13 Accounting for provisions, contingent liabilities and contingent assets
The Bank has assessed its obligations arising in the normal course of business, including pending litigations, proceedings pending
with tax authorities and other contracts including derivative and long term contracts. In accordance with Accounting Standard - 29 on
‘Provisions, Contingent Liabilities and Contingent Assets’, the Bank recognises a provision for material foreseeable losses when it has
a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are measured based on best
estimate of the expenditure 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.
In cases 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 to this effect is made as contingent liabilities in the financial statements. The Bank does not expect
the outcome of these contingencies to have a materially adverse effect on its financial results. Contingent assets are neither recognised nor
disclosed in the financial statements.
14 Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal /
external factors. Impairment loss, if any, is provided in the Profit and Loss Account to the extent carrying amount of assets exceeds their
estimated recoverable amount.
15 Taxes on income
The Income Tax expense comprises current tax and deferred tax. Current tax is measured at the amount expected to be paid in respect of
taxable income for the year in accordance with the Income Tax Act, 1961. Deferred tax assets and liabilities are recognised for the future
tax consequences of timing differences being the difference between the taxable income and the accounting income that originate in one
period and are capable of reversal in one or more subsequent period.
Deferred tax assets on account of timing differences are recognised only to the extent there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets can be realised. In case of carry forward losses and unabsorbed
depreciation, under tax laws, all the deferred tax assets are recognised only to the extent there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.
Deferred tax assets are reassessed at each reporting date, based upon the Management’s judgement as to whether realisation is considered
as reasonably certain.
Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the
Balance Sheet date. Changes in deferred tax assets / liabilities on account of changes in enacted tax rates are given effect to in the Profit
and Loss Account in the period of the change.
Current tax assets and liabilities and deferred tax assets and liabilities are off-set when they relate to income taxes levied by the same
taxation authority, when the Bank has a legal right to off-set and when the Bank intends to settle on a net basis.
16 Accounting for Dividend
As per AS 4 (Revised), with effect from April 2016, the Bank is not required to provide for dividend proposed / declared after the Balance
Sheet date. The same shall be appropriated from next year amount available for appropriation.
17 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting
attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of
equity shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders,
and share split.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Diluted
earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or
converted during the year.
18 Share issue expenses
Share issue expenses are adjusted from Securities Premium Account as permitted by Section 52 of the Companies Act, 2013.
19 Credit cards reward points
The Bank estimates the liability for credit card reward points and cost per point using actuarial valuation conducted by an independent
actuary, which includes assumptions such as mortality, redemption and spends.
20 Segment reporting
In accordance with guidelines issued by RBI and Accounting Standard 17 (AS-17) on “Segment Reporting”, the Banks’ business has been
segregated into the following segments whose principal activities were as under:
A transfer pricing mechanism has been established by Asset Liability Committee (ALCO) for allocation of interest cost to the above
segments based on borrowing costs, maturity profile of assets / liabilities etc. and which is disclosed as part of segment revenue.
Segment revenues consist of earnings from external customers and inter-segment revenues based on a transfer pricing mechanism.
Segment expenses consist of interest expenses including allocated operating expenses and provisions.
Segment results are net of segment revenues and segment expenses including interdivisional items.
Segment assets include assets related to segments and exclude tax related assets. Segment liabilities include liabilities related to the
segment excluding net worth and employees’ stock option (grants outstanding).
Since the business operations of the Bank are primarily concentrated in India, the Bank is considered to operate only in the
domestic segment.
7. DETAILS OF SALES MADE OUT OF HTM
During the year ended 31st March, 2025, the value of sale / transfer of securities to / from HTM category (excluding one-time transfer of
securities, permitted sales by RBI consequent to a downward revision in SLR requirements and sales to RBI under Open Market Operation
auctions/Switch/GSAP) was within 5% of the book value of instruments in HTM category at the beginning of the year.
8. CHANGE IN ACCOUNTING POLICY
The Bank implemented the Master Direction - Classification, Valuation and Operation of Investment Portfolio of Commercial Banks
(Directions), 2023 dated 12th September, 2023 which is applicable to banks from 1st April, 2024. Consequent to the transition provisions,
the Bank's networth and investments have increased by H 2,905.46 crore (post-tax) and H 3,283.11 crore (pre-tax) respectively as on 1st
April, 2024 on account of revision in the carrying value to the fair value as on such date. Subsequent changes in fair value of performing
investments under Available for Sale {"AFS") and Fair Value Through Profit and Loss ("FVTPL") (including Held For Trading ("HFT"))
categories have been recognised through AFS reserve and Profit and Loss Account respectively. Accordingly, the amounts for periods
prior to 1st April, 2024 are not comparable.
C. Disclosures on risk exposures in derivatives:
Qualitative disclosures:
a) Structure and organization for management of risk in derivatives trading:
The Board of Directors, the Risk Management Committee (RMC), Board Committee for Derivatives products, the Asset Liability
Management Committee (ALCO), the Senior Management Committee for Derivatives (SMC) and the Risk Management
Department are entrusted with the management of risks in derivatives.
The philosophy and framework for the derivative business is laid out in the Board approved Investment and Derivative policies.
The ALCO of the Bank is empowered to set the limit-framework for derivatives. It also reviews the market risk exposures of
derivatives against the limits. The Risk Management Committee reviews all risks on a consolidated basis and also defines
the risk appetite.
The Board Committee for Derivatives products and the Senior Management Committee for Derivatives (SMC) oversee the
client derivatives business. These committees are responsible for reviewing and approving the derivative products that can
be offered to clients (within the regulatory framework provided by the RBI). The Board approved ‘Customer Suitability and
Appropriateness Policy for Derivatives’ lays down the risk management & governance framework for offering derivatives.
The Bank has Operations and Risk Management functions - independent of the dealing function. The Market Risk Management
& Counterparty Risk Management Departments are responsible for assessment, monitoring, measurement & reporting of
market & counterparty risks in derivatives.
b) Scope and nature of risk measurement, risk reporting and risk monitoring systems:
All significant risks of the derivative portfolio are monitored, measured & reported to the senior management. The Treasury
Middle Office, on a daily basis, measures & reports risk-metrics like Value-at-Risk (VaR), PV01, Option Greeks like Delta, Gamma,
Vega, Theta, Rho etc. Counterparty Risk exposure of the derivatives portfolio is also monitored & reported daily. The Treasury
Middle Office independently reports profitability on a daily basis. Rate reasonability tests are performed on the Derivative
portfolio to ensure that all trades are entered into at market rates. Stress testing is performed to measure the impact of extreme
market shifts on the Bank’s portfolio (including derivatives). Suitability and Appropriateness assessment is performed before
offering derivatives to clients. The Bank continuously invests in technology to enhance the Risk Management architecture.
c) Policies for hedging and / or mitigating risk and strategies and processes for monitoring the continuing effectiveness of
hedges / mitigants:
The Board Approved ‘Hedging Policy’ details the hedging strategies, hedging processes, accounting treatment, documentation
requirements and effectiveness testing for hedges.
Hedges are monitored for effectiveness periodically, in accordance with the Board Approved Policy.
d) Accounting policy for recording hedge and non-hedge transactions; recognition of income, premiums and discounts;
valuation of outstanding contracts; provisioning, collateral and credit risk mitigation:
Derivative transactions are segregated into trading or hedge transactions. Trading transactions outstanding as at the Balance
Sheet dates are marked to market and the resulting profits or losses, are recorded in the Profit and Loss Account.
Derivative transactions designated as “Hedges” are accounted in accordance with hedging instruments on an accrual basis
over the life of the underlying instrument.
Option premium paid / received is accounted for in the Profit and Loss Account on expiry of the option.
Pursuant to the RBI guidelines, any receivables as well positive Mark to Market (MTM) in respect of future receivable under
derivative contracts comprising of crystallised receivables which remain overdue for more than 90 days are reversed through
the Profit and Loss Account. Full provision is made for the entire amount of overdue and future receivables relating to positive
marked to market value of non-performing derivative contracts. Limits for counterparty exposure (arising from derivative
trades) to Corporates are approved by the Credit Committee and for Banks by the ALCO. These limits are renewable annually
and are duly supported by ISDA agreements. MTM breaches are monitored daily and are cash collateralised wherever
necessary. Further, to mitigate the current exposure in noncentrally cleared forex and derivative transactions, Bank has
entered into Credit Support Annex (‘CSA’) agreements with some of the major international counterparty banks and few Indian
financial institutions.
• As defined in section 3(7) of the Insolvency and Bankruptcy Code, 2016
** Includes cases where requests received till 30th September, 2021 and implemented subsequently
• represents debt that slipped into NPA and was subsequently written off during the half-year
a includes change in balances on account of interest and net of increase in exposure during the period
30. The factoring exposure of the Bank as at 31st March, 2025 is H 2,604.16 crore (previous year H 4,710.44 crore).
31. During the year, the Reserve Bank of India has levied penalty of H 0.01 crore (previous year H 3.96 crore) on the Bank for the following:
Year ended 31st March, 2025:
• H 0.01 crores for 8 instances in relation to exchange of soiled notes / adjudicate mutilated notes as detected during incognito visits
undertaken by RBI.
Note: On 17th April, 2025, RBI had levied penalty of H 0.61 crores towards non-compliance with certain directions issued by RBI on Guidelines
on Loan System for Delivery of Bank Credit’ and Loans and Advances - Statutory and Other Restrictions.
Year ended 31st March, 2024:
• H 1 crore on account of failure to carryout annual review / due diligence of service provider.
• H 1 crore on account of failure to ensure that customers are not contacted after 7 pm and before 7 am.
• H 1 crore on account of levying interest from disbursement due date / loan agreement and not from the date of first disbursement of
the loan contrary to the terms & conditions of sanction.
• H 0.95 crore on account of charging foreclosures charges for the loans recalled by the Bank.
• H 0.005 crore for 3 instances in relation to exchange of soiled notes / adjudicate mutilated notes as detected during incognito visits
undertaken by RBI.
38. DISCLOSURES ON REMUNERATION
A. Qualitative Disclosures:
a) Information relating to the composition and mandate of the Remuneration Committee:
The Nomination and Remuneration Committee of the Board of Directors assists the Board in laying down criteria and
developing procedures and practices, in compliance with the provisions of applicable laws, for setting policies inter alia for the
appointment of Directors and senior management personnel, determining their remuneration and evaluating performance
and discharging Board’s other responsibilities and functions concerning human resource.
The Nomination & Remuneration committee comprises of independent directors of the Bank. Key mandate of the Nomination
& Remuneration committee is to oversee the overall design and operation of the compensation policy of the Bank and work in
coordination with the Risk Management Committee to achieve alignment between risks and remuneration.
The Nomination and Remuneration Committee (NRC) will be, inter alia, reviewing and tracking the implementation of the
Compensation Policy of the Bank. The NRC will comprise of at least 3 Non-executive Directors, out of which at least two third
of the members should be independent directors and should include at least one member from the Bank’s Risk Management
Committee of the Board. (RMC).
b) Information relating to the design and structure of remuneration processes and the key features and objectives of
remuneration policy1:
Objective of Banks’ Compensation Policy is:
• To maintain fair, consistent and equitable compensation practices in alignment with Bank’s core values and strategic
business goals;
• To ensure effective governance of compensation and alignment of compensation practices with prudent risk taking;
• To have mechanisms in place for effective supervisory oversight and Board engagement in compensation;
• To ensure that the Compensation practices are within the regulatory framework stipulated from time to time by RBI.
The remuneration process is aligned to the Bank’s Compensation Policy objectives.
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:
In order to manage current and future risk and allow a fair amount of time to measure and review both quality and quantity of
the delivered outcomes, a significant portion of senior and middle management compensation is variable. Further reasonable
portion variable compensation is non- cash and deferred, over a period of 3 years or longer.
In case the employee is retiring within next 2 years, cash to non-cash ratio may change in favor of more cash (including deferred
cash) and the vesting schedule may be shorter.
In addition, remuneration process provides for ‘malus’ and ‘clawback’ option to take care of any disciplinary issue or future
drop in performance of individual/ business/ company.
The nature and type of these measures have not changed over the past year and hence, there is no impact on remuneration.
d) Description of the ways in which the bank seeks to link performance during a performance measurement period
with levels of remuneration2:
Individual performances are assessed in line with business/ individual delivery of the Key Result Areas (KRAs), top priorities
of business, budgets etc. KRAs of Line roles are linked to financials, people, service and process (Quality) and compliance
parameters and KRAs of non-Line Roles have linkage to functional deliveries needed to achieve the top business priorities.
Further remuneration process is also linked to market salaries / job levels, business budgets and achievement of individual KRAs.
In cases where the performance metrics are weak with respect to bank performance, business performance and individual
performance parameters, the Bank moderates the remuneration taking into account the weak performance.
e) A discussion of the banks’ 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:
A discussion on Policy on Deferral of Remuneration basis last amendment effective 1st April, 2024
The Compensation Policy is applicable for all employees of the Bank.
Employees have been broadly classified into following categories:
• Category I - Comprising MD & CEO and Whole Time Directors (WTDs).
• Category II - Material Risk Takers (MRTs). These include employees whose actions may have material impact on the risk
exposures of the bank and who satisfy both - qualitative and quantitative criteria, as given below:
• Qualitative Criteria:
i. Employees in the grade M10 and above
ii. Organization Structure: Business & Function Heads in reporting hierarchy up to 2 level below MD&CEO
• Quantitative Criteria: Fixed Cost to Company (FCTC) is above H 1.5 Crore p.a.
This excludes employees under Category III.
Note: The definition applicable for FY2024 is as mentioned below
Category II - Material Risk Takers (MRTs). These include employees whose actions may have material impact on the risk
exposures of the bank and who satisfy both - qualitative and quantitative criteria, as given below:
• Qualitative Criteria: Employees in the grade M10 and above
• Quantitative Criteria: FCTC is above H 1.25 Crore p.a.
This excludes employees under Category III.
• Category III - Risk control and compliance employees - comprising staff in grade M9 and above in the following
Control functions;
• Risk & Policy function
• Financial Control including group consolidation;
• Compliance;
• Internal Audit;
• Back-office Operations
• Vigilance
• Legal
• Secretarial
• HR
• Investor Relations
• CSR
• Category IV: Other employees - This includes all employees, not explicitly covered in the first three categories.
Following principles are applied for deferral / vesting of variable remuneration in accordance with RBI guidelines and Bank’s
compensation policy:
Category I & II
• At least 50% of Total Pay, should be variable for arriving at the total compensation for the year
• The Cash component of the Variable Pay will not exceed 50% of the Fixed Pay
• The total variable payout shall be limited to a maximum of 300% of the fixed pay.
• In case variable pay is up to 200% of the fixed pay, a minimum of 50% of the variable pay; and in case variable pay is above
200%, a minimum of 67% of the variable pay should be via non-cash instruments.
• Regardless of the quantum of pay, a minimum of 60% of the total variable pay must invariably be under deferral
arrangements. Further, if cash component is part of variable pay, at least 50% of the cash bonus should also be deferred.
• However, in cases where the cash component of variable pay is under H 25 lakh for a year, deferral requirements would
not be necessary.
• The deferral period should be a minimum of three years. This would be applicable to both, the cash and non-cash
components of the variable pay.
The compensation will be approved by the Nomination and Remuneration committee. Additionally, for Category I, the same
will be further approved by RBI.
Category III
• The total variable payout shall be limited to a maximum of 300% of the fixed pay.
• However, in cases where the cash component of variable pay is under H 25 lakh for a year, deferral requirements would
not be necessary.
• The deferral period should be a minimum of three years. This would be applicable to both, the cash and non-cash
components of the variable pay.
Approval authority: MD & CEO or as delegated by MD & CEO, will approve the variable pay.
For adjusting deferred remuneration before & after vesting:
Malus: Payment of all or part of amount of deferred variable pay can be prevented.
Clawback: Previously paid or already vested deferred variable pay can also be recovered under this clause.
Malus and clawback may be applied for following circumstances:
• Fraud, misfeasance, breach of trust, dishonesty, or wrongful disclosure by the employee of any confidential information
pertaining to the bank or any of its affiliates;
• Willful misinterpretation / misreporting of financial performance of the bank;
• Material failure in risk management controls or material losses due to negligent risk-taking which are attributable to the
employee, whether directly or indirectly;
• Any misconduct pertaining to moral turpitude, theft, misappropriation, corruption, forgery, embezzlement or an act of
a felonious or criminal nature;
• Non-disclosure of material conflict of interest by the employee or any misuse of official powers;
• An act of willful, reckless or grossly negligent conduct which is detrimental to the interest or reputation of the bank or any
of its affiliates, monetarily or otherwise;
• Material breach of Code of Conduct, any Non-Disclosure Agreement, regulatory procedures, internal rules and
regulations or any other such instance for which the NRC, in its discretion, deems it necessary to apply malus or / and
clawback provisions;
Besides the above there can be other circumstances when malus may be applied. In deciding the application of malus /
clawback to any part or all of variable pay or incentives (whether paid, vested or unvested), the NRC will follow due process
and adhere to the principles of natural justice and proportionality.
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:
Depending on the nature of the business/function/ role, the risk involved, the time horizon for review, various forms of Variable
Pay may be applicable.
The components of such variable pay will include:
• Cash - this may be paid at intervals ranging from Monthly, Quarterly, half-yearly and annual. The Monthly/ Quarterly /
Half Yearly Variable Pay will be under the role and preapproved business specific incentive schemes. This may be payable
within one year of grant.
• Long Term Incentive Pay (LTIP): This shall be granted to employees, in the form of Employee Stock Options (ESOPs) and /
or Stock Appreciation Rights (SARs) and / or Deferred Cash. This shall be granted on a discretionary and reasonable basis,
to motivate employees, create shareholder value by aligning interest of employees with the long-term interests of the
Bank. LTIP may also be granted from time to time with the objective of retaining employees.
• ESOPs/ SARs will be linked to Kotak Mahindra Bank Stock price and will vest over a period of time.
• Black Scholes Model will generally be applied for arriving at the value of the units to be granted. However, Bank
may choose any other model with the approval of NRC within the regulatory framework.
• ESOPs / SARs will be approved by the NRC. The quantum of ESOPs / SARs will be reasonable and the formulation
of the ESOP series, the coverage, the vesting period and their pricing schedule, etc. will also be decided by the NRC
as per SEBI guidelines.
• Deferred Cash may paid over a period of 3 to 5 years.
g) External consultants whose advice has been sought, the body by which they were commissioned, and in what
areas of the remuneration process:
During the year ended 31st March, 2025, the Bank employed the services of a consulting firm for market benchmarking in the
area of compensation and benefits, including executive compensation.
B. QUANTITATIVE DISCLOSURES:
a) Number of meetings of the Nomination and Remuneration Committee held during the financial year and
remuneration (sitting fees) paid to its members during the financial year.
During the financial year ended 31st March, 2025, 8 meetings (previous year 14 meetings) of the Nomination and Remuneration
Committee were held. Members of the Nomination and Remuneration Committee were paid, for attending the meetings held
during the financial year, a sitting fee of H 75,000 per meeting [previous year H 75,000 per meeting].
b) Number of employees having received a variable remuneration award during the financial year.
As per FY25 policy for the year ended 31st March, 2025 (“FY2025 policy”):
Quantitative disclosure restricted to one CEO & two1 Whole Time Directors (Executive Directors) as Category I employees
and Thirty Category II employees as Material Risk Takers. For employees who have moved to a group company or retired or
separated as well as new joiner awards up to the date in the Bank are included.
*Plus 1 Whole Time Director (Executive Director) during the year
As per FY24 policy for the year ended 31st March, 2024 (“FY2024 policy”):
Quantitative disclosure restricted to one CEO1 & two Whole Time Directors as Category I employees and Seventy Seven
Category II employees as Material Risk Takers. For employees who have moved to a group company or retired or separated as
well as new joiner awards up to the date in the Bank are included.
h) Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and /
or implicit adjustments.
Nil (previous year Nil)
i) Total amount of reductions during the financial year due to ex- post explicit adjustments.
Nil (previous year Nil)
j) Total amount of reductions during the financial year due to ex- post implicit adjustments.
Nil (previous year Nil)
k) Number of MRT identified
34 (previous year 82)
41. UNHEDGED FOREIGN CURRENCY EXPOSURE OF BORROWERS:
The Bank recognises the importance of the risk of adverse fluctuation of foreign exchange rates on the profitability and financial position
of borrowers who are exposed to currency risk. Currency induced credit risk refers to the risk of inability of borrowers to service their debt
obligations due to adverse movement in the exchange rates and corresponding increase / decrease in their book values of trade payables,
loan payables, trade receivables, etc. thereby exposing the Bank to risk of default by the borrower. In this regard, the Bank had put in place
requisite policies & processes for monitoring and mitigation of currency induced credit risk of borrowers, as required by RBI circular dated
11th October, 2022. These include the following:
a) Currency risk of borrowers on account of un-hedged foreign currency exposures (“UFCE“) is duly considered and analysed in credit
appraisal notes.
b) Quarterly monitoring of un-hedged foreign currency exposures of borrowers.
c) Risk classification of borrowers having un-hedged foreign currency exposures, into Low / Medium / High, as per internal norms,
based on potential loss / EBID ratio. Potential loss means the loss which may arise over a one year horizon by adverse movement of
exchange rates; this is computed as UFCE amount multiplied by the annual volatility factor.
d) Incremental provisioning (over and above provision applicable for standard assets) is made in Bank’s Profit and Loss Account, on
borrower counterparties having UFCE, depending on the potential loss / EBID ratio, in line with stipulations by RBI. Incremental
capital is maintained in respect of borrower counterparties in the highest risk category, in line with stipulations by RBI. These
requirements are given below:
e) In case of borrowers exposed to currency risk where declarations for foreign currency payables / receivables (UFCE declarations) are
not submitted, provision for currency induced credit risk is made as per RBI stipulated rates mentioned below:
• 10 bps in cases where limits with banking system are H 50 crore or less;
• 80 bps in cases where limits with banking system are more than H 50 crore.
f) Further, where annual certification from statutory auditors of UFCE data is not submitted, such borrowers are treated as UFCE
declaration not submitted cases and provision is computed as per point (e) above.
g) Exemption allowed by RBI are excluded from UFCE provision computation, including specified all India financial institutions,
multilateral agencies, domestic & foreign sovereigns, and other exemptions. Further, 100% FD backed exposure is not reckoned
as exposure as per RBI definition and thus not reckoned by the Bank for UFCE provision computation. Similarly, LCBD and BG/LC
backed exposures are considered as exposure to LC/ SBLC issuing banks and not to borrower entity.
h) Management of foreign exchange risk is considered as a parameter for internal risk rating of borrowers.
Provision held for currency induced credit risk as at 31st March, 2025 is H 96.98 crores. (previous year H 73.55 crores). Incremental Risk
weighted Assets value considered for the purpose of CRAR calculation in respect of currency induced credit risk as at 31st March, 2025 is
H 3,585.81 crores (previous year H 3,154.68 crores).
b) Qualitative disclosure around LCR
The Reserve Bank of India has prescribed monitoring of sufficiency of Bank’s liquid assets using Basel III - Liquidity Coverage Ratio
(LCR). The LCR is aimed at measuring and promoting short-term resilience of Banks to potential liquidity disruptions by ensuring
maintenance of sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days.
The ratio comprises of high quality liquid assets (HQLAs) as numerator and net cash outflows in 30 days as denominator. HQLA has
been divided into two parts i.e. Level 1 HQLA which comprises of primarily cash, excess CRR, SLR securities in excess of minimum
SLR requirement and a portion of mandatory SLR as permitted by RBI (under MSF and FALLCR) and Level 2 HQLA which comprises
of investments in highly rated non-financial corporate bonds and listed equity investments considered at prescribed haircuts. Cash
outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities by the outflow run-off
rates and cash inflows are calculated by multiplying the outstanding balances of various categories of contractual receivables by the
rates at which they are expected to flow in.
The Bank has implemented the LCR framework and has consistently maintained LCR well above the regulatory threshold. The average
LCR for the quarter ended 31st March, 2025 was 128.05% which is above the regulatory requirement of 100%. For the quarter ended
31st March, 2025 average Level 1 HQLA stood at 93.06% (122,222 crore.) of the total HQLA.
Apart from LCR, Bank uses various stock liquidity indicators to measure and monitor the liquidity risk in terms of funding stability,
concentration risk, dependence on market borrowings, liquidity transformation, etc. The Bank maintains a diversified source
of funding in terms of depositors, lenders and various funding instruments. This is evident through low depositor and lender
concentration with top 20 depositors contributing 8.65% of Bank’s total deposits and top 10 lenders contributing 1.67% of Bank’s
total liabilities.
Asset Liability Committee (ALCO) of the Bank is the primary governing body for Liquidity Risk Management supported by Balance
Sheet Management Unit (BMU), Risk Management Department (RMD), Finance and ALCO Support Group. BMU is the central
repository of funds within the Bank and is vested with the responsibility of managing liquidity risk within the risk appetite of the
Bank. Bank has incorporated Basel III Liquidity Standards - LCR and NSFR as part of its risk appetite statement for liquidity risk.
43. FRAUDS
The Bank has reported 306 (previous year 896 cases) fraud cases involving fraud amount of H one lakh and above during the financial year
ended 31st March, 2025 amounting to H 69.96 crore (previous year H 97.91 crore). The Bank has recovered / expensed off / provided the
entire amount where necessary.
46. IMPLEMENTATION OF IFRS CONVERGED INDIAN ACCOUNTING STANDARDS (IND AS)
The Ministry of Finance, Government of India, had vide its press release dated 18th January, 2016 outlined the roadmap for implementation
of International Financial Reporting Standards (“IFRS”) converged Indian Accounting Standards (“Ind AS”) for Scheduled Commercial Bank
(excluding RRBs), Non-Banking Financial Companies and Insurance companies. The Reserve Bank of India (“RBI”) vide its circular dated
22nd March, 2019, deferred the implementation of Ind AS for Scheduled Commercial Banks (“SCB”) till further notice pending the
consideration of some recommended legislative amendments by the Government of India. The RBI has not issued any further notification
on implementation of Ind AS for SCBs.
The Bank has formed Steering Committee for Ind AS implementation. The Steering Committee headed by the Deputy Managing Director
(‘DMD’) comprises representatives from Finance, Risk, Information Technology, and Treasury. The Committee closely reviews progress of
Ind AS implementation in the Bank and provides guidance on critical aspects of the implementation. Further, there may be new regulatory
guidelines and clarifications for Ind AS application, which the Bank will need to suitably incorporate in its implementation. The Bank
prepares Proforma Ind AS Financial statements on a half yearly basis and submits to RBI.
47. DISCLOSURE ON AMORTISATION OF EXPENDITURE ON ACCOUNT OF ENHANCEMENT IN FAMILY PENSION OF EMPLOYEES
OF BANKS
Pursuant to the revision in family pension payable to employees of the Bank covered under 11th Bi-Partite settlement and Joint Note dated
11th November, 2020, the Bank has recognised the entire additional liability of H Nil in the Profit and Loss Account during the year ended
31st March, 2025 (previous year Nil). There is no unamortised expenditure in the Balance Sheet on account of Family Pension.
48. DISCLOSURE OF LETTERS OF COMFORT (LOCs) ISSUED BY BANKS
The Bank has not issued any letters of comfort for its subsidiaries and associates (previous year Nil).
49. PORTFOLIO-LEVEL INFORMATION ON THE USE OF FUNDS RAISED FROM GREEN DEPOSITS
The Bank has not yet offered green deposits to its customers.
50. ITEMS EXCEEDING 1% OF TOTAL ASSETS/TOTAL INCOME
a) Details of items under Others (including provisions) (Schedule 5 - Other Liabilities and Provisions) exceeding 1% of total assets of the
Bank is Nil. (previous year Nil).
b) Details of items under Others (Schedule 11 - Other Assets) exceeding 1% of total assets of the Bank is Nil (previous year Nil)
c) Details of items under Miscellaneous Income (Schedule 14 - Other Income) exceeding 1% of total income of the Bank is Nil.
(previous year Nil)
d) Details of items under Other expenditure (Schedule 16 - Operating Expenses) exceeding 1% of total income of the Bank
are given below:
3. LEASE DISCLOSURES:
a. The Bank has taken various premises and equipment under operating lease. The lease payments recognised in the Profit and Loss
Account are H 836.81 crore (previous year H 661.70 crore). The sub-lease income recognised in the Profit and Loss Account is H 14.17
crore (previous year H 12.90 crore).
b. The future minimum lease payments under non-cancellable operating lease - not later than one year is H 732.88 crore (previous year
H 680.40 crore), later than one year but not later than five years is H 2,194.07 crore (previous year H 2,009.28 crore) and later than five
years H 928.92 crore (previous year H 911.40 crore).
The lease terms include renewal option after expiry of primary lease period. There are no restrictions imposed by lease arrangements.
There are escalation clauses in the lease agreements.
4. DEFERRED TAXES:
“Others” in Other Liabilities (Schedule 5 (VI)) includes deferred tax liability (net) of H 110.52 crore (previous year DTA H 322.70 crore).
Notes
1. Maximum balance is determined based on comparison of total daily outstanding balances at party level during the financial year.
2. Maximum balance is determined based on comparison of the total outstanding balances at each quarter end during the financial year
3. Figures in brackets represent figures for corresponding period in previous year.
4. # In the above table denotes amounts less than H50,000.
5. Previous year figures are re-grouped, re-arranged wherever required.
8. EMPLOYEE SHARE BASED PAYMENTS:
The shareholders of the Bank had passed Special Resolutions on 29th June, 2015 and 22nd December, 2023, respectively, to grant options to
the eligible employees of the Bank and its subsidiaries. Pursuant to these resolutions, the Kotak Mahindra Equity Option Scheme 2015 and
Kotak Mahindra Equity Option Scheme 2023 have been formulated and adopted, respectively. The Kotak Mahindra Equity Option Scheme
2015 is operational only to the extent of treatment of options granted till 22nd December, 2023 and Kotak Mahindra Equity Option Scheme
2023 is currently in force.
Performance Linked Restricted Stock Units
The shareholders of the Bank have passed Special Resolutions on 20th February, 2025, to grant performance linked restricted stock units to
the eligible employees of the Bank and its concerned subsidiaries. Pursuant to these resolutions, the Kotak Mahindra Performance Linked
Restricted Stock Unit Scheme 2025 has been formulated and adopted. No options have been granted under this scheme during the year
ended 31st March, 2025.
Stock appreciation rights
On 29th June, 2015, the shareholders of the Bank had passed Special Resolutions to grant SARs to the eligible employees of the Bank and
its subsidiaries. Pursuant to these resolutions, Kotak Mahindra Stock Appreciation Rights Scheme 2015 had been formulated and adopted.
The Board of Directors of the Bank have formulated and adopted the Kotak Mahindra Stock Appreciation Rights Scheme 2023 effective from
1st December, 2023 in place of Kotak Mahindra Stock Appreciation Rights Scheme 2015. Kotak Mahindra Stock Appreciation Rights Scheme
2015 is operational only to the extent of treatment of SARs granted till 30th November, 2023.
The SARs granted under the Kotak Mahindra Stock Appreciation Rights Scheme 2015 and Kotak Mahindra Stock Appreciation Rights
Scheme 2023 are settled in cash and vest on the respective due dates in a graded manner as per the terms and conditions of grant. The
contractual life of the SARs outstanding range from 1.01 to 4.24 years.
16. The Bank, as part of its normal banking business that is conducted ensuring adherence to all regulatory requirements, grants loans and
advances, makes investment, provides guarantees to and accept deposits and borrowings from its customers, other entities and persons.
Other than the transactions described above which are carried out in the normal course of business, no funds have been advanced or
loaned or invested (either from borrowed funds or share premium or deposits or any other sources or kinds of funds) by the Bank to
or in any other persons or entities, including foreign entities ("intermediaries") with the understanding, whether recorded in writing or
otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Bank ("Ultimate Beneficiaries"). The Bank has
also not received any funds from any parties (Funding Party) with the understanding that the Bank shall whether, directly or indirectly lend
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.
17. On 18th June, 2024, the Bank has completed the divestment of 70% stake (through a combination of fresh growth capital and share sale)
in its subsidiary Zurich Kotak General Insurance (India) Company Limited (formerly Kotak Mahindra General Insurance Company Limited)
("KGI") to Zurich Insurance Company Limited ("Zurich"). The Bank sold 553,181,595 equity shares of KGI for a consideration of H 4,095.82
crore, resulting in net gain from such sale of H 3,519.90 crore (pretax). Consequent to this sale, KGI ceased to be a subsidiary of the Bank
and became an Associate with effect from 18th June, 2024. The Bank continues to hold the remaining 30% of the share capital of KGI as at
31st March, 2025.
18. As per the requirements of rule 3(1) of the Companies (Accounts) Rules 2014 the Company has used accounting software for maintaining
its books of account that have a feature of recording audit trail (edit log) facility and the audit trail feature has operated throughout
the year for all relevant transactions recorded in the software. Further, the audit trail has been preserved by the Company for all the
accounting softwares used for maintaining its books of accounts as per the statutory requirements for record retention.
19. The Bank had received an order from the Reserve Bank of India dated 24th April, 2024, directing the Bank to cease and desist, with
immediate effect from (i) onboarding new customers through the Bank’s online and mobile banking channels and (ii) issuing fresh credit
cards. The order was based, inter alia, on the deficiencies observed by the RBI in their IT Examination of the Bank.
The Bank had taken concrete steps to adopt new technologies to strengthen its IT systems. The RBI after having satisfied itself of the
remedial measures undertaken by the Bank to address the supervisory concerns, the submission of compliances made to the RBI
(including the report of the external Auditor), the RBI has vide its letter dated 12th February, 2025, communicated its decision to the Bank
to lift the aforementioned restrictions placed on the Bank.
20. Figures for the previous year have been regrouped / reclassified wherever necessary to conform to current years’ presentation.
As per our report of even date attached. For and on behalf of the Board of Directors
For KKC & Associates LLP C S Rajan Ashok Vaswani
Chartered Accountants Chairman Managing Director and
(formerly Khimji Kunverji & Co LLP) DIN: 00126063 Chief Executive Officer
Firm Registration No. 105146W/W100621 Jaipur DIN: 10227550
3rd May, 2025 Mumbai
3rd May, 2025
Gautam Shah Shanti Ekambaram Ashu Suyash
Partner Deputy Managing Director Director
Membership No. 117348 DIN: 00004889 DIN: 00494515
Mumbai Mumbai Mumbai
3rd May, 2025 3rd May, 2025 3rd May, 2025
For Deloitte Haskins & Sells Devang Gheewalla Avan Doomasia
Chartered Accountants Group President and Senior Executive Vice President and
Firm Registration No. 117365W Group Chief Financial Officer Company Secretary
Membership No. 045993 FCS. No. 3430
Mumbai Mumbai
G. K. Subramaniam 3rd May, 2025 3rd May, 2025
Partner
Membership No.109839
Mumbai
3rd May, 2025
1
Plus 2 CEOs during the year
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