14. Provisions and Contingent Liabilities
A provision is recognised when there is a present
obligation as a result of past event, and there is a
probability of an outflow of resources that will be
required to settle the obligation and in respect of
which a reliable estimate can be made. Provisions
are determined based on the Management's best
estimate required to settle the obligation as at the
balance sheet date. These are reviewed at each
balance sheet date and adjusted to reflect the
current best estimates.
In case where the available information indicates that
the loss on the contingency is reasonably possible but
the amount of loss cannot be reasonably estimated,
a disclosure is made in the financial statements.
In case of remote possibility, neither provision nor
disclosure is made in the financial statement.
Contingent Assets are neither recognized nor
disclosed in the financial statements since this may
result in the recognition of income that may never
be realized.
15. Country risk
In addition to the provisions required to be held
according to the asset classification status, provisions
are also required to be made towards country-
wise net funded exposure on foreign exchange
transactions exceeding the threshold limits (other
than for home country). Provision will be made where
the net funded exposure of any country is 1% or
more of the Bank's total funded assets.
Further, till such time internal rating systems
are developed by the Bank, the seven-category
classification followed by Export Credit Guarantee
Corporation of India Ltd. (ECGC) will be utilised
for the purpose of classification of country risk
exposures viz., countries will be classified into seven
risk categories namely insignificant (A1), low (A2),
moderately low (B1), moderate (B2), moderately
high (C1), high (C2) and very high (D).
16. Corporate Social Responsibility
Expenditure towards corporate social responsibility, in
accordance with Companies Act, 2013 is recognised
in the Profit and Loss Account.
17. Operating Lease
Leases where all the risks and rewards of ownership
are retained by the lessor are classified as ‘Operating
lease'. Operating lease payments are recognised as
an expense in the Profit and Loss Account as per the
lease terms. Initial direct costs in respect of operating
leases such as legal costs, brokerage costs etc., are
recognised as expense immediately in the Profit and
Loss Account.
18. Net Profit
The net profit disclosed in the Profit and Loss
Account is after providing for :
• Provision for taxes, standard assets and non¬
performing assets;
• Provision for depreciation on investments,
• Provision for employee benefits; and
• Other usual and necessary provisions
b. Draw down from Reserves
During the year, there has been no draw down from the reserves to the Profit & Loss account.
Basel III disclosures
In accordance with RBI circular DOR.CAP.REC.4/21.06.201/2024-25 dated April 01, 2024, read together with RBI circular
DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015, Banks are required to make Pillar 3 disclosures under Basel
III capital regulations. Accordingly, necessary disclosures have been made available on the Bank's website - https://www.
kvb.co.in/about-us/disclosures/pillar-III-disclosures/. These disclosures have not been subjected to audit by the Statutory
Central Auditors.
1.1 Tier II Capital
During the year ended March 31, 2024, the Bank did not raise any subordinated debt bonds qualifying for Tier II capital.
The Bank has repaid the Basel III complaint Tier II bonds by exercising the call option as indicated in the Information Memorandum
on 12th March 2024 after getting necessary approvals from RBI.
1.2 Proposed Dividend
The Board of Directors have recommended a dividend of 120% i.e. '2.40 per equity share of ' 2.00 each for the year 2023-24
(Previous year 100%-'2.00 per equity share), subject to the approval of the shareholders at the ensuing Annual General Meeting.
In accordance with Accounting Standards 4 - Contingencies and Events Occurring after the Balance Sheet date notified by the
MCA on 30th March 2016, the proposed dividend has not been shown as an appropriation from the Profit and Loss account for
the year ended March 31, 2024 and correspondingly not reported under Other Liabilities and Provisions as at March 31, 2024.
However, capital adequacy ratio has been computed by reducing the proposed dividend.
2b. Liquidity Coverage Ratio (LCR)
i. Qualitative disclosure
Pursuant to RBI guidelines on implementation of Basel III framework applicable to banks in India with effect from January 1,
2015, measurement of LCR by Bank is undertaken for stress testing. LCR promotes short term resilience of banks to potential
liquidity disruptions by ensuring that they have sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario
lasting for 30 days. As per extant regulatory guidelines, the minimum LCR to be maintained by banks is specified at 100%.
i.a Objective
LCR standard aims to ensure that a bank maintains an adequate level of unencumbered HQLAs that can be converted into
cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario
specified by supervisors. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the
stress scenario, by which time it is assumed that appropriate corrective actions can be taken.
Bank has consistently maintained LCR above 100% during FY 2023-24 (as well as during FY 2022-23) i.e. at levels higher
than the required regulatory minimum level, on an ongoing basis.
i.b Composition of HQLA
• Cash in hand
• Excess CRR balance as on that particular day
• Excess Government Securities in excess of minimum SLR requirement
• Government Securities within the mandatory SLR requirement to the extent allowed by RBI under MSF (presently
to the extent of 2% of NDTL as allowed for MSF)
• Facility to avail liquidity for liquidity coverage ratio at 15% of NDTL
• AAA rated bonds and AA- & above and marketable securities representing claims guaranteed by sovereigns having
risk weights higher than 20% but not higher than 50%
• Common equity shares not issued by the bank or any of its affiliated entities and included in NSE CNX Nifty and /
or S&P BSE Sensex indices.
2c. Net Stable Funding Ratio (NSFR)
Qualitative disclosure
NSFR = Amount of available stable funding (ASF) 4- amount of required stable funding (RSF).
NSFR indicates that the Bank maintains a stable funding profile in relation to the composition of its assets and off-balance sheet
activities and promotes funding stability i.e. resilience over a longer-term time horizon by requiring banks to fund their activities
with more stable sources of funding, on an on-going basis.
ASF is defined as the portion of capital and liabilities, expected to be reliable over the time horizon considered by NSFR, which
extends to one year. RSF is a function of the liquidity characteristics and residual maturity of various assets (including off-balance
sheet exposures) held. RBI has mandated that minimum NSFR of 100% is to be maintained with effect from October 01, 2021.
NSFR standard is structured to:
a) Ensure that investment banking inventories, off-balance sheet exposures, securitization pipelines and other assets and
activities are funded with at-least a minimum amount of stable liabilities;
b) Avoid over-reliance on wholesale funding during times of buoyant market liquidity;
c) Counterbalance the cliff-effects of the liquidity coverage ratio approach;
d) Offset incentives for institutions to fund their stock of liquid assets with short-term funds that mature just outside the
supervisory defined horizon for LCR; and
e) Require stable funding for all illiquid assets and securities held, including those held in HFT/AFS i.e. reckon illiquidity and
not the assumed execution turnover period.
The following assumptions are used by RBI in the calibration of NSFR :
• Longer-term liabilities are assumed to be more stable than short-term liabilities;
• Short-term (maturing in less than one year) deposits provided by retail customers and funding provided by small business
customers are behaviorally more stable than wholesale funding of the same maturity from other counterparties;
• For the sake of continuity and resilience of credit creation, stable funding for some proportion of lending to the real
economy is required;
• Banks may seek to roll over a significant proportion of maturing loans to preserve customer relationships;
• Short-dated assets (maturing in less than one year) require a smaller proportion of stable funding because these could
be allowed to mature without rolling-over;
• Unencumbered, high-quality assets that can be securitized or traded or used as collateral to secure additional funding, do
not need to be wholly financed with stable funding; and
• At least a small portion of the potential calls on liquidity arising from off-balance sheet commitments and contingent
funding obligations need to be met by stable funding.
NSFR is measured on a quarterly basis and advanced techniques such as stress testing, sensitivity analysis etc. are conducted
periodically to assess the impact of various contingencies.
3.3 Sale and transfers to / from Held to Maturity (HTM) Category
During the year (as well as during the previous year), sale of securities from HTM category does not exceed 5% of the book
value of investments held in HTM category at the beginning of the year. The market and book value of SLR investments held
in HTM category as on March 31, 2024 is ' 17,031.63 Crore and ' 17,211.32 Crore respectively (' 15,628.11 Crore and
' 16,005.10 Crore respectively during the previous year), and shows a mark to market depreciation of ' 179.69 Crore (mark to
market depreciation of ' 376.99 Crore during the previous year).
During the financial year, shifting was undertaken in Government securities from HTM to AFS category of ' 838.24 Crore (' Nil
during the previous year). There were no shifting undertaken from AFS to HTM category in the current year as well as previous
year. However, the bank has undertaken mandatory shifting of Investments held in Alternative Investment Fund (AIFs) amounting
to ' 2.13 Crore (' 2.11 Crore during the previous year) from HTM to AFS category during the first quarter of the F.Y. as per RBI
guidelines. Depreciation required to be provided on account of shifting of securities during the current year was Nil (' Nil during
the previous year).
7.3 Disclosures on risk exposure in derivatives
Qualitative Disclosure
Structure, Organisation, Scope, Nature of risk management in derivatives
Dealing in derivatives is centralized in the integrated Treasury of the Bank. Treasury is segregated into three functional areas i.e.,
front office, mid office and back office.
Derivative transactions are entered into by the front office; mid office conducts an independent check of the transactions entered
into by the front office and ensures compliance with various internal and regulatory guidelines. Back Office undertakes activities
such as confirmation, settlement, accounting, risk monitoring and reporting.
Rupee derivative deals are executed for hedging or for trading. The risk in the derivatives portfolio is monitored by assessing
the MTM position of the portfolio on a daily basis and the impact on account of probable market movements. The overall
portfolio is operated within the risk limit fixed by the Bank. Forex derivative deals are offered to clients on back-to-back basis.
The outstanding deals are marked to market on monthly basis. The MTM values are informed to the clients every month and
margin topped up where required. Banks have been permitted to adopt the Current Exposure Method for measurement of Credit
Exposure of Derivative products as per extant RBI guidelines.
The Board reviews the risk profile of the outstanding portfolio at regular intervals.
Accounting
Accounting policies for derivatives adopted by the Bank are as per RBI guidelines. Hedge swaps are accounted for like a hedge
of the asset or liability. The income / expense on hedge swaps are accounted on accrual basis except where swap transactions
whose underlying is subjected to MTM. Such hedge swaps are marked to market on a monthly basis and the gain / losses are
recorded as an adjustment to the designated asset / liability. The non-hedge swaps are marked to market every month and the
MTM losses in the basket are accounted in the books while MTM profits are ignored.
Collateral Security
As per market practice, no collateral security is insisted for the contracts with counter parties like Banks / PDs etc. For deals
with corporate clients, appropriate collateral security / margin etc. are stipulated whenever considered necessary.
Credit Risk Mitigation
Most of the deals are contracted with Banks / major PDs / highly rated clients and no default risk is anticipated on the deals
with them.
The market making and the proprietary trading activities in derivatives are governed by the Integrated Treasury policy of the
Bank, which lays down the position limits, stop loss limits as well as other risk limits. As far as forex derivatives are concerned,
they are undertaken on back-to-back basis only.
Risk monitoring on derivatives portfolio is done on a daily basis. The Bank measures and monitors risk using Price Value of a
Basis Point (PVBP) approach. Risk reporting on derivatives forms an integral part of the management information system and
the marked to market position and the PVBP of the derivatives portfolio is reported on a daily basis to the top management.
Risk monitoring on forex derivatives is done on a monthly basis. It is reported to the top management and related clients on
monthly basis.
12. Disclosure of penalties imposed by RBI
During the year RBI has levied the following penalties -
1. ' 1,30,100/- emanating out of deficiencies found while processing the currency notes remitted by the Bank, ' 30,000/-
for the deficiencies found in the branch incognito visit by RBI and ' 1,70,000/- for the deficiencies found in the ATM cash
outs (Previous year ' 187,200/-).
13. Disclosures on Remuneration
Qualitative Disclosure
a. Information relating to the composition and mandate of the Nomination and Remuneration Committee (NRC)
As on March 31, 2024, the Nomination & Remuneration Committee (NRC) of the Board consists of three Independent
Directors. Further as per RBI guidelines a Member of Risk Management Committee of the Board is also Member in
NRC. The Composition complies with RBI guidelines,
provisions of Companies Act, 2013 and SEBI
(Listing Obligations and Disclosure Requirements),
Regulations, 2015 (‘SEBI LODR').
The mandate of Nomination and Remuneration
Committee includes:
a. To formulate criteria for determining
qualifications, positive attributes and
independence of a director, in terms of fit
and proper criteria issued by the RBI from
time to time.
b. To devise policy on Board Diversity, and policy
on Appointment and Succession Planning
for Directors.
c. To formulate/review criteria for
evaluation of performance of Chairman,
Independent Directors, Board of Directors,
Committees of Board.
d. To recommend persons who are qualified to
become directors and who may be appointed
in senior management in accordance with the
criteria laid down and recommend to the board
of directors their appointment and removal.
e. To frame/review Compensation Policy towards
ensuring effective alignment between
remuneration and risk. Directors and Senior
Management Personnel shall be part of the
Compensation Policy.
f. To also review and recommend to the board,
all remuneration, in whatever form, payable to
Directors & senior management.
g. To formulate the criteria for variable pay
and fix the thresholds for applying malus &
clawback on the grant of variable pay payable
to MD & CEO/ WTD.
h. To consider grant of stock options to
employees, administer and supervise the
Employee Stock Option Plans in conformity
with statutory provisions and guidelines.
i. To provide inputs, if required, to Board
for making disclosures regarding policies,
appointments, remuneration etc. of Directors
and Senior Management personnel in the
Annual Reports/ Directors Reports/Financial
Statements etc. as may be required by the
regulations from time to time.
j. To perform any other functions or duties as
stipulated by the Companies Act, RBI, SEBI,
Stock Exchanges and any other regulatory
authority or under any applicable laws as may
be prescribed from time to time.
b. Information relating to the design and structure
of remuneration processes and the key features
and objectives of remuneration policy
The Bank has Board approved Compensation
Policy in terms of the RBI guidelines, provisions of
Companies Act, 2013 and SEBI (Listing Obligations
and Disclosure Requirements), Regulations, 2015
(‘SEBI LODR'). The Compensation Policy of the
Bank covers the compensation payable to all the
employees including the MD&CEO/ WTD, Key
Managerial Personnel, Material Risk Takers, Control
Function Staff as per the guidelines of RBI as also
fee payable including profit related commission to
Non- Executive Directors/ Independent Directors.
Nomination and Remuneration Committee (NRC)
of the Bank oversees the framing, review and
implementation of compensation policy on behalf
of the Board of Directors. NRC shall work in close
co-ordination with the Risk Management and Asset
Liability Management Committee of the Board
in order to achieve effective alignment between
remuneration and risks.
In terms of RBI Guidelines and Compensation Policy
of the Bank the position of Managing Director &
CEO and President & COO are identified as Material
Risk Taker (MRT). The compensation payable to
MRTs is divided into fixed and variable components.
Non-Executive Directors/ Independent Directors are
paid sitting Fees for attending Board/ Committee
meetings. Part-time (Non-Executive) Chairperson
is entitled for honorarium, as approved by Reserve
Bank of India and Shareholders of the Bank. In terms
of RBI Circulars and as approved by the shareholders
in 103rd Annual General Meeting, Non-Executive
Directors of the Bank including Independent directors
(Other than Non-Executive (Part-time) Chairperson)
are eligible for fixed compensation to the tune of
0.1% of the profit available for distribution subject
to a maximum of '10 Lakhs for each Director per
annum with effect from FY 2022-23, for a period of
three (3) years. The said fixed compensation payable
shall be in proportion to the tenure of the Directors
on the Board during the year.
Remuneration to employees (other than MRTs) is
defined by the IBA pay scale / CTC pay structure,
both of which are approved by the Board. The IBA
pay scale is an industry standard across all PSBs
and old generation private banks, while the CTC pay
structure specific to KVB has been formulated on the
basis of comparative industry practices. The objective
is to suitably compensate every employee as per
his position in the organization so as to adequately
recognize his contributions.
Objective of the Compensation policy is to align the
compensation with prudent risk taking;
• Compensation must be adjusted for all
types of risks
• Compensation outcomes must be symmetric
with risk outcomes
• Compensation pay-out schedules must be
sensitive to the time horizon of risks
• The proportion of cash, equity and other forms
of compensation must be consistent with
risk alignment.
c. Description of the ways in which current and future
risks are taken into account in the remuneration
processes. It should include the nature and type
of the key measures used to take account of these
risks
With respect MRTs the clauses of Compensation
Policy adopted by the Bank address the issues
pertaining to current and future risks. A wide
variety of measures of credit, market and liquidity
risks are used by the bank in implementation of
risk adjustment. This risk adjustment has both
quantitative and qualitative elements. The Policy
effectively aligns the compensation with prudent risk
taking and shall be symmetrical with risk outcomes
as well as sensitive to the time horizon of risk. Risk
measures relating to the compensation payable are
reviewed on timely basis and are updated to suit the
skill gaps and current day needs.
The remuneration (other than MRTs) as per IBA /
CTC package is position / designation specific and
not necessarily risk specific. However, there are
sufficient systems and procedures in place in the
Bank (including KVB Officer Employees, Conduct
Regulations and Discipline & Appeal Regulations, and
also Malus / Claw back clauses in the employment
contracts wherever applicable and continuous
monitoring / auditing etc) to ensure risk mitigation
and prevention.
Board of Directors of the Bank through NRC shall
exercise oversight & effective governance over the
framing and implementing the Compensation policy.
d. Description of the ways in which the Bank seeks
to link performance during a performance
measurement period with levels of remuneration
Bank follows a performance-based remuneration,
which motivates and rewards high performers who
strengthen long-term customer relations, and
generate income and shareholder value. The Bank
while designing the compensation structure ensures
that there is a proper balance between fixed pay and
variable pay. Bank ensures that variable pay shall
relate to the performance. The variable pay could be
in cash, stock linked instruments or a mix of both.
While fixing the Variable Pay, performance parameters
under financial and non-financial areas of operations
are assessed. The financial performance of the bank
is factored while determining the amount of variable
remuneration to be paid. Variable Pay shall be fixed on
the basis of performance matrix broadly categorized
as a) Bank as a whole, b) Business Unit, c) Individual,
based on the quantitative and qualitative criteria. The
quantitative criteria shall relate to the performance
of the Bank and certain qualitative factors taking into
account the, Governance Improvement Measures,
Cost to Income Ratio, Capital Adequacy Ratio,
extraordinary items, appropriate risk management
and efficient consumption of capital, etc as set
out by NRC.
In the event of negative growth of the bank and or in
the relevant line of business in any year, the deferred
compensation shall be subjected to malus and claw
back arrangements in tune with the RBI guidelines.
e. A discussion of the bank’s policy on deferral and
vesting of variable remuneration and a discussion
of the bank’s policy and criteria for adjusting
deferred remuneration before vesting and after
vesting
As per the Compensation Policy, Variable pay is
eligible on the achievement of certain business/
compliance targets fixed by the management. The
structuring of remuneration in case of MD & CEO/
WTD shall be subject to the approval of RBI.
Deferral arrangements for variable pay in case
of Managing Director & CEO/WTD and other
employees who are MRTs and Control Function Staff,
in adherence to FSB implementation standards shall
be; a minimum of 60% of the total variable pay shall
be under deferral arrangements.
If cash component of variable pay equals or exceeds
'25.00 Lakhs, then at least 50% of the cash bonus
shall be deferred.
The deferral period shall be a minimum of three years
applicable to both cash and non-cash components of
the variable pay. Deferred remuneration shall either
vest fully at the end of the deferral period or be
spread out over the course of the deferral period.
The first such vesting shall be not before one year
from the commencement of the deferral period.
The vesting shall be no faster than on a pro-rata
basis. Additionally, vesting, shall not take place more
frequently than on a yearly basis, to ensure a proper
assessment of risks before the application of ex¬
post adjustments.
Subject to bank's ESOP schemes, NRC at its
discretion may specify a retention period after the
vesting of stock linked instruments which have been
awarded as variable pay during which they cannot be
sold or accessed.
In cases where the compensation by way of share
linked, instruments is not permitted by law /
regulations, the entire variable pay can be in cash,
subject to deferral /vesting / malus-clawback norms.
f. Description of the different forms of variable
remuneration (i.e. cash, shares, ESOPs and other
forms) that the bank utilizes and the rationale for
using these different forms
Variable pay is purely based on performance and
is measured through score cards. Bank ensures
that the compensation structure is comprehensive
and considers both, qualitative and quantitative
performance measures. The variable pay would be
in the form of cash & non-cash components (in the
form of Share linked instruments).
Bank has Employees Stock Option Scheme i.e.
ESOS. NRC may grant stock options under the
Employees Stock Options Plan/Scheme from time
to time in terms of SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021
(Erstwhile SEBI (Share Based Employee Benefits)
Regulations, 2014).
In case of other employees Bank also subscribes to
different forms of variable pay such as performance
linked incentives, Ex-gratia for other employees,
non-cash incentives, Bonus, any other incentives by
whatever name called having the similar features.
The Bank shall not grant any severance pay (other
than the terminal benefits and gratuity as per
the provisions). Bank shall not provide any facility
or funds or permit to insure or hedge his/her
compensation structure to offset the risk alignment
effects embedded in the compensation package.
13.1 Remuneration (including sitting fees, profit related commission and Honorarium) paid to non-executive directors during the year
is ' 2.57 Crore (previous year ' 2.02 Crore).
13.2 Stock options
The Bank has formulated and adopted Employee Stock Option Schemes to provide a platform to employees for participating
in the ownership of the Bank and in its long-term growth. The Bank uses stock options as a compensation tool to attract and
retain critical talent and encourage employees to align individual performances with that of the Banks' objectives. Currently, the
Bank has the following Schemes in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021:
• Karur Vysya Bank Employees Stock Option Scheme 2011 (“KVB-ESOS-2011”)
• Karur Vysya Bank Employees Stock Option Scheme 2018 (“KVB-ESOS-2018”)
The grants made under the said schemes are in accordance with SEBI (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021 (Erstwhile SEBI (Share Based Employee Benefits) Regulations, 2014).
Note:
1. Vesting eligibility under these schemes are purely based on achievement of performance matrix of FY 2020-21. The
vesting period shall be under deferral arrangement upto three years from the date of grant based on the employees left
over service period in the Bank, however minimum vesting period of one year is mandatory.
2. Consequent to the performance assessment for FY 2022-23 and based on eligibility conditions during the year, 3,60,894
options (ESOS 2011 scheme - 3,28,194 options and ESOS 2018 scheme -32,700 options) were lapsed, and the said
options were added back to the Employee Stock Option pools (5,92,086 options lapsed during the previous year).
3. The Bank has granted 84,454 options of face value ' 2/- each to Material Risk Takers (MRTs) - MD & CEO and President &
COO under KVB ESOS 2018 scheme during the year(1,16,293 options during the previous year). In terms of RBI Guidelines
on Compensation Policy, the said grant is part of their variable pay non-cash component for the performance assessment
period of FY 2022-23. Further Bank has also granted 1,13,321 options of face value of ' 2/- each to Senior Management
under KVB ESOS 2018 scheme during the year as a part of their non-cash component for the performance assessment
period of FY 2022-23. The vesting period shall be under deferral arrangement of three years from the date of grant.
14.6 Status with regard to IndAS Implementation
Ministry of Corporate Affairs (MCA), Government of India, notified the Companies (Indian Accounting Standards) Rules, 2015
on February 16, 2015. Vide press release dated January18, 2016, MCA notified the roadmap for implementation of Indian
Accounting Standards (IndAS) (converging with the Internal Financial Reporting Standards (IFRS)) for Scheduled Commercial
Banks (SCBs) excluding Regional Rural Banks, Non-Banking Financial Companies and Insurance Companies. Accordingly, RBI,
vide circular DBR.BP.BC.No.76/21.07.001/2015-16 dated February 11, 2016, advised SCBs to follow IndAS from April 01,
2018, subject to guidelines / directions to be issued in this regard.
RBI initially deferred IndAS implementation by SCBs to April 01, 2019; subsequently, vide circular DBR.BP.BC.
No.29/21.07.001/2018-19 dated 22nd March 2019, implementation of IndAS by SCBs has been deferred till further notice.
RBI has not issued any further notification on implementation of IndAS by SCBs during the financial year 2023-24.
In compliance to the RBI circular dated February 11, 2016, the status of IndAS implementation is given below:
Proforma IndAS statements have to be submitted to RBI on half-yearly basis with effect from FY 2021-22 (as against quarterly
basis up to the previous year); accordingly, proforma IndAS statements for the half-year ended September 30, 2023 have
been prepared and submitted to RBI. Bank has evaluated IndAS solution offered by various vendors. It is proposed to procure a
suitable software to enable the Bank to comply with IndAS requirements including, inter-alia, to evaluate, determine and measure
probability of default, loss given default, expected credit loss, effective interest rate etc., as well as support accounting, reporting
and MIS generation for reporting purposes. Based on the Discussion Paper on Introduction of Expected Credit Loss Framework
for Provisioning by Banks issued by Reserve Bank of India, the bank is in the process of evaluating and reviewing the same.
14.8 Disclosure on amortisation of expenditure on account of enhancement in family pension of employees of banks
The revision in family pension payable to employees of the Bank covered under 11th Bipartite Settlement and Joint Note dated
November 11, 2020 was quantified on August 26, 2021; the Bank opted to amortize the additional liability of ' 80.26 Crore
based on actuarial valuation during the three quarters of financial year 2021-22 equally, and the same has been accordingly
expensed to Profit & Loss account in the previous financial year 2021-22 itself.
14.9 Disclosure requirement as per Accounting Standards (AS)
In compliance with the guidelines issued by the RBI regarding disclosure requirements of the various Accounting Standards, the
following information is disclosed:
a. There are no material prior period income and expenditure included in the Profit & Loss account, which requires a disclosure
as per AS-5.
For the preparation of these financial results, the bank has followed the same accounting policies and generally accepted
practices adopted for the preparation of audited financial statements for the year ended March 31, 2023.
b. Revenue Recognition (AS-9)
Bank recognises revenue on accrual basis, as per details given in item C.1 of the Accounting Policy of the Bank (Schedule 17).
c. Effects of changes in Foreign Exchange Rates (AS-11)
Bank has followed the guidelines issued by RBI and FEDAI, in order to comply with the applicable requirements under
AS-11. Accordingly, foreign exchange transactions are accounted as per details given item C.6 of the Accounting Policy
of the Bank (Schedule 17).
d. Employee Benefits (AS -15)
The Bank is following AS-15 (Revised 2005) ‘Employee Benefits' as under:
a. In respect of Contributory Plan, viz.,
Provident Fund: The Bank pays fixed contribution at pre-determined rates to a separate trust, which invests in
permitted securities. The obligation of the Bank is limited to such fixed contribution.
National Pension Scheme: As per industry settlement dated April 27, 2010, employees who have joined on or
after April 01, 2010 are covered under National Pension System (NPS) regulated by Provident Fund Regulatory
Development Authority (PFRDA). Employer's contribution to NPS has been recognised as expenditure in the profit
and loss account.
b. In respect of Defined Benefit Plans, viz.,
Gratuity: The Bank Provides for Gratuity, a defined benefit plan (the Gratuity Plan) covering the eligible employees.
The Gratuity Plan provides a lump sum payment to vested employees on retirement, death, incapacitation or
termination of employment, of an amount based on respective employee's salary and tenure of employment.
Pension: The Bank Provides for Monthly pension, a defined benefit plan (the Pension Plan) covering the eligible
employees. The Pension Plan provides a monthly pension after the retirement of the employees till death and to the
family after his death of the pensioner based on the respective employee's salary and tenure of the employment.
e. Segment Reporting: (AS-17)
1. Business Segments
For the purpose of segment reporting, the reportable segments are identified into Treasury, Corporate/Wholesale
banking, Retail banking and other banking operations, in compliance with RBI guidelines. Brief description of activities
of each segment and revenue attributable thereto is as under:
1. Treasury portfolio comprises of investments in Central and State Government securities, debt instruments of
Banks, FIs, Insurance companies, PSUs and corporates, certificate of deposits, equity shares, mutual funds,
security receipts etc. as well as forward contracts, derivatives and foreign exchange operations on proprietary
account and for customers, including trading in these instruments as well as borrowing and lending operations.
Treasury income is primarily earned through interest on investments, forex income as well as income from
securities trading; expenditure includes interest on funds borrowed and other allocated overheads.
2. Corporate/ Wholesale banking includes all advances to trusts, partnership firms, companies, and statutory
bodies, which are not included under Retail Banking.
Revenue comprises of interest and fees / charges earned from such clients and expenses are those incurred
on interest towards funds utilized and other allocated overheads.
3. Retail banking comprises of lending of funds and other banking services to any legal person including small
business customers, on the basis of the borrower, nature of the product, granularity of the exposure and
quantum thereof.
Revenue comprises of interest and fees / charges earned from such clients and expenses are those incurred
on interest towards funds utilized and other allocated overheads.
4. Other banking operations includes items not included above i.e. para-banking activities like bancassurance,
thirdpartyproductdistribution,dematservicesandotherbankingtransactionsandincludesitemslikedepositsinRIDF,MSME
Funds etc.
Income earned from such services and costs related thereto are reported thereunder.
k. Interim Financial Reporting (AS-25)
Quarterly financial reviews have been carried out as per extant RBI and SEBI guidelines, and reporting / filing of the
prescribed information have been complied with by the Bank.
l. Impairment of Assets (AS - 28)
In the opinion of the Management, there is no impairment of its Fixed Asset to any material extent as at March 31, 2024
requiring recognition in terms of Accounting Standard 28 (also as at March 31, 2023).
14.11 The Bank has deposited an amount of ' 599.91 Crore ('563.54 Crore during the previous year) towards disputed tax liability. In
the opinion of the Bank, no provision is considered necessary based on favourable decisions by various courts.
14.12 Disclosure on Investor Education and Protection Fund (IEPF)
As per the Companies Act 2013, dividends unclaimed for more than seven years from the date of their declaration and all shares
in respect of which dividends remain unclaimed for the last seven consecutive years are to be transferred to Investor Education
and Protection Fund.
In compliance with the above provisions, the unclaimed dividend amount of ' 56,05,194/- ('60,35,354/- of previous year) for
the FY 2015-16 and 85,482 shares (91,584 shares for previous year) of face value ' 2/- each, in respect of which the dividends
remain unclaimed from FY 2015-16 for the last seven consecutive years, were transferred to the IEPF during the year ended
March 31, 2024 within the timelines.
14.13 a. Corporate Social Responsibility (CSR)
The bank has incurred an expenditure of ' 8.06 Crore towards CSR and has also provided ' 10.33 Crore during the year for
various future projects and its appropriateness for spending / coverage under CSR (Previous year ' 12.84 Crore).
14.13 b. Audit Trail
As required by Rule 11 (g) of the Companies (Audit and Auditors) Rules 2014, which is effective from April 1, 2023, the Company
is using an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility
and the same has operated throughout the year for all relevant transactions recorded in the software. In respect of Digital Gold
Loan, PeopleSoft HRMS and Bullion Precious Metal where the audit trail (edit log) was enabled at database level/ captured in
DAM tool from June 13, 2023, July 9,2023 and February 01, 2024 respectively, based on the compensating controls and other
monitoring activities in place at the application and database levels, in the opinion of the management, the above will not have
any impact on the financial statements.
14.14 Description of Contingent Liabilities
a. Claims against the Bank not acknowledged as debts
These represent claims filed against the Bank in the normal course of business relating to various legal cases currently in
progress. These also include demands raised by income tax and other statutory authorities and disputed by the Bank.
b. Liability on account of forward exchange and derivative contracts
The Bank presently enters into foreign exchange contracts and interest rate swaps with interbank counterparties and
customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted
rate. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows in the same currency
based on fixed rates or benchmark reference. The notional amounts of such foreign exchange contracts and derivatives
provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the
amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the
Bank's exposure to credit or price risks. The fluctuation of market rates and prices cause fluctuations in the value of these
contracts and the contracted exposure become favourable (assets) or unfavourable (liabilities).
c. Guarantees given on behalf of constituents
As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit standing.
Guarantees represent irrevocable assurances that the Bank will make payments in the event of the customer failing to
fulfil its financial or performance obligations.
d. Acceptances, endorsements and other obligations
These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank's customers
that are accepted or endorsed by the Bank.
e. Other items for which the bank is contingently liable
Includes Capital commitments and amount transferred to RBI under the Depositor Education and Awareness Fund (DEAF).
(Refer schedule 12 for amounts relating to contingent liability.)
14.15 Inter-branch transactions
Inter Branch/Office accounts reconciliation has been completed upto March 31, 2024 and all the inter branch entries have been
reconciled upto March 31, 2024.
14.16 Balancing of books
The books of accounts have been balanced and tallied in all branches of the Bank as on March 31, 2024 (also as on March
31, 2023).
15. Disclosure under Rule 11(e) of the Companies (Audit & Auditors) Rules, 2014
The Bank, as part of its normal business, grants loans and advances to Non-Banking Finance Company/ies, real estate promoters
/ developers, makes investment, provides guarantees (including against margin / guarantees received from third parties / banks)
and accepts deposits and borrowings from its customers, other entities and persons. Also, the Bank, as part of its normal business,
avails refinance from financial institutions and other entities wherein the proceeds are applied to a category of customers with
specific profile parameters. These transactions are part of Bank's authorised normal business, which is conducted in adherence
to extant regulatory requirements.
Other than the transactions described above -
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 lend to or invest in other persons
or entities identified by or on behalf of the Bank (“Ultimate Beneficiaries”) or provide any guarantee, security or like on
behalf of the Ultimate Beneficiaries.
2. The Bank has not received any funds from any person(s) or entity(ies) (“Funding Party”) with the understanding, whether
recorded in writing or otherwise, that the Bank shall, whether, directly or indirectly, lend to or invest in other persons or
entities identified by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or
the like on behalf of the Ultimate Beneficiaries
16. Figures of the previous year have been regrouped/rearranged/reclassified wherever necessary.
Dr.MEENA HEMCHANDRA CHINNASAMY GANESAN B.RAMESH BABU J.NATARAJAN RAMSHANKAR R M.SRINIVASA RAO
Non-Executive Independent Audit Committee Chairman Managing Director & CEO President Chief Financial Officer Company Secretary
(Part-time) Chairperson DIN: 07615862 DIN: 06900325
DIN: 05337181
As per our report of even date
For Sundaram & Srinivasan For R.G.N. Price & Co.,
Chartered Accountants Chartered Accountants
FRN:004207S FRN: 002785S
P Menakshi Sundaram Sriraam Alevoor M
Place : Karur Partner Partner
Date : May 13, 2024 M. No. 217914 M. No. 221354
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