17. Provisions, contingent liabilities and
contingent assets
17.1 A provision is recognized when there is a present obligation
as a result of past event, and it is probable that an outflow
of resources will be required to settle the obligation, and in
respect of which a reliable estimate can be made. Provisions
are not discounted to their present value and are determined
based on best estimate required to settle the obligation at
the Balance Sheet date. These are reviewed at each Balance
Sheet date and adjusted to reflect the current best estimates.
17.2 A disclosure of contingent liability is made when there is:
(a) A possible obligation arising from a past event, the
existence of which will be confirmed by occurrence or
non-occurrence of one or more uncertain future events
not within the control of the Bank; or
(b) A present obligation arising from a past event which
is not recognized as it is not probable that an outflow
of resources will be required to settle the obligation
or a reliable estimate of the amount of the obligation
cannot be made.
17.3 When there is a possible obligation or a present obligation
in respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.
17.4 Contingent assets are not recognized or disclosed in the
financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow
of economic benefits will arise, the assets and related income
are recognized in the period in which the change occurs.
18. Accounting of Dividend
In accordance with AS-4 'Contingencies and Events occurring
after the Balance sheet date' as notified by the Ministry of
Corporate Affairs through amendments to Companies
(Accounting Standards) Amendment Rules, 2016, the Bank
does not account for proposed dividend as a liability through
appropriation from the profit and loss account. The same
is recognized in the year of actual payout post approval
of shareholders.
19. Share Issue Expenses
Share issue expenses are deducted from Share Premium
Account in terms of Section 52 of the Companies Act, 2013.
20. Impairment of Assets
The Bank assesses at each Balance Sheet date whether there
is any indication that an asset may be impaired. Impairment
loss, if any, is provided to the extent the carrying amount of
assets exceeds their estimated recoverable amount.
21. Cash and Cash equivalents
Cash and cash equivalents comprises of Cash in Hand and
Balances with RBI and Balances with Banks and Money at Call
and Short Notice.
22. Corporate Social Responsibility
Expenditure towards corporate social responsibility
obligations in accordance with provision of Companies Act,
2013, is recognized in the Profit and Loss Account.
1. Capital
1.1 Capital Issue
During the year, 7,34,521 equity shares of ?10 each fully paid (Previous year 24,24,753 equity shares of ?10 each fully paid) were
allotted on various dates to the employees who exercised their stock options, and consequently, the share capital of the Bank
increased by ?0.73 crores (Previous year ?2.42 crores) and share premium by ^60.72 crores (Previous year ^242.24 crores).
1.2 Capital Adequacy Ratio
The Bank computes Capital Adequacy Ratio as per Basel III Capital Regulations issued by RBI.
Under Basel III Capital Regulations, the Bank has to maintain a Minimum Total Capital of 11.50% including Capital Conversion Buffer
at 2.50%, of the total risk weighted assets. Out of the Minimum Total Capital (excluding CCB of 2.50%), at least 5.50% of risk weighted
assets, shall be from Common Equity Tier 1 capital and at least 7.00% from Tier 1 capital. The capital adequacy ratio of the Bank is
set out below.
2.6 Sale / transfer from HTM category
During the year ended March 31, 2025, and the year ended March 31, 2024, the value of sale and transfer of securities to/from
HTM category, excluding one-time transfer of securities from HTM and sale to RBI on account of Open Market Operation (OMO)/
Conversion/ switch auctions, has not exceeded 5% of the book value of investments held in HTM category at the beginning of the
year. Hence, in accordance with RBI guidelines, specific disclosures on book value, market value, and provisions if any, relating to
such sale and transfers are not applicable.
2.7 Government securities lending transactions during the year ended March 31, 2025 is Nil.
3. Derivatives
3.1 Interest Rate Swaps, Forward Rate Agreements and Cross Currency Swaps:
Bank offers derivative products such as IRS, FRA and CCS to its customers to enable them to hedge their interest rate risk and currency
risk within the prevalent regulatory guidelines.
An IRS is a financial contract between two parties exchanging or swapping a stream of interest payments for a 'notional principal'
amount on multiple occasions during a specified period. The Bank deals in interest rate benchmarks like Mumbai Inter-Bank Offered
Rate (MIBOR), Modified Mumbai Inter-Bank Forward Offer Rate (Mod MIFOR) and Alternative Reference Rates (ARR) like Sterling
Overnight Index Average (SONIA), Secured Overnight Financing Rate (SOFR), EURO Short term rate (ESTR), Tokyo Overnight Average
Rate (TONAR), etc.
A FRA is a financial contract between two parties to exchange interest payments for 'notional principal' amount on settlement date,
for a specified period from start date to maturity date. Accordingly, on the settlement date cash payments based on contract rate
and the settlement rate, which is the agreed bench-mark/reference rate prevailing on the settlement date, are made by the parties to
one another. Bond Forward Rate Agreement (Bond-FRA) is a derivative contract where two parties agree to exchange the difference
between a fixed price (determined today) and the actual market price of a specific bond at a future date.
A CCS is a financial contract between two parties primarily exchanging interest payments/principal, wherein interest payments/
principal in one currency would be exchanged for interest payments/principal in another currency. These contracts are subject to
the risks of changes in market interest rates and currency rates as well as the settlement risk with the counterparties.
The credit exposure includes exposure arising out of IRS, FRA and CCS contracts. However, generally, the collaterals provided by the
counterparties are not specifically earmarked towards specific derivative products, and hence the amount of collateral required by
the Bank upon entering into swaps is reported Nil.
# Concentration of credit risk based on Current Exposure Method arising from IRS / FRA / CCS with Banks (i.e. CEM for IRS / FRA/CCS
for Banks as % of total CEM for IRS / FRA/CCS) as at March 31, 2025 and March 31, 2024. Trades with QCCP (i.e. CCIL, NSE and BSE) has
not been considered. Further, as the collateral is received at counterparty-wise and not product or deal-wise, collateral netting off
has not been considered while arriving credit exposure.
3.2 Exchange Traded Interest Rate Derivatives
The Exchange Traded interest Rate Derivatives undertaken during the year ended March 31, 2025, and March 31, 2024, was Nil.
3.3 Risk Exposure in Derivatives
Derivatives are financial instruments whose characteristics are derived from an underlying asset, or from interest and exchange
rates or indices. Derivatives Policy approved by the Board of Directors defines the framework for carrying out derivatives business
and lays down policies and processes to measure, monitor and report risk arising from derivative transactions. The policy provides
for appropriate risk limits for different derivative products and action to be initiated in case of breaches. As part of the Derivatives
Policy, the Bank has a Product Suitability and Customer Appropriateness Policy, which is used to classify customers on the basis of
their need for various derivative products and their competence in understanding such products and the attendant risks involved.
The Bank undertakes derivative transactions for hedging customers' exposure, hedging the Bank's own exposure, as well as for
trading purposes, wherever permitted by RBI. The customers use these derivative products to hedge their forex and interest rate
exposures, in accordance with extant regulatory guidelines. The Bank has a policy on assessing the collateral required for undertaking
derivative transactions with clients as well as counterparty Banks. The credit appraisal process determines the collateral requirements.
The Bank retains the right to terminate transactions as a risk mitigation measure in certain circumstances.
The use of derivatives for hedging purposes is governed by the board approved Derivative policy. Bank enters into Forwards and
other derivative instruments such as Principal Only Swap (POS), etc. to hedge FX risk arising from its on-balance sheet liabilities such
as foreign currency deposits and borrowings. The effectiveness is assessed at inception of the hedge and quarterly thereafter. The
tenor of hedging instrument may be less than or equal to the tenor of underlying hedged asset or liability. Gains or losses arising from
hedge ineffectiveness, if any, are recognized in the profit and loss Account. Guidance Note on accounting for derivative contracts
and Accounting Standard 11 is applicable to all derivative contracts entered into by the Bank. Forward exchange contract or another
financial instrument that is in substance a forward exchange contract i.e. Principal only Swap (POS), etc., which are not intended
for trading or speculation purposes, to establish the amount of the reporting currency required or available at the settlement date
of a transaction are accounted for in line with AS 11. The premium or discount arising at the inception of such a forward exchange
contract is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in
the statement of profit and loss in the reporting period in which the exchange rates change. Derivatives for market making purpose
are marked to market and the resulting gain/loss is recorded in the Profit and Loss Account.
Risk Management Department of the Bank is responsible for measuring, reporting and monitoring risk arising from derivatives
transactions. it functions independent of Treasury Business Department and undertakes the following activities:
• Monitoring risk utilization on derivatives portfolio against prescribed limits on a daily basis;
• Daily review of product-wise profitability and activity reports for derivatives operations;
• Daily submission of MIS to the Top Management
The Risk Management function applies many quantitative tools and methods such as Value at Risk, PV01, Greeks, stop-loss limits
and counterparty limits.
Refer Note 17.5 for the accounting policy on derivatives.
The notional principal amounts of derivatives reflect the volume of transactions outstanding as at the Balance Sheet date and do
not represent the amounts at risk.
The swap contracts entered into for hedging purpose would have an opposite and off-setting impact with the underlying on balance
sheet items
Note 1: Outstanding Notional principal amount of exchange traded currency future trades was Nil as at March 31, 2025 (Previous
year was ^68.39 cores).
Note 2: Marked to Market positions include interest accrued on the swaps.
Note 3: In respect of derivative contracts, the Bank has computed the exposure under the Current Exposure Method for counterparty
credit risk capital computation based on the guidelines issued by RBI on "Bilateral Netting of Qualified Financial Contracts -
Amendments to Prudential Guidelines" dated March 30, 2021 and any related amendments thereafter. However, for the purpose of
calculating product-wise derivative exposure in table above, bank has calculated using Current Exposure Method ('CEM') without
the impact of Bilateral Netting. As the collateral is received counterparty-wise and not product or deal-wise, collateral netting off
has not been considered in the above credit exposure. Exposure includes trades with/guaranteed by the QCCP.
Note 4: PV01 for Currency Derivatives and Interest Rate Derivatives outstanding as at the year end.
Note 5: The Bank has computed the maximum and minimum of PV01 for the year based on the balances as at the end of every month.
Note 6: PV01 for Currency Derivatives and Interest Rate Derivatives are presented in absolute terms.
Note 7: Currency derivatives include forward exchange contracts, currency swaps, currency options and cross currency swaps;
Interest rate derivatives include interest rate swaps, forward rate agreements including Bond FRA, Swaption and interest rate caps
and floors.
4.4 Particulars of resolution plan and restructuring
During the year ended March 31, 2025, the Bank has implemented Resolution Plan in one NPA case with exposure of ^177.81 crore
and one standard account with exposure of ?55 crores (Previous Year -Nil) in accordance with the RBI Circular dated June 7, 2019,
on Prudential Revised Framework for Resolution of Stressed Assets ("Framework").
4.5 Divergence in Asset Classification and Provisioning for NPA
RBI vide circular no. DOR.ACC.REC.No.45 /21.04.018/2021-22 dated August 30, 2021 (updated as of April 01,2025) on 'Master Direction
on Financial Statements - Presentation and Disclosures', has directed that banks shall make suitable disclosures in the financial
statement for the year ended March 31,2025, if either or both of the following conditions are satisfied: (i.) the additional provisioning
for NPAs assessed by Reserve Bank of India as part of its supervisory process (RBI Inspection conducted for the Bank's position as
on March 31, 2024), exceeds five per cent of the reported profit before provisions and contingencies for the reference period, and
(ii.) the additional Gross NPAs identified by the Reserve Bank of India as part of its supervisory process (RBI Inspection conducted
for the Bank's position as on March 31, 2024), exceed five per cent of the reported incremental Gross NPAs for the reference period
Based on the criteria mentioned in the RBI circulars, no disclosure on divergence in asset classification and provisioning for NPA is
required with respect to RBI Supervisory Programme for Assessment of Risk and Capital completed during the year pertaining to
the previous year ended March 31, 2024
The Bank has adopted the Basel III framework on liquidity standards, prescribed by the Reserve Bank of India (RBI) and has put in place
requisite systems and processes to enable periodic automated computation and reporting of the Liquidity Coverage Ratio (LCR). The
LCR is aimed at measuring and promoting the short-term resilience of the liquidity risk profile of banks by ensuring maintenance of
sufficient High Quality Liquid Assets (HQLA) that can be easily and immediately converted into cash to meet the liquidity needs for
a 30 calendar day liquidity stress scenario.
The LCR Ratio is calculated by dividing the Bank's stock of HQLA by its total net cash flows over a 30 calendar day stress period,
measured on a daily basis for the following 30 days. The prime driver of LCR is determined by its HQLA and the proportion of retail
and wholesale funding sources. The HQLA comprises of two parts, i.e. Level 1 HQLA constituents which are primarily cash, excess
CRR, SLR securities in excess of the minimum SLR requirement and a portion of mandatory SLR as permitted by the RBI (under MSF
and FALLCR) and Level 2 HQLA constituents which are investments in highly rated non-financial corporate bonds and listed equity
investments considered with the prescribed regulatory haircuts. The average HQLA for the quarter ended March 31, 2025 was
^1,06,499 crores, as against ^94,773 crores for the quarter ended March 31, 2024. The Cash outflows are determined by multiplying the
outstanding balances of the various types / categories of liabilities by the outflow run-off factor and the cash inflows are calculated
by multiplying the outstanding balances of the various categories of contractual receivables by inflow run-offs at which they are
expected to flow in. Expected derivative cash outflows and inflows are calculated for outstanding contracts in accordance with laid
down valuation methodologies and regulatory guidelines. All significant outflows and inflows determined in accordance with the RBI
guidelines and are included in the LCR computation as per the prescribed template. Other contractual funding and borrowings which
are expected to run down in a 30-day time frame are included in the cash outflows. There are no intragroup exposures for the Bank.
The Bank has maintained LCR well above the minimum regulatory requirements during the FY 2024-25. The average LCR maintained
by the Bank for the quarter ended March 31, 2025 was at 118.43% against 117.95% for the quarter ended March 31, 2024.
The Asset Liability Committee (ALCO) of the Bank is a decision-making unit responsible for implementing the liquidity and interest
rate risk management strategies of the Bank in line with its risk management objectives and ensures adherence to the risk tolerance
/ limits set by the Board. Liquidity Risk Management of the Bank is centralized and is undertaken by the Asset Liability Management
Function in the Global Markets Group in accordance with the Board approved policies.
The Bank's funding sources are diversified across various sources and tenors. The Bank monitors the concentration of funding
from various counterparties and segments. The Bank adheres to the regulatory and internal limits on inter-bank liabilities and call
money borrowings. Apart from LCR, the Risk Management Department measures and monitors the liquidity profile of the Bank with
reference to the Board approved policy and regulatory limits and undertakes liquidity stress testing periodically.
6.8 Unhedged Foreign Currency Exposure (UFCE) of Clients/ Borrowers
Currency induced credit risk refers to risk of inability of borrowers to service their debt obligations due to adverse movement in
the exchange rates and corresponding changes in their book values of trade payables, loan payables, trade receivables, etc. Bank
recognizes importance of adverse fluctuations of foreign exchange rates on profitability and financial position of borrowers who
are exposed to currency risk.
In this regard, Bank had put in place Board approved policy & internal processes for monitoring and mitigation of currency induced
credit risk of borrowers on account of un-hedged foreign currency exposures ("UFCE") which includes analysis in credit appraisal
notes, risk assessment of borrowers having un-hedged foreign currency exposures based on likely loss / EBID ratio and incremental
provisioning (over and above provision applicable for standard assets) made depending on the likely loss / EBID ratio as per
regulatory guidelines.
The provision for standard assets as of March 31, 2025, included an amount of ^68.79 crores (Previous year ^62.43 crores) towards
UFCE. Further, capital maintained under Basel III Capital Regulations, as of March 31, 2025, includes an amount of ^295.47 crores
(Previous year ?123.07 crores) on account of UFCE, computed at the applicable risk weights.
6.9 Single Borrower limit and Group Borrower Limit
During the year ended March 31, 2025, and year ended March 31, 2024, the Bank's credit exposures to single borrowers and group
borrowers were within the prudential limits prescribed by RBI.
12. Penalties imposed by RBI
During the FY 2024-25 The Reserve Bank of India imposed a monetary penalty of ^27.30 lakh for opening savings deposit accounts
in the name of ineligible entities based on findings from a statutory inspection of the bank's financial position as of March 31, 2023.
This penalty was imposed due to violations of the Reserve Bank of India (Interest Rate on Deposits) Directions, 2016.
Reserve Bank of India imposed monetary penalties aggregating ^80,000 (6 instances) for non-adherence to the regulatory
guidelines pertaining to exchange of mutilated/soiled notes and coins during the incognito visits conducted by RBI officials at
various Bank Branches
RBI had levied a total penalty of ^19,150/- (25 instances) on account of the irregularities observed in the soiled note remittance
received from IndusInd Bank Currency Chest. RBI had imposed monetary penalties aggregating ^30,000/- on our two Currency
Chests towards discrepancies / irregularities observed during the inspection of Currency Chest.
During the FY 2023-24, Reserve Bank of India imposed monetary penalties aggregating ?1.20 lakh (10 instances) for non-adherence
to the regulatory guidelines pertaining to exchange of mutilated/soiled notes and coins during the incognito visits conducted by
RBI officials at various Bank Branches.
13. Disclosure on Remuneration
Effective October 1, 2022, the Compensation Committee was merged with the Nomination and Remuneration Committee (NRC) and
was renamed Compensation and Nomination & Remuneration Committee (C & NRC). The C & NRC presently comprises four members.
All these members are Independent Directors including the Chairperson of the Committee. On aspects relating to remuneration, the
mandate of the C & NRC is to establish, implement and maintain remuneration policies, procedures and practices that help to achieve
effective alignment between remuneration and risks. The Compensation and Nomination & Remuneration Committee is mandated
to oversee framing, review and implementation of the Compensation Policy of the Bank as per the RBI guidelines on Compensation
of Whole Time Directors / Chief Executive Officers / Risk Takers and Control function staff. The C & NRC is also required to ensure that
the cost to income ratio of the Bank supports the remuneration expense of the Bank consistent with the objective of maintaining
sound capital adequacy ratio. The Compensation and Nomination & Remuneration Committee also reviews compensation policies
of the Bank with a view to attract, retain and motivate talent. The Compensation and Nomination & Remuneration Committee also
looks after the administration and superintendence of grant of Options under the Employee Stock Option Schemes.
Compensation Policy
From April 1, 2020 onwards, the Bank has implemented the RBI Guidelines on Compensation of Whole Time Directors /Chief Executive
Officers/Material Risk Takers and Control Function Staff, issued vide circular dated November 4, 2019.
The Bank has formulated its Compensation Policy in alignment with the RBI guidelines, covering all components of compensation
including Fixed pay, Perquisites, Performance bonus, Guaranteed bonus (joining / sign-on bonus), Share-linked instruments
(Employee Stock Option Plan), Retirement benefits such as Provident Fund and Gratuity.
The key objectives of the policy are:
(i) Benchmark employee compensation for various job positions and skills with that of the market.
(ii) Maintain an optimal balance between Fixed and Variable pay
(iii) Pay for 'Position, Performance and Person'.
(iv) Be risk conscious and dissuade excessive risk taking (Focus on revenues and profits is balanced by emphasis on risk, operational
health, compliance and governance).
(v) Promote quality leadership development, integrity and ethics across the Bank
(vi) Build employee ownership and long term association through Long term incentive plans (ESOPs, Deferred Bonus).
(vii) Be compliant with all regulatory and statutory guidelines.
Some of the important features of the Compensation Policy are as follows:
(i) Basis the RBI description of Material Risk Takers, the Bank defines Material Risk Takers (MRTs) as critical personnel belonging
to the business line functions of Corporate & Commercial Banking, Global Markets, Gems and Jewellery, Consumer, Consumer
Finance Division, etc. whose functioning and decisioning impacts the Bank materially on tangible performance aspects of
Revenues, Costs, and Profits. The role of a Material Risk Taker is of strategic importance to the Bank and impacts the business
performance of the Bank. The Material Risk Takers are identified in accordance with the qualitative and quantitative criteria
specified by the RBI guidelines, such as nature of their role necessitating making risk related decisions, size of business portfolio,
role criticality, criteria of remuneration cut-offs prescribed by the Bank or are amongst 0.3% of staff with highest remuneration
in the Bank. The Risk controllers are defined as personnel critical to the functioning of the business support functions of Finance
& Accounts, Risk, Credit, Operations, Human Resources, Inspection and Audit, Information Technology, Digital, Compliance,
Investor Relations, Secretarial, Legal, Corporate Services, etc. These functions support the business line functions through
back- office business processes and their functioning does not have a revenue impact through business generation. The role
of a Risk controller is of strategic importance to the Bank and impacts the business processes of the Bank.
As a governance measure, the Bank applies similar Compensation Principles applicable to the WTDs / CEO / MRTs to the
identified Risk Controllers of the Bank.
(ii) In respect of WTDs / CEO / Material Risk Takers / Risk Controllers of the Bank, the Compensation policy provides for a reasonable
annual increase in fixed pay in line with the market benchmarks. Their individual increments are linked to their annual
performance rating. The quantum of overall annual increment for all eligible employees and increment percentages at various
performance rating levels are decided on the basis of the financial performance of the Bank.
(iii) The quantum of overall variable pay to be disbursed in a year for all eligible employees including the Material Risk Takers
and Risk Controllers may vary from year to year on the basis of the financial performance of the Bank in the financial year.
Deterioration in the financial performance of the Bank in a given Financial Year would lead to a contraction in the total variable
compensation, which can even be reduced to zero.
(Iv) Employee compensation Is linked to performance. Annual Performance Rating for an employee Is arrived on the basis of
tangible performance against pre-set Key Results Areas (KRAs) / Goals at the beginning of the financial year.
(v) The individual Variable pay is linked to the annual performance rating, and based on variable pay grids that outline variable
pay as a percentage of Fixed Pay i.e. Cost to Company at various rating levels for a grade band. Exceptional Variable pay may
be paid to select high performers on a case to case basis within the limits stipulated by the RBI guidelines.
(vI) As per the new RBI Compensation policy effective April 01, 2020, the overall compensation of WTDs/CEOs/Material Risk Takers
/ Risk Controllers comprises Fixed Pay and Variable Pay. The Variable Pay for FY24 paid to the Material Risk Taker and Risk
Controllers was a mix of cash and share linked instruments. The Bank followed the Variable pay composition and Deferral
guidelines as per the RBI policy.
(vII) The Bank has made applicable the malus / claw-back arrangements with the concerned employees. The criteria would be
negative financial performance of the Bank and/or relevant line of business in any year, assessed divergence in the bank's
provisioning of Non-Performing Assets (NPAs), material failure of risk management controls, breach of internal rules or
regulations, integrity / staff accountability issues, etc As applicable, malus arrangement would adjust deferred remuneration
before vesting and claw-back arrangement would adjust deferred remuneration after vesting.
(vIII) The Compensation Policy does not provide for guaranteed bonus or sign on bonus in cash. However, in case of select critical
hires, joining / sign on bonus can be granted in form of pre-hiring ESOPs (a one-time grant made at the time of joining).
(Ix) The Compensation Policy does not provide for severance pay other than the accrued benefits of Gratuity, Provident Fund,
Leave encashment wherever applicable, for any employee of the Bank. Retirement benefits in the form of Provident Fund and
Gratuity are as per the Bank's HR policies which are in line with the statutory norms.
(x) All Perquisites for WTDs / CEO / Material Risk Takers / Risk Controllers are laid down in the HR Policies of the Bank.
(xi) For WTDs /CEO/ Material Risk Takers / Risk Controllers, share linked instruments such as ESOPs form a part of the Variable pay
and are a part of the total compensation. For other employees, ESOPs do not form a part of the Variable Pay. ESOPs are very
selectively granted to attract and retain talent. ESOP grant criteria include grade of the employee, criticality of the position
in terms of business continuity and growth, market value of the position/ perceived future value creation, performance and
behavioural track record of the employee.
14.6 Implementation of IFRS converged Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued a circular in February 2016, requiring Scheduled Commercial Banks to implement Indian
Accounting Standards (Ind AS) from April 1, 2018. Vide a press release dated 05 April 2018 the implementation was deferred by one
year. The legislative amendments recommended by the Reserve Bank towards implementation of Ind AS are still under consideration
of the Government of India. Accordingly, RBI had, through a notification dated March 22, 2019, deferred the Ind AS implementation
until further notice.
Pursuant to the RBI Circular dated February 11, 2016, the Bank had formed a Steering Committee, comprising members from cross¬
functional areas, for the purpose of reviewing and monitoring the progress of implementation. The Bank had set up a Working
Group under the guidance of the Steering Committee and has conducted Gap Assessment and identified the differences between
the current accounting framework and Ind AS, including the identification of the accounting policy options provided under Ind AS
101, First Time Adoption.
The Audit Committee of the Board of Directors has an oversight on the progress of the Ind AS implementation. In accordance
with RBI directions, the Bank has been submitting half yearly standalone pro forma Ind- AS financial statements along with other
computations to the RBI, from time to time.
15.2 Fixed Assets
15.2.1 Cost of premises includes ?4.09 crores (Previous year ?4.09 crores) in respect of properties for which execution of documents and
registration formalities are in progress. Of these properties, the Bank has not obtained full possession of one property having
written down value of ?1.26 crores (Previous year ?1.29 crores) and has filed a suit for the same. During financial year ended March
31, 2025, Hon. Court has passed an order in favour of the bank and has awarded us a compensation of ^1.27 crores along with 10%
interest from the date of filing of matter i.e. from 2006 plus legal costs. The matter is being pursued further.
15.3 Contingent Liabilities
The Bank's pending litigations include claims against the Bank by clients and counterparties and proceedings pending with tax
authorities. The Bank has reviewed its pending litigations and proceedings and has adequately made, provisions wherever required
and disclosed as contingent liabilities wherever applicable. Claims against the Bank not acknowledged as debts comprise of tax
demands of ^475.22 crores (Previous year ^322.23 crores) in respect of which the Bank is in appeal, and legal cases sub judice of
^21.03 crores (Previous year ^1,176.41 crores). The Bank carries a provision of ^13.04 crores (Previous year ^12.32 crores) against legal
cases sub judice. The amount of contingent liabilities is based on management's estimate, and it is not probable that any liability
is expected to arise out of the same.
15.4 The Bank has a process to assess periodically all long-term contracts (including derivative contracts), for material foreseeable losses.
As at March 31, 2025, as well as March 31, 2024, the Bank has reviewed and made adequate provision as required under any law or
an accounting standard for material foreseeable losses on such long term contracts (including derivative contracts).
15.5 During the year ended March 31,2025 and March 31, 2024, the Bank has transferred requisite amounts to the Investor Education and
Protection Fund, without any delay.
15.6 Corporate Social Responsibility (CSR)
In accordance with the provisions of the Companies Act, 2013, during the year, the Bank was required to spend on CSR activities
an amount of ^181.34 crores (After netting off excess payout during year ended March 31,2024 of ^1.45 crores) (Previous year ^131.27
crores).
15.9 Employee Stock Option Scheme
15.9. 1 On September 25, 2020, the shareholders of the Bank approved the indusind Bank Employee Stock Option Scheme 2020 (ESOS
2020), which comprehensively replaced the erstwhile Employee Stock Option Scheme 2007 (ESOS 2007) that was approved by
the shareholders earlier on September 18, 2007. ESOS 2020 enables the Board and the Compensation Committee to grant such
number of stock options of the Bank not exceeding 7% of the aggregate number of paid up equity shares of the Bank, in line with
the guidelines issued by the SEBi. The options vest at one time or at various points of time as stipulated in the Award Confirmation
issued by the Compensation Committee, and there shall be a minimum period of one year between the grant of option and vesting
of the option. The unvested options shall expire by such period as stipulated in the Award Confirmation or five years from the
grant of options whichever is earlier, or such further or other period as the Compensation Committee may determine. The exercise
price for each grant is decided by the Compensation Committee, which is normally based on the latest available closing price and
shall not be lower than the face value of the shares. Upon vesting, the options have to be exercised within a maximum period of
five years or such period as may be determined by the Compensation Committee from time to time. The stock options are equity
settled where the employees will receive one equity share per stock option.
Pursuant to a Composite Scheme of Arrangement with the erstwhile Bharat Financial inclusion Limited, the shareholders of the Bank
approved the IBL Special incentive ESOS for BFiL Merger 2018 (ESOS 2018) on December 11, 2018. ESOS 2018 was approved with a
pool of 57,50,000 options which are equity settled. 50% of the options vest over a period of three years from the grant date and the
remaining options vest over a period of three years from the first anniversary of the grant date. Upon vesting, the options have to
be exercised within a maximum period of five years.
ESOS 2020 and ESOS 2018 are, hereinafter, collectively referred to as ESOS.
As at March 31, 2025, the Compensation Committee of the Bank has granted a total of 5,49,67,313 options that includes 4,96,79,507
options granted under ESOS 2020 and 52,87,806 options granted under ESOS 2018, as set out below:
Expected volatility Is a measure of the amount by which the equity share price is expected to fluctuate during a period. The measure
of volatility used in Black - Scholes option pricing model is the annualized standard deviation of the continuously compounded
rates of return on the share over a period of time. Expected volatility has been computed by considering the historical data on daily
volatility in the closing equity share price on the National Stock Exchange of India Limited (NSE), over a prior period equivalent to
the expected life of the options, till the date of the grant.
The Bank has changed valuation of stock-based compensation to fair value using Black-Scholes model from intrinsic value starting
April 1, 2021. ESOP's granted from April 1, 2021 are valued at fair value of the stock-based compensation is estimated on the date of
grant using Black-Scholes model and is recognized as compensation expense over the vesting period. ESOP's been granted before
April 1, 2021 are still valued at intrinsic value and if these options were valued at fair value then as a result, 'Employees cost' for the
year ended March 31, 2025 would have been higher by ^64.37 crores with a consequent reduction in profit after tax by ^48.17 crores.
15.12 Proposed Dividend
The Bank has not proposed divided for the financial year ended March 31, 2025.
Dividend for the year ended March 31, 2024, paid during the year ended March 31, 2025 pursuant to the approval of the shareholders
at the 30th Annual General Meeting, at the rate of ^16.50 per equity share amounting to ^1,284.89 crores have been considered as
an appropriation from the Profit and Loss Account during the year.
15.13 Letters of Comfort
The Bank has not issued any letters of comfort during the year ended March 31, 2025(Previous year Nil).
15.14 The Micro, Small and Medium Enterprises Development Act, 2006 that came into force from October 2, 2006, provides for certain
disclosures in respect of Micro, Small and Medium enterprises. There have been no reported cases of delays in payments to micro
and small enterprises or interest payments due to delays in such payments.
15.15 During the financial year ended March 31, 2025, other than the transactions undertaken in the normal course of banking business
and in accordance with extant regulatory guidelines and Bank's internal policies, as applicable:
1. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources
or kind of funds) by the Bank to or in any other person(s) or entity(ies), including foreign entities ("intermediaries"}, with the
understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or
invest in other persons or entities identified in any manner whatsoever by or on behalf of the Bank ("Ultimate Beneficiaries")
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
2. No funds have been received by the Bank from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with
the understanding, whether recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend or invest
in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries")
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
15.16 Disclosure of Material Items
Details of expenditure in excess of 1% of total income and classified under "Other Expenditure" has been provided below. Further,
details of Other assets in excess of 1% of total assets and classified under "Other Liabilities- Others" and "Other Assets- Others" has
been provided below.
• Fixed Assets, tax paid in advance and tax deducted at source (net of provisions}, stationery and stamps, non-banking assets
acquired in satisfaction of claims, and others which cannot be allocated to any segments, have been classified as unallocated
assets; Depreciation on Fixed Assets has been classified as unallocated expenses. The unallocated liabilities include share capital,
employee stock option outstanding, reserves and surplus, dividend and others.
• The above information is extracted from the Management Information System of the Bank and relied upon by the auditors.
• RBI's Master Direction on Financial Statements - Presentation and Disclosures, requires to sub-divide 'Retail Banking' into (a} Digital Banking and
(b) Other Retail Banking segment.
Geographic Segments:
The business operations of the Bank are largely concentrated in India. Activities outside India are restricted to resource mobilization in
the international markets and lending to a few overseas entities through the IFSC Banking Unit at the GIFT City, Gujarat. Since the Bank
does not have material earnings emanating from foreign operations, the Bank is considered to operate only in domestic segment.
16.3Related party transactions (AS-18)
The following is the information on transactions with related parties during the year ended March 31, 2025:
a) Name of Related Party with whom Bank has transactions during the year
Key Management Personnel (KMP)
Mr. Sumant Kathpalia - Managing Director & CEO (upto April 29, 2025); Mr. Arun Khurana - Whole Time Director & Deputy CEO (upto
April 28, 2025}
Relatives of KMP
Mrs. Ira Kathpalia, Mr. Karan Kathpalia, Mr. Arvind Kathpalia, Mr. Ranjeet Kathpalia, Dr. Krishan Kumar Khurana, Mrs. Padma Khurana,
Mrs. Nisha Khurana, Mr. Karan Khurana, Mr. Krish Khurana, Dr. Rohit Khurana, Ms. Tanu Mehtani
Associates
IndusInd Marketing and Financial Services Private Limited
Subsidiaries
Bharat Financial Inclusion Limited
17. Significant Matters and its Impact
17.1 On March 10, 2025, the Bank filed a disclosure under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 stating that it had, during an internal review of process relating to other assets and other liabilities of derivative
portfolio, noted discrepancies in these account balances, consequent to which an external firm appointed by the management
had carried out an independent review to validate its internal findings. On March 20, 2025, the Board decided to appoint another
independent professional firm to conduct a comprehensive investigation, amongst others, to identify the root causes of discrepancies,
assess correctness of accounting treatment and its impact on the financial statements, identify any lapses therein and establish
accountability of persons involved. The Bank has since received reports from both the firms. The investigation indicated that from
FY 2016 to FY 2024, the Bank entered into several derivative transactions referred to as internal trades wherein the accounting
followed was improper and not in consonance with the accounting guidelines. This incorrect accounting resulted in recognition of
notional income in the Profit and Loss Account with corresponding balance in other assets account over the years till FY 2023-2024.
Based on quantification of accounting discrepancies that were identified and confirmed in the investigation report, other assets
amounting to ^1,959.98 crores being accumulated notional profits since FY2016 have been written-off/derecognized by way of
reduction from other income under Schedule 14 (V) as prior period item in the current financial year.
17.2 During the review of other assets and other liabilities by the internal Audit Department (IAD) of the bank, it was noted that certain
incorrect manual entries resulted in an unsubstantiated increase in other assets and other liabilities amounting to ^595.00 crores.
The Bank has determined that these assets need to be set off against corresponding other liabilities. The rectification of these have
been carried out. This has no impact on the profit of the Bank for the year ended March 31, 2025.
17.3 In conducting a review of the Bank's microfinance portfolio for the nine-month period ended December 31,2024, the IAD of the Bank
noted incorrect recording of cumulative interest income of ^673.82 crores and fee income of ^172.58 crores for the said period. This
incorrect interest and fee income (net of an interim provision of ^322.43 crores and actual interest income for this period of ^101.41
crores) aggregating to ^422.56 crores has been reversed during the fourth quarter of the current year. This has, however, no impact
on the profit of the Bank for the year ended March 31, 2025.
17.4 In respect of the above matters mentioned in note 17.1, 17.2 and 17.3, the auditors have filed letters u/s 143(12) of the Companies
Act, 2013 read with Rule 13(1) to (4) of the Companies (Audit and Auditors) Rules, 2014 with the Bank, followed by Form ADT-4 along
with the Bank's reply to the Central Government, for suspected offence involving fraud. Further with respect to these matters the
Board of Directors of the Bank suspects the occurrence of fraud against the Bank and the involvement therein of certain employees
having a significant role in the accounting and financial reporting of the Bank. Accordingly, the Bank has made a filing to this effect
with the stock exchanges on May 21, 2025.
17.5 The Bank during its internal review noted misclassification of certain microfinance loans as 'standard assets' along with accrual of
interest income basis auditors observations. The Bank corrected this classification resulting in an additional recognition of Non¬
Performing Advances aggregating to ^1,885.19 crores. The Bank provided for these at a rate of 95% aggregating to ^1,791.08 crores.
This provision together with a reversal of interest income of ^178.12 crores resulted in an adverse impact of ?1,969.20 crores to the
Profit & Loss Account of the Bank for the fourth quarter of the year ended March 31, 2025.
17.6 Through its internal financial review, the Bank also identified other instances of incorrect accounting that required rectification and
have been rectified during the fourth quarter of the year ended March 31, 2025. These include the following:
• Interest payment of ^99.97 crores on certain borrowing instruments was not recognized in the Profit & Loss Account in earlier years.
• A provision of ^133.25 crores in respect of balances in Other Assets that are not expected to be realized.
• Prior period operating expenses of ^206.00 crores and income of ^126.75 crores.
• The Bank reviewed groupings and classification of the Profit & Loss items to assess compliance with prevailing guidelines. Based
on the review, the Bank reclassified the following for the financial year ended March 31, 2025.
• ^760.82 crores from interest income to other income.
• ^157.90 crores from Provision (other than tax) & Contingencies to Other Operating Expense.
17.7 As a result of the above matters mentioned in note 17.1 to 17.6, any financial implications arising from past inaccurate regulatory
submissions, including those to SEBI, Income Tax authorities, and the RBI, are currently unascertainable.
17.8 The Whole Time Director & Deputy CEO and Managing Director & CEO of the Bank resigned with effect from close of business
hours on April 28, 2025 and April 29, 2025 respectively. The RBI vide its letter dated April 29, 2025 has approved the constitution
of a "Committee of Executives" comprising of Head - Consumer Banking and Chief Administrative Officer as members of the said
Committee, to oversee the operations of the Bank under the oversight and guidance of an oversight committee of the Board.
Accordingly, the Board appointed the said Committee on April 30, 2025. The Bank has made necessary fillings with stock exchanges
in respect of the above aforesaid matters.
17.9 The Board of Directors has taken necessary steps in addressing all the areas of concerns and disclosing transparently at the
appropriate stage. The Board of Directors initiated a comprehensive internal financial review of all the material financial statement
balances. The Bank has given necessary accounting effects for all the identified discrepancies in the accounts and ensured that
the financial statements for the current year gave a true and fair view and are free from material misstatements, whether due to
fraud or error. In this regard, the Bank has received recommendations from various internal and external agencies involved. These
recommendations include strengthening policy and procedures, preparation and approval of accounting analysis, control and
discipline over reconciliations, minimizing manual accounting entries, automating processes, addressing manual overrides of control,
etc. These shall be reviewed and implemented under oversight of the Board.
Also, the Bank is in the process of taking necessary steps to assess roles and responsibilities and fix accountability for persons
involved in any of these lapses. The Bank is fully committed towards taking these matters to their conclusion under applicable laws.
18. Audit Trail
The Bank has used certain accounting software, for maintaining its books of account (including two accounting software managed
and maintained by a third-party software service provider) which has a feature of recording audit trail (edit log) facility, except that
no audit trail feature was enabled at database level in respect of two accounting software to log any direct data changes.
Further, to the extent enabled, audit trail feature has operated throughout the year for all relevant transactions recorded in the
accounting software and was not tampered with during the year except for the two software where necessary evidences were not
available to demonstrate the same. Additionally, the audit trail of previous year has been preserved as per the statutory requirements
for record retention to the extent it was enabled and recorded in previous year, except for two software where such audit trail has
not been preserved.
Previous year's figures have been regrouped / reclassified wherever necessary.
As per our report of even date For and on behalf of the Board of Directors
For MSKA & Associates
Chartered Accountants
Firm Registration No: 105047W
per Tushar Kurani Sunil Mehta
Partner Non-Executive,
Membership No: 118580 Independent Part-time Chairman
DIN:00065343
For Chokshi & Chokshi LLP. Soumitra Sen Anil Rao
Chartered Accountants Head - Consumer Banking and Head - Chief Administrative Officer and
Firm Registration No: 101872W/ W100045 Member of Committee of Executives Member of Committee of Executives
per Vineet Saxena Akila Krishnakumar Rajiv Agarwal
Partner Non-Executive, Independent Director Non-Executive, Independent Director
Membership No: 100770 DIN: 06629992 DIN: 00336487
Bhavna Doshi Jayant Deshmukh
Non-Executive, Independent Director Non-Executive, Independent Director
DIN: 00400508 DIN: 08697679
Pradeep Udhas Rakesh Bhatia
Non-Executive, Independent Director Non-Executive, Independent Director
DIN: 02207112 DIN: 06547321
Sudip Basu Lingam Venkata Prabhakar
Non-Executive, Non- Independent Director Non-Executive, Independent Director
DIN: 09743986 DIN: 08110715
Place: Mumbai Santosh Kumar Anand Kumar Das
Date: May 21, 2025 Deputy Chief Financial Officer and Special Company Secretary
Officer - Finance & Accounts
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