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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 500116ISIN: INE008A01015INDUSTRY: Finance - Banks - Public Sector

BSE   ` 42.65   Open: 43.25   Today's Range 42.50
43.30
-0.50 ( -1.17 %) Prev Close: 43.15 52 Week Range 41.50
77.15
Year End :2018-03 

EMPLOYEE BENEFITS (AS-15) (REVISED)

A. Employee Benefit Schemes

Defined Contribution Schemes

The Bank’s employees, excluding those who have opted for pension, who have joined Bank before March 31, 2008 are covered by Provident Fund Scheme (PFS). The Bank makes a defined contribution measured as a fixed percentage of basic salary to the PFS. The Provident Fund Scheme is administered by “The Committee of Administrators of IDBI Bank Employees’ Provident Fund (Fund)’.’ In respect of employees of IDBI Home Finance Limited (IHFL) and IDBI Gilts Limited (IGL), provident fund contributions were made to Regional Provident Fund Commissioner up to May 2011 and thereafter contributions have been made to the aforementioned Fund. During the year, Rs, 4.52 Crore (Rs, 4.68 Crore) has been contributed to PFS and charged to Profit and Loss Account.

The Bank’s employees who have joined after April 1, 2008 are covered by Defined Contribution Pension Scheme (DCPS) to which Bank makes a defined contribution as a fixed percentage of Pay and Dearness Allowance. During the year, Rs,69.20 Crore (Rs, 63.95 Crore) has been contributed to DCPS and charged to Profit and Loss Account.

Defined Benefit Schemes

The Bank makes contributions for the gratuity liability of the employees to the ‘IDBI Bank Employees Gratuity Fund Trust.

a. Some of the employees of the Bank are also eligible for Pension which is administered by the ‘IDBI Pension Fund Trust’

b. The present value of these defined benefit obligations and the related current service cost are measured using the Projected Unit Credit Method by an independent actuary at each balance sheet date.

‘Pursuant to the Gazette Notification dated March 29, 2018 regarding amendment in Payment of Gratuity Act, 1972, Reserve Bank of India vide its communication DBR No. BP.BC. 9730/ 21.04.018/ 2017-18 dated April 27, 2018, has given option to Banks to spread additional liability on account of enhancement in gratuity limits from Rs, 10 lakhs to Rs, 20 lakhs in four quarter beginning with the quarter ended March 31, 2018. The Bank has exercised the option and has charged Rs, 11.57 Crore during the quarter ended March 31, 2018 and deferred Rs, 34.71 Crore to subsequent three quarter of the ensuing financial year.

C Other long term benefits

Employees of the Bank are entitled to accumulate their earned/ privilege leave up to a maximum of 180 days for officers and 300 days for other staff. A maximum of 15 days leave is eligible for encashment in each year.

Employees of the Bank are eligible for Disability Assistance which is borne by the Bank as and when the disability events occur

Some employees of the Bank are eligible for Voluntary Health Scheme which is borne by the Bank as and when the liability events occur.

Actuarial valuation of these benefits have been carried out using the Projected Unit Credit Method and Rs, 17.47 Crore (Rs, 73.07 Crore) has been charged to Profit and Loss Account during the year.

SEGMENT REPORTING (AS-17)

The Bank primarily operates in three business segments as under :

-o

Treasury operations include trading portfolio of investments, money market operations, derivative trading, foreign exchange operations on the proprietary account and for customers..

Retail Banking broadly includes credit and deposit activities that are primarily oriented towards individuals & small business including Priority sector lending. Retail Banking also encompasses payment and alternate channels like ATMs, POS machines, internet Banking, mobile Banking, credit cards, debit cards, travel/currency cards, third party distribution and transaction Banking services.

Includes corporate relationship covering deposit & credit activities other than retail. It also covers corporate advisory / syndication, project appraisal and investment portfolio including strategic investments other than those covered under Treasury.

A. List of related party as per AS-18

IDBI Capital Market Services Ltd.

IDBI Intech Ltd.

IDBI MF Trustee Company Ltd.

IDBI Asset Management Company Ltd.

IDBI Trusteeship Services Limited

Jointly controlled entity

IDBI Federal Life Insurance Co. Ltd.

Key management personnel of the Bank

Shri Kishor P Kharat, Managing Director & CEO (up to April 02, 2017)

Shri Mahesh Kumar Jain, Managing Director & CEO (from April 03, 2017)

Shri Krishna Prasad Nair, Deputy Managing Director.

Shri G.M.Yadwadkar, Deputy Managing Director.

Smt. Padma Betai, CFO (upto July 02, 2017)

Shri Ajay Sharma CFO (from July 03, 2017)

Shri Pawan Agrawal, Company Secretary.

Following have been considered as Key Management Personnel w.e.f March 21, 2018 as per the Board resolution

Shri. P Sitaram, Executive Director & Chief Compliance Officer

Smt. B Mythili, Executive Director

Shri. A L Bongirwar, Executive Director

Shri. G A Tadas, Executive Director

Dr. S S Banerjee, Executive Director & Chief Technology Officer

Shri. S K Khatanhar, Executive Director

Shri. I S Kalra, Executive Director

Shri. M V Phadke, Executive Director & Chief Audit Officer

Shri. Subroto Gupta, Executive Director

Shri. Ajoy Nath Jha, Chief Risk Officer

Smt. Maya Chakravorty, Chief General Manager, Treasury

B. Details of transactions with Related Parties

Parties with whom transaction were entered into during the year

No disclosure is required in respect of related parties, which are “State-controlled Enterprises” as per paragraph 9 of Accounting Standard (AS) 18. All the subsidiaries of the Bank are State-controlled Enterprises, hence no disclosure is made for transaction with subsidiary Companies. Further, in terms of paragraph 5 of AS 18, transactions in the nature of Banker-Customer relationship have not been disclosed in respect of Key Management Personnel and relatives of Key Management Personnel.

Operating leases primarily comprise office premises, staff residences and Automated Teller Machines(ATM)s, which are either cancellable at the option of the Bank or non-cancellable operating lease.

During the year Rs, 331.82 Crore (Rs, 310.50 Crore) has been charged to the Profit and Loss Account towards lease charges paid/ payable on cancellable/non-cancellable operating lease.

b. Long term contracts

The Bank has a process whereby periodically all long term contracts including derivative contracts are assessed for material foreseeable losses. At the year end, the Bank has reviewed and ensured that adequate provision as required under any law/ accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made in the books of account.

c. Pending litigations

The Bank’s pending litigations comprise of claims against the Bank primarily by the borrowers, customers and proceedings pending with Income Tax authorities. The Bank has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements.

‘Refer Schedule-12- Contingent Liabilities for quantitative disclosure.

B DISCLOSURES REQUIRED AS PER RBI GUIDELINES

# Government of India infused Rs, 7881 crore on March 28, 2018 through Recapitalization of Bonds and the same has not been allotted and shown as 'Equity Share Application Money' as at March 31, 2018. On the basis of RBI letter dated April 23, 2018, the Bank has considered such 'Equity Share Application Money' as a part of Common Equity Tier I (CET1) Capital as at March 31, 2018.

The Bank uses derivatives for Hedging as well as for Trading purposes. The use of such derivatives gives rise to various risks like credit risk, market risk, operational risk, legal risk etc.

The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organization, risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent Risk Management Department, headed by a Chief General Manager designated also as Chief Risk Officer. The Risk Management Group is functionally responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes, parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management Committee of the Board as well as to the Board.

Risk exposures in derivatives transactions are measured/ assessed, in both quantitative and qualitative terms, to capture credit risk, market risk and operational & legal risk. Prior to the execution of derivative transaction, it is ensured that credit risk exposure to the client/counterparty, measured in terms of Loan Equivalent Risk (LER), is within the approved limit and the client/counterparty has the necessary understanding of the transaction. Market risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, gaps, greeks, stop loss etc. Operational risks are addressed by having adequate system infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal agreements and documentation.

The accounting policy for derivatives has been drawn up in accordance with RBI guidelines, the details of which are contained in Schedule No.17 "Significant Accounting Policies of the Bank".

‘Since the transaction are undertaken to hedge the interest rate and currency risks in the asset-liability portfolio, the bank is not calculating the maximum and minimum of 100‘PV01 on daily basis.

The Bank has Board approved limit for Net Overnight Open Position (NOOP) fixed at Rs, 400 crore w.e.f from October 16, 2017 (earlier limit Rs, 300 crore). During the year the open position was within the approved limit and the average utilization was Rs, 237.51 crore. The maximum utilization during the year was at Rs, 313.86 crore on February 28, 2018.

Banks shall make appropriate disclosures in their financial statements, under ‘Notes on Accounts’, relating to resolution plans implemented (ref: Para-16/ RBI Circular dtd february 12, 2018-RBI/2017-18/131/DBR.No.BP.BC.101/21.04.048/2017-18-“Resolution of Stressed Assets -Revised Framework”):

Rs, 75.16 crore @ 15% to be made on the outstanding funded liability of Rs, 501.09 crore (RTL & CC) as on March 31, 2018.

Rs, 145.50 crore on Bonds and Debentures & Rs, 290.06 crore on Pref Shares

a) quantum of provision made during the year to meet the shortfall in sale of NPAs to SCs/RCs- Nil

b) quantum of unamortised provision debited to ‘other reserves’ as at the end of the year.- Nil

$ Working funds are 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 and average of total assets (excluding accumulated losses, if any) of Dubai branch.

@ Return on Assets is with reference to average working funds (i.e. total of assets excluding accumulated losses, if any).

# For the purpose of computation of business per employee (deposits plus advances) inter Bank deposits are excluded.

The provision towards depreciation ( mark to market ) on the investment under Available for Sale (AFS ) & Held for Trading ( HFT ) category where individual scrip value has not changed as per RBI guidelines has been regrouped from Schedule -14 ‘Other Income’ under the head ‘Profit & Loss on Revaluation of investment (net) to Provision & Contingencies under the head ‘Provision for Depreciation on Investments

Total amount of advances for which intangible securities such as charge over the rights, licenses, authority etc. has been taken is Rs, Nil crore (Rs, 486.38 Crore) and the estimated value of intangible security as on March 31, 2018 is Rs,. Nil on pari-passu basis (Rs, Nil).

As a policy, the Bank does not make any floating provision for bad and doubtful advances and investments.

Note: Bank has not securitized-out any standard loans. However, bank has played the role of Investor by way of acquisition of Pass Through Certificate transaction, provider of credit enhancement as second loss facility and liquidity facility in securitization transaction of third party/ other Bank.

The LCR promotes short-term resilience of Banks to potential liquidity disruptions by ensuring that they have sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days. 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 specified by supervisors.

The LCR requirement are binding on Banks from January 1, 2015. However, with a view to provide a transition time for Banks, the requirement is minimum 60% for the calendar year 2015 i.e. with effect from January 1, 2015, and rise in equal steps of 10% over a period of 4 years to reach the minimum required level of 100% on January 1, 2019

Under the standard, Banks must hold a stock of unencumbered HQLA to cover the total net cash outflows over a 30-day period under the prescribed stress scenario. In order to qualify as HQLA, assets should be liquid in markets during times of stress and, in most cases, be eligible for use in central Bank operations. The HQLA of the Bank mainly comprise of SLR investments over and above mandatory requirement, liquidity available by way of borrowing under Marginal Standing Facility (2% of NDTL), Facility to Avail Liquidity for Liquidity Coverage Ratio (9% of NDTL) & other securities issued by PSEs or non-financial corporates.

Total expected cash outflows are calculated by multiplying the outstanding balances of various categories or types of liabilities and off-balance sheet commitments by the rates at which they are expected to run off or be drawn down. Total expected 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 well organised liquidity risk management structure as enumerated in ALM Policy which is approved by the Board. The Asset Liability Management Committee (ALCO) of the Bank monitors & manages liquidity and interest rate risk in line with the business strategy. ALM activity including liquidity analysis & management is conducted through coordination between various ALCO support groups residing in the functional areas of Balance Sheet Management, Treasury Front Office, Budget and Planning etc. ALCO directives and ALM actions are implemented by the business groups and verticals.

As per the regulatory guidelines, presently Bank maintains LCR in domestic currency only. The average LCR of the Bank for the year 2017-18 was at 102.87% (114.17%).

The Government of India (GoI), Ministry of Finance, Department of Financial Services vide its letter dated 5th September 2016, advised the Bank to surrender securities of Rs, 1064.27 crore to the GoI representing net impact of the asset exchange of Stressed Assets Stabilisation Fund (SASF) done by the Bank in 2006. These securities form part of Rs, 9000 crore of such securities issued to the Bank by GoI in September 2004 against SASF. These are 20 years securities maturing in September 2024. The Bank has obtained approval from the Appropriate Authorities to surrender these securities in 11 quarters commencing from quarter ended September 30, 2016 and accounted the same accordingly. Approval from appropriate authority has been obtained. Bank has so far surrendered securities of Rs, 677.25 crore to the GoI and the balance securities of Rs, 387.02 crore are carried forward as Investments. The Bank will surrender the balance of securities of Rs, 387.02 crore in the remaining four quarters.

Pursuant to the provisions of Micro, Small and Medium Enterprises Development Act, 2006, certain disclosures are required to be made relating to Micro, small & medium enterprise. The Bank is in the process of compiling relevant information from its suppliers about their coverage under the said Act. In view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of this Act is not expected to be material.

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs, 138.68 Crores (Rs, 205.94 Crores).

Other Liabilities include Rs, 7.05 crores as dividend payable pertaining to the years 1995 to 2003 in relation to the dividend declared by erstwhile Industrial Development Bank of India (IDBI). On the basis of the legal opinion on record the amount need not be transferred to Investors Education and Protection Fund (IEPF) as Companies Act 1956/Companies Act 2013 is not applicable to erstwhile IDBI. The Bank had referred the matter to Ministry of Corporate Affairs (MCA) about the legality of transferring the amount to Investor Education and Protection Fund (IEPF) where the reply is awaited.

Figures of previous year, are disclosed in brackets and are regrouped/ rearranged, so as to confirm with the presentation made for the current year.

1

To carry out any other role mandated to it by regulatory/ statutory requirements or the Government of India (GoI)/ Reserve Bank of India (RBI) directions notified from time to time.