|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
31.03.2014. 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 material.
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.3.87 Crore (previous year Rs.4.01 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 the following
a. Two (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.
b. The Govt.of Bihar had allotted 1.01 acre of land at Budh Marg Patna
on lease to the Bank w.e.f.07.09.1917. Bank is having its office
complex there. Last lease expired on 07.09.2012. Payment for renewal of
lease for further period of 30 years w.e.f. 07.09.2012 by payment of
one time premium for Rs.70.70 lacs and annual rent @ Rs.7.07 lacs has
been made to the Govt. of Bihar. The matter for execution of lease deed
by the Govt.of Bihar is under process.
c. Renewal of lease of residential plots of land measuring 17520 sq.ft
area at Paradeep, Odisha having 24 residential flats w.e.f. 02.04.2013
has been taken up with Paradeep Port Trust (PPT) and is under their
2.3. (i) In respect of Investments of face value of Rs.0.44 Crore
(Previous year Rs.1.25 Crore), the Bank is yet to receive
(ii) Total Investments made in shares, convertible debentures and units
of equity linked mutual fund/ venture capital funds and also advances
against shares aggregate to Rs.916.91 Crore (Previous year Rs.719.60
(iii) As per RBI guidelines, an amount of Rs.3.28 Crore (Previous Year
Rs.31.49 Crore) being an amount equivalent to profit on sale of 'Held
to Maturity' category 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 excess of acquisition cost over
the face value of the security amortized during the year amounts to
Rs.61.37 Crore (Previous year Rs.54.68 Crore) has been netted-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. Disclosure in terms of RBI guidelines:
As per RBI Circular DBOD.BP.BC.88/21.06.201/2012-13 dated 28 March,
2013, banks have been advised to disclose Capital Adequacy Ratio
computed under Basel-III regulations from the quarter ended June-2013.
Accordingly, corresponding details for the previous periods/year are
not applicable and as such not furnished.
In terms of RBI circular DBOD.DP.BC.No.41/21.04.141/2013- 14 dated
August 23, 2013 on 'Investment Portfolio of Banks - Classification,
Valuation and Provisioning', the bank had transferred SLR securities
having book value of Rs.7,961.10 crore from AFS category to HTM
category and had fully recognized the category transfer loss of
Rs.Rs.61.35 crore during the quarter ended September 30, 2013.
3.2.3 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.
3.3.2 Exchange Traded Interest Rate Derivatives: NIL (Previous year:
3.3.3 Disclosures on risk exposure in derivatives
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 derivatives 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. Accounting Standard 5- Net Profit or Loss for the period, prior
period items and changes in accounting policies: Income and Expenditure
relating to prior period are as under:
4.2. Income items recognised on cash basis were either not material or
did not require disclosure under AS 9 on Revenue Recognition.
4.3. The Bank has adopted Accounting Standard 15 (Revised)- Employee
Benefits, issued by Institute of Chartered Accountants of India, for
recognition of its liabilities in respect of employee benefits, viz,
Pension, Gratuity, Leave Encashment, LFC and Sick Leave w.e.f. 1st
April, 2007. Recognition of liability in respect of Sick Leave benefit
has been discontinued with effect from 31st March'2013.
4.3.1.Bank's liabilities in respect of the funded/ non-funded employee
benefits, viz., Pension(ABEPR-1995), 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.
4.4. Segment Reporting - Accounting Standard (AS) 17 "Segment
Reporting" Segment information is given in the Consolidated Statement
in terms of Para 4 of the AS-17.
Expenses towards gratuity and leave encashment are determined
actuarially on an overall basis annually and accordingly have not been
considered in the above information.
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.
b) 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 Cr
(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).
d) Transactions with associated company namely Universal Sompo General
Insurance Company Limited are as follows:
4.6. 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 ex- pected to be
received under non- cancellable sub- leases at the balance sheet date:
iii) Lease payments recognized in the statement of profit and loss for
the period: Rs.111.45 Crore (previous year Rs.90.49 Crore)
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.
4.8. Accounting for Taxes on Income: Accounting Standard (AS) 22
During the year, an amount of Rs.47.54 Crore has been debited (Previous
year Rs.32.92 Crore credited) to the Profit & Loss Account by way of
adjustment of deferred tax. The major components 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.
4.9. Discontinuing Operations: Accounting Standard (AS) 24
Disclosure requirement is not applicable for the year under review.
4.10. 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 31.03.2014 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":
5.3. Draw Down from Reserves (Previous year: NIL)
a. In accordance with Reserve Bank of India Notification No. DBOD No.
BP.BC.77/21.04.018/2013-14 dated 20.12.2013, the Bank has provided
Deferred Tax Liability (DTL) of Rs.301.71 Crore on account of Special
Reserve created (under section 36(1)(viii) of the Income Ta x Act,
1961) for the period upto 31.03.2013, directly from "Revenue Reserve".
Bank has provided Deferred Tax Liability (DTL) of Rs.88.71 Crore on
account of Special Reserve created for the financial year 2013-14
through Profit and Loss Account.
b. The Reserve Bank of India vide their letter No.
DBOD.No.BP.17109/21.04.132/2013-14 dated 11.04.2014, has permitted to
credit Sundry Liabilities (Interest Capitalisation) account for the
Funded Interest Term Loan (FITL) created upto 31st March'13 directly
from Reserve. Accordingly, Sundry Liabilities (Interest Capitalisation)
amounting to Rs.687.72 Crore on account of FITL upto 31.03.2013 has
been created directly from Revenue Reserve.
An amount of Rs.182.84 Crore has been charged to Profit & Loss account
for the FITL for the current period F.Y. 2013-14.
5.5. Letters of Comfort (LoCs)
During the current financial year, the Bank has issued 382 number of
LoCs amounting to Rs.2464.59 crore (previous year Rs.1901.94 Crore) for
providing Buyers credit facility. The outstanding LoCs as on 31.03.2014
amount to Rs.1394.45 crore (previous year Rs.1060.65 Crore). In Bank's
assessment, no financial impact is likely to arise in this respect.
5.6. Provision Coverage Ratio
The provision coverage ratio as on 31.03.2014: 46.03% (Previous Year
5.7. Income from Bancassurance business during the year Commission
received on life & non-life insurance business: Rs.20.08 Crore
(previous year Rs.19.87Crore)
5.8. Concentration of Deposits, Advances, Exposures & NPAs
5.12. Off-Balance Sheet SPVs sponsored (which are required to be
consolidated as per accounting norms)- NIL (Previous year :NIL)
5.13. 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.598.34 Crore
(i.e.Rs.566.41 Crore for Pension and Rs.31.93 Crore for Gratuity) has
been charged to the Profit and Loss Account in F.Y. 2010-11, 2011-12,
2012- 13 & 2013-14, carrying forward an amount of Rs.149.36 Crore (i.e.
Rs.141.66 Crore for Pension and Rs.7.70 Crore for Gratuity) as
unamortized expenses for F.Y. 2014-15. 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.
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 been
operationalised in our Bank since April,2012.
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.282.00 Crore during the current financial year
(previous year Rs.100.00 Crore).As suchtotal Provision on account of
wage revision as on 31st March 2014 stands at Rs.382.00 Crore. Keeping
in line with the IBA's Guidance Note/ Bank's Policy on Funding
Superannuation Schemes as also in compliance of RBI directive in the
matter, the Bank reviewed the model of provisioning in respect of the
probable load on account of 10th Bipartite Settlement, during this
fiscal. With the object to achieve strict compliance of the IBA's
Guidance Note in this regard, the probable funding load on
Superannuation Schemes (viz. Pension, Gratuity and Leave Encashment)
have been estimated on the basis of actuarial valuation conducted by
Bank's approved Actuary and accordingly, aggregate provision of
Rs.382.00 Crore has been relocated as (1) Arrear Salary Rs.178.00
Crore; (2) Pension Rs.145.00 Crore;(3) Gratuity Rs.41.00 Crore and (4)
Leave Encashment Rs.18.00 Crore.
5.14. Disclosures relating to Securitisation
As no SPVs sponsored by the Bank, the outstanding amount of securitized
assets of SPVs as on date of balance sheet is Nil (Previous year: Nil)
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.61.05 Crore (Previous
Year Rs.87.00 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.900.00 Crore (previous year
Rs.700.00) 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.900.00 Crore
(previous year Rs.700.00 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.261.00 Crore
(Previous Year Rs.251.00 Crore) to Special Reserve in terms of section
36 (1) (viii) of the income Tax Act, 1961.
11 . In accordance with RBI circular DBOD.No.BP.BC.2/ 21.06.201/2013-14
dated 1st July, 2013, banks are required to make half yearly Pillar 3
disclosures under Basel III capital requirements with effect from 30th
September, 2013. The disclosures have been made available on Bank's
website at the following link (https://www.allahabadbank.in/english/
12. The Board of Directors of the Bank in its meeting dated 11th
January, 2014 declared an interim dividend of Rs.2.50 per equity share
i.e. @ 25% of the paid up capital of the Bank subject to necessary
permission/approval from the Government of India. The Government of
India vide its Notification No. F. No. 10/3/2010-BOA dated 15th
January, 2014 notified that the provisions of Section 15(1) of the
Banking Regulation Act, 1949 shall not apply to Public Sector Banks for
the Financial Year 2013-14. The Dividend payment date was 30th January,
Further, the Board of Directors of the Bank have not recommended any
final dividend for the financial year 2013-14.
13. The Bank has allotted 4,45,83,147( Four Crore Forty Five Lac
Eighty Three Thousand One Hundred and Forty Seven) equity shares of
face value of Rs.10.00 (Rupees Ten only) at a premium of Rs.79.72
(Rupees Seventy Nine and Paisa Seventy Two only) per equity share to
Govt. Of India (President of India) on preferential basis on 24.12.2013
for a total consideration of Rs.399,99,99,948.84 (Rupees Three Hundred
Ninety Nine Crore Ninety Nine Lac Ninety Nine Thousand Nine Hundred
Forty Eight and Paisa Eighty Four only). Accordingly the EPS has been
calculated on weighted average number of equity shares as specified in
AS-20 issued by the Institute of Chartered Accountants of India.
14. An amount of Rs.0.74 Crore comprising of 103 credit entries of
individual value of less than USD2500.00 which originated between the
period from 1st April 1996 to 31st March 2002, and were held in
"Blocked Account-Nostro Accounts Reconciliation" at the branch were
credited to 'Profit & Loss' account in terms of RBI circular
DBOD.BP.BC.No.133/ 21.04.018/2008-09 dated 11th May,2009.The amount
credited to Profit & Loss account was appropriated to the Reserve and
shall not be available for declaration of dividend. Had this amount
not been credited to Profit & Loss Account, the amount of profit for
the year would have been lower by such amount.
15. Minimum Alternate Tax (MAT) Credit has been recognised as an asset
to the extent of Rs.192.43 Crore as MAT Credit Entitlement under
section 115JAA of the Income Tax Act, 1961.
16. Figures of previous year have been regrouped or reclassified
wherever considered necessary.