Notes to Accounts of Indian Overseas Bank

Mar 31, 2025

1.2 In respect of investments held above the face value, premium of ? 82.20 Crores was amortized during the year (previous year ? 45.28 Crore). During the financial Year, an amount of ? 295.23 Crore was accrued as discount on investments held below the face value (previous year NIL as discount accrued was not applicable). These are accounted in Interest Income as per the extant directions of Reserve Bank of India.

Further, a sum of ? 4100 Crore (Face Value) being nonInterest bearing GOI Recapitalization Bonds investments are maturing from March 2031 to March 2036 and held under Held to Maturity category. They are valued as per the extant directions of RBI and discounted on monthly intervals. As on 31.03.2025, the carrying cost of these bonds is ? 2,553.94 Crore as against ? 2368.85 Crore as on the date of transition.

1.3 Securities of Face Value for ? 517.00 Crore (previous year ? 517.00 Crore) towards CCIL Settlement Guarantee Fund/Default Fund and securities for ? 12,918.00 Crore

(previous year ? 13,018.00 Crore) towards collateral for borrowing under TREPS/Default Fund have been kept with Clearing Corporation of India Limited. Besides, securities to the extent of ? 132.10 Crore (previous year ? 127.10 Crore) has been lodged with CCIL towards default fund for Forex operations and ? 15.00 Crore (previous year ? 15.00 Crore) held for Currency derivative segment. The Bank has placed securities of face value ?

3,000 Crore (previous year ? 3,500 Crore) with Reserve Bank of India for intraday borrowing. The Bank has also placed Securities to the extent ? 17,500 Crore (previous year ? 16,000 Crore) with Reserve Bank of India for our borrowing under the LAF window.

1.4 Shares under Investments in India in Regional Rural Bank - Odisha Gramya Bank is ? 606.90 Crore (previous year ? 606.90 Crore).

1.5 The Bank sold Government Securities from HTM category during the year, both outright and under Reserve Bank of India''s Open Market Operations (OMO). The extent of sale by the Bank under OMO was ? 680.67 Crore (BV)

[previous year: NIL] and earned a profit of ? 4.72 Crore [previous year: NIL]. The Bank has also sold Government Securities (other than OMO), to the extent of ? 3,991.33 Crore (BV) [previous year ? 1,668.52 Crore] (within 5%, prescribed limit of Reserve Bank of India) and booked a profit of ? 51.74 Crore [previous year ? 14.20 Crore]. In accordance with the RBI guidelines the profit on sale of Government Securities under HTM category has been taken to Profit & Loss account and subsequently has been appropriated to capital reserve account (Net of taxes and amount to be transferred to Statutory Reserve).

1.8 With effect from April 1,2024, the bank has implemented master directions issued by RBI on Classification, Valuation and Operations of Investments Portfolio of Commercial Bank (Directions), 2023, DOR.MRG.36/21.04.141/2023-24 dated September 12, 2023 which has introduced significant changes in the basis of classification and accounting of investments and recognition of fair valuation of gains/losses. Accordingly, in the standalone financial results, the bank has accounted net loss of ? 1413.53 Crore in General Reserve at transition (as on 31.03.2025 ? 1315.57 Crore after transferring ?

97.96 Crore held in Investment Reserve Account (IRA)). There was a net gain of ? 390.57 Crore in AFS Reserve (net of tax) for the financial year which is not available for any distribution in accordance with RBI directions referred above.

Subsequent to the said transition, fair value of performing investments under AFS and Fair value through Profit & Loss (FVTPL) including Held for Trading (HFT) categories during the FY 2024-25 are recognized through AFS Reserve and Profit and Loss Account respectively. Accordingly amounts for the previous periods are not comparable.

2. INVESTMENT FLUCTUATION RESERVE

As per Reserve Bank of India circular number RBI/ DOR/2023-24/104DOR.M.RG.36/21.04.141/2023-24 dated September 12, 2023, an Investment Fluctuation Reserve (IFR) is to be created until the amount of IFR is at least two percent of the AFS and FVTPL (including HFT) portfolio, on a continuing basis, by transferring to the IFR an amount not less than the lower of the following:

a. Net profit on sale of Investments during the year

b. Net profit for the year less mandatory appropriations

c. During the year ended on March 31st, 2025, an amount of ?100 crore has been transferred to IFR.

d. During the year ended on March 31st, 2025, an amount of NIL has been draw down from IFR.

3. ADVANCES

3.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the reliability of certain advances, the estimated value of security, Central Government Guarantees etc., have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

4. FIXED ASSETS (PROPERTY, PLANT AND EQUIPMENT)

The Profit on sale of assets during the year was ? 17959457.20 (Rupees one Crore seventy-nine lakh fifty-nine thousand four hundred fifty seven and twenty paise only) out of which an amount of ? 1.35 crore has been transferred to capital reserve as per the consistent practice followed by the Bank.

5. INTER BRANCH RECONCILIATION/ INTERNAL OFFICE ACCOUNTS

Reconciliation of Inter Branch transactions and internal/ office accounts is under progress at different stages at the branches and /or Central Office Departments. Steps are being taken to eliminate the outstanding entries at the earliest. The necessary accounting adjusts if any required shall be carried out on the completion of such process. The management however does not anticipate any material consequential effect of pending reconciliation and elimination of outstanding entries.

6. CAPITAL AND RESERVES

• During the Financial Year 2024-25, the Bank has issued 35,41,77,539 equity shares having Face Value of ? 10 each for cash to Qualified Institutional Buyers (QIB) pursuant to Qualified Institutional Placement (QIP) in accordance with the provisions of Securities & Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended at a premium of ? 30.57 per share aggregating to ? 1436.89 Crore. This has resulted in an increase of ? 354.18 Crore in the issued and paid-up Equity Share Capital and ? 1078.60 Crore (net of share issue expenses of ? 4.11 crore) in Share Premium Account.

• The paid-up capital of the Bank stands at ? 19,256.59 Crore as on March 31st 2025. The Government of India shareholding stands at 94.61% as on March 31st, 2025.

• During the Financial Year 2024-25, Bank has not issued Basel III Tier II Bonds.

7. TAXES

7.1 In the opinion of management provisions under section 115 JB (Minimum Alternate Tax) of the Income Tax Act, 1961 are not applicable to the Bank. Therefore, bank has not provided any amount towards provision for MAT/ Income tax.

7.2 Tax paid in advance (Net of provisions) is under reconciliation. This is on account of amounts pending assessment/under appeal/ tax paid under dispute. [Refer Schedule 11(iii)].

7.3 Taking into consideration the decisions of Appellate Authorities, certain judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating ? 4061.92 Crore (previous year ? 8450.79 Crore), Service Tax aggregating to ? 256.24 Crore (previous year ? 238.42 crore) and Goods and Service Tax aggregating to ? 1615.29 crore (Previous year ? 1071.78 crore) towards contingent liabilities.

7.4 Tax expense for the year amounting to ? 1177.01 crore includes Current Tax expense of ? 17.01 crore and Deferred Tax expense of ? 1160.00 crore - refer note no.18.8.

7.5 The Bank has a carried balance of Net Deferred Tax Assets up to March 31,2025 aggregating to ? 3863.98 crore which was recognized in earlier periods and on estimated basis bank has reversed deferred tax asset amounting to ? 500.00 crores for the quarter (31.03.2025) and ? 1160.00 crore for the year ended 31.03.2025. In the opinion of the management, the carrying amount of DTA is fully realizable.

7.6 As per information available with the Bank, there is no outstanding dues payable by the Bank to MSME units identified by the Bank, which is pending beyond the time limit prescribed under MSMED Act, 2006 and there have been no reported cases of accepted liability of delayed payments of principal amount or interest thereon for such parties during the year.

8. There has not been any reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

b. Liquidity coverage ratio (LCR)

Reserve Bank of India had introduced the Liquidity Coverage Ratio (LCR) vide circular No RBI/2014-15/529 DBR. No. BP.BC.80/21.06.201/2014-15 dated March 31,2015 which has been modified from time to time, in order to ensure short term resilience of banks to potential liquidity disruptions by ensuring that bank have sufficient high quality liquid assets (HQLA) to survive an acute stress scenario lasting for 30 days. The minimum LCR requirement set out in the Reserve Bank of India guidelines for the bank effective for FY 2024-25 is 100%.

Definition of LCR: Stock of high-quality liquid assets (HQLAs)

Total net cash outflows over the next 30 calendar days

In the stock of high-quality liquid assets (HQLA), there are two categories of assets, viz. Level 1 and Level 2 assets. Level 2 assets are sub-divided into Level 2A and Level 2B assets on the basis of their price-volatility. Each category includes assets which the bank is holding on the first day of the stress period. Level 1 assets are with 0% haircut while in Level 2, 2A assets are with a minimum 15% haircut and Level 2B Assets, with a minimum 50% haircut.

The total net cash outflows is defined as 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.

Bank has calculated LCR for all working days for the March 2025 quarter based on the data extracted from the bank''s database through the program specifically designed for this purpose. Bank''s LCR for the quarter ended March 31^st 2025 stands at 126.27 % based on daily average of three months (Q4 FY 2024-25) and is well above the present minimum requirement prescribed by Reserve Bank of India of 100% for the Quarter ended March, 2025. Bank is having enough liquidity to meet sudden cash outflows.

The detailed Quantitative disclosure is placed below:

Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The Domestic and Overseas Centers 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 Risk Management Committee of Board (RMCB) 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, 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.

1. Unweighted values are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows) except where otherwise mentioned in the Circular and LCR template.

2. Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates (for inflows and outflows).

3. Adjusted values are calculated after the application of both (i) haircuts and inflow and outflow rates and (ii) any applicable caps (i.e. cap on level 2B and level 2 assets for HQLA and cap on inflows).

4. The Disclosure pertaining to first three quarters of FY 2024-25 are as compiled by the management and relied upon by the auditors.

c. Net Stable Funding ratio (NSFR)

Reserve Bank of India introduced the Net Stable Funding Ratio (NSFR) in order to promote resilience of Banks over a longer-term time horizon by requiring banks to fund their activities with more stable sources of funding on an ongoing basis. The minimum NSFR requirement set out in the Reserve Bank of India guidelines effective from October 1, 2021 is 100%

Definition of NSFR: Available Stable Fund (ASF)

Required Stable Fund (RSF)

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. Available stable funding (ASF) is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year. The amount of required stable funding (RSF) of a specific institution is a function of the liquidity characteristics and residual maturities of the various assets held by that institution as well as those of its off-balance sheet (OBS) exposures.

Bank has calculated NSFR for March 31st 2025 which stands at 133.78% which is well above the Reserve Bank of India prescribed minimum requirement of 100%. Bank''s majority funding is from Retail and Small Business customers, which provide high stability with regard to stability of Funding. Bank is having enough stable sources of funding to fund their activities on an ongoing basis over a longer-term time horizon.

* As per the RBI Master Direction-Classification, Valuation and Operations of Investments Portfolio of Commercial Banks (Directions), 2023, DOR.MRG.36/21.04.141/2023-24 dated September12, 2023, The balance in provision for depreciation as at March 31, 2024, is transferred to General/Revenue Reserve.

c) Sale and transfers to/from HTM category/Permanent Category

Sale from Held To Maturity category (above the prescribed limit of 5%) during the current year: Nil [Previous Year: Nil]. Transfer To/From Held To Maturity Category other than the Category Transfer allowed by Reserve Bank of India at the beginning of the Year: NIL

As per Master Circular-Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions) 2023 dated 12.09.2023 issued by Reserve Bank of India, after transition i.e., 01.04.2024, Banks shall not reclassify investments between categories (viz HTM, AFS and FVTPL) without prior approval of their Board and the Department of Supervision (DoS), RBI.

e) Divergence in asset classification and provisioning

RBI vide its notification no. RBI/DOR/2021-22/83 DOR.ACC.REC. No.45/ 21.04.018/2021-22 dated 30.08.2021(Last updated on 01.04.2024) has made disclosure requirement by the banks where divergences from prudential norms on income recognition, asset classification and provisioning exceed certain thresholds in their Annual report.

For the FY ending 31.03.2024, the banks should disclose divergences, if either or both of the following conditions are satisfied:

(a) the additional provisioning for NPAs assessed by RBI as part of its supervisory process exceeds 5 per cent of the reported profit before provisions and contingencies for the reference period, and

(b) the additional Gross NPAs identified by RBI as part of its supervisory process exceed 5 per cent of the reported incremental Gross NPAs for the reference period.

If any of the parameter (a) and/or (b) triggers, the information to be reported to the Stock Exchanges.

SEBI vide their circular dated SEBI/HO/CFD/PoD2/CIR/P/2023/120 dated July 11,2023 brought these disclosures under Regulation 30 of SEBI LODR of material events / information and hence, necessitate immediate disclosure, as this information is price sensitive, requiring prompt disclosure. The listed banks shall make disclosures of divergences and provisioning beyond specified threshold, as mentioned in aforesaid RBI notifications, as soon as reasonably possible and not later than 24 hours upon receipt of the Reserve Bank''s Final Risk Assessment Report (''RAR''), rather than waiting to publish them as part of annual financial statements published immediately following communication of such divergence by RBI to the bank.

Present Status: The RBI has submitted the divergence report for the year ended 31.03.2024 and assessment of trigger points are as follows:

a) the additional provisioning for NPAs assessed by RBI exceeds 5 per cent of the reported profit before provisions and contingencies for the reference period, and

Since there is no trigger evidenced in either or both of the trigger points, there is no breach by the Bank and accordingly, there is no need for making disclosure as per SEBI LODR regulations/guidelines.

f) Disclosure of transfer of loan exposures

Disclosures as per RBI Master directions ref no RE/DOR/2021-22/86 DOR.STR.REC.51/21.04.048/2021-22 "Master Direction -Reserve Bank of India (Transfer of loan exposures) Directions, 2021" dated 24.09.2021, the details of loans transferred / acquired during quarter ended March 31,2025 are given below:

i) In respect of "Loans not in default" that are transferred or acquired

• Bank has opted to provide full provision for the liability towards frauds for financial year ended 31.03.2025 instead of spilling over a period of four quarters.

• During the quarter ended 31.03.2025, 5 frauds under other than advances category has been reported to RBI, where likely loss is ? 0.50 Crore and for which the Bank is holding 100% provision. FMR wise fraud data is being reconciled

(i) Bank has opted to provide full provision for the liability towards frauds for the financial year ended 31.03.2025 instead of spilling over a period of four quarters.

(ii) During the quarter ended 31.03.2025, 13 frauds under other than advances category has been reported to RBI, where likely loss is ? 9.18 crore and for which the Bank is holding 100% provision. FMR wise fraud data is being reconciled.

Bank has opted to provide full provision for the liability towards frauds for financial year ended March 31st 2025 instead of spilling over a period of four quarters.

During the quarter ended March 31st, 2025, 27 number of frauds under cyber frauds category has been reported to Reserve Bank of India, where the likely loss is ? 0.003 crore. The provision for the amount of ? 0.003 crore has been made for the likely loss.

d. Unsecured advances

Banks shall disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. have been taken as also the estimated value of such intangible collateral as per the following format:

ensure transparency in their dealings with group entities, banks should make the following disclosures for the current year with comparatives for the previous year:

g. Unhedged foreign currency exposures

Based on the available financial results and the declaration from the borrowers, the Bank has estimated the liability towards unhedged foreign currency Exposure to their constituents in terms of RBI/2022-23/131 DOR .MRG.REC.76/00-00-007/2022-23 dated October 11,2022 and the Bank holds provision of Rs 17.12 crore as on March 31, 2025.

f. Intra-group exposures

With the developments of financial markets in India, banks have increasingly expanded their presence in permitted financial activities through entities that are owned by them fully or partly. As a result, banks'' exposure to the group entities has increased and may rise further going forward. In order to

Note : Nature and terms of the swaps including information on credit and market risk and the accounting policies adopted for recording the swaps should also be disclosed.

$ Examples of concentration could exposures to particular industries or swaps with highly geared companies.

@ if the swaps are linked to specific assets, liabilities, or commitments, the fair value would be the estimated amount that the bank would receive or pay to terminate the swap agreements as on the balance sheet date. For a trading swap the fair value would be its mark to market value.

c. Disclosures on risk exposure in derivatives i) Qualitative disclosures

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Market Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mismatch, for funding overseas branches etc.

b) The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as

hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank''s Balance sheet exposures.

g) The income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Risk Management policies pertaining to derivatives with particular reference to the extent to which derivatives are used, the associated risks and business purposes served. Also, to include

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

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

c) Policies for hedging and/or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants; and

d) Accounting policy for recording hedge and nonhedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Govt. Securities and to reduce the cost of Subordinated Debt. In addition, the bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The bank has put in place an appropriate structure and organization for management of risk, which includes Treasury Department, Asset Liability Management

Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks

as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge bank''s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 -

Significant Accounting Policies (Policy No.6)

d. Credit default swaps

Bank using a proprietor model for valuation of Credit Default Swaps (CDS) positions, shall disclose the valuation as per the proprietor model, including the rationale for using that model and an explanation of the valuation methodology in the Notes to Accounts in their financial statements. The disclosure shall also include the valuation as per the CDS curve published by Fixed Income Money Market and Derivatives Association of India (FIMMDA) or benchmark recommended by FIMMDA*

*The requirement to disclose valuation as per the CDS curve published by FIMMDA or a benchmark recommended by FIMMDA shall be effective once FIMMDA starts publishing the CDS curve or recommends a valuation benchmark.

Credit default swaps-Nil (Previous Year-Nil)

f. Implementation of IFRS converged Indian Accounting Standards (Ind AS)

As per RBI guidelines, Bank is in the process of implementing Ind AS (Indian Accounting Standards). RBI vide Circular DBR.BP.BC.No.29/21.07.001/2018-19 dated 22nd March 2019 has deferred implementation of Ind AS for all Scheduled Commercial Banks till further notice. However, RBI requires all banks to submit Proforma Ind AS Financial Statements every half-year. As per RBI directive, a project Steering Committee headed by Executive Director has been formed for monitoring of Implementation of Ind AS in the Bank. Bank is submitting Ind AS Proforma Financial Statements to RBI on half yearly basis regularly after approval of Project Steering Committee.

h. Disclosure on unamortised Pension and Gratuity Liabilities and amortization of expenditure on account of enhancement in family pension of employees of Banks

1. Pension:

Unamortized Pension /Family pension liabilities as on March 31,2025 is NIL.

2. Gratuity:

Unamortised gratuity liabilities as on March 31, 2025 is NIL.

Provision for the employee benefits pertaining to Pension, Gratuity & Leave encashment have been made on the basis of Actuarial Valuation.

i. Letters of Comfort (LoC)

Banks should disclose the full particulars of all the letters of comfort (LoCs) issued by them during the year, including their assessed financial impact, as also their assessed cumulative financial obligations under the LoCs issued by them in the past and outstanding, in its published financial statements, as part of the "Notes to Accounts”

Cumulative position of LOC''s outstanding as on March

31,2025:

1. During the year 2009-10, the Bank has issued a Letter of Comfort (LoC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch and to arrange to convert retained earnings to capital funds and/or infuse further capital in order to restore the CRAR to a minimum of 12%, subject to approval from Reserve Bank of India. The assigned capital of Bangkok Branch stands at THB 2,20,00,00,000(18.24%) as on March 31^st, 2025.

In the worst-case scenario of the entire textile exposure of the branch becoming NPA. We may have to make additional provision to the extent of THB 1.644 Mio being unsecured portion of standard textile advances. If this contingency arises, there would be no additional capital to be remitted as existing reserves are adequate to cover the unsecured amount.

2. During the year 2010-11, the Bank has issued a letter of Comfort favoring Bank Negara Malaysia. The Bank in association with other Joint Venture partners will provide support to India International Bank (Malaysia) Berhad in funding, business and other matters as and when required and ensure that it complies with the requirements of the Malaysian laws, regulations and policies in the conduct of its business operations and management. The financial impact of the letter of Comfort issued to bank Negara Malaysia is to the tune of our share of 35% of the paid-up capital of MYR 330 Mio i.e., MYR 115.500 Mio.

3. Based on the host country regulator''s guidelines, Bank has issued letter of Comfort favoring CBSL at its meeting held on 12.09.2019 for meeting all obligations and liabilities arising out of business carried on by IOB Srilanka Branch.

20. Pursuant to the RBI circular dated 29th March 2025, on government guaranteed security Receipts (SRs) issued by ARCs, the Bank has reversed the excess provision of ? 369.74 crores to the Profit and Loss Account in “Provision & Contingencies -Government guaranteed Security Receipts". The Bank has valued these SRs based upon the NAV declared by ARC and the resultant unrealized gains of ? 51.62 crores have been recognized in Profit and loss Account.

The above amount of ? 421.76 crores is held under "Revenue & Other reserves” and has been deducted from CET-1 capital and would not be available for distribution of Dividend.

21. Lien Marked deposits as on 31.03.2025 for deposits held under lien is ? 5439.48 crore against Loan, LG, LC and attached by Govt. authorities.

22. The Bank hold covid 19 related provision as contingency provision amounting to ? 1647.03 crore as on March 31,2025.

23. Details of Single Borrower Limit (SBL) , Group Borrower Limit (GBL) exceed by the Bank

Banks Tier 1 capital as on 31.03.2024 is Rs 20839.72 crore . as per LEF norms as on 31.03.2024,20% of tier 1 capital is Rs 4167.94 crores and 25% of tier1 capital is Rs 5209.93 crores

There is no breach under single counter party exposure as per Tier 1 capital ie., Rs 20839.72 crore as on 31.03.2024

There are no breaches in any account under Group counter party exposure as per Tier1 capital i.e., Rs 20839.72 crore as on 31.03.2024 and all the accounts are within 25% of tier1 1 capital.

DISCLOSURES UNDER ACCOUNTING STANDARDS

1. Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies

The financial statements have been prepared following the same accounting policies and practices as those followed for the year ended March 31, 2024.

During the year, there were no material prior period income / expenditure items.

2. Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17.

4. Accounting Standard 15 - Employee Benefits

The Bank had adopted Accounting Standard 15 (Revised) "Employees Benefits” issued by the Institute of Chartered Accountants of India.

1. Short-Term Employee Benefits:

The undiscounted amounts of short-term employee benefits, such as medical benefits which are expected to be paid in exchange for the services rendered by employees, are recognized during the period when the employee renders the service.

2. Long-Term Employee Benefits:

The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) are as under:

(i) The financial assumptions considered for the calculations are as under: -

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation (Balance sheet dated 31.03.2025).

Expected Rate of Return: The Overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which the obligation is to be settled.

Bank''s best estimate expected to be paid in next Financial Year for Gratuity is ? 84.40 crores.

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 1st April 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 FY 2024-25, the Bank has contributed ? 186.95 Crore (Previous Year ? 165.26 Crore).

The estimate of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee 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.

In respect of overseas branches, disclosures if any required for Employee Benefit Schemes are not made in the absence of information.

5. Accounting Standard 17 - Segment Reporting

The Bank has adopted Reserve Bank of India''s revised guidelines issued in April 2007 on Segment Reporting in terms of which the reportable segments have been divided into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. In compliance with RBI Circular DOR.AUT.REC. 12/22/01.001/2022-23 dated April 7, 2022, on establishment of Digital Banking Units (DBUs) and reporting of Digital Banking Segment as a sub-segment of Retail Banking Segment under Accounting Standard - 17 "Segment Reporting”, bank has reported Digital Banking Segment as a sub-segment of Retail Banking Segment.

2. The accounts of Joint Venture India International Bank (Malaysia) Berhad, which is combined in the Consolidated Financial results is prepared on a calendar year basis in accordance with the local legal requirements. The accounts incorporated of the Joint venture is for the period 01st October 2024 to 31st December 2024. There are no material changes during the period 01st January 2025 to 31st March 2025 requiring adjustment to the figures reported in the unreviewed accounts as received.

3. The Bank is holding 18.06% in Universal Sompo General Insurance Company Ltd. Since the shareholding in the Company is less than 25%, the same has not been considered as Joint Venture for preparation of Consolidated Financial Statements as per extant RBI guidelines.

4. The consolidated financial statements include the interest in JV which has been accounted in proportionate consolidation method as per AS 27 (Financial Reporting of Interest in JV). Accordingly, the share of excess of net asset over the carrying cost of investment of ? 28.34 Crores in JV representing FCTR is reported under reserves and surplus, this represents the translation difference.

5. In respect of investment in Associate, which has been accounted under equity method as per AS 23 (Accounting for investment in Associates), the carrying amount of investment in equity shares of ? 606.90 Crores is adjusted against IOB''s share of net assets of ? 275.52 Crores and the balance of ? 331.38 Crores is adjusted against balance in Reserves and Surplus to recognize the decline in the value.

6. The Financial Statements of the joint venture (IIBM) have been prepared on a basis other than going concern which includes where appropriate, writing down Bank''s asset to Net Realisable Value. IIBM has since entered cessation of business phase and intends to surrender its Banking licence. However, no material adjustments arose because of ceasing to apply the going concern basis.

7. Pursuant to Notification issued by the Central Government dated April 05,2025, effective May 01,2025, Odisha Gramya Bank and Utkal Grameen Bank have been amalgamated into a single Regional Rural Bank to be called as Odisha Grameen Bank in accordance with the scheme of amalgamation so notified.

10. Accounting Standard 24 - Discontinuing Operations

This Standard establishes principles for reporting information about discontinuing operations. Merger/ closure of branches

of banks by transferring the assets/ liabilities to the other branches of the same bank may not be deemed as a discontinuing operation and hence this Accounting Standard will not be applicable to merger / closure of branches of banks by transferring the assets/liabilities to the other branches of the

same bank. Disclosures shall be required under the Standard only when: (i) discontinuing of the operation has resulted in shedding of liability and realisation of the assets by the bank or decision to discontinue an operation which will have the above effect has been finalised by the bank and (ii) the discontinued operation is substantial in its entirety.

11. Accounting Standard 26 - Intangible Assets

The software acquired by the Bank for core Banking systems and other services relating to Information Technology

department are being capitalised under intangible assets and are amortized over 3 years.

12. Accounting Standard 27 - Financial Reporting of Interest in Joint Venture

The bank has an investment of 35% in the JV, India International Bank (Malaysia) Berhad (IIBMB) with 1,15,50,000 no. of shares

of MYR 10 each valuing Rs 1,99,57,52,186.00 as at the year-end 31.03.2025. Upon the shareholders of IIBMB unanimously deciding for voluntary exit of the operation in Malaysia, the Board of the IIBMB sought approval from the Bank Negara Malaysia (BNM) for voluntary winding up. The BNM in letter dated 09.02.2024 has given no objection to the winding up operation and subsequently surrender the business licence subject to submission of detailed exit plan. In terms of the said order of BNM, the IIBMB is in the process of winding up. As per the audited financials of IIBMB for the FY December 31^st 2024, the loans and advance and deposit from customers has been brought to zero. The impact on the investment, if any, that might arise shall be considered upon final winding up.

13. Accounting Standard 28 - Impairment of Assets

The impairment of assets in our Bank is NIL

---

Mar 31, 2024

1. Investments:

1.1 In accordance with Reserve Bank of India guidelines, the investments portfolio of the Bank has been classified into three categories, as given below:

Category	Gross Book Value (Rs. in Crore)		Percentage to Total Investments (%)
	31.03.2024	31.03.2023	31.03.2024	31.03.2023
Held to Maturity	85709.55	81802.30	84.93	84.98
Available for Sale	15207.30	14469.07	15.07	15.03
Held for Trading	0.00	0.00	0.00	0.00

1.2 SLR Securities (domestic) under "Held to Maturity" accounted for 20.66% (previous Year 21.30%) of Bank''s Demand and Time liabilities as at 31^st March 2024 as against ceiling of 23.00% (previous year 23%) stipulated by Reserve Bank of India.

1.3 In respect of Held to Maturity category of Investments, premium of ?45.28 Crores was amortized during the year (previous year ?48.32 Crore). In accordance with the RBI guidelines amortization expense of premium on investments is deducted from interest income.

Further, a sum of ?4100.00 crore being non-Interest bearing GOI Recapitalization Bonds investments which are held under Held To Maturity category at carrying cost are maturing from March 2031 to March 2036.

1.4 In accordance with the RBI Master Circular RBI/DOR/2021-22/83 DOR.ACC.REC. No.45/21.04.018/2021-22 dated August 30,2021, as updated, the Bank was required to disclose profit/loss on revaluation of investments as well as provision for depreciation under the head Proft /loss on revaluation of investment under Schedule 14-"Other Income" and Provision for non- performing investment (NPI) is to be reflected under Provisions and contingencies. The Bank has hitherto been accounting the mark to market impact in the case of nonperforming investments under the head Profit/ loss on revaluation of investment and the remaining portion of provision for non- performing investment under the head Provisions and contingencies. During the year, the entire provision required for non-performing investments has been disclosed under "provision and contingencies". Consequent to this, Profit/loss on revaluation of investment is higher to the extent of ?576.96 crores with corresponding increase in Provisions and contingencies. The impact though related to previous periods has been accounted for during the year, previous year figures have not been restated and are therefore not comparable.

1.5 Securities of Face Value for ?517.00 Crore (previous year ? 1,717 Crore) towards CCIL Settlement Guarantee Fund/Default Fund and securities for ?13,018.00 Crore (previous year ?15,518.00 Crore) towards collateral for borrowing under TREPS/Default Fund have been kept with Clearing Corporation of India Limited. Besides, securities to the extent of ?127.10 Crore (previous year ?127.10 Crore) has been lodged with CCIL towards default fund for Forex operations and ?15.00 Crore (previous year ?15.00 Crore) held for Currency derivative segment. The Bank has placed securities of face value Rs.3,500 Crore (previous year ?1,500 Crore) with Reserve Bank of India for intraday borrowing. The Bank has also placed Securities to the extent ?16,000 Crore (previous year ?6,100 Crore) with Reserve Bank of India for our borrowing under the LAF window.

1.6 Shares under Investments in India in Regional Rural Bank - Odisha Gramya Bank is ?606.90 Crore (previous year ?606.90 Crore) which includes amount towards Share Capital Deposits.

1.7 The Bank sold Government Securities from HTM category during the year through, outright sale and no security was sold under Reserve Bank of India''s Open Market Operations (OMO). The Bank has sold Government Securities (other than OMO), to the extent of ?1,668.52 Crore (BV) [previous year ?2408.02 Crore] (within 5%, prescribed limit of Reserve Bank of India) and booked a profit of ?14.20 Crore [previous year ?27.95 Crore]. In accordance with the RBI guidelines the profit on sale of Government Securities under HTM category has been taken to Profit & Loss account and subsequently has been appropriated to capital reserve account (Net of taxes and amount to be transferred to Statutory Reserve).

Investment Fluctuation Reserve

As per Reserve Bank of India circular number RBI/2017-18/147 DBR. No. BP BC.102/ 21.04.048/2017-18 dated April 2, 2018, from the year 2018-2019, an Investment Fluctuation Reserve (IFR) is to be created to build up adequate reserves to protect the Bank against increase in yields in future.

The Transfer to IFR is to be the lower of the following -

a) Net profit on sale of Investments during the year or

b) Net profit for the year less mandatory appropriations, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis.

During the year ended on March 31^st 2024 an amount of ?NIL ( Previous year ?390.00 Crore) has been transferred to IFR.

2. Advances

2.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

2.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

2.3 In assessing the reliability of certain advances, the estimated value of security, Central Government Guarantees etc. have been considered for the purpose of asset classification and income recognition.

2.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3. Fixed Assets (Property, Plant and Equipment)

The Profit on sale of assets during the year was Rs.2,20,92,202.68 (Rupees Two crore twenty lakhs ninety thousand two hundred and two and sixty eight paise only).

4. Rupee Interest Rate Swap

Deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging as on March 31^st 2024 is NIL (previous year NIL). This amount, if any, is to be recognized over the remaining contractual life of Swap or life of the Assets/Liabilities, whichever is earlier.

5. Inter Branch Reconciliation/internal office accounts

Reconciliation of Inter Branch transactions and internal/office accounts is under progress at different stages at the branches and/or Central Office Departments. Steps are being taken to eliminate the outstanding entries as at the earliest. The necessary accounting adjustments if any required shall be carried out on the completion of such process. The Management however does not anticipate any material consequential effect of pending reconciliation and elimination of outstanding entries.

6. Capital and Reserves

• During the Financial Year 2023-24, Bank has not issued Basel III Tier II Bonds. For the Financial year 2022-23, Bank has issued Basel III Tier II Bonds Rs.1000 Crore through private placement subscribed by Qualified Institutional Buyers (QIBs).

• During the financial year 2023-24, Bank has not raised any equity capital. The paid-up capital of the Bank stands at Rs.18,902.41 Crore as on March 31^st, 2024. The Government of India shareholding stands at 96.38% as on March 31^st, 2024.

7. Taxes

7.1 In the opinion of management provisions under section 115 JB (Minimum Alternate Tax ) of the Income Tax Act, 1961 are not applicable to the Bank. Therefore Bank has not provided any amount towards provision for Income tax.

7.2 Tax paid in advance (Net of provisions) is under reconciliation. This is on account of amounts pending assessment/under appeal/ tax paid under dispute. [Refer Schedule 11(iii)].

7.3 Taking into consideration the decisions of Appellate Authorities, certain judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs.8450.79 Crore (previous year Rs.9081.37 Crore), Service Tax aggregating to Rs. 238.42 Crore (previous year Rs.220.52 Crore) and Goods and Service Tax aggregating to Rs.1071.78 Crore (Previous year Rs.1648.68 Crs).

7.4 Tax expense for the year amounting to Rs.756.91 Crore includes Current Tax expense of Rs. 22.67 Crore and Deferred Tax expense of Rs.734.24 Crore - refer note no.18.8.

7.5 The Bank has a carried balance of Net Deferred Tax Assets up to March 31,2024 aggregating to ?5299.94 Crore which was recognized in earlier periods and on estimated basis Bank has reversed deferred tax asset amounting to ? 384.24 Crore for the quarter (31.03.2024) and ? 734.24 Crore for the year ended 31.03.2024.

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

b) Liquidity coverage ratio (LCR)

Reserve Bank of India had introduced the Liquidity Coverage Ratio (LCR) vide circular No RBI/2014-15/529 DBR. No. BP.BC.80/21.06.201/2014-15 dated March 31,2015 which has been modified from time to time, in order to ensure short term resilience of Banks to potential liquidity disruptions by ensuring that Bank have sufficient high quality liquid assets (HQLA) to survive an acute stress scenario lasting for 30 days. The minimum LCR requirement set out in the Reserve Bank of India guidelines for the Bank effective for FY 2023-24 is 100%.

Stock of high quality liquid assets (HQLAs)

Definition of LCR:

Total net cash outflows over the next 30 calendar days

In the stock of high quality liquid assets (HQLA), there are two categories of assets, viz. Level 1 and Level 2 assets. Level 2 assets are sub-divided into Level 2A and Level 2B assets on the basis of their price-volatility. Each category includes assets which the Bank is holding on the first day of the stress period. Level 1 assets are with 0% haircut while in Level 2, 2A assets are with a minimum 15% haircut and Level 2B Assets, with a minimum 50% haircut.

The total net cash outflows is defined as 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.

Bank has calculated LCR for all working days for the March 2024 quarter based on the data extracted from the Bank''s database through the program specifically designed for this purpose. Bank''s LCR for the quarter ended March 31^st 2024 stands at 138.93% based on daily average of three months (Q4 FY 2023-24) and is well above the present minimum requirement prescribed by Reserve Bank of India of 100% for the Quarter ended March, 2024. Bank is having enough liquidity to meet sudden cash outflows.

The detailed Quantitative disclosure is placed below:

Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The Domestic and Overseas Centers 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 Risk Management Committee of Board (RMCB) 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, 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.

c) Net Stable Funding ratio (NSFR)

Reserve Bank of India introduced the Net Stable Funding Ratio (NSFR) in order to promote resilience of Banks over a longer-term time horizon by requiring Banks to fund their activities with more stable sources of funding on an ongoing basis. The minimum NSFR requirement set out in the Reserve Bank of India guidelines effective from October 1, 2021 is 100%

Available Stable Fund (ASF)

Definition of NSFR:

Required Stable Fund (RSF)

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. Available stable funding (ASF) is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year. The amount of required stable funding (RSF) of a specific institution is a function of the liquidity characteristics and residual maturities of the various assets held by that institution as well as those of its off-balance sheet (OBS) exposures.

Bank has calculated NSFR for March 31^st 2024 which stands at 146.80% which is well above the Reserve Bank of India prescribed minimum requirement of 100%. Bank''s majority funding is from Retail and Small Business customers, which provide high stability with regard to stability of Funding. Bank is having enough stable sources of funding to fund their activities on an ongoing basis over a longer-term time horizon.

d) Sale and transfers to/from HTM category/Permanent Category

During the year ended March 31,2024 and March 31,2023, Sale from Held To Maturity category (above the prescribed limit of 5%) during the current year: Nil [Previous Year: Nil]. Transfer To/From Held To Maturity Category other than the Category Transfer allowed by Reserve Bank of India at the beginning of the Year: NIL

As per Master Circular-Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions) 2021d 25.08.2021 issued by Reserve Bank of India (updated as on March 23, 2022), Banks are permitted to shift Investments to/ from Held To Maturity once in a year, normally at the beginning of the accounting year. No further shifting will be allowed during remaining part of that accounting year, except when explicitly permitted by Reserve Bank of India.

d) Particulars of resolution plan and restructuring

The Reserve Bank of India Circular No. RBI/2018-19/2013 DBR No. BP.BC.45/21.04.048/2018-19 dated 07.06.2019 on resolution of stressed assets, where viable resolution plan has not been implemented within 180 days/365 days of review period - Prudential framework:

e) Divergence in asset classification and provisioning

RBI vide its notification no. RBI/DOR/2021-22/83 DOR.ACC.REC.No.45/ 21.04.018/2021-22 dated 30.08.2021 (updated as on 01.04.2024) has made disclosure requirement by the Banks where divergences from prudential norms on income recognition, asset classification and provisioning exceed certain thresholds in their Annual report.

For the FY ending 31.03.2023, the Banks should disclose divergences, if either or both of the following conditions are satisfied:

(a) the additional provisioning for NPAs assessed by RBI exceeds 5 % of the reported profit before provisions and contingencies for the reference period, and

(b) the additional Gross NPAs identified by RBI exceed 5 % of the published incremental Gross NPAs for the reference period

If any of the parameter (a) and / or (b) triggers, the information to be reported to the Stock Exchanges.

Present Status: The RBI has submitted the divergence report for the year ended 31.03.2023 and assessment of trigger points are as follows:

a) the additional provisioning for NPAs assessed by RBI exceeds 5 % of the reported profit before provisions and contingencies for the reference period, and

f) Disclosure of transfer of loan exposures

Disclosures as per RBI Master directions ref no RE/DOR/2021-22/86 DOR.STR.REC.51/21.04.048/2021-22 "Master Direction - Reserve Bank of India (Transfer of loan exposures) Directions, 2021" dated 24.09.2021, the details of loans transferred / acquired during quarter ended March 31,2024 are given below:

iii) The Bank has reversed the amount of Rs 161.23 Crore of excess provision to the profit & loss account on account of sale of stressed loans during year ending March 31^st 2024.

iv) Details of The Distribution of the SRs held across the various categories of Recovery Ratings assigned to such SRs by the credit Rating Agencies as on March 31^st 2024.

1. Bank has opted to provide full provision for the liability towards frauds for the financial year ended March 31^st, 2024, instead of spilling over a period of four quarters.

2. During the quarter ended March 31^st 2024, 1 number of advance related frauds reported, having NIL amount outstanding.

> Bank has opted to provide full provision for the liability towards frauds for financial year ended March 31^st 2024, instead of spilling over a period of four quarters.

> During the quarter ended March 31^st 2024, 6 frauds under other than advances category has been reported to Reserve Bank of India, where likely loss is Rs. 0.22 crores and for which the Bank is holding 100% provision. FMR wise fraud data is being reconciled.

> Bank has opted to provide full provision for the liability towards frauds for financial year ended March 31^st 2024 instead of spilling over a period of four quarters.

> During the quarter ended March 31^st 2024, 1569 frauds under cyber frauds category has been reported to Reserve Bank of India, where the likely loss is 0.01 crores. The provision for the amount of INR 0.01 crores has been made for the likely loss.

*Till such time, as Banks move over to internal rating systems, Banks shall use the seven-category classification followed by Export Credit Guarantee Corporation of India Ltd. (ECGC) for the purpose of classification and making provisions for country Risk exposures. ECGC shall provide to Banks, on request, quarterly updates of their country classifications and shall also inform

all Banks in case of any sudden major changes in country classification in the interim period.

d. Unsecured advances

Banks shall disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. have been taken as also the estimated value of such intangible collateral as per the following format:

f. Intra-group exposures

With the developments of financial markets in India, Banks have increasingly expanded their presence in permitted financial activities through entities that are owned by them fully or partly. As a result, Banks'' exposure to the group entities has increased and may rise further going forward. In order to ensure transparency in their dealings with group entities, Banks should make the following disclosures for the current year with comparatives for the previous year:

g. Unhedged foreign currency exposures

Based on the available financial results and the declaration from the borrowers, the Bank has estimated the liability towards unhedged foreign currency Exposure to their constituents in terms of RBI/2022-23/131 DOR .MRG.REC.76/00-00-007/2022-23 dated October 11,2022 and the Bank holds provision of Rs.12.86 Cr as on March 31,2024.

Note: Nature and terms of the swaps including information on credit and market Risk and the accounting policies adopted for recording the swaps should also be disclosed.

$ Examples of concentration could exposures to particular industries or swaps with highly geared companies.

@ if the swaps are linked to specific assets, liabilities or commitments, the fair value would be the estimated amount that the Bank would receive or pay to terminate the swap agreements as on the balance sheet date, for a trading swap the fair

value would be its mark to market value.

c. Disclosures on Risk exposure in derivatives i) Qualitative disclosures

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate Risk and currency Risk in Banking book. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the Risk in Interest/Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mismatch, for funding overseas branches etc.

b) The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the Risks associated in using derivatives as hedge instruments and proper Risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank''s Balance sheet exposures.

g) The income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate Risk in Government Securities and to reduce the cost of Subordinated Debt. In addition, the Bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The Bank has put in place an appropriate structure and organization for management of Risk, which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit Risk (arising from probable counter party failure), Liquidity Risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational Risk, Regulatory Risk and Reputation Risk. The Bank has laid down policies, set in place appropriate control systems to assess the Risks associated in using derivatives and proper Risk reporting and mitigation systems are in place to monitor all Risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the Bank for trading and hedging. The Bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge Bank''s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with Reserve Bank of India guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.6).

Risk Management policies pertaining to derivatives with articular reference to the extent to

which derivatives are used, the associated Risks and business purposes served. Also include

a) The Structure and Organization for management of Risk in derivatives trading.

b) The Scope and nature of Risk measurement, Risk reporting and Risk monitoring systems

c) Policies for hedging and/or mitigating Risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants; and

d) Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit Risk mitigation.

d. Credit default swaps

Bank using a proprietary model for valuation of Credit Default Swaps (CDS) positions, shall disclose the valuation as per the proprietary model, including the rationale for using that model and an explanation of the valuation methodology in the Notes to Accounts in their financial statements. The disclosure shall also include the valuation as per the CDS curve published by Fixed Income Money Market and Derivatives Association of India (FIMMDA) or a benchmark recommended by FIMMDA¹.

f. Implementation of IFRS converged Indian Accounting Standards (Ind AS)

As per RBI guidelines, Bank is in the process of implementing Ind AS (Indian Accounting Standards). RBI vide Circular DBR.BP.BC.No.29/21.07.001 / 2018-19 dated 22nd March 2019 has deferred implementation of Ind AS till further notice. However, RBI requires all Banks to submit Proforma Ind AS Financial Statements every half-year. A project Steering Committee headed by Executive Director has been formed for monitoring of Implementation of Ind AS in the Bank as per RBI directive. Bank is submitting Proforma Ind AS Financial Statements to RBI on half yearly basis after approval of Project Steering Committee

4^th October 2021, the Bank had opted to amortize additional liability on account of revision in family pension for employees as per IBA Joint Note dated November 11, 2020 over a period of not exceeding 5 (five) years, beginning with financial year 2021-22, subject to a minimum of 1/5 of the total amount being expensed every year and has been carrying amortized portion amounting to Rs.255.51 Crores as at March 31, 2023.

During the year, the Bank has charged entire carried forward amount to the Profit & Loss Account and the carried forward amount now is NIL.

2. Gratuity:

Unamortised gratuity liabilities as on March 31^st 2024 is NIL

Provision for the employee benefits pertaining to Pension, Gratuity & Leave encashment have been made on the basis of Actuarial Valuation.

i. Letters of Comfort (LoC)

Banks should disclose the full particulars of all the letters of comfort (LoCs) issued by them during the year, including their assessed financial impact , as also their assessed cumulative financial obligations under the LoCs issued by them in the past and outstanding, in its published financial statements, as part of the "Notes to Accounts"

During the year 2009-10, the Bank has issued a Letter of Comfort (LoC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch and to arrange to convert retained earnings to capital funds and/or infuse further capital in order to restore the CRAR to a minimum of 12%, subject to approval from Reserve Bank of India. The assigned capital of Bangkok Branch stands at THB 2199 Mio(25.97%) as on March 31^st 2024.

In the worst case scenario of the entire textile exposure of the branch becoming NPA. We may have to make additional provision to the extent of THB 92.854 Mio being unsecured portion of standard textile advances. If this contingency arises, there would be no additional capital to be remitted as existing reserves are adequate to cover the unsecured amount.

During the year 2010-11, the Bank has issued a letter of Comfort favoring Bank Negara Malaysia. The Bank in association with other Joint Venture partners will provide support to India International Bank (Malaysia) Berhad in funding, business and other matters as and when required and ensure that it complies with the requirements of the Malaysian laws, regulations and policies in the conduct of its business operations and management. The financial impact of the letter of Comfort issued to Bank Negara Malaysia is to the tune of our share of 35% of the paid-up capital of MYR 330 Mio i.e., MYR 115.500 Mio.

Based on the host country regulator''s guidelines, Bank has issued letter of Comfort favoring CBSL at its meeting held on 12.09.2019 for meeting all obligations and liabilities arising out of business carried on by IOB Srilanka Branch.

16. COVID-19 pandemic has adversely impacted the economic activity across the globe including the Indian economy for more than two years. However, the Bank''s results, operations and asset quality have not been affected much because of the pandemic. Further, Bank has made necessary provisions for all COVID related restructured loans. The Bank is however keeping a close watch on developments on an ongoing basis and taking proactive measures continuously to maintain and improve asset quality. The Bank, therefore, believes that there may not be any significant impact on Bank''s future financial results

18. Comparative Figures

Previous year''s figures have been regrouped / rearranged / reclassified wherever necessary.

DISCLOSURES UNDER ACCOUNTING STANDARDS1. Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies

The financial statements have been prepared following the same accounting policies and practices as those followed for the year ended March 31,2023.

During the year, there were no material prior period income / expenditure items.

2. Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies -Schedule 17.

4. Accounting Standard 15 - Employee Benefits

The Bank had adopted Accounting Standard 15 (Revised) "Employees Benefits" issued by the Institute of Chartered Accountants of India.

1. Short-Term Employee Benefits:

The undiscounted amounts of short-term employee benefits, such as medical benefits which are expected to be paid in exchange for the services rendered by employees, are recognized during the period when the employee renders the service.

2. Long-Term Employee Benefits:

The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) are as under:-

(i) The financial assumptions considered for the calculations are as under:

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation (Balance sheet dated 31.03.2024).

Expected Rate of Return: The Overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which the obligation is to be settled.

Bank''s best estimate expected to be paid in next Financial Year for Gratuity is Rs. 93.40 crores.

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 1st April 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 FY 2023-24, the Bank has contributed Rs.165.26 Crore (Previous Year Rs.145.51 Crore).

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market. Such estimates are very longterm 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.

In respect of overseas branches, disclosures if any required for Employee Benefit Schemes are not made in the absence of information.

2. The Bank is holding 18.06% in Universal Sompo General Insurance Company Ltd. Since the shareholding in the Company is less than 25%, the same has not been considered as Joint Venture for preparation of Consolidated Financial Statements as per extant RBI guidelines.

3. The consolidated financial statements include the interest in JV which has been accounted in proportionate consolidation method as per AS 27 (Financial Reporting of Interest in JV). Accordingly, the share of excess of net asset over the carrying cost of investment of Rs.15.86 Crore in JV representing FCTR is reported under reserves and surplus, this represents the translation difference.

4. In respect of investment in Associate, which has been accounted under equity method as per AS 23 (Accounting for investment in Associates), the carrying amount of investment in equity shares of Rs.606.90 Crore is adjusted against IOB''s share of net assets of Rs.214.83 Crore and the balance of Rs.392.07 Crore is adjusted against balance in Reserves and Surplus to recognize the decline in the value.

10. Accounting Standard 24 - Discontinuing Operations

This Standard establishes principles for reporting information about discontinuing operations. Merger/ closure of branches of Banks by transferring the assets/ liabilities to the other branches of the same Bank may not be deemed as a discontinuing operation and hence this Accounting Standard will not be applicable to merger / closure of branches of Banks by transferring the assets/liabilities to the other branches of the same Bank. Disclosures shall be required under the Standard only when: (i) discontinuing of the operation has resulted in shedding of liability and realisation of the assets by the Bank or decision to discontinue an operation which will have the above effect has been finalised by the Bank and (ii) the discontinued operation is substantial in its entirety.

11. Accounting Standard 26 - Intangible Assets

Impairment of Asset in our Bank is Nil.

12. Accounting Standard 27 - Financial Reporting of Interest in Joint Venture

The Bank has an investment of 35% in the JV, India International Bank (Malaysia) Berhad (IIBMB) with 1,15,50,000 no. of shares of MYR 10 each valuing Rs 199,57,52,186 as at the year-end 31.03.2024. Upon the shareholders of IIBMB unanimously deciding for voluntary exit of the operation in Malaysia, the Board of the IIBMB sought approval from the Bank Negara Malaysia (BNM) for voluntary winding up. The BNM in letter dated 09.02.2024 has given no objection to the winding up operation and subsequently surrender the business licence subject to submission of detailed exit plan. In terms of the said order of BNM, the IIBMB is in the process of winding up. The impact on the investment, if any, that might arise shall be considered upon final winding up.

13. Accounting Standard 28 - Impairment of Assets

The Software acquired by the Bank for core Banking Systems and other services relating to information technology departments are being capitalized under intangible assets and are amortized over 3 years.

1

The requirement to disclose valuation as per the CDS curve published by FIMMDA or a benchmark recommended by FIMMDA shall be effective once FIMMDA starts publishing the CDS curve or recommends a valuation benchmark.

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Mar 31, 2023

i) Qalitative disclosures Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mismatch, for funding overseas branches etc.

b) The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank''s Balance sheet exposures.

g) The income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Government Securities and to reduce the cost of Subordinated Debt. In addition, the bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The bank has put in place an appropriate structure and organization for management of risk, which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable

counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge bank''s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with Reserve Bank of India guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.6).

• In line with the guidance issued by the Reserve Bank of India in February 2016, the Bank has set up a Steering Committee headed by the Executive Director along with a Working Group consisting of four (4) General Managers which monitors the progress of Ind-AS implementation.

• Bank has also formed a core team of 10 members and ECL team of 7 members drawn from various functional departments for taking forward for implementation of Ind AS.

• Bank has appointed a consultant for implementation of Ind AS in our Bank for a period of three years from 09.11.2022

• Bank in the past imparted training to Executives as well as Officials attached to various Administrative Offices.

• Based on the GAP Analysis report, Bank has identified customization requirement in existing system for generating Ind AS compliant financials which includes fair valuation of staff advances, staff deposits, computation of Effective Interest Rate (EIR) for loans classified under Amortized cost, Expected Credit Loss (ECL) model development involving Probability of Default (PD), Loss Given Default (LGD) Exposure at Default (EAD) etc with the help of consultant appointed in the initial stage. Bank is in the process of floating RFP for procurement of Software and requirement hardware for implementation of Ind AS in the bank.

• Proforma financials Statements are being submitted to Reserve Bank of India according to the time lines stipulated by Reserve Bank of India.

h. Disclosure on unamortised Pension and Gratuity Liabilities and amortization of expenditure on account of enhancement in family pension of employees of Banks

1. Pension:

The additional liability on account of enhancement in family pension in view of Government guidelines, works out of Rs Rs.425,85,83,225- as per the Actuarial Valuation.

As per Reserve Bank of India Circular RBI / 2021 - 22 / 105 / DOR. ACC. REC. 57/ 21.04.018/2021-22 dated 04.10.2021 banks are permitted to amortise the total liabilities over the period of five years. The Bank has opted the said provision of Reserve Bank of India and has charged minimum amount of Rs.21,29,29,161.25 for the quarter ended March 31^st 2023.

For the Financial Year 2022-23, Bank has provided an amount of Rs 85,17,16,645 for amortization of family pension.

The balance unamortized expenses of Rs 255,51,49,935-has been carried forward.

2. Gratuity:

Unamortised gratuity liabilities as on March 31^st2023 is Nil.

Provision for the employee benefits pertaining to Pension, Gratuity & Leave encashment have been made on the basis of Final Actuarial Valuation.

15. Letter of Comfort (LoC):

Banks should disclose the full particulars of all the letters of comfort (LoCs) issued by them during the year, including their assessed financial impact , as also their assessed cumulative financial obligations under the LoCs issued by them in the past and outstanding, in its published financial statements, as part of the “Notes to Accounts”

Particulars FY 2022-23

Letters of Comfort issued during the year - NIL

Letters of Comfort outstanding as on 31.03.2023 - 3

Assessed Financial impact - NIL

Cumulative Assessed Financial Obligation - NIL

Cumulative position of LOC''s outstanding as on March 31,2023:

1. During the year 2009-10, the Bank has issued a Letter of Comfort (LoC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch and to arrange to convert retained earnings to capital funds and/or infuse further capital in order to restore the CRAR to a minimum of 12%, subject to approval from Reserve Bank of India. The assigned capital of Bangkok Branch stands at THB 2200 Mio(25.97) as on March 31^st 2023.

In the worst case scenario of the entire textile exposure of the branch becoming NPA. We may have to make additional provision to the extent of THB 92.854 Mio being unsecured portion of standard textile advances. If this contingency arises, there would be no additional capital to be remitted as existing reserves are adequate to cover the unsecured amount

During the year 2010-11 has issued a letter of Comfort favoring Bank Negara Malaysia. The Bank in association with other Joint Venture partners will provide support to India International Bank (Malaysia ) Berhad in funding, provide support to India International (Malaysia) Berhad in funding, business and other matters as and when required and ensure that it complies with the requirements of the Malaysian laws, regulations and policies in the conduct of its business operations and management. The financial impact of the letter of Comport issued to bank Negara Malaysia is to the tune of our share of 35% of the paid up capital of MYR 330 Mio i.e., MYR 115.500 Mio on various dates

Based on the host country regulators guidelines, Bank has issued letter of Comfort favoring CBSL at its meeting held on 12.09.2019 for meeting all obligations and liabilities arising out

	No. of Accounts	Aggregate exposure as on 31st March 2023 (Rs. in crore)
	5117	294.85

16. In accordance with the Reserve Bank of India Circular No DBR No. BP BC.18/21.04.048/2018-19 dated 01.01.2019, DOR.No.BPBC.34/21.04.048/2019-20 dated 11.02.2020 and DOR.No.BPBC/4/21.04.048/2020-21 dated 06.08.2020, on “Relief for MSME borrowers either exempted or registered under Goods and Service Tax (GST)”, the details of MSME restructured accounts from 01.04.2019 to 31.03.2023 are as under:

17. COVID-19 pandemic has adversely impacted the economic activity across the globe including the Indian economy for more than two years. However, the bank''s results, operations and asset quality have not been affected much because of the pandemic. Further, bank has made necessary provisions for all COVID related restructured loans. The Bank is however keeping a close watch on developments on an ongoing basis and taking proactive measures continuously to maintain and improve asset quality. The bank, therefore, believes that there may not be any significant impact on Bank''s future financial results

DISCLOSURES UNDER ACCOUNTING STANDARDS1. Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies

The financial statements have been prepared following the same accounting policies and practices as those followed for the year ended March 31,2022.

During the year, there were no material prior period income / expenditure items.

2. Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17.

3. Accounting Standard 11 - The Effects of Changes In Foreign Exchange Rates

Particulars	2022-23	2021-22
Opening Balance	841.66	1160.73
Credited during the year	126.64	34 .23
Withdrawn during the year	2.59	353.30
Closing Balance	965.71	841 .666

19. Comparative Figures

Previous year''s figures have been regrouped / rearranged / reclassified wherever necessary.

4. Accounting Standard 15 - Employee Benefits

i. The Bank had adopted Accounting Standard 15 (Revised) “Employees Benefits” issued by the Institute of Chartered Accountants of India, with effect from 1^st April, 2007.

ii. The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) are as under: -

(a) Defined Benefit Schemes:Changes in the present value of the obligations

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market. In respect of overseas branches, disclosures if any required for Employee Benefit Schemes are not made in the absence of information.

h) The financial assumptions considered for the calculations are as under:

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation (Balance sheet dated March 31^st 2023).

Expected Rate of Return: The Overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which the obligation is to be settled.

Bank''s best estimate expected to be paid in next Financial Year for Gratuity is Rs.100.00 crores.

5. Accounting Standard 17 - Segment Reporting

The Bank has adopted Reserve Bank of India''s revised guidelines issued in April 2007 on Segment Reporting in terms of which the reportable segments have been divided into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations.

Bank does not have any subsidiary.

The consolidated financial results are prepared in accordance with AS 21 on “Accounting for Consolidated Financial Statements”, AS 23 on “Accounting for Investment in Associates” and AS 27 on “Financial Reporting of Interests in Joint Ventures” issued by the ICAI & guidelines issued by the Reserve Bank of India.

*Since the shareholding in Universal Sompo General Insurance Company Ltd., is less than 25% the same has not been considered as Joint Venture as per extant Reserve Bank of India guidelines and thus not considered for preparation of consolidated financial statements.

10. Accounting Standard 24 - Discontinuing Operations

The Bank has not closed any of its Overseas Branches during the currency financial year 2022-23. Hence the data relating to this disclosure may be treated as Nil. This standard establishes principles for reporting information about discontinuing operations. Merger/closure of branches of banks by transferring the assets/liabilities to the other branches of the same bank may no be deemed as a discontinuing operation and hence this Accounting Standard will not be applicable to merger/closure of branches

of Bank. Disclosures shall be required under the standard only when: (i) discontinuing of the operation has resulted in shedding of liability and relisation of the assets by the bank or decision to discontinue an operation which will have the above effect has been finalized by the bank and (ii) the discontinued operation is substantial in its entirety.

11. Accounting Standard 26 - Intangible Assets

The software acquired for core banking system is treated as intangible asset and amortized over a period of 3 years

12. Accounting Standard 27 - Financial Reporting of Interest in Joint Venture

Our Bank (with 35% share) has floated a Joint Venture at Malaysia along with Bank of Baroda (40%) and Union Bank of India (25%) (erstwhile Andhra Bank now merged with Union Bank of India) by name India International Bank (Malaysia) BHD. IIBMB has an Authorized capital of MYR 500 Mio. The Joint Venture''s paid up capital is MYR 330 Mio (previous year MYR 330 Mio).

As on March 31^st 2023, Bank''s Investment value in the Joint Venture as per Books stands at Rs 193.44 crore (original investment value Rs.199.58 crore as reduced by diminution in value of investment amounting to Rs 6.14 crores).

13. Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as ‘Corporate Assets'' and are not ‘Cash Generating Units'' as defined by AS-28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

14. Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountant of India in this respect have been incorporated at the appropriate places.

	Sl No	Particulars	Brief Description
	1	Claims against the bank not acknowledged as debts	The Bank is a party to various proceedings in the normal course of business. The Bank does not expect the outcome of these proceedings to have a material advise effect on the Banks financial conditions, results of operations or cash flows. The Bank is also a party to various taxation matters in respect of which appeals are pending
	2	Liability on partly paid-up investments /venture funds	This item represents amounts remaining unpaid towards liability for partly paid investments. This also includes undrawn commitments for Venture Capital Funds.
	3	Liability on account of outstanding forward exchange contracts	The Bank enters into foreign exchanges in its normal course of business to exchange currencies at a prefixed price at a future date. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. The notional amounts are recorded as Contingent liabilities. with respect to the transactions entered into with its customers, the Bank generally enters into off setting transactions in the interbank market. This results in generation of a higher number of outstanding transactions, and hence a large value of gross notional principal of the portfolio, while the net market risk is lower.
	4	Guarantees given on behalf of constituents, acceptances, endorsements and other obligations	As a part of its commercial banking activities, the Bank issues documentary credits and guarantees on behalf on its customer. Documentary credits enhance the credit standing of the customers of the Bank. Guarantees generally represent irrevocable assurance that the bank will make payment in the event of the customer failing to fulfil its financial or performance obligations
	5	Other items for which the Bank is contingently liable	The banks enter into currency options, forward rate agreements, currency swaps and interest rate swaps with inter bank participants on its own account and for customers. Currency swaps are commitments to exchange cash flows by way of interest/principal in one currency against another, based on determined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts that are recorded as contingent liabilities, are typically amounts used as a benchmark for the calculation of the interest component of the contracts. Further, these also include estimated amount of contracts remaining to be executed on capital account and not provided for, letter of comforts issued by the bank on behalf of associates & subsidiaries, banks liability under Depositors Education and Awareness Fund a/c and other sundry contingent liabilities.

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Mar 31, 2022

1. Investments:

1.1 In accordance with RBI guidelines, the investments portfolio of the bank has been classified into three categories, as given below:

Category	Gross Book Value (Rs. in crore)		Percentage to Total Investments (%)
	31.03.2022	31.03.2021	31.03.2022	31.03.2021
Held to Maturity	79 958.83	74 703.05	79.47	75.91
Available for Sale	20 656.71	23 708.69	20.53	24.09
Held for Trading	0.00	0.00	0.00	0.00

1.2 SLR Securities (domestic) under “Held to Maturity” accounted for 20.91% (previous Year 20.16%) of bank''s Demand and Time liabilities as at 31st March 2022 as against ceiling of 22.00% (previous year 22%) stipulated by RBI

1.3 In respect of Held to Maturity category of Investments, premium of Rs.32.84 Crore was amortized during the year (previous year Rs.40.67 Crore).

Further, a sum of Rs.4100 Crore being Non-Interest bearing GOI Recapitalization Bonds investments are held under HTM category at carrying cost are maturing from March 2031 to March 2036.

1.4 Securities of Face Value for Rs.1639.00 Crore (previous year Rs.1305.50 Crore) towards CCIL Settlement Guarantee Fund/Default Fund and securities for Rs.7518.00 Crore (previous year Rs.4914.50 Crore) towards collateral for borrowing under TREPS/Default Fund have been kept with Clearing Corporation of India Limited. The Bank has placed securities of face value Rs 1500 Crore (previous year Rs.1500 Crore) with RBI for intraday borrowing. The Bank has also placed Securities to the extent Rs. 2800 Crore (previous year Rs.3065 Crore) with Reserve Bank of India for borrowing under the LAF window. Besides, securities to the extent of Rs.123.10 Crore (previous year Rs.95.73 Crore) has been lodged with CCIL towards default fund for Forex operations and Rs. 15.00 Crore (previous year Rs.12.50 Crore) held for Currency derivative segment.

1.5 Shares under Investments in India in Regional Rural Banks is Rs.575.37 Crore (previous year Rs.301.58 Crore) including amount towards share application money pending allotment.

1.6 The Bank sold Government Securities from HTM category during the year, both outright and under RBI''s Open Market Operations (OMO). The extent of sale by the Bank under OMO was Rs.3682.97 Crore (BV) [previous year: Rs.14002.39 Crore] and earned a profit of Rs.15.40 Crore [previous year: Rs.654.04 Crore]. The Bank has also sold Government Securities (other than OMO), to the extent of Rs.2314.59 Crore (BV) [previous year Rs.1963.02 Crore] (within 5%, prescribed limit of RBI) and booked a profit of Rs.124.77 Crore [previous

year Rs.217.66 Crore].

Investment Fluctuation Reserve

As per RBI circular number RBI/2017-18/147 DBR. No. BP BC .102/ 21.04.048/2017-18 dated April 2, 2018, from the year 2018-2019, an Investment Fluctuation Reserve (IFR) is to be created to build up adequate reserves to protect the bank against increase in yields in future.

The Transfer to IFR is to be the lower of the following -

a. Net profit on sale of Investments during the year or

b. Net profit for the year less mandatory appropriations, until the amount of IFR is at least 2 percent of the HFT and AFS portfolio, on a continuing basis.

Accordingly, in compliance with extant RBI Guidelines, Bank had provided Rs.390 crore being 2% of Trading book as on 31.03.2022.

2. Advances

2.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

2.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

2.3 In assessing the realis-ability of certain advances, the estimated value of security, Central Government Guarantees etc. have been considered for the purpose of asset classification and income recognition.

2.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

2.5 In terms of RBI Letter RBI/2021-22/28 DOR.STR. REC. 10/21.04.048/2021-22 dated 05.05.2021, Bank has utilized the balance outstanding under Counter Cyclical Provision Buffer (CCP Buffer) of Rs.338.22 crores towards specific provisions for non-performing assets, with the approval of the Board. As on 31.03.2022, there is no outstanding under CCP Buffer.

3. Fixed Assets (Property, Plant and Equipment)

The Profit on sale of land & building for the year 2021-22 is Rs.1.20 crores.

4. Rupee Interest Rate Swap

Deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging as on 31st March 2022 is NIL (previous year NIL). This amount, if any, is to be recognized over the remaining contractual life of Swap or life of the Assets/Liabilities, whichever is earlier.

5. Reconciliation

Reconciliation of Inter Branch transactions has been completed up to 31.03.2022 and steps for elimination of outstanding entries are in progress. The Management does not anticipate any material consequential effect on reconciliation / elimination of outstanding entries.

6. Capital and Reserves

During the Financial Year 2021-22 Bank has issued Basel III Tier II Bonds aggregating to Rs.665 crore through private placement subscribed by QIBs.

During the Financial year 2021-22, the Bank on 02.06.2021 had issued and allotted upto 246,54,23,932 equity shares of Rs.10/- each for cash at Issue Price of Rs.16.63 per Equity Share (including a premium of Rs.6.63 per equity share amounting to Rs. 1634.58 crores) aggregating to Rs.4100 crore on preferential basis to Government of India (President of India) for capital infusion and share application money was received by the Bank on 31.03.2021. The Government of India shareholding has increased from 95.84% to 96.38%. The paid up capital of the Bank increased from Rs.16436.99 crore to

Rs.18902.41 crore.

On account of revaluation of immovable properties during the year FY 2021-22, the Revaluation Reserve of the Bank increased by Rs.529.10 crores and stands at Rs.2,749.56 crore as at 31.03.2022.

7. Taxes

7.1 Taking into consideration the decisions of appellate Authorities, certain judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs.7409.24 crore (previous year Rs.5,734.33 crore) and Service Tax aggregating to Rs. 122.33 crore(previous year Rs.122.33 crore).

7.2 Tax expense for the year is Rs.69.52 crore consisting of Current Tax expense of Rs.31.71 crore and Deferred Tax expense of Rs.37.81 crore - refer note No.11 under Disclosures under Accounting Standards.

7.3 The Bank, based on internal evaluation, presently has decided to continue with the existing tax regime. Further, the Bank has recognized net Deferred Tax Asset as on 31st March, 2022 aggregating to Rs.6262.41 crore (Previous year Rs.6300.40 crore) on timing differences in accordance with Accounting Standard - 22 on “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India and adjustments if any to be carried out on reassessment at appropriated stage.

8. The 11th Bipartite Settlement and Eight Joint Note dated 11.11.2020 is operational for five years from 01.11.2017. The Bank has already implemented the 11th Bipartite Settlement, hence NO provision towards wage revision is held as on 31.03.2022.

9. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank has been disclosed to the extent information was made available to the Bank by the vendors. There are no overdue pending of principal amount and/ or interest and accordingly no additional disclosures have been made for the FY 2021-22.

#The Bank received a capital infusion of Rs.4100 crore (Rupees Four Thousand One Hundred Crore Only) from Government of India on 31.03.2021 and the equity shares were issued and allotted on 02.06.2021 i.e. 246,54,23,932 equity shares of face value of Rs.10 each for cash at issue price of Rs.16.63 per equity shares (including premium of Rs.6.63 per equity share)

$ Percentage of shareholding of State Government and Sponsor Bank is applicable only for RRBs.

* Capital to Risk Weighted Assets Ratio (CRAR) is arrived at after considering the Net Present Value (NPV) of non-interest bearing recapitalization Bond infused as Capital by the Govt. of India during the FY ended 31st March 2021. Without considering the said adjustment, the CRAR is 15.75% (CET 1 ratio of 12.63%) as on 31st March 2022.

b) Liquidity coverage ratio (LCR)

RBI had introduced the Liquidity Coverage Ratio (LCR) vide circular NoRBI/2014-15/529 DBR. No. BRBC.80/21.06.201/2014-15 dated March 31,2015 which has been modified from time to time, in order to ensure short term resilience of banks to potential liquidity disruptions by ensuring that bank have sufficient high quality liquid assets (HQLA) to survive an acute stress scenario lasting for 30 days. The minimum LCR requirement set out in the RBI guidelines for the bank effective January 1,2019 is 100%

Definition of LCR: Stock of high quality liquid assets (HQLAs)Total net cash outflows over the next 30 calendar days

In the stock of high quality liquid assets (HQLA), there are two categories of assets, viz. Level 1 and Level 2 assets. Level 2 assets are sub-divided into Level 2A and Level 2B assets on the basis of their price-volatility. Assets included in each category are those that the bank is holding on the first day of the stress period. Level 1 assets are with 0% haircut while in Level 2, 2A assets are with a minimum 15% haircut and Level 2B Assets, with a minimum 50% haircut.

The total net cash outflows is defined as 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.

Bank has calculated LCR for all working days over the March 2022 quarter. Bank''s LCR for the quarter ended 31st March 2022 stands at 177.90% based on daily average of three months (Q4 FY 2021-22) and is well above the present minimum requirement prescribed by RBI of 100% for the Quarter ended March, 2022. The Minimum requirement as on 31.03.2021 was 90% , the same was revised by RBI to 100% w.e.f 01.04.2022. Bank is having enough liquidity to meet sudden cash outflows.

The detailed Quantitative disclosure is placed below:

Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The Domestic and Overseas Centers 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, 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.

The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. Available stable funding (ASF) is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year. The amount of required stable funding (RSF) of a specific institution is a function of the liquidity characteristics and residual maturities of the various assets held by that institution as well as those of its off-balance sheet (OBS) exposures.

i) Qalitative disclosures Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mis-match, for funding overseas branches etc.

b) The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank''s Balance sheet exposures.

g) The income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower.

h) All the hedge transactions are accounted on accrual basis.Valuations of the outstanding contracts are done on Mark to Market basis.The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Bank shall discuss 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. Also to include:

a) The structure and organization for management of risk in derivatives trading;

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

c) Policies for hedging and/or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/ mitigants; and

d) Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Government Securities and to reduce the cost of Subordinated Debt. In addition, the bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The bank has put in place an appropriate structure and organization for management of risk, which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction

at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge bank''s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 -Significant Accounting Policies (Policy No.6).

a. The net position shall be shown either under asset or liability, as the case may be, for each type of derivatives.

b. Banks may adopt the Current Exposure Method on Measurement of Credit Exposure of Derivative Products as per extant Reserve Bank of India instructions.

d. Credit default swaps

Credit Default Swaps - Nil (previous year - Nil)

8. Disclosures relating to securitization

In the annual Notes to Account, the originators should indicate the outstanding amount of securitised assets as per books of the Special Purpose Entities (SPEs) and total amount of exposures retained by the originator as on the date of balance sheet

f. Implementation of IFRS converged Indian Accounting Standards (Ind AS)

> In line with the guidance issued by the Reserve Bank of India in February 2016, the Bank has set up a Steering Committee headed by the Executive Director along with a Working Group consisting of four (4) General Managers which monitors the progress of Ind-AS implementation.

> Bank has also formed a core team of 10 members and ECL team of 7 members drawn from various functional departments for taking forward for implementation of Ind AS.

—

> In 2016-17, Bank has engaged a Consultant for Ind AS and carried out GAP Analysis of all the assets and liabilities, revenue and expenditure items as well as treasury portfolio.

> Bank has undertaken Pan India training to Executives as well as Officials attached to various Administrative Offices.

> Based on the GAP Analysis report, Bank has identified customization requirement in existing system for generating Ind AS compliant financials which includes fair valuation of staff advances, staff deposits,computation of Effective Interest Rate (EIR) for loans classified under Amortized cost, Expected Credit Loss(ECL) model development involving Probability of Default (PD), Loss Given Default (LGD) Exposure at Default (EAD)etc with the help of consultant appointed in the initial stage.

1. Pension:

The additional liability on account of enhancement in family pension on account of Government guidelines, works out of Rs.425,85,83,225/- as per the Acturial Valuation.

As per RBI Circular RBI/2021-22/105/DOR.ACC.REC.57/21.04.018/2021-22 dated 04.10.2021 banks are permitted to amortise the total liabilities over the period of five years. The Bank has opted the said provision of RBI and has charged minimum amount of Rs.85,17,16,645/- for the year ended 31 March 2022.

The Balance unamortised expense of Rs.340,68,66,580/- has been carried forward.

Had the bank charged the entire additional liability to the profit and loss account, the net profit for the year ended March 31, 2022 would have been lower by Rs.340.69 Crores.

2. Gratuity:

Unamortised gratuity liabilities as on 31.03.2022 is NIL.

15. Disclosure relating to Investment Exposure of Colombo Branch, Sri Lanka

Sri Lanka is going through an economic crisis due to insufficient foreign exchange reserves. Due to the present economic and political situation in Sri Lanka, which has taken place in the current calendar year, Lankan Rupee has depreciated vis-a-vis all major currencies including USD and INR.

The yield on T Bills in Sri Lanka have increased from about 8.5% to 24% during Feb 2022 to May 2022.

Our Colombo Branch is holding T-Bills/Bonds of Central Bank of Sri Lanka (CBSL) issued on behalf of Govt. of Sri Lanka amounting to LKR 753 crore (INR 191 crore). So far the matured T-Bills/bonds have been paid by them promptly on the respective due dates. Out of investment in T-Bills/bonds, the Branch has to hold minimum of LKR 341 core (INR 86 crore) being 20% of their NDTL for the purpose of SLR. As these obligations are denominated in Lankan Rupee and the debt is domestic in nature, presently we are not envisaging any default. Further, these T-Bills/bonds are short term in nature and are maturing in a phased manner last being, on 01.07.2022.

16. Letters of Comfort (LoC)

Banks should disclose the full particulars of all the Letters of Comfort (LoCs) issued by them during the year, including their assessed financial impact, as also their assessed cumulative financial obligations under the LoCs issued by them in the past and outstanding, in its published financial statements, as part of the ‘Notes to Accounts”.

Particulars for FY 2021-22

Letters of Comfort issued during the year - Nil

Letters of Comfort outstanding as on 31.3.2022 - 3

Cumulative position of LOC’s outstanding as on March 31,2022:

1. During the year 2009-10, the Bank has issued a Letter of Comfort (LoC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch and to arrange to convert retained earnings to capital funds and/or infuse further capital in order to restore the CRAR to a minimum of 12%, subject to approval from RBI. The assigned capital of Bangkok Branch stands at THB 1798.89 Mio and CRAR is 23.57% as on 31.03.2022.

I n the worst case scenario of the entire textile exposure of the branch becoming NPA. We may have to make additional provision to the extent of THB 91.70 Mio being unsecured portion of standard textile advances. If this contingency arises, there would be no additional capital to be remitted as existing reserves are adequate to cover the unsecured amount.

2. LOC was issued during 2010-11 to Bank Negara Malaysia upto our Bank''s 35% shareholding in the Joint Venture Bank-India International Bank (Malaysia) Berhad (IIBMB). As on 31.03.2022, the deposits of IIBMB are Rs.152.14 Crores and other liabilities are Rs.3.94 Crores (i.e. total liabilities of Rs.156.08 Crores). The net worth of IIBMB as on 31.03.2022 is Rs.582.84 Crores. As the financial year end of IIBMB is 31 December, figure of 31^st March 2022 have been taken from unaudited statements.

3. Based on the host country regulator''s guidelines, during 2019-2020, Bank has issued Letter of Comfort favoring CBSL for meeting all obligations and liabilities arising out of business carried on by IOB-Sri Lanka Branch.

17. In accordance with the RBI Circular No DBR.No.BPBC. 18/21.04.048/2018-19 dated 01.01.2019, DOR.No.BP BC.34/21.04.048/2019-20 dated 11.02.2020 and DOR.No.BPBC/4/21.04.048/2020-21 dated 06.08.2020, on “Relief for MSME borrowers either exempted or registered under Goods and Service Tax (GST)”, the details of MSME restructured accounts from

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market.

In respect of overseas branches, disclosures if any required for Employee Benefit Schemes are not made in the absence of information.

h) The financial assumptions considered for the calculations are as under: -

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation (Balance sheet dated 31.03.2022).

Expected Rate of Return: The Overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which the obligation is to be settled.

Bank''s best estimate expected to be paid in next Financial Year for Gratuity is Rs.126.00 crores.

3. AS 24 - Discontinuing Operations

The Bank has not closed any of its Overseas Branches during 01.04.2021-31.03.2022. Hence the data relating to this disclosure may be treated as “NIL’.

4. AS 27 - Financial Reporting of Interest in Joint Venture

Our Bank (with 35% share) has floated a Joint Venture at Malaysia along with Bank of Baroda (40%) and Union Bank of India (25%) (erstwhile Andhra Bank now merged with Union Bank of India) by name INDIA INTERNATIONAL BANK (MALAYSIA) BHD. IIBMB has an Authorized capital of MYR 500 Mio. The Joint Venture''s paid up capital is MYR 330 Mio (previous year MYR 330 Mio).

As on 31.03.2022, Bank''s Investment value in the Joint Venture as per Books stands at Rs.193.33 crore (original investment value Rs.199.58 crore as reduced by diminution in value of investment amounting to Rs.6.14 crores).

Bank does not have any subsidiary.

The consolidated financial results are prepared in accordance with AS 21 on “Accounting for Consolidated Financial Statements”, AS 23 on “Accounting for Investment in Associates” and AS 27 on “Financial Reporting of Interests in Joint Ventures” issued by the ICAI & guidelines issued by the RBI.

*Since the shareholding in Universal Sompo General Insurance Company Ltd., is less than 25% the same has not been considered as Joint Venture as per extant RBI guidelines and thus not considered for preparation of consolidated financial statements.

6. Accounting Standard 26 - Intangible Assets

The software acquired for core banking system is treated as intangible asset and amortized over a period of 3 years.

7. Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as ‘Corporate Assets'' and are not ‘Cash Generating Units'' as defined by AS-28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

8. Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountant of India in this respect have been incorporated at the appropriate places.

9. Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies

The financial statements have been prepared following the same accounting policies and practices as those followed for the year ended March 31,2021.

12. Accounting Standard 17 - Segment Reporting

The Bank has adopted Reserve Bank of India''s revised guidelines issued in April 2007 on Segment Reporting in terms of which the reportable segments have been divided into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations.

---

Mar 31, 2021

1. Investments

1.1 In accordance with RBI guidelines, the investments portfolio of the bank has been classified into three categories, as given

below:
Category	Gross Book Value (Rs. in crore)		Percentage to Total Investments (%)
	31.03.2021	31.03.2020	31.03.2021	31.03.2020
Held to Maturity	74 703.05	61 620.85	75.91	75.12
Available for Sale	23 708.69	20 408.53	24.09	24.88
Held for Trading	--	--	--	--

1.2 SLR Securities (domestic) under “Held to Maturity" accounted for 20.16 % (previous Year 17.80%) of bank''s Demand and Time liabilities as at 31st March 2021 as against ceiling of 22.00% (previous year 19.50%) stipulated by RBI.

1.3 In respect of Held to Maturity category of Investments, premium of Rs.40.67 Crore was amortized during the year (previous year Rs.42.20 Crore).

1.4 Securities of Face Value for Rs.1305.50 Crore (previous year Rs.1305.50 Crore) towards CCIL Settlement Guarantee Fund/Default Fund and securities for Rs.4914.50 Crore (previous year Rs.5714.50 Crore) towards collateral for borrowing under TREPS/Default Fund have been kept with Clearing Corporation of India Limited. The Bank has placed securities of face value Rs.1500 Crore (previous year Rs.1500 Crore) with RBI for intraday borrowing. The Bank has also placed Securities to the extent of Rs.3065 Crore (previous year Rs.3065 Crore) with Reserve Bank of India for borrowing under the LAF window. Besides, securities to the extent of Rs.95.73 Crore (previous year Rs.95.73 Crore) has been lodged with CCIL towards default fund for Forex operations and Rs.12.50 Crore (previous year Rs.12.50 Crore) held for currency derivative segment.

1.5 Shares under Investments in India in Regional Rural Banks is Rs.301.58 Crore (previous year Rs.277.38 Crore) including amount towards share capital Deposits.

1.6 The Bank sold Government Securities from HTM category during the year, both outright and RBI''s Open Market Operations (OMO). The extent of sale by the Bank under OMO was Rs.14002.39 crore (BV) [previous year Rs.4741.23 crore] and earned a profit of Rs.654.04 crore [previous year Rs.155.10 crore]. The Bank has also sold Government Securities (other than OMO), to the extent of Rs.1963.02 Crore (BV) [previous year Rs.1673.04 Crore] (within 5%, prescribed limit of RBI) and booked a profit of Rs.217.66 Crore (previous year Rs.97.19 Crore).

1.7 As required by RBI Circular number RBI/2017-18/147 DBR. No.BP BC 102/21.04.048/2017-18 dated April 2,2018, the bank is required to create an Investment Fluctuation Reserve (IFR) for 2% of its HFT and AFS portfolio, on a continuing basis. The bank has assessed Rs.500.00 crore as IFR to be built up in three years, as allowed by RBI, based on estimation of its HFT and AFS portfolio of past three years. Accordingly, during the year, the bank has created Investment Fluctuation Reserve of Rs.100.00 Crore.

2. Advances

2.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

2.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

2.3 In assessing the realisability of certain advances, the estimated value of security, Central Government Guarantees etc. have been considered for the purpose of asset classification and income recognition.

2.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

2.5 The Reserve Bank of India, vide Circular No. DBR.No.BP BC.79/21.04.048 / 2014-15 dated 30.03.2015, allowed banks to utilize up to 50% of Counter-cyclical Provisioning Buffer / Floating Provisions held by them as at the end of 31.12.2014. During the year 2020-21, Bank has not utilized any portion of Counter-cyclical Provisioning Buffer [previous year NIL] out of balance in Counter-cyclical Provisioning Buffer of Rs.338.22 Crore held (as on March 31, 2020) for meeting specific provisions for Non-Performing Assets.

3. Fixed Assets (Property, Plant and Equipment)

The Profit on sale of assets during the year 2020-21 was Rs.1.49 crores.

4. Rupee Interest Rate Swap

Deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging as on 31st March 2021 is NIL (previous year NIL). This amount, if any, is to be recognized over the remaining contractual life of Swap or life of the Assets/Liabilities, whichever is earlier.

5. Reconciliation

Reconciliation of Inter Branch transactions has been completed up to 31.03.2021 and steps for elimination of outstanding entries are in progress. The Management does not anticipate any material consequential effect on reconciliation / elimination of outstanding entries.

6. Capital and Reserves

Equity Share Capital: The Government of India vide its letter no.F.No.7/23/2019-BOA-l dated 17.03.2021 infused capital of Rs.4100 crore for Preferential Allotment of Equity Shares and the amount was received by the Bank on 31.03.2021. the amount has been kept under Share Application Money pending receipt of necessary Regulatory Approvals. The same has been included in Bank''s Common Equity Capital (CET -I} after RBI approval vide letter No. DOR.CAP.21.01.002/2021-22 dated 30.04.2021.

Tier II Bonds: Tier II Bonds were not raised during FY 2020-21. Redemption of Bonds: Bank has redeemed the Lower Tier II Bonds amounting to Rs.1000 crore on 31.12.2020 and call option was exercised on Upper Tier II Bonds amounting to Rs.967 crore on 11.01.2021.

W -

7. Taxes

7.1 Taking into consideration the decisions of Appellate Authorities, certain judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs.5734.33 Crore (previous year Rs.5734.33 Crore) and Service Tax aggregating to Rs.122.33 crore (previous year Rs.192.28 crore).

7.2 Tax expense for the year is Rs.8.24 crore consisting of Current Tax expense of Rs.23.24 crore and Deferred Tax expense of Rs.15.00 crore - refer note no.18.8.

7.3 The Bank based on internal evaluation presently has decided to continue with the existing tax regime. Further, the Bank has recognized net Deferred Tax Asset as on 31st March, 2021 aggregating to Rs.6300.40 crores (PY Rs.6285.40 crores) on timing differences in accordance with Accounting Standard - 22 on “Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India and adjustments if any to be carried out on reassessment at appropriate stage.

8. During the year ended March 31, 2021, the Bank has made a provision or Rs.431.86 crore, arising out of 11th Bipartite Settlement effective from 1st November, 2017, (Cumulative Provision - Rs.840.92 crore). Bank has paid Rs.754.17 crore and balance amount of Rs.86.75 crore is payable as on March 31 2021.

9. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank has been disclosed to the extent information was made available to the Bank by the vendors. There are no overdue pending on account of principal amount and / or interest and accordingly no additional Disclosures have been made for the FY 2020-21.

11.5 Sale and Transfers to/from HTM Category

Sale and transfer to/from HTM category (above the prescribed limit of 5%) during the current year: NIL (previous year NIL)

As per Master Circular - Prudential Norms for Classification Valuation and Operation of Investment portfolio by Banks dated July 7,2015 issued by RBI, Banks are permitted to shift investments to/from HTM once in a year, normally at the beginning of the accounting year. No further shifting will be allowed during remaining part of that accounting year, except when explicitly permitted by RBI.

Under Targeted Long Term Repo Operations (TLTRO)/reversal of TLTRO/TLTRO 2.0 transactions guidelines, if a Bank opts for repayment of funds availed under TLTRO/TLTRO 2.0, RBI has permitted shifting of associated securities out of HTM category. This shifting of TLTRO/TLTRO 2.0, investments out of HTM shall be in addition to the shifting of investments allowed at the beginning of the accounting year.

Accordingly, our Bank has repaid funds availed under TLTRO 2.0 to the extent of RS.100 crore and shifted associated securities from HTM to AFS, in addition to regular transfer at the beginning of accounting year, which are not reckoned in the prescribed 5% limit.

12.3.1 Qualitative Disclosure Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/ Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mismatch, for funding overseas branches etc.

b) The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly

reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank’s Balance sheet exposures.

g) The income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Bank shall discuss 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 shall also include:

a) The structure and organization for management of risk in derivatives trading;

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

c) Policies for hedging and/or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/ mitigants; and

d) Accounting policy for recording hedge and nonhedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Government Securities and to reduce the cost of Subordinated Debt. In addition, the bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The bank has put in place an appropriate structure and organization for management of risk, which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge bank’s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.6)

13.1.2 Notes on RBI Divergence:

As per RBI Circular No. DBR.BPBC.No.32/21.04.018/2018-19 dated 01.04.2019 on Disclosure in the “Notes to Accounts" to the Financial Statements - Divergence in the Asset Classification and Provisioning, Banks should disclose Divergences, if either or both of the following conditions are satisfied:

i. The additional provisioning for NPAs assessed by RBI exceeds 10% of the reported profit before Provisions and Contingencies for the reference period, and

II. The additional Gross NPAs identified by RBI exceed 15% of the published incremental Gross NPAs for the reference period.

Divergences are within threshold limits in the Bank as specified above and hence no Disclosure is required with respect to RBI’s Annual Supervisory process for FY 2019-20.

13.1.3 Provision Coverage Ratio

The Provision Coverage Ratio (PCR) computed as per the RBI guidelines stood at 90.34% as on 31.03.2021 (86.94%as on 31 .03.2020).

Accounting Standard 5 - Net Protit or Loss for the period, prior period items and changes in accounting policies

The financial statements have been prepared following the same accounting policies and practices as those followed for the year ended March 31,2020.

Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17. Accounting Standard 15- Employee Benefits

. The Bank had adopted Accounting Standard 15 (Revised) “Employees Benefits” issued by the Institute of Chartered Accountants of India, with effect from 1st April, 2007.

i. The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) are as under: -

The software acquired for core banking system is treated as intangible asset and amortized over a period of 3 years.

18.10 Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

Our Bank (with 35% share) has floated a Joint Venture at Malaysia along with Bank of Baroda (40%) and Union Bank of India (erst while Andhra Bank now merged with Union Bank of India) (25%) by name INDIA INTERNATIONAL BANK (MALAYSIA) BHD (IIBMB). IIBMB has an Authorized Capital of MYR 500 Mio. The Joint Venture’s Paid up Capital is MYR 330 Mio. (previous year MYR 330 Mio.)

As on 31.03.2021, Bank’s investment value in the Joint Venture as per the books stands at Rs.193.44 Crore (Original Investment value Rs.199.58 Crores as reduced by Diminution in Value of Investments amounting to Rs.6.14 crore).

18.11 Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as ‘Corporate Assets’ and are not ‘Cash Generating Units’ as defined by AS-28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

18.12 Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountant of India in this respect have been incorporated at the appropriate places.

19 Additional Disclosures

19.1 Concentration of Deposits, Advances, Exposures and NPAs

-

Previously the figures reported for 2019-20 and earlier years was mentioned under the assumption of group exposure to borrowers of Bank where any interchangeability of limit is available to other group borrower accounts/entities within the borrower group. However as per the definition of India - Group Exposure relating to this disclosure, the exposure in the form of Loans/Advances to other entity of our Bank overseas is Nil.

As on date we have only one entity “India International Bank Malaysia, Behard (IIBMB) which is a joint venture of Bank of Baroda (40%), Indian Overseas Bank (35%), and Union Bank of India (25%). Our Bank had no exposure to IIBMB in the form of Loans/Advances for the year 2019-20 as well as 2020-21, Therefore it is rectified and reported as “Nil" for 2019-20 as well as 2020-21.

21 Unhedged Foreign Currency Exposure (UFCE)

As per RBI circular ref no. RBI/2013-14/620 & RBI/2013-14/448, data relating to UFCE of borrowers from individual branches is obtained through online and consolidated working of the required additional provision and capital for Exposures to entities with Unhedged Foreign Currency Exposure is done at Risk Management Department.

The Bank has estimated the provision towards Unhedged Foreign Currency Exposure to their constituents in terms of RBI Circular DBOD.NO.BRBC.85/21.06.200/2013-14 dated January 15, 2014 at Rs.4.88 crore. However, the Bank holds provision of Rs.11.08 crores as on 31.03.2021 against the same.

22. Disclosure on Liquidity Coverage Ratio Qualitative Disclosure about LCR

Basel III capital regulation has been implemented from April 1,2013 in phases and it was to be fully implemented-as on March 31,2019. Further RBI also introduced Basel III Liquidity Coverage Ratio (LCR) to be implemented by banks in India from January 1,2015 with full implementation being effective from January 1,2019. With a view to provide transition time for banks, the requirement was minimum of 60% for the calendar year 2015 i.e with effect from January 1,2015 and rise in equal steps to reach the minimum required level of 100% on January 1,2019

The LCR promotes short term resilience of banks to potential liquidity disruptions by ensuring that bank have sufficient high quality liquid assets (HQLA) to survive an acute stress scenario lasting for 30 days.

Definition of LCR:

Stock of high quality liquid assets (HQLAs)

Total net cash outflows over the next 30 calendar days

In the stock of high quality liquid assets (HQLA), there are two categories of assets, viz. Level land Level 2 assets. Level 2 assets are sub-divided into Level2A and Level2B assets on the basis of their price-volatility. Assets to be included in each category are those that the bank is holding on the first day of the stress period. Level-1 assets are with 0%haircut while in Level 2, 2A assets are with a minimum 15% haircut and Level 2B Assets, with a minimum 50% haircut.

The total net cash outflow is defined as 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.

Bank has calculated LCR for all working days over the March 2021 quarter. Bank''s LCR for the quarter ended 31.03.2021 stands at 168.91% based on daily average of three month (Q4 FY 2020-21) and is well above the present minimum requirement prescribed by RBI of 90% for the Quarter ended March 2021. Bank is having enough liquidity to meet sudden cash outflows.

The detailed Quantitative disclosure is placed as Annexure.

Liquidity Management in the Bank is driven by the ALM Policy of the Bank and regulatory prescriptions. The domestic and overseas centres 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, 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.

In accordance with the RBI guidelines relating to COYID-19 Regulatory Package on asset classification and provisioning dated 27.03.2020, 17.04.2020, 23.05.2020 and clarification issued by RBI through Indian Bankers Association dated 06.05.2020, Bank has granted a moratorium on payment of installments and/ or interest as applicable, falling due between 01.03.2020 and 31.08.2020 to eligible borrowers classified as standard, even if overdue, as on 29.02.2020 without considering the same as restructuring. The moratorium period, where granted, shall be excluded by the Bank from the number of days the account is past due for the purpose of asset classification under RBI''s Income Recognition and Asse Classification norms.

In accordance with RBI Circular DOR.No.BP.BC.63/21.04.048/2019-20 dated 17th April 2020 the Bank is required to make provision @10% of outstanding advances in respect of such borrower accounts where asset classification benefit has been taken as per RBI guidelines

The Hon''ble Supreme Court of India, in a Public Interest Litigation case of Gajendra Sharma Vs Union of India & Others vide an interim order dated 3^rd September, 2020 has directed that the accounts which were not declared as NPA till 31 ^st August, 2020 shall not be declared as NPA till further orders . Pursuant to the Order, the Bank did not classify any domestic borrowal account which had not been classified as NPA as at 31 st August 2020 as per RBI Prudential Norms on IRAC, provisioning and other related matters, as NPA after August 31,2020. As a matter of prudence, during the quarter ended 31.12.2020, the Bank has made an additional provision of Rs.241.32 crore.

Pursuant to the Supreme Court''s final order dated March 23,2021 and in accordance with the instructions of RBI Circular dated 07.04.2021, issued in this connection, the Bank has classified these borrower accounts as per extant IRAC norms with effect from 01.09.2020 and reversed the above provision and utilized the same towards provision on these accounts.

31. In accordance with the instructions of RBI Circular dated 07.04.2021 on "Asset Classification and Income Recognition following the expiry of COVID 19 regulatory package", the Bank shall refund / adjust ''interest on interest'' charged to all borrowers including those who had availed of working capital facilities during moratorium period i.e. 01 .03.2020 .to 31.08.2020, irrespective of whether moratorium had been fully or partially availed, or not availed. Pursuant to these instructions, the methodology for calculation of the amount to be refunded / adjusted for different facilities has been circulated by the Indian Banks'' Association (IBA) as required by RBI notification. Accordingly the bank has created an estimated liability of Rs.59.67 crore towards interest relief and has reversed the same from interest income.

32. As per RBI circular No DBR.No.BP15199/21.04.048/2016-17 and DBR.No.BP.1906/21.04.048/2017-18 dated June 23, 2017 and August 28, 2017 respectively, for the accounts covered under the provisions of IBC (Insolvency and Bankruptcy Code, the Bank is holding a total provision of Rs.17,647.43 crore (97.60% of total outstanding) as on 31.03.2021.

33. The Bank has an exposure or Rs.617.86 Crore with 2 borrower accounts belonging to the same group, Respectfully following the order of Honorable NCLT, Kolkata Bench order dated 21st October 2020, the bank has not downgraded these accounts as NPAfollowing IRAC norms and maintained the status Quo as ""Standard Assets'''' until further orders.

34. The disclosures as required under RBI circular DOR.No.BP.BC.62/21.04.048/2019-20 dated April 17, 2020 with respect to the number of accounts and the amount involved in those accounts where the Resolution period was extended is given for the year ended as on March 31,2021:

36. The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the code on Social Security 2020 on November 13, 2020, and has invited suggestions. The Bank will assess the impact and its evaluation once the subject rules are notified and will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

37. In accordance with RBI guidelines, relating to scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts dated 26th Oct 2020, the bank has paid the amount of RS.33.96 crore and is to be received from Nodal agency i.e. SBI.

38. Other Income for FY 2019-20 includes Rs.53.31 crore being Extraordinary Income on account of Exchange Differences recognized as Income on disposal of Net Investment in respect of one of the Foreign Branch.

39. In view of the continuing uncertainties prevailing in the Global and Indian economy consequent to the COVID-19 pandemic, the extent of impact on the Bank''s operations and financial position remain uncertain and would depend on several factors including actions taken to mitigate its impact and other regulatory measures. Despite these prevalent conditions, in the opinion of Management, there would not be significant impact on Bank''s financial results and ongoing concern assumptions.

40. Comparative Figures

Previous year''s figures have been regrouped / rearranged / reclassified wherever necessary.

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Mar 31, 2019

NOTES TO ACCOUNTS

1. Reconciliation

Reconciliation of Inter Branch transactions has been completed up to 31.03.2019 and steps for elimination of outstanding entries are in progress. The Management does not anticipate any material consequential effect on reconciliation / elimination of outstanding entries.

2. Investments

2.1 In accordance with RBI guidelines, the investments portfolio of the bank has been classified into three categories, as given below:

2.2 SLR Securities (domestic) under “Held to Maturity” accounted for 15.70 % (previous Year 18.83%) of bank’s Demand and Time liabilities as at 31st March 2019 as against ceiling of 19.50% (previous year 19.50%) stipulated by RBI.

2.3 In respect of Held to Maturity category of Investments, premium of Rs.66.20 Crore was amortized during the year (previous year Rs.68.62 Crore).

2.4 Securities of Face Value for Rs.1005.50 Crore (previous year Rs.1005.50 Crore) towards CCIL Settlement Guarantee Fund/ Default Fund and securities for Rs.4714.50 Crore (previous year Rs.9168.57 Crore) towards collateral for borrowing under TREPS/Default Fund have been kept with Clearing Corporation of India Limited. The Bank has placed securities of face value Rs.1500 Crore (previous year Rs.1500 Crore) with RBI for intraday borrowing. The Bank has also placed Securities to the extent of Rs.5415 Crore (previous year Rs.6150 Crore) with Reserve Bank of India for our borrowing under the LAF window. Besides, securities to the extent of Rs.85.34 Crore (previous year Rs.57.38 Crore) has been lodged with CCIL towards default fund for Forex operations and Rs.12.50 Crore (previous year Rs.12.50 Crore) held with currency derivative segment.

2.5 Shares under Investments in India in Regional Rural Banks is Rs.250.88 Crore (previous year Rs.222.04 Crore) including amount towards share capital Deposits.

2.6 The Bank sold Government Securities from HTM category during the year, both outright and RBI’s Open Market Operations (OMO). The extent of sale by the Bank under OMO was Rs.6365.32 crore (BV) [previous year NIL] and earned a profit of Rs.100.22 crore [previous year NIL]. The Bank has also sold Government Securities (other than OMO), to the extent of Rs.2039.92 Crore (BV) [previous year Rs.573.86 Crore] (within 5%, prescribed limit of RBI) and booked a profit of Rs.45.67 Crore (previous year Rs.19.01 Crore).

3. Advances

3.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the realisability of certain advances, the estimated value of security, Central Government Guarantees etc. Have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3.5 The Reserve Bank of India, vide Circular No. DBR.No.BP BC.79/21.04.048 / 2014-15 dated 30.03.2015, allowed banks to utilize up to 50% of Counter-cyclical Provisioning Buffer / Floating Provisions held by them as at the end of 31.12.2014. During the year 2018-19, Bank has not utilized any portion of Counter-cyclical Provisioning Buffer [previous year NIL] out of balance in Counter-cyclical Provisioning Buffer of Rs.338.22 Crore held (as on March 31, 2018) for meeting specific provisions for Non-Performing Assets.

4. Fixed Assets (Property, Plant and Equipment)

During the financial year 2018-19 the entire Land & Building of the Bank (including Lease hold property) were revalued based on the valuation report of the approved valuers. The net appreciation of Rs.605.34 Crores was added to the carrying value of the asset and credited to the revaluation reserve. The revalued amount on leasehold premises is amortised over the remaining period of the lease.

Profits on sale of assets during the year 2018-19 was Rs.82.34 crores, of which an amount of Rs. 67.65 Crores has been transferred to Capital Reserve.

5. Rupee Interest Rate Swap

Deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging as on 31st March 2019 is NIL (previous year NIL). This amount, if any, is to be recognized over the remaining contractual life of Swap or life of the Assets/Liabilities, whichever is earlier.

6. Capital and Reserves

1. During the year, the Bank has successfully raised Basel III Compliant Tier II Bonds Series II to the tune of Rs.300 crores.

2. During the Financial Year ended 31.03.2019, - Bank has allotted 137,30,10,821 equity shares of Rs.10/- each (Rupees Ten only) for cash at Issue Price of Rs.15.71 per share (including premium of Rs.5.71 per equity shares) on preferential basis to GOI on 12.11.2018 for Capital infusion of Rs.2157 crore.

- Bank has allotted 269,54,67,422 equity shares of Rs.10/- each (Rupees Ten only) for cash at Issue Price of Rs. 14.12 per equity share (including premium of Rs.4.12 per equity share) on 28.03.2019 for Capital infusion of Rs.3806 crores.

- Bank has allotted 18,24,00,000 equity shares of Rs.10/- each (Rupees Ten only) for cash at Issue Price of Rs.11.90 per share (including premium of Rs.1.90 per equity shares) to Employees under Employees Stock Purchase Scheme (IOB-ESPS 2018) on 04.02.2019 augmenting capital to the extent of Rs.260.47 crore.

7. Taxes

7.1 Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs.4446.63 Crore (previous year Rs.3916.26 Crore) and Service Tax aggregating to Rs.192.28 crore (previous year 263.22 crore).

7.2 Tax expense for the year is Rs.(-)2222.66 Crore net of deferred tax of Rs.2236.80 crore - refer note No.19.6.

7.3 In accordance with Accounting Standard: 22 - “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India and the extant guidelines, Bank has recognized net Deferred Tax Assets of Rs.2236.80 Crore during the year ended 31st March, 2019 on timing differences and unabsorbed depreciation losses.

8. Pending Bipartite settlement, the Bank has during the year 2018-19 made an adhoc provision of Rs.69.96 crore towards revision of wages due with effect from November 2017.

9. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank has been disclosed to the extent information was made available to the Bank by the vendors.

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Mar 31, 2018

1.0 Accounting Standard 5 - Net Protit or Loss for the period, prior period items and changes in accounting policies

The financial statements have been prepared following the same accounting policies and practices as those followed for the year ended March 31, 2017, except for the treatment of depreciation on revalued portion of Fixed Assets in accordance with Accounting Standard 10 (revised 2016) on Property, Plant and Equipment as below:

Depreciation on revalued portion of Fixed Assets has been transferred from the revaluation reserve to the revenue reserve instead of crediting to the Profit and Loss account.

1.1 Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17.

1. 2 Accounting Standard 15 - Employee Benefits

i. The Bank had adopted Accounting Standard 15 (Revised) “Employees Benefits” issued by the Institute of Chartered Accountants of India, with effect from 1stApril, 2007.

ii. The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) are as under:-

(a) Defined Benefit Schemes:

Changes in the present value of the obligations

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market.

In respect of overseas branches, disclosures if any required for Employee Benefit Schemes are not made in the absence of information.

h) The financial assumptions considered for the calculations are as under:-

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation (Balance sheet dated 31.03.2018).

Expected Rate of Return: The Overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the improved stock market scenario.

Bank’s best estimate expected to be paid in next Financial Year for Gratuity is Rs.200 Crore.

1.3 Accounting Standard 21 - Consolidated Financial Statements and Accounting Standard 23 - Accounting for Investments in Associates in Consolidated Financial Statements

As there is no subsidiary, no consolidated financial statement is considered necessary.

1.4 Accounting Standard 22: Accounting for Taxes on Income

1.5 Accounting Standard 26 - Intangible Assets

The software acquired for core banking system is treated as intangible asset and amortised over a period of 3 years.

1.6 Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

Our Bank (with 35% share) has floated a Joint Venture at Malaysia along with Bank of Baroda (40%) and Andhra Bank (25%). Bank Negara, the Central Bank of Malaysia, issued the license to the Joint Venture on 16.04.2010. The Joint Venture was incorporated at Malaysia on 13.08.2010 by name INDIA INTERNATIONAL BANK (MALAYSIA) BHD (IIBM). IIBM has an Authorised Capital of MYR 500 Mio. The Joint Venture’s Paid up Capital is MYR 330 Mio. (previous year MYR 330 Mio.) Our Bank’s share in the Assigned up Capital is 35% - MYR115.500 Mio.

As on 31.03.2018, Bank has paid Rs.199.58Crore (Previous year Rs. 199.58Crore) towards 11550000 shares of MYR10 each aggregating to MYR115.500 Mio. The Joint Venture has commenced operations on 11.07.2012.

1.7 Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as ‘Corporate Assets’ and are not ‘Cash Generating Units’ as defined by AS-28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

1.8 Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountant of India in this respect have been incorporated at the appropriate places.

During the year 2009-10, the Bank has issued a Letter of Comfort (LOC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch and to arrange to convert retained earnings to capital funds and/ or infuse further capital in order to restore the CRAR to a minimum of 12% subject to approval from RBI.

In the worst case scenario of the entire textile exposure of the branch becoming NPA, we may have to make additional provision to the extent of THB 676.273 mio (previous year THB 495.276 mio) being unsecured portion of standard textile advances and the capital of Bangkok centre is THB 1797.890 mio as on 31.03.2018. If this contingency arises, there would be no additional capital to be remitted as existing reserves are adequate to cover the unsecured amount.

During the year 2010-11, the Bank has issued a letter of comfort favoring Bank Negara Malaysia. The Bank in association with other JV partners will provide support to India International Bank (Malaysia) Bhd in funding, business and other matters as and when required and ensure that it complies with the requirements of the Malaysian Laws, Regulations and Policies in the conduct of its business operations and management.

The financial impact for the letter of undertaking issued to Bank Negara Malaysia is remittance of our share of 35% of the paid up capital of MYR 330 mio ie. MYR 115.500 mio. Our Bank has remittedINR 199,57,52,186/- towards the capital of MYR 115.500 mio.

*Fees/Remuneration received in respect of the Bancassurance Business undertaken by the Bank.

2.1 Disclosures relating to Securitisation NIL(previous year - NIL)

2.2 Credit Default Swaps (CDS) NIL(previous year - NIL) 18.13 Draw Down from Reserves

Coupon payment of Rs.100 crore on Basel III compliant Additional Tier I Perpetual Bonds due for payment on 04.02.2018 was made on 05.02.2018 (04.02.2018 being a holiday). The payment / provision towards interest remain adjusted against General Reserves in view of insufficient profits.

3 Unhedged Foreign Currency Exposure (UFCE)

As per RBI circular ref to RBI/2013-14/620 & RBI/2013-14/448, data relating to UFCE of borrowers from individual branches is obtained through online and consolidated working of the required additional provision and capital for Exposures to entities with Unhedged Foreign Currency Exposure is done at Risk Management Department.

The additional provision requirement for Unhedged Foreign Currency Exposure as on 31.03.2018 is Rs.8.99 Crore (As on 31.03.2017 is Rs.11.08 Crore) and the incremental RWA requirement for Unhedged Foreign Currency Exposure as on 31.03.2018 is Rs.257.81 Crore(As on 31.03.2017 is Rs.360.20 Crore) which is included as part of the Credit Risk Capital assessment.

LCR for the bank as on 31.03.2018 stood at 322.18% which is well above the RBI stipulated level of 90% for the current calendar year. Bank is having a strong build up of High Quality Liquid Assets at Rs.37,641.35 Crore as on 31.03.2018. Bank is having government securities to the worth of Rs.10,750.83 Crore in excess to the minimum SLR requirements. Bank is having enough liquidity to meet sudden cash outflows.

The Bank has been maintaining HQLA mainly in 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 Bank has sufficient liquidity cover to meet its likely future short term requirements.

RBI vide its Circular No.BPBC.101/21.04.048/2017-18 dated 12th February 2018, has issued revised framework on Resolution of Stressed Assets. Pursuant to the revised framewoirk, the bank has classified the specific restructured accounts in accordance with extant IRAC norms and made a provision of Rs.799.37 crore towards such accounts during the current year.

Note:

1) The disclosure is in line with RBI Circular FIDD.CO.Plan.BC.23/04.09.01/2015-16 dated : April 7, 2016 on Priority Sector Lending Certificates(PSLC).

4 As per RBI directions vide letter No.DBR.NO.BP:15199/21.04.048/2016-17 dated June 23, 2017 in respect of certain borrowal accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC) and vide letter no. DBR.NO.BP BC.1949/21.04.048/2017-18 dated August 28, 2017 in respect of certain borrowal accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank was required to make additional provision as stated therein. Accordingly, the Bank has made an additional provision of Rs.726.87 crore in respect of those accounts without availing any concession as per the latest RBI letter No.DBR.No.BP/8756/21.04.048/2017-18 dated 02.04.2018.

5 Comparative Figures

Previous year’s figures have been regrouped / rearranged / reclassified wherever necessary.

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Mar 31, 2017

1. Investments

2. In accordance with RBI guidelines, the investments portfolio of the bank has been classified into three categories, as given below:

3. SLR Securities (domestic) under “Held to Maturity” accounted for 17.94 % (previous Year 19.71%) of bank’s Demand and Time liabilities as at the end of March 2017 as against ceiling of 20.50% (previous year 21.50%) stipulated by RBI.

4. In respect of Held to Maturity category of Investments, premium of Rs. 92.88 Crore was amortized during the year (previous year Rs. 103.87 Crore).

5. Securities of Face Value for Rs. 1053.50 Crore (previous year Rs. 1050 Crore) towards CCIL Settlement Guarantee Fund/Default Fund and securities for Rs. 12213.57 Crore (previous year Rs.20455 Crore) towards collateral for borrowing under Collateralized Borrowing and Lending Obligations/Default Fund have been kept with Clearing Corporation Of India Limited. We have placed securities of face value Rs 1500 Crore (previous year Rs. 1500 Crore) with RBI for intraday borrowing. We have also placed Securities to the extent of Rs. 6150 Crore (previous year Rs.10550 Crore) with Reserve Bank of India for our borrowing under the LAF window. Besides, a sum of Rs. 47.38 Crore (previous year Rs.15 Crore) has been lodged with CCIL towards default fund for Forex operations and Rs. 12.50 Crore (previous year Rs. 12 Crore) held with NSCCL for Currency derivative segment.

6. Shares under Investments in India in Regional Rural Banks is Rs.222.04 Crore (previous year Rs.222.04 Crore) including amount towards share capital Deposits.

7. The Bank sold Government Securities from HTM category during the year, both outright and under RBI’s Open Market Operations (OMO). The extent of sale by the Bank under OMO was Rs.5073.63 Crore (BV) (previous year Rs.3285 Crore) and earned a profit of Rs.103.17 Crore (previous year Rs.18.90 Crore). The Bank has also sold Government Securities (other than OMO), to the extent of Rs. 2519.87 Crore (BV) (previous year Rs. 1642.35 Crore) (within 5%, prescribed limit of RBI) and booked a profit of Rs. 70.70 Crore (previous year Rs.55.70 Crore).

8.. Advances

9. The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

10. Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

11. In assessing the reliability of certain advances, the estimated value of security, Central Government guarantees etc. have been considered for the purpose of asset classification and income recognition.

12. The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

13. The Reserve Bank of India, vide Circular No. DBR. No. BP BC.79/21.04.048/ 2014-15 dated 30.03.2015, allowed banks to utilize upto 50% of Counter-cyclical Provisioning Buffer / Floating Provisions held by them as at the end of 31.12.2014. During the year 2016-17, Bank has not utilized any portion of Counter-cyclical Provisioning Buffer [previous year Rs.170 crore(25.83%)] out of Countercyclical Provisioning Buffer of Rs.658.22 crore held (as on December 31, 2014) for meeting specific provisions for Non-performing Assets.

14. Fixed Assets

15. Revaluation has not been carried out during the current year 2016-17 pertaining to Land and Building. However, during the previous year 2015-16, the entire land and building of the bank (including leasehold properties) were revalued based on the valuation reports of the approved valuers. The net appreciation of Rs. 800.55 crore was added to the carrying value of the assets and credited to the revaluation reserve. The revalued amount on leasehold premises is being amortised over the remaining period of the lease.

16. Profit on Sale of Assets for Rs.1.24 crore (previous year Rs.1.25 crore), has been appropriated to Capital Reserve.

17. Rupee Interest Rate Swap

Deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging as on 31st March 2017 is NIL (previous year Rs. 0.02 Crore). This amount, if any, is to be recognized over the remaining contractual life of Swap or life of the Assets/Liabilities, whichever is earlier.

18. Capital and Reserves

The Bank has issued 9,17,48,448 equity shares of Rs.10/- each for cash at issue price of Rs.28.55 per equity share (including premium of Rs.18.55 per equity share) aggregating upto Rs.261.94 crore to 14 Qualified Institutional Buyers on Qualified Institutions Placement basis on 23.05.2016 and 55,57,14,797 equity shares of Rs.10/- each for cash at issue price of Rs.27.91 per equity share (including premium of Rs.17.91 per equity share) aggregating upto Rs.1551 crore to Government of India (GOI) on 30.09.2016 on Preferential Basis. Hence, the paid up capital of the Bank has increased from Rs. 1807.27 crore to Rs.2454.73 crore. GOI’s shareholding has increased from Rs.1397.33 crore (77.32%) to Rs.1953.04 crore (79.56%) and the Public Shareholding stood at Rs.501.69 crore (20.44%).

During the Financial Year 2016-17, GOI as a part of turnaround linked Capital Infusion Plan, on 16.03.2017 has allotted Rs. 1100 crore in our Bank’s Equity Share Capital. This capital infusion has been parked in Share Application Money Account pending allotment, is to be treated as Common Equity Tier l(CET-l) Ratio for the financial year ending 31.03.2017 as permitted by RBI and GOI with approval dated 30.03.2017.

During the Financial Year 2016-17, Bank has raised capital funds by way of issue of Basel III Compliant Tier II Bonds of Rs.800 crore on 03.11.2016 at coupon rate of 9.24% per annum.

19. Taxes

20. Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs. 1974.46 crore (previous year Rs.1086.10 crore).

21. Tax expense for the year is Rs.35.81 crore net of deferred tax [Previous year Rs.(830.78) crore].

22. Reconciliation

23. Reconciliation of Inter Branch transactions has been completed up to the date of migration (19.02.2016) to new operating system during the year and steps for elimination of outstanding entries are in progress. The management does not anticipate any material consequential effect on reconciliation / elimination of outstanding entries.

24. During the previous year, the Bank has migrated to a new Operating System viz., ‘Finacle’ and has got the migration audit of Top 20 branches done by engaging an external consultant and has resolved the issues pointed out by them. During the course of audit certain other issues were identified, most of which also have been resolved, except with regard to balance lying in interest receivable account which has not been reconciled. Considering the nature of issues identified, there could be some more unidentified issues as well. Hence, the Management intends to conduct a comprehensive system audit in the near future to address all such issues connected therewith. However, the Management does not anticipate any material impact emanating out of such exercise on the Financial Statements of the bank.

25. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank, is being ascertained.

26. DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES

27. Qualitative Disclosure Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. The Bank also offers these products to corporate clients to enable them to manage their own currency and interest rate risk. Such transactions are entered only with Clients and Banks having agreements in place.

28. The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mis-match, for funding overseas branches etc., and also to offer derivative products on back-to-back basis to customers.

29. The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

30. The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

31. The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

32. The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

33. Derivatives are used by the Bank to hedge the Bank’s Balance sheet and offered to select corporate clients on back-to-back basis. In respect of hedge transactions the value and maturity of hedges have not exceeded that of the underlying exposures. In respect of back-to-back transactions the transactions with clients are fully matched with counter party Bank transactions and there is no uncovered exposure.

34. The income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower. In case of early termination of derivatives undertaken for customers on a back-to-back basis, income on account of such transactions will be recognized on termination.

35. All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

36. The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Risk Management policies pertaining to derivatives with particular reference to the extent to which derivatives are used, the associated risks and business purposes served. Also to include

37. The structure and organization for management of risk in derivatives trading;

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

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

40. Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts; valuation of outstanding contracts; provisioning, collateral and credit risk mitigation.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Government Securities and to reduce the cost of Subordinated Debt. In addition, the bank also enters into rupee IRS for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

41. The bank has put in place an appropriate structure and organization for management of risk, which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

42. Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

43. Derivatives are used by the bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge bank’s Balance Sheet has not exceeded that of the underlying exposure.

44. The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17- Significant Accounting Policies (Policy No.6)

DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS

45. Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17.

46. Accounting Standard 15- Employee Benefits

47. The Bank had adopted Accounting Standard 15 (Revised) “Employees Benefits” issued by the Institute of Chartered Accountants of India, with effect from 1st April, 2007.

48. The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard -15 (Revised) are as under:-

49. Defined Benefit Schemes:

Changes in the present value of the obligations

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market.

In respect of overseas branches, disclosures if any, required for Employee Benefit Schemes are not made in the absence of information.

50. The financial assumptions considered for the calculations are as under

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation (Balance sheet dated 31.03.2017).

Expected Rate of Return: The Overall expected rate of return on assets is determined based on the market prices prevailing on that date applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to the improved stock market scenario.

51. Bank’s best estimate expected to be paid in next Financial Year for Gratuity is Rs.200 Crore.

52. Accounting Standard 21 - Consolidated Financial Statements and Accounting Standard 23 - Accounting for Investments in Associates in Consolidated Financial Statements

As there is no subsidiary, no consolidated financial statement is considered necessary.

53. Accounting Standard 26 - Intangible Assets

The software acquired for core banking system is treated as intangible asset and amortised over a period of 3 years.

54. Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

Our Bank (with 35% share) has floated a Joint Venture at Malaysia along with Bank of Baroda (40%) and Andhra Bank (25%). Bank Negara, the Central Bank of Malaysia, issued the license to the Joint Venture on 16.04.2010. The Joint Venture was incorporated at Malaysia on 13.08.2010 byname INDIA INTERNATIONAL BANK (MALAYSIA) BHD (IIBM). IIBM has an Authorised Capital of MYR 500 Mio. The Joint Venture’s Paid up Capital is MYR 330 Mio. (previous year MYR 330 Mio.) Our Bank’s share in the Assigned up Capital is 35% - MYR115.500 Mio.

As on 31.3.2017, Bank has paid Rs.199.58 crore (Previous year Rs. 199.58 crore) towards 11 550 000 shares of MYR10 each aggregating to MYR115.500 Mio. The Joint Venture has commenced operations on 11.7.2012.

55. Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as ‘Corporate Assets’ and are not ‘Cash Generating Units’ as defined by AS28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

56. Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets

The guidelines issued by the Institute of Chartered Accountant of India in this respect have been incorporated at the appropriate places.

57. Additional Disclosures

58. Concentration of Deposits, Advances, Exposures and NPAs

59. Concentration of Deposits

60. Draw Down from Reserves

During the year 2016-17, Bank had made coupon payment on Additional Tier I Bonds amounting to Rs.100 Crore out of the Statutory Reserve (previous year Rs. 100 crore out of Revenue Reserve) as per the RBI circular dated 02.02.2017.

61. Unhedged Foreign Currency Exposure (UFCE)

As per RBI circular ref to RBI/2013-14/620 & RBI/2013-14/448, data relating to UFCE of borrowers from individual branches is obtained through online and consolidated working of the required additional provision and capital for Exposures to entities with Unhedged Foreign Currency Exposure is done at Risk Management Department.

The additional provision requirement for Unhedged Foreign Currency Exposure as on 31.03.2017 is Rs.11.08 Crore (As on 31.03.2016 is Rs.25.35 Crore) and the incremental RWA requirement for Unhedged Foreign Currency Exposure as on 31.03.2017 is Rs. 360.20 Crore(As on 31.03.2016 is Rs.1194.44 Crore) which is included as part of the Credit Risk Capital assessment.

---

Mar 31, 2015

1. Reconciliation

Reconciliation of Inter Bank and Inter Branch transactions has been completed up to 31.3.2015 and steps for elimination of outstanding entries are in progress. The management does not anticipate any material consequential effect on reconciliation / elimination of outstanding entries.

2. Investments

2.2 SLR Securities (domestic) under "Held to Maturity" accounted for 22.26 % (previous Year 21.69%) of Bank''s Demand and Time liabilities as at the end of March 2015 as against ceiling of 23.50% stipulated by RBI.

2.3 In respect of Held to Maturity category of Investments, premium of Rs. 88.37 Crores was amortized during the year (previous year Rs. 81.26 Crores).

2.4 Securities of Face Value for Rs. 1050 Crores (previous year Rs. 1050 Crores) towards Settlement Guarantee Fund and securities for Rs. 9455 Crores (previous year Rs. 9455 Crores) towards collateral for borrowing under Collateralized Borrowing and Lending Obligations have been kept with Clearing Corporation Of India Limited. We have placed securities of face value Rs. 2500 Crores with RBI for intra- day borrowing. We have also placed Securities to the extent Rs. 10600 Crores with Reserve Bank of India for our borrowing under the LAF window. Besides, a sum of Rs. 15 Crores (previous year Rs. 15 Crores) has been lodged with CCIL towards default fund for Forex operations.

2.5 Shares under Investments in India in Regional Rural Banks is Rs. 222,04,18,450/- (previous year Rs. 222,04,18,450/-) including amount towards share capital Deposits.

2.6 The Bank sold Government Securities from HTM category during the year, both outright and under RBI''s Open Market Operations (OMO). The extent of sale by the Bank under OMO was Rs. 20.00 Crores (BV) and earned a profit of Rs. 0.11 Crores. The Bank has also sold Government Securities (other than OMO), to the extent of Rs. 1769.86 Crores (BV) (within 5%, prescribed limit of RBI) and booked a profit of Rs. 53.69 Crores.

3. Advances

3.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the realisability of certain advances, the estimated value of security, Central Government guarantees etc. have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3.5 In terms of Reserve Bank of India Circular No. DBR No. BP BC. 79/21.04.048/2014-2015, dated March 30, 2015, the Bank has utilized Rs. 150.00 crores (22.79%) of floating provision/ countercyclical provisioning buffer of Rs. 658.22 crores held as on December 31, 2014 for meeting specific provisions for Non-performing Assets during the year ended March 31,2015.

4. Fixed Assets

4.1 During the year 2014-15, no revaluation was done for land and buildings in India.

4.2 Profit on Sale of Assets for Rs. 1.15 crore (previous year Rs. 1.87 crore), has been appropriated to Capital Reserve.

5. Rupee Interest Rate Swap

An amount of Rs. 0.99 Crores (previous year Rs. 2.33 Crores) is kept on deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging and would be recognized over the remaining contractual life of Swap or life of the Assets/Liabilities, whichever is earlier.

6. Capital and Reserves:

6.1 During the Financial Year 2014-15, Bank had issued Unsecured, Non-Convertible, Additional Tier - I, Basel III Compliant Perpetual Bonds to the extent of Rs. 1000 crore including green shoe option of Rs. 300 crore to augment additional Tier -I capital and overall capital of the Bank for further strengthening the capital adequacy required as per BASEL III norms. The Bond has a face value of Rs. 10 lac per Bond and carries a coupon of 10% per annum payable annually. The entire issue was fully subscribed by investors.

6.2 The Bank has not raised Tier II capital during the current year or in the previous year.

7. Taxes

7.1 Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs. 1031.31 crore (previous year Rs. 280.43 crore).

7.2 Tax expense for the year is Rs. 565.76 crore (Previous year Rs. 241.30 crore).

8. Unamortised Pension and Gratuity Liability

On the reopening of pension to employees of Public Sector Banks and enhancement of Gratuity limits, the Bank incurred a liability of Rs. 1005.21 crore in 2010-11. In terms of requirement of Accounting Standard (AS 15) "Employee Benefits", the entire amount of Rs. 1005.21 crore is required to be charged to Profit and Loss Account.

In terms of Reserve Bank of India circular No.DBOD. BPBC.80/21.04.018/2010-11, on Reopening of Pension Option to employees of Public Sector Banks and enhancement in Gratuity limits - Prudential Regulatory Treatment, dated 09.02.2011, Bank would amortize the amount of Rs. 1005.21 crore over a period of 5 years from 31.3.2011. Accordingly, Rs. 201.04 crore (previous year Rs. 201.04 crore) has been charged to Profit and Loss Account for the year 2014-15 and no balance amount has been carried over.

9. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank, is being ascertained.

ADDITIONAL DISCLOSURES

In accordance with the guidelines issued by Reserve Bank of India vide Master Circular dated 1.07.2014, the following additional disclosures are made:-

12.3 DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES 12.3.1 Qualitative Disclosure Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. The Bank also offers these products to corporate clients to enable them to manage their own currency and interest rate risk. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mis-match, for funding overseas branches etc., and also to offer derivative products on back-to-back basis to customers.

b) The Bank has a system of evaluating the derivatives exposure separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with the Banks and counter parties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank''s Balance sheet and offered to select corporate clients on back-to-back basis. In respect of hedge transactions the value and maturity of hedges have not exceeded that of the underlying exposures. In respect of back-to-back transactions the transactions with clients are fully matched with counter party Bank transactions and there is no uncovered exposure.

g) The Income from such derivatives are amortized and taken to profit and loss account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet Management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower. In case of early termination of derivatives undertaken for customers on a back-to-back basis, income on account of such things will be recognized on termination.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Govt. Securities and to reduce the cost of Subordinated Debt and term deposits. In addition, the Bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The Bank has put in place an appropriate structure and organization for management of risk, which includes treasury department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the Bank for trading and hedging. The Bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge Bank''s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.6)

DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS

18.1 Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies

As permitted by RBI vide its circular No. DBR. No. BR BC. 79 / 21.04.048/2014-15 dated 30.03.2015 and also in pursuance to Bank''s Board approved policy, the Bank has utilized a sum of '' 150.00 crores from Floating provisions/ Counter Cyclical Provisioning Buffer towards Specific Provisions for Non Performing Assets.

18. 2 Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17.

18. 3 Accounting Standard 15 - Employee Benefits

i) The Bank has adopted Accounting Standard 15 (Revised) "Employee Benefits" issued by the Institute of Chartered Accountants of India, with effect from 1st April 2007.

ADDITIONAL DISCLOSURES

Reserve Bank of India, Mumbai issues guidelines on Basel II Capital Adequacy Framework from time to time. In terms of the guidelines, the following disclosures are made as per the specified Formats under Pillar III requirement:

RISK MANAGEMENT

Risk taking is an integral part of the banking business. Banks assume various types of risks in its activities while providing different kinds of services based on its risk appetite. Each transaction that the Bank undertakes changes the risk profile of the Bank. In the normal course of business, a Bank is exposed to various risks including Credit Risk, Market Risk and Operational Risk. The objective of risk management is not to prohibit or prevent risk taking activity, but to ensure that the risks are consciously taken with full knowledge, clear purpose and understanding so that it can be measured and mitigated. With a view to managing such risks efficiently and strengthening its risk management systems, the Bank has put in place various risk management measures and practices which includes policies, tools, techniques, monitoring mechanism and management information systems (MIS).

The Bank, on a continuous basis, aims at enhancing and maximizing the shareholder values through achieving appropriate trade off between risks and returns. The Bank''s risk management objectives broadly cover proper identification, measurement, monitoring, control and mitigation of the risks with a view to enunciate the Bank''s overall risk philosophy. The risk management strategy adopted by the Bank is based on an understanding of risks and the level of risk appetite of the Bank. Bank''s risk appetite is demonstrated broadly through prescription of risk limits in various policies relating to risk management.

The Bank has set up appropriate risk management organization structure in the Bank. Risk Management Committee of the Board (RMCB), a sub-committee of the Board, is constituted which is responsible for management of credit risk, market risk, operational risk and other risks in the Bank. The Bank has also constituted internal risk management committees namely Credit Policy Committee (CPC) for the managing credit risk, Asset Liability Management Committee (ALCO) and ALCO Sub-committee for managing market risk, Operational Risk Management Committee for managing operational risk, Operational Risk management (Vigilance) Committee for managing fraud risk and Information Security Committee for managing Information security.

A full fledged Risk Management department is functioning at the Bank''s Central Office, independent of the business departments for implementing best risk management systems and practices in the Bank. A Chief Risk Officer in the rank of General Manager of the Bank is in charge of the department who is responsible for overall supervision on risk management in the Bank and is the convenor for all the internal risk management committees. The Mid-Office in Risk Management and Credit Support Services Dept., in particular, and other functional departments / branches in general also carry out the risk management functions and monitor the adherence/ compliance to policies, risk limit framework and internal approvals. Risk Managers have been placed at Regional Offices. Apart from coordinating with Risk Management Department, Central Office for submission of various MIS, they participate in Regional Level Credit Approval Committee.

The basic approach to manage risk more effectively lies with controlling the risk at the point of its origination. The Bank had implemented the New Capital Adequacy Framework (Basel-II) with effect from 31.3.2008 and is in compliance with the framework, in line with the guidelines issued by the RBI from time to time. Basel III guidelines have been introduced from 01.04.2013, and Bank is maintaining capital as per the guidelines. The Basel-II Framework is based on three mutually reinforcing pillars. While the first pillar of the revised framework addresses the minimum capital requirement for credit, market and operational risks, the second pillar of supervisory review process ensures that the Bank has adequate capital to address all the risks in their business commensurate with Bank''s risk profile and control environment. As per RBI''s requirement, the Bank has put in place a Board approved Policy on Internal Capital Adequacy Assessment Process (ICAAP) to address second pillar requirements. This policy aims at assessing all material risks to which the Bank is exposed over and above the regulatory prescriptions under the first pillar risks, and ensuring adequate capital structure to meet the requirements on an ongoing basis.

The Bank has formulated a "Stress Testing framework" to assess the potential vulnerability of the organization to exceptional but plausible events in line with the guidelines issued by RBI on 2nd December 2013. Stress testing and scenario analysis, particularly in respect of the Bank''s material risk exposure, enable identification of potential risks inherent in a portfolio at times of economic recession and accordingly take suitable proactive steps to address the same. In accordance with the policy prescriptions, the Bank carries out various stress tests on Bank''s balance sheet periodically and specific portfolios and places the reports to ALCO / RMCB / Board.

Board approved Business Continuity Plan and Disaster Recovery plan is in place. The 3 way data centers have been implemented to facilitate Zero data loss, Multiple MPLS-VPN high bandwidth connections at all 3 data Centres and Central, Dual connectivity from different alternate service/alternate providers and alternate media for branches have been established. Firewall and Intrusion detection systems have been implemented. Information System Security Department has been established to monitor and analyse the information security incidents to take corrective steps while IS Audit section takes care of the periodical Information Systems Audit of the Bank''s department and branches.. The Bank has fine tuned the information security systems in accordance with RBI guidelines. Regular DR drills are being conducted every quarter. To ensure Network security, periodical Vulnerability assessment and Penetration testing exercise are conducted by external experts.

The Bank is also in the process of upgrading its risk management systems and procedure for migrating to the advanced approaches envisaged under Basel II framework.

Reserve Bank of India has issued final guidelines on Liquidity Risk Management effective from March 2013. The guideline covers preparation and submission of consolidated Bank operations including domestic operations and overseas operations separately at various frequencies. The Bank has put in place system and procedure in place in this regard in compliance with the RBI guidelines.

Reserve Bank of India has issued guidelines on implementation of Basel III capital regulations in India to be implemented in phased manner effective from April 1,2013 with Banks disclosing

Basel III capital ratios from the quarter ending June 30, 2013. The Bank is complying with the same.

The third pillar of Basel-II framework refers to market discipline. The purpose of market discipline is to complement the minimum capital requirements detailed under Pillar 1 and the supervisory review process detailed under Pillar 2. In this context and as guided by RBI a set of disclosure (both qualitative and quantitative) are published in DF 1 to 11 (annexed) with regard to risk management in the Bank, which will enable market participants to assess key pieces of information on the (a) scope of application (DF-1), (b) Capital Adequacy (DF-2), (c) Credit

Risk: General Disclosures for all Banks (DF-3), (d) Credit Risk: Disclosures for Portfolios subject to the Standardised Approach (DF-4), (e) Credit Risk Mitigation: Disclosures for Standardised Approaches (DF-5), (f) Securitisation Exposures: Disclosure for Standardised Approach (DF-6), (g) Market Risk in Trading Book (DF-7), (h) Operational Risk (DF-8), (i) Interest Rate Risk in the Banking Book (IRRBB) (DF-9), (j) General Disclosure for Exposures Related to Counter Party Credit Risk (DF-10) and (k) Composition of Capital (DF-11). This would also provide necessary information to the market participants to evaluate the performance of the Bank in various parameters.

f. Any restrictions or impediments on transfer of funds or regulatory capital within the Banking Group: Not applicable

Table DF - 2: Capital Adequacy Qualitative disclosures:

Banks in India implemented capital adequacy measures in April 1992 based on the capital adequacy framework (Basel-I) issued by the Basel Committee on Banking Supervision (BCBS) and the guidelines issued by Reserve Bank of India (RBI) from time to time. Such a measure was taken in order to strengthen the capital base of Banks and at the same time to make it compliant with the international best practices in the matter of maintaining capital adequacy. Initially the Basel framework addressed the capital for credit risk, which was subsequently amended to include capital for market risk. In line with the guidelines issued by the RBI the Bank was compliant with the relevant guidelines.

Subsequently, the BCBS released the "International Convergence of Capital Measurement and Capital Standards: A Revised Framework" on June 26, 2004. The Revised Framework was updated in November 2005 to include trading activities and the treatment of double default effects and a comprehensive version of the framework was issued in June 2006. Based on these guidelines and to have consistency and to be in harmony with international standards, the RBI has issued guidelines on 27th April 2007 and subsequent amendments on implementation of the New Capital Adequacy (Basel-II) Framework from time to time.

In line with the RBI guidelines, the Bank had migrated to the revised (Basel-II) framework from 31.3.2008 and continues to be compliant with the requirements of Basel-II framework.

Basel-II Framework provides a range of options for determining the capital requirements for credit risk, market risk and operational risk. The Framework allows Banks and supervisors to select approaches that are most appropriate for their operations and financial markets. In accordance with the RBI''s requirements, the Bank has adopted Standardised Approach (SA) for credit risk, Standardised Measurement Method (SMM) for market risks and Basic Indicator Approach (BIA) for Operational Risk to compute capital. The Bank is maintaining capital for Credit, Market and Operational Risk in line with the RBI guidelines in this regard.

The Bank has computed capital for market risk and operational risk as per the prescribed guidelines at the Bank''s Central Office, based on the relevant data. In computation of capital for Credit risk under Standardized Approach, the Bank has relied upon the borrower-wise data captured from each individual branch besides portfolios held at Central Office of the Bank. In all loan types, the credit risk capital computation is done on borrower basis or facility type basis as per the segmentation advised in the RBI guidelines. For this purpose, the Bank has developed in-house software, which enables computation of capital for credit risk of the advances portfolio of the branches and generation of the requisite reports at the Branch level, Regional Office level and Central Office level through CBS System. Necessary training is imparted to the field staff periodically on various aspects of capital computation and close interactions held with the coordinators at Regional Offices, to ensure accuracy and adequacy of data in capital computation.

Banks generally use a number of techniques to mitigate the credit risk to which they are exposed. The Bank has also used the Credit Risk Mitigation in computation of capital for credit risk in order to get capital relief. A well articulated policy on Collateral

Management and Credit Risk Mitigation duly approved by the Bank''s Board is put in place. The Bank has followed the RBI guidelines in force to arrive at the credit risk mitigation, risk weighted assets, eligible capital and Capital to Risk Weighted Assets Ratio (CRAR).

RBI has prescribed that Banks are required to maintain a minimum total capital (MTC) of 9% of total risk weighted assets (RWAs) i.e. capital to risk weighted assets (CRAR). The framework issued by RBI prescribes maintenance of a minimum Tier-1 CRAR of 7% with a minimum CET 1 of 5.5%. Total Capital (Tier 1 Capital plus Tier 2 Capital) must be at least 9% of RWAs on an ongoing basis. Thus, within the minimum CRAR of 9%, Tier 2 capital can be admitted maximum up to 2%.

The Bank has put in place a policy on Internal Capital Adequacy Assessment Process (ICAAP) and the framework in consideration of the relevant risk factors of the Bank as a measure towards adequacy of capital available to meet the residual risk as part of Pillar 2 requirements of the revised framework commensurate with the Bank''s overall risk profile. In framing the policy the Bank has taken into consideration the requirements prescribed by the RBI in their guidelines and Bank''s risk appetite.

As regards the adequacy of capital to support the future activities, the Bank draws assessment of capital requirements periodically taking into account future growth of business. The surplus CRAR maintained by the Bank acts as a buffer to support the future activities. Moreover, the headroom available to the Bank in the Tier-1 and Tier-2 capital components provides additional capital support to meet the future needs. Thereby, the capital risk of the Bank is adequately addressed. Government of India, which is the major share holder in the Bank, has been subscribing fresh capital to augment capital adequacy. In future, the Bank shall take suitable steps to augment the capital by retention of earnings and through infusion of fresh capital from the market depending upon the market conditions in order to meet the Basel III requirements.

As part of Basel III framework RBI has introduced Leverage Ratio concept. The leverage ratio is the ratio of Tier-1 capital (Common Equity Additional Tier I) and total exposure (as defined under Basel III). The leverage ratio has to be maintained on a quarterly basis. The basis for calculation at the end of each quarter is "based on the definition of capital (the capital measure) and total exposure (the exposure measure). Banks operating in India are required to make disclosure of the leverage ratio on quarterly basis and its components from April 1,2015 on a quarterly basis as per the templates given. First disclosure required to be made for the quarter ending June 30, 2015.

RBI has issued guidelines on two minimum standards viz. Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) for funding liquidity. The LCR promotes short term resilience of Banks to potential liquidity disruptions by ensuring that Bank have sufficient high quality liquid assets (HQLA) to survive an acute stress scenario lasting for 30 days. The NSFR promotes resilience over longer term time horizons by requiring Banks to fund their activities with more stable sources of funding on an ongoing basis. The LCR and NSFR requirement would be binding on Banks from January 1,2015 and January 1, 2018 respectively. With a view to provide transition time for Banks, the requirement would be minimum of 60% for the calendar year 2015 i.e with effect from January 1,2015 and rise in equal steps to reach the minimum required level of 100% on January 1, 2019 as per the time line given below:

Table DF-3

CREDIT RISK: GENERAL DISCLOSURES FOR ALL BANKS Qualitative disclosures:

Credit Risk is the possibility of losses associated with diminution in the credit quality of borrowers or counter parties. In a Bank''s portfolio, Credit Risk arises mostly from lending and investment activities of the Bank if a borrower / counterparty is unable to meet its financial obligations to the lender/investor. It emanates from changes in the credit quality/worthiness of the borrowers or counter parties. Credit risk also includes counterparty risk and country risk.

Credit rating and Appraisal Process:

The Bank manages its credit risk through continuous measuring and monitoring of risks at obligor (borrower) and portfolio level. The Bank has a robust internal credit rating framework and well- established standardized credit appraisal / approval process. Credit rating is a facilitating process that enables the Bank to assess the inherent merits and demerits of a proposal. It is a decision enabling tool that helps the Bank to take a view on acceptability or otherwise of any credit proposal.

The rating models factor quantitative and qualitative attributes relating to Risk components such as Industry Risk, Business Risk, Management Risk, Financial Risk, Project risk (where applicable) and Facility Risk etc. The data on industry risk is regularly updated based on market conditions.

Credit rating as a concept has been well internalized within the Bank. As a measure of robust credit risk management process, the Bank has implemented a tiered system for validation of credit ratings at specified levels which is independent of credit departments, in order to draw unbiased rating for borrowers necessary for moving to advanced approaches. In respect of proposals falling under powers of Bank''s Central Office, the validations of ratings are done at Risk Management Dept. The advantage of credit rating is that it enables to rank different proposals based on risk and do meaningful comparisons.

The Bank follows a well-defined multi layered discretionary power structure for sanction of loans and advances. Approval Grid has been constituted at all levels covering Exceptionally Large branch / RO / CO for recommending fresh/enhancement proposal to appropriate sanctioning authorities. Specific Sanctioning Powers have been delegated to Branch Managers. In addition to the Management Committee of the Board (MCB), the Bank has constituted three committees such as (a) Credit Approval Committee (CAC) headed by MD & CEO, (b) Head Office Level Credit Approval Committee headed by Executive Director (HLCCED) and (c) Head Office Level Credit Approval Committee headed by senior most General Manager (HLCCGM) with delegated powers to consider sanction of credit proposals falling under Central Office powers at different levels. Further, Zonal Level Credit Committees (ZLCC) headed by the Zonal Head and Regional Level Credit Committees (RLCC) headed by the Regional Head have also been formed at all Zonal Offices and Regional Offices with suitable delegated power for sanction of credit proposals. Consequently, no Executives beyond Branch Heads exercise any discretionary powers for sanction of credit proposals at individual level.

The new products introduced by Bank are examined by the head office level risk management committee depending upon the type of risks involved in the new product / process before being placed to RMCB/Board for approval.

Credit Risk Management Policies

The Bank has put in place a well-structured loan policy and credit risk management policy duly approved by Board. The policy document defines organizational structure, role and responsibilities and processes whereby the Credit Risk carried by the Bank can be identified, quantified and managed within the framework that the Bank considers consistent with its mandate and risk tolerance. Credit risk is monitored by the Bank on a Bank-wide basis and compliance with the risk limits approved by Board / RMCB is ensured. The CPC takes into account the risk tolerance level of the Bank and accordingly handles the issues relating to Safety, Liquidity, Prudential Norms and Exposure limits.

The Bank has taken earnest steps to put in place best credit risk management practices in the Bank. In addition to Loan Policy and Credit Risk Management Policy, the Bank has also framed Funds and Investment Policy, Counter Party Risk Management Policy and Country Risk Management Policy etc., which forms integral part of monitoring of credit risk in the Bank. Besides, the Bank has implemented a policy on collateral management and credit risk mitigation which lays down the details of securities (both prime and collateral) normally accepted by the Bank and administration of such securities to protect the interest of the Bank. Presently, some select securities act as mitigation against credit risk (in capital computation), to which the Bank is exposed.

Credit Monitoring/Loan Review/Credit Audit

The Credit Monitoring Department monitors the quality of Credit portfolio, identifies problems and takes steps to correct deficiencies. The objective of the department is to minimize slippage of performing accounts to NPA category and also to comply with the laid down norms and guidelines. The department is also micro monitoring the accounts by segmentation and follow up the accounts on a daily basis to minimize slippages. Furthermore, the accounts are also monitored at different levels of authority depending upon the size of the exposure.

All standard borrowal accounts with credit exposure of Rs.1 crore and above are reviewed under Loan Review Mechanism, which is essentially an off-site audit mechanism. The credit audit is carried out in terms of Guidance Note on Credit Risk issued by Reserve Bank of India and the Credit Risk Management Policy of the Bank.

The credit audit covers all borrowal accounts with total exposure of Rs. 5 crore and above sanctioned by any authority. This is an ongoing exercise which helps the Bank to identify deficiencies and early warning signals of sickness/weakness in borrowal accounts. Essentially this is an onsite audit mechanism to prevent deterioration in the quality of advances thereby protecting the interest of the Bank. The Bank also maintains surveillance on the accounts with working capital exposure of Rs. 1.00 Cr and above by calling for Continuous Surveillance statements.

Classification of restructured accounts:

The Bank has followed the prudential guidelines issued by the RBI in respect of classification and provisioning for restructured accounts from time to time.

CREDIT RISK: DISCLOSURES FOR PORTFOLIOS SUBJECT TO THE STANDARDISED APPROACH

Qualitative disclosures:

General Principle:

In accordance with the RBI guidelines, the Bank has adopted Basel II Capital Adequacy Framework for computation of capital for credit risk. In computation of capital, the Bank has assigned risk weight to different asset classes as prescribed by the RBI from time to time.

In computation of capital for Credit risk under Standardised Approach, individual exposures are captured. Where the exposures are fully secured such as Jewel Loans, Loans against Term deposits/approved insurance policies etc, these loans are fully netted against available credit risk mitigants (CRM), as the mitigation higher than the exposure is available after applying the applicable hair cut due to higher margin prescription.

External Credit Ratings:

Ratings of borrowers by External Credit Rating Agencies (ECRA) assume importance in the light of Guidelines for implementation of the Basel II Capital Adequacy Framework. Exposures on Corporates / Public Sector Enterprises/ Primary Dealers are assigned with risk weights based on available external ratings. For this purpose, the Reserve Bank of India has permitted Banks to use the ratings of six domestic ECRAs viz. Credit Analysis and Research Ltd (CARE), CRISIL Ltd, FITCH India (renamed as India Ratings) and ICRA Ltd, Brickworks Rating Services India Ltd and Small and Medium Enterprises Rating Agency Ltd (SMERA)

In consideration of the above, the Bank has decided to accept the ratings assigned by all these ECRAs for capital relief purpose. The RBI has provided for mapping public issue ratings on to comparable assets into banking book. However, this particular provision has not been taken into account in Credit Risk Capital Computation.

The Bank uses only solicited external ratings for capital computation purpose. Borrowers at their option can approach any one or more of the above ECRAs for their rating. External ratings assigned fresh or reviewed during the previous 15 months are reckoned for capital computation by the Bank. Wherever a borrower possesses more than one rating from ECRAs the guidelines prescribed by the RBI are followed as regards to assignment of risk weight for computation of capital.

Internal Credit Rating:

The Bank has a well structured internal credit rating mechanism to evaluate the credit risk associated with a borrower and accordingly the systems are in place for taking credit decision as regards the acceptability of proposals and level of exposures and pricing. The Bank has prescribed entry level rating in case of new accounts. Accounts with ratings below the entry level can be considered only by higher authorities as per the delegated powers prescribed.

Presently, the internal ratings cannot be used for application of risk weight under Standardised Approach of capital computation. The Bank takes into consideration the borrower''s loan exposure credit ratings assigned by the approved ECRAs while computing the capital for credit risk as on 31.3.2015 under corporate and PSE segments.

In case of investment in particular issues of Corporates / PSEs, the issue specific rating of the approved ECRAs are reckoned and accordingly the risk weights have been applied after a corresponding mapping to rating scale provided in RBI guidelines.

For the purpose of capital computation of overseas exposures, ratings assigned by the international rating agencies namely Fitch, Moody''s and Standard & Poor''s are used as per RBI guidelines.

As regards the coverage of exposures in India by external ratings as relevant for capital computation under Standardised Approach, the process needs to be popularized among the borrowers so as to take the benefit of capital relief available for better-rated customers. The borrowers need to consider the external rating as an opportunity for their business development, which would take some time.

CREDIT RISK MITIGATION: DISCLOSURES FOR

STANDARDISED APPROACHES

Qualitative disclosures:

Policy on Credit Risk Mitigation:

In line with the regulatory requirements, the Bank has put in place a well-articulated policy on collateral management and credit risk mitigation techniques duly approved by the Bank''s Board. The Policy lays down the type of securities normally accepted by the Bank for lending and administration/ monitoring of such securities in order to safeguard /protect the interest of the Bank so as to minimize the risk associated with it.

The main types of securities (both prime and collateral) accepted by the Bank includes Bank''s own deposits, Gold/ Ornaments, Kisan Vikas Patras, Shares and debentures, Central and State Govt. securities, Life Insurance Policies, Mutual Fund units, Immovable Properties, Plant and Machinery, Goods and Merchandise, Documents of Title to Goods, Book debts, Vehicles and other moveable assets etc. The Bank has also framed a well- defined policy on valuation of immovable properties and Plant and Machineries duly approved by Board.

Credit Risk Mitigation under Standardised Approach:

(a) Eligible Financial Collaterals:

As advised by RBI, the Bank has adopted the comprehensive approach relating to credit risk mitigation under Standardised Approach, which allows fuller offset of securities (prime and collateral) against exposures, by effectively reducing the exposure amount by the value ascribed to the securities. Thus the eligible financial collaterals are fully made use of to reduce the credit exposure in computation of credit risk capital. In doing so, in line with RBI guidelines, the Bank has recognized specific securities viz (a) cash/Bank deposits (b) gold/ornaments (c) life insurance policies (d) kisan vikas patras (after a lock in period of 2 1h years).

(b) On Balance Sheet Nettings:

As per Bank''s policy on utilization of the credit risk mitigation techniques and collateral management, on-balance sheet netting has been reckoned to the extent of deposits available against loans/advances of the borrower (maximum to the extent of exposure), where Bank has legally enforceable netting arrangements involving specific lien with proof of documentation as prescribed by RBI. In such cases, the capital computation is done on the basis of net credit exposure.

(c) Eligible Guarantees:

Other approved form of credit risk mitigation is availability of "Eligible Guarantees", in computation of credit risk capital, types of guarantees recognized as mitigation, in line with RBI guidelines are (a) Central Government (0%) (b) State Government (20%), (c) CGTMSE (0%) (d) ECGC (20%) (e) Banks in the form of Bills Purchased/discounted under Letters of Credit (both domestic and foreign Banks as per guidelines).

The Bank has ensured compliance of legal certainty as prescribed by the RBI in the matter of credit risk mitigation.

Concentration risk in credit risk mitigation:

Policies and process are in place indicating the type of mitigants the Bank use for capital computation under the Standardised approach. All types of securities (financial collaterals) eligible for mitigation are easily realizable financial securities. As such, the Bank doesn''t envisage any concentration risk in credit risk mitigation used and presently no limit/ceiling has been prescribed for the quantum of each type of collateral under credit risk mitigation.

Market Risk in Trading Book:

Qualitative disclosure:

Market Risk:

Market Risk is defined as the possibility of loss to a Bank in on & off-balance sheet position caused by changes/movements in market variables such as interest rate, foreign currency exchange rate, equity prices and commodity prices. Bank''s exposure to market risk arises from domestic investments (interest related instruments and equities) in trading book (Both AFS and HFT categories), the Foreign Exchange positions (including open position, if any, in precious metals) and trading related derivatives. The objective of the market risk management is to minimize the impact of losses on earnings and erosion of equity capital arising from market risk.

Policies for management of market risk:

The Bank has put in place Board approved Market Risk Management Policy and Asset Liability Management (ALM) policy for effective management of market risk in the Bank. Other policies which also deal with market risk management are Funds Management and Investment Policy, Derivative Policy, Risk

Management Policy for forex operations and Stress testing policy. The market risk management policy lays down well defined organization structure for market risk management functions and processes whereby the market risks carried by the Bank are identified, measured, monitored and controlled within the ALM framework, consistent with the Bank''s risk tolerance. The policies set various risk limits for effective management of market risk and ensuring that the operations are in line with Bank''s expectation of return to market risk through proper Asset Liability Management. The policies also deal with the reporting framework for effective monitoring of market risk.

The ALM policy specifically deals with liquidity risk management and interest rate risk management framework. As envisaged in the policy, liquidity risk is managed through GAP analysis based on residual maturity/behavioral pattern of assets and liabilities on daily basis based on best available information data coverage as prescribed by RBI. The liquidity risk through Structural Liquidity statement was hither too reported to RBI for domestic operation while the same was managed separately at each overseas center and placed to ALCO for control purpose in the past. However as per recent RBI circular, w.e.f March 2013 onwards the liquidity risk is to be computed and submitted to RBI in rupee and foreign currency for domestic operations, overseas centers and consolidated for Bank operations at various frequencies.

The Bank has put in place mechanism of short-term dynamic liquidity management and contingent funding plan. Prudential (tolerance) limits are prescribed for different residual maturity time buckets for efficient asset liability management. Liquidity profile of the Bank is evaluated through various liquidity ratios. The Bank has also drawn various contingent measures to deal with any kind of stress on liquidity position. Bank ensures adequate liquidity management by Domestic Treasury through systematic and stable funds planning.

Interest rate risk is managed through use of GAP analysis of rate sensitive assets and liabilities and monitored through prudential (tolerance) limits prescribed for global operations. The Bank estimates earnings at risk for domestic operations and modified duration gap for global operations periodically for assessing the impact on Net Interest Income and Economic Value of Equity with a view to optimize shareholder value.

The Asset-Liability Management Committee (ALCO) / Board monitors adherence to prudential limits fixed by the Bank and determines the strategy in the light of the market conditions (current and expected) as articulated in the ALM policy. The mid- office monitors adherence to the prudential limits on a continuous basis. ALCO subcommittee which meets twice a week analyze the liquidity position, decide on price for bulk deposits and assess contingency funding requirement which is reported to ALCO in the subsequent meeting.

Operational Risk Qualitative disclosures:

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Operational risk includes legal risk but excludes strategic and reputation risk.

Policies on Management of Operational risk:

The Bank has framed operational risk management policy duly approved by the Board. Other policies adopted by the Board which deal with management of operational risk are (a) Information Systems security policy (b) forex risk management policy (c) Policy document on know your customer (KYC) and Anti-Money Laundering (AML) procedures (d) Business Continuity and Disaster Recovery Plan (BC-DRP) (e) compliance policy and (f) policy on outsourcing of Financial Services.

The operational risk management policy adopted by the Bank outlines organization structure and detailed processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk management processes of the Bank by clearly assigning roles for effectively identifying, assessing, monitoring and controlling or mitigating operational risk and by timely reporting of operational risk exposures including material operational losses. Operational risks in the Bank are managed through comprehensive and well-articulated internal control framework.

The Bank has got embodied in its Book of Instructions well-defined systems and procedures for various operations. The Bank has issued detailed guidelines for handling computerized operations and a system of EDP audit is in place to ensure adherence to the laid down systems and procedures. The Bank has clear guidelines as to the role functions of various levels of employees. A training system with provision for giving specialized training in credit /forex and other functional areas is in place. Conduct rules and service regulations for all the employees are also in place.

Various internal and external audit systems are in place to ensure that laid down systems and procedures are followed and timely actions are initiated for rectifying the deficiencies.

The Bank has put in place Compliance Policy duly approved by Board. In terms of the RBI guidelines on compliance functions in Banks, the Bank has established separate "Compliance Department" in C.O. independent of business group. Compliance officers are designated in each branch /department/office to monitor the level of compliance. The methodologies and system have been devised and put in place for assessment of level of compliance. Reporting systems on compliance function have been devised and put in place.

In line with the final guidelines issued by RBI, our Bank is adopting the Basic Indicator Approach for computing capital for operational risk. As per the guidelines the Banks must hold capital for operational risk equal to 15% of positive average annual gross income over the previous three years as defined by RBI

Table DF -9 Interest rate risk on the Banking Book: Qualitative disclosures:

Interest rate risk is the risk where changes in the market interest rates might affect a Bank''s financial condition. Changes in interest rates may affect both the current earnings (earnings perspective) as also the net worth of the Bank (economic value perspective). The risk from earnings perspective can be measured as impact on the Net Interest Income (NII) or Net Interest Margin. Similarly the risk from economic value perspective can be measured as drop in Economic Value of Equity.

The Bank identifies the risks associated with the changing interest rates on its on-balance sheet and off-balance sheet exposures in the Banking book from a short term (Earnings perspective) and long term Economic Value Perspective. The impact on income (Earnings Perspective) for domestic operations is measured through use of GAP analysis by applying notional rate shock ranging from 25bps to 200bps as prescribed in the Bank''s ALM Policy over one year horizon. Prudential limits have been prescribed for such impacts as a percentage of Net Interest Income of the Bank and in absolute terms and the same is monitored periodically. For the calculation of impacts on earnings, the Traditional GAP Analysis for domestic operation is taken from the Rate Sensitivity Statement and based on the remaining period from the mid point of a particular bucket the impact for change in interest rate up to 200 bps is arrived at. The same is reported to Board and ALCO periodically along with the Rate Sensitivity Statement. The limits are fixed on the basis of previous year''s Net Interest Income (NII) duly approved by Board.

The Bank has adopted traditional GAP analysis combined with duration GAP analysis for assessing the impact (as a percentage) on the Economic Value of Equity (Economic Value Perspective) on global operations by applying a notional interest rate shock of 200 bps over a time horizon of one year. For the purpose a limit of ( /-) 1.00% for modified duration gap is prescribed in the Bank''s ALM policy and the position is monitored periodically.

The Bank calculates Duration GAP and the impact on Economic Value of Equity on a monthly basis. Assets and liabilities are grouped as per rate sensitivity statement and bucket-wise modified duration is computed for these groups of Assets and Liabilities using common maturity, coupon and yield parameters. Wherever possible, the Modified Duraton is calculated on individual item wise. In case of non maturity deposits, the Bank has conducted behavioural studies as prescribed by RBI to have a realistic assessment of the interest rate sensitivity.

The Bank is computing the interest rate risk position in each currency applying the Duration Gap Analysis (DGA) and Traditional GAP Analysis (TGA) to the Rate Sensitive Assets (RSA)/ Rate Sensitive Liabilities (RSL) items in that currency, where either the assets, or liabilities are 5 per cent or more of the total of either the Bank''s global assets or global liabilities. . The interest rate risk positions in all other residual currencies are computed separately on an aggregate basis.

The quarterly returns are submitted within 21 days from the end of the quarter and monthly returns within 15 days from the end of the month to RBI as per guidelines.

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Mar 31, 2014

1. Reconciliation

Reconciliation of Inter Bank and Inter Branch transactions has been completed up to 31.3.2014 and steps for elimination of outstanding entries are in progress. The management does not anticipate any material consequential effect on reconciliation / elimination of outstanding entries.

2. Investments

2.1 In accordance with the Reserve Bank of India (RBI) guidelines, the Investments Portfolio of the Bank (domestic) has been classified into three categories, as given below: -

2.2 SLR Securities under "Held to Maturity" accounted for 21.69% (previous year 22.92%) of Bank''s Demand and Time liabilities as at the end of March 2014, as against the ceiling of 24.50% stipulated by RBI.

2.3 In respect of Held to Maturity category of Investments, premium of Rs.81.26 crore was amortised during the year (Previous year Rs.57.52 crore).

2.4 Securities of face value for Rs.1050 crores (previous year Rs.450 crore) towards Settlement Guarantee Fund and securities for Rs.9455 crore (previous year Rs.8455 crore) towards collateral for borrowing under Collateralised Borrowing and Lending Obligations have been kept with Clearing Corporation of India Limited. We have placed securities of face value Rs.3000 crore with RBI for intraday borrowing. We have also placed securities to the extent of Rs.10350 crore (including MSF of Rs.4342 crores) with Reserve Bank of India for our borrowing under the LAF window. Besides, a sum of Rs.15 crore (previous year Rs.15 crore) have been lodged with CCIL towards Default Fund for forex operations.

2.5 Shares under Investments in India in Regional Rural Banks is Rs. 222.04 crore (Previous year Rs.222.04 crore) includes amount towards share capital Deposits.

2.6 The Bank sold Government Securities from HTM category during the year, both outright and under RBI''s Open Market Operations (OMO). The total notified amount of buy back was Rs.81000 crore (previous year Rs. 138000 crore). The extent of sale by the Bank was Rs.2987.03 crore (previous year Rs.4430 crore), book value (BV) and earned a profit of Rs.120.62 crore (previous year Rs.34.55 crore).

2.7 On the settlement date of 15.04.2013 there was a SGL bouncing, due to technical reasons, attracting default charges of 0.03 crores from CCIL (without any monetary penalty by RBI).

3. Advances

3.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the realisability of certain advances, the estimated value of security, Central Government guarantees etc. have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3.5 In terms of Reserve Bank of India Circular No. DBOD No. BP.95/21.04.048/2013-14 dt. February 7, 2014, the Bank has utilized Rs. 324.20 crores (33%) of floating provision/ countercyclical provisioning buffer of Rs.988.42 Crore held as on March 31, 2013, for meeting specific provisions for Non-performing Assets during the year ended March 31, 2014.

4. Fixed Assets

4.1 During the year 2013-14, land and buildings in India, were revalued through approved valuers and Rs.844.94 crore added to the carrying value of assets on account of such revaluation.

4.2 Profit on Sale of Assets for Rs.1.87 crore (previous year Rs.0.82 crore), has been appropriated to Capital Reserve.

5. Rupee Interest Rate Swap

An amount of Rs.2.33 crore (previous year Rs.3.83 crore) is held kept on deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging and would be recognized over the remaining contractual life of swap or life of the assets/liabilities, whichever is earlier.

6. Capital and Reserves:

6.1 During the Financial Year 2013-14, Bank has issued 22,97,53,015 Equity Shares, of face value Rs.10/- each, at the rate of Rs.52.23 per equity share (including premium of Rs. 42.23 per equity share) aggregating to Rs.1199,99,99,973.45 (Rupees one thousand one Hundred and ninety nine crore ninety nine lac ninety nine thousand nine hundred and seventy three and paise forty five only) on 18.12.2013 to Government of India on Preferential Basis and 8,15,00,000 Equity shares, of face value Rs.10/- each, at the rate of Rs.48.84 per equity share (including premium of Rs.38.84 per equity share) aggregating to Rs.398,04,60,000 (Rupees three hundred and ninety eight crore four lac sixty thousand only)on 10.03.2014 to Life Insurance Corporation of India on Preferential Basis. Hence, the Paid-up Capital of the bank has increased from Rs.924.10 crore to Rs.1235.35 crore and Government of India''s shareholding has increased from Rs.681.96 crore (73.80%) to Rs. 911.71 crore (73.80%), retaining their holding level at 73.80% as on 31.03.2014.

6.2 The Bank has not raised Tier II capital during the current year or in the previous year.

6.3 The Bank has created a deferred tax liability for Rs 175.72 crore, by debiting general reserve, during the current financial year, on special reserve created under section 36(1)(viii) of Income tax Act, 1961 in compliance with RBI circular DBOD No BP.BC.72/21.04.018/2013-14 dated 20.03.2014.

7. Taxes

7.1 Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs.280.43 crore (previous year Rs.1208.42 crore).

7.2 Tax expense for the year is Rs.241.30 crore (Previous year Rs. 180.25 crore).

8. Unamortised Pension and Gratuity Liability

On the reopening of pension to employees of Public Sector Banks and enhancement of Gratuity limits, the Bank incurred a liability of Rs. 1005.21 crore in 2010-11. In terms of requirement of Accounting Standard (AS 15) "Employee Benefits", the entire amount of Rs.1005.21 crore is required to be charged to Profit and Loss Account.

In terms of Reserve Bank of India circular No.DBOD. BP.BC.80/21.04.018/2010-11, on Reopening of Pension Option to employees of Public Sector Banks and enhancement in Gratuity limits - Prudential Regulatory Treatment, dated 09.02.2011, Bank would amortise the amount of Rs.1005.21 crore over a period of 5 years from 31.3.2011. Accordingly, Rs.201.04 crore (previous year Rs.201.04 crore) has been charged to Profit and Loss Account for the year 2013-14 and the balance amount of Rs.201.05 crore has been carried over. Had the RBI not issued such a circular, the Revenue Reserves of the Bank would have been lower by Rs.201.05 crore pursuant to application of the requirements of AS-15.

9. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank, is being ascertained.

ADDITIONAL DISCLOSURES

In accordance with the guidelines issued by Reserve Bank of India vide Master Circular dated 01.07.2013, the following additional disclosures are made:-

10.DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES

10.1 Qualitative Disclosure

Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. The Bank also offers these products to corporate clients to enable them to manage their own currency and interest rate risk. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/ Exchange rates that arise on account of overseas borrowing/FCNR(B) portfolio/the asset liability mis- match, for funding overseas branches etc., and also to offer derivative products on back- to- back basis to customers.

b) The Bank has a system of evaluating the derivatives exposures separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring and appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank''s Balance sheet and offered to select corporate clients on back-to-back basis. In respect of hedge transactions the value and maturity of hedges has not exceeded that of the underlying exposure. In respect of back-to- back transactions the transactions with clients are fully matched with counter party Bank transactions and there is no uncovered exposure.

g) The income from such derivatives are amortized and taken to Profit and Loss Account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets/liabilities whichever is lower. In case of early termination of derivatives undertaken for customers on a back- to- back basis, income on account of such things will be recognized on termination.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Govt. Securities and to reduce the cost of Subordinated Debt and term deposits. In addition, the Bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The Bank has put in place an appropriate structure and organization for management of risk, which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the Bank for trading and hedging. The Bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge Bank''s Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.6)

11. DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS

11.1 Accounting Standard 5 - Net Profit or Loss for the period, prior period items and changes in accounting policies

As permitted by RBI vide its circular No. DBOD.BP.95/21.04.048./2013/14 Dt. 07.02.2014 and also in pursuance to Bank''s Board approved policy, the Bank has utilized a sum of Rs.324.20 crores from Floating provisions/ Counter Cyclical Provisioning Buffer towards Specific Provisions for Non Performing Assets.

11.2 Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in item No. 2 of Significant Accounting Policies - Schedule 17.

11.3 Accounting Standard 15 - Employee Benefits

i) The Bank has adopted Accounting Standard 15 (Revised) "Employee Benefits" issued by the Institute of Chartered Accountants of India, with effect from 1 st April 2007.

ii) The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with the Accounting Standard-15 (Revised) are as under:

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market.

In respect of overseas branches, disclosures if any, required for Employee Benefit Schemes are not made in the absence of information.

(b) The financial assumptions considered for the calculations are as under:-

Discount Rate: - The discount rate has been chosen by reference to market yield on Government bonds as on the date of valuation. (Balance sheet dated 31.03.2014)

Expected Rate of Return: In case of Pension the expected rate of return is taken on the basis of yield on Government bonds. In case of gratuity, the actual return has been taken.

Salary Increase: On the basis of past data.

(c) Bank''s best estimate expected to be paid in the next Financial Year for Gratuity is Rs.165 crore.

11.4 Accounting Standard 17 - Segment Reporting

The Bank has adopted Reserve Bank of India''s revised guidelines issued in April 2007 on Segment Reporting in terms of which the reportable segments have been divided into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations.

11.5 Accounting Standard 21 - Consolidated Financial Statements (CFS)

As there is no subsidiary, no consolidated financial statement is considered necessary.

11.6 Accounting Standard 23 - Accounting for Investments in Associates in Consolidated Financial Statements

As there is no subsidiary, no consolidated financial statement is considered necessary.

11.7 Accounting Standard 26 - Intangible Assets

The application software in use in the Bank has been developed in-house and has evolved over a period of time. Hence, the costs of software is essentially part of Bank''s operational expenses like wages etc. and as such are charged to the respective heads of expenditure in the Profit and Loss Account.

11.8 Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

Our Bank (with 35% share) has floated a Joint Venture at Malaysia along with Bank of Baroda (40%) and Andhra Bank (25%). Bank Negara, the Central Bank of Malaysia, issued the license to the Joint Venture on 16.04.2010. The Joint Venture was incorporated at Malaysia on 13.08.2010 by name INDIA INTERNATIONAL BANK (MALAYSIA) BHD (IIBM). IIBM has an Authorised Capital of MYR 500 Mio. The Joint Venture''s Assigned Capital is MYR 320 Mio. Our Bank''s share in the Assigned up Capital is 35% - MYR112.000 Mio.

As on 31.03.2014, Bank has paid Rs.193.20 crore towards 11200000 shares of MYR 10 each aggregating to MYR 112.00 Mio. The Joint Venture has commenced operations on 11.07.2012.

11.9 Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as ''Corporate Assets'' and are not ''Cash Generating Units'' as defined by AS28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

11.10 Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountants of India in this respect have been incorporated at the appropriate places.

12 Additional Disclosures

12.1 Concentration of Deposits, Advances, Exposures and NPAs

12.2 Provisions and Contingencies - Break-up (Rs.. In Crore)

Break up of ''Provisions and Contingencies'' shown under the head Expenditure in Profit and Loss Account

2013-14 2012-13

Provisions for depreciation on Investment 453.53 175.10

Provision towards NPA 2210.80 2198.82

Provision towards Standard Assets 246.13 259.18

Provision made towards Income Tax (including Deferred Tax & Wealth Tax) 241.30 180.25

Other Provision and Contingencies 243.74 436.43

Total 3395.50 3249.78

During the year 2009-10, the Bank has issued a Letter of Comfort (LOC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch and to arrange to convert retained earnings to capital funds and/ or infuse further capital in order to restore the CRAR to a minimum of 12% subject to approval from RBI.

In the worst case scenario of the entire textile exposure of the branch becoming NPA, we may have to make additional provision to the extent of THB 311.613 mio being unsecured portion of standard textile advances. If this contingency arises, there would be no additional capital to be remitted as existing reserves are adequate to cover the unsecured amount.

During the year 2010-11, the Bank has issued a letter of comfort favoring Bank Negara Malaysia. The Bank in association with other JV partners will provide support to India International Bank (Malaysia) Bhd in funding, business and other matters as and when required and ensure that it complies with the requirements of the Malaysian Laws, Regulations and Policies in the conduct of its business operations and management.

The financial impact for the letter of undertaking issued to Bank Negara Malaysia is remittance of our share of 35% of the paid up capital of MYR 320 mio ie. MYR 112.000 mio. Our Bank has remitted INR 193,20,10,398/- towards the capital of MYR 112.000 mio.

12.03 Disclosures relating to Securitisation NIL

12.04 Credit Default Swaps (CDS) NIL 20 Comparative Figures

Previous year''s figures have been regrouped / rearranged wherever necessary.

---

Mar 31, 2012

1. Reconciliation

Reconciliation of Inter Bank and Inter Branch transactions has been completed up to 31.3.2012 and steps for elimination of outstanding entries are in progress. Since the outstanding entries are insignificant, the management does not anticipate any material consequential effect.

2. Investments

2.1 In accordance with the Reserve Bank of India (RBI) guidelines, the Investments Portfolio of the Bank (domestic) has been classified into three categories, as given below: -

2.2 SLR Securities under "Held to Maturity" accounted for 22.54% (previous year 20.95%) of Bank's Demand and Time liabilities as at the end of March 2012, as against the ceiling of 25% stipulated by RBI.

2.3 In respect of Held to Maturity category of Investments, premium of Rs.52.53 crore was amortised during the year (Previous year Rs.53.00 crore).

2.4 Securities of face value for Rs.300 crore (previous year Rs.200 crore) towards Settlement Guarantee Fund and securities of face value for Rs.8455 crore (previous year Rs.5855 crore) towards collateral for borrowing under Collateralised Borrowing and Lending Obligations have been kept with Clearing Corporation of India Limited. Securities of face value Rs.3150 crore were placed with RBI for intraday borrowing. Besides, a sum of Rs.15.00 crore (previous year Rs.1.80 crore) have been lodged with NSCCL towards Currency Derivatives Segment and Rs.10.00 crore (previous year Rs.5.00 crore) with CCIL towards Default Fund for forex operations and Rs.1.17 crore (previous year Rs.1.17 crore) with Indian Clearing Corporation Limited towards Currency Derivatives Segment.

2.5 Shares under Investments in India in Schedule 8 includes Rs.36,24,07,080/- (Previous year Rs.21,89,07,080/-) being advance towards share capital in Regional Rural Banks pending allotment of shares.

2.6 Under the Open Market Operations(OMO) scheme of buy back of Government Securities announced by the RBI, Bank sold investments of book value of Rs 1763.48 crore under HTM category and earned a profit of Rs 18.45 crore.

3. Advances

3.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the realisability of certain advances, the estimated value of security, Central Government guarantees etc. have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3.5 In compliance with RBI guidelines, Bank maintained a Counter Cyclical Provisioning Buffer of Rs.614.06 crore as at 31.3.2012, against required provisioning buffer of Rs.811.06 crore. RBI has permitted the Bank to build-up the balance buffer requirement of Rs.197 crore by 31.03.2013.

4. Fixed Assets

4.1 During the year 2008-09, certain land and buildings in India, were revalued through approved valuers and Rs.1123.55 crore added to the carrying value of assets on account of such revaluation.

4.2 Rs.1.18 crore (previous year Rs.0.51 crore), being profit on sale of assets is appropriated to Capital Reserve.

5. Rupee Interest Rate Swap

An amount of Rs.5.92 crore (previous year Rs.2.33 crore) is held in deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging and would be recognized over the remaining contractual life of swap or life of the assets/liabilities, whichever is earlier.

6. Capital and Reserves:

6.1 During the financial year, in March 2012, Bank raised equity share capital of Rs.1743.63 crore (previous year Rs.1054 crore) including share premium of Rs.1565.38 crore (previous year Rs.980.05 crore) by way of preferential allotment of 3,09,37,467 equity shares (previous year Nil) to LIC of India and its various schemes and 14,73,11,388 equity shares (previous year 7,39,49,343 equity shares) to Government of India, aggregating to 17,82,48,855 equity shares at a premium of Rs.87.82 per equity share. Pursuant to the above the shareholding of the Government of India has increased from 65.87 % to 69.62%.

6.2 The Bank has not raised Tier II capital during the year (previous year Rs.1967 crore).

7. Taxes

7.1 Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision is considered necessary in respect of disputed and other demands of income tax aggregating Rs.592.32 crore (previous year Rs.566.68 crore).

7.2 Tax expense for the year is Rs.247.58 crore after reversal of excess provision to the extent of Rs.234.12 crore pertaining to earlier years.

8. Shree Suvarna Sahakari Bank Ltd

The balance of Rs.82.18 crore (previous year Rs.82.17 crore) out of aggregate deficit of Rs.246.52 crore representing excess of liabilities over the specific assets of Shree Suvarna Sahakari Bank Ltd., Pune taken over in 2009-10, is charged to Profit and Loss Account for the year, as permitted by the RBI.

9. Pension and Gratuity Liability

On the reopening of pension to employees of Public Sector Banks and enhancement of Gratuity limits, the Bank incurred a liability of Rs.1005.21 crore in 2010-11. In terms of requirement of Accounting Standard (AS 15) Employee Benefits, the entire amount of Rs.1005.21 crore is required to be charged to Profit and Loss Account. In terms of Reserve Bank of India circular No.DBOD.BP.BC.80/21.04.018/2010-11, on Reopening of Pension Option to employees of Public Sector Banks and enhancement in Gratuity limits - Prudential Regulatory Treatment, dated 09.02.2011, Bank would amortise the amount of Rs.1005.21 crore over a period of 5 years from 31.3.2011. Accordingly, Rs.201.04 crore (previous year Rs.201.04 crore) has been charged to Profit and Loss Account for the year 2011-12 and the balance amount of Rs.603.13 crore has been carried over. Had the RBI not issued such a circular, the Revenue Reserves of the Bank would have been lower by Rs.603.13 crore pursuant to application of the requirements of AS-15.

10. Information relating to vendors registered under Micro, Small and Medium Enterprises Development Act, 2006 and from whom goods and services have been procured by the Bank, is being ascertained.

ADDITIONAL DISCLOSURES

In accordance with the guidelines issued by Reserve Bank of India vide Master Circular dated 1.7.2011, the following additional disclosures are made:-

11.1 DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES

11.1.1 Qualitative Disclosure Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. The Bank also offers these products to corporate clients to enable them to manage their own currency and interest rate risk. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policy of the Bank allows using of derivative products to hedge the risk in Interest/ Exchange rates that arise on account of overseas borrowing/ FCNR(B) portfolio/ the asset liability mis-match, for funding overseas branches etc., and also to offer derivative products on back- to- back basis to customers.

b) The Bank has a system of evaluating the derivatives exposures separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with banks and counterparties well within their respective exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring and appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Bank's Balance sheet and offered to select corporate clients on back-to-back basis. In respect of hedge transactions the value and maturity of hedges has not exceeded that of the underlying exposure. In respect of back-to-back transactions the transactions with clients are fully matched with counter party Bank transactions and there is no uncovered exposure.

g) The income from such derivatives are amortized and taken to Profit and Loss Account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet management, income on account of such gains would be recognized over the remaining contractual life of the swap or life of the assets / liabilities whichever is lower. In case of early termination of derivatives undertaken for customers on a back- to- back basis, income on account of such things will be recognized on termination.

h) All the hedge transactions are accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the extant guidelines of Reserve Bank of India.

Treasury (Domestic)

The Bank uses Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Govt. Securities and to reduce the cost of Subordinated Debt and term deposits. In addition, the Bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The Bank has put in place an appropriate structure and organization for management of risk, which includes treasury department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), Credit risk (arising from probable counter party failure), Liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), Operational risk, Regulatory risk and Reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of Bank for each counter party.

c) Derivatives are used by the Bank for trading and hedging. The Bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge Bank's Balance Sheet has not exceeded that of the underlying exposure.

d) The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy, No.6)

DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS

12.1 Accounting Standard 9 - Revenue Recognition

Revenue has been recognized as described in Item No. 2 of Significant Accounting Policies - Schedule 17.

12.2 Accounting Standard 15 - Employee Benefits

12.2.1

i) The Bank has adopted Accounting Standard 15 (Revised) "Employees Benefits" issued by the Institute of Chartered Accountants of India, with effect from 1st April 2007.

ii) The balance of unrecognised Transitional Liability on account of Employee Pension amounted to Rs.89 Crore has been charged to Profit & Loss Account of the current year ended 31.3.2012.

iii) The summarized position of Post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard-15 (Revised) are as under:

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market.

In respect of overseas branches, disclosures if any, required for Employee Benefit Schemes are not made in the absence of information.

(b) The financial assumptions considered for the calculations are as under:-

Discount Rate: - The discount rate has been chosen by reference to market yield on Government bonds as on the date of valuation. (Balance sheet date 31.3.2012)

Expected Rate of Return: In case of Pension the expected rate of return is taken on the basis of yield on Government bonds. In case of gratuity, the actual return has been taken.

Salary Increase: On the basis of past data.

(c) Bank's best estimate of gratuity expected to be paid in the next Financial Year is Rs.120 crore.

12.2.2 Sick Leave

Provision of Rs.119 crore made for Sick Leave in earlier years is not considered necessary under AS 15 - Employee Benefits, since no encashment is involved. Hence, such provision for Rs.38 crore has been written back to Profit and Loss Account, besides credit of Rs.53.47 crore to other Revenue Reserves and Rs.27.53 crore to Deferred Tax Liability Account

12.3 Accounting Standard 17 - Segment Reporting

The Bank has adopted Reserve Bank of India's revised guidelines issued in April 2007 on Segment Reporting in terms of which the reportable segments have been divided into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. (Rs. In Crore)

12.4 Accounting Standard 21 - Consolidated Financial Statements (CFS)

As there is no subsidiary, no consolidated financial statement is considered necessary.

12.5 Accounting Standard 22: Accounting for Taxes on Income

The Bank has accounted for Deferred Tax Liability of Rs.330.16 crore during the year (Previous year Rs.101.09 crore). The Bank has outstanding net Deferred Tax Liability of Rs.628.96 crore (Previous year Rs.270.61 crore). The breakup of deferred tax assets and liabilities into major items is given below: Rs. In Crore

12.6 Accounting Standard 26 - Intangible Assets

The application software in use in the Bank has been developed in-house and has evolved over a period of time. Hence, the costs of software is essentially part of Bank's operational expenses like wages etc. and as such are charged to the respective heads of expenditure in the Profit and Loss Account.

12.7 Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

Bank has signed a Joint Venture with Bank of Baroda and Andhra Bank to open a Bank in Malaysia. Bank Negara, the Central Bank of Malaysia, has issued the license to the Joint Venture on 16.04.2010. The Joint Venture has been incorporated at Malaysia on 13.08.2010 in the name of INDIA INTERNATIONAL BANK (MALAYSIA) BHD, with an Authorised Capital of MYR500 Mio and Assigned Capital as on 31.3.2012 is MYR310 Mio. Our Bank's share in Paid- up Capital is 35% - MYR108.50 Mio. As on 31.3.2012, Bank has paid Rs.12.96 crore towards 819035 shares of MYR10 each aggregating to MYR8190350. The Joint Venture is expected to commence operations shortly.

12.8 Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as 'Corporate Assets' and are not 'Cash Generating Units' as defined by AS28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

12.9 Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountant of India in this respect have been incorporated at the appropriate places.

13.1 Off Balance Sheet SPVs sponsored (which are required to be consolidated as per Accounting norms)

14 Comparative Figures

Previous year's figures have been regrouped / rearranged wherever necessary.

---

Mar 31, 2011

1. Reconciliation

Reconciliation of inter-bank and inter-branch transactions has been completed up to 31st March 2011, Steps for elimination of outstanding entries are in progress. Since the outstanding entries to be eliminated are insignificant, no material consequential effect is anticipated.

2. Investments

2.2 SLR Securities under "Held to Maturity" accounted for 20.95% (previous year 22.39%) of banks Demand and Time liabilities as at the end of March 2011, as against the ceiling of 25% stipulated by RBI.

2.3 In respect of Held to Maturity category of Investments, premium of Rs.53.00 crore was amortised during the year (Previous year Rs.114.47 crore).

2.4 Securities of face value of Rs.200 crores (previous year Rs.100 crores) towards Settlement Guarantee Fund and securities for Rs.5855 crore crores (previous year Rs.4855 crore) towards collateral for borrowing under Collateralised Borrowing and Lending Obligations have been kept with Clearing Corporation of India Ltd. Besides, a sum of Rs.1.80 crore (previous year NIL) has been lodged with NSCCL towards Currency Derivatives Segment, Rs.5.00 crore (previous year NIL) with CCIL towards Default Fund for

forex operations, Rs.1.17 crore (previous year NIL) with Indian Clearing Corporation Ltd., towards Currency Derivatives Segment.

2.5 Shares under Investments in Schedule 8 includes Rs.21,89,07,080/- (Previous year Rs.21,89,07,080/-) being advance towards share capital in Regional Rural Banks pending allotment of shares.

3. Advances

3.1 The Classification for advances and provisions for possible loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the realisability of certain advances, the estimated value of security, Central Government guarantees etc. have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3.5 The Bank has a floating provision of Rs.171.36 crores (Previous Year Rs.171.36 crores) in respect of Gross Non- performing Advances over and above the minimum provision prescribed by RBI with a view to strengthening the financial stability of the Bank.

4. Fixed Assets

4.1 During the year 2008-09, the bank has revalued its premises (land and buildings) other than those at overseas branches and added an amount of Rs. 1123.55 crores to the existing carrying value of assets. The revaluation has been done by approved valuers.

4.2 A sum of Rs.0.51 crore (previous year Rs.1.61 crore) being profit on sale of Fixed Assets during the year has been appropriated to Capital Reserve as on 31.03.2011.

5. Rupee Interest Rate Swap:

An amount of Rs.2.33 crore (previous year Rs.4.69 crore) is kept in deferred income on account of gains on termination of Rupee Interest Rate Swaps taken for hedging and would be recognized over the remaining contractual life of swap or life of the assets/liabilities, whichever is earlier.

6. Capital and Reserves:

6.1 The bank had during the year raised equity share capital of Rs.1054 crore including share premium of Rs.980.05 crore by way of preferential allotment of 7,39,49,343 equity shares to Government of India on 24.3.2011. Pursuant to the above the share holding of Government of India has increased from 61.23% to 65.87%.

6.2 During the year, the Bank has raised Tier II capital amounting to Rs. 1967.00 crore (previous year Rs. 800.00 Crore) by issue of Lower/Upper Tier II bonds.

7. Taxes

Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision has been considered necessary in respect of disputed and other demands of income tax amounting to Rs.566.68 crore (previous year Rs. 406.92 crore)

8. Agricultural Debt Waiver and Debt Relief Scheme 2008

8.1 In terms of Agricultural Debt Waiver and Debt Relief Scheme 2008, framed by the Government of India, the Bank has received Rs.581.58 crore from Reserve Bank of India on account of loans to small and marginal farmers, out of the amount eligible for debt waiver of Rs.676 crore.

8.2 The balance amount due from the Government of India under the above scheme amounting to Rs.94.42 crore is shown as Claim Receivable from Government of India for ADW&DRS 2008 and included under advances in Schedule 9 as per Reserve Bank of India circular.

9. Shree Suvarna Sahakari Bank Ltd

During the year 2009-10, the Bank has taken over specific assets and liabilities of M/s. Shree Suvarna Sahakari Bank Ltd., Pune (which was under moratorium), with effect from the close of business on 19.05.2009 with the approval of RBI and other authorities.The deficit representing excess of liabilities over assets taken over as on the said date amounting to Rs.246.52 crore has to be absorbed over a period of three years, as permitted by Reserve Bank of India. The Bank has absorbed the deficit, amounting to Rs.164.34 crore (Rs.82.17 crore during the year 2009-10 and Rs.82.17 crore during the year 2010-11). The balance of deficit amounting to Rs.82.18 crore will be absorbed before 31.03.2012.

10. Pension and Gratuity Liability

During the year, the bank reopened the pension option for such of its employees who had not opted for the Pension Scheme earlier. As a result of exercise of this option by 11571 employees, the bank had incurred a liability of Rs.758.65 crore. Further, during the year, the limit of Gratuity payable to the employees of the bank was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result the Gratuity liability of the bank has increased by Rs.246.56 crore.

In terms of the requirements of the Accounting Standard (AS-15).Employee Benefits, the entire amount of Rs.1005.21 crore is required to be charged to the Profit and Loss account. However, the Reserve Bank of India has issued a circular No.DBOD.BP.BC.80/21.04.018/ 2010-11, on Reopening of Pension Option to employees of Public Sector Banks and enhancement in Gratuity limits - Prudential

Regulatory Treatment, dated 09.02.2011. In accordance with the provisions of the said Circular, the bank would amortise the amount of Rs.1005.21 crore over a period of 5 years. Accordingly, Rs.201.04 crore (representing one-fifth of Rs.1005.21 crore) has been charged to the Profit and Loss Account. In terms of the requirements of the aforesaid, RBI Circular, the balance amount carried forward, i.e., Rs.804.17 crore does not include any employees relating to separated / retired employees. Had such a circular not been issued by the RBI, the profit of the bank would have been lower by Rs.804.17 crore pursuant to application of the requirements of AS-15.

* Due to issuance of 7,39,49,343 equity shares to Government of India on preferential allotment.

3.3 DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES

3.3.1 Qualitative Disclosure

Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. The Bank also offers these products to corporate clients to enable them to manage their own currency and interest rate risk. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policies of the Bank allows using of derivative products to hedge the risk in Interest / Exchange rates that arise on account of overseas borrowing / FCNR (B) portfolio / the asset liability mis-match, for funding overseas branches etc., and also to offer derivative products on back-to-back basis to customers.

b) The Bank has a system of evaluating the derivatives exposures separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The derivative transactions were undertaken only with banks and counterparties well within their respective exposure limit approved by

appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring and appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Banks Balance Sheet and offered to select corporate clients on back-to-back basis. In respect of hedge transactions the value and maturity of hedges has not exceeded that of the underlying exposure. In respect of back-to- back transactions the transactions with clients are fully matched with counter party bank transactions and there is no uncovered exposure.

g) The income from such derivatives are amortised and taken to Profit and Loss Account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet management, income on account of such gains would be recognised over the remaining contractual life of the swap or life of the assets / liabilities whichever is lower. In case of early termination of derivatives undertaken for customers on a back-to-back basis, income on account of such things will be recognised on termination.

h) All the hedge transactions have been accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in derivatives.

i) The derivative transactions are conducted in accordance with the guidelines of Reserve Bank of India.

Treasury (Domestic)

The Bank uses the Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Govt. Securities and to reduce the

cost of Subordinated Debt and term deposits. In addition, the bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The Bank has put in place an appropriate structure and organization for management of risk which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), credit risk (arising from probable counter party failure), liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), operational risk, regulatory risk and reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of the Bank for each counter party.

c) Derivatives are used by the Bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge banks Balance Sheet has not exceeded that of the underlying exposure.

d) The Accounting Policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.6).

4.1.2 Provision Coverage Ratio

The Provision Coverage Ratio (PCR) computed as per the RBI guidelines stood at 70.45% as on 31.03.2011.

4.4 Details of non-performing financial assets purchased/sold from other banks

7.4 Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the bank:

As per RBI guidelines and terms of Loan Policy Document of our Bank for 2011, the permissible level of Single Borrower exposure ceiling is Rs. 1758.15 crore (15% of Capital funds) and Rs.4688.40 crore for Group Borrower limit (40% of Capital funds). SBL and GBL in case of overseas branches was enhanced to USD 40 Mio and USD 60 Mio respectively with effect from 11.12.2010.

# Limits to the captioned borrower was enhanced to USD 40 Mio vide MCB sanction of 10.2.2011 and this sanction is within the revised SBL of USD 40 Mio.

8. MISCELLANEOUS

8.2 Disclosure of Penalties imposed by RBI

NIL

During the year 2009-10, the Bank has issued a Letter of Comfort (LOC) undertaking to maintain a minimum CRAR of 12% in respect of Bangkok branch.

During the year 2010-11, the bank has issued a letter of comfort favoring Bank Negara Malaysia. The Bank in association with other JV partners will provide support to India International Bank (Malaysia) Bhd in funding, business and other matters as and when required and ensure that it complies with the requirements of the Malaysian laws, regulations and policies in the conduct of its business operations and management.

*Fees/Remuneration received in respect of the Bancassurance Business undertaken by the Bank.

9. DISCLOSURES IN TERMS OF ACCOUNTING STANDARDS

9.1 Accounting Standard 15 - Employee Benefits

i) The Bank had adopted Accounting Standard 15 (Revised) "Employees Benefits" issued by the Institute of Chartered Accountants of India, with effect from 1st April 2007.

* The un-funded net liability in Pension and Gratuity Funds, are to be amortised over a period of next 4 years.

* The information for experience adjustments for the previous year are not available.

The estimates of future salary increases, considered in actuarial valuation, take into account actual return on plan assets, inflation, seniority, promotion and other relevant factors, such as supply and demand in employee market.

In respect of overseas branches, disclosures if any, required for Employee Benefit Schemes are not made in the absence of information.

(b) The financial assumptions considered for the calculations are as under:

Discount Rate: The discount rate has been chosen by reference to market yield on government bonds as on the date of valuation. (Balance sheet date 31.03.2011)

Expected Rate of Return: In case of Pension and Leave Encashment, the expected rate of return is taken on the basis of yield on government bonds. In case of gratuity, the actual return has been taken.

Salary Increase: On the basis of past data.

(c) Banks best estimate expected to be paid in next Financial Year for Gratuity is Rs.90 crore (Previous year - NIL).

(d) The contribution on account of Defined Contribution Scheme - Provident Fund Rs.780.65 crore (previous year Rs.716.16 crore), out of which an amount of Rs.763.08 crore has been transferred to Pension Fund from PF Fund on account of II option of pension.

9.2 Accounting Standard 17- Segment Reporting

The bank has adopted Reserve Bank of Indias revised guidelines issued in April 2007 on Segment Reporting in terms of which the reportable segments have been divided into Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations.

9.3 Accounting Standard 18- Related Party Disclosures

Names of the related parties and their relationship with the bank

1 Parent Indian Overseas Bank

2 Associates Pandyan Grama Bank

Neelachal Gamya Bank

3. Subsidiaries None

4. Jointly controlled entity India International Bank (Malaysia) Bhd.

*Remuneration includes salary & allowances, salary arrears, performance incentives, leave encashment arrears and gratuity arrears.

9.5 Accounting Standard 21 - Consolidated Financial Statements (CFS)

As there is no subsidiary, no consolidated financial statement is considered necessary.

9.7 Accounting Standard 26 - Intangible Assets

The application software in use in the bank has been developed in-house and has evolved over a period of time. Hence, the costs of software is essentially part of Banks operational expenses like wages etc. and as such are charged to the respective heads of expenditure in the Profit and Loss Account.

9.8 Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures

Bank has signed a Joint Venture with Bank of Baroda and Andhra Bank to open a bank in Malaysia. Bank Negara, the Central Bank of Malaysia, has issued the licence to the Joint Venture on 16.04.2010. The Joint Venture has been incorporated at Malaysia on 13.08.2010 in the name of INDIA INTERNATIONAL BANK (MALAYSIA) BHD, with a total capital of MYR 300 Mio, Our bank share is 35% - MYR 105 Mio. Our bank has so far subscribed to 14035 shares of MYR 10 each towards preliminary expenses of the Joint Venture aggregating to MYR140350 (INR0.21 crore). The Joint Venture is expected to commence operations shortly.

9.9 Accounting Standard 28 - Impairment of Assets

Fixed Assets owned by the Bank are treated as Corporate Assets and are not Cash Generating Units as defined by AS28 issued by ICAI. In the opinion of the Management, there is no impairment of any of the Fixed Assets of the Bank.

9.10 Accounting Standard 29 - Provision for Contingent Liabilities and Contingent Assets:

The guidelines issued by the Institute of Chartered Accountants of India in this respect have been incorporated at the appropriate places.

10 Concentration of Deposits, Advances, Exposures and NPAs

11 Comparative Figures:

Previous years figures have been regrouped / rearranged wherever necessary.

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Mar 31, 2010

1. Reconciliation

Reconciliation of inter-bank and inter-branch transactions has been completed up to 31s March 2010. Steps for elimination of outstanding entries are in progress. Since the outstanding entries to be eliminated are insignificant, no material consequential effect is anticipated.

2.2 SLR Securities under "Held to Maturity" accounted for 22.39% of banks Demand and Time liabilities as at the end of March 2010, which is within the ceiling of 25% stipulated by RBI.

2.3 In respect of Held to Maturity category of Investments, premium of Rs.114.47 crores was amortised during the year (Previous year Rs.222.61 crores).

2.4 Securities of face value of Rs.100 crores (previous year Rs.100 crores) towards Settlement Guarantee Fund and securities for Rs. 4855 crores (previous year Rs.2200 crores) towards collateral for borrowing under Collateralised Borrowing and Lending Obligations have been kept with Clearing Corporation of India Ltd.

2.5 Shares under Investments in Schedule 8 includes Rs.21,89,07,080/- (Previous year Rs.21,89,07,080/-) being advance towards share capital in Regional Rural Banks pending allotment of shares.

3. Advances

3.1 The Classification for advances and provisions for possible Loss has been made as per prudential norms issued by Reserve Bank of India.

3.2 Claims pending settlement and claims yet to be lodged with Guarantee Institutions identified by the branches have been considered for provisioning requirements on the basis that such claims are valid and recoverable.

3.3 In assessing the realisability of certain advances, the estimated value of security, Central Government guarantees and subsequent conduct/ recoveries have been considered for the purpose of asset classification and income recognition.

3.4 The classification of advances, as certified by the Branch Managers have been incorporated, in respect of unaudited branches.

3.5 The Bank has a floating provision of Rs. 171.36 Crores (Previous Year Rs.171.36 Crores) in respect of Gross Non-performing Advances over and above the minimum provision prescribed by RBI with a view to strengthening the financial stability of the Bank.

4. Fixed Assets

4.1 During the year 2008-09, the bank has revalued its premises (land and buildings) other than those at overseas branches and added an amount of Rs. 1123.55 crores to the existing carrying value of assets. The revaluation has been done by approved valuers.

4.2 Pending completion of certain legal and other formalities, title deeds have not been executed / registered in favour of the Bank in respect of one premises amounting to Rs. 4.16 crores (previous year six properties - Rs.8.35 crores).

4.3 A sum of Rs.1.61 crores being profit on sale of Fixed Assets during the year has been appropriated to Capital Reserve as on 31.03.2010.

5. Rupee Interest Rate Swap:

An amount of Rs.4.69crores (previous year Rs.8.83 crores) is kept in deferred income on account of gains on termination of Rupee interest Rate swaps taken for hedging and would be recognized over the remaining contractual life of swap or life of the assets/ liabilities, whichever is earlier.

6. Capital and Reserves:

6.1 During the year, the Bank has raised Tier II Capital amounting to Rs.800.00 Crores (previous year Rs.955.30 Crores) by issue of Lower / Upper Tier II Bonds.

6.2 The Bank also raised Rs.300 Crores (Previous Year Nil) by way of Perpetual Bonds eligible for inclusion as Tier I Capital.

7. Taxes

Taking into consideration the decisions of Appellate Authorities, judicial pronouncements and the opinion of tax experts, no provision has been considered necessary in respect of disputed and other demands of income tax amounting to Rs.406.92 crores (previous year Rs.639.15 crores)

8. Salaries

The bank holds a provision of Rs.406 Crores as at 31.03.2010 towards arrears of salaries for the period from November 2007 to March 2010 on an estimated basis. Provision made during the year on this account is Rs.202 crores (including Rs.34 Crores relating to previous year).

9. Profit and Loss Account

The profit for the year includes an amount of Rs 4.89 Crores, representing amount transferred from Blocked Nostro Accounts as per RBI directives. The amount has been appropriated to Other Revenue Reserves.

10. Agricultural Debt Waiver and Debt Relief Scheme 2008

10.1 In terms of Agricultural Debt Waiver and Debt Relief Scheme 2008, framed by the Government of India, the Bank has received Rs. 371.97 crores towards 1st and 2nd installment from Reserve Bank of India on account of loans to small and marginal farmers, out of the amount eligible for debt waiver of Rs.580.88 crores.

10.2The balance amount due from the Government of India under the above scheme amounting to Rs.208.91 crores is shown as Claim Receivable from Government of India for ADW&DRS 2008 and included under advances in Schedule 9 as per Reserve Bank of India circular.

11 Shree Suvarna Sahakari Bank Ltd

During the current financial year, the Bank has taken over specific assets and liabilities of M/s. Shree Suvarna Sahakari Bank Ltd., Pune (which was under moratorium), with effect from the close of business on 19.05.2009 with the approval of RBI and other authorities. The deficit representing excess of liabilities over assets taken over as on the said date amounting to Rs.246.52 crore has to be absorbed over a period of three years, as permitted by Reserve Bank of India. The Bank has absorbed one-third of the deficit, amounting to Rs.82.17 crores during the current year. The balance of deficit amounting to Rs. 164.35 crore will be absorbed before 31.03.2012.

12 DISCLOSURES ON RISK EXPOSURE IN DERIVATIVES

12.1 Qualitative Disclosure

Treasury (Foreign)

The Bank uses Interest Rate Swaps (IRS), Currency Swaps and Options for hedging purpose to mitigate interest rate risk and currency risk in banking book. The Bank also offers these products to corporate clients to enable them to manage their own currency and interest rate risk. Such transactions are entered only with Clients and Banks having agreements in place.

a) The Risk Management Policies of the Bank allows using of derivative products to hedge the risk in Interest / Exchange rates that arise on account of overseas borrowing / FCNR (B) portfolio / the asset liability mis-match, for funding overseas branches etc., and also to offer derivative products on back-to-back basis to customers.

b) The Bank has a system of evaluating the derivatives exposures separately and placing appropriate credit lines for execution of derivative transactions duly reckoning the Net Worth and security backing of individual clients.

c) The Bank has set in place appropriate control systems to assess the risks associated in using derivatives as hedge instruments and proper risk reporting systems are in place to monitor all aspects relating to derivative transactions. The Derivative transactions were undertaken only with counterparties well within the exposure limit approved by appropriate credit sanctioning authorities for each counter party.

d) The Bank has set necessary limits in place for using derivatives and its position is continuously monitored.

e) The Bank has a system of continuous monitoring and appraisal of resultant exposures across the administrative hierarchy for initiation of necessary follow up actions.

f) Derivatives are used by the Bank to hedge the Banks Balance Sheet and offered to select corporate clients on back-to-back basis. In respect of hedge transactions the value and maturity of hedges has not exceeded that of the underlying exposure. In respect of back-to-back transactions the transactions with clients are fully matched with counter party bank transactions and there is no uncovered exposure.

g) The income from such derivatives are amortised and taken to Profit and Loss Account on accrual basis over the life of the contract. In case of early termination of swaps undertaken for Balance Sheet management, income on account of such gains would be recognised over the remaining contractual life of the swap or life of the assets / liabilities whichever is lower. In case of early termination of derivatives undertaken for customers on a back-to-back basis, income on account of such things will be recognised on termination.

h) All the hedge transactions have been accounted on accrual basis. Valuations of the outstanding contracts are done on Mark to Market basis. The Bank has duly approved Risk Management and Accounting procedures for dealing in Derivatives.

i) The derivative transactions are conducted in accordance with the guidelines of Reserve Bank of India.

Treasury (Domestic)

The Bank uses the Rupee Interest Rate Swaps (IRS) for hedging purpose to mitigate interest rate risk in Govt. Securities and to reduce the cost of Subordinated Debt and term deposits. In addition, the bank also enters into rupee interest rate swaps for trading purposes as per the policy duly approved by the Board. Swap transactions are entered only with Banks having ISDA agreements in place.

a) The Bank has put in place an appropriate structure and organization for management of risk which includes Treasury Department, Asset Liability Management Committee and Risk Management Committee of the Board.

b) Derivative transactions carry Market Risk (arising from adverse movement in interest rates), credit risk (arising from probable counter party failure), liquidity risk (arising from failure to meet funding requirements or execute the transaction at a reasonable price), operational risk, regulatory risk and reputation risk. The Bank has laid down policies, set in place appropriate control systems to assess the risks associated in using derivatives and proper risk reporting and mitigation systems are in place to monitor all risks relating to derivative transactions. The IRS transactions were undertaken with only Banks as counter party and well within the exposure limit approved by the Board of the Bank for each counter party.

c) Derivatives are used by the Bank for trading and hedging. The bank has an approved policy in force for derivatives and has set necessary limits for the use of derivatives and the position is continuously monitored. The value and maturity of the hedges which are used only as back to back or to hedge banks Balance Sheet has not exceeded that of the underlying exposure.

d) The Accounting Policy for derivatives has been drawn up in accordance with RBI guidelines, as disclosed in Schedule 17 - Significant Accounting Policies (Policy No.8).

13 Provision Coverage Ratio

The Provision Coverage Ratio (PCR) computed as per the RBI guidelines stood at 53.97% as on 31.03.2010.

13.1 Accounting Standard 15 - Employee Benefits

i) The Bank had adopted Accounting Standard 15 (Revised) "Employees Benefits" issued by the Institute of Chartered Accountants of India, with effect from 1sApril 2007.

ii) The balance of unrecognised Transitional Liability on account of Employee Pension amounted to Rs.267 Crores (previous year Rs.356 Crores) at the beginning of this year. A sum of Rs. 89 Crores (previous year Rs. 89 Crores) has been charged to Profit & Loss Account of the current year ended 31.03.2010. The balance Unrecognized Liability of Rs.178 crores (previous year Rs.267 crores) is being carried forward to be charged off in the next two years

iii) The summarized position of Post- employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard-15 (Revised) are as under: