XVIII. Provisions, Contingent Liabilities and Contingent Assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence
or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation
that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. The
Bank creates a provision when there is a present obligation as a result of a past event that probably requires an outflow
of resources and a reliable estimate can be made of the amount of the obligation. No provision is recognized, and a
disclosure of contingent liability is made when there is:
i. a possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non¬
occurrence of one or more uncertain future events not within the control of the Bank; or
ii. a present obligation arising from a past event which is not recognized because:
• it is not probable that an outflow of resources will be required to settle the obligation; or
• a reliable estimate of the amount of the obligation cannot be made. The Bank does not expect the outcome of
these contingencies to have a materially adverse effect on its financial results.
Provisions are determined based on management estimate required to settle the obligation at the balance sheet date,
supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to
reflect the current management estimates. If a favourable Judgement/ Order is already there in respect of disputed items of
taxation, no provisions or disclosures would be made in the books, in respect of such matters. Bank do not create provision
for the cases pending at first appellate authority and where there are no adverse judgements decided on such disputed
matters by the High Court/Supreme Court/ Income Tax Appellate Tribunal/ or other such Appellate Authorities.
Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if
it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period
in which the change occurs.
XIX. Share Issue Expenses
Share issue expenses are adjusted from the Share Premium Account in accordance with Section 52 of the Companies Act,
2013.
XX. Corporate Social Responsibility
Spends towards corporate social responsibility, in accordance with Companies Act, 2013 are recognized in the Profit and
Loss Account.
XXI. Priority Sector Lending Certificates (PSLC)
The fee paid for purchase of the PSLC would be treated as an 'Expense' and the fee received for the sale of PSLCs would
be treated as 'Miscellaneous Income'.
1. Approval and Modification of Accounting Policy
Any amendments or new provisions stipulated by RBI/ Regulatory authorities shall automatically become part of the Policy,
2. Compliance and Reporting requirements
The above policies are in the nature of general principles adopted by the Bank for recognizing, recording, and summarizing
the financial transactions of the bank. Banking services are extended from various offices of the bank spread across
India. For proper accounting, accounting aspects of such events/ services are first recorded at such offices from where
these transactions/ services/ events become measurable in monetary terms. Transactions thus generated are further
compiled at Head Office to prepare the financial statements of the bank. Detailed rules covering procedural aspects of
accounting, including accounting controls, of various products/ services at branches and Head Office are included in
the policies, Manuals/SOP and circulars issued from time to time.
3. Consequences of Non-Compliance
Any qualifications in the financial statements of banks for non-compliance with any Accounting Standard will be viewed
seriously by the Reserve Bank of India. Bank to ensure strict compliance with Accounting Policy,
1. DISCLOSURE REQUIREMENTS AS PER RBI'S MASTER DIRECTION ON FINANCIAL STATEMENTS - PRESENTATION AND DISCLOSURES
Amount in notes forming part of the financial statements for the year ended March 31,2025 are denominated in Rupees Crore
to conform to extant Reserve Bank of India (RBI) guidelines except, where stated otherwise.
1. Capital
1.1 Capital Infusion
The Bank, vide its Letter of Offer dated December 19, 2024, offered upto 14,16,86,767 equity shares of face value of '10 each
at a price of '21.00 per equity share (including a premium of '11.00 per equity share) for an amount aggregating to '297.54
Crore on a rights basis to the eligible equity shareholders of the bank in the ratio of 14 rights equity shares for every 25 fully paid-up
equity shares held by the eligible equity shareholders of the Bank on the record date, i.e., on December 27, 2024. The issue was
fully subscribed and Bank has allotted 14,16,86,767 equity shares on February 4,2025. Accordingly, share capital increased by
'141.69 Crore (Previous Year ' Nil) and share premium increased by '150.60 Crore (Previous Year ' Nil).
1.2 Regulatory Capital
The Bank is subject to the Basel-III Capital Regulations stipulated by RBI which are based on the framework of the Basel Committee
on Banking Supervision, effective from April 1, 2013. Bank has to comply with the regulatory limits and minima as prescribed
under Basel III capital regulations, on an ongoing basis. As per the guidelines, the Bank is required to maintain a minimum Capital
to Risk Weighted Assets Ratio (CRAR) of 9% (11.5% including Capital Conservation Buffer [CCB]), with minimum Common Equity
Tier I (CET1) of 5.5% (8% including CCB). These guidelines on Basel III have been implemented completely, The minimum CRAR
required to be maintained by the Bank as on 31st March 2025 is 11.50%.
1.3 Reserves and Surplus
Statutory Reserve
During the year ended March 31,2025, the Bank had appropriated '16.66 Crore (previous year: '14.46 Crore) out of profits for the
year ended March 31,2025 to the Statutory Reserve in terms of section 17 of the Banking Regulation Act, 1949 and RBI guidelines.
Capital Reserve
In the case of equity instruments designated under AFS at the time of initial recognition, any gain or loss on sale of such investments
shall be transferred from AFS-Reserve to the Capital Reserve. During the year an amount of '0.64 Crore (Previous year Nil) was
transferred to Capital Reserve as loss on sale of such Equity instruments. Profit on sale of investments in the Held to Maturity category
were credited to the Profit and Loss Account and thereafter appropriated to capital reserve (net of taxes and the amount required
to be transferred to Statutory Reserves) during the year is Nil (Previous year '0.21 Crore)
Investment Reserve (IRA)
Since the Bank has complied with minimum regulatory requirements of IFR, the balance in Investment Reserve Account as
of March, 31, 2024 amounting to '28.51 Crore was transferred to General Reserve, in compliance with RBI Master Direction-
Classification, Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023 dated Sept 12,2023, w.e.f
April 01,2024. During the previous year, there was transfer to Investment Reserve Account amounting to '12.77 Crore.
Investment Fluctuation Reserve (IFR)
Investment fluctuation reserve (IFR) is created with an amount not less than lower of net profit on sale of investments during the
year or net profit for the year less mandatory appropriations until the amount of IFR is at least 2 percent of the AFS and FVTPL
portfolio (including HFT), on a continuing basis. During the year, Bank has not transferred any amount (previous year '2.81 Crore) to
Investment Fluctuation Reserve Account as the Bank already hold adequate reserves in line with regulatory prescriptions.
AFS Reserve
The valuation gains and losses across all performing investments, irrespective of classification (i.e., Government securities, Other
approved securities, Bonds and Debentures, etc.), held under AFS shall be aggregated and net appreciation or depreciation shall
be directly credited or debited to AFS reserve without routing through the Profit & Loss Account. At the time of initial recognition, the
Bank has transferred the loss on account of transitional adjustment due to fair valuation of equity instruments amounting to '13.38
Crore. After making subsequent adjustments for gain/ loss in the AFS portfolio during the year, the loss stands at '9.17 Crore (net of
taxes) (Previous year: Nil) in the AFS reserve.
Revenue Reserve:
In compliance with RBI's Master Direction on classification, Valuation and Operation of Investment Portfolio of commercial Banks
(Directions) 2023 dated 12th September 2023, the investments of the Bank have been reclassified, wherever required and valued
in accordance with the above-mentioned RBI direction. Transitional adjustment on account of reclassification of securities has
been credited to General Reserve to the extent of '44.91 crore, which includes reversal of provision for depreciation of '13.74
Crore, amortization of discount on HTM securities of '2.66 Crore (net of taxes) and transfer of investment reserve of ' 28.51 crore.
An amount of '0.73 Crore (previous year '0.74 Crore) was credited to revenue reserves, being depreciation on the revalued
assets.
During the year 2023-2024, Bank had credited back '10.79 Crore drawn down from revenue and other reserves, which relates to
unamortized amount of one fraud account as permitted by the RBI vide DBR No.BPBC.92/21.04.048/2015-16 dated April 18, 2016.
There was no such credit back to revenue and other reserves during the year 2024-2025.
Draw down from reserves
The draw down from the reserves for the year ended March 31,2025 are as follows:
The Bank has not undertaken any drawdown from reserves during the year ended March 31,2025 and March 31,2024, except:
1. An amount of ?0,73 Crore (previous year ?0,74 Crore) was drawn from revaluation reserves and credited to revenue reserves,
being depreciation on the revalued assets.
2. In Financial year 2024-25, Bank had adjusted the share issue expenses of ?5,25 Crore, incurred for the equity raised through
the Right Issue during the year ended March 31, 2025, against the share premium account in terms of Section 52 of the
Companies Act, 2013 and Reserve Bank of India (Financial Statements - Presentation and Disclosures) Directions dated
August 30, 2021 as amended.
2. ASSET LIABILITY MANAGEMENT
a) Maturity pattern of Assets and Liabilities
Disclosure format of maturity pattern has been revised by RBI vide circular DBR.BRBC.No. 86/ 21.04.098/2015-16 dated
March 23, 2016. In compiling the information of maturity pattern, estimates and assumptions have been made by the
management and have been relied upon by the auditors.
ii) Qualitative Disclosure
The Bank measures and monitors the LCR in line with the Reserve Bank of India's circular dated June 09, 2014 on “Basel
III Framework on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure
Standards” as amended for “Prudential Guidelines on Capital Adequacy and Liquidity Standards” dated March 31, 2015.
The LCR guidelines aim to ensure that a bank maintains an adequate level of unencumbered High Quality Liquid Assets
(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. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the
stress scenario, by which time it is assumed that appropriate corrective actions can be taken. Banks are required to maintain
HQLA of a minimum of 100% of its Net Cash Outflows. The adequacy in the LCR maintenance is an outcome of a conscious
strategy of the Bank towards complying with LCR mandate ahead of the stipulated timelines. The maintenance of LCR, both
on end of period and on an average basis, has been on account of multiple factors viz, increases in excess SLR, existing
eligibility in corporate bond investments, increase in retail deposits and increase in non-callable deposits. Unweighted values
are calculated as outstanding balances maturing or callable within 30 days (for inflows and outflows) except where otherwise
mentioned in the circular and LCR template. Weighted values are calculated after the application of respective haircuts
(for HQLA) or inflow and outflow rates (for inflows and outflows). Board of Directors of the Bank has empowered ALCO (Senior
Management Executive Committee) to monitor and strategize the Balance Sheet profile of the Bank.
The Bank has been maintaining HQLA primarily in the form of SLR investments over and above mandatory requirement;
Certificate of Deposits issued by Banks with rating A1 and above apart from regulatory dispensation allowed in the form
of borrowing limit available through Marginal Standing Facility (MSF) and Facility to Avail Liquidity for Liquidity Coverage Ratio
(FALLCR). Average LCR for the Quarter ended March 31,2025 is 159.58% (Quarter ended March 31,2024: 163.89%), which
is comfortably above RBI prescribed minimum requirement of 100%.
c) Net Stable Funding Ratio (NSFR)
i) Quantitative Disclosure
The following table sets out the unweighted and weighted value of the NSFR components of the Dhanlaxmi Bank at March
31,2025 (i.e., quarter-end observation).
e) Disclosure of Divergence in the Asset Classification and Provisioning
In terms of RBI guidelines, banks are required to disclose the divergences in asset classification and provisioning consequent
to RBI's annual supervisory process in their notes to accounts to the financial statements. The disclosure is required if either or
both of the following conditions are satisfied: (i) the additional provisioning for NPAs assessed by RBI as part of its supervisory
process exceeds 5% of the reported profit before provisions and contingencies for the reference period and (ii) the additional
Gross NPAs identified by RBI as part of its supervisory process exceed 5% of the published incremental Gross NPAs for the
reference period ended 31 March, 2024 and 31 March, 2023.
Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to
RBI's annual supervisory process for the year ended 31 March, 2024 and 31 March, 2023.
f) Disclosure of transfer of loan exposures
During the year 2024-2025 and previous year 2023-2024:
(i) The Bank has not transferred any Non-Performing Assets.
(ii) The Bank has not transferred any special mention accounts & Loan not in default.
(iii) The bank has not transferred any loans in default acquired through assignment.
(iv) The Bank has not acquired any loans from SCBs, RRBs, Co-operative Banks, AIFIs, SFBs and NBFCs including Housing
Finance Companies (HFCs) or ARCs.
g) Fraud Accounts
RBI vide DoS. CO. FMG. No. S332/23.04.001/2022-23 dtd.13th January, 2023 has advised all member Banks to report all the
Digital Payment related Financial Fraud incidents to RBI through FMR, which includes the instances where either the credentials
have been compromised by customers themselves, or no loss has been caused to the Bank. In compliance of the above,
Bank has started reporting all cyber fraud incidents to RBI through FMR, from 1st January 2023 onwards.
e) Factoring Exposures: NIL
f) Intra-Group Exposures: Bank does not have any group entities.
g) Unhedged Foreign Currency Exposure
The Bank has a policy on managing credit risk arising out of foreign currency exposure of its borrowers. In line with the policy,
assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing
limits or at the review stage. The Bank has fixed a maximum limit on unhedged position on borrowers, while sanctioning
limits for all clients. The unhedged portion of foreign currency credit exposure of large corporate/SMEs are monitored and
reviewed on a monthly basis. Any sanction of fresh loans/ adhoc loans/ renewal of loans to new/ existing borrowers is done
after obtaining/ sharing necessary information. The Bank also maintains incremental provision towards the unhedged foreign
currency exposure of its borrowers in line with the extant RBI guidelines. The Bank has maintained a provision of '1.01 crore
(previous year - '0.96 crore), additional risk weighted assets of '0.35 crore (previous year-'1.81 crore) and capital charge of
'0.04 crore (Previous year '0.21 crore) as on 31.03.2025.
officers, whose responsibilities are well defined. The Bank enters into plain vanilla forward forex contracts only to backup
/ cover customer transactions as also for proprietary trading purpose. The Bank also enter in to foreign exchange swaps
with other banks for hedging own balance sheet items like FCNR/ EEFC etc. The Treasury Management Policy of the Bank
clearly lays down the scope of usages, approval process as also the limits like the open position limits, deal size limits and
stop loss limits for trading. The Mid Office is handled by Risk Management Department. Daily report is generated by Risk
Management Department for appraisal of the risk profile to the senior management for Asset and Liability management.
> Scope and nature of risk measurement, risk reporting and risk monitoring systems: Outstanding forward contracts
are monitored by Risk Management Department against the limits (Counterparty, Stop Loss, Open Position, VaR,
Aggregate Gap) fixed by the Board and approved by RBI (wherever applicable) and exceeding, if any, are reported
to the appropriate authority / Board for ratification.
1. Policies for hedging and / or mitigating and strategies and processes for monitoring the continuing effectiveness of
hedges / mitigants: The Bank's policy lays down that the transactions with the corporate clients are to be undertaken
only after the inherent credit exposures are quantified and approved for customer appropriateness and suitability and
necessary documents like ISDA agreements etc. are duly executed. The Bank adopts Current Exposure Method for
monitoring the credit exposures. While sanctioning the limits, the competent authority stipulates condition of obtaining
collaterals / margin as deemed appropriate. The derivative limits are reviewed periodically along with other credit
limits.
2. 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: Valuation of outstanding
forward contracts are done as per FEDAI guidelines in force. Marked to market profit & loss are taken to Profit & Loss
account. MTM profit & loss calculated as per Current Exposure method are taken into account while sanctioning
forward contract limits to customers and collaterals / cash margins are prescribed for credit and market risks. The
Bank undertakes foreign exchange forward contracts for its customers and hedges them with other banks. The credit
exposure on account of forward contracts is also considered while arriving at the total exposure of each customer
/ borrower and counter party banker. The Bank also deals with other banks in proprietary trading duly adhering to risk
limits permitted by RBI, set in the policy and is monitored by mid office. The Marked to Market values are monitored
on daily basis for foreign exchange forward contracts. The credit equivalent is computed under current exposure
method. The operations are conducted in terms of the policy guidelines issued by Reserve Bank of India from time to
time and as approved by the Board of the Bank.
d) Credit Default Swaps
The bank has not undertaken any transactions in Credit Default Swaps (CDS) during the year March 31,2025 and March 31,
2024.
e) OIS (Overnight Index Swap) position
The Bank has not entered into OIS (Overnight Index Swap) during FY 2024-25. The bank had NIL outstanding OIS position at the
end of March 2025 and March 2024.
f) Un-hedged / uncovered foreign currency exposure of the Bank
The Bank's foreign currency exposures as at March 31,2025 that are not hedged/ covered by either derivative instruments or
otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the Board.
NOOP limit is '15.00 Crore and actual position as on March 31, 2025 was '1.92 Crore. AGL limit is USD 80 Mio and actual
position as on March 31,2025 was USD 14.12 Million.
g) Currency Futures
The Bank does not deal in exchange traded currency futures during the current and previous Financial Years.
8. Securitization Transactions
The Bank has not undertaken any securitisation transactions during the year ended March 31,2025 and March 31,2024.
9. Off-balance sheet SPVs sponsored
There are no SPVs sponsored by the Bank as at March 31,2025 and March 31,2024.
13. Disclosures on Remuneration
i) Qualitative Disclosures
?. Information relating to the composition and mandate of the Nomination and Remuneration Committee.
Composition (as on 31/03/2025)
1. Dr. Nirmala Padmanabhan, Chairperson
2. Shri G. Rajagopalan Nair
3. Dr. Jineeshnath C.K
Terms of Reference
1. Recommending to the Board for its consideration and approval on the size and composition of the Board taking into account
the available and needed diversity and balance in terms of experience, knowledge, skills and judgment of the Directors;
2. Reviewing, from time to time, possible candidates for current and potential Board vacancies, including Directors who are to
retire and are eligible for re- appointment or re-election and other persons who may be recommended by the Chairman or
the MD&CEO or other Directors, shareholders or others;
3. Recommending to the Board, candidates for election (including reelection) or appointment (including reappointment) to the
Board;
4. Carrying out evaluation of every Director's performance;
5. Deciding on the matter of whether to extent or continue the term of appointment of the independent director, on the basis
of the report of performance evaluation of independent directors;
?. Identifying persons who are qualified to became directors and who may be appointed in senior management in accordance
with the criteria laid down, recommend to the Board their appointment and removal; formulation of the criteria for determining
qualifications, positive attributes and Independence of a Director;
7. Devising a policy on diversity of Board of Directors;
8. Recommending to the Board a policy relating to the remuneration for the Directors, key managerial personnel and other
employees;
[The committee shall ensure the following while formulating the policy on the aforesaid matters:
a) The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, key
managerial personnel and senior management of the quality required to run the Bank successfully;
b) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks;
c) Remuneration to Directors, key managerial personnel and senior management involves a balance between fixed and
incentive pay reflecting short- and long-term performance objectives appropriate to the working of the Bank and its
goals.]
9. Formulating and determining the Bank's policies on remuneration packages payable to the Directors and key managerial
personnel including performance / achievement bonus, perquisites, retirals, sitting fees.
10. Considering grant of Stock Options to employees.
11. Reviewing the composition of the existing Committees of the Board.
12. Formulation of criteria for performance evaluation of independent directors and the Board;
13. Validation of “fit and proper” status of all Directors on the Board of the Bank in terms of the guidelines issued by the RBI or other
regulatory authorities;
14. Developing and recommending to the Board the Corporate Governance guidelines applicable to the Bank for incorporating
best practices from time to time
15. Periodicity of Meetings: At least once in a year; however, the Committee should meet as and when new Directors are
proposed to be appointed and when existing Directors are proposed to be re- appointed
b) I information relating to the design and structure of remuneration processes and the key features and objectives of
remuneration policy.
In compliance with standards of corporate governance as well as regulatory reforms put forth by Reserve Bank of India, Bank
has in place 'Compensation Policy of Whole time Directors (WTD), Chief Executive Officers, Material Risk Takers (MRTs) and
Control Function Staff.
For employees who do not fall under the purview of above, we also have a 'Compensation Policy' clearly defining the
compensation design in line with banking industry benchmarks, under two streams of employment viz. IBA and CTC.
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.
Based on the Financial Stability Board (FSB) principles for sound compensation practices which also formed a part of
regulatory reforms circulated by RBI vide DOR. Appt. BC. No.23/ 29.67.001/2019-20 dated 04.11.2019, effective alignment of
compensation with prudent risk taking while ensuring that compensation covers all types of risks including difficult to measure
risks is already envisaged in 'Compensation Policy of WTDs, Chief Executive Officers, MRTs and Control Function Staff'.
The Policy also touches upon the sensitivity of payout schedule to the time horizon of risks.
In order to analyze the long-term consequences viz-a-viz risk appetite, our policy objective is to align regulatory guidelines with
prevailing trends / practices in the industry to achieve a balanced scenario wherein
1. compensation is adjusted for all types of risks
2. compensation outcomes are symmetric with risk outcomes
3. compensation payouts are sensitive to the time horizon of risks and
4. mix of cash, equity and other forms of compensation are consistent with risk alignment.
Regarding the employees who are not covered under 'Compensation Policy of WTDs, Chief Executive Officers, MRTs and
Control Function Staff', the payout falls under either IBA or CTC pattern.
The former is periodically revised by bi-partite settlements/ joint notes while the latter is linked to bank's performance and the
individual's performance, complying with the statutory guidelines and the yardsticks approved by competent authorities.
d) Description of the ways in which the bank seeks to link performance during a performance measurement period with
levels of remuneration.
Compensation structure for the personnel covered under 'Compensation Policy of WTDs, Chief Executive Officers, MRTs and
Control Function Staff' is a mix of fixed pay and variable pay with the latter proportionate to the responsibility/ seniority,
Bank will device scoring model with specific parameters in tandem with the rules and authorities handled by the respective
positions. The Board will review and finalize the score for each senior management position based on the audited figures of
the previous financial year.
For employees coming under IBA pattern, the compensation shall be revised once in five years as decided by the bi-partite
settlements/ joint notes, subject to granting of bank's mandate.
Under CTC pattern the increments shall be linked to bank's performance based on year-on-year yardsticks fixed by the Bank.
e) A discussion of the bank's 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.
Norms for grant of share linked instruments shall be in conformity with the provisions of Securities & Exchange Board of India
(Share Based Employee Benefits) Regulations, 2014. Share linked instruments shall be fair valued on the date of grant by the
bank using Black-Scholes Model.
Deferral of Variable Pay
In adherence to FSB implementation standards, a minimum of 60% of total Variable Pay shall be under deferral arrangement
with further guidelines on cash component as follows:
1) If cash component is part of Variable Pay, at least 50% of the cash bonus shall be under deferral arrangement.
2) If cash component of Variable Pay is under ?0.25 Crore, deferral payment for cash portion would not be necessary,
Period of Deferral Arrangement
Deferral Period shall be fixed as three years applicable to both cash and non-cash components of the Variable Pay, In order
to ensure a proper assessment of risks before the application of ex-post adjustments, following guidelines shall be ensured for
vesting.
1) Deferred portion of Variable Pay shall be spread out on a pro-rata basis, i.e., not more than 33.33% of the total deferred
Variable Pay shall vest at the end of first year. Further, not more than 33.33% of total deferred Variable Pay shall vest at the
end of second year.
2) The first such vesting shall not be before one year from the commencement of the deferral period.
The changes required on account of RBI Master Direction RBI/DOR/2023-24/104 DOR.MRG.36/ 21.04. 141/ 2023- 24 dated
12th September 2023, applicable from 1st April 2024 as stated below:
• Policies on classification and valuation of investments:
With effect from 1st April 2024, the Bank adopted the revised framework of classification and valuation of investments
issued by RBI vide Master Direction No. RBI/DOR/2023-24/104 DOR.MRG.36/ 21.04.141/ 2023-24 on Classification,
Valuation and Operation of Investment Portfolio of Commercial Banks (Directions), 2023 dated 12th September 2023.
The disclosure of transition impact in terms of Para 43 of the RBI Circular is disclosed under Para 3- Investments, of Notes
to Accounts.
• Method of recording the transactions on acquisition of securities:
As per the extant Policy, the premium paid on acquisition of HTM category Investments only, was amortized over
the term to maturity on a constant yield basis. In terms of the new investment framework, the Bank amortizes both,
premium and discount on acquisition, across all categories of investments, on a constant yield basis.
The impact of the revised framework for the period prior to the transition date is not ascertainable. As a result, the income/
profit or loss from investments for the year ended on 31st March 2025 are not comparable to figures reported for the year
ended on 31st March 2024.
i i) Other operating expenses for the year ended 31.03.2024 include prior period item amounting to '1.25 Crores being
correction of excess Input Tax Credit reversal of GST relating to FY 2017-18 (credit to operating expenses).
b) Employee Benefits (AS 15)
1) Provident Fund: Employees, who have not opted for pension plan are eligible to get benefits from provident fund,
which is a defined contribution plan. Aggregate contributions along with interest thereon are paid on retirement, death,
incapacitation or termination of employment. Both the employee and the Bank contribute a specified percentage of the
salary to the Dhanlaxmi Bank Employees' Provident Fund. The Bank has no obligation other than the monthly contribution.
The Bank recognized '0.98 Crore (Previous Year: '0.85 Crore) for provident fund contribution in the Profit and Loss Account.
2) New Pension Scheme: As per the industry level settlement dated April 27, 2010, employees who joined the services
of the Bank on or after April 1, 2010 are not eligible for the existing pension scheme whereas they will be eligible for
Defined Contributory Pension Scheme (DCPS) in line with the New Pension Scheme introduced for employees of Central
Government. Towards DCPS, employee shall contribute 10% of their pay components and Dearness Allowance thereon
and the Bank will also make a contribution of 14%. There is no separate Provident Fund for employees joining on or after
April 1,2010. The Bank recognized '11.10 Crores (Previous Year: '9.45 Crore) for DCPS contribution in the Profit and Loss
Account.
*Refer Schedule 12 for amounts relating to Contingent Liability
The Bank's pending litigations comprise of claims against the Bank by the clients and proceedings pending with Income
Tax authorities/GST/VAT/Service Tax Authorities. The Bank has reviewed all its pending litigations and proceedings and has
adequately provided for such liabilities where provisions are required and disclosed the contingent liabilities wherever
applicable (other than SCN's), in its financial statements. The Management believes that the possibility of outflow of resources
embodying economic benefits in these cases is possible but not probable and hence no provision is required in these cases.
However, the contingent liability has been disclosed with respect to the cases, as found required.
Dues to Micro, Small and Medium Enterprises
There have been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small
and Medium Enterprises.
e) Provision for 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 recorded adequate provision as required under any law /
accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts), if any, in
the books of account and disclosed the same under the relevant notes in the financial statements.
f) Investor Education and Protection Fund
There was no pending amount to be transferred to the Investor Education and Protection Fund by the Bank in the FY 2024-25.
g) Inter-Bank Participation Certificates with Risk Sharing
There was no purchase or sale of Inter Bank Participation Certificate with risk sharing by bank during year ended March 31,
2025 and March 31,2024.
ii) Revaluation Reserve
There has been no revaluation of assets during the year ended March 31,2025 and March 31,2024.
i) Corporate Social Responsibility (CSR)
Due to losses incurred by the Bank from FY 2013 to 2018, in compliance with the provision outlined in Section 198, these losses
were offset against profits in subsequent years. Consequently, no profits were available under Section 198 of the Companies
Act, for Corporate Social Responsibility purposes. Therefore, the Bank did not undertake any projects under Corporate Social
Responsibility for the financial year 2024-25 and 2023-24.
j) Inter Office Accounts:
Inter Office Accounts between branches, controlling offices, Corporate Office etc., are being reconciled on an ongoing basis
and there is no material effect on the profit and loss account of the current year.
17. Comparative Figures
Previous year figures have been re-grouped/ re-classified wherever considered necessary to conform to current year's classification.
18. Disclosure as to Rule 11(e) of the Companies (Audit and Auditors) Rules, 2014
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind
of funds) by the Bank to or in any other person(s) or entity(s), 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 not received any fund from any party(s) (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 Bank (“Ultimate
Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Signatories to Schedule 1 to 18
For and on behalf of Board of Directors
Kavitha T A Venkatesh H K.N Madhusoodanan Ajith Kumar K.K
Chief Financial Officer Company Secretary Chairman MD & CEO
As per our Report of even Date P. Suriaraj G. Rajagopalan Nair
For Sagar & Associates, For Abraham & Jose, Executive Director Director
Chartered Accountants, Chartered Accountants,
Dr. Nirmala Padmanabhan Vardhini Kalyanaraman
Firm Registration No. 003510S Firm Registration No. 000010S
Director Director
CA. Manohar D, CA. Mukesh K P,
Jineesh Nath C.K. Ashutosh Khajuria
Partner Partner
Director Director
Membership No. 029644 Membership No. 214773
D.K.Kashyap C Nageswara Rao
Director Director
Place: Kochi
Date : 9th May, 2025
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