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

BSE: 532461ISIN: INE160A01022INDUSTRY: Finance - Banks - Public Sector

BSE   ` 185.90   Open: 176.30   Today's Range 175.55
187.70
+10.10 (+ 5.43 %) Prev Close: 175.80 52 Week Range 126.45
231.60
Year End :2017-03 

1. IMPAIRMENT OF ASSETS

The carrying costs of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors.

An impairment loss is recognized wherever the carrying cost of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

After impairment, if any, depreciation is provided on the revised carrying cost of the asset over its remaining useful life.

A previously recognized impairment loss is increased or reversed depending on changes in circumstances.

However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

2. EMPLOYMENT BENEFITS

- PROVIDENT FUND:

Provident fund is a defined contribution scheme as the Bank pays fixed contribution at pre-determined rates. The obligation of the Bank is limited to such fixed contribution. The contribution are charged to Profit & Loss A/c.

- GRATUITY:

Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation. The scheme is funded by the bank and is managed by a separate trust.

- PENSION:

Pension liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation. The scheme is funded by the bank and is managed by a separate trust.

The Bank operates a New Pension Scheme (NPS) for all officers/ employees joining the Bank on or after 01.04.2010. As per the scheme, the covered employees contribute 10% of their basic pay plus dearness allowance to the scheme together with a matching contribution from the Bank. Pending completion of registration procedures of the employees concerned, these contributions are retained. The Bank recognizes such annual contributions as an expense in the year to which they relate. Upon receipt of the Permanent Retirement Account Number (PRAN), the consolidated contribution amounts are transferred to the NPS Trust.

- COMPENSATED ABSENCES:

Accumulating compensated absences such as Privilege Leave (PL) and Sick Leave (including unveiled casual leave) are provided for based on actuarial valuation.

- OTHER EMPLOYEE BENEFITS:

Other Employee Benefits such as Leave Fare Concession (LFC), Silver Jubilee Award, etc. are provided for based on actuarial valuation.

In respect of overseas branches and offices, the benefits in respect of employees other than those on deputation are valued and accounted for as per laws prevailing in the respective countries.

3. TRANSLATION OF FOREIGN CURRENCY TRANSACTIONS & BALANCES:

Transactions involving foreign exchange are accounted for in accordance with AS 11, “The Effect of Changes in Foreign Exchange Rates”.

4 Except advances of erstwhile London branches which are accounted for at the exchange rate prevailing on the date of parking in India, all other monetary assets and liabilities, guarantees, acceptances, endorsements and other obligations are initially recorded at a notional rate and translated in Indian Rupee equivalent at the exchange rates prevailing as on the Balance Sheet date as per Foreign Exchange Dealers' Association of India (FEDAI) guidelines.

5 Non-monetary items other than fixed assets which are carried at historical cost are translated at exchange rate prevailing on the date of transaction.

6 Outstanding Forward exchange spot and forward contracts are translated as on the Balance Sheet date at the rates notified by FEDAI and the resultant gain/loss on translation is taken to Profit & Loss Account.

Foreign exchange spot/forward contracts/deals (Merchant and Inter-bank) which are not intended for trading/Merchant Hedge and are outstanding on the Balance Sheet date, are reverse re-valued at the closing FEDAI spot/forward rate in order to remove revaluation effect on exchange profit. The premium or discount arising at the inception of such a forward exchange contract is amortized as interest expense or income over the life of the contract.

7 Income and expenditure items are accounted for at the exchange rate prevailing on the date of transaction.

Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded are recognized as income or as expense in the period in which they arise.

Gains/Losses on account of changes in exchange rates of open position in currency futures trades are settled with the exchange clearing house on daily basis and such gains/losses are recognized in the Profit and Loss Account.

8 Offices outside India / Offshore Banking Units:

i. Operations of foreign branches and off shore banking unit are classified as "Non-integral foreign operations" and operations of representative offices abroad are classified as "integral foreign operations"

ii. Foreign currency transactions of integral foreign operations and non-integral foreign operations are accounted for as prescribed by AS-11.

iii. Exchange Fluctuation resulting into Profit / loss of non-integral operations is credited /debited to Exchange Fluctuation Reserve.

9. TAXES ON INCOME

Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current tax expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per Accounting Standard 22 - Accounting for Taxes on Income respectively after taking into account taxes paid at the foreign offices, which are based on the tax laws of respective jurisdictions.

Deferred Tax adjustments comprises of changes in the deferred tax assets or liabilities during the year. Deferred tax assets and liabilities are recognized by considering the impact of timing differences between taxable income and accounting income for the current year, and carry forward losses. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognized in the profit and loss account. Deferred tax assets are recognized and re-assessed at each reporting date, based upon management's judgment as to whether their realization is considered as reasonably/virtually certain.

10. Earnings per Share:

The Bank reports basic and diluted earnings per share in accordance with AS 20 -‘Earnings per Share' issued by the ICAI. Basic Earnings per Share are computed by dividing the Net Profit after Tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding for the year.

11. Provisions, Contingent Liabilities and Contingent Assets:

- In conformity with AS 29, “Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India, the Bank recognizes provisions only when it has a present obligation as a result of a past event, and would result in a probable outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

- Contingent Assets are not recognized in the financial statements.

12. Bullion Transactions:

The Bank imports bullion including precious metal bars on a consignment basis for selling to its customers. The imports are typically on a back-to-back basis and are priced to the customer based on price quoted by the supplier. The Bank earns a fee on such bullion transactions. The fee is classified under commission income. The Bank also accepts deposits and lends gold, which is treated as deposits/advances as the case may be with the interest paid / received classified as interest expense/income.

13. Segment Reporting

The Bank recognizes the Business segment as the Primary reporting segment and Geographical segment as the Secondary reporting segment, in accordance with the RBI guidelines and in compliance with the Accounting Standard 17 issued by ICAI.

14c. Sale and transfers to / from HTM category

The total value of sales and transfers of securities to / from HTM category during 1st April 2016 to 31st March, 2017 has exceeded 5% of the book value of investments held in HTM category as on 31.03.2016 (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 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 2016 and January 2017, in addition to the shifting permitted at the beginning of the accounting year, i.e. April, 2016}

Disclosure in terms of extant RBI guidelines (excess of book value over market value for which provision is not made) is as follows:

The above Trades are Interest Rate Swap Deal done with Interbank for Rs. 348.72 Crores (Previous year Rs. 1173.72 crores) and Financial Institution Rs. 23.72 Crores (Previous year Rs. 23.72 Crores). Credit Risk (Credit Exposure) for

Current Year is Rs. 12.25 Crore and for previous year it is Rs. 22.72 Crore. There are total 14 deals out of which 2 deals are Back to Back Deals, 2 Deals where payment is made at Fixed Contract Rate and received at Floating rate and in remaining 10 deals, payment is made at Floating Rate and received at Fixed Contract Rate.

5c. Disclosure on risk exposure in derivatives

I - Qualitative Disclosure

1. Bank discusses their risk management policies pertaining to derivatives with particular reference to the extent to which derivatives are used, the associated risks and business purposes served. The discussion also include:

a. The structure and organization for management of risk in derivative trading.

b. The scope and nature of risk measurement, risk reporting and risk monitoring systems.

c. Policies for hedging and/or mitigating risks and strategies and processes for monitoring the continuing effectiveness of hedges/mitigates; and

d. 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.

9c. Risk Category wise Country Exposure

Total Net Funded Exposure as on 31.03.2017 isRs,45931.04 Crores. Total assets of the bank as on 31.12.2016 wereRs,713975.31 Crores, 1% of which isRs,7139.75 Crore. Total net funded exposure of two countries namely Hong Kong & UAE amounting toRs,9325.40 Crore &Rs,8900.38 Crore respectively, is more than 1 % of the total assets of the Bank as on 31.12.2016. Total net funded exposure of the bank on Hong Kong & UAE is more than 1% of total assets as on 31.03.2017 also. Hence provision ofRs,12.15 Crore for Hong Kong andRs,13.23 Crore for UAE has been made in terms of RBI guidelines. As per Export Credit Guarantee Corporation of India(ECGC) classification, Hong Kong is in the Insignificant Risk Category i.e. A1 and UAE is in the Low Risk Category i.e. A2.

*As certified by the Management

9d. Bank’s Disclosure in respect of Credit Exposures where the same had exceeded the Prudential Exposure limits prescribed by RBI for Individual/ Group Borrowers during 01.04.2016 to 31.03.2017.

“The Bank has not exceeded prudential exposure ceilings in respect of any Group Accounts and Individual Borrowers during the period 01.04.2016 to 31.03.2017.”

10. Disclosure of penalties imposed by the RBI:

a. During the period 01.04.2016 to 31.03.2017, Reserve Bank of India (RBI) has imposed an aggregate penalty of Rs. 30 million ( Rs. Thirty Million only) on the bank in exercise of powers conferred under Section 47 (A) (1) (c) read with Section 46(4) (i) of the Banking Regulation Act 1949.

The Bank has taken necessary preventive measures/ comprehensive action plan to avoid its recurrence.

(The above data is as certified by the Management)

b. The following SGL securities were bounced during the period ended 31.03.2017 (w.e.f. 01.04.2016 to 31.03.2017).

* Bouncing due to shortage in Principal A/c of RBI E-Kuber. However, Rs. 1,800.00 Crore of Security was available with the Bank in other folder of RBI E-Kuber maintained with RBI.

** Similar nomenclature of two different securities has caused this error. Balance in Security 8.62 MH SDL 2023 (ISIN: IN2220120116) was available but the deal was done for 8.62 MH SDL 2023 (ISIN: IN2220120108).

RBI had imposed a Penalty of Rs. 1.00 Lacs for bouncing of this SGL dated 09.03.2017 for which RBI has debited our Account on 12.05.2017 and said Penalty on SGL bouncing stands paid.

Other Disclosures required by Accounting Standards

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

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

12. AS- 6 Depreciation accounting

Break up of total depreciation for the year ended March, 2017 for each class of assets

13. 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.

14. AS 11- Changes in foreign exchange rates: Movement of foreign currency translation reserve

15. AS 15 - Employees Benefits:

DISCLOSURE IN ACCORDANCE WITH AS-15(R):

In line with the accounting policy and as per the Accounting Standard - 15(R), the summarized position of employment benefits is as under:

B. 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. During the FY 2016-17, the Bank has contributed Rs 113.16 crores (Previous year Rs 87.17 cr)

C. Changes in Fair Valuation of Plan Assets

In accordance with AS-15 issued by ICAI, during the year while considering the fair value of plan assets relating to pension and gratuity fund being long term benefits of employees, interest accrued on investments has also been taken into account as against principal amount in earlier years. Consequent to this, employer contribution to pension and gratuity funds representing excess of fair value of plan assets over present value of obligation amounting to Rs.2026.60 crores has been credited to “Payments to and Provisions for Employees- Employee Cost ” during the year. Figures of previous year are not comparable to that extent.

Note:

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

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

17. 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) Mrs. Usha Ananthasubramanian, Managing Director & CEO

ii) Shri K.V.Brahmaji Rao, Executive Director.

iii) Dr .Ram S.Sangapure, Executive Director.

iv) Shri Sanjiv Sharan, Executive Director ( w.e.f. 15.09.2016)

Subsidiaries:

i) PNB Gilts Ltd.

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

iii) PNB Investment Services Ltd.

iv) Druk PNB Bank Ltd, Bhutan.

v) PNB Insurance Broking Pvt Ltd*.

Associates:

i) Principal PNB Asset Management Company Pvt. Ltd.

ii) Principal Trustee Company Private Limited

iii) PNB Metlife India Insurance Company Ltd.

iv) PNB Housing Finance Ltd.

v) JSC Tengri Bank, Almaty, Kazakhstan

vi) Madhya Bihar Gramin Bank, Patna.

vii) Sarva Haryana Gramin Bank, Rohtak

viii)Himachal Pradesh Gramin Bank, Mandi

ix) Punjab Gramin Bank, Kapurthala

x) Sarva UP Gramin Bank, Meerut.

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

Joint Venture:

Everest Bank Limited, Kathmandu, Nepal

21. 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.

22. AS 24 - Discontinuing Operations

During the period from 01.04.2016 to 31.03.2017, 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.

23. AS 28 - Impairment of Assets

A substantial portion of the bank's assets comprise of ‘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 31.03.2017 requiring recognition in terms of the said standard.

24. AS-29 Provisions, Contingent Liabilities and Contingent Assets

*Excluding provisions for others Figures in brackets relate to previous year.

ii) Refer Schedule-12 on contingent liabilities

Such liabilities at S.No.(i), (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.

* Out of 15564 complaints, 315 complaints other than ATM stands resolved as on date.

** Appeal filed in both the cases

The awards passed by the BO as stated above are those where appeals have been filed, the consolidation of data received from various offices regarding of status of awards filed is in progress.

The Bank is in the process of implementing centralized controls to ensure that data of complaints and awards is generated automatically for reporting.

29. 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.

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 100 million on 31st March 2017 to help it to meet the minimum regulatory capital requirements.

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.

32. Reward Points of Credit Card & Debit Card

i. PNB Global Credit & Debit Cardholders are rewarded as and when they make purchases through usage of Credit & Debit Card. Reward Points are generated at the time of usage of Credit & Debit 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 atRs,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 atRs,0.25 for 1 point, which has further been valued at 15% on estimated basis as in the previous year.

34. 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.

35. Transfers to Depositor Education and Awareness Fund (DEAF):

In compliance to RBI Circular No.DBOD.NO.DEAF. CELL.BC.114/30.01.002/2013-14 dated 27.05.2014, the Bank has transferred the following amount to RBI, as per Depositor Education and Awareness Scheme, 2014.

*Reflected as "Contingent Liability - Others, items for which the bank is

contingently liable" under Schedule 12 of the financial statements.

36. Unhedged Foreign Currency Exposure (UFCE):

The Bank has framed a policy to manage currency induced credit risk and has been incorporated in bank's Credit Management & Risk Policy 2017-18 as follows:

“In terms of RBI guidelines Bank should monitor 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 shall maintain 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.”

Atonal exposure of the bank are Rs. 556869.31 crores as on 31.03.2017.

38. Liquidity Coverage Ratio

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

The LCR requirement has become binding on the banks with the following minimum required level as per the time-line given below:

As at 31.03.2017, against the regulatory requirement of 80%, bank is maintaining LCR at 143.16% (average of daily observation over the previous Quarter) at consolidated level (including domestic & foreign subsidiaries).

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 customers contribute about 69.08% of total deposit portfolio of the bank which attracts low run-off factor of 5/10%.

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.

Level-1 assets are those assets which are highly liquid. For quarter ended Mar 31, 2017, the daily observation average over the previous quarter Level-1 asset of the bank includes Cash in Hand, Excess CRR, Government Securities in excess of SLR, sovereign securities besides MSF & FALLCR and Marketable securities totaling Rs. 135969.40 cr.

Concentration of Funding Sources

This metric includes those sources of findings, 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 counter-parties accounting in aggregate for more than 1% of the bank's total liabilities.

The bank has no significant counterparty (deposits/ borrowings) as on 31.03.2017. The share of largest depositor in bank's total deposits is around 0.29% whereas the contribution of top 20 depositors is around 3.29% only. The significant product / instrument includes Saving Fund, Current deposit, Core Term Deposit, and Inter-bank 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 (8.63% of bank's total liabilities) falls in this criteria whose impact on total outflows in LCR horizon can be managed easily.

Degree of centralization of liquidity 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.

QUANTITATIVE DISCLOSURES

QUANTITATIVE DISCLOSURE ( On consolidated basis (including domestic & foreign subsidiaries)

39. Other Notes

a. As per RBI guidelines, the Bank has worked out the amount of inter Branch Credit entries outstanding for more than 5 years, pertaining to the period up to 31.03.2012, to be transferred to a Blocked Account. Accordingly, a sum ofRs,28.35 crores (net of adjustments since carried out) has been included under “Other Liabilities-others” in Schedule-5.

No claim has been received during the period ended March 2017 (01.04.2016 to 31.03.2017) against Inter Branch Credit entries, Blocked and transferred to General Ledger.

b. During the current financial year the Bank has revalued immovable properties (forming part of Schedule 10) based on the reports obtained from external independent valuers. The revaluation surplus amounting toRs,964.24 crore is credited to revaluation reserve.

c. Premises includes properties amounting toRs,2.75 crore (Net of Depreciation) (previous yearRs,1.66 crore) {CostRs,7.47 crore} (previous yearRs,7.47 crore) having revalued amount ofRs,104.68 crore (Net of Depreciation up to March 17), are awaiting registration of title deeds. Premises include capital work in progress ofRs,340.32 crore (previous yearRs,238.85 crore).

d. 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 demand ofRs,674.50 Crore (previous yearRs,1155.79 Crore) 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. Against these disputed demands,Rs,674.50 crores (previous yearRs,1155.79 crores) has been paid.

e. During the Financial Year 2016-17 the bank has allotted 164370768 equity shares ofRs,2/- each to Government of India at a premium ofRs,126.49 per share as determined by the Board in terms of the Chapter VII of the SEBI (ICDR) Regulations, 2009, as amended from time to time on preferential basis. The total amount received by the bank on this account isRs,2112 crores which includesRs,32.87 crores as equity capital andRs,2079.13 crores as premium. Consequently the Government holding has increased to 65.01 % as against 62.08% before preferential allotment.

f. The guidelines given in Micro, Small and Medium Enterprises Development Act 2006 have been complied with for purchases made during the Financial Year 2016- 2017 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 2016-17.

g. 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.

h. In compliance of RBI letter no. DBR. NO.BP.13018/21.04.048/2015-16 dated 12.04.2016, Bank has made a provision ofRs,209.07 crore being 15 % of the existing outstanding ofRs,1393.79 crore as on 31.03.2017 in respect of restructured Food Credit advance availed by State Government of Punjab.

i. Balances in ATMs / with cash replenishing agencies is being reconciled, impact of which is not expected to be material.

j. 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:

k. The Strategy for IND AS Implementation

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 is applicable to the Bank in accordance with the MCA press release from financial year 201819. In pursuance to this Reserve Bank of India (RBI) had issued notification (RBI/2015-16/315DBR.BP.BC. No.76/21.07.001/2015-16) dated 11 February 2016 for implementation of IND AS. The Bank has commenced the process of IND AS (Indian Accounting Standards) implementation from 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 its implementation and has made substantial progress during the year. 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 with the Reserve Bank of India. The Bank is now assessing the changes, wherever required in the core banking system. Bank has also commenced the formulation of the Expected Credit Loss Models. With the annual financial statements under the current accounting framework being finalized, the Bank will commence the preparation of the Opening Balance Sheet for the IND AS transition.

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