Provisions, Contingent Liabilities and Contingent Assets
In conformity with AS 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at each balance sheet date.
Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.
Contingent Assets are neither recognized nor disclosed.
A disclosure of contingent liability is made when there is:
a possible obligation in respect of which the likelihood of outflow of resources is not remote; or
a present obligation arising from a past event which is not recognized, as 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.
When there is a possible obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Where it is probable that a present obligation exists in respect of disputed taxes, a provision is made. Where it is not probable that such a present obligation exists, the bank discloses a contingent liability, unless the possibility of an outflow of resources is remote, based on opinions/ various judicial decisions in respect of past assessment, appeals pending admission, merits/facts of the case, the provisions of applicable Tax Laws and other relevant judicial decisions, where in no provision or disclosure is made.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Bank from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Bank recognizes any impairment loss on the assets associated with that contract.
Accounting for Dividend
In terms of Accounting Standard (AS) 4 “Contingencies and Events occurring after the Balance sheet date” the Bank does not account for proposed dividend or Dividend declared after balance sheet date as a liability through appropriation from profit and loss account in current year balance sheet. This is disclosed in the notes to accounts. The same is recognized in the year of approval of shareholders. However, the Bank reckons proposed dividend in determining capital funds in computing the capital adequacy ratio.
'Cash & Cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice.
Corporate Social Responsibility
Expenditure towards corporate social responsibility, in accordance with Companies Act, 2013, is recognised in the Profit and Loss Account.
RBI vide circular no DOR.CAP.REC.130/21.06.201/2025-26 dated November 28, 2025 has given discretion to Banks to consider Revaluation Reserve/ Foreign Currency Translation Reserve/ DTA for the purpose of computation of Capital Adequacy as CET-1 capital ratio. The Bank has exercised the option in the above computation.
Net Profit for the current financial year is considered in CET-1 capital in accordance with extant RBI guidelines. This had resulted in increase in CET-1 capital for period ending March 31,2026.
b) Draw Down from Reserves
The Bank has not undertaken any drawdown from reserves during the year ended March 31,2026 and March 31,2025.
a. The Basel Committee on Banking Supervision (BCBS) has introduced Liquidity Coverage Ratio (LCR) as one of the key reforms to strengthen global capital and liquidity regulations with the objective of promoting a more resilient banking sector.
b. 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.
High Quality Liquid Assets (HQLA):
As per the guidelines, banks must hold a Stock of unencumbered HQLA to cover the total net cash outflows over 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 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 (16% of NDTL) & other securities as may be permitted by Reserve Bank of India from time to time.
Total net cash outflows:
Total expected cash out flows 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.
The Bank has well organized 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 Asset Liability Management, Treasury Front Office, Budget and Planning etc. ALCO directives and ALM actions are implemented by the business groups and verticals.
The Bank during the quarter ended March 2026, maintained average HQLA of ' 92,982 crore after factoring eligible haircuts. HQLA is mainly driven by Level 1 Assets and comprises mainly of Government securities and T-bills which constitute more than 90% of HQLA as on 31st March 2026. The Bank has well diversified source of funds, which mainly comprise of deposits, with top 20 depositors contributing 12.02% of total deposits as on 31st March 2026.
The average LCR for the quarter ended March 2026 was at 122.25% (Previous Year 127.09%), which is above the present prescribed minimum requirement of 100%.
The Risk Management Group is functionally responsible for measurement, monitoring and reporting of risks like credit risk, market risk, operational risk etc. 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 respective committees (viz. Credit Risk Management Committee, Operational Risk Management Committee and Asset Liability Management Committee) with periodic 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. Physically-settled foreign exchange contracts are settled on payment versus payment (PvP) basis so as to mitigate principal risk resulting from failed trades. The Bank mitigates replacement cost risk by effective use of close-out netting agreements, exchange of margin, collaterals etc, wherever applicable. 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 Bank has computed the maximum and minimum of PV01 for the year based on the balances as at the end of each day while maximum and minimum of PV01 for Hedge book is computed on the balances as at the end of every month.
In respect of derivative contracts, the Bank computes the exposure under the Current Exposure Method based on RBI guidelines on “Commercial Banks - Prudential Norms on Capital Adequacy Directions, 2025” dated November 28, 2025 and any related amendments thereafter. However, for the purpose of calculating product-wise derivative exposure as mentioned in point number (iii) in table above, bank has calculated exposure using Current Exposure Method (‘CEM') without the impact of Bilateral Netting
Disclosures on Remuneration
(a) Information relating to the composition and mandate of the Nomination and Remuneration Committee:
Name, composition and mandate of the main body overseeing remuneration:
Nomination and Remuneration Committee (NRC) comprises of four members, all Non-Executive Directors with an Independent Director as its Chairman, one Government Nominee Director and three Independent Directors as members. The Committee fulfils the mandate / terms of reference provided under Section 178 of the Companies Act, 2013, Regulation 19 and Part D of Schedule II of the LODR Regulations, SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and RBI guidelines in respect of fit and proper status of Directors, as under :
Formulation of the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board of Directors a policy relating to remuneration of the Directors, Key Managerial Personnel and other employees;
For every appointment of an independent director, the Nomination and Remuneration Committee shall evaluate the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, prepare a description of the role and capabilities required of an independent director. The person recommended to the Board for appointment as an independent director shall have the capabilities identified in such description. For the purpose of identifying suitable candidates, the Committee may:
To undertake a process of due diligence to determine the suitability of any person for appointment / continuing to hold appointment as a Director on the Board, based upon qualification, expertise, track record, integrity, ‘fit and proper' criteria, positive attributes and independence (if applicable) and on the basis of the report of performance evaluation of directors including independent Directors and formulate the criteria relating thereto;
To act as the Compensation Committee as prescribed under Regulation 5 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. To administer and supervise the Employee Stock Option Scheme/Employee Stock Appreciation Rights (SAR) Scheme of the Bank as mandated under the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and to inter-alia approve the grades of employees to whom options/SARs could be granted as well as determine the performance level and/or any other criteria required to be adopted for grant of options/SARs;
To determine and finalize all the terms and conditions governing the Employee Stock Option Scheme/ Employee Stock Appreciation Rights Scheme of the Bank including any variation thereof subject to receipt of requisite approval, if required under regulatory and/or other applicable laws;
The Bank has formulated its Compensation Policy based on the Reserve Bank of India guidelines issued vide Circular No. DOR.Appt.BC.No.23/29.67.001/2019-20 dated November 4, 2019 (withdrawn and reissued consolidated Master Directions vide Circular No. RBI/DOR/2025-26/149 DOR.HGG.GOV. No.68/29.67.001/ 2025-26 dated November 28, 2025). The Compensation Policy is applicable to employees appointed at Bank's domestic branches/offices. It is not applicable to employees of subsidiaries of the Bank.
This category includes MD & CEO and two Deputy Managing Directors (DMDs). The remuneration structure for WTDs comprises of fixed and variable pay. Variable pay is payable as a percentage of fixed pay and is linked to the Bank's performance. The remuneration structure for MD & CEO and other Whole Time Directors (WTDs) of the Bank is fixed by NRC / Board and is subject to approval of Reserve Bank of India in terms of Section 35 B of the Banking Regulation Act, 1949. The payment of compensation also requires approval of the shareholders of the Bank in the General Meeting pursuant to clause 119 of Articles of Association of the Bank read with Section 197 of the Companies Act, 2013 and Section 35B (1) of Banking Regulation Act 1949.
The positions of Material Risk Takers (MRTs) & Control Function Staff are held by cadre officers of IDBI Bank and their fixed pay structure comprising of pay and allowances is equivalent to the pay & allowances being offered by IDBI Bank to the other parallel grade officers. Variable pay is payable as a percentage of fixed pay and is linked to individual and Bank performance for the MRTs. Variable Pay of Control Function Staff is linked to their individual performance and overall business performance of the Bank is reckoned only for ascertaining primary eligibility.
As per the current policy, the fixed pay structure of subordinate staff, clerical staff and officers from Grade A upto the grade of Executive Director is drawn on the lines of the Indian Banks' Association (IBA) pay scales and allowances and runs co-terminus with the industry level settlements for a period of 5 years. Officers in Grade O, however are on a cost to company (CTC) based salary structure. Variable Pay as a percentage/ number of days of fixed pay is payable to this category of employees and is linked to the individual and Bank performance.
In order to align remuneration with the risk and the time horizons over which they could emerge, a substantial portion of the senior management remuneration including that of MD & CEO and Deputy Managing Directors is under variable pay arrangement. The variable compensation is payable in the form of cash and non-cash* components and is deferred over a period of 3 years or more. The impact of remuneration adjustments is linked to actions taken by employees and/or business units, and their impact on the level of risk taken on by the Bank. At higher level of responsibility, the proportion of variable pay is higher. The amount of variable pay can even be reduced to zero depending on the financial performance of the Bank. In addition, variable pay is subject to the malus and clawback provisions of the Compensation Policy of the Bank.
The Variable Pay shall be a mix of cash and share-linked instruments with proper balance between cash and share linked components in keeping with the RBI guidelines. The focus of share-based LTI will be on long-term shareholder value creation. In view of the same, share-based LTI shall be granted as a part of Variable Pay and it shall be fair valued on the date of grant by using the Black-Scholes Model or any other model as may be directed by the Regulator(s). Only in cases where the compensation by way of share-linked instruments is not permitted by statute/regulations, the entire variable pay can be in the form of cash.
The assessment of variable pay is based on achievement of Bank-wide performance parameters for Whole Time Directors For Material Risk Takers (MRTs) and other employees the assessment of variable pay is based on achievement of individual as well as Bank-wide performance parameters For Control Function staff the assessment of variable pay is linked to their individual performance; overall business performance of the Bank is reckoned only for ascertaining primary eligibility.
|