A. DISCLOSURES REQUIRED IN TERMS OF GUIDELINES ISSUED BY RBI
1.0 CAPITAL
a) Bank has allotted 86,90,47,619 equity shares ofRs.2/- each at a premium ofRs.27.40 per share i.e. at an issue price ofRs.29.40 to Government of India on preferential basis on October 11, 2018 for a total consideration of Rs.2555.00 crore.
b) During the year, the Bank has allotted 5,40,40,570 equity shares of Rs.2/- each at a premium of Rs.17.61 per share i.e. at an issue price of Rs.19.61 per share to eligible employees of the Bank under Corporation Bank Employees Stock Purchase Scheme 2018 on March 8, 2019 for a total consideration of Rs.105.97 crore.
c) During the year, the Bank has allotted 340,55,47,226 equity shares of Rs.2/- each at a premium of Rs.24.68 per share i.e. at an issue price of Rs.26.68 per share to Government of India on preferential basis on March 29, 2019 for a total consideration of Rs.9086.00 crore.
d) The Bank’s Capital to Weighted Risk Assets Ratio (CRAR) has been worked out as per the RBI guidelines. These ratios are given below:
a) During the year, premium of Rs.78.94 crore (previous year Rs.98.36 crore) was amortized in respect of securities held under “Held to Maturity” category.
b) During the year, there was depreciation of Rs.0.01 crore (previous year nil) for securities held under the “Held for Trading” category.
c) During the year, there was reversal of provision for depreciation of Rs.58.96 crore (previous year Rs.202.91 crore was provided) for investments under the “Available for Sale” category.
d) RBI vide its circulars DBR.No.BP.BC.102/21.04.048/2017-18 dated April 2, 2018 and DBR.No.BP.BC.113/21.04.048/2017-18 dated June 15, 2018 had permitted banks to spread provisioning for mark to market (MTM) losses on investments held in AFS and HFT for the quarters ended 31st December, 2017, 31st March, 2018 and 30th June, 2018 equally over up to four quarters commencing from the quarter in which the loss is incurred. The MTM losses incurred by the bank of Rs.414.88 crores, Rs.99.25 crores and Rs.209.15 crore respectively in these three quarters have been spread over. Accordingly, the bank made provision of Rs.232.25 cr, Rs.60.01 cr and Rs.60.01 cr in the quarters ended 31st March, 2018, 30th June, 2018 and 30th September, 2018 and there was unamortized balance of Rs.109.49 cr as on 31.12.2018. Since the Bond rate had eased and there was change in the portfolio composition, deferred provision was not required to be made and it resulted in retrieval of net provision of Rs.52.29 crore for the quarter ended 31st March, 2019.
e) During the year, the Bank had transferred securities of book value of Rs.8692.94 crore (Previous year Rs.2940.94 crore) from “Available for Sale” to “Held to Maturity” category by accounting depreciation of Rs.238.52 crores (previous year Rs.66.47 crores), transferred securities of book value of Rs.12390.91 crore (Previous year Rs.6186.89 crore) from “Held to Maturity” to “Available for Sale” category, transferred securities of book value of ' NIL crores (Previous year ' Nil crores) from “Held for Trading” to “Available for Sale category” and also transferred securities of book value of ' NIL crore (Previous year ' Nil crores) from “Held for Trading” to “Held to Maturity”.
f) During the current year, the value of sales/ transfers of securities to/ from HTM category [excluding portfolio transfer of securities (under one time/special window permitted by RBI) and sales to RBI under OMO auctions] had not exceeded the limit of 5% of the book value of the investment held in HTM category at the beginning of the year.
g) Government Securities amounting to Rs.661.85 cr (Previous Year Rs.1,130.43 cr) are pledged with CCIL/NSCCL/MCXCCL/ICCL for Settlement Guarantee Fund or Default Fund.
h) Investments include Government securities amounting to Rs.20,244.57 crores (Previous year Rs.36,020.53 crore) pledged for borrowing under LAF-Repo/TREPS/CROMS-Repo/CBLO (as applicable) out of which Rs.5084.32 crores (Previous year was 14,451.90 crores) are encumbered.
2.1 Disclosure on Risk Exposure in Derivatives
(i) Qualitative Disclosure:
a) The Bank’s Derivative Policy as approved by the Board permits Bank to undertake deals in over-the-counter (OTC) as well as exchange traded (ET) interest rate and currency derivatives. The policy permits the offering of the products to the customer to manage their foreign currency exposures, which are to be covered on Back-to-Back basis in the interbank market. Derivatives can also be used by the Bank both for trading as well as hedging on-balance sheet items. In the current financial year, Bank has entered into derivative deals involving forwards and currency futures.
b) The Asset Liability Management Committee (ALCO) ofthe Bank overseas management ofthese risks. The Bank’s Integrated Risk Management Department (IRMD), independently identifies, measures and 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.
c) 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 “Derivative Policy” approved by the Board prescribes the market risk parameters as well as Customer Appropriateness policy for entering into derivative transactions. Credit risk is controlled by entering into derivative transactions only with counterparties in respect of whom appropriate credit limits are sanctioned taking into account their ability to honour obligations. The Bank enters into International Swap Dealers Association (IS DA) agreements with each counter party.
d) The accounting policy for derivatives as stated in Significant Accounting Policies, has been drawn-up in accordance with RBI guidelines and revenues are recognized accordingly.
3. ASSET QUALITY
3.1 ADVANCES
a) In the case of unaudited branches, the classification of advances, as certified by the Branch Managers has been incorporated.
b) During the year the Bank has made provision for NPA of Rs.12,002.72 crores (Previous Year Rs.11,111.90 crores). The Bank has made required provision cumulative for Non Performing Advances as at 31st March 2019 Rs.13,525.38 crores (Previous Year Rs.7,929.68 crores) in the line with RBI guidelines.
3.2 Non-Performing Assets
3.3 Divergence in Asset Classification and Provisioning for NPAs:
Pursuant to RBI Circular no. RBI/2018-19/157 DBR. BP.BC.NO.32/21.04.018/2018-19 dated April 1, 2019 “Divergence in the asset Classification and Provisioning”, the Bank has incorporated the disclosure prescribed as under:
3.4 In terms of RBI communication DBR No. BP.8756/21.04.048/2017-18 dated 2nd April, 2018, Rs.1011.99 crore has been additionally provided in respect of eligible NCLT (List 1 & List 2) accounts as on 31st March 2019. Total actual provision made as on 31st March 2019 for the eligible NCLT (List 1 & List 2) accounts is Rs.9079.56 crore, which represents 100% of provision of the outstanding value as on March 31, 2019, instead of Rs.8067.57 crore as per IRAC norms. With regard to the other 22 NCLT accounts an amount of Rs.610.40 crore further provided as on 31st March, 2019. Total actual provision made as on 31st March, 2019 is Rs.1547.69 crore instead of Rs.937.29 crore.
An additional, adequate and necessary, provision of Rs.1280.55 crore has been provided in 29 NPA accounts.
The bank has downgraded for 4 borrowal accounts from standard to NPA category and accordingly made a provision of Rs.123.70 crore as per prudential norms.
3.5 Details of financial assets sold to Securitization/ Reconstruction Company for Asset Reconstruction:
With a view to incentivizing banks to recover appropriate value in respect of their NPAs promptly, banks can reverse the excess provision on sale of NPA if the sale is for a value higher than the net book value (NBV) to its profit and loss account in the year the amounts received. The quantum of excess provision reversed to the profit and loss account on account of sale of NPAs should be disclosed in the financial statements of the bank under “Notes to Accounts”.
As on incentive for early sale of NPAs, bank can spread over any shortfall, if the sale value is lower than the NBV, over a period of two years. This facility of spreading over the shortfall would however be available for NPAs as per the Master Circular on Prudential norms on Income Recognition, Assets Classification and Provision pertaining to advances, in respect of NPA sold before 31st March, 2016, and will be subject to necessary disclosures in the “Notes to Account”.
B) Details of Book value of Investments in Security Receipts:
4.1 Risk Category wise Country Exposure
The following are the bank’s country wise net risk exposure based on the Country risk classification provided by the Export Credit Guarantee Corporation (ECGC).
4.2 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the Bank
During the year ended March 31, 2019, the Bank has exceeded the exposure ceiling fixed by RBI to Individual borrower/Group in the following cases, which have been approved by the Board.
5.0 Disclosure of Penalties Imposed by RBI
During the year 2018-19, Reserve Bank of India (“RBI”) has imposed following Penalties:
A. i) As per the provisions of RBI Master Circular DCM (CC) No. G-4/03.044.01/2018-19 dated 03.07.2018 on “Scheme of Incentive and penalties for Bank branches based on performance in rendering customer service to the members of public”, an aggregate amount of Rs.0.31 crores has been imposed as penalties for discrepancies detected while a) processing the soiled notes remittances received from the Bank’s Currency Chests and b) Inspection of Currency Chests.
ii) Rs.2.00 crores penalty levied by RBI vide communication ref No. EFD.CO.S0/537/02.01.013/2018-19 dated 01.02.2019 under Section 35, 35A, 46 and 47A of Banking Regulation Act, 1949 for violation of regulatory guidelines.
iii) Rs.1.00 crore penalty levied by RBI vide communication ref No. EFD.CO.SO/616/02.01.008/2018-19 dated 25.02.2019 under Section 35, 35A, 46 and 47A of Banking Regulation Act, 1949 for violation of regulatory directions on time bound implementation & strengthening of SWIFT related operational controls.
iv) Penalty levied during Incognito Visit of RBI Rs.0.001 crore.
B. Disclosure requirements as per accounting standards where RBI has issued guidelines in respect of disclosure items for notes to the accounts
1.0 PRIOR PERIOD ITEMS
Prior Period Expenses (net of Income) during the year Rs.3.29 crores [Previous year Rs.0.44 crores (Prior Period Income (net of Expenses)] to the extent identified.
2.0 FIXED ASSETS
1. Premises include properties costing Rs.12.23 crores (previous year Rs.12.47 crores) for which registration formalities are pending.
2. Fixed Assets include Rs.4.40 crores (Previous Year Rs.1.50 crores) in respect of Capital Work in Progress.-Premises.
3. During the year 2018-19, cost of software acquired is Rs.37.04 crores (Previous Year Rs.37.48 crores) and the amount amortized during the year is Rs.38.56 crores (Previous Year Rs.28.61 crores).
4. Contracts pending execution on Capital account and not provided for is Rs.105.06 crores (Previous Year Rs.578.59 crores).
5. During the year, the Bank has reversed Rs.19.26 crores from the revaluation reserve towards the General Reserve (previous year Rs.16.46 crores).
6. As per RBI guidelines, Bank has carried out Revaluation of Bank owned properties, the value of which is Rs.962.62 crores as gainst the previous value of Rs.687.99 crores.
7. During the year 2018-19, an amount of Rs.4.19 crores has been reduced from the cost of Fixed Assets on account of Goods and Services Tax (GST) for utilizing the same as input credit against GST liability (previous year Rs.2.33 crores)
3.0 EMPLOYEE BENFITS
3.1 The Bank has accounted for Employee Benefits as per Accounting Standard 15 issued by the Institute of Chartered Accountants of India.
DEFINED BENEFITS
3.2 a) Changes in the present value of the defined benefit obligations:
Part B : Geographic Segment
The Geographic segment consists of only domestic segment as the Bank does not have any foreign branch.
Notes on Segment Reporting:
1 As per guidelines of RBI on compliance with Accounting Standards, the Bank has adopted “Treasury Operations”, “Wholesale”, “Retail” and “Other Banking Operations” as Primary segments under “Domestic Segment” for the purpose of compliance with AS-17 on “Segment Reporting” issued by ICAI.
2 Segment Liabilities are distributed in the ratio of their respective Segment Assets.
3 Figures of the previous period / year have been regrouped / reclassified based on current quarter / period’s presentation.
4.0 RELATED PARTY DISCLOSURE
In compliance with Accounting Standard 18 - Related Party Disclosures, issued by the Institute of Chartered Accountants of India read along with the Reserve Bank of India guidelines, the details pertaining to Related Party transactions are disclosed as under:
a) Name of the Related Party and relationship:
The transactions with the subsidiary are not disclosed in view of para 9 of AS-18 “ Related Party Disclosure”, which exempts state controlled enterprises from making any disclosures pertaining to their transactions with other related parties,which are also state controlled.
Transactions in the nature of banker-customer relationship including those with KMP and relatives of KMP have been disclosed in terms of Para 5 of AS-18.
5.0 LEASES
The Bank has entered into various operating lease for offices, guest house and residential premises for employees that are renewable on a periodical basis and cancelable at the bank’s option. Rental expenses for such operating leases included in financial statements for the year 2018-19 are Rs.287.70 crores (previous year Rs.274.57 crores).
6.0 EARNINGS PER SHARE
Basic and diluted earnings per share has been computed in accordance with Accounting Standard - 20 (Earnings Per Share):
Diluted: Not applicable as there are no dilutive potential equity shares.
7.0 ACCOUNTING FOR TAXES ON INCOME
a) The bank has reckoned the Income Computation and Disclosure Standards (ICDS) as per Notification by Central Board of Direct Taxes (CBDT) Dt. 29.09.2016, read with Circular of CBDT Dt 23.03.2017 in this regard which are applicable for the Assessment Year 2018-19 and subsequent Assessment Years.
b) The Bank has recognized deferred tax assets and liabilities as per Accounting Standard No. 22 issued by The Institute of Chartered Accountants of India (ICAI). The components are as under:
Note: The DTA on Taxable Income (Loss) & DTL on Income from Long Term Finance created during the year FY 201819 was only on account of increase of tax rate (including cess and surcharge) from 34.608% to 34.944%. The DTA was not created on the tax loss incurred during the FY 2018-19.
c) The Bank has been recognising deferred tax assets and liabilities as per Accounting Standard 22 issued by the Institute of Chartered Accountants of India (ICAI), however during the current year deferred tax assets on timing differences other than tax losses to the tune of Rs.1740.09 crore has been recognised. Considering the quantum of loss and prudence the current year deferred tax ofRs.1240.13 crore on tax loss has not been recognised. The bank carries deferred tax asset of Rs.1557.96 crore on tax losses upto March 31, 2018.
d) Income Tax
i) Break-up of provision made for Income Tax during the year :
ii) Assessments for Income Tax have been completed up to the financial year 2015-16 (AY 2016-17).
The following appeals by the Bank/Income Tax Department are pending before various appellate authorities/courts :
iii) Advance Taxes paid, Taxes Paid under Disputes, Input Tax Credit availed and TDS deducted on Income to the Bank are appearing under “Other Assets--Tax Paid in Advance / Tax Deducted at Source”. With regard to the Taxes paid under dispute the Bank has filed appeals before Appellate Authorities and no additional provision is considered necessary in view of favourable judicial pronouncements in similar cases.
8.0 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
a) Provisions:
* includes provision for claims against the Bank not acknowledged as debt, provision towards fraudulent transactions and other miscellaneous transactions.
Figures in brackets represent previous year figures.
b) Contingent Liability:
i) Claims against the Bank not acknowledged as debts:
C. ADDITIONAL DISCLOSURES
1. PROVISIONS AND CONTINGENCIES
a) In terms of RBI communication DBR No. BP.8756/21.04.048/2017-18 dated 2nd April, 2018, Rs.1011.99 crores has been additionally provided in respect of eligible NCLT (List 1 & List 2) accounts as on 31st March 2019. Total actual provision made as on 31st March 2019 for the eligible NCLT (List 1 & List 2) accounts is Rs.9079.56 crores, which represents 100% of provision of the outstanding value as on March 31, 2019, instead of Rs.8067.57 crores as per IRAC norms.
b) With regard to the other 22 NCLT accounts an amount of Rs.610.40 crores further provided as on 31st March, 2019. Total actual provision made as on 31st March 2019 is Rs.1547.69 crores instead of Rs.937.29 crores.
c) In respect of 29 accounts under NPA category, in view of uncertainty of recovery, total provision made as on March 31, 2019 is Rs.2767.22 crores instead of Rs.1486.67 crores as per IRAC Norms.
d) The Bank has classified 4 borrowal accounts whose outstanding as on March 31, 2019 is Rs.627.63 crores, from standard to NPA category and accordingly made a provision of Rs.123.70 crores as per prudential norms.
3. Draw Down from Reserves : During the year 2018-19 was NIL (previously Rs.106.82 crores) from Investment Reserve Account as per RBI guidelines
4. Complaints / unimplemented awards of Banking Ombudsman
5a. Letter of Comforts (LOC) including Buyer’s Credit:
The Bank issues Letters of Comfort (LOCs) on behalf of its various constituents against the credit limits sanctioned to them. In the opinion of the Management, no significant financial impact and cumulative financial obligations have been assessed under LOCs issued by the Bank in the past, during the year and still outstanding. Brief details of LOCs by the Bank are as follows:
b. Bank has not entered into any credit default swap during the year.
6. Provisioning coverage ratio of the Bank as on March 31, 2019 is 83.30 % as against 63.65% as on March 31, 2018.
7. During the year, the Bank has received fee/remuneration of Rs.10.00 crores from Bank assurance business (Previous year Rs.13.43 crores).
*Banks may also disclose in the format above, sub sectors where the outstanding advances exceeds 10 percent of the outstanding total advances to that sector. For instance, if a bank’s outstanding advances to the mining industry exceed 10 percent of the outstanding total advances to ‘Industry’ sector it should disclose details of its outstanding advances to mining separately in the format above under the ‘Industry’ sector.
[1] Gross NPAs as per item 2 of Annex to DBOD Circular DBOD.BP.BC.No.46/21.04.048/2009-10 dated September 24, 2009 which specified a uniform method to compute Gross Advances, Net Advances, Gross NPAs and Net NPAs.
[2] Technical or prudential write-off is the amount of nonperforming loans which are outstanding in the books of the branches, but have been written-off (fully or partially) at Head Office level. Amount of Technical write-off should be certified by statutory auditors. (Defined in our circular reference DBOD.No.BP.BC.64/21.04.048/2009-10 dated December 1, 2009 on Provisioning Coverage for Advances)
Further, Banks should disclose the stock of technical write offs and the recoveries made thereon as per the format below:
8. During the year 2018-19, 162 cases of fraud, involving Rs.1951.10 crores, with outstanding balance of Rs.1761.08 crores were reported to RBI. Total provision made against these cases is Rs.1686.92 crores.
During the previous year 2017-18, 99 cases of fraud, involving Rs.1296.23 crores, with outstanding balance of Rs.1381.78 crores were reported to RBI. Total provision made against these cases is Rs.1348.37 crores.
9. Off-Balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)
10. Securitisation as Originating Bank
Information under Securitisation transaction of the Bank as a Originating Bank is given below :
11. Unhedged Foreign Currency Exposure
The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers. The objective of this policy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion.
In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage. Additionally, at the time of sanctioning limits for all clients, the Bank stipulates a limit on the unhedged foreign currency exposure of the client (as a % of total foreign currency exposure sanctioned by the Bank). After considering factors such as internal rating of the borrower, size, possibility of natural hedging, relative size of unhedged foreign currency exposure with respect to total borrowings of the client, etc. Further, the Bank reviews the unhedged foreign currency exposure across its portfolio on a periodic basis. The Bank also maintains incremental provision towards the unhedged foreign currency exposures across of its borrowers in line with the extant RBI guidelines.
Further, the bank has maintained provision of Rs.23.85 crores (Previous year Rs.26.01 crores) and additional capital of Rs.18.18 crores (Previous year Rs.16.22 crores) on account of Unhedged Foreign Currency Exposure of its borrowers as at March 31, 2019.
12. Liquidity Coverage Ratio:
The necessary information is as under:
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