|1. Adequate provision has been made by the Bank in respect of
performing and non-performing advances in terms of Reserve Bank of
India (RBI) guidelines.
2.1 (i) Reconciliation and clearance of outstanding entries in inter
branch adjustments are in progress and especially initial matching of
debit and credit entries in various heads have been done upto
31.03.2013. Pending final clearance, the overall impact, if any, on the
accounts, in the opinion of the management will not be significant.
(ii) At some branches, preparation of details / balancing /
reconciliation of accounts relating to Balances with Banks and NOSTRO
accounts are in progress. Since substantial progress has been made in
the above areas, the management is of the view that the impact of
reconciliation, if any, on the accounts of the Bank will not be
2.2 (i) Certain premises were revalued on the basis of the reports of
the approved valuers during the year ended on 31.03.1997, 31.03.2005
and 31.03.2007 and upward revision amounting to Rs.125.99 Crore
(commercial and residential), Rs.370.08 Crore (commercial and
residential) and Rs.298.32 Crore (commercial) respectively had been
credited to Revaluation Reserve. Depreciation on revalued premises is
worked out each year on its written down value. Additional depreciation
of Rs.4.01 Crore (previous year Rs.4.24 Crore) on account of
revaluation has been transferred from Revaluation Reserve Account and
shown in Miscellaneous Income under the head "Other Income"
included in Schedule No. 14 item (vii)
(ii) Depreciation has been charged on composite cost of land and
building, where separate cost of land is not available.
(iii) Premium on leasehold land has been amortized over the period of
lease, based on cost or written down value, where original cost is not
(iv) Registration formalities are yet to be completed for 2 residential
properties purchased during the year 1990 & 1998 at Kolkata &
Bhubaneshwar consisting of 29 & 10 flats respectively with total
original cost of Rs.0.86Crore.
2.3. (i) In respect of Investments of face value of Rs.1.25 Crore
(Previous year Rs.61.25 Crore), the Bank is yet to re- ceive
(ii) Total Investments made in shares, convertible de- bentures and
units of equity linked mutual fund/ven- ture capital funds and also
advances against shares aggregate to Rs. 719.60 Crore (Previous year
(iii) As per RBI guidelines, an amount of Rs.31.49 Crore (Previous Year
Rs.11.65 Crore) being an amount equivalent to profit on sale of 'Held
to Maturity' cat- egory securities, net of taxes & net of transfer to
statutory reserve; is transferred to 'Capital Reserve Account'.
(iv) In respect of 'Held to Maturity' category as stated in significant
Accounting Policy No. 4 (iv) (a), the ex- cess of acquisition cost over
the face value of the security amortized during the year amounts to
Rs.54.68 Crore (Previous year Rs.61.26 Crore) has been net- ted-off
from Income on Investment shown under the head "Interest Earned" of
Profit and Loss Account in terms of RBI guidelines.
2.4. The Bank has not made any financing for margin trading during the
year and also not securitised any assets.
3.1.1. Sale & Transfer to/from HTM category: All sales and transfers
to/from HTM category during the year are within the limit of 5% of book
value at the beginning of the year.
3.1.2. The Bank has not made any provision towards diminution in the
value of its investment in one of the joint venture companies (viz. M/s
Universal Sompo General Insurance Co. Ltd.) classified as HTM, as the
Bank is hopeful that the said investee company will generate profit in
the near future and the diminution is of temporary nature.
3.1.3. Exchange Traded Interest Rate Derivatives: NIL (Previous year:
3.1.4. Disclosures on risk exposure in derivatives Qualitative
Operation in the Treasury Branch of the Bank are segregated in three
functional areas i.e. Front Office, Mid Office and Back Office, which
are provided with trained officers with defined responsibilities and
back up roles.
The Treasury Policy & Derivative policy of the Bank lays down the type
of financial derivative instruments, scope of usages, approval
processes as also the limits like the open position limits, deal size
limits and stop loss limits besides delegated power for trading in the
approved instruments. The policy also allows purchase / sale of call or
put options to hedge cross currency proprietary trading positions and
to offer derivative products to its customers subject to back to back
covering by the Bank.
The Front Office takes positions and executes the deals while the Mid
Office monitors the transactions in the trading book and deviations of
excesses, if any, are brought to the notice of higher authorities. The
Mid office also measures the financial risk for transactions on a daily
basis through measurement tools such as MTM, VAR, Convexity and
modified durations. The figures are reported to Risk Management
division, which appraises the risk profile to the Assets and Liability
Management committee. The Back Office settles all the deals with
Interest Rate Swaps which hedge interest bearing assets or liabilities
are accounted for on accrual basis except the Swaps designated with an
asset or liability that is carried at market value or lower of cost or
market value in the financial statements. Gains or losses on the
termination of Swaps are recognised over the shorter of the remaining
contractual life of the Swap or the remaining life of the
assets/liabilities. Trading Swap transactions are marked to market
with changes recorded in the financial statements. The counterparties
to the transactions are Banks and corporate entities and deals
undertaken are within the approved exposure limits only. The guidelines
issued by RBI, FEDAI & FIMMDA from time to time for recognition of
Income, Premium and Discount are followed.
4. Disclosure Requirements as per Accounting Standards where R.B.I has
issued guidelines in respect of disclosure items for 'Notes to
4.1. Income items recognised on cash basis were either not material or
did not require disclosure under AS 9 on Revenue Recognition.
4.2. The Bank has adopted Accounting Standard 15 (Re- vised)- Employee
Benefits, issued by Institute of Char- tered Accountants of India, for
recognition of its liabili- ties in respect of employee benefits, viz,
Pension, Gra- tuity, Leave Encashment, LFC and Sick Leave w.e.f. 1st
4.2.1. Bank's liabilities in respect of the funded/ non-funded employee
benefits, viz., Pension(ABEPR), Gratuity, Leave Encashment and LFC are
recognised on the basis of actuarial valuation carried out by approved
Actuary as per
(a) Principles laid down in AS 15 (Revised) issued by the Institute of
Chartered Accountants of India, and
(b) Guidelines GN 26 issued by Institutes of Actuaries of India.
- The Bank had provided Rs.46.37 Crore towards Sick Leave upto
previous year. The Sick Leave being non-encashable, the Bank has
written back the entire provision of Rs.46.37 crore in the current year
as it is no longer required as per expert advice obtained.
4.3. Segment Reporting - Accounting Standard (AS) 17 "Segment
Segment information is given in the Consolidated Finan- cial Statements
in terms of para 4 of the Standard.
4.4. Related Party Disclosures - Accounting Standard (AS) 18 List of
Related Parties and Transactions: The names of the related parties,
their relationship with the bank and transactions effected- Expenses
towards gratuity and leave encashment are determined actuarially on an
overall basis annually and accordingly have not been considered in the
i) All Bank Finance Limited (wholly owned): The bank holds entire share
capital of Rs.15.00 Cr. (Previous year Rs.15.00 Cr) in the company.
c) Joint Venture:
i) Universal Sompo General Insurance Company Limited.
ii) ASREC (India) Ltd.
The Bank is holding 30% share in Universal Sompo General Insurance
Company Limited amounting to Rs.105.00 Cr (previous year Rs.105.00 Cr)
and 27.04% share in ASREC (india) Ltd. amounting to Rs.26.50 (previous
year Rs. 26.50 Cr )
Allahabad U.P. Gramin Bank:
The Bank is holding 35% share in Allahabad U.P. Gramin Bank amounting
to Rs.21.67 Cr (previous year Rs.21.67 Cr).
During the F.Y. 2012-13, Sharda Gramin Bank, another Regional Rural
Bank sponsored by the Bank was amalgamated with Madhyanchal Gramin Bank
promoted by State Bank of India in terms of Govt. of India, Ministry of
Finance (Department of Financial Services) notification dated
01.11.2012. As such, the Sharda Gramin Bank ceases to be an associate
of Allahabad Bank.
Transactions with associated company namely Universal Sompo General
Insurance Company Limited are as follows:
4.5. Lease Disclosure:
A) The Bank has various operating leases for office / residential
facilities. Disclosures in this regard are as under:
i) Total of future minimum lease payments under non- cancellable
operating leases for each of the following periods:
ii) The total of future minimum sublease payments expected to be
received under non- cancellable subleases at the balance sheet date:
iii) Lease payments recognized in the statement of profit and loss for
the period: Rs.90.49 Crore (previous year Rs.76.02Crore)
iv) Sub-lease payments received (or receivable) recognised in the
statement of profit and loss for the period: NIL.
B) Financial Lease:
Bank is not having any assets under Financial Lease.
4.6. Accounting for Taxes on Income: Accounting Stan- dard (AS) 22
During the year, an amount of Rs.32.92 Crore has been cred- ited
(Previous year Rs.18.35 Crore credited) to the Profit & Loss Account by
way of adjustment of deferred tax. The major com- ponents of Deferred
Tax Assets/ Liabilities as on Balance Sheet date are as under:
The Bank does not recognise deferred tax on HTM category of investments
as in Bank's opinion; there is no timing difference in this regard.
Pursuant to the opinion of the Expert Advisory Committee of the
Institute of Chartered Accountants of India on recognition of deferred
tax on investments, the bank has referred the issue to the Indian
Banks' Association for their guidance on the matter since there is a
difference in treatment on this subject in the industry.
4.7. Discontinuing Operations: Accounting Standard (AS) 24
Disclosure requirement is not applicable for the year under review.
4.8. A substantial portion of the bank's assets comprise of
financial assets' to which Accounting Standard (AS) 28 'Impairment
of Assets' is not applicable. In the opinion of the management, there
is no impairment of other assets of the Bank as at 31.03.2013 to any
material extent requiring recognition in terms of the said standard.
5. Disclosure in terms of Accounting Standard (AS) 29 on
"Provisions, Contingent Liabilities and Contingent Assets":
5.1. Letters of Comfort (LoCs):
During the current financial year, the Bank has issued 368 number of
LoCs amounting to Rs.1901.94 crore (previous year Rs.998.04 Crore) for
providing buyers credit facility. The out- standing LoCs as on
31.03.2013 amount to Rs.1060.65 crore (previous year Rs.108.88 Crore).
In Bank's assessment, no fi- nancial impact is likely to arise in this
5.2. Provision Coverage Ratio
The provision coverage ratio as on 31.03.2013: 50.00% (Pre- vious Year
5.3. Income from Bancassurance business during the year:
Commission received on life & non-life insurance business: Rs.19.87
Crore (previous year Rs.18.87Crore)
5.4. Concentration of Deposits, Advances, Exposures & NPAs:
5.5. Off-Balance Sheet SPVs sponsored (which are required to be
consolidated as per accounting norms): NIL.
5.6. Unamortised Pension and Gratuity Liabilities:
A. On re-opening of Pension option to employees under Allahabad Bank
(Employees') Pension Regulations 1995 and enhancement in Gratuity
limits under the Payment of Gratuity Act 1972 during the financial year
2010-2011, the Bank had incurred huge liability towards additional load
amounting to Rs.708.07 Crore for Pension and Rs.39.63 Crore for
Gratuity, which were amortised in terms of Reserve Bank of India
circular DBOD No.BP.BC.80/21.04.018/ 2010-11 dated 9th February, 2011.
As per the provisions of the said circular, 1/5th of the amortised
expenses is to be absorbed each year and accordingly, Rs.448.74 Crore
(i.e. Rs.424.81 Crore for Pension and Rs.23.93 Crore for Gratuity) has
already been charged to the Profit and Loss Account in F.Y. 2010-11,
2011-12 & 2012-13, carrying forward Rs.298.96 Crore (i.e. Rs.283.26
Crore for Pension and Rs.15.70 Crore for Gratuity) as unamortised
expenses for future years. Following the said directive of the Reserve
Bank of India, during the current financial year the Bank has charged a
sum of Rs.149.60 Crore (i.e. Rs.141.60 Crore for Pension and Rs.8.00
Crore for Gratuity) to the Profit and Loss Account and Rs.298.96 Crore
(i.e. Rs.283.26 Crore for Pension and Rs.15.70 Crore for Gratuity) is
carried forward to next financial year.
B. In implementation of the Defined Contribution Retirement Benefit
Scheme for the employees joining service of the Bank on or after
01.04.2010, the Bank has adopted National Pension System for Corporate
Model of NPS under the regulatory and administrative control of PFRDA
and has joined NPS as Corporate under the purview of employer-employee
relationship for these underlying employees, which has since been
C. Provision on account of Wage revision: To meet the probable load on
the Bank on account of wage revision of employees (10th bipartite
settlement) which is due from November 2012, the Bank has made a
provision of Rs.100.00 Crore during the current financial year.
6. Contingent Liabilities:
Such liabilities as mentioned at Sl. No.(I) to (VI) in schedule 12 of
Balance Sheet are dependent upon the outcome of court / arbitration /
out of court settlement, disposal of appeals, the amount being called
up, terms of contractual obligations, devolvement and raising of demand
by concerned parties respectively.
7. Estimated amount of contracts remaining to be executed on capital
account and not provided for (Net of advance) Rs.87.00 Crore (Previous
Year Rs.110.46 Crore).
8. Sector wise break-up of provision held under non- performing
advances is deducted on estimated basis from gross advances to arrive
at the balance of net advances as stated in the Schedule-9 of the
9. Priority Sector Advances include Rs.700.00 Crore (previous year
Rs.550.00) on account of Inter Bank Participation Certificates (IBPC)
of Direct Agriculture Advances purchased by the Bank on risk sharing
basis from Allahabad U.P. Gramin Bank. Likewise, Rs.700.00 Crore
(previous year Rs.350.00 Crore) has been reduced from advances being
amount of Inter Bank participation Certificates of non-priority sector
advances sold by the Bank to Allahabad U.P. Gramin Bank.
10. During the year, the Bank has transferred a sum of Rs.251.00Crore
(Previous Year Rs.209.00 Crore) to Special Reserve in terms of section
36 (1) (viii) of the income Tax Act, 1961.
11. The Board of Directors of the Bank has recommended dividend @60%
of paid-up capital i.e. Rs.6/- per share of face value of Rs.10/- each.
12. Figures of previous year have been regrouped or reclassified
wherever considered necessary.