(*) ‘the Bank has allotted 53,99,83,952 equity shares of Rs.10/- each for cash Rs. 37.39p per share (including premium of Rs. 27.39p per share) (PY 19,16,37,630 Equity shares at Rs. 57.40p per share including premium of Rs. 47.40p per share on 05.08.2017 amounting to Rs. 1099,99,99,962/-) on preferential basis to Government of India on 11.10.2018, amounting Rs. 2018,99,99,965.20 paise.

($) ‘the Bank has allotted 114,56,72,061 equity shares of Rs. 10/- each for cash at Rs. 28.42p per share (including premium of Rs.18.42p. per share) (PY 32,60,30,705 equity shares at Rs. 57.97p per share including a premium of Rs. 47.97p per share on 28.03.2018 amounting to t 1889,99,99,968.85p) on preferential basis to Government of India on 28.03.2019, amounting Rs. 3255,99,99,973.60paise.

(@) During the previous year 2017-18, Bank had raised 9.20% Basel-III Compliant Additional Tier I Perpetual Debt Bonds on Private Placement basis on 31.10.2017 amounting to Rs. 500.00 crores. No such bonds have been raised during the year 2018-19.

(#) During the previous year 2017-18, Bank had raised 7.98% - 10 years Basel III Compliant Tier-II Bonds (Series-D) on Private Placement basis on 24.10.2017 amounting to Rs.1000.00 crores. No such bonds have been raised during the year 2018-19. During the year, Bank has approved a scheme for raising of capital through ESPS (Employee Stock purchase Scheme) up to 10 Crore fresh issue of equity shares at a discount not exceeding 25%. ‘the scheme was opened for subscription from 11.03.2019 to 20.03.2019 at a discounted price of Rs. 19.26 per equity share aggregating to Rs.192.60 Crore. ‘the said shares have been allotted during the current financial year on 24.04.2019.

# Investment includes Rs. 2.60 (Rs.2.60) Crore invested in 26,04,770 (26,04,770) shares of Rs. 10 (Rs. 10) each of Regional Rural Bank and Share Capital deposit amounting to Rs.Nil (Rs. Nil) crore pursuant to Government of India directions.

* Includes the following

a) Investments in 1620 (1620) shares (class B) of Master card Inc with a Book value of Rs. 1 (Rs.1)

b) Investments in 8 (8) shares of SWIFT with a Book value of Rs.1 (Rs.1)

c) Investment in 8250000 (8250000) shares of Malaysian Ringgit 10 each amounting Rs.143.28 crore (Rs.143.28 crore) in India International Bank (Malaysia) BHD.

Shares of Master Card Inc. are allotted in kind, free of cost, as an incentive in view of the past business relations with the entity.

Shares of SWIFT include shares allotted on initial membership and accrued on re-allocation. ‘the reallocation of share is based on the bank’s utilization of SWIFT’s network based financial services.

Securities amounting to Rs.17507.57 crore (Rs.15341.07 crore) are kept as margin with Clearing Corporation of India Ltd, ICCL, BSE, NSE, RBI, and MSEI towards securities settlement.

Note : Previous year figures have been regrouped/ reclassified/ rearranged wherever necessary to conform to current years figures. Figures in bracket indicate figures of previous year.

Rs.Investment in Govt. Securities (Securities directly issued by the Central and State Governments, which are not reckoned for SLR purposes), Equity Shares, Equity Oriented Mutual Funds, Venture Capital Funds, Security Receipts, etc. are not segregated under these categories as these are exempt from rating/ listing guidelines.

** Includes Recapitalization Bonds amounting to Rs.7165 Crore. (Rs.1890 Crore.)

Amounts reported under columns 4, 5, 6 and 7 above are not mutually exclusive.

Total under column 3 include the following categories of investments specified in Schedule 8 to the Balance Sheet:

1.1.1 Shifting of Securities :

(a) During the year, the Bank has shifted Central/State Government securities aggregating Rs. 7321.06 crore (Rs. 7746.80 crore) from ‘Available for Sale’ (AFS) category/Held for Trading (HFT) category to Held to Maturity (HTM) Category at lower of acquisition cost/book value / market value and booked a shifting loss of Rs. 312.28 crore (Rs. 85.27 Crore) to P&L Account. Bank also shifted Central/ State Government Securities aggregating to Rs.7313.60 crore (Rs. 8169.32 crore) from Held to Maturity (HTM) category to Available for Sale (AFS) category and booked a shifting loss of Rs.0.00 crore (Rs. 0.00 crore). Bank also shifted investment of Rs. 27.16 crore (Rs. 32.84 crore) in Venture Capital funds from Held to Maturity (HTM) category to Available for Sale (AFS) category and provided a depreciation of Rs. 0.41 Crore (Rs. 0.17 Crore).

(b) ’the Bank has earned gross amount of Rs. 5.53 crore (Rs. 79.13 crore) as profit on sale of securities in HTM category out of which an amount of Rs. 2.70 crore (Rs. 38.81 crore), net of tax and amount required to be transferred to Statutory Reserve, has been appropriated to capital reserve account as per RBI guidelines.

(c) Sale and Transfers to / from HTM Category :

During the year ended March 31, 2019 and March 31, 2018 the aggregate book value of investments sold and transferred to/ from HTM category was within the limit of 5% of the book value of investments held in HTM category at the beginning of the year.

1.1.2 Spreading of MTM losses.

During the year ended March 31, 2019, the Bank has provided total depreciation on investment as required in terms of RBI guidelines and ‘Nil’ depreciation has been carried forward for the next quarter.

During the year ended March 31, 2018, In terms of RBI Circular No. DBR.No.BP.BC.102/21.04.048/2017-18 dated April 2, 2018, on ‘Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks - Spreading of MTM losses and creation of Investment Fluctuation Reserve (IFR), the Bank has utilized the option to spread provisioning for Mark to Market (MTM) losses on Investments held in AFS and HFT for the quarter ended December 31, 2017 and March 31, 2018 as follows.

a) ’the provision for depreciation of the investment portfolio for the quarter ended December 2017 amounting to Rs. 257.11 crore (out of total provision made during quarter ended December 2017 of Rs. 514.22 crore) and for March 2018 amounting to Rs. 30.16 crore (out of total provision requirement of Rs. 120.64 crore) was made during the quarter/year ended March 2018 and

b) ’the balance amounting to Rs. 347.59 crore was carried forward required to be made in the remaining quarters of the FY 2018-19, which has been provided during the current FY 2018-19.

1.2.1 Disclosures on risk exposure in derivatives :

A) Qualitative Disclosures:

a) Structure and Organization for Management of risk in derivatives trading:

i) In terms of Reserve Bank of India guidelines on Interest Rate Swaps (IRS) and Forward Rate Agreements (FRA) the Bank has approved policies and procedures, counter party exposure limits, delegation of powers, accounting policy, policy for valuation, ISDA documentation, cut loss, reporting etc., for Interest Rate Swaps and fixed a cap of Rs.1500 crore for interest rate swaps (sub-limit of Rs. 500 crore for Trading Book). Bank has conducted the derivative operations within the overall framework of these guidelines.

ii) ‘the Bank has approved policies and procedures, counter party exposure limits, delegation of powers, accounting policy, ISDA documentation, reporting etc., for undertaking forex derivatives in various forms of currency swaps & various types of interest rates swaps not specifically prohibited by Reserve Bank of India with the corporate borrower customers, other banks and non borrower customers to be covered on back to back basis. Bank’s policy also permits entering into Plain Vanilla European Style Option to Bank’s customers for hedging/ pricing their forward exposures on back to back basis, or for hedging foreign currency exposures.

iii) Derivative contracts undertaken on back-to-back basis or for hedging own foreign currency exposure are recorded at the rate prevailing on the date of the contract and are reported at the closing rates at the Balance Sheet date. ‘the revenue in respect of these transactions is recognized for the proportionate period till the expiry of the contract. In respect of contracts done on back to back basis, the revenue on early termination of the contract is recognized on termination.

b) Scope and nature of risk measurement, risk reporting and risk monitoring systems : ‘the position of all outstanding swaps, new swaps entered, swaps exited, mark to market value of swaps etc., is being reviewed by the bank’s investment Committee and Board at monthly intervals. Details of transactions undertaken in IRS are also reported to Reserve Bank of India on a fortnightly basis.

c) Policies for hedging and/ or mitigating and strategies and processes for monitoring the continuing effectiveness of hedges/ mitigants : Depending on the market opportunities a view on interest rate movement is taken and acted upon. ‘ttough the settlement of swaps takes place on due date/dates as per the terms of the swaps, the value monitoring is carried out daily to know the impact of market changes on Swap Book. When unfavorable market movements are unidirectional, swaps are exited cutting loss. Cut loss limits, exit powers, reviewing authority etc., are prescribed.

d) Accounting policy for recording the hedge and non-hedge transactions, recognition of income, premiums and discounts, valuation of outstanding contracts, provisioning, collateral and credit risk mitigation : Detailed accounting policy and valuation policy are approved by Board. Transactions for hedging purposes are accounted for on accrual basis except the swap designated with an asset / liability that is carried at lower of cost or market value. In that case, the swap is marked to market, with the resultant gain or loss recorded as an adjustment to the market value of designated asset or liability. On termination of swap, gain or loss is recognized when the offsetting gain or loss is recognized on the designated asset or liability. Any gain or loss on the terminated swap was deferred and recognized over the shorter of the remaining contractual life of the swap or the remaining life of the asset/ liability.

Trading transactions have to be marked to market with charges recorded in the income statement. Income, expenditure, fee, gains or losses on termination of swaps are all recorded as immediate income or expenses.

Bank is having marked to market position of Rs. 0.00 crore (Rs. 0.00 crore) for a derivative deal entered for hedging its foreign currency exposure. Net marked to market effect for this transaction is NIL (NIL) for the bank.

1.3 Disclosure pertaining to MSME:

(a) RBI vide Circular no. DBR.No.BP.BC.108/21.04.048/2017-18 dated 6th June 2018 permithed banks to continue the exposures to MSME borrowers to be classified as standard assets. Accordingly, the Bank has retained advances of Rs. 259.27 Crore as standard asset as on 31st March 2019. In accordance with the provisions of the circular, the bank has not recognized interest of Rs.8.77 crores on these accounts and is maintaining a standard asset provision of Rs. 12.53 Crore as on 31st March 2019 in respect of such borrowers.

(b) In accordance with RBI vide circular no. DBR.No.BP.BC.18/21.04.048/2018-19 dated 1st January 2019, on “Micro, Small and Medium Enterprises (MSME) Sector - Restructuring of Advances” the details of MSME accounts restructured by the bank as on 31st March 2019 are as under:

1.4.1 Floating and additional provisions:

a) Floating Provision of Rs.13.00 Crore is held as at 31.03.2019 (PY Rs.13.00 crore as on 31.03.2018) in respect of gross non performing advances over and above the minimum prescribed as per guidelines issued by Reserve Bank of India with a view to strengthening the financial position of the Bank.

b) ’the above floating provision is nethed off from advances

1.4.2

(a) In terms of Directions for initiating Insolvency Process-Provisioning Norms issued by Reserve Bank of India vide lether No. DBR.No.BP. 15199/21.04.048/2016-17 dated 23rd June 2017 and RBI lether No. DBR.NO.BP.1842/21.04.048/2017-18 dated 28th August 2017 on “ Resolution of Stressed Assets” in respect of certain 19 identified NPA accounts (22 accounts) covered under the provisions of Insolvency and Bankruptcy code (IBC) 2016 the bank has made additional provisions as at (Rs. 229.88 Crores ((Rs. 427.06 Crore) during the current year 2018-19.

(b) As per Reserve Bank of India guidelines vide lether No.DBR.No.8756/21.04.048/2017-18 dated 2nd April 2018, Bank has to maintain 50.00% of secured portion of outstanding plus 100.00% on unsecured portion or provisions required to be maintained as per IRAC norms, whichever is higher. ‘the Bank has complied with the same. ‘the provisions kept in these accounts are (Rs. 4950.09 Crore as per RBI norms as against (Rs. 4720.21 Crore as per IRAC norms.

1.4.3 Disclosure relating to Securitization:

As per outstanding amount of securitized assets as per books of the SPV sponsored by the bank and total amount of exposures retained by the bank as on the date of balance sheet to comply with the Minimum Retention Requirements (MRR) is NIL

t Working funds reckoned as average of total assets (excluding accumulated losses, if any) as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949 during the 12 months of the financial year.

$ Return on assets is with reference to average working funds (i.e., total of assets excluding accumulated losses, if any), as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949 during the 12 months of the financial year.

* For the purpose of computation of business (deposits plus gross advances) per employee, inter-bank deposits are excluded.

# Based on the number of employees as at year end.

2. Penalties imposed by Reserve Bank of India :

Monetary Penalty to the tune of Rs. 1.00 Crore (P.Y. Rs. NIL) has been imposed by Reserve Bank of India under Section 47A(1)(c) read with section 46(4)(i) of the Banking Regulation Act, 1949 for non-compliance with certain directions issued by RBI on monitoring of end use of funds, exchange of information with other banks, classification and reporting of frauds and on restructuring of accounts.

2.1 Disclosure requirements as per Accounting Standards (AS) issued by the Institute of Chartered Accountants of India where RBI has issued guidelines in respect of disclosure items.

2.2 In compliance to AS-3, the reconciliation of the components of Cash and Cash equivalents presented in the Cash Flow statement with the equivalent items reported in the balance sheet is furnished below.

2.3 Accounting Standard 9 - Revenue Recognition

As mentioned in Accounting Policy (2) of Schedule 17 certain items are accounted on cash basis on account of statutory/regulatory requirements and materiality.

2.4 Accounting Standard (Revised) 10 - Property, Plant and Equipment

In accordance with Revised Accounting Standard 10, Property, Plant and Equipment, depreciation on revalued amount of fixed assets amounting to Rs. 14.23 Crores (Rs. 14.23 Crore) has been transferred to free reserves from Revaluation reserve.

2.5 Accounting standard 15 Employee benefits

The Bank has adopted Accounting Standard - 15 (Revised) issued by the Institute of Chartered Accountants of India with effect from 01.04.2007

2.5.1 Gratuity

Bank pays gratuity to employees who retire/resign from Bank’s service as per rules. ‘the Bank makes contributions to the Trust, towards funding this gratuity, payable every year. In accordance with the gratuity funds rules, actuarial valuation of gratuity is done every year. Actuarial valuation of gratuity liability is calculated based on certain assumptions regarding discount rate, salary growth, mortality and staff attrition as per the projected unit credit actuarial method.

The gratuity payable to the employees is worked out by way of two methodologies i.e., as per the Payment of Gratuity Act, 1972 and other as per service rules and the entitlement is based on what is most beneficial to employees.

2.5.2 Pension

Bank pays pension under a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank’s service on or after 29.09.1995 but before 01.04.2010. ‘the plan provides for a pension on a monthly basis to these employees on their cessation from the bank’s service as provided for in Andhra Bank Employees’ Pension Regulations, 1995. Pension Fund is managed by Andhra Bank Employees Pension Fund Trust.

Employees who joined on or after 01.04.2010 are entitled to Defined Contributory Pension scheme where under the scheme, employee will contribute 10% of pay and eligible allowance with equivalent contribution being made by the Bank and the same will be maintained as per the guidelines issued by the Pension Fund Regulatory and Development Authority from time to time.

2.5.3 Provident Fund

Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to the employees who joined the bank’s service on or before 31.03.2010. ‘this fund is administered by a trust managed by the bank. Each employee contributes 10% of their basic salary and eligible allowances and Bank contributes an equal amount to the fund in respect of non-pension optees. ‘the investment of the fund is made according to the investment pathern prescribed by the Government of India.

2.5.4 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation / Voluntary Retirement/death. However on resignation encashment of privilege leave will be restricted to the tune of 50% of privilege leave standing to the credit of the employee subject to a maximum of 120 days. Actuarial valuation of leave encashment liability is done every year and accordingly, Bank is contributing to the fund.

2.5.5 ’the summarized position of post-employment benefits and long term employee benefits recognized in the Profit & Loss Account and Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) issued by the Institute of Chartered Accountants of India are as under :

Note: RBI vide Lr.No.DBR.BP.9730/21.04.018/2017-18 dated 27.04.2018 has given option to the Banks to spread additional liability on account of enhancement in Gratuity limits from Rs. 10 lakhs to Rs. 20 lakhs from 29.03.2018 under Payment of Gratuity Act, 1972, over four quarters beginning from the quarter ended March 31, 2018. Bank has exercised the above option and charged Rs. 186.76 Cr during the first 3 quarters of this FY 2018-19.

(g) ‘the financial assumptions considered for the calculations are as under:

Discount Rate: ‘the discount rate has been chosen by reference to market yield on government bonds as on the date of reporting. Expected Rate of Return: In case of pension, the expected rate of return is taken on the basis of yield on government bonds / investments. In case of gratuity and leave encashment the actual return has been taken.

Salary increase: On the basis of past data.

(i) Short term Employees’ benefits :

Short term Compensated Absences: Rs. 1.04 crore (Rs.1.04 Crore) (j) Contribution from Provident Fund: Rs. 0.36 crore (Rs. 0.29 Crore)

2.6 Accounting Standard 17 - Segment reporting

Note on Segment Results

(i) As per guidelines of RBI on compliance with Accounting Standards AS-17, Bank has adopted “Treasury Operations”, “Corporate/Wholesale Banking”, “Retail Banking” and “Other Banking Operations” as Primary business segments and “Domestic” Segment as secondary / geographic segment.

(ii) Segment revenue represents revenue from external customers.

(iii) Results of various segments are arrived at in the proportion of revenue of respective segments.

Geographic segments:-

The Bank does not have any branches outside India, the only reportable Geographical segment is of domestic operations, and hence no separate disclosure is made.

2.7 Accounting Standard 18 - Related party disclosures

Names of the Related Parties and their relationship with the Bank

(a) ’the Bank has identified the following persons to be the Key Management Personnel as per the Accounting Standard :

i) Sri. J.Packirisamy MD & CEO from 21.09.2018

ii) Sri. A.K. Rath, Executive Director

iii)Sri. Kul Bhushan Jain, Executive Director

(b) Subsidiary :

Andhra Bank Financial Services Ltd.

(c) Associate :

Chaitanya Godavari Grameena Bank

(d) Joint Ventures :

i) India First Life Insurance Company Ltd.,

ii) India International Bank (Malaysia) Bhd.

iii)ASREC India (P) Ltd.,

The transactions with the Subsidiary and Associate Banks have not been disclosed in view of para 9 of the AS-18 on Related Party Disclosures, which exempts State Controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled.

iv) Capital invested in Joint Ventures-

a) India International Bank (Malaysia) Bhd Rs.143.28 crore (Rs.143.28 crore)

b) ASREC India (P) Ltd. Rs. 28.40 crore (Rs.28.40 crore)

c) India First Life Insurance Company Limited Rs. 187.50 crore (Rs.187.50 crore)

2.8 Accounting standard 24 - Discontinuing operations:

During the financial year 2018-19, the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision to discontinue an operation which will have the above effect has been finalized.

2.9 Accounting Standard 28 - Impairment of Assets:

The indications listed in paragraphs 8 to 10 of Accounting Standard 28- Impairment of Assets (issued by the ICAI) have been examined and on such examination, it has been found that none of the indications are present in the case of the bank. A formal estimate of the recoverable amount has not been made, as there is no indication of a potential impairment loss.

2.10 Accounting Standard 29 - Provisions, contingent liabilities and contingent assets

Contingent liabilities mentioned in Schedule 12 are dependent upon the outcome of Court/arbitration/out of Court settlements, disposal of appeals, amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties as the case may be.

3.1 Draw Down from Reserves :

Pursuant to Reserve Bank of India Circular No. RBI/2015-16/376, DBR.No.BP.BC.92/21.04.048/2015-16 dated April 18, 2016, Bank has debited Rs. NIL crore (Rs.NIL crore) from Revenue Reserve towards unamortized portion of provision on accounts reported as fraud.

Pursuant to Reserve Bank of India circular no. DBR.BP.BC.No.50/21.06.201/2016-17 dated 2nd February, 2017 on Basel III Capital Regulations- Additional Tier 1 Capital’ read with Reserve Bank of India circular no. DBR. No.BP.BC.71/21.06.201/2015-16 dated 14th January, 2016 on ‘Master Circular-Basel III Capital Regulations -Clarification’, Bank has drawn an amount of Rs. 280.53 Crore (Rs. 147.34 Crores) during the year ended 31st March, 2019 from Statutory Reserve (Previous year from Revenue Reserve) towards payment of interest of Additional Tier-I Perpetual Basel III Compliant bonds.

3.2 Disclosure of complaints and unimplemented awards of Banking Ombudsman

The Bank has taken several measures to strengthen the customer complaint redressal machinery for fast disposal of customer complaints. In Head office there is a separate department to athend the complaints of customers.

# Does not include complaints redressed within the next working day.

* All the pending complaints are since redressed.

3.3 Disclosure of Lether of Comfort (LoC)/ Lether of Undertaking issued by bank:

During the year ended 31st March 2019, no Lether of Comfort (LOC)/ Lether of Undertaking (LOU) were issued by the bank. However, the outstanding amount of Lether of undertaking (for capital goods) as at the year ended 31st March 2019 was Rs. 7.54 Crore.

During the year ended 31st March 2018, a total of 1014 LOUs were issued by the bank, amounting to Rs. 2,603.17 Crs and the outstanding amount as on 31.03.2018 was Rs. 1,016.06 Crore.

3.4 Lether of Comfort on behalf of Joint Venture

The Bank had formed a joint venture Bank in Malaysia with joint venture partnership of Bank of Baroda and Indian Overseas Bank on 13.08.2010 in the name of INDIA INTERNATIONAL BANK (MALAYSIA) BHD.

Andhra Bank’s share of joint venture is 25% whereas 40% is held by Bank of Baroda and 35% by Indian Overseas Bank. Reserve Bank of India and Government of India, Ministry of Finance, Department of Financial Services have accorded approvals for the Bank for infusing capital funds equivalent to Malaysian Ringgit 82.50 million (being 25% of total paid up capital of Malaysian Ringgit 330 Mio).

For the purpose of fulfilment of capital requirements of its joint venture India International Bank (Malaysia) BHD,, Andhra Bank has issued a Lether of Undertaking and a Lether of Comfort on 05.08.2010 favouring Bank Negara Malaysia. ‘the financial impact on such LOC/LOU is limited to the extent of Andhra Bank’s share of capital contribution. As on 31.03.2019, Andhra Bank’s contribution to equity capital of India International Bank (Malaysia) BHD is Malaysian Ringgit 82.50 Mio representing 82,50,000 fully paid equity shares of Malaysian Ringgit 10 per share. ‘the rupee equivalent of such capital contribution is included under the head “Investments in Subsidiaries and Joint Ventures” by the Bank.

Thus, the Bank has fully remithed Malaysian Ringgit 82.50 Mio under the Lether of Comfort issued, towards its share in the paid up capital of Malaysian Ringgit 330.00 Mio.

* Technical / Prudential write-off is the amount of non-performing loans which are writhen-off at branch level and loans which are outstanding in the books of the branches but have been writhen-off (fully or partially) at Head Office level.

@ Specific Provisions held including provisions for diminution in fair vale of the restructured accounts classified as NPAs plus technical/prudential write-off.

# Total provisions held on NPAs Floating provision DICGC/ECGC claim amount considered for Calculating NPA amount of technically writhen off / Gross NPA amount of technically writhen off

3.5 Bancassurance business

The Bank has received total of Rs.65.08 crore (Rs.55.82 crore) as fee from Bancassurance. It includes fees from Bancassurance Life Rs.34.70 crore (Rs.31.93 crore) and Non-Life Rs.30.38 crore (Rs.23.89 crore).

3.6 Reconciliation of Inter Bank transactions have been done up to 31st March 2019.

Balancing of Subsidiary ledger accounts, confirmation/ reconciliation of balances with Nostro accounts, Suspense accounts, Drafts Payable, Clearing Differences, ATM transactions etc. is in progress on an on-going basis. In the opinion of the management, the overall impact on the financial statements, if any, of pending final clearance/ adjustment of the above, is not likely to be significant.

3.7 Provision for Income Tax has been made on the basis of the applicable laws and various judicial pronouncements available. In view of judicial pronouncements in similar cases, no additional provision is considered necessary towards disputed tax demands of Rs.2750.29 crore (Rs.1903.28 crore) up to assessment year 2016-17 for which assessments are completed/appealed. Amounts paid by the bank/adjusted by the department on account of the said disputed tax demands have been included in tax paid in advance/tax deducted at source (item III of Schedule 11 - Other Assets).

3.8 Credit Default Swaps : Bank has not entered into Credit Default Swaps during the current Financial Year (Previous year NIL).

3.9 Transfers to Depositor Education and Awareness Fund (DEAF) :

Details of unclaimed liabilities where the amount due has been transferred to DEAF reflected as “Contingent Liability - Other items for which the bank is contingently liable” under Schedule 12 of the Balance Sheet:

3.10 Unhedged Foreign Currency Exposure :

Bank has in place a Board approved policy on “Hedging of Forex Currency Exposures of the Borrowers” prepared in line with RBI guidelines. ‘the policy covers monitoring, reporting, reviewing and pricing mechanism of Un hedged Forex Exposures of Borrowers.

For computing aggregate forex exposures of the borrowers foreign currency loans/borrowings, Working capital demand loan / term loan in foreign currency, External Commercial Borrowings, Foreign Lether of Undertaking (LOU) / Lether of Comfort (LOC) including buyers credit, import lether of credit, Foreign Lether of Guarantees / Foreign Stand by Lether of Credit / Deferred Payment Guarantees issued in Foreign currency are considered.

The incremental provisions/Capital requirement is arrived by considering likely loss & EBID of the borrowers as per RBI guidelines.

LCR Qualitative Disclosure :

The 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.

a. Main drivers of LCR

LCR has two components:

(i) ’the value of the stock of high-quality liquid assets (HQLA) in stressed conditions

(ii) Total net cash outflows: ‘the term “Total net cash outflows” is defined as “Total expected cash outflows” minus “Total expected cash inflows” in the specified stress scenario for the subsequent 30 calendar days (the stressed period).

LCR = Stock of High Quality Liquid Assets/Total Net Cash Outflows over the next 30 calendar days -=100%

RBI introduced LCR in a phased manner starting with a minimum of 60% w.e.f January 1, 2015 and to be maintained at minimum 100% from January 1, 2019.

b. Intraday movements of LCR

The movement of monthly LCR for FY 2018-19 is as follows:

LCR (Daily Average) as on March 2019, based on the daily observations over the previous year stood at 104.51%. LCR as at the end of January-2019, February -2019 and March-2019 stood at 109.85%, 104.83%, 118.46% respectively as against the minimum requirement of 100%.

c. Composition of HQLA

Based on the Daily average for the FY 2018-19 the composition of HQLA is given below :

d. Concentration of funding sources

An internal limit of 20% was fixed by the bank based on the ratio of top 20 depositors to the total deposits. Top 20 depositors of the bank are mainly Government accounts, quasi government agencies, municipalities and Public Sector Entities.

e. ’the bank has low exposure in derivatives having negligible impact on its liquidity position.

f. Bank has no significant exposure in foreign currency.

Bank is maintaining sufficient quantity of High Quality Liquid Assets to meet the minimum LCR requirements on an ongoing basis as per regulatory requirements.

3.11 Revaluation of Fixed assets:

During the year properties owned by the bank was revalued to reflect the present market value based on the reports of External Independent Valuers and approved by the Board of Directors. ‘the net appreciation of Rs.138.50 Crore (with increase in original cost of assets by Rs.222.51 Crore and accumulated depreciation by Rs.84.01 Crore) has been credited to revaluation reserve.

3.12 Previous year figures have been regrouped / reclassified /rearranged wherever necessary to confirm to current year’s figures. Figures in the brackets indicate figures of previous year.