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PUNJAB NATIONAL BANK

NOTES TO ACCOUNTS

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You can view the entire text of Notes to accounts of the company for the latest year

Market Cap. ( ` in Cr. ) 41334.97 P/BV 0.98 Book Value ( ` ) 62.88
52 Week High/Low ( ` ) 100/56 FV/ML 2/1 P/E(X) 0.00
Book Closure 12/07/2019 EPS ( ` ) 0.00 Div Yield (%) 0.00
Year End :2019-03 

* Information given in 1 (i to iv) has been given as per Basel III Capital Regulations.

** Figures includes Rs.368.69Crore (Rs.126.52Crore) as Equity Capital and Rs.14435.31 Crore (Rs.10346.48Crore) as Share Premium.

RBI vide circular no. DBR.No.BP.BC.83/21.06.201/2015-16 dated 1st March, 2016 has given discretion to banks to consider Revaluation Reserve, Foreign Currency Translation Reserve and Deferred Tax Asset for purpose of computation of Capital Adequacy as CET-1 capital ratio. The Bank has exercised the option in the above computation.

‘Others include Special Govt. Securities of Rs.20955.52Crore (Rs.7463.42Crore) (Net of depreciation, if any) shown under Govt. Securities in Schedule 8. Amounts reported under columns 4, 5, 6 and 7 above may not be mutually exclusive.

1a. Sale and transfers to / from HTM category

The total value of sales and transfers of securities to / from HTM category during 1st April 2018 to 31st March, 2019 has not exceeded 5% of the book value of investments held in HTM category as on 31.03.2018 (Excluding following Transactions).

{The 5 percent threshold referred to above will exclude (a) the one- time transfer of securities to/ from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning quarter of the accounting year (b) sales to the Reserve Bank of India under pre-announced OMO auctions, (c) Repurchase of Government Securities by Government of India from banks, (d) Sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM at the beginning of April, July, October 2018 and January 2019. In addition to the shifting permitted at the beginning quarter of the accounting year i.e. 1st April 2018}

As such no disclosure is to be made in terms of extant RBI guidelines.

The above Trades are Interest Rate Swap Deal done with Interbank for Rs. 250.00Crores (Previous year Rs. 319.83Crores) and Financial Institution Rs. 0.0Crores (Previous yearRs.19.83Crores). Credit Risk (Credit Exposure) for Current Year is Rs.3.36Crore and for previous year it was Rs. 9.77Crore. There are total 10 deals out of which 0 deals are Back to Back Deals, 8 Deals where payment is made at Fixed Contract Rate and received at Floating rate and in remaining 2 deals, payment is made at Floating Rate and received at Fixed Contract Rate.

2b. Disclosure on risk exposure in derivatives

I - Qualitative Disclosure

The Bank uses derivatives products for hedging its own balance sheet items as well as for trading purposes. The risk management of derivative operation is headed by a senior executive, who reports to top management, independent of the line functions. Trading positions are marked to market on daily basis.

The derivative policy is framed by Integrated Risk Management Division, which includes measurement of credit risk and market risk.

The hedge transactions are undertaken for balance sheet management. Proper system for reporting and monitoring of risks are in place. Policy for hedging and processes for monitoring the same is in place.

Accounting policy for recording hedge and non-hedge transactions are in place, which includes recognition of income, premiums and discounts.

Valuation of outstanding contracts, provisioning, collateral and credit risk mitigation are being done.

3a. Details of financial assets sold to Securitisation I Reconstruction Company (SC/RC) for Asset Reconstruction.

6h. In accordance with RBI Circular DBR.No.BP. BC. 108/21.04.048/2017-18 dated 06.06.2018, the bank has retained advances of Rs.1718.41 Crore as standard asset on 31st March 2019. In accordance with the provisions of the circular, the bank has not recognized interest on these accounts and is maintaining a standard provision of Rs.85.92Crore in respect of such borrowers.

As per RBI Circular No. DBR.No.BP.18/21.04.048/2018-19 dated 1st January 2019 on restructuring of Advances-MSME sector, the details of restructured accounts as on 31.03.2019 are as under:

#lncludes Rs.420.66Crore in respect of exposure (including investment) in One borrower which is also considered as Infrastructure in line with paragraph 3 of RBI circular DBOD. BP.BC.No.42/08.12.015/2009-10 dated September 9, 2009.

3b. Risk Category wise Country Exposure

Total Net Funded Exposure as on 31.03.2019 is Rs.43412.20Crores. Total assets of the bank as on 31.12.2018 were Rs.747806.10Crores, 1% of which comes to Rs.7478.06Crore. Total net funded exposure of two countries namely Hongkong and UAE amounting to Rs.8857.37Crore & Rs.9495.27Crore respectively, is more than 1% of the total assets of the Bank as on 31.12.2018. In case, total net funded exposure of the bank on HongKong & UAE happens to be more than 1 % of total assets as on 31.03.2019, provision of Rs.14.09Crore for Hongkong and Rs.16.31 Crore for UAE has been made in terms of RBI guidelines. As per Export Credit Guarantee Corporation of India (ECGC) classification, HongKong is in the “Insignificant Risk Category" i.e.‘A1’and UAE is in the “Low Risk Category” i.e. ‘A2’.

3c. Bank’s Disclosure in respect of Credit Exposures where the same had exceeded the Prudential Exposure limits prescribed by RBI for Individual/Group Borrowers as on 31.03.2019

Details of accounts where Bank has exceeded prudential exposure ceilings in respect of any Group Accounts and Individuals Borrowers during the period 01.04.2018 to 31.03.2019 as below:-

1. Food Corporation of India, 2. HDFC Ltd, 3. Reliance Industries Ltd, 4. Reliance Jio Infocomm ltd, 5. Air India Ltd, 6. JSW Steel Ltd, 7. SIDBI.

However there are 3 accounts where exposure is exceeding the prudential ceiling i.e. 15 % of capital funds as on 31.03.2019, details of the same are as under: -

4.A. Disclosure of penalties imposed by the RBI:

1. RBI vide order dated 01.02.2019 has imposed a monetary penalty of Rs.10.00million (NIL) on observance of noncompliance with various directions issued by RBI on monitoring of end use of funds, exchange of information with other banks and on restructuring of accounts.

2. RBI vide order dated 25.02.2019 has imposed a monetary penalty of Rs.20.00million (NIL) on observance of non-compliances with directions related to implementation of SWIFT related operational controls.

[Penalties imposed by RBI under the provision of Section 46(4) of the Banking Regulation Act, 1949, for contraventions of any of the provisions of the Act or noncompliance with any other requirements of the Banking Regulation Act, 1949; order, rule or condition specified by Reserve Bank of India under the Act.]

4.B. Disclosure of Bouncing of SGL:

Particulars of Bouncing of SGL securities during the period 01.04.2018 to 31.03.2019 is NIL (NIL)

Other Disclosures required by Accounting Standards

5. AS -5 Prior Period and Change in Accounting Policy

There were no material prior period income/expenditure items requiring disclosure under AS-5.

6. AS-10 Properties, Plant and Equipment.

Break-up of total depreciation for the year ended March, 2019 for each class of assets

7. AS- 9 Revenue Recognition:

Certain items of income are recognized on realization basis as per Accounting Policy No. 3(5). However, the said income is not considered to be material.

* RBI vide its communication DBR.No.BP.BC.9730/21.04.18 /2017-18 dated April 27, 2018 has given the option to Banks to spread additional liability on account of enhancement in gratuity limits from Rs. 10.00 lakhs to Rs. 20.00 lakhs from 29.03.2018 under the Payment of Gratuity Act 1972, over four quarters beginning with the quarter ended March 31, 2018. The bank exercised the option and charged Rs. 63.45 crores during the quarter March 31, 2018 and deferred Rs. 190.00 crores to the ensuing financial year. The said amount of Rs. 190.00 crores has been recognized in the current financial year. Accordingly, the comparitive numbers for Gratuity has been adjusted to the extent permitted by RBI in Table VI, VII & VIII.

Defined Contribution Plans:-

“The Bank has Defined Contribution Plan applicable to all categories of employees joining the Bank on or after 01.04.2010. The scheme is managed by NPS trust under the aegis of the pension Fund Regulatory and Development Authority. National Securities Depository Limited has been appointed as the Central Record Keeping Agency for the NPS.

The details of contribution is as under: -

During the FY 2018-19 = Rs.327.10Crores (Bank Employee contribution)

During the FY 2017-18 = Rs.285.45Crores (Bank Employee contribution)

Note:

1. Segment Liabilities are distributed in the ratio of their respective Segment Assets.

2. Figures of the previous period have been re-grouped /reclassified wherever necessary to make them comparable.

8. Disclosure of Related Parties as per AS -18 issued by ICAI

Names of the related parties and their relationship with the Bank:

Key Management Personnel:

i) Shri Sunil Mehta, Managing Director & CEO

ii) Shri K. Veera Brahmaji Rao, Executive Director, Remained upto 18.01.2019 (ceased to be Director)

iii) Shri Sanjiv Saran, Executive Director, Remained upto 18.01.2019 (ceased to be Director)

iv) Shri Lingam Venkata Prabhakar, Executive Director,

v) Shri Agyey Kumar Azad, Executive Director, w.e.f. 22.01.2019

Subsidiaries:

i) PNB Gilts Ltd.

ii) PNB Investment Services Ltd.

iii) PNB Insurance Broking Pvt Ltd*.

iv) Punjab National Bank (International) Ltd., UK.

v) Druk PNB Bank Ltd, Bhutan.

*Steps are being taken for winding up of the company as the license has already been surrendered on 14.02.2011.

Associates:

i) Principal PNB Asset Management Company Pvt. Ltd (Stake sold on 24.08.2018)

ii) Principal Trustee Company Private Limited (Stake sold on 24.08.2018)

iii) PNB Housing Finance Ltd.

iv) PNB Metlife India Insurance Company Ltd.

v) JSC (Tengri Bank) Almaty, Kazakhstan .

vi) Madhya Bihar Gramin Bank, Patna* up to 31.12.2018

vii) Dakshin Bihar Gramin Bank, Patna** w.e.f. 01.01.2019

viii) Sarva Haryana Gramin Bank, Rohtak.

ix) Himachal Pradesh Gramin Bank, Mandi.

x) Punjab Gramin Bank, Kapurthala***

xi) Sarva UP Gramin Bank, Meerut.

*Madhya Bihar Gramin bank remained in existence till 31.12.2018.

**After amalgamation of Bihar Gramin Bank with Madhya Bihar Gramin Bank vide Notification no. 5014 dated 21.12.2018, Dakshin Bihar Gramin Bank came into existence w.e.f. 01.01.2019.

‘“Similarly, In state of Punjab, Malwa Gramin Bank and Sutlej Gramin Bank got amalgamated with Punjab Gramin Bank, Kapurthala w.e.f. 01.01.2019 vide GOI notification no. 5015 dated 21.12.2018

Joint Venture:

i) Everest Bank Limited, Kathmandu, Nepal.

9. AS -19 Accounting Of Lease

Financial and Operating Lease:

The Bank has not entered into any transaction of Financial Lease. Operating Lease primarily comprises of office premises, which are renewal at the option of the Bank. Lease payment for assets taken on operating lease is recognized as an expense in the Profit and Loss Account.

(ii) Current Tax: During the year the bank has debited to Profit & Loss Account Rs.17.15Crores (Previous Year Rs.-71.15Crores) on account of current tax. The current Tax in India has been calculated in accordance with the provisions of Income Tax Act 1961 after taking appropriate relief for taxes paid on foreign jurisdiction.

10. AS 23- Accounting for Investments in Associates in Consolidated financial Statements

Since Investments of the bank in its Associates are participative in nature and the Bank having the power to exercise significant influence on their activities, such Investments are recognized in the Consolidated Financial Statements of the Bank.

11. AS 24 - Discontinuing Operations

During the period from 01.04.2018 to 31.03.2019, the bank has not discontinued operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety which will have the above effect.

12. AS 28 - Impairment of Assets

A substantial portion of the bank's assets comprises ‘financial assets’ to which Accounting Standard 28 ‘Impairment of Assets' is Not Applicable. In the opinion of the bank, there is no impairment of its assets (to which the standard applies) to any material extent as at 31.03.2019 requiring recognition in terms of the said standard.

ii) Refer Schedule-12 on contingent liabilities

Such liabilities at S.No.(l), (II), (III), (IV), (V) & (VI) are dependent upon the outcome of Court / arbitration / out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, respectively.

*ln case of 1 award acceptance of award not given by complainant. As per clause 12(8) of BO, scheme 2006, the award shall lapse and be of no effect unless the complainant furnishes to the bank within 30 days from the date of receipt of copy of the award, a letter of acceptance of the award in full and final settlement of the claim.

**ln 2 cases in which appeals were filed in the earlier years, appeals are still pending as on 31.03.2019 and in 2 other cases appeals have been filed during the current year.

13. The Bank has issued a Letter of Comfort to Prudential Regulation Authority (PRA), the regulator in United Kingdom, committing that the bank shall provide financial support to its subsidiary, Punjab National Bank (International) Ltd., UK so that it meets its financial commitments as and when they fall due.

Apart from the above, the Bank has not issued any Letter of Comfort and therefore there are no cumulative Financial obligations under Letter of Comfort.

The Prudential Regulatory Authority (PRA), regulator of UK, has vide its letter dated 02.09.2015 put the Bank under ‘watch list’. There are no specific restrictions or penalties. PNB infused fresh capital of USD 20 million on 2nd June 2017 to help it to meet the minimum regulatory capital requirements.

14. Reward Points of Credit Card & Debit Card

i) PNB Global Credit Cardholders are rewarded as and when they make purchases through usage of Credit Card. Reward Points are generated at the time of usage of Credit Card by Cardholder at merchant Establishment. Card holder can redeem the accumulated reward points. The amount payable on account of reward points is charged to Profit and Loss account and credited to Sundry Provision Account on daily basis.

*The provision held against Rewards points in respect of Credit Cards has been worked out at ? 0.50 for 1 point. Based on past trend of redemption, provision has been made @25% of accumulated Reward points on estimated basis as in the previous year.

The provision held against Loyalty Reward Points has been worked at ?.0.25 for 1 point. Which has further been valued at 15% on estimated basis as in previous year

The accrual under Loyalty Program has ceased with effect from 01.08.2018 and all reward points have been deemed expired after 30.09.2018.

** The provision amount held, pertains to payment that has been put on hold on account of certain data extraction activities pending as a part of the Exit Management with the Vendor. The same will be cleared once all the relevant activities have been completed.

‘Only the SPVs relating to outstanding securitization transactions may be reported here

15. Credit Default Swaps

Since the Bank is not using any proprietary pricing model for pricing CDS contracts, and it is over the counter contract (OTC), the price is determined by the market dynamics. As such no disclosure is to be made in terms of extant RBI guidelines.

’Reflected as "Contingent Liability - Others, items for which the bank is contingently liable" under Schedule 12 of the financial statements.

16. Unhedged Foreign Currency Exposure (UFCE):

The Bank has framed a policy to manage currency induced credit risk and has been incorporated in current bank's Credit Management & Risk Policy as follows:

“In terms of RBI guidelines, the Bank monitors the currency wise Un-hedged Foreign Currency Exposure in the books of borrowers at quarter ends along-with the Annualized Earnings before Interest & Depreciation (EBID). The incremental provision (ranging from 0 to 80 bps on total credit exposure, over and above the standard asset provisioning) and capital requirement will depend on likely loss (due to foreign currency fluctuation), that borrowers may face due to their un-hedged forex exposure in their books. Bank maintains separate charge and provisioning requirement on account of such exposures which may impact the cost to the borrowers. Appropriate disclosures in the financial statements of the bank shall also be made.”

17. Liquidity Coverage Ratio (LCR)

QUALITATIVE DISCLOSURE ON LIQUIDITY COVERAGE RATIO

The bank has implemented RBI guidelines on Liquidity Coverage Ratio (LCR) from 1st January 2015.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be readily converted into cash at little/no loss of value to meet its liquidity needs for a 30 calendar day time horizon under a liquidity stress scenario

LCR has two components:

i. The value of the stock of High Quality Liquid Assets (HQLA)-The Numerator.

ii. Total Net Cash Outflows: Total expected cash outflows minus Total expected cash inflows, in stress scenario, for the subsequent 30 calendar days - The denominator.

Definition of LCR:

Stock of high quality liquid assets (HQLAs^ £ 100%

Total net cash outflows over the next 30 calendar days

ForQ4 FY’2018-19, the daily average LCR was 121.27% (based on simple average of daily observations) at consolidated level, as against the regulatory requirement of 100%.

The main drivers of LCR of the bank are High Quality Liquid Assets (HQLAs) to meet liquidity needs of the bank at all times and basic funding from retail and small business customers. The retail and small business customer’s contribute about 67.51% of total deposit portfolio of the bank which attracts low run-off factor of 5/10% as on 31.03.2019.

Composition of High Quality Liquid Assets (HQLA)

HQLAs comprises of Level 1 and Level 2 assets. Level 2 assets are further divided into Level 2A and Level 2B assets, keeping in view their marketability and price volatility.

Level-1 assets are those assets which are highly liquid. For quarter ended March 31, 2019, the Level-1 asset of the bank includes Cash in Hand, Excess CRR, Government Securities in excess of minimum SLR, Marketable securities issued or guaranteed by foreign sovereign, MSF and FALLCR totalling to Rs. 115635.14 cr (based on simple average of daily observations).

Level-2A & 2B assets are those assets which are less liquid and their weighted amount comes to Rs. 6896.33 cr (based on simple average of daily observations). Break-up of daily observation Average HQLA during quarter ended March 31, 2019 is given hereunder:

Concentration of Funding Sources

This metric includes those sources of funding, whose withdrawal could trigger liquidity risks. It aims to address the funding concentration of bank by monitoring its funding requirement from each significant counterparty and each significant product/ instrument. As per RBI guidelines, a "significant counterparty/ Instrument/product" is defined as a single counterparty/ Instrument/product or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank's total liabilities.

Total deposits mobilized from significant counterparty(s) were 0.47% of total liabilities of the Bank as at March 31,2019. Top 20 depositors of the bank constitute 3.02% of bank's total liability as at March 31, 2019. The significant product/ instrument includes Saving Fund, Current deposit, Core Term Deposit, and Interbank term deposit, the funding from which are widely spread and cannot create concentration risk for the bank.

Derivative exposure

The bank has low exposure in derivatives having negligible impact on its liquidity position.

Currency Mismatch

As per RBI guidelines, a currency is considered as “significant" if the aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank’s total liabilities. In our case, only USD (8.27% of bank's total liabilities) falls in this criteria whose impact on total outflows in LCR horizon can be managed easily as the impact is not large considering the size of balance sheet of the bank.

Degree of centralization of liouiditv management and interaction between group’s units

The group entities are managing liquidity on their own. However, the bank has put in place a group-wide contingency funding plan to take care of liquidity requirement of the group as a whole in the stress period.

18. Other Notes

a. I. As per RBI guidelines, the Bank has worked out the amount of inter Branch Credit entries outstanding for more than Five years to be transferred to Blocked Account. Accordingly, a sum of Rs.2.72Crores (net of adjustments since carried out) has been included under “Other Liabilities-others” in Schedule-5.

II. No claim has been received during the period ended March 2019 (01.04.2018 to 31.03.2019) against Inter Branch Credit entries, Blocked and transferred to General Reserve.

b. Premises includes:-

I. Premises includes properties amounting to Rs.2.52Crore (Net of Depreciation) {Cost Rs.8.15Crore} are awaiting registration of title deeds.

II. Premises includes Capital work in progress of Rs.40.93Crore.

III. A conversion fee of Rs.5.29Crore deposited with Delhi Development Authority for a leasehold property is capitalized and Rs.22.85Crores deposited with DDA against conversion fee, E-stamping of Rs.73.26Lacs for execution of conveyance deed, free hold deed is pending for execution at DDA.

IV. An extension fee of Rs.1.95Crore paid to Haryana Urban Development Authority (HUDA) for a property is capitalized as per policy, construction on the plot is yet to be started.

a. Depreciation on Revalued Portion :Rs.16.18Crore depreciation charged for Q-4 FY 2018-19 and Total depreciation charged during FY 2018-19 is Rs.64.73Crore.

b. Tax Paid in advance/Tax deducted at source appearing under Other Assets includes disputed amount adjusted by the department/paid by the Bank in respect tax demands for various assessment years.

No provision is considered necessary in respect of disputed Income Tax demands of Rs.267.52Crore (previous year Rs.1260.92Crore) as in the bank's view, duly supported by expert opinion and/or decision in bank's own appeals on same issues, additions / disallowances made are not sustainable.

c. Bank has not revalued Immovable properties (forming part of Schedule 10) during the current Financial Year. As such there is no impact on Balance sheet for current FY 2018-19.

d. The guidelines given in Micro, Small and Medium Enterprises Development Act 2006 have been complied with for purchases made during the Financial Year 2018 2019 and payments have been made to the Vendors in time as per Act. Since there had been no delay in payment, so no penal interest has been paid in FY 2018-19.

e. Information under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in terms of the provisions of Regulation 52(4) for unsecured bonds issued by bank excluding Debt instruments eligible for meeting capital requirement: (Year ended March 2019)

f. In compliance of RBI letter no. DBR NO.BP.13018/ 21.04.048/ 2015-16 dated 12.04.2016 and BPC.7201/ 21.04.132/ 2017-18 dated 08.02.2018, Bank has made a provision of Rs.65.53Crore being 5 % of the existing outstanding ofRs.1310.55Crore as on 31.03.2019 in respect of restructured Food Credit advance availed by State Government of Punjab.

g. Provisioning pertaining to fraud accounts due to amendment in provisioning norms as per RBI Circular no. RBI/2015-16/376 DBR.No.BP.BC.92/21.04.048/2015-16 dated 18.04.2016:

h. “IND AS roadmap for scheduled commercial banks (excluding regional rural banks), insurers/insurance companies and non-banking financial companies (NBFCs) was issued by Union Ministry of Corporate Affairs (MCA) through press release dated 18 January 2016. IND AS was applicable to the Bank in accordance with the MCA press release from financial year 2018-19 which was deferred to financial year 2019-20 vide RBI’s Press Release (2017-18/2642) dated 5 April 2018. RBI has further deferred implementation of IND AS till further notice vide its Circular no DBR.BP.BC.No. 29/21.07.001/2018-19 dated 22.03.2019. However, the Bank had commenced the process of IND AS (Indian Accounting Standards) implementation since financial year 2016-17.

A steering committee headed by the Executive Director and comprising of General Managers from various cross functional areas of the Bank to monitor the progress of the implementation is formed. The Bank has a well-planned strategy for Ind AS implementation and has made substantial progress in this exercise. The Bank has completed a diagnostic study to identify the differences between the current accounting framework and IND AS. Based on this diagnostic study, the Bank has quantified the impact and filed the pro-forma financial statements for the half year ended September 2016 and quarter ended June 2017 with the Reserve Bank of India. From the quarter ended June 2018, Bank is compiling the proforma Ind AS Financial Statements every quarter and submitting to RBI as per their requirement. Bank is now assessing the changes, wherever required in the core banking system and has already initiated formulation of Expected Credit Loss Models. Hence, the Bank will implement Ind AS once the transition date is conveyed by RBI. ”

i. During the year, the bank has made preferential allotment of following equity shares in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements Regulations, 2009), for which details are as under: -

j. During the Financial Year 2018-19 the bank has allotted 90226683 equity shares of Rs.2.00 each to the Employees of the Bank under PNB-ESPS at a premium of Rs.69.93 per share (including discount of Rs.17.98 per share) as approved by the Board and the shareholders in terms of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time. The total amount received by the bank on this account is Rs.649.00 crores which includes Rs.18.04Crores as equity capital and Rs.630.96Crores as premium.

k. RBI vide its circular dated April 2, 2018 and June 15, 2018 has permitted banks an option to spread Mark to Market (MTM) loss on AFS and HFT investment for the quarters stated therein equally over four quarters commencing with the quarter in which the loss is incurred. Accordingly, the bank has availed the option and charged Rs.1208.71 Crores to the Profit & Loss account during the year and there is no unamortised balance as on 31st March 2019.

l. Changes in accounting policy:

1. The Impact due to change in Significant Accounting Policies in valuation of NPI Debentures and Preference shares would result in a higher depreciation of Rs.60.00Crore.

2. There is no material impact due to change in accounting policy on Depreciation on fresh additions to assets and assets sold/disposed off.

m. As per RBI Letter no. DBR.No.BP.15199/21.04.048/2016-17 dated 23rd June, 2017and letter no DBR.No.BP.1908/ 21.04.048/2017-18 dated 28th August, 2017 for the accounts covered under the provisions of Insolvency and Bankruptcy code (IBC), the bank is holding total provision of Rs.11940.15Crores as on 31st March 2019 (84.63% of total outstanding) including additional provision of Rs.433.93 crores in said accounts made during the year ended on March 31, 2019.

n. During the year Bank has made remaining provision of Rs.7167.31 Crores (including exchange fluctuation) in respect of Fraud detected at Brady House Branch Mumbai in certain accounts of Gems & Jewellery Sector during 2017-18.

o. The Bank has availed dispensation for deferment of provision in respect of frauds reported during the year of Rs.2647.85Crores requiring additional provision of Rs.1052.78Crores in terms of option available as per RBI circular no DBR No.BP.BC.92/21.04.048/2015-16 dated 18.04.2016.Accordingly an amount of Rs.390.38Crores has been charged to profit and loss account and an amount of Rs.662.40Crores have been charged to reserves & deferred for adjustment in subsequent quarters.

p. Pursuant to the proposed bipartite agreement on wage revision (due with effect from November 2017), a sum of Rs 123.21 crore has been provided during the quarter towards wage revision on estimated basis. (Cumulative provision; Rs.713.71 Crores).

q. In terms of RBI Circular No.DBR.BP.BC. No.50/21.06.201/2016-17 dated 2nd February, 2017 the Bank has made payment of Interest on Additional Tier -1 Bonds of Rs.451,87Crore by debiting Statutory Reserves.

r. Based on the review and certainty of availability of future taxable income,the bank has recognised net Deferred Tax Assets of Rs.2440.90Crores for the quarter and Rs.5365.35Crores for the year ended 31stMarch, 2019in accordance with Accounting Standard-22, “Accounting for Taxes on Income” issued by The Institute of Chartered Accountants of India.

19. 1. Figures of the previous year have been regrouped / rearranged / reclassified wherever necessary.

2. Figures in the bracket wherever given (except Item no. 15: AS 15 - Employees Benefits) relates to previous year.

3. Figures given in the bracket in Item No. 15: AS 15 -Employees Benefits are in negative.

Notes

1 Direct taxes paid (net of refund) are treated as arising from operating activities and are not bifurcated between investing and financing activities.

2 All figures in minus represents "Cash Out Flow"