 19.88% 37,628.48 20.97% 64,203.98 28.21%
Subsidiary loans .......................................................................... 4,217.63 2.55% 6,108.15 3.40% 9,620.64 4.23%
Total Advances .......................................................................... 165,563.43 100.00% 179,415.15 100.00% 227,556.84 100.00%
Housing and Mortgage Loans
We provide housing loans with a maximum tenor of 30 years for the acquisition, construction and payment of residential
properties. The maximum loan-to-value ratio for such housing loans ranges from 75% to 90% as per guidelines from the RBI.
Although the return on equity for these loans is lower as compared to some other product segments, the long tenure of these loans
helps maintain a stable loan base and increases the opportunities to cross-sell other products and services.
We extend mortgage loans and loans against property for residential and commercial properties. The maximum loan tenor and
loan-to-value ratio are determined by the type of collateral security provided, with a maximum tenor of 15 years and loan-to-value
ratio of 75%, which are permitted against mortgage of residential properties. These loans carry a higher interest rate when
compared to housing loans. Our subsidiary helps to build a robust demand for our housing loans and loans against property
through channel engagements and developer tie-ups.
Personal loans
We offer unsecured personal loans at fixed rates to salaried and self-employed professionals for maximum amounts of `1.50
million and `1.00 million, respectively. We have customised group personal loan offers for employees of approved companies,
and pre-approved personal loans as part of continuous engagement of existing customers. Personal loans can be used for a wide
variety of end-uses such as medical, marriage, special occasions, travel and small asset purchase.
We obtain standardised credit score from multiple credit bureaus which help us conduct a more comprehensive risk assessment of
our customers.
Gold loans
We provide loans against gold ornaments at all of our branches. We engage professional appraisers to determine the purity and
value of the gold pledged. The maximum loan-to-value ratio for gold loans ranges from 68-75% of the appraised value within the
RBI guidelines. We monitor the value of the gold on a monthly basis to carry out effective portfolio management. We store the
gold in tamper proof covers in the vaults at our branches.
.Automobile finance
We offer loans for the purchase of new cars and two wheelers, which can be up to 100% of the vehicle's showroom price. We also
offer loans for used cars up to 75% of the depreciated or market value. Our subsidiary helps to build a robust demand for our
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automobile loans through dealer tie-ups. We also have tie-ups with original equipment manufacturers, through which we provide
SME financing for dealers.
Fedbank Financial Services Limited
Our subsidiary, Fedbank Financial Services Limited, is a diversified NBFC that offers multiple retail loan products including
loans against property and loans against pledge of gold ornaments.
Corporate Lending and Wholesale Lending
We classify loans and advances of `250 million and above to a single borrower as corporate lending. We provide commercial
banking products and services to corporate customers, consisting primarily of private and public limited companies. Loans and
advances provided to corporate customers include project loans, term loans for the acquisition of assets, as well as short term
loans, cash credit, export credit and other working capital financing and bill discounting facilities. We also provide non-fund
facilities, such as letters of credit and guarantees. All proposed loans and advances are subject to our internal credit rating
procedures, and internal ratings for facilities of `50 million and above must be reviewed and approved by our risk management
department before the loans are sanctioned.
We also provide corporate customers with treasury services, such as cash management services, foreign exchange products and
currency solutions. We offer banking products and services such as rent securitisation.
Our relationship managers play a key role in developing our corporate and wholesale lending business. Our relationship managers
are spread across key geographies to source and manage end-to-end relationships with our customers. These relationship
managers are supervised by our unit heads at different geographical locations to oversee address the needs of our customers. We
ensure that our relationship managers have the required product knowledge and skill profile to service our customers and take care
of their banking needs.
Our relationship managers identify new value propositions for our customers by recommending products that are relevant to our
clients. The engagement between our relationship managers and our customers creates brand loyalty and helps ensure that our
customers' needs are fulfilled. In order to continue developing this sector, we intend to target high rated corporate, mid corporates,
public sector undertakings and capital and bond market clients by offering value-based pricing and services.
SME Lending
All loans and advances of less than `250 million that are not otherwise classified and categorized as retail and agricultural loans
and advances constitute our SME portfolio. Our SME portfolio consist primarily of loans and advances to manufacturing and food
processing enterprises, educational institutions, healthcare providers, the services sector, traders and professionals. We seek to
provide integrated offerings along the supply chain to create better value for our SME customers. Our large presence in semi-
urban and rural centres, with 900 branches out of 1,252 bank branches, as of March 31, 2017, located in such centres, has allowed
us to expand our SME portfolio and leverage our distribution network to offer credit solutions for our SME customers. Loans and
advances to SMEs are generally secured by collateral and offer higher margins as compared to corporate loans and advances.
SME loans and advances are intended to facilitate the establishment, expansion and modernization of businesses, including
acquiring fixed assets, plant and machinery and meeting working capital needs. We target this sector and attempt to increase credit
flows with measures such as templated products, periodic campaigns, and a faster disposal of proposals. Our SME financing
strategy consists of the following:
● a relationship manager model of business development, which focuses on personalised services;
● financing of SMEs located in and around the area of each branch;
● financing of supply chain and SME linkages of big manufacturing companies; and
● financing SMEs located within a similar product area or geographical cluster.
Agricultural Lending
Our loans to the agricultural sector consist of loans to individual farmers, groups of farmers and corporates. We extend crop loans
to farmers to meet their financial needs towards seasonal agricultural operations and also provide working capital loans for their
allied activities. The amount of funding available is based on the land holding, the crops the farmer cultivates, cropping pattern
and the area of operations.
We extend term loans for land development, minor irrigation, farm mechanisation, plantation sector, hi-tech farming and allied
activities. Our agriculture portfolio includes loans against warehouse receipts of agricultural commodities and agricultural land
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purchase loans. We have deployed relationship managers and development officers across India in potential agricultural clusters.
Apart from providing a good yield, our agriculture finance portfolio helps us to meet our priority sector lending obligations, where
we are required to lend 40% of our adjusted net bank credit or credit equivalent amount of off balance sheet exposure, whichever
is higher, towards priority sectors and 18% of its adjusted net bank credit or credit equivalent amount of off balance sheet
exposure, whichever is higher, towards agriculture.
Working capital and short-term loans and advances
We extend working capital and short-term loans and advances in the following forms:
● Cash credits and overdrafts: These are the most common type of credit facilities available to businesses and self-employed
borrowers. Loans under these facilities are usually secured by assets, such as inventory, receivables, deposits and other
approved securities. Draw downs from these facilities are permitted based on the value of such assets. These facilities are
normally granted for periods up to 30 months, subject to an annual review. Renewals and rollovers are permitted based on
annual reviews.
● Pre-shipment finance facilities: These facilities are granted to exporters for procuring, processing, storing and packing
products. These facilities are normally extended for a period of 180-360 days. Drawings from the facilities are allowed based
on the value of the products offered as security.
● Bills finance / Post Shipment facilities: These facilities cover either bills drawn under letters of credit or documentary bills,
cheques and drafts arising from trade transactions. The credit extended is self-liquidating. Bills which are negotiable in India
and abroad generally have a tenor of up to 90 days.
As of March 31, 2017, our working capital and short-term advances totalled `376,114.76 million, or approximately 50.77% of our
net loans and advances.
Term loans
Term loans are usually structured as project finance facilities for infrastructure, industrial and commercial enterprises and are used
to finance the acquisition or construction of long-term assets. These facilities are repayable in fixed periodic instalments based on
the borrowers' cash flow projections.
As of March 31, 2017, the total amount of our term loans was ` 339,139.85 million, or 45.78% of net loans and advances.
Non-fund-based Financing
Documentary letters of credit
We open documentary letters of credits on behalf of its customers to facilitate the procurement of goods and equipment either on a
''documents against payment'' or on a ''documents against acceptance'' basis. Documentary letters of credit facilities are generally
approved along with other fund-based facilities when a detailed working capital assessment or project evaluation is done.
As of March 31, 2017, our contingent liability under our documentary letter of credit portfolio totalled ` 5,782.55 million.
Bank Guarantee
We normally issue two types of guarantees, namely performance guarantees and financial guarantees. Such guarantees are issued
for purposes such as bid bonds, performance of contractual obligations, fulfilment of financial obligations and the procurement of
goods and services, amongst others.
Generally the letters of guarantee are issued for periods of less than 36 months. In addition to a charge on the assets of the
borrower, such as receivables and cash flows, other current assets and fixed assets, we also require borrowers to provide additional
collateral by way of a cash margin or other securities.
As of March 31, 2017, our contingent liability under letters of guarantee totalled `47,954.50 million.
Pricing Policy
The MCLR is a tenor-linked benchmark and we arrive at the MCLR of a particular maturity by adding or subtracting the
corresponding tenor premium, discount to the sum of marginal cost of funds, negative carry on account of ("CRR") and operating
costs. Our one year MCLR as on March 31, 2017 was 8.95% per annum. The final card rates for loans and advances are arrived at
by adding the credit risk premium and business strategy component over the MCLR. We use a risk adjusted return on capital
framework for risk based pricing of loans and advances. We price our credit products based on its assessment of internal credit
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rating, tenor of the loan, availability of collateral security and market conditions.
Credit Selection Strategy
Our criteria for the acceptability of a borrower include:
● for corporate borrowers, satisfactory quality of management measured in terms of past track record, reputation, competence,
integrity, profitability and sustainability of the borrower's business model and its projected cash flows;
● an acceptable internal credit rating;
● significant probability of credit rating enhancement in the medium term;
● scope of the industry in which the borrower is involved and our internal prudential norms for sectoral exposures;
● compliance with internal and regulatory requirements on single borrower and group exposure;
● maturity profile for the proposed facility;
● acceptable security and credit enhancement measures; and
● pricing.
For more information, see ''Risk Management — Credit Risk '.
Other Products and Services
Fee-based services
We offer a variety of fee-based services, including cash management services, remittance services for NRIs and collection
services. Certain of our fee-generating activities are described below.
Cash management services
We offer cash management services in the form of bill and cheque collection and remittance services for corporate and
institutional clients. Electronic payment facilities are offered to such corporate and institutional customers for payments to
vendors or suppliers. Our customers are able to access such services at over 450 locations throughout India.
The volume of cash management services processed by us for year ended March 31, 2015, 2016 and 2017, totalled ` 13,060.96
million, `13,685.96 million and `4,204.68 million, respectively. Profit generated from cash management services for each of
fiscal years 2015, 2016 and 2017 totalled `33.96 million, `45.42 million and ` 43.92 million, respectively.
Depositary participant services
We act as a depositary participant with the National Securities Depository Limited, for which we earn commissions from account
holders. As of March 31, 2017, we have 16,506 depository accounts and 6,524 Fed-e-Trade accounts, and revenues from our
depository business for each of fiscal years 2015, 2016 and 2017 totalled `10.72 million, `10.92 million and `13.53 million,
respectively.
Services for non-resident Indians
We offer a wide range of banking services to the NRI community. As of March 31, 2017, we had an NRI customer base of 1.05
million.
● Portfolio Investment Schemes. We offer NRI customers a portfolio investment service through which NRIs are allowed to
open investment accounts at designated branches and the amounts deposited in these accounts are used by such NRIs to invest
in Indian equities, where we execute the investment instructions of such NRIs on a non-discretionary basis.
● Remittance Services. We have established Nostro relationships with 20 banks and Vostro relationship with 85 banks and
exchange houses across the world, which allows us to provide remittance facilities to NRIs. We offer 77 Rupee-drawing
arrangements from member states of the Gulf Cooperation Council, two each from Canada, and the United Kingdom and the
United States, one from Singapore and from Malaysia. We have also partnered with third-party remittance service providers
to enable remittance from other geographies, and are in the process of expanding its remittance businesses into new
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geographies. For the nine months ended December 31, 2016, we had a 15.44% market share of all foreign inward remittances
made for personal purposes into India.
Cards
We offer international debit cards to our customers in association with Visa, MasterCard and RuPay. These debit cards provide
customers with 24-hour access to their funds through our ATMs as well as any Visa, MasterCard and RuPay-enabled ATMs and
merchant establishments across the world.
We have an arrangement to issue co-branded Federal Bank-SBI credit cards without the Bank assuming any credit risk in relation
to charges on these cards. Federal Bank-SBI credit cards are available in "Platinum" or "Gold 'N More" for our customers, and we
earn commission for their sale and usage.
We also offer FeDelight, a pre-paid card, and Cash Passport, a travel card issued in partnership with MasterCard.
Third-party Products
Mutual Fund Products
We have agreements with 14 asset management companies to distribute their mutual fund products through our branch
distribution network. We receive either upfront commissions or annual commissions from the asset management companies for
the sale of their products. These asset management companies include HDFC Mutual Funds and Franklin Templeton Mutual
Funds.
Insurance Products
We have entered into agreements with IDBI Federal Life Insurance Company Limited for life Insurance business and
Cholamandalam MS General Insurance Co. Ltd for general insurance and Max Bupa Health Insurance Co. Ltd for health
insurance to distribute their respective insurance products. We receive a fee for each insurance product sold, and have no
underwriting exposure from such insurance products.
Compliance with RBI Lending Requirements
Lending to Priority Sectors
The Master Direction - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2016 dated July
7, 2016 sets out the broad policy in relation to priority sector lending (“PSL”). In accordance with this circular, the priority sectors
for all scheduled banks include (i) agriculture; (ii) micro, small and medium enterprises (“MSMEs”); (iii) export credit; (iv)
education; (v) housing; (vi) social infrastructure; (vii) renewable energy and (viii) others. Under the master direction, the priority
sector lending targets are linked to adjusted net bank credit as defined (“ANBC”) or credit equivalent amount of off-balance sheet
exposure ("CEOBE"), whichever is higher, as on the corresponding date of the preceding year. Currently, the total priority sector
lending target for domestic banks is 40% of ANBC or credit equivalent amount of off-balance sheet exposure, whichever is
higher. It also prescribed sub-targets for agriculture, micro-enterprises and weaker sections.
In the case of non-achievement of priority sector lending targets, including sub-targets, we are required to invest in the Rural
Infrastructure Development Fund ("RIDF") established with NABARD and other funds with NHB/SIDBI/ MUDRA Ltd. as
decided by the Reserve Bank from time to time. The amount to be deposited, interest rates on such deposits and periods of
deposits, and other terms, are determined by the RBI from time to time. We report priority sector loans to the RBI on a quarterly
basis.
For further details on our priority sector lending, see "Selected Statistical Information – Standalone Information".
Agricultural Finance
Pursuant to the RBI guidelines, at least 18% of the net bank credit is required to be provided to the agriculture sector. In fiscal
years 2017, 2016 and 2015, our ratio of agricultural credit to our net bank credit stood at 20.49%, 19.41% and 16.59 %,
respectively.
We provide a variety of financing for agricultural investments such as working capital and term loans for agricultural and allied
activities, including farm mechanization, irrigation and transport vehicles. These are typically secured by the assets being
purchased and/or a mortgage of or charge on agricultural land, immovable property or warehouse receipts. We also extend short-
term crop loans with a security interest being created in our favour over the crops to be harvested.
Deposits
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Our retail deposit products include the following:
● Term deposits. We accept term deposits (also known as fixed deposits or time deposits) giving a fixed return, for periods
ranging from 7 days to 10 years. Such deposits can be withdrawn before maturity in accordance with applicable rates by
paying penalties. Term deposits include recurring deposits, which enable the customer to make deposits over a fixed term at
regular intervals. We also offer overdraft facility against the term deposits to our customers. Term deposits provide us with a
cost efficient and stable funding source, and remain a key focus area for us.
● Savings accounts. We offer savings accounts, which are interest bearing on-demand deposit accounts designed primarily for
individuals and trusts. We currently offer 4.00% on savings deposits.
● Current Accounts. We also offer current accounts which are non-interest-bearing accounts, designed primarily for businesses.
Customers have a choice of regular and premium product offerings with different minimum average quarterly account
balance requirements.
For further information on our deposits, please refer to "Management Discussion and Analysis – Deposits".
For a description of the RBI's regulations applicable to deposits in India and required deposit insurance, see sections titled
"Supervision and Regulation — Regulations Relating to Deposits'' and ''Supervision and Regulation — Deposit Insurance".
We take deposits from individuals, business enterprises, trusts, clubs and associations, large public sector corporations,
government organizations, other banks and private sector companies. We take Rupee or foreign currency denominated deposits
and offers fixed interest rates.
In addition to our conventional deposit products, we offer a variety of special value-added products and services thereby
increasing product offerings and providing greater convenience for customers, such as higher rate deposit accounts for senior
citizens. We offer Fed Flexi Smart Saver deposit for NRIs, which gives the convenience of variable monthly recurring deposit
instalments and special NR deposits with higher return by way of forward-booking of underlying foreign currency, known as
Federal Rupee Plus. We also offer Millionaire Federal Savings Fund, a recurring deposit scheme which lets the customer choose a
certain tenure and instalment amount that will produce returns that will make a customer a "millionaire" upon successful
remittances of instalments.
Deposits for Non-Resident Indians
In addition to providing remittance and portfolio investment services to NRIs, we allow them to open various types of deposit
account. As of March 31, 2015, 2016 and 2017, our total NRI deposit portfolio was `259,355.22 million, `325,970.90 million and
`385,779.31 million, respectively. Our market share of remittances has also grown significantly from 10.25% in fiscal 2015 to
12.95% in fiscal 2016 and 15.44 % in fiscal year 2017 through December 31, 2016.
We offer the following deposit programs to NRIs:
● Foreign Currency Non-Resident Deposits. We offer foreign currency deposits in ten currencies, including the U.S. dollar, the
Pound Sterling, the Euro and the Japanese yen. The principal as well as the interest on these deposits are fully repatriable
outside of India and interest and principal are repaid in the currency of deposit. The terms of these deposits range from a
minimum of one year to a maximum of five years.
● Non-Resident External Fixed Deposits. These deposits are established in Rupees and are maintained for periods from a
minimum of one year to a maximum of ten years. The principal and interest from these accounts are fully repatriable outside
of India. Interest rates on these deposits are fixed by ALCO, subject to a maximum of rates offered to comparable domestic
rupee term deposits. Loans can be granted against these deposits for up to 90% of the deposit amount.
● Non-Resident Ordinary Deposits. These products are offered primarily to NRIs who also derive income from India. These
products are offered as savings bank deposits as well as fixed deposits. The interest rates and terms are structured along the
same lines as domestic deposits. While the principal is not repatriable, except in certain cases, the interest paid is repatriable,
net of payment of Indian taxes.
● Non-Resident External Savings Accounts. Non-Resident External Savings Accounts are maintained in Rupees. We presently
offer 4.00% interest on such savings accounts. The balances in these accounts are fully repatriable outside of India. We also
offer zero interest bearing current account for NRI customers.
Delivery Channels
We distribute our products and services through various access points ranging from traditional bank branches to ATMs to the
Internet. Investment in alternate distribution channels is part of our effort to migrate customers to lower-cost electronic delivery
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channels. Our channel migration effort is aimed at reducing cost while enhancing customer satisfaction levels by providing
customers access to their accounts at all times.
The table below sets forth the growth of our branch and ATM networks since the end of fiscal 2015
As of 31 March
2015 2016 2017
Branches - Bank 1,247 1,252 1,252
Branches – Subsidiary 113 101 100
ATMs 1,485 1,516 1,667
These branches serve to develop our relationship channels and sales channels to serve our customers' needs. We have also
developed allied products and strategic alliances to provide innovative co-branded products for our customers.
Branch Network
The Bank's branches are strategically and geographically segmented into two networks. The Zonal Offices reports to the networks
heads, have full-fledged administrative offices, and oversee the branches in their respective zones. The branches report to the
Zonal Offices through their regional heads. As of March 31, 2017, we had a network of 1,252 bank branches and 9 Zonal Offices.
Amongst the branches, 600 branches are located in Kerala and 652 are located in the other Indian states. We also maintain 12
extension counters, each of which acts as a service outlet linked to a branch and offering banking services at locations such as
educational institutions, information technology parks, airports and hospitals. We continuously assess market conditions and the
profitability of its branches and extension counters to rationalise its network by merging branches and opening new branches
which meet our customers' current needs.
We have our IFSC Banking Unit ("IBU") in GIFT City, Gandhinagar, Gujarat. The IFSC in GIFT City is conceptualized and
designed with other global financial centres, such as in Hong Kong, Dubai and Singapore, in mind. An IBU is equivalent to an
overseas branch for all practical purposes. It facilitates as a base to provide international banking services in the country. We have
also obtained approval to open a branch in the Dubai International Financial Centre ("DIFC").
The branch network extends across India, and the following table sets forth a geographical breakdown of the branch network as of
March 31, 2017:
State/ Union Territory Number of
branches
Percentage of
branches
East India
West Bengal 31 2.29%
Orissa 25 1.85%
Bihar 8 0.59%
Jharkhand 8 0.59%
Assam 12 0.89%
Meghalaya 2 0.15%
Tripura 1 0.07%
Mizoram 1 0.07%
Nagaland 2 0.15%
North India
Delhi 27 2.00%
Punjab 30 2.22%
Uttar Pradesh 23 1.70%
Rajasthan 8 0.59%
Haryana 22 1.63%
Madhya Pradesh 11 0.81%
Chhattisgarh 3 0.22%
Uttarakhand 1 0.07%
Jammu & Kashmir 1 0.07%
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State/ Union Territory Number of
branches
Percentage of
branches
Chandigarh 3 0.22%
South India
Karnataka 101 7.47%
Andhra Pradesh 22 1.63%
Telangana 16 1.18%
Tamil Nadu 137 10.13%
Kerala 600 44.38%
Puducherry 2 0.15%
West India
Maharashtra 102 7.54%
Gujarat 45 3.33%
Goa 6 0.44%
Dadra & Nagar Haveli 1 0.07%
Daman & Diu 1 0.07%
Total Bank Branches 1,252 92.60%
Fedbank Financial Services Limited 100 7.40%
Total Bank and Subsidiary Branches 1,352 100.00%
We are continually modernizing our branch network with technology in order to increase efficiency and increase profits per
employee. We believe that improving productivity by implementing new technology and upgrading branches is an area where we
can continue to improve.
As a part of the branch authorisation policy guidelines issued by the RBI, at least 25% of our branches opened in a financial year
must be located in unbanked rural centres. An unbanked rural centre is a rural centre in the Tier 5 and Tier 6 cities that does not
have a core banking solution enabled "banking outlet" of a scheduled commercial bank, small finance bank, payment bank or a
regional rural bank nor a branch of a local area bank, or licensed cooperative bank for carrying out customer based banking
transactions. As on March 31, 2017, we have 109 branches in such localities.
The table below sets forth a breakdown of our branches by metro, urban, semi-urban, rural areas and overseas as of 31 March
2015, 2016 and 2017:
As of 31 March
2015 2016 2017
Branches Branches Branches
Metro 204 200 199
Urban 213 215 216
Semi-urban 681 684 684
Rural 149 153 153
Total(1) 1247 1252 1252
(1) In addition, our subsidiary had 113, 101 and 100 branches as of March 31, 2015, 2016 and 2017, respectively. We do not classify them into the above subcategories.
Fedbank Financial Services Limited branches
Our subsidiary, Fedbank Financial Services Limited, has a total of 100 branches across India. Our subsidiary has 40 branches in
Tamil Nadu, 17 branches in Andhra Pradesh, 27 branches in Karnataka, 15 branches in Telangana and 1 branch in Delhi.
Representative office
We carry out our overseas operations pertaining to NRIs mainly through our Abu Dhabi representative office, which opened in
2008, and the team of officers attached to it stationed in various member states of the GCC. In fiscal year 2017, we opened our
second representative office in Dubai. Through the relationship managers in our representative offices, we provide remittance
services to our customers located in the GCC. We work closely with the exchange houses and banks in the GCC to provide such
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services to our customers.
We have received the RBI approval to open a representative office in Bahrain.
Federal Experience Center
We established the Federal Experience Center ("FEC") in November 2014. The FEC was established to provide digital banking
and leisure amenities in Cochin International Airport for our high net worth customers.
ATMs
As of March 31, 2017 we have installed 1,667 ATMs at various locations in India. As of March 31, 2017, we had issued
8,713,623 ATM cards, of which 7,624,611 have been activated and 2,765,560 are actively used. We evaluate whether ATM cards
are active ATM cards twice every financial year, each evaluation is six-months apart. We consider ATM cards as active ATM
cards if such cards are used at least once during the six-months before the evaluation date. During the six-months ended 31 March
2017, our ATM network handled an average of over 197,642 transactions per day.
We have an ATM co-branding arrangement at selected locations with two ATM operators. Branding of such sites is done jointly
between our partners and us and our customers can access these select ATMs without any charges.
Cash deposit machines
Cash deposit machines ("CDMs") facilitates cash deposits for our savings and current account holders. CDMs enable our
customers to deposit cash into their accounts even after our business hours. CDMs have inbuilt systems to identify fake notes and
to sort cash deposited by customers into different denominations. CDMs can also provide other facilities, like balance inquiries
and mini statement inquiries, if the operation is carried out through an ATM or debit card. All of our CDMs are installed in our
ATM sites. Our CDMs are widely accepted among our customers and it plays a major role in reducing the counter rush at our
branches. As of March 31, 2017, we have 180 CDMs.
Internet Banking and Other Technology-Enabled Services
We believe that access to account information and the ability to undertake banking transactions through the Internet are key to
satisfying the needs of certain customer segments and we offer Internet banking services to our customers through our website,
www.federalbank.co.in. The provision of internet banking has been a cost-effective tool in increasing our market share in the
retail sector. Services offered to Internet banking customers include online access to account information, placement of requests
for demand drafts and cheque books, a secure mail box facility for communicating with us, payments of utility bills, transfer of
funds to another account or to a third party account belonging to us. As of March 31, 2017, 1,034,903 of our accounts had been
registered to allow the use of Internet banking facilities.
We have revamped the user interface for our internet banking facilities. The new user interface allows our customers to access our
internet banking facilities across all devices. Our internet banking facilities provides the following services: funds transfer, IMPS,
mobile and DTH recharge, term deposits, recurring deposit opening, loans against term deposit, tax payment and utility bill
payments amongst others.
In addition to the foregoing, we have also implemented the following:
● Integrated Electronic Bills Presentment and Payment (EBPP) System. We have a facility called ''Fed e-Pay'' through
which our EBPP System is integrated with our various delivery channels. Fed e-Pay allows our customers who are also
BSNL customers to pay their BSNL bills from such customers' accounts via a telephone call from anywhere and at
anytime.
● Missed Call Banking. Customers can give our dedicated calling number to get an instant balance enquiry of their bank
accounts. They can also call a number and automatically recharge the balance on their mobile phone accounts or mobile
phone accounts of another person registered to their account.
● Instant Account Opening. We have introduced an instant account opening process by integrating and leveraging the
advantages of e-KYC and pre-opened kits. A pre-opened kit can be activated instantly after e-KYC authentication using
Aadhaar. Activating the pre-opened kit will enable customers to use their debit cards to activate other digital channels
like FedMobile, Lotza, FedNet and FedBook.
● Be Your Own Master ("BYOM"). Our BYOM service allows our customers to avail a preapproved retail personal loan
online and accepting the terms and conditions in the web portal. The customer's operative account is immediately
credited with the loan amount. This facility neither requires a customer to visit a branch nor does require any paper work.
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● SoftPin. In order to enhance the security features of our debit cards, we have launched the Softpin initiative to facilitate
our customers should they wish to change their debit card PIN numbers. Our customer have to send a SMS to us with the
last four numbers of their debit card and we will reply with a one-time password ("OTP") which our customers can use
to set their ATM pin in any ATM machine.
● E POS. We have introduced an electronic point of sale service to help merchants collect payments from their customers
by sending a SMS to their customers. The customers can access the link in the SMS, and make payment to the merchant
with their debit or credit cards.
Digital Banking
Our digital banking services seek to provide a simplified banking experience to our retail, SME and corporate customers. We have
partnered with various financial technology companies and start up studios to introduce new digital banking products for our
clients. Our digital banking products reflect our digital banking theme of "Digital at the fore, human at the core."
We have four mobile based applications, FedMobile, FedCorp, FedBook Selfie and the Lotza UPI app to cater to the various
requirements of our business segments. These applications compliment our branch and ATM network and enable us to win
customers by allowing customers to undertake their banking transactions with convenience. These applications are available
across multiple mobile operating systems.
FedMobile
FedMobile is our mobile banking application for our retail customers. We launched this application in June 2010. FedMobile
allows our customers to do funds transfer, pay bills, schedule payments, open deposits, apply for loans, plan for their travel, apply
for insurances and provide customer feedback. A FedMobile account can be registered online and secured with two factor
authentication.
FedCorp
FedCorp is our mobile banking application enabled for corporate and SME customers where our customers can manage their daily
banking transactions from their mobile devices in a secure and convenient environment. FedCorp provides an easy registration
process; funds transfer services, balance enquiry and mini statement generation, multi user approval and payees management.
FedBook Selfie
FedBook Selfie enables customers to open a savings bank account from anywhere using their mobile device.
FedBook Selfie enables customers to customers undertake banking transactions business through the application. The application
works as a digital passbook for the customer and reflects information relating to the customers bank account on a real time basis.
The application is enabled to undertake real time know your customer checks to ensure compliance and reduce account opening
turnaround time.
FedBook Selfie permits customers to open accounts using two modes:
1. Our customer can open an account with their Aadhaar OTP based e-KYC. Such accounts can start transacting within the
RBI prescribed limits, the account holder would have to undergo a full KYC at any of our branches within a year of
creating such an account.
2. Alternatively, our customers can open an account by providing a photo and scanning the Aadhaar Card Quick Response
code where the account will be opened instantly and customer can initiate a first transaction up to `10,000. In order to
activate the account, the account holder would have to perform a full KYC immediately.
We have introduced various security features to identify existing customers and prevent the same individual from opening a
second account.
Lotza
We have two applications under Lotza to cater to the different needs between retail customers and merchants. The Lotza-UPI
application for retail customers enables payments to any bank account in India by providing a virtual address. The Lotza-M
application enables merchants to accept payments by scanning a QR code. We also provide a point of sale device which is capable
of generating receipts for their customers. The Lotza applications allow our customers to inquire about their balance and conduct
fund transfers, our customer's mobile number will also be verified and registered with their Lotza accounts.
Treasury
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Our treasury group is responsible for balancing and managing the daily cash flow and liquidity of funds within the Bank, ensuring
regulatory compliance such as the CRR, SLR, proprietary investment and trading activities on Government securities, corporate
bonds, other fixed income products, foreign exchange products and derivatives. Treasury also extends client services related to
investments and trading of securities and foreign exchange.
Our treasury group follows as three tier structure comprising of Front Office, Mid Office and Back Office.
The Front Office consists of the following desks:
1. The SLR desk, responsible for ensuring SLR compliance, which also handles investments and trading activities in
Government securities, state development loans and treasury bills;
2. The Constituent Subsidiary General Ledger desk, which provides the investment and trading services on Government
Securities, state development loans and treasury bills to clients;
3. The Money Market desk, responsible for ensuring CRR compliance, managing the daily cash flow and liquidity of funds
within the bank, managing market borrowing and lending operations;
4. The Non-SLR desk, responsible for investments and trading in certificate of deposits, corporate bonds, short term paper,
commercial paper and equities, and making long term strategic investments;
5. The forex merchant desk, provides real time rates to bank branches for transactions in foreign exchange between the
branches and clients, provide daily “card rates”, i.e. foreign exchange rates for small value forex transactions, and books
forward exchange contracts based on requests from clients or branches;
6. The derivatives desk, which engages in arbitrage trading in interest rate and currency derivatives;
7. The forex cell, which formulates internal guidelines for trade finance, liaises with branches and other Bank departments
for trade-finance related matters and submits regulatory reports to RBI and other regulators; and
8. The analytics desk, which assists dealers with research on market developments and insights, analyses the performance
and valuation of the Bank's investment portfolio, and helps to monitor risk;
The Mid Office of treasury forms part of the Integrated Risk Management Department and directly reports to the Chief Risk
Officer of the Bank. Mid Office/Market Risk Division is responsible for the design and implementation of Bank’s market risk
management system. It produces, and analyses daily reports on the output of the Bank’s risk measurement model, including an
evaluation of the relationship between measures of risk exposures and trading limit.
The Back Office of Treasury, which reports to the head of the Operations Department, is responsible for acceptance, settlement
and reconciliation of Investment deals, accounting, reporting of CRR and SLR to the regulators, and valuation of Investments as
per regulatory guidelines.
Operations
The centralization of operational activity is an ongoing process in the bank which is carried out by the operations team, thus
facilitating the branches for customer engagement activities predominantly.
We also centralize various operational activities to streamline the work in our branches. Some of the key activities which we have
centralised include: the creation and modification of our customer's identity credentials, the opening of CASA and loan accounts,
trade finance instruments, the registration of channel facilities, the supervision and management of our payment channels, the
processing and settlement of domestic and international payments and receipts and administrative and back office functions.
Operational Controls and Procedures in Branches
Our branches currently handle an average of 316 transactions (including ATM transactions) daily. An operational framework has
been established to ensure that these transactions are handled with precision, regularity and efficiency in a risk-mitigating manner.
Operational instruction manuals at the branches detail procedures for processing various banking transactions. Amendments to
these manuals are implemented through circulars sent to all branches.
We place importance on computer security and have adopted an information security policy. Most of our information technology
assets, including critical servers, are subject to appropriate physical and logical access controls. The powers to authorise
transactions are exercised by officials in accordance with a scheme of delegation of powers and the monetary limits are
incorporated as authorisation levels in the software, which validates each payment.
Our transaction monitoring and fraud prevention department maintains an efficient system for constant surveillance and
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monitoring to prevent losses due to frauds, malpractices and lapses. The department monitors transactions based on the alerts
generated by our real time intelligent monitoring system. Predefined scenarios which can lead to frauds are plugged into these
tools and when a transaction meets the predefined conditions, an alert is generated for that transaction. Serious anomalies are
reported to respective departments for detailed enquiry and actions.
Operational Controls and Procedures for Internet Banking
Two factor authentications in the form of an OTP via SMS or the mobile application or the hardware token is in place as an added
security to internet banking transactions. A cooling period has also been provided when a new beneficiary is added for fund
transfer to mitigate fraud risk.
Anti-Money Laundering Controls
Pursuant to the Prevention of Money Laundering Act of 2002 ("PMLA"), we have implemented a policy on "know your clients"
standards and anti-money laundering and combating financing of terrorism controls. These policies has been approved by the
Board of Directors and is being followed by each of our branches. These policies, which consists of customer identification
procedures and customer acceptance policies, forms the basis of our anti-money laundering controls. Transactions are monitored
centrally and alerts are generated based on scenarios configured in accordance with the regulatory guidelines. Our branches also
monitor suspicious activities based on 27 alert indicators. A senior official designated as the Principal Officer under the PMLA
oversees the anti-money laundering activities and ensures compliance with our internal policies.
Recovery of Non Performing Assets
We have devised a strategic policy for the recovery of NPAs by identifying such risky assets at an early stage with the daily
recognition of NPAs. The various measures recommended for recovery include one-time settlements, out-of-court settlements,
filing of suits before the Debt Recovery Tribunals and courts, actions under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act 2002 and Lok Adalats, which is a system for out-of-court settlements of impaired
loans through mutual consent in accordance with the Legal Services Act 1987.
Additionally, NPA accounts of `1.00 million and above are reviewed periodically by our senior management or the Board of
Directors and appropriate measures are taken for their early recovery or upgrading. Non-performing loans which are not capable
of upgrading or recovery are also considered for write-off on a case by case basis, although recovery efforts continue to be
undertaken on accounts that have been written off.
We have assembled special teams to monitoring our high value NPAs and technically written-off ("TWO") accounts with a
specific focus on the resolution of such NPAs and to recover the sums in the TWO accounts. We also have a team for the slippage
prevention and recovery of retail portfolios through the collection and recovery agents. The above measures are coupled with our
resolution strategies to prevent the migration of assets to a lower asset class.
We believe that the healthy level of recoveries from NPAs and in unrealized interest were primarily due to the collateral that has
been provided to secure the impaired loans, which encourages borrowers to repay loans and interest rather than forfeit their
property.
Competition
We face strong competition in all of its principal lines of business. Our primary competitors are public sector banks, other private
sector banks, co-operative banks, foreign banks, funds transfer agencies and in some product areas, non-banking financial
companies, small finance banks, regional rural banks and payment banks.
Retail Banking
In retail banking, our principal competitors are the large public sector banks, small finance banks, as well as existing and new
private sector banks and foreign banks in the case of retail loan products. Public sector banks, such as the State Bank of India, also
have large deposit bases and large branch networks. Small finance banks provide niche services to small businesses and
individuals and compete with us in the agricultural loans sector. Private sector and foreign banks compete principally in limited
geographical areas by adopting different marketing strategies. Foreign banks, while having a small market penetration overall,
have a significant presence among non-resident Indians and also compete for non-branch based products such as auto loans and
credit cards.
In particular, we face significant competition primarily from private sector banks and from other public sector banks, in the
housing, auto and personal loan segments. In mutual fund sales and other investment related products, our principal competitors
are brokers, foreign banks and new private sector banks.
For more information on our digital banking products, please refer to "Business – Digital Banking".
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Corporate and Wholesale Banking
Our corporate banking products and services face competition from a number of public sector banks, private sector banks and
financial institutions. This competition has, over time, built extensive branch networks, providing them with the advantage of a
low cost deposit base, and enables them to lend at competitive rates. In addition, the extensive geographic reach of many of these
institutions enables product delivery in remote parts of the country. We seek to compete with these banks through the competitive
pricing of loans, advance and services, faster response to customer requirements, quality of service, a fast growing inter-connected
branch network, and technology-enabled delivery capabilities.
Other private sector banks also compete in the corporate banking market on the basis of pricing, efficiency, service delivery and
technology.
We also face competition from foreign banks, with foreign banks traditionally having been active in providing trade finance, fee-
based services and other short-term financing products to top-tier Indian corporations. We have established strong ties in trade
finance, strong fee-based cash management services and competes with foreign banks using its broader branch network in the
country, innovative products and competitive pricing.
Treasury
In its treasury advisory services for corporate clients, we compete principally with foreign banks in foreign exchange and
derivatives, as well as public sector and private sector banks in the foreign exchange and money markets business.
See “Risk Factors - Our business is highly competitive, which creates significant pricing pressures for us to retain existing
customers and solicit new business, and our strategy depends on our ability to compete effectively”
Subsidiary and Associates
As on 31 March 2017, we have one unlisted fully-owned subsidiary, named Fedbank Financial Services Limited, and one
associate, named IDBI Federal Life Insurance Company Limited ("IDBI Federal Life"). Fedbank Financial Services Limited is a
diversified NBFC offering multiple loan products such as loan against property and loan against pledge of gold ornaments. It also
distributes our loan products. We have engaged an investment banker/merchant banker to explore outside investment
opportunities in Fedbank Financial Services Limited. If such opportunity materializes, it would dilute our stake, though we would
continue to hold the majority stake. We would use the incoming funds from such investment to fund for the growth of Fedbank
Financial Services Limited.
IDBI Federal Life is an associate company, in which we hold a 26% stake, with Ageas Insurance International N.V. also holding a
26% stake and IDBI Bank Limited holding the remaining 48% stake. IDBI Federal Life is a life insurance company that
distributes its products through a multi-channel network consisting of insurance agents, bancassurance partners (IDBI Bank,
Federal Bank), direct channels and insurance Brokers.
Employees
We have built up a team of professionals comprising experts in risk management, credit analysis, treasury, relationship
management, retail products, marketing and information technology as well as general banking professionals. As of March 31,
2017, the Bank had 11,593 employees, compared to 11,735 at March 31, 2016 and 10,981 at March 31, 2015. Of these, 4,039 as
on March 31, 2017 were professionally qualified in management, accountancy, economics, banking, engineering, information
technology or law. As of March 31, 2017, the Bank employed 1,162 at our head office, 376 people at our Zonal Offices, 315
people at our credit hubs and 9,740 people at our branches. As of March 31, 2017, our Subsidiary had 579 employees.
Employees are eligible for benefits from the Provident Fund, which is a defined contribution plan. We also provides for gratuity
(the “Gratuity Plan”) and Pension (the “Pension Plan”), each of which are defined benefit retirement plans. The Gratuity Plan
provides a lump sum payment to vested employees or their nominees on retirement, death, incapacitation or termination of
employment, of an amount based on the respective employees’ salary and the tenure of employment. The pension plan provides a
monthly pension after retirement of the employees till death and to the family after the death of the pensioner. We also contribute
specified amounts to the gratuity fund and the superannuation fund. The liabilities are determined by actuarial valuation. As of
March 31, 2017, our Bank’s liability for retirement benefits (including pension, gratuity and leave encashment benefits) totalled
`11,888.94 million. Our employees who joined us on or after April 1, 2010 are governed by the Defined Contributory Pension
Scheme ("DCPS") in line with the New Pension Scheme. As of March 31, 2017, 5,437 employees are covered under the Pension
Plan and 6,098 employees under the DCPS.
Although a majority of our officers and employees are members of recognized union or officers' association, we consider relations
with our employees to be good. Collective bargaining negotiations to set salary and benefit standards for bank employees take
place at the industry level through the Indian Banks' Association, which is an independent body. We have not experienced a
serious work stoppage or other form of labour action. See ''Risk Factors — Risk Relating to the Business of the Bank — The
Bank's employees are represented by employee unions and officers' associations and any employee unrest could adversely affect
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its operations and profitability''.
Properties
As of March 31, 2017, we had a network consisting of 1,252 bank branches, nine Zonal Offices and 1,667 ATMs spread over 25
states, Delhi NCT and four union territories, throughout India, and our Subsidiary had a network of 100 branches. Our branches
and our offices operate on leased premises as well as on owned premises. 52 branches/offices, including the head office, are
functioning from the Bank’s owned premises and the remaining 1,210 branches/offices are functioning from leased premises. The
net book value of all the properties owned us as of March 31, 2017, including our corporate headquarters, our staff training
college, 5 Zonal Offices, 47 branches, 226 residential flats, 7 guest houses and 2 holiday homes, was `1,572.16 million.
As of date of this Placement Document, and to the best of the knowledge of our management, there are no environmental issues
that may materially affect our utilization of our properties.
Legal Proceedings
We are involved in a number of legal proceedings in the ordinary course of our business. In addition, certain government entities,
including the RBI, make inquiries and conduct examinations or investigations from time to time concerning our compliance with
certain laws and regulations. However, other than as described in the section titled "Legal Proceedings" (read along with the
explanations and assumptions), we are not currently a party to any proceedings and no proceedings are known by us to be
contemplated by government authorities or third parties, which, we believe, if adversely determined, would have a material
adverse effect on our business, prospects, financial condition or results of operations.
Intellectual Property
We are the registered proprietor of the trademark "Federal Bank". We are also the owner of copyright in the artistic work in the
"Federal Bank – Your Perfect Banking Partner" logo, which has been duly registered with the Registrar of Copyrights.
We utilise a number of different forms of intellectual property in our business including our Federal Bank brand and the names of
the various products we provide to our customers. We believe that we currently own, have licensed or otherwise possess the rights
to use, all intellectual property and other proprietary rights, including all trademarks, domain names, copyrights, patents and trade
secrets used in our business.
Awards
We have won the following awards:
1. Best use of Digital & Channels technology amongst small banks in IBA Banking Technology Conference, Expo &
Awards (2017)
2. Banking Frontiers Inspiring Work Place Award for Best HR & Talent Practice (2016)
3. Banking Frontier's Finnoviti Award (2015)
4. IDRBT Award for Digital Banking, Analytics and Big Data in mid-sized Banks Segment (2015)
5. Skoch Smart Technology Award (2015)
6. Asia Training & Development Excellence Awards (2014)
7. IBA Awards for Innovation in Banking in the category of Most Innovative Customer Service Proposition (2013)
Risk Management
Overview
There is risk in every facet of banking, and risk taking is inevitable for generation of returns. Our risk management philosophy is
to take risk by choice rather than by chance. Our major risks are credit risk, market risk (including liquidity risk) and operational
risk (includes information security and cyber security related risk). We have comprehensive policies and procedures in place to
identify, assess, monitor and manage these risks systematically across all its portfolios.
We have a robust risk appetite framework, which aligns with the business strategies set by the Board. The risk management
framework is subjected to review and upgrade on an ongoing basis, in tune with regulatory guidelines and best practices in the
industry. We have established an independent risk governance structure designed to help ensure the independence of the risk
measurement, monitoring and control functions.
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Our Board of Directors oversees and approves the risk policies, risk appetite and strategies to establish an integrated risk
management framework and control system. The Risk Management Committee ("RMC") of the Board devises a policy and
strategy for integrated risk management of the material risks the Bank is exposed to, in the course of its business. The RMC
coordinates with various executive level risk management committees such as the Credit Risk Management Committee, the Asset
Liability Management Committee ("ALCO") and, the Operational Risk Management Committee to ensure effective risk
management in the Bank. The Bank's Managing Director and CEO, assisted by the executive level committees, has the role of
striking the appropriate balance between business development and risk profile, in line with the strategies and risk appetite as
approved by the Board and RMC. Our Chief Risk Officer is responsible for ensuring effective risk management and reports
directly to Managing Director and CEO.
In order to manage risk, our business units and risk management units work together to ensure that business strategies and
activities are consistent with approved policies and defined risk appetite. Our risk management framework is established along the
three lines of defence model. The business units form the first line of defence and are responsible for ensuring that activities
comply with applicable rules and effectiveness of risk management in daily operation. The second line of defence comprises of
risk management units functioning independent of the business activities and responsible for developing and implementing
frameworks to identify, measure, monitor, control and report risks. The third line of defence is the audit function, which provides
an independent assurance and assessment of effectiveness of the first and second line of defence to the Board and executive
management.
The Integrated Risk Management Department monitors the adequacy and effectiveness of the risk management practices and
internal controls through tools such as risk assessments, monitoring of risk limits and risk indicators and review of exceptions, and
reports on these aspects to the executive level risk management committees. The Integrated Risk Management Department reports
to the Chief Risk Officer.
Risk appetite
The risk appetite is a top-down process consisting of specific quantitative and qualitative factors and provides an enforceable risk
statement on the amount of risk we are willing to accept in pursuit of its financial and strategic objectives. Our risk appetite is
framed by the Board of Directors considering the business strategies and market conditions and the risk levels with which we are
comfortable for carrying on its business. Our risk appetite acts as an enabler to pursue our business goals and at the same time,
control the level of risk taking. Breaches, if any, in the risk appetite limits acts as warning signals for the functionaries to take note
of the situations at hand and initiate corrective actions duly notifying the Board regarding the same.
Execution and monitoring of the business strategy in line with the defined risk appetite holds the key for achieving our objectives.
The risk appetite is provided to different business segments in terms of policy limits, budgets and targets. The risk appetite limits
are monitored periodically and status reported to the RMC on a quarterly basis.
Credit risk
Credit Risk arises when a borrower or counterparty fails to meet its obligations in accordance with the agreed terms. Even though
loans are the most evident source of credit risk, other sources exist throughout our other activities, including in the banking book,
the trading book, and in on-and off-balance sheet items.
A credit risk management framework is established through various Board approved policies and procedures for identifying,
measuring, monitoring and controlling credit risk. The policies and procedures cover all stages of the credit cycle such as the pre-
sanction stage (including origination, credit ratings and risk assessment and risk mitigation), the sanction stage (including
approval and documentation) and the post-sanction stage (including administration, monitoring and recovery).
Credit risk mitigation is a proactive management tool designed to protect an entity's earnings from loss. We employ various
methods and techniques to reduce the impact of the credit risks to which it is exposed in its daily operations. There are Board
approved policies that set out the criteria and conditions for eligibility of collaterals both for internal sanctioning as well as
regulatory capital purposes. Our valuation policy outlines our credit risk mitigation and collateral management framework sets
principles and standards relating to recognition, valuation and treatment of collateral.
Pre-sanction stage
Branches and relationship managers conduct preliminary scrutiny and due diligence of loan proposals based on our policy
guidelines. The proposals are then forwarded to the respective sanctioning authority for further processing. We have adopted the
committee approach for sanctioning loans in regional credit hubs and other corporate office committees. All loans are processed at
either regional credit hubs or our corporate office underwriting teams, other than certain retail and SME loans that can be
sanctioned under branch delegation. We have put in place a comprehensive policy for delegating authority, which states the
guidelines for exercising delegation and the powers conferred on various authorities for sanctioning loans. The power to sanction
loans has been delegated to various authorities based on various factors such as hierarchical position of the delegate, total
indebtedness of the borrower, tenure of loan and riskiness of the exposure.
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Our approach to credit risk encompasses both funded and non-funded exposures. Before a credit facility is sanctioned to any
borrower, a comprehensive assessment of the risk profile of the borrower and transaction characteristics is done, based on broad
categories of risk namely, financial risk, business risk, industry risk and management risk. We use the nine risk assessment models
in the case of SME and corporate customers, and twelve retail score cards, in the case of retail customers and small value business
loans. The rating models for corporate and SME borrowers are developed on two dimensional rating methodology including
obligor risk rating and facility risk rating. Obligor risk rating indicates the probability of default, and facility rating reflects the
securities and/or guarantees provided by the borrower that will act as credit risk mitigants. A combination of obligor risk rating
and facility risk rating provides the final rating of a borrower, which indicates the expected loss in case of default. Retail score
cards are scoring models that identify and assess the risk in retail, enabling us to accept or reject the proposal.
Sanction stage
All loan proposals are sanctioned by the designated authorities or committees in accordance with the powers vested in them.
Preparation of all relevant agreements and documents is centralized, and agreements and documents are executed at the respective
branches. Our procedures include verification of a legal scrutiny report, loan documentation and other relevant documentation by
specialized officers for loans above a threshold limit. The credit administration units and credit hubs ensure that the loans are
disbursed only after complying with the terms of sanction, as stipulated by sanctioning authority. We have specified hurdle rates
for internal rating, below which the loans are generally not sanctioned. Any overrides in internal ratings can be done only as per
the Board approved policy in this regard. The internal rating for loans above `50 million needs to be confirmed by risk
department, prior to sanction.
Post-sanction stage
We have established an independent credit monitoring department to facilitate efficient and effective credit management, review
changes in credit worthiness and initiate remedial measures in case of any deterioration in credit quality. All lending relationships
are subjected to regular reviews at least on an annual basis to assess performance of portfolios in accordance with the terms of
original sanction, to review our exposure to each borrower and to refresh risk rating data. Renewals and review frequencies are
adopted for borrowers commensurate with their level of risk.
Dedicated cells are set up (both at corporate office level and zonal level) for capturing the warning signals from various financial
and non-financial parameters to identify signs of credit weakness at an early stage. The team regularly monitors the conduct of the
loan accounts and follows up with the branches for rectification of any deficiencies noted. In cases where the status of the loans
deteriorates further, the loan collection and recovery team takes over the monitoring.
We have also implemented a framework for managing the unhedged foreign currency exposures of the borrowers. The policy
articulates the methodologies for ascertaining the amount of unhedged foreign currency exposures, estimating the riskiness of the
unhedged position and the extent of likely loss, making appropriate provisions and capital charge as required by the RBI and
elucidating the subsequent disclosures to be made in our balance sheet.
In order to minimize concentration risk in exposures from multi-dimensional sources and to curtail default loss by high risk grade
borrowers, we have laid down a Board approved exposure policy, which is reviewed annually. The objective of the exposure
policy is to contain risk in our credit and investment exposures and manage the exposures adhering to limits prescribed by law and
regulations. We have adopted a three-pronged approach for analyzing credit concentration – identification, monitoring and
responding. Exposure limits are determined based on our capital fund, net worth and total gross advance. Exposures are monitored
against these Board approved limits and quarterly exposure ceiling monitoring reports are placed before the Board.
Market risk
Market Risk is the risk of losses in on and off-balance-sheet positions arising from adverse movements in market factors like
interest rates, foreign exchange rates, equity prices and credit spreads. Our market risk management framework comprises of
Board approved policies like the market risk management policy and investment, foreign exchange and derivatives policy, and
established practices like mutually independent functioning of front office, mid office and back office, independent monitoring of
limits and treasury deals, independent valuation of instruments and positions and regular stress testing of different portfolios.
Our investment portfolio is exposed to interest rate risk on account of investments in instruments like government securities,
treasury bills, certificate of deposits, commercial paper and corporate bonds and debentures. We also engage in derivative
transactions for hedging and proprietary trading purposes. We classify our investment portfolio into held to maturity, available for
sale and held for trading. Interest rate risk in investment portfolio and derivatives is managed by establishing and monitoring
portfolio wise limits.
We manage equity price risk relating to changes in prices of securities (both equities and instruments exhibiting features of equity)
that may adversely affect our financial position. We undertake exposure in equities, as part of its trading activity within limits
stipulated by regulators and internal policies. Our investment policy provides for limits on equity exposure, as well as limits on
investments in individual securities within the overall limit. The securities are marked-to-market daily and the risk management
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department monitors the stop-loss limits. The value at risk of the equity portfolio is also monitored on a daily basis.
Our trading room undertakes foreign exchange transactions on behalf of its customers as well as for its proprietary trading book.
These activities include trade related transactions of corporate clients, placing and accepting deposits and borrowing and lending
in foreign currencies. We use currency swaps, forward contracts and futures for hedging as well as for trading purposes. We also
plan to venture into options trading in the near future. The exchange rate risk arising out of the above transactions is managed by
establishing and monitoring various limits like net overnight open position limit, value at risk ("VaR") limit, aggregate gap limit
and stop loss limit. The exposure to counterparties, including those arising from exchange transactions, is monitored through
counterparty limit on a daily basis.
Currently, market risk capital is computed under the standardized duration approach. We also use VaR as a tool for monitoring
risk in our trading portfolio. The VaR and stressed VaR for different market portfolios are monitored on a daily basis. The ALCO
oversees the market risks in the trading book and the banking book.
Liquidity risk
Liquidity refers to our ability to meet our funding requirements for repayment of liabilities and utilizing investment and lending
opportunities in a timely manner at an optimum cost. Analysis of liquidity risk involves the measurement of not only our liquidity
position on an ongoing basis but also examining how funding requirements are likely to evolve under various scenarios, including
adverse environments.
The Board approved asset liability management policy lays out a framework for management of our liquidity risk. Our liquidity
position is monitored on an ongoing basis both under stock and flow approaches. Structural liquidity position which analyses our
future cash flows based on liabilities and assets classified into appropriate time buckets as per their maturity profile and
behavioural pattern is drawn on a daily basis. Dynamic liquidity position for a projected horizon of 90 days is assessed on a
monthly basis. Prudential limits and Basel III stock ratios are monitored on a periodic basis. The liquidity coverage ratio ("LCR")
is computed on a daily basis and the risk appetite for liquidity risk is set based on LCR. The net stable funding ratio ("NSFR") is
computed on quarterly basis and reported to RBI. We also conduct stress testing and scenario analysis for assessing liquidity risk.
The outputs of the stress tests are used for developing contingency funding plans. Tolerance levels approved by the Board are set
for structural liquidity, LCR and other stock ratios and adherence to the tolerance levels is monitored and reported to ALCO.
Interest rate risk
The measures for management of interest rate risk in our investment portfolio are separately mentioned under section on market
risk in this document. In addition to this, we measure the interest rate risk in its entire rate sensitive assets, liabilities and off
balance sheet positions as well as on the banking book on a monthly basis and report to ALCO.
Our net interest income or net interest margin is dependent on the movement of interest rates and mismatches in the cashflows or
repricing dates. The immediate impact of changes in interest rates is on net interest income. A long-term impact of changing
interest rates is on our net worth, as the economic value of our assets, liabilities and off-balance sheet positions get affected due to
variation in market interest rates. Interest rate risk management is achieved by capturing the risks arising from the maturity and
repricing mismatches and it is measured both from the earnings perspective in terms of earnings at risk and the economic value
perspective in terms of modified duration of equity. We have a set risk appetite and tolerance limits for earnings at risk and
modified duration of equity, and monitors the same on a monthly basis. The impact of different types of interest rate shocks are
assessed by conducting appropriate stress tests. Interest rate reset for floating rate loans is effectively utilized for managing our
interest rate risk profile.
Operational risk
Our operational risk management focuses on proactive measures in order to ensure business continuity, a competent and well-
informed staff and its adherence to established rules and procedures as well as on security arrangements to protect our physical
and IT infrastructure. Operational risk is primarily managed by prescribing adequate controls and mitigation measures, which are
being reviewed and updated on a regular basis, to suit the changes in business practices, structure and risk profile.
For the purpose of managing operational risk, our activities have been divided into a set of core business processes and sub-
processes with designated process owners. The process owners are responsible for identifying, reporting and responding to risks
inherent in the processes. Regular risk and control self assessment is conducted for each core process. New products and processes
or any modifications to existing products and processes are vetted to identify and understand the nature and degree of the risks
which we would be exposed to and checks and controls are implemented to mitigate the risks. We have also put in place a fraud
prevention framework, whereby various transactions are monitored by dedicated teams from the angle of fraud risk and anti
money laundering.
We have put in place comprehensive bank-wide business continuity management plans and procedures to ensure continuity of our
critical operations in the event of any disaster or incident affecting business continuity. Our business continuity program is
developed considering the criticality of the functions performed and the systems used. Periodic drills and tests are conducted to
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evaluate the effectiveness of the business continuity arrangements.
Information security and cyber security risk
We have committed significant resources to protect the security of its systems, software, networks and other technology assets
through security programs, with the goal of maintaining overall cyber resilience that scans, detects and responds to threats such as
data breaches, malware, unauthorized access and denial-of-service attacks. We have established robust information and cyber
security frameworks for securing our IT infrastructure and systems. We constantly monitor the environment including cyber
threats, emerging regulatory requirements around cyber risks and mitigation strategies.
The Information Security Team formulates and periodically reviews our information and cyber security policies and practices.
Promotion of information and cyber security awareness among the staff and customers is undertaken on a regular basis through
various modes. The Chief Information Security Officer is responsible for articulating and enforcing the policies that we use to
protect its information assets and directly reports to Chief Risk Officer.
Reputation risk
Reputation risk can be defined as the risk arising from negative perception on the part of customers, counterparties, shareholders,
investors, debt-holders, market analysts, other relevant parties or regulators that can adversely affect a bank’s ability to maintain
existing, or establish new, business relationships and continued access to sources of funding. We manage the reputation risk
events on a proactive basis with the intention of avoiding such events. We have formed response teams whose task is to control
the effect of risk due to occurrence of reputation event. We manage reputation risk through our governance and control processes.
Reputation risk management policy lays down the framework to ensure that the reputation risk is managed effectively and
consistently across our business.
Internal Capital Adequacy Assessment Process ("ICAAP")
Our ability to take risk is dependent on its risk-bearing capacity. A key factor determining the risk-bearing capacity is stable
earnings allowing the build-up of a strong capital base to absorb potential losses. We strive to ensure that it is sufficiently
capitalised to carry out its mission even under macroeconomic downturns. Capital is managed in accordance with regulatory
requirements and business plan approved by the Board.
ICAAP covers all material risks involved in our business operations and our plans to maintain adequate level of capital
commensurate with our overall risk profile. ICAAP covers our procedures and measures designed to ensure:
appropriate identification and measurement / monitoring of risks material to its business operations; and
maintenance of appropriate level of internal capital in relation to its risk profile on an ongoing basis.
Capital planning under ICAAP takes into account the demand for capital from businesses for their growth plans and ensures that
we are adequately capitalised for the period ahead and holds sufficient buffers to withstand stress conditions. The ICAAP is thus a
forward-looking assessment of capital requirements given the business strategy, risk profile, risk assessment, risk appetite and
capital plan.
As on March 31, 2017, we have maintained Common Equity Tier I ratio well above the Basel III capital requirements. This
includes the Capital Conservation Buffer requirement of 1.25% as per the Basel III norms as on the date.
STRESS TESTING:
Stress testing refers to various techniques (quantitative and/or qualitative) used by us to gauge its vulnerability to exceptional but
plausible events. Stress testing is a risk management technique used to evaluate the potential effects on our financial condition of a
specific event and/ or movement in a set of financial variables. We undertake stress testing at intervals prescribed as per the Board
of Directors' approved policy, which varies based on the type of risk. We conduct monthly tests on (i) forex risks; (ii) interest rate
risks; (iii) equity price risks; (iv) derivative risks and (v) liquidity risks. We also conduct the following on a quarterly basis (i)
credit risks testing; (ii) pension obligation risks testing; (iii) reverse stress testing; and (iv) scenario analysis. Our operational risks
are tested annually.
Stress testing is based on our Board approved stress testing policy, which also sets out the frequency of the testing based on the
type of risk. We stress the relevant parameters at three levels of increasing adversity – baseline, medium and severe – with
reference to the normal situation and estimate the financial resources needed by it under each of the circumstances to:
meet the risk as it arises and for mitigating the impact of manifestation of that risk;
Meet the liabilities as and when they fall due; and
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meet the minimum Tier I Capital Ratio.
We carry out reverse stress testing for key risk areas to test the stress levels at which capital falls below the internal capital
threshold. We use stress tests for:
assessing its risk profile and communicating the same to the Board / senior management;
allocating capital for various risks;
managing the risk exposures; and
putting in place appropriate contingency plans for meeting the situations that may arise under adverse circumstances
Basel III Requirements
Our approach to capital adequacy is driven by strategic and organisational requirements while taking into account the regulatory
and macro-economic environment. Capital management practices are built on an assessment of all identified risks and consider the
risk reward balance. This involves the on-going review of the level of capitalization against key objectives and to maintain a
strong capital base to support the risks inherent in various businesses. Our approach to capital management ensures that businesses
are adequately capitalized in excess of minimum regulatory Capital Ratios to meet their short- and long-term business plans, while
holding adequate capital buffers during normal business conditions and to absorb the impact of stress events.
Under the Basel III capital regulations, in addition to the minimum regulatory capital, banks are required to hold a capital
conservation buffer that can be drawn down in times of stress. There are restrictions on dividend distribution, if the buffer is not
maintained. The capital conservation buffer is phased-in at 0.625% p.a., effective March 31, 2016 and will be fully implemented
by March 31, 2019.
We use the standardized approach for credit risk, and the basic indicator approach for operational risk and the standardized
duration approach in respect of market risk for the computation of capital charge under the Basel III guidelines.
We are gearing up with data build up and system requirements for migrating to advanced approaches. Our capital adequacy ratio
as of 31 March 2017 under the Basel III norms stands at 12.39%. Our common equity capital level of 11.81% as of 31 March
2017 offers a good cushion for further expansion and growth in asset portfolio and compliance with the requirements of Basel III
norms. Further, our capital adequacy ratio on a consolidated level stands at 12.64% as of 31 March 2017.
Inspection and Audit
We continue to use inspection and auditing as an effective tool of control and compliance. Our audit is conducted by Certified
Information Systems Auditor ("CISA") officers and chartered accountants with CISA qualifications or Diplomas in Information
System Audit ("DISA"). Our entire critical information system is subjected to audit by the information systems professionals from
external audit firms. Our critical information system is subjected to vulnerability assessment penetration testing ("VAPT").
Our audit policy, information systems audit policy and audit manual are subject to annual reviews and appropriate modifications
and updates are made in compliance with the observations from the RBI in the Risk Based Supervision ("RBS"), Basel III norms,
other regulatory guidelines and the directions of the Audit Committee of the Board ("ACB") and the Board of Directors.
The review of our policies has been duly approved by the ACB and the Board of Directors. The irregularity list was also refined
with the objective of simplifying and rationalizing the audit process. We have scaled up our audit processes to improve our audit
effectiveness. We prioritize our audit process as a fundamental tool of control and compliance. All of our entities including our
wholly owned subsidiary and outsourced activities fell within the ambit of our audit.
Our internal audit function is focused on achieving our vision and mission through the optimized use of our governance, risk and
compliance policies. We have also leveraged on the risk based internal audit ("RBIA") as a tool to assess and control our risks
which we encounter in our operations and in our transition to align our policies with the Basel III principles. We have calibrated
our risk rating architecture by rationalizing the parameters and scores assigned to each risk parameter.
Off-site Audit
We conduct off-site audits with a long term perspective as a forward looking diagnostic tool. We have introduced a system of
auditing our branches through our document management system. We conduct off-site audits based on triggers we receive in order
to assess the extent of non-compliance or irregularities in our operations. We generate reports at periodic intervals for our critical
operations and analyse such reports for any areas which require corrective action. The entire revenue audit in our bank is
undertaken through off-site audit.
Concurrent Audit
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We are increasingly relying on concurrent audit as an early warning system to ensure the real-time detection of irregularities and
lapses. Our concurrent audit is also used as a tool to prevent fraud in the bank. Our concurrent audit focuses on substantive
checking in key areas and in large value transactions rather than sample checking.
Management Audit
Our management audit focuses on identifying the adequacy and effectiveness of processes adopted for decision making in the
non-business offices.
Information Systems Audit
We conduct audits on our information systems to protect our customers' confidentiality and prevent cyber attacks. Our audit is
conducted by Certified Information Systems Auditor ("CISA") officers and chartered accountants with CISA qualifications and
Diplomas in Information System Audit ("DISA"). Our entire critical information system is subjected to audit by the information
systems professionals from external audit firms. Our critical information system is subjected to vulnerability assessment
penetration testing ("VAPT") every quarter.
Compliance
Our compliance department stays abreast of changing regulatory requirements, expectations and industry practices. The
department ensures regulatory compliance across the bank. Our compliance policy ensures the independence of the compliance
department. The policy helps to ensure the effective monitoring and co-ordination of the compliance functions. Our policy is
reviewed periodically and suitable changes are made to align our policies with the guidelines issued by the regulators from time to
time. Our compliance manual, which contains the compliance functions of our units, serves as guidance material for our branches.
We have various procedures and mechanisms online to monitor our compliance functions.
We nominate compliance monitoring officers in all units to monitor the compliance functions and to develop a robust compliance
culture in their units. In order to develop a strong compliance culture within our bank, we provide employee education on
compliance through circulars, frequent contact sessions and online quizzes.
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REGULATIONS AND POLICIES
The following description is a summary of some of the relevant regulations and policies as prescribed by the central, state and
regulatory bodies in India that are applicable to our Bank and its Subsidiary. The following description is not meant to be
exhaustive, and is only intended to provide general information to the investors on some of the key regulations and policies
applicable to us.
The primary legislation governing banking companies in India is the Banking Regulation Act. The provisions of the Banking
Regulation Act are, in addition to and not, save as expressly provided under the Banking Regulation Act, in derogation of the
Companies Act, 2013, Companies Act, 1956 and any other law currently in force. Other laws governing banking companies
include the Reserve Bank of India Act, 1934, the Negotiable Instruments Act, 1881, the SARFAESI Act, the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993, Foreign Exchange Management Act, 1999 and the Bankers’ Books Evidence
Act, 1891 read with the rules framed under the relavant statutes. Additionally, the RBI issues various guidelines, circulars,
directions, and policies relating to our businesses. Our Bank and its Subsidiary are regulated by various regulators, including but
not limited, to SEBI and the RBI.
I. Law, rules and regulations governing our Bank
Some of the key rules and regulations governing our Bank’s functioning are enumerated below:
A. RBI Regulations
Commercial banks in India are required to obtain a license from the RBI to carry on banking business in India. Such
license is granted to the bank subject to compliance with certain conditions, as specified in Section 22 of the Banking
Regulation Act. The RBI may cancel the license if the bank fails to meet the qualifications or if the bank ceases to carry
on banking operations in India.
The Banking Regulation Act confers power on the RBI (in consultation with the Central Government) to supersede the
Board of Directors of a banking company for a period not exceeding a total of 12 months, in public interest or for
preventing the affairs of the bank from being conducted in a manner detrimental to the interest of the depositors or for
securing the proper management of any banking company.
Our Bank has obtained a banking license from the RBI and is regulated and supervised by the RBI. The RBI has issued
directions/ guidelines to commercial banks in relation to functioning, covering various aspects such as loans and
advances, investments, risk management, recognition of income, classification of assets, valuation of investments,
maintenance of capital adequacy and provisioning for non-performing and restructured assets, periodical submission of
reports etc. The RBI requires us to furnish statements, information and certain details relating to our business and
operations.
When a bank fails to or omits to comply with the provisions of the Banking Regulation Act and directions issued
thereunder or willfully makes a statement which is false in any material particularly, knowing it to be false or willfully
omits to make a material statement, the RBI may impose fine within prescribed limits on banks and its officers or punish
with imprisonment for the term provided in the law, on the basis of the nature of the violation.
The appointment of the auditors of the banks is subject to the approval of the RBI. The RBI can direct a special audit in
the interest of the depositors or in the public interest.
B. Regulations Relating to the Opening of Branches
Section 23 of the Banking Regulation Act requires banks to obtain prior permission of the RBI to open new branches, in
or outside India. The RBI issues instructions and guidelines to banks on branch authorization from time to time,
including guidelines allowing banking companies to open new branches, banking outlets, closure, shifting of branches/
extension counters/ ATMs etc. With effect from September 19, 2013, domestic scheduled commercial banks may open
branches in Tier 1 to Tier 6 centres without prior permission from RBI, subject to the conditions laid down by RBI.
Further, such banks may also shift, merge or close all branches except rural branches and sole semi-urban branches
without prior permission from RBI, subject to the conditions laid down by RBI. Rural branches and sole semi-urban
branches can also be closed subject to certain conditions.
In terms of the Revised Branch Authorisation Policy released by the RBI dated May 18, 2017, the RBI has further
stipulated that the banks are required to open at least 25 percent of the total number of branches opened during a financial
year in unbanked rural (Tier 5 and Tier 6) centres.
Further, RBI has permitted installation of off-site ATMs at centres identified by banks, without the need for permission
from the RBI.
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Further, Banks are required to periodically report details of the branches opened/closed/shifted to RBI.
C. Capital Adequacy Requirements
The RBI has issued guidelines for implementation of the Prudential Guidelines on Capital Adequacy and Market
Discipline - New Capital Adequacy Framework (“NCAF”), to ensure that the capital held by a bank is commensurate
with the bank’s overall risk profile. The NCAF prescribes the minimum Capital to Risk – weighted Assets Ratio
(“CRAR”) to be maintained by banks.
The Basel Committee on Banking Supervision, with a view to improve the banking sectors’ ability to absorb shocks
arising from financial and economic stress, implemented Basel III framework. Further, the Basel III capital regulations in
India were made applicable to banks from April 1, 2013 and are required to be fully implemented by March 31, 2019 in a
phase-wise manner.
D. Liquidity coverage ratio
The Basel III framework on ‘Liquidity Standard’ includes ‘Liquidity Coverage Ratio’, ‘Net Stable Funding Ratio’ and
liquidity risk monitoring tools. With effect from January 1, 2015, the RBI introduced a requirement for commercial
banks in India to maintain certain levels of Liquidity Coverage Ratio (“LCR”). The LCR measures a bank’s ability to
manage and survive for 30 days under a significant stress scenario that combines idiosyncratic as well as market-wide
shock situations that would result in accelerated withdrawal of deposits from retail as well as wholesale depositors,
partial loss of secured funding, increase in collateral requirements and unscheduled drawdown of unused credit lines. At
least 60% of the net cash outflows in the next 30 days, computed with these assumptions of a stressed scenario, are
required to be supported by High Quality Liquid Assets (“HQLA”). Banks are required to maintain HQLA of 80% with
effect from January 1, 2017, which will increase to 90% with effect from January 1, 2018, and to 100% with effect from
January 1, 2019.
The Basel Committee on Banking Supervision issued the final rules on ‘Net Stable Funding Ratio’ in October 2014. RBI
has issued draft guidelines on NSFR on May 28, 2015. RBI proposes to make NSFR applicable to banks in India from
January 1, 2018.
E. Loan Loss Provisions and Non-Performing Assets
The RBI has issued guidelines on income recognition, asset classification, provisioning standards and the valuation of
investments, which are revised from time to time. In terms of the guidelines issued by RBI, banks are required to classify
an asset into non-performing when it ceases to generate income for the bank. Once the account has been classified as a
non-performing asset, the unrealized interest and other income already debited to the account is derecognized and further
interest is not recognized or credited to the income account unless collected in cash. The Prudential Norms require banks
to classify NPAs into the following three categories viz. (i) sub-standard assets;(ii) doubtful assets; and (iii) loss assets
based on the period for which the asset has remained non-performing. These norms also specify provisioning
requirements specific to the classification of the assets.
The RBI revised “Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions” on May 30,
2013. Pursuant to these guidelines, from April 1, 2015, advances (classified as a standard asset) that are restructured
(other than due to extension in date of commencement of commercial operation (“DCCO”) of infrastructure and non
infrastructure project) would be immediately classified as sub-standard on restructuring and the non-performing assets,
upon restructuring, would continue to have the same asset classification as prior to restructuring and slip into further
lower asset classification categories as per the extant asset classification norms with reference to the pre-restructuring
repayment schedule. The general provision required on restructured standard accounts stands increased to 5% from
March 31, 2016.
The RBI has issued guidelines on April 18, 2017 advising all scheduled commercial banks to make additional provisions
in respect of advances to stressed sectors of the economy. The banks are required to put in place a Board–approved
policy for making provisions for standard assets at rates higher than the regulatory minimum, based on evaluation of risk
and stress in various sectors. This evaluation needs to be on a quarterly basis.
The RBI has issued guidelines on September 1, 2016 to restrict scheduled commercial banks’ investment in Security
Receipts (“SRs”) backed by their own stressed assets. With effect from April 1, 2017, where the investment in a bank in
SRs backed by stressed assets sold by it, under an asset securitisation is more than 50 per cent of the SRs backed by its
sold assets and issued under that securitisation, provisioning requirement on SRs will be higher of the provisioning rate
required in terms of net asset value declared by the SCs/ RCs and provisioning rate as applicable to the underlying loans,
assuming that the loans notionally continued in the books of the bank. With effect from April 1, 2018, this threshold of
50 per cent will be reduced to 10 per cent.
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F. Corporate Debt Restructuring Mechanism
The corporate debt restructuring mechanism (“CDR”) provides for an institutional mechanism to restructure corporate
debt. The objective of this framework is to ensure a timely and transparent mechanism for the restructuring of corporate
debts of viable entities, particularly entities that are affected by certain internal and external factors and aims to minimize
the losses to creditors and other stakeholders through an orderly and co-ordinated restructuring program.
G. Scheme for Sustainable Structuring of Stressed Assets (“Scheme for Stressed Assets”)
The RBI has formulated the Scheme for Stressed Assets as an optional framework for the resolution of large stressed
accounts. The Scheme for Stressed Assets envisages determination of the sustainable debt level for a stressed borrower,
and bifurcation of the outstanding debt based on maturity profile and the level of debt which can be serviced.
Pursuant to the Banking Regulation (Amendment) Ordinance, 2017 promulgated on May 4, 2017, the Central
Government has been granted the power to authorise the RBI to issue directions to one or more banking companies to
initiate insolvency resolution process in respect of a “default” under the Insolvency and Bankruptcy Code, 2016. The
RBI has also been granted powers to issue directions to banks for resolution of stressed assets.
H. Directed Lending
The Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2016 dated July 7, 2016
sets out the broad policy in relation to priority sector lending (“PSL”). In accordance with this circular, the priority
sectors for all scheduled banks include (i) agriculture; (ii) micro, small and medium enterprises (“MSMEs”); (iii) export
credit; (iv) education; (v) housing; (vi) social infrastructure; (vii) renewable energy and (viii) others. Further, it also
prescribes the details of eligible activities under the aforesaid categories. Under the aforementioned master direction, the
priority sector lending targets are linked to adjusted net bank credit as defined (“ANBC”) or credit equivalent amount of
off-balance sheet exposure, whichever is higher, as on the corresponding date of the preceding year. Currently, the total
priority sector lending target for domestic banks is 40% of ANBC or credit equivalent amount of off-balance sheet
exposure, whichever is higher. It also prescribed sub-targets for small and marginal farmers, micro-enterprises and
weaker sections.
I. Exposure Norms
As a prudent measure aimed at better risk management and avoidance of concentration of credit risk, the RBI has
prescribed credit exposure limits for banks and long-term lending institutions in respect of their lending to individual
borrowers and to all borrowers belonging to a single group. The RBI has prescribed exposure ceiling for a single
borrower as 15.00% of capital funds and group exposure limit as 40% of capital funds comprising of Tier I and Tier II
capital. Relaxations are permitted in exceptional circumstances and lending to infrastructure sector. The total exposure to
a single NBFC, NBFC-AFC (Asset Financing Companies) and Infrastructure Finance Companies (“IFCs”) should not
exceed 10%, 15% and 15% respectively, of the bank's capital funds as per its last audited balance sheet. The limit may be
increased by another 5% provided that the excess exposure is on account of funds on-lent to the infrastructure sector.
The aggregate exposure of a bank to the capital markets in all forms (both fund based and non-fund based) should not
exceed 40% of its net worth, on both standalone and consolidated basis as on March 31 of the previous year. Within this
overall ceiling, the bank’s direct investment in shares, convertible bonds/debentures, units of equity-oriented mutual
funds and all exposures to Venture Capital Funds (VCFs) (both registered and unregistered) should not exceed 20% of its
net worth on both standalone and consolidated basis.
On August 25, 2016, the RBI released guidelines on Enhancing Credit Supply for Large Borrowers through market
Mechanism with the objective of mitigating the risk posed to the banking system on account of large aggregate lending to
a single corporate. As per the framework, exposure to corporate with large borrowing from banking system beyond the
prescribed limit would attract additional provisions and higher risk weights.
On December 1, 2016, the RBI released guidelines on Large Exposures Framework to align the exposure norms for
Indian banks with the Basel Committee on Banking Supervision standards. From April 1, 2019, exposure limits to single
and group borrowers will be 20% and 25% of our Tier 1 Capital funds as against the current norm of 15% and 40% of the
Total Capital funds Limits.
J. Regulations Relating to Know Your Customer and Anti-Money Laundering
The RBI has issued several guidelines on Know Your Customer (KYC) and Anti Money Laundering (AML) inter-alia
containing rules on (i) customer identification and acceptance; (ii) monitoring of transactions; and (iii) vigilance at the
time of opening accounts for new customers to prevent misuse of the banking system. Banks have been advised to ensure
that systems and procedures are in place to control financial frauds, identify money laundering and suspicious activities
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and monitor high value cash transactions. Such monitoring includes cross border transactions. Further, banks have also
been advised to ensure that adequate policies are formulated and adopted in relation to KYC and AML.
K. Legal Reserve Requirements
1. Cash Reserve Ratio
Each bank is required to maintain CRR on a daily basis which is a specified percentage of total of Demand and Time
Liabilities (“DTL”) adjusted for the exemptions, by way of a balance in a current account with the RBI. At present the
required CRR is 4%. The RBI does not pay any interest on CRR balances. The CRR has to be maintained on an average
basis for a fortnightly period and the minimum daily maintenance of the CRR should be 90% effective from the fortnight
beginning April 16, 2016. The RBI may impose penal interest at the rate of 3% above the bank rate on the amount by
which the reserve falls short of the CRR required to be maintained on a particular day and if the shortfall continues
further the penal interest charged shall be increased to a rate of 5% above the bank rate in respect of each subsequent day
during which the default continues. In case of default in the maintenance of CRR on average basis during the fortnight,
penal interest will be recovered as envisaged under Section 42(3) of the RBI Act.
2. Statutory Liquidity Ratio
Each Bank is required to maintain a SLR, a specified percentage of total DTL by way of liquid assets like cash, gold or
approved unencumbered securities. The percentage of this liquidity ratio is fixed by the RBI from time to time, pursuant
to Section 24 of the Banking Regulation Act. At present, the RBI requires banks to maintain SLR of 20.50% and this will
be 20% from the fortnight commencing on June 24, 2017.
RBI requires the banks to create a reserve fund to which it must transfer not less than 25.00% of the profits of each year
before dividends. If there is an appropriation from this account, the bank is required to report the same to the RBI within
21 days, explaining the circumstances leading to such appropriation.
L. Regulations relating to Authorised Dealers (“ADs”) for foreign exchange and cross-border business transactions
The foreign exchange and cross border transactions undertaken by banks, both on its own account and also on behalf of
customers, are subject to the provisions of the Foreign Exchange Management Act and rules/ regulations/ directions and
notifications issued thereunder. The bank should monitor all non-resident accounts and cross border transactions to
prevent money laundering. RBI may impose penalty for contravention of Foreign Exchange Management Act and
regulations/ notifications issued there under, or for contravention of any condition subject to which an authorisation is
issued by the RBI.
M. Secrecy obligations
We are mandated to keep secrecy on account of the regulations and directions of the RBI.
N. Ownership restrictions
Section 12 of the Banking Regulation Act prohibits any shareholder of the bank from exercising voting rights on poll in
excess of 10% of total voting rights of all the shareholders of the bank. However, the RBI may increase this ceiling to
26% in a phased manner. At present this is capped by RBI at 15%.
RBI guidelines prescribe a policy framework for the ownership and governance of private sector banks. As per the extant
guidelines any individual / entity who wishes to acquire shareholding of 5% or more but less than 10% of the total paid
up capital of the Bank needs to obtain prior approval of the RBI. Thereafter prior approval is also needed to go beyond
10% of the total paid-up capital. The RBI, when considering whether to grant an approval, may take into account all
matters that it considers relevant to the application, including ensuring that shareholders whose aggregate holdings are
above specified thresholds meet fit and proper criteria prescribed by RBI.
The “Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016” (“Directions on Ownership”) dated
May 12, 2016, envisages diversified shareholding in private sector banks by a single entity/corporate entity/group of
related entities. Pursuant to the Directions on Ownership, ownership limits for all shareholders in the private sector bank
in the long run shall be stipulated under two broad categories: (i) natural persons (individuals) and (ii) legal persons
(entities/institutions). Further, separate limits are now stipulated for (i) non-financial and (ii) financial institutions; and
among financial institutions, for diversified and non-diversified financial institutions.
O. Issue of shares by private sector banks
The “Reserve Bank of India (Issue and Pricing of Shares by Private Sector Banks) Directions, 2016” provides general
permission for issue of shares by private sector banks through the routes mentioned therein, including by way of a QIP,
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subject to certain conditions, including, the issue of shares and pricing thereof is required to be in compliance with the
Companies Act, 2013 and SEBI regulations; the issue of shares has the approval from the bank’s board or shareholders,
as may be required under the Companies Act, 2013 or applicable SEBI regulations.
P. Downstream investment by banks
In accordance with the Consolidated FDI Policy, downstream investments made by a banking company, as defined in
section 5(c) of the Banking Regulation Act, incorporated in India, which is owned or controlled by non-residents/ non-
resident entity, under corporate debt restructuring, or other loan restructuring mechanism, or in trading books, or for
acquisition of shares due to defaults in loans, shall not count towards indirect foreign investment.
Q. Guidelines for merger and amalgamation of private sector banks
The Reserve Bank of India (Amalgamation of Private Sector Banks) Directions, 2016 dated April 21, 2016 relate to,
among others: (i) an amalgamation of two banking companies; and (ii) an amalgamation of an NBFC with a banking
company. The provisions of the aforementioned directions apply to all private sector banks licensed to operate in India
by the RBI and to the NBFCs registered with the RBI.
R. Regulation of financial services provided by banks
The Reserve Bank of India (Financial Services provided by Banks) Directions, 2016 dated May 26, 2016 require banks to
comply with certain restrictions while undertaking financial services including in relation to risk mitigation measures,
limits on investment that can be made by banks in companies undertaking financial services. The directions also provide
for specific regulations for certain financial services such as, inter alia, setting of an infrastructure debt fund,
underwriting activities, mutual fund business, insurance business.
S. Guidelines on management of intra-group transactions and exposures
The RBI issued the Guidelines on Management of Intra-Group Transactions and Exposures on February 11, 2014”.
Pursuant to the said guidelines, RBI has prescribed quantitative limits on financial intra-group transactions and exposures
and prudential measures for the non-financial intra-group transactions and exposures. These guidelines also require that
all intra-group transactions to be at “arms-length”.
T. Capital and provisioning requirements for exposures to entities with unhedged foreign currency exposure
The RBI issued a circular relating to Capital and Provisioning Requirements for Exposures to entities with Unhedged
Foreign Currency Exposure on January 15, 2014. Pursuant to these guidelines, RBI has introduced incremental
provisioning and capital requirements for bank exposures to entities with unhedged foreign currency exposures.
U. Framework for revitalising distressed assets in the economy
The RBI issued the Framework for Revitalising Distressed Assets in the Economy on January 30, 2014 (the
“Framework”) which lays down the corrective action plan that will incentivise early identification of problem cases,
timely restructuring of accounts which are considered to be viable, and prompt steps taken by banks for recovery or sale
of unviable accounts. This framework became fully effective from April 1, 2014. In this regard, the RBI issued the
Framework for Revitalising Distressed Assets in the Economy - Guidelines on Joint Lenders’ Forum and Corrective
Action Plan (“CAP”) detailing guidelines on formation of the joint lenders’ forum and adoption of the corrective action
plan for operationalising the aforementioned framework. The RBI, by its circular dated May 5, 2017, clarified that the
CAP may include resolution by way of flexible structuring of project loans, change in ownership under strategic debt
restructuring or scheme for sustainable restructuring of stressed assets. The RBI, further reiterated that banks must
scrupulously adhere to the timelines prescribed in the Framework for finalising and implementing of CAP and any non-
compliance with the directions of the RBI with regards to the Framework shall attract monetary penalties on the
concerned banks under the provisions of the Banking Regulation Act. Following the notification dated February 25,
2016, the prudential guidelines on revitalising stressed assets in the economy, have been partially revised in relation to
inter alia, strategic debt restructuring scheme, joint lenders’ forum empowered group, restructuring of advances,
structuring of project loans and sale of financial assets to securitisation company/ reconstruction company.
V. Central Repository of Large Common Exposures
The RBI has introduced Central Repository of Large Common Exposures (CRILC) repository of large credits and share
information with the banks for enabling them to be aware of building leverage and common exposures. All banks are
required to report to RBI, on a quarterly basis, exposures of individuals and entities having exposure (both fund and non-
fund based) of more than `50.00 million and also details of customers with outstanding current account balance (debit or
credit) of `10.00 million and above. In addition, RBI guidelines require banks to report, among others, the SMA 2
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(Principal or interest payment overdue between 61-90 days) status of the borrower to the CRILC. Any non-submission of
or wrong reporting in these returns attracts penalties as specified in the Banking Regulation Act 1949.
W. The Banking Ombudsman Scheme, 2006
The Banking Ombudsman Scheme, 2006 (“Ombudsman Scheme”) provides the extent and scope of the authority and
functions of the Banking Ombudsman for redressal of grievances against deficiency in banking services, concerning
loans and advances and other specified matters. On February 3, 2009, the Ombudsman Scheme was amended to provide
for revised procedures for redressal of grievances by a complainant under the Ombudsman Scheme. The Banking
Ombudsman receives and considers complaints relating to the deficiencies in banking or other services filed on the
grounds mentioned in clause 8 and facilitates their satisfaction or settlement by agreement or through conciliation and
mediation between the bank concerned and the aggrieved parties or by passing an Award in accordance with the
Ombudsman Scheme.
X. Declaration of dividend by banks
The payment of dividends by banks is subject to restrictions under the Banking Regulation Act. Section 15(1) of the
Banking Regulation Act states that no banking company shall pay any dividend on its shares until all its capitalized
expenses (including preliminary expenses, organisation expenses, share-selling commission, brokerage, amounts of
losses incurred and any other item of expenditure not represented by tangible assets) have been completely written off. In
addition, Section 17(1) of the Banking Regulation Act requires every banking company to create a reserve fund and, shall
out of the balance of profit of each year as disclosed in the profit and loss account, transfer a sum equivalent to not less
than 20% of such profit to the reserve fund before declaring any dividend.
Further, in May 2005, the RBI issued guidelines on Declaration of Dividends by Banks, which prescribed certain
conditions for declaration of dividends by banks.
Y. Regulations governing International Operations and IFSC Banking Units
Our Bank’s international operations are governed by regulations in the countries in which our Bank has a presence and
also certain guidelines issued by Reserve Bank of India. RBI has formulated a scheme for setting up of IFSC Banking
Units (“IBUs”). All banks in the public sector and private sector authorized to deal in foreign exchange are eligible to set
up one IBU in each IFSC with the prior permission of the RBI. The IBU is required to maintain the minimum prescribed
regulatory capital on an on-going basis as per regulations amended from time to time. All prudential norms applicable to
overseas branches of Indian Bank are applicable to IBUs. All transaction of IBUs shall be in currency other than INR.
IBUs may undertake transactions with resident (for deployment of funds) and non-resident (for both raising of resources
and deployment of funds) entities other than individuals including HNIs and retail customers.
Z. Consolidated Supervision Guidelines
In 2003, the RBI issued guidelines for consolidated accounting and consolidated supervision for banks. Under the
guidelines, banks are required to prepare consolidated financial statements, submit consolidated prudential returns among
other things.
AA. Regulations relating to banking business
The Banking Regulation Act defined the forms of business in a banking company may engage. RBI has issued various
guidelines/directions/circulars governing the functioning of banks in India. These guidelines cover, not limited to,
governance, deposits, loans, investments, risk management, operations, audit, compliance, housekeeping etc.
BB. Classification and Reporting of Fraud Cases
The RBI issued guidelines on the classification and reporting of fraud cases. The fraud cases have been classified into
misappropriation and criminal breach of trust, fraudulent encashment through forged instruments, manipulation of books
of account or through fictitious accounts and conversion of property, unauthorised credit facilities extended for reward or
for illegal gratification, negligence and cash shortages, cheating and forgery, fraudulent transactions involving in foreign
exchange and any other type of fraud not coming under the specific heads as above. The banks are required to submit
fraud related data to RBI through various returns/ reports.
CC. Marginal Cost of Funds based Lending Rate (MCLR)
Pursuant to the notification issued by RBI dated December 17, 2015, all rupee loans sanctioned and credit limits renewed
with effect from April 1, 2016 are to be priced with reference to the MCLR which is the internal benchmark for such
purposes. MCLR comprises of: (a) marginal cost of funds; (b) negative carry on account of CRR (c) operating costs (d)
tenor premium.
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DD. Indian Accounting Standards
On February 16, 2015, the Ministry of Corporate Affairs (MCA), Government of India has notified the Companies
(Indian Accounting Standards) Rules, 2015. On January 18, 2016 MCA outlined the roadmap for implementation of
Indian Accounting Standards for banks, non-banking financial companies, select All India Term Lending and
Refinancing Institutions and insurance entities. Pursuant to this, RBI has issued guidelines on February 11, 2016 on
implementation of Indian Accounting Standards (Ind AS). All scheduled commercial banks to follow Indian Accounting
Standards (Ind AS) for financial statements for accounting periods beginning from April 1, 2018 onwards. Ind AS would
be applicable to both standalone financial statements and consolidated financial statement. These accounting standards
could impact the financials of banks in many ways but not limited to the way the fair value is computed on financial
assets and liabilities, the way financial assets and liabilities are classified and measured in resulting in volatility in profit
or loss and equity, accounting of interest income, the credit loss provisioning which would be based on expected credit
losses rather than percentage based provisioning etc.
II. Law governing our Subsidiary and Associate
The following description relates to our Subsidiary and Associate of our Bank and is not meant to be exhaustive, and is
only intended to provide general information to the investors on some of the key regulations and policies applicable to
our Subsidiary and Associate.
A. Non-Banking Finance Companies
The RBI Act defines an NBFC as (a) a financial institution which is a company; (b) a non-banking institution which is a
company and which has, as its principal business, the receiving of deposits, under any scheme or arrangement or in any
other manner, or lending in any manner; or (c) such other non-banking institution or class of institutions as the RBI may,
with the previous approval of the Central Government, and by notification in the Official Gazette, specify. NBFCs are
required to obtain a certificate of registration from the RBI and maintain net owned funds as prescribed, prior to
commencement of the business as a non banking financial institution.
Some of the important regulations that affect the operations of the NBFCs in our group are as under:
NBFCs are also governed by regulations on Income Recognition, Asset Classification and Provisioning norms;
While there are no separate CRR and SLR requirements, there is a requirement to maintain Statutory Reserve in
the form of cash balances / investments in financial instruments etc;
NBFCs are also required to report large credit exposures under CRILC;
NBFCs are required to report the frauds to Reserve Bank of India on a periodical basis much similar to that of
Banks;
NBFCs are not a part of the payment and settlement system;
All NBFC-ND-SI are required to adhere to certain corporate governance norms, including constitution of an
audit committee; and
NBFCs will also have to put in place a ‘fit and proper’ criteria for the directors at the time of appointment and
on an on-going basis.
B. Insurance
The insurance sector in India is governed by the Insurance Act, 1938 and the regulations, guidelines and circulars issued
by IRDAI from time to time. These govern the matters relating to the insurance sector in India, such as opening of new
places of business, accounts and balance sheet, audit of financial statements, actuarial report and abstract, insurance
intermediaries and agents, investment of funds, valuation of assets and liabilities, solvency margins, restrictions on
dividends, limits on expenses of management. IRDAI has been established under the Insurance Regulatory and
Development Authority Act, 1999, to regulate, promote and ensure orderly growth of the insurance sector in India.
Separately, any entity which intends to carry on the life insurance business in India must receive a certificate of
registration, in accordance with regulations promulgated by IRDAI.
Some of the important areas in which the regulations are issued by IRDA which affect our operations are as under:
Policy and procedure for issuing e-policies
KYC guidelines
156
Guidelines on investment of premium received
Customer grievance redressal mechanism and method of charging the customers
Guidelines on claims settlements
157
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Board of Directors
As per the Articles of Association of our Bank, the number of Directors in the Bank shall be not less than five and not more than
12, unless otherwise determined by the Bank in the General Meeting. The composition of our Board shall be in accordance with
applicable law, including the Banking Regulation Act and the rules framed thereunder. At present, our Bank has 10 Directors
including three Executive Directors and seven Independent Directors including two women Directors.
The Banking Regulation Act requires that at least 51% of Directors have specialised knowledge or practical experience in one or
more of the following areas, namely, accountancy, agriculture and rural economy, banking, cooperation, economics, finance, law,
small-scale industry and any other matter the special knowledge of, and practical experience in, which would in the opinion of the
RBI be useful to a banking company. Out of the aforesaid number of Directors, not less than two Directors are required to have
specialised knowledge or practical experience in agriculture and rural economy, co-operation or small-scale industry. As on the
date of this Placement Document, all of our Directors are professionals with the prescribed special knowledge or practical
experience and meet the conditions specified in the Banking Regulation Act. Further, under the Banking Regulation Act, the
appointment of whole-time Directors requires the approval of the RBI. The RBI has also prescribed the “fit and proper” criteria to
be considered when appointing directors of banks, with our Directors being required to make declarations confirming their on-
going compliance with such criteria.
Pursuant to the provisions of the Companies Act, 2013, at least two-thirds of the total number of Directors, excluding Independent
Directors, appointed are liable to retire by rotation, with one-third of such number retiring at each annual general meeting. A
retiring Director is eligible for re-election. Further, an Independent Director may be appointed for not more than two terms of up
to five consecutive years in accordance with the Companies Act, 2013. However, in accordance with the provisions of the
Banking Regulation Act, a Director (other than the Chairman or Whole-time Director) may be appointed for a maximum period of
eight years. Any re-appointment of Independent Directors shall inter alia be on the basis of the performance evaluation report and
on such appointment being approved by the shareholders by way of special resolution. Our Directors are not required to hold any
Equity Shares in our Bank to qualify as a Director.
The following table provides information about our Directors as of the date of this Placement Document. Except as disclosed
below, there were no other transactions other than in the ordinary course of business undertaken by our Bank, in which our
Directors are interested parties:
Sr. No. Name Age Designation
1. Kesava Menon Chandrasekhar
Address: Sai Sannidhi Ushus Cooperative Housing Colony,
Vattiyourkavu, Thiruvandandapuram 695 013, Kerala, India
DIN: 06466854
Term: For a period of three years from July 17, 2014
Occupation: Retired IAS officer
Nationality: Indian
69 Chairman, Independent Director
2. Shyam Srinivasan
Address: 101, Nagarjuna Apartments, 36 Raman Street, T
Nagar Chennai 600 017, Tamil Nadu, India
DIN: 02274773
Term: For a period of three years from September 23, 2016
Occupation: Professional
Nationality: Indian
55 Managing Director and Chief
Executive Officer
3. Nilesh Shivji Vikamsey
Address: 184, Kalpataru Habitat, Dr. S.S. Rao Road, Parel,
Mumbai 400 012, Maharashtra, India
52 Independent Director
158
Sr. No. Name Age Designation
DIN: 00031213
Term: For a period of three years from July 17, 2014
Occupation: Professional
Nationality: Indian
4. Balagopal Chandrasekhar
Address: Peace Villa, E-1, Belhaven Gardens, Kawdiar,
Thiruvandapuram 695 003, Kerala, India
DIN: 00430938
Term: For a period of three years August 11, 2016
Occupation: Professional
Nationality: Indian
64 Independent Director
5. Harish Hansubhai Engineer
Address: B 11, Sea Face Park, 50 Bhulabhai Desai Road,
Mumbai 400 026, Maharashtra, India
DIN: 01843009
Term: For a period of three years from July 17, 2014
Occupation: Professional
Nationality: Indian
68 Independent Director
6. Shubhalakshmi Aamod Panse
Address: SNO. 130/132, Roseland PH-II, PIM. Saudagar,
RHNO B/3, Pune 411 027, Maharashtra, India
DIN: 02599310
Term: For a period of three years with effect from July 17,
2014
Occupation: Professional
Nationality: Indian
63 Independent Director
7. Ashutosh Khajuria
Address: 604, Akruti Erica Apts, Shraddhanand Marg, Vile
Parle East, Mumbai 400 057, Maharashtra, India
DIN: 05154975
Term: For a period of two years with effect from January 28,
2016
Occupation: Banking Service
Nationality: Indian
56 Executive Director and Chief
Financial Officer
8. Dilip Gena Sadarangani 67 Independent Director
159
Sr. No. Name Age Designation
Address: 901, LA Sonrisa, L.N. Road, opposite Ruia
College, Matunga East, Mumbai 400 019, Maharashtra, India
DIN: 06610897
Term: For a period of three years from July 17, 2014
Occupation: Professional
Nationality: Indian
9. Grace Elizabeth Koshie
Address: A-705 Pearl, Rajhans Dreams Stella, Barampur,
Vasai (West), Thane 401 202, Maharashtra, India
DIN: 06765216
Term: For a period of three years with effect from July 17,
2014
Occupation: Retired (from RBI)
Nationality: Indian
64 Independent Director
10. Ganesh Sankaran
Address: 5, Lakshmi Jeevan Laxmi CHS Dr. R.P. Road,
Mulund (West), Mumbai 400 080, Maharashtra, India
DIN: 07580955
Term: For a period of two years with effect from July 4,
2016
Occupation: Professional
Nationality: Indian
47 Executive Director
Relationship with other Directors
None of the Directors are related to each other.
Borrowing Powers of our Board of Directors
Our Bank has resolved by way of its resolution dated June 14, 2014 and our shareholders have approved by way of a special
resolution dated July 17, 2014, that our Board of Directors is authorized to borrow monies from time to time such that the amount
of such moneys borrowed and remaining to be repaid shall in the aggregate not exceed `30,000 million, at any time over and
above the paid up capital and free reserves of our Bank, notwithstanding that the moneys to be borrowed, together with the
moneys already borrowed by our Bank may exceed the aggregate of our Bank’s paid up capital and free reserves. Subject to the
approval of our shareholders in the upcoming AGM to be held on July 14, 2017, the Board of Directors shall be authorized to
borrow monies from time to time such that the amount of monies borrowed and remaining to be repaid shall in the aggregate not
exceed `70,000 million, at any time over and above the paid up capital and free reserves of our Bank, notwithstanding that the
moneys to be borrowed, together with the moneys already borrowed by our Bank may exceed the aggregate of our Bank’s paid up
capital and free reserves.
160
Interest of our Directors
All of our Non-Executive Directors may be deemed to be interested to the extent of (i) fees payable to them for attending meetings
of the Board or a committee thereof; and (ii) reimbursement of expenses payable to them.
Our Directors have no economic interest in the Bank except to the extent of any sitting fees, remuneration, reimbursement of
expenses and equity shares held by the Directors or their relatives and associates or held by the companies, firms, trusts,
partnerships or entities in which they are interested as a director, member, partner and/or trustee, executive officer and to the
extent of benefits arising out of such shareholding in the Bank.
Our Directors may also be regarded as interested in the Equity Shares held by, or subscribed by and allotted to them or the
companies, firms and trust, in which they are interested as directors, members, partners or trustees.
Except for the appointment letters issued by our Bank to our Executive Directors, our Directors have not entered into any
contracts or arrangements with the Bank relating to their appointment and remuneration, or providing for benefits upon
termination of employment.
For details relating to transactions by our Bank during the three years preceding the date of this Placement Document, in which
the Directors are interested directly or indirectly, see “Financial Statements” on page 220.
Our Directors (excluding Independent Directors) may also be regarded as interested to the extent of employee stock options that
have been granted and may be granted to them in future, under the ESOP Scheme 2010. Our Directors may also be deemed to be
interested to the extent of any dividend payable to them and other distributions in respect of any Equity Shares held by them.
Furthermore, none of our Directors or any of their relatives have entered into any contract, arrangement or agreement with regard
to loans or advances, guarantees or securities provided by or to the Bank.
Shareholding of our Directors
Except as disclosed below none of our Directors hold Equity Shares in our Bank as on March 31, 2017:
S. No. Name of the Director Shareholding in our Bank Percentage of Shareholding in
our Bank (%)
1. Shyam Srinivasan 200,000 0.00*
2. Ashutosh Khajuria 42,000 0.00*
*less than 0.01%
Options held by our Directors
The following ESOPs are outstanding under our ESOS 2010 scheme, the details of which are set out below:
Name of the Director to
whom employee stock
options have been granted
Number of stock options
outstanding as on March
31, 2017
Number of stock options
vested and unexercised as on
March 31, 2017
Total number of Equity Shares
that would be issued as a result of
full exercise of options already
vested
Shyam Srinivasan 8,779,250 6,855,130 6,855,130
Ashutosh Khajuria 1,360,000 1,060,000 1,060,000
Ganesh Sankaran 925,000 - -
Remuneration of our Directors
Executive Directors
The following tables set forth the compensation paid by our Bank to the Executive Directors during Financial Years 2018, 2017,
2016 and 2015:
Shyam Srinivasan
(in ` million)
Financial Year Salary, Commission and variable pay Total
2018* 2.02 2.02
2017 11.38 11.38
161
Financial Year Salary, Commission and variable pay Total
2016 11.15 11.15
2015 7.80 7.80
*As of May 31, 2017
Further, in terms of the appointment letter dated July 2, 2010, Shyam Srinivasan is also entitled to the other benefits/perquisites
including: (i) accomodation; (ii) variable pay of `2.50 million per annum linked to performance parameters laid down by our
Board; (iii) medical expenses; (iv) employee stock options; (v) gratuity; and (vi) provident fund.
Ashutosh Khajuria
(in ` million)
Financial Year Salary, Commission & variable pay Total
2018* 1.39 1.39
2017 8.07 8.07
2016 10.23 10.23
2015(1) - -
*As of May 31, 2017
(1)Ashutosh Khajuria was appointed as an Executive Director on January 28, 2016
Further, in terms of the appointment letter dated October 21, 2015, Ashutosh Khajuria is also entitled to the other
benefits/perquisites including: (i) house rent allowance; (ii) performance linked incentive scheme of up to `1.50 million per
annum; (iii) personal accident insurance; (iv) employee stock options; and (v) medical benefit.
Ganesh Sankaran
(in ` million)
Financial Year Salary, Commission & variable pay Total
2018* 1.32 1.32
2017 8.46 8.46
2016 (1) - -
2015(1) - -
*As of May 31, 2017
(1)Ganesh Sankaran was appointed as an Executive Director on July 4, 2016
Further, in terms of the appointment letter dated July 27, 2015, Ganesh Sankaran is also entitled to the other benefits/perquisites
including: (i) house rent allowance; (ii) performance linked incentive scheme of up to `1.50 million per annum; (iii) personal
accident insurance; (iv) employee stock options; and (v) medical benefit.
Abraham Chacko
(in ` million)
Financial Year Salary, Commission & variable pay Total
2018*(1) - -
2017(1) - -
2016 (1) 1.25 1.25
2015 8.38 8.38
(1)Ceased to be an Executive Director on May 1, 2015
Non-Executive and Independent Directors
The following tables set forth all remuneration (including sitting fees) paid by our Bank to the Non-Executive and Independent
Directors during the Financial Years 2018, 2017, 2016 and 2015:
(in ` million)
Director Total remuneration
For Fiscal 2018
(Upto May 31,
2017)
For Fiscal
2017
For Fiscal 2016 For Fiscal 2015
Nilesh Shivji Vikamsey 0.17 4.43 1.70 1.53
Balagopal Chandrasekhar 0.20 1.17 1.02 -
Harish Hansubhai Engineer 0.09 1.19 1.40 1.62
Shubhalakshmi Aamod Panse 0.29 1.78 1.39 1.55
Kesava Menon Chandrasekhar 0.58 1.64 1.56 1.46
Dilip Gena Sadarangani 0.23 1.81 1.44 1.80
Grace Elizabeth Koshie 0.26 1.95 1.65 1.69
162
Director Total remuneration
For Fiscal 2018
(Upto May 31,
2017)
For Fiscal
2017
For Fiscal 2016 For Fiscal 2015
Abraham Koshy(1) - - 0.92 1.88
Sudhir M Joshi(2) - 1.40 2.10 2.53
M Y Khan(3) - - - 0.08
(1)Ceased to be a Director on May 18, 2015
(2)Ceased to be a Director on February 28, 2017
(3)Ceased to be a Director on June 24, 2014
Organizational Chart of our Bank
Senior Management Personnel
The senior management personnel of our Bank are as follows:
Shyam Srinivasan is the Managing Director and Chief Executive Officer of our Bank. He holds a bachelors degree in
Engineering from University of Madras and post graduate diploma in management from Indian Institute of Management, Kolkata.
He has been an employee of our Bank since September 23, 2010.
Ashutosh Khajuria is the Executive Director and Chief Financial Officer of our Bank. He holds a bachelors degree in law from
Jiwaji University, Gwalior and master of arts degree from Doctor Harisingh Gour Vishwavidhyalaya, Sagar. He is also a certified
associate of the Indian Institute of Bankers. He plays a key role in overseeing treasury, finance and accounts, corporate planning,
inspection and legal portfolios. He has been an employee of our Bank since June 16, 2011.
Ganesh Sankaran is the Executive Director of our Bank. He holds bachelors degree in Electronics Engineering and masters
degree in Business Administration from University of Poona. He plays a key role in overseeing corporate banking, SME and
agricultural business, financial inclusion and micro banking, collection and recovery of SME and corporate advances and
representative offices at Abu Dhabi and Dubai. He has been an employee of our Bank since September 16, 2015.
163
Shalini Warrier is the Chief Operating Officer of the Bank. She is a member of the Institute of Chartered Accountants of India.
She plays a key role as the controller of IT department, operations department, corporate services department, digital centre of
excellence and retail segment of loan collection and recovery department of the Bank. She is responsible for ensuring all the
relevant support functions run smoothly. She has been an employee of the Bank since November 2, 2015.
Sumit Kakkar is the Chief Credit Officer of the Bank. He holds a bachelor of engineering degree in Mechanical Engineering
from Mangalore University and masters degree in Finance and Control from University of Delhi. He plays a key role as the
controller of national credit hub, large corporate hub, remedial measures and credit monitoring department of the Bank. He is
responsible for overall credit growth/delivery of our Bank by ensuring the asset quality and mitigation of credit risk. He has been
an employee of our Bank since August 29, 2016.
Jose V Joseph is the Executive Vice President of the Bank. He holds a bachelors degree in Commerce from University of Kerala.
He is also a certified associate of the Indian Institute of Bankers. He plays a key role as the controller of Ernakulam, Kozhikode,
Kottayam and Thiruvananthapuram zones of our Bank. He has been an employee of our Bank since July 19, 1976.
Sampath D is the Executive Vice President of our Bank. He holds a master of science degree in Statistics from University of
Madras. He is also a certified associate of the Indian Institute of Bankers. He plays a key role as the controller of Mumbai, New
Delhi, Bangalore, Chennai and Kolkata zones of our Bank. He has been an employee of our Bank since May 1, 2017.
Harsh Dugar is the Head – Corporate & Insitutional Banking of our Bank. He holds a bachelors degree in Commerce from
University of Calcutta. He is also a certified member of the Institute of Cost and Works Accountants of India and Institute of
Chartered Financial Analysts of India. He plays a key role in formulating our Bank’s strategy on acquisition and servicing of
corporate, mid-market customers and to maintain a close track of the financial markets and suggest strategies of our Bank. He has
been an employee of our Bank since October 1, 2016.
Jose K Mathew is the Senior Vice President & Head - Retail Business Department of our Bank. He holds a diploma in
Commerical Practice. He is also a certified associate of the Indian Institute of Bankers. He plays a key role in the overseeing of
the retail business line, branch network, workplace banking and all initiatives to ensure service delivery and strategy fulfilment in
retail business. He has been an employee of our Bank since August 18, 1980.
Girish Kumar Ganapathy is the Senior Vice President cum Company Secretary of the Bank. He holds a bachelors degree in law
from University of Bombay and a bachelors degree in commerce from University of Calicut. He is also a certified associate of the
Institute of Companies Secretaries of India. He plays a key role in ensuring compliance with various instructions and directives
issued by statutory, regulatory, government bodies and other bodies as well as the internal guidelines of the Bank. He has been an
employee of our Bank since November 16, 1995.
Shareholding of the Senior Management Personnel
As of March 31, 2017, except as stated below, none of the Senior Management Personnel hold Equity Shares in our Bank:
Name Number of Equity Shares Percentage of Shareholding in our Bank
(%)
Sumit Kakkar 2,178 0.00*
Jose V Joseph 33,480 0.00*
Sampath D 20,000 0.00*
Harsh Dugar 100,000 0.00*
Jose K Mathew 10,000 0.00*
Girish Kumar Ganapathy 7,000 0.00* *less than 0.01%
Options held by our Senior Management Personnel
The following ESOPs are outstanding under our ESOS 2010 scheme, the details of which are set out below:
Name of the Senior Management
Personnel to whom employee stock
options have been granted
Number of stock options outstanding
as on March 31, 2017
Number of stock options vested and
unexercised as on March 31, 2017
Shalini Warrier 640,000 -
Sumit Kakkar 225,000 -
Jose V Joseph 113,470 65,470
Sampath D 135,950 79,450
Harsh Dugar 200,000 -
Jose K Mathew 97,650 62,410
Girish Kumar Ganapathy 48,790 16,050
164
Interest of the Senior Management Personnel
The Senior Management Personnel have no economic interest in the Bank except to the extent of any remuneration or benefits to
which they are entitled as per the terms of their appointment and reimbursement of expenses incurred by them during the ordinary
course of business and to the extent of any Equity Shares and employee stock options, if any, held by them in the Bank, if any.
Our Senior Management Personnel are not party to any bonus or profit sharing plan of the Bank.
None of our Directors are related to any of the Senior Management Personnel of our Bank.
Furthermore, except for Harsh Dugar, Ganesh Kumar Ganapathy and Ganesh Sankaran, none of our Senior Management
Personnel have taken any loans and advances from the Bank.
Corporate Governance
Our Bank has been complying with the requirements of all applicable corporate governance norms, including the SEBI Listing
Regulations in relation to the constitution of our Board of Directors and committees thereof. The corporate governance framework
is based on an effective independent Board, separation of the supervisory role of our Board of Directors from the executive
management team and proper constitution of committees of our Board. Our Board of Directors functions either as a full Board or
through various committees constituted to oversee specific operational areas.
As the Chairman of our Bank is a Non-Executive Director of our Bank, at least one-third of the Board of Directors is required to
consist of independent directors in accordance with Regulation 17(1)(b) of SEBI Listing Regulations. Our Bank is compliant with
Regulation 17 of the SEBI Listing Regulations, with seven of our Directors are eligible to be considered as independent directors
under the SEBI Listing Regulations. The SEBI Listing Regulations requires every company to appoint one woman director on its
Board. Our Bank has appointed two women directors on the Board.
Our Board of Directors has held 11 meetings during the Financial Year 2017.
Committees of our Board of Directors
In accordance with the SEBI Listing Regulations, and the Companies Act including the rules made thereunder, our Bank has
constituted the following committees of our Directors:
1. Audit Committee;
The members of the Audit Committee at present are:
Grace Elizabeth Koshie (Chairperson);
Nilesh Shivji Vikamsey; and
Shubhalakshmi Amod Panse.
2. CSR Committee;
The members of the CSR Committee at present are:
Harish Hansubhai Engineer (Chairman);
Kesava Menon Chandrasekhar;
Shyam Srinivasan; and
Ashutosh Khajuria.
3. Nomination, Remuneration, Ethics and Compensation Committee;
The members of the Nomination, Remuneration, Ethics and Compensation Committee at present are:
Nilesh Shivji Vikamsey (Chairman);
Kesava Menon Chandrasekhar; and
Dilip Gena Sadarangani.
165
4. Investor Grievance, Share Transfer and Stakeholders Relationship Committee;
The members of the Investor Grievance, Share Transfer and Stakeholders Relationship Committee at present are:
Dilip Gena Sadarangani (Chairman);
Balagopal Chandrasekhar;
Shyam Srinivasan; and
Ashutosh Khajuria.
5. Risk Management Committee;
The member of the Risk Management Committee at present are:
Shubhalakshmi Amod Panse (Chairperson);
Grace Elizabeth Koshie;
Balagopal Chandrasekhar;
Shyam Srinivasan; and
Ashutosh Khajuria
Further, in addition to the aforementioned committees, our Bank has constituted the following committees in compliance with
other relevant regulatory guidelines: (i) HR Committee; (ii) Credit Committee; (iii) Customer Service Committee; (iv)
Information Technology & Operations Committee; (v) SCBF Committee; (vi) Review Committee of the Board on Non Co-
operative Borrowers; and (vii) Review Committee of the Board for Wilful Defaulters.
Employee Stock Option Plans
Our Bank instituted ESOS 2010 pursuant to a special resolution dated December 24, 2010 passed through postal ballot. ESOS
2010 has been instituted for the benefit of such employees and directors (including our Managing Director and CEO) of our Bank
or any of its subsidiary company not exceeding 5% of the paid up Equity Share capital of our Bank, fully paid on payment of the
requisite exercise price, in such manner and subject to such terms and conditions as the Nomination and Remuneration Committee
may decide, subject to necessary provisions and approvals. Further, subject to the approval of our Shareholders in the upcoming
AGM to be held on July 14, 2017, our Board has approved the implementation of ESOS 2017 for grant of options to employees
and directors of our Bank (including Managing Director and CEO) (whether in India or abroad).
Other Confirmations
None of the Directors or Senior Management Personnel of our Bank have any financial or other material interest in this Issue and
there is no effect of such interest in so far as it is different from the interests of other persons.
None of the Directors have ever been identified as willful defaulters by any bank or financial institution or consortium thereof, in
accordance with the guidelines on willful defaulters issued by the RBI.
Related Party Transactions
For details in relation to the related party transactions entered by our Bank during the last three Financial Years under AS 18,
immediately preceding the year of circulation of this Placement Document, please see the section entitled “Financial Statements”
on page 220.
166
PRINCIPAL SHAREHOLDERS
I. The following table sets forth the details regarding the shareholding pattern of our Bank, as on March 31, 2017:
Category of
shareholder
Nos. of
shareholder
s
No. of fully paid
up Equity Shares
held
No. of Equity
Shares
underlying
Depository
Receipts
Total nos. shares
held
Shareholdin
g as a % of
total no. of
shares
(calculated
as per
SCRR,
1957)As a %
of (A+B+C2)
Number of equity
shares held in
dematerialized form
(A) Promoter &
Promoter
Group
- -
-
- - -
(B) Public 170,799 1,692,839,553 - 1,692,839,553 100.00 1,655,434,171
(C1) Shares
underlying DRs
1 - 31,205,861 31,205,861 0.00 31,205,861
(C2) Shares
held by
Employee Trust
- - - - 0.00 -
(C) Non
Promoter-Non
Public
- - 31,205,861 31,205,861 0.00 31,205,861
Grand Total 170,800 1,692,839,553 31,205,861 1,724,045,414 100.00 1,686,640,032
II. The following table sets forth the details regarding the shareholding of the Promoter and Promoter Group as on March 31,
2017: Nil
III. The following table sets forth the details regarding the shareholding of persons belonging to the category “Public” as on
March 31, 2017:
Category &
name of the
shareholders
No. of
shareholde
r
No. Of fully
paid up equity
shares held
No. of
Equity
Shares
underlyi
ng
Deposito
ry
Receipts
Total no.
Shares held
Shareholdin
g %
calculated
as per
SCRR, 1957
as a % of
(a+b+c2)
No of voting
rights
Total
as a
% of
total
voting
right
Number of
equity shares
held in
dematerialize
d form(not
applicable)
B1)
Institutions 0 0 0.00 0.00
Mutual Funds/ 190 447,829,246 - 447,829,246 26.45 447,829,246 26.45 447,733,466
ICICI
Prudential 1 28,030,895
-
28,030,895 1.66 28,030,895 1.66 28,030,895
DSP Black
Rock 1 40,910,400
-
40,910,400 2.42 40,910,400 2.42 40,910,400
Birla Sun Life
Trustee Co
Private Limited 1 51,941,389
-
51,941,389 3.07 51,941,389 3.07 51,941,389
L & T Mutual
Fund Trustee
Limited 1 26,618,119
-
26,618,119 1.57 26,618,119 1.57 26,618,119
HDFC Trustee
Company
Limited 1 71,971,600
-
71,971,600 4.25 71,971,600 4.25 71,971,600
Kotak
Mahindra 1 30,848,067
-
30,848,067 1.82 30,848,067 1.82 30,848,067
Reliance
Capital
Trustees Co
Ltd 1 69,287,309
-
69,287,309 4.09 69,287,309 4.09 69,287,309
UTI 1 32,070,510 - 32,070,510 1.89 32,070,510 1.89 32,070,510
Mirae Asset 1 18,765,152 - 18,765,152 1.11 18,765,152 1.11 18,765,152
Alternative
Investment 6 2,447,081
-
2,447,081 0.14 2,447,081 0.14 2,447,081
167
Category &
name of the
shareholders
No. of
shareholde
r
No. Of fully
paid up equity
shares held
No. of
Equity
Shares
underlyi
ng
Deposito
ry
Receipts
Total no.
Shares held
Shareholdin
g %
calculated
as per
SCRR, 1957
as a % of
(a+b+c2)
No of voting
rights
Total
as a
% of
total
voting
right
Number of
equity shares
held in
dematerialize
d form(not
applicable)
Funds
Foreign
Portfolio
Investors 185 529,652,923
-
529,652,923 31.29 529,652,923 31.29 529,652,923
Franklin
Templeton
Investment
Funds 1 52,381,941
-
52,381,941 3.09 52,381,941 3.09 52,381,941
MFS
International
new Discovery
Fund 1 18,342,466
-
18,342,466 1.08 18,342,466 1.08 18,342,466
Parvest Equity
India 1 20,300,000
-
20,300,000 1.20 20,300,000 1.20 20,300,000
Dimensional
Emerging
Markets Value
Fund 1 17,751,105
-
17,751,105 1.05 17,751,105 1.05 17,751,105
East Bridge
Capital Master
Fund Limited 1 48,345,447
-
48,345,447 2.86 48,345,447 2.86 48,345,447
Government
Pension Fund
Global 1 46,111,582
-
46,111,582 2.72 46,111,582 2.72 46,111,582
Bank Muscat
India Fund 1 33,351,210
-
33,351,210 1.97 33,351,210 1.97 33,351,210
Morgan
Stanley
Mauritius
Company Fund 1 19,361,867
-
19,361,867 1.14 19,361,867 1.14 19,361,867
Financial
Institutions/
Banks 26 43,129,605
-
43,129,605 2.55 43,129,605 2.55 43,000,105
Life Insurance
Corporation of
India 1 40,344,910
-
40,344,910 2.38 40,344,910 2.38 40,344,910
Insurance
Companies 3 29,440,000
-
29,440,000 1.74 29,440,000 1.74 29,440,000
General
Insurance
Corporation of
India 1 27,800,000
-
27,800,000 1.64 27,800,000 1.64 27,800,000
Sub Total B1
410 1,052,498,855
-
1,052,498,855 62.17
1,052,498,85
5 62.17 1,052,273,575
B2) Central
Government/
State
Government(s
) / President of
India 0 0 0.00 0.00
Central
Government/
State
Government(s
)/ President of
India 1 10 10 0.00 10 0.00 10
Sub Total B2 1 10 10 0.00 10 0.00 10
B3) Non-
Institutions 0 0 0.00 0.00
Individual
share capital 168,271 231,410,761
-
231,410,761 13.67 231,410,761 13.67 196,405,249
168
Category &
name of the
shareholders
No. of
shareholde
r
No. Of fully
paid up equity
shares held
No. of
Equity
Shares
underlyi
ng
Deposito
ry
Receipts
Total no.
Shares held
Shareholdin
g %
calculated
as per
SCRR, 1957
as a % of
(a+b+c2)
No of voting
rights
Total
as a
% of
total
voting
right
Number of
equity shares
held in
dematerialize
d form(not
applicable)
upto `2 Lacs
Individual
share capital in
excess of `2
Lacs 148 166,629,738
-
166,629,738 9.84 166,629,738 9.84 165,503,718
Yusuffali
Musaliam
Veetil Abdul
Kader 1 63,153,640
-
63,153,640 3.73 63,153,640 3.73 63,153,640
Jhunjhunwala
Rakesh
Radheshyam 1 39,331,060
-
39,331,060 2.32 39,331,060 2.32 39,331,060
NBFCs
registered
with RBI 15 1,217,219
-
1,217,219 0.07 1,217,219 0.07 1,217,219
Any Other
(specify) 1,954 241,082,970
-
241,082,970 14.24 241,082,970 14.24 240,034,400
Clearing
Members 524 8,005,921
-
8,005,921 0.47 8,005,921 0.47 8,005,921
Corporate
Bodies –
Foreign Bodies
- DR 2 738,472
-
738,472 0.04 738,472 0.04 738,472
Bodies
Corporate 1287 64,421,003
-
64,421,003 3.81 64,421,003 3.81 63,770,483
FII-DR 1 321,786 - 321,786 0.02 321,786 0.02 321,786
FII 48 109,388,490 - 109,388,490 6.46 109,388,490 6.46 109,058,240
Foreign
Portfolio
Investors
(Category III) 13 21,556,203
-
21,556,203 1.27 21,556,203 1.27 21,556,203
Limited
Liability
Partnership 49 1,533,928
-
1,533,928 0.09 1,533,928 0.09 1,533,928
Trusts 29 10,733,253 - 10,733,253 0.63 10,733,253 0.63 10,665,453
Amansa
Holdings
Private Limited 1 73,000,000
-
73,000,000 4.31 73,000,000 4.31 73,000,000
International
Finance
Corporation 1 24,383,914
-
24,383,914 1.44 24,383,914 1.44 24,383,914
Sub Total B3 170,388 640,340,688 - 640,340,688 37.83 640,340,688 37.83 603,160,586
B=B1+B2+B3 170799 1,692,839,553 - 1,692,839,553 100.00 1,692,839,55
3
100.0
0
1,655,434,171
IV. Statement showing shareholding pattern of the non-promoter- non-public shareholders as on March 31, 2017
Category & name of
the shareholders(i)
No. of shareholder(iii) No. of fully
paid up
equity
shares
held(iv)
Nos. of shares
underlying
depository
receipts(vi)
Total no.
Shares held(vii
= iv+v+vi)
Shareholding %
calculated as per
SCRR, 1957 as a %
of (a+b+c2)(viii)
Number of equity
shares held in
dematerialized
form(xiv)(not
applicable)
(C1) Custodian/DR
Holder 0 0 - - 0.00 0
Custodian/DR Holder 1 0 31,205,861 31,205,861 0.00 31,205,861
Deutsche Bank Trust
Company Americas 1 0 31,205,861 31,205,861 0.00 31,205,861
Sub Total C1 1 0 31,205,861 31,205,861 0.00 31,205,861
169
(C2) Employee Benefit Trust
0 0 - - 0.00 0
C = C1 + C2 1 0 31,205,861 31,205,861 0.00 31,205,861
V. Details of disclosure made by the Trading Members holding 1% or more of the Total no. of Equity Shares of the
Company: NIL
170
ISSUE PROCEDURE
Below is a summary, intended to provide a general outline of the procedures for the Bidding, application, payment, Allocation
and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure followed in the Issue may differ from the one
mentioned below, and Bidders are presumed to have apprised themselves of the same from our Bank or the BRLMs.
Bidders are advised to inform themselves of any restrictions or limitations that may be applicable to them and are required to
consult their respective advisers in this regard. Bidders that apply in the Issue will be required to confirm and will be deemed to
have represented to our Bank, the BRLMs and their respective directors, officers, agents, affiliates and representatives that they
are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. Our Bank and
the BRLMs and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for
advising any Bidder on whether such Bidder is eligible to acquire the Equity Shares. Please see the section entitled, “Selling
Restrictions” and “Transfer Restrictions and Purchaser Representations” on pages 180 and 186.
Qualified Institutions Placement
The Issue is being made to QIBs in accordance with Chapter VIII of the SEBI ICDR Regulations and Sections 42 and 62 of the
Companies Act, 2013, through a qualified institutions placement. Under Chapter VIII of the SEBI ICDR Regulations and Section
42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, as
amended, a listed issuer in India may issue equity shares, non-convertible debt instruments along with warrants and convertible
securities (other than warrants) to QIBs, provided, inter alia, that:
a special resolution approving the qualified institutions placement has been passed by its shareholders. Such special
resolution must specify (i) that the allotment of the Equity Shares is proposed to be made pursuant to the qualified
institutions placement; and (ii) the relevant date;
equity shares of the same class of such issuer, which are proposed to be allotted through the qualified institutions
placement or pursuant to conversion or exchange of eligible securities, are listed on a recognized stock exchange in India
that has nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its
shareholders for convening the meeting to pass the above-mentioned special resolution;
such issuer complies with the minimum public shareholding requirements as set out in the SCRR; and
such issuer should have completed allotments with respect to any offer or invitation made, or should have withdrawn, or
abandoned any invitation or offer made by the issuer.
At least 10% of the Equity Shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or any part
thereof to be allotted to Mutual Funds remains unsubscribed, it may be allotted to other QIBs. A QIB has been specifically defined
under Regulation 2(1)(zd) of the SEBI ICDR Regulations.
Bidders are not allowed to withdraw their Bids after the closure of the Issue.
Bidders will be required to make certain certifications in order to participate in the Issue including that they are either (A) outside
the U.S. and purchasing the Equity Shares in an offshore transaction (as defined in Regulation S) or (B) a “qualified institutional
buyer” as defined in Rule 144A.
Additionally, there is a minimum pricing requirement under the SEBI ICDR Regulations. The issue price of the equity shares
issued pursuant to the QIP shall not be less than the average of the weekly high and low of the closing prices of the issuer’s equity
shares of the same class quoted on the stock exchange during the two weeks preceding the relevant date. However, a discount of
up to 5% of the floor price is permitted in accordance with the provisions of the SEBI ICDR Regulations.
The “relevant date” refers to the date of the meeting in which the board of directors or the committee of directors duly authorised
by the board of the issuer decides to open the proposed issue and the “stock exchange” means any of the recognised stock
exchanges in India in which the equity shares of the same class of the issuer are listed and on which the highest trading volume in
such shares has been recorded during the two weeks immediately preceding the relevant date.
Securities must be allotted within 12 months from the date of the shareholders’ resolution approving the QIP and also within the
period of 60 days from the date of receipt of subscription money from the relevant QIBs. The securities issued pursuant to a QIP
must be issued on the basis of a placement document that shall contain all material information including the information
specified in Schedule XVIII of the SEBI ICDR Regulations and Form PAS-4, as prescribed under the Companies Act, 2013 and
the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended. The preliminary placement document and the
placement document are private documents provided to select investors through serially numbered copies and are required to be
placed on the website of the concerned stock exchange and of the issuer with a disclaimer to the effect that it is in connection with
an issue to QIBs and no offer is being made to the public or to any other category of investors.
171
This Issue was authorised and approved by our Board of Directors and our Shareholders on April 28, 2017 and June 7, 2017,
respectively. Further, this Issue has general permission of the RBI in terms of Clause 4(ii)(b) and Clause 5 of the Reserve Bank of
India (Issue and Pricing of Shares by Private Sector Banks) Directions, 2016 dated April 21, 2016, subject to compliance with
certain conditions.
Our Bank has received the in-principle approval of BSE and NSE in accordance with the provisions of Regulation 28(1) of the
SEBI Listing Regulations, for the listing of the Equity Shares on BSE and NSE. Our Bank has filed a copy of the Preliminary
Placement Document and this Placement Document with the Stock Exchanges.
The minimum number of Allottees for each qualified institutions placement shall not be less than:
two, where the issue size is less than or equal to `2.5 billion; and
five, where the issue size is greater than `2.5 billion.
No single Allottee shall be Allotted more than 50% of the Issue Size. QIBs that belong to the same group or that are under
common control shall be deemed to be a single Allottee.
In terms of Regulation 89 of the SEBI ICDR Regulations, the aggregate of the proposed qualified institutions placement and all
previous qualified institutions placements made in the same financial year shall not exceed five times the net worth of our Bank as
per its audited balance sheet of the previous Financial Year.
Equity Shares allotted to a QIB pursuant to the Issue shall not be sold for a period of one year from the date of Allotment, except
on the floor of the Stock Exchanges. Allotments made to VCFs and AIFs in the Issue are subject to the rules and regulations that
are applicable to them, including in relation to lock-in requirements.
The Equity Shares offered hereby have not been and will not be registered under the Securities Act and may not be offered or sold
within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United
States only to persons reasonably believed to be Qualified Institutional Buyers (as defined in Rule 144A under the Securities Act)
pursuant to Section 4(a)(2) of the Securities Act, and (b) outside the United States in offshore transactions in reliance on
Regulation S under the Securities Act. For a description of certain restrictions on transfer of the Equity Shares, see the “Transfer
Restrictions and Purchaser Representations” on page 186.
The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside
India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance
with the applicable laws of such jurisdiction.
Issue Procedure
1. Our Bank and the BRLMs shall circulate serially numbered copies of the Preliminary Placement Document and the
Application Form, either in electronic or physical form, to QIBs and the Application Form will be specifically addressed
to such QIBs. In terms of Section 42(7) of the Companies Act, 2013, our Bank shall maintain complete records of QIBs
to whom the Preliminary Placement Document and the serially numbered Application Form have been dispatched. Our
Bank will make the requisite filings with RoC and SEBI within the stipulated time period as required under the
Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014.
2. The list of QIBs to whom the Application Form is delivered shall be determined by the BRLMs in consultation with our
Bank. Unless a serially numbered Preliminary Placement Document along with the Application Form is addressed
to a particular QIB, no invitation to make an offer to subscribe the Equity Shares shall be deemed to have been
made to such a QIB. Even if such documentation were to come into the possession of any person other than the intended
recipient, no offer or invitation to offer shall be deemed to have been made to such person and any application that does
not comply with this requirement shall be treated as invalid.
3. QIBs shall submit Bids for, and our Bank shall issue and Allot to each Allottee at least such number of Equity Shares in
the Issue which would aggregate to `20,000 calculated at the face value of the Equity Shares.
4. QIBs may submit an Application Form, including any revisions thereof, during the Bid/Issue Period to the BRLMs.
5. QIBs will be required to indicate the following in the Application Form:
a. a representation that it is either (i) outside the United States acquiring the Equity Shares in an offshore
transaction under Regulation S, or (ii) a “qualified institutional buyer” as defined in Rule 144A, and it has
agreed to certain other representations set forth in the Application Form;
172
b. full official name of the QIB to whom the Equity Shares are to be Allotted;
c. number of Equity Shares Bid for;
d. price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate that
they are agreeable to submit an Application Form at “Cut-off Price”, which shall be any price as may be
determined by our Bank in consultation with the BRLMs at or above the Floor Price. Our Bank may offer a
discount of not more than 5% on the Floor Price in terms of Regulation 85 of the SEBI ICDR Regulations; and
e. details of the depository accounts to which the Equity Shares should be credited.
Note: Each sub-account of an Eligible FPI, other than a sub-account which is a foreign corporate or a foreign individual,
will be considered as an individual QIB and separate Application Forms would be required from each such sub-account
for submitting the Application Forms. Eligible FPIs or sub-accounts of such FPIs are required to indicate the SEBI FPI or
sub-account registration number in the Application Form. The Bids made by the asset management companies or
custodian of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In
case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI
and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple Bids provided that
the Bids clearly indicate the scheme for which the Bid has been made. Application by various schemes or funds of a
Mutual Fund will be treated as one application from the Mutual Fund. Bidders are advised to ensure that any single Bid
from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under
applicable laws.
6. Once a duly completed Application Form is submitted by a QIB, such Application Form constitutes an irrevocable offer
and cannot be withdrawn after the Bid/Issue Closing Date. The Bid may be revised during the Issue Period by submitting
a bid revision application form available with the BRLMs. Any revision of the Bid submitted after the Issue Period will
not be considered as valid and the original Bid will stand. The Bid/Issue Closing Date shall be notified to the Stock
Exchanges and the QIBs shall be deemed to have been given notice of such date after receipt of the Application Form.
7. Upon receipt of the duly completed Application Form, our Bank, after closure of the Issue, shall determine the final
terms, including the Issue Price and the number of the Equity Shares to be Allocated pursuant to the Issue in consultation
with the BRLMs. Upon determination of the Issue Price and the QIBs to whom Allocation shall be made, the BRLMs, on
behalf of our Bank, will send the CANs, along with serially numbered Placement Document, to the QIBs who have been
Allocated Equity Shares. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the QIB to
pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The CAN shall contain details such as the
number of the Equity Shares Allocated to the QIB and payment instructions including the details of the amounts payable
by the QIB for Allotment of the Equity Shares in its name and the Pay-in Date as applicable to the respective QIB.
Please note that the Allocation will be at the absolute discretion of our Bank and will be based on the
recommendation of the BRLMs.
8. Pursuant to receiving a CAN, each QIB shall be required to make the payment of the entire application monies for the
Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer to our Bank’s designated bank
account by the Pay-in Date as specified in the CAN sent to the respective QIBs.
9. No payment shall be made by QIBs in cash. Please note that any payment of application money for the Equity Shares
shall be made from the bank accounts of the relevant QIBs applying for the Equity Shares and our Bank shall keep a
record of the bank account from where such payment for subscriptions have been received. Monies payable on Equity
Shares to be held by joint holders shall be paid from the bank account of the person whose name appears first in the
application. Pending Allotment, all monies received for subscription of the Equity Shares shall be kept by our Bank in a
separate bank account with a scheduled bank and shall be utilised only for the purposes permitted under the Companies
Act, 2013.
10. Upon receipt of the application monies from the QIBs, our Bank shall Allot the Equity Shares as per the details in the
CAN sent to the QIBs. Our Bank will intimate to the Stock Exchanges the details of the Allotment and apply for
approvals of the Equity Shares for listing on the Stock Exchanges prior to crediting the Equity Shares into the Depository
Participant accounts of the QIBs.
11. Upon receipt of the listing approval from the Stock Exchanges, our Bank shall credit the Equity Shares into the
Depository Participant accounts of the respective QIBs.
12. Our Bank shall then apply for the final listing and trading permissions from the Stock Exchanges.
13. The Equity Shares that have been credited to the Depository Participant accounts of the QIBs shall be eligible for trading
on the Stock Exchanges only upon the receipt of final listing and trading approvals from the Stock Exchanges. Upon
receipt of the final listing and trading approval from the Stock Exchanges, our Bank shall inform the QIBs who have
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received an Allotment of the receipt of such approval. Our Bank and the BRLMs shall not be responsible for any delay or
non-receipt of the communication of the final listing and trading permissions from the Stock Exchanges or any loss
arising from such delay or non-receipt. Final listing and trading approvals granted by the Stock Exchanges are also
placed on their respective websites. QIBs are advised to apprise themselves of the status of the receipt of the permissions
from the Stock Exchanges or our Bank.
Qualified Institutional Buyers
Only QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations, and not otherwise excluded pursuant to Regulation
86(1)(b) of the SEBI ICDR Regulations are eligible to invest in the Issue. Under Regulation 86(1)(b) of the SEBI ICDR
Regulations, no Allotment shall be made, either directly or indirectly, to any QIB who is a promoter or any person related to the
Promoter. Currently, the definition of a QIB includes:
1. Mutual funds, venture capital funds, alternate investment funds and foreign venture capital investors registered with
SEBI;
2. Foreign Portfolio Investors other than Category III Foreign Portfolio Investors;
3. Public financial institutions as defined in Section 2 (72) of the Companies Act, 2013;
4. Scheduled commercial banks;
5. Multilateral and bilateral development financial institutions;
6. State industrial development corporations;
7. Insurance companies registered with IRDAI;
8. Provident funds with minimum corpus of `2.5 billion;
9. Pension funds with minimum corpus of `2.5 billion;
10. National Investment Fund set up by Government of India, set up by resolution no. F. No. 2/3/2005-DDII, dated
November 23, 2005;
11. Insurance funds set up and managed by army, navy or air force of the Union of India;
12. Insurance funds set up and managed by the Department of Posts, India; and
13. Systemically important non-banking financial companies (being a non-banking financial companies registered with the
RBI and having a net worth of more than `5,000 million as per the last audited financial statements).
Foreign Portfolio Investors are permitted to participate in the Issue subject to compliance with applicable law and such
that the shareholding of the Foreign Portfolio Investors does not exceed specified limits as prescribed under applicable law
in this regard. In terms of the SEBI FPI Regulations, purchase of equity shares of each company by a single Eligible FPI
or an investor group shall be below 10% of the total issued capital of such company.
Other eligible non-resident QIBs can participate in the Issue under Schedule 1 of the Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. Under the current Consolidated FDI
Policy, the total foreign ownership in a private sector bank cannot exceed 74% of the paid-up capital (49% of the paid-up capital
under the automatic route and above 49% of the paid-up capital and up to 74% of the paid-up capital under the approval route).
The Shareholders of our Bank’s pursuant to a special resolution passed on June 7, 2017 through the postal ballot process have
authorised Board of Directors of our Bank to increase the limits up to which FPIs can invest in the Bank to 74%. The Bank
through its letters dated May 15, 2017 and June 12, 2017 has intimated the RBI of the Board and Shareholders’ approval received
for the increase in FPI investment limits. The RBI is yet to issue a press release taking note of the increase FPI investment limits.
Our Bank and the BRLMs and any of their respective shareholders, directors, partners, officers, employees, counsel,
advisors, representatives, agents or affiliates are not liable for any amendment or modification or change to applicable
laws or regulations, which may occur after the date of this Placement Document. QIBs are advised to make their
independent investigations and satisfy themselves that they are eligible to apply. QIBs are advised to ensure that any single
application from them does not exceed the investment limits or maximum number of Equity Shares that can be held by
them under applicable law or regulation or as specified in this Placement Document. Further, QIBs are required to satisfy
themselves that their Bids would not eventually result in triggering a tender offer under the Takeover Regulations. The
QIB shall be solely responsible for compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulations,
2015 and other applicable laws, rules and regulations.
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A minimum of 10% of the Equity Shares offered in the Issue shall be Allotted to Mutual Funds. If no Mutual Fund is
agreeable to take up the minimum portion as specified above, such minimum portion or part thereof may be Allotted to
other QIBs.
Note: Affiliates or associates of the BRLMs who are QIBs may participate in the Issue in compliance with applicable laws.
Application Process
Application Form
QIBs shall only use the serially numbered Application Forms supplied by the BRLMs in either electronic form or by physical
delivery for the purpose of making a Bid (including revision of a Bid) in terms of this Placement Document.
By making a Bid (including the revision thereof) for the Equity Shares through Application Forms, the QIB will be deemed to
have made the following representations and warranties and the representations, warranties and agreements made under the
sections entitled “Representations by Investors”, “Selling Restrictions” and “Transfer Restrictions and Purchaser
Representations” on pages 5, 180 and 186 respectively:
1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI ICDR Regulations and not excluded under
Regulation 86 of the SEBI ICDR Regulations, has a valid and existing registration under applicable laws and is eligible
to participate in the Issue;
2. The QIB acknowledges that it has no right to withdraw its Bid after the Bid /Issue Closing Date;
3. The QIB confirms that if the Equity Shares are Allotted through the Issue, it shall not, for a period of one year from
Allotment, sell such Equity Shares otherwise than on the floor of the Stock Exchanges;
4. The QIB confirms that the QIB is eligible to apply and hold the Equity Shares so Allotted and together with any Equity
Shares held by the QIB prior to the Issue. The QIB further confirms that the holding of the QIB, does not and shall not,
exceed the level permissible as per any applicable regulations applicable to the QIB;
5. The QIB confirms that the Application would not result in triggering a tender offer under the Takeover Regulations;
6. The QIB confirms that to the best of its knowledge and belief, together with other QIBs in the Issue that belong to the
same group or are under common control, the Allotment to the QIB shall not exceed 50.00% of the Issue Size. For the
purposes of this statement:
a. The expression “belongs to the same group” shall derive meaning from the concept of “companies under the
same group” as provided in Section 372(11) of the Companies Act, 1956;
b. “Control” shall have the same meaning as is assigned to it under Regulation 2(1)(e) of the Takeover
Regulations.
7. The QIB confirms that it shall not undertake any trade in the Equity Shares credited into the beneficiary account
maintained with the Depository Participant by the QIBs until such time that the final listing and trading approvals for the
Equity Shares are issued by the Stock Exchanges.
8. The QIB acknowledges, represents and agrees that in the event its total interest in the paid-up share capital of our Bank
or voting rights in our Bank, whether direct or indirect, beneficial or otherwise (any such interest, your “Shareholding”),
when aggregated together with any existing Shareholding and/or Shareholding of any of the persons acting in concert,
results in Shareholding of 5% or more of the total paid-up share capital of, or voting rights in, our Bank a disclosure of
the aggregate shareholding and voting rights will have to be made under the Takeover Regulations. In case such QIB is
an existing shareholder who, together with persons acting in concert, holds 5% or more of the underlying paid up share
capital of, or voting rights in our Bank a disclosure will have to be made under the Takeover Regulations in the event of a
change of 2% or more in the existing Shareholding of the QIB and persons acting in concert.
9. You are aware that in accordance with Section 12B of the Banking Regulation Act, 1949 read with the Reserve Bank of
India (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015, dated November
19, 2015, (“RBI Acquisition Circular”) no person can make an acquisition which will/is likely to take the aggregate
holding of such person (as defined in the RBI Acquisition Circular), together with shares, voting rights, compulsorily
convertible debentures or bonds held by him or his relatives, associate enterprise (as defined in the Banking Regulations
Act) and persons acting in concert with him (“Holding”) to 5% or more of the total paid-up share capital of our Bank, or
be entitled to exercise 5% or more of the total voting rights of our Bank, without prior approval of the RBI. Accordingly,
you hereby represent that your (direct or indirect) aggregate holding in the paid-up share capital of our Bank,
whether beneficial or otherwise:
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(i). after subscription to the Equity Shares in the Issue by your relatives, your associate enterprises (as defined in the
Banking Regulations Act) or persons acting in concert with you, aggregated with your pre-Issue Holding; or
(ii). after subscription to the Equity Shares in the Issue by you aggregated with your pre-Issue Holding;
shall not amount to 5% or more of the total paid-up share capital of our Bank or would not entitle you to exercise 5% or
more of the total voting rights of our Bank, except with the prior approval of the RBI. All shareholders Holding more
than 5% of the total paid-up capital who intend to participate in the Issue are required to submit details of the source of
funds for such acquisition of Equity Shares and obtain “no-objection” certificate from our Bank. In the event already
existing shareholder(s) holding more than 5% subscribes to Equity Shares offered in the Issue such that their total
shareholding in our Bank goes beyond 10% of the total paid-up capital, prior approval of the RBI shall be obtained by
such existing shareholder participating in the Issue. The RBI, when considering whether to grant an approval, may take
into account all matters that it considers relevant to the application, including ensuring that shareholders whose aggregate
holdings are above specified thresholds meet fit and proper criteria prescribed by RBI.
10. The QIB confirms that:
a. If it is within the United States, it is a U.S. QIB who is, or are acquiring the Equity Shares for its own account or
for the account of an institutional investor who also meets the definition of a U.S. QIB, for investment purposes
only and not with a view to, or for resale in connection with, the distribution (within the meaning of any United
States securities laws) thereof, in whole or in part and are not our affiliate or a person acting on behalf of such
an affiliate;
b. If it is outside the United States, it is purchasing the Equity Shares in an offshore transaction in reliance on
Regulation S, and is not our affiliate or a person acting on behalf of such an affiliate;
It has read and understood, and by making a Bid for the Equity Shares through the Application Forms and pursuant to the terms of
this Placement Document, will be deemed to have made the representations, warranties and agreements made under the sections
entitled “Notice to Investors”, “Representations by Investors”, “Selling Restrictions” and “Transfer Restrictions and Purchaser
Representations” on pages 2, 5, 180 and 186, respectively.
QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S
NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN
THE APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS
EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE,
ELIGIBLE SUB ACCOUNTS OF AN ELIGIBLE FPI WOULD BE CONSIDERED AS AN INDEPENDENT QIB.
IF SO REQUIRED BY THE BRLMs, THE QIB SUBMITTING A BID, ALONG WITH THE APPLICATION FORM,
WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO THE BRLMs TO EVIDENCE THEIR STATUS AS
A QIB.
IF SO REQUIRED BY THE BRLMs, THE ESCROW AGENT OR ANY STATUTORY OR REGULATORY
AUTHORITY IN THIS REGARD, INCLUDING AFTER ISSUE CLOSURE, THE QIB SUBMITTING A BID AND/OR
BEING ALLOTTED EQUITY SHARES IN THE ISSUE, WILL ALSO HAVE TO SUBMIT REQUISITE
DOCUMENT(S) TO FULFILL THE KNOW YOUR CUSTOMER (KYC) NORMS.
Demographic details such as address and bank account will be obtained from the Depositories as per the Depository Participant
account details given above.
The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the QIB to pay the
entire Issue Price for its share of the Allotment (as indicated by the CAN) and becomes a binding contract on the QIB upon
issuance of the CAN by us in favour of the QIB.
Submission of Application Form
All Application Forms must be duly completed with information including the name of the QIB, the price and the number of the
Equity Shares applied for. The Application Form shall be submitted to the BRLMs either through electronic form or through
physical delivery at the following address:
Name of the BRLM Address Contact
Person
Email Phone (Telephone
and Fax)
Citigroup Global
Markets India Private
Limited
12th Floor, First International
Financial Centre, G Block C54
& 55, Bandra Kurla Complex,
Bandra (East), Mumbai 400 098
Natwar Parmar [email protected] Tel: +91 22 6175 9984
Fax: +91 22 6175 9973
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Name of the BRLM Address Contact
Person
Email Phone (Telephone
and Fax)
Deutsche Equities
India Private Limited
14th Floor, The Capital, Bandra
Kurla Complex, Mumbai 400
051
Viren Jairath [email protected] Tel: +91 22 7180 4789
Fax: +91 22 7180 4199
IIFL Holdings
Limited*
10th Floor, IIFL Centre, Kamala
City, Senapati Bapat Marg,
Lower Parel (West), Mumbai
400 013
Abhishek
Joshi/ Gaurav
Singhvi
[email protected] Tel: +91 22 4646 4600
Fax: +91 22 2493 1073
Kotak Mahindra
Capital Company
Limited
27 BKC, 1st Floor, Plot No. C –
27, G Block, Bandra Kurla
Complex Bandra (East),
Mumbai 400051
Karl Sahukar [email protected] Tel: +91 22 4336 0000
Fax: +91 22 6713 2447
*IIFL Holdings Limited shall be involved only in marketing of the Issue
The BRLMs shall not be required to provide any written acknowledgement of the same.
Permanent Account Number or PAN
Each QIB must mention its Permanent Account Number (“PAN”) allotted under the IT Act in the Application Form.
Applications without this information will be considered incomplete and are liable to be rejected. QIBs should not provide the
GIR number instead of the PAN as the Application Form is liable to be rejected on this ground.
Pricing and Allocation
Build up of the book
The QIBs shall submit their Bids (including the revision of bids) for the Equity Shares within the Bid / Issue Period to BRLMs
and cannot be withdrawn after the Bid/Issue Closing Date. The book shall be maintained by the BRLMs.
Price discovery, terms and allocation
Our Bank, in consultation with the BRLMs, shall determine the Issue Price which shall be at or above the Floor Price. Our Bank
may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85 of the SEBI ICDR Regulations.
After finalisation of the Issue Price, our Bank has updated the Preliminary Placement Document with the Issue details and file the
same with the Stock Exchanges as this Placement Document.
Method of Allocation
Our Bank shall determine the Allocation in consultation with the BRLMs on a discretionary basis and in compliance with Chapter
VIII of the SEBI ICDR Regulations.
Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand. The Allocation
to QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of 10% of the Issue Size shall be
undertaken subject to valid Bids being received at or above the Issue Price.
THE DECISION OF OUR BANK IN CONSULTATION WITH THE BRLMs IN RESPECT OF ALLOCATION SHALL
BE FINAL AND BINDING ON ALL QIBS. QIBS MAY NOTE THAT ALLOCATION OF THE EQUITY SHARES IS
AT THE SOLE AND ABSOLUTE DISCRETION OF OUR BANK IN CONSULTATION WITH THE BRLMs AND
QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION
FORMS AT OR ABOVE THE ISSUE PRICE. NEITHER OUR BANK NOR THE BRLMs ARE OBLIGED TO ASSIGN
ANY REASON FOR ANY SUCH NON-ALLOCATION.
Confirmation of Allotment Notice or CAN
Based on the Application Forms received, our Bank, in consultation with the BRLMs, in their sole and absolute discretion, decide
the QIBs to whom the serially numbered CAN shall be sent, pursuant to which the details of the Equity Shares Allocated to them
and the details of the amounts payable for Allotment of such Equity Shares by the Pay-in Date in their respective names shall be
notified to such QIBs. Additionally, the CAN will include details of the relevant Escrow Account for transfer of funds if done
electronically, address where the application money needs to be sent, Pay-in Date as well as the probable designated date, being
the date of credit of the Equity Shares to the respective QIB’s account, as applicable to the respective QIBs (“Designated Date”).
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The QIBs, who have been allotted Equity Shares, would also be sent a serially numbered Placement Document either in electronic
form or by physical delivery along with the serially numbered CAN.
The dispatch of the serially numbered Placement Document and the CAN to the QIBs shall be deemed a valid, binding and
irrevocable contract for the QIB to furnish all details that may be required by the BRLMs and to pay the entire Issue Price for all
the Equity Shares Allocated to such QIB.
QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be Allotted to them pursuant to the
Issue.
Bank Account for Payment of Application Money
Our Bank has opened the Escrow Account with Federal Bank Limited, acting as the Escrow Agent in terms of the arrangement
among our Bank, the BRLMs and the Escrow Agent. The QIB will be required to deposit the entire amount payable for the Equity
Shares Allocated to it by the Pay-in Date as mentioned in the respective CAN.
If the payment is not made favouring the Escrow Account within the time stipulated in the CAN, the Application Form and the
CAN of the QIB are liable to be cancelled.
In case of cancellations or default by the QIBs, our Bank and the BRLMs have the right to reallocate the Equity Shares at the
Issue Price among existing or new QIBs at their sole and absolute discretion.
Payment Instructions
The payment of application money shall be made by the QIBs in the name of the Escrow Account as per the payment instructions
provided in the CAN.
Payments are to be made only through electronic fund transfer.
Note: Payments through cheques are liable to be rejected.
Closing Date and Allotment of the Equity Shares
Our Bank will endeavor to complete the Allotment of Equity Shares by the probable Closing Date for those QIBs who have paid
subscription money as stipulated in the respective CANs. The Equity Shares will not be Allotted unless the QIBs pay the Issue
Price to the Escrow Account as stated above.
The monies lying to the credit of the Escrow Account shall not be released until final listing and trading approvals of the Stock
Exchanges for the listing and trading of the Equity Shares issued pursuant to this Issue are received by our Bank.
In accordance with the SEBI ICDR Regulations, the Equity Shares will be issued and Allotment shall be made only in
dematerialised form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they so desire, as per the
provisions of the Companies Act, 2013 and the Depositories Act.
Our Bank, at its sole discretion, reserves the right to cancel the Issue at any time up to Allotment without assigning any reason
whatsoever.
Following the Allotment of the Equity Shares, our Bank will apply for final listing and trading approvals from the Stock
Exchanges. In the event of any delay in the receipt of listing or trading approvals or cancellation of the Issue, no interest or
penalty would be payable by us or the BRLMs.
In the case of QIBs who have been Allotted more than 5% of the Equity Shares in the Issue, our Bank shall disclose the name and
the number of the Equity Shares Allotted to such QIB to the Stock Exchanges and the Stock Exchanges will make the same
available on their website. Our Bank shall make the requisite filings with the RoC and the SEBI within the stipulated period as
required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended. If
a QIB is Allotted any Equity Shares, our Bank is required to disclose details such as your name, address and the number of Equity
Shares Allotted to the RoC and the SEBI. Additionally, in accordance with Section 12B of the Banking Regulation Act, 1949 read
with the Reserve Bank of India (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015,
dated November 19, 2015, no person (along with his relatives, associate enterprises or persons acting in concert with) can
acquire or hold 5% or more of the total paid-up share capital of our Bank, or be entitled to exercise 5% or more of the total voting
rights of our Bank, without prior approval of the RBI. Accordingly, a Bidder’s aggregate holding in the paid-up share capital of
our Bank, whether beneficial or otherwise: after subscription to the Equity Shares in the Issue by such Bidder, his or her relatives,
associate enterprises or persons acting in concert with such Bidder, aggregated with any pre-Issue shareholding in our Bank of
such Bidder, his or her relatives, associate enterprises or persons acting in concert; or after subscription to the Equity Shares in the
Issue aggregated with any pre-Issue shareholding in our Bank of such Bidder, his or her relatives, associate enterprises or persons
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acting in concert; shall not amount to 5% or more of the total paid-up share capital of our Bank or would not entitle such Bidder to
exercise 5% or more of the total voting rights of our Bank, except with the prior approval of the RBI. In the event already existing
shareholder(s) holding more than 5% subscribes to Equity Shares offered in the Issue such that their total shareholding in our
Bank goes beyond 10% of the total paid-up capital, prior approval of the RBI shall be obtained by such existing shareholder
participating in the Issue. The RBI, when considering whether to grant an approval, may take into account all matters that it
considers relevant to the application, including ensuring that shareholders whose aggregate holdings are above specified
thresholds meet fit and proper criteria prescribed by RBI.
In the event that our Bank is unable to issue and Allot the Equity Shares offered in this Issue or on cancellation of this Issue,
within 60 days from the date of receipt of application money, our Bank shall repay the application money within 15 days from
expiry of 60 days, failing which our Bank shall repay that money with interest at the rate of 12% per annum from expiry of the
sixtieth day. The application money to be refunded by our Bank shall be refunded to the same bank account from which
application money was remitted by the QIBs.
Other Instructions
Right to Reject Applications
Our Bank, in consultation with the BRLMs, may reject Bids, in part or in full, without assigning any reason whatsoever. The
decision of our Bank and the BRLMs in relation to the rejection of Bids shall be final and binding.
Equity Shares in Dematerialised form with the Depositories
The Allotment of the Equity Shares shall be only in dematerialised form (i.e., not in physical certificates but represented by the
statement issued through the electronic mode).
A QIB applying for the Equity Shares to be issued pursuant to the Issue must have at least one beneficiary account with a
Depository Participant of either of the Depositories prior to making the Bid. Allotment to a successful QIB will be credited in
electronic form directly to the beneficiary account (with the Depository Participant) of the QIB.
Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with the Depositories.
The Stock Exchanges have electronic connectivity with the Depositories.
The trading of the Equity Shares would be in dematerialised form only for all QIBs in the respective demat segment of the Stock
Exchanges.
Our Bank will not be responsible or liable for the delay in the credit of the Equity Shares to be issued pursuant to the Issue due to
errors in the Application Form or otherwise on part of the QIBs.
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PLACEMENT
Placement Agreement
The BRLMs have entered into a placement agreement with our Bank (the “Placement Agreement”), pursuant to which the
BRLMs have agreed to manage the Issue and to act as placement agents in connection with the proposed Issue and procure
subscription for Equity Shares to be placed with the QIBs, pursuant to Chapter VIII of the SEBI ICDR Regulations and Section 42
of the Companies Act, 2013.
The Placement Agreement contains customary representations, warranties and indemnities from our Bank and the BRLMs, and it
is subject to termination in accordance with the terms contained therein.
This Placement Document has not been, and will not be, registered as a prospectus with the RoC and, no Equity Shares will be
offered in India or overseas to the public or any members of the public in India or any other class of investors, other than QIBs.
No assurance can be given on liquidity or sustainability of trading market for the Equity Shares (including the Equity Shares) post
the Issue.
Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on BSE and NSE. No
assurance can be given as to the liquidity or sustainability of the trading market for such Equity Shares, the ability of holders of
the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity
Shares.
In connection with the Issue, the BRLMs (or their affiliates) may, for their own accounts, subscribe to the Equity Shares or enter
into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares to be issued pursuant to the Issue
at the same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions,
the BRLMs may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the
Issue and no specific disclosure will be made of such positions.
The BRLMs and their affiliates may engage in transactions with and perform services for our Bank in the ordinary course of
business and have engaged, or may in the future engage, in commercial banking and investment banking transactions with our
Bank, for which they have received compensation and may in the future receive compensation.
Lock-up
The Bank will not, for a period commencing from the date hereof and ending 90 days from the date of Allotment, without the
prior written consent of the BRLMs, directly or indirectly: (a) issue, offer, lend, sell, pledge, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, any Equity Shares (including, without limitation, securities convertible into or exercisable or exchangeable for
Equity Shares) or file any registration statement under the Securities Act, with respect to any of the foregoing; (b) enter into any
swap or other agreement or any transaction that transfers, in whole or in part, any of the economic consequences associated with
the ownership of any of the Equity Shares (including, without limitation, securities convertible into or exercisable or exchangeable
for Equity Shares), regardless of whether any of such transactions are to be settled by the delivery of Equity Shares or such other
securities, in cash or otherwise; (c) deposit Equity Shares (including, without limitation, securities convertible into or exercisable
or exchangeable for Equity Shares) with any depositary in connection with a depositary receipt facility or enter into any
transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity
Shares or such other securities in any depositary receipt facility; or (d) publicly announce any intention to enter into any
transaction falling within (a) to (c) above; provided that the foregoing restrictions do not apply to any sale, transfer or disposition
of Equity Shares (including, without limitation, securities convertible into or exercisable or exchangeable for Equity Shares)
pursuant to (A) the Issue; (B) issue of Equity Shares or other securities pursuant to any scheme of amalgamation or arrangement
or otherwise in connection with any merger or acquisition of securities, business, property or other assets, joint ventures or other
strategic corporate transaction, subject to receipt of prior intimation by each Book Running Lead Manager; or (C) issue of Equity
Shares pursuant to the ESOP – 2010.
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SELLING RESTRICTIONS
The distribution of this Placement Document or any Offer material and the offering, sale or delivery of the Equity Shares is
restricted by law in certain jurisdictions. Therefore, persons who may come into possession of this Placement Document or any
offering material are advised to consult with their own legal advisors as to what restrictions may be applicable to them and to
observe such restrictions. This Placement Document may not be used for the purpose of an offer or invitation in any
circumstances in which such offer or invitation is not authorized. No action has been taken or will be taken that would permit a
public offering of the Equity Shares to occur in any jurisdiction other than India, or the possession, circulation or distribution of
this Placement Document or any other material relating to our Bank or the Equity Shares in any jurisdiction where action for
such purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this
Placement Document nor any offering materials or advertisements in connection with the Equity Shares may be distributed or
published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable
rules and regulations of any such country or jurisdiction.
Australia
The offer of Equity Shares in the Bank is only made in circumstances under which no disclosure is required under Chapter 6D of
the Corporations Act 2001 (Cth) (“Corporations Act”). Nothing in this Placement Document is, or purports to be, an offer to a
person to whom disclosure would be required under Chapter 6D of the Corporations Act.
If the Equity Shares in the Bank are to be on-sold to investors in Australia within 12 months of the issue of the shares in the Bank,
they may only be on-sold to investors in Australia in circumstances where disclosure is not required under Chapter 6D of the
Corporations Act.
This Placement Document is not a disclosure document for the purposes of the Corporations Act. This Offer Document has not
been and will not be lodged with the Australian Securities and Investments Commission (“ASIC”) and does not contain all the
information that a disclosure document is required to contain. The distribution of this Placement Document in Australia has not
been authorised by ASIC or any other regulatory authority in Australia.
This Placement Document is provided for general information purposes only and is not intended to constitute, and does not
constitute, the provision of any financial product advice or recommendation and must not be relied upon as such. This Placement
Document is not intended to influence a person in making a decision in relation to a particular financial product or class of
financial products, or an interest in a particular financial product or class of financial products.
This Placement Document has been prepared without taking account of your objectives, financial situation or needs and you
should obtain independent professional financial advice that considers your circumstances before making any financial or
investment decisions.
There is no cooling-off regime that applies in relation to the acquisition of any Equity Shares in the Bank in Australia.
Bahrain
This Placement Document has been prepared for private information purposes of intended investors only. This Placement
Document is intended to be read by the addressee only. No invitation has been made in or from the Kingdom of Bahrain and there
will be no marketing or offering of the Rights Entitlements or the Equity Shares to any potential investor in Bahrain. All
marketing and offering is made and will be made outside of the Kingdom of Bahrain. The Central Bank of Bahrain or any other
regulatory authority in Bahrain has not reviewed, nor has it approved, this offering document or the marketing of the Equity
Shares and takes no responsibility for the accuracy of the statements and information contained in this Placement Document, nor
shall it have any liability to any person for any loss or damage resulting from reliance on any statements or information contained
herein.
Canada
The Equity Shares may only be offered or sold, directly or indirectly, in the provinces of Alberta, British Columbia, Ontario and
Quebec (the “Private Placement Provinces”) or to residents thereof and not in, or to the residents of, any other province or
territory of Canada. Such offers or sales will be made pursuant to an exemption from the requirement to file a prospectus with the
regulatory authorities in the Private Placement Provinces and will be made only by a dealer duly registered under the applicable
securities laws of such provinces, as the case may be, or in accordance with an exemption from the applicable registered dealer
requirements.
Cayman Islands
This Placement Document does not constitute an invitation or offer to the public in the Cayman Islands of the Equity Shares,
whether by way of sale or subscription. The Equity Shares are not offered or sold, and will not be offered or sold, directly or
indirectly, to the public in the Cayman Islands.
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Dubai International Financial Centre
This Placement Document relates to an "exempt offer" in accordance with the Dubai Financial Services Authority ("DFSA")
Rulebook Markets Module, and which is not subject to any form of regulation or approval by the DFSA.
The DFSA has no responsibility for reviewing or verifying this Placement Document or any other documents in connection with
this offer. Accordingly, the DFSA has not approved this Placement Document or any other associated documents nor taken any
steps to verify the information set out in this Placement Document, and has no responsibility for it. The shares to which this
Placement Document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers should conduct
their own due diligence on the shares.
If you do not understand the contents of this document you should consult an authorised financial adviser.
This Placement Document may only be provided to Professional Clients as defined in the DFSA Rulebook Conduct of Business
Module ("COB Module"). This offer is not directed at Retail Clients as defined in the COB Module.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a
"Relevant Member State"), an offer to the public of any Equity Shares may not be made in that Relevant Member State except
that an offer to the public in that Relevant Member State of any Equity Shares may be made at any time under the following
exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
(a) to legal entities which are qualified investors as defined under the Prospectus Directive;
(b) to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending
Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as
permitted under the Prospectus Directive, subject to obtaining the prior consent of the BRLMs for any such offer; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Equity Shares shall result in a requirement for our Bank or the BRLMs to publish a prospectus
pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an "offer to the public" in relation to any Equity Shares in any Relevant Member
State means the communication in any form and by any means of sufficient information on the terms of the offer and any Equity
Shares to be offered so as to enable an investor to decide to purchase any Equity Shares, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus
Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent
implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and
the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
Hong Kong
This Placement Document has not been delivered for registration to the Registrar of Companies in Hong Kong and its contents
have not been reviewed by any regulatory authority in Hong Kong. Accordingly: (i) the Equity Shares have not been and will not
be offered or sold in Hong Kong, by means of any document, other than to persons who are "professional investors" within the
meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) of Hong Kong and any rules made
thereunder, or in other circumstances which do not result in the document being a "prospectus" within the meaning of the
Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) of Hong Kong or
which do not constitute an offer to the public within the meaning hereof; and (ii) no invitation, advertisement or other document
relating to the Equity Shares has been or may be issued or has been or may be in the possession of any person for the purposes of
issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the
public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Equity
Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within
the meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) of Hong Kong and any rules made
thereunder.
WARNING: The contents of this Placement Document have not been reviewed by any regulatory authority in Hong Kong. You
are advised to exercise caution in relation to the Offer. If you are in any doubt about any of the contents of this document, you
should obtain independent professional advice.
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Japan
The Equity Shares have not been and will not be registered under the Financial Instrument and Exchange Law of Japan (the
"FIEL"). The Equity Shares have not been offered or sold and will not be offered or sold in Japan or to, or for the benefit of, any
resident of Japan (which term shall mean any person resident in Japan or any corporation or other entity organized under the laws
of Japan), or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan,
except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and other
applicable laws, regulations and governmental guidelines in Japan.
Jordan
The Equity Shares are being offered in Jordan on a cross border basis based on one-on-one contacts to no more than thirty
potential investors and accordingly the Equity Shares will not be registered with the Jordanian Securities Commission and a local
prospectus is not required.
Kuwait
This Placement Document is not for general circulation to the public in Kuwait. The Equity Shares have not been licensed for
offering in Kuwait by the Kuwait Capital Markets Authority or any other relevant Kuwaiti government agency. The offering of
the Equity Shares in Kuwait on the basis a private placement or public offering is, therefore, restricted in accordance with Law
No. 7 of 2010 and the bylaws thereto (as amended). No private or public offering of the Equity Shares is being made in Kuwait,
and no agreement relating to the sale of the Equity Shares will be concluded in Kuwait. No marketing or solicitation or
inducement activities are being used to offer or market the Equity Shares in Kuwait.
Mauritius
The Equity Shares are not being offered to the public in Mauritius and nothing in the Placement Document or any information
contained herein may be treated as a prospectus for the purposes of the Securities Act 2005 of Mauritius. The Mauritius Financial
Services Commission (FSC) has neither reviewed nor approved the Placement Document and the Bank does not hold any licence
issued by the FSC. Accordingly, the Placement Document has not been registered with the FSC. Equity Shares are being offered
by way of private placement only to the person to whom such offer has been made.
Only persons licensed by the FSC as, investment dealers, investment advisers or investment bankers conducting activities as an
investment dealer or investment adviser may market and carry out any form of solicitation in Mauritius in respect to the offer,
distribution or sale of the Equity Shares. Where solicitation does not exist, a licensee as distributors of financial products may
distribute the Equity Shares. The Equity Shares may not be offered, distributed or sold, directly or indirectly, in Mauritius, except
as permitted by applicable Mauritius law, including but not limited to Securities Act 2005 of Mauritius.
The Bank has not been authorized (or recognized) and does not intend to seek authorization (or recognition) with the FSC, and the
FSC expresses no opinion as to the matters contained in the Placement Document and as to the merits of an investment in the
Bank. There is no statutory compensation scheme in Mauritius in the event of the Bank's failure.
New Zealand
This Placement Document is not a prospectus. It has not been prepared or registered in accordance with the Securities Act 1978 of
New Zealand (the “New Zealand Securities Act”). This Placement Document is being distributed in New Zealand only to
persons whose principal business is the investment of money or who, in the course of and for the purposes of their business,
habitually invest money, within the meaning of section 3(2)(a)(ii) of the New Zealand Securities Act (“Habitual Investors”). By
accepting this Placement Document, each investor represents and warrants that if they receive this Placement Document in New
Zealand they are a Habitual Investor and you will not disclose this Placement Document to any person who is not also a Habitual
Investor.
Oman
By receiving this Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees
that this Placement Document has not been approved by the Capital Market Authority of Oman (the "CMA") or any other
regulatory body or authority in the Sultanate of Oman (“Oman”), nor have the BRLMs or any placement agent acting on their
behalf received authorisation, licensing or approval from the CMA or any other regulatory authority in Oman, to market, offer,
sell, or distribute interests in the Equity Shares within Oman.
No marketing, offering, selling or distribution of any interests in the Equity Shares has been or will be made from within Oman
and no subscription for any interests in the Equity Shares may or will be consummated within Oman. Neither the BRLMs nor any
placement agent acting on their behalf is a company licensed by the CMA to provide investment advisory, brokerage, or portfolio
management services in Oman, nor a bank licensed by the Central Bank of Oman to provide investment banking services in
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Oman. Neither the BRLM nor any placement agent acting on their behalf advise persons or entities resident or based in Oman as
to the appropriateness of investing in or purchasing or selling securities or other financial products.
Nothing contained in this Placement Document is intended to constitute Omani investment, legal, tax, accounting or other
professional advice. This Placement Document is for your information only, and nothing herein is intended to endorse or
recommend a particular course of action. You should consult with an appropriate professional for specific advice on the basis of
your situation.
State of Qatar (including the Qatar Financial Centre)
This Placement Document is not intended to constitute an offer, sale or delivery of bonds or other debt financing instruments
under the laws of the State of Qatar (including the Qatar Financial Centre) ("Qatar"). The Equity Shares have not been and will
not be registered with the Qatar Stock Exchange, the Qatar Financial Markets Authority, the Qatar Financial Centre, the Qatar
Central Bank or with any other authority pursuant to any laws, regulations and rules in Qatar.
The Equity Shares have not been offered, sold or delivered and will not be offered, sold or delivered, directly or indirectly, in
Qatar, except: (a) in compliance with all applicable laws and regulations of Qatar; and (b) through persons or corporate entities
authorised and licensed to provide investment advice and/or engage in brokerage activity and/or trade in respect of foreign debt
financing instruments in Qatar.
Republic of Korea
The Equity Shares have not been and will not be registered under the Financial Investment Business and Capital Markets Act of
Korea and none of the Equity Shares may be offered or sold, directly or indirectly, in Korea or to any resident of Korea or to any
persons for reoffering or resale, directly or indirectly, in Korea or to any resident of Korea (as defined under the Foreign Exchange
Transaction Act of Korea and its Enforcement Decree) except pursuant to an exemption from the registration requirements of the
Financial Investment Business and Capital Markets Act of Korea available thereunder and/or in compliance with applicable laws
and regulations of Korea.
Saudi Arabia
No action has been or will be taken in the Kingdom of Saudi Arabia that would permit a public offering of the Equity Shares. Any
investor in the Kingdom of Saudi Arabia or who is a Saudi person (a “Saudi Investor”) who acquires any Equity Shares pursuant
to an offering should note that the offer of Equity Shares is a private placement under Article 10 or Article 11 of the “Offers of
Securities Regulations” as issued by the Board of the Capital Market Authority resolution number 2-11-2004 dated October 4,
2004 and amended by the Board of the Capital Market Authority resolution number 1-28-2008 dated August 18, 2008 (the “KSA
Regulations”), through a person authorized by the Capital Market Authority (“CMA”) to carry on the securities activity of
arranging and following a notification to the CMA under the KSA Regulations.
The Equity Shares may thus not be advertised, offered or sold to any person in the Kingdom of Saudi Arabia other than to
“sophisticated investors” under Article 10 of the KSA Regulations or by way of a limited offer under Article 11 of the KSA
Regulations. The International Selling Agents or the Joint Domestic Lead Managing Underwriters represents and agrees, that any
offer of Equity Shares to a Saudi Investor will be made in compliance with the KSA Regulations.
Investors are informed that Article 17 of the KSA Regulations places restrictions on secondary market activity with respect to the
Equity Shares, including as follows:
(i) a Saudi Investor (referred to as a “transferor”) who has acquired Equity Shares pursuant to a private placement may not
offer or sell Equity Shares to any person (referred to as a “transferee”) unless the offer or sale is made through an
authorized person where one of the following requirements is met:
(a) the price to be paid for the Equity Shares in any one transaction is equal to or exceeds Saudi Riyals one million
or an equivalent amount;
(b) the Equity Shares are offered or sold to a sophisticated investor; or
(c) the Equity Shares are being offered or sold in such other circumstances as the CMA may prescribe for these
purposes;
(ii) if the requirement of paragraph (i)(a) above cannot be fulfilled because the price of the Equity Shares being offered or
sold to the transferee has declined since the date of the original private placement, the transferor may offer or sell the
Equity Shares to the transferee if their purchase price during the period of the original private placement was equal to or
exceeded Saudi Riyals 1 million or an equivalent amount;
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(iii) if the requirement in paragraph (ii) above cannot be fulfilled, the transferor may offer or sell Equity Shares if he/she sells
his entire holding of Equity Shares to one transferee; and
(iv) the provisions of paragraphs (i), (ii) and (iii) above shall apply to all subsequent transferees of the Equity Shares.
Singapore
This Placement Document has not been and will not be registered as a prospectus with the Monetary Authority of Singapore.
Accordingly, this Offering Memorandum and any other document or material in connection with the offer or sale, or invitation for
subscription or purchase, of the Equity Shares may not be circulated or distributed, nor may the Equity Shares be offered or sold,
or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to any person in Singapore
other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289 of Singapore)
(the "SFA")) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to
Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified
in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision
of the SFA.
Where the Equity Shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to
hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an
accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of
the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has
acquired the Equity Shares pursuant to an offer made under Section 275 of the SFA except:
(1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising
from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(2) where no consideration is or will be given for the transfer;
(3) where the transfer is by operation of law;
(4) as specified in Section 276(7) of the SFA; or
(5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures)
Regulations 2005 of Singapore.
South Africa
In the Republic South Africa (“South Africa”), the invitations for subscription of Equity Shares to be issued pursuant to this Issue
shall only be made pursuant to this Placement Document together with the Application Form and will only be made by way of
private placement to, and be capable of acceptance only by, persons falling within one of the specified categories set out in section
96(1)(a) or (b) of the South African Companies Act 71 of 2008 (as amended or re-enacted) (the “South African Companies Act”)
and to whom the Issue will be specifically addressed (the “South African Qualifying Investors”) and this Placement Document is
only being made available to and capable of acceptance by such South African Qualifying Investors. The Issue does not constitute
an offer for the sale of or subscription for, or the solicitation of an offer to buy and/or to subscribe for, Equity Shares to the public
as defined in the South African Companies Act and will not be distributed to any person in South Africa in any manner which
could be construed as an offer to the public in terms of the Companies Act.
Should any person who is not a South African Qualifying Investors receive this Placement Document, they should not and will not
be entitled to acquire any Equity Shares or otherwise act thereon. This Placement Document does not, nor is it intended to,
constitute a prospectus prepared and registered under the South African Companies Act. Accordingly, this Placement Document
does not comply with the substance and form requirements for prospectuses set out in the South African Companies Act and the
South African Companies Act Regulations of 2011 and has not been approved by, and/or registered with, the South African
Companies and Intellectual Property Commission, or any other South African authority.
The information contained in this Placement Document constitutes factual information as contemplated in section 1(3)(a) of the
South African Financial Advisory and Intermediary Services Act, No. 37 of 2002 (as amended or re-enacted) and should not be
construed as an express or implied recommendation, guidance or proposal that any particular transaction in respect of the Equity
Shares is appropriate to the particular investment objectives, financial situations or needs of a prospective investor, and nothing in
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this Placement Document should be construed as constituting the canvassing for, or marketing or advertising of, financial services
in South Africa.
Switzerland
The Equity Shares may not be publicly offered in Switzerland. The Placement Document has been prepared without regard to the
disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under the listing rules of the SIX Swiss Exchange or of any other stock exchange or regulated
trading facility in Switzerland. Neither the Placement Document nor any other offering or marketing material relating to the
Equity Shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither the
Placement Document nor any other offering or marketing material relating to the offering, the Issuer or the Equity Shares have
been or will be filed with or approved by any Swiss regulatory authority.
United Arab Emirates (outside the Dubai International Financial Centre)
In the United Arab Emirates (the "UAE") (outside of the financial free zones established pursuant to UAE Federal Law No. 8 of
2004 (the "Financial Free Zones")), the Interests are not subject to regulation under the laws or regulations of the UAE relating
to the issue, offering and sale of shares. Neither the securities nor this Placement Document have been approved by the Securities
and Commodities Authority of the UAE (the "SCA"), the Central Bank of the UAE or any other regulatory authority in the UAE
(outside of the Financial Free Zones). In particular, this Placement Document has not been approved pursuant to Board Resolution
No. 11 of 2016 on the Regulation of the Offering and Issuance of Stocks of Public Joint Stock Companies issued by the SCA (as
amended) (the "Offer of Securities Regulation"). In addition, this Placement Document does not constitute or contain an offer of
shares to the general public in the UAE and the shares will not be registered under UAE Federal Law No. 4 of 2000 concerning
the SCA and will not be admitted to trading on a securities exchange in the UAE (outside of the Financial Free Zones).
Accordingly, this Placement Document is not intended for circulation or distribution in or into the UAE (outside of the Financial
Free Zones), other than to persons in the UAE to whom such circulation or distribution is permitted by, or is exempt from the
requirements of, the Offer of Securities Regulation, the SCA's Board of Directors Decision No. 3 of 2017 Concerning the
Organization of Promotion and Introduction, and other applicable UAE laws and regulations.
It should not be assumed that the placement agent, if any, is a licensed broker, dealer or investment advisor under the laws
applicable in the United Arab Emirates and the SCA regulations, or that it advises individuals resident in the United Arab
Emirates as to the appropriateness of investing in or purchasing or selling the securities or other financial products. Nothing
contained in this Placement Document is intended to constitute investment, legal, tax, accounting or other professional advice.
This Placement Document is for your information only and nothing in this Placement Document is intended to endorse or
recommend a particular course of action. Any person considering acquiring the shares should consult with an appropriate
professional for specific advice rendered based on their personal situation.
United Kingdom
In the United Kingdom, this Placement Document is only addressed to and directed to Qualified Investors who are (i) investment
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
"FP Order"), (ii) high net worth companies and other persons falling within Article 49(2)(a) to (d) of the FP Order or (iii) other
persons who fall within an exemption in the FP Order can lawfully be communicated. The persons specified in (i), (ii) and (iii)
above are collectively referred to as "Relevant Persons". The securities described herein are only available in the United
Kingdom to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities in the United
Kingdom will be engaged in only with, Relevant Persons. Any person in the United Kingdom who is not a Relevant Person should
not act or rely on this Prospectus or any of its contents.
United States
The Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended and may
not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S
under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United
States only to persons who are qualified institutional buyers (as defined in Rule 144A under the Securities Act and referred to in
this Placement Document as “U.S. QIBs”), and (b) outside the United States only in an “offshore transaction” in reliance on
Regulation S.
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TRANSFER RESTRICTIONS AND PURCHASER REPRESENTATIONS
Bidders are advised to consult with legal counsel prior to purchasing any Equity Shares or making any resale, pledge or transfer
of such Equity Shares.
The Equity Shares Allotted in the Issue are not permitted to be sold for a period of one year from the date of Allotment, except on
the Stock Exchanges. Due to the following restrictions, investors are advised to consult legal counsel prior to making any resale,
pledge or transfer of the Equity Shares, except if the resale of the Equity Shares is by way of a regular sale on the Stock
Exchanges.
The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and the applicable securities laws
of all states and other jurisdictions of the United States.
Each purchaser of the Equity Shares in the United States is deemed to have represented, agreed and acknowledged as follows:
1. You confirm that:
a. you are a “qualified institutional buyer” (as defined in Rule 144A under the U.S. Securities Act);
b. you are not a broker-dealer which owns and invests on a discretionary basis less than US$25 million in
securities of unaffiliated companies;
c. you were not formed for the purpose of investing in our Bank; and
d. you are not an affiliate of our Bank or a person acting on behalf of an affiliate of our Bank.
2. You are an institution that, in the normal course of business, invests in or purchases securities similar to the Equity
Shares, you are not purchasing the Equity Shares with a view to distribution, and you, and any accounts for which you
are acting, (a) are a sophisticated investor that has sufficient knowledge and experience in financial and business matters
to be capable of evaluating the merits and risks of its investment in the Equity Shares and (b) are able to bear the
economic risk, and sustain a complete loss, of such investment in the Equity Shares. If you are acquiring the Equity
Shares as a fiduciary or agent for one or more investor accounts,
a. each such account is a “qualified institutional buyer” (as defined in Rule 144A under the U.S. Securities Act);
b. you have sole investment discretion with respect to each account; and
c. you have full power and authority to make, and do make, the representations, warranties, agreements,
undertakings and acknowledgements contained herein on behalf of each such account.
3. You will base your investment decision on a copy of this Placement Document, as amended or supplemented from time
to time. You acknowledge that neither our Bank nor any of its affiliates nor any other person (including the BRLMs) or
any of their respective affiliates have made or will make any representations, express or implied, to you with respect to
our Bank, the Issue, the Equity Shares or the accuracy, completeness or adequacy of any financial or other information
concerning our Bank, the Issue or the Equity Shares, other than (in the case of our Bank and its affiliates only) the
information contained in this Placement Document. You acknowledge that you have not relied on and will not rely on
any investigation by, or on any information contained in any research reports prepared by, the BRLMs or any of their
respective affiliates.
4. You understand that our Bank, for U.S. federal income tax purposes, may be considered a “passive foreign investment
company” for the current taxable year and that there will be certain consequences under U.S. tax laws resulting from an
investment in the Equity Shares, and you will make such investigation and consult such tax and other advisors with
respect thereto as you deem appropriate. You will satisfy yourself concerning, without limitation, the effects of U.S.
federal, state and local income tax laws and foreign tax laws on your investment in the Equity Shares.
5. Any Equity Shares you acquire will be for your own account (or for the account of an investor who is a “qualified
institutional buyer” as to which you exercise sole investment discretion and have authority to make, and do make, the
statements contained in this document) for investment purposes, and not with a view to the resale or distribution within
the meaning of the U.S. federal securities laws, subject to the understanding that the disposition of its property shall at all
times be and remain within its control.
187
6. You understand that the Equity Shares are being offered in a transaction not involving any public offering in the United
States within the meaning of the U.S. Securities Act, that the Equity Shares have not been and will not be registered
under the U.S. Securities Act or under the securities laws of any state or other jurisdiction of the United States.
7. You acknowledge and agree that you are not purchasing the Equity Shares as a result of any general solicitation or
general advertising (as defined in Regulation D) or directed selling efforts (as defined in Regulation S).
8. You understand that the Equity Shares will be “restricted securities” within the meaning of Rule 144(a)(3) under the U.S.
Securities Act, and you agree that such securities may not be deposited into any unrestricted depository facility
established or maintained by any depository bank.
9. You agree, on your own behalf and on behalf of any accounts for which you are acting, that you will not reoffer, resell,
pledge or otherwise transfer the Equity Shares, except in an offshore transaction on a recognized Indian stock exchange
in compliance with Regulation S, or pursuant to an applicable exemption from the registration requirements of the U.S.
Securities Act.
10. You agree that, prior to any sale of the Equity Shares, you shall notify the purchaser of such Equity Shares or the
executing broker, as applicable, (a) of any transfer restrictions that are applicable to the Equity Shares being sold, and (b)
that the Equity Shares have not been and will not be registered under the U.S. Securities Act.
11. You acknowledge that neither our Bank nor any of its affiliates nor any other person (including the BRLMs) or any of
their respective affiliates have made or will make any representations as to the availability of the exemption provided by
Rule 144 and Rule 144A for the resale of the Equity Shares, nor the availability of any other exemptions from the
registration requirements of the U.S. Securities Act for the resale of the Equity Shares.
12. You understand and acknowledge that our Bank shall have no obligation to recognize any offer, sale, pledge or other
transfer made other than in compliance with the restrictions on transfer set forth and described herein and that our Bank
may make notation on its records or give instructions to any transfer agent of the Equity Shares.
13. You understand that the foregoing representations, warranties, agreements, undertakings and acknowledgements are
required in connection with United States and other securities laws and that our Bank and its respective affiliates, and
others are entitled to rely upon the truth and accuracy of the representations, warranties, agreements, undertakings or
acknowledgements contained herein. You agree that if any of the representations, warranties, agreements, undertakings
and acknowledgements made herein are no longer accurate, you shall promptly notify our Bank and the BRLMs in
writing. All representations, warranties, agreements, undertakings and acknowledgements you have made in this
document shall survive the execution and delivery hereof.
Each other purchaser of the Equity Shares is deemed to have represented, agreed and acknowledged as follows:
1. You are outside the United States and are purchasing the Equity Shares in an “offshore transaction” as defined in
Regulation S.
2. You are not an affiliate of our Bank or a person acting on behalf of an affiliate of our Bank.
3. You are not purchasing the Equity Shares as a result of any directed selling efforts (as defined in Regulation S), or any
general solicitation or general advertising (as defined in Regulation D).
4. You will base your investment decision on a copy of this Placement Document. You acknowledge that neither our Bank
nor any of its affiliates nor any other person (including the BRLMs) or any of their respective affiliates have made or will
make any representations, express or implied, to you with respect to our Bank, the Issue, the Equity Shares or the
accuracy, completeness or adequacy of any financial or other information concerning our Bank, the Issue or the Equity
Shares, other than (in the case of our Bank and its affiliates only) the information contained in this Placement Document.
You acknowledge that you have not relied on and will not rely on any investigation by, or on any information contained
in any research reports prepared by, the BRLMs or any of their respective affiliates.
5. You understand that our Bank, for U.S. federal income tax purposes, may be considered a “passive foreign investment
company” for the current taxable year and that there will be certain consequences under U.S. tax laws resulting from an
investment in the Equity Shares, and you will make such investigation and consult such tax and other advisors with
respect thereto as you deem appropriate. You will satisfy yourself concerning, without limitation, the effects of U.S.
federal, state and local income tax laws and foreign tax laws on your investment in the Equity Shares.
6. You acknowledge (or if acting for the account of another person, such person has confirmed that they acknowledge) that
the Equity Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory
authority of any state or other jurisdiction of the United States.
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7. You agree, on your own behalf and on behalf of any accounts for which you are acting, that you will not reoffer, resell,
pledge or otherwise transfer the Equity Shares, except in an offshore transaction on a recognized Indian stock exchange
in compliance with Regulation S.
8. None of you, any of your affiliates nor any person acting on behalf of you or any of your affiliates, has made or shall
make any directed selling efforts (as defined in Regulation S), or any general solicitation or general advertising (as
defined in Regulation D), with respect to the Equity Shares.
9. You agree that, prior to any sale of the Equity Shares, you shall notify the purchaser of such Equity Shares or the
executing broker, as applicable, (a) of any transfer restrictions that are applicable to the Equity Shares being sold, and (b)
that the Equity Shares have not been and will not be registered under the U.S. Securities Act.
10. You understand and acknowledge that our Bank shall have no obligation to recognize any offer, sale, pledge or other
transfer made other than in compliance with the restrictions on transfer set forth and described herein and that our Bank
may make notation on its records or give instructions to any transfer agent of the Equity Shares.
11. You understand that the foregoing representations, warranties, agreements, undertakings and acknowledgements are
required in connection with United States and other securities laws and that our Bank, the BRLMs and their respective
affiliates, and others are entitled to rely upon the truth and accuracy of the representations, warranties, agreements,
undertakings or acknowledgements contained herein. You agree that if any of the representations, warranties,
agreements, undertakings and acknowledgements made herein are no longer accurate, you shall promptly notify our
Bank and the BRLMs in writing. All representations, warranties, agreements, undertakings and acknowledgements you
have made in this document shall survive the execution and delivery hereof.
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THE SECURITIES MARKET OF INDIA
The information in this section has been extracted from documents available on the website of SEBI and the Stock Exchanges and
has not been prepared or independently verified by our Bank or the BRLMs or any of their respective affiliates or advisors.
The Indian Securities Market
India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai.
Stock Exchange Regulation
Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the Ministry of Finance,
Capital Markets Division, under the SCRA and the SCRR. SEBI, in exercise of its powers under the SCRA and the SEBI Act,
notified the SCR (SECC) Regulations on June 20, 2012, which regulate inter alia the recognition, ownership and internal
governance of stock exchanges and clearing corporations in India together with providing for minimum capitalisation
requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Regulations along with various rules, bye-laws and
regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership
thereof and the manner, in which contracts are entered into, settled and enforced between members of the stock exchanges.
The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and intermediaries in the
capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent and unfair trade practices. Regulations
concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider
trading, substantial acquisitions of shares and takeover of companies, buy-backs of securities, employee stock option schemes,
stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional investors, credit rating agencies and other capital
market participants have been notified by the relevant regulatory authority.
Listing and Delisting of Securities
The listing of securities on a recognised Indian stock exchange is regulated by applicable Indian law including the Companies Act,
the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued by the SEBI, the listing agreements entered into
by our Bank with the Stock Exchanges and the SEBI Listing Regulations. The SCRA empowers the governing body of each
recognised stock exchange to suspend trading of or withdraw admission to dealings in a listed security for breach of or non
compliance with any conditions or breach of company’s obligations under the Listing Regulations or for any reason, subject to the
issuer receiving prior written notice of the intent of the exchange and upon granting of a hearing in the matter. SEBI also has the
power to amend the bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw
recognition of a recognised stock exchange.
SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in relation to the
voluntary and compulsory delisting of equity shares from the stock exchanges. In addition, certain amendments to the SCRR have
also been notified in relation to delisting.
Minimum Level of Public Shareholding
Pursuant to an amendment of the SCRR in June 2010, all listed companies (except public sector undertakings) were required to
maintain a minimum public shareholding of 25%. However, pursuant to a subsequent amendment to the SCRR, a public company,
including public sector undertakings, seeking to get a particular class or kind of securities listed shall offer and allot to the public
(i) at least 25% of such class or kind of securities issued by the company, if the post issue capital is less than or equal to
`1,600,00,00,000, (ii) at least such percentage of such class or kind of securities issued by the company equivalent to
`4,00,00,00,000, if the post issue capital of the company is more than `16,000,000,000 but less than or equal to `40,00,00,00,000
or (iii) at least 10% of such class or kind of securities issued by the company, if the post issue capital of the company is above
`40,00,00,00,000. In case of (ii) and (iii) above, the public shareholding is required to be increased to 25% within a period of three
years from the date of listing of the securities. In this regard, SEBI has provided several mechanisms to comply with this
requirement. Where the public shareholding in a listed company falls below 25% at any time, such company shall bring the public
shareholding to 25% within a maximum period of 12 months from the date of such the public shareholding having fallen below
the 25% threshold.
Index-Based Market-Wide Circuit Breaker System
In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to apply daily circuit
breakers which do not allow transactions beyond a certain level of price volatility. The index-based market-wide circuit breaker
system (equity and equity derivatives) applies at three stages of the index movement, at 10%, 15% and 20%. These circuit
breakers, when triggered, bring about a co-ordinated trading halt in all equity and equity derivative markets nationwide. The
market-wide circuit breakers are triggered by movement of either the SENSEX of BSE or the CNX NIFTY of NSE, whichever is
breached earlier.
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In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise price bands of 20%
movements either up or down. However, no price bands are applicable on scrips on which derivative products are available or
scrips included in indices on which derivative products are available.
The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility. Margin
requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.
BSE
Established in 1875, it is the oldest stock exchange in India. The BSE became the first stock exchange in India to obtain
permanent recognition from the Government under the SCRA. It has evolved over the years into its present status as one of the
premier stock exchanges of India.
NSE
NSE was established by financial institutions and banks to provide nationwide online, satellite-linked, screen-based trading
facilities with market-makers and electronic clearing and settlement for securities including government securities, debentures,
public sector bonds and units. It has evolved over the years into its present status as one of the premier stock exchanges of India.
NSE was recognised as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market
segment in June 1994. The capital market (equities) segment commenced operations in November 1994 and operations in the
derivatives segment commenced in June 2000.
Internet-based Securities Trading and Services
Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution.
Stockbrokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have
to comply with certain minimum conditions stipulated by SEBI. NSE became the first exchange to grant approval to its members
for providing internet-based trading services. Internet trading is possible on both the “equities” as well as the “derivatives”
segments of NSE.
Trading Hours
Trading on both NSE and BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST (excluding the 15 minutes
pre-open session from 9:00 a.m. to 9:15 a.m.). BSE and NSE are closed on public holidays. The recognised stock exchanges have
been permitted to set their own trading hours (in the cash and derivatives segments) subject to the condition that (i) the trading
hours are between 9:00 a.m. and 5:00 p.m.; and (ii) the stock exchange has in place a risk management system and infrastructure
commensurate to the trading hours.
Trading Procedure
In order to facilitate smooth transactions, BSE replaced its open outcry system with BSE On-line Trading facility in 1995. This
totally automated screen based trading in securities was put into practice nation-wide. This has enhanced transparency in dealings
and has assisted considerably in smoothening settlement cycles and improving efficiency in back-office work.
NSE has introduced a fully automated trading system called National Exchange for Automated Trading (“NEAT”), which
operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth in the market by enabling large
number of members all over India to trade simultaneously, narrowing the spreads.
Takeover Regulations
Disclosure and mandatory bid obligations for listed Indian companies are governed by the Takeover Regulations which provide
specific regulations in relation to substantial acquisition of shares and takeover. Since we are an Indian listed company, the
provisions of the Takeover Regulations apply to us.
Insider Trading Regulations
The Insider Trading Regulations have been notified to prohibit and penalise insider trading in India.
An insider is, inter alia, prohibited from trading in securities of a listed or proposed to be listed company when in possession of
unpublished price sensitive information (“UPSI”) and to provide access to any person including other insiders to the above
referred UPSI except where such communication is for legitimate purposes, performance of duties or discharge of legal
obligations. UPSI shall include any information, relating to a company or its securities, directly or indirectly, that is not generally
available which upon becoming generally available, is likely to materially affect the price of the securities.
191
The Insider Trading Regulations also provide disclosure obligations for promoters, directors, senior management personnel and
employees, with respect to their shareholding in a company, and the changes therein. The definition of “insider” means any person
who is a connected person or is in possession of or having access to unpublished price sensitive information. The terms
“connected person” means any person who is or has during the six months prior to the concerned act been associated with a
company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or by being in any
contractual, fiduciary or employment relationship or by being a director, officer or an employee of the company or holds any
position including a professional or business relationship between himself and the company whether temporary or permanent, that
allows such person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow
such access.
The board of directors of all listed companies are required to formulate and publish on the company’s website a code of procedure
for fair disclosure of UPSI along with a code of conduct for its employees for compliances with the Insider Trading Regulations.
Depositories
The Depositories Act provides a legal framework for the establishment of depositories to record ownership details and effect
transfer in book-entry form. Further, SEBI framed regulations in relation to the registration of such depositories, the registration of
participants as well as the rights and obligations of the depositories, participants, companies and beneficial owners. The depository
system has significantly improved the operation of the Indian securities markets.
Derivatives (Futures and Options)
Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and
derivatives contracts were included within the term “securities”, as defined by the SCRA. Trading in derivatives in India takes
place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The
derivatives exchange or derivatives segment of a stock exchange functions as a self-regulatory organisation under the supervision
of the SEBI.
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DESCRIPTION OF THE EQUITY SHARES
The following is information relating to the Equity Shares including a brief summary of the Memorandum and Articles of
Association, the Companies Act, 1956 and the Companies Act, 2013. Bidders are urged to read the Memorandum of Association
and Articles of Association carefully, and consult with their advisers, as the Memorandum of Association and Articles of
Association and applicable Indian law, and not this summary, govern the rights attached to the Equity Shares.
Authorised Capital
The authorised share capital of our Bank is `5,000,000,000 divided into 2,500,000,000 Equity Shares of `2 each.
Dividends
Subject to the provisions of the Banking Regulation Act and other applicable law, a company pays dividends upon a
recommendation by its board of directors and approval by a majority of its shareholders at the AGM of shareholders. Dividends
are declared on per share basis and distributed and paid to shareholders. The Companies Act provides that shares of a company of
the same class must receive equal dividend treatment. These distributions and payments are required to be deposited into a
separate bank account within five days of the declaration of such dividend and paid to shareholders within 30 days of the AGM
where the resolution for declaration of dividends is approved.
The Companies Act states that any dividends that remain unpaid or unclaimed after that period is to be transferred to a special
bank account called the dividend unpaid account. Any money that remains unclaimed for seven years from the date of the transfer
is to be transferred by our Bank to a fund, called the Investor Education and Protection Fund, created by the Government of India.
The Articles authorise our Board of Directors to declare interim dividends, which may be declared at any time and shall be set off
against the final dividend for the relevant period. Further, the Bank shall, before declaring any dividend for each year, transfer to
the reserve fund, an amount in accordance with the Articles of Association of the Bank and subject to the provisions of the
Companies Act and the Banking Regulation Act.
Bonus Shares
In addition to permitting dividends to be paid out of current or retained earnings calculated under Indian GAAP, the Companies
Act permits our Board of Directors, subject to the approval of our Shareholders, to distribute to our Shareholders, in the form of
fully paid-up bonus shares or sweat equity shares, an amount transferred from our Bank’s profits or reserves in accordance with
the Articles of Association, the Companies Act and the Banking Regulation Act.
Bonus shares can only be issued if our Bank has not defaulted in payments of statutory dues of the employees, such as,
contribution to provident fund, gratuity and bonus or principal or interest payments on fixed deposits or debt securities issued by
it. Bonus shares may not be issued in lieu of dividend. Further, listed companies are also required to follow the SEBI ICDR
Regulations for issuance of bonus shares.
Pre-Emptive Rights and Issue of Additional Shares
Subject to the provisions of the Companies Act, the Banking Regulations Act and other guidelines as may be issued by RBI, our
Bank may increase its share capital by issuing new shares on such terms and with such rights as it may determine. According to
Section 62 of the Companies Act, 2013, such new shares shall be offered to existing shareholders in proportion to the amount paid
up on those shares at that date. The offer shall be made by notice specifying the number of shares offered and the date (being not
less than 15 days and not exceeding 30 days from the date of the offer) within which the offer, if not accepted, will be deemed to
have been declined. After such date our Board of Directors may dispose of the shares offered in respect of which no acceptance
has been received which shall not be disadvantageous to our Shareholders. The offer is deemed to include a right exercisable by
the person concerned to renounce the shares offered to him in favour of any other person subject to the provisions of FEMA 20, if
applicable.
Under the provisions of Section 62(1)(c) of the Companies Act, 2013, new shares may be offered to any persons whether or not
those persons include existing shareholders, either for cash or for a consideration other than cash, in the event a special resolution
to that effect is passed by our shareholders in a general meeting. In addition, our Bank will also be required to comply with the
SEBI ICDR Regulations.
General Meetings of our Shareholders
There are two types of General Meetings of our Shareholders:
AGM and;
EGM.
193
Our Bank must hold its AGM within six months after the expiry of each financial year provided that not more than 15 months
shall elapse between the AGM and next one, unless extended by the Registrar of Companies at its request for any special reason
for a period not exceeding three months. Our Board of Directors may convene an EGM when necessary and is required to call an
EGM at the request of shareholder(s) holding in the aggregate not less than one tenth of our Bank’s paid-up share capital (carrying
a right to vote in respect of the relevant matter on the date of receipt of the requisition).
Notices, either in writing or through electronic mode, convening a meeting setting out the date, day, hour, place and agenda of the
meeting must be given to members at least 21 clear days prior to the date of the proposed meeting. A general meeting may be
called after giving shorter notice if consent is received, in writing or electronic mode, from not less than 95.00% of the
shareholders entitled to vote. Unless the Articles of Association provide for a larger number, (i) five shareholders present in
person, if the number of shareholders as on the date of meeting is not more than 1,000; (ii) 15 shareholders present in person, if
the number of shareholders as on the date of the meeting is more than 1,000 but up to 5,000; and (iii) 30 shareholders present in
person, if the number of shareholders as on the date of meeting exceeds 5,000, shall constitute a quorum for a general meeting of
our Bank, whether AGM or EGM. The quorum requirements applicable to shareholder meetings under the Companies Act have to
be physically complied with.
A company intending to pass a resolution relating to matters such as, but not limited to, amendment in the objects clause of the
memorandum of association, the issuing of shares with different voting or dividend rights, a variation of the rights attached to a
class of shares or debentures or other securities, buy-back of shares, giving loans or extending guarantees in excess of limits
prescribed, is required to obtain the resolution passed by means of a postal ballot instead of transacting the business in the
company’s general meeting. A notice to all the shareholders shall be sent along with a draft resolution explaining the reasons
therefore and requesting them to send their assent or dissent in writing on a postal ballot within a period of 30 days from the date
of posting the letter. Postal ballot includes voting by electronic mode.
Voting Rights
Section 108 of the Companies Act and Rule 20 of the Companies (Management and Administration) Rules, 2014 deal with the
exercise of right to vote by members by electronic means. In terms of Rule 20, every listed company (other than a company
referred to in Chapters XB or XC of the SEBI ICDR Regulations) is required to provide to its members facility to exercise their
right to vote at general meetings by electronic means. The Ministry of Corporate Affairs, has clarified that voting by show of
hands would not be allowable in cases where Rule 20 is applicable. Section 12 of the Banking Regulation Act provides that no
shareholder shall exercise voting rights in excess of such percentage of the total voting rights of all the shareholders.
Transfer of shares
Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with the
regulations laid down by SEBI. These regulations provide the regime for the functioning of the depositories and the participants
and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system.
Transfers of beneficial ownership of shares held through a depository are exempt from stamp duty. Our Bank has entered into an
agreement for such depository services with the NSDL and CDSL. SEBI requires that the shares for trading and settlement
purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions
that are not required to be reported to the stock exchange. Our Bank shall keep an electronic book in which every transfer or
transmission of shares will be maintained.
Our Bank may, however, decline to register a transfer if not approved by RBI, wherever such approval is required in accordance
with the Banking Regulation Act and any guidelines that may be issued by RBI.
194
STATEMENT OF TAX BENEFITS
STATEMENT OF POSSIBLE SPECIAL TAX BENEFITS AVAILABLE TO THE BANK AND ITS SHAREHOLDERS
UNDER THE APPLICABLE LAWS IN INDIA
To,
The Board of Directors
The Federal Bank Limited
Federal Towers, Post Box No. 103
Aluva, Ernakulam 683101
Kerala, India
Dear Sirs,
Sub: Proposed Qualified Institutions Placement of equity shares of face value of Rs. 2 each (“Equity Shares”) by
The Federal Bank Limited (the “Bank”), pursuant to Chapter VIII of the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended and Section 42 and 62 of
the Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules,
2014, as amended (“Issue”).
We hereby confirm that the enclosed annexure states the current position of special/general tax benefits available to the Bank and
to its shareholders as per the provisions of the Income-tax Act 1961 (as amended by Finance Act, 2017) (the “Act”), as applicable
to the assessment year 2018-19 relevant to the financial year 2017-18.. These benefits are dependent on the Bank or its
shareholders fulfilling the conditions prescribed under the relevant provisions of the Act. Hence, the ability of the Bank or its
shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives, the
Bank may or may not choose to fulfill.
The benefits discussed in the enclosed Annexure are not exhaustive. We are informed that this statement is only intended to
provide general information to the investors and hence is neither designed nor intended to be a substitute for professional tax
advice.
Our confirmation is based on the information, explanations and representations obtained from the Bank and on the basis of our
understanding of the business activities and operations of the Bank.
We do not express any opinion or provide any assurance as to whether:
(i) the Bank or its shareholders will continue to obtain these benefits in future; or
(ii) the conditions prescribed for availing the benefits, where applicable have been/would be met; or
(iii) The revenue authorities/courts will concur with the views expressed herein.
In view of the individual nature of the Tax consequences and the changing tax laws, each investor is advised to consult their own
tax consultant with respect to the specific tax implications arising out of their participation in the Offer. We are neither suggesting
nor are we advising the investor to invest money or not to invest money based on this statement.
The enclosed statement is issued in connection with the Issue and the contents of the statements, in full or in part, can be disclosed
in the Preliminary Placement Document, the Placement Document and other documents or materials in relation to the Issue (the
“Offering Documents”). This letter and the statement can be shared with and relied on, as necessary, by the respective advisors
of the Bank and the Book Running Lead Managers, intermediaries appointed in connection with the Issue. Further, this letter and
the statement may be submitted to the stock exchanges or any other regulatory or statutory authority, as may be required provided
that the below statement of limitation is included in the Offer Documents
“LIMITATIONS
Our views expressed in the statement enclosed are based on the facts and assumptions indicated above. No assurance is given that
the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law
and its interpretation, which are subject to change from time to time.
We do not assume responsibility to update the views consequent to such changes. Reliance on the statement is on the express
understanding that we do not assume responsibility towards the investors who may or may not invest in the Offer relying on the
statement.
This statement has been prepared solely in connection with the Offer under the Regulations as amended.”
Any capitalised term that has not been defined shall have the meaning attributed to it in the Preliminary Placement Document/
Placement Document prepared/ to be prepared in connection with the Issue.
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STATEMENT OF INCOME TAX BENEFITS
A. This statement has been prepared solely in connection with the Offer under the Regulations as amended.
B. This statement covers only certain relevant direct tax law benefits and does not cover any indirect tax law benefits or benefits
under any other law.
C. The information provided below sets out the possible Income-tax benefits available to the shareholders of The Federal Bank
Ltd. (the Issuer) in a summary manner only and is not a complete analysis or listing of all potential tax
considerations/consequences of the subscription, ownership and disposal of the Equity Shares of the Issuer, under the current
Income-tax laws presently in force in India. The Income-tax benefits mentioned in this document are subject to the specific
conditions mentioned in the respective section and / or the related rules or guidelines. Several of these benefits are dependent
on the shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of any shareholder to
derive the Tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future,
it may choose not to fulfil.
D. The overview provided below is not exhaustive or comprehensive and is not intended to be a substitute for professional advice.
Investors are advised to consult their own tax consultants and advisors with respect to the Tax implications of an investment in
the Equity Shares of the Issuer, particularly in view of certain recently enacted legislation which may not have a direct legal
precedent or may have a different interpretation on the benefits which can be availed.
LIMITATION
Our views expressed in the statement enclosed are based on the facts and assumptions indicated above. No assurance is given that
the revenue authorities/ courts will concur with the views expressed herein. Our views are based on the existing provisions of law
and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views
consequent to such changes. Reliance on the statement is on the express understanding that we do not assume responsibility
towards the investors who may or may not invest in the Offer relying on the statement.
INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX CONSULTANT WITH RESPECT TO THE INCOME TAX
IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN
THEIR PARTICULAR SITUATION
E. The law stated below is as per the Income-tax Act, 1961 (“Act”) as amended by the Finance (No. 2) Act, 2017. “Tax” referred
in this statement means Income-Tax, unless specified otherwise.
F. The Government has introduced major reforms in Income-tax laws by introducing provisions relating to (a) General Anti-
Avoidance Rules (“GAAR”) and Place of Effective Management (“POEM”).
a) GAAR: The provisions of Chapter X-A (sections 95 to 102) of the Act are applicable in respect of Assessment Year 2018-
19 (Financial Year 2017-18) and onwards. The GAAR provisions intend to declare an arrangement as “impermissible
avoidance arrangement”, if any arrangement, the main purpose of which is to obtain a Tax benefit and which satisfies at
least one of the following tests (i) creates rights, or obligations, which are not ordinarily created between persons
dealing at arm’s length; (ii) results, directly or indirectly, in misuse, or abuse, of the provisions of the Act; (iii) lacks
commercial substance or is deemed to lack commercial substance, in whole or in part; or (iv) is entered into, or carried
out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. If GAAR provisions are
invoked, the tax authorities will have wide powers, including denial of Income-tax benefit or a benefit under a tax treaty.
b) POEM: The provisions of Section 6 (3) of the Act is applicable with effect from Assessment Year 2017-18. As per the
stated provision, a company is said to be a resident in India in any year if it is an Indian Company or its place of
effective management in that year is in India. ‘Place of Effective Management’ means a place where key management
and commercial decisions that are necessary for the conduct of business of an entity, as a whole, are in substance made.
Central Board of Direct Taxes (CBDT) has issued certain guiding principles for determination of POEM of a Company.
Thus, if a foreign company is considered to have PoEM in India, then it would become a tax resident in India and
consequently its global income would become taxable in India.
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STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO THE COMPANY AND TO ITS
SHAREHOLDERS
I. INCOME-TAX ACT, 1961
A. TAX BENEFIT TO THE BANK
1. Dividends
a Dividends from domestic companies are exempt from Tax in accordance with and subject to the provisions of Section
10 (34) read with Section 115-O.
b As per Section 94(7), losses arising from sale/transfer of shares, where such shares are purchased within 3 months
prior to the record date and sold within 3 months from the record date, will be disallowed to the extent such loss does
not exceed the amount of dividend claimed as exempt.
c No credit can be claimed in respect of the Dividend Distribution Tax (“DDT”) paid by the Company.
d Section 14A restricts claim for deduction of expenses incurred in relation to incomes which do not form part of the
total income under the Act. Thus, any expenditure incurred to earn Tax exempt income is not tax deductible.
e Dividend received by Indian company from specified foreign company (in which it has shareholding of 26% or more)
is taxable @ 15% (plus applicable surcharge, education cess and higher education cess) as per Section 115BBD of the
Act.
f As per section 115-O of the Act, tax on distributed profits of domestic companies is chargeable to tax @ 15% (plus
applicable surcharge, education cess and higher education cess). As per sub-section (1A) to section 115-O, the
domestic Company will be allowed to set-off the dividend received from its subsidiary company during the financial
year against the dividend distributed by it, while computing the DDT if:
i. the dividend is received from its domestic subsidiary and the subsidiary has paid the DDT payable on such
dividend; or
ii. the dividend is received from a foreign subsidiary, the Company has paid tax payable under section 115BBD.
However, the same amount of dividend shall not be taken into account for reduction more than once.
g Further, the net distributed profits shall be increased to such amount as would, after reduction of the tax on such
increased amounts at the specified rate, be equal to the net distributed profits.
2. Income earned from investment in units of mutual fund:
a Income earned from investment in units of mutual fund specified under Section 10(23D) or income received in
respect of units from the administrator of the specified undertaking or income received in respect of units from the
specified company is exempt from Tax under Section 10(35), subject to specified conditions.
b As per Section 94(7), losses arising from the sale/ redemption of units of mutual funds purchased within 3 months
prior to the record date (for entitlement to receive income) and sold within 9 months from the record date, will be
disallowed to the extent such loss does not exceed the amount of income claimed exempt.
c Under Section 94(8), losses arising from sale/ transfer of units of mutual funds, where such units are purchased within
3 months prior to the record date and additional units are allotted without payment based on holdings on such date
and all or any unit initially purchased are sold within 9 months from the record date while continuing to hold all or
any additional units, will be ignored for computing chargeable income. Such loss ignored will be considered as the
cost of acquisition of the additional units held on the date of sale/transfer.
3. Interest and other income
a Under Section 10(15) subject to specified conditions, income by way of interest, premium on redemption or other
payment on notified securities, bonds, certificates issued by the Central Government is exempt from Tax.
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b Interest income on certain categories of bad and doubtful debts, as specified in Rule 6EA of the Income-tax Rules,
1962, is chargeable to Tax only in the year of receipt or credit to the Profit & Loss Account of the Bank, whichever is
earlier, in accordance with the provisions of Section 43D.
c Under section 10(34A) of the Act, any income arising to the shareholder on account of buy back of shares (not being
shares listed on a recognised stock exchange in India) referred in section 115QA is exempt from Tax.
4. Capital Gains:
1 Capital assets may be categorised into short-term capital assets or long term capital assets based on the period of
holding. Capital assets being shares listed on a recognised Stock Exchange in India held for a period of more than 12
months and shares (other than listed) held for more than 24 months are considered as long term capital assets.
Consequently, capital gains arising on sale of these assets held for more than 12 months/ 24 months, as the case may
be, are considered as Long-term Capital Gain (“LTCG”). Capital gains arising on sale of these assets held for 12
months/ 24 months or less are considered as Short-term Capital Gain (“STCG”).
2 Under section 111A, STCG, as defined in section 2(42B), arising on the transfer of equity shares would be taxed @
15% (plus applicable surcharge and education cess), where the sale is made on or after October 1, 2004 on a
recognised stock exchange and the transaction is chargeable to Securities Transaction Tax (“STT”). In all other cases,
the STCG would be taxed at the normal rates of Tax (plus applicable surcharge and education cess). Cost indexation
benefits would not be available in computing Tax on STCG.
3 Such concessional rate would be available without such transaction being subject to STT, if such transaction is
undertaken on a recognised stock exchange located in any International Financial Services Centre and where the
consideration is paid or payable in foreign currency. No deduction under Chapter VIA of the Act shall be allowed
from such STCG.
4 LTCG, as defined under section 2(29B), arising on sale of equity shares is fully exempt from Tax in accordance with
the provision of section 10(38) where the sale is made on or after 1st October, 2004 on a recognised stock exchange
and transaction of sale is chargeable to STT (STT). However, such income by way of LTCG shall be taken into
account in computing the Book Profits and Tax payable under Section 115JB. Subject to following exceptions, the
exemption shall not be available in case the transaction of acquisition of equity shares is entered into on or after the 1st
October 2004 and such transaction is not chargeable to STT:
i. Acquisition of listed equity shares in a company which has been approved by the Supreme Court, High Court,
National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this
behalf.
ii. Acquisition of listed equity shares in a company by any non-resident in accordance with foreign direct
investment guidelines issued by the Government of India.
iii. Acquisition of listed equity shares in a company by an investment fund referred to in clause (a) of Explanation 1
to section 115UB or a venture capital fund referred to in clause (23FB) of section 10 or a Qualified Institutional
Buyer.
iv. Acquisition of listed equity shares in a company through preferential issue to which the provisions of Chapter
VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2009 does not apply.
v. Following acquisition of listed equity shares in a company made in accordance with the provisions of the
Securities Contracts (Regulation) Act, 1956:
1 acquisition through an issue of share by a company other than the issue referred to in clause (a) i.e.
preferential allotment.
2 acquisition by scheduled banks, reconstruction or securitisation companies or public financial institutions
during their ordinary course of business.
3 acquisition which has been approved by the Supreme Court, High Courts, National Company Law Tribunal,
Securities and Exchange Board of India or Reserve Bank of India in this behalf.
4 acquisition under employee stock option scheme or employee stock purchase scheme framed under the
Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999.
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5 acquisition by any non-resident in accordance with foreign direct investment guidelines of the Government
of India.
6 acquisition by mode of transfer referred to in sections 47 or 50B of the Act, if the previous owner of such
shares has not acquired them by any mode referred to in clause (a) or clause (b) or clause (c) [other than the
transactions referred to in the proviso to clause (a) or clause (b)].
5 Under section 112, LTCG, where STT is not levied, are subject to Tax @ 20% (plus applicable surcharge and cess)
after indexation, as provided in the second proviso to section 48 of the Act. However, in case of listed securities
(other than units) where STT is not levied, at the option of the shareholder, the rate of Tax would be @ 10% (plus
applicable surcharge and cess), without any indexation. Indexation benefit is not available in respect of LTCG on
bonds and debentures (excluding capital indexed bonds issued by the Government and sovereign gold bonds issued
by the Reserve Bank of India).
6 As base year for indexation purposes is shifted from 1st April 1981 to 1st April 2001, cost of acquisition of shares
acquired before 1st April 2001 shall be allowed to be taken as fair market value as on 1st April 2001 and shall be
indexed by applying following cost inflation index:
Year ending 31st March Cost inflation index
2001-02 100
2002-03 105
2003-04 109
2004-05 113
2005-06 117
2006-07 122
2007-08 129
2008-09 137
2009-10 148
2010-11 167
2011-12 184
2012-13 200
2013-14 220
2014-15 240
2015-16 254
2016-17 264
2017-18 272
7 Under Section 54EC, subject to the specified conditions, LTCG (other than those exempt under Section 10(38))
arising on transfer of securities would be exempt from Tax if such capital gain is invested within six months after the
date of such transfer in specified bonds (Long Term Specified Assets redeemable after 3 years) issued by:
i. National Highways Authority of India constituted under Section 3 of The National Highways Authority of India
Act, 1988.
ii. Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956.
iii. Power Finance Corporation Limited, a company formed and registered under the Companies Act, 1956.
8 The investment in the Long Term Specified Assets is eligible for such deduction to the extent of `5 Million. Such
investment during the financial year in which the shares are transferred and in the subsequent financial year cannot
exceed `5 Million. If only part of the capital gain is so reinvested, the exemption available shall be in the same
proportion as the cost of long term specified assets bears to the whole of the capital gain, However, in case the Long
Term Specified Asset is transferred or converted into money within 3 years from the date of its acquisition, the
amount so exempted shall be chargeable to Tax during the year of such transfer or conversion.
9 Under section 54EE of the Act and subject to the specified conditions and to the extent specified therein, LTCG (in
case not covered under section 10(38) of the Act) arising on the transfer of a Long-Term Capital Asset would be
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exempt from Tax if such capital gain is invested within six months from the date of such transfer in a “Long Term
Specified Asset”.
10 A “long term specified asset” means a unit or units, issued before the 1st day of April, 2019, of such fund as may be
notified by the Central Government in this behalf.
11 The total deduction with respect to investment in the long term specified assets is restricted to ` 5 Million whether
invested during the financial year in which the asset is transferred and in the subsequent year.
12 Where the “long term specified asset” are transferred within 3 years from the date of their acquisition, the amount so
exempted is taxable as capital gains in the year of transfer.
13 Under Section 47(xv), any transfer in a scheme of lending of any securities under an agreement or arrangement,
which the assessee has entered into with the borrower of such securities and which is subjected to the guidelines
issued by the Securities and Exchange Board of India or Reserve Bank of India, in this regard is not considered as
transfer and hence not liable to Tax
14 As per provisions of Section 72, the Bank is entitled to carry forward business losses that cannot be set off against
permitted sources of income in the relevant assessment year, for a period of eight consecutive assessment years
immediately succeeding the assessment year when the losses were first computed, and set off such losses against
income chargeable under the head “Profits and gains from business or profession” in such assessment year. The set
off is permissible even if the business in which the loss was sustained is not carried on in the year of set off.
15 Under Section 74, short-term capital loss suffered during the year is allowed to be carried forward and set-off against
STCG as well as LTCG of a subsequent year. Such loss is permitted to be carried forward for up to eight years
immediately succeeding the year in which such loss arises, for claiming set-off against subsequent years’ STCG as
well as LTCG. Long-term capital loss suffered during the year is allowed to be set-off against LTCG. Balance loss, if
any, could be carried forward for up to eight years for claiming set-off against subsequent years’ LTCG.
5. Deductions:
a Under Section 35D, 1/5th of specified expenses incurred towards capital raising is eligible for deduction for a period of
five years.
b Under Section 36(1)(vii), any bad debt or part thereof written off as irrecoverable in the accounts is allowable as a
deduction, subject to the provisions of section 36(2). The deduction of bad debts is limited to the amount, by which
such bad debts or part thereof, exceeds the credit balance in the provision for bad and doubtful debts account made
under Section 36(1)(viia).
c Under Section 36(1)(viia), a deduction is allowable in respect of any provision made for bad and doubtful debts, by an
amount not exceeding 7.50% of total income (computed before making any deduction under this Clause and Chapter
VIA) and an amount not exceeding 10% of the aggregate average advances made by rural branches of the Bank
computed in the prescribed manner.
d Under Section 36(1)(viii), a deduction is allowable in respect of any special reserve created and maintained for an
amount not exceeding 20% of the profits derived from the business of long term finance for industrial or agricultural
development or development of infrastructure facility in India or development of housing in India subject to the
specified conditions. If the aggregate amount carried to the Special Reserve from time to time exceeds twice the paid-
up capital and general reserves, no deduction shall be allowed of the excess amount under that Section. The amount
withdrawn from such Special Reserve Account would be chargeable to Tax in the year of withdrawal, in accordance
with the provisions for Section 41(4A).
e Under Section 36(1)(xv), STT paid by a taxpayer in respect of taxable securities transactions entered into in the
course of its business, would be allowed as a deduction if the income arising from such taxable securities transactions
is included in the income computed under the head “Profits and gains of business or profession”.
f Under Section 80LA, subject to specified conditions, income earned by scheduled bank from an Offshore Banking
Unit in a Special Economic Zone, or from the business referred to in sub-section (1) of section 6 of the Banking
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Regulation Act, 1949 with an undertaking located in a Special Economic Zone or any other undertaking which
develops, develops and operates or develops, operates and maintains a Special Economic Zone; or from any Unit of
the International Financial Services Centre from its business for which it has been approved for setting up in such a
Centre in a Special Economic Zone is able to claim a deduction of an amount equal to-
i. 100% of such income for five consecutive assessment years beginning with the assessment year relevant to the
previous year in which the permission, under clause (a) of sub-section (1) of section 23 of the Banking
Regulation Act, 1949 or permission or registration under the Securities and Exchange Board of India Act, 1992
(15 of 1992) or any other relevant law was obtained, and thereafter;
ii. 50% of such income for five consecutive assessment years.
B. STATEMENT OF GENERAL DIRECT TAX BENEFITS AVAILABLE TO THE RESIDENT SHAREHOLDERS
(PUBLIC SECTOR ENTERPRISES, MUTUAL FUNDS AND DOMESTIC INSURANCE COMPANIES IN INDIA)
AND FOREIGN INSTITUTIONAL INVESTORS (FIIs)
B.1 To Resident Shareholders: (Scheduled Commercial Banks, public financial institutions, state industrial development
corporations, others)
1 Dividends
a Dividends from domestic companies are exempt from Tax in accordance with and subject to the provisions of
Section 10 (34) read with Section 115-O subject to provisions of section 115BBDA, as per which dividend paid by a
domestic company exceeding ` Ten Lakhs is taxable @ 10% for certain specified assessees.
b As per Section 94(7), losses arising from sale/transfer of shares, where such shares are purchased within 3 months
prior to the record date and sold within 3 months from the record date, will be disallowed to the extent such loss
does not exceed the amount of dividend claimed as exempt.
c No credit can be claimed in respect of the DDT paid by the Company.
d Section 14A restricts claim for deduction of expenses incurred in relation to incomes which do not form part of the
total income under the Act. Thus, any expenditure incurred to earn Tax exempt income is not tax deductible.
2 Capital Gains
a The gains/losses, arising from sale of shares will assume the character of Capital Gains or Business Income
depending on the nature of holding in the hands of the shareholder and various other factors. Taxability of income
on regular trading of securities will depend on facts and circumstances of each case.
b Capital assets may be categorised into short-term capital assets or long-term capital assets based on the period of
holding. Capital assets being shares listed on a recognised Stock Exchange in India held for a period of more than
12 months and shares (other than listed) held for more than 24 months are considered as long term capital assets.
Consequently, capital gains arising on sale of these assets held for more than 12 months/ 24 months, as the case may
be, are considered as LTCG. Capital gains arising on sale of these assets held for 12 months/ 24 months or less are
considered as STCG.
c Under section 111A, STCG, as defined in section 2(42B), arising on the transfer of equity shares would be taxed @
15% (plus applicable surcharge and education cess), where the sale is made on or after October 1, 2004 on a
recognised stock exchange and the transaction is chargeable to Securities Transaction Tax (“STT”). In all other
cases, the STCG would be taxed at the normal rates of Tax (plus applicable surcharge and education cess). Cost
indexation benefits would not be available in computing Tax on STCG.
Such concessional rate would be available without such transaction being subject to STT, if such transaction is
undertaken on a recognised stock exchange located in any International Financial Services Centre and where the
consideration is paid or payable in foreign currency. No deduction under Chapter VIA of the Act shall be allowed
from such STCG.
d LTCG, as defined under section 2(29B), arising on sale of equity shares is fully exempt from Tax in accordance
with the provision of section 10(38) where the sale is made on or after 1st October, 2004 on a recognised stock
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exchange and transaction of sale is chargeable to STT (STT). However, such income by way of LTCG shall be
taken into account in computing the Book Profits and Tax payable under Section 115JB. Subject to following
exceptions, the exemption shall not be available in case the transaction of acquisition of equity shares is entered into
on or after the 1st October 2004 and such transaction is not chargeable to STT:
i. Acquisition of listed equity shares in a company which has been approved by the Supreme Court, High Court,
National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this
behalf.
ii. Acquisition of listed equity shares in a company by any non-resident in accordance with foreign direct
investment guidelines issued by the Government of India.
iii. Acquisition of listed equity shares in a company by an investment fund referred to in clause (a) of Explanation
1 to section 115UB or a venture capital fund referred to in clause (23FB) of section 10 or a Qualified
Institutional Buyer.
iv. Acquisition of listed equity shares in a company through preferential issue to which the provisions of Chapter
VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 does not apply.
v. Following acquisition of listed equity shares in a company made in accordance with the provisions of the
Securities Contracts (Regulation) Act, 1956:
1 acquisition through an issue of share by a company other than the issue referred to in clause (a) i.e.
preferential allotment.
2 acquisition by scheduled banks, reconstruction or securitisation companies or public financial institutions
during their ordinary course of business.
3 acquisition which has been approved by the Supreme Court, High Courts, National Company Law
Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf.
4 acquisition under employee stock option scheme or employee stock purchase scheme framed under the
Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999.
5 acquisition by any non-resident in accordance with foreign direct investment guidelines of the Government
of India.
6 acquisition by mode of transfer referred to in sections 47 or 50B of the Act, if the previous owner of such
shares has not acquired them by any mode referred to in clause (a) or clause (b) or clause (c) [other than the
transactions referred to in the proviso to clause (a) or clause (b)].
e Under section 112, LTCG, where STT is not levied, are subject to Tax @ 20% (plus applicable surcharge and cess)
after indexation, as provided in the second proviso to section 48 of the Act. However, in case of listed securities
(other than units) where STT is not levied, at the option of the shareholder, the rate of Tax would be @ 10% (plus
applicable surcharge and cess), without any indexation.
As base year for indexation purposes is shifted from 1st April 1981 to 1st April 2001, cost of acquisition of shares
acquired before 1st April 2001 shall be allowed to be taken as fair market value as on 1st April 2001 and shall be
indexed by applying following cost inflation index:
Year ending 31st March Cost inflation index
2001-02 100
2002-03 105
2003-04 109
2004-05 113
2005-06 117
2006-07 122
2007-08 129
2008-09 137
2009-10 148
2010-11 167
2011-12 184
2012-13 200
2013-14 220
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2014-15 240
2015-16 254
2016-17 264
2017-18 272
f Under Section 54EC, subject to the specified conditions, LTCG (other than those exempt under Section 10(38))
arising on transfer of securities would be exempt from Tax if such capital gain is invested within six months after
the date of such transfer in specified bonds (Long Term Specified Assets redeemable after 3 years) issued by:
i. National Highways Authority of India constituted under Section 3 of The National Highways Authority of
India Act, 1988.
ii. Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956.
iii. Power Finance Corporation Limited, a company formed and registered under the Companies Act, 1956.
The investment in the Long Term Specified Assets is eligible for such deduction to the extent of ` 5 Million. Such
investment during the financial year in which the shares are transferred and in the subsequent financial year cannot
exceed ` 5 Million. If only part of the capital gain is so reinvested, the exemption available shall be in the same
proportion as the cost of long term specified assets bears to the whole of the capital gain, However, in case the Long
Term Specified Asset is transferred or converted into money within 3 years from the date of its acquisition, the
amount so exempted shall be chargeable to Tax during the year of such transfer or conversion.
g Under section 54EE of the Act and subject to the specified conditions and to the extent specified therein, LTCG (in
case not covered under section 10(38) of the Act) arising on the transfer of a Long-Term Capital Asset would be
exempt from Tax if such capital gain is invested within six months from the date of such transfer in a “Long Term
Specified Asset”.
A “long term specified asset” means a unit or units, issued before the 1st day of April, 2019, of such fund as may be
notified by the Central Government in this behalf.
The total deduction with respect to investment in the long term specified assets is restricted to ` 5 Million whether
invested during the financial year in which the asset is transferred and in the subsequent year.
Where the “long term specified asset” are transferred within 3 years from the date of their acquisition, the amount so
exempted is taxable as capital gains in the year of transfer.
h Under Section 47(xv), any transfer in a scheme of lending of any securities under an agreement or arrangement,
which the assessee has entered into with the borrower of such securities and which is subjected to the guidelines
issued by the Securities and Exchange Board of India or Reserve Bank of India, in this regard is not considered as
transfer and hence not liable to Tax.
i Under Section 74, short-term capital loss suffered during the year is allowed to be carried forward and set-off
against STCG as well as LTCG of a subsequent year. Such loss is permitted to be carried forward for up to eight
years immediately succeeding the year in which such loss arises, for claiming set-off against subsequent years’
STCG as well as LTCG. Long-term capital loss suffered during the year is allowed to be set-off against LTCG.
Balance loss, if any, could be carried forward for up to eight years for claiming set-off against subsequent years’
LTCG.
3 Deductions
Under section 36(1)(xv), STT paid by a shareholder in respect of taxable securities transactions entered into in the
course of its business, would be allowed as a deduction if the income arising from such taxable securities transactions is
included in the income computed under the head profits and gains of business or profession.
B.2 To the Resident Mutual Fund
Under Section 10(23D), exemption is available in respect of all income (including capital gains arising on transfer of
shares) earned by a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or such other
mutual fund set up by a public- sector bank or a public financial institution or authorised by the Reserve Bank of India and
subject to the such specified conditions as the Central Government may specify by notification.
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B.3 To the Domestic Insurance Company
1 Taxation of insurance companies is governed by Section 44 of the Act which provides a special regime for taxation of
insurance companies. The section states that notwithstanding anything to the contrary contained in the provisions of this
Act relating to computation of income chargeable under the head “income from house property”, “capital gains” or
“income from other sources” or in section 199 or in sections 28 to 43B, the profits and gains of any business of
insurance, including a mutual insurance company or by a co-operative society shall be computed in accordance with the
rules contained in the First Schedule.
2 Taxation of life insurance business in India governed by section 115B, section 44 and the First Schedule of the Act.
“Profit and gains of the life insurance business” is taken as “annual average of the surplus arrived at after adjusting the
surplus or deficit disclosed by the actuarial valuation” excluding “from it any surplus or deficit included therein which
was made in any earlier inter-valuation period.”
3 Provisions of computation of Minimum Alternative Tax under section 115JB of the Act are not applicable to income
accruing to a company from life insurance business.
4 Profits and gains of business of general insurance companies is computed based on the profit and loss account prepared
in accordance with the provisions of the Insurance Act, 1938 and the IRDA Act, 1999 and the related Rules under both
laws, subject to the following adjustments:
a Additions of the amounts which are not admissible under the provisions of section 30 to 43B.
b Any gains or loss on realisation of investments shall be added or deducted, if such gain or loss is not credited or
debited to the profit and loss account.
c Any provision for diminution in the value of investments debited to profit and loss account shall be added back.
d Amount carried to reserve for unexpired risk shall be allowed as a deduction as prescribed in rule 6E of the Income-
tax Rules, 1962.
5 Tax rate:
a Life Insurance Companies: 12.50% on profits from life insurance business and 30% on other than life Insurance
business income as increased by surcharge and education cess.
b General insurance companies: 30% of profits as increased by surcharge and education cess.
B.4 Provident Fund and Pension Fund
Under section 10(25), any income received by trustees on behalf of a recognised provident fund (as defined in section
2(38)) and an Approved superannuation fund (as defined in section 2(6)) is exempt from Tax.
B.5 Investment Fund:
1 Under section 10(23FBA), any income of an Investment Fund, other than the income chargeable under the head
“Profits and gains of business or profession” would be exempt from Tax. For this purpose, an “Investment Fund”
means a fund registered as Category I or Category II Alternative Investment Fund under the Securities and Exchange
Board of India (Alternate Investment Fund) Regulations, 2012.
2 As per Section 115UB(1), any income accruing/arising/received by a person from investment in Investment Fund
would be taxable in the hands of the person making an investment in the same manner as if it were the income
accruing/arising/received by such person had the investments been made directly in the investment fund.
3 Under section 115UB(4), the taxable income of an Investment Fund would be charged at the rate or rates as specified in
the Finance Act of the relevant year where the Investment Fund is a company or a firm or at maximum marginal rate in
any other case.
4 Under Section 115UB(6), the income accruing or arising to or received by the Investment Fund if not paid or credited
to a person (who has made investments in an Investment Fund) shall be deemed to have been credited to the account of
the said person on the last day of the previous year in the same proportion in which such person would have been
entitled to receive the income had it been paid in the previous year.
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C. Non-Resident Shareholders
C.1 Multi-lateral and bilateral development financial institution
Multilateral and bilateral development financial institution may be exempt from Tax in India on the capital gains arising on
the sale of shares depending on the applicable Statute and Acts passed in India. In case they are not specifically exempt
from Tax then the provisions as applicable for capital gains to a non-resident FII may apply, as presumably they would be
registered as FII.
C.2 Foreign Institutional Investors (FIIs)
1 Dividends
a. Dividends from domestic companies are exempt from Tax in accordance with and subject to the provisions of
Section 10 (34) read with Section 115-O.
b. As per Section 94(7), losses arising from sale/transfer of shares, where such shares are purchased within 3 months
prior to the record date and sold within 3 months from the record date, will be disallowed to the extent such loss
does not exceed the amount of dividend claimed as exempt.
c. No credit can be claimed in respect of the DDT paid by the Company.
d. Section 14A restricts claim for deduction of expenses incurred in relation to incomes which do not form part of the
total income under the Act. Thus, any expenditure incurred to earn Tax exempt income is not tax deductible.
2 Capital Gains
a. LTCG, as defined under section 2(29B), arising on sale of equity shares is fully exempt from Tax in accordance
with the provision of section 10(38) where the sale is made on or after 1st October, 2004 on a recognised stock
exchange and transaction of sale is chargeable to STT (STT). However, such income by way of LTCG shall be
taken into account in computing the Book Profits and Tax payable under Section 115JB. Subject to following
exceptions, the exemption shall not be available in case the transaction of acquisition of equity shares is entered into
on or after the 1st October 2004 and such transaction is not chargeable to STT:
i. Acquisition of listed equity shares in a company which has been approved by the Supreme Court, High Court,
National Company Law Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this
behalf.
ii. Acquisition of listed equity shares in a company by any non-resident in accordance with foreign direct
investment guidelines issued by the Government of India.
iii. Acquisition of listed equity shares in a company by an investment fund referred to in clause (a) of Explanation
1 to section 115UB or a venture capital fund referred to in clause (23FB) of section 10 or a Qualified
Institutional Buyer.
iv. Acquisition of listed equity shares in a company through preferential issue to which the provisions of Chapter
VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 does not apply.
v. Following acquisition of listed equity shares in a company made in accordance with the provisions of the
Securities Contracts (Regulation) Act, 1956:
1 acquisition through an issue of share by a company other than the issue referred to in clause (a) i.e.
preferential allotment.
2 acquisition by scheduled banks, reconstruction or securitisation companies or public financial institutions
during their ordinary course of business.
3 acquisition which has been approved by the Supreme Court, High Courts, National Company Law
Tribunal, Securities and Exchange Board of India or Reserve Bank of India in this behalf.
4 acquisition under employee stock option scheme or employee stock purchase scheme framed under the
Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999.
5 acquisition by any non-resident in accordance with foreign direct investment guidelines of the Government
of India.
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6 acquisition by mode of transfer referred to in sections 47 or 50B of the Act, if the previous owner of such
shares has not acquired them by any mode referred to in clause (a) or clause (b) or clause (c) [other than the
transactions referred to in the proviso to clause (a) or clause (b)].
b. The provisions of section 115JB do not apply to a foreign company if it is a resident of a country with which India
has entered into a Double Tax Avoidance Agreement under section 90 and the assessee does not have a Permanent
Establishment in India or such company is a resident of a country with which India does not have such agreement
and the assessee is not required to seek registration under any law for the time being in force, relating to companies.
c. Under Section 115AD(1)(ii), STCG arising to an FII on transfer of shares shall be chargeable to Tax @ 30% (plus
surcharge and education cess), where such transactions are not subjected to STT @ 15%(plus surcharge and
education cess) provided such transaction of sale is entered on a recognised stock exchange in India and is
chargeable to STT.
d. Under Section 115AD(1)(iii), LTCG arising to an FII on transfer of shares (in cases not covered under Section
10(38) of the Act) held in the Company shall be chargeable to Tax @ 10% (plus surcharge and education cess). The
benefit of indexation of cost and of foreign currency fluctuations are not available to FIIs.
e. As per section 90(2), the provisions of the Act would prevail over the provisions of the Double Tax Avoidance
Agreement (“DTAA”) entered between India and the country of fiscal domicile of the non-resident, if any, to the
extent they are more beneficial to the non-resident. Thus, a non-resident (including NRIs) can opt to be governed by
the provisions of the Act or the applicable tax treaty, whichever are more beneficial. However, the FII eligible to
avail DTAA benefits shall obtain Tax Residency Certificate (“TRC”) from the Government of the Country of its
residence or specified territory containing the prescribed particulars, which has been notified by the CBDT through
insertion of Rule 21AB in the Income-tax Rules, 1962, also submit Form 10F (wherever applicable) and certain
specific information to avail of the tax benefit.
f. As per Section 196D, no tax is to be deducted at source from any income, by way of Capital Gains arising to an FII
from the transfer of securities referred to in section 115AD.
g. With effect from 1st April, 2017, the benefit of the DTAA will not be available to a non-resident investor if the Tax
department declares any arrangement to be an impermissible avoidance arrangement.
C.3 Foreign Venture Capital Investor (FVCI):
1 Income of a FVCI from investments in a Venture Capital Undertaking/ Companies is exempt under section 10(23FB).
2 In accordance with section 115-U, any income accruing or received by a person out of investment in venture capital
fund or venture capital company shall be chargeable to Tax in the same manner as if it were income accrued or received
by such person had he made investment in the venture capital undertaking directly. The income paid by a VCF or VCC
shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving it as it had
been received by or had accrued or arisen to VCF or VCC, as the case may be. The income accruing or arising to or
received by a VCF or VCC from investments in a Venture Capital Undertaking shall be deemed to have been credited
to the account of such person on the last day of the previous year in the same proportion in which such person would
have been entitled to receive the income.
3 The FVCI eligible to avail DTAA benefits shall obtain TRC from the Government of the Country of its residence or
specified territory containing the prescribed particulars, which has been notified by the CBDT through insertion of Rule
21AB in the Income-tax Rules, 1962, also submit Form 10F (wherever applicable) and certain specific information to
avail of the tax benefit.
C.4 Non-Resident Indians:
1 As per section 115C(e), the term “non-resident Indians” means an individual, being a citizen of India or a person of
Indian origin who is not a “resident”. A person shall be deemed to be of Indian origin if he, or either of his parents or
any of his grand-parents, was born in undivided India.
2 As per section 115E, in the case of a shareholder being a non-resident Indian, and subscribing to the shares of the Issuer
in convertible foreign exchange, in accordance with and subject to the prescribed conditions, LTCG on transfer of the
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shares of the Issuer (in cases not covered under section 10(38)) will be subject to tax at the rate of 10% (plus applicable
surcharge and education cess), without any indexation benefit.
3 As per section 115F and subject to the specified conditions, in the case of a shareholder being a non-resident Indian,
gains arising on transfer of a long-term capital asset being shares of the Company will not be chargeable to tax if the
entire net consideration received on such transfer is invested within the prescribed period of six months in any specified
asset or savings certificates referred to in section 10(4B). If part of such net consideration is invested within the
prescribed period of six months in any specified asset or savings certificates referred to in section 10(4B) then this
exemption would be allowable on a proportionate basis. Further, if the specified asset or saving certificates in which the
investment has been made is transferred within a period of 3 years from the date of investment, the amount of capital
gains tax exempted earlier would become chargeable to Tax as LTCG in the year in which such specified asset or
savings certificates are transferred.
4 As per section 115G, non-resident Indians are not obliged to file a return of income under section 139(1), if their only
source of income is income from specified investments or LTCG on transfer of such investments or both, provided Tax
has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.
5 As per section 115H, where non-resident Indian becomes assessable as a resident in India, he may furnish a declaration
in writing to the Assessing Officer, along with his return of income for that year under section 139 to the effect that the
provisions of Chapter XII-A shall continue to apply to him in relation to investment income derived from the
investment in equity shares of the Company as mentioned in section 115C(f)(i) for that year and subsequent assessment
years until assets are converted into money.
6 As per section 115I, a non-resident Indian may elect not to be governed by the provisions of Chapter XII-A for any
assessment year by furnishing a declaration along with his return of income for that assessment year under section 139,
that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income
for that assessment year will be computed in accordance with the other provisions of the Act.
D. Tax Deduction at Source:
No Tax is deductible at source from income by way of capital gains arising to a resident shareholder under the present
provisions of the Act. However, as per the provisions of Section 195, any income by way of capital gains payable to non-
residents (other than LTCG exempt under section 10(38)) may be subject to withholding of Tax at the rate under the
domestic tax laws or under the tax laws or under the DTAA, whichever is beneficial to the assessee unless a lower
withholding tax certificate is obtained from the tax authorities. However, the non-resident investor will have to obtain TRC
from the Government of the Country of its residence or specified territory containing the prescribed particulars which has
been notified by the CBDT through insertion of Rule 21AB in the Income-tax Rules, 1962, also submit Form 10F (wherever
applicable) and certain specific information to avail of the Tax benefit. The withholding tax rates are subject to the recipient
of income obtaining and furnishing a permanent account number (PAN) to the payer, in the absence of which the applicable
withholding tax rate would be the higher of the applicable rates or 20%(plus surcharge and cess), under section 206AA. The
provisions of section 206AA will not apply if the non- resident shareholder furnishes the prescribed documents to the payer.
Additionally, as per the provisions of section 196D of the IT Act, no tax is to be withheld in respect of gains earned by an
FII.
E. Surcharge and Cess:
1 Surcharge applicable for the Financial Year 2017-18 is as under:
Investor Rate of Surcharge
Individual or Hindu Undivided Family (HUF) or Associated of Persons
(AOP) or body of individuals or artificial juridical person
- Total income exceeds Rs.5 million
- Total income exceeds Rs. 10 million
10%
15%
Firm or Co-operative society or local authority
- Total income exceeds Rs. 10 million
12%
Domestic Company
- Total income exceeds Rs. 10 million
- Total income exceeds Rs. 100 million
7%
12%
Foreign Company
- Total income exceeds Rs. 10 million
2%
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- Total income exceeds Rs. 100 million 5%
2 Cess applicable for the Financial Year 2017-18: 2% education cess and 1% secondary and higher education cess
II. Securities Transaction Tax (STT):
1. For Purchaser:
The transaction for purchase of equity shares entered into on a recognised stock exchange and settled by actual delivery or
transfer is liable to STT @ 0.10%.
2. For Seller:
The transaction for sale of equity shares entered into on a recognised stock exchange and settled by actual delivery or
transfer is liable to STT @ 0.10%. The transaction for sale of equity shares entered into on a recognised stock exchange and
not settled by actual delivery or transfer is liable to STT @ 0.025%.
3. STT on derivative transactions:
Taxable securities transaction Rate Payable by
Sale of an option in securities 0.05 % Seller
Sale of an option in securities, where option is exercised 0.125 % Purchaser
Sale of a futures in securities 0.01 % Seller
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
The following discussion describes certain U.S. federal income tax consequences of the investment in shares, and is based upon
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), the U.S. Treasury regulations promulgated thereunder, judicial
decisions, revenue rulings and revenue procedures of the Internal Revenue Service ("IRS"), and other administrative
pronouncements of the IRS, all available as of the date hereof. All of the foregoing authorities are subject to change, which
change could apply retroactively and could affect the tax consequences described below. No ruling will be sought from the IRS
with respect to any statement in this discussion and there can be no assurance that the IRS will not challenge such statements, or,
if challenged, that a court will uphold such statement. This discussion is applicable to U.S. Holders (as defined below) that hold
the Equity Shares as capital assets for U.S. federal income tax purposes (generally property held for investment). This discussion
does not address any U.S. federal estate or gift tax consequences, the alternative minimum tax, the Medicare tax on net investment
income or any state, local, or non-U.S. tax consequences.
For purposes of this discussion a "U.S. Holder" is a beneficial owner of an ordinary share that is, for U.S. federal income tax
purposes:
an individual who is a citizen or resident of the United States;
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or
under the laws of the United States, any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust that is subject to the primary supervision of a court within the United States and one or more U.S. persons have the
authority to control all substantial decisions of the trust.
This discussion does not address all U.S. federal income tax consequences applicable to any particular investor, and does address
the tax consequences applicable to persons subject to special treatment under the U.S. federal income tax laws, including a person
who is:
a dealer in securities or currencies;
a financial institution;
a regulated investment company;
a real estate investment trust;
an insurance company;
a tax-exempt organization;
a person holding the Equity Shares as part of a hedging, integrated or conversion transaction, a constructive sale or a
straddle;
a trader in securities that has elected the mark-to-market method of accounting;
a person liable for alternative minimum tax;
a U.S. expatriate or former U.S. citizen or long-term resident;
an investor that holds shares through a financial account at a foreign financial institution that does not meet the
requirements to be exempt from withholding with respect to certain payments under Section 1471 of the Code;
persons who acquired shares pursuant to the exercise of any employee share option or otherwise as compensation;
partnerships or other pass-through entities, or persons holding shares through such partnerships or other pass-through
entities;
a person who actually or constructively owns 10% or more of the total combined value of all classes of our voting stock;
or
a person whose functional currency is not the U.S. dollar.
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If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares,
the tax treatment of a partner will depend upon the status of the partner and the activities of the partnership. Partnerships
considering an investment in the Equity Shares should consult their own tax advisors as to the particular U.S. federal income tax
consequences of acquiring, holding and disposing of the Equity Shares.
Investors are urged to consult their tax advisors about the application of the U.S. federal tax rules to their particular circumstances
as well as the state, local, non-U.S. and other tax consequences to them of the purchase, ownership, and disposition of offer shares.
We expect, and this summary assumes, that we will not be a passive foreign investment company for U.S. federal income tax
purposes. See the discussion under "—Passive Foreign Investment Company."
Distributions on Shares
Distributions will be includible in a U.S. Holder's income as dividends to the extent paid out of our current or accumulated
earnings and profits, as determined under U.S. federal income tax principles. To the extent that the amount of any distribution
exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax
principles, the distribution will first be treated as a tax free return of capital, and the balance in excess of a U.S. Holder's adjusted
tax basis in the Equity Shares will be taxed as capital gain recognized on a sale or exchange. However, we do not expect to
calculate our earnings and profits in accordance with U.S. federal income tax principles, and, accordingly, U.S. Holders should
expect that a distribution will generally be reported as a dividendeven if that distribution (or a portion thereof) would otherwise be
treated as a tax-free return of capital or as capital gain. Such dividends will not be eligible for the dividends received deduction
allowed to U.S. corporations for dividends received from other U.S. corporations.
With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, dividends may be taxed at the lower capital
gain rates applicable to “qualified dividend income”, provided (1) we are eligible for the benefits of the income tax treaty between
the United States and India (the “Treaty”), (2) we are neither a PFIC nor treated as such with respect to a U.S. Holder (as
discussed above) for either the taxable year in which the dividend was paid or the preceding taxable year, (3) certain holding
period requirements are met and (4) U.S Holders are not under an obligation to make related payments with respect to positions in
substantially similar or related property. We epect to be eligible for Treaty benefits as long as there is substantial and regular
trading of the Equity Shares on the BSE and NSE. U.S. Holders should consult their tax advisors regarding the availability of the
lower capital gain rates applicable to qualified dividend income for dividends paid with respect to the Equity Shares.
U.S. Holders should consult their own tax advisors regarding how to account for dividends that are paid in a currency other than
the U.S. dollar.
Sale or Other Taxable Disposition of Shares
A U.S. Holder will recognize U.S. source capital gain or loss upon the sale or other taxable disposition of shares in an amount
equal to the difference between the U.S. dollar value of the amount realized upon the disposition and the U.S. Holder's adjusted
tax basis in such shares. Any capital gain or loss will be long-term if the Equity Shares have been held for more than one year at
the time of the sale or other taxable disposition. Certain non-corporate U.S. Holders, including individuals, are eligible for
reduced rates of taxation on long-term capital gains. The deductibility of capital losses is subject to limitations.
U.S. Holders should consult their own tax advisors regarding how to account for sale or other disposition proceeds that are paid in
a currency other than the U.S. dollar.
Treatment of Non-U.S. Taxes
U.S. tax rules relating to foreign tax credits and deductions for non-U.S. taxes paid are complex. U.S. Holders should
consult their own advisors about the applicability of these rules to their particular circumstances.
Passive Foreign Investment Company
In general, a non-U.S. corporation will be classified as a PFIC for any taxable year if at least (i) 75 per cent. of its gross income is
classified as “passive income” or (ii) 50 per cent. of the average quarterly value of its assets produce or are held for the production
of passive income. For this purpose, passive income generally includes, among other items, dividends, interest, gains from certain
commodities transactions, certain rents, royalties and gains from the disposition of passive assets. However, under the proposed
Treasury regulations discussed below, interest or other income derived from the active conduct of banking business of a non-U.S.
corporation that meets certain conditions will not be considered passive income.
We do not believe we were a PFIC for our most recent taxable year and we do not expect to be a PFIC for the current taxable year
or in the foreseeable future, although there can be no assurance in this regard because our status as a PFIC depends, in part, on the
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application of complex U.S. federal income tax rules, which are subject to differing interpretations. Our belief is based in part on
proposed Treasury regulations, which are proposed to be effective for taxable years beginning after 31 December 1994, and on
estimates of our income and assets. Because the proposed Treasury regulations may not be finalized in their current form, the
application of the proposed regulations is not entirely clear and the composition of our income and assets will vary over time,
there can be no assurance that we were not or will not become a PFIC for any particular taxable year.
A non-U.S. corporation is classified as a PFIC in any year in which it meets either the income or asset test discussed above, which
depends on the actual financial results for each year in question. Accordingly, it is possible that we may become a PFIC in the
current or any future taxable year due to changes in our asset or income composition. In addition, the composition of our income
and assets will be affected by how, and how quickly, we spend the cash we raise in offerings.
If we are a PFIC for any taxable year during which a U.S. Holder holds the Equity Shares, such U.S. Holder will be subject to
special tax rules with respect to any "excess distribution" received and any gain realized from a sale or other disposition, including
a pledge, of shares. Distributions received in a taxable year that are greater than 125% of the average annual distributions
received during the shorter of the three preceding taxable years or a U.S. Holder's holding period for the Equity Shares will be
treated as excess distributions. Under these special tax rules:
the excess distribution or gain will be allocated ratably over a U.S. Holder's holding period for the Equity Shares;
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a
PFIC, will be treated as ordinary income; and
the amount allocated to each other taxable year will be subject to tax at the highest tax rate in effect for that year and the
interest charge applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
The tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution in which we were a
PFIC cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale or other disposition
of the Equity Shares cannot be treated as capital, even if a U.S. Holder holds the Equity Shares as capital assets. In addition, non-
corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the
taxable year in which such dividends are paid or in the preceding taxable year. A U.S. Holder will be required to additional
information with its U.S. federal income tax return if such U.S. Holder holds the Equity Shares in any year in which we are a
PFIC.
If we are a PFIC and if any of our subsidiaries or other entities in which we, directly or indirectly, own equity are PFICs
(collectively, “Lower-tier PFICs”), a U.S. Holder will be deemed to own its proportionate share of any Lower-tier PFICs and
will be subject to U.S. federal income tax according to the PFIC rules described in the paragraph above on (i) certain distributions
by a Lower-tier PFIC and (ii) a disposition of shares of a Lower-tier PFIC, in each case as if the U.S. Holder owned such shares
directly, even though it has not received the proceeds of those distributions or dispositions directly. U.S. Holders should consult
their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.
In certain circumstances, in lieu of being subject to the excess distribution rules discussed above, a U.S. Holder may make an
election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is
"regularly traded" on a "qualified exchange." In general, the Equity Shares will be treated as "regularly traded" for a given
calendar year if more than a de minimis quantity of the Equity Shares is traded on a qualified exchange on at least 15 days during
each calendar quarter of such calendar year. A non-U.S. securities exchange on which the Equity Shares are will be a "qualified
exchange" if it is (i) regulated or supervised by a governmental authority of the country in which the market is located; (ii) has
trading volume, listing, financial disclosure, surveillance, and other requirements designed to prevent fraudulent and manipulative
acts and practices, to remove impediments to and perfect the mechanism of a free and open, fair and orderly, market, and to
protect investors; and the laws of the country in which the exchange is located and the rules of the exchange ensure that such
requirements are actually enforced; and (iii) the rules of the exchange effectively promote active trading of listed stocks. No
assurance can be given that the Equity Shares will be regularly traded on a qualified exchange for purposes of the mark-to-market
election.
If a U.S. Holder makes an effective mark-to-market election, such U.S. Holder will include in each year as ordinary income the
excess of the fair market value of the Equity Shares at the end of the year over the adjusted tax basis in the Equity Shares. Such
U.S. Holder will be entitled to deduct as an ordinary loss each year the excess of the adjusted tax basis in the Equity Shares over
their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of
the mark-to-market election. A U.S. Holder's adjusted tax basis in the Equity Shares will be increased by the amount of any
income inclusion and decreased by the amount of any deductions under the mark-to-market rules. Any distributions that we make
would generally be subject to the rules discussed below under "—Distributions," except that the lower rate applicable to qualified
dividend income would not apply. If a U.S. Holder makes a mark-to-market election it will be effective for the taxable year for
which the election is made and all subsequent taxable years (provided that, for any subsequent taxable year in which we are not a
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PFIC, a U.S. Holder will not include in income mark-to-market gain or loss) unless the Equity Shares are no longer regularly
traded on a qualified exchange or the IRS consents to the revocation of the election. Because a mark-to-market election generally
cannot be made for equity interests in Lower-tier PFICs, U.S. Holders generally will continue to be subject to the PFIC rules with
respect to their indirect interest in any Lower-tier PFICs. As a result, distributions from, and dispositions of, Lower-tier PFICs, as
well as certain other transactions, generally will be treated as distributions or dispositions subject to the rules above regarding
excess distributions, even if a mark-to-market election is made. U.S. Holders are urged to consult their tax advisors about the
availability and advisability of the mark-to-market election in their particular circumstances, as well as the impact of such election
on interests in any Lower-tier PFICs.
Investors in certain PFICs can elect to be taxed on their share of the PFIC's ordinary income and net capital gain by making a
qualified electing fund election (a "QEF election"), which, if made, would result in tax treatment different from (and generally less
adverse than) the general tax treatment for PFICs described above under the excess distribution regime. We do not expect that a
U.S. Holder will be eligible to make a QEF election with respect to the Equity Shares.
Each U.S. Holder is urged to consult its own tax advisor concerning the U.S. federal income tax consequences of holding shares if
we are a PFIC in any taxable year during its holding period.
Information Reporting and Backup Withholding
A U.S. Holder may be subject to information reporting on amounts received by such U.S. Holder from a distribution on, or
disposition of shares, unless such U.S. Holder establishes that it is exempt from these rules. If a U.S. Holder does not establish
that it is exempt from these rules, it may be subject to backup withholding on the amounts received unless it provides a taxpayer
identification number and otherwise complies with the requirements of the backup withholding rules. Backup withholding is not
an additional tax and the amount of any backup withholding from a payment that is received will be allowed as a credit against a
U.S. Holder's U.S. federal income tax liability and may entitle such U.S. Holder to a refund, provided that the required
information is timely furnished to the IRS.
In addition, U.S. Holders should consult their tax advisors about any reporting obligations that may apply as a result of the
acquisition, holding or disposition of the Equity Shares. Failure to comply with applicable reporting obligations could result in the
imposition of substantial penalties.
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LEGAL PROCEEDINGS
Our Bank, our Directors and our Subsidiary are, subject to various legal proceedings from time to time, mostly arising in the
ordinary course of their business including criminal proceedings, civil proceedings, tax proceedings, labour, land related disputes
and notices received from various regulators. These proceedings involving our Bank are primarily in the nature of recovery
proceedings initiated by us in respect of advances made, pending before civil courts or the debts recovery tribunal(s), as the case
may be, criminal cases filed by us in cases of dishonor of cheques or fraud cases, claims against our Bank in relation to erroneous
or unauthorized debit from customer accounts, wrongful credit or dishonor of cheques, criminal and labour-related proceedings
against our Bank, claims in relation to repossession of assets by the Bank, proceedings initiated under the SARFAESI Act,
consumer claims for deficiency in service, claims involving forgery of documents, alleged frauds and suits for setting aside
recovery proceedings initiated by our Bank and tax matters.
Except as disclosed below, there are no legal proceedings against our Bank, our Directors and our Subsidiary: (i) which are
quantifiable and exceed `85.00 million (being 1% of the consolidated profit after tax for Financial Year 2017); (ii) which are
criminal litigations against our Bank, our Directors or our Subsidiary or (iii) which our Bank believes could have a material
adverse effect on the business, financial condition, profitability or results of operations of our Bank on a consolidated basis.
Accordingly, we have not disclosed any legal proceedings involving our Bank, our Directors and our Subsidiary: (i) which are
quantifiable and are below `85.00 million (being 1% of the consolidated profit after tax for Financial Year 2017); (ii) criminal
litigations against our Bank, our Directors or our Subsidiary or (ii) which our Bank believes does not have a material adverse
effect on the business, financial condition, profitability or results of operations of our Bank on a consolidated basis.
I. Litigation against our Bank
Criminal litigation against our Bank
1. S. B. Shethwala, Complaint Inspector, Octroi A.M.C, filed a criminal complaint dated January 9, 1993 against our Bank
before the Metropolitan Magistrate Court, Ahmedabad for not producing original invoice of goods within 30 days at the
time of submission of an import bill showing the value of import goods in violation of Octroi Standing Order, punishable
under Octroi Act. The matter is currently pending.
Civil Litigation above the materiality threshold
1. Zoom Developers Private Limited and others filed a suit dated July 14, 2011 before the High Court of Judicature at
Bombay, against Punjab National Bank, our Bank and other banks who were members of the consortium of banks that
had extended credit facilities to Zoom Developers Private Limited. It was alleged that due to the failure of the consortium
banks, the intermediary banks to whom they had issued bank guarantees and stand-by letter of credit on behalf of Zoom
Developers Private Limited, invoked their respective bank guarantees and stand-by letter of credits on technical grounds.
Thereafter, the consortium banks, including our Bank, allegedly, refused to issue additional bank guarantees as
sanctioned earlier which resulted in Zoom Developers Private Limited’s inability to meet its financial obligations. Zoom
Developers Private Limited, through the suit filed before the High Court of Judicature at Bombay demanded that the
consortium banks, including our Bank, jointly and severally pay them an aggregate amount of `109,207.60 million along
with interest as damages, loss of estimated future profits and loss of goodwill and be restrained by a permanent order and
injunction from taking possession of any of its moveable and immoveable properties. Our Bank along with the other
consortium banks filed their written statement in response to the suit filed before the High Court of Judicature at Bombay
challenging the allegations raised by Zoom Developers Private Limited. The matter is currently pending.
2. UBS AG filed a suit dated February 21, 2000 before the High Court of Judicature at Bombay against our Bank for
reimbursement of an aggregate amount of `204.89 million along with interest for failure to reimburse UBS AG for
payments made by it under three letters of credit issued by our Bank. Our Bank filed its written statement before the High
Court of Judicature at Bombay in response to the suit filed by UBS AG wherein our Bank contested the validity of the
transactions underlying the three letters of credit and informed that our Bank had already intimated UBS AG of the fraud
perpetuated by Hamco Mining & Smelting Ltd and Frobevia S.A., Switzerland the applicant and beneficiary,
respectively, to the three letter of credit facilities. The matter is currently pending.
3. PEC Limited has filed a suit dated January 29, 2008 before the Court of the City Civil Judge, Bangalore against our Bank
and Paresh Exports Private Limited for recovery of an aggregate amount of `152.00 million (including interest) and
payment of `7.50 million as damages. PEC Limited, Paresh Exports Private Limited and our Bank had entered into an
arrangement whereby PEC Limited was required to assist Paresh Exports Private Limited in importing gold from
overseas suppliers by establishing a usance letter of credit against fixed deposit receipts issued by our Bank. It was
alleged by PEC Limited that the quantum of amount credited to PEC Limited’s account pursuant to the fixed deposit
receipts was not equivalent to the consideration payable for the gold received by Paresh Exports Private Limited and that
our Bank and Paresh Exports Private Limited had connived with each other to cause huge monetary loss and damage to
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the reputation of PEC Limited. Our Bank filed a written statement before the Court of City Civil Judge, Bangalore in
response to the suit filed by PEC Limited challenging the liability of our Bank. The matter is currently pending.
Tax litigations above materiality threshold
1. Our Bank received a show cause notice from the Additional Director General, Directorate General of Central Excise
Intelligence, Bangalore Zonal Unit dated March 31, 2015 demanding payment of `218.22 million along with interest and
penalty in relation to the cenvat credit wrongly availed by our Bank in respect of deposit insurance service. Our Bank
filed its reply to the show cause notice before the Commissioner of Central Excise, Kochi Commissionerate on May 14,
2015. Thereafter, Commissioner of Central Excise, Customs & Service Tax, Cochin through its order dated December
29, 2015 disallowed an amount of `218.22 million, being the cenvat credit wrongly availed by our Bank, demanded
payment of a sum of `109.11 million being the credit wrongly availed and service tax short paid during the period 2009-
2010 to 2012-2013, along with interest and imposed a penalty of `218.22 million under Rule 15(3) of the CENVAT
Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. Our Bank has filed its appeal before the Customs
Excise and Service Tax Appellate Tribunal, Bangalore against the order of the Commissioner of Central Excise dated
December 29, 2015. The matter is currently pending.
Actions taken by Statutory and Regulatory Authorities
1. Financial Intelligence Unit - India, Department of Revenue, Ministry of Finance, Government of India through its order
dated August 28, 2015 imposed penalty of `0.20 million on our Bank for failure in detecting and reporting attempted
suspicious transactions in violation of obligations laid down in Section 12 of the Prevention of Money Laundering Act,
2002. Our Bank filed an appeal dated October 6, 2015 against the order before the Appellate Tribunal at New Delhi. The
matter is currently pending.
2. RBI issued a show cause notice dated April 18, 2016 citing violation of guidelines on import of goods and services, not
ensuring on-going monitoring of transactions as per extant KPC/AML instructions and non-filing/delayed filing of
suspicious transaction report and to give reasons why a penalty of `30.00 million should not be imposed on our Bank.
Our Bank filed its submissions vide letter dated May 9, 2016 followed by personal hearing before RBI. Thereafter, RBI
through its final order dated July 19, 2016 advised our Bank to strengthen our systems to meet the requirements under
KYC-AML guidelines and FEMA in letter and in spirit on an on-going basis and no penalty was imposed on our Bank.
II. Litigation against our Directors
Criminal Litigations
3. Abdul Rahim Siddique filed a criminal complaint before the Chief Judicial Magistrate, Muzzafarpur, against India
Infoline Limited and its directors, including our Director, Nilesh Vikamsey, alleging unauthorized trading, criminal
breach of trust, cheating and forgery. The matter is currently pending.
4. Arunava Patra filed a criminal complaint before 4th Judicial Magistrate, Paschim Medinipore against India Infoline
Limited and its directors, including our Director, Nilesh Vikamsey, alleging commission of offences under sections
163(4), 196(3), 301(5) and 372A(6) of the Companies Act and Sections 467 and 120B of Indian Penal Code, 1860.
Indian Infoline Limited filed a quashing petition before the High Court, Kolkata seeking necessary directions against the
process issued by the lower court. The High Court, Kolkata through its order dated June 18, 2015 granted stay on all
further proceedings. The matter is currently pending.
Civil Litigations
1. Harish Devidas Thawai filed a commercial suit against IIFL Holdings Limited and its directors, including our Director,
Nilesh Vikamsey, claiming losses, brokerage warehouse charges, etc in respect of the dues outstanding from National
Spot Exchange. The matter is currently pending.
III. Material Frauds committed against our Bank in the last three years, and actions taken by our Bank
The table below sets out the details of material frauds committed against our Bank in the last three years:
S. No. Fraud
Committed By
Nature of
Fraud
Brief Particulars of the fraud and the action taken by our Bank
1. Blue Bird India
Limited
Misappropriation
and criminal
breach of trust
Blue Bird India Limited had availed credit facilities from our Bank for
an aggregate amount of `405.00 million. The account of Blue Bird
India Limited became a non performing asset on March 31, 2010. Our
Bank along with the consortium banks issued notice under section
214
S. No. Fraud
Committed By
Nature of
Fraud
Brief Particulars of the fraud and the action taken by our Bank
13(2) of SARFAESI Act on February 10, 2012 and took symbolic
possession of the secured assets. The property was put for auction on
July 30, 2014 but failed for want of bids. Our Bank has also initiated
proceedings for recovery of amount and the matter is currently
pending. One of the consortium banks also filed a complaint with CBI
and investigation is progressing. Further, the consortium banks
decided to report the account of Blue Bird India Limited as fraud to
RBI. The total amount involved in the matter is `406.90 million.
2. Zylog Systems
Limited
Misappropriation
and criminal
breach of trust
Zylog Systems Limited was sanctioned a short term credit limit of
`250.00 million by our Bank. Zylog Systems Limited submitted an
export bill for USD 185850.00 drawn on Ultramatics Inc., USA and it
was discounted by our Bank. Subsequently, our Bank received a letter
from counsels of Ultramatics Inc., USA that the documents submitted
by Zylog Systems Limited was bogus and that Ultramatics Inc., USA
had not received the service mentioned in the invoice. Thereafter, our
Bank was informed that Dena Bank has also reported fraud against
Zylog Systems Limited. Upon examination of the matter, our Bank
found instances of diversion of funds and submission of fake export
bills by Zylog Systems Limited. Our Bank has filed a criminal
complaint under Section 138 of Negotiable Instruments Act which is
currently pending. The total amount involved in the matter is `255.51
milllion.
3. R P
Infosystems
Limited
Submission of
forged
documents
A consortium of banks (including our Bank) had sanctioned fund
based and non-fund based facilities aggregating up to `8,000 million
to R P Infosystems Limited. IDBI bank, the consortium leader,
reported fraud by C to RBI and filed a police complaint against R P
Infosystems Limited. Further, the Central Vigilance Commission had
advised IDBI Bank to treat the accounts of R P Infosystems Limited
as fraud and make appropriate reporting to RBI. In light of the letter
from the Central Vigilance Commission, the consortium banks
(including our Bank) in their meeting have decided to treat the
accounts of R P Infosystems Limited as fraud. Our Bank has also
initiated recovery proceedings against R P Infosystems Limited and
the matter is currently pending. The total amount involved in the
matter is `100.00 million.
4. Vikash
Smelters and
Alloys Limited
Misappropriation
and criminal
breach of trust
A consortium of banks including our Bank sanctioned `2,400.00
million as term loan to Vikash Smelters and Alloys Limited (out of
which `1,000 million was sanctioned by our Bank). One of the
unsecured creditors of Vikash Smelters and Alloys Limited initiated
winding up proceedings against Vikash Smelters and Alloys Limited
before the High Court of Calcutta. High Court of Calcutta through its
order dated July 6, 2016 issued a winding up order and appointed
official liquidator. Subsequently, RBI through its letter dated July 1,
2016 intimated our Bank that other banks have reported that the
genuineness/ credentials of the suppliers of Vikash Smelters and
Alloys Limited were doubtful and advised our Bank to investigate the
account. Pursuant to our examinations, we had determined that the
credentials of its supplier, Metrix Metal Industries was doubtful.
Accordingly, our Bank has given its consent letter to the consortium
for filing a joint petition before CBI. Our Bank has also initiated
recovery proceedings against Vikash Smelters and Alloys Limited.
The total amount involved in the matter is `99.61 million.
5. Parekh
Aluminex
Limited
Misappropriation
and diversion of
funds
Our Bank has subscribed to NCD issued by Parekh Aluminex Limited
for an aggregate amount of `250.00 million and also sanctioned a
short term loan of `250.00 million to meet its working capital
requirement. The short term loan was converted into regular cash
credit facility on December 18, 2012, and our Bank was made part of
215
S. No. Fraud
Committed By
Nature of
Fraud
Brief Particulars of the fraud and the action taken by our Bank
Parekh Aluminex Limited’s working capital consortium. RBI through
its letter dated November 9, 2015 advised our Bank to investigate the
operations in the account of Parekh Aluminex Limited and report
fraud, if any. Pursuant to investigations conducted by our Bank, our
Fraud Monitoring Group (FMG) in its meeting dated January 18, 2016
decided to report the account as fraud to RBI as it is found that there
were instances of diversion of funds by Parekh Aluminex Limited.
Further, our Bank has initiated recovery proceedings against Parekh
Aluminex Limited. The total amount involved in the matter is `472.00
million.
6. PSL Limited Misappropriation
and criminal
breach of trust
Our Bank had sanctioned a short term loan of `1,000 million to the
company during June 2012 for part financing along with other banks
the contract value of `5,702.7 crores awarded to PSL Limited. RBI
through its letter advised all member banks to investigate the
operations of the borrowal account of PSL Limited regarding end use
of funds and report fraud in case any fraudulent activity is observed.
M/s T R Chadha & Co (TRC) was appointed to conduct a forensic
audit on the company. Separately, our Bank investigated the
transactions in the account of PSL Limited and observed diversion of
funds aggregating to `1,050 million. Our Bank has filed a police
complaint. The total amount involved is `1,103.40 miilion.
7. Eskay Knit
India Limited
Misappropriation
and criminal
breach of trust
Eskay Knit India Limited had availed working capital and term loans
under consortium arrangements from the consortium banks, including
our Bank. Our Bank sanctioned a term loan of `500 million on March
30, 2007 and cash credit limit of `140 million on December 15, 2009.
The account of Eskay Knit India Limited became a non performing
asset on June 30, 2012 and the accounts were restructured on March
28, 2013 with cut off date as on January 1, 2012. But the company
could not operate satisfactorily and the corporate debt restructuring
failed. M/s Haribhakti & Co LLP, external auditors were engaged to
conduct forensic audit of Eskay Knit India Limited and based on their
report our Bank reported Eskay Knit India Limited as fraud to RBI.
Our Bank has also initiated recovery proceedings against Eskay Knit
India Limited. Further, our Bank has given its consent letter to
consortium for filing criminal case against Eskay Knit India Limited.
The total amount involved is `312.88 million.
8. Shree Raj
Mahal
Jewellers
Limited
Misappropriation
and criminal
breach of trust
Shree Raj Mahal Jewellers Limited had availed loan under consortium
arrangements with banks (including our Bank) for an aggregate
amount of `1,250.00 million. Subsequently, RBI through its letter
dated September 16, 2016 informed our Bank of the fraud in the
borrowal account of Shree Raj Mahal Jewellers Limited with Bank of
India and advised us to investigate the operations in the borrowal
account of Shree Raj Mahal Jewellers Limited with us and report
fraud, if any. Accordingly our Bank conducted an investigation and
reported the account of Shree Raj Mahal Jewellers Limited as fraud.
Our Bank filed a joint suit filed for symbolic possession of the
property. Further, our Bank has given its consent letter to consortium
for filing criminal case against Shree Raj Mahal Jewellers Limited.
The total amount involved in the matter is `191.60 million.
9. Kingfisher
Airlines
Limited
Misappropriation
and criminal
breach of trust
A bank guarantee limit of `1,000 million was sanctioned by our Bank
on October 30, 2010 to Kingfisher Airlines Limited as part of
consortium advance along with other banks. The account of
Kingfisher Airlines Limited became a non performing asset on March
31, 2012. Subsequently, the lenders started recovery proceedings by
initiating legal and SARFAESI actions. Out of the net proceeds
realised by sale of pledged shares, our Bank has received `83.22
million. The dues outstanding from Kingfisher Airlines Limited as on
216
S. No. Fraud
Committed By
Nature of
Fraud
Brief Particulars of the fraud and the action taken by our Bank
date is `822.12 million. Our Bank initiated recovery proceedings and
pursuant to a joint suit filed, recovery certificate was issued by the
court. Further, our Bank has reported fraud in the account of
Kingfisher Airlines Limited as central investigation agencies viz. CBI
and Enforcement Directorate have suo motu initiated criminal
proceedings against Kingfisher Airlines Limited. The total amount
involved in the matter is `822.12 million.
In addition, our Bank reports on an individual basis all frauds to RBI. There are 188 frauds committed against our Bank.
Our Bank has initiated various actions against these frauds including, filing police complaints, initiating recovery
proceedings and filing matters before various judicial authorities.
IV. Details of default in repayment of (i) statutory dues; (ii) debentures and interest thereon; (iii) deposits and interest
thereon; (iv) loan from any bank or financial institution and interest thereon
There is no default in repayment of (i) statutory dues; (ii) debentures and interest thereon; (iii) deposits and interest
thereon; (iv) loan from any bank or financial institution and interest thereon.
V. Inquiry, inspections, investigations, prosecutions, fines imposed or compounding of offences under the Companies
Act, 2013 or any previous company law in the last three years in the case of our Bank and our Subsidiary
There are no inquiry, inspections, investigations, prosecutions, fines imposed or compounding of offences under the
Companies Act, 2013 or any previous company law involving our Bank or our Subsidiary during the last three years
immediately preceding the year of circulation of this Placement Document.
217
STATUTORY AUDITORS
Our Bank’s current Auditors are BSR & Co. LLP, Chartered Accountants and M.M. Nissim & Co., Chartered Accountants, have
jointly audited the consolidated financial statements and standalone financial statements as at and for the financial years ended
March 31, 2017, included in this Placement Document, and are the statutory auditors of our Bank as required by the Companies
Act, the Banking Regulation Act, 1949, read with relevant guidelines and directions of RBI, and in accordance with the guidelines
issued by the ICAI.
Our Bank’s previous statutory auditors were Deloitte Haskins & Sells, Chartered Accountants and M P Chitale & Co., Chartered
Accountants, who have jointly audited the consolidated financial statements and standalone financial statements as at and for the
financial years ended March 31, 2016 and 2015, included in this Placement Document, and were the statutory auditors of our
Bank as required by the Companies Act and the Banking Regulation Act, 1949, read with relevant guidelines and directions of
RBI, and in accordance with the guidelines issued by the ICAI.
218
LEGAL MATTERS
Certain legal matters in connection with the Issue will be passed upon for us by Cyril Amarchand Mangaldas with respect to
matters of Indian law.
Certain legal matters in connection with the Issue will be passed upon for the BRLMs by Shardul Amarchand Mangaldas & Co
with respect to matters of Indian law and by Clifford Chance Pte Ltd with respect to matters of U.S. federal securities laws.
Each of Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas & Co and Clifford Chance Pte Ltd does not make, or
purport to make, any statement in this document and is not aware of any statement in this document which purports to be based on
a statement made by it and each of them makes no representation, express or implied, regarding, and takes no responsibility for,
any statement in or omission from this document.
219
GENERAL INFORMATION
1. Our Bank was incorporated as The Travancore Federal Bank Limited Nedumpram on April 23, 1931 under the
Travancore Companies Regulation, 1916. Our Bank’s name was changed to “The Federal Bank Limited” on December
2, 1949. Our Bank was registered under the Indian Companies Act, 1956 on April 1, 1956 .Our Bank was licensed under
the Banking Regulation Act, 1949, on July 11, 1959 and is a scheduled commercial bank under the Second Schedule of
Reserve Bank of India Act, 1934.
2. Our Board of Directors, through the resolution passed at its meeting on April 28, 2017 and our Shareholders by way of
the special resolution dated June 7, 2017 passed through postal ballot approved the Issue.
3. Our Bank has received in-principle approvals in terms of Regulation 28 of the SEBI Listing Regulations from each of
BSE and NSE on June 21, 2017, to list the Equity Shares on the Stock Exchanges.
4. Copies of the Memorandum and Articles of Association will be available for inspection during usual business hours on
any weekday between 10.00 a.m. to 1.00 p.m. (except public holidays), at the Registered and Corporate Office during the
Bid/Issue Period.
5. Except as disclosed in this Placement Document, our Bank has obtained necessary consents, approvals and authorizations
required in connection with the Issue.
6. Except as disclosed in this Placement Document, there has been no material adverse change in our Bank’s financial
condition since March 31, 2017, the date of the latest financial statements, prepared in accordance with Indian GAAP,
included herein.
7. Except as disclosed in this Placement Document, there are no legal or arbitration proceedings against or affecting our
Bank or its assets or revenues, nor is our Bank aware of any pending or threatened legal or arbitration proceedings, which
are, or might be, material in the context of the Issue.
8. Our Bank’s current Auditors are BSR & Co. LLP, Chartered Accountants and M.M. Nissim & Co., Chartered
Accountants, have jointly audited the consolidated financial statements and standalone financial statements as at and for
the financial years ended March 31, 2017, included in this Placement Document. Our Bank’s previous statutory auditors
were Deloitte Haskins & Sells, Chartered Accountants and M P Chitale & Co., Chartered Accountants, who have jointly
audited the consolidated financial statements and standalone financial statements as at and for the financial years ended
March 31, 2016 and 2015, included in this Placement Document.
9. Our Bank confirms that it is in compliance with the minimum public shareholding requirements as required under
Securities (Contracts) Regulations Act, 1956, Securities (Contracts) Regulation Rules, 1957, SEBI Listing Regulations.
10. The Floor Price for the Equity Shares under the Issue is `117.04 per Equity Share which has been calculated in
accordance with Chapter VIII of the SEBI ICDR Regulations. Our Bank has offered a discount of not more than 5% on
the Floor Price in accordance with the approval of our Shareholders accorded on June 7, 2017 and Regulation 85(1) of
the SEBI ICDR Regulations.
220
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS Page Numbers
Standalone Statements for the year ended March 31, 2017 F-1 – F-85
Consolidated Financial Statements for the year ended March 31, 2017 F-86 – F-138
Standalone Statements for the year ended March 31, 2016 F-139 – F-224
Consolidated Financial Statements for the year ended March 31, 2016 F-225 – F-277
Standalone Statements for the year ended March 31, 2015 F-278 - F-365
Consolidated Financial Statements for the year ended March 31, 2015 F-366 – F-416
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S i n c e t h e k e y o p e r a t i o n s o f t h eB a n k a r e a u t o m a t e d w i t h t h e k e y a p p l i c a t i o n s i n t e g r a t e d t o t h e c o r e b a n k i n g s y s t e m s , t h e a u d i ti s c a r r i e d o u t c e n t r a l l y a s a l l t h e n e c e s s a r y r e c o r d s a n d d a t a r e q u i r e d f o r t h e p u r p o s e s o f o u ra u d i t a r e a v a i l a b l e t h e r e i n .( d ) T h e r e p o r t s o n t h e a c c o u n t s o f t h e 1 , 2 3 1 b r a n c h e s a u d i t e d b y b r a n c h a u d i t o r s o f t h e B a n ka p p o i n t e d u n d e r s e c t i o n 1 4 3 ( 8 ) t h e C o m p a n i e s A c t , 2 0 1 3 a n d u n a u d i t e d r e t u r n w i t h r e s p e c t t o1 b r a n c h h a v e b e e n f o r w a r d e d t o u s a n d h a v e b e e n p r o p e r l y d e a l t w i t h b y u s i n p r e p a r i n g t h i sr e p o r t .T h e d i s c l o s u r e r e q u i r e d o n h o l d i n g s a s w e l l a s d e a l i n g s i n S p e c i f i e d B a n k N o t e s d u r i n g t h e p e r i o df r o m 8 N o v e m b e r 2 0 1 7 t o 3 0 D e c e m b e r 2 0 1 7 a s e n v i s a g e d i n n o t i f i c a t i o n G S R 3 0 8 ( E ) d a t e d3 0 M a r c h 2 0 1 7 i s s u e d b y t h e M i n i s t r y o f C o r p o r a t e A f f a i r s , i s n o t a p p l i c a b l e t o t h e B a n k . R e f e r N o t eN o . 4 . 1 5 o f S c h e d u l e 1 8 t o t h e s t a n d a l o n e f i n a n c i a l s t a t e m e n t s .F u r t h e r , a s r e q u i r e d b y S e c t i o n 1 4 3 ( 3 ) o f t h e C o m p a n i e s A c t , 2 0 1 3 , w e f u r t h e r r e p o r t t h a t :( a ) w e h a v e s o u g h t a n d o b t a i n e d a l l t h e i n f o r m a t i o n a n d e x p l a n a t i o n s w h i c h t o t h e b e s t o f o u rk n o w l e d g e a n d b e l i e f w e r e n e c e s s a r y f o r t h e p u r p o s e o f o u r a u d i t ;( b ) i n o u r o p i n i o n , p r o p e r b o o k s o f a c c o u n t a s r e q u i r e d b y l a w h a v e b e e n k e p t b y t h e B a n k s o f a ra s i t a p p e a r s f r o m o u r e x a m i n a t i o n o f t h o s e b o o k s ;( c ) t h e B a l a n c e S h e e t , t h e P r o f i t a n d L o s s A c c o u n t a n d t h e C a s h F l o w S t a t e m e n t d e a l t w i t h b yt h i s r e p o r t a r e i n a g r e e m e n t w i t h t h e b o o k s o f a c c o u n t ;( d ) i n o u r o p i n i o n , t h e a f o r e s a i d s t a n d a l o n e f i n a n c i a l s t a t e m e n t s c o m p l y w i t h t h e A c c o u n t i n gS t a n d a r d s s p e c i f i e d u n d e r S e c t i o n 1 3 3 o f t h e A c t , r e a d w i t h R u l e 7 o f t h e C o m p a n i e s( A c c o u n t s ) R u l e s , 2 0 1 4 t o t h e e x t e n t t h e y a r e n o t i n c o n s i s t e n t w i t h t h e a c c o u n t i n g p o l i c i e sp r e s c r i b e d b y t h e R B I .( e ) o n t h e b a s i s o f t h e w r i t t e n r e p r e s e n t a t i o n s r e c e i v e d f r o m t h e d i r e c t o r s a s o n 3 1 M a r c h2 0 1 7 t a k e n o n r e c o r d b y t h e B o a r d o f D i r e c t o r s , n o n e o f t h e d i r e c t o r s i s d i s q u a l i f i e d a s o n3 1 M a r c h 2 0 1 7 f r o m b e i n g a p p o i n t e d a s a d i r e c t o r i n t e r m s o f S e c t i o n 1 6 4 ( 2 ) o f t h e A c t .( f ) w i t h r e s p e c t t o t h e a d e q u a c y o f t h e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n go f t h e B a n k a n d t h e o p e r a t i n g e f f e c t i v e n e s s o f s u c h c o n t r o l s , r e f e r t o o u r s e p a r a t e R e p o r ti n " A n n e x u r e A " ;F-3
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T h e s e r e s p o n s i b i l i t i e s i n c l u d e t h e d e s i g n ,i m p l e m e n t a t i o n a n d m a i n t e n a n c e o f a d e q u a t e i n t e r n a l f i n a n c i a l c o n t r o l s t h a t w e r e o p e r a t i n ge f f e c t i v e l y f o r e n s u r i n g t h e o r d e r l y a n d e f f i c i e n t c o n d u c t o f i t s b u s i n e s s , i n c l u d i n g a d h e r e n c e t oB a n k ’ s p o l i c i e s , t h e s a f e g u a r d i n g o f i t s a s s e t s , t h e p r e v e n t i o n a n d d e t e c t i o n o f f r a u d s a n d e r r o r s , t h ea c c u r a c y a n d c o m p l e t e n e s s o f t h e a c c o u n t i n g r e c o r d s , a n d t h e t i m e l y p r e p a r a t i o n o f r e l i a b l e f i n a n c i a li n f o r m a t i o n , a s r e q u i r e d u n d e r t h e C o m p a n i e s A c t , 2 0 1 3 ( ‘ t h e A c t ’ ) .A u d i t o r s ’ R e s p o n s i b i l i t yO u r r e s p o n s i b i l i t y i s t o e x p r e s s a n o p i n i o n o n t h e B a n k ’ s i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a lr e p o r t i n g b a s e d o n o u r a u d i t . W e c o n d u c t e d o u r a u d i t i n a c c o r d a n c e w i t h t h e G u i d a n c e N o t e a n d t h eS t a n d a r d s o n A u d i t i n g ( ‘ t h e S t a n d a r d s ’ ) , i s s u e d b y t h e I C A I a n d d e e m e d t o b e p r e s c r i b e d u n d e rs e c t i o n 1 4 3 ( 1 0 ) o f t h e A c t , t o t h e e x t e n t a p p l i c a b l e t o a n a u d i t o f i n t e r n a l f i n a n c i a l c o n t r o l s , b o t hi s s u e d b y t h e I C A I . T h o s e S t a n d a r d s a n d t h e G u i d a n c e N o t e r e q u i r e t h a t w e c o m p l y w i t h e t h i c a lr e q u i r e m e n t s a n d p l a n a n d p e r f o r m t h e a u d i t t o o b t a i n r e a s o n a b l e a s s u r a n c e a b o u t w h e t h e r a d e q u a t ei n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g w a s e s t a b l i s h e d a n d m a i n t a i n e d a n d i f s u c h c o n t r o l so p e r a t e d e f f e c t i v e l y i n a l l m a t e r i a l r e s p e c t s .O u r a u d i t i n v o l v e s p e r f o r m i n g p r o c e d u r e s t o o b t a i n a u d i t e v i d e n c e a b o u t t h e a d e q u a c y o f t h e i n t e r n a lf i n a n c i a l c o n t r o l s s y s t e m o v e r f i n a n c i a l r e p o r t i n g a n d t h e i r o p e r a t i n g e f f e c t i v e n e s s . O u r a u d i t o fi n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g i n c l u d e d o b t a i n i n g a n u n d e r s t a n d i n g o f i n t e r n a lf i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g , a s s e s s i n g t h e r i s k t h a t a m a t e r i a l w e a k n e s s e x i s t s , a n dt e s t i n g a n d e v a l u a t i n g t h e d e s i g n a n d o p e r a t i n g e f f e c t i v e n e s s o f i n t e r n a l c o n t r o l b a s e d o n t h e a s s e s s e dr i s k . T h e p r o c e d u r e s s e l e c t e d d e p e n d o n t h e a u d i t o r ’ s j u d g e m e n t , i n c l u d i n g t h e a s s e s s m e n t o f t h e r i s k so f m a t e r i a l m i s s t a t e m e n t o f t h e f i n a n c i a l s t a t e m e n t s , w h e t h e r d u e t o f r a u d o r e r r o r .W e b e l i e v e t h a t t h e a u d i t e v i d e n c e w e h a v e o b t a i n e d i s s u f f i c i e n t a n d a p p r o p r i a t e t o p r o v i d e a b a s i sf o r o u r a u d i t o p i n i o n o n t h e B a n k ’ s i n t e r n a l f i n a n c i a l c o n t r o l s s y s t e m o v e r f i n a n c i a l r e p o r t i n g .M e a n i n g o f I n t e r n a l F i n a n c i a l C o n t r o l s o v e r F i n a n c i a l R e p o r t i n gA B a n k ’ s i n t e r n a l f i n a n c i a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g i s a p r o c e s s d e s i g n e d t o p r o v i d e r e a s o n a b l ea s s u r a n c e r e g a r d i n g t h e r e l i a b i l i t y o f f i n a n c i a l r e p o r t i n g a n d t h e p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t sf o r e x t e r n a l p u r p o s e s i n a c c o r d a n c e w i t h g e n e r a l l y a c c e p t e d a c c o u n t i n g p r i n c i p l e s . A B a n k ’ s i n t e r n a lf i n a n c i a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g i n c l u d e s t h o s e p o l i c i e s a n d p r o c e d u r e s t h a t ( 1 ) p e r t a i n t o t h em a i n t e n a n c e o f r e c o r d s t h a t , i n r e a s o n a b l e d e t a i l , a c c u r a t e l y a n d f a i r l y r e f l e c t t h e t r a n s a c t i o n s a n dd i s p o s i t i o n s o f t h e a s s e t s o f t h e b a n k ; ( 2 ) p r o v i d e r e a s o n a b l e a s s u r a n c e t h a t t r a n s a c t i o n s a r e r e c o r d e da s n e c e s s a r y t o p e r m i t p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t s i n a c c o r d a n c e w i t h g e n e r a l l y a c c e p t e da c c o u n t i n g p r i n c i p l e s , a n d t h a t r e c e i p t s a n d e x p e n d i t u r e s o f t h e b a n k a r e b e i n g m a d e o n l y i na c c o r d a n c e w i t h a u t h o r i z a t i o n s o f m a n a g e m e n t a n d d i r e c t o r s o f t h e B a n k ; a n d ( 3 ) p r o v i d e r e a s o n a b l ea s s u r a n c e r e g a r d i n g p r e v e n t i o n o r t i m e l y d e t e c t i o n o f u n a u t h o r i z e d a c q u i s i t i o n , u s e , o r d i s p o s i t i o n o ft h e B a n k ’ s a s s e t s t h a t c o u l d h a v e a m a t e r i a l e f f e c t o n t h e f i n a n c i a l s t a t e m e n t s .F-5
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(` in Thousands)
Year ended 31 March 2017
Year ended 31 March 2016
Cash Flow from Operating ActivitiesNet Profit before taxes 1,30,64,982 71,96,481 Adjustments for:Depreciation on Bank's Property 12,21,731 10,54,468 Depreciation on Investments 2,42,010 1,67,434
Amortisation of Premium on Held to Maturity Investments 4,76,526 3,53,411 Provision for Non Performing Investments 53,500 6,34,189
Provision / Charge for Non Performing Assets 40,51,246 55,53,173 Provision on Standard Assets 7,85,000 2,95,000 (Profit)/Loss on sale of fixed assets (net) (957) 3,406 Provision for Restructured assets 67,564 (2,08,598) Provision for Other Contingencies 9,84,829 6,00,129
2,09,46,431 1,56,49,093 Adjustments for working capital changes:-(Increase)/ Decrease in Investments (excluding Held to Maturity Investments) (82,64,657) (4,41,85,989) (Increase)/ Decrease in Advances (15,65,12,514) (7,36,04,707) (Increase)/ Decrease in Other Assets (18,11,783) 10,83,013 Increase/ (Decrease) in Deposits 18,49,28,553 8,34,67,140 Increase/ (Decrease) in Other liabilities and provisions 22,99,013 27,75,901 Direct taxes paid (40,15,140) (3,77,005)
Net Cash Flow from / (Used in) Operating Activities 3,75,69,903 (1,51,92,555)
Cash Flow from Investing ActivitiesPurchase of Fixed Assets (9,40,005) (16,02,531) Proceeds from Sale of Fixed Assets 24,294 11,220 (Increase)/ Decrease in Held to Maturity Investments (2,29,13,323) 2,15,00,187 Net Cash generated / (Used in) Investing Activities (2,38,29,034) 1,99,08,876
Cash Flow from Financing ActivitiesProceeds from Issue of Share Capital (ESOS) 10,196 8,693 Proceeds from Share Premium 1,98,169 2,15,627 Repayment of Subordinate Debt (20,00,000) - Increase/(Decrease) in Borrowings (Excluding Subordinate Debt) 98,27,567 37,27,255 Dividend Paid (Including Tax on Dividend) (14,48,805) (22,69,854)
Net Cash generated from financing Activities 65,87,127 16,81,721
Effect of exchange fluctuation on translation reserve (4,358) 93
Net Increase in Cash and Cash Equivalents 2,03,23,638 63,98,135
THE FEDERAL BANK LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2017
F-9
(` in Thousands)
Year ended 31 March 2017
Year ended 31 March 2016
Cash and Cash Equivalents at the beginning of year 5,41,98,100 4,77,99,965 Cash and Cash Equivalents at the end of year 7,45,21,738 5,41,98,100
Note:
For and on behalf of the Board of Directors
Krishnakumar K Girish Kumar Ganapathy Ashutosh Khajuria Ganesh SankaranDeputy General Manager Company Secretary Executive Director & CFO Executive Director
K M Chandrasekhar Shyam SrinivasanChairman Managing Director & CEO
In terms of our report attached Directors:
For B S R & Co. LLP For M. M. Nissim & Co. Nilesh S VikamseyChartered Accountants Chartered Accountants Firm's Registration No: Firm's Registration No:101248W/W-100022 107122W Dilip G Sadarangani
Harish H Engineer
Venkataramanan Vishwanath Sanjay Khemani Grace Elizabeth KoshiePartner PartnerMembership No: 113156 Membership No: 044577
Shubhalakshmi Panse
C Balagopal
Place: KochiDate : 28th April 2017
Cash and cash equivalents comprise of cash on hand (including foreign currency notes), Balances with Reserve Bank of India, Balance with Banks and money at call and short notice (Refer schedules 6 and 7 of the Balance sheet)
F-10
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T H E F E D E R A L B A N K L I M I T E DS C H E D U L E 1 7 : S I G N I F I C A N T A C C O U N T I N G P O L I C I E S A P P E N D E D T O A N DF O R M I N G P A R T O F T H E F I N A N C I A L S T A T E M E N T S F O RT H E Y E A R E N D E D 3 1 M A R C H , 2 0 1 71 . B a c k g r o u n dT h e F e d e r a l B a n k L i m i t e d ( ‘ t h e B a n k ’ ) w a s i n c o r p o r a t e d i n 1 9 3 1 a s T r a v a n c o r eF e d e r a l B a n k L i m i t e d t o c a t e r t o t h e b a n k i n g n e e d s o f T r a v a n c o r e P r o v i n c e . I te m b a r k e d o n a p h a s e o f s u s t a i n e d g r o w t h u n d e r t h e l e a d e r s h i p o f L a t e K . P . H o r m i s .T h e B a n k h a s a n e t w o r k o f 1 2 7 3 b r a n c h e s / o f f i c e s i n I n d i a a n d p r o v i d e s r e t a i l a n dc o r p o r a t e b a n k i n g , p a r a b a n k i n g a c t i v i t i e s s u c h a s d e b i t c a r d , t h i r d p a r t y p r o d u c td i s t r i b u t i o n e t c . , t r e a s u r y a n d f o r e i g n e x c h a n g e b u s i n e s s . T h e b a n k i s g o v e r n e d b y t h eB a n k i n g R e g u l a t i o n A c t , 1 9 4 9 a n d o t h e r a p p l i c a b l e A c t s / R e g u l a t i o n s . T h e B a n k ’ ss h a r e s a r e l i s t e d o n B S E L i m i t e d a n d N a t i o n a l S t o c k E x c h a n g e o f I n d i a L i m i t e d . T h eG D R s i s s u e d b y t h e B a n k i n 2 0 0 6 h a v e b e e n l i s t e d o n L o n d o n S t o c k E x c h a n g e . T h eb a n k h a d s e t u p a n I n t e r n a t i o n a l F i n a n c i a l S e r v i c e C e n t r e ( I F S C ) B a n k i n g u n i t ( I B U )i n G u j a r a t I n t e r n a t i o n a l F i n a n c e T e c j C i t y ( G I F T C i t y ) i n l i n e w i t h g l o b a l f i n a n c i a lc e n t r e s o f S i n g a p o r e a n d D u b a i . I B U a t G i f t c i t y i s e q u i v a l e n t t o a n O f f s h o r e B a n k i n gu n i t , f o r a l l r e g u l a t o r y p u r p o s e s .2 . B a s i s o f p r e p a r a t i o nT h e f i n a n c i a l s t a t e m e n t s h a v e b e e n p r e p a r e d i n a c c o r d a n c e w i t h r e q u i r e m e n t sp r e s c r i b e d u n d e r t h e T h i r d S c h e d u l e ( F o r m A a n d F o r m B ) o f t h e B a n k i n g R e g u l a t i o nA c t , 1 9 4 9 . T h e a c c o u n t i n g a n d r e p o r t i n g p o l i c i e s o f t h e b a n k u s e d i n t h e p r e p a r a t i o no f t h e s e f i n a n c i a l s t a t e m e n t s c o n f o r m t o G e n e r a l l y A c c e p t e d A c c o u n t i n g P r i n c i p l e s i nI n d i a ( “ I n d i a n G A A P ” ) , t h e c i r c u l a r s a n d g u i d e l i n e s i s s u e d b y t h e R e s e r v e B a n k o fI n d i a ( ' R B I ' ) f r o m t i m e t o t i m e a n d t h e A c c o u n t i n g S t a n d a r d s p r e s c r i b e d u n d e r S e c t i o n1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 ( “ t h e A c t ” ) a n d t h e r e l e v a n t p r o v i s i o n s o f t h e A c t , a sa p p l i c a b l e a n d c u r r e n t p r a c t i c e s p r e v a i l i n g w i t h i n t h e b a n k i n g i n d u s t r y i n I n d i a . T h eB a n k f o l l o w s t h e h i s t o r i c a l c o s t c o n v e n t i o n a n d a c c r u a l m e t h o d o f a c c o u n t i n g i n t h ep r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s , e x c e p t i n t h e c a s e o f i n t e r e s t i n c o m e o n N o n jP e r f o r m i n g A s s e t s ( N P A s ) a n d l o a n s u n d e r S c h e m e f o r S u s t a i n a b l e S t r u c t u r i n g o fS t r e s s e d A s s e t s ( S 4 A ) a n d S t r a t e g i c D e b t r e s t r u c t u r i n g ( S D R ) s c h e m e o f R B I w h e r e i ti s r e c o g n i s e d u p o n r e a l i s a t i o n a s p e r R B I g u i d e l i n e s . T h e a c c o u n t i n g p o l i c i e s a d o p t e di n t h e p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t s a r e c o n s i s t e n t w i t h t h o s e f o l l o w e d i n t h ep r e v i o u s y e a r .3 . U s e o f e s t i m a t e sT h e p r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s i n c o n f o r m i t y w i t h t h e g e n e r a l l y a c c e p t e da c c o u n t i n g p r i n c i p l e s r e q u i r e s t h e M a n a g e m e n t t o m a k e e s t i m a t e s a n d a s s u m p t i o n st h a t a f f e c t t h e r e p o r t e d a m o u n t s o f a s s e t s a n d l i a b i l i t i e s , r e v e n u e s a n d e x p e n s e s a n dd i s c l o s u r e o f c o n t i n g e n t l i a b i l i t i e s a t t h e d a t e o f t h e f i n a n c i a l s t a t e m e n t s . A c t u a l r e s u l t sc o u l d d i f f e r f r o m t h o s e e s t i m a t e s . T h e M a n a g e m e n t b e l i e v e s t h a t t h e e s t i m a t e s u s e d i nt h e p r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s a r e p r u d e n t a n d r e a s o n a b l e . A n y r e v i s i o n st o t h e a c c o u n t i n g e s t i m a t e s a r e r e c o g n i s e d p r o s p e c t i v e l y i n t h e c u r r e n t a n d f u t u r ep e r i o d s .F-21
2
4 . S i g n i f i c a n t a c c o u n t i n g p o l i c i e sS i g n i f i c a n t C h a n g e i n A c c o u n t i n g P o l i c y :P r o p o s e d D i v i d e n dI n t e r m s o f r e v i s e d A c c o u n t i n g S t a n d a r d ( A S ) 4 " C o n t i n g e n c i e s a n d E v e n t s o c c u r r i n ga f t e r t h e B a l a n c e s h e e t d a t e " a s n o t i f i e d b y t h e M i n i s t r y o f C o r p o r a t e a f f a i r s t h r o u g ha m e n d m e n t s t o C o m p a n i e s ( A c c o u n t i n g S t a n d a r d s ) A m e n d m e n t R u l e s , 2 0 1 6 d a t e dM a r c h 3 0 , 2 0 1 6 , B a n k h a s n o t a c c o u n t e d f o r p r o p o s e d d i v i d e n d a s a l i a b i l i t y a s a tM a r c h 3 1 , 2 0 1 7 . P r o p o s e d d i v i d e n d w a s h o w e v e r a c c o u n t e d a s a l i a b i l i t y a s a t M a r c h3 1 , 2 0 1 6 , i n l i n e w i t h e x i s t i n g a c c o u n t i n g s t a n d a r d a p p l i c a b l e a t t h a t t i m e .4 . 1 R e v e n u e R e c o g n i t i o n•
I n t e r e s t i n c o m e i s r e c o g n i s e d o n a n a c c r u a l b a s i s e x c e p t i n t e r e s t i n c o m e o n n o n Ép e r f o r m i n g a s s e t s , l o a n s u n d e r S c h e m e f o r S u s t a i n a b l e S t r u c t u r i n g o f S t r e s s e dA s s e t s ( S 4 A ) a n d S t r a t e g i c D e b t r e s t r u c t u r i n g ( S D R ) s c h e m e o f R B I w h i c h i sr e c o g n i s e d u p o n r e c e i p t i n a c c o r d a n c e w i t h A S É 9 , R e v e n u e R e c o g n i t i o n a sp r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 a n d a s s p e c i f i e d i n R B Ig u i d e l i n e s .•
I n t e r e s t o n i n c o m e t a x r e f u n d i s r e c o g n i s e d i n t h e y e a r o f p a s s i n g o f A s s e s s m e n tO r d e r s .• T h e r e c o v e r i e s m a d e f r o m N P A a c c o u n t s a r e a p p r o p r i a t e d f i r s t t o w a r d s u n r e a l i z e di n t e r e s t / i n c o m e d e b i t e d t o b o r r o w e r s a c c o u n t s , t h e n e x p e n d i t u r e / o u t o f p o c k e te x p e n s e s i n c u r r e d a n d l a s t l y t o w a r d s p r i n c i p a l d u e s .•
P r o c e s s i n g f e e s c o l l e c t e d o n l o a n s d i s b u r s e d , a l o n g w i t h r e l a t e d l o a n a c q u i s i t i o nc o s t s a r e r e c o g n i s e d a t i n c e p t i o n / R e n e w a l o f t h e l o a n .•
I n c o m e o n d i s c o u n t e d i n s t r u m e n t s i s r e c o g n i s e d o v e r t h e t e n u r e o f t h e i n s t r u m e n to n a s t r a i g h t l i n e b a s i s .• G u a r a n t e e c o m m i s s i o n , c o m m i s s i o n o n l e t t e r o f c r e d i t a n d a n n u a l l o c k e r r e n t f e e sa r e r e c o g n i s e d o n a s t r a i g h t l i n e b a s i s o v e r t h e p e r i o d o f c o n t r a c t . O t h e r f e e s a n dc o m m i s s i o n i n c o m e a r e r e c o g n i s e d w h e n d u e , e x c e p t i n c a s e s w h e r e t h e b a n k i su n c e r t a i n o f u l t i m a t e c o l l e c t i o n .•
D i v i d e n d o n E q u i t y S h a r e s , P r e f e r e n c e S h a r e s a n d o n M u t u a l F u n d s i s r e c o g n i s e da s I n c o m e w h e n t h e r i g h t t o r e c e i v e t h e d i v i d e n d i s e s t a b l i s h e d .• L o a n S y n d i c a t i o n f e e i s a c c o u n t e d f o r o n c o m p l e t i o n o f t h e a g r e e d s e r v i c e a n dw h e n r i g h t t o r e c e i v e i s e s t a b l i s h e d .•
I n c o m p r o m i s e s e t t l e m e n t c a s e s , s a c r i f i c e o n s e t t l e m e n t i s a c c o u n t e d u p f r o n t .• U n p a i d f u n d e d i n t e r e s t o n t e r m l o a n s a r e a c c o u n t e d o n r e a l i s a t i o n a s p e r t h eg u i d e l i n e s o f R B I .• T h e d i f f e r e n c e b e t w e e n t h e s a l e p r i c e a n d p u r c h a s e c o s t o f g o l d c o i n s , r e c e i v e d o nc o n s i g n m e n t b a s i s i s i n c l u d e d i n o t h e r i n c o m e .
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4 . 2 A d v a n c e sA d v a n c e s a r e c l a s s i f i e d i n t o p e r f o r m i n g a s s e t s ( S t a n d a r d ) a n d n o n ö p e r f o r m i n g a s s e t s( ' N P A s ' ) a s p e r t h e R B I g u i d e l i n e s a n d a r e s t a t e d n e t o f b i l l s r e d i s c o u n t e d , s p e c i f i cp r o v i s i o n s m a d e t o w a r d s N P A s , f l o a t i n g p r o v i s i o n s a n d u n r e a l i z e d i n t e r e s t o n N P A s .I n t e r e s t o n N o n P e r f o r m i n g a d v a n c e s i s t r a n s f e r r e d t o a n u n r e a l i z e d i n t e r e s t a c c o u n ta n d n o t r e c o g n i z e d i n p r o f i t a n d l o s s a c c o u n t u n t i l r e c e i v e d . F u r t h e r , N P A s a r ec l a s s i f i e d i n t o s u b ö s t a n d a r d , d o u b t f u l a n d l o s s a s s e t s b a s e d o n t h e c r i t e r i a s t i p u l a t e d b yt h e R B I . T h e B a n k h a s m a d e p r o v i s i o n f o r N o n ö P e r f o r m i n g A s s e t s a s s t i p u l a t e d u n d e rR e s e r v e B a n k o f I n d i a ( R B I ) n o r m s .T h e B a n k a l s o m a i n t a i n s p r o v i s i o n s o n l o a n s u n d e r S c h e m e f o r S u s t a i n a b l eS t r u c t u r i n g o f S t r e s s e d A s s e t s ( S 4 A ) a n d S t r a t e g i c D e b t r e s t r u c t u r i n g ( S D R ) s c h e m ea s p e r t h e R B I g u i d e l i n e s .A m o u n t s r e c o v e r e d a g a i n s t d e b t s w r i t t e n o f f a r e r e c o g n i s e d i n t h e p r o f i t a n d l o s sa c c o u n t a n d i n c l u d e d u n d e r “ O t h e r I n c o m e ” .F o r r e s t r u c t u r e d / r e s c h e d u l e d a s s e t s , p r o v i s i o n i s m a d e i n a c c o r d a n c e w i t h t h eg u i d e l i n e s i s s u e d b y t h e R B I , w h i c h r e q u i r e s t h e d i m i n u t i o n i n t h e f a i r v a l u e o f t h ea s s e t s t o b e p r o v i d e d a t t h e t i m e o f r e s t r u c t u r i n g . I n r e s p e c t o f l o a n s a n d a d v a n c e sa c c o u n t s s u b j e c t e d t o r e s t r u c t u r i n g , t h e a c c o u n t i s u p g r a d e d t o s t a n d a r d o n l y a f t e r t h es p e c i f i e d p e r i o d i . e . a p e r i o d o f o n e y e a r a f t e r t h e d a t e w h e n f i r s t p a y m e n t o f i n t e r e s to r o f p r i n c i p a l , w h i c h e v e r i s l a t e r , f a l l s d u e , s u b j e c t t o s a t i s f a c t o r y p e r f o r m a n c e o f t h ea c c o u n t d u r i n g t h e p e r i o d .P r o v i s i o n f o r U n h e d g e d F o r e i g n c u r r e n c y E x p o s u r e ( U F C E ) o f b o r r o w e r e n t i t i e s , i sm a d e i n a c c o r d a n c e w i t h t h e g u i d e l i n e s i s s u e d b y R B I , w h i c h r e q u i r e s t h e B a n k t oa s c e r t a i n t h e a m o u n t o f U F C E , e s t i m a t e t h e e x t e n t o f l i k e l y l o s s a n d e s t i m a t e t h er i s k n e s s o f u n h e d g e d p o s i t i o n o f t h o s e e n t i t i e s . T h e P r o v i s i o n i s c l a s s i f i e d u n d e rS c h e d u l e 5 – O t h e r L i a b i l i t i e s i n t h e B a l a n c e S h e e tT h e B a n k m a i n t a i n s g e n e r a l p r o v i s i o n f o r s t a n d a r d a s s e t s i n c l u d i n g c r e d i t e x p o s u r e sc o m p u t e d a s p e r t h e c u r r e n t m a r k e d t o m a r k e t v a l u e s o f i n t e r e s t r a t e a n d f o r e i g ne x c h a n g e d e r i v a t i v e c o n t r a c t s , i n a c c o r d a n c e w i t h t h e g u i d e l i n e s a n d a t l e v e l ss t i p u l a t e d b y R B I f r o m t i m e t o t i m e – F a r m C r e d i t t o a g r i c u l t u r a l a c t i v i t i e s a n d S m a l la n d M i c r o E n t e r p r i s e s ( S M E s ) 0 . 2 5 % , C o m m e r c i a l R e a l E s t a t e a t 1 % , r e s t r u c t u r e da d v a n c e s a t 5 % , t e a s e r r a t e h o u s i n g l o a n s a t 2 % , c o m m e r c i a l r e a l e s t a t e ö r e s i d e n t i a lh o u s i n g a t 0 . 7 5 % a n d f o r o t h e r s e c t o r s a t 0 . 4 0 % .T h e b a n k t r a n s f e r s a d v a n c e s t h r o u g h i n t e r ö b a n k p a r t i c i p a t i o n w i t h a n d w i t h o u t r i s k . I na c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , i n t h e c a s e o f p a r t i c i p a t i o n w i t h r i s k , t h ea g g r e g a t e a m o u n t o f t h e p a r t i c i p a t i o n i s s u e d b y t h e B a n k i s r e d u c e d f r o m a d v a n c e sa n d w h e r e b a n k i s p a r t i c i p a t i n g , t h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n i s c l a s s i f i e du n d e r a d v a n c e s . I n t h e c a s e o f p a r t i c i p a t i o n w i t h o u t r i s k , t h e a g g r e g a t e a m o u n t o fp a r t i c i p a t i o n i s s u e d b y t h e B a n k i s c l a s s i f i e d u n d e r b o r r o w i n g s a n d w h e r e t h e b a n k i sp a r t i c i p a t i n g , t h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n i s s h o w n a s d u e f r o m b a n k s u n d e ra d v a n c e s .F-23
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L o s s o n s a l e o f a s s e t s t o A s s e t R e c o n s t r u c t i o n C o m p a n i e sT h e R B I i s s u e d g u i d e l i n e s o n s a l e o f n o n = p e r f o r m i n g a d v a n c e s o n F e b r u a r y 2 6 , 2 0 1 4 .I n a c c o r d a n c e w i t h t h e s e g u i d e l i n e s , i f t h e s a l e o f n o n = p e r f o r m i n g a d v a n c e s i s a t ap r i c e b e l o w t h e n e t b o o k v a l u e , t h e s h o r t f a l l i s c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n ts p r e a d o v e r a p e r i o d o f t w o y e a r s . I f t h e s a l e i s f o r a v a l u e h i g h e r t h a n t h e n e t b o o kv a l u e , t h e e x c e s s p r o v i s i o n i s c r e d i t e d t o t h e P r o f i t a n d L o s s A c c o u n t i n t h e y e a r t h ea m o u n t s a r e r e c e i v e d .4 . 3 C o u n t r y r i s kI n a d d i t i o n t o t h e p r o v i s i o n s r e q u i r e d t o b e h e l d a c c o r d i n g t o t h e a s s e t c l a s s i f i c a t i o ns t a t u s , p r o v i s i o n s a r e h e l d f o r i n d i v i d u a l c o u n t r y e x p o s u r e ( o t h e r t h a n f o r h o m ec o u n t r y ) . T h e c o u n t r i e s a r e c a t e g o r i s e d i n t o s e v e n r i s k c a t e g o r i e s n a m e l y i n s i g n i f i c a n t ,l o w , m o d e r a t e , h i g h , v e r y h i g h , r e s t r i c t e d a n d o f f = c r e d i t a s p e r E x p o r t C r e d i tG u a r a n t e e C o r p o r a t i o n o f I n d i a L i m i t e d ( “ E C G C ” ) g u i d e l i n e s a n d p r o v i s i o n i s m a d ei n r e s p e c t o f t h e c o u n t r y w h e r e t h e n e t f u n d e d e x p o s u r e i s 1 % o r m o r e o f t h e b a n k ’ st o t a l f u n d e d a s s e t s .4 . 4 I n v e s t m e n t sC l a s s i f i c a t i o nI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , i n v e s t m e n t s a r e c a t e g o r i s e d a t t h e t i m e o fp u r c h a s e a s :• H e l d f o r T r a d i n g ( H F T ) ;•
A v a i l a b l e f o r S a l e ( A F S ) ; a n d• H e l d t o M a t u r i t y ( H T M )I n v e s t m e n t s w h i c h a r e p r i m a r i l y h e l d f o r s a l e w i t h i n 9 0 d a y s f r o m t h e d a t e o f p u r c h a s ea r e c l a s s i f i e d a s “ H e l d f o r T r a d i n g ” . A s p e r R B I g u i d e l i n e s , H F T S e c u r i t i e s w h i c hr e m a i n u n s o l d f o r a p e r i o d o f 9 0 d a y s a r e c l a s s i f i e d a s A F S S e c u r i t i e s o n t h a t d a t e .I n v e s t m e n t s w h i c h t h e b a n k i n t e n d s t o h o l d t i l l m a t u r i t y a r e c l a s s i f i e d a s “ H e l d t oM a t u r i t y ” .I n v e s t m e n t s w h i c h a r e n o t c l a s s i f i e d i n e i t h e r o f t h e a b o v e t w o c a t e g o r i e s a r ec l a s s i f i e d a s “ A v a i l a b l e f o r S a l e ” .U n d e r e a c h o f t h e s e c a t e g o r i e s , i n v e s t m e n t s a r e f u r t h e r c l a s s i f i e d u n d e r s i x g r o u p s( h e r e i n a f t e r c a l l e d g r o u p s ) = G o v e r n m e n t S e c u r i t i e s , O t h e r A p p r o v e d S e c u r i t i e s ,S h a r e s , D e b e n t u r e s a n d B o n d s , I n v e s t m e n t s i n S u b s i d i a r i e s / J o i n t V e n t u r e s a n d O t h e rI n v e s t m e n t s f o r t h e p u r p o s e s o f d i s c l o s u r e i n t h e B a l a n c e S h e e t .T r a n s f e r o f s e c u r i t i e s b e t w e e n C a t e g o r i e sT r a n s f e r o f s e c u r i t i e s b e t w e e n c a t e g o r i e s i s d o n e a t t h e l o w e r o f t h e a c q u i s i t i o n c o s t /b o o k v a l u e / m a r k e t v a l u e o n t h e d a t e o f t h e t r a n s f e r a n d t h e d e p r e c i a t i o n , i f a n y , o ns u c h t r a n s f e r i s f u l l y p r o v i d e d f o r , a s p e r R B I g u i d e l i n e s .
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A c q u i s i t i o n C o s tI n d e t e r m i n i n g t h e a c q u i s i t i o n c o s t o f t h e I n v e s t m e n t :• T r a n s a c t i o n c o s t s i n c l u d i n g b r o k e r a g e a n d c o m m i s s i o n p e r t a i n i n g t o a c q u i s i t i o n o fI n v e s t m e n t s a r e c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t .• B r o k e n p e r i o d i n t e r e s t i s c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t .• C o s t o f i n v e s t m e n t s i s c o m p u t e d b a s e d o n t h e w e i g h t e d a v e r a g e c o s t m e t h o d .V a l u a t i o nT h e v a l u a t i o n o f i n v e s t m e n t s i s m a d e i n a c c o r d a n c e w i t h t h e R B I G u i d e l i n e s a sf o l l o w s :a ) H e l d f o r T r a d i n g / A v a i l a b l e f o r S a l e – I n v e s t m e n t s c l a s s i f i e d u n d e r t h e A F S a n dH F T c a t e g o r i e s a r e m a r k e d Õ t o Õ m a r k e t . T h e m a r k e t / f a i r v a l u e o f q u o t e di n v e s t m e n t s i n c l u d e d i n t h e ‘ A F S ’ a n d ‘ H F T ’ c a t e g o r i e s i s t h e M a r k e t P r i c e o f t h eS c r i p a s a v a i l a b l e f r o m t h e t r a d e s / q u o t e s o n t h e s t o c k e x c h a n g e s o r p r i c e sd e c l a r e d b y P r i m a r y D e a l e r s A s s o c i a t i o n o f I n d i a ( ‘ P D A I ’ ) j o i n t l y w i t h F i x e dI n c o m e M o n e y M a r k e t a n d D e r i v a t i v e A s s o c i a t i o n s o f I n d i a ( ‘ F I M M D A ’ ) ,p e r i o d i c a l l y . N e t d e p r e c i a t i o n , i f a n y , w i t h i n e a c h c a t e g o r y o f e a c h i n v e s t m e n tc l a s s i f i c a t i o n i s r e c o g n i s e d i n P r o f i t a n d L o s s A c c o u n t . T h e n e t a p p r e c i a t i o n , i fa n y , u n d e r e a c h c a t e g o r y o f e a c h I n v e s t m e n t i s i g n o r e d . E x c e p t i n c a s e s w h e r ep r o v i s i o n f o r d i m i n u t i o n o t h e r t h a n t e m p o r a r y i s c r e a t e d , t h e B o o k v a l u e o fi n d i v i d u a l s e c u r i t i e s i s n o t c h a n g e d c o n s e q u e n t t o t h e p e r i o d i c v a l u a t i o n o fI n v e s t m e n t s .b ) H e l d t o M a t u r i t y – T h e s e a r e c a r r i e d a t t h e i r a c q u i s i t i o n c o s t . A n y p r e m i u m o na c q u i s i t i o n o f g o v e r n m e n t s e c u r i t i e s a r e a m o r t i s e d o v e r t h e r e m a i n i n g m a t u r i t yp e r i o d o f t h e s e c u r i t y o n a s t r a i g h t l i n e b a s i s . A n y d i m i n u t i o n , o t h e r t h a nt e m p o r a r y , i n t h e v a l u e o f s u c h s e c u r i t i e s i s p r o v i d e d f o r .c ) T r e a s u r y B i l l s a n d C e r t i f i c a t e o f D e p o s i t s b e i n g d i s c o u n t e d i n s t r u m e n t s , a r ev a l u e d a t c a r r y i n g c o s t .d ) U n i t s o f M u t u a l F u n d s a r e v a l u e d a t t h e l a t e s t r e p u r c h a s e p r i c e / n e t a s s e t v a l u ed e c l a r e d b y M u t u a l F u n d .e ) M a r k e t v a l u e o f i n v e s t m e n t s w h e r e c u r r e n t q u o t a t i o n s a r e n o t a v a i l a b l e , i sd e t e r m i n e d a s p e r t h e n o r m s p r e s c r i b e d b y t h e R B I a s u n d e r :
• i n c a s e o f u n q u o t e d b o n d s , d e b e n t u r e s a n d p r e f e r e n c e s h a r e s w h e r ei n t e r e s t / d i v i d e n d i s r e c e i v e d r e g u l a r l y ( i . e . n o t o v e r d u e b e y o n d 9 0 d a y s ) , t h em a r k e t p r i c e i s d e r i v e d b a s e d o n t h e Y i e l d t o M a t u r i t y ( Y T M ) f o r G o v e r n m e n tS e c u r i t i e s a s p u b l i s h e d b y F I M M D A / P D A I a n d s u i t a b l y m a r k e d u p f o r c r e d i tr i s k a p p l i c a b l e t o t h e c r e d i t r a t i n g o f t h e i n s t r u m e n t . T h e m a t r i x f o r c r e d i t r i s km a r k Õ u p f o r e a c h c a t e g o r i e s a n d c r e d i t r a t i n g s a l o n g w i t h r e s i d u a l m a t u r i t yi s s u e d b y F I M M D A a r e a d o p t e d f o r t h i s p u r p o s e ;• i n c a s e o f b o n d s a n d d e b e n t u r e s ( i n c l u d i n g P a s s T h r o u g h C e r t i f i c a t e s o r P T C s )w h e r e i n t e r e s t i s n o t r e c e i v e d r e g u l a r l y ( i . e . o v e r d u e b e y o n d 9 0 d a y s ) , t h ev a l u a t i o n i s i n a c c o r d a n c e w i t h p r u d e n t i a l n o r m s f o r p r o v i s i o n i n g a s
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p r e s c r i b e d b y R B I ;• E q u i t y s h a r e s , f o r w h i c h c u r r e n t q u o t a t i o n s a r e n o t a v a i l a b l e o r w h e r e t h es h a r e s a r e n o t q u o t e d o n t h e s t o c k e x c h a n g e s , a r e v a l u e d a t b r e a k � u p v a l u e( w i t h o u t c o n s i d e r i n g r e v a l u a t i o n r e s e r v e s , i f a n y ) w h i c h i s a s c e r t a i n e d f r o mt h e c o m p a n y ' s l a t e s t B a l a n c e S h e e t . I n c a s e t h e l a t e s t B a l a n c e S h e e t i s n o ta v a i l a b l e , t h e s h a r e s a r e v a l u e d a t R e . 1 / � p e r c o m p a n y ;• D e p r e c i a t i o n o n e q u i t y s h a r e s a c q u i r e d a n d h e l d b y t h e B a n k u n d e r S D Rs c h e m e i s p r o v i d e d o v e r a p e r i o d o f f o u r c a l e n d a r q u a r t e r s f r o m t h e d a t e o fc o n v e r s i o n o f d e b t i n t o e q u i t y i n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s .• U n i t s o f V e n t u r e C a p i t a l F u n d s ( V C F ) h e l d u n d e r A F S c a t e g o r y w h e r e c u r r e n tq u o t a t i o n s a r e n o t a v a i l a b l e a r e m a r k e d t o m a r k e t b a s e d o n t h e N e t A s s e tV a l u e ( N A V ) s h o w n b y V C F a s p e r t h e l a t e s t a u d i t e d f i n a n c i a l s o f t h e f u n d . I nc a s e t h e a u d i t e d f i n a n c i a l s a r e n o t a v a i l a b l e f o r a p e r i o d b e y o n d 1 8 m o n t h s , t h ei n v e s t m e n t s a r e v a l u e d a t R e . 1 / � p e r V C F . I n v e s t m e n t i n u n q u o t e d V C F a f t e r2 3 r d A u g u s t , 2 0 0 6 a r e c a t e g o r i s e d u n d e r H T M c a t e g o r y f o r t h e i n i t i a l p e r i o d o ft h r e e y e a r s a n d v a l u e d a t c o s t a s p e r R B I g u i d e l i n e s ;•
I n v e s t m e n t i n s e c u r i t y r e c e i p t s a r e v a l u e d a s p e r t h e N e t A s s e t V a l u e ( N A V )o b t a i n e d f r o m t h e i s s u i n g R e c o n s t r u c t i o n C o m p a n y / S e c u r i t i s a t i o n C o m p a n y .f ) I n v e s t m e n t s i n s u b s i d i a r i e s / a s s o c i a t e s a r e c a t e g o r i s e d a s H T M a n d a s s e s s e d f o ri m p a i r m e n t t o d e t e r m i n e p e r m a n e n t d i m i n u t i o n , i f a n y , i n a c c o r d a n c e w i t h t h eR B I g u i d e l i n e s .g ) T h e B a n k f o l l o w s t r a d e d a t e m e t h o d o f a c c o u n t i n g f o r p u r c h a s e a n d s a l e o fi n v e s t m e n t s , e x c e p t f o r G o v e r n m e n t o f I n d i a a n d S t a t e G o v e r n m e n t s e c u r i t i e sw h e r e s e t t l e m e n t d a t e m e t h o d o f a c c o u n t i n g i s f o l l o w e d i n a c c o r d a n c e w i t h R B IG u i d e l i n e s .h ) N o n P e r f o r m i n g I n v e s t m e n t s a r e i d e n t i f i e d a n d v a l u e d b a s e d o n R B I G u i d e l i n e s .D i s p o s a l o f I n v e s t m e n t sa ) H e l d f o r T r a d i n g a n d A v a i l a b l e f o r S a l e – P r o f i t o r l o s s o n s a l e / r e d e m p t i o n i si n c l u d e d i n t h e P r o f i t a n d L o s s a c c o u n t .b ) H e l d t o M a t u r i t y – P r o f i t o n s a l e / r e d e m p t i o n o f i n v e s t m e n t s i s i n c l u d e d i n t h eP r o f i t a n d L o s s A c c o u n t a n d i s a p p r o p r i a t e d t o C a p i t a l R e s e r v e a f t e r a d j u s t m e n t sf o r t a x a n d t r a n s f e r t o s t a t u t o r y R e s e r v e . L o s s o n s a l e / r e d e m p t i o n i s c h a r g e d t ot h e P r o f i t a n d L o s s a c c o u n t .R e p o a n d R e v e r s e R e p o t r a n s a c t i o n sI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s r e p o a n d r e v e r s e r e p o t r a n s a c t i o n s i ng o v e r n m e n t s e c u r i t i e s a r e r e f l e c t e d a s b o r r o w i n g a n d l e n d i n g t r a n s a c t i o n sr e s p e c t i v e l y . B o r r o w i n g c o s t o n r e p o t r a n s a c t i o n s i s a c c o u n t e d f o r a s i n t e r e s t e x p e n s ea n d r e v e n u e o n r e v e r s e r e p o i s a c c o u n t e d f o r a s i n t e r e s t i n c o m e .P u r s u a n t t o R B I C i r c u l a r F M R D . D I R D . 1 0 / 1 4 . 0 3 . 0 0 2 / 2 0 1 5 � 1 6 d a t e d M a y 1 9 , 2 0 1 6 , a sa m e n d e d , t h e b a n k h a s c o n s i d e r e d i t s r e p o / r e v e r s e r e p o t r a n s a c t i o n s u n d e r L i q u i d i t yA d j u s t m e n t F a c i l i t y ( L A F ) a n d M a r g i n a l S t a n d i n g F a c i l i t y ( M S F ) o f R B I a sF-26
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B o r r o w i n g s / L e n d i n g , a s t h e c a s e m a y b e . H i t h e r t o , t h e r e p o / r e v e r s e r e p o t r a n s a c t i o n su n d e r L i q u i d i t y A d j u s t m e n t F a c i l i t y ( L A F ) a n d M a r g i n a l S t a n d i n g F a c i l i t y ( M S F ) o fR B I w e r e i n c l u d e d u n d e r I n v e s t m e n t s .S h o r t S a l e sI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , t h e B a n k u n d e r t a k e s s h o r t s a l e t r a n s a c t i o n s i nC e n t r a l G o v e r n m e n t d a t e d s e c u r i t i e s . T h e S h o r t S a l e s p o s i t i o n s a r e r e f l e c t e d i n‘ S e c u r i t i e s S h o r t S o l d ( ‘ S S S ’ ) A / C ’ , s p e c i f i c a l l y c r e a t e d f o r t h i s p u r p o s e . S u c h s h o r tp o s i t i o n s a r e c a t e g o r i z e d u n d e r H F T c a t e g o r y . T h e s e p o s i t i o n s a r e m a r k e d – t o o m a r k e ta l o n g w i t h t h e o t h e r s e c u r i t i e s u n d e r H F T P o r t f o l i o a n d r e s u l t a n t m a r k o t o o m a r k e tg a i n s / l o s s e s a r e a c c o u n t e d f o r a s p e r t h e r e l e v a n t R B I g u i d e l i n e s f o r v a l u a t i o n o fI n v e s t m e n t s d i s c u s s e d e a r l i e r .4 . 5 T r a n s a c t i o n s i n v o l v i n g f o r e i g n e x c h a n g eF o r e i g n c u r r e n c y i n c o m e a n d e x p e n d i t u r e i t e m s o f d o m e s t i c o p e r a t i o n s a r e t r a n s l a t e da t t h e e x c h a n g e r a t e s p r e v a i l i n g o n t h e d a t e o f t h e t r a n s a c t i o n . I n c o m e a n d e x p e n d i t u r ei t e m s o f n o n o i n t e g r a l f o r e i g n o p e r a t i o n s ( f o r e i g n b r a n c h e s ) a r e t r a n s l a t e d a t q u a r t e r l ya v e r a g e c l o s i n g r a t e s .F o r e i g n c u r r e n c y m o n e t a r y i t e m s o f d o m e s t i c o p e r a t i o n a r e t r a n s l a t e d a t t h e c l o s i n ge x c h a n g e r a t e s n o t i f i e d b y F o r e i g n E x c h a n g e D e a l e r ’ s A s s o c i a t i o n o f I n d i a ( F E D A I )a s a t t h e B a l a n c e s h e e t d a t e a n d t h e r e s u l t i n g n e t v a l u a t i o n p r o f i t o r l o s s i s r e c o g n i z e di n t h e p r o f i t a n d l o s s a c c o u n t .B o t h M o n e t a r y a n d N o n o M o n e t a r y f o r e i g n c u r r e n c y A s s e t s a n d l i a b i l i t i e s o f N o n oI n t e g r a l F o r e i g n O p e r a t i o n s a r e t r a n s l a t e d a t c l o s i n g e x c h a n g e r a t e s n o t i f i e d b yF E D A I a t t h e b a l a n c e s h e e t d a t e a n d t h e r e s u l t i n g p r o f i t / l o s s a r i s i n g f r o m e x c h a n g ed i f f e r e n c e s a r e a c c u m u l a t e d i n F o r e i g n c u r r e n c y t r a n s l a t i o n R e s e r v e u n t i l r e m i t t a n c eo r t h e d i s p o s a l o f t h e n e t i n v e s t m e n t i n t h e n o n o i n t e g r a l f o r e i g n o p e r a t i o n s i na c c o r d a n c e w i t h A S o 1 1 .F o r e i g n e x c h a n g e s p o t a n d f o r w a r d C o n t r a c t s ( O t h e r t h a n F o r e i g n e x c h a n g e s w a p st a k e n t o h e d g e F e d e r a l R u p e e p l u s d e p o s i t s d e n o m i n a t e d i n J P Y ) o u t s t a n d i n g a s a t t h eB a l a n c e S h e e t d a t e a r e r e v a l u e d a t t h e c l o s i n g S p o t a n d F o r w a r d R a t e s r e s p e c t i v e l y a sn o t i f i e d b y F E D A I a n d a t i n t e r p o l a t e d r a t e s f o r c o n t r a c t s o f i n t e r i m m a t u r i t i e s . F o rv a l u a t i o n o f c o n t r a c t s h a v i n g l o n g e r m a t u r i t i e s i . e . g r e a t e r t h a n o n e y e a r , t h e f o r w a r dp o i n t s ( f o r r a t e s / t e n u r e s n o t p u b l i s h e d b y F E D A I ) a r e o b t a i n e d f r o m R e u t e r s f o rv a l u a t i o n o f t h e F X D e a l s . A s d i r e c t e d b y F E D A I t o c o n s i d e r p r o f i t o r l o s s o n p r e s e n tv a l u e b a s i s , t h e f o r w a r d p r o f i t o r l o s s o n t h e d e a l s a r e d i s c o u n t e d t i l l t h e v a l u a t i o n d a t eu s i n g t h e d i s c o u n t i n g y i e l d s . T h e r e s u l t i n g p r o f i t o r l o s s o n v a l u a t i o n i s r e c o g n i s e d i nt h e P r o f i t a n d L o s s A c c o u n t .F o r e i g n e x c h a n g e s w a p s t a k e n t o h e d g e F e d e r a l R u p e e p l u s d e p o s i t s d e n o m i n a t e d i nJ P Y a r e t r a n s l a t e d a t t h e p r e v a i l i n g s p o t r a t e a t t h e t i m e o f s w a p . T h e P r e m i u m /D i s c o u n t o n t h e s w a p a r i s i n g o u t o f t h e d i f f e r e n c e i n t h e e x c h a n g e r a t e o f t h e s w a pd a t e a n d m a t u r i t y d a t e o f t h e u n d e r l y i n g f o r w a r d e x c h a n g e c o n t r a c t i s a m o r t i s e d o v e rt h e p e r i o d o f t h e s w a p a n d t h e s a m e i s r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t .C o n t i n g e n t l i a b i l i t i e s o n a c c o u n t o f f o r e i g n e x c h a n g e c o n t r a c t s , g u a r a n t e e s , l e t t e r s o fF-27
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c r e d i t , a c c e p t a n c e s a n d e n d o r s e m e n t s a r e r e p o r t e d a t c l o s i n g r a t e s o f e x c h a n g en o t i f i e d b y F E D A I a s a t t h e B a l a n c e S h e e t d a t e4 . 6 D e r i v a t i v e t r a n s a c t i o n sT h e B a n k r e c o g n i s e s a l l d e r i v a t i v e c o n t r a c t s a t f a i r v a l u e , o n t h e d a t e o n w h i c h t h ed e r i v a t i v e c o n t r a c t s a r e e n t e r e d i n t o a n d a r e r e » m e a s u r e d a t f a i r v a l u e a s a t t h e B a l a n c es h e e t o r r e p o r t i n g d a t e s . D e r i v a t i v e s a r e c l a s s i f i e d a s a s s e t s w h e n t h e f a i r v a l u e i sp o s i t i v e ( P o s i t i v e m a r k e d » t o » m a r k e t ) o r a s l i a b i l i t i e s w h e n t h e f a i r v a l u e i s n e g a t i v e( n e g a t i v e m a r k e d » t o » m a r k e t ) . C h a n g e s i n t h e f a i r v a l u e o f d e r i v a t i v e s o t h e r t h a n t h o s ed e s i g n a t e d a s h e d g e s a r e r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t .4 . 7 F i x e d a s s e t s a n d d e p r e c i a t i o nF i x e d a s s e t s a r e c a r r i e d a t c o s t o f a c q u i s i t i o n l e s s a c c u m u l a t e d d e p r e c i a t i o n a n di m p a i r m e n t , i f a n y . C o s t i n c l u d e s c o s t o f p u r c h a s e a n d a l l e x p e n d i t u r e l i k e f r e i g h t ,d u t i e s , t a x e s a n d i n c i d e n t a l e x p e n s e s r e l a t e d t o t h e a c q u i s i t i o n a n d i n s t a l l a t i o n o f t h ea s s e t .C a p i t a l w o r k » i n » p r o g r e s s i n c l u d e s c o s t o f f i x e d a s s e t s t h a t a r e n o t r e a d y f o r t h e i ri n t e n d e d u s e a n d a l s o i n c l u d e s a d v a n c e s p a i d t o a c q u i r e f i x e d a s s e t s .D e p r e c i a t i o n o n f i x e d a s s e t s , i n c l u d i n g a m o r t i s a t i o n o f s o f t w a r e , i s c h a r g e d o v e r t h ee s t i m a t e d u s e f u l l i f e o f f i x e d a s s e t s o n a s t r a i g h t » l i n e b a s i s a t t h e r a t e s a n d m a n n e rp r e s c r i b e d i n S c h e d u l e I I o f t h e C o m p a n i e s A c t , 2 0 1 3 , e x c e p t a s m e n t i o n e d b e l o w :•
P r e m i s e s a r e d e p r e c i a t e d u n d e r t h e w r i t t e n d o w n v a l u e m e t h o d , u s i n g t h e s a m eu s e f u l l i f e a s i n S c h e d u l e I I o f t h e C o m p a n i e s A c t , 2 0 1 3 . I m p r o v e m e n t t ol e a s e d P r e m i s e s a r e d e p r e c i a t e d o v e r 5 y e a r s b a s e d o n t e c h n i c a l e v a l u a t i o n .•
D e p r e c i a t i o n o n p r e m i s e s r e v a l u e d h a s b e e n c h a r g e d o n t h e i r w r i t t e n » d o w nv a l u e i n c l u d i n g t h e a d d i t i o n m a d e o n r e v a l u a t i o n .•
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2 , 0 0 0 / » o r l e s s a r e f u l l y d e p r e c i a t e d i n t h e y e a r o fp u r c h a s e .D e p r e c i a t i o n o n a s s e t s s o l d d u r i n g t h e y e a r i s r e c o g n i s e d o n a p r o » r a t a b a s i s t i l l t h ed a t e o f s a l e .P r o f i t o n s a l e o f p r e m i s e s i s a p p r o p r i a t e d t o C a p i t a l R e s e r v e a c c o u n t i n a c c o r d a n c ew i t h R B I i n s t r u c t i o n s .4 . 8 I m p a i r m e n t o f A s s e t sT h e c a r r y i n g v a l u e s o f a s s e t s a t e a c h b a l a n c e s h e e t d a t e a r e r e v i e w e d f o r i m p a i r m e n t ,i f a n y i n d i c a t i o n o f i m p a i r m e n t e x i s t s . I f t h e c a r r y i n g a m o u n t o f t h e a s s e t s e x c e e d s t h ee s t i m a t e d r e c o v e r a b l e a m o u n t , a n i m p a i r m e n t i s r e c o g n i s e d f o r s u c h e x c e s s a m o u n t .T h e i m p a i r m e n t l o s s i s r e c o g n i s e d a s a n e x p e n s e i n t h e P r o f i t a n d L o s s A c c o u n t ,u n l e s s t h e a s s e t i s c a r r i e d a t r e v a l u e d a m o u n t , i n w h i c h c a s e a n y i m p a i r m e n t l o s s o ft h e r e v a l u e d a s s e t i s t r e a t e d a s a r e v a l u a t i o n d e c r e a s e t o t h e e x t e n t a r e v a l u a t i o nr e s e r v e i s a v a i l a b l e f o r t h a t a s s e t .F-28
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T h e r e c o v e r a b l e a m o u n t i s t h e g r e a t e r o f t h e n e t s e l l i n g p r i c e a n d t h e i r v a l u e i n u s e .V a l u e i n u s e i s a r r i v e d a t b y d i s c o u n t i n g t h e f u t u r e c a s h f l o w s t o t h e i r p r e s e n t v a l u eb a s e d o n a n a p p r o p r i a t e d i s c o u n t f a c t o r .W h e n t h e r e i s i n d i c a t i o n t h a t a n i m p a i r m e n t l o s s r e c o g n i s e d f o r a n a s s e t ( o t h e r t h a n ar e v a l u e d a s s e t ) i n e a r l i e r a c c o u n t i n g p e r i o d s n o l o n g e r e x i s t s o r m a y h a v e d e c r e a s e d ,s u c h r e v e r s a l o f i m p a i r m e n t l o s s i s r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t , t o t h ee x t e n t t h e a m o u n t w a s p r e v i o u s l y c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t . I n c a s e o fr e v a l u e d a s s e t s s u c h r e v e r s a l i s n o t r e c o g n i z e d .4 . 9 N o n ü B a n k i n g A s s e t sN o n � B a n k i n g a s s e t s a c q u i r e d i n s e t t l e m e n t o f d e b t s / d u e s a r e a c c o u n t e d a t t h e l o w e ro f t h e i r c o s t o f a c q u i s i t i o n o r n e t r e a l i s a b l e v a l u e .4 . 1 0 C a s h a n d C a s h E q u i v a l e n t sC a s h a n d c a s h e q u i v a l e n t s i n c l u d e c a s h i n h a n d , b a l a n c e s w i t h R e s e r v e B a n k o f I n d i aa n d B a l a n c e s w i t h O t h e r B a n k s / i n s t i t u t i o n s a n d m o n e y a t c a l l a n d s h o r t n o t i c e( i n c l u d i n g t h e e f f e c t o f c h a n g e s i n e x c h a n g e r a t e s o n c a s h a n d c a s h e q u i v a l e n t s i nf o r e i g n c u r r e n c y ) .4 . 1 1 L e a s e t r a n s a c t i o n sO p e r a t i n g L e a s eL e a s e s w h e r e t h e l e s s o r e f f e c t i v e l y r e t a i n s s u b s t a n t i a l l y a l l t h e r i s k s a n d b e n e f i t s o fo w n e r s h i p o v e r t h e l e a s e t e r m a r e c l a s s i f i e d a s o p e r a t i n g l e a s e . L e a s e p a y m e n t s f o ra s s e t s t a k e n o n o p e r a t i n g l e a s e a r e r e c o g n i s e d a s a n e x p e n s e i n t h e P r o f i t a n d L o s sA c c o u n t a s p e r t h e l e a s e t e r m s .4 . 1 2 R e t i r e m e n t a n d o t h e r e m p l o y e e b e n e f i t sa ) P r o v i d e n t F u n dT h e c o n t r i b u t i o n m a d e b y t h e b a n k t o T h e F e d e r a l B a n k E m p l o y e e s P r o v i d e n tF u n d , a d m i n i s t e r e d b y t h e t r u s t e e s i s c h a r g e d t o t h e P r o f i t a n d L o s s a c c o u n t .b ) P e n s i o n F u n dT h e c o n t r i b u t i o n t o w a r d s T h e F e d e r a l B a n k E m p l o y e e s ’ P e n s i o n F u n d , m a n a g e db y t r u s t e e s , i s d e t e r m i n e d o n a c t u a r i a l b a s i s o n p r o j e c t e d u n i t c r e d i t m e t h o d a s o nt h e B a l a n c e S h e e t d a t e a n d i s r e c o g n i s e d i n t h e p r o f i t a n d l o s s a c c o u n t s .E m p l o y e e s w h o h a d j o i n e d t h e s e r v i c e s o f t h e B a n k w i t h e f f e c t f r o m A p r i l 0 1 ,2 0 1 0 a r e c o v e r e d u n d e r D e f i n e d C o n t r i b u t o r y P e n s i o n S c h e m e ( D C P S ) . I n r e s p e c to f s u c h e m p l o y e e s t h e b a n k c o n t r i b u t e s 1 0 % o f t h e B a s i c P a y p l u s D e a r n e s sA l l o w a n c e a n d t h e e x p e n d i t u r e t h e r e o f i s c h a r g e d t o t h e P r o f i t a n d L o s s a c c o u n t .c ) G r a t u i t yF-29
1 0
T h e b a n k m a k e s a n n u a l c o n t r i b u t i o n t o T h e F e d e r a l B a n k E m p l o y e e s ’ G r a t u i t yT r u s t F u n d a d m i n i s t e r e d a n d m a n a g e d b y t h e T r u s t e e s . T h e c o s t o f p r o v i d i n g s u c hb e n e f i t s i s d e t e r m i n e d u s i n g t h e P r o j e c t e d U n i t C r e d i t m e t h o d , w i t h a c t u a r i a lv a l u a t i o n s b e i n g c a r r i e d o u t a t e a c h b a l a n c e s h e e t d a t e . A c t u a r i a l g a i n s a n d l o s s e sa r e r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t i n t h e p e r i o d i n w h i c h t h e y o c c u r .T h e r e t i r e m e n t b e n e f i t o b l i g a t i o n r e c o g n i s e d i n t h e B a l a n c e S h e e t r e p r e s e n t s t h ep r e s e n t v a l u e o f t h e d e f i n e d b e n e f i t o b l i g a t i o n a s a d j u s t e d f o r u n r e c o g n i s e d p a s ts e r v i c e c o s t , a s r e d u c e d b y t h e f a i r v a l u e o f s c h e m e a s s e t s . A n y a s s e t r e s u l t i n gf r o m t h i s c a l c u l a t i o n i s l i m i t e d t o p a s t s e r v i c e c o s t , p l u s t h e p r e s e n t v a l u e o fa v a i l a b l e r e f u n d s a n d r e d u c t i o n s i n f u t u r e c o n t r i b u t i o n s t o t h e s c h e m e s .d ) C o m p e n s a t i o n f o r a b s e n c e o n P r i v i l e g e / S i c k / C a s u a l L e a v e a n d L e a v eT r a v e l C o n c e s s i o n ( L T C )T h e e m p l o y e e s o f t h e b a n k a r e e n t i t l e d t o c o m p e n s a t e d a b s e n c e o n a c c o u n t o fp r i v i l e g e / s i c k / c a s u a l l e a v e a s p e r t h e l e a v e r u l e s . T h e b a n k m e a s u r e s t h e l o n gt e r m e x p e c t e d c o s t o f c o m p e n s a t e d a b s e n c e a s a r e s u l t o f t h e u n u s e d e n t i t l e m e n tt h a t h a s a c c u m u l a t e d a t t h e b a l a n c e s h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n a n ds u c h c o s t s a r e r e c o g n i s e d i n t h e p r o f i t a n d l o s s a c c o u n t s .T h e e m p l o y e e s a r e a l s o e l i g i b l e f o r L T C a s p e r t h e r u l e s . T h e e s t i m a t e d c o s t o fu n u s e d e n t i t l e m e n t a s o n t h e B a l a n c e S h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n i sp r o v i d e d f o r .e ) O t h e r e m p l o y e e B e n e f i t sT h e u n d i s c o u n t e d a m o u n t o f S h o r t ¬ t e r m e m p l o y e e b e n e f i t s e x p e c t e d t o b e p a i d i ne x c h a n g e f o r t h e s e r v i c e s r e n d e r e d b y e m p l o y e e s i s r e c o g n i s e d d u r i n g t h e p e r i o dw h e n t h e e m p l o y e e s r e n d e r t h e s e r v i c e . T h e s e b e n e f i t s i n c l u d e p e r f o r m a n c ei n c e n t i v e s .4 . 1 3 D e b i t c a r d r e w a r d p o i n t sT h e B a n k r u n s a l o y a l t y p r o g r a m w h i c h s e e k s t o r e c o g n i s e a n d r e w a r d c u s t o m e r sb a s e d o n t h e i r r e l a t i o n s h i p w i t h t h e B a n k . U n d e r t h e p r o g r a m , e l i g i b l e c u s t o m e r s a r eg r a n t e d l o y a l t y p o i n t s r e d e e m a b l e i n f u t u r e , s u b j e c t t o c e r t a i n c o n d i t i o n s . T h e B a n ke s t i m a t e s t h e p r o b a b l e r e d e m p t i o n o f s u c h l o y a l t y / r e w a r d p o i n t s u s i n g a n a c t u a r i a lm e t h o d a t t h e B a l a n c e S h e e t d a t e b y e m p l o y i n g i n d e p e n d e n t a c t u a r y . P r o v i s i o n f o rs a i d r e w a r d p o i n t s i s t h e n m a d e b a s e d o n t h e a c t u a r i a l v a l u a t i o n r e p o r t a s f u r n i s h e d b yt h e s a i d i n d e p e n d e n t A c t u a r y .4 . 1 4 E m p l o y e e S t o c k O p t i o n S c h e m eT h e B a n k h a s f o r m u l a t e d E m p l o y e e S t o c k O p t i o n S c h e m e ( E S O S ) 2 0 1 0 i na c c o r d a n c e w i t h S e c u r i t i e s a n d E x c h a n g e B o a r d o f I n d i a ( E m p l o y e e S t o c k O p t i o nS c h e m e ) G u i d e l i n e s , 1 9 9 9 . T h e S c h e m e p r o v i d e s f o r g r a n t o f o p t i o n s t o E m p l o y e e s o ft h e B a n k t o a c q u i r e E q u i t y S h a r e s o f t h e B a n k t h a t v e s t i n a g r a d e d m a n n e r a n d t h a ta r e t o b e e x e r c i s e d w i t h i n a s p e c i f i e d p e r i o d . I n a c c o r d a n c e w i t h t h e S E B I G u i d e l i n e sa n d t h e g u i d a n c e n o t e o n “ A c c o u n t i n g f o r E m p l o y e e S h a r e b a s e d p a y m e n t s ” i s s u e d b yt h e I C A I , t h e e x c e s s , i f a n y , o f t h e m a r k e t p r i c e o f t h e s h a r e p r e c e d i n g t h e d a t e o fF-30
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g r a n t o f t h e o p t i o n u n d e r E S O S o v e r t h e e x e r c i s e p r i c e o f t h e o p t i o n i s a m o r t i s e d o n as t r a i g h t l i n e b a s i s o v e r t h e v e s t i n g p e r i o d .4 . 1 5 T a x a t i o nI n c o m e t a x e x p e n s e i s t h e a g g r e g a t e a m o u n t o f c u r r e n t t a x a n d d e f e r r e d t a x c h a r g e .C u r r e n t t a x i s t h e a m o u n t o f t a x p a y a b l e o n t h e t a x a b l e i n c o m e f o r t h e y e a r a sd e t e r m i n e d i n a c c o r d a n c e w i t h t h e a p p l i c a b l e t a x r a t e s a n d t h e p r o v i s i o n s o f t h eI n c o m e T a x A c t , 1 9 6 1 a n d o t h e r a p p l i c a b l e t a x l a w s .M i n i m u m A l t e r n a t e T a x ( M A T ) p a i d i n a c c o r d a n c e w i t h t h e t a x l a w s , w h i c h g i v e sf u t u r e e c o n o m i c b e n e f i t s i n t h e f o r m o f a d j u s t m e n t t o f u t u r e i n c o m e t a x l i a b i l i t y , i sc o n s i d e r e d a s a n a s s e t i f t h e r e i s c o n v i n c i n g e v i d e n c e t h a t t h e B a n k w i l l p a y n o r m a li n c o m e t a x . A c c o r d i n g l y , M A T i s r e c o g n i s e d a s a n a s s e t i n t h e B a l a n c e S h e e t w h e n i ti s h i g h l y p r o b a b l e t h a t f u t u r e e c o n o m i c b e n e f i t a s s o c i a t e d w i t h i t w i l l f l o w t o t h eB a n k .D e f e r r e d t a x i s r e c o g n i s e d o n t i m i n g d i f f e r e n c e s , b e i n g t h e d i f f e r e n c e s b e t w e e n t h et a x a b l e i n c o m e a n d t h e a c c o u n t i n g i n c o m e t h a t o r i g i n a t e i n o n e p e r i o d a n d a r e c a p a b l eo f r e v e r s a l i n o n e o r m o r e s u b s e q u e n t p e r i o d s . D e f e r r e d t a x i s m e a s u r e d u s i n g t h e t a xr a t e s a n d t h e t a x l a w s e n a c t e d o r s u b s t a n t i v e l y e n a c t e d a s a t t h e r e p o r t i n g d a t e .D e f e r r e d t a x l i a b i l i t i e s a r e r e c o g n i s e d f o r a l l t i m i n g d i f f e r e n c e s . D e f e r r e d t a x a s s e t sa r e r e c o g n i s e d f o r t i m i n g d i f f e r e n c e s o f i t e m s o t h e r t h a n u n a b s o r b e d d e p r e c i a t i o n a n dc a r r y f o r w a r d l o s s e s o n l y t o t h e e x t e n t t h a t r e a s o n a b l e c e r t a i n t y e x i s t s t h a t s u f f i c i e n tf u t u r e t a x a b l e i n c o m e w i l l b e a v a i l a b l e a g a i n s t w h i c h t h e s e c a n b e r e a l i s e d . H o w e v e r ,i f t h e r e a r e u n a b s o r b e d d e p r e c i a t i o n a n d c a r r y f o r w a r d o f l o s s e s a n d i t e m s r e l a t i n g t oc a p i t a l l o s s e s , d e f e r r e d t a x a s s e t s a r e r e c o g n i s e d o n l y i f t h e r e i s v i r t u a l c e r t a i n t ys u p p o r t e d b y c o n v i n c i n g e v i d e n c e t h a t t h e r e w i l l b e s u f f i c i e n t f u t u r e t a x a b l e i n c o m ea v a i l a b l e t o r e a l i s e t h e a s s e t s . D e f e r r e d t a x a s s e t s a n d l i a b i l i t i e s a r e o f f s e t i f s u c h i t e m sr e l a t e t o t a x e s o n i n c o m e l e v i e d b y t h e s a m e g o v e r n i n g t a x l a w s a n d t h e B a n k h a s al e g a l l y e n f o r c e a b l e r i g h t f o r s u c h s e t o f f . D e f e r r e d t a x a s s e t s a r e r e v i e w e d a t e a c hb a l a n c e s h e e t d a t e f o r t h e i r r e a l i s a b i l i t y .C u r r e n t a n d d e f e r r e d t a x r e l a t i n g t o i t e m s d i r e c t l y r e c o g n i s e d i n r e s e r v e s a r e a d j u s t e di n r e s e r v e s a n d n o t i n P r o f i t a n d L o s s A c c o u n t .4 . 1 6 E a r n i n g s p e r S h a r eT h e B a n k r e p o r t s b a s i c a n d d i l u t e d e a r n i n g s p e r s h a r e i n a c c o r d a n c e w i t h A S 2 0 ,E a r n i n g s p e r S h a r e , a s p r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 .B a s i c e a r n i n g s p e r s h a r e i s c o m p u t e d b y d i v i d i n g t h e n e t p r o f i t a f t e r t a x b y t h ew e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e s o u t s t a n d i n g f o r t h e y e a r .D i l u t e d e a r n i n g s p e r s h a r e r e f l e c t t h e p o t e n t i a l d i l u t i o n t h a t c o u l d o c c u r i f s e c u r i t i e s o ro t h e r c o n t r a c t s t o i s s u e e q u i t y s h a r e s w e r e e x e r c i s e d o r c o n v e r t e d d u r i n g t h e y e a r .D i l u t e d e a r n i n g s p e r s h a r e i s c o m p u t e d u s i n g t h e w e i g h t e d a v e r a g e n u m b e r o f e q u i t ys h a r e s a n d d i l u t i v e p o t e n t i a l e q u i t y s h a r e s o u t s t a n d i n g a t t h e y e a r e n d .F-31
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4 . 1 7 S h a r e i s s u e e x p e n s e sS h a r e i s s u e e x p e n s e s a r e a d j u s t e d f r o m S h a r e P r e m i u m A c c o u n t i n t e r m s o f S e c t i o n5 2 o f t h e C o m p a n i e s A c t , 2 0 1 3 .4 . 1 8 S e g m e n t i n f o r m a t i o nT h e d i s c l o s u r e r e l a t i n g t o s e g m e n t i n f o r m a t i o n i s i n a c c o r d a n c e w i t h t h e g u i d e l i n e si s s u e d b y R B I .4 . 1 9 P r o v i s i o n s , c o n t i n g e n t l i a b i l i t i e s a n d c o n t i n g e n t a s s e t sA p r o v i s i o n i s r e c o g n i s e d w h e n t h e B a n k h a s a p r e s e n t o b l i g a t i o n a s a r e s u l t o f p a s te v e n t s a n d i t i s p r o b a b l e t h a t a n o u t f l o w o f r e s o u r c e s w i l l b e r e q u i r e d t o s e t t l e t h eo b l i g a t i o n , i n r e s p e c t o f w h i c h a r e l i a b l e e s t i m a t e c a n b e m a d e . P r o v i s i o n s ( e x c l u d i n gr e t i r e m e n t b e n e f i t s ) a r e n o t d i s c o u n t e d t o i t s p r e s e n t v a l u e a n d a r e d e t e r m i n e d b a s e do n b e s t e s t i m a t e r e q u i r e d t o s e t t l e t h e o b l i g a t i o n a t t h e B a l a n c e S h e e t d a t e . T h e s e a r er e v i e w e d a t e a c h B a l a n c e S h e e t d a t e a n d a d j u s t e d t o r e f l e c t t h e c u r r e n t b e s t e s t i m a t e s .A d i s c l o s u r e o f c o n t i n g e n t l i a b i l i t y i s m a d e w h e n t h e r e i s :•
a p o s s i b l e o b l i g a t i o n a r i s i n g f r o m a p a s t e v e n t , t h e e x i s t e n c e o f w h i c h w i l l b ec o n f i r m e d b y o c c u r r e n c e o r n o n ^ o c c u r r e n c e o f o n e o r m o r e u n c e r t a i n f u t u r e e v e n t sn o t w i t h i n t h e c o n t r o l o f t h e B a n k ; o r•
a p r e s e n t o b l i g a t i o n a r i s i n g f r o m a p a s t e v e n t w h i c h i s n o t r e c o g n i s e d a s i t i s n o tp r o b a b l e t h a t a n o u t f l o w o f r e s o u r c e s w i l l b e r e q u i r e d t o s e t t l e t h e o b l i g a t i o n o r ar e l i a b l e e s t i m a t e o f t h e a m o u n t o f t h e o b l i g a t i o n c a n n o t b e m a d e .C o n t i n g e n t a s s e t s a r e n o t r e c o g n i s e d i n t h e f i n a n c i a l s t a t e m e n t s . H o w e v e r , c o n t i n g e n ta s s e t s a r e a s s e s s e d c o n t i n u a l l y a n d i f i t i s v i r t u a l l y c e r t a i n t h a t a n i n f l o w o f e c o n o m i cb e n e f i t s w i l l a r i s e , t h e a s s e t a n d r e l a t e d i n c o m e a r e r e c o g n i s e d i n t h e p e r i o d i n w h i c ht h e c h a n g e o c c u r s .4 . 2 0 C o r p o r a t e S o c i a l R e s p o n s i b i l i t yS p e n d s t o w a r d s c o r p o r a t e s o c i a l r e s p o n s i b i l i t y , i n a c c o r d a n c e w i t h C o m p a n i e s A c t ,2 0 1 3 a r e r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t .4 . 2 1 C E N V A T C r e d i tS e r v i c e t a x i n p u t c r e d i t i s a c c o u n t e d f o r i n t h e b o o k s w i t h i n t h e t i m e l i m i t p r e s c r i b e du n d e r C E N V A T C r e d i t R u l e s , 2 0 0 4 , a s a m e n d e d .4 . 2 2 P r i o r i t y S e c t o r L e n d i n g C e r t i f i c a t e s ( P S L C )T h e B a n k v i d e R B I c i r c u l a r F I D D . C O . P l a n . B C . 2 3 / 0 4 . 0 9 . 0 1 / 2 0 1 5 ^ 1 6 d a t e d A p r i l 7 ,2 0 1 6 t r a d e s i n p r i o r i t y s e c t o r p o r t f o l i o b y s e l l i n g o r b u y i n g P S L C . T h e r e i s n o t r a n s f e ro f r i s k s o r l o a n a s s e t s i n t h e s e t r a n s a c t i o n s . T h e f e e p a i d f o r p u r c h a s e o f t h e P S L C i st r e a t e d a s a n ‘ E x p e n s e ’ a n d t h e f e e r e c e i v e d f r o m t h e s a l e o f P S L C s i s t r e a t e d a s‘ O t h e r I n c o m e ’ .F-32
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T H E F E D E R A L B A N K L I M I T E DS C H E D U L E 1 8 : N O T E S O N A C C O U N T S F O R M I N G P A R T O F T H EF I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 1M A R C H , 2 0 1 71 . D i s c l o s u r e s r e q u i r e m e n t a s p e r R B I ’ s M a s t e r C i r c u l a r o n D i s c l o s u r e i n F i n a n c i a lS t a t e m e n t sA m o u n t s i n n o t e s f o r m i n g p a r t o f t h e f i n a n c i a l s t a t e m e n t s f o r t h e y e a r e n d e d 3 1 s t M a r c h ,2 0 1 7 a r e d e n o m i n a t e d i n R u p e e s C r o r e t o c o n f o r m t o e x t a n t R B I g u i d e l i n e s .1 . 1 . C a p i t a l A d e q u a c y R a t i oT h e B a n k c o m p u t e s C a p i t a l A d e q u a c y R a t i o a s p e r B a s e l I I I C a p i t a l R e g u l a t i o n s i s s u e d b yR B I , w h i c h b e c a m e a p p l i c a b l e t o t h e B a n k w i t h e f f e c t f r o m A p r i l 1 , 2 0 1 3 .U n d e r B a s e l I I I C a p i t a l R e g u l a t i o n s , o n a n o n Î g o i n g b a s i s , t h e B a n k h a s t o m a i n t a i n aM i n i m u m T o t a l C a p i t a l ( M T C ) o f 1 0 . 2 5 % ( P r e v i o u s Y e a r 9 . 6 2 5 % ) i n c l u d i n g C a p i t a lC o n v e r s i o n B u f f e r ( C C B ) a t 1 . 2 5 % ( P r e v i o u s Y e a r 0 . 6 2 5 % ) , o f t h e t o t a l r i s k w e i g h t e d a s s e t s( R W A ) . O u t o f t h e M T C , a t l e a s t 6 . 7 5 % ( P r e v i o u s Y e a r 6 . 1 2 5 % ) , s h a l l b e f r o m C o m m o nE q u i t y T i e r 1 ( C E T 1 ) c a p i t a l a n d a t l e a s t 8 . 2 5 % ( P r e v i o u s Y e a r 7 . 6 2 5 % ) f r o m T i e r 1 c a p i t a l ,i n c l u d i n g 1 . 2 5 % ( P r e v i o u s Y e a r 0 . 6 2 5 % ) t o w a r d s C C B . T h e c a p i t a l a d e q u a c y r a t i o o f t h eB a n k i s s e t o u t b e l o w : (�
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I n a c c o r d a n c e w i t h R B I G u i d e l i n e s , b a n k s a r e r e q u i r e d t o m a k e P i l l a r 3 d i s c l o s u r e s u n d e rB a s e l I I I c a p i t a l r e g u l a t i o n s . T h e B a n k h a s m a d e t h e s e d i s c l o s u r e s w h i c h a r e a v a i l a b l e o ni t s w e b s i t e a t t h e f o l l o w i n g l i n k : h t t p : / / w w w . f e d e r a l b a n k . c o . i n / r e g u l a t o r y Î d i s c l o s u r e s . T h eP i l l a r 3 d i s c l o s u r e s h a v e n o t b e e n s u b j e c t e d t o a u d i t
P a r t i c u l a r s A s a t 3 1M a r c h ,2 0 1 7 A s a t 3 1M a r c h ,2 0 1 6C o m m o n E q u i t y T i e r I 8 , 5 3 9 . 2 5 7 , 7 9 1 . 8 4T i e r 1 C a p i t a l 8 , 5 3 9 . 2 5 7 , 7 9 1 . 8 4T i e r 2 C a p i t a l 4 1 6 . 0 8 3 3 3 . 6 4T o t a l C a p i t a l 8 , 9 5 5 . 3 3 8 , 1 2 5 . 4 8T o t a l r i s k w e i g h t e d a s s e t s 7 2 , 2 9 5 . 4 3 5 8 , 3 3 0 . 1 0C a p i t a l R a t i o sC o m m o n E q u i t y T i e r 1 1 1 . 8 1 % 1 3 . 3 6 %T i e r 1 C a p i t a l 1 1 . 8 1 % 1 3 . 3 6 %T i e r 2 C a p i t a l 0 . 5 8 % 0 . 5 7 %T o t a l C R A R 1 2 . 3 9 % 1 3 . 9 3 %P e r c e n t a g e o f t h e s h a r e h o l d i n g o f t h e G o v e r n m e n t o f I n d i a i np u b l i c s e c t o r b a n k s N A N AA m o u n t o f E q u i t y C a p i t a l R a i s e d Î ÎA m o u n t o f A d d i t i o n a l T i e r I C a p i t a l r a i s e d o f w h i c h : Î Îa ) P e r p e t u a l N o n Î C u m u l a t i v e P r e f e r e n c e S h a r e s ( P N C P S ) Î Îb ) P e r p e t u a l D e b t I n s t r u m e n t s ( P D I ) Î ÎA m o u n t o f T i e r I I C a p i t a l r a i s e d o f w h i c h : Î Îa ) D e b t C a p i t a l i n s t r u m e n t s Î Îb ) P r e f e r e n c e S h a r e C a p i t a l I n s t r u m e n t s :[ P e r p e t u a l C u m u l a t i v e P r e f e r e n c e S h a r e s ( P C P S ) /R e d e e m a b l e N o n � C u m u l a t i v e P r e f e r e n c e S h a r e s ( R N C P S ) /R e d e e m a b l e C u m u l a t i v e P r e f e r e n c e S h a r e s ( R C P S ) ] F-33
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1 . 2 . I n v e s t m e n t s1 . 2 . 1 . D e t a i l s o f I n v e s t m e n t s : (� i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h 2 0 1 7 3 1 s t M a r c h 2 0 1 6( 1 ) V a l u e o f I n v e s t m e n t s( i ) G r o s s V a l u e o f I n v e s t m e n t s( a ) I n I n d i a 2 8 , 3 3 2 . 0 1 2 5 , 2 6 1 . 9 9( b ) O u t s i d e I n d i a 0 . 9 3 0 . 8 1( i i ) P r o v i s i o n f o r D e p r e c i a t i o n( a ) I n I n d i a 5 3 . 3 7 2 9 . 0 6( b ) O u t s i d e I n d i a 0 . 0 6 0 . 1 6( i i i ) P r o v i s i o n f o r N o n M p e r f o r m i n g i n v e s t m e n t s( a ) I n I n d i a 8 3 . 4 3 7 8 . 0 9( b ) O u t s i d e I n d i a M M( i v ) N e t v a l u e o f I n v e s t m e n t s( a ) I n I n d i a 2 8 , 1 9 5 . 2 1 2 5 , 1 5 4 . 8 4( b ) O u t s i d e I n d i a 0 . 8 7 0 . 6 5( 2 ) M o v e m e n t o f p r o v i s i o n h e l d t o w a r d sd e p r e c i a t i o n o n I n v e s t m e n t s( i ) O p e n i n g B a l a n c e 2 9 . 2 2 1 2 . 4 8( i i ) A d d : P r o v i s i o n s m a d e d u r i n g t h e y e a r 8 9 . 4 8 3 6 . 3 4( i i i ) L e s s : W r i t e o f f / W r i t e b a c k o f e x c e s sp r o v i s i o n d u r i n g t h e y e a r 6 5 . 2 7 1 9 . 6 0( i v ) C l o s i n g B a l a n c e 5 3 . 4 3 2 9 . 2 2( 3 ) M o v e m e n t o f p r o v i s i o n f o r N o n M p e r f o r m i n gi n v e s t m e n t s ( N P I s )( i ) O p e n i n g B a l a n c e 7 8 . 0 9 1 7 . 5 3( i i ) A d d : P r o v i s i o n s m a d e d u r i n g t h e y e a r 5 . 3 4 6 3 . 4 2( i i i ) L e s s : W r i t e o f f / W r i t e b a c k o f e x c e s sp r o v i s i o n d u r i n g t h e y e a r M 2 . 8 6( i v ) C l o s i n g B a l a n c e 8 3 . 4 3 7 8 . 0 9M o v e m e n t i n p r o v i s i o n s h e l d t o w a r d s d e p r e c i a t i o n o n i n v e s t m e n t s h a v e b e e n r e c k o n e d o na y e a r l y b a s i s1 . 2 . 2 . a ) I n v e s t m e n t s u n d e r H T M ( e x c l u d i n g s p e c i f i e d i n v e s t m e n t s a s p e r R B I n o r m s )a c c o u n t f o r 1 9 . 7 8 % ( P r e v i o u s y e a r 2 0 . 7 2 % ) o f d e m a n d a n d t i m e l i a b i l i t i e s a s a tt h e e n d o f M a r c h 2 0 1 7 a s a g a i n s t p e r m i t t e d c e i l i n g o f 2 0 . 5 0 % ( P r e v i o u s Y e a r :2 1 . 5 0 % ) s t i p u l a t e d b y R B I .b ) I n r e s p e c t o f s e c u r i t i e s h e l d u n d e r H T M c a t e g o r y p r e m i u m o f � 4 7 . 6 5 C r o r e( P r e v i o u s y e a r : ��� 3 5 . 3 4 C r o r e ) h a s b e e n a m o r t i s e d d u r i n g t h e y e a r a n d d e b i t e du n d e r i n t e r e s t r e c e i v e d o n G o v e r n m e n t s e c u r i t i e s .c ) P r o f i t o n s a l e o f s e c u r i t i e s f r o m H T M c a t e g o r y a m o u n t i n g t o � �� 1 3 4 . 2 6
� C r o r e( P r e v i o u s y e a r : �� 1 2 . 9 2 C r o r e ) h a s b e e n t a k e n t o P r o f i t a n d L o s s A c c o u n t . D u r i n gt h e y e a r , t h e B a n k h a d a p p r o p r i a t e d ��6 5 . 8 5 C r o r e ( P r e v i o u s y e a r � 6 . 3 4 C r o r e ) ,[ n e t o f t a x e s a n d t r a n s f e r t o s t a t u t o r y r e s e r v e ] t o t h e C a p i t a l R e s e r v e , b e i n g t h eg a i n o n s a l e o f H T M I n v e s t m e n t s i n a c c o r d a n c e w i t h R B I g u i d e l i n e s .d ) D u r i n g t h e y e a r e n d e d 3 1 s t M a r c h , 2 0 1 7 t h e b a n k h a d w i t h d r a w n � 1 4 . 4 9 � C r o r e( P r e v i o u s y e a r : � 8 . 2 1 C r o r e ) [ n e t o f a p p l i c a b l e t a x e s a n d t r a n s f e r t o s t a t u t o r yr e s e r v e ] f r o m I n v e s t m e n t R e s e r v e A c c o u n t o n p r o v i s i o n f o r d e p r e c i a t i o n o nI n v e s t m e n t s , d e b i t e d t o P r o f i t a n d L o s s a c c o u n t .F-34
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1 . 2 . 3 . R e p o T r a n s a c t i o n sD e t a i l s o f s e c u r i t i e s s o l d / p u r c h a s e d ( i n f a c e v a l u e t e r m s ) d u r i n g t h e y e a r s e n d e d 3 1 s t M a r c h ,2 0 1 7 a n d 3 1 s t M a r c h , 2 0 1 6 u n d e r r e p o s / r e v e r s e r e p o s : (�
i n C r o r e )P a r t i c u l a r s O u t s t a n d i n g d u r i n g t h e y e a r O u t s t a n d i n ga s o n3 1 / 0 3 / 2 0 1 7 /( 3 1 / 0 3 / 2 0 1 6 )M i n i m u m M a x i m u m D a i l y A v e r a g eA ) S e c u r i t i e s s o l d u n d e rR B I R e p o si ) G o v e r n m e n t S e c u r i t i e s æ( æ ) 3 , 2 0 0 . 0 0( 2 , 8 2 5 . 0 0 ) 2 2 0 . 9 3( 4 2 7 . 7 6 ) 0 . 0 0( 2 , 8 2 5 . 0 0 )i i ) C o r p o r a t e D e b t S e c u r i t i e s æ( æ ) æ( æ ) æ( æ ) æ( æ )S e c u r i t i e s p u r c h a s e d u n d e rR B I R e v e r s e R e p o si ) G o v e r n m e n t S e c u r i t i e s æ( æ ) 4 , 3 4 1 . 0 0( 1 , 5 4 1 . 0 0 ) 7 4 2 . 7 3( 1 3 5 . 5 2 ) 1 , 4 5 0 . 0 0( æ )i i ) C o r p o r a t e D e b t S e c u r i t i e s æ( æ ) æ( æ ) æ( æ ) æ( æ )B ) S e c u r i t i e s s o l d u n d e rM a r k e t R e p o si ) G o v e r n m e n t S e c u r i t i e s æ( æ ) 9 6 6 . 4 7( 1 0 4 . 0 5 ) 1 2 5 . 0 8( 1 0 . 5 8 ) 9 1 9 . 7 4( æ )i i ) C o r p o r a t e D e b t S e c u r i t i e s æ( æ ) æ( æ ) æ( æ ) æ( æ )S e c u r i t i e s p u r c h a s e d u n d e rR e v e r s e M a r k e t R e p o si ) G o v e r n m e n t S e c u r i t i e s æ( æ ) 2 , 6 7 2 . 9 6( 1 , 0 4 5 . 5 5 ) 4 9 0 . 6 3( 1 4 3 . 7 1 ) æ( æ )i i ) C o r p o r a t e D e b t S e c u r i t i e s æ( æ ) æ( æ ) æ( æ ) æ( æ )( P r e v i o u s y e a r ’ s f i g u r e s a r e g i v e n i n b r a c k e t s )1 . 2 . 4 . D e t a i l s o f N o n ô S L R i n v e s t m e n t p o r t f o l i o ôa ) I s s u e r c o m p o s i t i o n a s a t 3 1 M a r c h , 2 0 1 7 o f N o n æ S L R i n v e s t m e n t s (�
i n C r o r e )S l . N o . I s s u e r A m o u n t E x t e n t o fp r i v a t ep l a c e m e n t E x t e n t o f‘ b e l o wi n v e s t m e n tg r a d e ’s e c u r i t i e s E x t e n t o f‘ u n r a t e d ’s e c u r i t i e s* * E x t e n t o f‘ u n l i s t e d ’S e c u r i t i e s* * *( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) ( 6 ) ( 7 )1 P u b l i c S e c t o rU n d e r t a k i n g s 2 6 7 . 5 4( 2 7 5 . 7 4 ) 2 6 7 . 5 4( 2 7 5 . 7 4 ) æ( 5 . 0 0 ) æ( æ ) æ( æ )2 F i n a n c i a lI n s t i t u t i o n s 2 , 4 8 5 . 8 2( 9 6 2 . 9 3 ) 7 6 9 . 9 8( 5 0 0 . 1 7 ) æ( æ ) æ( æ ) 5 . 0 0( 5 . 0 0 )3 B a n k s 1 , 8 3 2 . 8 8( 1 , 3 0 5 . 1 0 ) 1 0 5 . 1 4( 1 0 8 . 1 4 ) æ( 3 0 . 0 0 ) æ( æ ) æ( æ )F-35
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4 P r i v a t eC o r p o r a t e s 8 4 9 . 1 9( 1 , 0 8 2 . 8 6 ) 4 0 2 . 8 7( 4 1 6 . 6 5 ) 7 0 . 9 8( 3 5 . 3 6 ) 0 . 0 0( 1 5 . 0 0 ) 3 4 . 9 8( 5 9 . 9 8 )5 S u b s i d i a r i e s /J o i n t v e n t u r e s 3 9 8 . 0 0( 3 9 8 . 0 0 ) 3 9 8 . 0 0( 3 9 8 . 0 0 ) /( / ) /( / ) /( / )6 O t h e r s * 9 1 9 . 3 3( 6 7 8 . 2 8 ) 8 0 6 . 1 3( 6 7 8 . 2 8 ) 6 0 8 . 9 5( 4 5 0 . 8 2 ) 1 7 3 . 5 3( 1 8 8 . 5 1 ) /( / )7 L e s s :P r o v i s i o n h e l dt o w a r d sd e p r e c i a t i o no n i n v e s t m e n t 3 8 . 6 5( 2 3 . 9 1 ) X X X X X X X X X X X X8 L e s s :P r o v i s i o n h e l dt o w a r d s n o np e r f o r m i n gi n v e s t m e n t s 8 3 . 4 3( 7 8 . 0 9 ) X X X X X X X X X X X XT o t a l 6 , 6 3 0 . 6 8( 4 , 6 0 0 . 9 1 ) 2 , 7 4 9 . 6 6( 2 , 3 7 6 . 9 8 ) 6 7 9 . 9 3( 5 2 1 . 1 8 ) 1 7 3 . 5 3( 2 0 3 . 5 1 ) 3 9 . 9 8( 6 4 . 9 8 )P r e v i o u s y e a r ’ s f i g u r e s a r e g i v e n i n b r a c k e t sA m o u n t s r e p o r t e d u n d e r c o l u m n ( 4 ) , ( 5 ) , ( 6 ) a n d ( 7 ) a b o v e a r e n o t m u t u a l l y e x c l u s i v e* I n c l u d e s I n v e s t m e n t s i n N o n / S L R g o v e r n m e n t s e c u r i t i e s a m o u n t i n g t o��
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6 1 2 . 6 1 C r o r e ) .* * E x c l u d e s i n v e s t m e n t s i n e q u i t y s h a r e s , c o m m e r c i a l p a p e r s , C e r t i f i c a t e s o f D e p o s i t ,S e c u r i t i e s d i r e c t l y i s s u e d b y t h e C e n t r a l a n d S t a t e G o v e r n m e n t s , w h i c h a r e n o tr e c k o n e d f o r S L R p u r p o s e s , s e c u r i t y a c q u i r e d b y w a y o f c o n v e r s i o n o f d e b t a n d u n i t si s s u e d b y v e n t u r e c a p i t a l i n l i n e w i t h e x t a n t R B I g u i d e l i n e s .* * * E x c l u d e s i n v e s t m e n t s i n e q u i t y s h a r e s , u n i t s i s s u e d b y v e n t u r e c a p i t a l f u n d s , p a s st h r o u g h c e r t i f i c a t e s , s e c u r i t y r e c e i p t s , s e c u r i t y a c q u i r e d b y w a y o f c o n v e r s i o n o f d e b ta n d c e r t i f i c a t e o f d e p o s i t s i n l i n e w i t h e x t a n t R B I g u i d e l i n e s .b ) N o n / S L R i n v e s t m e n t s c a t e g o r y / w i s e ( N e t o f P r o v i s i o n s ) : (� i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6S h a r e s 2 1 8 . 4 7 1 5 6 . 0 9D e b e n t u r e s a n d B o n d s * 1 , 4 0 7 . 6 1 1 , 6 9 9 . 0 4S u b s i d i a r i e s / J o i n t V e n t u r e s 3 9 8 . 0 0 3 9 8 . 0 0O t h e r s 4 , 6 0 6 . 6 0 2 , 9 6 0 . 3 9T o t a l 6 , 6 3 0 . 6 8 5 , 2 1 3 . 5 2* � I n c l u d e s I n v e s t m e n t s i n N o n � S L R g o v e r n m e n t s e c u r i t i e s a m o u n t i n g t o �� 1 1 3 . 1 8 C r o r e �
�P r e v i o u s y e a r : ���6 1 2 . 6 1 C r o r e ) .c ) N o n � p e r f o r m i n g N o n � S L R i n v e s t m e n t s i s s e t o u t b e l o w : (
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1 . 2 . 5 . S a l e a n d t r a n s f e r s t o / f r o m H T M C a t e g o r yD u r i n g t h e c u r r e n t y e a r , t h e v a l u e o f s a l e s / t r a n s f e r s o f s e c u r i t i e s t o / f r o m H T M c a t e g o r y( e x c l u d i n g o n e Û t i m e t r a n s f e r o f s e c u r i t i e s a n d s a l e s t o R B I u n d e r O M O a u c t i o n s ) w a s w i t h i n5 % o f t h e b o o k v a l u e o f i n v e s t m e n t s h e l d i n H T M c a t e g o r y a t t h e b e g i n n i n g o f t h e y e a r .1 . 3 . D e r i v a t i v e sD i s c l o s u r e i n r e s p e c t o f O u t s t a n d i n g I n t e r e s t R a t e S w a p s ( I R S ) a n d F o r w a r d R a t eA g r e e m e n t ( F R A )1 . 3 . 1 A ) E x c h a n g e T r a d e d I n t e r e s t R a t e D e r i v a t i v e s : (�
i n C r o r e )S l .N o . P a r t i c u l a r s 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6( i ) N o t i o n a l p r i n c i p a l a m o u n t o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e s u n d e r t a k e nd u r i n g t h e y e a r ( i n s t r u m e n t � w i s e )a ) 7 . 5 9 G � S e c 2 0 2 6b ) 6 . 9 7 G � S e c 2 0 2 6c ) 7 . 7 2 G � S e c 2 0 2 5 1 4 , 0 7 0 . 2 46 2 . 4 41 , 2 9 4 . 4 4 N i l( i i ) N o t i o n a l p r i n c i p a l a m o u n t o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e so u t s t a n d i n g a s o n 3 1 s t M a r c h 2 0 1 7 N i l N i l( i i i ) N o t i o n a l p r i n c i p a l a m o u n t o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e so u t s t a n d i n g a n d n o t " h i g h l y e f f e c t i v e "( I n s t r u m e n t w i s e ) N i l N i l( i v ) M a r k � t o � m a r k e t v a l u e o f e x c h a n g e t r a d e di n t e r e s t r a t e d e r i v a t i v e s o u t s t a n d i n g a n dn o t " h i g h l y e f f e c t i v e " ( i n s t r u m e n t w i s e ) N i l N i l1 . 3 . 1 . B ) T h e b a n k h a d d e a l t i n e x c h a n g e t r a d e d c u r r e n c y f u t u r e s d u r i n g t h e f i n a n c i a l y e a re n d e d M a r c h 3 1 , 2 0 1 7 a n d M a r c h 3 1 , 2 0 1 6 . A s a t M a r c h 3 1 , 2 0 1 7 t h e o p e n c o n t r a c t s o n t h ee x c h a n g e w a s N i l .1 . 3 . 2 F o r w a r d R a t e A g r e e m e n t ( F R A ) / I n t e r e s t R a t e S w a p ( I R S )D i s c l o s u r e i n r e s p e c t o f O u t s t a n d i n g I n t e r e s t R a t e S w a p s ( I R S ) a n d F o r w a r d R a t eA g r e e m e n t ( F R A ) (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6i ) T h e n o t i o n a l p r i n c i p a l o f s w a p a g r e e m e n t s 1 , 8 2 5 . 0 0 2 , 2 0 0 . 0 0i i ) L o s s e s w h i c h w o u l d b e i n c u r r e d i f c o u n t e rp a r t i e s f a i l e d t o f u l f i l t h e i r o b l i g a t i o n s u n d e rt h e a g r e e m e n t s 3 . 4 8 7 . 0 4i i i ) C o l l a t e r a l r e q u i r e d b y t h e b a n k u p o n e n t e r i n gi n t o s w a p s N i l N i li v ) C o n c e n t r a t i o n o f c r e d i t r i s k a r i s i n g f r o m t h es w a p s 3 9 . 5 4 N i lv ) T h e f a i r v a l u e o f t h e s w a p b o o k � 0 . 9 0 . 0 1F-37
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i n C r o r e )N a t u r e N o s . N o t i o n a lP r i n c i p a l B e n c h m a r k T e r m sT r a d i n g 3 1 9 2 5 M I O I S F i x e d p a y a b l e v / s f l o a t i n g r e c e i v a b l eT r a d i n g 2 9 9 0 0 M I O I S F i x e d r e c e i v a b l e / f l o a t i n g p a y a b l eT h e n a t u r e a n d t e r m s o f t h e I R S a s o n 3 1 M a r c h , 2 0 1 6 a r e s e t o u t b e l o w : (��
i n C r o r e )N a t u r e N o s . N o t i o n a lP r i n c i p a l B e n c h m a r k T e r m sT r a d i n g 3 5 1 0 2 5 N S E M I B O R F i x e d p a y a b l e v / s f l o a t i n g r e c e i v a b l eT r a d i n g 3 4 1 0 2 5 N S E M I B O R F i x e d r e c e i v a b l e / f l o a t i n g p a y a b l eT r a d i n g 6 1 5 0 N S E M I B O R F i x e d r e c e i v a b l e / f l o a t i n g p a y a b l eT h e b a n k h a s n o t u n d e r t a k e n a n y t r a n s a c t i o n s i n C r e d i t D e f a u l t S w a p s ( C D S ) d u r i n g t h ey e a r 3 1 M a r c h , 2 0 1 7 a n d 3 1 M a r c h , 2 0 1 6 .1 . 3 . 3 . D i s c l o s u r e o n R i s k e x p o s u r e i n D e r i v a t i v e sQ u a l i t a t i v e d i s c l o s u r e s :( a ) S t r u c t u r e a n d o r g a n i z a t i o n f o r m a n a g e m e n t o f r i s k i n d e r i v a t i v e s t r a d i n g , t h e s c o p ea n d n a t u r e o f r i s k m e a s u r e m e n t , r i s k r e p o r t i n g a n d r i s k m o n i t o r i n g s y s t e m s , p o l i c i e sf o r h e d g i n g a n d / o r M i t i g a t i n g r i s k a n d s t r a t e g i e s a n d p r o c e s s e s f o r m o n i t o r i n g t h ec o n t i n u i n g e f f e c t i v e n e s s o f H e d g e s / m i t i g a n t s :D e r i v a t i v e s a r e f i n a n c i a l i n s t r u m e n t s w h o s e c h a r a c t e r i s t i c s a r e d e r i v e d f r o m a n u n d e r l y i n ga s s e t l i k e i n t e r e s t r a t e s , e x c h a n g e r a t e s o r i n d i c e s . T h e B a n k u n d e r t a k e s o v e r t h e c o u n t e ra n d e x c h a n g e t r a d e d d e r i v a t i v e t r a n s a c t i o n s f o r B a l a n c e S h e e t m a n a g e m e n t a n d a l s o f o rp r o p r i e t a r y t r a d i n g / m a r k e t m a k i n g . B a n k o f f e r s d e r i v a t i v e p r o d u c t s t o t h e c u s t o m e r s t oe n a b l e t h e m t o h e d g e t h e i r e x p o s u r e w i t h i n t h e p r e v a l e n t r e g u l a t o r y g u i d e l i n e s .P r o p r i e t a r y t r a d i n g i n c l u d e s I n t e r e s t R a t e F u t u r e s , C u r r e n c y F u t u r e s a n d R u p e e I n t e r e s t R a t eS w a p s u n d e r d i f f e r e n t b e n c h m a r k s ( v i z . M I B O R , M I F O R e t c ) i n o v e r t h e c o u n t e r / e x c h a n g et r a d e d d e r i v a t i v e s . T h e B a n k a l s o u n d e r t a k e s t r a n s a c t i o n s i n L o n g T e r m F o r e x C o n t r a c t s( L T F X ) f o r h e d g i n g i t s B a l a n c e S h e e t a n d a l s o o f f e r s t h e m t o i t s c u s t o m e r s . T h e s et r a n s a c t i o n s e x p o s e t h e B a n k t o v a r i o u s r i s k s p r i m a r i l y c r e d i t , m a r k e t , o p e r a t i o n a l , l e g a l ,a n d r e p u t a t i o n . T h e B a n k h a s a d o p t e d t h e f o l l o w i n g m e c h a n i s m f o r m a n a g i n g r i s k s a r i s i n go u t o f t h e d e r i v a t i v e t r a n s a c t i o n s .T h e d e r i v a t i v e t r a n s a c t i o n s a r e g o v e r n e d b y t h e I n v e s t m e n t , f o r e x a n d d e r i v a t i v e p o l i c y a n dm a r k e t r i s k m a n a g e m e n t p o l i c y o f t h e B a n k a s w e l l a s b y t h e e x t a n t R B I g u i d e l i n e s . V a r i o u so p e r a t i o n a l / r i s k l i m i t s a r e s e t u p a n d a c t u a l e x p o s u r e s a r e m o n i t o r e d v i s ´ à ´ v i s t h e l i m i t sa l l o c a t e d . T h e s e l i m i t s a r e s e t u p t a k i n g i n t o a c c o u n t m a r k e t v o l a t i l i t y , r i s k a p p e t i t e , b u s i n e s ss t r a t e g y a n d m a n a g e m e n t e x p e r i e n c e . R i s k l i m i t s a r e i n p l a c e f o r r i s k p a r a m e t e r s v i z . V a l u ea t R i s k ( V a R ) , S t o p L o s s , P V B P . A c t u a l p o s i t i o n s a r e m o n i t o r e d a g a i n s t t h e s e l i m i t s o n ad a i l y b a s i s a n d b r e a c h e s , i f a n y , a r e r e p o r t e d p r o m p t l y . R i s k a s s e s s m e n t o f t h e p o r t f o l i o i su n d e r t a k e n p e r i o d i c a l l y .F-38
7
T h e T r e a s u r y f r o n t o f f i c e e n t e r s i n t o d e r i v a t i v e t r a n s a c t i o n w i t h c u s t o m e r s a n d i n t e r b a n kc o u n t e r p a r t i e s . T h e B a n k h a s a n i n d e p e n d e n t b a c k o f f i c e a n d m i d o f f i c e a s p e r r e g u l a t o r yg u i d e l i n e s . T h e M T M p o s i t i o n o f t h e d e r i v a t i v e p o r t f o l i o i s m o n i t o r e d o n a r e g u l a r b a s i s .T h e i m p a c t o n d e r i v a t i v e p o r t f o l i o o n a c c o u n t o f t h e p r o b a b l e m a r k e t m o v e m e n t s a r ea s s e s s e d o n r e g u l a r b a s i s . T h e r i s k p r o f i l e o f t h e o u t s t a n d i n g p o r t f o l i o i s r e v i e w e d b y t h eB o a r d a t r e g u l a r i n t e r v a l s . T h e c u r r e n t o u t s t a n d i n g u n d e r t h e d e r i v a t i v e s p o r t f o l i o w e r ee x e c u t e d f o r t r a d i n g p u r p o s e s .( b ) A c c o u n t i n g p o l i c y f o r r e c o r d i n g h e d g e a n d n o n ç h e d g e t r a n s a c t i o n s , r e c o g n i t i o n o fi n c o m e , P r e m i u m s a n d d i s c o u n t s , v a l u a t i o n o f o u t s t a n d i n g c o n t r a c t sB a n k d e a l s i n d e r i v a t i v e s f o r h e d g i n g G þ S e c o r f o r e i g n c u r r e n c y a s s e t s / l i a b i l i t i e s s u b j e c t t ot h e p r e v a i l i n g r e g u l a t o r y g u i d e l i n e s . T r a n s a c t i o n s f o r h e d g i n g a n d t r a d i n g a r e r e c o r d e ds e p a r a t e l y . F o r h e d g e t r a n s a c t i o n s , t h e B a n k i d e n t i f i e s t h e h e d g e d i t e m ( a s s e t o r l i a b i l i t y ) a tt h e i n c e p t i o n o f t h e t r a n s a c t i o n i t s e l f . T h e e f f e c t i v e n e s s i s a s c e r t a i n e d a t t h e t i m e o fi n c e p t i o n o f t h e h e d g e a n d p e r i o d i c a l l y t h e r e a f t e r .T r a n s a c t i o n s r e l a t e d t o f o r e i g n e x c h a n g e f o r w a r d , I n t e r e s t r a t e F u t u r e / I R S / C u r r e n c y f u t u r ea r e m a r k e d t o m a r k e t e v e r y m o n t h a n d t h e M T M i s a c c o u n t e d i n t h e b o o k s .( c ) C o l l a t e r a l S e c u r i t yW e h a v e p r o v i d e d S u f f i c i e n t C o l l a t e r a l S e c u r i t y t o C e n t r a l c o u n t e r P a r t i e s a n d E x c h a n g e sw h e r e v e r A p p l i c a b l eA s p e r m a r k e t p r a c t i c e , n o c o l l a t e r a l s e c u r i t y i s i n s i s t e d o n f o r t h e c o n t r a c t s w i t h c o u n t e rp a r t i e s l i k e B a n k s / P r i m a r y D e a l e r s ( P D s ) e t c . F o r d e a l s w i t h C o r p o r a t e C l i e n t s , a p p r o p r i a t ec o l l a t e r a l s e c u r i t y / m a r g i n e t c . i s s t i p u l a t e d w h e r e v e r c o n s i d e r e d n e c e s s a r y .( d ) C r e d i t R i s k M i t i g a t i o nM o s t o f t h e d e a l s h a v e b e e n c o n t r a c t e d w i t h B a n k s / M a j o r P D s a n d n o d e f a u l t r i s k i sa n t i c i p a t e d o n t h e d e a l s w i t h t h e m .Q u a n t i t a t i v e D i s c l o s u r e s (�
i n C r o r e )S l .N o P a r t i c u l a r s C u r r e n c y D e r i v a t i v e s * I n t e r e s t r a t e D e r i v a t i v e sY e a r e n d e dM a r c h 3 1 ,2 0 1 7 Y e a r e n d e dM a r c h 3 1 ,2 0 1 6 Y e a r e n d e dM a r c h 3 1 ,2 0 1 7 Y e a r e n d e dM a r c h 3 1 ,2 0 1 6( i ) D e r i v a t i v e s ( N o t i o n a lP r i n c i p a l A m o u n t )a ) F o r h e d g i n g þ þ þ 1 5 0 . 0 0b ) F o r t r a d i n g þ þ 1 , 8 2 5 . 0 0 2 , 0 5 0 . 0 0( i i ) M a r k e d t o M a r k e tp o s i t i o n sa ) A s s e t ( + ) þ þ 7 . 5 0 7 . 0 4b ) L i a b i l i t i e s ( þ ) þ þ 8 . 4 0 þ 7 . 0 4( i i i ) C r e d i t E x p o s u r e þ þ 2 4 . 3 8 2 5 . 6 6F-39
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( i v ) L i k e l y i m p a c t o f o n ep e r c e n t a g e c h a n g e i ni n t e r e s t r a t e ( 1 0 0 * P V 0 1 )a ) o n h e d g i n g d e r i v a t i v e s p p 6 . 0 8b ) o n t r a d i n g d e r i v a t i v e s p p p 0 . 5 8 p 0 . 7 8( v ) M a x i m u m a n d M i n i m u mo f 1 0 0 * P V 0 1 o b s e r v e dd u r i n g t h e y e a ra ) o n h e d g i n g � � � M a x 0 . 6 2 4M i n 0 . 1 8 0b ) o n t r a d i n g � � M a x � 0 . 5 6M i n � 0 . 9 9 M a x 0 . 1 4 9M i n � 0 . 6 8 8* e x c l u d e s f o r w a r d e x c h a n g e c o n t r a c t .• T h e n o t i o n a l p r i n c i p a l a m o u n t o f f o r w a r d e x c h a n g e c o n t r a c t s c l a s s i f i e d a s H e d g i n g a n dT r a d i n g o u t s t a n d i n g a s o n M a r c h 3 1 , 2 0 1 7 a m o u n t e d t o
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2 2 7 . 7 6 C r o r e ) .• T h e n o t i o n a l p r i n c i p a l a m o u n t s o f d e r i v a t i v e s r e f l e c t t h e v o l u m e o f t r a n s a c t i o n so u t s t a n d i n g a s a t t h e B a l a n c e S h e e t d a t e a n d d o n o t r e p r e s e n t t h e a m o u n t s a t r i s k .• I n t e r e s t r a t e d e r i v a t i v e r e p r e s e n t s i n t e r e s t r a t e s w a p s .• T h e b a n k h a s c o m p u t e d t h e m a x i m u m a n d m i n i m u m o f P V 0 1 f o r t h e y e a r b a s e d o n t h eb a l a n c e s a s a t t h e e n d o f e v e r y m o n t h .• I n r e s p e c t o f d e r i v a t i v e c o n t r a c t s , t h e b a n k e v a l u a t e s t h e c r e d i t e x p o s u r e a r i s i n gt h e r e f r o m , i n l i n e w i t h R B I g u i d e l i n e s . C r e d i t e x p o s u r e h a s b e e n c o m p u t e d u s i n g t h ec u r r e n t e x p o s u r e m e t h o d w h i c h i s t h e s u m o f :a ) T h e c u r r e n t r e p l a c e m e n t c o s t ( M a r k e d t o M a r k e t v a l u e i n c l u d i n g a c c r u a l s o f t h ec o n t r a c t ) o r z e r o w h i c h e v e r i s h i g h e r .b ) T h e P o t e n t i a l F u t u r e E x p o s u r e ( P F E ) i s a p r o d u c t o f t h e n o t i o n a l p r i n c i p a la m o u n t o f t h e c o n t r a c t a n d a f a c t o r t h a t i s b a s e d o n t h e g r i d o f c r e d i t c o n v e r s i o nf a c t o r p r e s c r i b e d i n R B I G u i d e l i n e s , w h i c h i s a p p l i e d o n t h e b a s i s o f t h e r e s i d u a lm a t u r i t y a n d t h e t y p e o f c o n t r a c t .
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1 . 4 . A s s e t Q u a l i t y1 . 4 . 1 N e t n o n À p e r f o r m i n g a s s e t sP a r t i c u l a r s 3 1 M a r c h , 2 0 1 7( % ) 3 1 M a r c h , 2 0 1 6( % )N e t n o n ã p e r f o r m i n g a s s e t s a s a p e r c e n t a g e o f n e ta d v a n c e s . 1 . 2 8 1 . 6 41 . 4 . 2 M o v e m e n t i n g r o s s n o n À p e r f o r m i n g a s s e t s (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6O p e n i n g b a l a n c e 1 , 6 6 7 . 7 7 1 , 0 5 7 . 7 3A d d i t i o n s d u r i n g t h e y e a r 1 , 0 7 4 . 9 9 1 , 8 9 5 . 4 1R e d u c t i o n s d u r i n g t h e y e a r 1 , 0 1 5 . 7 1 1 , 2 8 5 . 3 7C l o s i n g b a l a n c e 1 , 7 2 7 . 0 5 1 , 6 6 7 . 7 71 . 4 . 3 M o v e m e n t i n n e t n o n À p e r f o r m i n g a s s e t s (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6O p e n i n g b a l a n c e 9 5 0 . 0 1 3 7 3 . 2 7A d d i t i o n s d u r i n g t h e y e a r 5 2 3 . 7 7 9 5 6 . 3 3R e d u c t i o n s d u r i n g t h e y e a r 5 3 2 . 5 8 3 7 9 . 5 9C l o s i n g b a l a n c e 9 4 1 . 2 0 9 5 0 . 0 11 . 4 . 4 M o v e m e n t i n p r o v i s i o n s f o r n o n À p e r f o r m i n g a s s e t s (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6O p e n i n g b a l a n c e 7 0 0 . 5 0 6 6 6 . 3 8A d d i t i o n s d u r i n g t h e y e a r 5 2 8 . 6 3 9 0 8 . 1 7R e d u c t i o n s d u r i n g t h e y e a r 4 7 4 . 6 8 8 7 4 . 0 5C l o s i n g b a l a n c e 7 5 4 . 4 5 7 0 0 . 5 01 . 4 . 5 D i v e r g e n c e i n A s s e t c l a s s i f i c a t i o n a n d P r o v i s i o n i n g f o r N P A sT h e d i v e r g e n c e o b s e r v e d b y R B I f o r t h e F i n a n c i a l y e a r 2 0 1 5 ã 1 6 i n r e s p e c t o f t h e B a n k ’ sa s s e t c l a s s i f i c a t i o n a n d p r o v i s i o n i n g u n d e r t h e e x t a n t p r u d e n t i a l n o r m s o n i n c o m er e c o g n i t i o n , a s s e t c l a s s i f i c a t i o n a n d p r o v i s i o n i n g i s i n s i g n i f i c a n t a n d h e n c e t h e d i s c l o s u r ea s r e q u i r e d u n d e r R B I C i r c u l a r D B R . B P . B C . N o . 6 3 / 2 1 . 0 4 . 0 1 8 / 2 0 1 6 ã 1 7 d a t e d A p r i l 1 8 , 2 0 1 7o n ‘ D i v e r g e n c e i n t h e a s s e t c l a s s i f i c a t i o n a n d p r o v i s i o n i n g ’ , i s n o t r e q u i r e d t o b e m a d e .F-41
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b)Oth erf acilit y2 .831 .6510 .003 .7818 .260 .000 .000 .000 .000 .00
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b)Oth erf acilit y0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
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R est ruct ured St and ard Ad vanceswhi ch ceaset oatt ract hi gh er provi si oni ng and/ oradditi onal ri sk wei ght atth e end of31M arch 20173N o .ofb orrowers0000
A mount O ut st andi ng – ( a)R est ruct ured f acilit y0 .000 .000 .000 .00
b)Oth erf acilit y0 .000 .00
P rovi si onth ereon0 .000 .000 .000 .00
D owngrad ati on of rest ruct ured account sd uri ng th eyearend ed31 M arch2017N o .ofb orrowers ;1 ;120000000
A mount O ut st andi ng – ( a)R est ruct ured f acilit y;31 .43 ;2 .6834 .110 .000 .000 .000 .000 .000 .000 .00
b)Oth erf acilit y0 .00 ;1 .821 .820 .000 .000 .000 .000 .000 .000 .00
P rovi si onth ereon ;4 .450 .004 .450 .000 .000 .000 .000 .000 .000 .00
W rit e ;off sof rest ruct ured account sd uri ng th eyearend ed31 M arch2017N o .ofb orrowers0000000000
A mount O ut st andi ng – ( a)R est ruct ured f acilit y0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
b)Oth erf acilit y0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
P rovi si onth ereon0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
R est ruct ured account sasat31 M arch2017 ( cl osi ngfi gures)4N o .ofb orrowers5031900000
A mount O ut st andi ng – ( a)R est ruct ured f acilit y232 .360 .0034 .110 .00266 .470 .000 .000 .000 .000 .00
b)Oth erf acilit y1 .560 .0011 .823 .7817 .160 .000 .000 .000 .000 .00
P rovi si onth ereon31 .040 .004 .450 .0035 .490 .000 .000 .000 .000 .00
F-43
12( �i nC rore)
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ar dS ub l St and ardD oubtf ulL ossT ot alSt and ardS ub l St and ardD oubtf ulL ossT ot al
R est ruct ured account sasat1 A pril2016 (O peni ng B al ance)N o .ofb orrowers205574101250266075102263
A mountO ut st andi ng –( a)R est ruct ured f acilit y517 .92104 .3894 .522 .32719 .14803 .08250 .04134 .586 .071193 .77
b)Oth erf acilit y247 .34193 .388 .330 .02449 .07250 .17195 .0318 .333 .80467 .33
P rovi si onth ereon70 .025 .250 .180 .1175 .56115 .006 .450 .180 .11121 .74
M ovementi n b al ancef or account s appeari ngund er openi ngb al ance1N o .ofb orrowers �2 �17 �13 �17 l49 �2 �21 �13 �17 l53
A mountO ut st andi ng –( a)R est ruct ured f acilit y�147 .46 �64 .74 �70 .79 �0 .04 l283 .03 �168 .83 �207 .72 �110 .84 �3 .79 l491 .18
b)Oth erf acilit y �213 .5716 .06 �2 .900 .00 l200 .41 �214 .8516 .23 �2 .900 .00 l201 .52
P rovi si onth ereon �14 .86 �4 .630 .060 .00 l19 .43 �24 .35 �5 .830 .060 .00 l30 .12
F resh R est ruct uri ng d uri ngth eyear end ed31M arch 20172N o .ofb orrowers810 .00110810110
A mountO ut st andi ng –( a)R est ruct ured f acilit y203 .030 .010 .000 .05203 .09203 .030 .010 .000 .05203 .09
b)Oth erf acilit y23 .280 .000 .000 .0023 .2823 .280 .000 .000 .0023 .28
P rovi si onth ereon33 .380 .000 .000 .0033 .3833 .380 .000 .000 .0033 .38
U pgrad ati ont o rest ruct ured st and ard cat egory d uri ngth eyear end ed31M arch , 2017N o .ofb orrowers16 �7 �1 �8016�7 �1 �80
A mountO ut st andi ng –( a)R est ruct ured f acilit y0 .75 �0 .49 �0 .07 �0 .190 .000 .75 �0 .49 �0 .07 �0 .190 .00
b)Oth erf acilit y0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
P rovi si onth ereon0 .04 �0 .020 .00 �0 .020 .000 .04 �0 .020 .00 �0 .020 .00
R est ruct ured St and ard Ad vanceswhi ch ceaset oatt ract hi gh erN o .ofb orrowers �9l9 �9l9
A mountO ut st andi ng –( a)R est ruct ured f acilit y�0 .28l0 .28 �0 .28l0 .28
b)Oth erf acilit y0 .000 .000 .000 .00
F-44
13
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ar dS ub ¼ St and ardD oubtf ulL ossT ot alSt and ardS ub ¼ St and ardD oubtf ulL ossT ot al
provi si oni ng and/ oradditi onal ri sk wei ght atth e end of31M arch 20173P rovi si onth ereon Ù0 .01Ý0 .01 á0 .01Ý0 .01
D owngrad ati on of rest ruct ured account sd uri ng th eyearend ed31 M arch2017N o .ofb orrowers á5 á232170 á6 á242370
A mountO ut st andi ng –( a)R est ruct ured f acilit yá6 .66 á32 .3838 .930 .110 .00 á38 .09 á35 .0673 .040 .110 .00
b)Oth erf acilit y á4 .94 á2 .247 .180 .000 .00 á4 .94 á4 .058 .990 .000 .00
P rovi si onth ereon á0 .04 á0 .540 .570 .010 .00 á4 .49 á0 .545 .020 .010 .00
W rit e áoff sof rest ruct ured account sd uri ng th eyearend ed31 M arch2017N o .ofb orrowers0000000000
A mountO ut st andi ng –( a)R est ruct ured f acilit y0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
b)Oth erf acilit y0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
P rovi si onth ereon0 .000 .000 .000 .000 .000 .000 .000 .000 .000 .00
R est ruct ured account sasat31 M arch2017 ( cl osi ngfi gures)4N o .ofb orrowers28981842023398485211
A mountO ut st andi ng –( a)R est ruct ured f acilit y567 .296 .7862 .592 .25638 .91799 .656 .7896 .702 .25905 .38
b)Oth erf acilit y52 .11207 .2012 .610 .02271 .9453 .67207 .2024 .433 .80289 .10
P rovi si onth ereon88 .530 .050 .810 .1089 .49119 .570 .055 .260 .10124 .98
1I ncl ud esaccount scl osedd uri ngth eyearonaccount of payment of out st andi ngf aciliti esb yth eb orrower ,al soi ncl ud esth ediff erenceof amount
b et weenth eb al anceofFY16 andFY17 and al soi ncl ud esal eofR est ruct ured account sasf oll ows:
F-45
14( �i nC rore)
U nd erCDRM ech ani smOth ers
St and ardS ub L St and ardD oubtf ulL ossT ot alSt and ardS ub L St and ardD oubtf ulL ossT ot al
N o .ofb orrowers0100102103
A mountO ut st andi ng ( a)R est ruct uredf acilit y@0 .0049 .530 .000 .0049 .530 .0035 .4450 .040 .0085 .48
b)Oth erF acilit y@0 .000 .000 .000 .000 .000 .002 .300 .000 .002 .30
P rovi si onth ereon@0 .000 .810 .000 .000 .810 .002 .080 .000 .002 .08
@R epresent sb al anceason31 p03 p20162A mount report edh ererepresent sout st andi ngason31M arch ,2017 .
3A ccount swhi ch werenot att racti nghi gh erprovi si oni ngand/ oradditi onal ri sk wei ght atth eb egi nni ngofth efi nanci al year .
4Oth erF acilit yi ncl ud ei nvest menti nB ond/D eb ent uresamounti ngt o �216 .04C rore .
5Th erearenoSME caseswhi chh aveb eenrest ruct uredd uri ngth eyearend ed31M arch ,2017 .
F-46
15
D et ail sofl oanasset ssubj ect edt orest ruct uri ngd uri ngth eyearend ed31M arch ,2016 :( �i nC rore)
T ypeofR est ruct uri ngU nd erCDRM ech ani smU nd erSMED ebtR est ruct uri ngM ech ani sm6
A ssetCl assifi cati onSt and ardS ub Å St and ardD oubtf ulL ossT ot alSt and ardS ub Å St and ardD oubtf ulL ossT ot al
R est ruct ured account sason A pril1 ofth e FY(O peni ng B al ance)N o .ofb orrowers1313ì17 ìììì
ì
A mount O ut st andi ng – ( a)R est ruct ured f acilit y469 .8526 .09105 .35 ì601 .29 ììììì
b)Oth erF acilit y74 .1117 .7121 .65 ì113 .47 ììììì
P rovi si onth ereon6 .960 .264 .71 ì11 .93 ììììì
M ovementi n b al ancef or account s appeari ngund er openi ng b al ance1N o .ofb orrowers3 ììì3 ììì
ìì
A mount O ut st andi ng – ( a)R est ruct ured f acilit y136 .48 ì0 .01 ì136 .49 ììììì
b)Oth erF acilit y(29 .77) ì(5 .26) ì(35 .03) ììììì
P rovi si onth ereon39 .220 .01(0 .01) ì39 .22 ììììì
F resh R est ruct uri ng d uri ngth eyear2N o .ofb orrowers ìììì�ììì
ìì
A mount O ut st andi ng – ( a)R est ruct ured f acilit yìììì�ììì
ìì
b)Oth erF acilit y ìììì�ììì
ìì
P rovi si onth ereon ìììì�ììììì
U pgrad ati ont o rest ruct ured st and ard cat egoryd uri ng th eFYN o .ofb orrowers ìììì� ììì
ìì
A mount O ut st andi ng – ( a)R est ruct ured f acilit yìììì� ììì
ìì
b)Oth erF acilit y ìììì� ììì
ìì
F-47
16
T ypeofR est ruct uri ngU nd erCDRM ech ani smU nd erSMED ebtR est ruct uri ngM ech ani sm6
A ssetCl assifi cati onSt and ardS ub 5 St and ardD oubtf ulL ossT ot alSt and ardS ub 5 St and ardD oubtf ulL ossT ot al
P rovi si onth ereon M MMMN MMM
MM
R est ruct ured St and ard Ad vances whi ch ceaset o att racthi gh er provi si oni ng and/ or additi onal ri sk wei ght atth e end ofFYN o .ofb orrowers(3)(3) M
M
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(62 .41)(62 .41) M
M
b)Oth erF acilit y(5 .00) MMM(5 .00) M
M
P rovi si onth ereon MNM
M
D owngrad ati on of rest ruct ured account sd uri ng th eFYN o .ofb orrowers(7)6M1 N MMMMM
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(258 .76)255 .01 M3 .75 NMMMMM
b)Oth erF acilit y(36 .51)32 .73 M3 .78 NMMMMM
P rovi si onth ereon(1 .20)1 .20 MM NMMMMM
W rit e �off s/S al e of rest ruct ured account sd uri ng th eFY3 ,4N o .ofb orrowers M(2)(2) M(4) MMMMM
A mount O ut st andi ng – ( a)R est ruct ured f acilit yM(135 .44)(65 .30) M(200 .74) MMMMM
b)Oth erF acilit y M(48 .79)(6 .39) M(55 .18) MMMMM
P rovi si onth ereon M(0 .27)(4 .70) M(4 .97) MMMMM
R est ruct ured account sason M arch31 ofth eN o .ofb orrowers 6511 13 MMM
MM
A mount O ut st andi ng –285 .16145 .6640 .063 .75474 .63 MMMMM
F-48
17
T ypeofR est ruct uri ngU nd erCDRM ech ani smU nd erSMED ebtR est ruct uri ngM ech ani sm6
A ssetCl assifi cati onSt and ardS ub ± St and ardD oubtf ulL ossT ot alSt and ardS ub ± St and ardD oubtf ulL ossT ot al
FY( cl osi ng fi gures)5( a)R est ruct ured f acilit y b)Oth erF acilit y2 .831 .6510 .003 .78 18 .26 ååååå
P rovi si onth ereon44 .981 .20 åå46 .18 ååååå ( �i nC rore)
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub õ St and ardD oubtf ulL ossT ot alSt and ardS ub õ St and ardD oubtf ulL ossT ot al
R est ruct ured account sason A pril1 ofth e FY(O peni ng B al ance)N o .ofb orrowers264348486468277358786485
A mount O ut st andi ng – ( a)R est ruct ured f acilit y1 ,279 .2329 .4939 .791 .671 ,350 .181 ,749 .0855 .58145 .141 .67 1 ,951 .47
b)Oth erF acilit y1 ,062 .735 .4014 .31 �1 ,082 .441 ,136 .8423 .1135 .96 �1 ,195 .91
P rovi si onth ereon16 .011 .460 .380 .0917 .9422 .971 .725 .090 .0929 .87
M ovementi n b al ancef or account s appeari ngund er openi ngb al ance 1N o .ofb orrowers12(7)(15)(13)(23)15(7)(15)(13)(20)
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(355 .20)(0 .70)(2 .05)(0 .24)(358 .19)(218 .72)(0 .70)(2 .04)(0 .24)(221 .70)
b)Oth erF acilit y(554 .12)0 .08(0 .07) �(554 .11)(583 .89)0 .08(5 .33) �(589 .14)
P rovi si onth ereon56 .46(1 .40)(0 .13)(0 .02)54 .9195 .68(1 .39)(0 .14)(0 .02)94 .13
F resh R est ruct uri ng d uri ngth eyear2N o .ofb orrowers30 ���3030
���30
A mount O ut st andi ng – ( a)R est ruct ured f acilit y77 .84 ���77 .8477 .84 ���77 .84
b)Oth erF acilit y14 .39 ���14 .3914 .39 ���14 .39
F-49
18
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub E St and ardD oubtf ulL ossT ot alSt and ardS ub E St and ardD oubtf ulL ossT ot al
P rovi si onth ereon4 .64 ZZZ4 .644 .64 ZZZ4 .64
U pgrad ati ont o rest ruct ured st and ard cat egoryd uri ng th eFYN o .ofb orrowers14(7)(4)(3) E 14(7)(
4)(3)E
A mount O ut st andi ng – ( a)R est ruct ured f acilit y0 .72(0 .40)(0 .25)(0 .07) E0 .72(0 .40)(0 .25)(0 .07) E
b)Oth erF acilit y ~~~~E ~~~
~E
P rovi si onth ereon ~~~~E ~~~~E
R est ruct ured St and ard Ad vances whi ch ceaset o att racthi gh er provi si oni ng and/ or additi onal ri sk wei ght atth e end ofFYN o .ofb orrowers(218)(218) (221)
(221)
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(215 .56)(215 .56)(277 .97)(277 .97)
b)Oth erF acilit y(41 .38)(41 .38)(46 .38)
(46 .38)
P rovi si onth ereon ~E~E
D owngrad ati on of rest ruct ured account sd uri ng th eFYN o .ofb orrowers(82)361531 E(89)42
1532 E
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(269 .11)189 .8378 .320 .96 E(527 .87)444 .8478 .324 .71 E
b)Oth erF acilit y(234 .28)228 .855 .410 .02 E(270 .79)261 .585 .413 .80 E
P rovi si onth ereon(7 .09)7 .010 .040 .04 E(8 .29)8 .210 .040 .04 E
W rit e Zoff s/S al e of rest ruct uredN o .ofb orrowers ~(1)(6) ~(7) ~(3)(8) ~(11)
A mount O ut st andi ng –~(113 .84)(21 .29) ~(135 .13) ~(249 .28)(86 .59) ~(335 .87)
F-50
19
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub ² St and ardD oubtf ulL ossT ot alSt and ardS ub ² St and ardD oubtf ulL ossT ot al
account sd uri ng th eFY3 ,4( a)R est ruct ured f acilit y b)Oth erF acilit y Ô(40 .95)(11 .32) Ô(52 .27) Ô(89 .74)(17 .71) Ô(107 .45)
P rovi si onth ereon Ô(1 .82)(0 .11) Ô(1 .93) Ô(2 .09)(4 .81) Ô(6 .90)
R est ruct ured account sason M arch31 ofth e FY( cl osi ng fi gures)5N o .ofb orrowers205574101250
266075102263
A mount O ut st andi ng – ( a)R est ruct ured f acilit y517 .92104 .3894 .522 .32719 .14803 .08250 .04134 .586 .071 ,193 .77
b)Oth erF acilit y247 .34193 .388 .330 .02449 .07 250 .17195 .0318 .333 .80467 .33
P rovi si onth ereon70 .025 .250 .180 .11 75 .56115 .006 .450 .180 .11121 .74
1 I ncl ud esaccount scl osedd uri ngth eyearonaccount of payment of out st andi ngf aciliti esb yth eb orrowerand account swhi ch werenot att racti ng
hi gh erprovi si oni ngand/ oradditi onal ri sk wei ght atth eb egi nni ngofth eFi nanci alY ear
2 A mount report edh ererepresent sout st andi ngason31M arch ,2016
3 A mount out st andi ngund errest ruct uri ngf aciliti esi sout st andi ngb al anceason31 �03 �2015
4 I ncl ud essal eof rest ruct ured account sasf oll ows:
( �i nC rore)
U nd erCDRM ech ani smOth ers
St and ardS ub � St and ardD oubtf ulL ossT ot alSt and ardS ub � St and ardD oubtf ulL ossT ot al
N o .ofb orrowers�11 �2 �1 ��1
A mountO ut st andi ng( a)R est ruct uredf acilit y@� 26 .0935 .81� 61 .90� 113 .84�� 113 .84
b)Oth erF acilit y@ �17 .714 .59 �22 .30 �40 .95 ��40 .95
P rovi si onth ereon@ �0 .27 ��0 .27 �1 .82 ��1 .82
@R epresent sb al anceason31 �03 �20155 Oth erF acilit yi ncl ud ei nvest ment si nB ond s/D eb ent uresamounti ngt o �195.62C rore
6 Th erearenoSME caseswhi chh aveb eenrest ruct uredd uri ngth eyearend ed31M arch ,2016
F-51
2 0
�1 . 4 . 6 B ) A d d i t i o n a l D i s c l o s u r e s w i t h r e l a t i o n t o C e r t a i n R e s t r u c t u r i n g S c h e m e s :1 . D i s c l o s u r e s o n F l e x i b l e S t r u c t u r i n g o f E x i s t i n g L o a n s (� i n C r o r e )P e r i o d N o . o fb o r r o w e r st a k e n u pf o r f l e x i b l es t r u c t u r i n g A m o u n t o f L o a n st a k e n u p f o r f l e x i b l ys t r u c t u r i n g E x p o s u r e w e i g h t e d a v e r a g ed u r a t i o n o f l o a n s t a k e n u p f o rf l e x i b l e s t r u c t u r i n g *C l a s s i f i e da sS t a n d a r d C l a s s i f i e da s N P A B e f o r ea p p l y i n gf l e x i b l ys t r u c t u r i n g A f t e r a p p l y i n gf l e x i b l ys t r u c t u r i n gF o r t h e y e a re n d e d M a r c h3 1 , 2 0 1 6 N I L N I L N I L N I L N I LF o r t h e y e a re n d e d M a r c h3 1 , 2 0 1 7 2 9 1 . 0 4 N A 9 . 3 3 Y e a r s 1 5 . 3 6 Y e a r s2 . D i s c l o s u r e s o n S t r a t e g i c D e b t R e s t r u c t u r i n g S c h e m e ( a c c o u n t s w h i c h a r e c u r r e n t l yu n d e r t h e s t a n d s t i l l p e r i o d ) (� i n C r o r e )N o . o fa c c o u n t sw h e r eS D R h a sb e e ni n v o k e d G r o s s a m o u n to u t s t a n d i n g a s o n t h er e p o r t i n g d a t e G r o s s a m o u n to u t s t a n d i n g a s o n t h er e p o r t i n g d a t e w i t hr e s p e c t t o a c c o u n t sw h e r e c o n v e r s i o n o fd e b t t o e q u i t y i sp e n d i n g G r o s s a m o u n t o u t s t a n d i n ga s o n t h e r e p o r t i n g d a t ew i t h r e s p e c t t o a c c o u n t sw h e r e c o n v e r s i o n o f d e b t t oe q u i t y h a s t a k e n p l a c eC l a s s i f i e da sS t a n d a r d C l a s s i f i e da sN P A C l a s s i f i e da sS t a n d a r d C l a s s i f i e da sN P A C l a s s i f i e d a sS t a n d a r d C l a s s i f i e da sN P A3 1 1 3 . 4 3 ¦ 5 1 . 9 0 ¦ 6 1 . 5 3 ¦3 . D i s c l o s u r e s o n C h a n g e i n O w n e r s h i p o u t s i d e S D R S c h e m e ( a c c o u n t s w h i c h a r ec u r r e n t l y u n d e r t h e s t a n d ª s t i l l p e r i o d ) (� i n C r o r e )N o . o fa c c o u n ts w h e r eb a n k sh a v ed e c i d e dt o e f f e c tc h a n g ei no w n e r sh i p A m o u n to u t s t a n d i n g a so n t h er e p o r t i n g d a t e A m o u n to u t s t a n d i n g a s o nt h e r e p o r t i n g d a t ew i t h r e s p e c t t oa c c o u n t s w h e r ec o n v e r s i o n o f d e b tt oe q u i t y / i n v o c a t i o no f p l e d g e o f e q u i t ys h a r e s i s p e n d i n g A m o u n to u t s t a n d i n g a s o nt h e r e p o r t i n g d a t ew i t h r e s p e c t t oa c c o u n t s w h e r ec o n v e r s i o n o f d e b tt o e q u i t y / i n v o c a t i o no f p l e d g e o f e q u i t ys h a r e s h a s t a k e np l a c e A m o u n to u t s t a n d i n g a s o nt h e r e p o r t i n g d a t ew i t h r e s p e c t t oa c c o u n t s w h e r ec h a n g e i no w n e r s h i p i se n v i s a g e d b yi s s u a n c e o f f r e s hs h a r e s o r s a l e o fp r o m o t e r s e q u i t yC l a s s i f i e da sS t a n d a r d C l a s s if i e d a sN P A C l a s s i f i e da sS t a n d a r d C l a s s i f i e da sN P A C l a s s i f i e da sS t a n d a r d C l a s s i f i e da sN P A C l a s s i f i e da sS t a n d a r d C l a s s i f i e da sN P AN A N A N A N A N A N A N A N A N A
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4 . D i s c l o s u r e s o n C h a n g e i n O w n e r s h i p o f P r o j e c t s u n d e r I m p l e m e n t a t i o n ( a c c o u n t sw h i c h a r e c u r r e n t l y u n d e r t h e s t a n d Ù s t i l l p e r i o d ) (� i n C r o r e )N o . o f a c c o u n t sw h e r e b a n k sh a v e d e c i d e d t oe f f e c t c h a n g e i no w n e r s h i p A m o u n t o u t s t a n d i n g a s o n t h e r e p o r t i n g d a t eC l a s s i f i e d a sS t a n d a r d C l a s s i f i e d a s s t a n d a r dr e s t r u c t u r e d C l a s s i f i e d a s N P A1 3 1 . 6 6 N A N A5 . D i s c l o s u r e s o n t h e S c h e m e f o r S u s t a i n a b l e S t r u c t u r i n g o f S t r e s s e d A s s e t s ( S 4 A ) a s o nM a r c h 3 1 , 2 0 1 7 : (� i n C r o r e )N o . o f a c c o u n t s w h e r eS 4 A h a s b e e n a p p l i e d A g g r e g a t eA m o u n to u t s t a n d i n g A m o u n t o u t s t a n d i n g P r o v i s i o nH e l dI n P a r t A I n P a r t BC l a s s i f i e d a s S t a n d a r d 1 2 1 . 9 6 6 3 . 4 6 5 8 . 5 0 2 3 . 2 9C l a s s i f i e d a s N P A � � � �1 . 4 . 7 A ) D e t a i l s o f f i n a n c i a l a s s e t s s o l d t o S e c u r i t i s a t i o n / R e c o n s t r u c t i o n c o m p a n i e sf o r A s s e t R e c o n s t r u c t i o n : (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6S t a n d a r d N P A # S t a n d a r d N P Aa ) N o o f a c c o u n t s 1 7 9 2 5 5b ) A g g r e g a t e v a l u e ( n e t o f p r o v i s i o n ) o fa c c o u n t s s o l d t o S C / R C 0 . 5 3 2 0 3 . 6 3 5 1 . 1 0 3 4 3 . 4 6c ) A g g r e g a t e c o n s i d e r a t i o n 0 . 5 3 2 4 2 . 4 2 5 1 . 1 0 2 2 1 . 3 2d ) A d d i t i o n a l c o n s i d e r a t i o n r e a l i s e d i nr e s p e c t o f a c c o u n t s t r a n s f e r r e d i ne a r l i e r y e a r s � � �e ) A g g r e g a t e g a i n / ( l o s s ) o v e r n e t b o o kv a l u e � 3 8 . 7 9 � ( 1 2 2 . 1 4 ) *# i n c l u d i n g w r i t t e n o f f a s s e t s* � D u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 , t h e B a n k h a d a s s i g n e d c e r t a i n N o n � p e r f o r m i n gf i n a n c i a l a s s e t s t o A s s e t R e c o n s t r u c t i o n C o m p a n i e s . I n t e r m s o f R B I M a s t e r C i r c u l a rD B R . N o . B P . B C . 2 / 2 1 . 0 4 . 0 4 8 / 2 0 1 5 � 1 6 o n P r u d e n t i a l n o r m s o n I n c o m e R e c o g n i t i o n ,A s s e t C l a s s i f i c a t i o n a n d P r o v i s i o n i n g p e r t a i n i n g t o A d v a n c e s d a t e d J u l y 1 , 2 0 1 5 , t h es h o r t f a l l a r r i v e d a t b y d e d u c t i n g s a l e c o n s i d e r a t i o n f r o m t h e N e t B o o k V a l u e o f t h ef i n a n c i a l a s s e t s , a m o u n t i n g t o�
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B ) D e t a i l s o f I n v e s t m e n t s h e l d a s S e c u r i t y R e c e i p t s r e c e i v e d b y s a l e o f N P A t oS e c u r i t i s a t i o n / R e c o n s t r u c t i o n C o m p a n i e s a s a t 3 1 M a r c h , 2 0 1 7 a n d 3 1 M a r c h , 2 0 1 6 a r ea s f o l l o w s : (�
i n C r o r e )P a r t i c u l a r s B a c k e d b y N P A s s o l db y t h e b a n k a su n d e r l y i n g B a c k e d b y N P A s s o l d b yo t h e r b a n k s / f i n a n c i a li n s t i t u t i o n s / n o n · b a n k i n gf i n a n c i a l c o m p a n i e s a su n d e r l y i n g T o t a lA s a t3 1 M a r c h ,2 0 1 7 A s a t3 1 M a r c h ,2 0 1 6 A s a t3 1 M a r c h ,2 0 1 7 A s a t3 1 M a r c h ,2 0 1 6 A s a t3 1 M a r c h ,2 0 1 7 A s a t3 1 M a r c h ,2 0 1 6B o o k v a l u e o fi n v e s t m e n t s i ns e c u r i t y r e c e i p t s 7 0 5 . 9 4 5 6 3 . 2 3 å å 7 0 5 . 9 4 5 6 3 . 2 3N o t e : I n a d d i t i o n t o a b o v e , b a n k h o l d s s e c u r i t y r e c e i p t s o f� 7 6 . 5 5 C r o r e ( P r e v i o u s y e a r :
�7 6 . 1 0 C r o r e ) w h i c h a r e b a c k e d b y s t a n d a r d a s s e t s s o l d b y t h e b a n k .C ) D e t a i l s o f a g e i n g o f I n v e s t m e n t s h e l d a s S e c u r i t y R e c e i p t s a s a t M a r c h 3 1 , 2 0 1 7 a r e a sf o l l o w s : (�
i n C r o r e )P a r t i c u l a r s S R si s s u e dw i t h i np a s t 5y e a r s S R s i s s u e dm o r e t h a n 5y e a r s a g o b u tw i t h i n p a s t 8y e a r s S R s i s s u e dm o r e t h a n 8y e a r s a g o( i ) B o o k v a l u e o f S R sb a c k e d b y N P A s s o l d b yt h e b a n k a s u n d e r l y i n g 6 9 6 . 7 1 9 . 2 3 0 . 0 0P r o v i s i o n h e l d a g a i n s t ( i ) 2 9 . 1 7 6 . 1 1 0 . 0 0( i i ) B o o k v a l u e o f S R sb a c k e d b y N P A s s o l d b yo t h e r b a n k s / f i n a n c i a li n s t i t u t i o n s / n o n , b a n k i n gf i n a n c i a l c o m p a n i e s a su n d e r l y i n g 0 . 0 0 0 . 0 0 0 . 0 0P r o v i s i o n h e l d a g a i n s t ( i i ) 0 . 0 0 0 . 0 0 0 . 0 0G r o s s B o o k v a l u e 6 9 6 . 7 1 9 . 2 3 0 . 0 0T o t a l p r o v i s i o n h e l d a g a i n s ta b o v e 2 9 . 1 7 6 . 1 1 0 . 0 0N e t B o o k v a l u e 6 6 7 . 5 4 3 . 1 2 0 . 0 0N o t e : I n a d d i t i o n t o a b o v e , b a n k h o l d s s e c u r i t y r e c e i p t s o f� 7 6 . 5 5 C r o r e w h i c h a r e b a c k e db y s t a n d a r d a s s e t s s o l d b y t h e b a n k , w h i c h i s i s s u e d w i t h i n p a s t 5 y e a r s . N o p r o v i s i o ni s h e l d a g a i n s t s e c u r i t y r e c e i p t s b a c k e d b y s t a n d a r d a s s e t s s o l d b y t h e b a n k .
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1 . 4 . 8 D e t a i l s o f n o n L p e r f o r m i n g f i n a n c i a l a s s e t s p u r c h a s e d / s o l dA . D e t a i l s o f n o n b p e r f o r m i n g f i n a n c i a l a s s e t s p u r c h a s e d : (�
i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h 2 0 1 7 3 1 s t M a r c h 2 0 1 61 . ( a ) N o . o f a c c o u n t s p u r c h a s e d d u r i n g t h e y e a r N I L N I L( b ) A g g r e g a t e o u t s t a n d i n g2 . ( a ) O f t h e s e , n u m b e r o f a c c o u n t sr e s t r u c t u r e d d u r i n g t h e y e a r( b ) A g g r e g a t e o u t s t a n d i n gB . D e t a i l s o f n o n b p e r f o r m i n g f i n a n c i a l a s s e t s s o l d : (�
i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h 2 0 1 7 3 1 s t M a r c h 2 0 1 61 . N o o f a c c o u n t s s o l d N I L N I L2 . A g g r e g a t e o u t s t a n d i n g3 . A g g r e g a t e c o n s i d e r a t i o n r e c e i v e d1 . 4 . 9 M o v e m e n t o f P r o v i s i o n o n S t a n d a r d A s s e t s (� i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h 2 0 1 7 3 1 s t M a r c h 2 0 1 6( a ) O p e n i n g b a l a n c e 3 1 6 . 4 3 2 8 6 . 9 3( b ) A d d i t i o n / a d j u s t m e n t s d u r i n g t h e y e a r 7 8 . 5 0 2 9 . 5 0( c ) D e d u c t i o n d u r i n g t h e y e a r ß ß( d ) C l o s i n g b a l a n c e * 3 9 4 . 9 3 3 1 6 . 4 3* I n c l u d e s P r o v i s i o n h e l d t o w a r d s U n h e d g e d F o r e i g n C u r r e n c y E x p o s u r e o f C u s t o m e r sa m o u n t i n g
�5 . 2 7 C r o r e ( P r e v i o u s Y e a r :
�1 0 . 0 5 C r o r e )1 . 5 T h e K e y b u s i n e s s r a t i o s a n d o t h e r i n f o r m a t i o n :P a r t i c u l a r s A s a t3 1 s t M a r c h2 0 1 7 A s a t3 1 s t M a r c h2 0 1 6( i ) I n t e r e s t I n c o m e a s a p e r c e n t a g e t o W o r k i n g F u n d s *( % ) 8 . 7 7 9 . 2 1( i i ) N o n ß i n t e r e s t i n c o m e a s a p e r c e n t a g e t o W o r k i n gF u n d s * ( % ) 1 . 0 9 0 . 9 4( i i i ) O p e r a t i n g P r o f i t a s a p e r c e n t a g e t o W o r k i n g F u n d s *( % ) 1 . 9 5 1 . 6 9( i v ) R e t u r n o n A s s e t s [ B a s e d o n A v e r a g e W o r k i n g F u n d ]* ( % ) 0 . 8 4 0 . 5 7( v ) B u s i n e s s ( D e p o s i t s l e s s i n t e r ß b a n k d e p o s i t s p l u sa d v a n c e s ) p e r e m p l o y e e (
�i n C r o r e ) * * 1 4 . 4 9 1 2 . 0 3( v i ) P r o f i t p e r e m p l o y e e (
�i n C r o r e ) * * 0 . 0 7 0 . 0 4* W o r k i n g F u n d s r e p r e s e n t a v e r a g e o f t o t a l a s s e t s a s r e p o r t e d t o R B I i n F o r m X u n d e rS e c t i o n 2 7 o f t h e B a n k i n g R e g u l a t i o n A c t , 1 9 4 9 d u r i n g t h e y e a r .* * P r o d u c t i v i t y r a t i o s a r e b a s e d o n a v e r a g e e m p l o y e e n u m b e r s f o r t h e y e a r .
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1 . 6 . A s s e t L i a b i l i t y M a n a g e m e n tA m a t u r i t y p a t t e r n o f c e r t a i n i t e m s o f a s s e t s a n d l i a b i l i t i e s a t 3 1 M a r c h , 2 0 1 7 a n d 3 1M a r c h , 2 0 1 6 i s s e t o u t b e l o w :Y e a r e n d e d 3 1 M a r c h , 2 0 1 7 (�
i n C r o r e )M a t u r i t yP a t t e r n D e p o s i t s A d v a n c e s I n v e s t m e n t s B o r r o w i n g s F o r e i g nC u r r e n c yA s s e t s F o r e i g nC u r r e n c yL i a b i l i t i e sD a y 1 4 6 5 . 6 3 9 1 8 . 8 4 4 , 0 3 1 . 8 7 4 8 . 4 3 4 6 3 . 0 4 1 5 0 . 5 52 T 7 d a y s 1 , 9 2 4 . 0 7 1 , 5 6 2 . 1 2 2 6 4 . 5 9 9 9 9 . 7 7 8 3 5 . 3 9 1 1 . 5 98 T 1 4d a y s 7 4 2 . 3 3 5 6 5 . 0 9 8 9 . 5 6 1 0 0 . 0 0 1 4 6 . 8 2 1 0 . 4 31 5 T 3 0d a y s * 2 , 4 8 0 . 4 8 1 , 5 6 3 . 4 4 1 , 2 4 3 . 7 6 7 1 . 7 9 1 1 4 . 4 7 1 0 0 . 3 33 1 d a y st o 2m o n t h s * 3 , 4 6 5 . 5 1 2 , 7 2 1 . 0 7 2 5 9 . 0 8 1 6 0 . 5 7 2 2 7 . 6 3 2 2 7 . 7 6M o r et h a n 2m o n t h sa n d u p t o3m o n t h s * 5 , 9 2 0 . 9 2 3 , 1 7 2 . 7 2 8 1 5 . 9 1 3 0 0 . 0 6 2 6 4 . 0 8 2 1 7 . 5 9O v e r3 m o n t h sa n d u p t o6 m o n t h s 7 , 9 7 3 . 4 6 6 , 0 7 3 . 3 0 1 , 6 1 1 . 3 3 7 0 6 . 7 8 6 8 1 . 0 4 3 5 2 . 2 4O v e r 6m o n t h sa n d u p t o1 Y e a r 1 5 , 9 6 9 . 6 3 8 , 4 5 8 . 3 9 2 , 3 6 2 . 8 1 6 3 6 . 8 5 7 6 8 . 2 0 5 3 7 . 5 4O v e r 1Y e a r a n du p t o3 Y e a r s 3 7 , 9 5 8 . 3 1 3 0 , 6 3 9 . 6 6 4 , 0 9 6 . 6 8 1 , 8 5 9 . 7 8 3 4 1 . 9 0 9 4 3 . 7 2O v e r 3Y e a r sa n d u p t o5 Y e a r s 1 , 4 1 6 . 3 4 8 , 4 6 5 . 5 7 1 , 4 1 6 . 2 6 1 , 0 1 3 . 2 9 3 6 3 . 9 5 9 6 0 . 5 2O v e r 5Y e a r s 1 9 , 3 4 7 . 8 8 9 , 1 9 6 . 0 7 1 2 , 0 0 4 . 2 3 0 . 0 0 4 6 9 . 3 9 0 . 0 0T o t a l 9 7 , 6 6 4 . 5 6 7 3 , 3 3 6 . 2 7 2 8 , 1 9 6 . 0 8 5 , 8 9 7 . 3 2 4 , 6 7 5 . 9 1 3 , 5 1 2 . 2 7* T h e b u c k e t i n g s t r u c t u r e h a s b e e n r e v i s e d b a s e d o n t h e R B I g u i d e l i n e s v i d eD B R . B P . B C . N o . 8 6 / 2 1 . 0 4 . 0 9 8 / 2 0 1 5 � 1 6 d a t e d M a r c h 2 3 , 2 0 1 6 .F-56
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i n C r o r e )M a t u r i t y P a t t e r n D e p o s i t s A d v a n c e s I n v e s t m e n t s B o r r o w i n g s F o r e i g nC u r r e n c yA s s e t s F o r e i g nC u r r e n c yL i a b i l i t i e sD a y 1 3 9 3 . 8 8 8 9 0 . 5 1 á 2 9 9 . 7 9 2 1 1 . 7 7 5 5 5 . 0 72 ä 7 d a y s 7 9 8 . 4 4 1 , 1 2 3 . 8 7 4 , 2 8 0 . 3 6 3 0 7 6 . 6 3 1 , 0 9 9 . 8 5 1 5 . 9 48 ä 1 4 d a y s 7 4 7 . 7 8 1 , 2 2 3 . 8 7 1 , 1 8 7 . 1 4 7 2 8 . 0 0 6 . 7 2 1 1 . 6 81 5 ä 2 8 d a y s 1 , 6 0 8 . 9 6 5 0 6 . 2 8 3 3 8 . 6 0 á 4 0 . 5 2 2 0 . 6 32 9 d a y s t o 3m o n t h s 5 , 4 5 1 . 0 7 3 , 1 1 4 . 6 3 1 , 3 7 4 . 2 9 8 6 . 8 5 3 2 0 . 0 1 1 1 9 . 3 1O v e r 3 m o n t h s a n du p t o 6 m o n t h s 5 , 6 0 9 . 5 7 5 , 0 3 2 . 0 2 1 , 3 1 1 . 7 3 2 5 6 . 1 1 8 4 7 . 5 4 1 8 6 . 5 2O v e r 6 m o n t h s a n du p t o 1 Y e a r 1 5 , 6 3 5 . 8 0 7 , 3 0 1 . 1 5 1 , 0 1 1 . 7 8 4 0 2 . 4 4 3 4 4 . 4 0 4 3 9 . 0 0O v e r 1 Y e a r a n du p t o 3 Y e a r s 3 1 , 2 7 3 . 8 5 2 6 , 7 5 2 . 3 6 2 , 9 8 0 . 6 5 2 5 9 . 8 6 8 2 . 2 5 8 3 1 . 6 0O v e r 3 Y e a r s a n du p t o 5 Y e a r s 1 , 0 6 4 . 7 0 6 , 3 0 2 . 6 0 2 , 2 0 7 . 3 6 4 . 8 9 1 3 9 . 5 3 2 8 4 . 8 0O v e r 5 Y e a r s 1 6 , 5 8 7 . 6 6 5 , 8 4 2 . 8 6 1 0 , 4 6 3 . 5 8 á 2 2 . 7 1 0 . 5 3T o t a l 7 9 , 1 7 1 . 7 1 5 8 , 0 9 0 . 1 5 2 5 , 1 5 5 . 4 9 5 , 1 1 4 . 5 7 3 , 1 1 5 . 3 0 2 , 4 6 5 . 0 8N o t e :C l a s s i f i c a t i o n o f a s s e t s a n d l i a b i l i t i e s u n d e r t h e d i f f e r e n t m a t u r i t y b u c k e t s i s b a s e d o n t h es a m e e s t i m a t e s a n d a s s u m p t i o n s a s u s e d b y t h e B a n k f o r c o m p i l i n g t h e r e t u r n s u b m i t t e d t ot h e R B I , w h i c h h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s . M a t u r i t y p r o f i l e o f f o r e i g n c u r r e n c ya s s e t s a n d l i a b i l i t i e s e x c l u d e s f o r w a r d e x c h a n g e c o n t r a c t s a n d o f f b a l a n c e s h e e t i t e m s .1 . 7 . E x p o s u r e s1 . 7 . 1 E x p o s u r e t o R e a l E s t a t e S e c t o r (�
i n C r o r e )C a t e g o r y 2 0 1 6 , 1 7 2 0 1 5 , 1 6a ) D i r e c t E x p o s u r e :i ) R e s i d e n t i a l M o r t g a g e s : áL e n d i n g f u l l y s e c u r e d b y m o r t g a g e s o n r e s i d e n t i a l p r o p e r t yt h a t i s o r w i l l b e o c c u p i e d b y t h e b o r r o w e r o r t h a t i s r e n t e d ;( o f w h i c h i n d i v i d u a l h o u s i n g l o a n s e l i g i b l e f o r i n c l u s i o n i nP r i o r i t y s e c t o r a d v a n c e s ) 1 0 , 2 3 3 . 5 7( 3 , 0 0 5 . 4 0 ) 7 , 8 7 6 . 2 2( 3 , 1 6 6 . 4 3 )i i ) C o m m e r c i a l R e a l E s t a t e : áL e n d i n g s e c u r e d b y m o r t g a g e s o n c o m m e r c i a l r e a l e s t a t e s( o f f i c e b u i l d i n g s , r e t a i l s p a c e , m u l t i á p u r p o s e c o m m e r c i a lp r e m i s e s , m u l t i á f a m i l y r e s i d e n t i a l b u i l d i n g s , m u l t i át e n a n t e d c o m m e r c i a l p r e m i s e s , i n d u s t r i a l o r w a r e h o u s es p a c e , h o t e l s , l a n d a c q u i s i t i o n , d e v e l o p m e n t a n dc o n s t r u c t i o n , e t c . ) . E x p o s u r e w o u l d a l s o i n c l u d e n o n á f u n db a s e d ( N F B ) l i m i t s ; 4 , 0 6 9 . 8 9 1 , 7 3 8 . 9 4( i i i ) I n v e s t m e n t s i n M o r t g a g e B a c k e d S e c u r i t i e s ( M B S ) a n do t h e r s e c u r i t i s e d e x p o s u r e s –a . R e s i d e n t i a l N i l N i lb . C o m m e r c i a l R e a l E s t a t e N i l N i lF-57
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i n C r o r e )C a t e g o r y 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6( i ) d i r e c t i n v e s t m e n t i n e q u i t y s h a r e s , c o n v e r t i b l e b o n d s ,c o n v e r t i b l e d e b e n t u r e s a n d u n i t s o f e q u i t y U o r i e n t e dm u t u a l f u n d s t h e c o r p u s o f w h i c h i s n o t e x c l u s i v e l yi n v e s t e d i n c o r p o r a t e d e b t ; 2 2 0 . 6 0 1 6 3 . 7 0( i i ) a d v a n c e s a g a i n s t s h a r e s / b o n d s / d e b e n t u r e s o r o t h e rs e c u r i t i e s o r o n c l e a n b a s i s t o i n d i v i d u a l s f o ri n v e s t m e n t i n s h a r e s ( i n c l u d i n g I P O s / E S O P s ) ,c o n v e r t i b l e b o n d s , c o n v e r t i b l e d e b e n t u r e s , a n d u n i t s o fe q u i t y U o r i e n t e d m u t u a l f u n d s ; 0 . 0 1 0 . 0 9( i i i ) a d v a n c e s f o r a n y o t h e r p u r p o s e s w h e r e s h a r e s o rc o n v e r t i b l e b o n d s o r c o n v e r t i b l e d e b e n t u r e s o r u n i t s o fe q u i t y o r i e n t e d m u t u a l f u n d s a r e t a k e n a s p r i m a r ys e c u r i t y ; 1 6 2 . 2 8 0 . 1 5( i v ) a d v a n c e s f o r a n y o t h e r p u r p o s e s t o t h e e x t e n ts e c u r e d b y t h e c o l l a t e r a l s e c u r i t y o f s h a r e s o r c o n v e r t i b l eb o n d s o r c o n v e r t i b l e d e b e n t u r e s o r u n i t s o f e q u i t yo r i e n t e d m u t u a l f u n d s i . e . w h e r e t h e p r i m a r y s e c u r i t yo t h e r t h a n s h a r e s / c o n v e r t i b l e b o n d s / c o n v e r t i b l ed e b e n t u r e s / u n i t s o f e q u i t y o r i e n t e d m u t u a l f u n d s ` d o e sn o t f u l l y c o v e r t h e a d v a n c e s ; U U( v ) s e c u r e d a n d u n s e c u r e d a d v a n c e s t o s t o c k b r o k e r s a n dg u a r a n t e e s i s s u e d o n b e h a l f o f s t o c k b r o k e r s a n d m a r k e tm a k e r s ; 4 0 . 8 9 1 8 . 8 4( v i ) l o a n s s a n c t i o n e d t o c o r p o r a t e s a g a i n s t t h e s e c u r i t y o fs h a r e s / b o n d s / d e b e n t u r e s o r o t h e r s e c u r i t i e s o r o n c l e a nb a s i s f o r m e e t i n g p r o m o t e r ’ s c o n t r i b u t i o n t o t h e e q u i t yo f n e w c o m p a n i e s i n a n t i c i p a t i o n o f r a i s i n g r e s o u r c e s ; U U( v i i ) b r i d g e l o a n s t o c o m p a n i e s a g a i n s t e x p e c t e d e q u i t yf l o w s / i s s u e s ; U U( v i i i ) u n d e r w r i t i n g c o m m i t m e n t s t a k e n u p b y t h e b a n k si n r e s p e c t o f p r i m a r y i s s u e o f s h a r e s o r c o n v e r t i b l e b o n d so r c o n v e r t i b l e d e b e n t u r e s o r u n i t s o f e q u i t y o r i e n t e dm u t u a l f u n d s ; U U( i x ) f i n a n c i n g t o s t o c k b r o k e r s f o r m a r g i n t r a d i n g ; U U( x ) A l l e x p o s u r e s t o V e n t u r e C a p i t a l F u n d s ( b o t hr e g i s t e r e d a n d u n r e g i s t e r e d ) 2 2 . 7 1 3 8 . 1 2T o t a l E x p o s u r e t o C a p i t a l M a r k e t 4 4 6 . 4 9 2 2 0 . 9 0F-58
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1 . 7 . 3 R i s k C a t e g o r y w i s e C o u n t r y E x p o s u r eT h e n e t f u n d e d e x p o s u r e o f t h e B a n k i n r e s p e c t o f f o r e i g n e x c h a n g e t r a n s a c t i o n s w i t h e a c hc o u n t r y i s w i t h i n 1 % o f t h e t o t a l a s s e t s o f t h e B a n k a n d h e n c e n o p r o v i s i o n i s r e q u i r e d t o b em a d e i n r e s p e c t o f c o u n t r y r i s k a s p e r t h e R B I g u i d e l i n e s : (�
i n C r o r e )R i s k c a t e g o r y * E x p o s u r e( n e t ) a s a t P r o v i s i o n h e l da s a t E x p o s u r e( n e t ) a s a t P r o v i s i o nh e l d a s a t3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 6I n s i g n i f i c a n t 1 , 0 1 1 . 3 5 8 7 8 . 6 3 L o w 9 0 8 . 1 7 6 3 6 . 4 0 M o d e r a t e 1 8 . 8 4 4 7 . 9 5 H i g h 1 3 . 3 9 4 . 1 7 V e r y H i g h 0 . 2 0 1 . 0 6 R e s t r i c t e d 0 . 1 5 0 . 0 0 O f f � c r e d i t 0 . 0 0 0 . 0 0 T o t a l 1 , 9 5 2 . 1 0 1 , 5 6 8 . 2 1 * T h e a b o v e f i g u r e s i n c l u d e b o t h f u n d e d a s w e l l a s n o n � f u n d e d e x p o s u r e .1 . 7 . 4 . D u r i n g t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 7 a n d 3 1 M a r c h , 2 0 1 6 , t h e B a n k ' s c r e d i te x p o s u r e t o s i n g l e b o r r o w e r a n d g r o u p b o r r o w e r s w a s w i t h i n t h e p r u d e n t i a l e x p o s u r el i m i t s p r e s c r i b e d b y R B I .1 . 7 . 5 D u r i n g t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 7 a n d 3 1 M a r c h , 2 0 1 6 t h e r e a r e n o u n s e c u r e da d v a n c e s f o r w h i c h i n t a n g i b l e s e c u r i t i e s s u c h a s c h a r g e o v e r t h e r i g h t s , l i c e n c e s ,a u t h o r i t y e t c . h a s b e e n t a k e n a s c o l l a t e r a l b y t h e B a n k .1 . 8 . D e t a i l s o f P e n a l t y i m p o s e d b y R B I (�
i n L a k h s )P a r t i c u l a r s 2 0 1 6 1 7 2 0 1 5 1 6P e n a l t y i m p o s e d o n c u r r e n c y c h e s t s # 0 . 1 1 0 . 1 6P e n a l t y i m p o s e d f o r a l l e g e d f a i l u r e i n d e t e c t i n g a n dr e p o r t i n g a t t e m p t e d s u s p i c i o u s t r a n s a c t i o n s r e l a t e d t oC o b r a p o s t s t i n g o p e r a t i o n * 2 . 0 0 N i l* B a n k h a d f i l e d a p p e a l a g a i n s t t h e o r d e r b e f o r e t h e H o n o r a b l e A p p e l l a t e T r i b u n a l a t N e wD e l h i . D e s p i t e p e n d e n c y o f t h e a p p e a l R e c o v e r y o f f i c e r , F I U � I N D h a s d e m a n d e d t h ep a y m e n t o f t h e p e n a l t y a m o u n t . H e n c e t h e a m o u n t o f R s 2 l a k h s p a i d o n 1 0 . 0 8 . 1 6 ,s u b j e c t t o o r d e r s o f A p p e l l a t e T r i b u n a l .# P e n a l t y w a s i m p o s e d b y R B I :( a ) A s p e r t h e R B I C i r c u l a r D C M ( F N V D ) N o . 7 7 6 / 1 6 . 0 1 . 1 5 / 2 0 1 5 � 1 6 d a t e dA u g u s t 2 6 , 2 0 1 5 a n d( b ) F a k e I n d i a n C u r r e n c y N o t e ( F I C N ) d e t e c t e d i n t h e s o i l e d n o t e r e m i t t a n c e .F-59
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2 . D i s c l o s u r e r e q u i r e m e n t s a s p e r A c c o u n t i n g S t a n d a r d s w h e r e R B I h a s i s s u e dg u i d e l i n e s i n r e s p e c t o f d i s c l o s u r e i t e m s f o r ‘ N o t e s t o A c c o u n t s ’2 . 1 . E m p l o y e e B e n e f i t s ( A S 1 5 )a ) D e f i n e d C o n t r i b u t i o n P l a nP r o v i d e n t F u n dE m p l o y e e s , w h o h a v e n o t o p t e d f o r p e n s i o n p l a n a r e e l i g i b l e t o g e t b e n e f i t s f r o m p r o v i d e n tf u n d , w h i c h i s a d e f i n e d c o n t r i b u t i o n p l a n . A g g r e g a t e c o n t r i b u t i o n s a l o n g w i t h i n t e r e s tt h e r e o n a r e p a i d o n r e t i r e m e n t , d e a t h , i n c a p a c i t a t i o n o r t e r m i n a t i o n o f e m p l o y m e n t . B o t h t h ee m p l o y e e a n d t h e B a n k c o n t r i b u t e a s p e c i f i e d p e r c e n t a g e o f t h e s a l a r y t o t h e F e d e r a l B a n kE m p l o y e e s ‘ P r o v i d e n t F u n d . T h e B a n k h a s n o o b l i g a t i o n o t h e r t h a n t h e m o n t h l yc o n t r i b u t i o n .T h e B a n k r e c o g n i z e d� 0 . 4 7 C r o r e ( P r e v i o u s Y e a r :
� 0 . 7 9 C r o r e ) f o r p r o v i d e n t f u n dc o n t r i b u t i o n i n t h e P r o f i t a n d L o s s A c c o u n t .N e w P e n s i o n S c h e m eA s p e r t h e i n d u s t r y l e v e l s e t t l e m e n t d a t e d 2 7 t h A p r i l , 2 0 1 0 , e m p l o y e e s w h o j o i n e d t h e s e r v i c e so f t h e B a n k o n o r a f t e r 1 s t A p r i l , 2 0 1 0 a r e n o t e l i g i b l e f o r t h e e x i s t i n g p e n s i o n s c h e m e w h e r e a st h e y w i l l b e e l i g i b l e f o r D e f i n e d C o n t r i b u t o r y P e n s i o n S c h e m e ( D C P S ) i n l i n e w i t h t h e N e wP e n s i o n S c h e m e i n t r o d u c e d f o r e m p l o y e e s o f C e n t r a l G o v e r n m e n t . E m p l o y e e s h a l lc o n t r i b u t e 1 0 % o f t h e i r B a s i c P a y a n d D e a r n e s s A l l o w a n c e t o w a r d s D C P S a n d t h e B a n k w i l la l s o m a k e a m a t c h i n g c o n t r i b u t i o n . T h e r e i s n o s e p a r a t e P r o v i d e n t F u n d f o r e m p l o y e e sj o i n i n g o n o r a f t e r 0 1 / 0 4 / 2 0 1 0 .T h e B a n k r e c o g n i z e d�
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1 8 . 9 5 C r o r e ) f o r D C P S c o n t r i b u t i o n i nt h e P r o f i t a n d L o s s A c c o u n tb ) D e f i n e d b e n e f i t p l a nG r a t u i t yT h e B a n k p r o v i d e s f o r G r a t u i t y , a d e f i n e d b e n e f i t r e t i r e m e n t p l a n ( t h e “ G r a t u i t y P l a n ” )c o v e r i n g t h e e l i g i b l e e m p l o y e e s . T h e G r a t u i t y P l a n p r o v i d e s a l u m p s u m p a y m e n t t o v e s t e de m p l o y e e s o n r e t i r e m e n t , d e a t h , i n c a p a c i t a t i o n o r t e r m i n a t i o n o f e m p l o y m e n t , o f a n a m o u n tb a s e d o n t h e r e s p e c t i v e e m p l o y e e s ’ s a l a r y a n d t h e t e n u r e o f e m p l o y m e n t . V e s t i n g o c c u r su p o n c o m p l e t i o n o f f i v e y e a r s o f s e r v i c e a s p e r P a y m e n t o f G r a t u i t y A c t , 1 9 7 2 a n d i t sa m e n d m e n t w i t h e f f e c t f r o m 2 4 t h M a y , 2 0 1 0 o r a s p e r t h e p r o v i s i o n s o f t h e F e d e r a l B a n kE m p l o y e e s ’ G r a t u i t y T r u s t F u n d R u l e s / B i · p a r t i t e A w a r d p r o v i s i o n s . L i a b i l i t i e s w i t h r e g a r dt o t h e G r a t u i t y P l a n a r e d e t e r m i n e d b y A c t u a r i a l v a l u a t i o n a s o n t h e B a l a n c e S h e e t d a t e , b a s e du p o n w h i c h , t h e B a n k c o n t r i b u t e s a l l t h e a s c e r t a i n e d l i a b i l i t i e s t o t h e F e d e r a l B a n kE m p l o y e e s ’ G r a t u i t y T r u s t F u n d ( t h e “ T r u s t ” ) . T r u s t e e s a d m i n i s t e r c o n t r i b u t i o n s m a d e t ot h e T r u s t a n d c o n t r i b u t i o n s a r e i n v e s t e d i n s p e c i f i c i n v e s t m e n t s a s p e r m i t t e d b y l a w .S u p e r a n n u a t i o n / P e n s i o nT h e B a n k p r o v i d e s f o r m o n t h l y p e n s i o n , a d e f i n e d b e n e f i t r e t i r e m e n t p l a n ( t h e “ p e n s i o np l a n ” ) c o v e r i n g e l i g i b l e e m p l o y e e s . T h e p e n s i o n p l a n p r o v i d e s a m o n t h l y p e n s i o n a f t e rr e t i r e m e n t o f t h e e m p l o y e e s t i l l d e a t h a n d t o t h e f a m i l y a f t e r t h e d e a t h o f t h e p e n s i o n e r . T h em o n t h l y p e n s i o n i s b a s e d o n t h e r e s p e c t i v e e m p l o y e e s ’ s a l a r y a n d t h e t e n u r e o fe m p l o y m e n t . V e s t i n g o c c u r s u p o n c o m p l e t i o n o f t e n y e a r s o f s e r v i c e . T h e B a n k p a y s t h em o n t h l y p e n s i o n b y p u r c h a s i n g a n n u i t i e s f r o m L i f e I n s u r a n c e C o r p o r a t i o n o f I n d i a( L I C ) . L i a b i l i t i e s w i t h r e g a r d t o t h e p e n s i o n p l a n a r e d e t e r m i n e d b y a c t u a r i a l v a l u a t i o n a s o nt h e B a l a n c e S h e e t d a t e , b a s e d u p o n w h i c h , t h e B a n k c o n t r i b u t e s a l l t h e a s c e r t a i n e d l i a b i l i t i e sF-60
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t o t h e F e d e r a l B a n k ( E m p l o y e e s ’ ) P e n s i o n F u n d ( t h e “ T r u s t ” ) . T r u s t e e s a d m i n i s t e rc o n t r i b u t i o n s m a d e t o t h e T r u s t a n d c o n t r i b u t i o n s a r e i n v e s t e d i n s p e c i f i c i n v e s t m e n t s a sp e r m i t t e d b y l a w .T h e f o l l o w i n g t a b l e a s f u r n i s h e d b y A c t u a r y s e t s o u t t h e f u n d e d s t a t u s o f g r a t u i t y / p e n s i o np l a n a n d t h e a m o u n t r e c o g n i z e d i n t h e B a n k ’ s f i n a n c i a l s t a t e m e n t s a s a t M a r c h 3 1 , 2 0 1 7 .i ) C h a n g e i n b e n e f i t o b l i g a t i o n s : (� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6P r o j e c t e d b e n e f i t o b l i g a t i o n ,b e g i n n i n g o f t h e y e a r 2 4 6 . 0 9 2 0 9 . 3 4 6 3 7 . 5 0 5 8 7 . 4 8S e r v i c e C o s t 1 5 . 6 6 1 3 . 8 2 7 9 . 2 6 5 7 . 7 0I n t e r e s t c o s t 1 7 . 1 4 1 5 . 2 9 4 1 . 4 2 4 0 . 1 7A c t u a r i a l ( g a i n ) / l o s s 1 6 . 6 4 4 4 . 0 7 1 4 9 . 6 2 1 2 2 . 9 9B e n e f i t s p a i d ( 3 5 . 0 5 ) ( 3 6 . 4 3 ) ( 1 7 0 . 4 2 ) ( 1 7 0 . 8 4 )P r o j e c t e d b e n e f i t o b l i g a t i o n ,e n d o f t h e y e a r 2 6 0 . 4 8 2 4 6 . 0 9 7 3 7 . 3 8 6 3 7 . 5 0i i ) C h a n g e i n p l a n a s s e t s : (
� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6P l a n a s s e t s a t b e g i n n i n g o f t h ey e a r a t f a i r v a l u e 2 2 5 . 6 6 2 2 3 . 5 2 5 7 8 . 2 7 5 4 4 . 4 0E x p e c t e d r e t u r n o n p l a n a s s e t s 1 9 . 8 4 1 8 . 5 5 4 8 . 5 7 4 7 . 5 8A c t u a r i a l g a i n / ( l o s s ) 0 . 6 9 ( 0 . 6 5 ) 4 . 6 9 ( 0 . 5 8 )E m p l o y e r ’ s C o n t r i b u t i o n s 5 0 . 4 0 2 0 . 6 7 2 8 5 . 2 2 1 5 7 . 7 1B e n e f i t s p a i d ( 3 5 . 0 5 ) ( 3 6 . 4 3 ) ( 1 7 0 . 4 2 ) ( 1 7 0 . 8 4 )P l a n a s s e t s a t e n d o f t h e y e a r ,a t f a i r v a l u e 2 6 1 . 5 4 2 2 5 . 6 6 7 4 6 . 3 3 5 7 8 . 2 7i i i ) R e c o n c i l i a t i o n o f p r e s e n t v a l u e o f t h e o b l i g a t i o n a n d t h e f a i r v a l u e o f t h e p l a n a s s e t s :(� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6F a i r v a l u e o f p l a n a s s e t s a t t h ee n d o f t h e y e a r 2 6 1 . 5 4 2 2 5 . 6 6 7 4 6 . 3 3 5 7 8 . 2 7P r e s e n t v a l u e o f t h e d e f i n e db e n e f i t o b l i g a t i o n s a t t h e e n d o ft h e y e a r 2 6 0 . 4 8 2 4 6 . 0 9 7 3 7 . 3 8 6 3 7 . 5 0L i a b i l i t y / ( A s s e t ) r e c o g n i z e d i nt h e B a l a n c e S h e e t ( 1 . 0 6 ) 2 0 . 4 3 ( 8 . 9 5 ) 5 9 . 2 3
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i n C r o r e )3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6P r i v i l e g e l e a v e 1 5 2 . 1 3 1 3 1 . 1 5S i c k l e a v e 2 5 . 0 5 2 0 . 9 7L e a v e T r a v e l C o n c e s s i o n 1 2 . 2 9 1 3 . 1 8C a s u a l L e a v e 1 . 5 6 1 . 0 9T o t a l a c t u a r i a l l i a b i l i t y 1 9 1 . 0 3 1 6 6 . 3 9A s s u m p t i o n sD i s c o u n t r a t e 7 . 5 0 % 8 . 0 0 %S a l a r y e s c a l a t i o n r a t e 5 . 0 0 % 5 . 0 0 %A t t r i t i o n R a t e 3 . 0 0 % 3 . 0 0 %T h e d i s c o u n t r a t e i s b a s e d o n t h e p r e v a i l i n g m a r k e t y i e l d s o f G o v e r n m e n t o f I n d i a s e c u r i t i e sa s a t t h e B a l a n c e S h e e t d a t e f o r t h e e s t i m a t e d t e r m o f t h e o b l i g a t i o n s .T h e e s t i m a t e o f f u t u r e s a l a r y i n c r e a s e s c o n s i d e r e d , t a k e s i n t o a c c o u n t t h e i n f l a t i o n , s e n i o r i t y ,p r o m o t i o n , i n c r e m e n t s a n d o t h e r r e l e v a n t f a c t o r s .T h e a b o v e i n f o r m a t i o n i s a s c e r t i f i e d b y t h e a c t u a r y a n d r e l i e d u p o n b y t h e a u d i t o r s .2 . 2 . S e g m e n t R e p o r t i n g ( A S 1 7 )A . B u s i n e s s S e g m e n t sB u s i n e s s o f t h e B a n k i s d i v i d e d i n t o f o u r s e g m e n t s v i z . T r e a s u r y , C o r p o r a t e o r W h o l e s a l eB a n k i n g , R e t a i l B a n k i n g a n d o t h e r b a n k i n g o p e r a t i o n s . T h e p r i n c i p a l a c t i v i t i e s o f t h e s es e g m e n t s a n d i n c o m e a n d e x p e n s e s s t r u c t u r e a r e a s f o l l o w s :T r e a s u r yT r e a s u r y o p e r a t i o n s i n c l u d e t r a d i n g a n d i n v e s t m e n t s i n G o v e r n m e n t a n d c o r p o r a t e d e b ti n s t r u m e n t s , e q u i t y a n d m u t u a l f u n d s , d e r i v a t i v e t r a d i n g a n d f o r e i g n e x c h a n g e o p e r a t i o n s o np r o p r i e t a r y a c c o u n t a n d f o r c u s t o m e r s .T h e i n c o m e o f t h i s s e g m e n t p r i m a r i l y c o n s i s t s o f e a r n i n g s f r o m t h e i n v e s t m e n t p o r t f o l i o o ft h e b a n k , g a i n s a n d l o s s e s o n t r a d i n g o p e r a t i o n s . T h e p r i n c i p a l e x p e n s e o f t h e s e g m e n tc o n s i s t s o f i n t e r e s t e x p e n s e o n f u n d s b o r r o w e d / u t i l i z e d a n d o t h e r a l l o c a t e d o v e r h e a d s .C o r p o r a t e / W h o l e s a l e B a n k i n g :T h i s s e g m e n t p r o v i d e s l o a n s a n d o t h e r b a n k i n g s e r v i c e s t o C o r p o r a t e a n d o t h e r c l i e n t s w h e r ev a l u e o f i n d i v i d u a l e x p o s u r e t o t h e C l i e n t s e x c e e d s��
5 C r o r e a s d e f i n e d b y R B I . R e v e n u e o ft h i s s e g m e n t c o n s i s t s o f i n t e r e s t a n d f e e s e a r n e d o n l o a n s t o s u c h c u s t o m e r s a n d c h a r g e s a n df e e s e a r n e d f r o m o t h e r b a n k i n g s e r v i c e s . E x p e n s e s o f t h i s s e g m e n t p r i m a r i l y c o n s i s t o fi n t e r e s t e x p e n s e o n f u n d s u t i l i z e d a n d a l l o c a t e d o v e r h e a d sR e t a i l b a n k i n g :R e t a i l b a n k i n g c o n s t i t u t e s l e n d i n g a n d o t h e r b a n k i n g s e r v i c e s t o i n d i v i d u a l s / s m a l l b u s i n e s sc u s t o m e r s , o t h e r t h a n c o r p o r a t e / w h o l e s a l e b a n k i n g c u s t o m e r s , i d e n t i f i e d o n t h e b a s i s o f R B Ig u i d e l i n e s .F-64
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R e v e n u e o f t h i s s e g m e n t c o n s i s t s o f i n t e r e s t e a r n e d o n l o a n s m a d e t o s u c h c u s t o m e r s a n dc h a r g e s / f e e s c a r r i e d f r o m o t h e r b a n k i n g s e r v i c e s t o t h e m . T h e p r i n c i p a l e x p e n s e s o f t h es e g m e n t c o n s i s t o f i n t e r e s t e x p e n s e s o n f u n d s b o r r o w e d a n d o t h e r e x p e n s e s .O t h e r B a n k i n g O p e r a t i o n sT h i s s e g m e n t i n c l u d e s p a r a b a n k i n g a c t i v i t i e s l i k e t h i r d p a r t y p r o d u c t d i s t r i b u t i o n a n do t h e r b a n k i n g t r a n s a c t i o n s , n o t c o v e r e d u n d e r a n y o f t h e a b o v e s e g m e n t s . T h e i n c o m e f r o ms u c h s e r v i c e s a n d a s s o c i a t e d c o s t s a r e d i s c l o s e d i n t h i s s e g m e n t .T h e f o l l o w i n g t a b l e s e t s f o r t h , f o r t h e p e r i o d s i n d i c a t e d , t h e b u s i n e s s s e g m e n t r e s u l t s :A s o n 3 1 M a r c h 2 0 1 7 : (�
i n C r o r e )B u s i n e s s S e g m e n t s T r e a s u r y C o r p o r a t e /W h o l e s a l eB a n k i n g R e t a i lB a n k i n g O t h e rB a n k i n gO p e r a t i o n s T o t a lR e v e n u e 2 , 4 9 6 . 3 4 3 , 0 0 6 . 7 1 4 , 1 0 3 . 5 0 1 5 2 . 6 5 9 , 7 5 9 . 2 0R e s u l t ( n e t o f p r o v i s i o n s ) 3 9 5 . 1 4 1 9 6 . 4 1 6 8 7 . 9 9 5 6 . 0 3 1 , 3 3 5 . 5 7U n a l l o c a t e d e x p e n s e ( 2 9 . 0 7 )O p e r a t i n g p r o f i t ( P B T ) 1 , 3 0 6 . 5 0I n c o m e t a x e s 4 7 5 . 7 1E x t r a o r d i n a r y p r o f i t / l o s s fN e t P r o f i t 8 3 0 . 7 9O T H E RI N F O R M A T I O NS e g m e n t A s s e t s 3 9 , 0 0 0 . 2 8 3 1 , 3 8 4 . 6 1 4 2 , 4 1 7 . 2 2 1 8 . 5 4 1 , 1 2 , 8 2 0 . 6 5U n a l l o c a t e d a s s e t s 2 , 1 5 6 . 2 8T o t a l a s s e t s 1 , 1 4 , 9 7 6 . 9 3S e g m e n t l i a b i l i t i e s 3 6 , 1 8 8 . 6 5 2 9 , 5 0 1 . 5 1 3 9 , 9 2 6 . 2 5 f 1 , 0 5 , 6 1 6 . 4 1U n a l l o c a t e d l i a b i l i t i e s 4 1 8 . 1 4T o t a l l i a b i l i t i e s 1 , 0 6 , 0 3 4 . 5 5A s o n 3 1 M a r c h 2 0 1 6 (���
n C r o r e )B u s i n e s s S e g m e n t s T r e a s u r y C o r p o r a t e /W h o l e s a l eB a n k i n g R e t a i lB a n k i n g O t h e rB a n k i n gO p e r a t i o n s T o t a lR e v e n u e 2 , 2 8 1 . 9 3 2 , 3 6 0 . 9 4 3 , 8 0 9 . 6 4 1 0 3 . 8 4 8 , 5 5 6 . 3 5R e s u l t ( n e t o f p r o v i s i o n s ) 1 5 8 . 5 1 1 8 . 1 4 4 9 4 . 5 9 7 3 . 8 5 7 4 5 . 0 9U n a l l o c a t e d e x p e n s e ( 2 5 . 4 4 )O p e r a t i n g p r o f i t ( P B T ) 7 1 9 . 6 5I n c o m e t a x e s ( 2 4 4 . 0 0 )E x t r a o r d i n a r y p r o f i t / l o s s fN e t P r o f i t 4 7 5 . 6 5O T H E RI N F O R M A T I O NS e g m e n t A s s e t s 3 3 , 5 5 5 . 3 2 2 4 , 8 3 6 . 6 7 3 3 , 7 1 0 . 8 6 2 6 . 5 6 9 2 , 1 2 9 . 4 1U n a l l o c a t e d a s s e t s 2 , 4 5 1 . 9 6T o t a l a s s e t s 9 4 , 5 8 1 . 3 7S e g m e n t l i a b i l i t i e s 3 0 , 8 8 6 . 0 9 2 3 , 3 7 6 . 8 4 3 1 , 7 8 8 . 1 8 f 8 6 , 0 5 1 . 1 1U n a l l o c a t e d l i a b i l i t i e s 4 3 9 . 0 4T o t a l l i a b i l i t i e s 8 6 , 4 9 0 . 1 5F-65
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G e o g r a p h i c a l S e g m e n t I n f o r m a t i o nT h e B u s i n e s s o p e r a t i o n s o f t h e B a n k a r e l a r g e l y c o n c e n t r a t e d i n I n d i a a n d f o r p u r p o s e o fS e g m e n t a l r e p o r t i n g , t h e b a n k c o n s i d e r e d t o o p e r a t e o n l y i n d o m e s t i c s e g m e n t , t h o u g h t h eb a n k h a s i t s o p e r a t i o n i n I n t e r n a t i o n a l F i n a n c e S e r v i c e C e n t r e ( I F S C ) B a n k i n g U n i t i n G u j a r a tI n t e r n a t i o n a l F i n a n c e T e c § c i t y ( G I F T ) . T h e b u s i n e s s c o n d u c t e d f r o m t h e s a m e i s c o n s i d e r e da s a p a r t o f I n d i a n o p e r a t i o n s .S e g m e n t i n f o r m a t i o n i s p r o v i d e d a s p e r t h e M I S a v a i l a b l e f o r i n t e r n a l r e p o r t i n g p u r p o s e s ,w h i c h i n c l u d e c e r t a i n e s t i m a t e s / a s s u m p t i o n s . T h e m e t h o d o l o g y a d o p t e d i n c o m p i l i n g a n dr e p o r t i n g t h e a b o v e i n f o r m a t i o n h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s .2 . 3 . R e l a t e d P a r t y D i s c l o s u r e s ( A S 1 8 )a ) D e t a i l s o f R e l a t e d P a r t i e s :N a m e o f t h e P a r t y N a t u r e o f R e l a t i o n s h i pI D B I F e d e r a l L i f e I n s u r a n c e C o m p a n y L i m i t e d A s s o c i a t eF e d B a n k F i n a n c i a l S e r v i c e s L i m i t e d S u b s i d i a r yS r i . S h y a m S r i n i v a s a n , M a n a g i n g D i r e c t o r &C E O K e y M a n a g e m e n t P e r s o n n e lS r i . A s h u t o s h K h a j u r i a , E x e c u t i v e D i r e c t o r &C F O K e y M a n a g e m e n t P e r s o n n e lS r i G a n e s h S a n k a r a n , E x e c u t i v e D i r e c t o r( F r o m 0 4 § 0 7 § 2 0 1 6 ) K e y M a n a g e m e n t P e r s o n n e lF e d B a n k H o r m i s M e m o r i a l F o u n d a t i o n E n t i t y i n w h i c h K M P s c a n e x e r c i s es i g n i f i c a n t i n f l u e n c eb ) S i g n i f i c a n t t r a n s a c t i o n s w i t h r e l a t e d p a r t i e s : (� i n C r o r e )P a r t i c u l a r s K e y M a n a g e m e n t P e r s o n n e l #3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6i ) R e m u n e r a t i o nS r i . S h y a m S r i n i v a s a n 1 . 1 4 1 . 1 2S r i . A s h u t o s h K h a j u r i a 0 . 8 1 1 . 0 2S r i . A b r a h a m C h a c k o ( U p t o 3 0 � 0 4 � 2 0 1 5 ) � 0 . 7 2S r i G a n e s h S a n k a r a n , E x e c u t i v e D i r e c t o r( F r o m 0 4 � 0 7 � 2 0 1 6 ) 0 . 8 4 �i i ) D i v i d e n d P a i d 0 . 0 2 0 . 0 2# T h e n o r m a l t r a n s a c t i o n s o f t h e B a n k w i t h t h e a b o v e p e r s o n s a s c o n s t i t u e n t s a r e n o t r e c k o n e df o r t h e p u r p o s e o f d i s c l o s u r e .N o s t o c k o p t i o n s w e r e g r a n t e d t o M D & C E O , E x e c u t i v e D i r e c t o r & C F O S r i . A s h u t o s hK h a j u r i a a f t e r b e c o m i n g E x e c u t i v e D i r e c t o r d u r i n g F Y 2 0 1 6 � 1 7 .S r i . G a n e s h S a n k a r a n , E x e c u t i v e D i r e c t o r w a s g r a n t e d 3 , 0 0 , 0 0 0 o p t i o n s d u r i n g F Y 2 0 1 6 � 1 7 .( P r e v i o u s Y e a r : N i l )N o t e :I n a c c o r d a n c e w i t h R B I g u i d e l i n e s , d e t a i l s p e r t a i n i n g t o t h e r e l a t e d p a r t y t r a n s a c t i o n s , o t h e rt h a n t r a n s a c t i o n w i t h K M P s , h a v e n o t b e e n p r o v i d e d a s t h e r e i s o n l y o n e r e l a t e d p a r t y i n e a c ho f t h e a b o v e c a t e g o r i e s .
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2 . 4 . D e f e r r e d T a x A s s e t s / L i a b i l i t y ( A S 2 2 )T h e m a j o r c o m p o n e n t s o f d e f e r r e d t a x a s s e t s a n d d e f e r r e d t a x l i a b i l i t i e s a r e a s u n d e r :(�
i n C r o r e )3 1 M a r c h2 0 1 7 3 1 M a r c h2 0 1 6D e f e r r e d T a x L i a b i l i t yT a x e f f e c t o f i t e m s c o n s t i t u t i n g d e f e r r e d t a x l i a b i l i t y :( i ) I n t e r e s t a c c r u e d b u t n o t d u e ] 1 4 5 . 6 6( i i ) D e p r e c i a t i o n o n I n v e s t m e n t s 1 0 1 . 8 0 1 9 . 5 2( i i i ) D e p r e c i a t i o n o n F i x e d a s s e t s 1 2 . 6 6 ]( i v ) S p e c i a l R e s e r v e u n d e r S e c t i o n 3 6 ( 1 ) ( v i i i ) o f t h eI n c o m e T a x A c t , 1 9 6 1 1 0 7 . 2 8 9 1 . 3 5v ) O t h e r s 1 0 . 2 3 ]T o t a l ( A ) 2 3 1 . 9 7 2 5 6 . 5 3D e f e r r e d T a x A s s e tT a x e f f e c t o f i t e m s c o n s t i t u t i n g d e f e r r e d t a x a s s e t s :( i ) I n t e r e s t / p r e m i u m p a i d o n p u r c h a s e o f s e c u r i t i e s 9 2 . 7 0 9 0 . 2 7( i i ) P r o v i s i o n f o r S t a n d a r d A s s e t s 1 3 6 . 6 8 1 0 9 . 4 5( i i i ) D e p r e c i a t i o n o n F i x e d a s s e t s ] 1 . 1 5( i v ) O t h e r s 8 8 . 5 1 1 1 1 . 1 9T o t a l ( B ) 3 1 7 . 8 9 3 1 2 . 0 6N e t D e f e r r e d t a x l i a b i l i t y / ( A s s e t ) ( A u B ) ( 8 5 . 9 2 ) ( 5 5 . 5 3 )N o t e : T h e a b o v e N e t D e f e r r e d t a x i s a f t e r a d j u s t m e n t o f�
1 7 2 . 8 5 C r o r e f r o m p r o v i s i o n s f o rI n c o m e t a x t o D e f e r r e d t a x o n r e v i e w a n d r e a s s e s s m e n t o f d e f e r r e d t a x a s s e t s a n dl i a b i l i t i e s d u r i n g t h e y e a r .3 . A d d i t i o n a l D i s c l o s u r e s a s p e r R B I ’ s M a s t e r C i r c u l a r o n D i s c l o s u r e i n F i n a n c i a lS t a t e m e n t s3 . 1 ‘ P r o v i s i o n s a n d C o n t i n g e n c i e s ’ r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t i n c l u d e :(�
i n C r o r e )F o r t h e y e a r e n d e d 3 1 s t M a r c h 2 0 1 7 3 1 s t M a r c h 2 0 1 6i ) P r o v i s i o n t o w a r d s N P A s 4 0 5 . 1 2 5 5 5 . 3 2 *i i ) P r o v i s i o n f o r D e p r e c i a t i o n i n V a l u e o fI n v e s t m e n t s ( N e t ) 2 4 . 2 1 1 6 . 7 4i i i ) P r o v i s i o n f o r N o n ] P e r f o r m i n g I n v e s t m e n t s 5 . 3 5 6 3 . 4 2i v ) P r o v i s i o n f o r S t a n d a r d A s s e t s 7 8 . 5 0 2 9 . 5 0v ) P r o v i s i o n f o r T a x a t i o n 4 7 5 . 7 1 # 2 4 4 . 0 0v i ) P r o v i s i o n t o w a r d s P r e s e n t V a l u e o f s a c r i f i c eo n r e s t r u c t u r i n g , o t h e r c o n t i n g e n c i e s e t c . 1 0 5 . 2 4 3 9 . 1 5T o t a l 1 , 0 9 4 . 1 3 9 4 8 . 1 3* N e t o f F l o a t i n g P r o v i s i o n o f��
6 9 . 0 0 C r o r e w i t h d r a w n d u r i n g t h e y e a r v i d e C i r c u l a rD B R . N o . B P . B C . 7 9 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 ] 1 5 d a t e d M a r c h 3 0 , 2 0 1 5 i s s u e d b y t h e R e s e r v e B a n ko f I n d i a .#�
1 7 . 9 8 C r o r e r e l a t i n g t o e a r l i e r y e a r s .F-67
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3 . 2 M o v e m e n t i n f l o a t i n g p r o v i s i o n i s s e t o u t b e l o w : (� i n C r o r e )P a r t i c u l a r s S t a n d a r d A s s e t sP r o v i s i o n N P A P r o v i s i o n3 1 M a r c h2 0 1 7 3 1 M a r c h2 0 1 6 3 1 M a r c h2 0 1 7 3 1 M a r c h2 0 1 6 *( a ) O p e n i n g b a l a n c e 1 2 . 7 5 1 2 . 7 5 6 9 . 1 8 1 3 8 . 1 8( b ) P r o v i s i o n m a d e d u r i n g t h e y e a r N i l N i l N i l N i l( c ) P r o v i s i o n u t i l i s e d d u r i n g t h ey e a r * N i l N i l N i l 6 9 . 0 0( d ) C l o s i n g b a l a n c e 1 2 . 7 5 1 2 . 7 5 6 9 . 1 8 6 9 . 1 8* F l o a t i n g p r o v i s i o n h a s b e e n u t i l i s e d i n a c c o r d a n c e w i t h R B I c i r c u l a r s D B O D . N o . B P . 9 5/ 2 1 . 0 4 . 0 4 8 / 2 0 1 3 é 1 4 d a t e d F e b r u a r y 7 , 2 0 1 4 a n d D B R . N o . B P . B C . 7 9 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 é 1 5d a t e d M a r c h 3 0 , 2 0 1 5 .3 . 3 . D r a w D o w n f r o m R e s e r v e sT h e B a n k h a s d r a w n d o w n � 1 4 . 4 9 C r o r e f r o m I n v e s t m e n t R e s e r v e A c c o u n t ( P r e v i o u s Y e a r
� 8 . 2 1 c r o r e ) i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f R B I g u i d e l i n e s o n ‘ P r u d e n t i a l N o r m s f o rC l a s s i f i c a t i o n , V a l u a t i o n a n d O p e r a t i o n o f I n v e s t m e n t P o r t f o l i o b y B a n k s ’ .3 . 4 . A ) D i s c l o s u r e o f c u s t o m e r c o m p l a i n t sP a r t i c u l a r s 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6( a ) N o . o f c o m p l a i n t s p e n d i n g a t t h e b e g i n n i n g o f t h e y e a r 4 2 6 2( b ) N o . o f c o m p l a i n t s r e c e i v e d d u r i n g t h e y e a r 3 1 1 5 3 5 4 9( c ) N o . o f c o m p l a i n t s r e d r e s s e d d u r i n g t h e y e a r 3 0 9 9 3 5 6 9( d ) N o . o f c o m p l a i n t s p e n d i n g a t t h e e n d o f t h e y e a r 5 8 4 2T h e a b o v e i n f o r m a t i o n i s a s c e r t i f i e d b y t h e M a n a g e m e n t a n d r e l i e d u p o n b y t h e a u d i t o r s .B ) D i s c l o s u r e o f A w a r d s p a s s e d b y t h e B a n k i n g O m b u d s m a n 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6( a ) N o . o f u n i m p l e m e n t e d a w a r d s a t t h e b e g i n n i n g o f t h ey e a r 1 @ 1 @( b ) N o . o f a w a r d s p a s s e d b y t h e B a n k i n g O m b u d s m a n N i l 1( c ) N o . o f a w a r d s i m p l e m e n t e d d u r i n g t h e y e a r N i l 1( d ) N o . o f u n i m p l e m e n t e d a w a r d s a t t h e e n d o f t h e y e a r 1 @ 1 @@ A p p e a l r e j e c t e d b y A p p e l l a t e A u t h o r i t y , c a s e f i l e d i n H i g h C o u r t a n d s t a y o b t a i n e dT h e a b o v e i n f o r m a t i o n i s a s c e r t i f i e d b y t h e M a n a g e m e n t a n d r e l i e d u p o n b y t h e a u d i t o r s .3 . 5 . L e t t e r o f C o m f o r tT h e B a n k h a s n o t i s s u e d a n y l e t t e r s o f c o m f o r t ( L o C ) o n b e h a l f o f i t s s u b s i d i a r i e s d u r i n g t h ey e a r e n d e d 3 1 s t M a r c h , 2 0 1 7 a n d 3 1 s t M a r c h , 2 0 1 6 .3 . 6 T h e P r o v i s i o n c o v e r a g e r a t i o o f t h e b a n k a s o n 3 1 M a r c h , 2 0 1 7 , c o m p u t e d i n t e r m so f t h e R B I G u i d e l i n e s w a s 7 2 . 6 7 % ( P r e v i o u s Y e a r 7 2 . 0 5 % ) .F-68
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3 . 7 . B a n c a s s u r a n c e B u s i n e s sD e t a i l s o f i n c o m e e a r n e d f r o m b a n c a s s u r a n c e b u s i n e s s : (�
i n C r o r e )S l . N o . N a t u r e o f I n c o m e * 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 61 F o r s e l l i n g l i f e i n s u r a n c e p o l i c i e s 3 1 . 0 1 2 8 . 3 92 F o r s e l l i n g n o n U l i f e i n s u r a n c e p o l i c i e s 6 . 6 6 6 . 5 13 F o r s e l l i n g m u t u a l f u n d p r o d u c t s 1 . 8 4 1 . 4 84 O t h e r s 1 . 5 3 1 . 3 1* U I n c l u d e s r e c e i p t s o n a c c o u n t o f m a r k e t i n g a c t i v i t i e s u n d e r t a k e n o n b e h a l f o fB a n c a s s u r a n c e p a r t n e r s .3 . 8 . 1 I n f o r m a t i o n o n C o n c e n t r a t i o n o f d e p o s i t s : (�
i n C r o r e )3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6T o t a l d e p o s i t s o f t w e n t y l a r g e s t d e p o s i t o r s 4 , 8 8 3 . 6 2 2 , 3 1 8 . 4 6P e r c e n t a g e o f d e p o s i t s o f t w e n t y l a r g e s td e p o s i t o r s t o t o t a l d e p o s i t s o f t h e b a n k 5 . 0 0 % 2 . 9 3 %N o t e : E x c l u d e s h o l d e r s o f c e r t i f i c a t e o f d e p o s i t s w h i c h a r e t r a d e a b l e i n s t r u m e n t s .3 . 8 . 2 I n f o r m a t i o n o n C o n c e n t r a t i o n o f a d v a n c e s : (�
i n C r o r e )3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6T o t a l a d v a n c e s t o t w e n t y l a r g e s t b o r r o w e r s 9 , 4 6 9 . 0 0 1 1 , 5 1 4 . 3 5P e r c e n t a g e o f a d v a n c e s t o t w e n t y l a r g e s tb o r r o w e r s t o t o t a l a d v a n c e s o f t h e b a n k 1 0 . 2 0 % 1 6 . 2 9 %N o t e : A d v a n c e i s c o m p u t e d a s p e r t h e d e f i n i t i o n o f C r e d i t E x p o s u r e i n R B I M a s t e r C i r c u l a ro n E x p o s u r e N o r m s D B O D . N o . D i r . B C . 1 2 / 1 3 . 0 3 . 0 0 / 2 0 1 5 Ä 1 6 d a t e d J u l y 1 , 2 0 1 5 .3 . 8 . 3 I n f o r m a t i o n o n C o n c e n t r a t i o n o f e x p o s u r e : (�
i n C r o r e )3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6T o t a l e x p o s u r e s t o t w e n t y l a r g e s tb o r r o w e r s / c u s t o m e r s 1 1 , 0 3 3 . 7 4 1 2 , 8 6 3 . 2 1P e r c e n t a g e o f e x p o s u r e s t o t w e n t y l a r g e s tb o r r o w e r s / c u s t o m e r s t o t o t a l e x p o s u r e o f t h eb a n k o n b o r r o w e r s / c u s t o m e r s 1 1 . 0 8 % 1 6 . 9 3 %N o t e : E x p o s u r e i s c o m p u t e d a s p e r t h e d e f i n i t i o n o f C r e d i t a n d I n v e s t m e n t E x p o s u r e i n R B IM a s t e r C i r c u l a r o n E x p o s u r e N o r m s D B O D . N o . D i r . B C . 1 2 / 1 3 . 0 3 . 0 0 / 2 0 1 5 Ä 1 6 d a t e dJ u l y 1 , 2 0 1 5 .T h e b a n k h a s c o m p i l e d t h e d a t a f o r t h e p u r p o s e o f d i s c l o s u r e i n N o t e N o . 3 . 8 . 1 t o 3 . 8 . 3 f r o mi t s i n t e r n a l M I S s y s t e m a n d h a s b e e n f u r n i s h e d b y t h e m a n a g e m e n t , w h i c h h a s b e e n r e l i e du p o n b y t h e a u d i t o r s .3 . 8 . 4 I n f o r m a t i o n o n C o n c e n t r a t i o n o f N P A s : (�
i n C r o r e )3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6T o t a l e x p o s u r e s t o t o p f o u r N P A a c c o u n t s 2 4 9 . 5 0 2 6 6 . 9 5F-69
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3 . 9 S e c t o r w i s e a d v a n c e s a n d N P AT h e d e t a i l s o f S e c t o r ü w i s e G r o s s A d v a n c e s a n d G r o s s N P A s a s a t M a r c h 3 1 , 2 0 1 7 a n d M a r c h3 1 , 2 0 1 6 a r e g i v e n b e l o w : (�
i n C r o r e )S l.No . S e c t o r * 3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6G r o s sA d v a n c e s G r o s sN P A s % o fG r o s sN P A s t oG r o s sA d v a n c e si n t h a ts e c t o r G r o s sA d v a n c e s G r o s sN P A s % o f G r o s sN P A s t oG r o s sA d v a n c e s i nt h a t s e c t o rA P r i o r i t y S e c t o r1 . A g r i c u l t u r e a n da l l i e d a c t i v i t i e s 9 , 7 4 6 . 4 0 2 7 8 . 4 4 2 . 8 6 8 , 2 2 5 . 2 4 1 3 9 . 3 1 1 . 6 92 . A d v a n c e s t oi n d u s t r i e ss e c t o r e l i g i b l ea s p r i o r i t ys e c t o r l e n d i n g 2 , 7 0 1 . 7 0 2 0 6 . 7 8 7 . 6 5 2 , 3 4 6 . 2 2 1 6 8 . 4 5 7 . 1 8O f w h i c h :B a s i c M e t a l 5 2 2 . 5 0 7 7 . 8 3 1 4 . 9 0 3 3 1 . 6 1 5 8 . 7 5 1 7 . 7 2I n f r a s t r u c t u r e 3 0 1 . 8 1 6 . 4 4 2 . 1 3 2 1 0 . 9 8 2 8 . 1 4 1 3 . 3 43 . S e r v i c e s 4 , 3 3 0 . 9 6 2 3 3 . 9 3 5 . 4 0 4 , 6 1 5 . 8 9 1 9 5 . 5 5 4 . 2 4O f w h i c h :T r a d e 2 , 4 6 9 . 1 7 1 6 4 . 4 3 6 . 6 6 1 , 9 1 8 . 7 0 1 3 6 . 7 9 7 . 1 3P r o f e s s i o n a lS e r v i c e s 1 , 1 6 3 . 1 9 5 8 . 2 9 5 . 0 1 8 6 3 . 0 0 2 3 . 1 0 2 . 6 84 . P e r s o n a l l o a n s 0 . 0 0 0 . 0 0 0 . 0 0 � � �5 . O t h e r s 3 , 7 6 4 . 6 2 1 9 8 . 7 1 5 . 2 8 3 , 6 3 1 . 7 7 1 7 0 . 5 8 4 . 7 0S u b ¦ t o t a l ( A ) 2 0 , 5 4 3 . 6 8 9 1 7 . 8 6 4 . 4 7 1 8 , 8 1 9 . 1 2 6 7 3 . 8 9 3 . 5 8B N o n ¦ P r i o r i t yS e c t o r1 . A g r i c u l t u r e a n da l l i e d a c t i v i t i e s � � � � � �2 . I n d u s t r y 9 , 1 1 6 . 0 6 3 8 7 . 7 0 4 . 2 5 8 , 0 7 4 . 6 6 5 1 0 . 6 6 6 . 3 2O f w h i c h :B a s i c M e t a l 1 , 0 0 7 . 6 4 2 1 6 . 4 5 2 1 . 4 8 1 , 0 6 4 . 7 6 1 7 5 . 7 8 1 6 . 5 1I n f r a s t r u t u r e 3 , 3 2 3 . 6 7 7 8 . 6 1 2 . 3 7 3 , 4 5 0 . 9 3 9 3 . 2 9 2 . 7 03 . S e r v i c e s 2 4 , 2 7 6 . 6 8 2 7 7 . 7 9 1 . 1 4 1 6 , 7 4 1 . 4 9 3 6 6 . 3 1 2 . 1 9O f w h i c h :N o n Ê B a n k i n gF i n a n c eC o m p a n i e s 4 , 8 5 0 . 4 7 Ê � 3 , 7 5 8 . 0 5 Ê ÊT r a d e 3 , 8 9 1 . 4 8 1 1 3 . 4 0 2 . 9 1 3 , 3 4 3 . 2 4 2 0 5 . 2 0 6 . 1 4C o m m e r c i a lR e a l E s t a t e 3 , 3 3 0 . 8 2 1 6 . 1 2 0 . 4 8 1 , 2 7 0 . 0 1 0 . 3 3 0 . 0 3P r o f e s s i o n a lS e r v i c e s 2 , 2 8 1 . 7 2 6 5 . 9 1 2 . 8 9 2 , 8 6 4 . 7 7 7 7 . 3 4 2 . 7 04 . P e r s o n a l l o a n s 6 7 . 3 6 3 . 0 2 4 . 4 8 5 2 . 3 6 2 . 6 4 5 . 0 45 . O t h e r s 2 0 , 0 8 6 . 9 5 1 4 0 . 6 8 0 . 7 0 1 5 , 1 0 3 . 0 1 1 1 4 . 2 7 0 . 7 6S u b ¦ t o t a l ( B ) 5 3 , 5 4 7 . 0 5 8 0 9 . 1 9 1 . 5 1 3 9 , 9 7 1 . 5 2 9 9 3 . 8 8 2 . 4 9T o t a l ( A + B ) 7 4 , 0 9 0 . 7 3 1 , 7 2 7 . 0 5 2 . 3 3 5 8 , 7 9 0 . 6 4 1 , 6 6 7 . 7 7 2 . 8 4* C l a s s i f i c a t i o n i n t o s e c t o r s / s u b s e c t o r s a s a b o v e h a s b e e n d o n e b a s e d o n B a n k ’ s i n t e r n a ln o r m s , w h i c h h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s .F-70
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3 . 1 0 A ) M o v e m e n t i n g r o s s n o n � p e r f o r m i n g a s s e t s (� i n C r o r e )P a r t i c u l a r s 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6G r o s s N P A s a s a t t h e b e g i n n i n g o f t h e y e a r 1 6 6 7 . 7 7 1 0 5 7 . 7 3A d d i t i o n s ( F r e s h N P A s ) d u r i n g t h e y e a r 1 0 7 4 . 9 9 1 8 9 5 . 4 1S u b t o t a l ( A ) 2 7 4 2 . 7 6 2 9 5 3 . 1 4L e s s :( i ) U p g r a d a t i o n s 2 6 8 . 6 8 2 1 9 . 4 3( i i ) R e c o v e r i e s ( e x c l u d i n g r e c o v e r i e s m a d e f r o mu p g r a d e d a c c o u n t s ) 1 9 2 . 2 6 2 0 1 . 1 8( i i i ) T e c h n i c a l / P r u d e n t i a l W r i t e – o f f s 2 3 3 . 3 1 4 4 8 . 4 8( i v ) W r i t e – o f f s o t h e r t h a n t h o s e u n d e r ( i i i ) a b o v e 3 . 1 1 3 . 5 9( v ) R e d u c t i o n b y S a l e o f A s s e t s t o A R C s 3 1 8 . 3 5 4 1 2 . 6 9S u b W t o t a l ( B ) 1 0 1 5 . 7 1 1 2 8 5 . 3 7G r o s s N P A s a s a t t h e e n d o f t h e y e a r * ( A W B ) 1 7 2 7 . 0 5 1 6 6 7 . 7 7* A f t e r c o n s i d e r i n g t e c h n i c a l / P r u d e n t i a l W r i t e – O f f sC l o s i n g G r o s s N P A s b e f o r e t e c h n i c a l / P r u d e n t i a l W r i t e – O f f s i s � 3 4 4 3 . 2 3 C r o r e ( P r e v i o u sY e a r
�3 4 6 0 . 1 8 C r o r e )B ) M o v e m e n t i n t e c h n i c a l / p r u d e n t i a l w r i t t e n o f f a c c o u n t s i s s e t o u t b e l o w : (
� i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h 2 0 1 7 3 1 s t M a r c h 2 0 1 6O p e n i n g b a l a n c e 1 7 9 2 . 4 1 1 3 7 8 . 4 8A d d : T e c h n i c a l w r i t e s o f f s d u r i n g t h e y e a r 2 3 3 . 3 1 4 4 8 . 4 8S u b t o t a l ( A ) 2 0 2 5 . 7 2 1 8 2 6 . 9 6L e s s : R e d u c t i o n d u e t o r e c o v e r y m a d e f r o mp r e v i o u s l y t e c h n i c a l / p r u d e n t i a l w r i t t e n s o f fa c c o u n t s d u r i n g t h e y e a r 3 5 . 7 5 3 3 . 5 1L e s s : S a c r i f i c e m a d e f r o m p r e v i o u s l yt e c h n i c a l / p r u d e n t i a l w r i t t e n s o f f a c c o u n t s d u r i n gt h e y e a r 0 . 0 0 1 . 0 4L e s s : R e d u c t i o n d u e t o s a l e o f N P A s t o A R C sf r o m p r e v i o u s l y t e c h n i c a l / p r u d e n t i a l w r i t t e n o f fa c c o u n t s d u r i n g t h e y e a r 2 7 3 . 7 9 0 . 0 0S u b t o t a l ( B ) 3 0 9 . 5 4 3 4 . 5 5C l o s i n g b a l a n c e a t t h e e n d o f t h e y e a r ( A W B ) 1 7 1 6 . 1 8 1 7 9 2 . 4 13 . 1 1 . D e t a i l s o f O v e r s e a s A s s e t s , N P A s a n d R e v e n u eD u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 t h e B a n k h a d c o m m e n c e d i t s o p e r a t i o n , p u r s u a n t t oR B I a p p r o v a l , i n I n t e r n a t i o n a l F i n a n c e S e r v i c e C e n t e r ( I F S C ) B a n k i n g U n i t ( I B U ) i n G u j a r a tI n t e r n a t i o n a l F i n a n c e T e c C i t y ( G I F T ) a n d t h e b u s i n e s s t r a n s a c t i o n f r o m t h e s a m e i sc o n s i d e r e d a s a F o r e i g n b r a n c h f o r m o s t R e g u l a t o r y p u r p o s e a s p e r p a r a 2 . 2 o f A n n e x I o fR B I C i r c u l a r D B R . I B D . B C 1 4 5 7 0 / 2 3 . 1 3 . 0 0 4 / 2 0 1 4 s 1 5 d a t e d A p r i l 1 , 2 0 1 5 . A p a r t f r o m t h es a i d I B U , t h e b a n k d o e s n o t h a v e a n y o v e r s e a s b r a n c h ( s ) a s o n 3 1 M a r c h , 2 0 1 7 a n d 3 1 M a r c h ,2 0 1 6 . D e t a i l s o f A s s e t s , N P A s a n d R e v e n u e o f I B U a r e g i v e n b e l o w : (� i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6T o t a l A s s e t s 1 4 8 5 . 6 1 2 9 3 . 2 5T o t a l N P A s s sT o t a l R e v e n u e 2 9 . 6 9 1 . 2 0
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3 . 1 2 . S p o n s o r e d S P V sT h e B a n k h a s n o t s p o n s o r e d a n y s p e c i a l p u r p o s e v e h i c l e w h i c h i s r e q u i r e d t o b e c o n s o l i d a t e di n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s p e r a c c o u n t i n g n o r m s a s a t 3 1 M a r c h 2 0 1 7 a n d 3 1M a r c h 2 0 1 6 .3 . 1 3 D i s c l o s u r e s o n R e m u n e r a t i o ni ) Q u a l i t a t i v e d i s c l o s u r e sa ) I n f o r m a t i o n r e l a t i n g t o t h e c o m p o s i t i o n a n d m a n d a t e o f t h e N o m i n a t i o n ,R e m u n e r a t i o n , C o m p e n s a t i o n a n d E t h i c s C o m m i t t e e ( o r R e m u n e r a t i o n C o m m i t t e ei n s h o r t ) :T h e R e m u n e r a t i o n C o m m i t t e e o f t h e B o a r d o v e r s e e s t h e f r a m i n g , r e v i e w a n d i m p l e m e n t a t i o no f t h e c o m p e n s a t i o n p o l i c y o f t h e B a n k , o n b e h a l f o f t h e B o a r d . T h i s c o m m i t t e e w o r k s i nc o o r d i n a t i o n w i t h R i s k M a n a g e m e n t C o m m i t t e e o f t h e B a n k , i n o r d e r t o a c h i e v e e f f e c t i v ea l i g n m e n t b e t w e e n r i s k a n d r e m u n e r a t i o n . A s o n 3 1 M a r c h , 2 0 1 7 , t h e r e m u n e r a t i o nc o m m i t t e e o f t h e B o a r d c o m p r i s e s o f t h e f o l l o w i n g I n d e p e n d e n t D i r e c t o r s :É S r i . K M C h a n d r a s e k h a rÉ C A N i l e s h S h i v j i V i k a m s e yÉ S r i . D i l i p G e n a S a d a r a n g a n iT h e a b o v e c o m m i t t e e o f t h e B o a r d f u n c t i o n s w i t h t h e f o l l o w i n g o b j e c t i v e s :a ) T o r e v i e w t h e C o m p e n s a t i o n p a c k a g e f o r t h e M D a n d C E O a n d E x e c u t i v e D i r e c t o r sa n d r e c o m m e n d r e v i s i o n s f o r B o a r d a p p r o v a lb ) T o c o n s i d e r a n d a p p r o v e i s s u a n c e a n d a l l o t m e n t o f E S O S s h a r e s t o M D / E D s a n de m p l o y e e s o f t h e B a n k .c ) T o d e v e l o p a n d i m p l e m e n t a n e f f e c t i v e c o m p e n s a t i o n p o l i c y , a s p e r R B I g u i d e l i n e sb ) I n f o r m a t i o n r e l a t i n g t o t h e d e s i g n a n d s t r u c t u r e o f r e m u n e r a t i o n p r o c e s s e s a n d t h ek e y f e a t u r e s a n d o b j e c t i v e s o f r e m u n e r a t i o n p o l i c y .T h e c o m p e n s a t i o n p a y a b l e t o M D & C E O , E D s a n d S e n i o r E x e c u t i v e s i s d i v i d e d i n t o f i x e da n d v a r i a b l e c o m p o n e n t s . T h e f i x e d c o m p e n s a t i o n i s d e t e r m i n e d b a s e d o n t h e i n d u s t r ys t a n d a r d s , t h e e x p o s u r e , s k i l l s e t s , t a l e n t a n d q u a l i f i c a t i o n a t t a i n e d b y t h e o f f i c i a l o v e r h i s / h e rc a r e e r s p a n e t c . A p p r o v a l f r o m R B I i s o b t a i n e d t o d e c i d e f i x e d c o m p e n s a t i o n f o r M D & C E Oa n d E D s .T h e v a r i a b l e c o m p e n s a t i o n f o r M D & C E O a n d s e n i o r e x e c u t i v e s ( N o n – I B A p a c k a g e i . e .C G M a n d a b o v e ) a r e d e t e r m i n e d b a s e d o n B a n k ’ s p e r f o r m a n c e a n d K e y P e r f o r m a n c e A r e a s( K P A ) s e t f o r t h e o f f i c i a l . K P A s c o n t a i n t a r g e t s o n r i s k a d j u s t e d m e t r i c s s u c h a s R i s kA d j u s t e d R e t u r n o n C a p i t a l ( R A R O C ) , R i s k A d j u s t e d R e t u r n o n R i s k A d j u s t e d C a p i t a l( R A R O R A C ) , i n a d d i t i o n t o t a r g e t o n N P A s .T h e o b j e c t i v e s o f t h e r e m u n e r a t i o n p o l i c y a r e f o u r f o l d :�
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c ) D e s c r i p t i o n o f t h e w a y s i n w h i c h c u r r e n t a n d f u t u r e r i s k s a r e t a k e n i n t o a c c o u n t i nt h e r e m u n e r a t i o n p r o c e s s e s .F o r t h e p u r p o s e o f e f f e c t i v e l y a l i g n i n g c o m p e n s a t i o n s t r u c t u r e w i t h r i s k o u t c o m e s , t h ef u n c t i o n a r i e s i n t h e B a n k a r e a r r a n g e d u n d e r t h e f o l l o w i n g f o u r c a t e g o r i e s• M D & C E O / E D• S e n i o r E x e c u t i v e s ( N o n I B A p a c k a g e )• S e n i o r E x e c u t i v e s ( O n I B A p a c k a g e )• O t h e r m e m b e r s o f s t a f f ( o n I B A p a c k a g e )L i m i t o n v a r i a b l e p a yT h e v a r i a b l e c o m p e n s a t i o n o f f e r e d t o a n o f f i c i a l w o u l d n o t e x c e e d 7 0 % o f t h e t o t a l f i x e dc o m p e n s a t i o nS e v e r a n c e p a y a n d g u a r a n t e e d b o n u sS e v e r a n c e p a y ( o t h e r t h a n g r a t u i t y o r t e r m i n a l e n t i t l e m e n t s o r a s e n t i t l e d b ys t a t u t e ) i s n o t p a i d t o a n y o f f i c i a l o f t h e B a n kS i g n o n b o n u s o r j o i n i n g b o n u s i s l i m i t e d t o t h e f i r s t y e a r a n d i s p a i d o n l y a s E m p l o y e e s t o c ko p t i o n sH e d g i n gN o c o m p e n s a t i o n s c h e m e o r i n s u r a n c e f a c i l i t y w o u l d b e p r o v i d e d b y t h e B a n k t o e m p l o y e e st o h e d g e t h e i r c o m p e n s a t i o n s t r u c t u r e t o o f f s e t t h e r i s k a l i g n m e n t m e c h a n i s m ( d e f e r r a l p a ya n d c l a w b a c k a r r a n g e m e n t s ) e m b e d d e d i n t h e i r c o m p e n s a t i o n a r r a n g e m e n tC o m p e n s a t i o n R e c o v e r y p o l i c yA c l a w b a c k a r r a n g e m e n t o r a c o m p e n s a t i o n r e c o v e r y p o l i c y i s p r o v i d e d , w h i c h w i l l e n t a i lt h e B a n k t o r e c o v e r p r o p o r t i o n a t e a m o u n t o f v a r i a b l e c o m p e n s a t i o n p a i d t o t h e a b o v ef u n c t i o n a r i e s o n a c c o u n t o f a n a c t o r d e c i s i o n t a k e n b y t h e o f f i c i a l w h i c h h a s b r o u g h t f o r t h an e g a t i v e c o n t r i b u t i o n t o t h e b a n k a t a p r o s p e c t i v e s t a g e . T h e c l a w b a c k a r r a n g e m e n t w o u l db e v a l i d f o r a p e r i o d o f t h r e e y e a r s f r o m t h e d a t e o f p a y m e n t o f v a r i a b l e c o m p e n s a t i o n .C o m m i t t e e s t o m i t i g a t e r i s k s c a u s e d b y a n i n d i v i d u a l d e c i s i o nI n o r d e r t o f u r t h e r b a l a n c e t h e i m p a c t o f m a r k e t o r c r e d i t r i s k s c a u s e d t o t h e B a n k b y a ni n d i v i d u a l d e c i s i o n t a k e n b y a s e n i o r l e v e l e x e c u t i v e , M D & C E O o r E D , t h e b a n kh a s c o n s t i t u t e d v a r i o u s c o m m i t t e e s t o t a k e d e c i s i o n s o n v a r i o u s a s p e c t s :� C r e d i t l i m i t s a r e s a n c t i o n e d b y c o m m i t t e e s a t d i f f e r e n t l e v e l s .�
I n v e s t m e n t d e c i s i o n s o f t h e B a n k a r e t a k e n a n d m o n i t o r e d b y I n v e s t m e n t c o m m i t t e ea n d t h e r e i s a n u p p e r l i m i t i n t r e a s u r y d e a l i n g s w h e r e i n d i v i d u a l d e c i s i o n s c a n b et a k e n .�
I n t e r e s t r a t e s o n a s s e t a n d l i a b i l i t y p r o d u c t s f o r d i f f e r e n t b u c k e t s a r e d e c i d e d a n dm o n i t o r e d b y t h e A s s e t L i a b i l i t y C o m m i t t e e o f t h e B o a r d ( A L C O ) . B a n k s ’ e x p o s u r et o l i q u i d i t y r i s k a r e a l s o m o n i t o r e d b y A L C O .I n t e g r a t e d R i s k M a n a g e m e n t D e p a r t m e n t ( I R M D )I n o r d e r t o e f f e c t i v e l y g o v e r n t h e c o m p e n s a t i o n s t r u c t u r e , I R M D w o u l d a s s i s t t h eR e m u n e r a t i o n C o m m i t t e e o f t h e B o a r d t o m o n i t o r , r e v i e w a n d c o n t r o l v a r i o u s r i s k s a n db a l a n c e p r u d e n t r i s k t a k i n g w i t h t h e c o m p e n s a t i o n p a i d o u t t o t o p e x e c u t i v e s a n d o t h e re m p l o y e e s .C o m p e n s a t i o n o f r i s k c o n t r o l s t a f fT h e t o t a l f i x e d a n d v a r i a b l e c o m p e n s a t i o n p a i d o u t t o t h e e m p l o y e e s o f I R M D a r ei n d e p e n d e n t o f b u s i n e s s p a r a m e t e r s a n d r e n d e r i n g o f e f f e c t i v e s u p p o r t t o t h e R e m u n e r a t i o nC o m m i t t e e o f t h e B o a r d . T h e v a r i a b l e c o m p e n s a t i o n c o m p o n e n t ( P e r f o r m a n c e L i n k e dF-73
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I n c e n t i v e o r P L I ) w i l l b e s u b j e c t e d t o a m i n i m u m a n d g r e a t e r p r o p o r t i o n o f c o m p e n s a t i o nw i l l b e f i x e d i n n a t u r e t o e n s u r e a u t o n o m y a n d i n d e p e n d e n c e f r o m b u s i n e s s g o a l sd ) L i n k a g e o f p e r f o r m a n c e d u r i n g a p e r f o r m a n c e m e a s u r e m e n t p e r i o d w i t h l e v e l s o fr e m u n e r a t i o n .T h e B a n k ’ s p e r f o r m a n c e i s c h a r t e d b a s e d o n t h e r e v e n u e p o i n t i n d e x / p e r f o r m a n c e s c o r e c a r dw h i c h t a k e s i n t o a c c o u n t v a r i o u s f i n a n c i a l i n d i c a t o r s l i k e r e v e n u e e a r n e d , c o s t d e p l o y e d , a n dp r o f i t e a r n e d , N P A p o s i t i o n a n d o t h e r i n t a n g i b l e f a c t o r s l i k e l e a d e r s h i p a n d e m p l o y e ed e v e l o p m e n t . V a r i a b l e p a y i s p a i d p u r e l y b a s e d o n p e r f o r m a n c e a n d i s m e a s u r e d t h r o u g hS c o r e c a r d s f o r M D & C E O / E D s . T h e s c o r e c a r d p r o v i d e s a m i x o f f i n a n c i a l a n d n o n pf i n a n c i a l , q u a n t i t a t i v e a n d q u a l i t a t i v e m e t r i c s .C o m p e n s a t i o n p a i d t o S e n i o r e x e c u t i v e s a n d o t h e r s t a f f m e m b e r s o n I B A p a c k a g eT h e c o m p e n s a t i o n p a i d t o o t h e r o f f i c i a l s t h a t i n c l u d e A w a r d s t a f f , O f f i c e r s c o m i n g u n d e rS c a l e I t o I I I a n d S e n i o r e x e c u t i v e s c o m i n g u n d e r S c a l e I V t o V I I i s f i x e d b a s e d o n t h ep e r i o d i c i n d u s t r y l e v e l s e t t l e m e n t s w i t h I n d i a n B a n k s A s s o c i a t i o n . T h e v a r i a b l ec o m p e n s a t i o n p a i d t o t h e s e f u n c t i o n a r i e s i s b a s e d o n t h e P e r f o r m a n c e L i n k e d i n c e n t i v es c h e m e w h i c h h a s b e e n f o r m u l a t e d o n t h e b a s i s o f p e r f o r m a n c e p a r a m e t e r s s e t i nP e r f o r m a n c e M a n a g e m e n t S y s t e me ) B a n k ' s p o l i c y o n d e f e r r a l a n d v e s t i n g o f v a r i a b l e r e m u n e r a t i o n a n d c r i t e r i a f o ra d j u s t i n g d e f e r r e d r e m u n e r a t i o n b e f o r e v e s t i n g a n d a f t e r v e s t i n g .D e f e r r e d c o m p e n s a t i o n a n d P e r f o r m a n c e L i n k a g eI n t h e e v e n t v a r i a b l e c o m p e n s a t i o n p a i d t o M D & C E O , E D a n d S e n i o r E x e c u t i v e s ( N o n pI B A ) e x c e e d s m o r e t h a n 5 0 % o f t h e f i x e d c o m p e n s a t i o n f o r t h e y e a r o n a c c o u n t o f h i g h l e v e lo f B a n k ’ s p e r f o r m a n c e , 6 0 % o f t h e v a r i a b l e p a y s o e n t i t l e d t o t h e o f f i c i a l w i l l b e d e f e r r e d f o rp a y m e n t o v e r a p e r i o d o f 3 y e a r s . T h e a m o u n t i s p a r k e d i n a n e s c r o w a c c o u n t a n d t h e p a y m e n tw i l l b e m a d e i n t h e r a t i o o f 2 0 : 3 0 : 5 0 o v e r a p e r i o d o f t h r e e y e a r s , i . e .•
2 0 % o f t h e d e f e r r e d c o m p e n s a t i o n w i l l b e p a i d i n t h e f i r s t y e a r•
3 0 % o f t h e d e f e r r e d c o m p e n s a t i o n i n t h e s e c o n d y e a r ; a n d•
5 0 % o f t h e d e f e r r e d c o m p e n s a t i o n i n t h e t h i r d y e a rC l a w b a c k a n d d e f e r r a l a r r a n g e m e n t sT h e p r o v i s i o n s o f c l a w b a c k a n d d e f e r r a l a r r a n g e m e n t s a r e a p p l i c a b l e t o t h e r e f e r r e df u n c t i o n a r i e s a n d a l l e m p l o y e e s i n t h e e v e n t t h e i r v a r i a b l e c o m p e n s a t i o n e x c e e d s 5 0 % o ft h e i r f i x e d e m o l u m e n t sf ) D e s c r i p t i o n o f t h e d i f f e r e n t f o r m s o f v a r i a b l e r e m u n e r a t i o nB a n k u s e s a n o p t i m u m m i x o f c a s h , E S O P S a n d v a r i a b l e P L I t o d e c i d e t h e c o m p e n s a t i o n o fe m p l o y e e s i n a l l c a t e g o r i e s . T h e d i s t r i b u t i o n o f E S O P S a n d v a r i a b l e P L I a r e h i g h e r i n t o pl e v e l s a n d i s l i n k e d w i t h t h e i r p e r f o r m a n c e m e a s u r e m e n t s t a k e n f r o m S c o r e c a r d s . T h i s i sd o n e t o a l i g n t h e c o m p e n s a t i o n o f s e n i o r s t a f f w i t h t h e i r p e r f o r m a n c e , r i s k a n d r e s p o n s i b i l i t yt a k e n i n h i g h e r a s s i g n m e n t s . T h e O f f i c e r s i n S c a l e I p I I I a s w e l l a s A w a r d s t a f f c o m e u n d e rt h e p u r v i e w o f I B A p a c k a g e t h a t i s a s p e r t h e I n d u s t r y w i d e s e t t l e m e n t s . V a r i a b l ec o m p e n s a t i o n , E S O P , i s l i n k e d w i t h s e n i o r i t y i n t h e s e l e v e l s .F-74
4 3
( i i ) Q u a n t i t a t i v e d i s c l o s u r e s 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6( a ) N u m b e r o f m e e t i n g s h e l d b y t h e R e m u n e r a t i o nC o m m i t t e e d u r i n g t h e f i n a n c i a l y e a r a n dr e m u n e r a t i o n p a i d t o i t s m e m b e r s . 7� 6 , 3 0 , 0 0 0 8
�7 , 2 0 , 0 0 0( b ) ( i ) N u m b e r o f e m p l o y e e s h a v i n g a v a r i a b l er e m u n e r a t i o n a w a r d d u r i n g t h e f i n a n c i a l y e a r . 3 4( i i ) N u m b e r a n d t o t a l a m o u n t o f s i g n Á o n a w a r d sm a d e d u r i n g t h e f i n a n c i a l y e a r . N i l N i l( i i i ) D e t a i l s o f g u a r a n t e e d b o n u s , i f a n y , p a i d a sj o i n i n g / s i g n o n b o n u s N i l N i l( i v ) D e t a i l s o f s e v e r a n c e p a y , i n a d d i t i o n t oa c c r u e d b e n e f i t s , i f a n y . N i l N i l( c ) ( i ) T o t a l a m o u n t o f o u t s t a n d i n g d e f e r r e dr e m u n e r a t i o n , s p l i t i n t o c a s h , s h a r e s a n d s h a r e Ál i n k e d i n s t r u m e n t s a n d o t h e r f o r m s N i l N i l( i i ) T o t a l a m o u n t o f d e f e r r e d r e m u n e r a t i o n p a i do u t i n t h e f i n a n c i a l y e a r . N i l N i l( d ) B r e a k d o w n o f a m o u n t o f r e m u n e r a t i o n a w a r d s f o rt h e f i n a n c i a l y e a r t o s h o w f i x e d a n d v a r i a b l e ,d e f e r r e d a n d n o n Á d e f e r r e d (
�i n C r o r e ) 2 . 7 9 ( F i x e d )0 . 0 0( V a r i a b l e ) 3 . 1 4 ( F i x e d )0 . 3 4( V a r i a b l e )( e ) T o t a l a m o u n t o f o u t s t a n d i n g d e f e r r e d r e m u n e r a t i o na n d r e t a i n e d r e m u n e r a t i o n e x p o s e d t o e x p o s te x p l i c i t a n d / o r i m p l i c i t a d j u s t m e n t s . N i l N i l3 . 1 4 S e c u r i t i s a t i o n T r a n s a c t i o n sT h e B a n k h a s n o t d o n e a n y s e c u r i t i s a t i o n t r a n s a c t i o n s d u r i n g t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 7a n d 3 1 M a r c h , 2 0 1 6 .3 . 1 5 D e t a i l s o f I n t r a ù G r o u p E x p o s u r e (
�i n C r o r e )S l .N o . P a r t i c u l a r s 3 1 M a r c h2 0 1 7 3 1 M a r c h2 0 1 61 T o t a l a m o u n t o f i n t r a � g r o u p e x p o s u r e s * 6 9 1 . 3 9 7 5 8 . 9 12 T o t a l a m o u n t o f t o p � 2 0 i n t r a g r o u p e x p o s u r e s * 6 9 1 . 3 9 7 5 8 . 9 13 P e r c e n t a g e o f i n t r a g r o u p e x p o s u r e s t o t o t a l e x p o s u r eo f t h e b a n k t o b o r r o w e r s / c u s t o m e r s * ( % ) 0 . 6 9 4 % 0 . 9 9 8 %4 D e t a i l s o f b r e a c h o f l i m i t s o n i n t r a � g r o u p e x p o s u r e sa n d r e g u l a t o r y a c t i o n t h e r e o n , i f a n y N I L N I L* E x p o s u r e i s c o m p u t e d a s p e r t h e d e f i n i t i o n o f C r e d i t a n d I n v e s t m e n t E x p o s u r e i n R B IM a s t e r C i r c u l a r o n E x p o s u r e N o r m s D B R . N o . D i r . B C . 1 2 / 1 3 . 0 3 . 0 0 / 2 0 1 5 � 1 6 d a t e d J u l y 1 ,2 0 1 5 .3 . 1 6 T r a n s f e r s t o D e p o s i t o r E d u c a t i o n a n d A w a r e n e s s F u n d ( D E A F )I n a c c o r d a n c e w i t h t h e g u i d e l i n e s i s s u e d b y t h e R B I , t h e B a n k t r a n s f e r s t h e a m o u n t t o t h ec r e d i t o f a n y a c c o u n t w h i c h h a s n o t b e e n o p e r a t e d u p o n f o r a p e r i o d o f t e n y e a r s o r a n yd e p o s i t o r a n y a m o u n t r e m a i n i n g u n c l a i m e d f o r m o r e t h a n t e n y e a r s t o t h e D E A F . D e t a i l s o fa m o u n t s t r a n s f e r r e d t o D E A F a r e s e t o u t b e l o w :
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(� i n C r o r e )P a r t i c u l a r s 3 1 M a r c h ,2 0 1 7 3 1 M a r c h ,2 0 1 6O p e n i n g b a l a n c e o f a m o u n t s t r a n s f e r r e d t o D E A F 7 7 . 3 3 6 6 . 8 0A d d : A m o u n t s t r a n s f e r r e d t o D E A F d u r i n g t h e y e a r 1 8 . 1 8 1 2 . 6 5L e s s : A m o u n t s r e i m b u r s e d b y D E A F t o w a r d s c l a i m s 2 . 2 5 2 . 1 2C l o s i n g b a l a n c e o f a m o u n t s t r a n s f e r r e d t o D E A F 9 3 . 2 6 7 7 . 3 33 . 1 7 U n h e d g e d F o r e i g n C u r r e n c y E x p o s u r eT h e B a n k h a s i n p l a c e a p o l i c y o n m a n a g i n g c r e d i t r i s k a r i s i n g o u t o f u n h e d g e d f o r e i g nc u r r e n c y e x p o s u r e s o f i t s b o r r o w e r s . T h e o b j e c t i v e o f t h i s p o l i c y i s t o m a x i m i z e t h e h e d g i n go n f o r e i g n c u r r e n c y e x p o s u r e s o f b o r r o w e r s b y r e v i e w i n g t h e i r f o r e i g n c u r r e n c y e x p o s u r e sa n d e n c o u r a g i n g t h e m t o h e d g e t h e u n h e d g e d p o r t i o n . T h e p o l i c y f r a m e w o r k a l s o a r t i c u l a t e st h e m e t h o d o l o g i e s f o r a s c e r t a i n i n g t h e a m o u n t o f u n h e d g e d f o r e i g n c u r r e n c y e x p o s u r e s ,e s t i m a t i n g t h e e x t e n t o f l i k e l y l o s s , e s t i m a t i n g t h e r i s k i n e s s o f t h e u n h e d g e d p o s i t i o n a n dm a k i n g a p p r o p r i a t e p r o v i s i o n s a n d c a p i t a l c h a r g e a s p e r e x t a n t R B I g u i d e l i n e s . I n l i n e w i t ht h e p o l i c y , a s s e s s m e n t o f u n h e d g e d f o r e i g n c u r r e n c y e x p o s u r e i s a p a r t o f c r e d i t a p p r a i s a lw h i l e p r o p o s i n g l i m i t s o r a t t h e r e v i e w s t a g e . F u r t h e r , t h e b a n k r e v i e w s t h e u n h e d g e d f o r e i g nc u r r e n c y e x p o s u r e a c r o s s i t s p o r t f o l i o o n a p e r i o d i c b a s i s . T h e B a n k m a i n t a i n s i n c r e m e n t a lp r o v i s i o n s a n d a d d i t i o n a l c a p i t a l f o r t h e u n h e d g e d f o r e i g n c u r r e n c y e x p o s u r e s o f i t sb o r r o w e r s i n l i n e w i t h t h e e x t a n t R B I g u i d e l i n e s . T h e B a n k h a s m a i n t a i n e d
� 5 . 2 7 C r o r e( P r e v i o u s y e a r� 1 0 . 0 5 C r o r e ) a s p r o v i s i o n a n d
�2 . 2 1 C r o r e ( P r e v i o u s y e a r
� 4 . 6 6 C r o r e ) a sa d d i t i o n a l c a p i t a l f o r c o m p u t a t i o n o f c a p i t a l a d e q u a c y r a t i o o n a c c o u n t o f t h e u n h e d g e df o r e i g n c u r r e n c y e x p o s u r e s o f b o r r o w e r s a s a t M a r c h 3 1 , 2 0 1 7 .
F-76
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3 .18Li quidit yC overageR ati o(LCR)a)Q uantit ati veDi scl osure
( �i nC rore)
P arti cul arsQ uart erend ed M arch31 ,2017Q uart erend ed D ecemb er31 ,2016Q uart erend ed S ept emb er30 ,2016Q uart erend ed J une30 ,2016Q uart erend ed M arch31 ,2016
T ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght e dV al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ue ( average)T ot al W ei ght ed V al ue ( average)
Hi ghQ ualit yLi quidA sset s 1T ot alHi ghQ ualit yLi quid A sset s(HQLA)15142 .7914978 .8511415 .7711222 .1310021 .22
C ashO utfl ows 2R et aild eposit sand d eposit sf romsmall b usi nesscust omers ,of whi ch :85093 .527787 .3183883 .947679 .3779100 .537278 .5977647 .206420 .8875103 .225853 .20
(i) St abl ed eposit s 14440 .83722 .0414180 .44709 .0212629 .18631 .4626876 .751343 .8433142 .471657 .12
(ii) L essst abl ed eposit s70652 .707065 .2769703 .496970 .3566471 .346647 .1350770 .455077 .0441960 .754196 .08
3U nsecured wh ol esal e f undi ng ,of whi ch :4416 .562113 .575265 .242882 .583377 .921747 .152669 .551268 .491443 .23661 .14
(i) O perati onald eposit s( all count erparti es)145 .7930 .14122 .8224 .46111 .4421 .41125 .2124 .67116 .8022 .80
(ii) N on Coperati onald eposit s ( all count erparti es)4270 .772083 .425142 .422858 .123266 .491725 .742544 .351243 .821308 .38620 .29
(iii) U nsecuredd ebt 0 .000 .000 .000 .000 .000 .000 .000 .0018 .0518 .05
4S ecured wh ol esal e f undi ng0 .0267 .5427 .430 .00
C
5Additi onal requi rement s , of whi ch12 .6412 .0330 .6030 .6063 .8963 .8911 .6611 .66174 .30174 .30
(i)O utfl owsrel at edt o d eri vati veexposuresand oth ercoll at eral requi rement s12 .6412 .0330 .6030 .6063 .8963 .8911 .6611 .66174 .30174 .30
F-77
46
P arti cul arsQ uart erend ed M arch31 ,2017Q uart erend ed D ecemb er31 ,2016Q uart erend ed S ept emb er30 ,2016Q uart erend ed J une30 ,2016Q uart erend ed M arch31 ,2016
T ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght e dV al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ue ( average)T ot al W ei ght ed V al ue ( average)
(ii) O utfl owsrel at edt ol ossof f undi ngond ebt prod uct s����������
(iii) C redit andli quidit y f aciliti es����������
6Oth ercont ract ualf undi ng obli gati ons16860 .711849 .0115277 .461729 .5514984 .211844 .1214566 .861710 .0413675 .421305 .85
7Oth erconti ngentf undi ng obli gati ons6363 .76190 .916102 .20183 .035825 .45174 .765884 .54176 .545263 .29189 .38
8TOTALCASH OUTFLOWS11952 .8512572 .6711135 .959587 .618183 .87
C ashI nfl ows 9S ecuredl endi ng( e .g . reverserepos)1971 .060 .002346 .580 .00293 .920 .00564 .090 .0048 .37 �
10I nfl owsf romf ull y perf ormi ngexposures3189 .162325 .402400 .321930 .372641 .632033 .021845 .581111 .421920 .031010 .02
11Oth ercashi nfl ows 6 .996 .992 .172 .1745 .8745 .8777 .1177 .1165 .5065 .50
12TOTALCASH INFLOWS
5167 .212332 .394749 .071932 .542981 .422078 .892486 .771188 .532033 .901075 .52
13TOTALHQLA15142 .7914978 .8511415 .7711222 .1310021 .22
14TOTALNETCASH OUTFLOWS
9620 .4510640 .139057 .068399 .087108 .35
15LIQUIDITY COVERAGERATIO (%)157 .40%140 .78%126 .04%133 .61%140 .98%
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b ) Q u a l i t a t i v e D i s c l o s u r eT h e B a n k a d h e r e s t o R B I g u i d e l i n e s o n L i q u i d i t y C o v e r a g e R a t i o , L i q u i d i t y R i s k M o n i t o r i n gT o o l s a n d t h e L C R D i s c l o s u r e S t a n d a r d s p u r s u a n t t o t h e B a s e l I I I F r a m e w o r k o n L i q u i d i t yS t a n d a r d s t h a t a r e a p p l i c a b l e t o b a n k s i n I n d i a w i t h e f f e c t f r o m J a n u a r y 1 , 2 0 1 5 . L i q u i d i t yC o v e r a g e R a t i o ( L C R ) p r o m o t e s s h o r t � t e r m r e s i l i e n c e o f b a n k s t o p o t e n t i a l l i q u i d i t yd i s r u p t i o n s b y e n s u r i n g t h a t t h e y h a v e s u f f i c i e n t h i g h q u a l i t y l i q u i d a s s e t s ( H Q L A s ) t o s u r v i v ea n a c u t e s t r e s s s c e n a r i o l a s t i n g f o r 3 0 d a y s . L C R i s c o m p u t e d o n a d a i l y b a s i s f r o m 1 s t J a n u a r y2 0 1 7 . B a n k h a s c o m p u t e d t h e L C R o f t h e I F S C b a n k i n g U n i t a t G I F T C i t y o n a s t a n d a l o n eb a s i s a s p e r t h e e x t a n t g u i d e l i n e s . B a n k h a s n o t c o m p u t e d L C R s e p a r a t e l y f o r a n y f o r e i g nc u r r e n c y s i n c e t h e a g g r e g a t e l i a b i l i t i e s d e n o m i n a t e d i n a n y f o r e i g n c u r r e n c y d o e s n ’ t a m o u n tt o 5 p e r c e n t o r m o r e o f t h e B a n k ’ s t o t a l l i a b i l i t i e s . B a n k h a s c o n s i s t e n t l y m a i n t a i n e d L C Ra b o v e 1 0 0 % d u r i n g F i s c a l 2 0 1 7 , a s a g a i n s t t h e r e g u l a t o r y m i n i m u m o f 7 0 % ( t i l l D e c e m b e r2 0 1 6 ) / 8 0 % ( f r o m J a n u a r y 2 0 1 7 ) .O n a n a v e r a g e , 9 0 % o f t h e H Q L A m a i n t a i n e d b y t h e B a n k c o m p r i s e s o f L e v e l 1 a s s e t s w h i c hi s t h e m o s t l i q u i d a s s e t c a t e g o r y . C a s h i n h a n d , e x c e s s C R R a n d S L R , G � S e c w i t h i nm a n d a t o r y S L R r e q u i r e m e n t p e r m i t t e d b y R B I u n d e r M S F ( p r e s e n t l y 2 % o f N D T L ) a n df a c i l i t y t o a v a i l l i q u i d i t y r a t i o ( 9 % o f N D T L ) c o n s t i t u t e s L e v e l 1 H Q L A . L e v e l 2 A s s e t sm a i n t a i n e d b y t h e B a n k c o m p r i s e s o f ( a ) m a r k e t a b l e s e c u r i t i e s r e p r e s e n t i n g c l a i m s o n o rc l a i m s g u a r a n t e e d b y s o v e r e i g n s , P u b l i c S e c t o r E n t i t i e s ( P S E s ) o r m u l t i l a t e r a l d e v e l o p m e n tb a n k s t h a t a r e a s s i g n e d a 2 0 % r i s k w e i g h t u n d e r t h e B a s e l I I I S t a n d a r d i z e d A p p r o a c h f o rc r e d i t r i s k a n d t h a t a r e n o t i s s u e d b y a b a n k / f i n a n c i a l i n s t i t u t i o n / N B F C o r a n y o f i t s a f f i l i a t e de n t i t i e s a n d ( b ) C o r p o r a t e b o n d s , n o t i s s u e d b y a b a n k / f i n a n c i a l i n s t i t u t i o n / N B F C o r a n y o fi t s a f f i l i a t e d e n t i t i e s , w h i c h h a v e b e e n r a t e d B B B � o r a b o v e b y a n E l i g i b l e C r e d i t R a t i n gA g e n c y . H Q L A i s a l s o w e l l d i v e r s i f i e d a c r o s s v a r i o u s i n s t r u m e n t s a n d l i q u i d a s s e t t y p e s a n ds h o u l d p r o v i d e t h e B a n k w i t h a d e q u a t e a n d t i m e l y l i q u i d i t y .B a n k h a s a w e l l � d i v e r s i f i e d f u n d i n g p o r t f o l i o . R e t a i l d e p o s i t s , c o n s i d e r e d a s s t a b l e f r o m al i q u i d i t y p e r s p e c t i v e i s t h e m a j o r f u n d i n g s o u r c e o f t h e B a n k , i n d i c a t i n g l o w e r d e p e n d e n c e o ft h e B a n k o n w h o l e s a l e f u n d s .T h e l i q u i d i t y r i s k m a n a g e m e n t i n t h e B a n k i s g u i d e d b y t h e A L M P o l i c y . A s s e t L i a b i l i t yM a n a g e m e n t C o m m i t t e e ( A L C O ) i s t h e e x e c u t i v e l e v e l c o m m i t t e e r e s p o n s i b l e f o r A L Mp r o c e s s i n t h e B a n k . B a n k ’ s l i q u i d i t y m a n a g e m e n t i s a c t i v e l y d o n e b y t h e T r e a s u r yd e p a r t m e n t a s p e r t h e d i r e c t i o n s o f A L C O . I n t e g r a t e d R i s k M a n a g e m e n t D e p a r t m e n t a c t i v e l ym o n i t o r s t h e l i q u i d i t y p o s i t i o n o f t h e B a n k a n d a p p r i s e s A L C O o n a c o n t i n u o u s b a s i s t oi n i t i a t e a p p r o p r i a t e a c t i o n s t o e n s u r e t h a t t h e l i q u i d i t y p o s i t i o n i s w e l l w i t h i n t h e R i s k A p p e t i t es e t b y t h e B o a r d o f D i r e c t o r s .4 . O t h e r D i s c l o s u r e s4 . 1 . E a r n i n g s p e r S h a r e ( ' E P S ' )P a r t i c u l a r s 3 1 M a r c h2 0 1 7 3 1 M a r c h2 0 1 6W e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e s u s e d i nc o m p u t a t i o n o f b a s i c e a r n i n g s p e r s h a r e ( i n 0 0 0 ’ s ) 1 7 , 2 0 , 7 0 8 1 7 , 1 6 , 9 9 3W e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e s u s e d i nc o m p u t a t i o n o f d i l u t e d e a r n i n g s p e r s h a r e ( i n 0 0 0 ’ s ) 1 7 , 4 6 , 5 8 7 1 7 , 2 5 , 5 9 1N o m i n a l V a l u e o f s h a r e ( i n�
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2 / � e a c h ( P r e v i o u s Y e a r 1 6 , 5 9 0 s h a r e s o f�
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2 / �e a c h ) , o u t o f t h e B o n u s i s s u e o f 2 0 1 5 .D . E m p l o y e e S t o c k O p t i o n S c h e m e ( “ E S O S ” ) :i ) S h a r e h o l d e r s o f t h e b a n k h a d a p p r o v e d E m p l o y e e S t o c k O p t i o n S c h e m e ( E S O S ) t h r o u g hp o s t a l b a l l o t , t h e r e s u l t o f w h i c h w a s a n n o u n c e d o n D e c e m b e r 2 4 , 2 0 1 0 , e n a b l i n g t h e B o a r da n d / o r t h e “ C o m p e n s a t i o n C o m m i t t e e ” t o g r a n t s u c h n u m b e r o f e q u i t y s h a r e s , i n c l u d i n go p t i o n s , o f t h e B a n k n o t e x c e e d i n g 5 % o f t h e a g g r e g a t e n u m b e r o f p a i d u p e q u i t y s h a r e s o ft h e B a n k , i n l i n e w i t h t h e g u i d e l i n e s o f S E B I . P u r s u a n t t h e r e t o , t h e C o m p e n s a t i o n C o m m i t t e eo f t h e b a n k g r a n t e d t h e f o l l o w i n g o p t i o n s : N u m b e r o f O p t i o n s3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6O u t s t a n d i n g a t t h e b e g i n n i n g o f t h e y e a r 7 , 6 1 , 8 7 , 1 4 6 8 , 1 1 , 2 4 , 1 8 6S u r r e n d e r e d d u r i n g t h e y e a r � �G r a n t e d d u r i n g t h e y e a r * 9 , 6 5 , 0 0 0 1 0 , 2 5 , 0 0 0E x e r c i s e d d u r i n g t h e y e a r 5 0 , 9 8 , 5 7 0 5 6 , 3 6 , 4 5 0F o r f e i t e d / l a p s e d d u r i n g t h e y e a r 2 , 5 0 , 5 9 0 3 , 2 5 , 5 9 0O u t s t a n d i n g a t t h e e n d o f t h e y e a r 7 , 1 8 , 0 2 , 9 8 6 7 , 6 1 , 8 7 , 1 4 6O p t i o n s e x e r c i s a b l e 4 , 7 6 , 1 7 , 6 9 6 5 , 2 7 , 2 7 , 1 7 6F-80
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� 7 2 . 4 5 p e r s h a r e a n d� 7 9 . 4 5 p e rs h a r e , r e s p e c t i v e l y .A s p e r S E B I g u i d e l i n e s t h e a c c o u n t i n g f o r E S O S c a n b e d o n e e i t h e r u n d e r t h e ‘ I n t r i n s i c v a l u eb a s i s ’ o r ‘ F a i r v a l u e b a s i s ’ . T h e C o m p e n s a t i o n C o m m i t t e e i n t h e i r m e e t i n g d a t e d 1 0 t h M a y ,2 0 1 2 d e c i d e d t o a d o p t ‘ I n t r i n s i c v a l u e m e t h o d ’ f o r a c c o u n t i n g o f E S O S , i n t e r m s o f t h e p o w e rv e s t e d o n t h e m a s p e r t h e r e s o l u t i o n o f E G M d a t e d 2 4 D e c e m b e r , 2 0 1 0 .T h e e x e r c i s e p r i c e o f t h e o p t i o n s g r a n t e d i s t h e s a m e a s t h e m a r k e t p r i c e o n t h e d a t e p r i o r t og r a n t d a t e a n d h e n c e t h e r e i s n o i n t r i n s i c v a l u e f o r t h e o p t i o n s , w h i c h h a s t o b e a m o r t i z e d o v e rt h e v e s t i n g p e r i o d , o t h e r t h a n 3 , 0 0 , 0 0 0 O p t i o n s g r a n t e d d u r i n g t h e y e a r a t a n e x e r c i s e p r i c el o w e r t h a n t h e M a r k e t p r i c e .I f “ F a i r V a l u e M e t h o d ” h a d b e e n a d o p t e d b a s e d o n “ B l a c k á S c h o l e s p r i c i n g m o d e l ” f o r p r i c i n ga n d a c c o u n t i n g o f o p t i o n s , n e t p r o f i t w o u l d b e l o w e r b y
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�0 . 0 2 C r o r e r e p r e s e n t d i v i d e n df o r F i n a n c i a l Y e a r 2 0 1 5 á 1 6 o n t h e s h a r e s i s s u e d u n d e r E m p l o y e e S t o c k O p t i o n s S c h e m eb e f o r e t h e r e c o r d d a t e , a s p e r s h a r e h o l d e r s ’ a p p r o v a l .E . P r o p o s e d D i v i d e n d a n d T a x o n P r o p o s e d D i v i d e n dI n t e r m s o f r e v i s e d A c c o u n t i n g S t a n d a r d ( A S ) 4 " C o n t i n g e n c i e s a n d E v e n t s o c c u r r i n g a f t e rt h e B a l a n c e s h e e t d a t e " a s n o t i f i e d b y t h e M i n i s t r y o f C o r p o r a t e a f f a i r s t h r o u g h a m e n d m e n t st o C o m p a n i e s ( A c c o u n t i n g S t a n d a r d s ) A m e n d m e n t R u l e s , 2 0 1 6 , t h e B a n k h a s n o ta p p r o p r i a t e d p r o p o s e d d i v i d e n d ( i n c l u d i n g t a x ) a g g r e g a t i n g t o
�1 8 6 . 7 5 C r o r e f r o m t h es t a t e m e n t o f P r o f i t a n d l o s s a c c o u n t f o r t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 7 , a l s o t h e s a m e h a s n o tb e e n s h o w n a s a n O t h e r L i a b i l i t i e s .4 . 3 . F i x e d A s s e t s �A ) F i x e d A s s e t s a s p e r S c h e d u l e 1 0 i n c l u d e I n t a n g i b l e A s s e t s r e l a t i n g t o S o f t w a r e a n d S y s t e mD e v e l o p m e n t E x p e n d i t u r e w h i c h a r e a s f o l l o w s : (
�i n C r o r e )P a r t i c u l a r s 3 1 M a r c h , 2 0 1 7 3 1 M a r c h , 2 0 1 6G r o s s B l o c kA t t h e b e g i n n i n g o f t h e y e a r 1 4 3 . 0 4 9 3 . 6 2A d d i t i o n s d u r i n g t h e y e a r 3 3 . 4 5 4 9 . 4 2D e d u c t i o n s / A d j u s t m e n t s d u r i n g t h e y e a r 2 . 4 8 �C l o s i n g B a l a n c e 1 7 4 . 0 1 1 4 3 . 0 4
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9 . 6 5 C r o r e i n t h e v a l u e o f l a n d a n d b u i l d i n g sc o n s e q u e n t u p o n r e v a l u a t i o n b y a p p r o v e d v a l u e r w a s c r e d i t e d t o R e v a l u a t i o n R e s e r v e . T h e r eh a s b e e n n o r e v a l u a t i o n o f a s s e t s d u r i n g t h i s y e a r .4 . 4 . O p e r a t i n g L e a s e s :L e a s e p a y m e n t s f o r a s s e t s t a k e n o n o p e r a t i n g l e a s e a r e r e c o g n i s e d a s a n e x p e n s e i n t h e P r o f i ta n d L o s s A c c o u n t a s p e r t h e l e a s e t e r m s . D u r i n g t h e y e a r a n a m o u n t o f�
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1 2 7 . 5 8 C r o r e ) w a s c h a r g e d t o P r o f i t a n d l o s s a c c o u n t .4 . 5 P r o v i s i o n s a n d C o n t i n g e n c i e sa ) M o v e m e n t i n p r o v i s i o n f o r f r a u d s i n c l u d e d u n d e r o t h e r l i a b i l i t i e s : (�
i n C r o r e )3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6O p e n i n g b a l a n c e a t t h e b e g i n n i n g o f t h e y e a r 5 . 8 2 6 . 6 4A d d i t i o n s d u r i n g t h e y e a r 0 . 7 2 0 . 4 2R e d u c t i o n s o n a c c o u n t o f p a y m e n t s d u r i n g t h e y e a r \ \R e d u c t i o n s o n a c c o u n t o f r e v e r s a l s d u r i n g t h e y e a r 2 . 4 9 1 . 2 4B a l a n c e a t t h e e n d o f t h e y e a r 4 . 0 5 5 . 8 2b ) M o v e m e n t i n p r o v i s i o n f o r d e b i t c a r d r e w a r d p o i n t s : (�
i n C r o r e )3 1 M a r c h 2 0 1 7 3 1 M a r c h 2 0 1 6O p e n i n g p r o v i s i o n a t t h e b e g i n n i n g o f t h e y e a r 1 . 9 2 2 . 2 5P r o v i s i o n m a d e d u r i n g t h e y e a r 4 . 0 2 0 . 7 7R e d u c t i o n s d u r i n g t h e y e a r 1 . 8 6 1 . 1 0C l o s i n g p r o v i s i o n a t t h e e n d o f t h e y e a r * 4 . 0 8 1 . 9 2* T h e c l o s i n g p r o v i s i o n i s b a s e d o n t h e a c t u a r i a l v a l u a t i o n o f a c c u m u l a t e d d e b i t c a r dr e w a r d p o i n t s . T h i s a m o u n t w i l l b e u t i l i s e d t o w a r d s r e d e m p t i o n o f t h e d e b i t c a r d r e w a r dp o i n t s .c ) M o v e m e n t i n p r o v i s i o n f o r o t h e r c o n t i n g e n c i e s : (�
i n C r o r e )3 1 M a r c h2 0 1 7 3 1 M a r c h2 0 1 6O p e n i n g p r o v i s i o n a t t h e b e g i n n i n g o f t h e y e a r 4 0 . 0 3 1 4 5 . 5 4P r o v i s i o n m a d e d u r i n g t h e y e a r 2 5 . 2 4 2 9 . 2 3R e d u c t i o n s d u r i n g t h e y e a r 5 . 2 1 1 3 4 . 7 4C l o s i n g p r o v i s i o n a t t h e e n d o f t h e y e a r 6 0 . 0 6 4 0 . 0 3F-82
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4 . 6 A m o u n t o f P r o v i s i o n s m a d e f o r i n c o m e Ó t a x d u r i n g t h e y e a r (� i n C r o r e )P a r t i c u l a r s 2 0 1 6 Ó 1 7 2 0 1 5 Ó 1 6P r o v i s i o n f o r I n c o m e t a xa ) C u r r e n t t a x 6 7 8 . 9 5 3 3 9 . 0 2b ) D e f e r r e d t a x ( 2 0 3 . 2 4 ) ( 9 5 . 0 2 )4 . 7 D e s c r i p t i o n o f c o n t i n g e n t l i a b i l i t i e s :a ) C l a i m s a g a i n s t t h e B a n k n o t a c k n o w l e d g e d a s d e b t sT h e s e r e p r e s e n t c l a i m s f i l e d a g a i n s t t h e B a n k i n t h e n o r m a l c o u r s e o f b u s i n e s s r e l a t i n g t ov a r i o u s l e g a l c a s e s c u r r e n t l y i n p r o g r e s s . T h e s e a l s o i n c l u d e d e m a n d s r a i s e d b y i n c o m e t a xa n d o t h e r s t a t u t o r y a u t h o r i t i e s a n d d i s p u t e d b y t h e B a n k .b ) L i a b i l i t y o n a c c o u n t o f f o r w a r d e x c h a n g e a n d d e r i v a t i v e c o n t r a c t sT h e B a n k e n t e r s i n t o F o r w a r d e x c h a n g e c o n t r a c t s o n i t s o w n a c c o u n t a n d o n b e h a l f o f i t sc u s t o m e r s . F o r w a r d e x c h a n g e c o n t r a c t s a r e c o m m i t m e n t s t o b u y o r s e l l f o r e i g n c u r r e n c y a t af u t u r e d a t e a t t h e c o n t r a c t e d r a t e .c ) G u a r a n t e e s g i v e n o n b e h a l f o f c o n s t i t u e n t sA s a p a r t o f i t s b a n k i n g a c t i v i t i e s , t h e B a n k i s s u e s g u a r a n t e e s o n b e h a l f o f i t s c u s t o m e r s t oe n h a n c e t h e i r c r e d i t s t a n d i n g . G u a r a n t e e s r e p r e s e n t i r r e v o c a b l e a s s u r a n c e s t h a t t h e B a n k w i l lm a k e p a y m e n t s i n t h e e v e n t o f t h e c u s t o m e r f a i l i n g t o f u l f i l l i t s f i n a n c i a l o r p e r f o r m a n c eo b l i g a t i o n s .d ) A c c e p t a n c e s , e n d o r s e m e n t s a n d o t h e r o b l i g a t i o n sT h e s e i n c l u d e d o c u m e n t a r y c r e d i t i s s u e d b y t h e B a n k o n b e h a l f o f i t s c u s t o m e r s a n d b i l l sd r a w n b y t h e B a n k ' s c u s t o m e r s t h a t a r e a c c e p t e d o r e n d o r s e d b y t h e B a n k .e ) O t h e r i t e m s f o r w h i c h t h e b a n k i s c o n t i n g e n t l y l i a b l eI n c l u d e s C a p i t a l c o m m i t m e n t s a n d a m o u n t t r a n s f e r r e d t o R B I u n d e r t h e D e p o s i t o r E d u c a t i o na n d A w a r e n e s s F u n d ( D E A F )R e f e r s c h e d u l e 1 2 f o r a m o u n t s r e l a t i n g t o c o n t i n g e n t l i a b i l i t y .4 . 8 P r o v i s i o n i n g P e r t a i n i n g t o F r a u d A c c o u n t sT h e B a n k h a s r e p o r t e d 6 8 c a s e s ( P r e v i o u s y e a r : 6 5 c a s e s ) o f f r a u d i n t h e F i n a n c i a l y e a r e n d e d3 1 M a r c h , 2 0 1 7 a m o u n t i n g t o � 2 5 9 . 1 9 C r o r e ( P r e v i o u s Y e a r : � 8 2 . 0 7 C r o r e ) a n d h a s p r o v i d e df o r t h e s a m e i n t h e b o o k s o f a c c o u n t . B a n k d o e s n o t h a v e a n y u n a m o r t i s e d l o s s i n t h i s r e g a r da s o f M a r c h 3 1 , 2 0 1 7 .4 . 9 I n t e r Ó b a n k p a r t i c i p a t i o n w i t h r i s k s h a r i n gT h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n p u r c h a s e d b y t h e B a n k , s h o w n a s a d v a n c e s a s p e rr e g u l a t o r y g u i d e l i n e s , o u t s t a n d i n g a s o f M a r c h 3 1 , 2 0 1 7 w a s � 1 9 8 1 . 2 7 C r o r e ( P r e v i o u s Y e a r :
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T h e a g g r e g a t e a m o u n t o f t h e p a r t i c i p a t i o n i s s u e d b y t h e B a n k , r e d u c e d f r o m a d v a n c e s a s p e rr e g u l a t o r y g u i d e l i n e s , o u t s t a n d i n g a s o f M a r c h 3 1 , 2 0 1 7 w a s� 1 5 0 . 0 0 C r o r e ( P r e v i o u s Y e a r :
� N I L ) .4 . 1 0 F a c t o r i n g E x p o s u r eT h e f a c t o r i n g e x p o s u r e o f t h e B a n k a s o n M a r c h 3 1 , 2 0 1 7 i s � 1 0 5 5 . 6 7 C r o r e ( P r e v i o u s Y e a r :� N I L )4 . 1 1 P r i o r i t y S e c t o r L e n d i n g C e r t i f i c a t e s ( P S L C )A s p e r R B I C i r c u l a r F I D D . C O . P l a n . B C . 2 3 / 0 4 . 0 9 . 0 1 / 2 0 1 5 � 1 6 d a t e d A p r i l 7 , 2 0 1 6 t h e P S L C sp u r c h a s e d a n d s o l d d u r i n g t h e y e a r M a r c h 3 1 , 2 0 1 7 i s g i v e n b e l o w : ( � i n C r o r e )P a r t i c u l a r s P u r c h a s e d( F a c e v a l u e ) S o l d( F a c e v a l u e )P S L C – A g r i c u l t u r e � �P S L C – S F / M F � �P S L C – M i c r o E n t e r p r i s e s 2 7 5 . 0 0 �P S L C � G e n e r a l � �4 . 1 2 P r o v i s i o n f o r L o n g T e r m c o n t r a c t sT h e B a n k h a s a p r o c e s s w h e r e b y p e r i o d i c a l l y a l l l o n g t e r m c o n t r a c t s ( i n c l u d i n g d e r i v a t i v ec o n t r a c t s ) a r e a s s e s s e d f o r m a t e r i a l f o r e s e e a b l e l o s s e s . A t t h e y e a r e n d , t h e b a n k h a s r e v i e w e da n d r e c o r d e d a d e q u a t e p r o v i s i o n a s r e q u i r e d u n d e r a n y L a w / A c c o u n t i n g S t a n d a r d s f o rm a t e r i a l f o r e s e e a b l e l o s s e s o n s u c h l o n g t e r m c o n t r a c t s ( i n c l u d i n g d e r i v a t i v e c o n t r a c t s ) i n t h eb o o k s o f a c c o u n t a n d d i s c l o s e d t h e s a m e u n d e r t h e r e l e v a n t n o t e s i n t h e f i n a n c i a l s t a t e m e n t s .4 . 1 3 C o r p o r a t e S o c i a l R e s p o n s i b i l i t y ( C S R ) ( � i n C r o r e )P a r t i c u l a r s F o r t h e y e a r e n d e d 3 1 s tM a r c h , 2 0 1 7 F o r t h e y e a r e n d e d3 1 s t M a r c h , 2 0 1 6A m o u n t r e q u i r e d t o b e s p e n t 2 3 . 0 2 2 6 . 1 8A m o u n t s p e n t d u r i n g t h e y e a r 1 5 . 4 2 1 2 . 3 0T h e B a n k h a s s p e n t o f 1 . 3 4 % o f i t s a v e r a g e n e t p r o f i t f o r t h e l a s t t h r e e f i n a n c i a l y e a r s a s p a r to f i t s C S R a c t i v i t i e s f o r t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 7 . A s a r e s p o n s i b l e B a n k , i t h a sa p p r o a c h e d t h e m a n d a t o r y r e q u i r e m e n t s o f C S R s p e n d p o s i t i v e l y b y u t i l i s i n g t h e r e p o r t i n gy e a r t o l a y a f o u n d a t i o n o n w h i c h t o b u i l d a n d s c a l e f u t u r e p r o j e c t s a n d p a r t n e r s h i p s . T h eB a n k i s c u r r e n t l y i n t h e p r o c e s s o f e v a l u a t i n g s t r a t e g i c a v e n u e s f o r C S R e x p e n d i t u r e i n o r d e rt o d e l i v e r m a x i m u m i m p a c t . I n t h e y e a r s t o c o m e , t h e B a n k w i l l f u r t h e r s t r e n g t h e n i t sp r o c e s s e s a s p e r r e q u i r e m e n t .4 . 1 4 I n v e s t o r e d u c a t i o n a n d p r o t e c t i o n f u n dT h e r e h a s b e e n n o d e l a y i n t r a n s f e r r i n g a m o u n t s , r e q u i r e d t o b e t r a n s f e r r e d t o t h e I n v e s t o rE d u c a t i o n a n d P r o t e c t i o n F u n d b y t h e B a n k .4 . 1 5 D i s c l o s u r e o n S p e c i f i e d B a n k N o t e s :T h e B a n k b e l i e v e s t h a t t h e M C A n o t i f i c a t i o n G . S . R . 3 0 8 ( E ) d a t e d M a r c h 3 0 , 2 0 1 7 r e g a r d i n gh o l d i n g s a s w e l l a s d e a l i n g s i n S p e c i f i e d B a n k N o t e s d u r i n g t h e p e r i o d f r o m 8 t h N o v e m b e r ,2 0 1 6 t o 3 0 t h D e c e m b e r , 2 0 1 6 i s n o t a p p l i c a b l e t o b a n k i n g c o m p a n i e s .
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4 . 1 6 S m a l l a n d M i c r o I n d u s t r i e sU n d e r t h e M i c r o , S m a l l a n d M e d i u m E n t e r p r i s e s D e v e l o p m e n t A c t , 2 0 0 6 w h i c h c a m e i n t of o r c e f r o m 2 n d O c t o b e r , 2 0 0 6 , c e r t a i n d i s c l o s u r e s a r e r e q u i r e d t o b e m a d e r e l a t i n g t o M i c r o ,S m a l l a n d M e d i u m e n t e r p r i s e s . T h e r e h a v e b e e n n o r e p o r t e d c a s e s o f d e l a y s i n p a y m e n t s t om i c r o a n d s m a l l e n t e r p r i s e s o r o f i n t e r e s t p a y m e n t s d u e t o d e l a y s i n s u c h p a y m e n t s . T h e a b o v ei s b a s e d o n t h e i n f o r m a t i o n a v a i l a b l e w i t h t h e B a n k w h i c h h a s b e e n r e l i e d u p o n b y t h ea u d i t o r s .4 . 1 7 T h e f i g u r e s f o r t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 w e r e a u d i t e d b y p r e v i o u s s t a t u t o r ya u d i t o r s .4 . 1 8 F i g u r e s f o r t h e p r e v i o u s y e a r h a v e b e e n r e g r o u p e d a n d r e c l a s s i f i e d , w h e r e v e rn e c e s s a r y t o c o n f o r m t o c u r r e n t y e a r ' s p r e s e n t a t i o n .F o r a n d o n b e h a l f o f t h e B o a r d o f D i r e c t o r sK r i s h n a k u m a r K G i r i s h K u m a r G a n a p a t h y A s h u t o s h K h a j u r i a G a n e s h S a n k a r a nD e p u t y G e n e r a l M a n a g e r C o m p a n y S e c r e t a r y E x e c u t i v e D i r e c t o r & C F O E x e c u t i v e D i r e c t o rK M C h a n d r a s e k h a r S h y a m S r i n i v a s a nC h a i r m a n M a n a g i n g D i r e c t o r & C E OD i r e c t o r s :N i l e s h S V i k a m s e yD i l i p G S a d a r a n g a n iH a r i s h H E n g i n e e rG r a c e E l i z a b e t h K o s h i eS h u b h a l a k s h m i P a n s eC B a l a g o p a lP l a c e : K o c h iD a t e : 2 8 t h A p r i l , 2 0 1 7F-85
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" # $ % % & ' ( ) '* + , + - % . / 0 , 1 & 2 ' , 1 / 1 $ 1 3 4 0 5 & + 6 7 7 0 8 9 8 . 1 7 : ; % 1 < ', = 4 > 1 0 ? @ A A A ) ) B % & $ 0 ' , = 4 > 1 0 ? @ A A A ) (C D E F G F D E F D H I J E K H L M N O P F G L M HQ R Q S T U T V W T X Y R Z Q S T [ T \ T X ] ^ _ ] ` a b c V c d T \e T f R X d R ` d S T g R ` Y R ^ c \ ] d T \ [ c ` ] ` h c ] ^ i d ] d T V T ` d Yj k l m n k m o p q r k p r l k m s s t u v m w x q w y s t w z t { q p m r k p | q w m w s q m { z r m r k u k w r z t | } ~ � � � � � � � � � � � �� � � � } � � � l k � k q w m | r k � � k | k � � k p r t m z � r l k � t { p q w y � t u v m w x � � � q r z z o � z q p q m � x m w p q r z m z z t s q m r k � r l k � t { p q w y� t u v m w x � r l k z o � z q p q m � x m w p q r z m z z t s q m r k r t y k r l k � � k | k � � k p r t m z r l k � r l k � � t o v � � � � l q s l s t u v � q z k r l k� m { m w s k � l k k r m z m r � � � m � s l � � � � � r l k � � t | q r m w p � t z z � s s t o w r � r l k � m z l { t � � r m r k u k w r | t � r l k x k m �r l k w k w p k p � m w p m z o u u m � x t | r l k z q y w q | q s m w r m s s t o w r q w y v t { q s q k z m w p t r l k � k ¡ v { m w m r t � x q w | t � u m r q t w� l k � k q w m | r k � � k | k � � k p r t m z � r l k s t w z t { q p m r k p | q w m w s q m { z r m r k u k w r z � � ¢£ ¤ ¥ ¤ ¦ § ¨ § ¥ © ª « ¬ § « ® ¥ « ¯ ° ¯ ± ¯ © ² ³ ® ´ © µ § ¶ ® ¥ « ® ± ¯ · ¤ © § · ¸ ¯ ¥ ¤ ¥ ¹ ¯ ¤ ± º © ¤ © § ¨ § ¥ © «» l k � t { p q w y � t u v m w x ¼ z � t m � p t | ½ q � k s r t � z q z � k z v t w z q � { k | t � r l k v � k v m � m r q t w t | r l k z k s t w z t { q p m r k p| q w m w s q m { z r m r k u k w r z q w r k � u z t | r l k � k ¾ o q � k u k w r t | r l k � t u v m w q k z � s r � � � � � � l k � k q w m | r k � � k | k � � k p r t m z� r l k � s r � � r l m r y q n k m r � o k m w p | m q � n q k � t | r l k s t w z t { q p m r k p | q w m w s q m { v t z q r q t w � s t w z t { q p m r k p | q w m w s q m {v k � | t � u m w s k m w p s t w z t { q p m r k p s m z l | { t � z t | r l k � � t o v q w m s s t � p m w s k � q r l r l k m s s t o w r q w y v � q w s q v { k zy k w k � m { { x m s s k v r k p q w ¿ w p q m � q w s { o p q w y r l k � s s t o w r q w y � r m w p m � p z z v k s q | q k p o w p k � � k s r q t w � � � t | r l k � s r �� k m p � q r l À o { k � t | r l k � t u v m w q k z � � s s t o w r z � À o { k z � � � Á � v � t n q z q t w z t | � k s r q t w �  t | r l k � m w à q w yÀ k y o { m r q t w � s r � �  Á  m w p r l k s q � s o { m � z � y o q p k { q w k z m w p p q � k s r q t w z q z z o k p � x r l k À k z k � n k � m w à t | ¿ w p q m� � À � ¿ � � | � t u r q u k r t r q u k ¢» l k � k z v k s r q n k � t m � p t | ½ q � k s r t � z t | r l k s t u v m w q k z q w s { o p k p q w r l k � � t o v m � k � k z v t w z q � { k | t � u m q w r k w m w s kt | m p k ¾ o m r k m s s t o w r q w y � k s t � p z q w m s s t � p m w s k � q r l r l k v � t n q z q t w z t | r l k � s r | t � z m | k y o m � p q w y t | r l k m z z k r zt | r l k � � t o v m w p | t � v � k n k w r q w y m w p p k r k s r q w y | � m o p z m w p t r l k � q � � k y o { m � q r q k z Ä z k { k s r q t w m w p m v v { q s m r q t w t |m v v � t v � q m r k m s s t o w r q w y v t { q s q k z Ä u m à q w y Å o p y u k w r z m w p k z r q u m r k z r l m r m � k � k m z t w m � { k m w p v � o p k w r Ä m w pp k z q y w � q u v { k u k w r m r q t w m w p u m q w r k w m w s k t | m p k ¾ o m r k q w r k � w m { | q w m w s q m { s t w r � t { z � r l m r � k � k t v k � m r q w yk | | k s r q n k { x | t � k w z o � q w y r l k m s s o � m s x m w p s t u v { k r k w k z z t | r l k m s s t o w r q w y � k s t � p z � � k { k n m w r r t r l kv � k v m � m r q t w m w p v � k z k w r m r q t w t | r l k | q w m w s q m { z r m r k u k w r z r l m r y q n k m r � o k m w p | m q � n q k � m w p m � k | � k k | � t uu m r k � q m { u q z z r m r k u k w r � � l k r l k � p o k r t | � m o p t � k � � t � � � l q s l l m n k � k k w o z k p | t � r l k v o � v t z k t | v � k v m � m r q t wt | r l k s t w z t { q p m r k p | q w m w s q m { z r m r k u k w r z � x r l k p q � k s r t � z t | r l k � t { p q w y � t u v m w x � m z m | t � k z m q p ¢Æ Ç · ¯ © ® ´ « È ¬ § « ® ¥ « ¯ ° ¯ ± ¯ © ²É o � � k z v t w z q � q { q r x q z r t k ¡ v � k z z m w t v q w q t w t w r l k z k s t w z t { q p m r k p | q w m w s q m { z r m r k u k w r z � m z k p t w t o � m o p q r ¢j l q { k s t w p o s r q w y t o � m o p q r � � k l m n k r m à k w q w r t m s s t o w r r l k v � t n q z q t w z t | r l k � s r � r l k m s s t o w r q w y m w pm o p q r q w y z r m w p m � p z m w p u m r r k � z � l q s l m � k � k ¾ o q � k p r t � k q w s { o p k p q w r l k m o p q r � k v t � r o w p k � r l k v � t n q z q t w zt | r l k � s r m w p r l k À o { k z u m p k r l k � k o w p k � ¢j k s t w p o s r k p t o � m o p q r q w m s s t � p m w s k � q r l r l k � r m w p m � p z t w � o p q r q w y z v k s q | q k p o w p k � � k s r q t w � Á � � � � � t |r l k � s r ¢ » l t z k � r m w p m � p z � k ¾ o q � k r l m r � k s t u v { x � q r l k r l q s m { � k ¾ o q � k u k w r z m w p v { m w m w p v k � | t � u r l k m o p q rr t t � r m q w � k m z t w m � { k m z z o � m w s k m � t o r � l k r l k � r l k | q w m w s q m { z r m r k u k w r z m � k | � k k | � t u u m r k � q m {u q z z r m r k u k w r ¢F-86
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` 0 , 0 4 9 4 + 0 B / + 5 2 8 , 7 , 5 / 0 7 4 3 , 0 4 5 0 2 0 = 4 , 9 2 - + 0 5 , + . . / 5 ; 3 2 5 - 7 4 5 / + ; 3 - . 4 ./ + 7 4 5 6 4 ; 0 2 8 0 = 4 5 - < 5 / . / , 7 H B / 5 < , 5 4 . 5 2 3 4 3 H 2 + 0 = 4 7 4 6 2 7 0 2 8 0 = 4 2 0 = 4 7 , - . / 0 2 7? = 4 ; 2 + 5 2 3 / . , 0 4 . 8 / + , + ; / , 3 7 4 5 - 3 0 5 , 3 5 2 / + ; 3 - . 4 0 = 4 5 = , 7 4 2 8 6 7 2 8 / 0 2 8 [ 5 > S B R _ _ 3 , C = 5 8 2 7 0 = 4 H 4 , 7 4 + . 4 . R SM , 7 ; = T U S V B , 5 ; 2 + 5 / . 4 7 4 . / + 0 = 4 ; 2 + 5 2 3 / . , 0 4 . 8 / + , + ; / , 3 7 4 5 - 3 0 5 B / + 7 4 5 6 4 ; 0 2 8 , + , 5 5 2 ; / , 0 4 B < , 5 4 . 2 + / 0 5- + , - . / 0 4 . 8 / + , + ; / , 3 5 0 , 0 4 9 4 + 0 5 > L - 7 2 6 / + / 2 + 2 + 0 = 4 ` 0 , 0 4 9 4 + 0 B / + 5 2 8 , 7 , 5 / 0 7 4 3 , 0 4 5 0 2 0 = 4 , 9 2 - + 0 5 , + .. / 5 ; 3 2 5 - 7 4 5 / + ; 3 - . 4 . / + 7 4 5 6 4 ; 0 2 8 0 = / 5 , 5 5 2 ; / , 0 4 B / 5 < , 5 4 . 5 2 3 4 3 H 2 + 5 - ; = - + , - . / 0 4 . 8 / + , + ; / , 3 5 0 , 0 4 9 4 + 0 5 , 5; 4 7 0 / 8 / 4 . < H 0 = 4 M , + , : 4 9 4 + 0 2 8 0 = , 0 , 5 5 2 ; / , 0 4 > L - 7 2 6 / + / 2 + 2 + 0 = 4 ` 0 , 0 4 9 4 + 0 / 5 + 2 0 9 2 . / 8 / 4 . / + 7 4 5 6 4 ; 0 2 82 - 7 7 4 3 / , + ; 4 2 + 0 = 4 8 / + , + ; / , 3 5 0 , 0 4 9 4 + 0 5 ; 4 7 0 / 8 / 4 . < H 0 = 4 M , + , : 4 9 4 + 0F-87
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F-94
Year ended 31 March 2017
Year ended 31 March 2016
Cash Flow from Operating ActivitiesNet Profit before taxes 1,35,55,252 73,70,258 Adjustments for:Depreciation on Bank's Property 12,39,133 10,81,723 Depreciation on Investments 2,42,010 1,67,434 Amortisation of Premium on Held to Maturity Investments 4,76,526 3,53,411 Provision for Non Performing Investments 53,500 6,34,189 Provision / Charge for Non Performing Assets 40,51,627 55,55,174 Provision on Standard Assets 8,00,345 3,02,341 (Profit)/ Loss on sale of fixed assets (net) (879) 4,495 (Income) / Loss From Associate (1,35,493) 14,837 Provision for Restructured assets 67,564 (2,08,598) Provision for Other Contingencies 9,84,829 6,01,219
2,13,34,414 1,58,76,483 Adjustments for working capital changes:-(Increase)/ Decrease in Investments (76,41,122) (4,40,44,385) (Increase)/ Decrease in Advances (16,07,16,178) (7,44,61,047) (Increase)/ Decrease in Other Assets (19,64,223) 10,69,376 Increase/ (Decrease) in Deposits 18,49,11,758 8,34,82,119 Increase/ (Decrease) in Other liabilities and provisions 25,19,896 29,40,156 Direct taxes paid (41,37,903) (4,32,059) Net Cash Flow from / (Used in) Operating Activities 3,43,06,642 (1,55,69,357)
Cash Flow from Investing ActivitiesPurchase of Fixed Assets (9,50,249) (16,10,868) Proceeds from Sale of Fixed Assets 24,950 15,100 (Increase)/ Decrease in Held to Maturity Investments (2,29,13,323) 2,15,00,186 Net Cash generated / (Used in) Investing Activities (2,38,38,622) 1,99,04,418
Cash Flow from Financing ActivitiesProceeds from Issue of Share Capital 10,196 8,693 Proceeds from Share Premium 1,98,169 2,15,627 Repayment of Subordinate Debt (20,00,000) - Increase/(Decrease) in Borrowings (Excluding Subordinate Debt) 1,30,91,761 40,97,367 Dividend Paid (Including Tax on Dividend) (14,48,805) (22,69,854)
Net Cash generated from financing Activities 98,51,321 20,51,833
Effect of exchange fluctuation on translation reserve (4,358) 93
Increase/(Decrease) in Cash & Cash Equivalents 2,03,14,983 63,86,987
(` in Thousands)
THE FEDERAL BANK LIMITEDCONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2017
F-95
Year ended 31 March 2017
Year ended 31 March 2016
(` in Thousands)
Cash and Cash Equivalents at the beginning of year 5,42,31,428 4,78,44,441 Cash and Cash Equivalents at the end of year 7,45,46,411 5,42,31,428
Note:
For and on behalf of the Board of Directors
Krishnakumar K Girish Kumar Ganapathy Ashutosh Khajuria Ganesh SankaranDeputy General Manager Company Secretary Executive Director & CFO Executive Director
K M Chandrasekhar Shyam SrinivasanChairman Managing Director & CEO
Directors:
In terms of our report attached Nilesh S Vikamsey
For B S R & Co. LLP For M. M. Nissim & Co. Dilip G Sadarangani Chartered Accountants Chartered Accountants Firm's Registration No: Firm's Registration No:101248W/W-100022 107122W Harish H Engineer
Grace Elizabeth Koshie
Venkataramanan Vishwanath Sanjay Khemani Shubhalakshmi PansePartner PartnerMembership No: 113156 Membership No: 044577
C Balagopal
Place: KochiDate : 28th April 2017
Cash and cash equivalents comprise of cash on hand (including foreign currency notes), Balances with Reserve Bank of India, Balance with Banks and Money at Call and Short notice (Refer schedules 6 and 7 of the Consolidated Balance sheet)
F-96
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` ] [ \ ] ^ _ [ = S > a ? B I Y S L A < B = L H H B I < = > F C B ? Y ? B Y B A > F F E D E F > < F L A L U E L V E U E = W L A L =X L ? H S ` ^ [ \ ] ^ b c d ? B Y B A > F F E D E F > < F e L A S B e > D > ? L H H B I < = > F L A L U E L V E U E = W L A L = X L ? H S` ^ [ \ ] ^ _ [ E < U E < > e E = S > f E A = E < J L H H B I < = E < J A = L < F L ? F L Y Y U E H L V U > L = = S L = = E @ > cg c ^ c h 0 : 0 & - 0 h 0 ( , % & $ * $ , &•
; < = > ? > A = E < H B @ > E A ? > H B J < E A > F B < L < L H H ? I L U V L A E A > f H > Y = E < = > ? > A = E < H B @ > B < < B < iY > ? C B ? @ E < J L A A > = A [ U B L < A I < F > ? K H S > @ > C B ? K I A = L E < L V U > K = ? I H = I ? E < J B C K = ? > A A > FG A A > = A M K O G N L < F K = ? L = > J E H j > V = ? > A = ? I H = I ? E < J M K j Z N A H S > @ > B C Z T ; e S E H S E A? > H B J < E A > F I Y B < ? > H > E Y = E < L H H B ? F L < H > e E = S G K i k [ Z > D > < I > Z > H B J < E = E B < L AY ? > A H ? E V > F I < F > ? K > H = E B < ^ ` ` B C = S > Q B @ Y L < E > A G H = [ \ ] ^ ` L < F L A A Y > H E C E > F E < Z T ;J I E F > U E < > A c•
; < = > ? > A = B < E < H B @ > = L f ? > C I < F E A ? > H B J < E A > F E < = S > W > L ? B C Y L A A E < J B C G A A > A A @ > < =l ? F > ? A c• m S > ? > H B D > ? E > A @ L F > C ? B @ n d G L H H B I < = A L ? > L Y Y ? B Y ? E L = > F C E ? A = = B e L ? F AI < ? > L U E o > F E < = > ? > A = p E < H B @ > F > V E = > F = B V B ? ? B e > ? A L H H B I < = A [ = S > < > f Y > < F E = I ? > p B I = B CY B H q > = > f Y > < A > A E < H I ? ? > F L < F U L A = U W = B e L ? F A Y ? E < H E Y L U F I > A c•
d ? B H > A A E < J C > > A H B U U > H = > F B < U B L < A F E A V I ? A > F [ L U B < J e E = S ? > U L = > F U B L < L H r I E A E = E B <H B A = A L ? > ? > H B J < E A > F L = E < H > Y = E B < p Z > < > e L U B C = S > U B L < c•
; < H B @ > B < F E A H B I < = > F E < A = ? I @ > < = A E A ? > H B J < E A > F B D > ? = S > = > < I ? > B C = S > E < A = ? I @ > < =B < L A = ? L E J S = U E < > V L A E A c•
a I L ? L < = > > H B @ @ E A A E B < [ H B @ @ E A A E B < B < U > = = > ? B C H ? > F E = L < F L < < I L U U B H q > ? ? > < = C > > AL ? > ? > H B J < E A > F B < L A = ? L E J S = U E < > V L A E A B D > ? = S > Y > ? E B F B C H B < = ? L H = c l = S > ? C > > A L < FH B @ @ E A A E B < E < H B @ > L ? > ? > H B J < E A > F e S > < F I > [ > f H > Y = E < H L A > A e S > ? > = S > V L < q E AI < H > ? = L E < B C I U = E @ L = > H B U U > H = E B < c•
j E D E F > < F B < R r I E = W K S L ? > A [ d ? > C > ? > < H > K S L ? > A L < F B < X I = I L U s I < F A E A ? > H B J < E A > FL A ; < H B @ > e S > < = S > ? E J S = = B ? > H > E D > = S > F E D E F > < F E A > A = L V U E A S > F c• t B L < K W < F E H L = E B < C > > E A L H H B I < = > F C B ? B < H B @ Y U > = E B < B C = S > L J ? > > F A > ? D E H > L < Fe S > < ? E J S = = B ? > H > E D > E A > A = L V U E A S > F c•
; < H B @ Y ? B @ E A > A > = = U > @ > < = H L A > A [ A L H ? E C E H > B < A > = = U > @ > < = E A L H H B I < = > F I Y C ? B < = c• u < Y L E F C I < F > F E < = > ? > A = B < = > ? @ U B L < A L ? > L H H B I < = > F B < ? > L U E A L = E B < L A Y > ? = S >J I E F > U E < > A B C Z T ; c• m S > F E C C > ? > < H > V > = e > > < = S > A L U > Y ? E H > L < F Y I ? H S L A > H B A = B C J B U F H B E < A [ ? > H > E D > FB < H B < A E J < @ > < = V L A E A E A E < H U I F > F E < B = S > ? E < H B @ > c
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W F @ 8 = @ I = 4 A ? D � @ = 4 _ W H � ` � @ > ;• � 4 = ; S ? � @ S : D 8 S J _ � 2 � `7 > F 4 9 S E 4 > S 9 R 3 8 G 3 @ D 4 C D 8 E @ D 8 = J 3 4 = ; A ? D 9 @ = 4 R 8 S 3 8 > � N ; @ J 9 A D ? E S 3 4 ; @ S 4 ? A C : D G 3 @ 9 4@ D 4 G = @ 9 9 8 A 8 4 ; @ 9 d � 4 = ; A ? D 2 D @ ; 8 > < e Q W 9 C 4 D 5 6 7 < : 8 ; 4 = 8 > 4 9 M � H 2 � 4 G : D 8 S 8 4 9 R 3 8 G 3D 4 E @ 8 > : > 9 ? = ; A ? D @ C 4 D 8 ? ; ? A � N ; @ J 9 @ D 4 G = @ 9 9 8 A 8 4 ; @ 9 W H � � 4 G : D 8 S 8 4 9 ? > S 3 @ S ; @ S 4 Q7 > F 4 9 S E 4 > S 9 R 3 8 G 3 S 3 4 I @ > T 8 > S 4 > ; 9 S ? 3 ? = ; S 8 = = E @ S : D 8 S J @ D 4 G = @ 9 9 8 A 8 4 ; @ 9 d � 4 = ; S ?� @ S : D 8 S J e Q7 > F 4 9 S E 4 > S 9 R 3 8 G 3 @ D 4 > ? S G = @ 9 9 8 A 8 4 ; 8 > 4 8 S 3 4 D ? A S 3 4 @ I ? F 4 S R ? G @ S 4 < ? D 8 4 9 @ D 4G = @ 9 9 8 A 8 4 ; @ 9 d W F @ 8 = @ I = 4 A ? D � @ = 4 e Q� > ; 4 D 4 @ G 3 ? A S 3 4 9 4 G @ S 4 < ? D 8 4 9 M 8 > F 4 9 S E 4 > S 9 @ D 4 A : D S 3 4 D G = @ 9 9 8 A 8 4 ; : > ; 4 D 9 8 X < D ? : C 9_ 3 4 D 4 8 > @ A S 4 D G @ = = 4 ; < D ? : C 9 ` B c ? F 4 D > E 4 > S � 4 G : D 8 S 8 4 9 M � S 3 4 D W C C D ? F 4 ; � 4 G : D 8 S 8 4 9 M� 3 @ D 4 9 M � 4 I 4 > S : D 4 9 @ > ; 6 ? > ; 9 M 7 > F 4 9 S E 4 > S 9 8 > � : I 9 8 ; 8 @ D 8 4 9 � � ? 8 > S � 4 > S : D 4 9 @ > ; � S 3 4 D7 > F 4 9 S E 4 > S 9 A ? D S 3 4 C : D C ? 9 4 9 ? A ; 8 9 G = ? 9 : D 4 8 > S 3 4 6 @ = @ > G 4 � 3 4 4 S Q� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �2 D @ > 9 A 4 D ? A 9 4 G : D 8 S 8 4 9 I 4 S R 4 4 > G @ S 4 < ? D 8 4 9 8 9 ; ? > 4 @ S S 3 4 = ? R 4 D ? A S 3 4 @ G ^ : 8 9 8 S 8 ? > G ? 9 S �I ? ? T F @ = : 4 � E @ D T 4 S F @ = : 4 ? > S 3 4 ; @ S 4 ? A S 3 4 S D @ > 9 A 4 D @ > ; S 3 4 ; 4 C D 4 G 8 @ S 8 ? > M 8 A @ > J M ? >9 : G 3 S D @ > 9 A 4 D 8 9 A : = = J C D ? F 8 ; 4 ; A ? D M @ 9 C 4 D 5 6 7 < : 8 ; 4 = 8 > 4 9 Q
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! " # $ % # % & ' ( # ) ! $ * ( ! + , - $ + . % # / # % . ' + / # 0 - 1 / # 2 # / + # / # 0 - ' / ! $ + ! , ' . - $ + 3 $ % # / 4 . 5 3 . % . ' 67 % 8 3 + ' " # $ ' 9 ! , . : . ' 6 ; 4 7 9 < ! $ % = ! / > . $ ! : ? ' ! $ % . $ > 9 ! , . : . ' 6 ; = ? 9 < - @ A B C ! +B - / / - D . $ > + 1 4 # $ % . $ > & ! + ' ( # , ! + # " ! 6 ) # E F . ' ( # / ' - & ' ( # / # 0 - 1 / # 2 # / + # / # 0 - ' / ! $ + ! , ' . - $ +3 $ % # / 4 . 5 3 . % . ' 6 7 % 8 3 + ' " # $ ' 9 ! , . : . ' 6 ; 4 7 9 < ! $ % = ! / > . $ ! : ? ' ! $ % . $ > 9 ! , . : . ' 6 ; = ? 9 < - @A B C D # / # . $ , : 3 % # % 3 $ % # / C $ 2 # + ' " # $ ' + EG H I J K G L M N OC $ ! , , - / % ! $ , # D . ' ( ' ( # A B C > 3 . % # : . $ # + & ' ( # B ! $ * 3 $ % # / ' ! * # + + ( - / ' + ! : # ' / ! $ + ! , ' . - $ + . $P # $ ' / ! : Q - 2 # / $ " # $ ' % ! ' # % + # , 3 / . ' . # + E R ( # ? ( - / ' ? ! : # + 0 - + . ' . - $ + ! / # / # @ : # , ' # % . $S ? # , 3 / . ' . # + ? ( - / ' ? - : % ; S ? ? ? T < 7 1 P T & + 0 # , . @ . , ! : : 6 , / # ! ' # % @ - / ' ( . + 0 3 / 0 - + # E ? 3 , ( + ( - / '0 - + . ' . - $ + ! / # , ! ' # > - / . U # % 3 $ % # / F 9 R , ! ' # > - / 6 E R ( # + # 0 - + . ' . - $ + ! / # " ! / * # % V ' - W " ! / * # '! : - $ > D . ' ( ' ( # - ' ( # / + # , 3 / . ' . # + 3 $ % # / F 9 R X - / ' @ - : . - ! $ % / # + 3 : ' ! $ ' " ! / * W ' - W " ! / * # '> ! . $ + 1 : - + + # + ! / # ! , , - 3 $ ' # % @ - / ! + 0 # / ' ( # / # : # 2 ! $ ' A B C > 3 . % # : . $ # + @ - / 2 ! : 3 ! ' . - $ - @C $ 2 # + ' " # $ ' + % . + , 3 + + # % # ! / : . # / EY Z [ \ ] ^ _ ` a ` b c dC $ 2 # + ' " # $ ' + ( # : % ! + : - $ > W ' # / " . $ 2 # + ' " # $ ' + ! / # , ! / / . # % ! ' , - + ' , - " 0 / . + . $ > - @! , 5 3 . + . ' . - $ ! $ % . $ , . % # $ ' ! : # e 0 # $ + # + E X / - 2 . + . - $ @ - / % . " . $ 3 ' . - $ . $ 2 ! : 3 # - @ . $ 2 # + ' " # $ ' + &. @ ! $ 6 & . + " ! % # . @ . $ ' ( # - 0 . $ . - $ - @ " ! $ ! > # " # $ ' & + 3 , ( % . " . $ 3 ' . - $ . + - ' ( # / ' ( ! $' # " 0 - / ! / 6 E 7 $ 6 0 / # " . 3 " - $ ! , 5 3 . + . ' . - $ . + ! " - / ' . + # % - 2 # / ' ( # / # " ! . $ . $ > " ! ' 3 / . ' 6 - @' ( # + # , 3 / . ' 6 - $ ! , - $ + ' ! $ ' 6 . # : % ' - " ! ' 3 / . ' 6 ) ! + . + E ? 3 , ( ! " - / ' . + ! ' . - $ - @ 0 / # " . 3 " . +! % 8 3 + ' # % ! > ! . $ + ' . $ ' # / # + ' . $ , - " # @ / - " . $ 2 # + ' " # $ ' + ER ( # ) - - * 2 ! : 3 # - @ . $ 2 # + ' " # $ ' . + / # % 3 , # % ' - ' ( # # e ' # $ ' - @ ! " - 3 $ ' ! " - / ' . + # % % 3 / . $ > ' ( #/ # : # 2 ! $ ' ! , , - 3 $ ' . $ > 0 # / . - % EC $ 2 # + ' " # $ ' + - ' ( # / ' ( ! $ : - $ > W ' # / " . $ 2 # + ' " # $ ' + ! / # , : ! + + . @ . # % ! + , 3 / / # $ ' . $ 2 # + ' " # $ ' + ! $ %2 ! : 3 # % ! ' : - D # / - @ , - + ' - / @ ! . / 2 ! : 3 # Ef E f E Y c b g _ b h i ` j g _ ` g k j l k ` g m n j c [ ` m g [ o h Z b g m [9 - / # . > $ , 3 / / # $ , 6 . $ , - " # ! $ % # e 0 # $ % . ' 3 / # . ' # " + - @ % - " # + ' . , - 0 # / ! ' . - $ + ! / # ' / ! $ + : ! ' # %! ' ' ( # # e , ( ! $ > # / ! ' # + 0 / # 2 ! . : . $ > - $ ' ( # % ! ' # - @ ' ( # ' / ! $ + ! , ' . - $ E C $ , - " # ! $ % # e 0 # $ % . ' 3 / #. ' # " + - @ $ - $ W . $ ' # > / ! : @ - / # . > $ - 0 # / ! ' . - $ + ; C B p ! ' Q C 9 R , . ' 6 < ! / # ' / ! $ + : ! ' # % ! ' 5 3 ! / ' # / : 6! 2 # / ! > # , : - + . $ > / ! ' # + E9 - / # . > $ , 3 / / # $ , 6 " - $ # ' ! / 6 . ' # " + - @ % - " # + ' . , - 0 # / ! ' . - $ ! / # ' / ! $ + : ! ' # % ! ' ' ( # , : - + . $ ># e , ( ! $ > # / ! ' # + $ - ' . @ . # % ) 6 9 - / # . > $ q e , ( ! $ > # r # ! : # / T + 7 + + - , . ! ' . - $ - @ C $ % . ! ; 9 q r 7 C <! + ! ' ' ( # B ! : ! $ , # + ( # # ' % ! ' # ! $ % ' ( # / # + 3 : ' . $ > $ # ' 2 ! : 3 ! ' . - $ 0 / - @ . ' - / : - + + . + / # , - > $ . U # %. $ ' ( # P - $ + - : . % ! ' # % 0 / - @ . ' ! $ % : - + + ! , , - 3 $ ' EB - ' ( = - $ # ' ! / 6 ! $ % s - $ W = - $ # ' ! / 6 @ - / # . > $ , 3 / / # $ , 6 7 + + # ' + ! $ % : . ! ) . : . ' . # + - @ s - $ WC $ ' # > / ! : 9 - / # . > $ t 0 # / ! ' . - $ + ! / # ' / ! $ + : ! ' # % ! ' , : - + . $ > # e , ( ! $ > # / ! ' # + $ - ' . @ . # % ) 69 q r 7 C ! ' ' ( # ) ! : ! $ , # + ( # # ' % ! ' # ! $ % ' ( # / # + 3 : ' . $ > 0 / - @ . ' 1 : - + + ! / . + . $ > @ / - " # e , ( ! $ > #% . @ @ # / # $ , # + ! / # ! , , 3 " 3 : ! ' # % . $ 9 - / # . > $ , 3 / / # $ , 6 ' / ! $ + : ! ' . - $ A # + # / 2 # 3 $ ' . : / # " . ' ' ! $ , #- / ' ( # % . + 0 - + ! : - @ ' ( # $ # ' . $ 2 # + ' " # $ ' . $ ' ( # $ - $ W . $ ' # > / ! : @ - / # . > $ - 0 # / ! ' . - $ + . $! , , - / % ! $ , # D . ' ( 7 ? W u u E9 - / # . > $ # e , ( ! $ > # + 0 - ' ! $ % @ - / D ! / % P - $ ' / ! , ' + ; t ' ( # / ' ( ! $ 9 - / # . > $ # e , ( ! $ > # + D ! 0 +F-114
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` [ a b c ^ d e [ e ] f f g [ ` d h ] i d h [ a b ^ i ` ] a i e ] i j ] d ` h ] f k [ l b ^ i Z [ g ] i [ b ^ m Z d a Z i Z [g [ ` d h ] i d h [ a b ^ i ` ] a i e ] ` [ [ ^ i [ ` [ g d ^ i b ] ^ g ] ` [ ` [ n o [ ] e k ` [ g ] i j ] d ` h ] f k [ ] e ] i i Z [ \ ] f ] ^ a [e Z [ [ i b ` ` [ p b ` i d ^ c g ] i [ e q r [ ` d h ] i d h [ e ] ` [ a f ] e e d j d [ g ] e ] e e [ i e m Z [ ^ i Z [ j ] d ` h ] f k [ d ep b e d i d h [ s t b e d i d h [ o ] ` _ [ g n i b n o ] ` _ [ i u b ` ] e f d ] v d f d i d [ e m Z [ ^ i Z [ j ] d ` h ] f k [ d e ^ [ c ] i d h [s ^ [ c ] i d h [ o ] ` _ [ g n i b n o ] ` _ [ i u q w Z ] ^ c [ e d ^ i Z [ j ] d ` h ] f k [ b j g [ ` d h ] i d h [ e b i Z [ ` i Z ] ^ i Z b e [g [ e d c ^ ] i [ g ] e Z [ g c [ e ] ` [ ` [ a b c ^ d e [ g d ^ i Z [ w b ^ e b f d g ] i [ g t ` b j d i ] ^ g x b e e y a a b k ^ i qz q { q | Q } O ~ S V V O T V S U ~ ~ O � P O W Q S T Q X U d ! [ g ] e e [ i e ] ` [ a ] ` ` d [ g ] i a b e i b j ] a " k d e d i d b ^ f [ e e ] a a k o k f ] i [ g g [ p ` [ a d ] i d b ^ ] ^ gd o p ] d ` o [ ^ i l d j ] ^ # q w b e i d ^ a f k g [ e a b e i b j p k ` a Z ] e [ ] ^ g ] f f [ ! p [ ^ g d i k ` [ f d _ [ j ` [ d c Z i lg k i d [ e l i ] ! [ e ] ^ g d ^ a d g [ ^ i ] f [ ! p [ ^ e [ e ` [ f ] i [ g i b i Z [ ] a " k d e d i d b ^ ] ^ g d ^ e i ] f f ] i d b ^ b j i Z [] e e [ i qw ] p d i ] f m b ` _ n d ^ n p ` b c ` [ e e d ^ a f k g [ e a b e i b j j d ! [ g ] e e [ i e i Z ] i ] ` [ ^ b i ` [ ] g # j b ` i Z [ d `d ^ i [ ^ g [ g k e [ ] ^ g ] f e b d ^ a f k g [ e ] g h ] ^ a [ e p ] d g i b ] a " k d ` [ j d ! [ g ] e e [ i e qr [ p ` [ a d ] i d b ^ b ^ j d ! [ g ] e e [ i e l d ^ a f k g d ^ c ] o b ` i d e ] i d b ^ b j e b j i m ] ` [ l d e a Z ] ` c [ g b h [ ` i Z [[ e i d o ] i [ g k e [ j k f f d j [ b j j d ! [ g ] e e [ i e b ^ ] e i ` ] d c Z i n f d ^ [ v ] e d e ] i i Z [ ` ] i [ e ] ^ g o ] ^ ^ [ `p ` [ e a ` d v [ g d ^ $ a Z [ g k f [ % % b j i Z [ w b o p ] ^ d [ e y a i l & ' ( ) l [ ! a [ p i ] e o [ ^ i d b ^ [ g v [ f b m *•
t ` [ o d e [ e ] ` [ g [ p ` [ a d ] i [ g k ^ g [ ` i Z [ m ` d i i [ ^ g b m ^ h ] f k [ o [ i Z b g l k e d ^ c i Z [ e ] o [k e [ j k f f d j [ ] e d ^ $ a Z [ g k f [ % % b j i Z [ w b o p ] ^ d [ e y a i l & ' ( ) q % o p ` b h [ o [ ^ i i bf [ ] e [ g t ` [ o d e [ e ] ` [ g [ p ` [ a d ] i [ g b h [ ` z # [ ] ` e v ] e [ g b ^ i [ a Z ^ d a ] f [ h ] f k ] i d b ^ q•
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! " # $ % & ' ( ) & * & + ' , + - . ' / & ) & * 0 1 . 2 & & 3 & + & 4 ( ' 56 7 8 9 : ; <= > ? @ A B C D E F G H I F DJ K L M N O P Q R S T P R N O U V W L S X P K L S V O Y P N J K L Z L W L Q V [ \ V O Y ] U ^ [ N X L L _ ` Q N a R W L O P Z T O W bV W U R O R _ P L Q L W S X P K L P Q T _ P L L _ R _ M K V Q c L W P N d N O _ N [ R W V P L W ` Q N e R P V O W f N _ _ V M M N T O P gh > ? E F i C A F H I F DJ K L M N O P Q R S T P R N O P N j V Q W _ J K L Z L W L Q V [ \ V O Y ] U ^ [ N X L L _ k ` L O _ R N O Z T O W b U V O V c L W S XP Q T _ P L L _ b R _ W L P L Q U R O L W N O V M P T V Q R V [ S V _ R _ N O ^ Q N l L M P L W T O R P M Q L W R P U L P K N W V _ N O P K L\ V [ V O M L m K L L P W V P L V O W R _ Q L M N c O R _ L W R O P K L V M M N T O P _ g] U ^ [ N X L L _ j K N K V W l N R O L W P K L _ L Q a R M L _ N e P K L \ V O Y j R P K L e e L M P e Q N U n ^ Q R [ o p b q o p oV Q L M N a L Q L W T O W L Q r L e R O L W d N O P Q R S T P N Q X ` L O _ R N O m M K L U L s r d ` m t g u O Q L _ ^ L M P N e _ T M KL U ^ [ N X L L _ P K L S V O Y M N O P Q R S T P L _ p o v N e P K L \ V _ R M ` V X ^ [ T _ r L V Q O L _ _ n [ [ N j V O M L V O WP K L L w ^ L O W R P T Q L P K L Q L N e R _ M K V Q c L W P N P K L d N O _ N [ R W V P L W ` Q N e R P V O W f N _ _ V M M N T O P gx > y @ = G I C G zJ K L S V O Y U V Y L _ V O O T V [ M N O P Q R S T P R N O P N J K L Z L W L Q V [ \ V O Y ] U ^ [ N X L L _ k { Q V P T R P X J Q T _ PZ T O W V W U R O R _ P L Q L W V O W U V O V c L W S X P K L J Q T _ P L L _ g J K L M N _ P N e ^ Q N a R W R O c _ T M K S L O L e R P _R _ W L P L Q U R O L W T _ R O c P K L ` Q N l L M P L W | O R P d Q L W R P U L P K N W b j R P K V M P T V Q R V [ a V [ T V P R N O _S L R O c M V Q Q R L W N T P V P L V M K S V [ V O M L _ K L L P W V P L g n M P T V Q R V [ c V R O _ V O W [ N _ _ L _ V Q LQ L M N c O R _ L W R O P K L d N O _ N [ R W V P L W ` Q N e R P V O W f N _ _ n M M N T O P R O P K L ^ L Q R N W R O j K R M K P K L XN M M T Q g J K L Q L P R Q L U L O P S L O L e R P N S [ R c V P R N O Q L M N c O R _ L W R O P K L \ V [ V O M L m K L L P Q L ^ Q L _ L O P _P K L ^ Q L _ L O P a V [ T L N e P K L W L e R O L W S L O L e R P N S [ R c V P R N O V _ V W l T _ P L W e N Q T O Q L M N c O R _ L W ^ V _ P_ L Q a R M L M N _ P b V _ Q L W T M L W S X P K L e V R Q a V [ T L N e _ M K L U L V _ _ L P _ g n O X V _ _ L P Q L _ T [ P R O c e Q N UP K R _ M V [ M T [ V P R N O R _ [ R U R P L W P N ^ V _ P _ L Q a R M L M N _ P b ^ [ T _ P K L ^ Q L _ L O P a V [ T L N e V a V R [ V S [ LQ L e T O W _ V O W Q L W T M P R N O _ R O e T P T Q L M N O P Q R S T P R N O _ P N P K L _ M K L U L _ gD > } A ~ E F i = G C A F ! A @ = h i E F x E A F ? @ C B C " E # E $ % C x & $ } = i I = " ' E = B E = F D ' E = B E( @ = B E " } A F x E i i C A F ) ' ( } >J K L L U ^ [ N X L L _ N e P K L S V O Y V Q L L O P R P [ L W P N M N U ^ L O _ V P L W V S _ L O M L N O V M M N T O P N e^ Q R a R [ L c L * _ R M Y * M V _ T V [ [ L V a L V _ ^ L Q P K L [ L V a L Q T [ L _ g J K L S V O Y U L V _ T Q L _ P K L [ N O c P L Q UL w ^ L M P L W M N _ P N e M N U ^ L O _ V P L W V S _ L O M L V _ V Q L _ T [ P N e P K L T O T _ L W L O P R P [ L U L O P P K V P K V _V M M T U T [ V P L W V P P K L S V [ V O M L _ K L L P W V P L S V _ L W N O V M P T V Q R V [ a V [ T V P R N O V O W _ T M K M N _ P _ V Q LQ L M N c O R _ L W R O P K L V M M N T O P _ gJ K L L U ^ [ N X L L _ V Q L V [ _ N L [ R c R S [ L e N Q f J d V _ ^ L Q P K L Q T [ L _ g J K L L _ P R U V P L W M N _ P N eT O T _ L W L O P R P [ L U L O P V _ N O P K L \ V [ V O M L m K L L P W V P L S V _ L W N O V M P T V Q R V [ a V [ T V P R N O R _^ Q N a R W L W e N Q gE > + G , E @ E ~ " A z E E - E F E ! C G iJ K L T O W R _ M N T O P L W V U N T O P N e m K N Q P . P L Q U L U ^ [ N X L L S L O L e R P _ L w ^ L M P L W P N S L ^ V R W R OL w M K V O c L e N Q P K L _ L Q a R M L _ Q L O W L Q L W S X L U ^ [ N X L L _ R _ Q L M N c O R _ L W W T Q R O c P K L ^ L Q R N Wj K L O P K L L U ^ [ N X L L _ Q L O W L Q P K L _ L Q a R M L g J K L _ L S L O L e R P _ R O M [ T W L ^ L Q e N Q U V O M LR O M L O P R a L _ gF-117
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` X ab c d e f g h i j g k f l m n f l o n p i m q i f r s c t u c k d d h k o m i d u m q g t k d f g v i d s f i v u j k o m r d i kw f k d v m g o c d t i i d l f o t m g k c t p s t o c o c d e f g h x y g v d i o c d p i m q i f r z d l t q t w l d u j k o m r d i k f i dq i f g o d v l m n f l o n p m t g o k i d v d d r f w l d t g { j o j i d z k j w | d u o o m u d i o f t g u m g v t o t m g k x b c d e f g hd k o t r f o d k o c d p i m w f w l d i d v d r p o t m g m { k j u c l m n f l o n } i d s f i v p m t g o k j k t g q f g f u o j f i t f lr d o c m v f o o c d e f l f g u d ~ c d d o v f o d w n d r p l m n t g q t g v d p d g v d g o f u o j f i n x � i m � t k t m g { m ik f t v i d s f i v p m t g o k t k o c d g r f v d w f k d v m g o c d f u o j f i t f l � f l j f o t m g i d p m i o f k { j i g t k c d vw n o c d k f t v t g v d p d g v d g o � u o j f i n x� x � � � � � � � � � � � � � � � � � � � � � � � � � � �b c d e f g h c f k { m i r j l f o d v � r p l m n d d ~ o m u h � p o t m g ~ u c d r d � � ~ � ~ � � � � � t gf u u m i v f g u d s t o c ~ d u j i t o t d k f g v � � u c f g q d e m f i v m { � g v t f � � r p l m n d d ~ o m u h � p o t m g~ u c d r d � � j t v d l t g d k z � � � � x b c d ~ u c d r d p i m � t v d k { m i q i f g o m { m p o t m g k o m � r p l m n d d km { o c d e f g h o m f u � j t i d � � j t o n ~ c f i d k m { o c d e f g h o c f o � d k o t g f q i f v d v r f g g d i f g vo c f o f i d o m w d d � d i u t k d v s t o c t g f k p d u t { t d v p d i t m v x � g f u u m i v f g u d s t o c o c d ~ � e �� j t v d l t g d k f g v o c d q j t v f g u d g m o d m g � � u u m j g o t g q { m i � r p l m n d d ~ c f i d w f k d vp f n r d g o k t k k j d v w n o c d � ¡ � � z o c d d � u d k k z t { f g n z m { o c d r f i h d o p i t u d m { o c d k c f i dp i d u d v t g q o c d v f o d m { q i f g o m { o c d m p o t m g j g v d i � ~ � ~ m � d i o c d d � d i u t k d p i t u d m { o c dm p o t m g t k f r m i o t k d v m g f k o i f t q c o l t g d w f k t k m � d i o c d � d k o t g q p d i t m v x� x � � ¢ £ ¤ £ � � � �� g u m r d o f � d � p d g k d t k o c d f q q i d q f o d f r m j g o m { u j i i d g o o f � f g v v d { d i i d v o f � u c f i q d x¡ j i i d g o o f � t k o c d f r m j g o m { o f � p f n f w l d m g o c d o f � f w l d t g u m r d { m i o c d n d f i f kv d o d i r t g d v t g f u u m i v f g u d s t o c o c d f p p l t u f w l d o f � i f o d k f g v o c d p i m � t k t m g k m { o c d� g u m r d b f � � u o z � � ¥ � f g v m o c d i f p p l t u f w l d o f � l f s k x¦ t g t r j r � l o d i g f o d b f � � ¦ � b � p f t v t g f u u m i v f g u d s t o c o c d o f � l f s k z s c t u c q t � d kF-118
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•
! 7 9 < < ; " # > 9 " # ; @ ! D ; 9 = ! 8 ; < ; = @ $ 8 9 ' ! 7 ! < D > : > = D & D C > > * ; < D > = ? > 9 $ B C ; ? C B ; # # " >? 9 = $ ; 8 ' > A " 0 9 ? ? 8 8 > = ? > 9 8 = 9 = 2 9 ? ? 8 8 > = ? > 9 $ 9 = > 9 8 ' 9 8 > = ? > 8 D ! ; = $ D 8 > > : > = D <= 9 D B ; D C ; = D C > ? 9 = D 8 9 # 9 $ D C > @ 8 9 7 3 9 8•
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
! " # $ % & ' $ ( ) * + , - $ ! , + . " " , & + - ! / , 0 1 2 + 3 4 . 0 - , / - # $" , + ! , ' 2 % . - $ % / 2 + . + " 2 . ' ! - . - $ 1 $ + - ! / , 0 - # $5 $ . 0 $ + % $ % 6 ( 1 . 0 " # 7 8 9 ( :; < = > ? @ A B ? C = @ D A E = F < B ? G H I F @ = E @ J D K = ? A = L B M I @ D M N B ? I ? O B I L P @ I @ D < D ? @ A E = F @ J D Q D I F D ? M D MR S T I F O J U V W S X I F D M D ? = < B ? I @ D M B ? Y > H D D A K F = F D @ = O = ? E = F < @ = D Z @ I ? @ Y [ \ G > B M D L B ? D AS ] S ! ^ _ ` a " _ b c d _ e *; ] 2 f f g a h i j h k g f ! ^ _ ` a fl > F B ? G @ J D Q D I F D ? M D M T I F O J R S U V W S m @ J D [ I ? n J I M B A A > D M [ = ? > A P J I F D A B ? @ J D Y I @ B = = ES o S E = F P J I F D A J D L M I A = ? @ J D F D O = F M M I @ D = E p > L Q q U V W S r ] s > F A > I ? @ @ = @ J D I t = u D v r U X q U w r U V W mE > L L Q H I B M > H x y > B @ Q P J I F D A J I M t D D ? I L L = @ @ D M t Q @ J D t I ? n I A t = ? > A A J I F D A I ? M z ? D { L = t I Ll D H = A B @ I F Q A J I F D | { l P } J I M t D D ? B A A > D M I A t = ? > A E = F D u D F Q { l P J D L M @ = @ J D D Z B A @ B ? GJ = L M D F A I A = ? @ J D F D O = F M M I @ D ] K = ? A D y > D ? @ L Q U I A H D F @ J D D Z @ I ? @ x P z P V W S W P O J D < D t = ? > A= H @ B = ? A J I M t D D ? H F = u B M D M @ = @ J D D Z B A @ B ? G x P z P = H @ B = ? J = L M D F A I ? M @ J D D Z D F O B A D H F B O D J I Mt D D ? I M ~ > A @ D M I O O = F M B ? G L Q ] � J D D I F ? B ? G A H D F A J I F D J I u D t D D ? I M ~ > A @ D M E = F H F D u B = > A Q D I F B ?I O O = F M I ? O D � B @ J ; O O = > ? @ B ? G P @ I ? M I F M V W U x I F ? B ? G A H D F A J I F D ]j � ! g � f � ` c � a � _ k � b _ c � � g b � _ b c d _ e c k � e g � a f *| B } S m U r q W A J I F D A = E��
V � � D I O J | s F D u B = > A � D I F S m U r q W A J I F D A = E�
V � � D I O J } B A A > D M E = FO = ? A B M D F I @ B = ? = @ J D F @ J I ? O I A J| B B } R U S V U W r U v m S > ? M D F L Q B ? G D y > B @ Q A J I F D A = E��
V � � D I O J | s F D u B = > A � D I F V U v W U w q U q m vD y > B @ Q A J I F D A = E��
V � � D I O J } J D L M t Q O > A @ = M B I ? = ? t D J I L E = E J = L M D F A = E { L = t I Ll D H = A B @ = F Q Y D O D B H @ A | { l Y A }| B B B } r W U q v U r X W x P z P A J I F D A = E��
V � � H D F A J I F D | s F D u B = > A Q D I F r X U m S U S R R A J I F D A = E��
V � �s D F A J I F D } I L L = @ @ D M > ? M D F x P z P V W S W ]| B u } v r U X q U w r U V W m t = ? > A A J I F D A � D F D B A A > D M B ? @ J D F I @ B = = E S o S M > F B ? G N B ? I ? O B I L Q D I FV W S r � S m ]" � � J D E = L L = � B ? G I L L = @ < D ? @ A I F D n D H @ H D ? M B ? G E = L L = � B ? G = F M D F A E F = < u I F B = > A O = > F @ AB } ; L L = @ < D ? @ = E m U r R W A J I F D A = E�
V � � D I O J | s F D u B = > A Q D I F m U r R W A J I F D A = E�
V � � D I O J }H D F @ I B ? B ? G @ = @ J D Y B G J @ B A A > D = E S q q R B A A > D M I @ H F D < B > < = E�
r � � H D F A J I F DB B } V U m V U S W W A J I F D A = E�
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1 4 ^ = 8 = . _` a b c d e b b f e g h e d i b j k e l b a k m n o k p o k l i e qr s o t e b l t e` l d u c d g v e i l c t` l d u c d g w i s e k` l d u c d gw p e k l i c o d b j o i l tx y z y { | y } ~ } � � � � � } ~ � � � � � � � ~ � � � � � } � � � � � � � ~ � � � � � �x y � | � � � � y � � � � � � z � � � � { � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �� { � � � � � � � y � y � � y { � y � } � � � � �� � y � � � � { � � � � � � � � � � � � � � � � � �� { � � � y � � � y � � } � � � � � � ¡ � � y � � � � � � � � � � � � � � � � � � y � � � � � �F-130
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` ^ a S U ] V _ Y S ^b c d e f g h i d g g j k d l m n h j i g j o n c d e m i p m l d q m l r d q s t j i t d i n l m n d u h i v i u h m m i u o j l k f l k j g d j ow d r x d i n m q l d k j l n h i r y n c d z m i p t j i g h u d l d u n j j k d l m n d j i q s h i u j x d g n h t g d r x d i n y n c j f r c n c dz m i p c m g h n g j k d l m n h j i h i v i n d l i m n h j i m q h i m i t d w d l ! h t d " d i n l d # v w " $ e m i p h i r % i h n h i& f ' m l m n v i n d l i m n h j i m q h i m i t d b d t ( t h n s # & v b $ ) b c d z f g h i d g g t j i u f t n d u o l j x n c d g m x d h gt j i g h u d l d u m g m k m l n j o v i u h m i j k d l m n h j i g )w d r x d i n h i o j l x m n h j i h g k l j ! h u d u m g k d l n c d * v w m ! m h q m z q d o j l h i n d l i m q l d k j l n h i r k f l k j g d g y+ c h t c h i t q f u d t d l n m h i d g n h x m n d g , m g g f x k n h j i g ) b c d x d n c j u j q j r s m u j k n d u h i t j x k h q h i r m i ul d k j l n h i r n c d m z j ! d h i o j l x m n h j i c m g z d d i l d q h d u f k j i z s n c d m f u h n j l g )- ) . / R [ V _ R 0 1 V U _ 2 3 Y 4 Z [ S 4 5 U R 4 6 7 \ 8 9 :m $ ; d n m h q g j o < d q m n d u = m l n h d g >? V ] R S a _ X R 1 V U _ 2 ? V _ 5 U R S a / R [ V _ Y S ^ 4 X Y Wv ; e v d u d l m q @ h o d v i g f l m i t d " j x k m i s @ h x h n d u A g g j t h m n dw l h ) w c s m x w l h i h ! m g m i y * m i m r h i r ; h l d t n j l B" C D E d s * m i m r d x d i n = d l g j i i d qw l h ) A g c f n j g c E c m ' f l h m y C F d t f n h ! d ; h l d t n j l B" D E d s * m i m r d x d i n = d l g j i i d qw l h & m i d g c w m i p m l m i y C F d t f n h ! d ; h l d t n j l # l j xG . ( G H ( I G - J $ E d s * m i m r d x d i n = d l g j i i d q d u e m i p K j l x h g * d x j l h m q j f i u m n h j i C i n h n s h i + c h t c E * = g t m i d F d l t h g dg h r i h o h t m i n h i o q f d i t dz $ w h r i h o h t m i n n l m i g m t n h j i g + h n c l d q m n d u k m l n h d g > #��
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R o = p I F = q FF-132
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b ) t h e t r a n s a c t i o n s o f t h e B a n k , w h i c h h a v e c o m e t o o u r n o t i c e , h a v e b e e n w i t h i nt h e p o w e r s o f t h e B a n k ;c ) I n o u r o p i n i o n , p r o p e r b o o k s o f a c c o u n t a s r e q u i r e d b y l a w h a v e b e e n k e p t b yt h e B a n k s o f a r a s i t a p p e a r s f r o m o u r e x a m i n a t i o n o f t h o s e b o o k s ;d ) T h e r e p o r t s o n t h e a c c o u n t s o f t h e 1 2 2 1 b r a n c h e s / o f f i c e s a u d i t e d b y b r a n c ha u d i t o r s o f t h e B a n k a p p o i n t e d u n d e r s e c t i o n 1 4 3 ( 8 ) o f t h e C o m p a n i e s A c t ,2 0 1 3 h a v e b e e n f o r w a r d e d t o u s a n d h a v e b e e n p r o p e r l y d e a l t w i t h b y u s i np r e p a r i n g t h i s r e p o r t ;e ) T h e B a l a n c e S h e e t , t h e P r o f i t a n d L o s s A c c o u n t a n d t h e C a s h F l o w S t a t e m e n td e a l t w i t h b y t h i s r e p o r t a r e i n a g r e e m e n t w i t h t h e b o o k s o f a c c o u n t ;f ) I n o u r o p i n i o n , t h e a f o r e s a i d f i n a n c i a l s t a t e m e n t s c o m p l y w i t h t h e A c c o u n t i n gS t a n d a r d s p r e s c r i b e d u n d e r s e c t i o n 1 3 3 o f t h e A c t , a s a p p l i c a b l e ;g ) O n t h e b a s i s o f t h e w r i t t e n r e p r e s e n t a t i o n s r e c e i v e d f r o m t h e d i r e c t o r s a s o n 3 1 s tM a r c h , 2 0 1 6 t a k e n o n r e c o r d b y t h e B o a r d o f D i r e c t o r s , n o n e o f t h ed i r e c t o r s i s d i s q u a l i f i e d a s o n 3 1 s t M a r c h , 2 0 1 6 f r o m b e i n g a p p o i n t e d a s ad i r e c t o r i n t e r m s o f S e c t i o n 1 6 4 ( 2 ) o f t h e A c t ;h ) W i t h r e s p e c t t o t h e a d e q u a c y o f t h e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a lr e p o r t i n g o f t h e B a n k a n d t h e o p e r a t i n g e f f e c t i v e n e s s o f s u c h c o n t r o l s , r e f e r t oo u r r e p o r t i n “ A n n e x u r e A ” . O u r r e p o r t e x p r e s s e s a n u n m o d i f i e d o p i n i o n o n t h ea d e q u a c y a n d o p e r a t i n g e f f e c t i v e n e s s o f t h e B a n k ’ s i n t e r n a l f i n a n c i a l c o n t r o l so v e r f i n a n c i a l r e p o r t i n g ;i ) W i t h r e s p e c t t o t h e o t h e r m a t t e r s t o b e i n c l u d e d i n t h e A u d i t o r ’ s R e p o r t i na c c o r d a n c e w i t h R u l e 1 1 o f t h e C o m p a n i e s ( A u d i t a n d A u d i t o r s ) R u l e s , 2 0 1 4 ,i n o u r o p i n i o n a n d t o t h e b e s t o f o u r i n f o r m a t i o n a n d a c c o r d i n g t o t h ee x p l a n a t i o n s g i v e n t o u s :i . t h e B a n k h a s d i s c l o s e d t h e i m p a c t o f p e n d i n g l i t i g a t i o n s o n i t s f i n a n c i a lp o s i t i o n i n i t s f i n a n c i a l s t a t e m e n t s – R e f e r S c h e d u l e 1 2 a n d N o t e N o . 2 . 9 o fS c h e d u l e 1 8 t o t h e s t a n d a l o n e f i n a n c i a l s t a t e m e n t s ;i i . t h e B a n k h a s m a d e p r o v i s i o n , a s r e q u i r e d u n d e r t h e a p p l i c a b l e l a w o ra c c o u n t i n g s t a n d a r d s , f o r m a t e r i a l f o r e s e e a b l e l o s s e s , i f a n y , o n l o n g ¬t e r m c o n t r a c t s i n c l u d i n g d e r i v a t i v e c o n t r a c t s – R e f e r N o t e N o . 2 . 1 0 o fS c h e d u l e 1 8 t o t h e s t a n d a l o n e f i n a n c i a l s t a t e m e n t s ;i i i . t h e r e h a s b e e n n o d e l a y i n t r a n s f e r r i n g a m o u n t s , r e q u i r e d t o b et r a n s f e r r e d , t o t h e I n v e s t o r E d u c a t i o n a n d P r o t e c t i o n F u n d b y t h e B a n k .F o r D E L O I T T E H A S K I N S & S E L L S F o r M P C H I T A L E & C O .C h a r t e r e d A c c o u n t a n t s C h a r t e r e d A c c o u n t a n t s( F i r m ’ s R e g i s t r a t i o n N o . 0 0 8 0 7 2 S ) ( F i r m ’ s R e g i s t r a t i o n N o . 1 0 1 8 5 1 W )M . R a m a c h a n d r a n S a n a t U l h a s C h i t a l eP a r t n e r P a r t n e r( M e m b e r s h i p N o . 1 6 3 9 9 ) ( M e m b e r s h i p N o . 1 4 3 7 0 0 )K O C H I , 3 0 t h A p r i l , 2 0 1 6 .F-141
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T h e s e r e s p o n s i b i l i t i e s i n c l u d e t h e d e s i g n , i m p l e m e n t a t i o na n d m a i n t e n a n c e o f a d e q u a t e i n t e r n a l f i n a n c i a l c o n t r o l s t h a t w e r e o p e r a t i n g e f f e c t i v e l y f o re n s u r i n g t h e o r d e r l y a n d e f f i c i e n t c o n d u c t o f i t s b u s i n e s s , i n c l u d i n g a d h e r e n c e t o B a n k ’ sp o l i c i e s , t h e s a f e g u a r d i n g o f i t s a s s e t s , t h e p r e v e n t i o n a n d d e t e c t i o n o f f r a u d s a n d e r r o r s , t h ea c c u r a c y a n d c o m p l e t e n e s s o f t h e a c c o u n t i n g r e c o r d s , a n d t h e t i m e l y p r e p a r a t i o n o f r e l i a b l ef i n a n c i a l i n f o r m a t i o n , a s r e q u i r e d u n d e r t h e C o m p a n i e s A c t , 2 0 1 3 , t h e B a n k i n g R e g u l a t i o nA c t , 1 9 4 9 a n d t h e g u i d e l i n e s a n d d i r e c t i v e s i s s u e d b y t h e R e s e r v e B a n k o f I n d i a .A u d i t o r s ’ R e s p o n s i b i l i t yO u r r e s p o n s i b i l i t y i s t o e x p r e s s a n o p i n i o n o n t h e B a n k ' s i n t e r n a l f i n a n c i a l c o n t r o l s o v e rf i n a n c i a l r e p o r t i n g b a s e d o n o u r a u d i t . W e c o n d u c t e d o u r a u d i t i n a c c o r d a n c e w i t h t h eG u i d a n c e N o t e o n A u d i t o f I n t e r n a l F i n a n c i a l C o n t r o l s O v e r F i n a n c i a l R e p o r t i n g ( t h e“ G u i d a n c e N o t e ” ) i s s u e d b y t h e I n s t i t u t e o f C h a r t e r e d A c c o u n t a n t s o f I n d i a a n d t h eS t a n d a r d s o n A u d i t i n g p r e s c r i b e d u n d e r S e c t i o n 1 4 3 ( 1 0 ) o f t h e C o m p a n i e s A c t , 2 0 1 3 , t o t h ee x t e n t a p p l i c a b l e t o a n a u d i t o f i n t e r n a l f i n a n c i a l c o n t r o l s . T h o s e S t a n d a r d s a n d t h eG u i d a n c e N o t e r e q u i r e t h a t w e c o m p l y w i t h e t h i c a l r e q u i r e m e n t s a n d p l a n a n d p e r f o r m t h ea u d i t t o o b t a i n r e a s o n a b l e a s s u r a n c e a b o u t w h e t h e r a d e q u a t e i n t e r n a l f i n a n c i a l c o n t r o l s o v e rf i n a n c i a l r e p o r t i n g w a s e s t a b l i s h e d a n d m a i n t a i n e d a n d i f s u c h c o n t r o l s o p e r a t e d e f f e c t i v e l yi n a l l m a t e r i a l r e s p e c t s .O u r a u d i t i n v o l v e s p e r f o r m i n g p r o c e d u r e s t o o b t a i n a u d i t e v i d e n c e a b o u t t h e a d e q u a c y o ft h e i n t e r n a l f i n a n c i a l c o n t r o l s s y s t e m o v e r f i n a n c i a l r e p o r t i n g a n d t h e i r o p e r a t i n ge f f e c t i v e n e s s . O u r a u d i t o f i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g i n c l u d e do b t a i n i n g a n u n d e r s t a n d i n g o f i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g , a s s e s s i n gt h e r i s k t h a t a m a t e r i a l w e a k n e s s e x i s t s , a n d t e s t i n g a n d e v a l u a t i n g t h e d e s i g n a n d o p e r a t i n ge f f e c t i v e n e s s o f i n t e r n a l c o n t r o l b a s e d o n t h e a s s e s s e d r i s k . T h e p r o c e d u r e s s e l e c t e d d e p e n do n t h e a u d i t o r ’ s j u d g e m e n t , i n c l u d i n g t h e a s s e s s m e n t o f t h e r i s k s o f m a t e r i a l m i s s t a t e m e n to f t h e f i n a n c i a l s t a t e m e n t s , w h e t h e r d u e t o f r a u d o r e r r o r .T h e r e p o r t s o n t h e a d e q u a c y o f i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g a t t h eb r a n c h o f f i c e s o f t h e B a n k a u d i t e d b y b r a n c h a u d i t o r s o f t h e B a n k h a v e b e e n s e n t t o u s a n dh a v e b e e n p r o p e r l y d e a l t w i t h b y u s i n p r e p a r i n g t h i s r e p o r t .W e b e l i e v e t h a t t h e a u d i t e v i d e n c e w e h a v e o b t a i n e d i s s u f f i c i e n t a n d a p p r o p r i a t e t o p r o v i d ea b a s i s f o r o u r a u d i t o p i n i o n o n t h e B a n k ’ s i n t e r n a l f i n a n c i a l c o n t r o l s s y s t e m o v e r f i n a n c i a lr e p o r t i n g .F-142
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T H E F E D E R A L B A N K L I M I T E DS C H E D U L E 1 7 : S I G N I F I C A N T A C C O U N T I N G P O L I C I E S A P P E N D E D T O A N DF O R M I N G P A R T O F T H E F I N A N C I A L S T A T E M E N T S F O RT H E Y E A R E N D E D 3 1 M A R C H , 2 0 1 61 B a c k g r o u n dT h e F e d e r a l B a n k L i m i t e d ( ‘ t h e B a n k ’ ) w a s i n c o r p o r a t e d i n 1 9 3 1 a s T r a v a n c o r eF e d e r a l B a n k L i m i t e d t o c a t e r t o t h e b a n k i n g n e e d s o f T r a v a n c o r e P r o v i n c e . I te m b a r k e d o n a p h a s e o f s u s t a i n e d g r o w t h u n d e r t h e l e a d e r s h i p o f L a t e K . P . H o r m i s .T h e B a n k h a s a n e t w o r k o f 1 2 7 8 b r a n c h e s / o f f i c e s i n I n d i a a n d p r o v i d e s r e t a i l a n dc o r p o r a t e b a n k i n g , p a r a b a n k i n g a c t i v i t i e s s u c h a s d e b i t c a r d , t h i r d p a r t y p r o d u c td i s t r i b u t i o n e t c . , t r e a s u r y a n d f o r e i g n e x c h a n g e b u s i n e s s . T h e b a n k i s g o v e r n e d b y t h eB a n k i n g R e g u l a t i o n A c t , 1 9 4 9 a n d o t h e r a p p l i c a b l e A c t s / R e g u l a t i o n s . T h e B a n k ’ ss h a r e s a r e l i s t e d o n B S E L i m i t e d a n d N a t i o n a l S t o c k E x c h a n g e o f I n d i a L i m i t e d . T h eG D R s i s s u e d b y t h e B a n k i n 2 0 0 6 h a v e b e e n l i s t e d o n L o n d o n S t o c k E x c h a n g e .D u r i n g t h e y e a r , t h e b a n k h a d s e t u p a n I n t e r n a t i o n a l F i n a n c i a l S e r v i c e C e n t r e ( I F S C )B a n k i n g u n i t ( I B U ) i n G u j a r a t I n t e r n a t i o n a l F i n a n c e T e c / C i t y ( G I F T C i t y ) i n l i n e w i t hg l o b a l f i n a n c i a l c e n t r e s o f S i n g a p o r e a n d D u b a i . I B U a t G i f t c i t y i s e q u i v a l e n t t o a nO f f s h o r e B a n k i n g u n i t , f o r a l l r e g u l a t o r y p u r p o s e s .2 . B a s i s o f p r e p a r a t i o nT h e f i n a n c i a l s t a t e m e n t s h a v e b e e n p r e p a r e d i n a c c o r d a n c e w i t h r e q u i r e m e n t sp r e s c r i b e d u n d e r t h e T h i r d S c h e d u l e ( F o r m A a n d F o r m B ) o f t h e B a n k i n g R e g u l a t i o nA c t , 1 9 4 9 . T h e a c c o u n t i n g a n d r e p o r t i n g p o l i c i e s o f t h e b a n k u s e d i n t h e p r e p a r a t i o no f t h e s e f i n a n c i a l s t a t e m e n t s c o n f o r m t o G e n e r a l l y A c c e p t e d A c c o u n t i n g P r i n c i p l e s i nI n d i a ( “ I n d i a n G A A P ” ) , t h e c i r c u l a r s a n d g u i d e l i n e s i s s u e d b y t h e R e s e r v e B a n k o fI n d i a ( ' R B I ' ) f r o m t i m e t o t i m e a n d t h e A c c o u n t i n g S t a n d a r d s p r e s c r i b e d u n d e r S e c t i o n1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 ( “ t h e A c t ” ) a n d t h e r e l e v a n t p r o v i s i o n s o f t h e A c t , a sa p p l i c a b l e a n d c u r r e n t p r a c t i c e s p r e v a i l i n g w i t h i n t h e b a n k i n g i n d u s t r y i n I n d i a . T h eB a n k f o l l o w s t h e h i s t o r i c a l c o s t c o n v e n t i o n a n d a c c r u a l m e t h o d o f a c c o u n t i n g i n t h ep r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s , e x c e p t i n t h e c a s e o f i n t e r e s t i n c o m e o n N o n /P e r f o r m i n g A s s e t s w h e r e i t i s r e c o g n i s e d u p o n r e a l i s a t i o n , a s p e r R B I g u i d e l i n e s . T h ea c c o u n t i n g p o l i c i e s a d o p t e d i n t h e p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t s a r e c o n s i s t e n tw i t h t h o s e f o l l o w e d i n t h e p r e v i o u s y e a r .T h e M i n i s t r y o f C o r p o r a t e a f f a i r s ( M C A ) h a s n o t i f i e d t h e C o m p a n i e s ( A c c o u n t i n gS t a n d a r d s ) A m e n d m e n t R u l e s , 2 0 1 6 v i d e i t s n o t i f i c a t i o n d a t e d M a r c h 3 0 , 2 0 1 6 . A s p e rC l a r i f i c a t i o n i s s u e d b y I n s t i t u t e o f C h a r t e r e d A c c o u n t a n t s o f I n d i a d a t e d 2 6 t h A p r i l ,2 0 1 6 , t h e s a i d n o t i f i c a t i o n i s a p p l i c a b l e t o a c c o u n t i n g p e r i o d s c o m m e n c i n g o n o r a f t e rt h e d a t e o f n o t i f i c a t i o n i . e . 1 s t A p r i l , 2 0 1 6 . H e n c e t h e s a i d n o t i f i c a t i o n h a s n o t b e e nc o n s i d e r e d i n t h e p r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s .F-158
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3 . U s e o f e s t i m a t e sT h e p r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s i n c o n f o r m i t y w i t h t h e g e n e r a l l y a c c e p t e da c c o u n t i n g p r i n c i p l e s r e q u i r e s t h e M a n a g e m e n t t o m a k e e s t i m a t e s a n d a s s u m p t i o n st h a t a f f e c t t h e r e p o r t e d a m o u n t s o f a s s e t s a n d l i a b i l i t i e s , r e v e n u e s a n d e x p e n s e s a n dd i s c l o s u r e o f c o n t i n g e n t l i a b i l i t i e s a t t h e d a t e o f t h e f i n a n c i a l s t a t e m e n t s . A c t u a l r e s u l t sc o u l d d i f f e r f r o m t h o s e e s t i m a t e s . T h e M a n a g e m e n t b e l i e v e s t h a t t h e e s t i m a t e s u s e d i nt h e p r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s a r e p r u d e n t a n d r e a s o n a b l e . A n y r e v i s i o n st o t h e a c c o u n t i n g e s t i m a t e s a r e r e c o g n i s e d p r o s p e c t i v e l y i n t h e c u r r e n t a n d f u t u r ep e r i o d s .4 . S i g n i f i c a n t a c c o u n t i n g p o l i c i e s4 . 1 A d v a n c e sA d v a n c e s a r e c l a s s i f i e d i n t o p e r f o r m i n g a s s e t s ( S t a n d a r d ) a n d n o n � p e r f o r m i n g a s s e t s( ' N P A s ' ) a s p e r t h e R B I g u i d e l i n e s a n d a r e s t a t e d n e t o f b i l l s r e d i s c o u n t e d , s p e c i f i cp r o v i s i o n s m a d e t o w a r d s N P A s , f l o a t i n g p r o v i s i o n s a n d u n r e a l i z e d i n t e r e s t o n N P A s .I n t e r e s t o n N o n P e r f o r m i n g a d v a n c e s i s t r a n s f e r r e d t o a n u n r e a l i z e d i n t e r e s t a c c o u n ta n d n o t r e c o g n i z e d i n p r o f i t a n d l o s s a c c o u n t u n t i l r e c e i v e d . F u r t h e r , N P A s a r ec l a s s i f i e d i n t o s u b � s t a n d a r d , d o u b t f u l a n d l o s s a s s e t s b a s e d o n t h e c r i t e r i a s t i p u l a t e d b yt h e R B I . T h e B a n k h a s m a d e p r o v i s i o n f o r N o n � P e r f o r m i n g A s s e t s a s s t i p u l a t e d u n d e rR e s e r v e B a n k o f I n d i a ( R B I ) n o r m s .A m o u n t s r e c o v e r e d a g a i n s t d e b t s w r i t t e n o f f a r e r e c o g n i s e d i n t h e p r o f i t a n d l o s sa c c o u n t a n d i n c l u d e d u n d e r “ O t h e r I n c o m e ” .F o r r e s t r u c t u r e d / r e s c h e d u l e d a s s e t s , p r o v i s i o n i s m a d e i n a c c o r d a n c e w i t h t h eg u i d e l i n e s i s s u e d b y t h e R B I , w h i c h r e q u i r e s t h e d i m i n u t i o n i n t h e f a i r v a l u e o f t h ea s s e t s t o b e p r o v i d e d a t t h e t i m e o f r e s t r u c t u r i n g . I n r e s p e c t o f l o a n s a n d a d v a n c e sa c c o u n t s s u b j e c t e d t o r e s t r u c t u r i n g , t h e a c c o u n t i s u p g r a d e d t o s t a n d a r d o n l y a f t e r t h es p e c i f i e d p e r i o d i . e . a p e r i o d o f o n e y e a r a f t e r t h e d a t e w h e n f i r s t p a y m e n t o f i n t e r e s to r o f p r i n c i p a l , w h i c h e v e r i s l a t e r , f a l l s d u e , s u b j e c t t o s a t i s f a c t o r y p e r f o r m a n c e o f t h ea c c o u n t d u r i n g t h e p e r i o d .P r o v i s i o n f o r U n h e d g e d F o r e i g n c u r r e n c y E x p o s u r e ( U F C E ) o f b o r r o w e r e n t i t i e s , i sm a d e i n a c c o r d a n c e w i t h t h e g u i d e l i n e s i s s u e d b y R B I , w h i c h r e q u i r e s t h e B a n k t oa s c e r t a i n t h e a m o u n t o f U F C E , e s t i m a t e t h e e x t e n t o f l i k e l y l o s s a n d e s t i m a t e t h er i s k n e s s o f u n h e d g e d p o s i t i o n o f t h o s e e n t i t i e s . T h e P r o v i s i o n i s c l a s s i f i e d u n d e rS c h e d u l e 5 – O t h e r L i a b i l i t i e s i n t h e B a l a n c e S h e e tT h e B a n k m a i n t a i n s g e n e r a l p r o v i s i o n f o r s t a n d a r d a s s e t s i n c l u d i n g c r e d i t e x p o s u r e sc o m p u t e d a s p e r t h e c u r r e n t m a r k e d t o m a r k e t v a l u e s o f i n t e r e s t r a t e a n d f o r e i g ne x c h a n g e d e r i v a t i v e c o n t r a c t s , i n a c c o r d a n c e w i t h t h e g u i d e l i n e s a n d a t l e v e l ss t i p u l a t e d b y R B I f r o m t i m e t o t i m e – F a r m C r e d i t t o a g r i c u l t u r a l a c t i v i t i e s a n d S m a l la n d M i c r o E n t e r p r i s e s ( S M E s ) 0 . 2 5 % , C o m m e r c i a l R e a l E s t a t e a t 1 % , r e s t r u c t u r e da d v a n c e s a t 5 % , t e a s e r r a t e h o u s i n g l o a n s a t 2 % , c o m m e r c i a l r e a l e s t a t e � r e s i d e n t i a lh o u s i n g a t 0 . 7 5 % a n d f o r o t h e r s e c t o r s a t 0 . 4 0 % .F-159
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T h e b a n k t r a n s f e r s a d v a n c e s t h r o u g h i n t e r « b a n k p a r t i c i p a t i o n w i t h a n d w i t h o u t r i s k . I na c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , i n t h e c a s e o f p a r t i c i p a t i o n w i t h r i s k , t h ea g g r e g a t e a m o u n t o f t h e p a r t i c i p a t i o n i s s u e d b y t h e B a n k i s r e d u c e d f r o m a d v a n c e sa n d w h e r e b a n k i s p a r t i c i p a t i n g , t h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n i s c l a s s i f i e du n d e r a d v a n c e s . I n t h e c a s e o f p a r t i c i p a t i o n w i t h o u t r i s k , t h e a g g r e g a t e a m o u n t o fp a r t i c i p a t i o n i s s u e d b y t h e B a n k i s c l a s s i f i e d u n d e r b o r r o w i n g s a n d w h e r e t h e b a n k i sp a r t i c i p a t i n g , t h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n i s s h o w n a s d u e f r o m b a n k s u n d e ra d v a n c e s .L o s s o n s a l e o f a s s e t s t o A s s e t R e c o n s t r u c t i o n C o m p a n i e sT h e R B I i s s u e d g u i d e l i n e s o n s a l e o f n o n « p e r f o r m i n g a d v a n c e s o n F e b r u a r y 2 6 , 2 0 1 4 .I n a c c o r d a n c e w i t h t h e s e g u i d e l i n e s , i f t h e s a l e o f n o n « p e r f o r m i n g a d v a n c e s i s a t ap r i c e b e l o w t h e n e t b o o k v a l u e , t h e s h o r t f a l l i s c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n ts p r e a d o v e r a p e r i o d o f t w o y e a r s . I f t h e s a l e i s f o r a v a l u e h i g h e r t h a n t h e n e t b o o kv a l u e , t h e e x c e s s p r o v i s i o n i s c r e d i t e d t o t h e P r o f i t a n d L o s s A c c o u n t i n t h e y e a r t h ea m o u n t s a r e r e c e i v e d .4 . 2 C o u n t r y r i s kI n a d d i t i o n t o t h e p r o v i s i o n s r e q u i r e d t o b e h e l d a c c o r d i n g t o t h e a s s e t c l a s s i f i c a t i o ns t a t u s , p r o v i s i o n s a r e h e l d f o r i n d i v i d u a l c o u n t r y e x p o s u r e ( o t h e r t h a n f o r h o m ec o u n t r y ) . T h e c o u n t r i e s a r e c a t e g o r i s e d i n t o s e v e n r i s k c a t e g o r i e s n a m e l y i n s i g n i f i c a n t ,l o w , m o d e r a t e , h i g h , v e r y h i g h , r e s t r i c t e d a n d o f f « c r e d i t a s p e r E x p o r t C r e d i tG u a r a n t e e C o r p o r a t i o n o f I n d i a L i m i t e d ( “ E C G C ” ) g u i d e l i n e s a n d p r o v i s i o n i s m a d eo n e x p o s u r e s e x c e e d i n g 1 8 0 d a y s o n a g r a d e d s c a l e r a n g i n g f r o m 0 . 2 5 % t o 1 0 0 % . F o re x p o s u r e s w i t h c o n t r a c t u a l m a t u r i t y o f l e s s t h a n 1 8 0 d a y s , 2 5 % o f t h e n o r m a lp r o v i s i o n r e q u i r e m e n t i s h e l d . I f t h e c o u n t r y e x p o s u r e ( n e t ) o f t h e B a n k i n r e s p e c t o fe a c h c o u n t r y d o e s n o t e x c e e d 1 % o f t h e t o t a l f u n d e d a s s e t s , n o p r o v i s i o n i s m a i n t a i n e do n s u c h c o u n t r y e x p o s u r e .4 . 3 I n v e s t m e n t sC l a s s i f i c a t i o nI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , i n v e s t m e n t s a r e c a t e g o r i s e d a t t h e t i m e o fp u r c h a s e a s :• H e l d f o r T r a d i n g ( H F T ) ;•
A v a i l a b l e f o r S a l e ( A F S ) ; a n d• H e l d t o M a t u r i t y ( H T M )I n v e s t m e n t s w h i c h a r e p r i m a r i l y h e l d f o r s a l e w i t h i n 9 0 d a y s f r o m t h e d a t e o f p u r c h a s ea r e c l a s s i f i e d a s “ H e l d f o r T r a d i n g ” . A s p e r R B I g u i d e l i n e s , H F T S e c u r i t i e s w h i c hr e m a i n u n s o l d f o r a p e r i o d o f 9 0 d a y s a r e c l a s s i f i e d a s A F S S e c u r i t i e s o n t h a t d a t e .I n v e s t m e n t s w h i c h t h e b a n k i n t e n d s t o h o l d t i l l m a t u r i t y a r e c l a s s i f i e d a s “ H e l d t oM a t u r i t y ” .I n v e s t m e n t s w h i c h a r e n o t c l a s s i f i e d i n e i t h e r o f t h e a b o v e t w o c a t e g o r i e s a r ec l a s s i f i e d a s “ A v a i l a b l e f o r S a l e ” .
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U n d e r e a c h o f t h e s e c a t e g o r i e s , i n v e s t m e n t s a r e f u r t h e r c l a s s i f i e d u n d e r s i x g r o u p s( h e r e i n a f t e r c a l l e d g r o u p s ) � G o v e r n m e n t S e c u r i t i e s , O t h e r A p p r o v e d S e c u r i t i e s ,S h a r e s , D e b e n t u r e s a n d B o n d s , I n v e s t m e n t s i n S u b s i d i a r i e s / J o i n t V e n t u r e s a n d O t h e rI n v e s t m e n t s f o r t h e p u r p o s e s o f d i s c l o s u r e i n t h e B a l a n c e S h e e t .T r a n s f e r o f s e c u r i t i e s b e t w e e n C a t e g o r i e sT r a n s f e r o f s e c u r i t i e s b e t w e e n c a t e g o r i e s i s d o n e a t t h e l o w e r o f t h e a c q u i s i t i o n c o s t /b o o k v a l u e / m a r k e t v a l u e o n t h e d a t e o f t h e t r a n s f e r a n d t h e d e p r e c i a t i o n , i f a n y , o ns u c h t r a n s f e r i s f u l l y p r o v i d e d f o r , a s p e r R B I g u i d e l i n e s .A c q u i s i t i o n C o s tI n d e t e r m i n i n g t h e a c q u i s i t i o n c o s t o f t h e I n v e s t m e n t :•
T r a n s a c t i o n c o s t s i n c l u d i n g b r o k e r a g e a n d c o m m i s s i o n p e r t a i n i n g t o a c q u i s i t i o n o fI n v e s t m e n t s a r e c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t .•
B r o k e n p e r i o d i n t e r e s t i s c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t .• C o s t o f i n v e s t m e n t s i s c o m p u t e d b a s e d o n t h e w e i g h t e d a v e r a g e c o s t m e t h o d .V a l u a t i o nT h e v a l u a t i o n o f i n v e s t m e n t s i s m a d e i n a c c o r d a n c e w i t h t h e R B I G u i d e l i n e s a sf o l l o w s :a ) H e l d f o r T r a d i n g / A v a i l a b l e f o r S a l e – I n v e s t m e n t s c l a s s i f i e d u n d e r t h e A F S a n dH F T c a t e g o r i e s a r e m a r k e d � t o � m a r k e t . T h e m a r k e t / f a i r v a l u e o f q u o t e di n v e s t m e n t s i n c l u d e d i n t h e ‘ A F S ’ a n d ‘ H F T ’ c a t e g o r i e s i s t h e M a r k e t P r i c e o f t h eS c r i p a s a v a i l a b l e f r o m t h e t r a d e s / q u o t e s o n t h e s t o c k e x c h a n g e s o r p r i c e sd e c l a r e d b y P r i m a r y D e a l e r s A s s o c i a t i o n o f I n d i a ( ‘ P D A I ’ ) j o i n t l y w i t h F i x e dI n c o m e M o n e y M a r k e t a n d D e r i v a t i v e A s s o c i a t i o n s o f I n d i a ( ‘ F I M M D A ’ ) ,p e r i o d i c a l l y . N e t d e p r e c i a t i o n , i f a n y , w i t h i n e a c h c a t e g o r y o f e a c h i n v e s t m e n tc l a s s i f i c a t i o n i s r e c o g n i s e d i n P r o f i t a n d L o s s A c c o u n t . T h e n e t a p p r e c i a t i o n , i fa n y , u n d e r e a c h c a t e g o r y o f e a c h I n v e s t m e n t i s i g n o r e d . E x c e p t i n c a s e s w h e r ep r o v i s i o n f o r d i m i n u t i o n o t h e r t h a n t e m p o r a r y i s c r e a t e d , t h e B o o k v a l u e o fi n d i v i d u a l s e c u r i t i e s i s n o t c h a n g e d c o n s e q u e n t t o t h e p e r i o d i c v a l u a t i o n o fI n v e s t m e n t s .b ) H e l d t o M a t u r i t y – T h e s e a r e c a r r i e d a t t h e i r a c q u i s i t i o n c o s t . A n y p r e m i u m o na c q u i s i t i o n o f g o v e r n m e n t s e c u r i t i e s a r e a m o r t i s e d o v e r t h e r e m a i n i n g m a t u r i t yp e r i o d o f t h e s e c u r i t y o n a s t r a i g h t l i n e b a s i s . A n y d i m i n u t i o n , o t h e r t h a nt e m p o r a r y , i n t h e v a l u e o f s u c h s e c u r i t i e s i s p r o v i d e d f o r .c ) T r e a s u r y B i l l s a n d C e r t i f i c a t e o f D e p o s i t s b e i n g d i s c o u n t e d i n s t r u m e n t s , a r ev a l u e d a t c a r r y i n g c o s t .d ) U n i t s o f M u t u a l F u n d s a r e v a l u e d a t t h e l a t e s t r e p u r c h a s e p r i c e / n e t a s s e t v a l u ed e c l a r e d b y M u t u a l F u n d .
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e ) M a r k e t v a l u e o f i n v e s t m e n t s w h e r e c u r r e n t q u o t a t i o n s a r e n o t a v a i l a b l e , i sd e t e r m i n e d a s p e r t h e n o r m s p r e s c r i b e d b y t h e R B I a s u n d e r :•
i n c a s e o f u n q u o t e d b o n d s , d e b e n t u r e s a n d p r e f e r e n c e s h a r e s w h e r ei n t e r e s t / d i v i d e n d i s r e c e i v e d r e g u l a r l y ( i . e . n o t o v e r d u e b e y o n d 9 0 d a y s ) , t h em a r k e t p r i c e i s d e r i v e d b a s e d o n t h e Y i e l d t o M a t u r i t y ( Y T M ) f o r G o v e r n m e n tS e c u r i t i e s a s p u b l i s h e d b y F I M M D A / P D A I a n d s u i t a b l y m a r k e d u p f o r c r e d i tr i s k a p p l i c a b l e t o t h e c r e d i t r a t i n g o f t h e i n s t r u m e n t . T h e m a t r i x f o r c r e d i t r i s km a r k � u p f o r e a c h c a t e g o r i e s a n d c r e d i t r a t i n g s a l o n g w i t h r e s i d u a l m a t u r i t yi s s u e d b y F I M M D A a r e a d o p t e d f o r t h i s p u r p o s e ;•
i n c a s e o f b o n d s a n d d e b e n t u r e s ( i n c l u d i n g P a s s T h r o u g h C e r t i f i c a t e s o r P T C s )w h e r e i n t e r e s t i s n o t r e c e i v e d r e g u l a r l y ( i . e . o v e r d u e b e y o n d 9 0 d a y s ) , t h ev a l u a t i o n i s i n a c c o r d a n c e w i t h p r u d e n t i a l n o r m s f o r p r o v i s i o n i n g a sp r e s c r i b e d b y R B I ;• E q u i t y s h a r e s , f o r w h i c h c u r r e n t q u o t a t i o n s a r e n o t a v a i l a b l e o r w h e r e t h es h a r e s a r e n o t q u o t e d o n t h e s t o c k e x c h a n g e s , a r e v a l u e d a t b r e a k � u p v a l u e( w i t h o u t c o n s i d e r i n g r e v a l u a t i o n r e s e r v e s , i f a n y ) w h i c h i s a s c e r t a i n e d f r o mt h e c o m p a n y ' s l a t e s t B a l a n c e S h e e t . I n c a s e t h e l a t e s t B a l a n c e S h e e t i s n o ta v a i l a b l e , t h e s h a r e s a r e v a l u e d a t R e . 1 / � p e r c o m p a n y ;• U n i t s o f V e n t u r e C a p i t a l F u n d s ( V C F ) h e l d u n d e r A F S c a t e g o r y w h e r e c u r r e n tq u o t a t i o n s a r e n o t a v a i l a b l e a r e m a r k e d t o m a r k e t b a s e d o n t h e N e t A s s e tV a l u e ( N A V ) s h o w n b y V C F a s p e r t h e l a t e s t a u d i t e d f i n a n c i a l s o f t h e f u n d . I nc a s e t h e a u d i t e d f i n a n c i a l s a r e n o t a v a i l a b l e f o r a p e r i o d b e y o n d 1 8 m o n t h s , t h ei n v e s t m e n t s a r e v a l u e d a t R e . 1 / � p e r V C F . I n v e s t m e n t i n u n q u o t e d V C F a f t e r2 3 r d A u g u s t , 2 0 0 6 a r e c a t e g o r i s e d u n d e r H T M c a t e g o r y f o r t h e i n i t i a l p e r i o d o ft h r e e y e a r s a n d v a l u e d a t c o s t a s p e r R B I g u i d e l i n e s ;•
I n v e s t m e n t i n s e c u r i t y r e c e i p t s a r e v a l u e d a s p e r t h e N e t A s s e t V a l u e ( N A V )o b t a i n e d f r o m t h e i s s u i n g R e c o n s t r u c t i o n C o m p a n y / S e c u r i t i s a t i o n C o m p a n y .f ) I n v e s t m e n t s i n s u b s i d i a r i e s / a s s o c i a t e s a r e c a t e g o r i s e d a s H T M a n d a s s e s s e d f o ri m p a i r m e n t t o d e t e r m i n e p e r m a n e n t d i m i n u t i o n , i f a n y , i n a c c o r d a n c e w i t h t h eR B I g u i d e l i n e s .g ) T h e B a n k f o l l o w s t r a d e d a t e m e t h o d o f a c c o u n t i n g f o r p u r c h a s e a n d s a l e o fi n v e s t m e n t s , e x c e p t f o r G o v e r n m e n t o f I n d i a a n d S t a t e G o v e r n m e n t s e c u r i t i e sw h e r e s e t t l e m e n t d a t e m e t h o d o f a c c o u n t i n g i s f o l l o w e d i n a c c o r d a n c e w i t h R B IG u i d e l i n e s .h ) N o n P e r f o r m i n g I n v e s t m e n t s a r e i d e n t i f i e d a n d v a l u e d b a s e d o n R B I G u i d e l i n e s .D i s p o s a l o f I n v e s t m e n t sa ) H e l d f o r T r a d i n g a n d A v a i l a b l e f o r S a l e – P r o f i t o r l o s s o n s a l e / r e d e m p t i o n i si n c l u d e d i n t h e P r o f i t a n d L o s s a c c o u n t .b ) H e l d t o M a t u r i t y – P r o f i t o n s a l e / r e d e m p t i o n o f i n v e s t m e n t s i s i n c l u d e d i n t h eP r o f i t a n d L o s s A c c o u n t a n d i s a p p r o p r i a t e d t o C a p i t a l R e s e r v e a f t e r a d j u s t m e n t sf o r t a x a n d t r a n s f e r t o s t a t u t o r y R e s e r v e . L o s s o n s a l e / r e d e m p t i o n i s c h a r g e d t ot h e P r o f i t a n d L o s s a c c o u n t .F-162
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R e p o a n d R e v e r s e R e p o t r a n s a c t i o n sI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s r e p o a n d r e v e r s e r e p o t r a n s a c t i o n s i ng o v e r n m e n t s e c u r i t i e s [ e x c l u d i n g t r a n s a c t i o n s c o n d u c t e d u n d e r L i q u i d i t y A d j u s t m e n tF a c i l i t y ( ‘ L A F ’ ) a n d M a r g i n a l S t a n d b y f a c i l i t y ( ‘ M S F ’ ) w i t h R B I ] a r e r e f l e c t e d a sb o r r o w i n g a n d l e n d i n g t r a n s a c t i o n s r e s p e c t i v e l y . B o r r o w i n g c o s t o n r e p o t r a n s a c t i o n si s a c c o u n t e d f o r a s i n t e r e s t e x p e n s e a n d r e v e n u e o n r e v e r s e r e p o i s a c c o u n t e d f o r a si n t e r e s t i n c o m e .I n r e s p e c t o f R e p o t r a n s a c t i o n s u n d e r L A F a n d M S F w i t h R B I , a m o u n t b o r r o w e d f r o mR B I a r e c r e d i t e d t o i n v e s t m e n t a c c o u n t a n d r e v e r s e d o n m a t u r i t y o f t h e t r a n s a c t i o n .C o s t s t h e r e o n a r e a c c o u n t e d f o r a s i n t e r e s t e x p e n s e . I n r e s p e c t o f r e v e r s e R e p ot r a n s a c t i o n s u n d e r L A F , a m o u n t l e n t t o R B I i s d e b i t e d t o i n v e s t m e n t a c c o u n t a n dr e v e r s e d o n m a t u r i t y o f t h e t r a n s a c t i o n . R e v e n u e s t h e r e o n a r e a c c o u n t e d a s i n t e r e s ti n c o m e .S h o r t S a l e sI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , t h e B a n k u n d e r t a k e s s h o r t s a l e t r a n s a c t i o n s i nC e n t r a l G o v e r n m e n t d a t e d s e c u r i t i e s . T h e S h o r t S a l e s p o s i t i o n s a r e r e f l e c t e d i n‘ S e c u r i t i e s S h o r t S o l d ( ‘ S S S ’ ) A / C ’ , s p e c i f i c a l l y c r e a t e d f o r t h i s p u r p o s e . S u c h s h o r tp o s i t i o n s a r e c a t e g o r i z e d u n d e r H F T c a t e g o r y . T h e s e p o s i t i o n s a r e m a r k e d – t o õ m a r k e ta l o n g w i t h t h e o t h e r s e c u r i t i e s u n d e r H F T P o r t f o l i o a n d r e s u l t a n t m a r k õ t o õ m a r k e tg a i n s / l o s s e s a r e a c c o u n t e d f o r a s p e r t h e r e l e v a n t R B I g u i d e l i n e s f o r v a l u a t i o n o fI n v e s t m e n t s d i s c u s s e d e a r l i e r .4 . 4 T r a n s a c t i o n s i n v o l v i n g f o r e i g n e x c h a n g eF o r e i g n c u r r e n c y i n c o m e a n d e x p e n d i t u r e i t e m s o f d o m e s t i c o p e r a t i o n s a r e t r a n s l a t e da t t h e e x c h a n g e r a t e s p r e v a i l i n g o n t h e d a t e o f t h e t r a n s a c t i o n . I n c o m e a n d e x p e n d i t u r ei t e m s o f n o n � i n t e g r a l f o r e i g n o p e r a t i o n s ( I B U a t G I F T c i t y ) a r e t r a n s l a t e d a t q u a r t e r l ya v e r a g e c l o s i n g r a t e s .F o r e i g n c u r r e n c y m o n e t a r y i t e m s o f d o m e s t i c o p e r a t i o n a r e t r a n s l a t e d a t t h e c l o s i n ge x c h a n g e r a t e s n o t i f i e d b y F o r e i g n E x c h a n g e D e a l e r ’ s A s s o c i a t i o n o f I n d i a ( F E D A I )a s a t t h e B a l a n c e s h e e t d a t e a n d t h e r e s u l t i n g n e t v a l u a t i o n p r o f i t o r l o s s i s r e c o g n i z e di n t h e p r o f i t a n d l o s s a c c o u n t .B o t h M o n e t a r y a n d N o n � M o n e t a r y f o r e i g n c u r r e n c y A s s e t s a n d l i a b i l i t i e s o f N o n �I n t e g r a l F o r e i g n O p e r a t i o n s a r e t r a n s l a t e d a t c l o s i n g e x c h a n g e r a t e s n o t i f i e d b yF E D A I a t t h e b a l a n c e s h e e t d a t e a n d t h e r e s u l t i n g p r o f i t / l o s s a r i s i n g f r o m e x c h a n g ed i f f e r e n c e s a r e a c c u m u l a t e d i n F o r e i g n c u r r e n c y t r a n s l a t i o n R e s e r v e u n t i l r e m i t t a n c eo r t h e d i s p o s a l o f t h e n e t i n v e s t m e n t i n t h e n o n � i n t e g r a l f o r e i g n o p e r a t i o n s i na c c o r d a n c e w i t h A S � 1 1 .F o r e i g n e x c h a n g e s p o t a n d f o r w a r d C o n t r a c t s ( O t h e r t h a n F o r e i g n e x c h a n g e s w a p st a k e n t o h e d g e F e d e r a l R u p e e p l u s d e p o s i t s d e n o m i n a t e d i n J P Y ) o u t s t a n d i n g a s a t t h eB a l a n c e S h e e t d a t e a r e r e v a l u e d a t t h e c l o s i n g S p o t a n d F o r w a r d R a t e s r e s p e c t i v e l y a sn o t i f i e d b y F E D A I a n d a t i n t e r p o l a t e d r a t e s f o r c o n t r a c t s o f i n t e r i m m a t u r i t i e s . F o rv a l u a t i o n o f c o n t r a c t s h a v i n g l o n g e r m a t u r i t i e s i . e . g r e a t e r t h a n o n e y e a r , t h e f o r w a r dp o i n t s ( f o r r a t e s / t e n u r e s n o t p u b l i s h e d b y F E D A I ) a r e o b t a i n e d f r o m R e u t e r s f o rv a l u a t i o n o f t h e F X D e a l s . A s d i r e c t e d b y F E D A I t o c o n s i d e r p r o f i t o r l o s s o n p r e s e n tF-163
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v a l u e b a s i s , t h e f o r w a r d p r o f i t o r l o s s o n t h e d e a l s a r e d i s c o u n t e d t i l l t h e v a l u a t i o n d a t eu s i n g t h e d i s c o u n t i n g y i e l d s . T h e r e s u l t i n g p r o f i t o r l o s s o n v a l u a t i o n i s r e c o g n i s e d i nt h e P r o f i t a n d L o s s A c c o u n t .F o r e i g n e x c h a n g e s w a p s t a k e n t o h e d g e F e d e r a l R u p e e p l u s d e p o s i t s d e n o m i n a t e d i nJ P Y a r e t r a n s l a t e d a t t h e p r e v a i l i n g s p o t r a t e a t t h e t i m e o f s w a p . T h e P r e m i u m /D i s c o u n t o n t h e s w a p a r i s i n g o u t o f t h e d i f f e r e n c e i n t h e e x c h a n g e r a t e o f t h e s w a pd a t e a n d m a t u r i t y d a t e o f t h e u n d e r l y i n g f o r w a r d e x c h a n g e c o n t r a c t i s a m o r t i s e d o v e rt h e p e r i o d o f t h e s w a p a n d t h e s a m e i s r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t .C o n t i n g e n t l i a b i l i t i e s o n a c c o u n t o f f o r e i g n e x c h a n g e c o n t r a c t s , g u a r a n t e e s , l e t t e r s o fc r e d i t , a c c e p t a n c e s a n d e n d o r s e m e n t s a r e r e p o r t e d a t c l o s i n g r a t e s o f e x c h a n g en o t i f i e d b y F E D A I a s a t t h e B a l a n c e S h e e t d a t e4 . 5 D e r i v a t i v e t r a n s a c t i o n sT h e B a n k r e c o g n i s e s a l l d e r i v a t i v e c o n t r a c t s a t f a i r v a l u e , o n t h e d a t e o n w h i c h t h ed e r i v a t i v e c o n t r a c t s a r e e n t e r e d i n t o a n d a r e r e r m e a s u r e d a t f a i r v a l u e a s a t t h e B a l a n c es h e e t o r r e p o r t i n g d a t e s . D e r i v a t i v e s a r e c l a s s i f i e d a s a s s e t s w h e n t h e f a i r v a l u e i sp o s i t i v e ( P o s i t i v e m a r k e d r t o r m a r k e t ) o r a s l i a b i l i t i e s w h e n t h e f a i r v a l u e i s n e g a t i v e( n e g a t i v e m a r k e d r t o r m a r k e t ) . C h a n g e s i n t h e f a i r v a l u e o f d e r i v a t i v e s o t h e r t h a n t h o s ed e s i g n a t e d a s h e d g e s a r e r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t .4 . 6 F i x e d a s s e t s a n d d e p r e c i a t i o nF i x e d a s s e t s a r e c a r r i e d a t c o s t o f a c q u i s i t i o n l e s s a c c u m u l a t e d d e p r e c i a t i o n a n di m p a i r m e n t , i f a n y . C o s t i n c l u d e s c o s t o f p u r c h a s e a n d a l l e x p e n d i t u r e l i k e f r e i g h t ,d u t i e s , t a x e s a n d i n c i d e n t a l e x p e n s e s r e l a t e d t o t h e a c q u i s i t i o n a n d i n s t a l l a t i o n o f t h ea s s e t .C a p i t a l w o r k r i n r p r o g r e s s i n c l u d e s c o s t o f f i x e d a s s e t s t h a t a r e n o t r e a d y f o r t h e i ri n t e n d e d u s e a n d a l s o i n c l u d e s a d v a n c e s p a i d t o a c q u i r e f i x e d a s s e t s .D e p r e c i a t i o n o n f i x e d a s s e t s , i n c l u d i n g a m o r t i s a t i o n o f s o f t w a r e , i s c h a r g e d o v e r t h ee s t i m a t e d u s e f u l l i f e o f f i x e d a s s e t s o n a s t r a i g h t r l i n e b a s i s a t t h e r a t e s a n d m a n n e rp r e s c r i b e d i n S c h e d u l e I I o f t h e C o m p a n i e s A c t , 2 0 1 3 , e x c e p t a s m e n t i o n e d b e l o w :•
P r e m i s e s a r e d e p r e c i a t e d u n d e r t h e w r i t t e n d o w n v a l u e m e t h o d , u s i n g t h e s a m eu s e f u l l i f e a s i n S c h e d u l e I I o f t h e C o m p a n i e s A c t , 2 0 1 3 . I m p r o v e m e n t t ol e a s e d P r e m i s e s a r e d e p r e c i a t e d o v e r 5 y e a r s b a s e d o n t e c h n i c a l e v a l u a t i o n .•
D e p r e c i a t i o n o n p r e m i s e s r e v a l u e d h a s b e e n c h a r g e d o n t h e i r w r i t t e n r d o w nv a l u e i n c l u d i n g t h e a d d i t i o n m a d e o n r e v a l u a t i o n .D e p r e c i a t i o n o n a s s e t s s o l d d u r i n g t h e y e a r i s r e c o g n i s e d o n a p r o r r a t a b a s i s t i l l t h ed a t e o f s a l e .P r o f i t o n s a l e o f p r e m i s e s i s a p p r o p r i a t e d t o C a p i t a l R e s e r v e a c c o u n t i n a c c o r d a n c ew i t h R B I i n s t r u c t i o n s .F-164
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4 . 7 I m p a i r m e n t o f A s s e t sT h e c a r r y i n g v a l u e s o f a s s e t s a t e a c h b a l a n c e s h e e t d a t e a r e r e v i e w e d f o r i m p a i r m e n t ,i f a n y i n d i c a t i o n o f i m p a i r m e n t e x i s t s . I f t h e c a r r y i n g a m o u n t o f t h e a s s e t s e x c e e d t h ee s t i m a t e d r e c o v e r a b l e a m o u n t , a n i m p a i r m e n t i s r e c o g n i s e d f o r s u c h e x c e s s a m o u n t .T h e i m p a i r m e n t l o s s i s r e c o g n i s e d a s a n e x p e n s e i n t h e P r o f i t a n d L o s s A c c o u n t ,u n l e s s t h e a s s e t i s c a r r i e d a t r e v a l u e d a m o u n t , i n w h i c h c a s e a n y i m p a i r m e n t l o s s o ft h e r e v a l u e d a s s e t i s t r e a t e d a s a r e v a l u a t i o n d e c r e a s e t o t h e e x t e n t a r e v a l u a t i o nr e s e r v e i s a v a i l a b l e f o r t h a t a s s e t .T h e r e c o v e r a b l e a m o u n t i s t h e g r e a t e r o f t h e n e t s e l l i n g p r i c e a n d t h e i r v a l u e i n u s e .V a l u e i n u s e i s a r r i v e d a t b y d i s c o u n t i n g t h e f u t u r e c a s h f l o w s t o t h e i r p r e s e n t v a l u eb a s e d o n a n a p p r o p r i a t e d i s c o u n t f a c t o r .W h e n t h e r e i s i n d i c a t i o n t h a t a n i m p a i r m e n t l o s s r e c o g n i s e d f o r a n a s s e t ( o t h e r t h a n ar e v a l u e d a s s e t ) i n e a r l i e r a c c o u n t i n g p e r i o d s n o l o n g e r e x i s t s o r m a y h a v e d e c r e a s e d ,s u c h r e v e r s a l o f i m p a i r m e n t l o s s i s r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t , t o t h ee x t e n t t h e a m o u n t w a s p r e v i o u s l y c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t . I n c a s e o fr e v a l u e d a s s e t s s u c h r e v e r s a l i s n o t r e c o g n i s e d .4 . 8 N o n ³ B a n k i n g A s s e t sN o n ¸ B a n k i n g a s s e t s a c q u i r e d i n s e t t l e m e n t o f d e b t s / d u e s a r e a c c o u n t e d a t t h e l o w e ro f t h e i r c o s t o f a c q u i s i t i o n o r n e t r e a l i s a b l e v a l u e .4 . 9 C a s h a n d C a s h E q u i v a l e n t sC a s h a n d c a s h e q u i v a l e n t s i n c l u d e c a s h i n h a n d , b a l a n c e s w i t h R e s e r v e B a n k o f I n d i aa n d B a l a n c e s w i t h O t h e r B a n k s / i n s t i t u t i o n s a n d m o n e y a t c a l l a n d s h o r t n o t i c e( i n c l u d i n g t h e e f f e c t o f c h a n g e s i n e x c h a n g e r a t e s o n c a s h a n d c a s h e q u i v a l e n t s i nf o r e i g n c u r r e n c y )4 . 1 0 R e v e n u e R e c o g n i t i o n• I n t e r e s t i n c o m e i s r e c o g n i s e d o n a n a c c r u a l b a s i s e x c e p t i n t e r e s t i n c o m e o n n o n ñp e r f o r m i n g a s s e t s , w h i c h i s r e c o g n i s e d u p o n r e c e i p t w i t h A S ñ 9 , R e v e n u eR e c o g n i t i o n a s p r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 a n d a ss p e c i f i e d i n R B I g u i d e l i n e s .• P r o c e s s i n g f e e s c o l l e c t e d o n l o a n s d i s b u r s e d , a l o n g w i t h r e l a t e d l o a n a c q u i s i t i o nc o s t s a r e r e c o g n i s e d a t i n c e p t i o n / R e n e w a l o f t h e l o a n .• I n c o m e o n d i s c o u n t e d i n s t r u m e n t s i s r e c o g n i s e d o v e r t h e t e n u r e o f t h e i n s t r u m e n to n a s t r a i g h t l i n e b a s i s .• G u a r a n t e e c o m m i s s i o n , c o m m i s s i o n o n l e t t e r o f c r e d i t a n d a n n u a l l o c k e r r e n t f e e sa r e r e c o g n i s e d o n a s t r a i g h t l i n e b a s i s o v e r t h e p e r i o d o f c o n t r a c t . O t h e r f e e s a n dc o m m i s s i o n i n c o m e a r e r e c o g n i s e d w h e n d u e , e x c e p t i n c a s e s w h e r e t h e b a n k i su n c e r t a i n o f u l t i m a t e c o l l e c t i o n .• D i v i d e n d o n E q u i t y S h a r e s , P r e f e r e n c e S h a r e s a n d o n M u t u a l F u n d s i s r e c o g n i s e da s I n c o m e w h e n t h e r i g h t t o r e c e i v e t h e d i v i d e n d i s e s t a b l i s h e d .
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• L o a n S y n d i c a t i o n f e e i s a c c o u n t e d f o r o n c o m p l e t i o n o f t h e a g r e e d s e r v i c e a n dw h e n r i g h t t o r e c e i v e i s e s t a b l i s h e d .• U n p a i d f u n d e d i n t e r e s t o n t e r m l o a n s a r e a c c o u n t e d o n r e a l i s a t i o n a s p e r t h eg u i d e l i n e s o f R B I .• T h e d i f f e r e n c e b e t w e e n t h e s a l e p r i c e a n d p u r c h a s e c o s t o f g o l d c o i n s , r e c e i v e d o nc o n s i g n m e n t b a s i s i s i n c l u d e d i n o t h e r i n c o m e .4 . 1 1 L e a s e t r a n s a c t i o n sO p e r a t i n g L e a s eL e a s e s w h e r e t h e l e s s o r e f f e c t i v e l y r e t a i n s s u b s t a n t i a l l y a l l t h e r i s k s a n d b e n e f i t s o fo w n e r s h i p o v e r t h e l e a s e t e r m a r e c l a s s i f i e d a s o p e r a t i n g l e a s e . L e a s e p a y m e n t s f o ra s s e t s t a k e n o n o p e r a t i n g l e a s e a r e r e c o g n i s e d a s a n e x p e n s e i n t h e P r o f i t a n d L o s sA c c o u n t a s p e r t h e l e a s e t e r m s4 . 1 2 R e t i r e m e n t a n d o t h e r e m p l o y e e b e n e f i t sa ) P r o v i d e n t F u n dT h e c o n t r i b u t i o n m a d e b y t h e b a n k t o T h e F e d e r a l B a n k E m p l o y e e s P r o v i d e n tF u n d , a d m i n i s t e r e d b y t h e t r u s t e e s i s c h a r g e d t o t h e P r o f i t a n d L o s s a c c o u n t .b ) P e n s i o n F u n dT h e c o n t r i b u t i o n t o w a r d s T h e F e d e r a l B a n k E m p l o y e e s ’ P e n s i o n F u n d , m a n a g e db y t r u s t e e s , i s d e t e r m i n e d o n a c t u a r i a l b a s i s o n p r o j e c t e d u n i t c r e d i t m e t h o d a s o nt h e B a l a n c e S h e e t d a t e a n d i s r e c o g n i s e d i n t h e a c c o u n t s .E m p l o y e e s w h o h a d j o i n e d t h e s e r v i c e s o f t h e B a n k w i t h e f f e c t f r o m A p r i l 0 1 ,2 0 1 0 a r e c o v e r e d u n d e r D e f i n e d C o n t r i b u t o r y P e n s i o n S c h e m e ( D C P S ) . I n r e s p e c to f s u c h e m p l o y e e s t h e b a n k c o n t r i b u t e s 1 0 % o f t h e B a s i c P a y p l u s D e a r n e s sA l l o w a n c e a n d t h e e x p e n d i t u r e t h e r e o f i s c h a r g e d t o t h e P r o f i t a n d L o s s a c c o u n t .c ) G r a t u i t yT h e b a n k m a k e s a n n u a l c o n t r i b u t i o n t o T h e F e d e r a l B a n k E m p l o y e e s ’ G r a t u i t yT r u s t F u n d a d m i n i s t e r e d a n d m a n a g e d b y t h e T r u s t e e s . T h e c o s t o f p r o v i d i n g s u c hb e n e f i t s i s d e t e r m i n e d u s i n g t h e P r o j e c t e d U n i t C r e d i t m e t h o d , w i t h a c t u a r i a lv a l u a t i o n s b e i n g c a r r i e d o u t a t e a c h b a l a n c e s h e e t d a t e . A c t u a r i a l g a i n s a n d l o s s e sa r e r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t i n t h e p e r i o d i n w h i c h t h e y o c c u r .T h e r e t i r e m e n t b e n e f i t o b l i g a t i o n r e c o g n i s e d i n t h e B a l a n c e S h e e t r e p r e s e n t s t h ep r e s e n t v a l u e o f t h e d e f i n e d b e n e f i t o b l i g a t i o n a s a d j u s t e d f o r u n r e c o g n i s e d p a s ts e r v i c e c o s t , a s r e d u c e d b y t h e f a i r v a l u e o f s c h e m e a s s e t s . A n y a s s e t r e s u l t i n gf r o m t h i s c a l c u l a t i o n i s l i m i t e d t o p a s t s e r v i c e c o s t , p l u s t h e p r e s e n t v a l u e o fa v a i l a b l e r e f u n d s a n d r e d u c t i o n s i n f u t u r e c o n t r i b u t i o n s t o t h e s c h e m e s .
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d ) C o m p e n s a t i o n f o r a b s e n c e o n P r i v i l e g e / S i c k / C a s u a l L e a v e a n d L e a v eT r a v e l C o n c e s s i o n ( L T C )T h e e m p l o y e e s o f t h e b a n k a r e e n t i t l e d t o c o m p e n s a t e d a b s e n c e o n a c c o u n t o fp r i v i l e g e / s i c k / c a s u a l l e a v e a s p e r t h e l e a v e r u l e s . T h e b a n k m e a s u r e s t h e l o n gt e r m e x p e c t e d c o s t o f c o m p e n s a t e d a b s e n c e a s a r e s u l t o f t h e u n u s e d e n t i t l e m e n tt h a t h a s a c c u m u l a t e d a t t h e b a l a n c e s h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n a n ds u c h c o s t s a r e r e c o g n i s e d i n t h e a c c o u n t s .T h e e m p l o y e e s a r e a l s o e l i g i b l e f o r L T C a s p e r t h e r u l e s . T h e e s t i m a t e d c o s t o fu n u s e d e n t i t l e m e n t a s o n t h e B a l a n c e S h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n i sp r o v i d e d f o r .e ) O t h e r e m p l o y e e B e n e f i t sT h e u n d i s c o u n t e d a m o u n t o f S h o r t � t e r m e m p l o y e e b e n e f i t s e x p e c t e d t o b e p a i d i ne x c h a n g e f o r t h e s e r v i c e s r e n d e r e d b y e m p l o y e e s i s r e c o g n i s e d d u r i n g t h e p e r i o dw h e n t h e e m p l o y e e s r e n d e r t h e s e r v i c e . T h e s e b e n e f i t s i n c l u d e p e r f o r m a n c ei n c e n t i v e s .4 . 1 3 D e b i t c a r d r e w a r d p o i n t sT h e B a n k r u n s a l o y a l t y p r o g r a m w h i c h s e e k s t o r e c o g n i s e a n d r e w a r d c u s t o m e r sb a s e d o n t h e i r r e l a t i o n s h i p w i t h t h e B a n k . U n d e r t h e p r o g r a m , e l i g i b l e c u s t o m e r s a r eg r a n t e d l o y a l t y p o i n t s r e d e e m a b l e i n f u t u r e , s u b j e c t t o c e r t a i n c o n d i t i o n s . T h e B a n ke s t i m a t e s t h e p r o b a b l e r e d e m p t i o n o f s u c h l o y a l t y / r e w a r d p o i n t s u s i n g a n a c t u a r i a lm e t h o d a t t h e B a l a n c e S h e e t d a t e b y e m p l o y i n g i n d e p e n d e n t a c t u a r y . P r o v i s i o n f o rs a i d r e w a r d p o i n t s i s t h e n m a d e b a s e d o n t h e a c t u a r i a l v a l u a t i o n r e p o r t a s f u r n i s h e d b yt h e s a i d i n d e p e n d e n t A c t u a r y .4 . 1 4 E m p l o y e e S t o c k O p t i o n S c h e m eT h e B a n k h a s f o r m u l a t e d E m p l o y e e S t o c k O p t i o n S c h e m e ( E S O S ) 2 0 1 0 i na c c o r d a n c e w i t h S e c u r i t i e s a n d E x c h a n g e B o a r d o f I n d i a ( E m p l o y e e S t o c k O p t i o nS c h e m e ) G u i d e l i n e s , 1 9 9 9 . T h e S c h e m e p r o v i d e s f o r g r a n t o f o p t i o n s t o E m p l o y e e s o ft h e B a n k t o a c q u i r e E q u i t y S h a r e s o f t h e B a n k t h a t v e s t i n a g r a d e d m a n n e r a n d t h a ta r e t o b e e x e r c i s e d w i t h i n a s p e c i f i e d p e r i o d . I n a c c o r d a n c e w i t h t h e S E B I G u i d e l i n e sa n d t h e g u i d a n c e n o t e o n “ A c c o u n t i n g f o r E m p l o y e e S h a r e b a s e d p a y m e n t s ” i s s u e d b yt h e I C A I , t h e e x c e s s , i f a n y , o f t h e m a r k e t p r i c e o f t h e s h a r e p r e c e d i n g t h e d a t e o fg r a n t o f t h e o p t i o n u n d e r E S O S o v e r t h e e x e r c i s e p r i c e o f t h e o p t i o n i s a m o r t i s e d o n as t r a i g h t l i n e b a s i s o v e r t h e v e s t i n g p e r i o d .4 . 1 5 T a x a t i o nI n c o m e t a x e x p e n s e i s t h e a g g r e g a t e a m o u n t o f c u r r e n t t a x a n d d e f e r r e d t a x c h a r g e .C u r r e n t t a x i s t h e a m o u n t o f t a x p a y a b l e o n t h e t a x a b l e i n c o m e f o r t h e y e a r a sd e t e r m i n e d i n a c c o r d a n c e w i t h t h e a p p l i c a b l e t a x r a t e s a n d t h e p r o v i s i o n s o f t h eI n c o m e T a x A c t , 1 9 6 1 a n d o t h e r a p p l i c a b l e t a x l a w s .F-167
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M i n i m u m A l t e r n a t e T a x ( M A T ) p a i d i n a c c o r d a n c e w i t h t h e t a x l a w s , w h i c h g i v e sf u t u r e e c o n o m i c b e n e f i t s i n t h e f o r m o f a d j u s t m e n t t o f u t u r e i n c o m e t a x l i a b i l i t y , i sc o n s i d e r e d a s a n a s s e t i f t h e r e i s c o n v i n c i n g e v i d e n c e t h a t t h e B a n k w i l l p a y n o r m a li n c o m e t a x . A c c o r d i n g l y , M A T i s r e c o g n i s e d a s a n a s s e t i n t h e B a l a n c e S h e e t w h e n i ti s h i g h l y p r o b a b l e t h a t f u t u r e e c o n o m i c b e n e f i t a s s o c i a t e d w i t h i t w i l l f l o w t o t h eB a n k .D e f e r r e d t a x i s r e c o g n i s e d o n t i m i n g d i f f e r e n c e s , b e i n g t h e d i f f e r e n c e s b e t w e e n t h et a x a b l e i n c o m e a n d t h e a c c o u n t i n g i n c o m e t h a t o r i g i n a t e i n o n e p e r i o d a n d a r e c a p a b l eo f r e v e r s a l i n o n e o r m o r e s u b s e q u e n t p e r i o d s . D e f e r r e d t a x i s m e a s u r e d u s i n g t h e t a xr a t e s a n d t h e t a x l a w s e n a c t e d o r s u b s t a n t i v e l y e n a c t e d a s a t t h e r e p o r t i n g d a t e .D e f e r r e d t a x l i a b i l i t i e s a r e r e c o g n i s e d f o r a l l t i m i n g d i f f e r e n c e s . D e f e r r e d t a x a s s e t sa r e r e c o g n i s e d f o r t i m i n g d i f f e r e n c e s o f i t e m s o t h e r t h a n u n a b s o r b e d d e p r e c i a t i o n a n dc a r r y f o r w a r d l o s s e s o n l y t o t h e e x t e n t t h a t r e a s o n a b l e c e r t a i n t y e x i s t s t h a t s u f f i c i e n tf u t u r e t a x a b l e i n c o m e w i l l b e a v a i l a b l e a g a i n s t w h i c h t h e s e c a n b e r e a l i s e d . H o w e v e r ,i f t h e r e a r e u n a b s o r b e d d e p r e c i a t i o n a n d c a r r y f o r w a r d o f l o s s e s a n d i t e m s r e l a t i n g t oc a p i t a l l o s s e s , d e f e r r e d t a x a s s e t s a r e r e c o g n i s e d o n l y i f t h e r e i s v i r t u a l c e r t a i n t ys u p p o r t e d b y c o n v i n c i n g e v i d e n c e t h a t t h e r e w i l l b e s u f f i c i e n t f u t u r e t a x a b l e i n c o m ea v a i l a b l e t o r e a l i s e t h e a s s e t s . D e f e r r e d t a x a s s e t s a n d l i a b i l i t i e s a r e o f f s e t i f s u c h i t e m sr e l a t e t o t a x e s o n i n c o m e l e v i e d b y t h e s a m e g o v e r n i n g t a x l a w s a n d t h e B a n k h a s al e g a l l y e n f o r c e a b l e r i g h t f o r s u c h s e t o f f . 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i n C r o r e )P a r t i c u l a r s A s a t 3 1M a r c h , 2 0 1 6 A s a t 3 1M a r c h , 2 0 1 5C o m m o n E q u i t y T i e r I 7 7 9 1 . 8 4 7 5 3 4 . 2 3T i e r 1 C a p i t a l 7 7 9 1 . 8 4 7 5 3 4 . 2 3T i e r 2 C a p i t a l 3 3 3 . 6 4 3 3 0 . 7 9T o t a l C a p i t a l 8 1 2 5 . 4 8 7 8 6 5 . 0 2T o t a l r i s k w e i g h t e d a s s e t s 5 8 3 3 0 . 1 0 5 0 8 8 8 . 6 3C a p i t a l R a t i o sC o m m o n E q u i t y T i e r 1 1 3 . 3 6 % 1 4 . 8 1 %T i e r 1 C a p i t a l 1 3 . 3 6 % 1 4 . 8 1 %T i e r 2 C a p i t a l 0 . 5 7 % 0 . 6 5 %T o t a l C R A R 1 3 . 9 3 % 1 5 . 4 6 %P e r c e n t a g e o f t h e s h a r e h o l d i n g o f t h e G o v e r n m e n t o fI n d i a i n p u b l i c s e c t o r b a n k sA m o u n t o f E q u i t y C a p i t a l R a i s e d N A � N A ¯A m o u n t o f A d d i t i o n a l T i e r I C a p i t a l r a i s e d o f w h i c h :P e r p e t u a l N o n � C u m u l a t i v e P r e f e r e n c e S h a r e s( P N C P S )P e r p e t u a l D e b t I n s t r u m e n t s ( P D I )A m o u n t o f T i e r I I C a p i t a l r a i s e d o f w h i c h :D e b t C a p i t a l i n s t r u m e n t sP r e f e r e n c e S h a r e C a p i t a l I n s t r u m e n t s :[ P e r p e t u a l C u m u l a t i v e P r e f e r e n c e S h a r e s ( P C P S ) /R e d e e m a b l e N o n C u m u l a t i v e P r e f e r e n c e S h a r e s ( R N C P S )/ R e d e e m a b l e C u m u l a t i v e P r e f e r e n c e S h a r e s ( R C P S ) ] ÎÎÎÎ ÎÎÎÎF-170
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9 . 7 61 . 1 62 . 1 41 . 3 21 1 . 1 50 . 0 9* W o r k i n g F u n d s r e p r e s e n t a v e r a g e o f t o t a l a s s e t s a s r e p o r t e d t o R B I i n F o r m Xu n d e r S e c t i o n 2 7 o f t h e B a n k i n g R e g u l a t i o n A c t , 1 9 4 9 d u r i n g t h e y e a r .* * P r o d u c t i v i t y r a t i o s a r e b a s e d o n a v e r a g e e m p l o y e e n u m b e r s f o r t h e y e a r .1 . 3 . ‘ P r o v i s i o n s a n d C o n t i n g e n c i e s ’ r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n ti n c l u d e : (�
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2 2 3 2 3 . 9 90 . 8 12 9 . 0 60 . 1 67 8 . 0 9 �2 2 2 1 6 . 8 40 . 6 51 2 . 4 83 6 . 3 41 9 . 6 02 9 . 2 21 7 . 5 36 3 . 4 22 . 8 67 8 . 0 9
2 4 4 3 9 . 2 0 �1 2 . 4 8�1 7 . 5 3 �2 4 4 0 9 . 1 9 �1 0 5 . 9 55 . 2 89 8 . 7 51 2 . 4 84 . 6 71 2 . 8 6 �1 7 . 5 3M o v e m e n t i n p r o v i s i o n s h e l d t o w a r d s d e p r e c i a t i o n o n i n v e s t m e n t s h a v e b e e nr e c k o n e d o n a y e a r l y b a s i s1 . 4 . 2 . a ) I n v e s t m e n t s u n d e r H T M ( e x c l u d i n g s p e c i f i e d i n v e s t m e n t s a s p e r R B I n o r m s )a c c o u n t f o r 2 0 . 7 2 % ( P r e v i o u s y e a r 2 2 . 2 3 % ) o f d e m a n d a n d t i m e l i a b i l i t i e s a s a tt h e e n d o f M a r c h 2 0 1 6 a s a g a i n s t p e r m i t t e d c e i l i n g o f 2 1 . 5 0 % ( P r e v i o u s Y e a r :2 3 . 5 0 % ) s t i p u l a t e d b y R B I .b ) I n r e s p e c t o f s e c u r i t i e s h e l d u n d e r H T M c a t e g o r y p r e m i u m o f�
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d ) D u r i n g t h e y e a r t h e b a n k h a d w i t h d r a w n� 8 . 2 1 C r o r e [ n e t o f a p p l i c a b l e t a x e sa n d t r a n s f e r t o s t a t u t o r y r e s e r v e ] f r o m I n v e s t m e n t R e s e r v e A c c o u n t o n p r o v i s i o nf o r d e p r e c i a t i o n o n I n v e s t m e n t s , d e b i t e d t o P r o f i t a n d L o s s a c c o u n t .D u r i n g t h e y e a r e n d e d 3 1 s t M a r c h , 2 0 1 5 t h e b a n k h a d t r a n s f e r r e d
�4 6 . 2 8 C r o r e[ n e t o f a p p l i c a b l e t a x e s a n d t r a n s f e r t o s t a t u t o r y r e s e r v e ] t o I n v e s t m e n t R e s e r v eA c c o u n t o n p r o v i s i o n f o r d e p r e c i a t i o n o n I n v e s t m e n t s , c r e d i t e d t o P r o f i t a n dL o s s a c c o u n t .1 . 4 . 3 . R e p o T r a n s a c t i o n sD e t a i l s o f s e c u r i t i e s s o l d / p u r c h a s e d ( i n f a c e v a l u e t e r m s ) d u r i n g t h e y e a r s e n d e d3 1 s t M a r c h , 2 0 1 6 a n d 3 1 s t M a r c h , 2 0 1 5 u n d e r r e p o s / r e v e r s e r e p o s : (�
i n C r o r e )P a r t i c u l a r s O u t s t a n d i n g d u r i n g t h e y e a r O u t s t a n d i ng a s o n3 1 / 0 3 / 2 0 1 6 /( 3 1 / 0 3 / 2 0 1 5 )M i n i m u m M a x i m u m D a i l yA v e r a g eA ) S e c u r i t i e s s o l d u n d e rR B I R e p o si ) G o v e r n m e n t S e c u r i t i e s ( Z )( Z ) 2 8 2 5 . 0 0( 2 6 7 0 . 0 0 ) 4 2 7 . 7 6( 1 0 8 6 . 8 3) 2 8 2 5 . 0 0( 2 3 4 0 . 0 0 )i i ) C o r p o r a t e D e b t S e c u r i t i e s Z( Z ) Z( Z ) Z( Z ) Z( Z )S e c u r i t i e s p u r c h a s e d u n d e rR B I R e v e r s e R e p o si ) G o v e r n m e n t S e c u r i t i e s Z( Z ) 1 5 4 1 . 0 0( 4 0 0 . 0 0 ) 1 3 5 . 5 2( 1 8 . 2 7 ) Z( Z )i i ) C o r p o r a t e D e b t S e c u r i t i e s Z( Z ) Z( Z ) Z( Z ) Z( Z )B ) S e c u r i t i e s s o l d u n d e rM a r k e t R e p o si ) G o v e r n m e n t S e c u r i t i e s Z( Z ) 1 0 4 . 0 5( 5 8 8 . 9 6 ) 1 0 . 5 8( 3 3 . 4 0 ) Z( Z )i i ) C o r p o r a t e D e b t S e c u r i t i e s Z( Z ) Z( Z ) Z( Z ) Z( Z )S e c u r i t i e s p u r c h a s e d u n d e rR e v e r s e M a r k e t R e p o si ) G o v e r n m e n t S e c u r i t i e s Z( Z ) 1 0 4 5 . 5 5( 9 5 6 . 9 6 ) 1 4 3 . 7 1( 4 9 . 4 1 ) Z( Z )i i ) C o r p o r a t e D e b t S e c u r i t i e s Z( Z ) Z( Z ) Z( Z ) Z( Z )( P r e v i o u s y e a r ’ s f i g u r e s a r e g i v e n i n b r a c k e t s )F-173
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1 . 4 . 4 . D e t a i l s o f N o n u S L R i n v e s t m e n t p o r t f o l i oa ) I s s u e r c o m p o s i t i o n a s a t 3 1 M a r c h , 2 0 1 6 o f n o n � S L R i n v e s t m e n t s * (� i n C r o r e )S l .N o . I s s u e r A m o u n t E x t e n t o fp r i v a t ep l a c e m e n t E x t e n t o f‘ b e l o wi n v e s t m e n tg r a d e ’s e c u r i t i e s E x t e n t o f‘ u n r a t e d ’s e c u r i t i e s* * E x t e n t o f‘ u n l i s t e d’S e c u r i t i es* * *( 1 ) ( 2 ) ( 3 ) ( 4 ) ( 5 ) ( 6 ) ( 7 )1 P u b l i c S e c t o rU n d e r t a k i n g s 2 7 5 . 7 4( 3 9 1 . 8 5 ) 2 7 5 . 7 4( 3 9 1 . 8 5 ) 5 . 0 0( 3 5 6 . 8 5 ) �( 8 3 . 3 0 ) �( � )2 F i n a n c i a lI n s t i t u t i o n s 9 6 2 . 9 3( 2 0 . 1 6 ) 5 0 0 . 1 7( 2 0 . 1 6 ) �( � ) �( � ) 5( 5 )3 B a n k s 1 3 0 5 . 1 0( 1 8 9 7 . 6 8 ) 1 0 8 . 1 4( 1 0 5 . 9 2 ) 3 0 . 0 0( 1 5 ) �( � ) �( � )4 P r i v a t eC o r p o r a t e s 1 0 8 2 . 8 6( 4 9 2 . 0 6 ) 4 1 6 . 6 5( 3 7 0 . 0 3 ) 3 5 . 3 6( 8 5 . 5 3 ) 1 5 . 0 0( 2 2 . 5 9 ) 5 9 . 9 8( 5 9 . 9 8 )5 S u b s i d i a r i e s /J o i n t v e n t u r e s 3 9 8 . 0 0( 3 9 8 . 0 0 ) 3 9 8 . 0 0( 3 9 8 . 0 0 ) �( � ) �( � ) �( � )6 O t h e r s 6 7 8 . 2 8( 4 8 2 . 1 8 ) 6 7 8 . 2 8( 4 8 2 . 1 8 ) 4 5 0 . 8 2( 3 4 7 . 0 3 ) 1 8 8 . 5 1( 0 . 8 8 ) �( � )7 L e s s :P r o v i s i o n h e l dt o w a r d sd e p r e c i a t i o no n i n v e s t m e n t 2 3 . 9 1( 7 . 9 2 ) X X X X X X X X X X X X8 L e s s :P r o v i s i o n h e l dt o w a r d s n o np e r f o r m i n gi n v e s t m e n t s 7 8 . 0 9( 1 7 . 5 3 ) X X X X X X X X X X X XT o t a l 4 6 0 0 . 9 1( 3 6 5 6 . 4 8 ) 2 3 7 6 . 9 8( 1 7 6 8 . 1 4 ) 5 2 1 . 1 8( 8 0 4 . 4 1 ) 2 0 3 . 5 1( 1 0 6 . 7 7 ) 6 4 . 9 8( 6 4 . 9 8 )P r e v i o u s y e a r ’ s f i g u r e s a r e g i v e n i n b r a c k e t sA m o u n t s r e p o r t e d u n d e r c o l u m n ( 4 ) , ( 5 ) , ( 6 ) a n d ( 7 ) a b o v e a r e n o t m u t u a l l y e x c l u s i v e* e x c l u d e s i n v e s t m e n t s i n n o n � S L R g o v e r n m e n t s e c u r i t i e s a m o u n t i n g t o�
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3 6 . 2 5 C r o r e )* * E x c l u d e s i n v e s t m e n t s i n e q u i t y s h a r e s , u n i t s i s s u e d b y v e n t u r e c a p i t a l f u n d s ,p a s s t h r o u g h c e r t i f i c a t e s , s e c u r i t y a c q u i r e d b y w a y o f c o n v e r s i o n o f d e b t ,c o m m e r c i a l P a p e r a n d c e r t i f i c a t e o f d e p o s i t s i n l i n e w i t h e x t a n t R B Ig u i d e l i n e s .* * * E x c l u d e s i n v e s t m e n t s i n e q u i t y s h a r e s , u n i t s i s s u e d b y v e n t u r e c a p i t a l f u n d s ,p a s s t h r o u g h c e r t i f i c a t e s , s e c u r i t y r e c e i p t s , s e c u r i t y a c q u i r e d b y w a y o fc o n v e r s i o n o f d e b t , c o m m e r c i a l P a p e r a n d c e r t i f i c a t e o f d e p o s i t s i n l i n e w i t he x t a n t R B I g u i d e l i n e s .F-174
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3 6 . 2 5 C r o r e )c ) N o n ã p e r f o r m i n g N o n ã S L R i n v e s t m e n t s i s s e t o u t b e l o w : (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5O p e n i n g B a l a n c e 1 7 . 5 3 4 . 6 7A d d i t i o n s d u r i n g t h e y e a r 2 1 7 . 9 8 1 2 . 8 6R e d u c t i o n s d u r i n g t h e y e a r 2 . 8 6 ãC l o s i n g B a l a n c e 2 3 2 . 6 5 1 7 . 5 3T o t a l P r o v i s i o n h e l d 7 8 . 0 9 1 7 . 5 3d ) I n a c c o r d a n c e w i t h R B I C i r c u l a r D B R . B P . B C . N o . 3 1 / 2 1 . 0 4 . 0 1 8 / 2 0 1 5 ã 1 6 d a t e d J u l y1 6 , 2 0 1 5 , t h e B a n k h a s , e f f e c t i v e f r o m S e p t e m b e r 3 0 , 2 0 1 5 i n c l u d e d i t s d e p o s i t sp l a c e d w i t h N A B A R D , S I D B I a n d N H B o n a c c o u n t o f s h o r t f a l l i n l e n d i n g t op r i o r i t y s e c t o r u n d e r ' O t h e r A s s e t s ' . H i t h e r t o t h e s e w e r e i n c l u d e d u n d e r' I n v e s t m e n t s ' a n d I n t e r e s t i n c o m e t h e r e o n w a s i n c l u d e d u n d e r ' I n t e r e s t E a r n e d ãI n c o m e o n I n v e s t m e n t s ' . A r i s i n g o u t o f r e g r o u p i n g i n l i n e w i t h t h e a b o v e m e n t i o n e dR B I g u i d e l i n e s , i n t e r e s t i n c o m e o n d e p o s i t p l a c e d w i t h N A B A R D , S I D B I a n d N H Bi s i n c l u d e d u n d e r " I n t e r e s t E a r n e d ã O t h e r s " . F i g u r e s f o r t h e p r e v i o u s y e a r h a v eb e e n r e g r o u p e d / r e c l a s s i f i e d t o c o n f o r m t o c u r r e n t y e a r c l a s s i f i c a t i o n . T h e a b o v ec h a n g e i n c l a s s i f i c a t i o n h a s n o i m p a c t o n t h e p r o f i t o f t h e B a n k f o r t h e y e a r e n d e dM a r c h 3 1 , 2 0 1 6 a n d M a r c h 3 1 , 2 0 1 5 .1 . 4 . 5 . S a l e a n d t r a n s f e r s t o / f r o m H T M C a t e g o r yD u r i n g t h e c u r r e n t y e a r , t h e v a l u e o f s a l e s / t r a n s f e r s o f s e c u r i t i e s t o / f r o m H T Mc a t e g o r y ( e x c l u d i n g o n e ã t i m e t r a n s f e r o f s e c u r i t i e s a n d s a l e s t o R B I u n d e r O M Oa u c t i o n s ) w a s w i t h i n 5 % o f t h e b o o k v a l u e o f i n v e s t m e n t s h e l d i n H T M c a t e g o r ya t t h e b e g i n n i n g o f t h e y e a r .1 . 5 . D e r i v a t i v e sD i s c l o s u r e i n r e s p e c t o f O u t s t a n d i n g I n t e r e s t R a t e S w a p s ( I R S ) a n d F o r w a r d R a t eA g r e e m e n t ( F R A )F-175
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1 . 5 . 1 E x c h a n g e T r a d e d I n t e r e s t R a t e D e r i v a t i v e s : (� i n C r o r e )S l .N o . P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5( i ) N o t i o n a l p r i n c i p a l a m o u n t o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e su n d e r t a k e n d u r i n g t h e y e a r ( i n s t r u m e n t ~w i s e ) N i l N i l( i i ) N o t i o n a l p r i n c i p a l a m o u n t o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e so u t s t a n d i n g a s o n 3 1 s t M a r c h 2 0 1 6 N i l N i l( i i i ) N o t i o n a l p r i n c i p a l a m o u n t o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e so u t s t a n d i n g a n d n o t " h i g h l y e f f e c t i v e "( I n s t r u m e n t w i s e ) N i l N i l( i v ) M a r k ~ t o ~ m a r k e t v a l u e o f e x c h a n g et r a d e d i n t e r e s t r a t e d e r i v a t i v e so u t s t a n d i n g a n d n o t " h i g h l y e f f e c t i v e "( i n s t r u m e n t w i s e ) N i l N i l1 . 5 . 2 F o r w a r d R a t e A g r e e m e n t ( F R A ) / I n t e r e s t R a t e S w a p ( I R S ) (� i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h2 0 1 5i ) T h e n o t i o n a l p r i n c i p a l o f s w a p a g r e e m e n t si i ) L o s s e s w h i c h w o u l d b e i n c u r r e d i f c o u n t e rp a r t i e s f a i l e d t o f u l f i l t h e i r o b l i g a t i o n s u n d e rt h e a g r e e m e n t si i i ) C o l l a t e r a l r e q u i r e d b y t h e b a n k u p o ne n t e r i n g i n t o s w a p si v ) C o n c e n t r a t i o n o f c r e d i t r i s k a r i s i n g f r o mt h e s w a p sv ) T h e f a i r v a l u e o f t h e s w a p b o o k 2 2 0 0 . 0 07 . 0 4N i lN i l0 . 0 1 1 2 4 6 . 6 03 . 8 6N i lN i l0 . 4 6T h e n a t u r e a n d t e r m s o f t h e I R S a s o n 3 1 M a r c h , 2 0 1 6 a r e s e t o u t b e l o w : (��i n C r o r e )N a t u r e N o s . N o t i o n a lP r i n c i p a l B e n c h m a r k T e r m sT r a d i n g 3 5 1 0 2 5 N S E M I B O R F i x e d p a y a b l e v / s f l o a t i n gr e c e i v a b l eT r a d i n g 3 4 1 0 2 5 N S E M I B O R F i x e d R e c e i v a b l e / f l o a t i n gp a y a b l eT r a d i n g 6 1 5 0 N S E M I B O R F i x e d R e c e i v a b l e / f l o a t i n gp a y a b l e
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T h e n a t u r e a n d t e r m s o f t h e I R S a s o n 3 1 M a r c h , 2 0 1 5 a r e s e t o u t b e l o w : (��i n C r o r e )N a t u r e N o s . N o t i o n a lP r i n c i p a l B e n c h m a r k T e r m sT r a d i n g 2 5 6 2 5 N S E M I B O R F i x e d p a y a b l e v / s f l o a t i n gr e c e i v a b l eT r a d i n g 2 5 6 2 1 . 6 0 N S E M I B O R F i x e d R e c e i v a b l e / f l o a t i n gp a y a b l eT h e b a n k h a s n o t u n d e r t a k e n a n y t r a n s a c t i o n s i n C r e d i t D e f a u l t S w a p s ( C D S ) d u r i n gt h e y e a r 3 1 M a r c h , 2 0 1 6 a n d 3 1 M a r c h , 2 0 1 5 .1 . 5 . 3 . D i s c l o s u r e o n R i s k e x p o s u r e i n D e r i v a t i v e sQ u a l i t a t i v e d i s c l o s u r e s :( a ) S t r u c t u r e a n d o r g a n i z a t i o n f o r m a n a g e m e n t o f r i s k i n d e r i v a t i v e s t r a d i n g , t h es c o p e a n d n a t u r e o f r i s k m e a s u r e m e n t , r i s k r e p o r t i n g a n d r i s k m o n i t o r i n gs y s t e m s , p o l i c i e s f o r h e d g i n g a n d / o r M i t i g a t i n g r i s k a n d s t r a t e g i e s a n dp r o c e s s e s f o r m o n i t o r i n g t h e c o n t i n u i n g e f f e c t i v e n e s s o f H e d g e s / m i t i g a n t s :D e r i v a t i v e s a r e f i n a n c i a l i n s t r u m e n t s w h o s e c h a r a c t e r i s t i c s a r e d e r i v e d f r o m a nu n d e r l y i n g a s s e t , o r f r o m i n t e r e s t a n d e x c h a n g e r a t e s o r i n d i c e s . T h e B a n ku n d e r t a k e s o v e r t h e c o u n t e r a n d E x c h a n g e T r a d e d d e r i v a t i v e t r a n s a c t i o n s f o rB a l a n c e S h e e t m a n a g e m e n t a n d a l s o f o r p r o p r i e t a r y t r a d i n g / m a r k e t m a k i n gw h e r e b y t h e B a n k o f f e r s d e r i v a t i v e p r o d u c t s t o t h e c u s t o m e r s t o e n a b l e t h e m t oh e d g e t h e i r i n t e r e s t r a t e a n d c u r r e n c y r i s k s w i t h i n t h e p r e v a l e n t r e g u l a t o r yg u i d e l i n e s .P r o p r i e t a r y t r a d i n g i n c l u d e s I n t e r e s t R a t e F u t u r e s , C u r r e n c y F u t u r e s a n d R u p e eI n t e r e s t R a t e S w a p s u n d e r d i f f e r e n t b e n c h m a r k s ( v i z . M I B O R , M I F O R ) i n b o t hO T C a n d e x c h a n g e t r a d e d d e r i v a t i v e s . T h e B a n k a l s o u n d e r t a k e s t r a n s a c t i o n s i nL o n g T e r m F o r e x C o n t r a c t s ( L T F X ) f o r h e d g i n g i t s B a l a n c e S h e e t a n d a l s o o f f e r st h e m t o i t s c u s t o m e r s . T h e s e t r a n s a c t i o n s e x p o s e t h e B a n k t o v a r i o u s r i s k s ,p r i m a r i l y c r e d i t , m a r k e t , l e g a l , r e p u t a t i o n a n d o p e r a t i o n a l r i s k . T h e B a n k h a sa d o p t e d t h e f o l l o w i n g m e c h a n i s m f o r m a n a g i n g r i s k s a r i s i n g o u t o f t h e d e r i v a t i v et r a n s a c t i o n s .T h e T r e a s u r y f r o n t o f f i c e e n t e r s i n t o d e r i v a t i v e t r a n s a c t i o n w i t h c u s t o m e r s a n di n t e r b a n k c o u n t e r p a r t i e s . T h e B a n k h a s a n i n d e p e n d e n t b a c k o f f i c e a n d m i d o f f i c ea s p e r r e g u l a t o r y g u i d e l i n e s . D e r i v a t i v e d e a l s a r e g e n e r a l l y e x e c u t e d f o r m a r k e tm a k i n g a n d a l s o N e w d e r i v a t i v e p r o d u c t h a s b e e n s t a r t e d d u r i n g t h e y e a r V i z .E x c h a n g e t r a d e d O I S . T h e r i s k i n t h e d e r i v a t i v e s i s m o n i t o r e d o n d a i l y o r m o n t h l yb a s i s b y a s s e s s i n g m a r k e d t o m a r k e t p o s i t i o n ( M T M ) o f t h e e n t i r e p o r t f o l i o a n d t h ei m p a c t o n a c c o u n t o f t h e p r o b a b l e m a r k e t m o v e m e n t s . T h e r i s k p r o f i l e o f t h eo u t s t a n d i n g p o r t f o l i o i s r e v i e w e d b y t h e B o a r d a t r e g u l a r i n t e r v a l s . T h e c u r r e n to u t s t a n d i n g u n d e r t h e d e r i v a t i v e s p o r t f o l i o w e r e e x e c u t e d f o r t r a d i n g p u r p o s e s .T h e d e r i v a t i v e t r a n s a c t i o n s a r e g o v e r n e d b y t h e d e r i v a t i v e p o l i c y a n d m a r k e t r i s km a n a g e m e n t p o l i c y o f t h e B a n k a s w e l l a s b y t h e e x t a n t R B I g u i d e l i n e s . V a r i o u sr i s k l i m i t s a r e s e t u p a n d a c t u a l e x p o s u r e s a r e m o n i t o r e d v i s � à � v i s t h e l i m i t sa l l o c a t e d . T h e s e l i m i t s a r e s e t u p t a k i n g i n t o a c c o u n t m a r k e t v o l a t i l i t y , r i s k a p p e t i t e ,
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b u s i n e s s s t r a t e g y a n d m a n a g e m e n t e x p e r i e n c e . R i s k l i m i t s a r e i n p l a c e f o r r i s kp a r a m e t e r s v i z . V a l u e a t R i s k ( V a R ) , S t o p L o s s . A c t u a l p o s i t i o n s a r e m o n i t o r e da g a i n s t t h e s e l i m i t s o n a d a i l y b a s i s a n d b r e a c h e s , i f a n y , a r e r e p o r t e d p r o m p t l y .R i s k a s s e s s m e n t o f t h e p o r t f o l i o i s u n d e r t a k e n p e r i o d i c a l l y .H e d g i n g t r a n s a c t i o n s a r e u n d e r t a k e n b y t h e B a n k t o p r o t e c t t h e v a r i a b i l i t y i n t h e f a i rv a l u e o r t h e c a s h f l o w o f t h e u n d e r l y i n g B a l a n c e S h e e t i t e m . T h e s e d e a l s a r ea c c o u n t e d o n a n a c c r u a l b a s i s e x c e p t t h e s w a p d e s i g n a t e d w i t h a n a s s e t / l i a b i l i t y t h a ti s c a r r i e d a t m a r k e t v a l u e o r l o w e r o f c o s t o r m a r k e t v a l u e . I n t h a t c a s e , t h e s w a p i sm a r k e d t o m a r k e t w i t h t h e r e s u l t i n g g a i n o r l o s s r e c o r d e d a s a n a d j u s t m e n t t o t h em a r k e t v a l u e o f d e s i g n a t e d a s s e t o r l i a b i l i t y .( b ) A c c o u n t i n g p o l i c y f o r r e c o r d i n g h e d g e a n d n o n U h e d g e t r a n s a c t i o n s , r e c o g n i t i o no f i n c o m e , P r e m i u m s a n d d i s c o u n t s , v a l u a t i o n o f o u t s t a n d i n g c o n t r a c t sB a n k d e a l s i n d e r i v a t i v e s f o r h e d g i n g G \ S e c o r f o r e i g n c u r r e n c y a s s e t s / l i a b i l i t i e ss u b j e c t t o t h e p r e v a i l i n g r e g u l a t o r y g u i d e l i n e s . T r a n s a c t i o n s f o r h e d g i n g a n d t r a d i n ga r e r e c o r d e d s e p a r a t e l y . F o r h e d g e t r a n s a c t i o n s , t h e B a n k i d e n t i f i e s t h e h e d g e d i t e m( a s s e t o r l i a b i l i t y ) a t t h e i n c e p t i o n o f t h e t r a n s a c t i o n i t s e l f . T h e e f f e c t i v e n e s s i sa s c e r t a i n e d a t t h e t i m e o f i n c e p t i o n o f t h e h e d g e a n d p e r i o d i c a l l y t h e r e a f t e r . H e d g ed e r i v a t i v e t r a n s a c t i o n s a r e a c c o u n t e d f o r i n a c c o r d a n c e w i t h t h e h e d g e a c c o u n t i n gp r i n c i p l e s .A c c o u n t i n g f o r t r a d i n g p u r p o s e d e p e n d s o n t y p e o f i n s t r u m e n t : \•
T r a n s a c t i o n r e l a t i n g f o r f o r e i g n e x c h a n g e f o r w a r d a r e m a r k e d t o m a r k e t a n dt h e r e s u l t i n g g a i n / l o s s i s r e c o r d e d i n t h e P r o f i t a n d L o s s A c c o u n t .•
T r a n s a c t i o n r e l a t i n g t o I n t e r e s t r a t e F u t u r e / I R S / C u r r e n c y f u t u r e a r e m a r k e d t om a r k e t e v e r y m o n t h a n d t h e M T M l o s s e s i n t h e b a s k e t a r e a c c o u n t e d i n t h eb o o k s w h i l e M T M p r o f i t s a r e i g n o r e d( c ) C o l l a t e r a l S e c u r i t yW e h a v e p r o v i d e d S u f f i c i e n t C o l l a t e r a l S e c u r i t y t o C e n t r a l c o u n t e r P a r t i e s a n dE x c h a n g e s w h e r e v e r A p p l i c a b l eA s p e r m a r k e t p r a c t i c e , n o c o l l a t e r a l s e c u r i t y i s i n s i s t e d o n f o r t h e c o n t r a c t s w i t hc o u n t e r p a r t i e s l i k e B a n k s / P r i m a r y D e a l e r s ( P D s ) e t c . F o r d e a l s w i t h C o r p o r a t eC l i e n t s , a p p r o p r i a t e c o l l a t e r a l s e c u r i t y / m a r g i n e t c . i s s t i p u l a t e d w h e r e v e r c o n s i d e r e dn e c e s s a r y .( d ) C r e d i t R i s k M i t i g a t i o nM o s t o f t h e d e a l s h a v e b e e n c o n t r a c t e d w i t h B a n k s / M a j o r P D s a n d n o d e f a u l t r i s ki s a n t i c i p a t e d o n t h e d e a l s w i t h t h e m . C u r r e n t l y E x c h a n g e T r a d e d d e r i v a t i v ec o n t r a c t s a r e d o n e f o r o t h e r c l i e n t s .F-178
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Q u a n t i t a t i v e D i s c l o s u r e s (��i n C r o r e )S l .N o P a r t i c u l a r s C u r r e n c y D e r i v a t i v e s * I n t e r e s t r a t e D e r i v a t i v e sY e a r e n d e dM a r c h 3 1 ,2 0 1 6 Y e a r e n d e dM a r c h 3 1 ,2 0 1 5 Y e a r e n d e dM a r c h 3 1 ,2 0 1 6 Y e a r e n d e dM a r c h 3 1 ,2 0 1 5( i ) D e r i v a t i v e s ( N o t i o n a lP r i n c i p a l A m o u n t )a ) F o r h e d g i n g » » 1 5 0 . 0 0 »b ) F o r t r a d i n g » » 2 0 5 0 . 0 0 1 2 4 6 . 6 0( i i ) M a r k e d t o M a r k e tp o s i t i o n sa ) A s s e t ( + ) » » 7 . 0 4 3 . 8 6b ) L i a b i l i t i e s ( » ) » » » 7 . 0 4 » 3 . 4 0( i i i ) C r e d i t E x p o s u r e » » 2 5 . 6 6 1 3 . 8 4( i v ) L i k e l y i m p a c t o f o n ep e r c e n t a g e c h a n g e i ni n t e r e s t r a t e ( 1 0 0 * P V 0 1 )a ) o n h e d g i n g d e r i v a t i v e s » » 6 . 0 8 »b ) o n t r a d i n g d e r i v a t i v e s » » » 0 . 7 8 0 . 0 0 3( v ) M a x i m u m a n d M i n i m u mo f 1 0 0 * P V 0 1 o b s e r v e dd u r i n g t h e y e a ra ) o n h e d g i n g » » M a x 0 . 6 2 4M i n 0 . 1 8 0 »b ) o n t r a d i n g » » M a x 0 . 1 4 9M i n »0 . 6 8 8 M a x 0 . 0 0 3M i n 0 . 0 0 3* e x c l u d e s f o r w a r d e x c h a n g e c o n t r a c t .
� T h e n o t i o n a l p r i n c i p a l a m o u n t o f f o r w a r d e x c h a n g e c o n t r a c t s c l a s s i f i e d a s H e d g i n ga n d T r a d i n g o u t s t a n d i n g a s o n M a r c h 3 1 , 2 0 1 6 a m o u n t e d t o � 1 5 8 9 . 1 8 C r o r e( P r e v i o u s y e a r �� 2 8 0 4 . 0 7 C r o r e ) a n d � 1 2 6 5 2 . 9 4 C r o r e ( P r e v i o u s y e a r � 9 8 2 6 . 7 6C r o r e ) r e s p e c t i v e l y . T h e m a r k e d t o M a r k e t p o s i t i o n ( A s s e t ) o f t h e s e c o n t r a c t s a r e� 2 1 . 1 5 C r o r e ( P r e v i o u s y e a r �5 1 . 5 8 C r o r e ) C r e d i t e x p o s u r e o n f o r w a r d e x c h a n g ec o n t r a c t s a t M a r c h 3 1 , 2 0 1 6 w a s ��2 2 7 . 7 6 C r o r e ( P r e v i o u s y e a r � 5 5 4 . 2 5 C r o r e ) .
� T h e n o t i o n a l p r i n c i p a l a m o u n t s o f d e r i v a t i v e s r e f l e c t t h e v o l u m e o f t r a n s a c t i o n so u t s t a n d i n g a s a t t h e B a l a n c e S h e e t d a t e a n d d o n o t r e p r e s e n t t h e a m o u n t s a t r i s k .� I n t e r e s t r a t e d e r i v a t i v e r e p r e s e n t s i n t e r e s t r a t e s w a p s .� T h e b a n k h a s c o m p u t e d t h e m a x i m u m a n d m i n i m u m o f P V 0 1 f o r t h e y e a r b a s e d o nt h e b a l a n c e s a s a t t h e e n d o f e v e r y m o n t h .� I n r e s p e c t o f d e r i v a t i v e c o n t r a c t s , t h e b a n k e v a l u a t e s t h e c r e d i t e x p o s u r e a r i s i n gt h e r e f r o m , i n l i n e w i t h R B I g u i d e l i n e s . C r e d i t e x p o s u r e h a s b e e n c o m p u t e d u s i n gt h e c u r r e n t e x p o s u r e m e t h o d w h i c h i s t h e s u m o f :a ) T h e c u r r e n t r e p l a c e m e n t c o s t ( M a r k e d t o M a r k e t v a l u e i n c l u d i n g a c c r u a l s o ft h e c o n t r a c t ) o r z e r o w h i c h e v e r i s h i g h e r .b ) T h e P o t e n t i a l F u t u r e E x p o s u r e ( P F E ) i s a p r o d u c t o f t h e n o t i o n a l p r i n c i p a la m o u n t o f t h e c o n t r a c t a n d a f a c t o r t h a t i s b a s e d o n t h e g r i d o f c r e d i tc o n v e r s i o n f a c t o r p r e s c r i b e d i n R B I G u i d e l i n e s , w h i c h i s a p p l i e d o n t h e b a s i so f t h e r e s i d u a l m a t u r i t y a n d t h e t y p e o f c o n t r a c t .
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1 . 6 . A s s e t Q u a l i t y1 . 6 . 1 N e t n o n í p e r f o r m i n g a s s e t sP a r t i c u l a r s 3 1 M a r c h ,2 0 1 6% 3 1 M a r c h ,2 0 1 5%N e t n o n � p e r f o r m i n g a s s e t s a s a p e r c e n t a g e o fn e t a d v a n c e s . 1 . 6 4 0 . 7 31 . 6 . 2 M o v e m e n t i n g r o s s n o n í p e r f o r m i n g a s s e t s (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5G r o s s N P A s a s a t t h e b e g i n n i n g o f t h e y e a r 1 0 5 7 . 7 3 1 0 8 7 . 4 1A d d i t i o n s ( F r e s h N P A s ) d u r i n g t h e y e a r 1 8 9 5 . 4 1 8 1 4 . 1 0S u b t o t a l ( A ) 2 9 5 3 . 1 4 1 9 0 1 . 5 1L e s s :( i ) U p g r a d a t i o n s 2 1 9 . 4 3 2 5 9 . 4 6( i i ) R e c o v e r i e s ( e x c l u d i n g r e c o v e r i e s m a d ef r o m u p g r a d e d a c c o u n t s ) 2 0 1 . 1 8 2 0 9 . 4 3( i i i ) T e c h n i c a l / P r u d e n t i a l W r i t e – o f f s 4 4 8 . 4 8 2 2 5 . 1 0( i v ) W r i t e – o f f s o t h e r t h a n t h o s e u n d e r ( i i i )a b o v e 3 . 5 9 8 . 3 6( v ) R e d u c t i o n b y S a l e o f A s s e t s t o A R C s 4 1 2 . 6 9 1 4 1 . 4 3S u b � t o t a l ( B ) 1 2 8 5 . 3 7 8 4 3 . 7 8G r o s s N P A s a s a t t h e e n d o f t h e y e a r * ( A � B ) 1 6 6 7 . 7 7 1 0 5 7 . 7 3* a f t e r c o n s i d e r i n g t e c h n i c a l / P r u d e n t i a l W r i t e – O f f sC l o s i n g G r o s s N P A s b e f o r e t e c h n i c a l / P r u d e n t i a l W r i t e – O f f s i s�
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2 5 . 4 6 C r o r e ) a sp e r m i t t e d b y R B I v i d e C i r c u l a r D B R . N o . B P . B C . 7 5 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 � 1 5 d a t e dM a r c h 1 1 , 2 0 1 5 . T h i s r e v e r s a l h a s b e e n u t i l i s e d f o r C r e a t i o n o f N P A P r o v i s i o nd u r i n g t h e P r e v i o u s Y e a r .1 . 6 . 5 M o v e m e n t i n f l o a t i n g p r o v i s i o n i s s e t o u t b e l o w : (� i n C r o r e )P a r t i c u l a r s S t a n d a r d A s s e t sP r o v i s i o n N P A P r o v i s i o n2 0 1 5 J 1 6 2 0 1 4 J 1 5 2 0 1 5 J 1 6 2 0 1 4 J 1 5( a ) O p e n i n g B a l a n c e( b ) A d d i t i o n a l p r o v i s i o n f o r t h ey e a r( c ) D r a w d o w n d u r i n g t h e y e a r *( d ) C l o s i n g B a l a n c e 1 2 . 7 5N i lN i l1 2 . 7 5 2 5 . 5 0N i l1 2 . 7 51 2 . 7 5 1 3 8 . 1 8N i l6 9 . 0 06 9 . 1 8 1 7 9 . 5 2N i l4 1 . 3 41 3 8 . 1 8* F l o a t i n g p r o v i s i o n h a s b e e n u t i l i s e d i n a c c o r d a n c e w i t h R B I c i r c u l a r sD B O D . N o . B P . 9 5 / 2 1 . 0 4 . 0 4 8 / 2 0 1 3 � 1 4 d a t e d F e b r u a r y 7 , 2 0 1 4 a n dD B R . N o . B P . B C . 7 9 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 � 1 5 d a t e d M a r c h 3 0 , 2 0 1 5 .1 . 6 . 6 T h e P r o v i s i o n c o v e r a g e r a t i o o f t h e b a n k a s o n 3 1 M a r c h , 2 0 1 6 , c o m p u t e d i n t e r m so f t h e R B I G u i d e l i n e s w a s 7 2 . 0 5 % ( P r e v i o u s Y e a r 8 3 . 9 4 % ) .1 . 6 . 7 M o v e m e n t o f P r o v i s i o n o n S t a n d a r d A s s e t s (��i n C r o r e )P a r t i c u l a r s 2 0 1 5 J 1 6 2 0 1 4 J 1 5( a ) O p e n i n g B a l a n c e( b ) A d d i t i o n / A d j u s t m e n t s d u r i n g t h e y e a r( c ) D e d u c t i o n d u r i n g t h e y e a r( d ) C l o s i n g B a l a n c e * 2 8 6 . 9 32 9 . 5 0�3 1 6 . 4 3 2 4 5 . 5 85 4 . 1 01 2 . 7 52 8 6 . 9 3* I n c l u d e s P r o v i s i o n h e l d t o w a r d s U n h e d g e d F o r e i g n C u r r e n c y E x p o s u r e o fC u s t o m e r s a m o u n t i n g �
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b)Oth erF acilit y1062 .735 .4014 .31 ä1082 .441136 .8423 .1135 .96 ä1195 .91
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M ovementi n b al ancef or account s appeari ngund er openi ngb al ance 1N o .ofb orrowers12(7)(15)(13)(23)15(7)(15)(13)(20)
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(355 .20)(0 .70)(2 .05)(0 .24)(358 .19)(218 .72)(0 .70)(2 .04)(0 .24)(221 .70)
b)Oth erF acilit y(554 .12)0 .08(0 .07) ä(554 .11)(583 .89)0 .08(5 .33) ä(589 .14)
P rovi si onth ereon56 .46(1 .40)(0 .13)(0 .02)54 .9195 .68(1 .39)(0 .14)(0 .02)94 .13
F resh R est ruct uri ng d uri ngth eyear2N o .ofb orrowers30 äää3030
äää30
A mount O ut st andi ng – ( a)R est ruct ured f acilit y77 .84 äää77 .8477 .84 äää77 .84
b)Oth erF acilit y14 .39 äää14 .3914 .39 äää14 .39
P rovi si onth ereon 4 .64 äää4 .644 .64äää4 .64
U pgrad ati ont oN o .ofb orrowers14(7)(4)(3) �14(7)(4)(3) �
F-184
16
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub ! St and ardD oubtf ulL ossT ot alSt and ardS ub ! St and ardD oubtf ulL ossT ot al
rest ruct ured st and ard cat egory d uri ngth eFYA mountO ut st andi ng –( a)R est ruct ured f acilit y0 .72(0 .40)(0 .25)(0 .07) N0 .72(0 .40)(0 .25)(0 .07) N
b)Oth erF acilit y NNNNNNNNNN
P rovi si onth ereon NNNNNNNNNN
R est ruct ured St and ard Ad vanceswhi ch ceaset oatt ract hi gh er provi si oni ng and/ oradditi onal ri sk wei ght atth e end ofFYN o .ofb orrowers(218)(218)(221)(221)
A mountO ut st andi ng –( a)R est ruct ured f acilit y(215 .56)(215 .56)(277 .97)(277 .97)
b)Oth erF acilit y(41 .38)(41 .38)(46 .38)
(46 .38)
P rovi si onth ereon NNNN
D owngrad ati on of rest ruct ured account sd uri ng th eFYN o .ofb orrowers(82)361531 N(89)421532 N
A mountO ut st andi ng –( a)R est ruct ured f acilit y(269 .11)189 .8378 .320 .96 N(527 .87)444 .8478 .324 .71 N
b)Oth erF acilit y(234 .28)228 .855 .410 .02 N(270 .79)261 .585 .413 .80 N
P rovi si onth ereon(7 .09)7 .010 .040 .04 N(8 .29)8 .210 .040 .04 N
W rit e Noff s/S al e of rest ruct ured account sd uri ng th eFY3 ,4N o .ofb orrowers N(1)(6) N(7) N(3)(8) N(11)
A mountO ut st andi ng –( a)R est ruct ured f acilit yN(113 .84)(21 .29) N(135 .13) N (249 .28)(86 .59) N(335 .87)
b)Oth erF acilit y N(40 .95)(11 .32) N(52 .27) N(89 .74)(17 .71) N(107 .45)
P rovi si onth ereon N(1 .82)(0 .11) N(1 .93) N(2 .09)(4 .81) N(6 .90)
R est ruct ured account sason M arch31 ofth e FY( cl osi ngN o .ofb orrowers205574101250266075102263
A mountO ut st andi ng –( a)R est ruct ured f acilit y517 .92104 .3894 .522 .32719 .14803 .08250 .04134 .586 .071193 .77
F-185
17
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub � St and ardD oubtf ulL ossT ot alSt and ardS ub � St and ardD oubtf ulL ossT ot al
fi gures)5 b)Oth erF acilit y247 .34193 .388 .330 .02449 .07250 .17195 .0318 .333 .80467 .33
P rovi si onth ereon70 .025 .250 .180 .1175 .56115 .006 .450 .180 .11121 .74
1 I ncl ud esaccount scl osedd uri ngth eyearonaccount of payment of out st andi ngf aciliti esb yth eb orrowerand account swhi ch werenot att racti ng
hi gh erprovi si oni ngand/ oradditi onal ri sk wei ght atth eb egi nni ngofth eFi nanci alY ear
2 A mount report edh ererepresent sout st andi ngason31M arch ,2016
3 A mount out st andi ngund errest ruct uri ngf aciliti esi sout st andi ngb al anceason31 Õ03 Õ2015
4 I ncl ud essal eof rest ruct ured account sasf oll ows:
( �i nC rore)
U nd erCDRM ech ani smOth ers
St and ardS ub ã St and ardD oubtf ulL ossT ot alSt and ardS ub ã St and ardD oubtf ulL ossT ot al
N o .ofb orrowersÕ11 Õ2 Õ1 ÕÕ1
A mountO ut st andi ng ( a)R est ruct uredf acilit y@Õ 26 .0935 .81Õ 61 .90Õ 113 .84ÕÕ 113 .84
b)Oth erF acilit y@ Õ17 .714 .59 Õ22 .30 Õ40 .95 ÕÕ40 .95
P rovi si onth ereon@ Õ0 .27 ÕÕ0 .27 Õ1 .82 ÕÕ1 .82
@R epresent sb al anceason31 Õ03 Õ20155 Oth erF acilit yi ncl ud ei nvest ment si nB ond s/D eb ent uresamounti ngt o ��195.62C rore
6 Th erearenoSME caseswhi chh aveb eenrest ruct uredd uri ngth eyearend ed31M arch ,2016
F-186
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D et ail sofl oanasset ssubj ect edt orest ruct uri ngd uri ngth eyearend ed31M arch ,2015 :( �i nC rore)
T ypeofR est ruct uri ngU nd erCDRM ech ani smU nd erSMED ebtR est ruct uri ngM ech ani sm6
A ssetCl assifi cati onSt and ardS ub : St and ardD oubtf ulL ossT ot alSt and ardS ub : St and ardD oubtf ulL ossT ot al
R est ruct ured account sason A pril1 ofth e FY(O peni ng B al ance)N o .ofb orrowers1623 S21 SSS
SS
A mount O ut st andi ng – ( a)R est ruct ured f acilit y452 .6285 .7285 .84 S624 .18 SSSSS
b)Oth erF acilit y108 .854 .6714 .59 S128 .11 SSSSS
P rovi si onth ereon25 .517 .936 .91 S40 .35 SSSSS
M ovementi n b al ancef or account s appeari ngund er openi ng b al ance1N o .ofb orrowers SSSSSSSSSS
A mount O ut st andi ng – ( a)R est ruct ured f acilit y42 .06(9 .85)(1 .80) S30 .41 SSSSS
b)Oth erF acilit y27 .3315 .186 .47 S48 .98 SSSSS
P rovi si onth ereon(24 .13)(7 .94)(0 .01) S(32 .08) SSSSS
F resh R est ruct uri ng d uri ngth eyear 2N o .ofb orrowers4 SSS4 SSS
SS
A mount O ut st andi ng – ( a)R est ruct ured f acilit y115 .59SSS115 .59SSS
SS
b)Oth erF acilit y7 .45 SSS7 .45 SSS
SS
P rovi si onth ereon5 .90 SSS5 .90 SSS
SS
U pgrad ati ont o rest ruct ured st and ard cat egoryd uri ng th eFYN o .ofb orrowers SSSSSSSSSS
A mount O ut st andi ng – ( a)R est ruct ured f acilit ySSSSS SSS
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b)Oth erF acilit y SSSSSSSSSS
F-187
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T ypeofR est ruct uri ngU nd erCDRM ech ani smU nd erSMED ebtR est ruct uri ngM ech ani sm6
A ssetCl assifi cati onSt and ardS ub � St and ardD oubtf ulL ossT ot alSt and ardS ub � St and ardD oubtf ulL ossT ot al
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fi gures)5 f acilit y b)Oth erF acilit y74 .1117 .7121 .65 �113 .47 �����
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R est ruct ured account sason A pril1 ofth e FY(O peni ng B al ance)N o .ofb orrowers36852127916383845413091659
A mount O ut st andi ng – ( a)R est ruct ured f acilit y1323 .5220 .3890 .852 .501437 .251776 .14106 .10176 .692 .502061 .43
b)Oth erF acilit y1105 .4913 .5731 .33 �1150 .391214 .3418 .2445 .92 �1278 .50
P rovi si onth ereon35 .523 .131 .080 .1639 .8961 .0311 .067 .990 .1680 .24
M ovementi n b al ancef or account s appeari ngund er openi ngb al ance 1N o .ofb orrowers(40)4(25)(1)(62)(40)4(25)(1)(62)
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(66 .31)6 .78(7 .41)(0 .17)(67 .11)(24 .25)(3 .07)(9 .21)(0 .17)(36 .70)
b)Oth erF acilit y37 .186 .31(21 .63)0 .1922 .0564 .5121 .39(15 .06)0 .1971 .03
P rovi si onth ereon(17 .83)(2 .91)(0 .87)(0 .08)(21 .69)(41 .96)(10 .85)(0 .88)(0 .08)(53 .77)
F resh R est ruct uri ng d uri ngth eyear2N o .ofb orrowers158 ���158162
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A mount O ut st andi ng – ( a)R est ruct ured f acilit y204 .27 ���204 .27 319 .86���
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b)Oth erF acilit y46 .26 ���46 .2653 .71 ���53 .71
P rovi si onth ereon4 .17 ���4 .1710 .07 ���10 .07
F-189
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T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub n St and ardD oubtf ulL ossT ot alSt and ardS ub n St and ardD oubtf ulL ossT ot al
U pgrad ati ont o rest ruct ured st and ard cat egoryd uri ng th eFYN o .ofb orrowers16(12)�(4) � 16(12)
�(4)�
A mount O ut st andi ng – ( a)R est ruct ured f acilit y16 .62(13 .86)(2 .59)(0 .17) � 16 .62(13 .86)(2 .59)(0 .17) �
b)Oth erF acilit y9 .68(9 .68) ���9 .68(9 .68) ���
P rovi si onth ereon0 .02(0 .02)0 .01(0 .01) �0 .02(0 .02)0 .01(0 .01) �
R est ruct ured St and ard Ad vances whi ch ceaset o att racthi gh er provi si oni ng and/ or additi onal ri sk wei ght atth e end ofFYN o .ofb orrowers(208)(208)(213)(213)
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(169 .49)(169 .49) (251 .65)(251 .65 )
b)Oth erF acilit y(130 .69)(130 .69)(177 .56)(177 .56 )
P rovi si onth ereon (4 .43)(4 .43)(4 .48)
(4 .48)
D owngrad ati on of rest ruct ured account sd uri ng th eFYN o .ofb orrowers(28)(8)1620 �(29)(9)1820 �
A mount O ut st andi ng – ( a)R est ruct ured f acilit y(29 .20)17 .1911 .510 .50 � (55 .29)(32 .59)87 .380 .50 �
b)Oth erF acilit y(5 .19)(4 .80)9 .99 ��(22 .90)(6 .94)29 .84 ��
P rovi si onth ereon(1 .44)1 .260 .160 .02 �(1 .71)1 .530 .160 .02 �
W rit e �off s/S al e of rest ruct ured account sd uri ng th eFY3 ,4N o .ofb orrowers(2)(2)(34)(20)(58)(3)(2)(36)(20)(61)
A mount O ut st andi ng – ( a)R est ruct ured(0 .18)(1)(52 .57)(0 .99)(54 .74)(32 .35)(1)(107 .13)(0 .99)(141 .47)
F-190
22
T ypeofR est ruct uri ngOth ersT ot al
A ssetCl assifi cati onSt and ardS ub Æ St and ardD oubtf ulL ossT ot alSt and ardS ub Æ St and ardD oubtf ulL ossT ot al
f acilit y b)Oth erF acilit y ÜÜ(5 .38)(0 .19)(5 .57)(4 .94) Ü(24 .64)(0 .19)(29 .77)
P rovi si onth ereon ÜÜÜÜÜÜÜ(2 .19) Ü(2 .19)
R est ruct ured account sason M arch31 ofth e FY( cl osi ng fi gures)5N o .ofb orrowers264348486468277358786485
A mount O ut st andi ng – ( a)R est ruct ured f acilit y1279 .2329 .4939 .791 .671350 .18 1749 .0855 .58145 .141 .671951 .47
b)Oth erF acilit y1062 .735 .4014 .31 Ü1082 .441136 .8423 .0136 .06 Ü1195 .91
P rovi si onth ereon16 .011 .460 .380 .0917 .9422 .971 .725 .090 .0929 .87
1 I ncl ud esaccount scl osedd uri ngth eyearonaccount of payment of out st andi ngf aciliti esb yth eb orrowerand account swhi ch werenot att racti ng
hi gh erprovi si oni ngand/ oradditi onal ri sk wei ght atth eb egi nni ngofth eFi nanci alY ear
2 A mount report edh ererepresent sout st andi ngason31M arch ,2015
3 A mount out st andi ngund errest ruct uri ngf aciliti esi sout st andi ngb al anceason31 Ü03 Ü2014
4 I ncl ud essal eof rest ruct ured account sasf oll ows:
( �i nC rore)
U nd erCDRM ech ani smOth ers
St and ar dS ub � St and ar dD oubtf u lL ossT ot alSt and ardS ub � St and ardD oubtf ulL ossT ot al
N o .ofb orrowers1 Ü2 �3 ���11
A mountO ut st andi ng( a)R est ruct uredf acilit y@38 .11 Ü27 .64 � 59 .82���
5 .835 .83
b)Oth erF acilit y@4 .94 Ü19 .08 �24 .02 ���4 .514 .51
P rovi si onth ereon@ �Ü2 .19 �2 .19 ���ÜÜ
@R epresent sb al anceason31 Ü03 Ü20145 Oth erF acilit yi ncl ud ei nvest ment si nB ond s/D eb ent uresamounti ngt o �45 .03C rore .
6 Th erearenoSME caseswhi chh aveb eenrest ruct uredd uri ngth eyearend ed31M arch ,2015
F-191
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�1 . 6 . 1 0 D e t a i l s o f f i n a n c i a l a s s e t s s o l d t o S e c u r i t i s a t i o n / R e c o n s t r u c t i o n c o m p a n i e s f o rA s s e t R e c o n s t r u c t i o n : (��i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5S t a n d a r d N P A S t a n d a r d N P A( a ) N o o f a c c o u n t s( b ) A g g r e g a t e v a l u e ( n e t o f p r o v i s i o n )o f a c c o u n t s s o l d t o S C / R C( c ) A g g r e g a t e c o n s i d e r a t i o n( d ) A d d i t i o n a l c o n s i d e r a t i o n r e a l i s e di n r e s p e c t o f a c c o u n t s t r a n s f e r r e di n e a r l i e r y e a r s( e ) A g g r e g a t e g a i n / ( l o s s ) o v e r n e tb o o k v a l u e 25 1 . 1 05 1 . 1 0 [[ 5 53 4 3 . 4 62 2 1 . 3 2 [( 1 2 2 . 1 4 ) 33 8 . 0 64 1 . 8 8[3 . 8 2 8 28 7 . 9 49 6 . 9 3 [2 . 3 6D u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 , t h e B a n k h a d a s s i g n e d c e r t a i n N o n p e r f o r m i n gf i n a n c i a l a s s e t s t o A s s e t R e c o n s t r u c t i o n C o m p a n i e s . I n t e r m s o f R B I M a s t e r C i r c u l a rD B R . N o . B P . B C . 2 / 2 1 . 0 4 . 0 4 8 / 2 0 1 5 [ 1 6 o n P r u d e n t i a l n o r m s o n I n c o m e R e c o g n i t i o n ,A s s e t C l a s s i f i c a t i o n a n d P r o v i s i o n i n g p e r t a i n i n g t o A d v a n c e s d a t e d J u l y 1 , 2 0 1 5 , t h es h o r t f a l l a r r i v e d a t b y d e d u c t i n g s a l e c o n s i d e r a t i o n f r o m t h e N e t B o o k v a l u e o f t h ef i n a n c i a l a s s e t s , a m o u n t i n g t o �
1 2 2 . 1 4 C r o r e , i s a m o r t i s e d o v e r a p e r i o d o f t w o y e a r s .A c c o r d i n g l y , t h e b a n k h a s c h a r g e d t o t h e p r o f i t a n d l o s s a c c o u n t a n a m o u n t o f � 3 5 . 4 1C r o r e d u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 ( P r e v i o u s Y e a r : N i l ) a n d t h e b a l a n c e o f ��8 6 . 7 3 C r o r e w i l l b e a m o r t i s e d o v e r t h e n e x t f o u r q u a r t e r s .�1 . 6 . 1 1 D e t a i l s o f I n v e s t m e n t s h e l d a s S e c u r i t y R e c e i p t s r e c e i v e d b y s a l e o f N P A t oS e c u r i t i s a t i o n / R e c o n s t r u c t i o n C o m p a n i e s a s a t 3 1 M a r c h , 2 0 1 6 a n d 3 1 s M a r c h , 2 0 1 5a r e a s f o l l o w s : (
� i n C r o r e )P a r t i c u l a r s B a c k e d b y N P A ss o l d b y t h e b a n k a su n d e r l y i n g B a c k e d b y N P A ss o l d b y o t h e r b a n k s /f i n a n c i a li n s t i t u t i o n s / n o n �b a n k i n g f i n a n c i a lc o m p a n i e s a su n d e r l y i n g T o t a lA s a t3 1M a r c h ,2 0 1 6 A s a t3 1M a r c h ,2 0 1 5 A s a t3 1M a r c h ,2 0 1 6 A s a t3 1M a r c h ,2 0 1 5 A s a t3 1M a r c h ,2 0 1 6 A s a t3 1M a r c h ,2 0 1 5B o o k v a l u e o fi n v e s t m e n t s i ns e c u r i t y r e c e i p t s 5 6 3 . 2 3 4 1 0 . 2 4 [ [ 5 6 3 . 2 3 4 1 0 . 2 4N o t e : I n a d d i t i o n t o a b o v e , b a n k h o l d s s e c u r i t y r e c e i p t s o f �7 6 . 1 0 C r o r e ( P r e v i o u sY e a r : ��3 2 . 6 7 C r o r e ) w h i c h a r e b a c k e d b y s t a n d a r d a s s e t s s o l d b y t h e b a n k .
F-192
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1 . 6 . 1 2 D e t a i l s o f n o n § p e r f o r m i n g f i n a n c i a l a s s e t s p u r c h a s e d / s o l dA . D e t a i l s o f n o n ½ p e r f o r m i n g f i n a n c i a l a s s e t s p u r c h a s e d : (��
i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h2 0 1 6 3 1 s t M a r c h2 0 1 51 . ( a ) N o . o f a c c o u n t s p u r c h a s e d d u r i n g t h ey e a r N I L N I L( b ) A g g r e g a t e o u t s t a n d i n g2 . ( a ) O f t h e s e , n u m b e r o f a c c o u n t sr e s t r u c t u r e d d u r i n g t h e y e a r( b ) A g g r e g a t e o u t s t a n d i n gB . D e t a i l s o f n o n ½ p e r f o r m i n g f i n a n c i a l a s s e t s s o l d : (��
i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h2 0 1 6 3 1 s t M a r c h2 0 1 51 . N o o f A c c o u n t s s o l d N I L N I L2 . A g g r e g a t e o u t s t a n d i n g3 . A g g r e g a t e c o n s i d e r a t i o n r e c e i v e d1 . 6 . 1 3 D u r i n g t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 6 a n d 3 1 M a r c h , 2 0 1 5 t h e r e a r e n o u n s e c u r e da d v a n c e s f o r w h i c h i n t a n g i b l e s e c u r i t i e s s u c h a s c h a r g e o v e r t h e r i g h t s , l i c e n c e s ,a u t h o r i t y e t c . h a s b e e n t a k e n a s c o l l a t e r a l b y t h e B a n k .1 . 6 . 1 4 M o v e m e n t i n t e c h n i c a l / p r u d e n t i a l W r i t t e n o f f a c c o u n t s i s s e t o u t b e l o w : (�
i n C r o r e )P a r t i c u l a r s 3 1 . 0 3 . 2 0 1 6 3 1 . 0 3 . 2 0 1 5O p e n i n g b a l a n c e a t t h e b e g i n n i n g o f t h e y e a r 1 3 7 8 . 4 8 1 2 2 5 . 2 0A d d : T e c h n i c a l w r i t e ½ o f f s d u r i n g t h e y e a r 4 4 8 . 4 8 2 2 5 . 1 0S u b T o t a l ( A ) 1 8 2 6 . 9 6 1 4 5 0 . 3 0L e s s : R e d u c t i o n d u e t o r e c o v e r y m a d e f r o mp r e v i o u s l y t e c h n i c a l / p r u d e n t i a l w r i t t e n ½ o f fa c c o u n t s d u r i n g t h e y e a r 3 3 . 5 1 5 5 . 8 7L e s s : S a c r i f i c e m a d e f r o m p r e v i o u s l yt e c h n i c a l / p r u d e n t i a l w r i t t e n ½ o f f a c c o u n t s d u r i n gt h e y e a r 1 . 0 4 1 5 . 9 5S u b T o t a l ( B ) 3 4 . 5 5 7 1 . 8 2C l o s i n g b a l a n c e a t t h e e n d o f t h e y e a r ( A § B ) 1 7 9 2 . 4 1 1 3 7 8 . 4 8F-193
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1 . 7 . A s s e t L i a b i l i t y M a n a g e m e n tA m a t u r i t y p a t t e r n o f c e r t a i n i t e m s o f a s s e t s a n d l i a b i l i t i e s a t 3 1 M a r c h , 2 0 1 6 a n d 3 1M a r c h , 2 0 1 5 i s s e t o u t b e l o w :Y e a r e n d e d 3 1 M a r c h , 2 0 1 6 (��
i n C r o r e )M a t u r i t y P a t t e r n D e p o s i t s A d v a n c e s I n v e s t m e n t s B o r r o w i n g s F o r e i g nC u r r e n c yA s s e t s F o r e i g nC u r r e n c yL i a b i l i t i e sD a y 1 3 9 3 . 8 8 8 9 0 . 5 1 f 2 9 9 . 7 9 2 1 1 . 7 7 5 5 5 . 0 72 h 7 d a y s 7 9 8 . 4 4 1 1 2 3 . 8 7 2 0 7 0 . 3 6 8 6 6 . 6 3 1 0 9 9 . 8 5 1 5 . 9 48 h 1 4 d a y s 7 4 7 . 7 8 1 2 2 3 . 8 7 4 5 9 . 1 4 h 6 . 7 2 1 1 . 6 81 5 h 2 8 d a y s 1 6 0 8 . 9 6 5 0 6 . 2 8 3 3 8 . 6 0 h 4 0 . 5 2 2 0 . 6 32 9 d a y s t o 3m o n t h s 5 4 5 1 . 0 7 3 1 1 4 . 6 3 1 3 7 4 . 2 9 8 6 . 8 5 3 2 0 . 0 1 1 1 9 . 3 1O v e r 3 m o n t h sa n d u p t o 6m o n t h s 5 6 0 9 . 5 7 5 0 3 2 . 0 2 1 3 1 1 . 7 3 2 5 6 . 1 1 8 4 7 . 5 4 1 8 6 . 5 2O v e r 6 m o n t h sa n d u p t o 1 Y e a r 1 5 6 3 5 . 8 0 7 3 0 1 . 1 5 1 0 1 1 . 7 8 4 0 2 . 4 4 3 4 4 . 4 0 4 3 9 . 0 0O v e r 1 Y e a r a n du p t o 3 Y e a r s 3 1 2 7 3 . 8 5 2 6 7 5 2 . 3 6 2 9 8 0 . 6 5 2 5 9 . 8 6 8 2 . 2 5 8 3 1 . 6 0O v e r 3 Y e a r sa n d u p t o 5 Y e a r s 1 0 6 4 . 7 0 6 3 0 2 . 6 0 2 2 0 7 . 3 6 4 . 8 9 1 3 9 . 5 3 2 8 4 . 8 0O v e r 5 Y e a r s 1 6 5 8 7 . 6 6 5 8 4 2 . 8 6 1 0 4 6 3 . 5 8 h 2 2 . 7 1 0 . 5 3T o t a l 7 9 1 7 1 . 7 1 5 8 0 9 0 . 1 5 2 2 2 1 7 . 4 9 2 1 7 6 . 5 7 3 1 1 5 . 3 0 2 4 6 5 . 0 8Y e a r e n d e d 3 1 M a r c h , 2 0 1 5 (��i n C r o r e )M a t u r i t y P a t t e r n D e p o s i t s A d v a n c e s I n v e s t m e n t s B o r r o w i n gs F o r e i g nC u r r e n c yA s s e t s F o r e i g nC u r r e n c yL i a b i l i t i e sD a y 1 2 9 8 . 3 0 1 5 5 6 . 2 0 Π2 8 0 . 9 8 2 3 8 . 6 3 3 5 4 . 4 02 Π7 d a y s 1 0 3 9 . 8 2 1 3 7 5 . 4 9 2 3 0 5 . 7 9 3 1 8 . 1 2 6 2 5 . 0 0 1 3 . 7 48 Π1 4 d a y s 8 5 0 . 9 3 1 2 7 5 . 3 5 ΠΠ3 . 8 1 2 9 . 2 31 5 Π2 8 d a y s 1 7 0 8 . 6 1 6 5 8 . 0 7 1 9 6 . 3 7 Π1 . 5 6 4 0 . 1 72 9 d a y s t o 3 m o n t h s 5 7 4 4 . 0 8 4 3 0 5 . 3 6 1 2 7 4 . 9 4 3 1 . 2 5 5 4 0 . 4 7 2 4 1 . 7 5O v e r 3 m o n t h s a n du p t o 6 m o n t h s 6 6 5 2 . 7 0 3 9 1 9 . 7 9 1 0 5 . 6 4 4 1 9 . 1 0 5 0 9 . 9 6 3 5 6 . 4 2O v e r 6 m o n t h s a n du p t o 1 Y e a r 1 2 9 0 5 . 9 9 6 0 8 9 . 9 4 4 7 7 . 5 1 3 6 9 . 1 4 3 4 6 . 9 6 4 0 7 . 6 8O v e r 1 Y e a r a n du p t o 3 Y e a r s 2 5 9 5 0 . 7 8 2 5 4 0 7 . 1 3 2 3 4 . 6 7 8 2 9 . 8 6 9 0 . 3 5 4 1 7 . 7 0O v e r 3 Y e a r s a n du p t o 5 Y e a r s 1 3 9 7 . 8 8 3 4 1 2 . 4 1 7 5 3 . 3 0 5 9 . 7 9 4 2 . 5 9 5 3 7 . 5 3O v e r 5 Y e a r s 1 4 2 7 5 . 9 0 3 2 8 5 . 2 5 1 5 2 2 0 . 6 0 Π1 5 . 1 5 0 . 3 2T o t a l 7 0 8 2 4 . 9 9 5 1 2 8 4 . 9 9 2 0 5 6 8 . 8 2 2 3 0 8 . 2 4 2 4 1 4 . 4 8 2 3 9 8 . 9 4
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N o t e :C l a s s i f i c a t i o n o f a s s e t s a n d l i a b i l i t i e s u n d e r t h e d i f f e r e n t m a t u r i t y b u c k e t s i s b a s e do n t h e s a m e e s t i m a t e s a n d a s s u m p t i o n s a s u s e d b y t h e B a n k f o r c o m p i l i n g t h e r e t u r ns u b m i t t e d t o t h e R B I , w h i c h h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s . M a t u r i t y p r o f i l eo f f o r e i g n c u r r e n c y a s s e t s a n d l i a b i l i t i e s e x c l u d e s f o r w a r d e x c h a n g e c o n t r a c t s .1 . 8 . E x p o s u r e s1 . 8 . 1 E x p o s u r e t o R e a l E s t a t e S e c t o r (�
i n C r o r e )C a t e g o r y 2 0 1 5 , 1 6 2 0 1 4 , 1 5a ) D i r e c t E x p o s u r e :( i ) R e s i d e n t i a l M o r t g a g e s : 2L e n d i n g f u l l y s e c u r e d b y m o r t g a g e s o nr e s i d e n t i a l p r o p e r t y t h a t i s o r w i l l b e o c c u p i e db y t h e b o r r o w e r o r t h a t i s r e n t e d ;( o f w h i c h i n d i v i d u a l h o u s i n g l o a n s e l i g i b l e f o ri n c l u s i o n i n P r i o r i t y s e c t o r a d v a n c e s ) 7 8 7 6 . 2 2( 3 1 6 6 . 4 3 ) 6 9 4 9 . 7 4( 3 2 2 5 . 3 8 )( i i ) C o m m e r c i a l R e a l E s t a t e : 2L e n d i n g s e c u r e d b y m o r t g a g e s o n c o m m e r c i a lr e a l e s t a t e s ( o f f i c e b u i l d i n g s , r e t a i l s p a c e ,m u l t i 2 p u r p o s e c o m m e r c i a l p r e m i s e s , m u l t i 2f a m i l y r e s i d e n t i a l b u i l d i n g s , m u l t i 2 t e n a n t e dc o m m e r c i a l p r e m i s e s , i n d u s t r i a l o r w a r e h o u s es p a c e , h o t e l s , l a n d a c q u i s i t i o n , d e v e l o p m e n ta n d c o n s t r u c t i o n , e t c . ) . E x p o s u r e w o u l d a l s oi n c l u d e n o n 2 f u n d b a s e d ( N F B ) l i m i t s ; 1 7 3 8 . 9 4 1 3 4 5 . 2 7( i i i ) I n v e s t m e n t s i n M o r t g a g e B a c k e d S e c u r i t i e s( M B S ) a n d o t h e r s e c u r i t i s e d e x p o s u r e s –a . R e s i d e n t i a l N i l N i lb . C o m m e r c i a l R e a l E s t a t e N i l N i lb ) I n d i r e c t E x p o s u r e :F u n d b a s e d a n d n o n 2 f u n d b a s e d e x p o s u r e s o nN a t i o n a l H o u s i n g B a n k ( N H B ) a n d H o u s i n gF i n a n c e C o m p a n i e s ( H F C s ) . 3 1 2 6 . 8 2 2 2 7 0 . 3 7T o t a l E x p o s u r e t o R e a l E s t a t e s e c t o r 1 2 7 4 1 . 9 8 1 0 5 6 5 . 3 8F-195
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1 . 8 . 2 E x p o s u r e t o C a p i t a l M a r k e t (�
i n C r o r e )C a t e g o r y 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5( i ) d i r e c t i n v e s t m e n t i n e q u i t y s h a r e s , c o n v e r t i b l eb o n d s , c o n v e r t i b l e d e b e n t u r e s a n d u n i t s o f e q u i t y �o r i e n t e d m u t u a l f u n d s t h e c o r p u s o f w h i c h i s n o te x c l u s i v e l y i n v e s t e d i n c o r p o r a t e d e b t ; 1 6 3 . 7 0 1 5 7 . 4 2( i i ) a d v a n c e s a g a i n s t s h a r e s / b o n d s / d e b e n t u r e s o ro t h e r s e c u r i t i e s o r o n c l e a n b a s i s t o i n d i v i d u a l s f o ri n v e s t m e n t i n s h a r e s ( i n c l u d i n g I P O s / E S O P s ) ,c o n v e r t i b l e b o n d s , c o n v e r t i b l e d e b e n t u r e s , a n du n i t s o f e q u i t y � o r i e n t e d m u t u a l f u n d s ; 0 . 0 9 0 . 2 9( i i i ) a d v a n c e s f o r a n y o t h e r p u r p o s e s w h e r e s h a r e so r c o n v e r t i b l e b o n d s o r c o n v e r t i b l e d e b e n t u r e s o ru n i t s o f e q u i t y o r i e n t e d m u t u a l f u n d s a r e t a k e n a sp r i m a r y s e c u r i t y ; 0 . 1 5 0 . 1 5( i v ) a d v a n c e s f o r a n y o t h e r p u r p o s e s t o t h e e x t e n ts e c u r e d b y t h e c o l l a t e r a l s e c u r i t y o f s h a r e s o rc o n v e r t i b l e b o n d s o r c o n v e r t i b l e d e b e n t u r e s o ru n i t s o f e q u i t y o r i e n t e d m u t u a l f u n d s i . e . w h e r e t h ep r i m a r y s e c u r i t y o t h e r t h a n s h a r e s / c o n v e r t i b l eb o n d s / c o n v e r t i b l e d e b e n t u r e s / u n i t s o f e q u i t yo r i e n t e d m u t u a l f u n d s ` d o e s n o t f u l l y c o v e r t h ea d v a n c e s ; � 0 . 0 3( v ) s e c u r e d a n d u n s e c u r e d a d v a n c e s t os t o c k b r o k e r s a n d g u a r a n t e e s i s s u e d o n b e h a l f o fs t o c k b r o k e r s a n d m a r k e t m a k e r s ; 1 8 . 8 4 6 0 . 0 3( v i ) l o a n s s a n c t i o n e d t o c o r p o r a t e s a g a i n s t t h es e c u r i t y o f s h a r e s / b o n d s / d e b e n t u r e s o r o t h e rs e c u r i t i e s o r o n c l e a n b a s i s f o r m e e t i n g p r o m o t e r ’ sc o n t r i b u t i o n t o t h e e q u i t y o f n e w c o m p a n i e s i na n t i c i p a t i o n o f r a i s i n g r e s o u r c e s ; � �( v i i ) b r i d g e l o a n s t o c o m p a n i e s a g a i n s t e x p e c t e de q u i t y f l o w s / i s s u e s ; � �( v i i i ) u n d e r w r i t i n g c o m m i t m e n t s t a k e n u p b y t h eb a n k s i n r e s p e c t o f p r i m a r y i s s u e o f s h a r e s o rc o n v e r t i b l e b o n d s o r c o n v e r t i b l e d e b e n t u r e s o ru n i t s o f e q u i t y o r i e n t e d m u t u a l f u n d s ; � �( i x ) f i n a n c i n g t o s t o c k b r o k e r s f o r m a r g i n t r a d i n g ; � �( x ) a l l e x p o s u r e s t o V e n t u r e C a p i t a l F u n d s ( b o t hr e g i s t e r e d a n d u n r e g i s t e r e d ) 3 8 . 1 2 3 9 . 2 3T o t a l E x p o s u r e t o C a p i t a l M a r k e t 2 2 0 . 9 0 2 5 7 . 1 5F-196
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1 . 8 . 3 R i s k C a t e g o r y w i s e C o u n t r y E x p o s u r eT h e n e t f u n d e d e x p o s u r e o f t h e B a n k i n r e s p e c t o f f o r e i g n e x c h a n g e t r a n s a c t i o n sw i t h e a c h c o u n t r y i s w i t h i n 1 % o f t h e t o t a l a s s e t s o f t h e B a n k a n d h e n c e n op r o v i s i o n i s r e q u i r e d t o b e m a d e i n r e s p e c t o f c o u n t r y r i s k a s p e r t h e R B I g u i d e l i n e s :(�
i n C r o r e )R i s k C a t e g o r y * E x p o s u r e( n e t ) a s a t3 1 M a r c h2 0 1 6 P r o v i s i o nh e l d a s a t3 1 M a r c h2 0 1 6 E x p o s u r e ( n e t )a s a t 3 1M a r c h 2 0 1 5 P r o v i s i o nh e l d a s a t 3 1M a r c h 2 0 1 5I n s i g n i f i c a n t 8 7 8 . 6 3 é 7 6 0 . 7 2 éL o w 6 3 6 . 4 0 é 7 4 6 . 9 2 éM o d e r a t e 4 7 . 9 5 é 2 5 6 . 2 3 éH i g h 4 . 1 7 é 7 . 8 4 éV e r y H i g h 1 . 0 6 é 1 . 2 3 éR e s t r i c t e d 0 . 0 0 é 0 . 0 0 éO f f ó c r e d i t 0 . 0 0 é 0 . 0 0 éT o t a l 1 5 6 8 . 2 1 ó 1 7 7 2 . 9 4 ó* T h e a b o v e f i g u r e s i n c l u d e b o t h f u n d e d a s w e l l a s n o n ó f u n d e d e x p o s u r e .1 . 8 . 4 I n f o r m a t i o n o n C o n c e n t r a t i o n o f d e p o s i t s : (�
i n C r o r e )3 1 M a r c h , 2 0 1 6 3 1 M a r c h , 2 0 1 5T o t a l D e p o s i t s o f T w e n t y L a r g e s td e p o s i t o r s 2 3 1 8 . 4 6 3 2 2 0 . 7 6P e r c e n t a g e o f D e p o s i t s o f t w e n t y l a r g e s td e p o s i t o r s t o t o t a l d e p o s i t s o f t h e b a n k 2 . 9 3 % 4 . 5 5 %N o t e : E x c l u d e h o l d e r s o f c e r t i f i c a t e o f d e p o s i t s1 . 8 . 5 I n f o r m a t i o n o n C o n c e n t r a t i o n o f a d v a n c e s : (�
i n C r o r e )3 1 M a r c h , 2 0 1 6 3 1 M a r c h , 2 0 1 5T o t a l a d v a n c e s t o T w e n t y L a r g e s tB o r r o w e r s 1 1 5 1 4 . 3 5 7 2 1 8 . 5 9P e r c e n t a g e o f a d v a n c e s t o t w e n t y l a r g e s tB o r r o w e r s t o t o t a l a d v a n c e s o f t h e b a n k 1 6 . 2 9 % 1 0 . 5 1 %N o t e : A d v a n c e i s c o m p u t e d a s p e r t h e d e f i n i t i o n o f C r e d i t E x p o s u r e i n R B I M a s t e rC i r c u l a r o n E x p o s u r e N o r m s D B O D . N o . D i r . B C . 1 2 / 1 3 . 0 3 . 0 0 / 2 0 1 5 ó 1 6 d a t e dJ u l y 1 , 2 0 1 5 .1 . 8 . 6 I n f o r m a t i o n o n C o n c e n t r a t i o n o f e x p o s u r e : (�
i n C r o r e )3 1 M a r c h , 2 0 1 6 3 1 M a r c h , 2 0 1 5T o t a l e x p o s u r e s t o T w e n t y L a r g e s tb o r r o w e r s / c u s t o m e r s 1 2 8 6 3 . 2 1 7 6 6 6 . 5 0P e r c e n t a g e o f e x p o s u r e s t o t w e n t y l a r g e s tb o r r o w e r s / c u s t o m e r s t o t o t a l e x p o s u r e o ft h e b a n k o n b o r r o w e r s / c u s t o m e r s 1 6 . 9 3 % 1 0 . 0 6 %F-197
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i n C r o r e )S l .N o . P a r t i c u l a r s 3 1 M a r c h2 0 1 6 3 1 M a r c h2 0 1 51 T o t a l a m o u n t o f i n t r a À G r o u p e x p o s u r e * 7 5 8 . 9 1 6 4 82 T o t a l a m o u n t o f t o p À 2 0 i n t r a g r o u p e x p o s u r e * 7 5 8 . 9 1 6 4 83 P e r c e n t a g e o f i n t r a g r o u p e x p o s u r e s t o t o t a l e x p o s u r eo f t h e b a n k t o b o r r o w e r s / c u s t o m e r s * ( % ) 0 . 9 9 8 % 0 . 8 5 %4 D e t a i l s o f b r e a c h o f l i m i t s o n i n t r a À g r o u p e x p o s u r e sa n d r e g u l a t o r y a c t i o n t h e r e o n , i f a n y N I L N I L* E x p o s u r e i s c o m p u t e d a s p e r t h e d e f i n i t i o n o f C r e d i t a n d I n v e s t m e n t E x p o s u r e i nR B I M a s t e r C i r c u l a r o n E x p o s u r e N o r m s D B R . N o . D i r . B C . 1 2 / 1 3 . 0 3 . 0 0 / 2 0 1 5 À 1 6d a t e d J u l y 1 , 2 0 1 5 .1 . 8 . 1 1 T r a n s f e r s t o D e p o s i t o r E d u c a t i o n a n d A w a r e n e s s F u n d ( D E A F )I n a c c o r d a n c e w i t h t h e g u i d e l i n e s i s s u e d b y t h e R B I , t h e B a n k t r a n s f e r s t h e a m o u n tt o t h e c r e d i t o f a n y a c c o u n t w h i c h h a s n o t b e e n o p e r a t e d u p o n f o r a p e r i o d o f t e ny e a r s o r a n y d e p o s i t o r a n y a m o u n t r e m a i n i n g u n c l a i m e d f o r m o r e t h a n t e n y e a r s t ot h e D E A F . D e t a i l s o f a m o u n t s t r a n s f e r r e d t o D E A F a r e s e t o u t b e l o w : (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5O p e n i n g b a l a n c e o f a m o u n t s t r a n s f e r r e d t o D E A F 6 6 . 8 0 ÀA d d : A m o u n t s t r a n s f e r r e d t o D E A F d u r i n g t h e y e a r 1 2 . 6 5 6 7 . 8 0L e s s : A m o u n t s r e i m b u r s e d b y D E A F t o w a r d s c l a i m s 2 . 1 2 1 . 0 0C l o s i n g b a l a n c e o f a m o u n t s t r a n s f e r r e d t o D E A F 7 7 . 3 3 6 6 . 8 0F-199
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8 . 2 1 C r o r e f r o m I n v e s t m e n t R e s e r v e A c c o u n t i na c c o r d a n c e w i t h t h e p r o v i s i o n s o f R B I g u i d e l i n e s o n ‘ P r u d e n t i a l N o r m s f o rC l a s s i f i c a t i o n , V a l u a t i o n a n d O p e r a t i o n o f I n v e s t m e n t P o r t f o l i o b y B a n k s . T h e r eh a s b e e n n o d r a w d o w n f r o m R e s e r v e s d u r i n g t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 5 .1 . 1 3 . L e t t e r o f C o m f o r tT h e B a n k h a s n o t i s s u e d a n y l e t t e r s o f c o m f o r t ( L o C ) o n b e h a l f o f i t s s u b s i d i a r i e sd u r i n g t h e y e a r e n d e d 3 1 s t M a r c h , 2 0 1 6 a n d 3 1 s t M a r c h , 2 0 1 5 .F-200
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i n C r o r e )S l .N o . N a t u r e o f I n c o m e * 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 51 F o r s e l l i n g l i f e i n s u r a n c e p o l i c i e s 2 8 . 3 9 2 0 . 2 92 F o r s e l l i n g n o n Î l i f e i n s u r a n c e p o l i c i e s 6 . 5 1 2 . 0 93 F o r s e l l i n g m u t u a l f u n d p r o d u c t s 1 . 4 8 0 . 9 74 O t h e r s 1 . 3 1 3 . 3 6* Î I n c l u d e s r e c e i p t s o n a c c o u n t o f m a r k e t i n g a c t i v i t i e s u n d e r t a k e n o n b e h a l f o fB a n c a s s u r a n c e p a r t n e r s .1 . 1 5 . S p o n s o r e d S P V sT h e B a n k h a s n o t s p o n s o r e d a n y s p e c i a l p u r p o s e v e h i c l e w h i c h i s r e q u i r e d t o b ec o n s o l i d a t e d i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a s p e r a c c o u n t i n g n o r m s .1 . 1 6 . D e t a i l s o f O v e r s e a s A s s e t s , N P A s a n d R e v e n u eT h e B a n k h a s c o m m e n c e d i t s o p e r a t i o n , p u r s u a n t t o R B I a p p r o v a l , i n I n t e r n a t i o n a lF i n a n c e S e r v i c e C e n t e r ( I F S C ) B a n k i n g U n i t ( I B U ) i n G u j a r a t I n t e r n a t i o n a l F i n a n c eT e c C i t y ( G I F T ) a n d t h e b u s i n e s s t r a n s a c t i o n f r o m t h e s a m e i s c o n s i d e r e d a s aF o r e i g n b r a n c h f o r m o s t R e g u l a t o r y p u r p o s e a s p e r p a r a 2 . 2 o f A n n e x I o f R B IC i r c u l a r D B R . I B D . B C 1 4 5 7 0 / 2 3 . 1 3 . 0 0 4 / 2 0 1 4 Î 1 5 d a t e d A p r i l 1 , 2 0 1 5 . A p a r t f r o mt h e s a i d I B U , t h e b a n k d o e s n o t h a v e a n y o v e r s e a s b r a n c h ( s ) a s o n 3 1 M a r c h , 2 0 1 6 .D e t a i l s o f A s s e t s , N P A s a n d R e v e n u e o f I B U a r e g i v e n b e l o w : (�
i n C r o r e )P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5T o t a l A s s e t s 2 9 3 . 2 5 ÎT o t a l N P A s Î ÎT o t a l R e v e n u e 1 . 2 0 Î1 . 1 7 S e c u r i t i s a t i o n T r a n s a c t i o n sT h e B a n k h a s n o t d o n e a n y s e c u r i t i s a t i o n t r a n s a c t i o n s d u r i n g t h e y e a r e n d e d 3 1M a r c h , 2 0 1 6 a n d 3 1 M a r c h , 2 0 1 5 .1 . 1 8 D i s c l o s u r e s o n R e m u n e r a t i o n( i ) Q u a l i t a t i v e d i s c l o s u r e sa ) I n f o r m a t i o n r e l a t i n g t o t h e c o m p o s i t i o n a n d m a n d a t e o f t h e N o m i n a t i o n ,R e m u n e r a t i o n , C o m p e n s a t i o n a n d E t h i c s C o m m i t t e e ( o r R e m u n e r a t i o nC o m m i t t e e i n s h o r t ) :T h e R e m u n e r a t i o n C o m m i t t e e o f t h e B o a r d o v e r s e e s t h e f r a m i n g , r e v i e w a n di m p l e m e n t a t i o n o f t h e c o m p e n s a t i o n p o l i c y o f t h e B a n k , o n b e h a l f o f t h e B o a r d .T h i s c o m m i t t e e w o r k s i n c o o r d i n a t i o n w i t h R i s k M a n a g e m e n t C o m m i t t e e o f t h eB a n k , i n o r d e r t o a c h i e v e e f f e c t i v e a l i g n m e n t b e t w e e n r i s k a n d r e m u n e r a t i o n .F-201
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A s o n 3 1 M a r c h , 2 0 1 6 , t h e r e m u n e r a t i o n c o m m i t t e e o f t h e B o a r d c o m p r i s e s o ft h e f o l l o w i n g I n d e p e n d e n t D i r e c t o r s :# S h r i S u d h i r M J o s h i # C h a i r m a n# S h r i N i l e s h S V i k a m s e y# S h r i K . M C h a n d r a s e k h a rT h e a b o v e c o m m i t t e e o f t h e B o a r d f u n c t i o n s w i t h t h e f o l l o w i n g o b j e c t i v e s :a ) T o r e v i e w t h e C o m p e n s a t i o n p a c k a g e f o r t h e M D a n d C E O a n d E x e c u t i v eD i r e c t o r s a n d r e c o m m e n d r e v i s i o n s f o r B o a r d a p p r o v a lb ) T o c o n s i d e r a n d a p p r o v e i s s u a n c e a n d a l l o t m e n t o f E S O S s h a r e s t o M D / E D sa n d e m p l o y e e s o f t h e B a n k .c ) T o d e v e l o p a n d i m p l e m e n t a n e f f e c t i v e c o m p e n s a t i o n p o l i c y , a s p e r R B Ig u i d e l i n e sb ) I n f o r m a t i o n r e l a t i n g t o t h e d e s i g n a n d s t r u c t u r e o f r e m u n e r a t i o n p r o c e s s e s a n dt h e k e y f e a t u r e s a n d o b j e c t i v e s o f r e m u n e r a t i o n p o l i c y .T h e c o m p e n s a t i o n p a y a b l e t o M D & C E O , E D s a n d S e n i o r E x e c u t i v e s i sd i v i d e d i n t o f i x e d a n d v a r i a b l e c o m p o n e n t s . T h e f i x e d c o m p e n s a t i o ni s d e t e r m i n e d b a s e d o n t h e i n d u s t r y s t a n d a r d s , t h e e x p o s u r e , s k i l l s e t s , t a l e n t a n dq u a l i f i c a t i o n a t t a i n e d b y t h e o f f i c i a l o v e r h i s / h e r c a r e e r s p a n e t c . A p p r o v a l f r o mR B I i s o b t a i n e d t o d e c i d e f i x e d c o m p e n s a t i o n f o r M D & C E O a n d E D s .T h e v a r i a b l e c o m p e n s a t i o n f o r M D & C E O a n d s e n i o r e x e c u t i v e s ( N o n – I B Ap a c k a g e i . e . C G M a n d a b o v e ) a r e d e t e r m i n e d b a s e d o n B a n k ’ s p e r f o r m a n c e a n dK e y P e r f o r m a n c e A r e a s ( K P A ) s e t f o r t h e o f f i c i a l . K P A s c o n t a i n t a r g e t s o n r i s ka d j u s t e d m e t r i c s s u c h a s R i s k A d j u s t e d R e t u r n o n C a p i t a l ( R A R O C ) , R i s kA d j u s t e d R e t u r n o n R i s k A d j u s t e d C a p i t a l ( R A R O R A C ) , i n a d d i t i o n t o t a r g e t o nN P A s .T h e o b j e c t i v e s o f t h e r e m u n e r a t i o n p o l i c y a r e f o u r f o l d :> T o a l i g n c o m p e n s a t i o n w i t h p r u d e n t r i s k t a k e n> T o d r i v e s u s t a i n a b l e p e r f o r m a n c e i n t h e o r g a n i z a t i o n> T o e n s u r e f i n a n c i a l s t a b i l i t y o f t h e o r g a n i z a t i o n ; a n d> T o a t t r a c t a n d r e t a i n t a l e n tc ) D e s c r i p t i o n o f t h e w a y s i n w h i c h c u r r e n t a n d f u t u r e r i s k s a r e t a k e n i n t o a c c o u n ti n t h e r e m u n e r a t i o n p r o c e s s e s .F o r t h e p u r p o s e o f e f f e c t i v e l y a l i g n i n g c o m p e n s a t i o n s t r u c t u r e w i t h r i s ko u t c o m e s , t h e f u n c t i o n a r i e s i n t h e B a n k a r e a r r a n g e d u n d e r t h e f o l l o w i n g f o u rc a t e g o r i e sF-202
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M D & C E O / E DS e n i o r E x e c u t i v e s ( N o n I B A p a c k a g e )S e n i o r E x e c u t i v e s ( O n I B A p a c k a g e )O t h e r m e m b e r s o f s t a f f ( o n I B A p a c k a g e )L i m i t o n v a r i a b l e p a yT h e v a r i a b l e c o m p e n s a t i o n o f f e r e d t o a n o f f i c i a l w o u l d n o t e x c e e d 7 0 % o f t h et o t a l f i x e d c o m p e n s a t i o nS e v e r a n c e p a y a n d g u a r a n t e e d b o n u sS e v e r a n c e p a y ( o t h e r t h a n g r a t u i t y o r t e r m i n a l e n t i t l e m e n t s o r a s e n t i t l e d b ys t a t u t e ) i s n o t p a i d t o a n y o f f i c i a l o f t h e o r g a n i z a t i o nS i g n o n b o n u s o r j o i n i n g b o n u s i s l i m i t e d t o t h e f i r s t y e a r a n d i s p a i d o n l y a sE m p l o y e e s t o c k o p t i o n sH e d g i n gN o c o m p e n s a t i o n s c h e m e o r i n s u r a n c e f a c i l i t y w o u l d b e p r o v i d e d b y t h e B a n k t oe m p l o y e e s t o h e d g e t h e i r c o m p e n s a t i o n s t r u c t u r e t o o f f s e t t h e r i s k a l i g n m e n tm e c h a n i s m ( d e f e r r a l p a y a n d c l a w b a c k a r r a n g e m e n t s ) e m b e d d e d i n t h e i rc o m p e n s a t i o n a r r a n g e m e n tC o m p e n s a t i o n R e c o v e r y p o l i c yA c l a w b a c k a r r a n g e m e n t o r a c o m p e n s a t i o n r e c o v e r y p o l i c y i s p r o v i d e d ,w h i c h w i l l e n t a i l t h e B a n k t o r e c o v e r p r o p o r t i o n a t e a m o u n t o f v a r i a b l ec o m p e n s a t i o n p a i d t o t h e a b o v e f u n c t i o n a r i e s o n a c c o u n t o f a n a c t o r d e c i s i o nt a k e n b y t h e o f f i c i a l w h i c h h a s b r o u g h t f o r t h a n e g a t i v e c o n t r i b u t i o n t o t h e b a n ka t a p r o s p e c t i v e s t a g e . T h e c l a w b a c k a r r a n g e m e n t w o u l d b e v a l i d f o r a p e r i o d o ft h r e e y e a r s f r o m t h e d a t e o f p a y m e n t o f v a r i a b l e c o m p e n s a t i o n .C o m m i t t e e s t o m i t i g a t e r i s k s c a u s e d b y a n i n d i v i d u a l d e c i s i o nI n o r d e r t o f u r t h e r b a l a n c e t h e i m p a c t o f m a r k e t o r c r e d i t r i s k s c a u s e d t o t h eo r g a n i z a t i o n b y a n i n d i v i d u a l d e c i s i o n t a k e n b y a s e n i o r l e v e l e x e c u t i v e , M D &C E O o r E D , t h e b a n k h a s c o n s t i t u t e d v a r i o u s c o m m i t t e e s t o t a k e d e c i s i o n s o nv a r i o u s a s p e c t s :�
C r e d i t l i m i t s a r e s a n c t i o n e d b y c o m m i t t e e s a t d i f f e r e n t l e v e l s .�
I n v e s t m e n t d e c i s i o n s o f t h e B a n k a r e t a k e n a n d m o n i t o r e d b y I n v e s t m e n tc o m m i t t e e a n d t h e r e i s a n u p p e r l i m i t i n t r e a s u r y d e a l i n g s w h e r e i n d i v i d u a ld e c i s i o n s c a n b e t a k e n .�
I n t e r e s t r a t e s o n a s s e t a n d l i a b i l i t y p r o d u c t s f o r d i f f e r e n t b u c k e t s a r e d e c i d e da n d m o n i t o r e d b y t h e A s s e t L i a b i l i t y C o m m i t t e e o f t h e B o a r d ( A L C O ) .B a n k s ’ e x p o s u r e t o l i q u i d i t y r i s k a r e a l s o m o n i t o r e d b y A L C O .F-203
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I n t e g r a t e d R i s k M a n a g e m e n t D e p a r t m e n t ( I R M D )I n o r d e r t o e f f e c t i v e l y g o v e r n t h e c o m p e n s a t i o n s t r u c t u r e , I R M D w o u l d a s s i s tt h e R e m u n e r a t i o n C o m m i t t e e o f t h e B o a r d t o m o n i t o r , r e v i e w a n d c o n t r o lv a r i o u s r i s k s a n d b a l a n c e p r u d e n t r i s k t a k i n g w i t h t h e c o m p e n s a t i o n p a i d o u t t ot o p e x e c u t i v e s a n d o t h e r e m p l o y e e s .C o m p e n s a t i o n o f r i s k c o n t r o l s t a f fT h e t o t a l f i x e d a n d v a r i a b l e c o m p e n s a t i o n p a i d o u t t o t h e e m p l o y e e s o f I R M Da r e i n d e p e n d e n t o f b u s i n e s s p a r a m e t e r s a n d r e n d e r i n g o f e f f e c t i v e s u p p o r t t o t h eR e m u n e r a t i o n C o m m i t t e e o f t h e B o a r d . T h e v a r i a b l e c o m p e n s a t i o n c o m p o n e n t( P e r f o r m a n c e L i n k e d I n c e n t i v e o r P L I ) w i l l b e s u b j e c t e d t o a m i n i m u m a n dg r e a t e r p r o p o r t i o n o f c o m p e n s a t i o n w i l l b e f i x e d i n n a t u r e t o e n s u r e a u t o n o m ya n d i n d e p e n d e n c e f r o m b u s i n e s s g o a l sd ) L i n k a g e o f p e r f o r m a n c e d u r i n g a p e r f o r m a n c e m e a s u r e m e n t p e r i o d w i t h l e v e l so f r e m u n e r a t i o n .T h e B a n k ’ s p e r f o r m a n c e i s c h a r t e d b a s e d o n t h e r e v e n u e p o i n t i n d e x /p e r f o r m a n c e s c o r e c a r d w h i c h t a k e s i n t o a c c o u n t v a r i o u s f i n a n c i a l i n d i c a t o r s l i k er e v e n u e e a r n e d , c o s t d e p l o y e d , p r o f i t e a r n e d , N P A p o s i t i o n a n d o t h e r i n t a n g i b l ef a c t o r s l i k e l e a d e r s h i p a n d e m p l o y e e d e v e l o p m e n t . V a r i a b l e p a y i s p a i d p u r e l yb a s e d o n p e r f o r m a n c e a n d i s m e a s u r e d t h r o u g h S c o r e c a r d s f o r M D & C E O /E D s . T h e s c o r e c a r d p r o v i d e s a m i x o f f i n a n c i a l a n d n o n à f i n a n c i a l , q u a n t i t a t i v ea n d q u a l i t a t i v e m e t r i c s .C o m p e n s a t i o n p a i d t o S e n i o r e x e c u t i v e s a n d o t h e r s t a f f m e m b e r s o n I B Ap a c k a g eT h e c o m p e n s a t i o n p a i d t o o t h e r o f f i c i a l s t h a t i n c l u d e A w a r d s t a f f , O f f i c e r sc o m i n g u n d e r S c a l e I t o I I I a n d S e n i o r e x e c u t i v e s c o m i n g u n d e r S c a l e I V t o V I Ii s f i x e d b a s e d o n t h e p e r i o d i c i n d u s t r y l e v e l s e t t l e m e n t s w i t h I n d i a n B a n k sA s s o c i a t i o n . T h e v a r i a b l e c o m p e n s a t i o n p a i d t o t h e s e f u n c t i o n a r i e s i s b a s e d o nt h e P e r f o r m a n c e L i n k e d i n c e n t i v e s c h e m e w h i c h h a s b e e n f o r m u l a t e d o n t h eb a s i s o f p e r f o r m a n c e p a r a m e t e r s s e t i n P e r f o r m a n c e M a n a g e m e n t S y s t e me ) B a n k ' s p o l i c y o n d e f e r r a l a n d v e s t i n g o f v a r i a b l e r e m u n e r a t i o n a n d c r i t e r i a f o ra d j u s t i n g d e f e r r e d r e m u n e r a t i o n b e f o r e v e s t i n g a n d a f t e r v e s t i n g .D e f e r r e d c o m p e n s a t i o n a n d P e r f o r m a n c e L i n k a g eI n t h e e v e n t v a r i a b l e c o m p e n s a t i o n p a i d t o M D & C E O , E D a n d S e n i o rE x e c u t i v e s ( N o n à I B A ) e x c e e d s m o r e t h a n 5 0 % o f t h e f i x e d c o m p e n s a t i o n f o rt h e y e a r o n a c c o u n t o f h i g h l e v e l o f B a n k ’ s p e r f o r m a n c e , 6 0 % o f t h e v a r i a b l ep a y s o e n t i t l e d t o t h e o f f i c i a l w i l l b e d e f e r r e d f o r p a y m e n t o v e r a p e r i o d o f 3y e a r s . T h e a m o u n t i s p a r k e d i n a n e s c r o w a c c o u n t a n d t h e p a y m e n t w i l l b em a d e i n t h e r a t i o o f 2 0 : 3 0 : 5 0 o v e r a p e r i o d o f t h r e e y e a r s , i . e . ,à 2 0 % o f t h e d e f e r r e d c o m p e n s a t i o n w i l l b e p a i d i n t h e f i r s t y e a rà 3 0 % o f t h e d e f e r r e d c o m p e n s a t i o n i n t h e s e c o n d y e a r ; a n dà 5 0 % o f t h e d e f e r r e d c o m p e n s a t i o n i n t h e t h i r d y e a rF-204
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C l a w b a c k a n d d e f e r r a l a r r a n g e m e n t sT h e p r o v i s i o n s o f c l a w b a c k a n d d e f e r r a l a r r a n g e m e n t s a r e a p p l i c a b l e t o t h er e f e r r e d f u n c t i o n a r i e s a n d a l l e m p l o y e e s i n t h e e v e n t t h e i r v a r i a b l e c o m p e n s a t i o ne x c e e d s 5 0 % o f t h e i r f i x e d e m o l u m e n t sf ) D e s c r i p t i o n o f t h e d i f f e r e n t f o r m s o f v a r i a b l e r e m u n e r a t i o nB a n k u s e s a n o p t i m u m m i x o f c a s h , E S O P S a n d v a r i a b l e P L I t o d e c i d e t h ec o m p e n s a t i o n o f e m p l o y e e s i n a l l c a t e g o r i e s . T h e d i s t r i b u t i o n o f E S O P S a n dv a r i a b l e P L I a r e h i g h e r i n t o p l e v e l s a n d i s l i n k e d w i t h t h e i r p e r f o r m a n c em e a s u r e m e n t s t a k e n f r o m S c o r e c a r d s . T h i s i s d o n e t o a l i g n t h e c o m p e n s a t i o n o fs e n i o r s t a f f w i t h t h e i r p e r f o r m a n c e , r i s k a n d r e s p o n s i b i l i t y t a k e n i n h i g h e ra s s i g n m e n t s . T h e O f f i c e r s i n S c a l e I õ I I I a s w e l l a s A w a r d s t a f f c o m e u n d e r t h ep u r v i e w o f I B A p a c k a g e t h a t i s a s p e r t h e I n d u s t r y w i d e s e t t l e m e n t s . V a r i a b l ec o m p e n s a t i o n , E S O P , i s l i n k e d w i t h s e n i o r i t y i n t h e s e l e v e l s .( i i ) Q u a n t i t a t i v e d i s c l o s u r e s 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5( a ) N u m b e r o f m e e t i n g s h e l d b y t h eR e m u n e r a t i o n C o m m i t t e e d u r i n g t h e f i n a n c i a ly e a r a n d r e m u n e r a t i o n p a i d t o i t s m e m b e r s . 8� 7 , 2 0 , 0 0 0 4
� 2 , 3 0 , 0 0 0( b ) ( i ) N u m b e r o f e m p l o y e e s h a v i n g av a r i a b l e r e m u n e r a t i o n a w a r d d u r i n gt h e f i n a n c i a l y e a r . 4 3( i i ) N u m b e r a n d t o t a l a m o u n t o f s i g n * o na w a r d s m a d e d u r i n g t h e f i n a n c i a ly e a r . N i l N i l( i i i ) D e t a i l s o f g u a r a n t e e d b o n u s , i f a n y ,p a i d a s j o i n i n g / s i g n o n b o n u s N i l N i l( i v ) D e t a i l s o f s e v e r a n c e p a y , i n a d d i t i o nt o a c c r u e d b e n e f i t s , i f a n y . N i l N i l( c ) ( i ) T o t a l a m o u n t o f o u t s t a n d i n g d e f e r r e dr e m u n e r a t i o n , s p l i t i n t o c a s h , s h a r e sa n d s h a r e * l i n k e d i n s t r u m e n t s a n do t h e r f o r m s N i l N i l( i i ) T o t a l a m o u n t o f d e f e r r e dr e m u n e r a t i o n p a i d o u t i n t h e f i n a n c i a ly e a r . N i l N i l( d ) B r e a k d o w n o f a m o u n t o f r e m u n e r a t i o n a w a r d sf o r t h e f i n a n c i a l y e a r t o s h o w f i x e d a n dv a r i a b l e , d e f e r r e d a n d n o n * d e f e r r e d (�
i nC r o r e ) 2 . 3 0 ( F i x e d )0 . 4 6 ( V a r i a b l e ) 1 . 5 1 ( F i x e d )0 . 3 4 ( V a r i a b l e )( e ) T o t a l a m o u n t o f o u t s t a n d i n g d e f e r r e dr e m u n e r a t i o n a n d r e t a i n e d r e m u n e r a t i o ne x p o s e d t o e x p o s t e x p l i c i t a n d / o r i m p l i c i ta d j u s t m e n t s . N i l N i lF-205
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1 . 1 9 U n h e d g e d F o r e i g n C u r r e n c y E x p o s u r eT h e B a n k h a s i n p l a c e a p o l i c y o n m a n a g i n g c r e d i t r i s k a r i s i n g o u t o f u n h e d g e df o r e i g n c u r r e n c y e x p o s u r e s o f i t s b o r r o w e r s . T h e o b j e c t i v e o f t h i s p o l i c y i s t om a x i m i z e t h e h e d g i n g o n f o r e i g n c u r r e n c y e x p o s u r e s o f b o r r o w e r s b y r e v i e w i n g t h e i rf o r e i g n c u r r e n c y e x p o s u r e s a n d e n c o u r a g i n g t h e m t o h e d g e t h e u n h e d g e d p o r t i o n . T h ep o l i c y f r a m e w o r k a l s o a r t i c u l a t e s t h e m e t h o d o l o g i e s f o r a s c e r t a i n i n g t h e a m o u n t o fu n h e d g e d f o r e i g n c u r r e n c y e x p o s u r e s , e s t i m a t i n g t h e e x t e n t o f l i k e l y l o s s , e s t i m a t i n gt h e r i s k i n e s s o f t h e u n h e d g e d p o s i t i o n a n d m a k i n g a p p r o p r i a t e p r o v i s i o n s a n d c a p i t a lc h a r g e a s p e r e x t a n t R B I g u i d e l i n e s . I n l i n e w i t h t h e p o l i c y , a s s e s s m e n t o f u n h e d g e df o r e i g n c u r r e n c y e x p o s u r e i s a p a r t o f c r e d i t a p p r a i s a l w h i l e p r o p o s i n g l i m i t s o r a t t h er e v i e w s t a g e . F u r t h e r , t h e b a n k r e v i e w s t h e u n h e d g e d f o r e i g n c u r r e n c y e x p o s u r ea c r o s s i t s p o r t f o l i o o n a p e r i o d i c b a s i s . T h e B a n k m a i n t a i n s i n c r e m e n t a l p r o v i s i o n sa n d a d d i t i o n a l c a p i t a l f o r t h e u n h e d g e d f o r e i g n c u r r e n c y e x p o s u r e s o f i t s b o r r o w e r s i nl i n e w i t h t h e e x t a n t R B I g u i d e l i n e s . T h e B a n k h a s m a i n t a i n e d�
1 0 . 0 5 C r o r e ( p r e v i o u sy e a r� 8 . 4 5 C r o r e ) a s p r o v i s i o n a n d
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�9 . 4 9 C r o r e ) a sa d d i t i o n a l c a p i t a l f o r c o m p u t a t i o n o f c a p i t a l a d e q u a c y R a t i o o n a c c o u n t o f t h eu n h e d g e d f o r e i g n c u r r e n c y e x p o s u r e s o f b o r r o w e r s a s a t M a r c h 3 1 , 2 0 1 6 .
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38
1 .20Li quidit yC overageR ati o(LCR)a)Q uantit ati veDi scl osure
( �i nC rore)
P arti cul arsQ uart erend ed M arch31 ,2016Q uart erend ed D ecemb er31 ,2015Q uart erend ed S ept emb er30 ,2015Q uart erend ed J une30 ,2015Q uart erend ed M arch31 ,2015
T ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ue ( average)T ot al W ei ght ed V al ue ( average)
Hi ghQ ualit yLi quidA sset s 1T ot alHi ghQ ualit y Li quidA sset s(HQLA)10021 .2210798 .8010402 .2010719 .667485 .40
C ashO utfl ows 2R et aild eposit sand d eposit sf romsmall b usi nesscust omers ,of whi ch :75103 .225853 .2072453 .075642 .2770732 .165511 .5668314 .835336 .8862865 .404848 .03
(i) St abl ed eposit s33142 .471657 .1232060 .701603 .0331233 .191561 .6629891 .971494 .6028770 .181438 .51
(ii) L essst abl ed eposit s41960 .754196 .0840392 .374039 .2439498 .973949 .9038422 .863842 .2834095 .223409 .52
3U nsecured wh ol esal e f undi ng ,of whi ch :1443 .23661 .14925 .29455 .641361 .33730 .761626 .641027 .772736 .541455 .37
(i) O perati onald eposit s( all count erparti es)116 .8022 .80106 .5922 .99100 .8922 .1191 .8320 .6984 .6819 .31
(ii) N on �operati onald eposit s ( all count erparti es)1308 .38620 .29768 .70382 .651260 .44708 .651501 .48973 .752651 .861436 .06
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(i)O utfl owsrel at edt o d eri vati veexposuresand oth ercoll at eral requi rement s174 .30174 .30268 .55268 .55269 .69269 .69245 .57245 .57129 .77129 .77
F-207
39
P arti cul arsQ uart erend ed M arch31 ,2016Q uart erend ed D ecemb er31 ,2015Q uart erend ed S ept emb er30 ,2015Q uart erend ed J une30 ,2015Q uart erend ed M arch31 ,2015
T ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ueT ot al W ei ght ed V al ueT ot al U nwei ght ed V al ue ( average)T ot al W ei ght ed V al ue ( average)
(ii) O utfl owsrel at edt ol oss off undi ngond ebt prod uct s~~~~~~~~~~
(iii) C redit andli quidit y f aciliti es~~~~~~~~~~
6Oth ercont ract ualf undi ng obli gati ons13675 .421305 .8513403 .071332 .5313681 .081477 .5813996 .711338 .2213296 .531233 .98
7Oth erconti ngentf undi ng obli gati ons5263 .29189 .384386 .47219 .324396 .19219 .814248 .29212 .414326 .77216 .34
8TOTALCASH OUTFLOWS8183 .877918 .318209 .408160 .8583355 .017883 .49
C ashI nfl ows 9S ecuredl endi ng( e .g . reverserepos)48 .37 Ä457 .98 Ä777 .78 Ä483 .96 ÄÄÄ
10I nfl owsf romf ull y perf ormi ngexposures1920 .031010 .022166 .551133 .282302 .001251 .002201 .671134 .671934 .94967 .47
11Oth ercashi nfl ows65 .5065 .50181 .36181 .36230 .10230 .10278 .70244 .86287 .33287 .33
12TOTALCASH INFLOWS2033 .901075 .522805 .891314 .643309 .881481 .102964 .331379 .532222 .271254 .80
13TOTALHQLA10021 .2 210798 .8010402 .2010719 .667485 .40
14TOTALNETCASH OUTFLOWS7108 .356603 .676728 .306781 .326628 .69
15LIQUIDITY COVERAGERATIO (%)140 .98 %163 .53%154 .60%158 .08%112 .92%
F-208
4 0
b ) Q u a l i t a t i v e D i s c l o s u r eT h e B a n k a d h e r e s t o R B I g u i d e l i n e s o n L i q u i d i t y C o v e r a g e R a t i o , L i q u i d i t y R i s kM o n i t o r i n g T o o l s a n d t h e L C R D i s c l o s u r e S t a n d a r d s p u r s u a n t t o t h e B a s e l I I IF r a m e w o r k o n L i q u i d i t y S t a n d a r d s t h a t a r e a p p l i c a b l e t o b a n k s i n I n d i a w i t h e f f e c tf r o m J a n u a r y 1 , 2 0 1 5 . L i q u i d i t y C o v e r a g e R a t i o ( L C R ) p r o m o t e s s h o r t 7 t e r mr e s i l i e n c e o f b a n k s t o p o t e n t i a l l i q u i d i t y d i s r u p t i o n s b y e n s u r i n g t h a t t h e y h a v es u f f i c i e n t h i g h q u a l i t y l i q u i d a s s e t s ( H Q L A s ) t o s u r v i v e a n a c u t e s t r e s s s c e n a r i ol a s t i n g f o r 3 0 d a y s . B a n k i s c o m p u t i n g L C R o n a m o n t h l y b a s i s a n d h a s c o n s i s t e n t l ym a i n t a i n e d L C R a b o v e 1 0 0 % d u r i n g F i s c a l 2 0 1 6 , a s a g a i n s t t h e r e g u l a t o r y m i n i m u mo f 6 0 % ( t i l l D e c e m b e r 2 0 1 5 ) / 7 0 % ( f r o m J a n u a r y 2 0 1 6 ) . B a n k h a s n o t c o m p u t e dL C R s e p a r a t e l y f o r a n y f o r e i g n c u r r e n c y s i n c e t h e a g g r e g a t e l i a b i l i t i e s d e n o m i n a t e di n a n y f o r e i g n c u r r e n c y d o e s n ’ t a m o u n t t o 5 p e r c e n t o r m o r e o f t h e B a n k ’ s t o t a ll i a b i l i t i e s .O n a n a v e r a g e , 8 5 % o f t h e H Q L A m a i n t a i n e d b y t h e B a n k c o m p r i s e s o f L e v e l 1a s s e t s w h i c h i s t h e m o s t l i q u i d a s s e t c a t e g o r y . C a s h i n h a n d , e x c e s s C R R a n d S L R ,G 7 S e c w i t h i n m a n d a t o r y S L R r e q u i r e m e n t p e r m i t t e d b y R B I u n d e r M S F ( p r e s e n t l y2 % o f N D T L ) a n d f a c i l i t y t o a v a i l l i q u i d i t y r a t i o ( 8 % o f N D T L ) c o n s t i t u t e s L e v e l 1H Q L A . L e v e l 2 A s s e t s m a i n t a i n e d b y t h e B a n k c o m p r i s e s o f ( a ) m a r k e t a b l es e c u r i t i e s r e p r e s e n t i n g c l a i m s o n o r c l a i m s g u a r a n t e e d b y s o v e r e i g n s , P u b l i c S e c t o rE n t i t i e s ( P S E s ) o r m u l t i l a t e r a l d e v e l o p m e n t b a n k s t h a t a r e a s s i g n e d a 2 0 % r i s kw e i g h t u n d e r t h e B a s e l I I I S t a n d a r d i z e d A p p r o a c h f o r c r e d i t r i s k a n d t h a t a r e n o ti s s u e d b y a b a n k / f i n a n c i a l i n s t i t u t i o n / N B F C o r a n y o f i t s a f f i l i a t e d e n t i t i e s a n d ( b )C o r p o r a t e b o n d s , n o t i s s u e d b y a b a n k / f i n a n c i a l i n s t i t u t i o n / N B F C o r a n y o f i t sa f f i l i a t e d e n t i t i e s , w h i c h h a v e b e e n r a t e d B B B 7 o r a b o v e b y a n E l i g i b l e C r e d i tR a t i n g A g e n c y . H Q L A i s a l s o w e l l d i v e r s i f i e d a c r o s s v a r i o u s i n s t r u m e n t s a n d l i q u i da s s e t t y p e s a n d s h o u l d p r o v i d e t h e B a n k w i t h a d e q u a t e a n d t i m e l y l i q u i d i t y .B a n k h a s a w e l l 7 d i v e r s i f i e d f u n d i n g p o r t f o l i o . R e t a i l d e p o s i t s , c o n s i d e r e d a s s t a b l ef r o m a l i q u i d i t y p e r s p e c t i v e i s t h e m a j o r f u n d i n g s o u r c e o f t h e B a n k , i n d i c a t i n gl o w e r d e p e n d e n c e o f t h e B a n k o n w h o l e s a l e f u n d s .T h e l i q u i d i t y r i s k m a n a g e m e n t i n t h e B a n k i s g u i d e d b y t h e A L M P o l i c y . A s s e tL i a b i l i t y M a n a g e m e n t C o m m i t t e e ( A L C O ) i s t h e e x e c u t i v e l e v e l c o m m i t t e er e s p o n s i b l e f o r A L M p r o c e s s i n t h e B a n k . B a n k ’ s l i q u i d i t y m a n a g e m e n t i s a c t i v e l yd o n e b y t h e T r e a s u r y d e p a r t m e n t a s p e r t h e d i r e c t i o n s o f A L C O . I n t e g r a t e d R i s kM a n a g e m e n t D e p a r t m e n t a c t i v e l y m o n i t o r s t h e l i q u i d i t y p o s i t i o n o f t h e B a n k a n da p p r i s e s A L C O o n a c o n t i n u o u s b a s i s t o i n i t i a t e a p p r o p r i a t e a c t i o n s t o e n s u r e t h a tt h e l i q u i d i t y p o s i t i o n i s w e l l w i t h i n t h e R i s k A p p e t i t e s e t b y t h e B o a r d o f D i r e c t o r s .1 . 2 1 P r o v i s i o n i n g P e r t a i n i n g t o F r a u d A c c o u n t sT h e B a n k h a s r e p o r t e d 6 5 c a s e s ( P r e v i o u s y e a r : 5 5 c a s e s ) o f f r a u d i n t h e F i n a n c i a ly e a r e n d e d 3 1 M a r c h , 2 0 1 6 a m o u n t i n g t o�
8 2 . 0 7 C r o r e ( P r e v i o u s Y e a r : 8 1 . 7 8C r o r e ) a n d h a s p r o v i d e d f o r t h e s a m e i n t h e b o o k s o f a c c o u n t . B a n k d o e s n o t h a v ea n y u n a m o r t i s e d l o s s i n t h i s r e g a r d a s o f M a r c h 3 1 , 2 0 1 6 .F-209
4 1
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1 2 5 4 . 9 8 C r o r e( P r e v i o u s Y e a r : N i l ) .2 . O t h e r D i s c l o s u r e s2 . 1 . E a r n i n g s p e r S h a r e ( ' E P S ' )P a r t i c u l a r s 3 1 M a r c h2 0 1 6 3 1 M a r c h2 0 1 5W e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e s u s e d i nc o m p u t a t i o n o f b a s i c e a r n i n g s p e r s h a r e ( i n 0 0 0 ’ s )W e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e s u s e d i nc o m p u t a t i o n o f d i l u t e d e a r n i n g s p e r s h a r e ( i n 0 0 0 ’ s )N o m i n a l V a l u e o f s h a r e ( i n R s )B a s i c e a r n i n g s p e r s h a r e ( i n R s )D i l u t e d e a r n i n g s p e r s h a r e ( i n R s )E a r n i n g s u s e d i n t h e c o m p u t a t i o n o f b a s i c a n d d i l u t e de a r n i n g s p e r s h a r e (�
i n ‘ 0 0 0 ) 1 7 , 1 6 , 9 9 31 7 , 2 5 , 5 9 122 . 7 72 . 7 54 7 , 5 6 , 4 8 1��������������������
1 7 , 1 3 , 7 7 61 7 , 2 8 , 3 1 025 . 8 75 . 8 21 , 0 0 , 5 7 , 5 0 52 . 2 A . I s s u e o f B o n u s S h a r e sT h e s h a r e h o l d e r s o f t h e B a n k h a d a p p r o v e d t h e i s s u e o f B o n u s S h a r e s a t t h e A n n u a lG e n e r a l M e e t i n g h e l d o n J u n e 2 9 , 2 0 1 5 , i n t h e R a t i o o f 1 : 1 f o r S h a r e s h e l d a s o n t h er e c o r d d a t e o f J u l y 9 , 2 0 1 5 . P u r s u a n t t o t h e a b o v e 8 5 , 7 9 , 4 5 , 2 0 6 f u l l y p a i d u p E q u i t yS h a r e s h a d b e e n a l l o t t e d b y t h e b a n k a s b o n u s s h a r e s a n d O n e G l o b a l D e p o s i t a r ys h a r e ( G D S ) h a d b e e n i s s u e d a s b o n u s f o r e v e r y G D S h e l d t o t h e e x i s t i n g h o l d e r s a so n t h e r e c o r d d a t e . C o n s e q u e n t l y , a s p e r t h e e x t a n t E S O S 2 0 1 0 S c h e m e b o n u so p t i o n s h a d b e e n p r o v i d e d t o t h e e x i s t i n g E S O S o p t i o n h o l d e r s a n d t h e e x e r c i s ep r i c e h a d b e e n a d j u s t e d a c c o r d i n g l y . T h e e a r n i n g s p e r s h a r e h a v e b e e n a d j u s t e d f o rp r e v i o u s y e a r i n a c c o r d a n c e w i t h A c c o u n t i n g S t a n d a r d 2 0 , E a r n i n g s p e r s h a r e .B . S u b s c r i b e d a n d p a i d u p c a p i t a l i n c l u d e s :( i ) 1 6 , 5 9 0 s h a r e s o f�
2 / Æ e a c h ( P r e v i o u s Y e a r 1 6 5 9 0 s h a r e s o f�
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2 / Æ e a c h ( P r e v i o u s Y e a r 1 , 6 6 , 6 6 , 5 8 8o f�
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2 / Æ P e r s h a r e ) a l l o t t e d u n d e r E S O S 2 0 1 0 .( i v ) 8 5 , 7 9 , 4 5 , 2 0 6 b o n u s s h a r e s w e r e i s s u e d i n t h e r a t i o o f 1 : 1 i n t h i s f i n a n c i a ly e a r .C . A l l o t m e n t o f 6 , 5 3 0 s h a r e s o f�
2 / Æ e a c h ( P r e v i o u s y e a r 6 , 5 3 0 s h a r e s o f�
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1 4 0 / Æ p e r S h a r e a n d1 0 , 8 0 , 4 1 5 e q u i t y s h a r e s o f�
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4 2
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2 / à e a c h ) o u t o f t h e B o n u s i s s u e o f 2 0 0 4a n d 6 , 1 5 , 7 5 5 b o n u s s h a r e s o f��
2 / à e a c h , o u t o f t h e B o n u s i s s u e o f 2 0 1 5 a r e k e p t i na b e y a n c e c o n s e q u e n t t o i n j u n c t i o n o r d e r s f r o m v a r i o u s c o u r t s .D . E m p l o y e e S t o c k O p t i o n S c h e m e ( “ E S O S ” ) :( i ) S h a r e h o l d e r s o f t h e b a n k h a d a p p r o v e d E m p l o y e e S t o c k O p t i o n S c h e m e ( E S O S )t h r o u g h p o s t a l b a l l o t , t h e r e s u l t o f w h i c h w a s a n n o u n c e d o n D e c e m b e r 2 4 , 2 0 1 0 ,e n a b l i n g t h e B o a r d a n d / o r t h e “ C o m p e n s a t i o n C o m m i t t e e ” t o g r a n t s u c h n u m b e r o fe q u i t y s h a r e s , i n c l u d i n g o p t i o n s , o f t h e B a n k n o t e x c e e d i n g 5 % o f t h e a g g r e g a t en u m b e r o f p a i d u p e q u i t y s h a r e s o f t h e B a n k , i n l i n e w i t h t h e g u i d e l i n e s o f S E B I .P u r s u a n t t h e r e t o , t h e C o m p e n s a t i o n C o m m i t t e e o f t h e b a n k g r a n t e d t h e f o l l o w i n go p t i o n s : N u m b e r o f O p t i o n s3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5O u t s t a n d i n g a t t h e b e g i n n i n g o f t h e y e a r 8 1 1 2 4 1 8 6 7 4 0 5 5 6 1 0S u r r e n d e r e d d u r i n g t h e y e a r à àG r a n t e d d u r i n g t h e y e a r * 1 0 2 5 0 0 0 1 1 1 5 6 4 5 0E x e r c i s e d d u r i n g t h e y e a r ( I n c l u d e s1 2 , 9 0 , 0 0 9 ( P r e v i o u s Y e a r : 1 3 , 4 , 4 1 2 ) o na c c o u n t o f a c t u a l i s s u e o f B o n u s s h a r e s 5 6 3 6 4 5 0 2 6 8 0 8 2 4F o r f e i t e d / l a p s e d d u r i n g t h e y e a r 3 2 5 5 9 0 1 4 0 7 0 5 0O u t s t a n d i n g a t t h e e n d o f t h e y e a r 7 , 6 1 , 8 7 , 1 4 6 8 1 1 2 4 1 8 6O p t i o n s e x e r c i s a b l e 5 2 7 2 7 1 7 6 4 0 9 7 4 0 6 6* E S O S g r a n t e d o n 1 8 t h S e p t e m b e r , 2 0 1 5 a n d 1 6 t h N o v e m b e r 2 0 1 5 w i t h v e s t i n gp e r i o d o f 1 , 2 , 3 a n d 4 y e a r s . E x e r c i s e p e r i o d o f 5 y e a r s a n d e x e r c i s e p r i c e o f��
6 0 . 3 5 / à p e r s h a r e a n d���
5 3 . 7 0 p e r s h a r e , r e s p e c t i v e l y .A s p e r S E B I g u i d e l i n e s t h e a c c o u n t i n g f o r E S O S c a n b e d o n e e i t h e r u n d e r t h e‘ I n t r i n s i c v a l u e b a s i s ’ o r ‘ F a i r v a l u e b a s i s ’ .T h e C o m p e n s a t i o n C o m m i t t e e i n t h e i r m e e t i n g d a t e d 1 0 t h M a y , 2 0 1 2 d e c i d e d t oa d o p t ‘ I n t r i n s i c v a l u e m e t h o d ’ f o r a c c o u n t i n g o f E S O S , i n t e r m s o f t h e p o w e r v e s t e do n t h e m a s p e r t h e r e s o l u t i o n o f E G M d a t e d 2 4 D e c e m b e r , 2 0 1 0T h e e x e r c i s e p r i c e o f t h e o p t i o n s g r a n t e d i s t h e s a m e a s t h e m a r k e t p r i c e o n t h e d a t ep r i o r t o g r a n t d a t e a n d h e n c e t h e r e i s n o i n t r i n s i c v a l u e f o r t h e o p t i o n s , w h i c h h a s t ob e a m o r t i z e d o v e r t h e v e s t i n g p e r i o d . I f “ F a i r V a l u e M e t h o d ” h a d b e e n a d o p t e db a s e d o n “ B l a c k à S c h o l e s p r i c i n g m o d e l ” f o r p r i c i n g a n d a c c o u n t i n g o f o p t i o n s , n e tp r o f i t w o u l d b e l o w e r b y��
1 9 . 8 3 C r o r e ( P r e v i o u s Y e a r :��
2 5 . 4 2 C r o r e )T h e m o d i f i e d b a s i c a n d d i l u t e d e a r n i n g s p e r s h a r e f o r t h e y e a r , h a d t h e c o m p a n yf o l l o w e d F a i r V a l u e M e t h o d o f a c c o u n t i n g f o r E S O S c o m p e n s a t i o n c o s t w o u l d b e�
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i i ) D i v i d e n d p a i d o n s h a r e s i s s u e d o n e x e r c i s e o f s t o c k o p t i o nT h e B a n k m a y a l l o t s h a r e s b e t w e e n t h e B a l a n c e S h e e t d a t e a n d r e c o r d d a t e f o rt h e d e c l a r a t i o n o f d i v i d e n d p u r s u a n t t o t h e e x e r c i s e o f a n y e m p l o y e e s t o c ko p t i o n s . T h e s e s h a r e s w i l l b e e l i g i b l e f o r f u l l d i v i d e n d f o r t h e y e a r e n d e d 3 1M a r c h 2 0 1 6 , i f a p p r o v e d a t t h e e n s u i n g A n n u a l G e n e r a l M e e t i n g . D i v i d e n dr e l a t i n g t o t h e s e s h a r e s h a s n o t b e e n r e c o r d e d i n t h e c u r r e n t y e a r .i i i ) D i v i d e n d ( I n c l u d i n g t a x / c e s s t h e r e o n ) a p p r o p r i a t i o n o f�
0 . 1 5 C r o r e r e p r e s e n td i v i d e n d f o r F i n a n c i a l Y e a r 2 0 1 4 o 1 5 o n t h e s h a r e s i s s u e d u n d e r E m p l o y e e S t o c kO p t i o n s S c h e m e b e f o r e t h e r e c o r d d a t e , a s p e r s h a r e h o l d e r s a p p r o v a l .2 . 3 . S e g m e n t R e p o r t i n g ( A S 1 7 )A . B u s i n e s s S e g m e n t sB u s i n e s s o f t h e B a n k i s d i v i d e d i n t o f o u r s e g m e n t s v i z . T r e a s u r y , C o r p o r a t e o rW h o l e s a l e B a n k i n g , R e t a i l B a n k i n g a n d o t h e r b a n k i n g o p e r a t i o n s . T h e p r i n c i p a la c t i v i t i e s o f t h e s e s e g m e n t s a n d i n c o m e a n d e x p e n s e s s t r u c t u r e a r e a s f o l l o w s :T r e a s u r yT r e a s u r y o p e r a t i o n s i n c l u d e t r a d i n g a n d i n v e s t m e n t s i n G o v e r n m e n t a n d c o r p o r a t ed e b t i n s t r u m e n t s , e q u i t y a n d m u t u a l f u n d s , d e r i v a t i v e t r a d i n g a n d f o r e i g n e x c h a n g eo p e r a t i o n s o n p r o p r i e t a r y a c c o u n t a n d f o r c u s t o m e r s .T h e i n c o m e o f t h i s s e g m e n t p r i m a r i l y c o n s i s t s o f e a r n i n g s f r o m t h e i n v e s t m e n tp o r t f o l i o o f t h e b a n k , g a i n s a n d l o s s e s o n t r a d i n g o p e r a t i o n s . T h e p r i n c i p a l e x p e n s eo f t h e s e g m e n t c o n s i s t s o f i n t e r e s t e x p e n s e o n f u n d s b o r r o w e d / u t i l i z e d a n d o t h e ra l l o c a t e d o v e r h e a d s .C o r p o r a t e / W h o l e s a l e B a n k i n g :T h i s s e g m e n t p r o v i d e s l o a n s a n d o t h e r b a n k i n g s e r v i c e s t o C o r p o r a t e a n d o t h e rc l i e n t s w h e r e v a l u e o f i n d i v i d u a l e x p o s u r e t o t h e C l i e n t s e x c e e d s��
5 C r o r e a sd e f i n e d b y R B I . R e v e n u e o f t h i s s e g m e n t c o n s i s t s o f i n t e r e s t a n d f e e s e a r n e d o nl o a n s t o s u c h c u s t o m e r s a n d c h a r g e s a n d f e e s e a r n e d f r o m o t h e r b a n k i n g s e r v i c e s .E x p e n s e s o f t h i s s e g m e n t p r i m a r i l y c o n s i s t o f i n t e r e s t e x p e n s e o n f u n d s u t i l i z e d a n da l l o c a t e d o v e r h e a d sR e t a i l b a n k i n g :R e t a i l b a n k i n g c o n s t i t u t e s l e n d i n g a n d o t h e r b a n k i n g s e r v i c e s t o i n d i v i d u a l s / s m a l lb u s i n e s s c u s t o m e r s , o t h e r t h a n c o r p o r a t e / w h o l e s a l e b a n k i n g c u s t o m e r s , i d e n t i f i e d o nt h e b a s i s o f R B I g u i d e l i n e s .R e v e n u e o f t h i s s e g m e n t c o n s i s t s o f i n t e r e s t e a r n e d o n l o a n s m a d e t o s u c h c u s t o m e r sa n d c h a r g e s / f e e s c a r r i e d f r o m o t h e r b a n k i n g s e r v i c e s t o t h e m . T h e p r i n c i p a le x p e n s e s o f t h e s e g m e n t c o n s i s t o f i n t e r e s t e x p e n s e s o n f u n d s b o r r o w e d a n d o t h e re x p e n s e s .F-212
4 4
O t h e r B a n k i n g O p e r a t i o n sT h i s s e g m e n t i n c l u d e s p a r a b a n k i n g a c t i v i t i e s l i k e t h i r d p a r t y p r o d u c t d i s t r i b u t i o na n d o t h e r b a n k i n g t r a n s a c t i o n s , n o t c o v e r e d u n d e r a n y o f t h e a b o v e s e g m e n t s . T h ei n c o m e f r o m s u c h s e r v i c e s a n d a s s o c i a t e d c o s t s a r e d i s c l o s e d i n t h i s s e g m e n t .T h e f o l l o w i n g t a b l e s e t s f o r t h , f o r t h e p e r i o d s i n d i c a t e d , t h e b u s i n e s s s e g m e n tr e s u l t s :A s o n 3 1 M a r c h 2 0 1 6 : (��
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C r o r e )B u s i n e s sS e g m e n t s T r e a s u r y C o r p o r a t e /W h o l e s a l eB a n k i n g R e t a i l B a n k i n g O t h e rB a n k i n gO p e r a t i o n s T o t a lR e v e n u e 2 2 8 1 . 9 3 2 3 6 0 . 9 4 3 8 0 9 . 6 4 7 8 . 5 6 8 5 3 1 . 0 7R e s u l t ( n e t o fp r o v i s i o n s ) 1 5 8 . 5 1 1 8 . 1 4 4 9 4 . 5 9 7 3 . 8 5 7 4 5 . 0 9U n a l l o c a t e de x p e n s e ( 2 5 . 4 4 )O p e r a t i n gp r o f i t ( P B T ) 7 1 9 . 6 5I n c o m e t a x e s ( 2 4 4 . 0 0 )E x t r a o r d i n a r yp r o f i t / l o s s çN e t P r o f i t 4 7 5 . 6 5O T H E RI N F O R M A TI O NS e g m e n tA s s e t s 3 0 4 0 3 . 9 8 2 4 8 3 6 . 6 7 3 3 7 1 0 . 8 6 2 6 . 5 6 8 8 9 7 8 . 0 7U n a l l o c a t e da s s e t s 2 4 5 1 . 9 6T o t a l a s s e t s 9 1 4 3 0 . 0 3S e g m e n tl i a b i l i t i e s 2 7 8 9 4 . 7 6 2 3 3 0 8 . 9 6 3 1 6 9 6 . 0 5 ç 8 2 8 9 9 . 7 7U n a l l o c a t e dl i a b i l i t i e s 4 3 9 . 0 4T o t a ll i a b i l i t i e s 8 3 3 3 8 . 8 1A s o n 3 1 M a r c h 2 0 1 5 (���
n C r o r e )B u s i n e s sS e g m e n t s T r e a s u r y C o r p o r a t e /W h o l e s a l eB a n k i n g R e t a i l B a n k i n g O t h e rB a n k i n gO p e r a t i o n s T o t a lR e v e n u e 2 2 5 0 . 2 7 2 3 4 9 . 9 3 3 5 7 7 . 9 7 1 1 9 . 6 0 8 2 9 7 . 7 7R e s u l t ( n e t o fp r o v i s i o n s ) 3 4 2 . 1 8 3 3 3 . 9 9 7 6 1 . 1 2 1 0 3 . 7 2 1 5 4 1 . 0 1U n a l l o c a t e de x p e n s e ( 1 9 . 9 7 )O p e r a t i n gp r o f i t ( P B T ) 1 5 2 1 . 0 4F-213
4 5
B u s i n e s sS e g m e n t s T r e a s u r y C o r p o r a t e /W h o l e s a l eB a n k i n g R e t a i l B a n k i n g O t h e rB a n k i n gO p e r a t i o n s T o t a lI n c o m e t a x e s ( 5 1 5 . 2 9 )E x t r a o r d i n a r yp r o f i t / l o s s %N e t P r o f i t 1 0 0 5 . 7 5O T H E RI N F O R M A TI O NS e g m e n tA s s e t s 2 8 8 1 5 . 2 3 2 0 5 2 0 . 0 8 3 1 0 4 8 . 8 9 2 4 . 3 2 8 0 4 0 8 . 5 2U n a l l o c a t e da s s e t s 2 4 4 1 . 9 6T o t a l a s s e t s 8 2 8 5 0 . 4 8S e g m e n tl i a b i l i t i e s 2 6 2 4 5 . 2 0 1 9 1 8 1 . 6 3 2 9 0 8 3 . 6 9 % 7 4 5 1 0 . 5 2U n a l l o c a t e dl i a b i l i t i e s 6 0 1 . 8 2T o t a ll i a b i l i t i e s 7 5 1 1 2 . 3 4G e o g r a p h i c a l S e g m e n t I n f o r m a t i o nT h e B a n k r e p o r t s i t s o p e r a t i o n s u n d e r t h e f o l l o w i n g g e o g r a p h i c a l s e g m e n t sa ) D o m e s t i c O p e r a t i o n s c o m p r i s e b r a n c h e s i n I n d i ab ) F o r e i g n o p e r a t i o n s c o m p r i s e B a n k i n g u n i t i n I n t e r n a t i o n a l F i n a n c i a l S e r v i c e s C e n t r e ,a s p e r p a r a 2 . 2 o f A n n e x I o f R B I C i r c u l a r D B R . I B D . B C 1 4 5 7 0 / 2 3 . 1 3 . 0 0 4 / 2 0 1 4 % 1 5d a t e d A p r i l 1 , 2 0 1 5 .T h e f o l l o w i n g t a b l e s e t s f o r t h , f o r t h e p e r i o d s i n d i c a t e d , t h e g e o g r a p h i c a l s e g m e n t r e s u l t s :A s o n 3 1 M a r c h , 2 0 1 6 (��
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C r o r e )P a r t i c u l a r s D o m e s t i cO p e r a t i o n s F o r e i g nO p e r a t i o n s T o t a lR e v e n u e 8 2 9 7 . 7 7 % 8 2 9 7 . 7 7A s s e t s 8 2 8 5 0 . 4 8 % 8 2 8 5 0 . 4 8C a p i t a l E x p e n d i t u r e 1 1 6 . 8 2 % 1 1 6 . 8 2F-214
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S e g m e n t i n f o r m a t i o n i s p r o v i d e d a s p e r t h e M I S a v a i l a b l e f o r i n t e r n a l r e p o r t i n g p u r p o s e s ,w h i c h i n c l u d e c e r t a i n e s t i m a t e s / a s s u m p t i o n s . T h e m e t h o d o l o g y a d o p t e d i n c o m p i l i n g a n dr e p o r t i n g t h e a b o v e i n f o r m a t i o n h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s .2 . 4 . R e l a t e d P a r t y D i s c l o s u r e sa ) D e t a i l s o f R e l a t e d P a r t i e s :N a m e o f t h e P a r t y N a t u r e o f R e l a t i o n s h i pI D B I F e d e r a l L i f e I n s u r a n c e C o m p a n yL i m i t e d A s s o c i a t eF e d B a n k F i n a n c i a l S e r v i c e s L i m i t e d S u b s i d i a r yS r i . S h y a m S r i n i v a s a n , M a n a g i n gD i r e c t o r & C E O K e y M a n a g e m e n t P e r s o n n e lS r i . A s h u t o s h K h a j u r i a , E x e c u t i v eD i r e c t o r & C F O ( F r o m 2 8 § 0 1 § 2 0 1 6 ) K e y M a n a g e m e n t P e r s o n n e lS r i A b r a h a m C h a c k o , E x e c u t i v eD i r e c t o r ( U p t o 3 0 § 0 4 § 2 0 1 5 ) K e y M a n a g e m e n t P e r s o n n e lF e d B a n k H o r m i s M e m o r i a l F o u n d a t i o n E n t i t y i n w h i c h K M P s c a ne x e r c i s e s i g n i f i c a n t i n f l u e n c eb ) S i g n i f i c a n t t r a n s a c t i o n s w i t h r e l a t e d p a r t i e s : (��
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C r o r e )P a r t i c u l a r s K e y M a n a g e m e n t P e r s o n n e l #3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5R e m u n e r a t i o nS r i . S h y a m S r i n i v a s a n 1 . 1 2 0 . 7 8S r i . A s h u t o s h K h a j u r i a 1 . 0 2 N AS r i A b r a h a m C h a c k o 0 . 7 2 0 . 7 5D i v i d e n d P a i d 0 . 0 2 *A s t e r i s k d e n o t e s f i g u r e s b e l o w �1 L a k hD u r i n g t h e y e a r 2 0 1 5 § 1 6 : N i l ( P r e v i o u s Y e a r : 6 4 1 T h o u s a n d s ) n u m b e r o f S t o c kO p t i o n s u n d e r “ E S O S 2 0 1 0 ” S c h e m e w e r e g r a n t e d t o M a n a g i n g D i r e c t o r & C E O a n dE x e c u t i v e D i r e c t o r .# T h e n o r m a l t r a n s a c t i o n s o f t h e B a n k w i t h t h e a b o v e p e r s o n s a s c o n s t i t u e n t s a r e n o tr e c k o n e d f o r t h e p u r p o s e o f d i s c l o s u r e .N o t e : I n a c c o r d a n c e w i t h R B I g u i d e l i n e s , d e t a i l s p e r t a i n i n g t o t h e r e l a t e d p a r t yt r a n s a c t i o n s , o t h e r t h a n t r a n s a c t i o n w i t h K M P s , h a v e n o t b e e n p r o v i d e d a s t h e r e i so n l y o n e r e l a t e d p a r t y i n e a c h o f t h e a b o v e c a t e g o r i e s .2 . 5 . F i x e d A s s e t sA ) F i x e d A s s e t s a s p e r S c h e d u l e 1 0 i n c l u d e I n t a n g i b l e A s s e t s r e l a t i n g t o S o f t w a r e a n dS y s t e m D e v e l o p m e n t E x p e n d i t u r e w h i c h a r e a s f o l l o w s : (
�i n C r o r e )P a r t i c u l a r s 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5G r o s s B l o c kA t t h e b e g i n n i n g o f t h e y e a r 9 3 . 6 2 7 9 . 1 2
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A d d i t i o n s d u r i n g t h e y e a r 4 9 . 4 2 1 4 . 5 0D e d u c t i o n s d u r i n g t h e y e a r à àC l o s i n g B a l a n c e 1 4 3 . 0 4 9 3 . 6 2D e p r e c i a t i o n / A m o r t i s a t i o nA t t h e b e g i n n i n g o f t h e y e a r 7 1 . 7 7 5 3 . 7 9C h a r g e f o r t h e y e a r 2 1 . 7 1 1 7 . 9 8D e d u c t i o n s d u r i n g t h e y e a r ø øD e p r e c i a t i o n t o d a t e 9 3 . 4 8 7 1 . 7 7N e t B l o c k 4 9 . 5 6 2 1 . 8 5B ) R e v a l u a t i o n o f F i x e d A s s e t sD u r i n g t h e y e a r 1 9 9 5 � 9 6 , t h e a p p r e c i a t i o n o f�
9 . 6 5 C r o r e i n t h e v a l u e o f l a n d a n db u i l d i n g s c o n s e q u e n t u p o n r e v a l u a t i o n b y a p p r o v e d v a l u e r s w a s c r e d i t e d t oR e v a l u a t i o n R e s e r v e . T h e r e h a s b e e n n o r e v a l u a t i o n o f a s s e t s d u r i n g t h i s y e a r .2 . 6 . D e f e r r e d T a x A s s e t s / L i a b i l i t yT h e m a j o r c o m p o n e n t s o f d e f e r r e d t a x a s s e t s a n d d e f e r r e d t a x l i a b i l i t i e s a r e a s u n d e r :(�
i n C r o r e )3 1 M a r c h2 0 1 6 3 1 M a r c h2 0 1 5D e f e r r e d T a x L i a b i l i t yT a x e f f e c t o f i t e m s c o n s t i t u t i n g d e f e r r e d t a x l i a b i l i t y :( i ) I n t e r e s t a c c r u e d b u t n o t d u e 1 4 5 . 6 6 1 4 2 . 1 6( i i ) D e p r e c i a t i o n o n I n v e s t m e n t s 1 9 . 5 2 1 0 6 . 4 3( i i i ) R e s e r v e u n d e r S e c t i o n 3 6 ( 1 ) ( v i i i ) o f t h eI n c o m e T a x A c t , 1 9 6 1 9 1 . 3 5 8 0 . 2 8T o t a l ( A ) 2 5 6 . 5 3 3 2 8 . 8 7D e f e r r e d T a x A s s e tT a x e f f e c t o f i t e m s c o n s t i t u t i n g d e f e r r e d t a x a s s e t s :( i ) I n t e r e s t / p r e m i u m p a i d o n p u r c h a s e o fs e c u r i t i e s 9 0 . 2 7 7 8 . 1 0( i i ) P r o v i s i o n f o r S t a n d a r d A s s e t s 1 0 9 . 4 5 9 9 . 2 4( i i i ) D e p r e c i a t i o n o n F i x e d A s s e t s 1 . 1 5 1 . 8 8( i v ) O t h e r s 1 1 1 . 1 9 1 0 8 . 9 7T o t a l ( B ) 3 1 2 . 0 6 2 8 8 . 1 9D e f e r r e d t a x l i a b i l i t y / ( A s s e t ) ( A à B ) ( 5 5 . 5 3 ) 4 0 . 6 8L e s s : D e f e r r e d t a x o n v a l u e o f a s s e t sd e p r e c i a t e d o n e x p i r y o f u s e f u l l i f e a s o n 1A p r i l , 2 0 1 4 . à 1 . 1 9N e t D e f e r r e d t a x l i a b i l i t y / ( A s s e t ) ( 5 5 . 5 3 ) 3 9 . 4 9N e t o f D e f e r r e d t a x o f�
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2 . 7 . E m p l o y e e B e n e f i t sa ) D e f i n e d C o n t r i b u t i o n P l a nP r o v i d e n t F u n dE m p l o y e e s , w h o h a v e n o t o p t e d f o r p e n s i o n p l a n a r e e l i g i b l e t o g e t b e n e f i t s f r o mp r o v i d e n t f u n d , w h i c h i s a d e f i n e d c o n t r i b u t i o n p l a n . A g g r e g a t e c o n t r i b u t i o n s a l o n gw i t h i n t e r e s t t h e r e o n a r e p a i d o n r e t i r e m e n t , d e a t h , i n c a p a c i t a t i o n o r t e r m i n a t i o n o fe m p l o y m e n t . B o t h t h e e m p l o y e e a n d t h e B a n k c o n t r i b u t e a s p e c i f i e d p e r c e n t a g e o ft h e s a l a r y t o t h e F e d e r a l B a n k E m p l o y e e s ‘ P r o v i d e n t F u n d . T h e B a n k h a s n oo b l i g a t i o n o t h e r t h a n t h e m o n t h l y c o n t r i b u t i o n .T h e B a n k r e c o g n i z e d�� 0 . 7 9 C r o r e ( P r e v i o u s Y e a r :
� 0 . 3 0 C r o r e ) f o r p r o v i d e n t f u n dc o n t r i b u t i o n i n t h e P r o f i t a n d L o s s A c c o u n t .N e w P e n s i o n S c h e m eA s p e r t h e i n d u s t r y l e v e l s e t t l e m e n t d a t e d 2 7 t h A p r i l , 2 0 1 0 , e m p l o y e e s w h o j o i n e d t h es e r v i c e s o f t h e B a n k o n o r a f t e r 1 s t A p r i l , 2 0 1 0 a r e n o t e l i g i b l e f o r t h e e x i s t i n g p e n s i o ns c h e m e w h e r e a s t h e y w i l l b e e l i g i b l e f o r D e f i n e d C o n t r i b u t o r y P e n s i o n S c h e m e( D C P S ) i n l i n e w i t h t h e N e w P e n s i o n S c h e m e i n t r o d u c e d f o r e m p l o y e e s o f C e n t r a lG o v e r n m e n t . E m p l o y e e s h a l l c o n t r i b u t e 1 0 % o f t h e i r B a s i c P a y a n d D e a r n e s sA l l o w a n c e t o w a r d s D C P S a n d t h e B a n k w i l l a l s o m a k e a m a t c h i n g c o n t r i b u t i o n .T h e r e i s n o s e p a r a t e P r o v i d e n t F u n d f o r e m p l o y e e s j o i n i n g o n o r a f t e r 0 1 / 0 4 / 2 0 1 0 .T h e B a n k r e c o g n i z e d� 1 8 . 9 5 C r o r e ( P r e v i o u s y e a r :
� 1 3 . 3 4 C r o r e ) f o r D C P Sc o n t r i b u t i o n i n t h e P r o f i t a n d L o s s A c c o u n tb ) D e f i n e d b e n e f i t p l a nG r a t u i t yT h e B a n k p r o v i d e s f o r G r a t u i t y , a d e f i n e d b e n e f i t r e t i r e m e n t p l a n ( t h e “ G r a t u i t yP l a n ” ) c o v e r i n g t h e e l i g i b l e e m p l o y e e s . T h e G r a t u i t y P l a n p r o v i d e s a l u m p s u mp a y m e n t t o v e s t e d e m p l o y e e s o n r e t i r e m e n t , d e a t h , i n c a p a c i t a t i o n o r t e r m i n a t i o n o fe m p l o y m e n t , o f a n a m o u n t b a s e d o n t h e r e s p e c t i v e e m p l o y e e s ’ s a l a r y a n d t h e t e n u r eo f e m p l o y m e n t . V e s t i n g o c c u r s u p o n c o m p l e t i o n o f f i v e y e a r s o f s e r v i c e a s p e rP a y m e n t o f G r a t u i t y A c t , 1 9 7 2 a n d i t s a m e n d m e n t w i t h e f f e c t f r o m 2 4 t h M a y , 2 0 1 0 o ra s p e r t h e p r o v i s i o n s o f t h e F e d e r a l B a n k E m p l o y e e s ’ G r a t u i t y T r u s t F u n d R u l e s / B i ¤p a r t i t e A w a r d p r o v i s i o n s . L i a b i l i t i e s w i t h r e g a r d t o t h e G r a t u i t y P l a n a r e d e t e r m i n e db y A c t u a r i a l v a l u a t i o n a s o n t h e B a l a n c e S h e e t d a t e , b a s e d u p o n w h i c h , t h e B a n kc o n t r i b u t e s a l l t h e a s c e r t a i n e d l i a b i l i t i e s t o t h e F e d e r a l B a n k E m p l o y e e s ’ G r a t u i t yT r u s t F u n d ( t h e “ T r u s t ” ) . T r u s t e e s a d m i n i s t e r c o n t r i b u t i o n s m a d e t o t h e T r u s t a n dc o n t r i b u t i o n s a r e i n v e s t e d i n s p e c i f i c i n v e s t m e n t s a s p e r m i t t e d b y l a w .S u p e r a n n u a t i o n / P e n s i o nT h e B a n k p r o v i d e s f o r m o n t h l y p e n s i o n , a d e f i n e d b e n e f i t r e t i r e m e n t p l a n ( t h e“ p e n s i o n p l a n ” ) c o v e r i n g e l i g i b l e e m p l o y e e s . T h e p e n s i o n p l a n p r o v i d e s a m o n t h l yp e n s i o n a f t e r r e t i r e m e n t o f t h e e m p l o y e e s t i l l d e a t h a n d t o t h e f a m i l y a f t e r t h e d e a t h o fF-217
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t h e p e n s i o n e r . T h e m o n t h l y p e n s i o n i s b a s e d o n t h e r e s p e c t i v e e m p l o y e e s ’ s a l a r y a n dt h e t e n u r e o f e m p l o y m e n t . V e s t i n g o c c u r s u p o n c o m p l e t i o n o f t e n y e a r s o f s e r v i c e .T h e B a n k p a y s t h e m o n t h l y p e n s i o n b y p u r c h a s i n g a n n u i t i e s f r o m L i f e I n s u r a n c eC o r p o r a t i o n o f I n d i a ( L I C ) . L i a b i l i t i e s w i t h r e g a r d t o t h e p e n s i o n p l a n a r e d e t e r m i n e db y a c t u a r i a l v a l u a t i o n a s o n t h e B a l a n c e S h e e t d a t e , b a s e d u p o n w h i c h , t h e B a n kc o n t r i b u t e s a l l t h e a s c e r t a i n e d l i a b i l i t i e s t o t h e F e d e r a l B a n k ( E m p l o y e e s ’ ) P e n s i o nF u n d ( t h e “ T r u s t ” ) . T r u s t e e s a d m i n i s t e r c o n t r i b u t i o n s m a d e t o t h e T r u s t a n dc o n t r i b u t i o n s a r e i n v e s t e d i n s p e c i f i c i n v e s t m e n t s a s p e r m i t t e d b y l a w .T h e f o l l o w i n g t a b l e a s f u r n i s h e d b y A c t u a r y s e t s o u t t h e f u n d e d s t a t u s o f g r a t u i t y /p e n s i o n p l a n a n d t h e a m o u n t r e c o g n i z e d i n t h e B a n k ’ s f i n a n c i a l s t a t e m e n t s a s a tM a r c h 3 1 , 2 0 1 6 .i ) C h a n g e i n b e n e f i t o b l i g a t i o n s : (�
i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5P r o j e c t e d b e n e f i t o b l i g a t i o n ,b e g i n n i n g o f t h e y e a r 2 0 9 . 3 4 2 0 1 . 2 6 5 8 7 . 4 8 5 3 1 . 7 8S e r v i c e C o s t 1 3 . 8 2 1 3 . 5 9 5 7 . 7 0 5 6 . 5 1I n t e r e s t c o s t 1 5 . 2 9 1 5 . 0 3 4 0 . 1 7 3 6 . 9 0A c t u a r i a l ( g a i n ) / l o s s 4 4 . 0 7 6 . 3 3 1 2 2 . 9 9 1 0 3 . 4 2B e n e f i t s p a i d ( 3 6 . 4 3 ) ( 2 6 . 8 7 ) ( 1 7 0 . 8 4 ) ( 1 4 1 . 1 3 )P r o j e c t e d b e n e f i t o b l i g a t i o n ,e n d o f t h e y e a r 2 4 6 . 0 9 2 0 9 . 3 4 6 3 7 . 5 0 5 8 7 . 4 8i i ) C h a n g e i n p l a n a s s e t s : (�
i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5 3 1M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5P l a n a s s e t s a t b e g i n n i n g o f t h ey e a r a t f a i r v a l u e 2 2 3 . 5 2 2 3 0 . 8 3 5 4 4 . 4 0 4 1 6 . 2 5E x p e c t e d r e t u r n o n p l a n a s s e t s 1 8 . 5 5 2 0 . 5 2 4 7 . 5 8 3 6 . 9 6A c t u a r i a l g a i n / ( l o s s ) ( 0 . 6 5 ) ( 0 . 9 6 ) ( 0 . 5 8 ) 3 . 5 6E m p l o y e r ’ s C o n t r i b u t i o n s 2 0 . 6 7 � 1 5 7 . 7 1 2 2 8 . 7 6B e n e f i t s p a i d ( 3 6 . 4 3 ) ( 2 6 . 8 7 ) ( 1 7 0 . 8 4 ) ( 1 4 1 . 1 3 )P l a n a s s e t s a t e n d o f t h e y e a r ,a t f a i r v a l u e 2 2 5 . 6 6 2 2 3 . 5 2 5 7 8 . 2 7 5 4 4 . 4 0F-218
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i i i ) R e c o n c i l i a t i o n o f p r e s e n t v a l u e o f t h e o b l i g a t i o n a n d t h e f a i r v a l u e o f t h e p l a na s s e t s : (� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 6 3 1M a r c h ,2 0 1 5 3 1 M a r c h ,2 0 1 6 3 1M a r c h ,2 0 1 5F a i r v a l u e o f p l a n a s s e t s a t t h ee n d o f t h e y e a r 2 2 5 . 6 6 2 2 3 . 5 2 5 7 8 . 2 7 5 4 4 . 4 0P r e s e n t v a l u e o f t h e d e f i n e db e n e f i t o b l i g a t i o n s a t t h e e n do f t h e y e a r 2 4 6 . 0 9 2 0 9 . 3 4 6 3 7 . 5 0 5 8 7 . 4 8L i a b i l i t y / ( A s s e t ) r e c o g n i z e di n t h e B a l a n c e S h e e t 2 0 . 4 3 ( 1 4 . 1 8 ) 5 9 . 2 3 4 3 . 0 8i v ) G r a t u i t y / p e n s i o n c o s t f o r t h e y e a r e n d e d 3 1 s t M a r c h , 2 0 1 6 (
� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1M a r c h ,2 0 1 6 3 1M a r c h ,2 0 1 5 3 1M a r c h ,2 0 1 6 3 1M a r c h ,2 0 1 5S e r v i c e c o s t 1 3 . 8 2 1 3 . 5 9 5 7 . 7 0 5 6 . 5 1I n t e r e s t c o s t 1 5 . 2 9 1 5 . 0 3 4 0 . 1 7 3 6 . 9 0E x p e c t e d r e t u r n o n p l a n a s s e t s ( 1 8 . 5 5 ) ( 2 0 . 5 2 ) ( 4 7 . 5 8 ) ( 3 6 . 9 6 )A c t u a r i a l ( g a i n ) / l o s s 4 4 . 7 2 7 . 2 9 1 2 3 . 5 7 9 9 . 8 6E m p l o y e e C o s t 5 5 . 2 8 1 5 . 3 9 1 7 3 . 8 6 1 5 6 . 3 1A m o r t i s a t i o n C o s t b b b 3 3 . 6 8N e t c o s t D e b i t t o P r o f i t a n d L o s sa c c o u n t 5 5 . 2 8 1 5 . 3 9 1 7 3 . 8 6 1 8 9 . 9 9A c t u a l r e t u r n o n p l a n a s s e t s 1 7 . 9 0 1 9 . 5 6 4 7 . 0 0 4 0 . 5 2v ) I n v e s t m e n t d e t a i l s o f p l a n A s s e t s (�i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5 3 1M a r c h ,2 0 1 6 3 1M a r c h ,2 0 1 5C e n t r a l a n d s t a t e G o v e r n m e n tb o n d s 7 . 1 3 4 0 . 1 3 1 7 . 8 2 1 2 9 . 7 2O t h e r d e b t s e c u r i t i e s 1 6 . 3 5 2 7 . 1 5 6 6 . 0 4 7 9 . 0 5B a l a n c e i n S a v i n g b a n ka c c o u n t w i t h t h e B a n k 0 . 6 6 2 . 1 4 3 . 2 1 5 6 . 8 3N e t c u r r e n t a s s e t s 0 . 8 2 1 . 8 9 3 . 1 8 5 . 8 8B a l a n c e w i t h L I C # 2 0 0 . 7 0 1 5 2 . 2 1 4 8 8 . 0 2 2 7 2 . 9 2T o t a l 2 2 5 . 6 6 2 2 3 . 5 2 5 7 8 . 2 7 5 4 4 . 4 0# I n t h e a b s e n c e o f d e t a i l e d i n f o r m a t i o n r e g a r d i n g p l a n a s s e t s w h i c h i s f u n d e d w i t hL i f e I n s u r a n c e C o r p o r a t i o n o f I n d i a , t h e c o m p o s i t i o n o f e a c h m a j o r c a t e g o r y o fp l a n a s s e t s , t h e p e r c e n t a g e o r a m o u n t f o r e a c h c a t e g o r y t o t h e f a i r v a l u e o f p l a na s s e t s h a s n o t b e e n d i s c l o s e d .
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i n C r o r e )3 1M a r c h2 0 1 6 3 1M a r c h2 0 1 5 3 1M a r c h2 0 1 4 3 1M a r c h2 0 1 3 3 1M a r c h2 0 1 2D e f i n e d B e n e f i tO b l i g a t i o n s 6 3 7 . 5 0 5 8 7 . 4 8 5 3 1 . 7 8 5 8 4 . 1 2 5 9 8 . 7 6P l a n A s s e t s 5 7 8 . 2 7 5 4 4 . 4 0 4 1 6 . 2 5 4 4 4 . 1 7 4 2 2 . 6 2S u r p l u s / [ D e f i c i t ] ( 5 9 . 2 3 ) ( 4 3 . 0 8 ) ( 1 1 5 . 5 3 ) ( 1 3 9 . 9 5 ) ( 1 7 6 . 1 4 )E x p e r i e n c e a d j u s t m e n t s o nP l a n L i a b i l i t i e s [ G a i n /( L o s s ) ] ( 1 4 2 . 4 9 ) ( 7 9 . 7 5 ) ( 8 . 1 8 ) ( 1 . 2 2 ) 4 5 0 . 1 1E x p e r i e n c e A d j u s t m e n t s o nP l a n A s s e t s [ G a i n / ( L o s s ) ] 0 . 1 8 2 . 1 9 3 . 0 3 1 . 3 8 0 . 9 6v i i ) A s s u m p t i o n sP a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a n3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5 3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5D i s c o u n t r a t e 8 . 0 0 % 8 . 0 0 % 8 . 0 0 % 8 . 0 0 %A n n u i t y r a t e p e r R u p e e È È 1 2 6 . 1 8 2 9 7 1 2 6 . 1 8 2 9 7S a l a r y e s c a l a t i o n r a t e 5 . 0 0 % 5 . 1 0 % 5 . 0 0 % 5 . 1 0 %E s t i m a t e d r a t e o f r e t u r no n p l a n a s s e t s 8 . 3 0 % 8 . 8 9 % 8 . 7 4 % 8 . 8 8 %A t t r i t i o n R a t e 3 . 0 0 % 3 . 0 0 % 3 . 0 0 % 3 . 0 0 %M o r t a l i t y T a b l e I A L M 2 0 0 6 È0 8 U l t i m a t e I A L M2 0 0 6 È 0 8U l t i m a t e I A L M2 0 0 6 È 0 8U l t i m a t e I A L M2 0 0 6 È 0 8U l t i m a t eT h e e s t i m a t e s o f f u t u r e s a l a r y i n c r e a s e s c o n s i d e r e d i n a c t u a r i a l v a l u a t i o n t a k ea c c o u n t o f i n f l a t i o n , s e n i o r i t y , p r o m o t i o n a n d o t h e r r e l e v a n t f a c t o r s .T h e e x p e c t e d r a t e o f r e t u r n o n p l a n a s s e t s i s b a s e d o n t h e a v e r a g e l o n g È t e r m r a t e o fr e t u r n e x p e c t e d o n i n v e s t m e n t s o f t h e F u n d d u r i n g t h e e s t i m a t e d t e r m o f t h eo b l i g a t i o n s .F-220
5 2
A s t h e c o n t r i b u t i o n e x p e c t e d t o b e p a i d t o t h e d e f i n e d b e n e f i t p l a n s d u r i n g t h ea n n u a l p e r i o d b e g i n n i n g a f t e r t h e b a l a n c e s h e e t d a t e i s b a s e d o n v a r i o u s i n t e r n a l /e x t e r n a l f a c t o r s , a b e s t e s t i m a t e o f t h e c o n t r i b u t i o n i s n o t d e t e r m i n a b l e( c ) L e a v e E n c a s h m e n t / S i c k L e a v e / L e a v e T r a v e l C o n c e s s i o n / U n a v a i l e dC a s u a l L e a v eT h e e m p l o y e e s o f t h e B a n k a r e e n t i t l e d t o c o m p e n s a t e d a b s e n c e . T h e e m p l o y e e sc a n c a r r y f o r w a r d a p o r t i o n o f t h e u n u t i l i s e d a c c r u e d c o m p e n s a t e d a b s e n c e a n du t i l i s e i t i n f u t u r e p e r i o d s o r r e c e i v e c a s h c o m p e n s a t i o n a t r e t i r e m e n t o r t e r m i n a t i o no f e m p l o y m e n t f o r t h e u n u t i l i z e d a c c r u e d c o m p e n s a t e d a b s e n c e f o r a m a x i m u m o f2 4 0 d a y s . T h e B a n k r e c o r d s a n o b l i g a t i o n f o r c o m p e n s a t e d a b s e n c e s i n t h e p e r i o d i nw h i c h t h e e m p l o y e e r e n d e r s t h e s e r v i c e s t h a t i n c r e a s e t h i s e n t i t l e m e n t . T h e B a n km e a s u r e s t h e e x p e c t e d c o s t o f c o m p e n s a t e d a b s e n c e a s t h e a d d i t i o n a l a m o u n t t h a tt h e B a n k e x p e c t s t o p a y a s a r e s u l t o f t h e u n u s e d e n t i t l e m e n t t h a t h a s a c c u m u l a t e d a tt h e b a l a n c e s h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n s .A s u m o f��
2 . 7 2 C r o r e ( P r e v i o u s y e a r :�� 8 . 7 3 C r o r e ) h a s b e e n p r o v i d e d t o w a r d s t h ea b o v e l i a b i l i t i e s i n a c c o r d a n c e w i t h A S 1 5 b a s e d o n a c t u a r i a l v a l u a t i o n .T h e A c t u a r i a l l i a b i l i t y o f c o m p e n s a t e d a b s e n c e s o f a c c u m u l a t e d p r i v i l e g e , s i c k ,c a s u a l l e a v e a n d l e a v e t r a v e l c o n c e s s i o n o f t h e e m p l o y e e s o f t h e B a n k i s g i v e nb e l o w : (
�i n C r o r e )3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5P r i v i l e g e l e a v e 1 3 1 . 1 5 1 2 0 . 8 9S i c k l e a v e 2 0 . 9 7 3 0 . 9 3L e a v e T r a v e l C o n c e s s i o n 1 3 . 1 8 1 1 . 0 3C a s u a l L e a v e 1 . 0 9 0 . 8 2T o t a l a c t u a r i a l l i a b i l i t y 1 6 6 . 3 9 1 6 3 . 6 7A s s u m p t i o n sD i s c o u n t r a t e 8 . 0 0 % 8 . 0 0 %S a l a r y e s c a l a t i o n r a t e 5 . 0 0 % 5 . 1 0 %A t t r i t i o n R a t e 3 . 0 0 % 3 . 0 0 %T h e d i s c o u n t r a t e i s b a s e d o n t h e p r e v a i l i n g m a r k e t y i e l d s o f G o v e r n m e n t o f I n d i as e c u r i t i e s a s a t t h e B a l a n c e S h e e t d a t e f o r t h e e s t i m a t e d t e r m o f t h e o b l i g a t i o n s .T h e e s t i m a t e o f f u t u r e s a l a r y i n c r e a s e s c o n s i d e r e d , t a k e s i n t o a c c o u n t t h e i n f l a t i o n ,s e n i o r i t y , p r o m o t i o n , i n c r e m e n t s a n d o t h e r r e l e v a n t f a c t o r s .T h e a b o v e i n f o r m a t i o n i s a s c e r t i f i e d b y t h e a c t u a r y a n d r e l i e d u p o n b y t h e a u d i t o r s .2 . 8 . P r o v i s i o n s a n d C o n t i n g e n c i e sa ) M o v e m e n t i n p r o v i s i o n f o r f r a u d s i n c l u d e d u n d e r o t h e r l i a b i l i t i e s : (
�i n C r o r e )3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5O p e n i n g b a l a n c e a t t h e b e g i n n i n g o f t h e y e a r 6 . 6 4 5 . 3 2A d d i t i o n s d u r i n g t h e y e a r 0 . 4 2 2 . 3 0R e d u c t i o n s o n a c c o u n t o f p a y m e n t s d u r i n g t h e y e a r v vR e d u c t i o n s o n a c c o u n t o f r e v e r s a l s d u r i n g t h e y e a r 1 . 2 4 0 . 9 8B a l a n c e a t t h e e n d o f t h e y e a r 5 . 8 2 6 . 6 4
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b ) M o v e m e n t i n p r o v i s i o n f o r d e b i t c a r d r e w a r d p o i n t s : (�
i n C r o r e )3 1 M a r c h2 0 1 6 3 1 M a r c h2 0 1 5O p e n i n g p r o v i s i o n a t t h e b e g i n n i n g o f t h e y e a r 2 . 2 5 1 . 0 0P r o v i s i o n m a d e d u r i n g t h e y e a r 0 . 7 7 2 . 7 6R e d u c t i o n s d u r i n g t h e y e a r 1 . 1 0 1 . 5 1C l o s i n g p r o v i s i o n a t t h e e n d o f t h e y e a r * 1 . 9 2 2 . 2 5* T h e c l o s i n g p r o v i s i o n i s b a s e d o n t h e a c t u a r i a l v a l u a t i o n o f a c c u m u l a t e dd e b i t c a r d r e w a r d p o i n t s . T h i s a m o u n t w i l l b e u t i l i s e d t o w a r d s r e d e m p t i o no f t h e d e b i t c a r d r e w a r d p o i n t s .c ) M o v e m e n t i n p r o v i s i o n f o r o t h e r c o n t i n g e n c i e s : (�
i n C r o r e )3 1 M a r c h2 0 1 6 3 1 M a r c h2 0 1 5O p e n i n g p r o v i s i o n a t t h e b e g i n n i n g o f t h e y e a r 1 4 5 . 5 4 1 4 2 . 0 5P r o v i s i o n m a d e d u r i n g t h e y e a r 2 9 . 2 3 1 7 . 4 7R e d u c t i o n s d u r i n g t h e y e a r 1 3 4 . 7 4 1 3 . 9 8C l o s i n g p r o v i s i o n a t t h e e n d o f t h e y e a r 4 0 . 0 3 1 4 5 . 5 4d ) M o v e m e n t i n f l o a t i n g p r o v i s i o n s : (�
i n C r o r e )P a r t i c u l a r s S t a n d a r d A s s e t s P r o v i s i o n s N P A P r o v i s i o n2 0 1 5 Ê 1 6 2 0 1 4 Ê 1 5 2 0 1 5 Ê 1 6 2 0 1 4 Ê 1 5O p e n i n g b a l a n c e 1 2 . 7 5 2 5 . 5 0 1 3 8 . 1 8 1 7 9 . 5 2P r o v i s i o n m a d ed u r i n g t h e y e a r Ë Ë Ë ËD r a w d o w n f r o mp r o v i s i o n * Ë 1 2 . 7 5 6 9 . 0 0 4 1 . 3 4C l o s i n g b a l a n c e 1 2 . 7 5 1 2 . 7 5 6 9 . 1 8 1 3 8 . 1 8* F l o a t i n g p r o v i s i o n h a s b e e n u t i l i s e d i n a c c o r d a n c e w i t h R B I c i r c u l a r sD B O D . N o . B P . 9 5 / 2 1 . 0 4 . 0 4 8 / 2 0 1 3 Ë 1 4 d a t e d F e b r u a r y 7 , 2 0 1 4 a n dD B R . N o . B P . B C . 7 9 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 Ë 1 5 d a t e d M a r c h 3 0 , 2 0 1 5 .2 . 9 D e s c r i p t i o n o f c o n t i n g e n t l i a b i l i t i e s :a ) C l a i m s a g a i n s t t h e B a n k n o t a c k n o w l e d g e d a s d e b t sT h e s e r e p r e s e n t c l a i m s f i l e d a g a i n s t t h e B a n k i n t h e n o r m a l c o u r s e o f b u s i n e s sr e l a t i n g t o v a r i o u s l e g a l c a s e s c u r r e n t l y i n p r o g r e s s . T h e s e a l s o i n c l u d e d e m a n d sr a i s e d b y i n c o m e t a x a n d o t h e r s t a t u t o r y a u t h o r i t i e s a n d d i s p u t e d b y t h e B a n k .b ) L i a b i l i t y o n a c c o u n t o f f o r w a r d e x c h a n g e a n d d e r i v a t i v e c o n t r a c t sT h e B a n k e n t e r s i n t o F o r w a r d e x c h a n g e c o n t r a c t s o n i t s o w n a c c o u n t a n d o n b e h a l fo f i t s c u s t o m e r s . F o r w a r d e x c h a n g e c o n t r a c t s a r e c o m m i t m e n t s t o b u y o r s e l l f o r e i g nc u r r e n c y a t a f u t u r e d a t e a t t h e c o n t r a c t e d r a t e .F-222
5 4
c ) G u a r a n t e e s g i v e n o n b e h a l f o f c o n s t i t u e n t sA s a p a r t o f i t s b a n k i n g a c t i v i t i e s , t h e B a n k i s s u e s g u a r a n t e e s o n b e h a l f o f i t sc u s t o m e r s t o e n h a n c e t h e i r c r e d i t s t a n d i n g . G u a r a n t e e s r e p r e s e n t i r r e v o c a b l ea s s u r a n c e s t h a t t h e B a n k w i l l m a k e p a y m e n t s i n t h e e v e n t o f t h e c u s t o m e r f a i l i n g t of u l f i l l i t s f i n a n c i a l o r p e r f o r m a n c e o b l i g a t i o n s .d ) A c c e p t a n c e s , e n d o r s e m e n t s a n d o t h e r o b l i g a t i o n sT h e s e i n c l u d e d o c u m e n t a r y c r e d i t i s s u e d b y t h e B a n k o n b e h a l f o f i t s c u s t o m e r s a n db i l l s d r a w n b y t h e B a n k ' s c u s t o m e r s t h a t a r e a c c e p t e d o r e n d o r s e d b y t h e B a n k .e ) O t h e r i t e m s f o r w h i c h t h e b a n k i s c o n t i n g e n t l y l i a b l eI n c l u d e s C a p i t a l c o m m i t m e n t s a n d a m o u n t t r a n s f e r r e d t o R B I u n d e r t h e D e p o s i t o rE d u c a t i o n a n d A w a r e n e s s F u n d ( D E A F )R e f e r s c h e d u l e 1 2 f o r a m o u n t s r e l a t i n g t o c o n t i n g e n t l i a b i l i t y .2 . 1 0 P r o v i s i o n f o r L o n g T e r m c o n t r a c t sT h e B a n k h a s a p r o c e s s w h e r e b y p e r i o d i c a l l y a l l l o n g t e r m c o n t r a c t s ( i n c l u d i n gd e r i v a t i v e c o n t r a c t s ) a r e a s s e s s e d f o r m a t e r i a l f o r e s e e a b l e l o s s e s . A t t h e y e a r e n d ,t h e b a n k h a s r e v i e w e d a n d r e c o r d e d a d e q u a t e p r o v i s i o n a s r e q u i r e d u n d e r a n yL a w / A c c o u n t i n g S t a n d a r d s f o r m a t e r i a l f o r e s e e a b l e l o s s e s o n s u c h l o n g t e r mc o n t r a c t s ( i n c l u d i n g d e r i v a t i v e c o n t r a c t s ) i n t h e b o o k s o f a c c o u n t a n d d i s c l o s e d t h es a m e u n d e r t h e r e l e v a n t n o t e s i n t h e f i n a n c i a l s t a t e m e n t s .2 . 1 1 C o r p o r a t e S o c i a l R e s p o n s i b i l i t y ( C S R ) (�
i n C r o r e )P a r t i c u l a r s F o r t h e y e a r e n d e d 3 1 s tM a r c h , 2 0 1 6 F o r t h e y e a re n d e d 3 1 s t M a r c h ,2 0 1 5A m o u n t r e q u i r e d t o b e s p e n t 2 6 . 1 8 2 3 . 8 3A m o u n t s p e n t d u r i n g t h e y e a r 1 2 . 3 0 7 . 2 7T h e B a n k h a s s p e n t o f 0 . 9 4 % o f i t s a v e r a g e n e t p r o f i t f o r t h e l a s t t h r e e f i n a n c i a ly e a r s a s p a r t o f i t s C S R a c t i v i t i e s f o r t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 . A s ar e s p o n s i b l e B a n k , i t h a s a p p r o a c h e d t h e m a n d a t o r y r e q u i r e m e n t s o f C S R s p e n dp o s i t i v e l y b y u t i l i s i n g t h e r e p o r t i n g y e a r t o l a y a f o u n d a t i o n o n w h i c h t o b u i l d a n ds c a l e f u t u r e p r o j e c t s a n d p a r t n e r s h i p s . T h e B a n k i s c u r r e n t l y i n t h e p r o c e s s o fe v a l u a t i n g s t r a t e g i c a v e n u e s f o r C S R e x p e n d i t u r e i n o r d e r t o d e l i v e r m a x i m u mi m p a c t . I n t h e y e a r s t o c o m e , t h e B a n k w i l l f u r t h e r s t r e n g t h e n i t s p r o c e s s e s a s p e rr e q u i r e m e n t .2 . 1 2 I n v e s t o r e d u c a t i o n a n d p r o t e c t i o n f u n dT h e r e h a s b e e n n o d e l a y i n t r a n s f e r r i n g a m o u n t s , r e q u i r e d t o b e t r a n s f e r r e d t o t h eI n v e s t o r E d u c a t i o n a n d P r o t e c t i o n F u n d b y t h e B a n k .F-223
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2 . 1 3 S m a l l a n d M i c r o I n d u s t r i e sU n d e r t h e M i c r o , S m a l l a n d M e d i u m E n t e r p r i s e s D e v e l o p m e n t A c t , 2 0 0 6 w h i c hc a m e i n t o f o r c e f r o m 2 n d O c t o b e r , 2 0 0 6 , c e r t a i n d i s c l o s u r e s a r e r e q u i r e d t o b e m a d er e l a t i n g t o M i c r o , S m a l l a n d M e d i u m e n t e r p r i s e s . T h e r e h a v e b e e n n o r e p o r t e d c a s e so f d e l a y s i n p a y m e n t s t o m i c r o a n d s m a l l e n t e r p r i s e s o r o f i n t e r e s t p a y m e n t s d u e t od e l a y s i n s u c h p a y m e n t s . T h e a b o v e i s b a s e d o n t h e i n f o r m a t i o n a v a i l a b l e w i t h t h eB a n k w h i c h h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s .2 . 1 4 F i g u r e s f o r t h e p r e v i o u s y e a r h a v e b e e n r e g r o u p e d a n d r e c l a s s i f i e d , w h e r e v e rn e c e s s a r y t o c o n f o r m t o c u r r e n t y e a r ' s p r e s e n t a t i o n .F o r a n d o n b e h a l f o f t h e B o a r d o f D i r e c t o r sK r i s h n a k u m a r K G i r i s h K u m a r G a n a p a t h y A s h u t o s h K h a j u r i a S h y a m S r i n i v a s a nD e p u t y G e n e r a l M a n a g e r C o m p a n y S e c r e t a r y E x e c u t i v e D i r e c t o r &C F O M a n a g i n g D i r e c t o r & C E ON i l e s h S V i k a m s e yC h a i r m a nD i r e c t o r s :S u d h i r M J o s h iK M C h a n d r a s e k h a rD i l i p G S a d a r a n g a n iH a r i s h H E n g i n e e rG r a c e E l i z a b e t h K o s h i eS h u b h a l a k s h m i P a n s eC B a l a g o p a lP l a c e : K o c h iD a t e : 3 0 t h A p r i l , 2 0 1 6F-224
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A u d i t o r s ’ R e s p o n s i b i l i t yO u r r e s p o n s i b i l i t y i s t o e x p r e s s a n o p i n i o n o n t h e s e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t sb a s e d o n o u r a u d i t . W h i l e c o n d u c t i n g t h e a u d i t , w e h a v e t a k e n i n t o a c c o u n t t h ep r o v i s i o n s o f t h e A c t , t h e a c c o u n t i n g a n d a u d i t i n g s t a n d a r d s a n d m a t t e r s w h i c h a r er e q u i r e d t o b e i n c l u d e d i n t h e a u d i t r e p o r t u n d e r t h e p r o v i s i o n s o f t h e A c t a n d t h e R u l e sm a d e t h e r e u n d e r .W e c o n d u c t e d o u r a u d i t i n a c c o r d a n c e w i t h t h e S t a n d a r d s o n A u d i t i n g s p e c i f i e d u n d e rS e c t i o n 1 4 3 ( 1 0 ) o f t h e A c t . T h o s e S t a n d a r d s r e q u i r e t h a t w e c o m p l y w i t h e t h i c a lr e q u i r e m e n t s a n d p l a n a n d p e r f o r m t h e a u d i t t o o b t a i n r e a s o n a b l e a s s u r a n c e a b o u tw h e t h e r t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a r e f r e e f r o m m a t e r i a l m i s s t a t e m e n t .A n a u d i t i n v o l v e s p e r f o r m i n g p r o c e d u r e s t o o b t a i n a u d i t e v i d e n c e a b o u t t h ea m o u n t s a n d t h e d i s c l o s u r e s i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s . T h e p r o c e d u r e ss e l e c t e d d e p e n d o n t h e a u d i t o r s ’ j u d g m e n t , i n c l u d i n g t h e a s s e s s m e n t o f t h e r i s k s o fm a t e r i a l m i s s t a t e m e n t o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , w h e t h e r d u e t o f r a u d o re r r o r . I n m a k i n g t h o s e r i s k a s s e s s m e n t s , t h e a u d i t o r c o n s i d e r s i n t e r n a l f i n a n c i a l c o n t r o lr e l e v a n t t o t h e B a n k ’ s p r e p a r a t i o n o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s t h a t g i v e at r u e a n d f a i r v i e w i n o r d e r t o d e s i g n a u d i t p r o c e d u r e s t h a t a r e a p p r o p r i a t e i n t h ec i r c u m s t a n c e s . A n a u d i t a l s o i n c l u d e s e v a l u a t i n g t h e a p p r o p r i a t e n e s s o f t h e a c c o u n t i n gp o l i c i e s u s e d a n d t h e r e a s o n a b l e n e s s o f t h e a c c o u n t i n g e s t i m a t e s m a d e b y t h e B a n k ’ sB o a r d o f D i r e c t o r s , a s w e l l a s e v a l u a t i n g t h e o v e r a l l p r e s e n t a t i o n o f t h e c o n s o l i d a t e df i n a n c i a l s t a t e m e n t s .W e b e l i e v e t h a t t h e a u d i t e v i d e n c e o b t a i n e d b y u s a n d t h e a u d i t e v i d e n c e o b t a i n e d b y t h eo t h e r a u d i t o r s i n t e r m s o f t h e i r r e p o r t s r e f e r r e d t o i n s u b ¥ p a r a g r a p h ( a ) o f t h e O t h e rM a t t e r s p a r a g r a p h b e l o w , i s s u f f i c i e n t a n d a p p r o p r i a t e t o p r o v i d e a b a s i s f o r o u r a u d i to p i n i o n o n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s .O p i n i o nI n o u r o p i n i o n a n d t o t h e b e s t o f o u r i n f o r m a t i o n a n d a c c o r d i n g t o t h e e x p l a n a t i o n s g i v e nt o u s , t h e a f o r e s a i d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s g i v e t h e i n f o r m a t i o n r e q u i r e d b yt h e A c t i n t h e m a n n e r s o r e q u i r e d a n d g i v e a t r u e a n d f a i r v i e w i n c o n f o r m i t y w i t h t h ea c c o u n t i n g p r i n c i p l e s g e n e r a l l y a c c e p t e d i n I n d i a , o f t h e c o n s o l i d a t e d s t a t e o f a f f a i r s o ft h e G r o u p a n d i t s a s s o c i a t e a s a t 3 1 s t M a r c h , 2 0 1 6 , a n d t h e i r c o n s o l i d a t e d p r o f i t a n dt h e i r c o n s o l i d a t e d c a s h f l o w s f o r t h e y e a r e n d e d o n t h a t d a t e .E m p h a s i s o f M a t t e rA t t e n t i o n i s d r a w n t o N o t e N o . 1 . 1 1 o f S c h e d u l e 1 8 a b o u t a m o r t i s i n g t h e s h o r t f a l la r i s i n g f r o m t h e s a l e o f c e r t a i n n o n ¥ p e r f o r m i n g a s s e t s d u r i n g t h e y e a r e n d e d 3 1 s t M a r c h ,2 0 1 6 o v e r a p e r i o d o f 2 y e a r s , i n t e r m s o f R B I M a s t e r C i r c u l a r D B R . N o .B P . B C . 2 / 2 1 . 0 4 . 0 4 8 / 2 0 1 5 ¥ 1 6 o n P r u d e n t i a l N o r m s o n I n c o m e R e c o g n i t i o n , A s s e tC l a s s i f i c a t i o n a n d P r o v i s i o n i n g p e r t a i n i n g t o a d v a n c e s , d a t e d J u l y 1 , 2 0 1 5 a n d t h eb a l a n c e o u t s t a n d i n g o f s u c h s h o r t f a l l a s a t 3 1 s t M a r c h , 2 0 1 6 o f R s . 8 6 . 7 3 C r o r e .O u r O p i n i o n i s n o t m o d i f i e d i n r e s p e c t o f t h i s m a t t e r .F-226
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T h e s e f i n a n c i a ls t a t e m e n t s h a v e b e e n a u d i t e d b y o t h e r a u d i t o r s w h o s e r e p o r t s h a v e b e e n f u r n i s h e d t o u sb y t h e M a n a g e m e n t a n d o u r o p i n i o n o n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , i n s o f a ra s i t r e l a t e s t o t h e a m o u n t s a n d d i s c l o s u r e s i n c l u d e d i n r e s p e c t o f a f o r e s a i ds u b s i d i a r y , i s b a s e d s o l e l y o n t h e r e p o r t o f t h e o t h e r a u d i t o r s .b ) T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a l s o i n c l u d e t h e G r o u p ’ s s h a r e o f n e t l o s s o fR s . 1 . 4 8 C r o r e f o r t h e y e a r e n d e d 3 1 s t M a r c h , 2 0 1 6 , a s c o n s i d e r e d i n t h e c o n s o l i d a t e df i n a n c i a l s t a t e m e n t s , i n r e s p e c t o f a n a s s o c i a t e , w h o s e f i n a n c i a l s t a t e m e n t s h a v e n o tb e e n a u d i t e d b y u s . T h e s e f i n a n c i a l s t a t e m e n t s a r e u n a u d i t e d a n d h a v e b e e n f u r n i s h e d t ou s b y t h e M a n a g e m e n t a n d o u r o p i n i o n o n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , i ns o f a r a s i t r e l a t e s t o t h e a m o u n t s a n d d i s c l o s u r e s i n c l u d e d i n r e s p e c t o f t h i s a s s o c i a t e , i sb a s e d s o l e l y o n s u c h u n a u d i t e d f i n a n c i a l s t a t e m e n t s a s c e r t i f i e d b y t h e M a n a g e m e n t o ft h a t a s s o c i a t e . I n o u r o p i n i o n a n d a c c o r d i n g t o t h e i n f o r m a t i o n a n d e x p l a n a t i o n s g i v e nt o u s b y t h e M a n a g e m e n t , t h e s e f i n a n c i a l s t a t e m e n t s a r e n o t m a t e r i a l t o t h e G r o u p .O u r o p i n i o n o n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , a n d o u r r e p o r t o n O t h e r L e g a la n d R e g u l a t o r y R e q u i r e m e n t s b e l o w i s n o t m o d i f i e d i n r e s p e c t o f t h e a b o v e m a t t e r sw i t h r e s p e c t t o o u r r e l i a n c e o n t h e w o r k d o n e a n d t h e r e p o r t s o f t h e o t h e r a u d i t o r s a n dt h e f i n a n c i a l s t a t e m e n t s c e r t i f i e d b y t h e M a n a g e m e n t .R e p o r t o n O t h e r L e g a l a n d R e g u l a t o r y R e q u i r e m e n t sA s r e q u i r e d b y S e c t i o n 1 4 3 ( 3 ) o f t h e A c t , w e r e p o r t , t o t h e e x t e n t a p p l i c a b l e , t h a t :a ) W e h a v e s o u g h t a n d o b t a i n e d a l l t h e i n f o r m a t i o n a n d e x p l a n a t i o n s w h i c h t o t h eb e s t o f o u r k n o w l e d g e a n d b e l i e f w e r e n e c e s s a r y f o r t h e p u r p o s e s o f o u r a u d i t o ft h e a f o r e s a i d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s ;b ) I n o u r o p i n i o n , p r o p e r b o o k s o f a c c o u n t a s r e q u i r e d b y l a w r e l a t i n g t o p r e p a r a t i o no f t h e a f o r e s a i d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s h a v e b e e n k e p t s o f a r a s i ta p p e a r s f r o m o u r e x a m i n a t i o n o f t h o s e b o o k s a n d t h e r e p o r t s o f t h e o t h e r a u d i t o r s ;c ) T h e C o n s o l i d a t e d B a l a n c e S h e e t , t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t a n dt h e C o n s o l i d a t e d C a s h F l o w S t a t e m e n t d e a l t w i t h b y t h i s R e p o r t a r e i n a g r e e m e n tw i t h t h e r e l e v a n t b o o k s o f a c c o u n t m a i n t a i n e d f o r t h e p u r p o s e o f p r e p a r a t i o n o ft h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s ;d ) I n o u r o p i n i o n , t h e a f o r e s a i d c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s c o m p l y w i t h t h eA c c o u n t i n g S t a n d a r d s p r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e A c t , a s a p p l i c a b l e ;e ) O n t h e b a s i s o f t h e w r i t t e n r e p r e s e n t a t i o n s r e c e i v e d f r o m t h e d i r e c t o r s o f t h e B a n ka s o n 3 1 s t M a r c h , 2 0 1 6 t a k e n o n r e c o r d b y t h e B o a r d o f D i r e c t o r s o f t h e B a n k a n dt h e r e p o r t s o f t h e s t a t u t o r y a u d i t o r s o f i t s s u b s i d i a r y c o m p a n y i n c o r p o r a t e d i nF-227
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I n d i a , n o n e o f t h e d i r e c t o r s o f t h e G r o u p i n c o r p o r a t e d i n I n d i a i s d i s q u a l i f i e d a s o n3 1 s t M a r c h , 2 0 1 6 f r o m b e i n g a p p o i n t e d a s a d i r e c t o r i n t e r m s o f S e c t i o n 1 6 4 ( 2 )o f t h e A c t ;f ) W i t h r e s p e c t t o t h e a d e q u a c y o f t h e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a lr e p o r t i n g a n d t h e o p e r a t i n g e f f e c t i v e n e s s o f s u c h c o n t r o l s , r e f e r t o o u r R e p o r t i n“ A n n e x u r e A ” , w h i c h i s b a s e d o n t h e a u d i t o r s ’ r e p o r t s o f t h e B a n k a n d s u b s i d i a r yc o m p a n y i n c o r p o r a t e d i n I n d i a . O u r r e p o r t e x p r e s s e s a n u n m o d i f i e d o p i n i o n o n t h ea d e q u a c y a n d o p e r a t i n g e f f e c t i v e n e s s o f t h e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a lr e p o r t i n g , o f t h e B a n k a n d S u b s i d i a r y C o m p a n y , i n c o r p o r a t e d i n I n d i a .g ) W i t h r e s p e c t t o t h e o t h e r m a t t e r s t o b e i n c l u d e d i n t h e A u d i t o r ’ s R e p o r t i na c c o r d a n c e w i t h R u l e 1 1 o f t h e C o m p a n i e s ( A u d i t a n d A u d i t o r ’ s ) R u l e s , 2 0 1 4 , i no u r o p i n i o n a n d t o t h e b e s t o f o u r i n f o r m a t i o n a n d a c c o r d i n g t o t h e e x p l a n a t i o n sg i v e n t o u s :i ) T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s d i s c l o s e t h e i m p a c t o f p e n d i n gl i t i g a t i o n s o n t h e c o n s o l i d a t e d f i n a n c i a l p o s i t i o n o f t h e G r o u p a n d i t s a s s o c i a t e§ R e f e r S c h e d u l e 1 2 a n d N o t e N o . 1 . 1 2 o f S c h e d u l e 1 8 t o t h e c o n s o l i d a t e df i n a n c i a l s t a t e m e n t s ;i i ) P r o v i s i o n h a s b e e n m a d e i n t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s , a s r e q u i r e du n d e r t h e a p p l i c a b l e l a w o r a c c o u n t i n g s t a n d a r d s , f o r m a t e r i a l f o r e s e e a b l el o s s e s , i f a n y , o n l o n g § t e r m c o n t r a c t s i n c l u d i n g d e r i v a t i v e c o n t r a c t s § R e f e rN o t e N o . 1 . 1 3 o f S c h e d u l e 1 8 t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s ;i i i ) T h e r e h a s b e e n n o d e l a y i n t r a n s f e r r i n g a m o u n t s , r e q u i r e d t o b e t r a n s f e r r e d , t ot h e I n v e s t o r E d u c a t i o n a n d P r o t e c t i o n F u n d b y t h e B a n k a n d i t s s u b s i d i a r yc o m p a n y i n c o r p o r a t e d i n I n d i a .F o r D E L O I T T E H A S K I N S & S E L L S F o r M P C H I T A L E & C O .C h a r t e r e d A c c o u n t a n t s C h a r t e r e d A c c o u n t a n t s( F i r m ’ s R e g i s t r a t i o n N o . 0 0 8 0 7 2 S ) ( F i r m ’ s R e g i s t r a t i o n N o . 1 0 1 8 5 1 W )M . R a m a c h a n d r a n S a n a t U l h a s C h i t a l eP a r t n e r P a r t n e r( M e m b e r s h i p N o . 1 6 3 9 9 ) ( M e m b e r s h i p N o . 1 4 3 7 0 0 )K O C H I , 3 0 t h A p r i l , 2 0 1 6 .F-228
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A N N E X U R E “ A ” T O T H E I N D E P E N D E N T A U D I T O R S ’ R E P O R T O N T H EC O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S O F T H E F E D E R A L B A N KL I M I T E D( R e f e r r e d t o i n p a r a g r a p h 1 . f u n d e r ‘ R e p o r t o n O t h e r L e g a l a n d R e g u l a t o r y R e q u i r e m e n t s o fo u r r e p o r t o f e v e n d a t e )R e p o r t o n t h e I n t e r n a l F i n a n c i a l C o n t r o l s O v e r F i n a n c i a l R e p o r t i n g u n d e r C l a u s e ( i )o f S u b � s e c t i o n 3 o f S e c t i o n 1 4 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 ( “ t h e A c t ” )W e h a v e a u d i t e d t h e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g o f T H E F E D E R A LB A N K L I M I T E D ( h e r e i n a f t e r r e f e r r e d t o a s “ t h e B a n k ” ) , i t s s u b s i d i a r y c o m p a n y a n d i t sa s s o c i a t e c o m p a n y , w h i c h a r e c o m p a n i e s i n c o r p o r a t e d i n I n d i a , a s o f 3 1 s t M a r c h , 2 0 1 6 i nc o n j u n c t i o n w i t h o u r a u d i t o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f t h e B a n k f o r t h e y e a rt h e n e n d e d .M a n a g e m e n t ’ s R e s p o n s i b i l i t y f o r I n t e r n a l F i n a n c i a l C o n t r o l sT h e r e s p e c t i v e B o a r d o f D i r e c t o r s o f t h e B a n k , i t s s u b s i d i a r y c o m p a n y a n d i t s a s s o c i a t ec o m p a n y , w h i c h a r e c o m p a n i e s i n c o r p o r a t e d i n I n d i a , a r e r e s p o n s i b l e f o r e s t a b l i s h i n g a n dm a i n t a i n i n g t h e i n t e r n a l f i n a n c i a l c o n t r o l s b a s e d o n t h e i n t e r n a l c o n t r o l s o v e r f i n a n c i a lr e p o r t i n g c r i t e r i a e s t a b l i s h e d b y t h e r e s p e c t i v e c o m p a n i e s c o n s i d e r i n g t h e e s s e n t i a lc o m p o n e n t s o f i n t e r n a l c o n t r o l s t a t e d i n t h e G u i d a n c e N o t e o n A u d i t o f I n t e r n a l F i n a n c i a lC o n t r o l s O v e r F i n a n c i a l R e p o r t i n g ( “ t h e G u i d a n c e N o t e ” ) i s s u e d b y t h e I n s t i t u t e o fC h a r t e r e d A c c o u n t a n t s o f I n d i a . T h e s e r e s p o n s i b i l i t i e s i n c l u d e t h e d e s i g n , i m p l e m e n t a t i o na n d m a i n t e n a n c e o f a d e q u a t e i n t e r n a l f i n a n c i a l c o n t r o l s t h a t w e r e o p e r a t i n g e f f e c t i v e l y f o re n s u r i n g t h e o r d e r l y a n d e f f i c i e n t c o n d u c t o f i t s b u s i n e s s , i n c l u d i n g a d h e r e n c e t o t h er e s p e c t i v e c o m p a n y ’ s p o l i c i e s , t h e s a f e g u a r d i n g o f i t s a s s e t s , t h e p r e v e n t i o n a n d d e t e c t i o n o ff r a u d s a n d e r r o r s , t h e a c c u r a c y a n d c o m p l e t e n e s s o f t h e a c c o u n t i n g r e c o r d s , a n d t h e t i m e l yp r e p a r a t i o n o f r e l i a b l e f i n a n c i a l i n f o r m a t i o n , a s r e q u i r e d u n d e r t h e C o m p a n i e s A c t , 2 0 1 3 ,t h e B a n k i n g R e g u l a t i o n A c t , 1 9 4 9 a n d t h e g u i d e l i n e s a n d d i r e c t i v e s i s s u e d b y t h e R e s e r v eB a n k o f I n d i a f r o m t i m e t o t i m e , a s a p p l i c a b l e .A u d i t o r s ’ R e s p o n s i b i l i t yO u r r e s p o n s i b i l i t y i s t o e x p r e s s a n o p i n i o n o n t h e B a n k ’ s i n t e r n a l f i n a n c i a l c o n t r o l s o v e rf i n a n c i a l r e p o r t i n g b a s e d o n o u r a u d i t . W e c o n d u c t e d o u r a u d i t i n a c c o r d a n c e w i t h t h eG u i d a n c e N o t e i s s u e d b y t h e I n s t i t u t e o f C h a r t e r e d A c c o u n t a n t s o f I n d i a a n d t h e S t a n d a r d so n A u d i t i n g , p r e s c r i b e d u n d e r S e c t i o n 1 4 3 ( 1 0 ) o f t h e C o m p a n i e s A c t , 2 0 1 3 , t o t h e e x t e n ta p p l i c a b l e t o a n a u d i t o f i n t e r n a l f i n a n c i a l c o n t r o l s . T h o s e S t a n d a r d s a n d t h e G u i d a n c e N o t er e q u i r e t h a t w e c o m p l y w i t h e t h i c a l r e q u i r e m e n t s a n d p l a n a n d p e r f o r m t h e a u d i t t o o b t a i nr e a s o n a b l e a s s u r a n c e a b o u t w h e t h e r a d e q u a t e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a lr e p o r t i n g w a s e s t a b l i s h e d a n d m a i n t a i n e d a n d i f s u c h c o n t r o l s o p e r a t e d e f f e c t i v e l y i n a l lm a t e r i a l r e s p e c t s .O u r a u d i t i n v o l v e s p e r f o r m i n g p r o c e d u r e s t o o b t a i n a u d i t e v i d e n c e a b o u t t h e a d e q u a c y o ft h e i n t e r n a l f i n a n c i a l c o n t r o l s s y s t e m o v e r f i n a n c i a l r e p o r t i n g a n d t h e i r o p e r a t i n ge f f e c t i v e n e s s . O u r a u d i t o f i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g i n c l u d e do b t a i n i n g a n u n d e r s t a n d i n g o f i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g , a s s e s s i n gt h e r i s k t h a t a m a t e r i a l w e a k n e s s e x i s t s , a n d t e s t i n g a n d e v a l u a t i n g t h e d e s i g n a n d o p e r a t i n ge f f e c t i v e n e s s o f i n t e r n a l c o n t r o l b a s e d o n t h e a s s e s s e d r i s k . T h e p r o c e d u r e s s e l e c t e d d e p e n dF-229
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A c o m p a n y ' s i n t e r n a l f i n a n c i a l c o n t r o l o v e r f i n a n c i a lr e p o r t i n g i n c l u d e s t h o s e p o l i c i e s a n d p r o c e d u r e s t h a t ( 1 ) p e r t a i n t o t h e m a i n t e n a n c e o fr e c o r d s t h a t , i n r e a s o n a b l e d e t a i l , a c c u r a t e l y a n d f a i r l y r e f l e c t t h e t r a n s a c t i o n s a n dd i s p o s i t i o n s o f t h e a s s e t s o f t h e c o m p a n y ; ( 2 ) p r o v i d e r e a s o n a b l e a s s u r a n c e t h a t t r a n s a c t i o n sa r e r e c o r d e d a s n e c e s s a r y t o p e r m i t p r e p a r a t i o n o f f i n a n c i a l s t a t e m e n t s i n a c c o r d a n c e w i t hg e n e r a l l y a c c e p t e d a c c o u n t i n g p r i n c i p l e s , a n d t h a t r e c e i p t s a n d e x p e n d i t u r e s o f t h e c o m p a n ya r e b e i n g m a d e o n l y i n a c c o r d a n c e w i t h a u t h o r i s a t i o n s o f m a n a g e m e n t a n d d i r e c t o r s o f t h ec o m p a n y ; a n d ( 3 ) p r o v i d e r e a s o n a b l e a s s u r a n c e r e g a r d i n g p r e v e n t i o n o r t i m e l y d e t e c t i o n o fu n a u t h o r i s e d a c q u i s i t i o n , u s e , o r d i s p o s i t i o n o f t h e c o m p a n y ' s a s s e t s t h a t c o u l d h a v e am a t e r i a l e f f e c t o n t h e f i n a n c i a l s t a t e m e n t s .I n h e r e n t L i m i t a t i o n s o f I n t e r n a l F i n a n c i a l C o n t r o l s O v e r F i n a n c i a l R e p o r t i n gB e c a u s e o f t h e i n h e r e n t l i m i t a t i o n s o f i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g ,i n c l u d i n g t h e p o s s i b i l i t y o f c o l l u s i o n o r i m p r o p e r m a n a g e m e n t o v e r r i d e o f c o n t r o l s , m a t e r i a lm i s s t a t e m e n t s d u e t o e r r o r o r f r a u d m a y o c c u r a n d n o t b e d e t e c t e d . A l s o , p r o j e c t i o n s o f a n ye v a l u a t i o n o f t h e i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n g t o f u t u r e p e r i o d s a r es u b j e c t t o t h e r i s k t h a t t h e i n t e r n a l f i n a n c i a l c o n t r o l o v e r f i n a n c i a l r e p o r t i n g m a y b e c o m ei n a d e q u a t e b e c a u s e o f c h a n g e s i n c o n d i t i o n s , o r t h a t t h e d e g r e e o f c o m p l i a n c e w i t h t h ep o l i c i e s o r p r o c e d u r e s m a y d e t e r i o r a t e .O p i n i o nI n o u r o p i n i o n a n d t o t h e b e s t o f o u r i n f o r m a t i o n a n d a c c o r d i n g t o t h e e x p l a n a t i o n s g i v e n t ou s , a n d t a k i n g i n t o c o n s i d e r a t i o n t h e r e p o r t o f t h e o t h e r a u d i t o r s r e f e r r e d t o i n t h e O t h e rM a t t e r s p a r a g r a p h b e l o w , t h e B a n k a n d i t s s u b s i d i a r y c o m p a n y , w h i c h a r e c o m p a n i e si n c o r p o r a t e d i n I n d i a , h a v e , i n a l l m a t e r i a l r e s p e c t s , a n a d e q u a t e i n t e r n a l f i n a n c i a l c o n t r o l ss y s t e m o v e r f i n a n c i a l r e p o r t i n g a n d s u c h i n t e r n a l f i n a n c i a l c o n t r o l s o v e r f i n a n c i a l r e p o r t i n gw e r e o p e r a t i n g e f f e c t i v e l y a s a t 3 1 s t M a r c h , 2 0 1 6 , b a s e d o n t h e i n t e r n a l c o n t r o l o v e rf i n a n c i a l r e p o r t i n g c r i t e r i a e s t a b l i s h e d b y t h e r e s p e c t i v e c o m p a n i e s c o n s i d e r i n g t h e e s s e n t i a lc o m p o n e n t s o f i n t e r n a l c o n t r o l s t a t e d i n t h e G u i d a n c e N o t e i s s u e d b y t h e I n s t i t u t e o fC h a r t e r e d A c c o u n t a n t s o f I n d i a .F-230
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T H E F E D E R A L B A N K L I M I T E DS C H E D U L E 1 7 : S I G N I F I C A N T A C C O U N T I N G P O L I C I E S F O R M I N G P A R T O FT H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H EY E A R E N D E D 3 1 M A R C H , 2 0 1 61 . C o r p o r a t e i n f o r m a t i o nT h e F e d e r a l B a n k L i m i t e d ( ‘ F B L ’ o r t h e ' B a n k ' ) t o g e t h e r w i t h i t s s u b s i d i a r y ( c o l l e c t i v e l y ,t h e ‘ G r o u p ’ ) a n d a s s o c i a t e i s a d i v e r s i f i e d f i n a n c i a l s e r v i c e s g r o u p p r o v i d i n g a w i d er a n g e o f b a n k i n g a n d f i n a n c i a l s e r v i c e s i n c l u d i n g c o m m e r c i a l b a n k i n g , r e t a i l b a n k i n g ,p r o j e c t a n d c o r p o r a t e f i n a n c e , w o r k i n g c a p i t a l f i n a n c e , i n s u r a n c e a n d t r e a s u r yp r o d u c t s a n d s e r v i c e s . O p e r a t i o n s o f t h e G r o u p a r e s p r e a d a l l o v e r I n d i a .T h e B a n k w a s i n c o r p o r a t e d i n 1 9 3 1 a s T r a v a n c o r e F e d e r a l B a n k L i m i t e d t o c a t e r t ot h e b a n k i n g n e e d s o f T r a v a n c o r e P r o v i n c e . I t e m b a r k e d o n a p h a s e o f s u s t a i n e dg r o w t h u n d e r t h e l e a d e r s h i p o f L a t e K . P . H o r m i s . T h e b a n k i s g o v e r n e d b y B a n k i n gR e g u l a t i o n A c t , 1 9 4 9 a n d o t h e r a p p l i c a b l e a c t s / r e g u l a t i o n s .D u r i n g t h e Y e a r t h e b a n k h a d s e t u p a n I n t e r n a t i o n a l F i n a n c i a l S e r v i c e C e n t r e ( I F S C )B a n k i n g u n i t ( I B U ) i n G u j a r a t I n t e r n a t i o n a l F i n a n c e T e c x C i t y ( G I F T C i t y ) i n l i n e w i t hg l o b a l f i n a n c i a l c e n t r e s o f S i n g a p o r e a n d D u b a i . I B U a t G i f t c i t y i s e q u i v a l e n t t o a nO f f s h o r e B a n k i n g u n i t , f o r a l l r e g u l a t o r y p u r p o s e s .2 . B a s i s o f C o n s o l i d a t i o n a n d s i g n i f i c a n t a c c o u n t i n g p o l i c i e s2 . 1 . B a s i s o f a c c o u n t i n g a n d p r e p a r a t i o n o f c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t sT h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f t h e B a n k a n d i t s s u b s i d i a r y ( t o g e t h e r t h e' G r o u p ' ) h a v e b e e n p r e p a r e d i n a c c o r d a n c e w i t h t h e G e n e r a l l y A c c e p t e d A c c o u n t i n gP r i n c i p l e s i n I n d i a ( I n d i a n G A A P ) t o c o m p l y w i t h t h e A c c o u n t i n g S t a n d a r d sp r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 a n d t h e r e l e v a n t p r o v i s i o n so f t h e C o m p a n i e s A c t , 2 0 1 3 ( “ t h e A c t ” ) a s a p p l i c a b l e a n d c u r r e n t p r a c t i c e s p r e v a i l i n gw i t h i n t h e B a n k i n g I n d u s t r y i n I n d i a . S u i t a b l e a d j u s t m e n t s a r e m a d e t o a l i g n w i t h t h ef o r m a t p r e s c r i b e d u n d e r t h e B a n k i n g R e g u l a t i o n A c t , 1 9 4 9 . T h e c o n s o l i d a t e d f i n a n c i a ls t a t e m e n t s h a v e b e e n p r e p a r e d o n a c c r u a l b a s i s u n d e r h i s t o r i c a l c o s t c o n v e n t i o n ,e x c e p t i n t h e c a s e o f i n t e r e s t i n c o m e o n N o n x P e r f o r m i n g A s s e t s w h e r e i t i s r e c o g n i s e du p o n r e a l i s a t i o n , a s p e r R B I g u i d e l i n e s . T h e a c c o u n t i n g p o l i c i e s a d o p t e d i n t h ep r e p a r a t i o n o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s a r e c o n s i s t e n t w i t h t h o s e f o l l o w e di n t h e p r e v i o u s y e a r .T h e M i n i s t r y o f C o r p o r a t e a f f a i r s ( M C A ) h a s n o t i f i e d t h e C o m p a n i e s ( A c c o u n t i n gS t a n d a r d s ) A m e n d m e n t R u l e s , 2 0 1 6 v i d e i t s n o t i f i c a t i o n d a t e d M a r c h 3 0 , 2 0 1 6 . A s p e rC l a r i f i c a t i o n i s s u e d b y I n s t i t u t e o f C h a r t e r e d A c c o u n t a n t s o f I n d i a d a t e d 2 6 t h A p r i l ,2 0 1 6 , t h e s a i d n o t i f i c a t i o n i s a p p l i c a b l e t o a c c o u n t i n g p e r i o d s c o m m e n c i n g o n o r a f t e rt h e d a t e o f n o t i f i c a t i o n i . e . 1 s t A p r i l , 2 0 1 6 . H e n c e t h e s a i d n o t i f i c a t i o n h a s n o t b e e nc o n s i d e r e d i n t h e p r e p a r a t i o n o f t h e s e f i n a n c i a l s t a t e m e n t s .F-246
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2 . 2 . P r i n c i p l e s o f c o n s o l i d a t i o n( i ) T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s r e l a t e t o t h e F e d e r a l B a n k L i m i t e d ( ‘ F B L ’o r t h e ' B a n k ' ) i t s s u b s i d i a r y c o m p a n y a n d t h e G r o u p ’ s s h a r e o f l o s s i n i t sa s s o c i a t e . T h e d e t a i l s o f s u b s i d i a r y a n d a s s o c i a t e e n t i t i e s a r e g i v e n b e l o w :N a m e o f t h ee n t i t y R e l a t i o n s h i p C o u n t r y o fI n c o r p o r a t i o n O w n e r s h i ph e l d b y % o f H o l d i n g a n dv o t i n g p o w e r e i t h e rd i r e c t l y o r i n d i r e c t l yt h r o u g h s u b s i d i a r y a s a t3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5F e d b a n kF i n a n c i a lS e r v i c e sL i m i t e d ( F F S Lo r S u b s i d i a r y ) S u b s i d i a r yC o m p a n y I n d i a T h e F e d e r a lB a n kL i m i t e d 1 0 0 1 0 0I D B I F e d e r a lL i f e I n s u r a n c eC o m p a n yL i m i t e d( A s s o c i a t e ) A s s o c i a t e I n d i a T h e F e d e r a lB a n kL i m i t e dI D B I B a n kL i m i t e dA g e a sI n s u r a n c eI n t e r n a t i o n a lN . V 2 64 82 6 2 64 82 6( i i ) T h e a u d i t e d f i n a n c i a l s t a t e m e n t s o f t h e s u b s i d i a r y c o m p a n y a n d t h e u n a u d i t e df i n a n c i a l s t a t e m e n t s o f t h e a s s o c i a t e h a v e b e e n d r a w n u p t o t h e s a m e r e p o r t i n gd a t e a s t h a t o f t h e B a n k , i . e . 3 1 M a r c h , 2 0 1 6 .( i i i ) T h e f i n a n c i a l s t a t e m e n t s o f t h e B a n k a n d i t s s u b s i d i a r y c o m p a n y h a v e b e e nc o m b i n e d o n a l i n e + b y + l i n e b a s i s b y a d d i n g t o g e t h e r l i k e i t e m s o f a s s e t s ,l i a b i l i t i e s , i n c o m e a n d e x p e n s e s , a f t e r e l i m i n a t i n g i n t r a + g r o u p b a l a n c e s , i n t r a +g r o u p t r a n s a c t i o n s a n d r e s u l t i n g u n r e a l i s e d p r o f i t s o r l o s s e s , u n l e s s c o s t c a n n o tb e r e c o v e r e d .( i v ) T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s i n c l u d e t h e s h a r e o f l o s s o f t h e a s s o c i a t ec o m p a n y w h i c h h a v e b e e n a c c o u n t e d f o r u s i n g e q u i t y m e t h o d a s p e r A S 2 3A c c o u n t i n g f o r I n v e s t m e n t s i n A s s o c i a t e s i n C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s .A c c o r d i n g l y , t h e s h a r e o f l o s s o f t h e a s s o c i a t e c o m p a n y h a s b e e n d e d u c t e d f r o mt h e c o s t o f i n v e s t m e n t .( v ) T h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s h a v e b e e n p r e p a r e d u s i n g u n i f o r ma c c o u n t i n g p o l i c i e s f o r l i k e t r a n s a c t i o n s a n d o t h e r e v e n t s i n s i m i l a rc i r c u m s t a n c e s a n d a r e p r e s e n t e d t o t h e e x t e n t p o s s i b l e , i n t h e s a m e m a n n e r a st h e B a n k ' s s e p a r a t e f i n a n c i a l s t a t e m e n t s .( v i ) D i f f e r e n c e s i n a c c o u n t i n g p o l i c i e s f o l l o w e d b y t h e S u b s i d i a r y a n d a s s o c i a t e h a v eb e e n r e v i e w e d a n d n o a d j u s t m e n t s h a v e b e e n m a d e , s i n c e t h e i m p a c t o f t h e s ed i f f e r e n c e s i s n o t s i g n i f i c a n t .F-247
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2 . 3 . U s e o f e s t i m a t e sT h e p r e p a r a t i o n o f t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s i n c o n f o r m i t y w i t h I n d i a nG A A P r e q u i r e s t h e M a n a g e m e n t t o m a k e e s t i m a t e s a n d a s s u m p t i o n s c o n s i d e r e d i n t h er e p o r t e d a m o u n t s o f a s s e t s a n d l i a b i l i t i e s ( i n c l u d i n g c o n t i n g e n t l i a b i l i t i e s ) a n d t h er e p o r t e d i n c o m e a n d e x p e n s e s d u r i n g t h e y e a r . T h e M a n a g e m e n t b e l i e v e s t h a t t h ee s t i m a t e s u s e d i n p r e p a r a t i o n o f t h e f i n a n c i a l s t a t e m e n t s a r e p r u d e n t a n d r e a s o n a b l e .F u t u r e r e s u l t s c o u l d d i f f e r d u e t o t h e s e e s t i m a t e s a n d t h e d i f f e r e n c e s b e t w e e n t h ea c t u a l r e s u l t s a n d t h e e s t i m a t e s a r e r e c o g n i s e d i n t h e p e r i o d s i n w h i c h t h e r e s u l t s a r ek n o w n / m a t e r i a l i s e .2 . 4 A d v a n c e sA d v a n c e s a r e c l a s s i f i e d i n t o p e r f o r m i n g a s s e t s ( S t a n d a r d ) a n d n o n ~ p e r f o r m i n g a s s e t s( ' N P A s ' ) a s p e r t h e R B I g u i d e l i n e s a n d a r e s t a t e d n e t o f b i l l s r e d i s c o u n t e d , s p e c i f i cp r o v i s i o n s m a d e t o w a r d s N P A s , f l o a t i n g p r o v i s i o n s a n d u n r e a l i z e d i n t e r e s t o n N P A s .I n t e r e s t o n N o n P e r f o r m i n g a d v a n c e s i s t r a n s f e r r e d t o a n u n r e a l i z e d i n t e r e s t a c c o u n ta n d n o t r e c o g n i z e d i n p r o f i t a n d l o s s a c c o u n t u n t i l r e c e i v e d . F u r t h e r , N P A s a r ec l a s s i f i e d i n t o s u b ~ s t a n d a r d , d o u b t f u l a n d l o s s a s s e t s b a s e d o n t h e c r i t e r i a s t i p u l a t e d b yt h e R B I . T h e B a n k h a s m a d e p r o v i s i o n f o r N o n P e r f o r m i n g A s s e t s a s s t i p u l a t e d u n d e rR e s e r v e B a n k o f I n d i a ( R B I ) n o r m s .A m o u n t s r e c o v e r e d a g a i n s t d e b t s w r i t t e n o f f a r e r e c o g n i s e d i n t h e p r o f i t a n d l o s sa c c o u n t a n d i n c l u d e d u n d e r “ O t h e r I n c o m e ” .F o r r e s t r u c t u r e d / r e s c h e d u l e d a s s e t s , p r o v i s i o n i s m a d e i n a c c o r d a n c e w i t h t h eg u i d e l i n e s i s s u e d b y t h e R B I , w h i c h r e q u i r e s t h e d i m i n u t i o n i n t h e f a i r v a l u e o f t h ea s s e t s t o b e p r o v i d e d a t t h e t i m e o f r e s t r u c t u r i n g . I n r e s p e c t o f l o a n s a n d a d v a n c e sa c c o u n t s s u b j e c t e d t o r e s t r u c t u r i n g , t h e a c c o u n t i s u p g r a d e d t o s t a n d a r d o n l y a f t e r t h es p e c i f i e d p e r i o d i . e . a p e r i o d o f o n e y e a r a f t e r t h e d a t e w h e n f i r s t p a y m e n t o f i n t e r e s to r o f p r i n c i p a l , w h i c h e v e r i s l a t e r , f a l l s d u e , s u b j e c t t o s a t i s f a c t o r y p e r f o r m a n c e o f t h ea c c o u n t d u r i n g t h e p e r i o d .P r o v i s i o n f o r U n h e d g e d F o r e i g n c u r r e n c y E x p o s u r e ( U F C E ) o f b o r r o w e r e n t i t i e s , i sm a d e i n a c c o r d a n c e w i t h t h e g u i d e l i n e s i s s u e d b y R B I , w h i c h r e q u i r e s t h e B a n k t oa s c e r t a i n t h e a m o u n t o f U F C E , e s t i m a t e t h e e x t e n t o f l i k e l y l o s s a n d e s t i m a t e t h er i s k n e s s o f u n h e d g e d p o s i t i o n o f t h o s e e n t i t i e s . T h e P r o v i s i o n i s c l a s s i f i e d u n d e rS c h e d u l e 5 – O t h e r L i a b i l i t i e s i n t h e B a l a n c e S h e e tT h e B a n k m a i n t a i n s g e n e r a l p r o v i s i o n f o r s t a n d a r d a s s e t s i n c l u d i n g c r e d i t e x p o s u r e sc o m p u t e d a s p e r t h e c u r r e n t m a r k e d ~ t o ~ m a r k e t v a l u e s o f i n t e r e s t r a t e a n d f o r e i g ne x c h a n g e d e r i v a t i v e c o n t r a c t s , i n a c c o r d a n c e w i t h t h e g u i d e l i n e s a n d a t l e v e l ss t i p u l a t e d b y R B I f r o m t i m e t o t i m e – F a r m C r e d i t t o a g r i c u l t u r a l a c t i v i t i e s a n d S m a l la n d M i c r o E n t e r p r i s e s ( S M E s ) 0 . 2 5 % , C o m m e r c i a l R e a l E s t a t e a t 1 % , r e s t r u c t u r e da d v a n c e s a t 5 % , t e a s e r r a t e h o u s i n g l o a n s a t 2 % , c o m m e r c i a l r e a l e s t a t e ~ r e s i d e n t i a lh o u s i n g a t 0 . 7 5 % a n d f o r o t h e r s e c t o r s a t 0 . 4 0 % .F-248
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T h e b a n k t r a n s f e r s a d v a n c e s t h r o u g h i n t e r ¦ b a n k p a r t i c i p a t i o n w i t h a n d w i t h o u t r i s k . I na c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , i n t h e c a s e o f p a r t i c i p a t i o n w i t h r i s k , t h ea g g r e g a t e a m o u n t o f t h e p a r t i c i p a t i o n i s s u e d b y t h e B a n k i s r e d u c e d f r o m a d v a n c e sa n d w h e r e b a n k i s p a r t i c i p a t i n g , t h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n i s c l a s s i f i e du n d e r a d v a n c e s . I n t h e c a s e o f p a r t i c i p a t i o n w i t h o u t r i s k , t h e a g g r e g a t e a m o u n t o fp a r t i c i p a t i o n i s s u e d b y t h e B a n k i s c l a s s i f i e d u n d e r b o r r o w i n g s a n d w h e r e t h e b a n k i sp a r t i c i p a t i n g , t h e a g g r e g a t e a m o u n t o f p a r t i c i p a t i o n i s s h o w n a s d u e f r o m b a n k s u n d e ra d v a n c e s .L o s s o n s a l e o f a s s e t s t o A s s e t R e c o n s t r u c t i o n C o m p a n i e sT h e R B I i s s u e d g u i d e l i n e s o n s a l e o f n o n Ó p e r f o r m i n g a d v a n c e s o n F e b r u a r y 2 6 , 2 0 1 4 .I n a c c o r d a n c e w i t h t h e s e g u i d e l i n e s , i f t h e s a l e o f n o n Ó p e r f o r m i n g a d v a n c e s i s a t ap r i c e b e l o w t h e n e t b o o k v a l u e , t h e s h o r t f a l l i s c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n ts p r e a d o v e r a p e r i o d o f t w o y e a r s . I f t h e s a l e i s f o r a v a l u e h i g h e r t h a n t h e n e t b o o kv a l u e , t h e e x c e s s p r o v i s i o n i s c r e d i t e d t o t h e P r o f i t a n d L o s s A c c o u n t i n t h e y e a r t h ea m o u n t s a r e r e c e i v e d .2 . 5 C o u n t r y r i s kI n a d d i t i o n t o t h e p r o v i s i o n s r e q u i r e d t o b e h e l d a c c o r d i n g t o t h e a s s e t c l a s s i f i c a t i o ns t a t u s , p r o v i s i o n s a r e h e l d f o r i n d i v i d u a l c o u n t r y e x p o s u r e ( o t h e r t h a n f o r h o m ec o u n t r y ) . T h e c o u n t r i e s a r e c a t e g o r i s e d i n t o s e v e n r i s k c a t e g o r i e s n a m e l yi n s i g n i f i c a n t , l o w , m o d e r a t e , h i g h , v e r y h i g h , r e s t r i c t e d a n d o f f Ó c r e d i t a s p e r E x p o r tC r e d i t G u a r a n t e e C o r p o r a t i o n o f I n d i a L i m i t e d ( “ E C G C ” ) g u i d e l i n e s a n d p r o v i s i o n i sm a d e o n e x p o s u r e s e x c e e d i n g 1 8 0 d a y s o n a g r a d e d s c a l e r a n g i n g f r o m 0 . 2 5 % t o1 0 0 % . F o r e x p o s u r e s w i t h c o n t r a c t u a l m a t u r i t y o f l e s s t h a n 1 8 0 d a y s , 2 5 % o f t h en o r m a l p r o v i s i o n r e q u i r e m e n t i s h e l d . I f t h e c o u n t r y e x p o s u r e ( n e t ) o f t h e B a n k i nr e s p e c t o f e a c h c o u n t r y d o e s n o t e x c e e d 1 % o f t h e t o t a l f u n d e d a s s e t s , n o p r o v i s i o n i sm a i n t a i n e d o n s u c h c o u n t r y e x p o s u r e .2 . 6 I n v e s t m e n t sT h e B a n kC l a s s i f i c a t i o nI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , i n v e s t m e n t s a r e c a t e g o r i s e d a t t h e t i m e o fp u r c h a s e a s :• H e l d f o r T r a d i n g ( H F T ) ;•
A v a i l a b l e f o r S a l e ( A F S ) ; a n d• H e l d t o M a t u r i t y ( H T M )I n v e s t m e n t s w h i c h a r e p r i m a r i l y h e l d f o r s a l e w i t h i n 9 0 d a y s f r o m t h e d a t e o f p u r c h a s ea r e c l a s s i f i e d a s “ H e l d f o r T r a d i n g ” . A s p e r R B I g u i d e l i n e s , H F T S e c u r i t i e s w h i c hr e m a i n u n s o l d f o r a p e r i o d o f 9 0 d a y s a r e c l a s s i f i e d a s A F S S e c u r i t i e s o n t h a t d a t e .I n v e s t m e n t s w h i c h t h e b a n k i n t e n d s t o h o l d t i l l m a t u r i t y a r e c l a s s i f i e d a s “ H e l d t oM a t u r i t y ” .
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I n v e s t m e n t s w h i c h a r e n o t c l a s s i f i e d i n e i t h e r o f t h e a b o v e t w o c a t e g o r i e s a r ec l a s s i f i e d a s “ A v a i l a b l e f o r S a l e ” .U n d e r e a c h o f t h e s e c a t e g o r i e s , i n v e s t m e n t s a r e f u r t h e r c l a s s i f i e d u n d e r s i x g r o u p s( h e r e i n a f t e r c a l l e d g r o u p s ) ? G o v e r n m e n t S e c u r i t i e s , O t h e r A p p r o v e d S e c u r i t i e s ,S h a r e s , D e b e n t u r e s a n d B o n d s , I n v e s t m e n t s i n S u b s i d i a r i e s / J o i n t V e n t u r e s a n d O t h e rI n v e s t m e n t s f o r t h e p u r p o s e s o f d i s c l o s u r e i n t h e B a l a n c e S h e e t .T r a n s f e r o f s e c u r i t i e s b e t w e e n C a t e g o r i e sT r a n s f e r o f s e c u r i t i e s b e t w e e n c a t e g o r i e s i s d o n e a t t h e l o w e r o f t h e a c q u i s i t i o n c o s t /b o o k v a l u e / m a r k e t v a l u e o n t h e d a t e o f t h e t r a n s f e r a n d t h e d e p r e c i a t i o n , i f a n y , o ns u c h t r a n s f e r i s f u l l y p r o v i d e d f o r , a s p e r R B I g u i d e l i n e s .A c q u i s i t i o n C o s tI n d e t e r m i n i n g t h e a c q u i s i t i o n c o s t o f t h e I n v e s t m e n t :•
T r a n s a c t i o n c o s t s i n c l u d i n g b r o k e r a g e a n d c o m m i s s i o n p e r t a i n i n g t o a c q u i s i t i o no f I n v e s t m e n t s a r e c h a r g e d t o t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .•
B r o k e n p e r i o d i n t e r e s t i s c h a r g e d t o t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .•
C o s t o f i n v e s t m e n t s i s c o m p u t e d b a s e d o n t h e w e i g h t e d a v e r a g e c o s t m e t h o d .V a l u a t i o nT h e v a l u a t i o n o f i n v e s t m e n t s i s m a d e i n a c c o r d a n c e w i t h t h e R B I G u i d e l i n e s a sf o l l o w s :a ) H e l d f o r T r a d i n g / A v a i l a b l e f o r S a l e – I n v e s t m e n t s c l a s s i f i e d u n d e r t h e A F S a n dH F T c a t e g o r i e s a r e m a r k e d ? t o ? m a r k e t . T h e m a r k e t / f a i r v a l u e o f q u o t e di n v e s t m e n t s i n c l u d e d i n t h e ‘ A F S ’ a n d ‘ H F T ’ c a t e g o r i e s i s t h e M a r k e t P r i c e o f t h eS c r i p a s a v a i l a b l e f r o m t h e t r a d e s / q u o t e s o n t h e s t o c k e x c h a n g e s o r p r i c e sd e c l a r e d b y P r i m a r y D e a l e r s A s s o c i a t i o n o f I n d i a ( ‘ P D A I ’ ) j o i n t l y w i t h F i x e dI n c o m e M o n e y M a r k e t a n d D e r i v a t i v e A s s o c i a t i o n s o f I n d i a ( ‘ F I M M D A ’ ) ,p e r i o d i c a l l y . N e t d e p r e c i a t i o n , i f a n y , w i t h i n e a c h c a t e g o r y o f e a c h i n v e s t m e n tc l a s s i f i c a t i o n i s r e c o g n i s e d i n C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t . T h e n e ta p p r e c i a t i o n , i f a n y , u n d e r e a c h c a t e g o r y o f e a c h I n v e s t m e n t i s i g n o r e d . E x c e p t i nc a s e s w h e r e p r o v i s i o n f o r d i m i n u t i o n o t h e r t h a n t e m p o r a r y i s c r e a t e d , t h e B o o kv a l u e o f i n d i v i d u a l s e c u r i t i e s i s n o t c h a n g e d c o n s e q u e n t t o t h e p e r i o d i c v a l u a t i o no f I n v e s t m e n t s .b ) H e l d t o M a t u r i t y – T h e s e a r e c a r r i e d a t t h e i r a c q u i s i t i o n c o s t . A n y p r e m i u m o na c q u i s i t i o n o f g o v e r n m e n t s e c u r i t i e s a r e a m o r t i s e d o v e r t h e r e m a i n i n g m a t u r i t yp e r i o d o f t h e s e c u r i t y o n a s t r a i g h t l i n e b a s i s . A n y d i m i n u t i o n , o t h e r t h a nt e m p o r a r y , i n t h e v a l u e o f s u c h s e c u r i t i e s i s p r o v i d e d f o r .c ) T r e a s u r y B i l l s a n d C e r t i f i c a t e o f D e p o s i t s b e i n g d i s c o u n t e d i n s t r u m e n t s , a r ev a l u e d a t c a r r y i n g c o s t .d ) U n i t s o f M u t u a l F u n d s a r e v a l u e d a t t h e l a t e s t r e p u r c h a s e p r i c e / n e t a s s e t v a l u ed e c l a r e d b y M u t u a l F u n d .F-250
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e ) M a r k e t v a l u e o f i n v e s t m e n t s w h e r e c u r r e n t q u o t a t i o n s a r e n o t a v a i l a b l e , i sd e t e r m i n e d a s p e r t h e n o r m s p r e s c r i b e d b y t h e R B I a s u n d e r :•
i n c a s e o f u n q u o t e d b o n d s , d e b e n t u r e s a n d p r e f e r e n c e s h a r e s w h e r ei n t e r e s t / d i v i d e n d i s r e c e i v e d r e g u l a r l y ( i . e . n o t o v e r d u e b e y o n d 9 0 d a y s ) , t h em a r k e t p r i c e i s d e r i v e d b a s e d o n t h e Y i e l d t o M a t u r i t y ( Y T M ) f o r G o v e r n m e n tS e c u r i t i e s a s p u b l i s h e d b y F I M M D A / P D A I a n d s u i t a b l y m a r k e d u p f o r c r e d i tr i s k a p p l i c a b l e t o t h e c r e d i t r a t i n g o f t h e i n s t r u m e n t . T h e m a t r i x f o r c r e d i t r i s km a r k ¶ u p f o r e a c h c a t e g o r i e s a n d c r e d i t r a t i n g s a l o n g w i t h r e s i d u a l m a t u r i t yi s s u e d b y F I M M D A a r e a d o p t e d f o r t h i s p u r p o s e ;•
i n c a s e o f b o n d s a n d d e b e n t u r e s ( i n c l u d i n g P a s s T h r o u g h C e r t i f i c a t e s o r P T C s )w h e r e i n t e r e s t i s n o t r e c e i v e d r e g u l a r l y ( i . e . o v e r d u e b e y o n d 9 0 d a y s ) , t h ev a l u a t i o n i s i n a c c o r d a n c e w i t h p r u d e n t i a l n o r m s f o r p r o v i s i o n i n g a sp r e s c r i b e d b y R B I ;• E q u i t y s h a r e s , f o r w h i c h c u r r e n t q u o t a t i o n s a r e n o t a v a i l a b l e o r w h e r e t h es h a r e s a r e n o t q u o t e d o n t h e s t o c k e x c h a n g e s , a r e v a l u e d a t b r e a k ¶ u p v a l u e( w i t h o u t c o n s i d e r i n g r e v a l u a t i o n r e s e r v e s , i f a n y ) w h i c h i s a s c e r t a i n e d f r o mt h e c o m p a n y ' s l a t e s t B a l a n c e S h e e t . I n c a s e t h e l a t e s t B a l a n c e S h e e t i s n o ta v a i l a b l e , t h e s h a r e s a r e v a l u e d a t R e . 1 / ¶ p e r c o m p a n y ;• U n i t s o f V e n t u r e C a p i t a l F u n d s ( V C F ) h e l d u n d e r A F S c a t e g o r y w h e r e c u r r e n tq u o t a t i o n s a r e n o t a v a i l a b l e a r e m a r k e d t o m a r k e t b a s e d o n t h e N e t A s s e tV a l u e ( N A V ) s h o w n b y V C F a s p e r t h e l a t e s t a u d i t e d f i n a n c i a l s o f t h e f u n d . I nc a s e t h e a u d i t e d f i n a n c i a l s a r e n o t a v a i l a b l e f o r a p e r i o d b e y o n d 1 8 m o n t h s , t h ei n v e s t m e n t s a r e v a l u e d a t R e . 1 / ã p e r V C F . I n v e s t m e n t i n u n q u o t e d V C F a f t e r2 3 r d A u g u s t , 2 0 0 6 a r e c a t e g o r i s e d u n d e r H T M c a t e g o r y f o r t h e i n i t i a l p e r i o d o ft h r e e y e a r s a n d v a l u e d a t c o s t a s p e r R B I g u i d e l i n e s ;• I n v e s t m e n t i n s e c u r i t y r e c e i p t s a r e v a l u e d a s p e r t h e N e t A s s e t V a l u e ( N A V )o b t a i n e d f r o m t h e i s s u i n g R e c o n s t r u c t i o n C o m p a n y / S e c u r i t i s a t i o n C o m p a n y .f ) I n v e s t m e n t s i n s u b s i d i a r i e s / a s s o c i a t e s a r e c a t e g o r i s e d a s H T M a n d a s s e s s e d f o ri m p a i r m e n t t o d e t e r m i n e p e r m a n e n t d i m i n u t i o n , i f a n y , i n a c c o r d a n c e w i t h t h eR B I g u i d e l i n e s .g ) T h e B a n k f o l l o w s t r a d e d a t e m e t h o d o f a c c o u n t i n g f o r p u r c h a s e a n d s a l e o fi n v e s t m e n t s , e x c e p t f o r G o v e r n m e n t o f I n d i a a n d S t a t e G o v e r n m e n t s e c u r i t i e sw h e r e s e t t l e m e n t d a t e m e t h o d o f a c c o u n t i n g i s f o l l o w e d i n a c c o r d a n c e w i t h R B IG u i d e l i n e s .h ) N o n P e r f o r m i n g I n v e s t m e n t s a r e i d e n t i f i e d a n d v a l u e d b a s e d o n R B I G u i d e l i n e s .D i s p o s a l o f I n v e s t m e n t sa ) H e l d f o r T r a d i n g a n d A v a i l a b l e f o r S a l e – P r o f i t o r l o s s o n s a l e / r e d e m p t i o ni s i n c l u d e d i n c o n s o l i d a t e d t h e P r o f i t a n d L o s s a c c o u n t .b ) H e l d t o M a t u r i t y – P r o f i t o n s a l e / r e d e m p t i o n o f i n v e s t m e n t s i s i n c l u d e d i nt h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t a n d i s a p p r o p r i a t e d t o C a p i t a lR e s e r v e a f t e r a d j u s t m e n t s f o r t a x a n d t r a n s f e r t o s t a t u t o r y R e s e r v e . L o s s o ns a l e / r e d e m p t i o n i s c h a r g e d t o t h e C o n s o l i d a t e d P r o f i t a n d L o s s a c c o u n t .
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R e p o a n d R e v e r s e R e p o t r a n s a c t i o n sI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s r e p o a n d r e v e r s e r e p o t r a n s a c t i o n s i ng o v e r n m e n t s e c u r i t i e s [ e x c l u d i n g t r a n s a c t i o n s c o n d u c t e d u n d e r L i q u i d i t y A d j u s t m e n tF a c i l i t y ( ‘ L A F ’ ) a n d M a r g i n a l S t a n d b y f a c i l i t y ( ‘ M S F ’ ) w i t h R B I ] a r e r e f l e c t e d a sb o r r o w i n g a n d l e n d i n g t r a n s a c t i o n s r e s p e c t i v e l y . B o r r o w i n g c o s t o n r e p o t r a n s a c t i o n si s a c c o u n t e d f o r a s i n t e r e s t e x p e n s e a n d r e v e n u e o n r e v e r s e r e p o i s a c c o u n t e d f o r a si n t e r e s t i n c o m e .I n r e s p e c t o f R e p o t r a n s a c t i o n s u n d e r L A F a n d M S F w i t h R B I , a m o u n t b o r r o w e df r o m R B I a r e c r e d i t e d t o i n v e s t m e n t a c c o u n t a n d r e v e r s e d o n m a t u r i t y o f t h et r a n s a c t i o n . C o s t s t h e r e o n a r e a c c o u n t e d f o r a s i n t e r e s t e x p e n s e . I n r e s p e c t o f r e v e r s eR e p o t r a n s a c t i o n s u n d e r L A F , a m o u n t l e n t t o R B I i s d e b i t e d t o i n v e s t m e n t a c c o u n ta n d r e v e r s e d o n m a t u r i t y o f t h e t r a n s a c t i o n . R e v e n u e s t h e r e o n a r e a c c o u n t e d a si n t e r e s t i n c o m e .S h o r t S a l e sI n a c c o r d a n c e w i t h t h e R B I g u i d e l i n e s , t h e B a n k u n d e r t a k e s s h o r t s a l e t r a n s a c t i o n s i nC e n t r a l G o v e r n m e n t d a t e d s e c u r i t i e s . T h e S h o r t S a l e s p o s i t i o n s a r e r e f l e c t e d i n‘ S e c u r i t i e s S h o r t S o l d ( ‘ S S S ’ ) A / C ’ , s p e c i f i c a l l y c r e a t e d f o r t h i s p u r p o s e . S u c h s h o r tp o s i t i o n s a r e c a t e g o r i z e d u n d e r H F T c a t e g o r y . T h e s e p o s i t i o n s a r e m a r k e d – t o D m a r k e ta l o n g w i t h t h e o t h e r s e c u r i t i e s u n d e r H F T P o r t f o l i o a n d r e s u l t a n t m a r k D t o D m a r k e tg a i n s / l o s s e s a r e a c c o u n t e d f o r a s p e r t h e r e l e v a n t R B I g u i d e l i n e s f o r v a l u a t i o n o fI n v e s t m e n t s d i s c u s s e d e a r l i e r .T h e S u b s i d i a r yI n v e s t m e n t s h e l d a s l o n g D t e r m i n v e s t m e n t s a r e c a r r i e d a t c o s t c o m p r i s i n g o fa c q u i s i t i o n a n d i n c i d e n t a l e x p e n s e s . P r o v i s i o n f o r d i m i n u t i o n i n v a l u e o f i n v e s t m e n t s ,i f a n y , i s m a d e i f i n t h e o p i n i o n o f m a n a g e m e n t , s u c h d i m i n u t i o n i s o t h e r t h a nt e m p o r a r y . A n y p r e m i u m o n a c q u i s i t i o n i s a m o r t i s e d o v e r t h e r e m a i n i n g m a t u r i t y o ft h e s e c u r i t y o n a c o n s t a n t y i e l d t o m a t u r i t y b a s i s . S u c h a m o r t i s a t i o n o f p r e m i u m i sa d j u s t e d a g a i n s t i n t e r e s t i n c o m e f r o m i n v e s t m e n t s .T h e b o o k v a l u e o f i n v e s t m e n t i s r e d u c e d t o t h e e x t e n t o f a m o u n t a m o r t i s e d d u r i n g t h er e l e v a n t a c c o u n t i n g p e r i o d .I n v e s t m e n t s o t h e r t h a n l o n g D t e r m i n v e s t m e n t s a r e c l a s s i f i e d a s c u r r e n t i n v e s t m e n t s a n dv a l u e d a t l o w e r o f c o s t o r f a i r v a l u e .2 . 7 T r a n s a c t i o n s i n v o l v i n g f o r e i g n e x c h a n g eF o r e i g n c u r r e n c y i n c o m e a n d e x p e n d i t u r e i t e m s o f d o m e s t i c o p e r a t i o n s a r e t r a n s l a t e da t t h e e x c h a n g e r a t e s p r e v a i l i n g o n t h e d a t e o f t h e t r a n s a c t i o n . I n c o m e a n d e x p e n d i t u r ei t e m s o f n o n D i n t e g r a l f o r e i g n o p e r a t i o n s ( I B U a t G I F T c i t y ) a r e t r a n s l a t e d a t q u a r t e r l ya v e r a g e c l o s i n g r a t e s .F o r e i g n c u r r e n c y m o n e t a r y i t e m s o f d o m e s t i c o p e r a t i o n a r e t r a n s l a t e d a t t h e c l o s i n ge x c h a n g e r a t e s n o t i f i e d b y F o r e i g n E x c h a n g e D e a l e r ’ s A s s o c i a t i o n o f I n d i a ( F E D A I )a s a t t h e B a l a n c e s h e e t d a t e a n d t h e r e s u l t i n g n e t v a l u a t i o n p r o f i t o r l o s s i s r e c o g n i z e di n t h e C o n s o l i d a t e d p r o f i t a n d l o s s a c c o u n t .F-252
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B o t h M o n e t a r y a n d N o n m M o n e t a r y f o r e i g n c u r r e n c y A s s e t s a n d l i a b i l i t i e s o f N o n mI n t e g r a l F o r e i g n O p e r a t i o n s a r e t r a n s l a t e d a t c l o s i n g e x c h a n g e r a t e s n o t i f i e d b yF E D A I a t t h e b a l a n c e s h e e t d a t e a n d t h e r e s u l t i n g p r o f i t / l o s s a r i s i n g f r o m e x c h a n g ed i f f e r e n c e s a r e a c c u m u l a t e d i n F o r e i g n c u r r e n c y t r a n s l a t i o n R e s e r v e u n t i l r e m i t t a n c eo r t h e d i s p o s a l o f t h e n e t i n v e s t m e n t i n t h e n o n m i n t e g r a l f o r e i g n o p e r a t i o n s i na c c o r d a n c e w i t h A S m 1 1 .F o r e i g n e x c h a n g e s p o t a n d f o r w a r d C o n t r a c t s ( O t h e r t h a n F o r e i g n e x c h a n g e s w a p st a k e n t o h e d g e F e d e r a l R u p e e p l u s d e p o s i t s d e n o m i n a t e d i n J P Y ) o u t s t a n d i n g a s a t t h eB a l a n c e S h e e t d a t e a r e r e v a l u e d a t t h e c l o s i n g S p o t a n d F o r w a r d R a t e s r e s p e c t i v e l y a sn o t i f i e d b y F E D A I a n d a t i n t e r p o l a t e d r a t e d f o r c o n t r a c t s o f i n t e r i m m a t u r i t i e s . F o rv a l u a t i o n o f c o n t r a c t s h a v i n g l o n g e r m a t u r i t i e s i . e g r e a t e r t h a n o n e y e a r , t h e f o r w a r dp o i n t s ( f o r r a t e s / t e n u r e s n o t p u b l i s h e d b y F E D A I ) a r e o b t a i n e d f r o m R e u t e r s f o rv a l u a t i o n o f t h e F X D e a l s . A s d i r e c t e d b y F E D A I t o c o n s i d e r p r o f i t o r l o s s o n p r e s e n tv a l u e b a s i s , t h e f o r w a r d p r o f i t o r l o s s o n t h e d e a l s a r e d i s c o u n t e d t i l l t h e v a l u a t i o nd a t e u s i n g t h e d i s c o u n t i n g y i e l d s . T h e r e s u l t i n g p r o f i t o r l o s s o n v a l u a t i o n i sr e c o g n i s e d i n t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .F o r e i g n e x c h a n g e s w a p s t a k e n t o h e d g e F e d e r a l R u p e e p l u s d e p o s i t s d e n o m i n a t e d i nJ P Y a r e t r a n s l a t e d a t t h e p r e v a i l i n g s p o t r a t e a t t h e t i m e o f s w a p . T h e P r e m i u m /D i s c o u n t o n t h e s w a p a r i s i n g o u t o f t h e d i f f e r e n c e i n t h e e x c h a n g e r a t e o f t h e s w a pd a t e a n d m a t u r i t y d a t e o f t h e u n d e r l y i n g f o r w a r d e x c h a n g e c o n t r a c t i s a m o r t i s e d o v e rt h e p e r i o d o f t h e s w a p a n d t h e s a m e i s r e c o g n i s e d i n t h e C o n s o l i d a t e d P r o f i t a n d L o s sA c c o u n t .C o n t i n g e n t l i a b i l i t i e s o n a c c o u n t o f f o r e i g n e x c h a n g e c o n t r a c t s , g u a r a n t e e s , l e t t e r s o fc r e d i t , a c c e p t a n c e s a n d e n d o r s e m e n t s a r e r e p o r t e d a t c l o s i n g r a t e s o f e x c h a n g en o t i f i e d b y F E D A I a s a t t h e B a l a n c e S h e e t d a t e .2 . 8 D e r i v a t i v e t r a n s a c t i o n sT h e B a n k r e c o g n i s e s a l l d e r i v a t i v e c o n t r a c t s a t f a i r v a l u e , o n t h e d a t e o n w h i c h t h ed e r i v a t i v e c o n t r a c t s a r e e n t e r e d i n t o a n d a r e r e ³ m e a s u r e d a t f a i r v a l u e a s a t t h e B a l a n c es h e e t o r r e p o r t i n g d a t e s . D e r i v a t i v e s a r e c l a s s i f i e d a s a s s e t s w h e n t h e f a i r v a l u e i sp o s i t i v e ( P o s i t i v e m a r k e d ³ t o ³ m a r k e t ) o r a s l i a b i l i t i e s w h e n t h e f a i r v a l u e i s n e g a t i v e( n e g a t i v e m a r k e d ³ t o ³ m a r k e t ) . C h a n g e s i n t h e f a i r v a l u e o f d e r i v a t i v e s o t h e r t h a n t h o s ed e s i g n a t e d a s h e d g e s a r e r e c o g n i s e d i n t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .2 . 9 F i x e d a s s e t s a n d d e p r e c i a t i o nF i x e d a s s e t s a r e c a r r i e d a t c o s t o f a c q u i s i t i o n l e s s a c c u m u l a t e d d e p r e c i a t i o n a n di m p a i r m e n t , i f a n y . C o s t i n c l u d e s c o s t o f p u r c h a s e a n d a l l e x p e n d i t u r e l i k e f r e i g h t ,d u t i e s , t a x e s a n d i n c i d e n t a l e x p e n s e s r e l a t e d t o t h e a c q u i s i t i o n a n d i n s t a l l a t i o n o f t h ea s s e t .C a p i t a l w o r k ³ i n ³ p r o g r e s s i n c l u d e s c o s t o f f i x e d a s s e t s t h a t a r e n o t r e a d y f o r t h e i ri n t e n d e d u s e a n d a l s o i n c l u d e s a d v a n c e s p a i d t o a c q u i r e f i x e d a s s e t s .F-253
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D e p r e c i a t i o n o n f i x e d a s s e t s , i n c l u d i n g a m o r t i s a t i o n o f s o f t w a r e , i s c h a r g e d o v e r t h ee s t i m a t e d u s e f u l l i f e o f f i x e d a s s e t s o n a s t r a i g h t à l i n e b a s i s a t t h e r a t e s a n d m a n n e rp r e s c r i b e d i n S c h e d u l e I I o f t h e C o m p a n i e s A c t , 2 0 1 3 , e x c e p t a s m e n t i o n e d b e l o w :P r e m i s e s a r e d e p r e c i a t e d u n d e r t h e w r i t t e n d o w n v a l u e m e t h o d , u s i n g t h e s a m e u s e f u ll i f e a s i n S c h e d u l e I I o f t h e C o m p a n i e s A c t , 2 0 1 3 . I m p r o v e m e n t t o l e a s e d P r e m i s e sa r e d e p r e c i a t e d o v e r 5 y e a r s b a s e d o n t e c h n i c a l e v a l u a t i o n .D e p r e c i a t i o n o n p r e m i s e s r e v a l u e d h a s b e e n c h a r g e d o n t h e i r w r i t t e n à d o w n v a l u ei n c l u d i n g t h e a d d i t i o n m a d e o n r e v a l u a t i o n .D e p r e c i a t i o n o n a s s e t s s o l d d u r i n g t h e y e a r i s r e c o g n i s e d o n a p r o à r a t a b a s i s t i l l t h ed a t e o f s a l e .P r o f i t o n s a l e o f p r e m i s e s i s a p p r o p r i a t e d t o C a p i t a l R e s e r v e a c c o u n t i n a c c o r d a n c ew i t h R B I i n s t r u c t i o n s .2 . 1 0 I m p a i r m e n t o f A s s e t sT h e c a r r y i n g v a l u e s o f a s s e t s a t e a c h b a l a n c e s h e e t d a t e a r e r e v i e w e d f o r i m p a i r m e n t ,i f a n y i n d i c a t i o n o f i m p a i r m e n t e x i s t s . I f t h e c a r r y i n g a m o u n t o f t h e a s s e t s e x c e e d t h ee s t i m a t e d r e c o v e r a b l e a m o u n t , a n i m p a i r m e n t i s r e c o g n i s e d f o r s u c h e x c e s s a m o u n t .T h e i m p a i r m e n t l o s s i s r e c o g n i s e d a s a n e x p e n s e i n t h e P r o f i t a n d L o s s A c c o u n t ,u n l e s s t h e a s s e t i s c a r r i e d a t r e v a l u e d a m o u n t , i n w h i c h c a s e a n y i m p a i r m e n t l o s s o ft h e r e v a l u e d a s s e t i s t r e a t e d a s a r e v a l u a t i o n d e c r e a s e t o t h e e x t e n t a r e v a l u a t i o nr e s e r v e i s a v a i l a b l e f o r t h a t a s s e t .T h e r e c o v e r a b l e a m o u n t i s t h e g r e a t e r o f t h e n e t s e l l i n g p r i c e a n d t h e i r v a l u e i n u s e .V a l u e i n u s e i s a r r i v e d a t b y d i s c o u n t i n g t h e f u t u r e c a s h f l o w s t o t h e i r p r e s e n t v a l u eb a s e d o n a n a p p r o p r i a t e d i s c o u n t f a c t o r .W h e n t h e r e i s i n d i c a t i o n t h a t a n i m p a i r m e n t l o s s r e c o g n i s e d f o r a n a s s e t ( o t h e r t h a n ar e v a l u e d a s s e t ) i n e a r l i e r a c c o u n t i n g p e r i o d s n o l o n g e r e x i s t s o r m a y h a v e d e c r e a s e d ,s u c h r e v e r s a l o f i m p a i r m e n t l o s s i s r e c o g n i s e d i n t h e P r o f i t a n d L o s s A c c o u n t , t o t h ee x t e n t t h e a m o u n t w a s p r e v i o u s l y c h a r g e d t o t h e P r o f i t a n d L o s s A c c o u n t . I n c a s e o fr e v a l u e d a s s e t s s u c h r e v e r s a l i s n o t r e c o g n i s e d .2 . 1 1 N o n � B a n k i n g A s s e t sN o n à B a n k i n g a s s e t s a c q u i r e d i n s e t t l e m e n t o f d e b t s / d u e s a r e a c c o u n t e d a t t h e l o w e ro f t h e i r c o s t o f a c q u i s i t i o n o r n e t r e a l i s a b l e v a l u e .2 . 1 2 C a s h a n d C a s h E q u i v a l e n t sC a s h a n d c a s h e q u i v a l e n t s i n c l u d e c a s h i n h a n d , b a l a n c e s w i t h R e s e r v e B a n k o f I n d i aa n d B a l a n c e s w i t h O t h e r B a n k s / i n s t i t u t i o n s a n d m o n e y a t c a l l a n d s h o r t n o t i c e( i n c l u d i n g t h e e f f e c t o f c h a n g e s i n e x c h a n g e r a t e s o n c a s h a n d c a s h e q u i v a l e n t s i nf o r e i g n c u r r e n c y )F-254
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2 . 1 3 R e v e n u e R e c o g n i t i o n• I n t e r e s t i n c o m e i s r e c o g n i s e d o n a n a c c r u a l b a s i s e x c e p t i n t e r e s t i n c o m e o n n o n ]p e r f o r m i n g a s s e t s , w h i c h i s r e c o g n i s e d u p o n r e c e i p t w i t h A S ] 9 , R e v e n u eR e c o g n i t i o n a s p r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 a n d a ss p e c i f i e d i n R B I g u i d e l i n e s .• P r o c e s s i n g f e e s c o l l e c t e d o n l o a n s d i s b u r s e d , a l o n g w i t h r e l a t e d l o a n a c q u i s i t i o nc o s t s a r e r e c o g n i s e d a t i n c e p t i o n / R e n e w a l o f t h e l o a n .• I n c o m e o n d i s c o u n t e d i n s t r u m e n t s i s r e c o g n i s e d o v e r t h e t e n u r e o f t h e i n s t r u m e n to n a s t r a i g h t l i n e b a s i s .• G u a r a n t e e c o m m i s s i o n , c o m m i s s i o n o n l e t t e r o f c r e d i t a n d a n n u a l l o c k e r r e n t f e e sa r e r e c o g n i s e d o n a s t r a i g h t l i n e b a s i s o v e r t h e p e r i o d o f c o n t r a c t . O t h e r f e e s a n dc o m m i s s i o n i n c o m e a r e r e c o g n i s e d w h e n d u e , e x c e p t i n c a s e s w h e r e t h e b a n k i su n c e r t a i n o f u l t i m a t e c o l l e c t i o n .• D i v i d e n d o n E q u i t y S h a r e s , P r e f e r e n c e S h a r e s a n d o n M u t u a l F u n d s i s r e c o g n i s e da s I n c o m e w h e n t h e r i g h t t o r e c e i v e t h e d i v i d e n d i s e s t a b l i s h e d .• L o a n S y n d i c a t i o n f e e i s a c c o u n t e d f o r o n c o m p l e t i o n o f t h e a g r e e d s e r v i c e a n dw h e n r i g h t t o r e c e i v e i s e s t a b l i s h e d .• U n p a i d f u n d e d i n t e r e s t o n t e r m l o a n s a r e a c c o u n t e d o n r e a l i s a t i o n a s p e r t h eg u i d e l i n e s o f R B I .• T h e d i f f e r e n c e b e t w e e n t h e s a l e p r i c e a n d p u r c h a s e c o s t o f g o l d c o i n s , r e c e i v e do n c o n s i g n m e n t b a s i s i s i n c l u d e d i n o t h e r i n c o m e .2 . 1 4 L e a s e t r a n s a c t i o n sO p e r a t i n g L e a s eL e a s e s w h e r e t h e l e s s o r e f f e c t i v e l y r e t a i n s s u b s t a n t i a l l y a l l t h e r i s k s a n d b e n e f i t s o fo w n e r s h i p o v e r t h e l e a s e t e r m a r e c l a s s i f i e d a s o p e r a t i n g l e a s e . L e a s e p a y m e n t s f o ra s s e t s t a k e n o n o p e r a t i n g l e a s e a r e r e c o g n i s e d a s a n e x p e n s e i n t h e C o n s o l i d a t e dP r o f i t a n d L o s s A c c o u n t a s p e r t h e l e a s e t e r m s2 . 1 5 R e t i r e m e n t a n d o t h e r e m p l o y e e b e n e f i t sT h e B a n ka ) P r o v i d e n t F u n dT h e c o n t r i b u t i o n m a d e b y t h e b a n k t o T h e F e d e r a l B a n k E m p l o y e e s P r o v i d e n t F u n d ,a d m i n i s t e r e d b y t h e t r u s t e e s i s c h a r g e d t o C o n s o l i d a t e d P r o f i t a n d L o s s a c c o u n t .b ) P e n s i o n F u n dT h e c o n t r i b u t i o n t o w a r d s T h e F e d e r a l B a n k E m p l o y e e s ’ P e n s i o n F u n d , m a n a g e d b yt r u s t e e s , i s d e t e r m i n e d o n a c t u a r i a l b a s i s o n p r o j e c t e d u n i t c r e d i t m e t h o d a s o n t h eB a l a n c e S h e e t d a t e a n d i s r e c o g n i s e d i n t h e a c c o u n t s .
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E m p l o y e e s w h o h a d j o i n e d t h e s e r v i c e s o f t h e B a n k w i t h e f f e c t f r o m A p r i l 0 1 , 2 0 1 0a r e c o v e r e d u n d e r D e f i n e d C o n t r i b u t o r y P e n s i o n S c h e m e ( D C P S ) . I n r e s p e c t o f s u c he m p l o y e e s t h e b a n k c o n t r i b u t e s 1 0 % o f t h e B a s i c P a y p l u s D e a r n e s s A l l o w a n c e a n dt h e e x p e n d i t u r e t h e r e o f i s c h a r g e d t o t h e C o n s o l i d a t e d P r o f i t a n d L o s s a c c o u n t .c ) G r a t u i t yT h e b a n k m a k e s a n n u a l c o n t r i b u t i o n t o T h e F e d e r a l B a n k E m p l o y e e s ’ G r a t u i t y T r u s tF u n d a d m i n i s t e r e d a n d m a n a g e d b y t h e T r u s t e e s . T h e c o s t o f p r o v i d i n g s u c h b e n e f i t si s d e t e r m i n e d u s i n g t h e P r o j e c t e d U n i t C r e d i t m e t h o d , w i t h a c t u a r i a l v a l u a t i o n sb e i n g c a r r i e d o u t a t e a c h b a l a n c e s h e e t d a t e . A c t u a r i a l g a i n s a n d l o s s e s a r er e c o g n i s e d i n t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t i n t h e p e r i o d i n w h i c h t h e yo c c u r . T h e r e t i r e m e n t b e n e f i t o b l i g a t i o n r e c o g n i s e d i n t h e B a l a n c e S h e e t r e p r e s e n t st h e p r e s e n t v a l u e o f t h e d e f i n e d b e n e f i t o b l i g a t i o n a s a d j u s t e d f o r u n r e c o g n i s e d p a s ts e r v i c e c o s t , a s r e d u c e d b y t h e f a i r v a l u e o f s c h e m e a s s e t s . A n y a s s e t r e s u l t i n g f r o mt h i s c a l c u l a t i o n i s l i m i t e d t o p a s t s e r v i c e c o s t , p l u s t h e p r e s e n t v a l u e o f a v a i l a b l er e f u n d s a n d r e d u c t i o n s i n f u t u r e c o n t r i b u t i o n s t o t h e s c h e m e s .d ) C o m p e n s a t i o n f o r a b s e n c e o n P r i v i l e g e / S i c k / C a s u a l L e a v e a n d L e a v eT r a v e l C o n c e s s i o n ( L T C )T h e e m p l o y e e s o f t h e b a n k a r e e n t i t l e d t o c o m p e n s a t e d a b s e n c e o n a c c o u n t o fp r i v i l e g e / s i c k / c a s u a l l e a v e a s p e r t h e l e a v e r u l e s . T h e b a n k m e a s u r e s t h e l o n g t e r me x p e c t e d c o s t o f c o m p e n s a t e d a b s e n c e a s a r e s u l t o f t h e u n u s e d e n t i t l e m e n t t h a t h a sa c c u m u l a t e d a t t h e b a l a n c e s h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n a n d s u c h c o s t s a r er e c o g n i s e d i n t h e a c c o u n t s .T h e e m p l o y e e s a r e a l s o e l i g i b l e f o r L T C a s p e r t h e r u l e s . T h e e s t i m a t e d c o s t o fu n u s e d e n t i t l e m e n t a s o n t h e B a l a n c e S h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n i sp r o v i d e d f o r .e ) O t h e r e m p l o y e e B e n e f i t sT h e u n d i s c o u n t e d a m o u n t o f S h o r t ê t e r m e m p l o y e e b e n e f i t s e x p e c t e d t o b e p a i d i ne x c h a n g e f o r t h e s e r v i c e s r e n d e r e d b y e m p l o y e e s i s r e c o g n i s e d d u r i n g t h e p e r i o dw h e n t h e e m p l o y e e s r e n d e r t h e s e r v i c e . T h e s e b e n e f i t s i n c l u d e p e r f o r m a n c ei n c e n t i v e s .T h e S u b s i d i a r ya ) T h e c o m p a n y h a s d e f i n e d c o n t r i b u t i o n p l a n s f o r e m p l o y e e s c o m p r i s i n g o fP r o v i d e n t F u n d a n d E m p l o y e e S t a t e I n s u r a n c e . T h e c o n t r i b u t i o n s p a i d / p a y a b l et o t h e s e p l a n s d u r i n g t h e y e a r a r e c h a r g e d t o P r o f i t a n d L o s s A c c o u n t f o r t h ey e a r .b ) T h e n e t p r e s e n t v a l u e o f t h e o b l i g a t i o n f o r g r a t u i t y b e n e f i t s , w h i c h i s a d e f i n e db e n e f i t p l a n , a s d e t e r m i n e d o n i n d e p e n d e n t a c t u a r i a l v a l u a t i o n , c o n d u c t e da n n u a l l y u s i n g p r o j e c t e d u n i t c r e d i t m e t h o d , a s a d j u s t e d f o r u n r e c o g n i z e d p a s ts e r v i c e s c o s t , i f a n y , i s r e c o g n i s e d i n t h e a c c o u n t s . A c t u a r i a l g a i n s a n d l o s s e s a r er e c o g n i s e d i n f u l l i n t h e P r o f i t a n d L o s s A c c o u n t f o r t h e p e r i o d i n w h i c h t h e yo c c u r .F-256
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c ) T h e c o m p a n y h a s a s c h e m e f o r c o m p e n s a t e d a b s e n c e s f o r e m p l o y e e s , t h el i a b i l i t y o f w h i c h i s d e t e r m i n e d o n t h e b a s i s o f a n i n d e p e n d e n t a c t u a r i a lv a l u a t i o n c a r r i e d o u t a t t h e e n d o f t h e y e a r , u s i n g t h e p r o j e c t e d u n i t c r e d i tm e t h o d . A c t u a r i a l g a i n s a n d l o s s e s a r e r e c o g n i s e d i n f u l l i n t h e P r o f i t a n d L o s sA c c o u n t f o r t h e p e r i o d i n w h i c h t h e y o c c u r .2 . 1 6 D e b i t c a r d r e w a r d p o i n t sT h e B a n k r u n s a l o y a l t y p r o g r a m w h i c h s e e k s t o r e c o g n i s e a n d r e w a r d c u s t o m e r sb a s e d o n t h e i r r e l a t i o n s h i p w i t h t h e B a n k . U n d e r t h e p r o g r a m , e l i g i b l e c u s t o m e r s a r eg r a n t e d l o y a l t y p o i n t s r e d e e m a b l e i n f u t u r e , s u b j e c t t o c e r t a i n c o n d i t i o n s . T h e B a n ke s t i m a t e s t h e p r o b a b l e r e d e m p t i o n o f s u c h l o y a l t y / r e w a r d p o i n t s u s i n g a n a c t u a r i a lm e t h o d a t t h e B a l a n c e S h e e t d a t e b y e m p l o y i n g i n d e p e n d e n t a c t u a r y . P r o v i s i o n f o rs a i d r e w a r d p o i n t s i s t h e n m a d e b a s e d o n t h e a c t u a r i a l v a l u a t i o n r e p o r t a s f u r n i s h e db y t h e s a i d i n d e p e n d e n t A c t u a r y .2 . 1 7 E m p l o y e e S t o c k O p t i o n S c h e m eT h e B a n k h a s f o r m u l a t e d E m p l o y e e S t o c k O p t i o n S c h e m e ( E S O S ) 2 0 1 0 i na c c o r d a n c e w i t h S e c u r i t i e s a n d E x c h a n g e B o a r d o f I n d i a ( E m p l o y e e S t o c k O p t i o nS c h e m e ) G u i d e l i n e s , 1 9 9 9 . T h e S c h e m e p r o v i d e s f o r g r a n t o f o p t i o n s t o E m p l o y e e so f t h e B a n k t o a c q u i r e E q u i t y S h a r e s o f t h e B a n k t h a t v e s t i n a g r a d e d m a n n e r a n dt h a t a r e t o b e e x e r c i s e d w i t h i n a s p e c i f i e d p e r i o d . I n a c c o r d a n c e w i t h t h e S E B IG u i d e l i n e s a n d t h e g u i d a n c e n o t e o n “ A c c o u n t i n g f o r E m p l o y e e S h a r e b a s e dp a y m e n t s ” i s s u e d b y t h e I C A I , t h e e x c e s s , i f a n y , o f t h e m a r k e t p r i c e o f t h e s h a r ep r e c e d i n g t h e d a t e o f g r a n t o f t h e o p t i o n u n d e r E S O S o v e r t h e e x e r c i s e p r i c e o f t h eo p t i o n i s a m o r t i s e d o n a s t r a i g h t l i n e b a s i s o v e r t h e v e s t i n g p e r i o d .2 . 1 8 T a x a t i o nI n c o m e t a x e x p e n s e i s t h e a g g r e g a t e a m o u n t o f c u r r e n t t a x a n d d e f e r r e d t a x c h a r g e .C u r r e n t t a x i s t h e a m o u n t o f t a x p a y a b l e o n t h e t a x a b l e i n c o m e f o r t h e y e a r a sd e t e r m i n e d i n a c c o r d a n c e w i t h t h e a p p l i c a b l e t a x r a t e s a n d t h e p r o v i s i o n s o f t h eI n c o m e T a x A c t , 1 9 6 1 a n d o t h e r a p p l i c a b l e t a x l a w s .M i n i m u m A l t e r n a t e T a x ( M A T ) p a i d i n a c c o r d a n c e w i t h t h e t a x l a w s , w h i c h g i v e sf u t u r e e c o n o m i c b e n e f i t s i n t h e f o r m o f a d j u s t m e n t t o f u t u r e i n c o m e t a x l i a b i l i t y , i sc o n s i d e r e d a s a n a s s e t i f t h e r e i s c o n v i n c i n g e v i d e n c e t h a t t h e G r o u p w i l l p a y n o r m a li n c o m e t a x . A c c o r d i n g l y , M A T i s r e c o g n i s e d a s a n a s s e t i n t h e C o n s o l i d a t e dB a l a n c e S h e e t w h e n i t i s h i g h l y p r o b a b l e t h a t f u t u r e e c o n o m i c b e n e f i t a s s o c i a t e dw i t h i t w i l l f l o w t o t h e G r o u p .D e f e r r e d t a x i s r e c o g n i s e d o n t i m i n g d i f f e r e n c e s , b e i n g t h e d i f f e r e n c e s b e t w e e n t h et a x a b l e i n c o m e a n d t h e a c c o u n t i n g i n c o m e t h a t o r i g i n a t e i n o n e p e r i o d a n d a r ec a p a b l e o f r e v e r s a l i n o n e o r m o r e s u b s e q u e n t p e r i o d s . D e f e r r e d t a x i s m e a s u r e du s i n g t h e t a x r a t e s a n d t h e t a x l a w s e n a c t e d o r s u b s t a n t i v e l y e n a c t e d a s a t t h er e p o r t i n g d a t e . D e f e r r e d t a x l i a b i l i t i e s a r e r e c o g n i s e d f o r a l l t i m i n g d i f f e r e n c e s .D e f e r r e d t a x a s s e t s a r e r e c o g n i s e d f o r t i m i n g d i f f e r e n c e s o f i t e m s o t h e r t h a nu n a b s o r b e d d e p r e c i a t i o n a n d c a r r y f o r w a r d l o s s e s o n l y t o t h e e x t e n t t h a t r e a s o n a b l ec e r t a i n t y e x i s t s t h a t s u f f i c i e n t f u t u r e t a x a b l e i n c o m e w i l l b e a v a i l a b l e a g a i n s t w h i c hF-257
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t h e s e c a n b e r e a l i s e d . H o w e v e r , i f t h e r e a r e u n a b s o r b e d d e p r e c i a t i o n a n d c a r r yf o r w a r d o f l o s s e s a n d i t e m s r e l a t i n g t o c a p i t a l l o s s e s , d e f e r r e d t a x a s s e t s a r er e c o g n i s e d o n l y i f t h e r e i s v i r t u a l c e r t a i n t y s u p p o r t e d b y c o n v i n c i n g e v i d e n c e t h a tt h e r e w i l l b e s u f f i c i e n t f u t u r e t a x a b l e i n c o m e a v a i l a b l e t o r e a l i s e t h e a s s e t s . D e f e r r e dt a x a s s e t s a n d l i a b i l i t i e s a r e o f f s e t i f s u c h i t e m s r e l a t e t o t a x e s o n i n c o m e l e v i e d b yt h e s a m e g o v e r n i n g t a x l a w s a n d t h e G r o u p h a s a l e g a l l y e n f o r c e a b l e r i g h t f o r s u c hs e t o f f . D e f e r r e d t a x a s s e t s a r e r e v i e w e d a t e a c h b a l a n c e s h e e t d a t e f o r t h e i rr e a l i s a b i l i t y .T h e G r o u p O f f s e t s D e f e r r e d T a x A s s e t s a n d D e f e r r e d T a x L i a b i l i t i e s , a n d a d v a n c eI n c o m e t a x a n d p r o v i s i o n f o r t a x , i f i t h a s a l e g a l l y e n f o r c e a b l e r i g h t a n d t h e s e r e l a t et o t a x e s i n i n c o m e l e v i e d b y t h e s a m e g o v e r n i n g t a x a t i o n l a w s .C u r r e n t a n d d e f e r r e d t a x r e l a t i n g t o i t e m s d i r e c t l y r e c o g n i s e d i n r e s e r v e s a r ea d j u s t e d i n r e s e r v e s a n d n o t i n C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .2 . 1 9 E a r n i n g s p e r S h a r eT h e G r o u p r e p o r t s b a s i c a n d d i l u t e d e a r n i n g s p e r s h a r e i n a c c o r d a n c e w i t h A S 2 0 ,E a r n i n g s p e r S h a r e , a s p r e s c r i b e d u n d e r S e c t i o n 1 3 3 o f t h e C o m p a n i e s A c t , 2 0 1 3 .B a s i c e a r n i n g s p e r s h a r e i s c o m p u t e d b y d i v i d i n g t h e n e t p r o f i t a f t e r t a x b y t h ew e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e s o u t s t a n d i n g f o r t h e y e a r .D i l u t e d e a r n i n g s p e r s h a r e r e f l e c t t h e p o t e n t i a l d i l u t i o n t h a t c o u l d o c c u r i f s e c u r i t i e s o ro t h e r c o n t r a c t s t o i s s u e e q u i t y s h a r e s w e r e e x e r c i s e d o r c o n v e r t e d d u r i n g t h e y e a r .D i l u t e d e a r n i n g s p e r s h a r e i s c o m p u t e d u s i n g t h e w e i g h t e d a v e r a g e n u m b e r o f e q u i t ys h a r e s a n d d i l u t i v e p o t e n t i a l e q u i t y s h a r e s o u t s t a n d i n g a t t h e y e a r e n d .2 . 2 0 S e g m e n t i n f o r m a t i o nT h e d i s c l o s u r e r e l a t i n g t o s e g m e n t i n f o r m a t i o n i s i n a c c o r d a n c e w i t h t h e g u i d e l i n e si s s u e d b y R B I .2 . 2 1 P r o v i s i o n s , c o n t i n g e n t l i a b i l i t i e s a n d c o n t i n g e n t a s s e t sA p r o v i s i o n i s r e c o g n i s e d w h e n t h e G r o u p h a s a p r e s e n t o b l i g a t i o n a s a r e s u l t o f p a s te v e n t s a n d i t i s p r o b a b l e t h a t a n o u t f l o w o f r e s o u r c e s w i l l b e r e q u i r e d t o s e t t l e t h eo b l i g a t i o n , i n r e s p e c t o f w h i c h a r e l i a b l e e s t i m a t e c a n b e m a d e . P r o v i s i o n s ( e x c l u d i n gr e t i r e m e n t b e n e f i t s ) a r e n o t d i s c o u n t e d t o i t s p r e s e n t v a l u e a n d a r e d e t e r m i n e d b a s e do n b e s t e s t i m a t e r e q u i r e d t o s e t t l e t h e o b l i g a t i o n a t t h e B a l a n c e S h e e t d a t e . T h e s e a r er e v i e w e d a t e a c h B a l a n c e S h e e t d a t e a n d a d j u s t e d t o r e f l e c t t h e c u r r e n t b e s t e s t i m a t e s .A d i s c l o s u r e o f c o n t i n g e n t l i a b i l i t y i s m a d e w h e n t h e r e i s :•
a p o s s i b l e o b l i g a t i o n a r i s i n g f r o m a p a s t e v e n t , t h e e x i s t e n c e o f w h i c h w i l l b ec o n f i r m e d b y o c c u r r e n c e o r n o n � o c c u r r e n c e o f o n e o r m o r e u n c e r t a i n f u t u r e e v e n t sn o t w i t h i n t h e c o n t r o l o f t h e g r o u p ; o r•
a p r e s e n t o b l i g a t i o n a r i s i n g f r o m a p a s t e v e n t w h i c h i s n o t r e c o g n i s e d a s i t i s n o tp r o b a b l e t h a t a n o u t f l o w o f r e s o u r c e s w i l l b e r e q u i r e d t o s e t t l e t h e o b l i g a t i o n o r ar e l i a b l e e s t i m a t e o f t h e a m o u n t o f t h e o b l i g a t i o n c a n n o t b e m a d e .F-258
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C o n t i n g e n t a s s e t s a r e n o t r e c o g n i s e d i n t h e f i n a n c i a l s t a t e m e n t s . H o w e v e r , c o n t i n g e n ta s s e t s a r e a s s e s s e d c o n t i n u a l l y a n d i f i t i s v i r t u a l l y c e r t a i n t h a t a n i n f l o w o f e c o n o m i cb e n e f i t s w i l l a r i s e , t h e a s s e t a n d r e l a t e d i n c o m e a r e r e c o g n i s e d i n t h e p e r i o d i n w h i c ht h e c h a n g e o c c u r s .2 . 2 2 C o r p o r a t e S o c i a l R e s p o n s i b i l i t yS p e n d s t o w a r d s c o r p o r a t e s o c i a l r e s p o n s i b i l i t y , i n a c c o r d a n c e w i t h C o m p a n i e s A c t ,2 0 1 3 a r e r e c o g n i s e d i n t h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .2 . 2 3 C E N V A T C r e d i tS e r v i c e t a x i n p u t c r e d i t i s a c c o u n t e d f o r i n t h e b o o k s w i t h i n t h e t i m e l i m i t p r e s c r i b e du n d e r C E N V A T C r e d i t R u l e s , 2 0 0 4 , a s a m e n d e d .
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S C H E D U L E 1 8 : N O T E S O N A C C O U N T S F O R M I N G P A R T O F T H EC O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S F O R T H EY E A R E N D E D 3 1 M A R C H , 2 0 1 6A m o u n t s i n N o t e s f o r m i n g p a r t o f t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s f o r t h e y e a r e n d e d3 1 M a r c h , 2 0 1 6 a r e d e n o m i n a t e d i n R u p e e s C r o r e t o c o n f o r m t o e x t a n t R B I g u i d e l i n e s1 . 1 ‘ P r o v i s i o n s a n d C o n t i n g e n c i e s ’ r e c o g n i s e d i n t h e C o n s o l i d a t e d P r o f i t a n d L o s sA c c o u n t i n c l u d e : (��i n C r o r e ) �F o r t h e y e a r e n d e d 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5i ) P r o v i s i o n t o w a r d s N P A s * 5 5 5 . 6 3 2 0 3 . 9 4i i ) P r o v i s i o n f o r d e p r e c i a t i o n I n v e s t m e n t s( N e t ) 1 6 . 7 4 ( 9 3 . 4 7 )i i i ) P r o v i s i o n f o r N o n P e r f o r m i n g I n v e s t m e n t s 6 3 . 4 2 1 2 . 8 6i v ) P r o v i s i o n f o r S t a n d a r d A s s e t s 3 0 . 2 3 5 4 . 3 4v ) W i t h d r a w a l f r o m f l o a t i n g p r o v i s i o n [ ( 1 2 . 7 5 )v i ) P r o v i s i o n f o r T a x a t i o n :C u r r e n t T a xD e f e r r e d t a x 3 4 6 . 2 4( 9 5 . 6 3 ) 7 6 2 . 9 8( 2 4 5 . 5 0 )v i i ) P r o v i s i o n t o w a r d s p r e s e n t v a l u e o fs a c r i f i c e o n r e s t r u c t u r i n g , o t h e rc o n t i n g e n c i e s e t c . 3 9 . 1 5 ( 5 9 . 7 2 )T o t a l 9 5 5 . 7 8 6 2 2 . 6 8* N e t o f F l o a t i n g P r o v i s i o n o f ��
6 9 C r o r e ( P r e v i o u s Y e a r : N i l ) w i t h d r a w n d u r i n gt h e y e a r v i d e C i r c u l a r D B R . N o . B P . B C . 7 9 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 [ 1 5 d a t e d M a r c h 3 0 ,2 0 1 5 i s s u e d b y t h e R e s e r v e B a n k o f I n d i a .�1 . 2 E a r n i n g s p e r S h a r e ( ' E P S ' )P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5W e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e su s e d i n c o m p u t a t i o n o f b a s i c e a r n i n g s p e rs h a r e ( i n 0 0 0 ’ s ) 1 7 , 1 6 , 9 9 3 1 7 , 1 3 , 7 7 6W e i g h t e d a v e r a g e n u m b e r o f e q u i t y s h a r e su s e d i n c o m p u t a t i o n o f d i l u t e d e a r n i n g s p e rs h a r e ( i n 0 0 0 ’ s ) 1 7 , 2 5 , 5 9 1 1 7 , 2 8 , 3 1 0N o m i n a l V a l u e o f s h a r e ( i n �) 2 2B a s i c e a r n i n g s p e r s h a r e ( i n
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1 . 3 A . I s s u e o f B o n u s S h a r e sT h e s h a r e h o l d e r s o f t h e B a n k h a d a p p r o v e d t h e i s s u e o f B o n u s S h a r e s a t t h e A n n u a lG e n e r a l M e e t i n g h e l d o n J u n e 2 9 , 2 0 1 5 , i n t h e R a t i o o f 1 : 1 f o r S h a r e s h e l d a s o n t h er e c o r d d a t e o f J u l y 9 , 2 0 1 5 . P u r s u a n t t o t h e a b o v e 8 5 , 7 9 , 4 5 , 2 0 6 f u l l y p a i d u p E q u i t yS h a r e s h a d b e e n a l l o t t e d b y t h e b a n k a s b o n u s s h a r e s a n d O n e G l o b a l D e p o s i t a r ys h a r e ( G D S ) h a d b e e n i s s u e d a s b o n u s f o r e v e r y G D S h e l d t o t h e e x i s t i n g h o l d e r s a so n t h e r e c o r d d a t e . C o n s e q u e n t l y , a s p e r t h e e x t a n t E S O S 2 0 1 0 S c h e m e b o n u so p t i o n s h a d b e e n p r o v i d e d t o t h e e x i s t i n g E S O S o p t i o n h o l d e r s a n d t h e e x e r c i s ep r i c e h a d b e e n a d j u s t e d a c c o r d i n g l y . T h e e a r n i n g s p e r s h a r e h a v e b e e n a d j u s t e d f o rp r e v i o u s y e a r i n a c c o r d a n c e w i t h A c c o u n t i n g S t a n d a r d 2 0 , E a r n i n g s p e r s h a r e .B . S u b s c r i b e d a n d p a i d ó u p c a p i t a l i n c l u d e s :( i ) 1 6 , 5 9 0 s h a r e s o f��
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2 / ø e a c h ) h e l d b y c u s t o d i a n o n b e h a l f o f h o l d e r s o f G l o b a l D e p o s i t o r yR e c e i p t s ( G D R s )( i i i ) 5 7 , 6 1 , 1 3 3 E S O S s h a r e s o f��
2 / ø p e r s h a r e ( P r e v i o u s y e a r 1 4 , 1 4 , 6 9 2 s h a r e s o f��2 / ø P e r s h a r e ) a l l o t t e d u n d e r E S O S 2 0 1 0 .( i v ) 8 5 , 7 9 , 4 5 , 2 0 6 b o n u s s h a r e s w e r e i s s u e d i n t h e r a t i o o f 1 : 1 i n t h i s f i n a n c i a l y e a r .C . A l l o t m e n t o f 6 , 5 3 0 s h a r e s o f
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2 4 0 / ø p e r s h a r e ) p e r t a i n i n g t o R i g h t s i s s u e o f2 0 0 7 a r e k e p t p e n d i n g f o l l o w i n g o r d e r s f r o m v a r i o u s c o u r t s .I s s u e o f c e r t i f i c a t e s / c r e d i t i n d e m a t a c c o u n t i n r e s p e c t o f 4 , 0 9 , 1 7 0 s h a r e s o f��
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2 / ø e a c h ) o u t o f t h e B o n u s i s s u e o f 2 0 0 4a n d 6 , 1 5 , 7 5 5 b o n u s s h a r e s o f�
2 / ø e a c h , o u t o f t h e B o n u s i s s u e o f 2 0 1 5 a r e k e p ti n a b e y a n c e c o n s e q u e n t t o i n j u n c t i o n o r d e r s f r o m v a r i o u s c o u r t sD . E m p l o y e e S t o c k O p t i o n S c h e m e ( “ E S O S ” )( i ) S h a r e h o l d e r s o f t h e b a n k h a d a p p r o v e d E m p l o y e e S t o c k O p t i o n S c h e m e ( E S O S )t h r o u g h p o s t a l b a l l o t , t h e r e s u l t o f w h i c h w a s a n n o u n c e d o n D e c e m b e r 2 4 , 2 0 1 0 ,e n a b l i n g t h e B o a r d a n d / o r t h e “ C o m p e n s a t i o n C o m m i t t e e ” t o g r a n t s u c h n u m b e ro f e q u i t y s h a r e s , i n c l u d i n g o p t i o n s , o f t h e B a n k n o t e x c e e d i n g 5 % o f t h ea g g r e g a t e n u m b e r o f p a i d u p e q u i t y s h a r e s o f t h e B a n k , i n l i n e w i t h t h e g u i d e l i n e so f S E B I . P u r s u a n t t h e r e t o , t h e C o m p e n s a t i o n C o m m i t t e e o f t h e b a n k g r a n t e d t h ef o l l o w i n g o p t i o n s : N u m b e r o f O p t i o n s3 1 M a r c h , 2 0 1 6 3 1 M a r c h , 2 0 1 5O u t s t a n d i n g a t t h e b e g i n n i n g o f t h e y e a r 8 1 1 2 4 1 8 6 7 4 0 5 5 6 1 0S u r r e n d e r e d d u r i n g t h e y e a r ø øG r a n t e d d u r i n g t h e y e a r * 1 0 2 5 0 0 0 1 1 1 5 6 4 5 0F-261
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3 1 M a r c h , 2 0 1 6 3 1 M a r c h , 2 0 1 5E x e r c i s e d d u r i n g t h e y e a r ( I n c l u d e s1 2 , 9 0 , 0 0 9 ( P r e v i o u s Y e a r : 1 3 , 4 , 4 1 2 ) o na c c o u n t o f a c t u a l i s s u e o f B o n u s s h a r e s 5 6 3 6 4 5 0 2 6 8 0 8 2 4F o r f e i t e d / l a p s e d d u r i n g t h e y e a r 3 2 5 5 9 0 1 4 0 7 0 5 0O u t s t a n d i n g a t t h e e n d o f t h e y e a r 7 6 1 8 7 1 4 6 8 1 1 2 4 1 8 6O p t i o n s e x e r c i s a b l e 5 2 7 2 7 1 7 6 4 0 9 7 4 0 6 6* E S O S g r a n t e d o n 1 8 t h S e p t e m b e r , 2 0 1 5 a n d 1 6 t h N o v e m b e r 2 0 1 5 w i t h v e s t i n gp e r i o d o f 1 , 2 , 3 a n d 4 y e a r s . E x e r c i s e p e r i o d o f 5 y e a r s a n d e x e r c i s e p r i c e o f�6 0 . 3 5 / W p e r s h a r e a n d
�5 3 . 7 0 p e r s h a r e , r e s p e c t i v e l y .A s p e r S E B I g u i d e l i n e s t h e a c c o u n t i n g f o r E S O S c a n b e d o n e e i t h e r u n d e r t h e‘ I n t r i n s i c v a l u e b a s i s ’ o r ‘ F a i r v a l u e b a s i s ’ .T h e C o m p e n s a t i o n C o m m i t t e e i n t h e i r m e e t i n g d a t e d 1 0 t h M a y , 2 0 1 2 d e c i d e d t o a d o p t‘ I n t r i n s i c v a l u e m e t h o d ’ f o r a c c o u n t i n g o f E S O S , i n t e r m s o f t h e p o w e r v e s t e d o nt h e m a s p e r t h e r e s o l u t i o n o f E G M d a t e d 2 4 D e c e m b e r , 2 0 1 0T h e e x e r c i s e p r i c e o f t h e o p t i o n s g r a n t e d i s t h e s a m e a s t h e m a r k e t p r i c e o n t h e d a t ep r i o r t o g r a n t d a t e a n d h e n c e t h e r e i s n o i n t r i n s i c v a l u e f o r t h e o p t i o n s , w h i c h h a s t o b ea m o r t i z e d o v e r t h e v e s t i n g p e r i o d . I f “ F a i r V a l u e M e t h o d ” h a d b e e n a d o p t e d b a s e d o n“ B l a c k W S c h o l e s p r i c i n g m o d e l ” f o r p r i c i n g a n d a c c o u n t i n g o f o p t i o n s , n e t p r o f i t w o u l db e l o w e r b y
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��2 5 . 4 2 C r o r e )T h e m o d i f i e d b a s i c a n d d i l u t e d e a r n i n g s p e r s h a r e f o r t h e y e a r , h a d t h e c o m p a n yf o l l o w e d F a i r V a l u e M e t h o d o f a c c o u n t i n g f o r E S O S c o m p e n s a t i o n c o s t , w o u l d b e
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6 . 1 2 ) r e s p e c t i v e l y .( i i ) D i v i d e n d p a i d o n s h a r e s i s s u e d o n e x e r c i s e o f s t o c k o p t i o n sT h e B a n k m a y a l l o t s h a r e s b e t w e e n t h e B a l a n c e S h e e t d a t e a n d r e c o r d d a t e f o r t h ed e c l a r a t i o n o f d i v i d e n d p u r s u a n t t o t h e e x e r c i s e o f a n y e m p l o y e e s t o c k o p t i o n s . T h e s es h a r e s w i l l e l i g i b l e f o r f u l l d i v i d e n d f o r t h e y e a r e n d e d 3 1 M a r c h 2 0 1 6 , i f a p p r o v e d a tt h e e n s u i n g A n n u a l G e n e r a l M e e t i n g . D i v i d e n d r e l a t i n g t o t h e s e s h a r e s h a s n o t b e e nr e c o r d e d i n t h e c u r r e n t y e a r .( i i i ) D i v i d e n d ( I n c l u d i n g t a x / c e s s t h e r e o n ) a p p r o p r i a t i o n o f�
0 . 1 5 C r o r e r e p r e s e n td i v i d e n d f o r F i n a n c i a l Y e a r 2 0 1 4 W 1 5 o n t h e s h a r e s i s s u e d u n d e r E m p l o y e e S t o c kO p t i o n s S c h e m e b e f o r e t h e r e c o r d d a t e , a s p e r s h a r e h o l d e r s a p p r o v a l .1 . 4 S e g m e n t R e p o r t i n g ( A S 1 7 )A . B u s i n e s s S e g m e n t sB u s i n e s s o f t h e G r o u p i s d i v i d e d i n t o f o u r s e g m e n t s v i z . T r e a s u r y , C o r p o r a t e o rW h o l e s a l e B a n k i n g , R e t a i l B a n k i n g a n d o t h e r b a n k i n g o p e r a t i o n s . T h e p r i n c i p a la c t i v i t i e s o f t h e s e s e g m e n t s a n d i n c o m e a n d e x p e n s e s s t r u c t u r e a r e a s f o l l o w s :F-262
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T r e a s u r yT r e a s u r y o p e r a t i o n s i n c l u d e t r a d i n g a n d i n v e s t m e n t s i n G o v e r n m e n t a n d c o r p o r a t ed e b t i n s t r u m e n t s , e q u i t y a n d m u t u a l f u n d s , d e r i v a t i v e t r a d i n g a n d f o r e i g n e x c h a n g eo p e r a t i o n s o n p r o p r i e t a r y a c c o u n t a n d f o r c u s t o m e r s .T h e i n c o m e o f t h i s s e g m e n t p r i m a r i l y c o n s i s t s o f e a r n i n g s f r o m t h e i n v e s t m e n tp o r t f o l i o o f t h e b a n k , g a i n s a n d l o s s e s o n t r a d i n g o p e r a t i o n s . T h e p r i n c i p a l e x p e n s e o ft h e s e g m e n t c o n s i s t s o f i n t e r e s t e x p e n s e o n f u n d s b o r r o w e d / u t i l i z e d a n d o t h e ra l l o c a t e d o v e r h e a d s .C o r p o r a t e / W h o l e s a l e B a n k i n g :T h i s s e g m e n t p r o v i d e s l o a n s a n d o t h e r b a n k i n g s e r v i c e s t o C o r p o r a t e a n d o t h e r c l i e n t sw h e r e v a l u e o f i n d i v i d u a l e x p o s u r e t o t h e C l i e n t s e x c e e d s�
. 5 C r o r e a s d e f i n e d b yR B I . R e v e n u e o f t h i s s e g m e n t c o n s i s t s o f i n t e r e s t a n d f e e s e a r n e d o n l o a n s t o s u c hc u s t o m e r s a n d c h a r g e s a n d f e e s e a r n e d f r o m o t h e r b a n k i n g s e r v i c e s . E x p e n s e s o f t h i ss e g m e n t p r i m a r i l y c o n s i s t o f i n t e r e s t e x p e n s e o n f u n d s u t i l i z e d a n d a l l o c a t e do v e r h e a d sR e t a i l b a n k i n g :R e t a i l b a n k i n g c o n s t i t u t e s l e n d i n g a n d o t h e r b a n k i n g s e r v i c e s t o i n d i v i d u a l s / s m a l lb u s i n e s s c u s t o m e r s , o t h e r t h a n c o r p o r a t e / w h o l e s a l e b a n k i n g c u s t o m e r s , i d e n t i f i e d o nt h e b a s i s o f R B I g u i d e l i n e s .R e v e n u e o f t h i s s e g m e n t c o n s i s t s o f i n t e r e s t e a r n e d o n l o a n s m a d e t o s u c h c u s t o m e r sa n d c h a r g e s / f e e s c a r r i e d f r o m o t h e r b a n k i n g s e r v i c e s t o t h e m . T h e p r i n c i p a l e x p e n s e so f t h e s e g m e n t c o n s i s t o f i n t e r e s t e x p e n s e s o n f u n d s b o r r o w e d a n d o t h e r e x p e n s e s .O t h e r B a n k i n g O p e r a t i o n sT h i s s e g m e n t i n c l u d e s p a r a b a n k i n g a c t i v i t i e s l i k e t h i r d p a r t y p r o d u c t d i s t r i b u t i o n a n do t h e r b a n k i n g t r a n s a c t i o n s , n o t c o v e r e d u n d e r a n y o f t h e a b o v e s e g m e n t s . T h e i n c o m ef r o m s u c h s e r v i c e s a n d a s s o c i a t e d c o s t s a r e d i s c l o s e d i n t h i s s e g m e n t .T h e o p e r a t i o n s o f S u b s i d i a r y h a s b e e n c l a s s i f i e d u n d e r ‘ R e t a i l B a n k i n g ’ .T h e f o l l o w i n g t a b l e s e t s f o r t h , f o r t h e p e r i o d s i n d i c a t e d , t h e b u s i n e s s s e g m e n t r e s u l t sA s o n 3 1 M a r c h 2 0 1 6 (�
i n C r o r e )B u s i n e s s S e g m e n t s T r e a s u r y C o r p o r a t e / W h o l es a l e B a n k i n g R e t a i l B a n k i n g O t h e r B a n k i n gO p e r a t i o n s T o t a lR e v e n u e 2 2 8 1 . 9 3 2 3 6 0 . 9 4 3 8 8 7 . 9 2 7 8 . 5 6 8 6 0 9 . 3 5R e s u l t ( n e t o fp r o v i s i o n s ) 1 5 8 . 5 1 1 8 . 1 4 5 1 3 . 4 5 7 3 . 8 5 7 6 3 . 9 5U n a l l o c a t e de x p e n s e ( 2 5 . 4 4 )O p e r a t i n g p r o f i t( P B T ) 7 3 8 . 5 1I n c o m e t a x e s ( 2 5 0 . 6 1 )F-263
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B u s i n e s s S e g m e n t s T r e a s u r y C o r p o r a t e / W h o l es a l e B a n k i n g R e t a i l B a n k i n g O t h e r B a n k i n gO p e r a t i o n s T o t a lS h a r e o f P r o f i t o fa s s o c i a t e ( 1 . 4 8 )E x t r a o r d i n a r yp r o f i t / l o s s 7N e t P r o f i t 4 8 6 . 4 1O T H E RI N F O R M A T I O NS e g m e n t A s s e t s 3 0 4 0 3 . 9 8 2 4 8 3 6 . 6 7 3 3 8 3 5 . 2 2 2 6 . 5 6 8 9 1 0 2 . 4 3U n a l l o c a t e d a s s e t s 2 4 5 1 . 9 6T o t a l a s s e t s 9 1 5 5 4 . 3 9S e g m e n t l i a b i l i t i e s 2 7 8 9 4 . 7 6 2 3 3 0 8 . 9 6 3 1 8 4 7 . 5 0 7 8 3 0 5 1 . 2 2U n a l l o c a t e dl i a b i l i t i e s 4 3 9 . 0 4T o t a l l i a b i l i t i e s 8 3 4 9 0 . 2 6A s o n 3 1 M a r c h 2 0 1 5 : (� i n C r o r e )B u s i n e s s S e g m e n t s T r e a s u r y C o r p o r a t e / W h o l es a l e B a n k i n g R e t a i l B a n k i n g O t h e r B a n k i n gO p e r a t i o n s T o t a lR e v e n u e 2 2 5 0 . 2 7 2 3 4 9 . 9 3 3 6 4 6 . 5 1 1 1 9 . 6 0 8 3 6 6 . 3 1R e s u l t ( n e t o fp r o v i s i o n s ) 3 4 2 . 1 8 3 3 3 . 9 9 7 6 9 . 6 5 1 0 3 . 7 2 1 5 4 9 . 5 4U n a l l o c a t e de x p e n s e ( 1 9 . 9 7 )O p e r a t i n g p r o f i t( P B T ) 1 5 2 9 . 5 7I n c o m e t a x e s ( 5 1 7 . 4 8 )S h a r e o f P r o f i t o fa s s o c i a t e 4 5 . 7 2E x t r a o r d i n a r yp r o f i t / l o s s 7N e t P r o f i t 1 0 5 7 . 8 1O T H E RI N F O R M A T I O NS e g m e n t A s s e t s 2 8 8 1 5 . 2 3 2 0 5 2 0 . 0 8 3 1 1 0 6 . 7 0 2 4 . 3 2 8 0 4 6 6 . 3 3U n a l l o c a t e d a s s e t s 2 4 4 1 . 9 6T o t a l a s s e t s 8 2 9 0 8 . 2 9S e g m e n t l i a b i l i t i e s 2 6 2 4 5 . 2 0 1 9 1 8 1 . 6 3 2 9 1 7 9 . 3 7 7 7 4 6 0 6 . 2 0U n a l l o c a t e dl i a b i l i t i e s 6 0 1 . 8 2T o t a l l i a b i l i t i e s 7 5 2 0 8 . 0 2B . G e o g r a p h i c a l S e g m e n t I n f o r m a t i o nT h e G r o u p h a s r e p o r t e d i t s o p e r a t i o n s u n d e r t h e f o l l o w i n g g e o g r a p h i c a l s e g m e n t sa ) D o m e s t i c O p e r a t i o n s c o m p r i s e b r a n c h e s i n I n d i a a n d S u b s i d i a r y .b ) F o r e i g n o p e r a t i o n s c o m p r i s e B a n k i n g u n i t i n I n t e r n a t i o n a l F i n a n c i a l S e r v i c e sC e n t r e , a s p e r p a r a 2 . 2 o f A n n e x I o f R B I C i r c u l a r D B R . I B D . B C 1 4 5 7 0 /2 3 . 1 3 . 0 0 4 / 2 0 1 4 ® 1 5 d a t e d A p r i l 1 , 2 0 1 5 o f t h e B a n k .
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T h e f o l l o w i n g t a b l e s e t s f o r t h , f o r t h e p e r i o d s i n d i c a t e d , t h e g e o g r a p h i c a l s e g m e n tr e s u l t s :A s o n 3 1 M a r c h , 2 0 1 6 (�����C r o r e )P a r t i c u l a r s D o m e s t i cO p e r a t i o n s F o r e i g nO p e r a t i o n s T o t a lR e v e n u e 8 6 0 8 . 1 6 1 . 2 0 8 6 0 9 . 3 6A s s e t s 9 1 2 6 1 . 1 4 2 9 3 . 2 5 9 1 5 5 4 . 3 9C a p i t a l E x p e n d i t u r e 1 7 1 . 8 7 0 . 0 4 1 7 1 . 9 1A s o n 3 1 M a r c h , 2 0 1 5 (�����C r o r e )P a r t i c u l a r s D o m e s t i cO p e r a t i o n s F o r e i g nO p e r a t i o n s T o t a lR e v e n u e 8 3 6 6 . 3 2 � 8 3 6 6 . 3 2A s s e t s 8 2 9 0 8 . 2 9 � 8 2 9 0 8 . 2 9C a p i t a l E x p e n d i t u r e 1 1 7 . 1 8 � 1 1 7 . 1 8S e g m e n t i n f o r m a t i o n i s p r o v i d e d a s p e r t h e M I S a v a i l a b l e f o r i n t e r n a l r e p o r t i n g p u r p o s e s ,w h i c h i n c l u d e c e r t a i n e s t i m a t e s / a s s u m p t i o n s . T h e m e t h o d o l o g y a d o p t e d i n c o m p i l i n g a n dr e p o r t i n g t h e a b o v e i n f o r m a t i o n h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s .1 . 5 R e l a t e d P a r t y D i s c l o s u r e sa ) D e t a i l s o f R e l a t e d P a r t i e s :N a m e o f t h e P a r t y N a t u r e o f R e l a t i o n s h i pI D B I F e d e r a l L i f e I n s u r a n c e C o m p a n yL i m i t e d A s s o c i a t eS r i . S h y a m S r i n i v a s a n , M a n a g i n gD i r e c t o r & C E O K e y M a n a g e m e n t P e r s o n n e lS r i . A s h u t o s h K h a j u r i a , E x e c u t i v eD i r e c t o r & C F O ( F r o m 2 8 � 0 1 � 2 0 1 6 ) K e y M a n a g e m e n t P e r s o n n e lS r i A b r a h a m C h a c k o , E x e c u t i v eD i r e c t o r ( U p t o 3 0 � 0 4 � 2 0 1 5 ) K e y M a n a g e m e n t P e r s o n n e lF e d B a n k H o r m i s M e m o r i a l F o u n d a t i o n E n t i t y i n w h i c h K M P s c a n e x e r c i s es i g n i f i c a n t i n f l u e n c eb ) S i g n i f i c a n t t r a n s a c t i o n s w i t h r e l a t e d p a r t i e s : (
��C r o r e )P a r t i c u l a r s K e y M a n a g e m e n t P e r s o n n e l #3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5R e m u n e r a t i o nS r i . S h y a m S r i n i v a s a n 1 . 1 2 0 . 7 8S r i . A s h u t o s h K h a j u r i a 1 . 0 2 N o t A p p l i c a b l eS r i A b r a h a m C h a c k o 0 . 7 2 0 . 7 5D i v i d e n d P a i d 0 . 0 2 ** A s t e r i s k d e n o t e s f i g u r e s b e l o w��
1 L a k hD u r i n g t h e y e a r 2 0 1 5 � 1 6 � N i l ( P r e v i o u s Y e a r : 6 4 1 T h o u s a n d s ) n u m b e r o f S t o c kO p t i o n s u n d e r “ E S O S 2 0 1 0 ” S c h e m e w e r e g r a n t e d t o M a n a g i n g D i r e c t o r & C E O a n dE x e c u t i v e D i r e c t o r o f t h e B a n k .F-265
2 1
# T h e n o r m a l t r a n s a c t i o n s o f t h e B a n k w i t h t h e a b o v e p e r s o n s a s c o n s t i t u e n t s a r e n o tr e c k o n e d f o r t h e p u r p o s e o f d i s c l o s u r e .N o t e : I n a c c o r d a n c e w i t h R B I g u i d e l i n e s , d e t a i l s p e r t a i n i n g t o t h e r e l a t e d p a r t yt r a n s a c t i o n s , o t h e r t h a n t r a n s a c t i o n w i t h K M P s , h a v e n o t b e e n p r o v i d e d a s t h e r e i so n l y o n e r e l a t e d p a r t y i n e a c h o f t h e a b o v e c a t e g o r i e s .1 . 6 F i x e d A s s e t sa ) F i x e d A s s e t s a s p e r S c h e d u l e 1 0 i n c l u d e I n t a n g i b l e A s s e t s r e l a t i n g t o S o f t w a r e a n dS y s t e m D e v e l o p m e n t E x p e n d i t u r e w h i c h a r e a s f o l l o w s :�� i n C r o r e ) �P a r t i c u l a r s 3 1 M a r c h 2 0 1 6 3 1 M a r c h 2 0 1 5G r o s s B l o c kA t t h e b e g i n n i n g o f t h e y e a r 9 7 . 4 6 8 2 . 8 7A d d i t i o n s d u r i n g t h e y e a r 4 9 . 4 8 1 4 . 5 9D e d u c t i o n s d u r i n g t h e y e a r � �C l o s i n g B a l a n c e 1 4 6 . 9 4 9 7 . 4 6D e p r e c i a t i o n / A m o r t i s a t i o nA t t h e b e g i n n i n g o f t h e y e a r 7 4 . 7 8 5 5 . 7 0C h a r g e f o r t h e y e a r 2 2 . 3 6 1 9 . 0 8D e d u c t i o n s d u r i n g t h e y e a r ¥ ¥D e p r e c i a t i o n t o d a t e 9 7 . 1 4 7 4 . 7 8N e t B l o c k 4 9 . 8 0 2 2 . 6 8b ) R e v a l u a t i o n o f F i x e d A s s e t sD u r i n g t h e y e a r 1 9 9 5 « 9 6 , t h e a p p r e c i a t i o n o f
�9 . 6 5 C r o r e i n t h e v a l u e o f l a n d a n db u i l d i n g s c o n s e q u e n t u p o n r e v a l u a t i o n b y a p p r o v e d v a l u e r s w a s c r e d i t e d t oR e v a l u a t i o n R e s e r v e .1 . 7 D e f e r r e d T a x A s s e t s / L i a b i l i t yT h e m a j o r c o m p o n e n t s o f d e f e r r e d t a x a s s e t s a n d d e f e r r e d t a x l i a b i l i t i e s a r e a s u n d e r :(
�i n C r o r e )P a r t i c u l a r s 3 1 s t M a r c h2 0 1 6 3 1 s t M a r c h2 0 1 5D e f e r r e d T a x L i a b i l i t yT a x e f f e c t o f i t e m s c o n s t i t u t i n g d e f e r r e d t a x l i a b i l i t y :( i ) I n t e r e s t a c c r u e d b u t n o t d u e 1 4 5 . 6 6 1 4 2 . 1 6( i i ) D e p r e c i a t i o n o n I n v e s t m e n t s 1 9 . 5 2 1 0 6 . 4 3( i i i ) S p e c i a l R e s e r v e u n d e r S e c t i o n 3 6 ( 1 ) ( v i i i ) o ft h e I n c o m e T a x A c t , 1 9 6 1 9 1 . 3 5 8 0 . 2 8T o t a l ( A ) 2 5 6 . 5 3 3 2 8 . 8 7D e f e r r e d T a x A s s e tT a x e f f e c t o f i t e m s c o n s t i t u t i n g d e f e r r e d t a x a s s e t s :( i ) I n t e r e s t / p r e m i u m p a i d o n p u r c h a s e o f s e c u r i t i e s 9 0 . 2 7 7 8 . 1 0( i i ) P r o v i s i o n f o r S t a n d a r d A s s e t s 1 0 9 . 4 5 9 9 . 2 4( i i i ) D e p r e c i a t i o n o n F i x e d A s s e t s 3 . 5 0 3 . 7 2
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P a r t i c u l a r s 3 1 s t M a r c h2 0 1 6 3 1 s t M a r c h2 0 1 5( i v ) O t h e r s 1 1 1 . 4 5 1 0 9 . 1 1T o t a l ( B ) 3 1 4 . 6 7 2 9 0 . 1 7D e f e r r e d t a x l i a b i l i t y / ( A s s e t ) ( A � B ) ( 5 8 . 1 4 ) 3 8 . 7 0L e s s : D e f e r r e d t a x o n v a l u e o f a s s e t s d e p r e c i a t e do n e x p i r y o f u s e f u l l i f e a s o n 1 A p r i l , 2 0 1 4 . 1 . 2 1N e t D e f e r r e d t a x l i a b i l i t y / ( A s s e t ) ( 5 8 . 1 4 ) 3 7 . 4 9N e t D e f e r r e d A s s e t o f�
9 5 . 6 3 C r o r e [ P r e v i o u s Y e a r��
2 4 5 . 5 0 C r o r e ] c r e d i t e d t ot h e C o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t .1 . 8 A . D r a w D o w n f r o m R e s e r v e sT h e B a n k h a s d r a w n d o w n�
8 . 2 1 C r o r e f r o m I n v e s t m e n t R e s e r v e A c c o u n t i na c c o r d a n c e w i t h t h e p r o v i s i o n s o f R B I g u i d e l i n e s o n ‘ P r u d e n t i a l N o r m s f o rC l a s s i f i c a t i o n , V a l u a t i o n a n d O p e r a t i o n o f I n v e s t m e n t P o r t f o l i o b y B a n k s . T h e r eh a s b e e n n o d r a w d o w n f r o m R e s e r v e s d u r i n g t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 5 .B . D e t a i l s o f P e n a l t y i m p o s e d b y R B IP a r t i c u l a r s 2 0 1 5 � 1 6 2 0 1 4 � 1 5P e n a l t y f o r c e r t a i n o p e r a t i n g d e f i c i e n c i e s 0 . 1 6 0 . 5 5D a t e s o f P a y m e n t V a r i o u s d a t e s V a r i o u s d a t e sN o t e : P e n a l t y w a s i m p o s e d b y R B I( a ) a s p e r t h e C e n t r a l o f f i c e m a s t e r c i r c u l a r D C M ( F N V D ) N o . 7 7 6 / 1 6 . 0 1 . 1 5 /2 0 1 5 5 1 6 d a t e d A u g u s t 2 6 , 2 0 1 5 a n d( b ) F a k e I n d i a n C u r r e n c y N o t e ( F I C N ) d e t e c t e d i n t h e s o i l e d n o t e r e m i t t a n c e .1 . 9 E m p l o y e e B e n e f i t sa ) D e f i n e d C o n t r i b u t i o n P l a nT h e B a n kP r o v i d e n t F u n dE m p l o y e e s , w h o h a v e n o t o p t e d f o r p e n s i o n p l a n a r e e l i g i b l e t o g e t b e n e f i t s f r o mp r o v i d e n t f u n d , w h i c h i s a d e f i n e d c o n t r i b u t i o n p l a n . A g g r e g a t e c o n t r i b u t i o n sa l o n g w i t h i n t e r e s t t h e r e o n a r e p a i d o n r e t i r e m e n t , d e a t h , i n c a p a c i t a t i o n o rt e r m i n a t i o n o f e m p l o y m e n t . B o t h t h e e m p l o y e e a n d t h e B a n k c o n t r i b u t e as p e c i f i e d p e r c e n t a g e o f t h e s a l a r y t o t h e F e d e r a l B a n k E m p l o y e e s ’ P r o v i d e n tF u n d . T h e B a n k h a s n o o b l i g a t i o n o t h e r t h a n t h e m o n t h l yF-267
2 3
N e w P e n s i o n S c h e m eA s p e r t h e i n d u s t r y l e v e l s e t t l e m e n t d a t e d 2 7 t h A p r i l , 2 0 1 0 , e m p l o y e e s w h oj o i n e d t h e s e r v i c e s o f t h e B a n k o n o r a f t e r 1 s t A p r i l , 2 0 1 0 a r e n o t e l i g i b l e f o rt h e e x i s t i n g p e n s i o n s c h e m e w h e r e a s t h e y w i l l b e e l i g i b l e f o r D e f i n e dC o n t r i b u t o r y P e n s i o n S c h e m e ( D C P S ) i n l i n e w i t h t h e N e w P e n s i o n S c h e m ei n t r o d u c e d f o r e m p l o y e e s o f C e n t r a l G o v e r n m e n t . E m p l o y e e s h a l l c o n t r i b u t e1 0 % o f t h e i r B a s i c P a y a n d D e a r n e s s A l l o w a n c e t o w a r d s D C P S a n d t h e B a n kw i l l a l s o m a k e a m a t c h i n g c o n t r i b u t i o n . T h e r e i s n o s e p a r a t e P r o v i d e n t F u n df o r e m p l o y e e s j o i n i n g o n o r a f t e r 1 s t A p r i l , 2 0 1 0 .T h e S u b s i d i a r yT h e c o m p a n y h a s d e f i n e d c o n t r i b u t i o n p l a n s f o r e m p l o y e e s c o m p r i s i n g o fP r o v i d e n t F u n d a n d E m p l o y e e S t a t e I n s u r a n c e . T h e c o n t r i b u t i o n s p a i d / p a y a b l et o t h e s e p l a n s d u r i n g t h e y e a r a r e c h a r g e d t o P r o f i t a n d L o s s A c c o u n t f o r t h ey e a r .T h e G r o u p M a k e s P r o v i d e n t F u n d , E m p l o y e e S t a t e I n s u r a n c e S c h e m eC o n t r i b u t i o n s a n d D e f i n e d C o n t r i b u t o r y P e n s i o n S c h e m e f o r Q u a l i f y i n gE m p l o y e e s . U n d e r t h e s c h e m e s , t h e G r o u p i s r e q u i r e d t o c o n t r i b u t e a s p e c i f i e dp e r c e n t a g e o f t h e p a y r o l l c o s t s t o f u n d t h e b e n e f i t s . T h e G r o u p r e c o g n i s e d�1 . 7 3 C r o r e ( P r e v i o u s y e a r :
���. 2 4 C r o r e ) f o r p r o v i d e n t f u n d c o n t r i b u t i o n s ,
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0 . 1 8 C r o r e ) f o r E m p l o y e e S t a t e I n s u r a n c e S c h e m eC o n t r i b u t i o n s a n d��
1 8 . 9 5 C r o r e ( P r e v i o u s y e a r :��
1 3 . 3 4 C r o r e ) f o r D C P S i nt h e c o n s o l i d a t e d P r o f i t a n d L o s s A c c o u n t . T h e C o n t r i b u t i o n s p a y a b l e t o t h e s ep l a n s b y t h e g r o u p a r e a t t h e r a t e s s p e c i f i e d i n t h e R u l e s o f t h e S c h e m e s .b ) D e f i n e d b e n e f i t p l a nT h e G r o u p o f f e r s t h e f o l l o w i n g e m p l o y e e b e n e f i t s c h e m e s t o i t s e m p l o y e e s :i . G r a t u i t yi i . S u p e r a n n u a t i o n / P e n s i o nG r a t u i t yT h e B a n kT h e B a n k p r o v i d e s f o r G r a t u i t y , a d e f i n e d b e n e f i t r e t i r e m e n t p l a n ( t h e“ G r a t u i t y P l a n ” ) c o v e r i n g t h e e l i g i b l e e m p l o y e e s . T h e G r a t u i t y P l a n p r o v i d e sa l u m p s u m p a y m e n t t o v e s t e d e m p l o y e e s o n r e t i r e m e n t , d e a t h , i n c a p a c i t a t i o no r t e r m i n a t i o n o f e m p l o y m e n t , o f a n a m o u n t b a s e d o n t h e r e s p e c t i v ee m p l o y e e s ’ s a l a r y a n d t h e t e n u r e o f e m p l o y m e n t . V e s t i n g o c c u r s u p o nc o m p l e t i o n o f f i v e y e a r s o f s e r v i c e a s p e r P a y m e n t o f G r a t u i t y A c t , 1 9 7 2 a n di t s a m e n d m e n t w i t h e f f e c t f r o m 2 4 t h M a y , 2 0 1 0 o r a s p e r t h e p r o v i s i o n s o f t h eF e d e r a l B a n k E m p l o y e e s ’ G r a t u i t y T r u s t F u n d R u l e s / B i Ù p a r t i t e A w a r dp r o v i s i o n s . L i a b i l i t i e s w i t h r e g a r d t o t h e G r a t u i t y P l a n a r e d e t e r m i n e d b yA c t u a r i a l v a l u a t i o n a s o n t h e B a l a n c e S h e e t d a t e , b a s e d u p o n w h i c h , t h e B a n kc o n t r i b u t e s a l l t h e a s c e r t a i n e d l i a b i l i t i e s t o t h e F e d e r a l B a n k E m p l o y e e s ’G r a t u i t y T r u s t F u n d ( t h e “ T r u s t ” ) . T r u s t e e s a d m i n i s t e r c o n t r i b u t i o n s m a d e t ot h e T r u s t a n d c o n t r i b u t i o n s a r e i n v e s t e d i n s p e c i f i c i n v e s t m e n t s a s p e r m i t t e d b yl a w .F-268
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T h e S u b s i d i a r yT h e n e t p r e s e n t v a l u e o f t h e o b l i g a t i o n f o r u n ú f u n d e d g r a t u i t y b e n e f i t s , w h i c hi s a d e f i n e d b e n e f i t p l a n , a s d e t e r m i n e d o n i n d e p e n d e n t a c t u a r i a l v a l u a t i o n ,c o n d u c t e d a n n u a l l y u s i n g p r o j e c t e d u n i t c r e d i t m e t h o d , a s a d j u s t e d f o ru n r e c o g n i z e d p a s t s e r v i c e s c o s t , i f a n y , i s r e c o g n i s e d i n t h e a c c o u n t s . A c t u a r i a lg a i n s a n d l o s s e s a r e r e c o g n i s e d i n f u l l i n t h e C o n s o l i d a t e d P r o f i t a n d L o s sA c c o u n t f o r t h e p e r i o d i n w h i c h t h e y o c c u r .S u p e r a n n u a t i o n / P e n s i o nT h e B a n kT h e B a n k p r o v i d e s f o r m o n t h l y p e n s i o n , a d e f i n e d b e n e f i t r e t i r e m e n t p l a n ( t h e“ p e n s i o n p l a n ” ) c o v e r i n g e l i g i b l e e m p l o y e e s . T h e p e n s i o n p l a n p r o v i d e s am o n t h l y p e n s i o n a f t e r r e t i r e m e n t o f t h e e m p l o y e e s t i l l d e a t h a n d t o t h e f a m i l ya f t e r t h e d e a t h o f t h e p e n s i o n e r . T h e m o n t h l y p e n s i o n i s b a s e d o n t h er e s p e c t i v e e m p l o y e e s ’ s a l a r y a n d t h e t e n u r e o f e m p l o y m e n t . V e s t i n g o c c u r su p o n c o m p l e t i o n o f t e n y e a r s o f s e r v i c e . T h e B a n k p a y s t h e m o n t h l y p e n s i o nb y p u r c h a s i n g a n n u i t i e s f r o m L i f e I n s u r a n c e C o r p o r a t i o n o f I n d i a ( L I C ) .L i a b i l i t i e s w i t h r e g a r d t o t h e p e n s i o n p l a n a r e d e t e r m i n e d b y a c t u a r i a lv a l u a t i o n a s o n t h e B a l a n c e S h e e t d a t e , b a s e d u p o n w h i c h , t h e B a n kc o n t r i b u t e s a l l t h e a s c e r t a i n e d l i a b i l i t i e s t o t h e F e d e r a l B a n k ( E m p l o y e e s ’ )P e n s i o n F u n d ( t h e “ T r u s t ” ) . T r u s t e e s a d m i n i s t e r c o n t r i b u t i o n s m a d e t o t h eT r u s t a n d c o n t r i b u t i o n s a r e i n v e s t e d i n s p e c i f i c i n v e s t m e n t s a s p e r m i t t e d b yl a w .T h e f o l l o w i n g t a b l e a s f u r n i s h e d b y A c t u a r y s e t s o u t t h e f u n d e d s t a t u s o fg r a t u i t y / p e n s i o n p l a n a n d t h e a m o u n t r e c o g n i z e d i n t h e G r o u p ’ s f i n a n c i a ls t a t e m e n t s a s a t M a r c h 3 1 , 2 0 1 6 .i ) C h a n g e i n b e n e f i t o b l i g a t i o n s (�
i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a nF B L F F S L F B L2 0 1 5 I 1 6 2 0 1 4 O 1 5 2 0 1 5 O 1 6 2 0 1 4 O 1 5 2 0 1 5 O 1 6 2 0 1 4 O 1 5P r o j e c t e d b e n e f i to b l i g a t i o n , b e g i n n i n go f t h e y e a r 2 0 9 . 3 4 2 0 1 . 2 6 0 . 0 8 0 . 1 5 5 8 7 . 4 8 5 3 1 . 7 8S e r v i c e C o s t 1 3 . 8 2 1 3 . 5 9 0 . 1 8 0 . 0 5 5 7 . 7 0 5 6 . 5 1I n t e r e s t c o s t 1 5 . 2 9 1 5 . 0 3 * 0 . 0 1 4 0 . 1 7 3 6 . 9 0A c t u a r i a l ( g a i n ) / l o s s 4 4 . 0 7 6 . 3 3 ( 0 . 0 6 ) ( 0 . 0 8 ) 1 2 2 . 9 9 1 0 3 . 4 2B e n e f i t s p a i d ( 3 6 . 4 3 ) ( 2 6 . 8 7 ) ( 0 . 0 1 ) ( 0 . 0 5 ) ( 1 7 0 . 8 4 ) ( 1 4 1 . 1 3 )P r o j e c t e d b e n e f i to b l i g a t i o n , e n d o f t h ey e a r 2 4 6 . 0 9 2 0 9 . 3 4 0 . 1 9 0 . 0 8 6 3 7 . 5 0 5 8 7 . 4 8A s t e r i s k d e n o t e f i g u r e b e l o w��1 L a k h
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i i ) C h a n g e i n p l a n a s s e t s (� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a nF B L F F S L F B L2 0 1 5 Ç 1 6 2 0 1 4 Ç 1 5 2 0 1 5 Ç 1 6 2 0 1 4 Ç 1 5 2 0 1 5 Ç 1 6 2 0 1 4 Ç 1 5P l a n a s s e t s a tb e g i n n i n g o f t h e y e a ra t f a i r v a l u e 2 2 3 . 5 2 2 3 0 . 8 3 á á 5 4 4 . 4 0 4 1 6 . 2 5E x p e c t e d r e t u r n o np l a n a s s e t s 1 8 . 5 5 2 0 . 5 2 á á 4 7 . 5 8 3 6 . 9 6A c t u a r i a l g a i n / ( l o s s ) ( 0 . 6 5 ) ( 0 . 9 6 ) á á ( 0 . 5 8 ) 3 . 5 6E m p l o y e r ’ sC o n t r i b u t i o n s 2 0 . 6 7 ó á á 1 5 7 . 7 1 2 2 8 . 7 6B e n e f i t s p a i d ( 3 6 . 4 3 ) ( 2 6 . 8 7 ) á á ( 1 7 0 . 8 4 ) ( 1 4 1 . 1 3 )P l a n a s s e t s a t e n d o ft h e y e a r , a t f a i r v a l u e 2 2 5 . 6 6 2 2 3 . 5 2 á á 5 7 8 . 2 7 5 4 4 . 4 0i i i ) R e c o n c i l i a t i o n o f p r e s e n t v a l u e o f t h e o b l i g a t i o n a n d t h e f a i r v a l u e o f t h e p l a na s s e t s (� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a nF B L F F S L F B L2 0 1 5 � 1 6 2 0 1 4 � 1 5 2 0 1 5 � 1 6 2 0 1 4 � 1 5 2 0 1 5 � 1 6 2 0 1 4 � 1 5F a i r v a l u e o f p l a na s s e t s a t t h e e n d o f t h ey e a r 2 2 5 . 6 6 2 2 3 . 5 2 9 9 5 7 8 . 2 7 5 4 4 . 4 0P r e s e n t v a l u e o f t h ed e f i n e d b e n e f i to b l i g a t i o n s a t t h e e n do f t h e y e a r 2 4 6 . 0 9 2 0 9 . 3 4 0 . 1 9 0 . 0 8 6 3 7 . 5 0 5 8 7 . 4 8L i a b i l i t y / ( A s s e t )r e c o g n i z e d i n t h eC o n s o l i d a t e d B a l a n c eS h e e t 2 0 . 4 3 ( 1 4 . 1 8 ) 0 . 1 9 0 . 0 8 5 9 . 2 3 4 3 . 0 8i v ) G r a t u i t y / p e n s i o n c o s t f o r t h e y e a r e n d e d 3 1 M a r c h , 2 0 1 6 (� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a nF B L F F S L F B L2 0 1 5 � 1 6 2 0 1 4 � 1 5 2 0 1 5 � 1 6 2 0 1 4 � 1 5 2 0 1 5 � 1 6 2 0 1 4 � 1 5S e r v i c e c o s t 1 3 . 8 2 1 3 . 5 9 0 . 1 8 0 . 0 5 5 7 . 7 0 5 6 . 5 1I n t e r e s t c o s t 1 5 . 2 9 1 5 . 0 3 * 0 . 0 1 4 0 . 1 7 3 6 . 9 0E x p e c t e d r e t u r n o np l a n a s s e t s ( 1 8 . 5 5 ) ( 2 0 . 5 2 ) 9 9 ( 4 7 . 5 8 ) ( 3 6 . 9 6 )A c t u a r i a l ( g a i n ) / l o s s 4 4 . 7 2 7 . 2 9 ( 0 . 0 6 ) ( 0 . 0 8 ) 1 2 3 . 5 7 9 9 . 8 6E m p l o y e e C o s t 5 5 . 2 8 1 5 . 3 9 0 . 1 2 ( 0 . 0 2 ) 1 7 3 . 8 6 1 5 6 . 3 1A m o r t i s a t i o n C o s t 9 9 9 9 9 3 3 . 6 8N e t C o s t D e b i t t oC o n s o l i d a t e d P r o f i ta n d L o s s A c c o u n t 5 5 . 2 8 1 5 . 3 9 0 . 1 2 ( 0 . 0 2 ) 1 7 3 . 8 6 1 8 9 . 9 9A c t u a l r e t u r n o n p l a na s s e t s 1 7 . 9 0 1 9 . 5 6 9 9 4 7 . 0 0 4 0 . 5 2A s t e r i s k d e n o t e f i g u r e b e l o w
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v ) I n v e s t m e n t d e t a i l s o f p l a n A s s e t s (� i n C r o r e )P a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a nF B L F F S L F B L2 0 1 5 ½ 1 6 2 0 1 4 ½ 1 5 2 0 1 5 ½ 1 6 2 0 1 4 ½ 1 5 2 0 1 5 ½ 1 6 2 0 1 4 ½ 1 5C e n t r a l a n d s t a t eG o v e r n m e n t b o n d s 7 . 1 3 4 0 . 1 3 N A N A 7 . 1 3 1 2 9 . 7 2O t h e r d e b t s e c u r i t i e s 1 6 . 3 5 2 7 . 1 5 N A N A 1 6 . 3 5 7 9 . 0 5B a l a n c e i n S a v i n gb a n k a c c o u n t w i t h t h eB a n k 0 . 6 6 2 . 1 4 N A N A 0 . 6 6 5 6 . 8 3N e t c u r r e n t a s s e t s 0 . 8 2 1 . 8 9 N A N A 0 . 8 2 5 . 8 8B a l a n c e w i t h L I C # 2 0 0 . 7 0 1 5 2 . 2 1 N A N A 2 0 0 . 7 0 2 7 2 . 9 2T o t a l 2 2 5 . 6 6 2 2 3 . 5 2 N A N A 2 2 5 . 6 6 5 4 4 . 4 0N A – N o t A p p l i c a b l e .# I n t h e a b s e n c e o f d e t a i l e d i n f o r m a t i o n r e g a r d i n g p l a n a s s e t s w h i c h i s f u n d e d w i t hL i f e I n s u r a n c e C o r p o r a t i o n o f I n d i a , t h e c o m p o s i t i o n o f e a c h m a j o r c a t e g o r y o f p l a na s s e t s , t h e p e r c e n t a g e o r a m o u n t f o r e a c h c a t e g o r y t o t h e f a i r v a l u e o f p l a n a s s e t s h a sn o t b e e n d i s c l o s e d .v i ) E x p e r i e n c e a d j u s t m e n t si ) G r a t u i t y P l a na ) F B L (
� i n C r o r e )P a r t i c u l a r s 2 0 1 5 � 1 6 2 0 1 4 � 1 5 2 0 1 3 � 1 4 2 0 1 2 � 1 3 2 0 1 1 � 1 2D e f i n e d B e n e f i t O b l i g a t i o n s 2 4 6 . 0 9 2 0 9 . 3 4 2 0 1 . 2 6 2 4 0 . 1 3 2 2 5 . 2 5P l a n A s s e t s 2 2 5 . 6 6 2 2 3 . 5 2 2 3 0 . 8 3 2 2 1 . 6 7 1 9 8 . 8 7S u r p l u s / [ D e f i c i t ] ( 2 0 . 4 3 ) 1 4 . 1 8 2 9 . 5 7 ( 1 8 . 4 6 ) ( 2 6 . 3 8 )E x p e r i e n c e a d j u s t m e n t s o n P l a nL i a b i l i t i e s [ G a i n / ( L o s s ) ] ( 4 6 . 0 0 ) ( 6 . 3 1 ) ( 5 . 7 4 ) 1 7 . 0 2 0 . 0 3E x p e r i e n c e A d j u s t m e n t s o n P l a nA s s e t s [ G a i n / ( L o s s ) ] ( 1 . 9 7 ) 1 . 1 9 1 . 7 6 2 2 . 3 3 0 . 6 4b ) F F S L (� i n C r o r e )P a r t i c u l a r s 2 0 1 5 � 1 6 2 0 1 4 � 1 5 2 0 1 3 � 1 4 2 0 1 2 � 1 3 2 0 1 1 � 1 2D e f i n e d B e n e f i to b l i g a t i o n s 0 . 1 9 0 . 0 8 0 . 1 5 0 . 0 8 0 . 0 4P l a n A s s e t s N i l N i l N i l N i l N i lS u r p l u s / [ D e f i c i t ] ( 0 . 1 9 ) ( 0 . 0 8 ) ( 0 . 1 5 ) ( 0 . 0 8 ) ( 0 . 0 4 )E x p e r i e n c e a d j u s t m e n t s o nP l a n L i a b i l i t i e s [ G a i n /( L o s s ) ] 1 . 0 0 ( 0 . 0 3 ) ( 0 . 0 2 ) 0 . 0 4 ( 0 . 0 2 )E x p e r i e n c e a d j u s t m e n t s o nP l a n A s s e t s [ G a i n / ( L o s s ) ] N o tA p p l i c a b l e N o tA p p l i c a b l e N o tA p p l i c a b l e N o tA p p l i c a b l e N o tA p p l i c a b l ei i ) P e n s i o n P l a n
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F B L (� i n C r o r e )P a r t i c u l a r s 2 0 1 5 E 1 6 2 0 1 4 E 1 5 2 0 1 3 E 1 4 2 0 1 2 E 1 3 2 0 1 1 E 1 2D e f i n e d B e n e f i t O b l i g a t i o n s 6 3 7 . 5 0 5 8 7 . 4 8 5 3 1 . 7 8 5 8 4 . 1 2 5 9 8 . 7 6P l a n A s s e t s 5 7 8 . 2 7 5 4 4 . 4 0 4 1 6 . 2 5 4 4 4 . 1 7 4 2 2 . 6 2S u r p l u s / [ D e f i c i t ] ( 5 9 . 2 3 ) ( 4 3 . 0 8 ) ( 1 1 5 . 5 3 ) ( 1 3 9 . 9 5 ) ( 1 7 6 . 1 4 )E x p e r i e n c e a d j u s t m e n t s o n P l a nL i a b i l i t i e s [ G a i n / ( L o s s ) ] ( 1 4 2 . 4 9 ) ( 7 9 . 7 5 ) ( 8 . 1 8 ) ( 1 . 2 2 ) 4 5 0 . 1 1E x p e r i e n c e a d j u s t m e n t s o n P l a nA s s e t s [ G a i n / ( L o s s ) ] 0 . 1 8 2 . 1 9 3 . 0 3 1 . 3 8 0 . 9 6v i i ) A s s u m p t i o n sP a r t i c u l a r s G r a t u i t y P l a n P e n s i o n P l a nF B L F F S L F B L2 0 1 5 E 1 6 2 0 1 4 E 1 5 2 0 1 5 E 1 6 2 0 1 4 E 1 5 2 0 1 5 E 1 6 2 0 1 4 E 1 5D i s c o u n t r a t e 8 . 0 0 % 8 . 0 0 % 7 . 8 3 % 7 . 7 4 % 8 . 0 0 % 8 . 0 0 %A n n u i t y r a t ep e r R u p e e ¢ ¢ £ £ 1 2 6 . 1 8 2 9 7 1 2 6 . 1 8 2 9 7S a l a r ye s c a l a t i o n r a t e 5 . 0 0 % 5 . 1 0 % 7 . 7 5 % 6 . 0 0 % 5 . 0 0 % 5 . 1 0 %E s t i m a t e d r a t eo f r e t u r n o np l a n a s s e t s 8 . 3 0 % 8 . 8 9 % £ £ 8 . 7 4 % 8 . 8 8 %A t t r i t i o n R a t e 3 . 0 0 % 3 . 0 0 % N o tA v a i l a b l e N o tA v a i l a b l e 3 . 0 0 % 3 . 0 0 %M o r t a l i t yT a b l e I A L M2 0 0 6 ¢ 0 8U l t i m a t e I A L M2 0 0 6 ¢ 0 8U l t i m a t e I A L M2 0 0 6 ¢ 0 8U l t i m a t e I A L M2 0 0 6 ¢ 0 8U l t i m a t e I A L M2 0 0 6 ¢ 0 8U l t i m a t e I A L M2 0 0 6 ¢ 0 8U l t i m a t eT h e e s t i m a t e s o f f u t u r e s a l a r y i n c r e a s e s c o n s i d e r e d i n a c t u a r i a l v a l u a t i o n t a k e a c c o u n to f i n f l a t i o n , s e n i o r i t y , p r o m o t i o n a n d o t h e r r e l e v a n t f a c t o r s .T h e e x p e c t e d r a t e o f r e t u r n o n p l a n a s s e t s i s b a s e d o n t h e a v e r a g e l o n g ¢ t e r m r a t e o fr e t u r n e x p e c t e d o n i n v e s t m e n t s o f t h e F u n d d u r i n g t h e e s t i m a t e d t e r m o f t h eo b l i g a t i o n s .A s t h e c o n t r i b u t i o n e x p e c t e d t o b e p a i d t o t h e d e f i n e d b e n e f i t p l a n s d u r i n g t h e a n n u a lp e r i o d b e g i n n i n g a f t e r t h e b a l a n c e s h e e t d a t e i s b a s e d o n v a r i o u s i n t e r n a l / e x t e r n a lf a c t o r s , a b e s t e s t i m a t e o f t h e c o n t r i b u t i o n i s n o t d e t e r m i n a b l e .( c ) L e a v e E n c a s h m e n t / S i c k L e a v e / L e a v e T r a v e l C o n c e s s i o n / U n a v a i l e d C a s u a lL e a v eT h e B a n kT h e e m p l o y e e s o f t h e B a n k a r e e n t i t l e d t o c o m p e n s a t e d a b s e n c e . T h e e m p l o y e e s c a nc a r r y f o r w a r d a p o r t i o n o f t h e u n u t i l i s e d a c c r u e d c o m p e n s a t e d a b s e n c e a n d u t i l i s e i t i nf u t u r e p e r i o d s o r r e c e i v e c a s h c o m p e n s a t i o n a t r e t i r e m e n t o r t e r m i n a t i o n o fe m p l o y m e n t f o r t h e u n u t i l i z e d a c c r u e d c o m p e n s a t e d a b s e n c e f o r a m a x i m u m o f 2 4 0d a y s . T h e B a n k r e c o r d s a n o b l i g a t i o n f o r c o m p e n s a t e d a b s e n c e s i n t h e p e r i o d i n
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w h i c h t h e e m p l o y e e r e n d e r s t h e s e r v i c e s t h a t i n c r e a s e t h i s e n t i t l e m e n t . T h e B a n km e a s u r e s t h e e x p e c t e d c o s t o f c o m p e n s a t e d a b s e n c e a s t h e a d d i t i o n a l a m o u n t t h a t t h eB a n k e x p e c t s t o p a y a s a r e s u l t o f t h e u n u s e d e n t i t l e m e n t t h a t h a s a c c u m u l a t e d a t t h eb a l a n c e s h e e t d a t e b a s e d o n a c t u a r i a l v a l u a t i o n s .A s u m o f � 2 . 7 2 C r o r e ( P r e v i o u s y e a r : � 8 . 7 3 C r o r e ) h a s b e e n p r o v i d e d t o w a r d s t h ea b o v e l i a b i l i t i e s i n a c c o r d a n c e w i t h A S 1 5 b a s e d o n a c t u a r i a l v a l u a t i o n .T h e S u b s i d i a r yT h e c o m p a n y h a s a s c h e m e f o r c o m p e n s a t e d a b s e n c e s f o r e m p l o y e e s , t h e l i a b i l i t y o fw h i c h i s d e t e r m i n e d o n t h e b a s i s o f a n i n d e p e n d e n t a c t u a r i a l v a l u a t i o n c a r r i e d o u t a tt h e e n d o f t h e y e a r , u s i n g t h e p r o j e c t e d u n i t c r e d i t m e t h o d . A c t u a r i a l g a i n s a n d l o s s e sa r e r e c o g n i s e d i n f u l l i n t h e P r o f i t a n d L o s s A c c o u n t f o r t h e y e a r i n w h i c h t h e y o c c u r .T h e A c t u r i a l l i a b i l i t y o f c o m p e n s a t e d a b s e n c e s o f a c c u m u l a t e d p r i v i l e g e , s i c k , c a s u a ll e a v e s a n d l e a v e t r a v e l c o n c e s s i o n o f t h e e m p l o y e e s o f t h e G r o u p i s g i v e n b e l o w :( � i n C r o r e )A s a t 3 1 M a r c h , 2 0 1 6 A s a t 3 1 M a r c h , 2 0 1 5F B L F F S L F B L F F S LP r i v i l e g e l e a v e 1 3 1 . 1 5 0 . 1 9 1 2 0 . 8 9 0 . 2 3S i c k l e a v e 2 0 . 9 7 5 3 0 . 9 3 5L e a v e T r a v e l C o n c e s s i o n 1 3 . 1 8 5 1 1 . 0 3 5C a s u a l L e a v e 1 . 0 9 5 0 . 8 2 5T o t a l a c t u a r i a l l i a b i l i t y 1 6 6 . 3 9 0 . 1 9 1 6 3 . 6 7 0 . 2 3A s s u m p t i o n sD i s c o u n t r a t e 8 . 0 0 % 7 . 8 3 % 8 . 0 0 % 7 . 7 4 %S a l a r y e s c a l a t i o n r a t e 5 . 0 0 % 7 . 7 5 % 5 . 1 0 % 6 . 0 0 %A t t r i t i o n R a t e 3 . 0 0 % N o tA v a i l a b l e 3 . 0 0 % N o tA v a i l a b l eT h e d i s c o u n t r a t e i s b a s e d o n t h e p r e v a i l i n g m a r k e t y i e l d s o f G o v e r n m e n t o f I n d i as e c u r i t i e s a s a t t h e B a l a n c e S h e e t d a t e f o r t h e e s t i m a t e d t e r m o f t h e o b l i g a t i o n s .T h e e s t i m a t e o f f u t u r e s a l a r y i n c r e a s e s c o n s i d e r e d , t a k e s i n t o a c c o u n t t h e i n f l a t i o n ,s e n i o r i t y , p r o m o t i o n , i n c r e m e n t s a n d o t h e r r e l e v a n t f a c t o r s .T h e a b o v e i n f o r m a t i o n i s a s c e r t i f i e d b y t h e a c t u a r y a n d r e l i e d u p o n b y t h e a u d i t o r s .1 . 1 0 P r o v i s i o n s a n d C o n t i n g e n c i e sa ) M o v e m e n t i n p r o v i s i o n f o r f r a u d s i n c l u d e d u n d e r o t h e r l i a b i l i t i e s : (�
i n C r o r e )3 1 M a r c h , 2 0 1 6 3 1 M a r c h , 2 0 1 5B a l a n c e a t t h e b e g i n n i n g o f t h e y e a r 6 . 6 4 5 . 3 2A d d i t i o n s d u r i n g t h e y e a r 0 . 4 2 2 . 3 0R e d u c t i o n s o n a c c o u n t o f p a y m e n t sd u r i n g t h e y e a r 5 5R e d u c t i o n s o n a c c o u n t o f r e v e r s a l sd u r i n g t h e y e a r 1 . 2 4 0 . 9 8B a l a n c e a t t h e e n d o f t h e y e a r 5 . 8 2 6 . 6 4F-273
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i n C r o r e )3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5B a l a n c e a t t h e b e g i n n i n g o f t h e y e a r 2 . 2 5 1 . 0 0P r o v i s i o n m a d e d u r i n g t h e y e a r 0 . 7 7 2 . 7 6R e d u c t i o n s d u r i n g t h e y e a r 1 . 1 0 1 . 5 1B a l a n c e a t t h e e n d o f t h e y e a r * 1 . 9 2 2 . 2 5* T h e c l o s i n g p r o v i s i o n i s b a s e d o n t h e a c t u a r i a l v a l u a t i o n o f a c c u m u l a t e dd e b i t c a r d r e w a r d p o i n t s . T h i s a m o u n t w i l l b e u t i l i s e d t o w a r d s r e d e m p t i o no f t h e d e b i t c a r d r e w a r d p o i n t s .c ) M o v e m e n t i n p r o v i s i o n f o r o t h e r c o n t i n g e n c i e s : (��
i n C r o r e )3 1 M a r c h ,2 0 1 6 3 1 M a r c h ,2 0 1 5B a l a n c e a t t h e b e g i n n i n g o f t h e y e a r 1 4 5 . 5 4 1 4 2 . 0 5P r o v i s i o n m a d e d u r i n g t h e y e a r 2 9 . 2 3 1 7 . 4 7R e d u c t i o n s d u r i n g t h e y e a r 1 3 4 . 7 4 1 3 . 9 8B a l a n c e a t t h e e n d o f t h e y e a r 4 0 . 0 3 1 4 5 . 5 4d ) M o v e m e n t i n f l o a t i n g p r o v i s i o n : (�
i n C r o r e )P a r t i c u l a r s S t a n d a r d A s s e t sP r o v i s i o n s N P A P r o v i s i o n2 0 1 5 Â 1 6 2 0 1 4 Â 1 5 2 0 1 5 Â 1 6 2 0 1 4 Â 1 5O p e n i n g b a l a n c e 1 2 . 7 5 2 5 . 5 0 1 3 8 . 1 8 1 7 9 . 5 2P r o v i s i o n m a d e d u r i n gt h e y e a r Ä Ä Ä ÄD r a w d o w n f r o mp r o v i s i o n * 1 2 . 7 5 1 2 . 7 5 6 9 . 0 0 4 1 . 3 4C l o s i n g b a l a n c e 1 2 . 7 5 1 2 . 7 5 6 9 . 1 8 1 3 8 . 1 8* F l o a t i n g p r o v i s i o n h a s b e e n u t i l i s e d i n a c c o r d a n c e w i t h R B I c i r c u l a r sD B O D . N o . B P . 9 5 / 2 1 . 0 4 . 0 4 8 / 2 0 1 3 Ä 1 4 d a t e d F e b r u a r y 7 , 2 0 1 4 a n dD B R . N o . B P . B C . 7 9 / 2 1 . 0 4 . 0 4 8 / 2 0 1 4 Ä 1 5 d a t e d M a r c h 3 0 , 2 0 1 5 .1 . 1 1 L o s s o n S a l e o f N o n P e r f o r m i n g A s s e t sD u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 , t h e B a n k h a d a s s i g n e d c e r t a i n N o n p e r f o r m i n gf i n a n c i a l a s s e t s t o A s s e t R e c o n s t r u c t i o n C o m p a n i e s . I n t e r m s o f R B I M a s t e r C i r c u l a rD B R . N o . B P . B C . 2 / 2 1 . 0 4 . 0 4 8 / 2 0 1 5 Ä 1 6 o n P r u d e n t i a l n o r m s o n I n c o m e R e c o g n i t i o n ,A s s e t C l a s s i f i c a t i o n a n d P r o v i s i o n i n g p e r t a i n i n g t o A d v a n c e s d a t e d J u l y 1 , 2 0 1 5 , t h es h o r t f a l l a r r i v e d a t b y d e d u c t i n g s a l e c o n s i d e r a t i o n f r o m t h e N e t B o o k v a l u e o f t h ef i n a n c i a l a s s e t s , a m o u n t i n g t o�
1 2 2 . 1 4 C r o r e , i s a m o r t i s e d o v e r a p e r i o d o f t w o y e a r s .A c c o r d i n g l y , t h e b a n k h a s c h a r g e d t o t h e p r o f i t a n d l o s s a c c o u n t a n a m o u n t o f�
3 5 . 4 1C r o r e d u r i n g t h e y e a r e n d e d M a r c h 3 1 , 2 0 1 6 ( P r e v i o u s Y e a r : N i l ) a n d t h e b a l a n c e o f��8 6 . 7 3 C r o r e w i l l b e a m o r t i s e d o v e r t h e n e x t f o u r q u a r t e r s .
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1 . 1 2 D e s c r i p t i o n o f c o n t i n g e n t l i a b i l i t i e s :a ) C l a i m s a g a i n s t t h e G r o u p n o t a c k n o w l e d g e d a s d e b t sT h e s e r e p r e s e n t c l a i m s f i l e d a g a i n s t t h e g r o u p i n t h e n o r m a l c o u r s e o f b u s i n e s sr e l a t i n g t o v a r i o u s l e g a l c a s e s c u r r e n t l y i n p r o g r e s s . T h e s e a l s o i n c l u d e d e m a n d sr a i s e d b y i n c o m e t a x a n d o t h e r s t a t u t o r y a u t h o r i t i e s a n d d i s p u t e d b y t h e g r o u p .b ) L i a b i l i t y o n a c c o u n t o f f o r w a r d e x c h a n g e a n d d e r i v a t i v e c o n t r a c t sT h e B a n k e n t e r s i n t o F o r w a r d e x c h a n g e c o n t r a c t s o n i t s o w n a c c o u n t a n d o nb e h a l f o f i t s c u s t o m e r s . F o r w a r d e x c h a n g e c o n t r a c t s a r e c o m m i t m e n t s t o b u y o rs e l l f o r e i g n c u r r e n c y a t a f u t u r e d a t e a t t h e c o n t r a c t e d r a t e .c ) G u a r a n t e e s g i v e n o n b e h a l f o f c o n s t i t u e n t sA s a p a r t o f i t s b a n k i n g a c t i v i t i e s , t h e B a n k i s s u e s g u a r a n t e e s o n b e h a l f o f i t sc u s t o m e r s t o e n h a n c e t h e i r c r e d i t s t a n d i n g . G u a r a n t e e s r e p r e s e n t i r r e v o c a b l ea s s u r a n c e s t h a t t h e B a n k w i l l m a k e p a y m e n t s i n t h e e v e n t o f t h e c u s t o m e r f a i l i n gt o f u l f i l l i t s f i n a n c i a l o r p e r f o r m a n c e o b l i g a t i o n s .d ) A c c e p t a n c e s , e n d o r s e m e n t s a n d o t h e r o b l i g a t i o n sT h e s e i n c l u d e d o c u m e n t a r y c r e d i t i s s u e d b y t h e B a n k o n b e h a l f o f i t s c u s t o m e r sa n d b i l l s d r a w n b y t h e B a n k ' s c u s t o m e r s t h a t a r e a c c e p t e d o r e n d o r s e d b y t h eB a n k .e ) O t h e r i t e m s f o r w h i c h b a n k i s c o n t i n g e n t l y l i a b l eI n c l u d e s C a p i t a l c o m m i t m e n t s a n d a m o u n t t r a n s f e r r e d t o R B I u n d e r t h e D e p o s i t o rE d u c a t i o n a n d A w a r e n e s s F u n d ( D E A F )R e f e r s c h e d u l e 1 2 f o r a m o u n t s r e l a t i n g t o c o n t i n g e n t l i a b i l i t y1 . 1 3 P r o v i s i o n f o r L o n g T e r m c o n t r a c t sT h e G r o u p h a s a p r o c e s s w h e r e b y p e r i o d i c a l l y a l l l o n g t e r m c o n t r a c t s ( i n c l u d i n gd e r i v a t i v e c o n t r a c t s ) a r e a s s e s s e d f o r m a t e r i a l f o r e s e e a b l e l o s s e s . A t t h e y e a r e n d ,t h e b a n k h a s r e v i e w e d a n d r e c o r d e d a d e q u a t e p r o v i s i o n a s r e q u i r e d u n d e r a n y L a w /A c c o u n t i n g S t a n d a r d s f o r m a t e r i a l f o r e s e e a b l e l o s s e s o n s u c h l o n g t e r m c o n t r a c t s( i n c l u d i n g d e r i v a t i v e c o n t r a c t s ) i n t h e b o o k s o f a c c o u n t a n d d i s c l o s e d t h e s a m eu n d e r t h e r e l e v a n t n o t e s i n t h e f i n a n c i a l s t a t e m e n t s .1 . 1 4 S m a l l a n d M i c r o I n d u s t r i e sU n d e r t h e M i c r o , S m a l l a n d M e d i u m E n t e r p r i s e s D e v e l o p m e n t A c t , 2 0 0 6 w h i c hc a m e i n t o f o r c e f r o m 2 n d O c t o b e r , 2 0 0 6 , c e r t a i n d i s c l o s u r e s a r e r e q u i r e d t o b e m a d er e l a t i n g t o M i c r o , S m a l l a n d M e d i u m e n t e r p r i s e s . T h e r e h a v e b e e n n o r e p o r t e d c a s e so f d e l a y s i n p a y m e n t s t o m i c r o a n d s m a l l e n t e r p r i s e s o r o f i n t e r e s t p a y m e n t s d u e t oF-275
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d e l a y s i n s u c h p a y m e n t s . T h e a b o v e i s b a s e d o n t h e i n f o r m a t i o n a v a i l a b l e w i t h t h eB a n k w h i c h h a s b e e n r e l i e d u p o n b y t h e a u d i t o r s .1 . 1 5 A d d i t i o n a l i n f o r m a t i o n o n n e t a s s e t s a n d s h a r e o f p r o f i t s o f t h e C o m p a n y , i t ss u b s i d i a r i e s , a s s o c i a t e s a n d j o i n t v e n t u r e s a s c o n s i d e r e d i n t h e C o n s o l i d a t e dF i n a n c i a l S t a t e m e n t s3 1 s t M a r c h , 2 0 1 6N a m e o f t h e e n t i t y N e t A s s e t s i . e . t o t a l a s s e t sm i n u s t o t a l l i a b i l i t i e s S h a r e o f p r o f i t o r l o s sA s % o fC o n s o l i d a t e dN e t A s s e t s A m o u n t����
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5 M ] d` c c _ 8 6 % R N R F H S H J c a S J ) H R O G & e a b f V M L O ] P X F X M L ` O G F X P ] F a a J N J G F 7 M L H L O M H ] ` J H J F Y F L J S VQ P R S P H L J J N J G F F m F Y Q J M N L T R N Y J G F H Q Q ] M O H J M N L N T J G F Q R N I M S M N L S N T J G F U O O N P L J M L W ` J H L X H R Xd U ` f a * V ; Y Q ] N h F F l F L F T M J S V W R H L J F X \ h J G F ^ F S F R I F l H L K N T k L X M H H L X Y H X F H Q Q ] M O H \ ] F J NJ G F l H L K I M X F ] F J J F R L N _ n l < n 5 N _ l 9 _ l % _ a * 6 $ 8 = & a _ e b _ e a 6 = & e a e > a a X H J F X U Q R M ] 6 V & e a a _< P R < Q M L M N L M S L N J Y N X M T M F X M L R F S Q F O J N T J G M S Y H J J F R _
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` X C E G G A ? H F F > B I A CG S A T U V K W E < A D E ? A B 1; J H W ? G B C A @ H = A C A < > K > E ? B G < A \ G B X C E G G A ? H F F > C A C A @ H K ? E B A < E ? G S A I C H F E G > ? < D H B B> @ @ H W ? G > ? < E ? @ D W < A < W ? < A C a b G S A C V ? @ H J A c 1[ H C C A B G C W @ G W C A < ` C A B @ S A < W D A < > B B A G B Y I C H = E B E H ? E B J > < A E ? > @ @ H C < > ? @ A X E G S G S AK W E < A D E ? A B E B B W A < \ ] G S A T U V Y X S E @ S C A ^ W E C A B G S A < E J E ? W G E H ? E ? G S A F > E C = > D W A H F G S A> B B A G B G H \ A I C H = E < A < > G G S A G E J A H F C A B G C W @ G W C E ? K 1; K A ? A C > D I C H = E B E H ? F H C B G > ? < > C < > < = > ? @ A B E B J > < A d e 1 f g h E ? @ > B A H F < E C A @ G> < = > ? @ A B G H > K C E @ W D G W C > D > ? < M i j B A @ G H C B Y 2 h E ? C A B I A @ G H F > < = > ? @ A B @ D > B B E F E A < > B@ H J J A C @ E > D C A > D A B G > G A Y k 1 g e G H g h E ? C A B I A @ G H F @ A C G > E ? @ D > B B H F C A B G C W @ G W C A < > B B A G B> ? < e 1 0 e h F H C > D D H G S A C > < = > ? @ A B > B I C A B @ C E \ A < \ ] G S A T U V 1l m n o p q 7 r s t s u : vV ? > < < E G E H ? G H G S A I C H = E B E H ? B C A ^ W E C A < G H \ A S A D < > @ @ H C < E ? K G H G S A > B B A G @ D > B B E F E @ > G E H ?B G > G W B Y I C H = E B E H ? B > C A S A D < F H C E ? < E = E < W > D @ H W ? G C ] A w I H B W C A L H G S A C G S > ? F H C S H J A@ H W ? G C ] N 1 x S A @ H W ? G C E A B > C A @ > G A K H C E B A < E ? G H B A = A ? C E B y @ > G A K H C E A B ? > J A D ]E ? B E K ? E F E @ > ? G Y D H X Y J H < A C > G A Y S E K S Y = A C ] S E K S Y C A B G C E @ G A < > ? < H F F O @ C A < E G > B I A C j w I H C Gz C A < E G { W > C > ? G A A z H C I H C > G E H ? H F V ? < E > _ E J E G A < L a j z { z c N K W E < A D E ? A B > ? < I C H = E B E H ?E B J > < A H ? A w I H B W C A B A w @ A A < E ? K 2 | e < > ] B H ? > K C > < A < B @ > D A C > ? K E ? K F C H J e 1 f g h G H2 e e h 1 [ H C A w I H B W C A B X E G S @ H ? G C > @ G W > D J > G W C E G ] H F D A B B G S > ? 2 | e < > ] B Y f g h H F G S A? H C J > D I C H = E B E H ? C A ^ W E C A J A ? G E B S A D < 1 V F G S A @ H W ? G C ] A w I H B W C A L ? A G N H F G S A U > ? y E ?C A B I A @ G H F A > @ S @ H W ? G C ] < H A B ? H G A w @ A A < 2 h H F G S A G H G > D F W ? < A < > B B A G B Y ? H I C H = E B E H ?E B J > E ? G > E ? A < H ? B W @ S @ H W ? G C ] A w I H B W C A 1F-297
! " # $ % & ' ( ) & $ ( '* + , ' ' - . - / , ( - 0 $1 2 3 4 4 5 6 7 3 2 4 8 9 : ; < ; < 8 = > 1 ? @ : 7 8 A : 2 8 B C : 2 D 8 B ; E 8 2 ; B 3 6 8 4 3 ; 8 ? 5 6 : B 8 7 3 ; ; < 8 ; : E 8 5 FG @ 6 4 < 3 B 8 3 B H· I 8 A 7 F 5 6 J 6 3 7 : 2 ? K I L J M · ! D 3 : A 3 " A 8 F 5 6 # 3 A 8 K ! L # M 3 2 7· I 8 A 7 ; 5 $ 3 ; @ 6 : ; % K I J $ M1 2 D 8 B ; E 8 2 ; B 9 < : 4 < 3 6 8 G 6 : E 3 6 : A % < 8 A 7 F 5 6 B 3 A 8 9 : ; < : 2 & ' 7 3 % B F 6 5 E ; < 8 7 3 ; 8 5 FG @ 6 4 < 3 B 8 3 6 8 4 A 3 B B : F : 8 7 3 B ( I 8 A 7 F 5 6 J 6 3 7 : 2 ? ) * ! B G 8 6 = > 1 ? @ : 7 8 A : 2 8 B C I L J# 8 4 @ 6 : ; : 8 B 9 < : 4 < 6 8 E 3 : 2 @ 2 B 5 A 7 F 5 6 3 G 8 6 : 5 7 5 F & ' 7 3 % B 3 6 8 4 A 3 B B : F : 8 7 3 B ! L ## 8 4 @ 6 : ; : 8 B 5 2 ; < 3 ; 7 3 ; 8 * 1 2 D 8 B ; E 8 2 ; B 9 < : 4 < ; < 8 " 3 2 + : 2 ; 8 2 7 B ; 5 < 5 A 7 ; : A A E 3 ; @ 6 : ; % 3 6 84 A 3 B B : F : 8 7 3 B ( I 8 A 7 ; 5 $ 3 ; @ 6 : ; % ) *1 2 D 8 B ; E 8 2 ; B 9 < : 4 < 3 6 8 2 5 ; 4 A 3 B B : F : 8 7 : 2 8 : ; < 8 6 5 F ; < 8 3 " 5 D 8 ; 9 5 4 3 ; 8 ? 5 6 : 8 B 3 6 84 A 3 B B : F : 8 7 3 B ( ! D 3 : A 3 " A 8 F 5 6 # 3 A 8 ) *I 5 9 8 D 8 6 F 5 6 ; < 8 G @ 6 G 5 B 8 5 F 7 : B 4 A 5 B @ 6 8 : 2 > 3 A 3 2 4 8 # < 8 8 ; C : 2 D 8 B ; E 8 2 ; B : 2 1 2 7 : 3 3 6 84 A 3 B B : F : 8 7 @ 2 7 8 6 B : , 4 3 ; 8 ? 5 6 : 8 B C D : - * . 5 D 8 6 2 E 8 2 ; # 8 4 @ 6 : ; : 8 B C / ; < 8 6 ! G G 6 5 D 8 7# 8 4 @ 6 : ; : 8 B C # < 3 6 8 B C 0 8 " 8 2 ; @ 6 8 B 3 2 7 > 5 2 7 B C 1 2 D 8 B ; E 8 2 ; B : 2 # @ " B : 7 : 3 6 : 8 B 1 2 5 : 2 ;3 8 2 ; @ 6 8 B 3 2 7 5 ; < 8 6 B *4 5 6 7 8 9 : 5 ; 9 8 : < = 5 > ? > : 8 @ : ? A : : 7 B 6 ? : C ; 5 > : 8J 6 3 2 B F 8 6 5 F B 8 4 @ 6 : ; : 8 B " 8 ; 9 8 8 2 4 3 ; 8 ? 5 6 : 8 B : B 7 5 2 8 3 ; ; < 8 A 5 9 8 6 5 F ; < 8 3 4 D @ : B : ; : 5 2 4 5 B ;1 " 5 5 + D 3 A @ 8 1 E 3 6 + 8 ; D 3 A @ 8 5 2 ; < 8 7 3 ; 8 5 F ; < 8 ; 6 3 2 B F 8 6 3 2 7 ; < 8 7 8 G 6 8 4 : 3 ; : 5 2 C : F 3 2 % C5 2 B @ 4 < ; 6 3 2 B F 8 6 : B F @ A A % G 6 5 D : 7 8 7 F 5 6 C 3 B G 8 6 = > 1 ? @ : 7 8 A : 2 8 B *E / F G - ' - ( - 0 $ * 0 ' (·
J 6 3 2 B 3 4 ; : 5 2 4 5 B ; B : 2 4 A @ 7 : 2 ? " 6 5 + 8 6 3 ? 8 3 2 7 4 5 E E : B B : 5 2 G 8 6 ; 3 : 2 : 2 ? ; 5 3 4 D @ : B : ; : 5 25 F : 2 D 8 B ; E 8 2 ; B 3 6 8 4 < 3 6 ? 8 7 ; 5 ; < 8 H 6 5 F : ; 3 2 7 I 5 B B ! 4 4 5 @ 2 ; *·
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R I A O U A P D E W O A P H I J D J A O J R P B H C A C J R G R K E W D N A D N I A A P G D A X E I J A O E W J R Y A O D V A R D O] N A I A J R D A I A O D ^ U I J R P J U G B J O J R G I I A G I O [ W E I V E I A D N G R ` a C G K O [ J R P E V A D N A I A E R J OR E D I A P b E R A C G R C G U U I E U I J G D A U I E Y J O J E R W E I D N A C A U I A P J G D J E R J R D N A Y G B H A E W D N AJ R Y A O D V A R D O J O V G C A [ G O U A I U I H C A R D J G B R E I V O G U U B J P G Z B A D E R E R c U A I W E I V J R XJ R Y A O D V A R D O S d A Z A R D H I A O ^ e E R C O J R D N A R G D H I A E W G C Y G R P A O G I A O H Z f A P D A C D EH O H G B U I H C A R D J G B R E I V O G U U B J P G Z B A D E G C Y G R P A O SA S M I A G O H I K e J B B O G R C g A I D J W J P G D A E W d A U E O J D O Z A J R X C J O P E H R D A C J R O D I H V A R D O [ G I AY G B H A C G D P G I I K J R X P E O D SW S h R J D O E W F H D H G B i H R C O G I A Y G B H A C G D D N A B G D A O D I A U H I P N G O A U I J P A ^ R A D G O O A D Y G B H AC A P B G I A C Z K F H D H G B i H R C SX S F G I b A D Y G B H A E W J R Y A O D V A R D O ] N A I A P H I I A R D Q H E D G D J E R O G I A R E D G Y G J B G Z B A [ J OC A D A I V J R A C G O U A I D N A R E I V O U I A O P I J Z A C Z K D N A \ e j G O H R C A I k·
J R P G O A E W H R Q H E D A C Z E R C O [ C A Z A R D H I A O G R C U I A W A I A R P A O N G I A O ] N A I AJ R D A I A O D ^ C J Y J C A R C J O I A P A J Y A C I A X H B G I B K l J S A S R E D E Y A I C H A Z A K E R C ` a C G K O m [ D N AV G I b A D U I J P A J O C A I J Y A C Z G O A C E R D N A n J A B C D E F G D H I J D K l n M F m W E Io E Y A I R V A R D p A P H I J D J A O G O U H Z B J O N A C Z K i J _ A C j R P E V A F E R A K F G I b A D G R Cd A I J Y G D J Y A O T O O E P J G D J E R E W j R C J G l i j F F d T m ^ q I J V G I K d A G B A I O T O O E P J G D J E RE W j R C J G l q d T j m G R C O H J D G Z B K V G I b A C H U W E I P I A C J D I J O b G U U B J P G Z B A D E D N AP I A C J D I G D J R X E W D N A J R O D I H V A R D S M N A V G D I J _ W E I P I A C J D I J O b V G I b c H U W E I A G P NP G D A X E I J A O G R C P I A C J D I G D J R X O G B E R X ] J D N I A O J C H G B V G D H I J D K J O O H A C Z Ki j F F d T G I A G C E U D A C W E I D N J O U H I U E O A r·
J R P G O A E W Z E R C O G R C C A Z A R D H I A O l J R P B H C J R X q G O O M N I E H X N g A I D J W J P G D A O E Iq M g O m ] N A I A J R D A I A O D J O R E D I A P A J Y A C I A X H B G I B K l J S A S E Y A I C H A Z A K E R C ` aC G K O m [ D N A Y G B H G D J E R J O J R G P P E I C G R P A ] J D N U I H C A R D J G B R E I V O W E I U I E Y J O J E R J R XG O U I A O P I J Z A C Z K \ e j rF-299
· ! " # $ % & ' ( ) & * + , ) - ' # . ' . " ) ) / $ ! " , $ ( $ # , / & ( ) / , $ ( 0 ( # 1 ( 2 1 , ) - ' ) $ ' & ' ( ) & ( ) / , $ ! " , $ 3 , / $ ' & $ , . 4 5 . ' ( / 6 & * ( ) 0 ( 1 " 3 ( $ 2 ) ( 4 7 " 8 0 ( 1 " 9 - # $ ' , " $ . , / & # 3 ) # / 6 ) 0 ( 1 " ( $ # , / ) & ) 0 & * # + ( / % : - ' # . ' # & ( & . ) $ ( # / 3 + ) , ;$ ' . , ; 8 ( / % < & 1 ( $ & $ = ( 1 ( / . > ' $ ? @ / . ( & $ ' 1 ( $ & $ = ( 1 ( / . > ' $ # & / , $( 0 ( # 1 ( 2 1 * $ ' & ' ( ) & ( ) 0 ( 1 " 3 ( $ ` A B 7 8 ) . , ; 8 ( / % C· D / # $ & , + E / $ " ) F ( 8 # $ ( 1 G " / 3 & 9 E F G : ' 1 3 " / 3 ) H G > . ( $ 6 , ) % - ' ) . " ) ) / $ ! " , $ ( $ # , / & ( ) / , $ ( 0 ( # 1 ( 2 1 ( ) ; ( ) 4 3 $ , ; ( ) 4 $ 2 ( & 3 , / $ ' I $H & & $ E ( 1 " 9 I H E : & ' , - / 2 % E F G ( & 8 ) $ ' 1 ( $ & $ ( " 3 # $ 3 + # / ( / . # ( 1 & , + $ ' + " / 3 ? @ / . ( & $ ' ( " 3 # $ 3 + # / ( / . # ( 1 & ( ) / , $ ( 0 ( # 1 ( 2 1 + , ) ( 8 ) # , 3 2 % , / 3 A J; , / $ ' & * $ ' # / 0 & $ ; / $ & ( ) 0 ( 1 " 3 ( $ ` A B 7 8 ) E F G ? @ / 0 & $ ; / $ # / " / ! " , $ 3E F G ( + $ ) K L M N H " 6 " & $ * K O O P ( ) . ( $ 6 , ) # & 3 " / 3 ) Q R S . ( $ 6 , ) % + , ) $ ' # / # $ # ( 1 8 ) # , 3 , + $ ' ) % ( ) & ( / 3 0 ( 1 " 3 ( $ . , & $ ( & 8 ) T = @ 6 " # 3 1 # / & C·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` a b c a d a e f Z Y W ] W X g ] h a \ Z e a ] Z \i j k l m n o p q r q i n s t u i t n v w i s m i x m l o p q y i m l z { q p o s | p q m p } } p t } i m l ~ q l n l � � | s p t s }s t � m � n l n s t | � l { q p o s | i t n � p } } i � � p � t | jx j k l m n | p � i | � q s | � z { q p o s | p q m p } } p t } i m l ~ q l n l � � | s p t p o s t w l } | � l t | } s } s t � m � n l ns t | � l { q p o s | i t n � p } } i � � p � t | j � t � i } l p o � q p o s | } � | � l } i � l s } i � � q p � q s i | l n | p� i � s | i m � l } l q w l i o | l q i n � � } | � l t | } o p q | i � i t n | q i t } o l q | p } | i | � | p q � q l } l q w l s ti � � p q n i t � l � s | � � � � u � s n l m s t l } j� � � � � � � � � � � � � � � � � � � � � � � � � � � � �� t q l } � l � | p o � l � p | q i t } i � | s p t } � t n l q � s ! � s n s | � v n � � } | � l t | " i � s m s | � # � v " $ � s | �� � � � � p t s l } x p q q p � l n o q p � � � � i q l � q l n s | l n | p s t w l } | � l t | i � � p � t | i t n q l w l q } l n p t� i | � q s | � p o | � l | q i t } i � | s p t j � p } | } | � l q l p t i q l i � � p � t | l n o p q i } s t | l q l } | l � � l t } l j � tq l } � l � | p o � l w l q } l � l � p | q i t } i � | s p t } � t n l q � v " � � p t s l } � i s n | p � � � i q l n l x s | l n | ps t w l } | � l t | i � � p � t | i t n q l w l q } l n p t � i | � q s | � p o | � l | q i t } i � | s p t j � l w l t � l } | � l q l p ti q l i � � p � t | l n i } s t | l q l } | s t � p � l j
F-300
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` H 7 H = > = X ? @ 4 < 7 6 @ 4 2 6 N I ` X 2 J C 6 H A H 7 6 F F ; < A 6 7 F 4 M H @ 3 @ 3 4 @ 6 N ? 6 M 9 R M 3 H F 3 O H T 4 9: > @ > < 4 4 F ; 7 ; = H F V 4 7 4 : H @ 9 H 7 @ 3 4 : ; < = ; : 6 A a > 9 @ = 4 7 @ @ ; : > @ > < 4 H 7 F ; = 4 @ 6 N ? H 6 V H ? H @ D R H 9F ; 7 9 H A 4 < 4 A 6 9 6 7 6 9 9 4 @ H : @ 3 4 < 4 H 9 F ; 7 T H 7 F H 7 O 4 T H A 4 7 F 4 @ 3 6 @ @ 3 4 Z ; = C 6 7 D M H ? ? C 6 D7 ; < = 6 ? H 7 F ; = 4 @ 6 N ! X F F ; < A H 7 O ? D R ` X 2 H 9 < 4 F ; O 7 H 9 4 A 6 9 6 7 6 9 9 4 @ H 7 @ 3 4 5 6 ? 6 7 F 4E 3 4 4 @ M 3 4 7 H @ H 9 3 H O 3 ? D C < ; V 6 V ? 4 @ 3 6 @ : > @ > < 4 4 F ; 7 ; = H F V 4 7 4 : H @ 6 9 9 ; F H 6 @ 4 A M H @ 3 H @ M H ? ?: ? ; M @ ; @ 3 4 Z ; = C 6 7 D !b 4 : 4 < < 4 A @ 6 N H 9 < 4 F ; O 7 H 9 4 A ; 7 @ H = H 7 O A H : : 4 < 4 7 F 4 9 R V 4 H 7 O @ 3 4 A H : : 4 < 4 7 F 4 9 V 4 @ M 4 4 7 @ 3 4@ 6 N 6 V ? 4 H 7 F ; = 4 6 7 A @ 3 4 6 F F ; > 7 @ H 7 O H 7 F ; = 4 @ 3 6 @ ; < H O H 7 6 @ 4 H 7 ; 7 4 C 4 < H ; A 6 7 A 6 < 4F 6 C 6 V ? 4 ; : < 4 T 4 < 9 6 ? H 7 ; 7 4 ; < = ; < 4 9 > V 9 4 U > 4 7 @ C 4 < H ; A 9 ! b 4 : 4 < < 4 A @ 6 N H 9 = 4 6 9 > < 4 A> 9 H 7 O @ 3 4 @ 6 N < 6 @ 4 9 6 7 A @ 3 4 @ 6 N ? 6 M 9 4 7 6 F @ 4 A ; < 9 > V 9 @ 6 7 @ H T 4 ? D 4 7 6 F @ 4 A 6 9 6 @ @ 3 4< 4 C ; < @ H 7 O A 6 @ 4 ! b 4 : 4 < < 4 A @ 6 N ? H 6 V H ? H @ H 4 9 6 < 4 < 4 F ; O 7 H 9 4 A : ; < 6 ? ? @ H = H 7 O A H : : 4 < 4 7 F 4 9 !b 4 : 4 < < 4 A @ 6 N 6 9 9 4 @ 9 6 < 4 < 4 F ; O 7 H 9 4 A : ; < @ H = H 7 O A H : : 4 < 4 7 F 4 9 ; : H @ 4 = 9 ; @ 3 4 < @ 3 6 7> 7 6 V 9 ; < V 4 A A 4 C < 4 F H 6 @ H ; 7 6 7 A F 6 < < D : ; < M 6 < A ? ; 9 9 4 9 ; 7 ? D @ ; @ 3 4 4 N @ 4 7 @ @ 3 6 @ < 4 6 9 ; 7 6 V ? 4F 4 < @ 6 H 7 @ D 4 N H 9 @ 9 @ 3 6 @ 9 > : : H F H 4 7 @ : > @ > < 4 @ 6 N 6 V ? 4 H 7 F ; = 4 M H ? ? V 4 6 T 6 H ? 6 V ? 4 6 O 6 H 7 9 @ M 3 H F 3@ 3 4 9 4 F 6 7 V 4 < 4 6 ? H 9 4 A ! c ; M 4 T 4 < R H : @ 3 4 < 4 6 < 4 > 7 6 V 9 ; < V 4 A A 4 C < 4 F H 6 @ H ; 7 6 7 A F 6 < < D: ; < M 6 < A ; : ? ; 9 9 4 9 6 7 A H @ 4 = 9 < 4 ? 6 @ H 7 O @ ; F 6 C H @ 6 ? ? ; 9 9 4 9 R A 4 : 4 < < 4 A @ 6 N 6 9 9 4 @ 9 6 < 4< 4 F ; O 7 H 9 4 A ; 7 ? D H : @ 3 4 < 4 H 9 T H < @ > 6 ? F 4 < @ 6 H 7 @ D 9 > C C ; < @ 4 A V D F ; 7 T H 7 F H 7 O 4 T H A 4 7 F 4 @ 3 6 @@ 3 4 < 4 M H ? ? V 4 9 > : : H F H 4 7 @ : > @ > < 4 @ 6 N 6 V ? 4 H 7 F ; = 4 6 T 6 H ? 6 V ? 4 @ ; < 4 6 ? H 9 4 @ 3 4 6 9 9 4 @ 9 ! b 4 : 4 < < 4 A@ 6 N 6 9 9 4 @ 9 6 7 A ? H 6 V H ? H @ H 4 9 6 < 4 ; : : 9 4 @ H : 9 > F 3 H @ 4 = 9 < 4 ? 6 @ 4 @ ; @ 6 N 4 9 ; 7 H 7 F ; = 4 ? 4 T H 4 A V D@ 3 4 9 6 = 4 O ; T 4 < 7 H 7 O @ 6 N ? 6 M 9 6 7 A @ 3 4 5 6 7 8 3 6 9 6 ? 4 O 6 ? ? D 4 7 : ; < F 4 6 V ? 4 < H O 3 @ : ; < 9 > F 39 4 @ ; : : ! b 4 : 4 < < 4 A @ 6 N 6 9 9 4 @ 9 6 < 4 < 4 T H 4 M 4 A 6 @ 4 6 F 3 V 6 ? 6 7 F 4 9 3 4 4 @ A 6 @ 4 : ; < @ 3 4 H << 4 6 ? H 9 6 V H ? H @ D !Z > < < 4 7 @ 6 7 A A 4 : 4 < < 4 A @ 6 N < 4 ? 6 @ H 7 O @ ; H @ 4 = 9 A H < 4 F @ ? D < 4 F ; O 7 H 9 4 A H 7 < 4 9 4 < T 4 9 6 < 46 A a > 9 @ 4 A H 7 < 4 9 4 < T 4 9 6 7 A 7 ; @ H 7 d < ; : H @ 6 7 A e ; 9 9 X F F ; > 7 @ !F-306
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5 ) G ( * ( % ; 8 8< = H > I ( * J 5 & @ % ( % E @ A * F % % 9`
5 ) G ( * ( % ; 8 8 K L M NK K L K OP L P Q K L N PQ L Q RP L P S8 3 * ( 4 5 ) 2 6 ' ) 0 , ( % @ ( % , % ) & / 1 % ( / 2 % * J & * & / A / , , % & , / , ( % @ * ( & % 0 & * $ . T 5 ) 6 * ( E U ' ) 0 % (V % D & 5 * ) N R * J & W % . / ) 4 5 ) 2 $ % 2 ' A / & 5 * ) + D & X K Q Y Q 0 ' ( 5 ) 2 & W % F % / ( L8 8 I ( * 0 ' D & 5 1 5 & F ( / & 5 * , / ( % C / , % 0 * ) / 1 % ( / 2 % % E @ A * F % % ) ' E C % ( , J * ( & W % F % / ( LZ [ \ [ ] ^ _ ` a b c b ` c ! " # ` $ b % & ' b & c ( _ & ' ` % b c & " b $ ) & ^ _ ` * b $ ! " + ` c c , ' ' ` - $b ' . - " & / 0` 1 2 3 4 5 4 6 78 ` _ $ ) & 9 & ! _ & " & " : , c ! $ \ Z ; < = ! _ ' ) > ? Z @ \ Z ; < = ! _ ' ) > ? Z A1 7 B 4 5 C 1 D 1 5 2 E 5 F G 4 H D I B J D 0 2 6 E 7 K L M N O M K K P N K K1 1 7 B 4 5 C 1 D 1 5 2 Q 5 4 R 6 S 4 6 T 1 G E 1 5 2 1 2 U G V W 6 5 QX 2 C 6 D E Y 6 2 E D 0 I 6 E 7 0 Z O N M [ 7 \ \ \ N ] Z1 1 1 7 B 4 5 C 1 D 1 5 2 Q 5 4 I 5 2 ^ B 6 4 Q 5 4 Y 1 2 _X 2 C 6 D E Y 6 2 E D \ K N P ` ^1 C 7 B 4 5 C 1 D 1 5 2 Q 5 4 a E G 2 H G 4 H J D D 6 E D ] M N \ L \ K N [ LC 7 b 1 E c H 4 G F G V Q 4 5 Y Q V 5 G E 1 2 _ S 4 5 C 1 D 1 5 2 0 \ K N [ ] 7 ^C 1 7 B 4 5 C 1 D 1 5 2 Q 5 4 d G e G E 1 5 2 f3 W 4 4 6 2 E d G eR 6 Q 6 4 4 6 H E G eg G E 3 4 6 H 1 E 6 2 E 1 E V 6 Y 6 2 E [ ` L N K [0 K M M N Z P 7^ \ Z P N L LK ] K N O Z0 [ [ N K Z 7C 1 1 7 B 4 5 C 1 D 1 5 2 E 5 F G 4 H D B 4 6 D 6 2 E U G V W 6 5 QD G T 4 1 Q 1 T 6 5 2 4 6 D E 4 W T E W 4 1 2 _ h 5 E c 6 4T 5 2 E 1 2 _ 6 2 T 1 6 D 6 E T N 0 ] P N O M 7 0 P M N \ \ 7i ` $ ! . j > > [ ? \ j A Z [ @ ?\ N M N k a & c $ l & $ c\ N M N \ [ m & $ ! b . c ` * k a & c $ l & $ c / 0` 1 2 3 4 5 4 6 7^ ! _ $ b ' - . ! _ c n o p q r s t u v w x o y n o p q r s t u v w x o z0 \ 7 U G V W 6 5 Q X 2 C 6 D E Y 6 2 E D0 1 7 { 4 5 D D U G V W 6 5 Q X 2 C 6 D E Y 6 2 E D0 G 7 X 2 X 2 H 1 G0 | 7 } W E D 1 H 6 X 2 H 1 G0 1 1 7 B 4 5 C 1 D 1 5 2 D Q 5 4 R 6 S 4 6 T 1 G E 1 5 20 G 7 X 2 X 2 H 1 G0 | 7 } W E D 1 H 6 X 2 H 1 G0 1 1 1 7 B 4 5 C 1 D 1 5 2 D Q 5 4 I 5 2 ^ B 6 4 Q 5 4 Y 1 2 _X 2 C 6 D E Y 6 2 E D K M M O Z N K L ^\ K N M P ^ K M K K P N M [ ^\ L ] N Z ] ^
F-309
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` ZY B I _ ` QY Z I [ V
\ I ` Z QB \ Y Y Z I _ [ Q^ I _ _^ ` I ] Z QY ] [ I ^ [\ I ` Z QQ\ I ` ZY I \ I B I 6 1 ; < 0 3 = 4 > 3 < 4 = 8 < ? 3 E a b C . 3 T H 7 8 ? / < J = D 3 H / : / 3 ? / < 0 3 = 4 > 3 < 4 = 6 = D 3 E c W ; < 9 E > = 16 H H 9 8 < 4 : 9 E B B I B V d . D E 3 0 / 9 8 = N 3 6 E B \ I Y Z d 1 9 : ? 3 > 6 < ? 6 < ? 4 / > 3 7 / 6 @ / 7 / 4 / 3 = 6 = 6 44 F 3 3 < ? 9 : C 6 E H F B ] Y [ 6 = 6 J 6 / < = 4 D 3 E > / 4 4 3 ? H 3 / 7 / < J 9 : B [ d = 4 / D 8 7 6 4 3 ? @ N c W ; I@ 1 ; < E 3 = D 3 H 4 9 : = 3 H 8 E / 4 / 3 = F 3 7 ? 8 < ? 3 E a b C H 6 4 3 J 9 E N D E 3 > / 8 > 9 :`
V B I Y Y U E 9 E 3. D E 3 0 / 9 8 = N 3 6 E L`
B ^ I ` ^ U E 9 E 3 1 F 6 = @ 3 3 < 6 > 9 E 4 / = 3 ? ? 8 E / < J 4 F 3 N 3 6 E 6 < ? ? 3 @ / 4 3 ?8 < ? 3 E / < 4 3 E 3 = 4 E 3 H 3 / 0 3 ? 9 < e 9 0 3 E < > 3 < 4 = 3 H 8 E / 4 / 3 = IH 1 M E 9 : / 4 9 < = 6 7 3 9 : = 3 H 8 E / 4 / 3 = : E 9 > a b C H 6 4 3 J 9 E N 6 > 9 8 < 4 / < J 4 9`
[ Z I _ ] U E 9 E 3. D E 3 0 / 9 8 = N 3 6 E L`
V ` I B ` U E 9 E 3 1 F 6 = @ 3 3 < 4 6 S 3 < 4 9 M E 9 : / 4 6 < ? O 9 = = K H H 9 8 < 4 I f 8 E / < J4 F 3 N 3 6 E g 4 F 3 W 6 < S F 6 ? 6 D D E 9 D E / 6 4 3 ?`
B _ I ` B U E 9 E 3 . D E 3 0 / 9 8 = N 3 6 E L`
Y Z I ^ [ U E 9 E 3 1 g< 3 4 9 : 4 6 T 3 = 6 < ? 4 E 6 < = : 3 E 4 9 = 4 6 4 8 4 9 E N E 3 = 3 E 0 3 4 9 4 F 3 U 6 D / 4 6 7 c 3 = 3 E 0 3 g @ 3 / < J 4 F 3J 6 / < 9 < = 6 7 3 9 : a b C ; < 0 3 = 4 > 3 < 4 = / < 6 H H 9 E ? 6 < H 3 G / 4 F c W ; J 8 / ? 3 7 / < 3 = I? 1 b F 3 @ 6 < S F 6 ? 4 E 6 < = : 3 E E 3 ?`
\ ` I B _ U E 9 E 3 . D E 3 0 / 9 8 = N 3 6 E`
2 / 7 1 . 2 3 4 9 : 6 D D 7 / H 6 @ 7 34 6 T 3 = 6 < ? 4 E 6 < = : 3 E 4 9 = 4 6 4 8 4 9 E N E 3 = 3 E 0 3 1 4 9 G 6 E ? = ; < 0 3 = 4 > 3 < 4 c 3 = 3 E 0 3 K H H 9 8 < 4 9 <D E 9 0 / = / 9 < : 9 E ? 3 D E 3 H / 6 4 / 9 < 9 < ; < 0 3 = 4 > 3 < 4 = H E 3 ? / 4 3 ? 4 9 M E 9 : / 4 6 < ? O 9 = = 6 H H 9 8 < 4 IF-310
! " ! # ! $ % & ' ( ) * + , * - . / ' + ,0 1 2 3 4 5 6 7 8 6 1 9 : ; 4 2 4 1 6 6 7 5 < = > : ; 9 ? 3 6 1 < @ 4 A 8 3 9 1 B 3 5 : 1 2 1 ; C 6 D < : ; 4 A E 2 ? 1 F 1 3 ; 6 1 A < 1 <# G H I 3 ; 9 ? J K L M 3 A < # G H I 3 ; 9 ? J K L " : A < 1 ; ; 1 > 7 6 = ; 1 B 1 ; 6 1 ; 1 > 7 6 @ 1 N 9 5 : < 4 A E O P Q2 ; 3 A 6 3 9 2 4 7 A 6 D R S` T U V W X W Y Z[ \ ] ^ _ ` a b \ ] c d a ^ c ^ \ e f _ e g f a ] _ e g ^ h i j i \ ] d a ^ c ^ \ e f _ e g\ c k el m n o l n p o m q nr l m n o l n p o m s tu _ e _ v a v u \ w _ v a v x \ _ b jy i ] \ g iy t ! i ` a ] _ ^ _ i c c k b f a e f i ] " i # k c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
F-311
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A C S < > < ; 7T U VW X V Y Z Z [ \ ] ^ _ X [ ` a b c a \ ` a X de ] f g h a \e U h i \ _ \ ` a b c a \ ` a X dj k \ U X lf ` g \ Z a _ \ ` am ] h n \ oZ \ i [ ] f a f \ Z b c a \ ` a X dj [ ` ] h a \ n oZ \ i [ ] f a f \ Zp p b c a \ ` a X dj [ ` U f Z a \ n oT \ i [ ] f a f \ Zp p pq r s q t s q u s q v s q w s q x s q y sz { | } ~ � � � � � � � �� � � � � � � z � � �� � � � � � � � � � z � � �� � � � � � � � � � � � � �� � � � � z � � � � � � �� z � � � z � � �� � �� � � � � � � � � ~� � � � � � | � � � � � � � � � � � �� � � � � � � � � � � � � � � �� � � � � � � � � �� � � �� � � �� � �� � � � � � z � � � � � �� � � � � � � � � z � � � � �� z � z � � � � z �� z � � �� � � �� � �� { � � � � � �� � � � � � � � � � � � � � � �� � � � � � � � � � � � � �� � � � � � � � � � � � �� z � � � � � � � � � � �� z z � � � � � � � � �� � � � � � �� � | } � � � � � � � � � � � � � � � � � � | � � � � � � � � �� � � � � � � � � � � � � �� � � � � � � � �� � � �� � � �� � �� ¡ � ¢ � � � � � � � z �� � � � � � � � � � � � z �� � � � � � � � � � � � � �� � � z � � � � � � � �� � � �� � �� £ � � � ¤ { � � � � � � � �¢ � ~ �� � ¥ � � � �� � � � � � � � � � � � � �� � � � � � ¦ � � � � � � �� � � z � � § § § § § § § § § § § §� £ � � � ¤ { � � � � � � � �¢ � ~ � � � ¥ � � � � � � �� � � ¨ � � ¦ � � ©� � � � � � ¦ � � � � z � � � �� � � � � � § § § § § § § § § § § §ª � � � ~ y v « x V ¬ xq ¬ t u « V « ¬ s w x ¬ V w tq w u x u V x t s ¬ v V v rq « u « V v s r x V y yq r r y V « y s x v V « ¬q ¬ v V « ¬ s® < ; P A > : 9 ¯ ; 6 < ° 9 K A ± : < ; 9 6 < ; ± A P ; C A C ² < 6 = ³ ; B 9´ ? > : C B 9 < ; @ > < B ; µ : C µ ; < = > ¶ : ? C R " 7 G R J 7 G R · 7 6 C µ R ¸ 7 6 ² > P ; 6 < ; C > B ? : B : 6 ¶ ¶ ¯ ; ¹ = ¶ : 9 A P ;Q ; ¹ = ¶ : µ ; 9 A C P ; 9 B ? ; C B 9 A C C > C L M N O ± > P ; < C ? ; C B 9 ; = : < A B A ; 9 6 ? > : C B A C ± B >`
D · ! H J S < > < ;R @ < ; P A > : 9 ¯ ; 6 <`
J " ! º S < > < ; 7Q Q » ¹ = ¶ : µ ; 9 A C P ; 9 B ? ; C B 9 A C ; ¼ : A B ¯ 9 F 6 < ; 9 G : C A B 9 A 9 9 : ; µ ² ¯ P ; C B : < ; = 6 @ A B 6 ¶ K : C µ 9 6 C µµ ; @ > 9 A B 9 ½ A B F ¾ ´ ¿ ´ O À G M 8 À ¿ 8 6 C µ ¾ Á ¿ : C µ ; < B F ; @ < A > < A B ¯ Â ½ ; 6 ³ ; < 9 ; = B > < ¶ ; C µ A C ±9 = F ; ? ; A C ¶ A C ; ½ A B F ; ¹ B 6 C B O ¿ 8 ± : A µ ; ¶ A C ; 9 !Q Q Q » ¹ = ¶ : µ ; 9 A C P ; 9 B ? ; C B 9 A C ; ¼ : A B ¯ 9 F 6 < ; 9 G : C A B 9 A 9 9 : ; µ ² ¯ P ; C B : < ; = 6 @ A B 6 ¶ K : C µ 9 G @ 6 9 9B F < > : ± F = ; < B A K A = 6 B ; 9 G 9 ; = : < A B ¯ < ; = ; A @ B 9 G 9 ; = : < A B ¯ 6 = ¼ : A < ; µ ² ¯ ½ 6 ¯ > K = > C P ; < 9 A > C > K µ ; ² B G= ; < B A K A = 6 B ; > K µ ; @ > 9 A B 9 6 C µ µ ; @ > 9 A B 9 ½ A B F ¾ ´ ¿ ´ O À G M 8 À ¿ 8 6 C µ ¾ Á ¿ : C µ ; < B F ;@ < A > < A B ¯ Â ½ ; 6 ³ ; < 9 ; = B > < ¶ ; C µ A C ± 9 = F ; ? ; A C ¶ A C ; ½ A B F ; ¹ B 6 C B O ¿ 8 ± : A µ ; ¶ A C ; 9 !F-312
! " # $ % & ' ( ) $ * + , - . + $ - , / 0 - + 1 # 2 3 % 4 ) , + 5 " + - # 6 7 2 # * ) , ) # $ ! 8 5`
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* 1 ( I & 9 2 # 2 +5 J 2 + * ) # - , 3 + 0 2`
& 8 ( 6 % 9 2 # 2 + !/ ! " # $ % J + 2 6 # 2 . ) $ 1 " # $ % & ' ( ) $ * + , - . + $ - , ) , , + - # - - , + H # 4 8 5`
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` # 6 - $ + , # # a * 0 H - + # 6 ) $ * + , - . + $ - , $ + H . ) $ ] M ^ / 0 - + 1 # 2 3 0 -- $ + , + 1 ) $ $ ) $ 1 # 6 - $ + 3 + 0 2 (% ( & ( b O R c d < ; c d O Sb c S e = : S f R O c P R O S g O e ; : T h f ; S ; < P Q c P Z i P ; O R O S ; j < ; O N k < g S l i j N m < P Q n : R k < R Qj < ; O o Z R O O V O P ; l n j o m% ( & ( % p q e r < P Z O 9 R < Q O Q i P ; O R O S ; j < ; O b O R c d < ; c d O S s 5`
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`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` _ C D ] > 3 G 0 _ , C D C 2 - ? D ` ` 2 - , > , M 0 _ , C D C D a b > - _ E D 7J 7 ; 7 @ c d e O f g Q P h O d O d i O d j k d P f Q P h O d O e l k m O n h P n o p`
! " # $ # % & ! " # $ ' ( ) * + ! , ! " # $ ' ( ) * + ! -. $ / 0 1 2 % 3 $ 4 / 4 $ 5 . 6 % ! / 7 8 0 # 9 % 4 /: % 3 $ 4 / $ # 4 ; < < = > ? @ < A B < C > = <D % # E % ! / 0 9 % $ 5 2 % 3 $ 4 / 4 $ 5 / 6 % ! / 7 1 0 # 9 % 4 /: % 3 $ 4 / $ # 4 / $ / $ / 0 1 : % 3 $ 4 / 4 $ 5 / F % G 0 ! H I > J J K ; > J @ KL $ / % M N O E 1 P : % F $ 1 : % # 4 $ 5 E % # / 5 E 0 / % $ 5 : % 3 $ 4 / 4B > Q > J R S T U V W X Y Z U S U S [ U S \ ] S Y V X Y Z U S U T X ^ _ X S \ ] ` a b`
! " # $ # % & ! " # $ ' ( ) * + ! , ! " # $ ' ( ) * + ! -. $ / 0 1 0 : c 0 ! E % 4 / $ . 6 % ! / 7 8 0 # 9 % 4 /d $ # # $ 6 % # 4 ? < B Q > J C ? < < Q > @ CD % # E % ! / 0 9 % $ 5 0 : c 0 ! E % 4 / $ / 6 % ! / 7 1 0 # 9 % 4 /d $ # # $ 6 % # 4 / $ / $ / 0 1 0 : c 0 ! E % 4 $ 5 / F % G 0 ! H B = > J B K B B > C = Ke f g h i j k l m n o h p q o f r s t g h k m q s h u g v h k h w p n p g p f n f w x u h k p g y z s f q t u h p n { | } ~ m q g h u x p u o t � m uf n y z s f q t u h e f u r q � | � � � e f � � p u � | x � � � � � � � � � � � � � � � � � � � � k m g h k � t � � � � � � � � �B > Q > @ R S T U V W X Y Z U S U S [ U S \ ] S Y V X Y Z U S U T ] � � U ` � V ] a b`
! " # $ # % & ! " # $ ' ( ) * + ! , ! " # $ ' ( ) * + ! -. $ / 0 1 % O 3 $ 4 P # % 4 / $ . 6 % ! / 7 8 0 # 9 % 4 /G $ # # $ 6 % # 4 � E P 4 / $ � % # 4 ? @ @ @ > J = ? ? = J > C =D % # E % ! / 0 9 % $ 5 % O 3 $ 4 P # % 4 / $ / 6 % ! / 7 1 0 # 9 % 4 /G $ # # $ 6 % # 4 � E P 4 / $ � % # 4 / $ / $ / 0 1 % O 3 $ 4 P # % $ 5/ F % G 0 ! H $ ! G $ # # $ 6 % # 4 � E P 4 / $ � % # 4 B = > = @ K B B > B @ KF-337
! " # $ % & ' ! ( ) * # + ( , ! - ' ) " # . / ( ' # * " 0 # . # 1 + 2 + " + ! 2 ! 1 3 * # . + " / 2 . 4 2 5 # ( " - # 2 " % & ' ! ( ) * #+ 2 6 7 4 8 / ( " # * 3 + * , ) 9 / * ! 2 % & ' ! ( ) * # ! * - ( : ; < : = > ? = : @ A = ; B = C D E C F = G F = G G ED G C H I C J K L M N K O P Q R C S D G C H =T U V W X Y Z U X [ \ ] ^ _ ` a V b c U V b X c X d ] e c U V _ f e _ ] [ V ] d b a [ \ ` ] [ f e V a Y g ] c V g ] h i h j h k c ]i h j h l d e ] ^ a c [ a Y c V e Y X ` m n o [ p [ c V ^ X Y b U X [ W V V Y d f e Y a [ U V b W p c U V ^ X Y X q V ^ V Y c rs U a \ U U X [ W V V Y e V ` a V b f _ ] Y W p c U V X f b a c ] e [i h j h t u v w x y z { | } x v x v ~ x v � � v | y { | } x v x w � � � � � �`
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a Y � e ] e V �4 5 67 8 6 o V \ c ] e 9 � � � � � � � � � � � � � � � � � � � � � � � �1 e ] [ [" b 2 X Y \ V[ 1 e ] [ [g ! " [ : ] d1 e ] [ [g ! " [ c ]1 e ] [ [" b 2 X Y \ V[ a Y c U X c[ V \ c ] e 1 e ] [ [" b 2 X Y \ V[ 1 e ] [ [g ! " [ : ] d1 e ] [ [g ! " [ c ]1 e ] [ [" b 2 X Y \ V[ a Y c U X c[ V \ c ] e� � y } x y } | ; , � � | x yi h " q e a \ f ` c f e V X Y bX ` ` a V b X \ c a 2 a c a V [ l & i & h $ t i # l h # & # h ' ' k $ k j h + j i l i h j & & h $ l# h " b 2 X Y \ V [ c ]a Y b f [ c e a V [ [ V \ c ] eV ` a q a W ` V X [_ e a ] e a c p [ V \ c ] e` V Y b a Y q & k t + h ' # j j h k l # h $ k # + j # h i # j k h t t # h j k< = > ? @ A ? B C C DE F C A G H H @ I J K L K M N O O P N L P Q N L M R P S N T M O N O P K N K O& h o V e 2 a \ V [ & t & t h k + i $ + h i t k h # l & + ' + h & i i l k h & j k h # 'k h ! V e [ ] Y X ` ` ] X Y [ 0 0 0 0 0 0$ h U c U V e [ k ' t i h + & i i l h k $ # h j l & + l l h k l i $ i h t k & h j &, V W X | x | { Y Z � [ \ ] ^ _ ` a _ \ b c _ a d \ ` a ] c \ e b _ ^ a f ] e ^ ` a ] ` d a ^ eF-338
! " # $ % & " % & ' () * + ' " %, - . / 0 1 2 3 4 5 3 0 6 7 8 97 4 4 1 6 9 7 2 5 1 : 1 5 1 6 ; < < < < < <= - > 8 9 3 ; 5 0 ? @ = A @ - = = B A C - D E B - E B @ = F B - B C B = G - D F B - C AH I J K L M KN O P M Q R L M L Q ST U P V P R W Q L X V YQ R W V Z [ X R Q W Q L X VW V \\ L Z Q R L ] ^ Q L X V _ ` a b c d e f g g ` h i a d e i g gB - j 6 0 : 1 2 6 ; , B D B D - , , , A G - = G , - , A @ B B E - D G , B @ - A B , - A @A - k 6 0 ; l 8 7 4 4 l 7 8 ; A , - G = = - , G C - = = A G - = D = - , C A - A FC - m 5 n 6 0 ; , = D = G - = , E , - G @ D - F D , D , D , - E E C C - D C D - C Ao p q r s t s u v w x y z { z { | } z ~ � ~ � } { � � } ~ � � � � � � } { � � � { } ~ | � } � �� t s u v w � � x y � � | � � } z � � � � � } � z � } � { { { � � � } � � � � � � } { � � } { ~� � 4 7 ; ; 1 � 1 2 7 5 1 l 8 1 8 5 l ; 6 2 5 l 0 ; � ; 3 � ; 6 2 5 l 0 ; 7 ; 7 � l : 6 n 7 ; � 6 6 8 9 l 8 6 � 7 ; 6 9 l 8 � 7 8 � � ; 1 8 5 6 0 8 7 48 l 0 � ; -, - G - , D � 6 5 7 1 4 ; l � > 8 5 0 7 < � 0 l 3 � � � � l ; 3 0 6 �`
1 8 � 0 l 0 6 �o v }� t } � u � s � � p v u � � z � � u � � �� � � � z � � u � � �� � � {, l 5 7 4 7 � l 3 8 5 l � 1 8 5 0 7 < � 0 l 3 � 6 � � l ; 3 0 6 � F A G C @ G= l 5 7 4 7 � l 3 8 5 l � 5 l � < = D 1 8 5 0 7 / 0 l 3 � 6 � � l ; 3 0 6 � F A G C @ GB k 6 0 2 6 8 5 7 / 6 l � 1 8 5 0 7 / 0 l 3 � 6 � � l ; 3 0 6 ; 5 l 5 l 5 7 46 � � l ; 3 0 6 l � 5 n 6 � 7 8 � 5 l � l 0 0 l ¡ 6 0 ; � 2 3 ; 5 l � 6 0 ; � � ¢ � D - G C ¢ D - @ = ¢A � 6 5 7 1 4 ; l � � 0 6 7 2 n l � 4 1 � 1 5 ; l 8 1 8 5 0 7 < / 0 l 3 � 6 � � l ; 3 0 6 ;7 8 9 0 6 / 3 4 7 5 l 0 ? 7 2 5 1 l 8 5 n 6 0 6 l 8 £ 1 � 7 8 ? ¤ > ¥ ¤ 1 4� � � � l ; 3 0 6 1 ; 2 l � � 3 5 6 9 7 ; � 6 0 5 n 6 9 6 � 1 8 1 5 1 l 8 l � � 0 6 9 1 5 7 8 9 > 8 : 6 ; 5 � 6 8 5 � � � l ; 3 0 6 1 8¦ � > § 7 ; 5 6 0 � 1 0 2 3 4 7 0 l 8 � � � l ; 3 0 6 ¤ l 0 � ; ¨ © ª ¨ « ¬ « ¨ ® ¯ « © ° « ± ² ³ ± ´ « µ ´ « µ µ ³ ² µ ± ¶ · ± ¸¹ º » ¼ ¹ ½ ¾ ¿ À ± Á ² µ ± ¶ «, - G - , , 0 7 8 ; � 6 0 ; 5 l � 6 � l ; 1 5 l 0 � 9 3 2 7 5 1 l 8 7 8 9 . ¡ 7 0 6 8 6 ; ;  3 8 9 � � � .  �> 8 7 2 2 l 0 9 7 8 2 6 ¡ 1 5 n 5 n 6 / 3 1 9 6 4 1 8 6 ; 1 ; ; 3 6 9 � ? 5 n 6 ¦ � > £ 5 n 6 � 7 8 � 5 0 7 8 ; � 6 0 ; 5 n 6 7 � l 3 8 55 l 5 n 6 2 0 6 9 1 5 l � 7 8 ? 7 2 2 l 3 8 5 ¡ n 1 2 n n 7 ; 8 l 5 � 6 6 8 l � 6 0 7 5 6 9 3 � l 8 � l 0 7 � 6 0 1 l 9 l � 5 6 8? 6 7 0 ; l 0 7 8 ? 9 6 � l ; 1 5 l 0 7 8 ? 7 � l 3 8 5 0 6 � 7 1 8 1 8 / 3 8 2 4 7 1 � 6 9 � l 0 � l 0 6 5 n 7 8 5 6 8 ? 6 7 0 ; 5 l5 n 6 � � .  - � 6 5 7 1 4 ; l � 7 � l 3 8 5 ; 5 0 7 8 ; � 6 0 0 6 9 5 l � � .  7 0 6 ; 6 5 l 3 5 � 6 4 l ¡ ÃF-339
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` E F a V b C J @ N J T > c] > F B E A Z ^ > @ L D B R > ? _ [ F a V b C J @ N J T > c[ D H > A O > O d > A ? E G ? D J G G _ E F a V b C J @ N J T > ce B O B D E F R J A B J d S > C J Kf H > R J A B J d S > @ E O C > F ? J D B E F E G G > A > M D E J F E G G B @ B J S I E L S M F E D > ^ @ > > M g h i E G D H >D E D J S G B ^ > M @ E O C > F ? J D B E F] > R > A J F @ > C J K J F M T L J A J F D > > M d E F L ?] > R > A J F @ > C J K _ E D H > A D H J F T A J D L B D K E A D > A O B F J S > F D B D S > O > F D ? E A J ? > F D B D S > M d K? D J D L D > c B ? F E D C J B M D E J F K E G G B @ B J S E G D H > E A T J F B j J D B E F] B T F E F d E F L ? E A k E B F B F T d E F L ? B ? S B O B D > M D E D H > G B A ? D K > J A J F M B ? C J B M E F S K J ?Z O C S E K > > ? D E @ N E C D B E F ?l > M T B F T` E @ E O C > F ? J D B E F ? @ H > O > E A B F ? L A J F @ > G J @ B S B D K I E L S M d > C A E R B M > M d K D H > V J F N D E> O C S E K > > ? D E H > M T > D H > B A @ E O C > F ? J D B E F ? D A L @ D L A > D E E G G ? > D D H > A B ? N J S B T F O > F DO > @ H J F B ? O _ M > G > A A J S C J K J F M @ S J I d J @ N J A A J F T > O > F D ? c > O d > M M > M B F D H > B A@ E O C > F ? J D B E F J A A J F T > O > F DY E O C > F ? J D B E F m > @ E R > A K C E S B @ Kb @ S J I d J @ N J A A J F T > O > F D E A J @ E O C > F ? J D B E F A > @ E R > A K C E S B @ K B ? C A E R B M > M U I H B @ HI B S S > F D J B S D H > V J F N D E A > @ E R > A C A E C E A D B E F J D > J O E L F D E G R J A B J d S > @ E O C > F ? J D B E FC J B M D E D H > J d E R > G L F @ D B E F J A B > ? E F J @ @ E L F D E G J F J @ D E A M > @ B ? B E F D J N > F d K D H >E G G B @ B J S I H B @ H H J ? d A E L T H D G E A D H J F > T J D B R > @ E F D A B d L D B E F D E D H > d J F N J D JC A E ? C > @ D B R > ? D J T > P f H > @ S J I d J @ N J A A J F T > O > F D I E L S M d > R J S B M G E A J C > A B E M E GD H A > > K > J A ? G A E O D H > M J D > E G C J K O > F D E G R J A B J d S > @ E O C > F ? J D B E F PF-343
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� ¤ � � � � � � � � � � � � � �� � � � � � ¤ � � � � � � � � � � � � � � � }̀ � � � � � � � � � � � � � � � � � � � � � � � ª � ¤ � � � � � � � � � � }̀ � � � � �� � � � � � � � � � � � © � � © � � }̀ ¤ � � � � � � � � � � � ? � � � � � � � � � � � � £ � � � � � � � � � � � � } � � § � � � « � � �� � � � � � � � � � � � ¬ � � � � � � � � � � � � © � � � � � � � � � � � � � ~ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � © � � � � � � � � � � � � � � � � � � � � ¤ � � � � � ¤ � � � � � � � � � }̀ � �� � � � � � � � � � � � � � � � � ¤ � � } � � ¤ � � � � � � � � � £ � ~ } � � � � � � ? � � � � � � � � ¨ � � � � � � � � � � � } � � ¤� � � « � � � � � � � � � � � � � � � � � � � � � � � � � � ® � � � � � � � � � � � � � � � © � � � � � � � � � � � � � ~} ~ ª ~ ¯ ° ± ² ³ ´ µ µ ¶ · ³ ¸ ¹ º ± · » ³ ¼ ¶ ¸ ½ µ ° µ ¾ ¿ ¯ ¶ º ¶ À Á Â� � ? � � � � � � � � � � � � � � � � � � � � « � � � � � � � � � � � ¥ © � � � � � � � � � � « ¦ � � � � � � � � � © �� ¥ � ¦ � ? � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ¬ � � � � ¬ � � � � � � � � � � � � � ¢ � � � © � � �} ¤ � } � � � � � � � � � � � � � � � ¨ � � � � � � � � � � � � � Ã Ä � © � � � � � � � � � Ä � © © � � � � � Å � � � � � � �� � � � � � © � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � ¨ � � « � � � � Æ � � � � � � � � Ç� � � � � � � � � � � � � � � � © � � � � � � � � � � � � � � � � � � � � � � � � � � � ¨ � � « � � � � � � � ¬ � � � � � �� � � � � � � � � � � � � ¥ ¨ ~ > � � � � � � � � � � � � � � � � � � Ä � © � � � � � � � � � Ä � © © � � � � � � � � � � � � � «� � � � � � � � � � � � � � � ¬ � � � � � � � � � � �F-349
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`
/ 0 8 E F 3 , ( = ; ) ( , AG = # D I S X H I B ; A @ D " A ? D = < C D > Z Z F ; ? < A ? B G F I X S : S Z > ? E D @ F ? D D A < C D I ; ? @ D I < C DJ I ? < I A ? = A Z K > " ; D E > = A = L F I J > A I K > " ; D E > = A = L MN C D O F P # D ? = > < A F ? O F P P A < < D D A ? < C D A I P D D < A ? B @ > < D @ Q M ! M P ! N M Q N @ D Z A @ D @ < F > @ F # <J I ? < I A ? = A Z K > " ; D P D < C F @ L G F I > Z Z F ; ? < A ? B F G X S : S K A ? < D I P = F G < C D # F Q D I K D = < D @ F ?< C D P > = # D I < C D I D = F " ; < A F ? F G X U R @ > < D @ N W S D Z D P E D I N M Q MN C D D Y D I Z A = D # I A Z D F G < C D F # < A F ? = B I > ? < D @ A = < C D = > P D > = < C D P > I T D < # I A Z D F ? < C D @ > < D# I A F I < F B I > ? < @ > < D > ? @ C D ? Z D < C D I D A = ? F A ? < I A ? = A Z K > " ; D G F I < C D F # < A F ? = K Q C A Z C C > = < FE D > P F I < A U D @ F K D I < C D K D = < A ? B # D I A F @ M I G V > A I W > " ; D R D < C F @ X C > @ E D D ? > @ F # < D @E > = D @ F ? V H " > Z T T S Z C F " D = # I A Z A ? B P F @ D " X G F I # I A Z A ? B > ? @ > Z Z F ; ? < A ? B F G F # < A F ? = K ? D <# I F G A < Q F ; " @ E D " F Q D I E H`
N P M W N O I F I D Y Z I D K A F ; = [ D > I \ Ǹ M M M J O I F I D ]N C D P F @ A G A D @ E > = A Z > ? @ @ A " ; < D @ D > I ? A ? B = # D I = C > I D G F I < C D H D > I K C > @ < C D Z F P # > ? HG F " " F Q D @ > A I W > " ; D R D < C F @ F G > Z Z F ; ? < A ? B G F I X S : S Z F P # D ? = > < A F ? Z F = < Q F ; " @ E D`
Q Q M W P > ? @`
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Z I D K A F ; = [ D > I \ R̀ M P L > ? @ R̀ M P Q ] I D = # D Z < A K D " H MA A ] ^ _ ` _ a b c a d e _ a f c g h e i b g _ g g j b a f c b k b i l _ g b f m g n f l o f d n _ f cN C D H > ? T P > H > " " F < = C > I D = E D < Q D D ? < C D H > " > ? Z D S C D D < @ > < D > ? @ I D Z F I @ @ > < D G F I < C D@ D Z " > I > < A F ? F G @ A K A @ D ? @ # ; I = ; > ? < < F < C D D Y D I Z A = D F G > ? H D P # " F H D D = < F Z T F # < A F ? = MN C D = D = C > I D = Q A " " E D D " A B A E " D G F I G ; " " @ A K A @ D ? @ G F I < C D H D > I D ? @ D @ J Q R > I Z C N M Q P K A G> # # I F K D @ > < < C D D ? = ; A ? B G ? ? ; > " U D ? D I > " R D D < A ? B M S A K A @ D ? @ I D " > < A ? B < F < C D = D = C > I D =C > = ? F < E D D ? I D Z F I @ D @ A ? < C D Z ; I I D ? < H D > I MA A A ] S A K A @ D ? @ Y I ? Z " ; @ A ? B < > Y ! Z D = = < C D I D F ? ] > # # I F # I A > < A F ? F G`
M M M N O I F I D I D # I D = D ? <@ A K A @ D ? @ G F I A ? > ? Z A > " [ D > I N M Q J T Q W F ? < C D = C > I D = A = = ; D @ ; ? @ D I X P # " F H D D S < F Z T: # < A F ? = S Z C D P D E D G F I D < C D I D Z F I @ @ > < D K > = # D I = C > I D C F " @ D I = > # # I F K > " MN M W M p b q r b c n s b d f i n _ c q t u p v w xH ; = A ? D = = F G < C D H > ? T A = @ A K A @ D @ A ? < F G F ; I = D B P D ? < = K A U M N I D > = ; I H K O F I # F I > < D F Iy C F " D = > " D H > ? T A ? B K z D < > A " H > ? T A ? B > ? @ F < C D I E > ? T A ? B F # D I > < A F ? = M N C D # I A ? Z A # > "> Z < A K A < A D = F G < C D = D = D B P D ? < = > ? @ A ? Z F P D > ? @ D Y # D ? = D = = < I ; Z < ; I D > I D > = G F " " F Q = \F-350
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`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` * ( 3 ? a b _ T ; * ( ) + ) 0 . , 0 : ) 4 . B R c d 8 . , 2 0 1 2 S̀ ( . ( ) ef g h i j k h h l k m n k j o h p q k r h g q s t u q v u q r o k wx y u z k h r z kf r j { i j m | k o r i z f r j { i j m } o y k q f r j { i j m} v k q r o i u j h p u o r z~ � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �� � � � � � � � � � � �� � � � � � � � � � � � � � ¡ ¢ � � � £ £ ¤ ¥ ¡ ¡ � ¡ ¦ � ¤ � ¡ § � ¡ ¦ ¡¨ � © � � � ª © � � «� ¬ � � � � � � ¡ £ £ ¤ � � � � © � � � ® � � � � � �� ¯ ° ± � ¡ § � ¡ ¦ �² � ª � ³ � � © ¬ � � � § ¡ § � £ �´ ¬ � � © � � « � � © � µ� � � � � � ¶ � � � � ·¸ � � ¯ � � � � � ¡ ¦ ¦ § ¤ §
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! " # $ ! % & ' ( # ) ! * ' % ! + " ! ' , ! , % - & ' . $ / ! 0 ! * 1 2 / ! 3 * ' * . ! ) ! ' $ 4 ! 5 & ! 6 ! , $ / * $ $ / !! , $ & ) * $ ! , - , ! % & ' " ! " * * $ & # ' # 7 $ / ! 7 & ' * ' ( & * 5 , $ * $ ! ) ! ' $ , * ! " - % ! ' $ * ' % ! * , # ' * 4 5 ! 18 - $ - ! ! , - 5 $ , ( # - 5 % % & 7 7 ! % - ! $ # $ / ! , ! ! , $ & ) * $ ! , * ' % $ / ! % & 7 7 ! ! ' ( ! , 4 ! $ 9 ! ! ' $ / ! * ( $ - * 5 ! , - 5 $ , * ' % $ / ! ! , $ & ) * $ ! , * ! ! ( # . ' & , ! % & ' $ / ! " ! & # % , & ' 9 / & ( / $ / ! ! , - 5 $ , * ! : ' # 9 ' ;) * $ ! & * 5 & , ! 1< 1 = > ? @ A B C D EF G H I J K L M I N L K O I M M P Q P L G P J R S T L N Q S N U P J V I M M L R M W X R I J G I N G Y I J G J S J Z T L N Q S N U P J V I M M L R MW [ \ ] F M [ Y I M T L N R ^ L _ ` a V b P G L O P J L M I J G I N L M R I R L G J L R S Q M T L K P Q P K T N S H P M P S J M U I G LR S c I N G M \ ] F M d Q O S I R P J V T N S H P M P S J M I J G b J N L I O P e L G P J R L N L M R S J \ ] F M f a J R L N L M R S J \ S JT L N Q S N U P J V I G H I J K L P M R N I J M Q L N N L G R S b J N L I O P e L G P J R L N L M R I K K S b J R I J G J S R N L K S V J P e L G P J] N S Q P R I J G g S M M F K K S b J R b J R P O N L K L P H L G f h b N R ^ L N d \ ] F M I N L K O I M M P Q P L G P J R S M b i Z M R I J G I N G dG S b i R Q b O I J G O S M M I M M L R M i I M L G S J R ^ L K N P R L N P I M R P T b O I R L G i j R ^ L _ ` a f ] N S H P M P S J M Q S N\ ] F M I N L U I G L S H L N I J G I i S H L R ^ L U P J P U b U N L k b P N L G I M T L N R ^ L V b P G L O P J L M S Q R ^ L _ ` aS J U I R R L N M N L O I R P J V R S T N b G L J R P I O J S N U M fF G H I J K L M M ^ S c J P J R ^ L ` I O I J K L X ^ L L R I N L J L R S Q W I Y i P O O M N L G P M K S b J R L G I J G W i YT N S H P M P S J M U I G L Q S N J S J T L N Q S N U P J V I G H I J K L Mg S M M I M M L R M I J G b J M L K b N L G T S N R P S J S Q G S b i R Q b O I M M L R M I N L T N S H P G L G l c N P R R L J S Q Q I M T L NR ^ L _ ` a V b P G L O P J L M fF U S b J R M N L K S H L N L G I V I P J M R G L i R M c N P R R L J S Q Q I N L N L K S V J P M L G P J R ^ L T N S Q P R I J G O S M MI K K S b J R I J G P J K O b G L G b J G L N m n R ^ L N a J K S U L o fh S N N L M R N b K R b N L G l N L M K ^ L G b O L G I M M L R M d T N S H P M P S J P M U I G L P J I K K S N G I J K L c P R ^ R ^ LV b P G L O P J L M P M M b L G i j R ^ L _ ` a d c ^ P K ^ N L k b P N L M R ^ L G P U P J b R P S J P J R ^ L Q I P N H I O b L S Q R ^ LI M M L R M R S i L T N S H P G L G I R R ^ L R P U L S Q N L M R N b K R b N P J V fF V L J L N I O T N S H P M P S J Q S N M R I J G I N G I G H I J K L M P M U I G L p q f r s t P J K I M L S Q G P N L K R I G H I J K L MR S I V N P K b O R b N I O I J G X u v M L K R S N M d w t P J N L M T L K R S Q I G H I J K L M K O I M M P Q P L G I M K S U U L N K P I ON L I O L M R I R L d x f s q t R S s t P J N L M T L K R S Q K L N R I P J K O I M M S Q N L M R N b K R b N L G I M M L R M I J G q f y q tQ S N I O O S R ^ L N I G H I J K L M I M T N L M K N P i L G i j R ^ L _ ` a fz { | } ~ � � � � � � � � �a J I G G P R P S J R S R ^ L T N S H P M P S J M N L k b P N L G R S i L ^ L O G I K K S N G P J V R S R ^ L I M M L R K O I M M P Q P K I R P S JM R I R b M d T N S H P M P S J M I N L ^ L O G Q S N P J G P H P G b I O K S b J R N j L � T S M b N L W S R ^ L N R ^ I J Q S N ^ S U LK S b J R N j Y f � ^ L K S b J R N P L M I N L K I R L V S N P M L G P J R S M L H L J N P M � K I R L V S N P L M J I U L O j P J M P V J P Q P K I J R dO S c d U S G L N I R L d ^ P V ^ d H L N j ^ P V ^ d N L M R N P K R L G I J G S Q Q Z K N L G P R I M T L N v � T S N R � N L G P R� b I N I J R L L � S N T S N I R P S J S Q a J G P I g P U P R L G W m v � � � o Y V b P G L O P J L M I J G T N S H P M P S J P M U I G LS J L � T S M b N L M L � K L L G P J V w � q G I j M S J I V N I G L G M K I O L N I J V P J V Q N S U q f r s t R S w q q t f h S NL � T S M b N L M c P R ^ K S J R N I K R b I O U I R b N P R j S Q O L M M R ^ I J w � q G I j M d r s t S Q R ^ L J S N U I OT N S H P M P S J N L k b P N L U L J R P M ^ L O G f a Q R ^ L K S b J R N j L � T S M b N L W J L R Y S Q R ^ L ` I J � P J N L M T L K R S QL I K ^ K S b J R N j G S L M J S R L � K L L G w t S Q R ^ L R S R I O Q b J G L G I M M L R M d J S T N S H P M P S J P M U I P J R I P J L GS J M b K ^ K S b J R N j L � T S M b N L fF-387
! " # $ % & ' ( ) & $ ( '* + , ' ' - . - / , ( - 0 $1 2 3 4 4 5 6 7 3 2 4 8 9 : ; < ; < 8 = > 1 ? @ : 7 8 A : 2 8 B C : 2 D 8 B ; E 8 2 ; B 3 6 8 4 3 ; 8 ? 5 6 : B 8 7 3 ; ; < 8 ; : E 8 5 FG @ 6 4 < 3 B 8 3 B H· I J K L M N O P O Q L R S T U I V P W X· Y Z Q R K Q [ K J M N O \ Q K J U Y V \ W X Q S L· I J K L ] N ^ Q ] _ O R ] ` U I P ^ Wa S Z J b ] c J S ] b d e R f e Q O J g O R c Q O R K ` e J K L M N O b Q K J d R ] e R S h i L Q ` b M O N c ] e J L Q ] J N M g _ O f e Q b JQ O J f K Q b b R M R J L Q b j I J K L M N O P O Q L R S T k l Y b g J O m n a T _ R L J K R S J b o I V P \ J f _ O R ] R J b d e R f eO J c Q R S _ S b N K L M N O Q g J O R N L N M h i L Q ` b Q O J f K Q b b R M R J L Q b Y V \ \ J f _ O R ] R J b N S ] e Q ] L Q ] J la S Z J b ] c J S ] b d e R f e ] e J [ Q S p R S ] J S L b ] N e N K L ] R K K c Q ] _ O R ] ` Q O J f K Q b b R M R J L Q b j I J K L ] N^ Q ] _ O R ] ` k la S Z J b ] c J S ] b d e R f e Q O J S N ] f K Q b b R M R J L R S J R ] e J O N M ] e J Q [ N Z J ] d N f Q ] J T N O R J b Q O J f K Q b b R M R J LQ b j Y Z Q R K Q [ K J M N O \ Q K J k lI N d J Z J O M N O ] e J g _ O g N b J N M L R b f K N b _ O J R S n Q K Q S f J \ e J J ] o R S Z J b ] c J S ] b R S a S L R Q Q O Jf K Q b b R M R J L _ S L J O b R q f Q ] J T N O R J b o Z R r l s N Z J O S c J S ] \ J f _ O R ] R J b o t ] e J O Y g g O N Z J L \ J f _ O R ] R J b o\ e Q O J b o u J [ J S ] _ O J b Q S L n N S L b o a S Z J b ] c J S ] b R S \ _ [ b R L R Q O R J b v w N R S ] x J S ] _ O J b Q S L N ] e J O b ly z { | } ~ � z � ~ } � � � z � � � � } � � � � � � | � { � � � � z � � }P O Q S b M J O N M b J f _ O R ] R J b [ J ] d J J S f Q ] J T N O R J b R b L N S J Q ] ] e J K N d J O N M ] e J Q f � _ R b R ] R N S f N b ] v[ N N p Z Q K _ J v c Q O p J ] Z Q K _ J N S ] e J L Q ] J N M ] e J ] O Q S b M J O Q S L ] e J L J g O J f R Q ] R N S o R M Q S ` o N Sb _ f e ] O Q S b M J O R b M _ K K ` g O N Z R L J L M N O Q b g J O m n a T _ R L J K R S J b l� � � � � � � � � � � � � � �P O Q S b Q f ] R N S f N b ] b R S f K _ L R S T [ O N p J O Q T J Q S L f N c c R b b R N S g J O ] Q R S R S T ] N Q f � _ R b R ] R N S N MR S Z J b ] c J S ] b Q O J f e Q O T J L ] N ] e J O N M R ] Q S L ! N b b Y f f N _ S ] ln O N p J S g J O R N L R S ] J O J b ] R b f e Q O T J L ] N ] e J O N M R ] Q S L ! N b b Y f f N _ S ] l" N b ] N M R S Z J b ] c J S ] b R b f N c g _ ] J L [ Q b J L N S ] e J d J R T e ] J L Q Z J O Q T J f N b ] c J ] e N L l# $ % � $ � � � �P e J Z Q K _ Q ] R N S N M R S Z J b ] c J S ] b R b c Q L J R S Q f f N O L Q S f J d R ] e ] e J m n a s _ R L J K R S J b &Q W I J K L M N O P O Q L R S T v Y Z Q R K Q [ K J M N O \ Q K J ' a S Z J b ] c J S ] b f K Q b b R M R J L _ S L J O ] e J Y V \ Q S LI V P f Q ] J T N O R J b Q O J c Q O p J L ( ] N ( c Q O p J ] l P e J c Q O p J ] v M Q R O Z Q K _ J N M � _ N ] J L R S Z J b ] c J S ] b
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·
! " . 4 & 2 8 ; 2 ! % 4 . ! % % & ; & ! ' $ 3 & 4 C ! " # $ % ! 1 7 . 4 4 0 ( 3 2 $ 1 ( Q & 3 ' 8 " . ' & 4 2 3 7 0 Q 4 DF ( & 3 & ! ' & 3 & 4 ' 4 ! 2 ' 3 & " & : & % 3 & 1 $ # . 3 # @ C H & H 2 : & 3 % $ & ; & @ 2 ! % N O % . @ 4 D G ' ( & : . # $ . ' 2 ! 4 ! . " " 2 3 % . ! " & F ' ( 9 3 $ % & ! ' . # ! 2 3 < 4 8 2 3 9 3 2 : 4 2 ! ! 1 . 4 9 3 & 4 " 3 ; & % ; @ M K B VF-389
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L I M N O F P Q C I N R D C S H B M N H T U R I V O W Q S U X Y C T V R I V C D Z U [ E H N C \ F D J ] Y C D C E R D D C I N^ R F N H N M F I O H D C I F N H _ H M T H ` T C H D C G H D a C V N F G H D a C N ` H O C V F I N Y C b C N Z O O C N Q H T R CW b Z Q X O Y F ] I ` J Q S U H O B C D N Y C T H N C O N H R V M N C V P M I H I E M H T O F P N Y C P R I V c d I E H O C N Y CH R V M N C V P M I H I E M H T O H D C I F N H _ H M T H ` T C P F D H B C D M F V ` C J F I V A e G F I N Y O f N Y C M I _ C O N G C I N OH D C _ H T R C V H N ` A B C D Q S U c d I _ C O N G C I N M I R I ^ R F N C V Q S U H P N C D g h i j Z R \ R O N f g k k l H D CE H N C \ F D M O C V R I V C D m n o E H N C \ F D J P F D N Y C M I M N M H T B C D M F V F P N Y D C C J C H D O H I V _ H T R C V H NE F O N H O B C D p q d \ R M V C T M I C O K·d I _ C O N G C I N M I O C E R D M N J D C E C M B N O H D C _ H T R C V H O B C D N Y C b C N Z O O C N Q H T R C W b Z Q X F ` N H M I C VP D F G N Y C M O O R M I \ p C E F I O N D R E N M F I S F G B H I J r [ C E R D M N M O H N M F I S F G B H I J cd I _ C O N G C I N O M I O R ` O M V M H D M C O r H O O F E M H N C O H D C E H N C \ F D M O C V H O m n o H I V H O O C O O C V P F DM G B H M D G C I N N F V C N C D G M I C B C D G H I C I N V M G M I R N M F I f M P H I J f M I H E E F D V H I E C ] M N Y N Y C p q d\ R M V C T M I C O cZ T T M I _ C O N G C I N O H D C H E E F R I N C V P F D F I O C N N T C G C I N V H N C O C s E C B N M I _ C O N G C I N O M I C ^ R M N JO Y H D C O ] Y M E Y H D C H E E F R I N C V P F D F I N D H V C V H N C H O N Y C E F D B F D H N C H E N M F I O H D C C P P C E N C V M IC ^ R M N J F I N Y C N D H V C V H N C ct u v w x y v u z v { { v | } ~ � � � � � � � � � y x v | v w � | � � { y � � | y {H c m C T V P F D n D H V M I \ H I V Z _ H M T H ` T C P F D [ H T C � � D F P M N F D T F O O F I O H T C r D C V C G B N M F I M OM I E T R V C V M I N Y C � D F P M N H I V � F O O H E E F R I N c` c m C T V N F o H N R D M N J � � D F P M N F D T F O O F I O H T C r D C V C G B N M F I F P M I _ C O N G C I N O M O M I E T R V C VM I N Y C � D F P M N H I V � F O O H E E F R I N c d I E H O C F P B D F P M N O f N Y C O H G C M O H B B D F B D M H N C V N FS H B M N H T p C O C D _ C H P N C D H V � R O N G C I N O P F D N H s H I V N D H I O P C D N F O N H N R N F D J D C O C D _ C M IH E E F D V H I E C ] M N Y p q d \ R M V C T M I C O c� � � v ~ | � � � � � u { � � � � v � u ~ | { ~ � y x v | {d I D C O B C E N F P p C B F N D H I O H E N M F I O R I V C D � M ^ R M V M N J Z V � R O N G C I N U H E M T M N J W � Z U X ] M N Y p q d fG F I M C O ` F D D F ] C V P D F G p q d H D C E D C V M N C V N F M I _ C O N G C I N H E E F R I N H I V D C _ C D O C V F IG H N R D M N J F P N Y C N D H I O H E N M F I c S F O N O N Y C D C F I H D C H E E F R I N C V P F D H O M I N C D C O N C s B C I O C c d ID C O B C E N F P p C _ C D O C p C B F N D H I O H E N M F I O R I V C D � Z U f G F I M C O B H M V N F p q d H D C V C ` M N C V N FM I _ C O N G C I N H E E F R I N H I V D C _ C D O C V F I G H N R D M N J F P N Y C N D H I O H E N M F I c p C _ C I R C O N Y C D C F I H D CH E E F R I N C V H O M I N C D C O N M I E F G C c} � v u y } ~ � � {d I H E E F D V H I E C ] M N Y N Y C p q d \ R M V C T M I C O f N Y C q H I a R I V C D N H a C O O Y F D N O H T C N D H I O H E N M F I O M IS C I N D H T � F _ C D I G C I N V H N C V O C E R D M N M C O c n Y C [ Y F D N [ H T C O B F O M N M F I O H D C D C P T C E N C V M I
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` E < < I : L J G @ > : a H < @ E @ I @ : B C b > ; ? @ : ? : LS D D B I H @ ; H @ < B C a H L E ; ] a b S a ` E < ; M M A E D ; J A : @ B A : ; < : < : H @ : ? : L E H @ B B H B ? ; C @ : ? ^ c d S M ? E Ae f f ^ P \ E H D : ; A A @ > : g ; H K h < B I @ < @ ; H L E H O C E H ; H D : A : ; < : @ ? ; H < ; D @ E B H < = : ? : : H @ : ? : L E H @ BM ? E B ? @ B @ > ; @ L ; @ : i @ > : g ; H K > ; < C B A A B = : L @ > : : ; ? A E : ? a b S a O I E L : A E H : < E H ? : < M : D @ B C @ > : < :A : ; < : < Pe P ^ j k ! " # $ % ! & % ' ( ! ) # $ * + ( , - % . " ! /0 1 Y 2 W V 3; ` R ? B F E L : H @ 4 I H L5 > : D B H @ ? E J I @ E B H N ; L : J G @ > : J ; H K @ B 5 > : 4 : L : ? ; A g ; H K 6 N M A B G : : < R ? B F E L : H @4 I H L i ; L N E H E < @ : ? : L J G @ > : @ ? I < @ : : < E < D > ; ? O : L @ B R ? B C E @ ; H L 9 B < < ; D D B I H @ PJ ` R : H < E B H 4 I H L5 > : D B H @ ? E J I @ E B H @ B = ; ? L < 5 > : 4 : L : ? ; A g ; H K 6 N M A B G : : < h R : H < E B H 4 I H L i N ; H ; O : LJ G @ ? I < @ : : < i E < L : @ : ? N E H : L B H ; D @ I ; ? E ; A J ; < E < B H M ? B 7 : D @ : L I H E @ D ? : L E @ N : @ > B L ; < B H@ > : g ; A ; H D : \ > : : @ L ; @ : ; H L E < ? : D B O H E < : L E H @ > : ; D D B I H @ < P 8 B = : F : ? i @ > : A E ; J E A E @ G; ? E < E H O B H ; D D B I H @ B C ? : 9 B M : H E H O B C M : H < E B H B M @ E B H @ B : Q E < @ E H O : N M A B G : : < = > B > ; L7 B E H : L M ? E B ? @ B e _ d : \ : M @ : N J : ? ^ _ _ j ; H L H B @ : Q : ? D E < : L @ > : B M @ E B H : ; ? A E : ? i E <; N B ? @ E < : L B F : ? ; M : ? E B L B C C E F : G : ; ? < D B N N : H D E H O C ? B N @ > : C E H ; H D E ; A G : ; ? e f ^ f 9 ^ ^; < M : ? N E @ @ : L J G @ > : ; : < : ? F : g ; H K B C a H L E ; P6 N M A B G : : < = > B > ; L 7 B E H : L @ > : < : ? F E D : < B C @ > : g ; H K = E @ > : C C : D @ C ? B N S M ? E A f ^ ie f ^ f ; ? : D B F : ? : L I H L : ? < : C E H : L b B H @ ? E J I @ B ? G R : H < E B H \ D > : N : ] < b R \ ` P a H ? : < M : D @B C < I D > : N M A B G : : < @ > : J ; H K D B H @ ? E J I @ : < ^ f = B C @ > : g ; < E D R ; G M A I < < : ; ? H : < <S A A B = ; H D : ; H L @ > : : Q M : H L E @ I ? : @ > : ? : B C E < D > ; ? O : L @ B @ > : R ? B C E @ ; H L 9 B < < ; D D B I H @D ` > ? ; @ I E @ G5 > : J ; H K N ; K : < ; H H I ; A D B H @ ? E J I @ E B H @ B 5 > : 4 : L : ? ; A g ; H K 6 N M A B G : : < h > ? ; @ I E @ G5 ? I < @ 4 I H L ; L N E H E < @ : ? : L ; H L N ; H ; O : L J G @ > : 5 ? I < @ : : < P 5 > : D B < @ B C M ? B F E L E H O < I D >J : H : C E @ < E < L : @ : ? N E H : L I < E H O @ > : R ? B 7 : D @ : L ? H E @ b ? : L E @ N : @ > B L i = E @ > ; D @ I ; ? E ; AF-394
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` a b c d e f g f h i jF Y W Z C L @ A B F D [ Z F E V C I H D C V L @ D G J H K T G H @ D B O F D E I @ J C A B O @ [ C C E L @ A B J H E H D P @ IM J @ N H V C D G k T D V F D V l A B O @ [ C C R G F G C m D E T J F D L C \ W Z C L @ D G J H K T G H @ D E B F H V Q B F [ F K O CG @ G Z C E C B O F D E V T J H D P G Z C [ C F J F J C L Z F J P C V G @ M J @ I H G F D V U @ E E n L L @ T D G I @ J G Z C[ C F J \K Y W Z C D C G B J C E C D G N F O T C @ I G Z C @ K O H P F G H @ D I @ J P J F G T H G [ K C D C I H G E o p Z H L Z H E F V C I H D C VK C D C I H G B O F D o F E V C G C J A H D C V @ D H D V C B C D V C D G F L G T F J H F O N F O T F G H @ D o L @ D V T L G C VF D D T F O O [ T E H D P B J @ q C L G C V T D H G L J C V H G A C G Z @ V o F E F V q T E G C V I @ J T D J C L @ P D H r C V B F E GE C J N H L C E L @ E G o H I F D [ o H E J C L @ P D H E C V H D G Z C F L L @ T D G E \ n L G T F J H F O P F H D E F D V O @ E E C EF J C J C L @ P D H E C V H D I T O O H D G Z C M J @ I H G F D V U @ E E n L L @ T D G I @ J G Z C B C J H @ V H D p Z H L ZG Z C [ @ L L T J \L Y W Z C L @ A B F D [ Z F E F E L Z C A C I @ J L @ A B C D E F G C V F K E C D L C E I @ J C A B O @ [ C C E o G Z CO H F K H O H G [ @ I p Z H L Z H E V C G C J A H D C V @ D G Z C K F E H E @ I F D H D V C B C D V C D G F L G T F J H F ON F O T F G H @ D L F J J H C V @ T G F G G Z C C D V @ I G Z C [ C F J o T E H D P G Z C B J @ q C L G C V T D H G L J C V H GA C G Z @ V \ n L G T F J H F O P F H D E F D V O @ E E C E F J C J C L @ P D H E C V H D I T O O H D G Z C M J @ I H G F D V U @ E En L L @ T D G I @ J G Z C B C J H @ V H D p Z H L Z G Z C [ @ L L T J \s \ t u v w x y z { | } ~ } w � | } ~ � � y � z �W Z C ^ F D S J T D E F O @ [ F O G [ B J @ P J F A p Z H L Z E C C S E G @ J C L @ P D H E C F D V J C p F J V L T E G @ A C J EK F E C V @ D G Z C H J J C O F G H @ D E Z H B p H G Z G Z C ^ F D S \ � D V C J G Z C B J @ P J F A o C O H P H K O C L T E G @ A C J E F J CP J F D G C V O @ [ F O G [ B @ H D G E J C V C C A F K O C H D I T G T J C o E T K q C L G G @ L C J G F H D L @ D V H G H @ D E \ W Z C ^ F D SF-395
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` [ V a S b ^ [ c V R ` a N O X O d ] ` b ` e f g h g c RQ a a V W \ Q R a O i c [ N ` O a Y W c [ c O T Q R \ ] j a N Q R k O P V Q W \ V U l R \ c Q d ] X ^ Z V _ O O ` [ V a S b ^ [ c V R` a N O X O e m Y c \ O Z c R O T n h o o o p M N O ` a N O X O ^ W V q c \ O T U V W k W Q R [ V U V ^ [ c V R T [ V ] X ^ Z V _ O O T V U[ N O P Q R S [ V Q a r Y c W O ] r Y c [ _ ` N Q W O T V U [ N O P Q R S [ N Q [ q O T [ c R Q k W Q \ O \ X Q R R O W Q R \ [ N Q [ Q W O[ V s O O j O W a c T O \ i c [ N c R Q T ^ O a c U c O \ ^ O W c V \ p l R Q a a V W \ Q R a O i c [ N [ N O ` ] P l m Y c \ O Z c R O T Q R \[ N O k Y c \ Q R a O R V [ O V R t u a a V Y R [ c R k U V W ] X ^ Z V _ O O ` N Q W O s Q T O \ ^ Q _ X O R [ T v c T T Y O \ s _ [ N Ol w u l n [ N O O j a O T T n c U Q R _ n V U [ N O X Q W S O [ ^ W c a O V U [ N O T N Q W O ^ W O a O \ c R k [ N O \ Q [ O V U k W Q R [ V U[ N O V ^ [ c V R Y R \ O W ] ` b ` V q O W [ N O O j O W a c T O ^ W c a O V U [ N O V ^ [ c V R c T Q X V W [ c T O \ V R Q T [ W Q c k N [Z c R O s Q T c T V q O W [ N O q O T [ c R k ^ O W c V \ pf p h x y z { z | } ~ �l R a V X O [ Q j O j ^ O R T O c T [ N O Q k k W O k Q [ O Q X V Y R [ V U a Y W W O R [ [ Q j Q R \ \ O U O W W O \ [ Q j a N Q W k O pw Y W W O R [ [ Q j c T [ N O Q X V Y R [ V U [ Q j ^ Q _ Q s Z O V R [ N O [ Q j Q s Z O c R a V X O U V W [ N O _ O Q W Q T\ O [ O W X c R O \ c R Q a a V W \ Q R a O i c [ N [ N O Q ^ ^ Z c a Q s Z O [ Q j W Q [ O T Q R \ [ N O ^ W V q c T c V R T V U [ N Ol R a V X O M Q j u a [ n h o � h Q R \ V [ N O W Q ^ ^ Z c a Q s Z O [ Q j Z Q i T p� c R c X Y X u Z [ O W R Q [ O M Q j d � u M e ^ Q c \ c R Q a a V W \ Q R a O i c [ N [ N O [ Q j Z Q i T n i N c a N k c q O TU Y [ Y W O O a V R V X c a s O R O U c [ T c R [ N O U V W X V U Q \ � Y T [ X O R [ [ V U Y [ Y W O c R a V X O [ Q j Z c Q s c Z c [ _ n c Ta V R T c \ O W O \ Q T Q R Q T T O [ c U [ N O W O c T a V R q c R a c R k O q c \ O R a O [ N Q [ [ N O O R [ c [ _ i c Z Z ^ Q _ R V W X Q Zc R a V X O [ Q j p u a a V W \ c R k Z _ n � u M c T W O a V k R c T O \ Q T Q R Q T T O [ c R [ N O w V R T V Z c \ Q [ O \ P Q Z Q R a O` N O O [ i N O R c [ c T N c k N Z _ ^ W V s Q s Z O [ N Q [ U Y [ Y W O O a V R V X c a s O R O U c [ Q T T V a c Q [ O \ i c [ N c [ i c Z ZU Z V i [ V [ N O O R [ c [ _ p� O U O W W O \ [ Q j c T W O a V k R c T O \ V R [ c X c R k \ c U U O W O R a O T n s O c R k [ N O \ c U U O W O R a O T s O [ i O O R [ N O[ Q j Q s Z O c R a V X O Q R \ [ N O Q a a V Y R [ c R k c R a V X O [ N Q [ V W c k c R Q [ O c R V R O ^ O W c V \ Q R \ Q W O a Q ^ Q s Z OV U W O q O W T Q Z c R V R O V W X V W O T Y s T O r Y O R [ ^ O W c V \ T p � O U O W W O \ [ Q j c T X O Q T Y W O \ Y T c R k [ N O [ Q jW Q [ O T Q R \ [ N O [ Q j Z Q i T O R Q a [ O \ V W T Y s T [ Q R [ c q O Z _ O R Q a [ O \ Q T Q [ [ N O W O ^ V W [ c R k \ Q [ O p� O U O W W O \ [ Q j Z c Q s c Z c [ c O T Q W O W O a V k R c T O \ U V W Q Z Z [ c X c R k \ c U U O W O R a O T p � O U O W W O \ [ Q j Q T T O [ T Q W OW O a V k R c T O \ U V W [ c X c R k \ c U U O W O R a O T V U c [ O X T V [ N O W [ N Q R Y R Q s T V W s O \ \ O ^ W O a c Q [ c V R Q R \a Q W W _ U V W i Q W \ Z V T T O T V R Z _ [ V [ N O O j [ O R [ [ N Q [ W O Q T V R Q s Z O a O W [ Q c R [ _ O j c T [ T [ N Q [ T Y U U c a c O R [U Y [ Y W O [ Q j Q s Z O c R a V X O i c Z Z s O Q q Q c Z Q s Z O Q k Q c R T [ i N c a N [ N O T O a Q R s O W O Q Z c T O \ p � V i O q O W nc U [ N O W O Q W O Y R Q s T V W s O \ \ O ^ W O a c Q [ c V R Q R \ a Q W W _ U V W i Q W \ V U Z V T T O T Q R \ c [ O X T W O Z Q [ c R k [ Va Q ^ c [ Q Z Z V T T O T n \ O U O W W O \ [ Q j Q T T O [ T Q W O W O a V k R c T O \ V R Z _ c U [ N O W O c T q c W [ Y Q Z a O W [ Q c R [ _T Y ^ ^ V W [ O \ s _ a V R q c R a c R k O q c \ O R a O [ N Q [ [ N O W O i c Z Z s O T Y U U c a c O R [ U Y [ Y W O [ Q j Q s Z O c R a V X OQ q Q c Z Q s Z O [ V W O Q Z c T O [ N O Q T T O [ T p � O U O W W O \ [ Q j Q T T O [ T Q R \ Z c Q s c Z c [ c O T Q W O V U U T O [ c U T Y a N c [ O X TW O Z Q [ O [ V [ Q j O T V R c R a V X O Z O q c O \ s _ [ N O T Q X O k V q O W R c R k [ Q j Z Q i T Q R \ [ N O m W V Y ^ N Q T QZ O k Q Z Z _ O R U V W a O Q s Z O W c k N [ U V W T Y a N T O [ V U U p � O U O W W O \ [ Q j Q T T O [ T Q W O W O q c O i O \ Q [ O Q a Ns Q Z Q R a O T N O O [ \ Q [ O U V W [ N O c W W O Q Z c T Q s c Z c [ _ pF-396
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F-406
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` G : H IB / $ / " J 4 / " 5 - $ 1 * ) " ' / K
` 1: I I B / $ / " L , $ / & / $ 5 - + " ( . , 1 ( + # $ ( . / - 0 1 . - $ ( * A
` M : G NB / $ / " J 4 / " 5 - $ 1 * O " ' /` M : P M B / $ / " L , $ / 7 % & 2 $ ) " " 8 . ' . " 9 ( * 1 / ' ( # " 8 # ! " % "B $ ( . / - 0 1 . - $ ( * ' ( +
` G P : P I B / $ / " J 4 / " 5 - $ 1 * ) " ' / K` Q : I G B / $ / " L , $ / C B 4 8 - ( . ! "# $ ( * $ 2 - + ' . " + 4 / $ , - . ' ( + < $ * * = # # $ 1 ( . : ! " B $ ( . / - 0 1 . - $ ( * & ' ) ' 0 2 " . $ . ! " * " & 2 ' ( *0 ) . ! " 3 / $ 1 & ' / " ' . . ! " / ' . " * * & " # - , - " + - ( . ! " R 1 2 " * $ , . ! " 8 # ! " % " * :S T U V W X Y V Z S V Y V W X [ \ ] ^ Y ! " > / $ 1 & $ , , " / * . ! " , $ 2 2 $ _ - ( 3 " % & 2 $ ) " " 0 " ( " , - . * # ! " % " * . $ - . * " % & 2 $ ) " " * K- : ` a b c d e c fe e g h d i j a b k k d b c e l k m n j k o e l kp q r s t u s vw x y z { | }~ � j � b k � i a l � e � j o � l a ` a b c d e c f � b � j � e k j � � j k j � e c a j c e a j � j k c i � b k � c � j � ` a b c d e c fn � b k � � � l � j a e k � c � j j � e � e � � j j � i � l f j j o g ~ � j ` a b c d e c f n � b k i a l � e � j o b � d � i o d �i b f � j k c c l � j o c j � j � i � l f j j o l k a j c e a j � j k c � � j b c � � e k � b i b � e c b c e l k l a c j a � e k b c e l kl � j � i � l f � j k c � l � b k b � l d k c � b o j � l k c � j a j o i j � c e � j j � i � l f j j o � o b � b a f b k � c � jc j k d a j l � j � i � l f � j k c g � j o c e k � l � � d a o d i l k � l � i � j c e l k l � � e � j f j b a o l � o j a � e � jb o i j a n b f � j k c l � ` a b c d e c f � � c � � � � b k � e c o b � j k � � j k c ! e c � j � � j � c � a l � " g # $ g # � # l a b o i j a c � j i a l � e o e l k o l � c � j % j � j a b � � b k � & � i � l f j j o � ` a b c d e c f~ a d o c % d k � ' d � j o m � e ( i b a c e c j � ! b a � i a l � e o e l k o g ) e b � e � e c e j o ! e c � a j � b a � c l c � j` a b c d e c f n � b k b a j � j c j a � e k j � � f � � c d b a e b � � b � d b c e l k b o l k c � j � b � b k � j h � j j c � b c j �� b o j � d i l k ! � e � � � c � j � b k � � l k c a e � d c j o b � � c � j b o � j a c b e k j � � e b � e � e c e j o c l c � j% j � j a b � � b k � & � i � l f j j o � ` a b c d e c f ~ a d o c % d k � � c � j � ~ a d o c � � g ~ a d o c j j o b � � e k e o c j a� l k c a e � d c e l k o � b � j c l c � j ~ a d o c b k � � l k c a e � d c e l k o b a j e k � j o c j � e k o i j � e � e �e k � j o c � j k c o b o i j a � e c c j � � f � b ! gw x y * + , - . / . { 0 1~ � j k j c i a j o j k c � b � d j l � c � j l � � e � b c e l k � l a d k ( � d k � j � � a b c d e c f � j k j � e c o � ! � e � � e o b� j � e k j � � j k j � e c i � b k � b o � j c j a � e k j � l k e k � j i j k � j k c b � c d b a e b � � b � d b c e l k � � l k � d � c j �b k k d b � � f d o e k � i a l 2 j � c j � d k e c � a j � e c � j c � l � � b o b � 2 d o c j � � l a d k a j � l � k e 3 j � i b o co j a � e � j o � l o c � e � b k f � e o a j � l � k e o j � e k c � j b � � l d k c o g � � c d b a e b � � b e k o b k � � l o o j o b a ja j � l � k e o j � e k � d � � e k c � j n a l � e c b k � ) l o o � � � l d k c � l a c � j i j a e l � e k ! � e � � c � j fl � � d a g
F-407
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` a G b c a d Oe f g h i j k l e j m l j l n e o p m q e k i o e p j r s` t u v w x w y z{ | } ~ � � � � | } � � } | ~ � � ~ � { � | � { � � � � � � { � | �� � � � � � � � � �� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �� � � � � � � � � � � � � � � �� � � ¡ ¢ � � � � £ � � ¡ � � � � � ¡� � � ¤ � ¥ � ¢ � ¦ § ¨ © ¦ ª ¦ « § © ¨ ¬ § © ¨ § © § ® ¬ ¨ © ¯ ® ® « © ¨ ¦° � � ± � � � ² � ³ � ¨ ¬ © ´ ¨ ¬ © § ¯ § © § § © ¨ § ª © ¨ « ¯ © ¨ ¨µ � � � � � ³ � � � ³ � ¨ © § ¬ ¨ ´ © ¯ § © § ¨ § © § ¨ ¬ ª © ´ § « « © ¦ ¦¶ � � · ¢ � � ¢ ¸ ¡ ¢ � � ¹ º � ³ ³ ª © ¬ ¬ ¸ « ¦ © ¯ « ¹ ¸ § © § ® ¹ ¸ § © § « ¹ ¨ § ¬ © « ¦ ¨ ¬ © ¯ ¯» � � � � � � ³ ¼ ¢ � � ¸ ¦ ª © ® ¯ ¹ ¸ ¦ ® © ´ ¹ ¸ § © § ¹ ½ ¸ ¨ « ¨ © ¨ ¬ ¹ ¸ ¨ ¯ © « « ¹� � � � � � � � � � � � � � � �� � � ¡ ¢ � � � � £ � � � � � � ¤ �¥ � ¢ � ¾ ¿ À Á  à ¾ ¿ Ä Á ¾ Å ¿ Á ¿ Æ ¿ Á Ä Ç Ç Æ È Á Ã Æ Ç Â Ä Á È ÆÉ Ê Ë Ì Í Î Ê Ï Ð Ì Ñ Ò Ë Ì Ó Î Ô Õ Í Ì Ö Ì × Ò Ø
` Ù Ú Û Ï Üe e f g h i j k l e j Ý q i j i r r l o r s` t u v w x w y z{ | } ~ � � � � | } � � } | ~ � � ~ � { � | � { � � � � � � { � | �� � � � � � � � � �� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �� ¢ � ¢ ³ ³ � � ³ ¢ �� � ¡ � � � � � ¡ � � � ¤ � ¥ � ¢ �¢ � � ¢ � � ± ¢ · � Þ ß à á â ß Þ Þ ã á ä å æ æ ç ã ä á Þ è ç ç ç á ã å
F-408
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` @ A B C D C E FG H I J K L M N H I O P I H J M K J Q G N H R G S R O K T R G N H RU V W U U X W U V WY Z [ \ ] [ ^ Y Z [ _ ] [ \ Y Z [ \ ] [ ^ Y Z [ _ ] [ \ Y Z [ \ ] [ ^ Y Z [ _ ] [ \` a b c d a e f g h i j e a ka l l g m l a m m n g g k o h i m n gp g a c q q r s t q q r u s v r w w t x x s x u x y z s q t{ c g l g k m d a e f g h i m n go g i b k g o | g k g i b mh | e b } a m b h k l a m m n g g k oh i m n g p g a c q u ~ s r x q u y s q z � � � � � � � � t v � s x v t r y s � v� b a | b e b m p � � � l l g m �c g � h } k b � g o b k m n g� h k l h e b o a m g o � a e a k � g� n g g m ? y x s y v F ? q ~ s t � F � � � � � � � � x r s u v y y t s t r �� � A � � � � E � � � D � A � � � � � � � E D A � � � D � A � D � � C � A � @ � @ D A � � � @ � � @ � @ � � � � E � D � E � D A � D � � @ D A � D C� E A � @ D A ` � @ � ? � C E � @ D � � � E � C `
r r s z v B C D C E F ¡ ¢ £ ¤ ¥ ¦ § ¦ ¨ © ª « ¬ ® ¬ ¯ ® ¦ ° ® ¤ ¦ ± « ¨ « ¥ ¤ « ¬ ² « ² ³ ´ µ ¥ ¤ ¯ ± ¶ · ¸ ´ ¹ ?` @ A B C D C E FG H I J K L M N H I O P I H J M K J Q G N H R G S R O K T R G N H Rº » ¼ º º ½ ¼ º » ¼Y Z [ \ ] [ ^ Y Z [ _ ] [ \ Y Z [ \ ] [ ^ Y Z [ _ ] [ \ Y Z [ \ ] [ ^ Y Z [ _ ] [ \� g c d b � g � h l m � ¾ � � ¿ � ¾ � � À � � � � � � � � � Á � � �  À � � �à k m g c g l m � h l m � � � � ¾ � ¿ � À � � � � � � � � � ¾ Á � ¿ �   � Ä ÄÅ Æ j g � m g o c g m f c k h kj e a k a l l g m l � Ä � � � Ä � � � ¿ �  ¿ � w w � ¾ Á � ¿ Á � � ¾ � � ¾ ¾ �� � m f a c b a e � } a b k � � e h l l À � Ä ¿ � Â Ä � ¿ � � � � � � � � � � � �  � ¿ ¿ � � Á � ¾ � � �Å Ç j e h p g g � h l m � � � ¾ ¿ � Ä ¿ � � À � � � � � Ä � � � � À � � Á � ¾ � Á Á � � �� Ç h c m b l a m b h k � h l m w w w w ¾ ¾ � Á � ¾ ¾ � Á �È g m � h l m É g | b m m h� h k l h e b o a m g o { c h i b ma k o � h l l � � � h f k m � � � ¾ ¿ � Ä ¿ � � À � � � � � Ä � � � � À � � ¿ � ¿ ¿ � � � � � ¿� Ç h f k m k h m o g | b m g ob k � h k l h e b o a m g o w w w w w ¾ ¾ � Á �
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! " # " " # $ % # & ' & ( # ' " ) * + , * ) * - ' & ( , ) . " # / ' $ # ) & % 01 2 3 ( ( , + $ ' & ( , % 4 , & 1 ) * % , - , & $ % ' & 1 ) $ 5 , * ) . " # / ' $ # ) & %6 5 , % , # & ( " ! 1 , 1 ) ( ! - , & $ ' * 7 ( * , 1 # $ # % % ! , 1 . 7 $ 5 , 8 ' & 9 ) & . , 5 ' " ) # $ % ( ! % $ ) - , * %' & 1 . # " " % 1 * ' : & . 7 $ 5 , 8 ' & 9 ; % ( ! % $ ) - , * % $ 5 ' $ ' * , ' ( ( , + $ , 1 ) * , & 1 ) * % , 1 . 7 $ 5 ,8 ' & 9 0, 2 < $ 5 , * # $ , - % ) * : 5 # ( 5 . ' & 9 # % ( ) & $ # & / , & $ " 7 " # ' . " ,= & ( " ! 1 , % > ' + # $ ' " ( ) - - # $ - , & $ % ' & 1 ' - ) ! & $ $ * ' & % , * * , 1 $ ) ? 8 = ! & 1 , * $ 5 , , + ) % # $ ) *! 1 ! ( ' $ # ) & ' & 1 3 : ' * , & , % % " ! & 1 # ! 3 " 2? , , * % ( 5 , 1 ! " , $ % ) * ' - ) ! & $ % * , " ' $ # & / $ ) ( ) & $ # & / , & $ " # ' . # " # $ 7$ 0 $ & ' ( ) * + , + ) - . ) ( / ) - 0 1 2 ( 3 4 ) - 5 ( 6 4 5 ,6 5 , 7 * ) ! + 5 ' % ' + * ) ( , % % : 5 , * , . 7 + , * # ) 1 # ( ' " " 7 ' " " " ) & / $ , * - ( ) & $ * ' ( $ % # # & ( " ! 1 # & /1 , * # 8 ' $ # 8 , ( ) & $ * ' ( $ % 2 ' * , ' % % , % % , 1 ) * - ' $ , * # ' " ) * , % , , ' . " , " ) % % , % 0 3 $ $ 5 , 7 , ' * , & 1 4 $ 5 ,. ' & 9 5 ' % * , 8 # , : , 1 ' & 1 * , ( ) * 1 , 1 ' 1 , 9 ! ' $ , + * ) 8 # % # ) & ' % * , 9 ! # * , 1 ! & 1 , * ' & 7 : ' : ;3 ( ( ) ! & $ # & / < $ ' & 1 ' * 1 % ) * - ' $ , * # ' " ) * , % , , ' . " , " ) % % , % ) & % ! ( 5 " ) & / $ , * - ( ) & $ * ' ( $ %# # & ( " ! 1 # & / 1 , * # 8 ' $ # 8 , ( ) & $ * ' ( $ % 2 # & $ 5 , . ) ) 9 % ) ' ( ( ) ! & $ ' & 1 1 # % ( " ) % , 1 $ 5 , % ' - , ! & 1 , *$ 5 , * , " , 8 ' & $ & ) $ , % # & $ 5 , # & ' & ( # ' " % $ ' $ , - , & $ % 0$ 0 $ = 3 1 1 # $ # ) & ' " # & ) * - ' $ # ) & ' % * , 9 ! # * , 1 . 7 + ' * ' / * ' + 5 % ) $ 5 , 7 , & , * ' " = & % $ * ! ( $ # ) & % ) *+ * , + ' * ' $ # ) & ) > ) & % ) " # 1 ' $ , 1 " # & ' & ( # ' " < $ ' $ , - , & $ % $ ) < ( 5 , 1 ! " , = = = $ ) $ 5 , > ) - + ' & # , %3 ( $ 4 % > $ & 0? 6 3 2 ) . 5 @ 2 2 - 5 + 5 A ? 2 5 B , , 2 5 , + C 2 C 5 ) 5 6 D 6 , , 2 5 ,3 + - E , 5 ) 5 6 D D + 6 F + D + 5 + 2 , G @ 6 ( 2 ) . H ( ) . + 5 ) ( D ) , ,B , I ) .J ) - , ) D + K 6 5 2 K? 2 5 B , , 2 5 , B 3 ) E - 5
(`+ - J ( ) ( 2 L B , I ) .J ) - , ) D + K 6 5 2 K' ( ) . + 5 ) ( / ) , , B 3 ) E - 5
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! " ! # $ % & ' ( ) * + ' , - ( . ' ( / $ + & ) 0 ( 1 ' - 1 / ( 2 ( ( 3 ' ( % ' + & . ( 4 1 3 4 ' ( 5 6 1 ) ) $ * $ ( 4 7 8 - ( ' ( / ( ' 3 ( 5 ( ) ) 1 ' 0, + 5 + 3 * + ' 9 , + 5 & ' ' ( 3 , 0 ( 1 ' : ) . ' ( ) ( 3 , 1 , $ + 3 ! ; < = > ? @ < ? A B C > D E < E F C B G < > = @ < E H I = B J F < = KL M N O P Q R S T U R M L V N M N O P L T U R M V R Q R W R X P Y Z [ \ ] ^ ] _ ` ^ ] a b c d ^ e ] _ d \ f g f h ] i ] gj k l m n o p k q k r s t u s q s v k r w x y l s q o z k { r k n s r o | } k { m n ~ � k j ~ r k { n x r u s q s v ~ q v j ~ r k { n x r � w | �� � d ] _ � ] � ^ � \ c � � Z [ \ ] ^ ] _ � c i ^ ep k q k r s t u s q s v k r � w � � w � s ~ r y s q� f \ � a � c \ i �� f � � i ^ d � f b ] _ i � e� � ` ^ ] g � \ ] i � b ^ ] \d � � ^ f \ � � c i ^ f� f � f � � d ] � ] \ ] g � ] g f� ] \ f i ^ � � g � f g � � \� \ ] a � � � f � ] [ � � ^ � c i ^ f �� P T � P R � R S O P U N � R Q O �� � ] a � � � c a ^ f� ] � � � � � � ^ Z � \ f � � ¡ ¢ £F-416
221
DECLARATION
Our Bank certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the SEBI ICDR Regulations have been
complied with and no statement made in this Placement Document is contrary to the same and that all approvals and permissions
required to carry on our Bank’s business have been obtained, are currently valid and have been complied with. Our Bank further
certifies that all the statements in this Placement Document are true and correct.
Signed by:
Shyam Srinivasan
Managing Director
Date: June 27, 2017
Place: Mumbai
222
DECLARATION
We, the Directors of our Bank certify that:
(i) our Bank has complied with the provisions of the Companies Act, 2013 and the rules made thereunder;
(ii) the compliance with the Companies Act, 2013 and the rules does not imply that payment of dividend or interest or
repayment of debentures, if applicable, is guaranteed by the Central Government; and
(iii) the monies received under the offer shall be used only for the purposes and objects indicated in this Placement Document
(which includes disclosures prescribed under Form PAS-4).
Signed by:
___________
Shyam Srinivasan
Managing Director
I am authorised by the Credit Committee & Investment and Raising Capital Committee, a committee of our Board of Directors,
through resolution dated June 27, 2017 to sign this form and declare that all the requirements of Companies Act, 2013 and the
rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with.
Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the
subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters
subscribing to the Memorandum of Association and the Articles of Association.
It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this
form.
Signed by:
___________
Shyam Srinivasan
Managing Director
Date: June 27, 2017
Place: Mumbai
223
THE FEDERAL BANK LIMITED
Registered and Corporate Office
Federal Towers, P B No. 103, Aluva, Ernakulam 683 101, Kerala, India
Website: www.federalbank.co.in; CIN: L65191KL1931PLC000368
Contact Person: Girish Kumar Ganapathy, Company Secretary and Compliance Officer
Address of Compliance Officer:
Federal Towers, P B No. 103, Aluva, Ernakulam 683 101, Kerala, India
Tel: +91 484 2622 263; Fax: +91 484 2623 119; E-mail: [email protected]
BRLMs
Citigroup Global Markets India Private Limited
12th Floor, First International Financial Centre
G Block C54 & 55, Bandra Kurla Complex
Bandra (East), Mumbai 400 098
Tel: +91 22 6175 9999
Fax: +91 22 6175 9961
E-mail: [email protected]
Deutsche Equities India Private Limited
14th Floor, The Capital,
Bandra Kurla Complex, Mumbai 400 051
Tel: +91 22 7180 4444
Fax: +91 22 7180 4199
E-mail: [email protected]
IIFL Holdings Limited*
10th Floor, IIFL Centre, Kamala City
Senapati Bapat Marg, Lower Parel (West), Mumbai 400 013
Tel: +91 22 4646 4600
Fax: +91 22 2493 1073
E-mail: [email protected]
Kotak Mahindra Capital Company Limited
27 BKC, 1st Floor, Plot No. C – 27, G Block,
Bandra Kurla Complex Bandra (East), Mumbai
400051
Tel: +91 22 4336 0000
Fax: +91 22 6713 2447
E-mail: [email protected]
*One of the Directors of our Bank is also a director of IIFL Holdings Limited. In compliance with Regulation 21A of the Securities and Exchange Board of India (Merchant Bankers) Regulations,
1992, as amended, IIFL Holdings Limited would be involved only in the marketing of the Issue.
STATUTORY AUDITORS TO OUR BANK
BSR & Co. LLP
Chartered Accountants
5th Floor, Lodha Excelus
Apollo Mills Compound
N.M.Joshi Marg, Mahalaxmi
Mumbai 400 011
Maharashtra, India
M.M. Nissim & Co.
Chartered Accountants
Barodawala Mansion, B-Wing,
3rd Floor, 81
Dr. Annie Besant Road
Worli, Mumbai 400 018
Maharashtra, India
DOMESTIC LEGAL ADVISORS TO OUR BANK
Cyril Amarchand Mangaldas 201, Midford House
Midford Garden
Off M.G. Road
Bengaluru 560 001
Karnataka, India
DOMESTIC LEGAL ADVISOR TO THE BRLMs
Shardul Amarchand Mangaldas & Co Amarchand Towers
216, Okhla Industrial Estate Phase III
New Delhi 110 020, India
INTERNATIONAL LEGAL ADVISOR TO THE BRLMs
Clifford Chance Pte Ltd 12 Marina Boulevard
25th Floor Tower 3
Singapore 018982