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

BSE: 500112ISIN: INE062A01020INDUSTRY: Finance - Banks - Public Sector

BSE   ` 295.20   Open: 298.05   Today's Range 294.20
299.70
-2.15 ( -0.73 %) Prev Close: 297.35 52 Week Range 232.00
334.80
Year End :2018-03 

Notes:

a. Securities amounting to Rs, 40,992.04 crore (Previous Year 18,676.03 crore) are kept as margin with Clearing Corporation of India Limited (CCIL)/ NSCCL/MCX/ NSEIL/ BSE towards Securities Settlement.

b. During the year, the Bank infused additional capital in its subsidiaries and associates viz. i) SBI Foundation Rs, 3.00 crore, ii) Nepal SBI Bank Ltd. Rs, 68.47 crore and after infusion there is no change in Bank's stake. Further, the Bank has increased its stake in SBI Cards & Payments Services Private Ltd. from 60% to 74% (purchased 109,899,999 shares of Rs, 10 per share by investing Rs, 887.26 crore) and in GE Capital Business Process Management Ltd. from 40% to 74% (purchased 8,024,342 shares of Rs, 10 per share by investing Rs, 264.07 crore).

c. During the year, the Bank has sold its stake in the following subsidiaries & associates:

- 8,00,00,000 equity shares of SBI Life Insurance Company Ltd. at a profit of Rs, 5,436.17 crore. Thus the Bank's stake has reduced from 70.10% to 62.10%.

- 22,00,000 equity shares of The Clearing Corporation of India Ltd. at a profit of Rs, 140.80 crore. Thus the Bank stake has reduced from 21.20% to 16.80%.

- 19,11,974 equity shares of SBI DFHI Ltd. in a buy back offer at a profit of Rs, 62.93 crore and there is no change in stake holding after buy back offer.

d. Post-acquisition of erstwhile domestic banking subsidiaries (DBS), following RRBs of the erstwhile DBS have become RRBs of the Bank:

- Kaveri Grameena Bank

- Malwa Gramin Bank

- Rajasthan Marudhara Gramin Bank

- Telangana Grameena Bank

2. RBI Circular DBR.No.BP.BC.102/21.04.048/2017-18 dated April

2, 2018 grants banks an option to spread provisioning on mark to market losses on investments held in AFS and HFT for the quarters ended December 31, 2017 and March 31, 2018. The circular states that the provisioning for each of these quarters may be spread equally over up to four quarters, commencing with the quarter in which the loss was incurred. The Bank has recognized the entire net mark to market loss on investments in the respective quarters and has not availed the said option.

C. Risk Exposure in Derivatives

(A) Qualitative Risk Exposure

i. The Bank currently deals in over-the-counter (OTC) interest rate and currency derivatives as also in Interest Rate Futures and Exchange Traded Currency Derivatives. Interest Rate Derivatives dealt by the Bank are rupee interest rate swaps, foreign currency interest rate swaps and forward rate agreements, cap, floor and collars. Currency derivatives dealt by the Bank are currency swaps, rupee dollar options and cross-currency options. The products are offered to the Bank's customers to hedge their exposures and the Bank also enters into derivatives contracts to cover off such exposures. Derivatives are used by the Bank both for trading as well as hedging balance sheet items. The Bank also runs option position in US$/ INR, which is managed through various types of loss limits and Greek limits.

ii. Derivative transactions carry market risk i.e. the probable loss the Bank may incur as a result of adverse movements in interest rates/exchange rates and credit risk i.e. the probable loss the Bank may incur if the counterparties fail to meet their obligations. The Bank's “Policy for Derivatives” approved by the Board prescribes the market risk parameters (Greek limits, Loss Limits, cut-loss triggers, open position limits, duration, modified duration, PV01 etc.) as well as customer eligibility criteria (credit rating, tenure of relationship, limits and customer appropriateness and suitability of policy (CAS) etc.) for entering into derivative transactions. Credit risk is controlled by entering into derivative transactions only with counterparties satisfying the criteria prescribed in the Policy. Appropriate limits are set for the counterparties taking into account their ability to honour obligations and the Bank enters into ISDA agreement with each counterparty.

iii. The Asset Liability Management Committee (ALCO) of the Bank oversees efficient management of these risks. The Bank's Market Risk Management Department (MRMD) identifies, measures, monitors market risk associated with derivative transactions, assists ALCO in controlling and managing these risks and reports compliance with policy prescriptions to the Risk Management Committee of the Board (RMCB) at regular intervals.

iv. The accounting policy for derivatives has been drawn-up in accordance with RBI guidelines, the details of which are presented under Schedule 17: Significant Accounting Policies (SAP) for the financial year 2017-18.

v. Interest Rate Swaps are mainly used at Foreign Offices for hedging of the assets and liabilities.

vi. Apart from hedging swaps, swaps at Foreign Offices consist of back to back swaps done at our Foreign Offices which are done mainly for hedging of FCNR deposits at Global Markets, Kolkata.

vii. Majority of the swaps were done with First class counterparty banks.

viii. Derivative transactions comprise of swaps which are disclosed as contingent liabilities. The swaps are categorized as trading or hedging.

ix. Derivative deals are entered into with only those interbank participants for whom counterparty exposure limits are sanctioned. Similarly, derivative deals entered into with only those corporate for whom credit exposure limit is sanctioned. Collateral requirements for derivative transactions are laid down as a part of credit sanction terms on a case by case basis. Such collateral requirements are determined based on usual credit appraisal process. The Bank retains the right to terminate transactions as a risk mitigation measure in certain cases.

@ The swaps amounting to Rs, 2,870.26 crore (Previous Year Rs, 4,988.14 crore) entered with the Bank's own foreign offices are not shown here as they are for hedging of FCNB corpus and hence not marked to market.

# IRS/FRA amounting to Rs, 2,988.82 crore (Previous Year Rs, 9,299.54 crore) entered with the Bank's own Foreign offices are not shown here as they are for hedging of FCNB corpus and hence not marked to market.

* The forward contract deals with our own Foreign Offices are not included. Currency Derivatives Rs, Nil (Previous Year Rs, Nil) and Interest Rate Derivatives Rs, Nil (Previous Year Rs, Nil)

1. The outstanding notional amount of derivatives done between Global Markets Unit and International Banking Group as on 31st March, 2018 amounted to Rs, 5,859.08 crore (Previous Year Rs, 7,571.57 crore) and the derivatives done between SBI Foreign Offices as on 31st March, 2018 amounted to Rs, 12,056.81 crore (Previous Year Rs, 16,955.57 crore).

2. The outstanding notional amount of interest rate derivatives which are not marked -to-market (MTM) where the underlying Assets/ Liabilities are not marked to market as on 31st March, 2018 amounted to Rs, 45,442.82 crore (Previous Year Rs, 53,675.54 crore).

Opening and closing balances of provision for NPAs include ECGC claims received and held pending adjustment of Rs, 1.97 crore (Previous Year Rs, 67.27 crore) and Rs, 8.72 crore (Previous Year Rs, 1.97 crore) respectively.

b) The disclosures relating to the divergence for the financial year 2016-17 in respect of provisions made by the bank against nonperforming assets (excluding provisions made against standard assets) mandated in circular No. DBR.BP.BC.No.63/21.04.018/2016-17 dated 18th April 2017 issued by RBI is as under:

* The net current impact of the afore-mentioned retrospective slippages due to divergences noted by RBI has been duly reflected in the results for the year ended 31st March, 2018.

c) Risk Category wise Country Exposure

As per the extant RBI guidelines, the country exposure of the Bank is categorized into various risk categories listed in the following table. The country exposure (net funded) of the Bank for any country does not exceed 1% of its total assets except on USA, hence provision for the country exposure on USA has been made.

18.8. Miscellaneous

a. Disclosure of Penalties

Monetary Authority of Singapore (MAS) levied a penalty of Rs, 2.99 crore (Singapore Dollar 6,00,000) on Singapore branch for breach of section 27 B (2) of the MAS Act.

Reserve Bank of India levied a penalty of Rs, 0.40 crore on the Bank for non-compliance with the directions issued by RBI on detection and impounding of counterfeit notes.

Previous year: Central Bank of Oman levied penalty of Rs, 0.13 crore (Omani Riyal 8000) on Muscat branch for non compliance to some of the provisions of Banking Law 2000 & circulars of Central Bank of Oman.

b. Penalty for Bouncing of SGL forms

No penalty has been levied on the Bank for bouncing of SGL Forms.

18.9. Disclosure Requirements as per the Accounting Standards

a) Accounting Standard - 5 "Net Profit or Loss for the period, Prior Period items and Changes in Accounting Policies"

The Bank changed its accounting policy with respect to booking of commission earned on issuance of Letter of Credit and Bank Guarantees, other than on Deferred Payment Guarantees w. e. f. April 1, 2017. Now these are being recognized over the period of LC/BG, instead of on realization basis done earlier.

The impact of the change in policy, as compared to previous practice has resulted in lower income under this head to the extent of ' 1,203.60 crore for the year ended on 31st March, 2018.

The estimates of future salary growth, factored in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Such estimates are very long term and are not based on limited past experience / immediate future. Empirical evidence also suggests that in very long term, consistent high salary growth rates are not possible. The said estimates and assumptions have been relied upon by the auditors.

Consequent upon amendment in Payment of Gratuity Act 1972 and revision in gratuity ceiling from Rs, 10.00 Lakh to Rs, 20.00 lakh, the additional liability works out to Rs, 3,610.00 crore. RBI has vide letter No. DBR.BP.9730/21.04.018/2017-18 dated 27th April 2018 advised that banks, may at their discretion, spread the expenditure involved over four quarters beginning from the quarter ended 31st March, 2018. They have also advised that the enhanced gratuity related unamortized expenditure would not be reduced from Tier I capital.

Accordingly, out of the total additional liability of Rs, 3,610.00 crore, an amount of Rs, 902.50 crore have been charged to the Profit & Loss Account for the year ended 31st March, 2018 and the remaining unamortized liability of Rs, 2,707.50 crore shall be provided over next three quarters i.e. from June'18 quarter to December'18 quarter.

2. Employees' Provident Fund

Actuarial valuation carried out in respect of interest shortfall in the Provident Fund Trust of the Bank, as per Deterministic Approach shows “Nil” liability, hence no provision is made in F.Y. 2017-18.

There is a guaranteed return applicable to liability under SBI

Employees Provident Fund which shall not be lower of either:

(a) one half percent above the average standard rate (adjusted up or down to the interest one quarter per cent) quoted by the bank for new deposits fixed for twelve months in the preceding year (ending on the preceding the 31st day of March); or

(b) three percent per annum, subject to approval of Executive Committee.

ii. Defined Contribution Plan:

The Bank has a Defined Contribution Pension Scheme (DCPS) applicable to all categories of officers and employees joining the Bank on or after August 1, 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. During F.Y. 2017-18, the Bank has contributed Rs, 390.00 crore (Previous Year Rs, 218.15 crore).

iii. Long Term Employee Benefits (Unfunded Obligation):

(A) Accumulating Compensated Absences (Privilege Leave)

The following table sets out the status of Accumulating Compensated Absences (Privilege Leave) as per the actuarial valuation by the independent Actuary appointed by the Bank:-

(B) Other Long Term Employee Benefits

Amount of Rs, (-) 63.95 crore (Previous Year Rs, 46.94 crore) is (written back) / provided towards Other Long Term Employee Benefits as per the actuarial valuation by the independent Actuary appointed by the Bank and is included under the head “Payments to and Provisions for Employees” in Profit and Loss Account.

Details of Provisions made for various Other Long Term Employee Benefits during the year:

c) Accounting Standard - 17 "Segment Reporting"

1. Segment Identification

I. Primary (Business Segment)

The following are the primary segments of the Bank:

- Treasury

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business

The present accounting and information system of the Bank does not support capturing and extraction of the data in respect of the above segments separately. However, based on the present internal, organisational and management reporting structure and the nature of their risk and returns, the data on the primary segments have been computed as under:

i. Treasury -

The Treasury Segment includes the entire investment portfolio and trading in foreign exchange contracts and derivative contracts. The revenue of the treasury segment primarily consists of fees and gains or losses from trading operations and interest income on the investment portfolio.

ii. Corporate / Wholesale Banking -

The Corporate / Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Resolution Group. These include providing loans and transaction services to corporate and institutional clients and further include non-treasury operations of foreign offices.

iii. Retail Banking -

The Retail Banking Segment comprises of branches in National Banking Group, which primarily includes Personal Banking activities including lending activities to corporate customers having banking relations with branches in the National Banking Group. This segment also includes agency business and ATMs.

iv. Other Banking business -

Segments not classified under (i) to (iii) above are classified under this primary segment.

II. Secondary (Geographical Segment)

i) Domestic Operations - Branches/Offices having operations in India

ii) Foreign Operations - Branches/Offices having operations outside India and offshore Banking units having operations in India

III. Pricing of Inter-segmental Transfers

The Retail Banking segment is the primary resource mobilising unit. The Corporate/Wholesale Banking and Treasury segments are recipient of funds from Retail Banking. Market related Funds Transfer Pricing (MRFTP) is followed under which a separate unit called Funding Centre has been created. The Funding Centre notionally buys funds that the business units raise in the form of deposits or borrowings and notionally sell funds to business units engaged in creating assets.

IV. Allocation of Expenses, Assets and Liabilities

Expenses incurred at Corporate Centre establishments directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of number of employees in each segment/ratio of directly attributable expenses.

The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

d) Accounting Standard - 18 "Related Party Disclosures"

1. Related Parties

A. SUBSIDIARIES

i. FOREIGN BANKING SUBSIDIARIES

1. Commercial Indo Bank LLC, Moscow

2. Bank SBI Botswana Limited

3. SBI Canada Bank

4. State Bank of India (California)

5. State Bank of India (UK) Limited

6. SBI (Mauritius) Ltd.

7. PT Bank SBI Indonesia

8. Nepal SBI Bank Ltd.

ii. DOMESTIC NON-BANKING SUBSIDIARIES

1. SBI Capital Markets Ltd.

2. SBICAP Securities Ltd.

3. SBICAP Trustee Company Ltd.

4. SBICAP Ventures Ltd.

5. SBI DFHI Ltd.

6. SBI Global Factors Ltd.

7. SBI Infra Management Solutions Pvt. Ltd.

8. SBI Mutual Fund Trustee Company Pvt. Ltd.

9. SBI Payment Services Pvt. Ltd.

10. SBI Pension Funds Pvt. Ltd.

11. SBI Life Insurance Company Ltd.

12. SBI General Insurance Company Ltd.

13. SBI Cards and Payment Services Pvt. Ltd.

14. SBI Business Process Management Services Pvt. Ltd. (formerly known as GE Capital Business Process Management Services Pvt. Ltd) w.e.f. 15.12.2017

15. SBI - SG Global Securities Services Pvt. Ltd.

16. SBI Funds Management Pvt. Ltd.

17. SBI Foundation

iii. FOREIGN NON-BANKING SUBSIDIARIES

1. SBICAP (Singapore) Ltd.

2. SBICAP (UK) Ltd.

3. SBI Funds Management (International) Pvt. Ltd.

4. State Bank of India Servicos Limitada

5. Nepal SBI Merchant Banking Limited

B. JOINTLY CONTROLLED ENTITIES

1. C-Edge Technologies Ltd.

2. GE Capital Business Process Management Services Pvt. Ltd (up to 14.12.2017)

3. SBI Macquarie Infrastructure Management Pvt. Ltd.

4. SBI Macquarie Infrastructure Trustee Pvt. Ltd.

5. Macquarie SBI Infrastructure Management Pte. Ltd.

6. Macquarie SBI Infrastructure Trustee Ltd.

7. Oman India Joint Investment Fund - Management Company Pvt. Ltd.

8. Oman India Joint Investment Fund - Trustee Company Pvt. Ltd.

9. Jio Payments Bank Ltd.

C. ASSOCIATES

i. Regional Rural Banks

1. Andhra Pradesh Grameena Vikas Bank

2. Arunachal Pradesh Rural Bank

3. Chhattisgarh Rajya Gramin Bank

4. Ellaquai Dehati Bank

5. Langpi Dehangi Rural Bank

6. Madhyanchal Gramin Bank

7. Meghalaya Rural Bank

8. Mizoram Rural Bank

9. Nagaland Rural Bank

10. Purvanchal Bank

11. Saurashtra Gramin Bank

12. Utkal Grameen Bank

13. Uttarakhand Gramin Bank

14. Vananchal Gramin Bank

15. Rajasthan Marudhara Gramin Bank

16. Telangana Grameena Bank

17. Kaveri Grameena Bank

18. Malwa Gramin Bank

ii. Others

1. SBI Home Finance Ltd.(under liquidation)

2. The Clearing Corporation of India Ltd.

3. Bank of Bhutan Ltd.

D. Key Management Personnel of the Bank

1. Shri Rajnish Kumar, Chairman (w.e.f. 07.10.2017)

2. Smt Arundhati Bhattacharya, Chairman (up to 06.10.2017)

3. Shri Rajnish Kumar, Managing Director (National Banking Group) (up to 06.10.2017)

4. Shri P. K. Gupta, Managing Director (Retail & Digital Banking)

5. Shri Dinesh Kumar Khara, Managing Director (Risk, IT & Subsidiaries)

6. Shri B. Sriram, Managing Director (Corporate & Global Banking)

2. Parties with whom transactions were entered into during the year

No disclosure is required in respect of related parties, which are “State-controlled Enterprises” as per paragraph 9 of Accounting Standard (AS)

18. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker-Customer relationship have not been disclosed including those with Key Management Personnel and relatives of Key Management Personnel.

Figures in brackets are for Previous Year.

There are no materially significant related party transactions during the year.

e) Accounting Standard - 19 "Leases"

Premises taken on operating lease are given below:

Operating leases primarily comprise office premises and staff residences, which are renewable at the option of the Bank.

(ii) Amount of lease payments recognized in the P&L Account for operating leases is Rs, 3,244.23 crore (Rs, 2,582.72 crore)

f) Accounting Standard -20 "Earnings per Share"

The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard 20

- “Earnings per Share”. “Basic earnings” per share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year.

g) Accounting Standard - 22 "Accounting for Taxes on Income"

a. Current Tax :-

During the year the Bank has debited to Profit & Loss Account Rs, 673.54 crore (Previous Year Rs, 4,165.83 crore) 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 in foreign jurisdictions.

b. Deferred Tax :-

During the year, Rs, 9,654.33 crore has been credited to Profit and Loss Account (Previous Year Rs, 337.78 crore debited) on account of deferred tax.

The Bank has a net DTA of Rs, 11,365.99 crore (Previous Year net DTL of Rs, 2,561.87 crore), which comprises of DTL of Rs, 2.80 crore (Previous Year Rs, 2989.77 crore) included under 'Other Liabilities and Provisions' and Deferred Tax Assets (DTA) of Rs, 11,368.79 crore (Previous Year Rs, 427.90 crore) included under 'Other Assets'. The major components of DTA and DTL is given below:

$ During the year, the Bank has recognized Deferred Tax Asset, on provision for standard assets as per IRAC norms, amounting to ' 2,461.40 crore which was hitherto not considered for Deferred Tax Asset with consequential effect on the results for the year.

h) Accounting Standard - 27 "Financial Reporting of interests in Joint Ventures"

Investments include Rs, 67.66 crore (Previous Year Rs, 78.17 crore) representing Bank's interest in the following jointly controlled entities

# Indirect holding through Maquarie SBI Infra Management Pte.

Ltd., against which the company has made 100% provision on investments made up to 31st March, 2017.

(Figures in brackets relate to previous year)

During the year the Bank increased its stake from 40% to 74% in GE Capital Business Process Management Ltd.. Consequent to increase, it became subsidiary of the Bank from Jointly controlled entity.

As required by AS 27, the aggregate amount of the assets, liabilities, income, expenses, contingent liabilities and commitments related to the Bank's interests in jointly controlled entities are disclosed as under:

i) Accounting Standards - 28 "Impairment of Assets"

In the opinion of the Bank's Management, there is no indication of impairment to the assets during the year to which Accounting Standard 28 - “Impairment of Assets” applies.

j) Accounting Standard - 29 "Provisions, Contingent Liabilities and Contingent Assets"

Description of Contingent liabilities:

5. Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006

There has been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

6. Letter of Comfort

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

7. Provisioning Coverage Ratio (PCR):

The Provisioning to Gross Non-Performing Assets ratio of the Bank as on 31st March, 2018 is 66.17 % (Previous Year 65.95%).

8. Fees/remuneration received in respect of the Bancassurance Business

17. Unhedged Foreign Currency Exposure

The Bank in accordance with RBI Circular No. DBOD.No.BP. BC.85/21.06.200/2013-14 dated January 15, 2014 on 'Capital and Provisioning Requirements for Exposure to entities has provided for Unhedged Foreign Currency Exposure'.

An amount of Rs, 86.44 crore (Previous Year Rs, 110.74 crore) was held as on 31st March 2018 for towards Currency Induced Credit Risk and Capital allocated for Currency Induced Credit Risk amounting to Rs, 66.49 crore (Previous Year Rs, 246.98 crore).

18. Liquidity Coverage Ratio (LCR):

a) Standalone LCR

Liquidity Coverage Ratio (LCR) standard has been introduced with the objective that a bank maintains an adequate level of unencumbered High Quality Liquid Assets (HQLAs) that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario.

LCR has been defined as :

Stock of high quality liquid assets (HQLAs)

Total net cash outflow over the next 30 calendar days

Liquid assets comprise of high quality assets that can be readily encashed or used as collateral to obtain cash in a range of stress scenarios. There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets. While Level 1 assets are with 0% haircut, Level 2A and Level 2 B assets are with 15% and 50% haircuts respectively. The total net cash outflow is the total expected cash outflows minus total expected cash inflows for the subsequent 30 calendar days. Total expected cash outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities and off-balance sheet commitments by the rates at which they are expected to run off or be drawn down. Total expected cash inflows are calculated by multiplying the outstanding balances of various categories of contractual receivables by the rates at which they are expected to flow in up to an aggregate cap of 75% of total expected cash outflows.

The LCR position is above the minimum 90% prescribed by RBI. Bank's LCR comes to 134.05% based on daily average of three months (Q4 FY17-18). The average HQLA for the quarter was Rs, 6,74,894 crore, of which, Level 1 assets constituted 93.58% of total HQLA. Government securities constituted 96.92% of Total Level 1 Assets. Level 2A Assets constitutes 5.39% of total HQLA and Level 2B assets constitutes 1.03% of total HQLA. The net cash outflow position has slightly gone up on account of decrease in receivable RBI/Central Bank. Derivative exposures are considered insignificant due to almost matching inflows and outflows position. During the quarter, LCR for US$ (significant Foreign Currency constituting more than 5% of the Balance Sheet of the Bank) was 77.98% on average.

Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The Domestic and International Treasuries are reporting to the Asset Liability Management Committee (ALCO). The ALCO has been empowered by the Bank's Board to formulate the Bank's funding strategies to ensure that the funding sources are well diversified and is consistent with the operational requirements of the Bank. All the major decisions of ALCO are being reported to the Bank's Board periodically. In addition to daily/monthly LCR reporting, Bank prepares daily Structural Liquidity statements to assess the liquidity needs of the Bank on an ongoing basis.

The Bank has been maintaining HQLA mainly in the form of SLR investments over and above the mandatory requirements. Retail deposits constitute major portion of total funding sources, which are well diversified. Management is of the view that the Bank has sufficient liquidity cover to meet its likely future short term requirements.

b. Consolidated LCR

The RBI through a supplementary guideline issued on March 31, 2015 had stipulated the implementation of LCR at a consolidated level from January 1, 2016. Accordingly, SBI Group has been computing the Consolidated LCR.

The entities covered in the Group LCR are State Bank of India and the seven Overseas Banking Subsidiaries: Bank SBI Botswana Ltd, Commercial Indo Bank LLC, Moscow, Nepal SBI Bank Ltd., State Bank of India (California) , SBI Canada Bank, SBI (Mauritius) Ltd, and PT Bank SBI Indonesia.

SBI Group LCR comes out to 134.01% as on 31st March, 2018 based on average of three months January, February and March 2018.

The Group has been maintaining HQLA mainly in the form of SLR investments over and above the mandatory requirements. Retail deposits constitute major portion of total funding sources, and such funding sources are well diversified. Management is of the view that the Bank has sufficient liquidity cover to meet its likely future short term requirements.

19. Fraud Reported and provision made during the year:

Out of the total frauds of Rs, 2,532.24 crore in 1,789 cases (Previous year Rs, 2,424.74 crore in 837 cases) reported during the year, an amount of Rs, 2,359.61 crore in 539 cases (Previous year Rs, 2,360.37 crore in 278 cases) represents advances declared as frauds. Full provision has been made for the frauds reported during the year.

20. Inter Office Accounts

Inter Office Accounts between branches, controlling offices, local head offices and corporate centre establishments are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

21. Sale of Assets to Reconstruction Companies

Shortfall on account of sale of assets to reconstruction companies during the year amounting to Rs, 9.07 crore (Previous Year Rs,48.59 crore) has been fully charged in the current year.

22. MSME Borrowers

In accordance with RBI vide circular no. DBR.No.BP. BC.100/21.04.048/2017-18 dated 7th February 2018, on “Relief for MSME borrowers registered under Goods and Service Tax (GST)” the Bank has classified 11,398 accounts of the borrowers having outstanding balance of Rs, 320.15 crore as standard accounts on 31st March 2018.

24. Counter Cyclical Provisioning Buffer (CCPB)

RBI vide Circular No. DBR.No.BP.BC.79/21.04.048/2014-15 dated March 30, 2015 on 'Utilisation of Floating Provisions/Counter Cyclical Provisioning Buffer' has allowed the banks, to utilize up to 50 per cent of CCPB held by them as on December 31, 2014, for making specific provisions for Non-Performing Assets (NPAs) as per the policy approved by the Bank's Board of Directors.

During the year, the Bank has not utilized the CCPB for making specific provision for NPAs.

25. Food Credit

In accordance with RBI instruction, the Bank has made a provision of 7.5% amounting to Rs, 285.31 crore (Previous Year Rs, 856 crore) against outstanding in the long term food credit advance to a State Government.

26. Reversal of Revaluation Reserve of Bank's Leasehold Properties:

In compliance with the RBI instructions, the Bank has reversed the effect of revaluation amounting to Rs, 11,210.94 crore made in earlier periods in the value of certain leasehold properties, which has resulted in write back of depreciation earlier charged amounting to Rs, 193.24 crore.

27. Acquisition of Erstwhile Domestic Banking subsidiaries (DBS) & Bharatiya Mahila Bank Limited

a) The Government of India has accorded sanction under subsection (2) of section 35 of the State Bank of India Act, 1955, for acquisition of five domestic banking subsidiaries (DBS) of SBI namely (i) State Bank of Bikaner & Jaipur (SBBJ), (ii) State Bank of Mysore (SBM), (iii) State Bank of Travancore (SBT),

(iv) State Bank of Patiala (SBP), (v) State Bank of Hyderabad (SBH) and for acquisition of Bharatiya Mahila Bank Limited (BMBL) (hereinafter collectively referred to as Transferor Banks) vide orders dated February 22, 2017 and March 20,

2017. As per GOI orders these schemes of acquisition shall come into effect from April 01, 2017 (hereafter referred to as the effective date).

As per the said scheme, the undertakings of the Transferor Banks which shall be deemed to include all business, assets, liabilities, reserves and surplus, present or contingent and all other rights and interest arising out of such property as were immediately before the effective date in the ownership, possession or power of the Transferor Banks shall be transferred to and will vest in SBI (hereinafter referred to as Transferee Bank) on and from the effective date.

28. a) On April 18, 2017, RBI through its circular advised that the provisioning rates prescribed as per the prudential norms circular are the regulatory minimum and banks are encouraged to make provisions at higher rates in respect of advances to stressed sectors of the economy. Accordingly, during the year, the Bank as per its Board approved policy made additional general provision amounting to Rs, 74.66 crore on standard loans to borrowers.

Further, SBI has paid cash in respect of entitlements to fraction of equity shares wherever so determined. In respect of State Bank of Patiala (SBP) and State Bank of Hyderabad (SBH) which were wholly owned entities, entire share capital of those banks were cancelled against the investments held in those entities.

c) The merger of DBS & BMBL with SBI, has been accounted under the 'pooling of interest' method as per Accounting Standard 14 (AS 14), “Accounting for amalgamation” and the approved Scheme of Acquisition. Pursuant thereto, all assets and liabilities amounting to Rs, 11,314.75 crore (net) of the transferor Banks have been recorded in the books of SBI at their existing carrying amounts as on effective date, in consideration for 13,63,52,740 shares of face value of Rs, 1 each of SBI and Rs, 0.25 crore paid in cash towards fractional entitlements as stated above and SBI's investments in e-DBS on effective date stands cancelled. The net difference between share capital of transferor banks of e-DBS & BMBL and corresponding investments by SBI and cash in lieu of fractional entitlement of shares have been transferred to Capital Reserve. The net assets taken over on amalgamation are as under:

b) RBI vide letter DBR.No.BP.8756/ 21.04.048/2017-18 dated 2nd April 2018, the provisioning requirements in respects of NCLT accounts is reduced from 50% of secured portion to 40% of secured portion as at 31st March 2018. Based on the prospects of recovery the bank has availed the relaxation in a few accounts.

29. RBI vide letter RBI 2017-18/131/DBR.No.BP.BC.101/ 21.04.048/2017-18 dated February 12, 2018, issued a Revised Framework for Resolution of Stressed Assets, which superseded the existing guidelines on CDR,SDR, change in ownership outside SDR, Flexible Structuring of Existing Long term project loans (5/25 Scheme) and S4A with immediate effect. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were revoked and accordingly these accounts have been classified as per the extant RBI prudential norms on Income Recognition and Asset Classification.

30. The bank has made an adhoc provision of Rs, 1,659.41 crore towards arrears of wages due for revision w.e.f 1st November 2017.

31. Profit / (loss) on sale of investment (net) under Schedule 14 “Other Income” includes Rs, 5,436.17 crore on sale of partial investment in SBI Life Insurance Company Limited.

32. (a) The results for the year ended 31st March, 2018 include the result of operations of the erstwhile Associate Banks (ABs)

& Bharatiya Mahila Bank Limited (BMBL) for the period from 1st April 2017 to the year end. Hence, the results of the Bank are not comparable to that of the corresponding previous year.

(b) Previous year figures have been regrouped/reclassified, wherever necessary, to confirm to current year classification. In cases where disclosures have been made for the first time in terms of RBI guidelines / Accounting Standards, previous year's figures have not been mentioned.