UNITED BANK OF INDIA Bank€¦ · UNITED BANK OF INDIA United Bank of India (“Bank”) was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act,

Placement Document

Not for circulation

Private and confidential

Serial No. ___

UNITED BANK OF INDIA

United Bank of India (“Bank”) was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 on July 19, 1969. For further

details with respect to constitution of our Bank, please see section “General Information” beginning on page 226.

Head Office: United Tower, 11, Hemanta Basu Sarani, Kolkata – 700 001, West Bengal, India Telephone: +91 33 2248 3857; Fax: +91 33 2248 9391; Website:

www.unitedbankofindia.com; Email: [email protected]

Our Bank is issuing 54,906,211 equity shares of face of value ₹ 10 each (the “Equity Shares”) at a price of ₹ 23.22 per Equity Share, including a premium of ₹ 13.22

per Equity Share, aggregating up to ₹ 127.49 Crores (the “Issue”).

ISSUE IN ACCORDANCE WITH CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND

DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “ICDR REGULATIONS”), AND THE RULES MADE THEREUNDER

THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL BUYERS AS DEFINED

UNDER THE ICDR REGULATIONS (“QIBs”) IN RELIANCE UPON CHAPTER VIII OF THE ICDR REGULATIONS. THIS PLACEMENT DOCUMENT IS

PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO

THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA OTHER THAN TO QIBs. THIS PLACEMENT

DOCUMENT WILL BE CIRCULATED ONLY TO SUCH QIBs WHOSE NAMES ARE RECORDED BY OUR BANK PRIOR TO MAKING AN INVITATION

TO SUBSCRIBE TO EQUITY SHARES OFFERED IN THE ISSUE.

YOU ARE NOT AUTHORISED TO AND MAY NOT (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; (2) REPRODUCE THIS

PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3) RELEASE ANY PUBLIC ADVERTISEMENT OR UTILIZE ANY MEDIA,

MARKETING OR DISTRIBUTION CHANNELS OR AGENTS TO INFORM THE PUBLIC AT LARGE ABOUT THE ISSUE. ANY DISTRIBUTION OR

REPRODUCTION OF THIS PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION

MAY RESULT IN A VIOLATION OF THE ICDR REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THIS ISSUE UNLESS

THEY ARE PREPARED TO RISK LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY READ

THE SECTION “RISK FACTORS” BEGINNING ON PAGE 37 BEFORE MAKING AN INVESTMENT DECISION IN THIS ISSUE. EACH PROSPECTIVE

INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES TO IT OF AN INVESTMENT IN THE EQUITY

SHARES PROPOSED TO BE ISSUED PURSUANT TO THE PRELIMINARY PLACEMENT DOCUMENT.

Invitations, offers and sale of the Equity Shares shall only be made pursuant to the Preliminary Placement Document, the Application Form, this Placement Document

and the Confirmation of Allocation Note. See the section “Issue Procedure” beginning on page 177. The distribution of this Placement Document or the disclosure of

its contents to any person other than QIBs (as defined in the ICDR Regulations) and persons retained by QIBs to advise them with respect to their purchase of the Equity

Shares is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to

make no copies of this Placement Document or any documents referred to in this Placement Document. Information contained in this Placement Document is not

complete and may be changed. The information on our Bank’s website or any website directly or indirectly linked to our Bank’s website does not form part of this

Placement Document and prospective investors should not rely on such information contained in, or available through, such websites.

The Equity Shares of our Bank are listed on the BSE Limited (the “BSE”) and the National Stock Exchange of India Limited (the “NSE”) (the BSE and the NSE

collectively the “Stock Exchanges”). The closing price of the outstanding Equity Shares on the BSE and the NSE on March 20, 2017 was ₹ 25.20 and ₹ 25.20 per

Equity Share, respectively. In-principle approvals under regulation 28(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015, as amended (“Listing Regulations”) for listing of the Equity Shares have been received from the BSE and the NSE on March 21,

2017. Applications to the Stock Exchanges will be made for the listing of the Equity Shares offered through this Placement Document. The Stock Exchanges assume

no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock

Exchanges should not be taken as an indication of the merits of the business of our Bank or the Equity Shares.

OUR BANK HAS PREPARED THIS PLACEMENT DOCUMENT SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED

ISSUE.

This Placement Document has not been reviewed by SEBI, the Reserve Bank of India (the “RBI”), the Stock Exchanges, or any other regulatory or listing authority.

The Equity Shares offered in the Issue have not been recommended or approved by SEBI, nor does SEBI guarantee the accuracy or adequacy of this Placement

Document. This Placement Document will be circulated or distributed to Qualified Institutional Buyers (as defined in the ICDR Regulations), only and will not constitute

an offer to any other class of investors in India or any other jurisdiction. The placement of Equity Shares proposed to be made pursuant to this Placement Document is

meant solely for QIBs on a private placement basis and is not an offer to the public or to any other class of investors. Information on our Bank’s website or any website

directly or indirectly linked to our Bank’s website does not form part of this Placement Document and prospective investors should not rely on such information

contained in, or available through, such websites.

The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws

of the United States and may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold outside the United

States in “offshore transactions” (as defined in Regulation S under the U.S. Securities Act (“Regulation S”)) in accordance with Regulation S and the applicable laws

of the jurisdictions where those offers and sales are made. For further details, see “Selling Restrictions” and “Transfer Restrictions” beginning on pages 189 and 195,

respectively.

This Placement Document is dated March 24, 2017.

BOOK RUNNING LEAD MANAGERS

SBI CAPITAL MARKETS LIMITED

MOTILAL OSWAL INVESTMENT ADVISORS PRIVATE LIMITED

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TABLE OF CONTENTS

NOTICE TO INVESTORS............................................................................................................................................................... 2

REPRESENTATIONS BY INVESTORS ........................................................................................................................................ 4

DISCLAIMER CLAUSE OF STOCK EXCHANGES ................................................................................................................... 10

CERTAIN CONVENTIONS, CURRENCY OF PRESENTATION AND FINANCIAL DATA .................................................. 11

INDUSTRY AND MARKET DATA ............................................................................................................................................. 13

FORWARD – LOOKING STATEMENTS .................................................................................................................................... 14

ENFORCEMENT OF CIVIL LIABILITIES .................................................................................................................................. 15

EXCHANGE RATES ..................................................................................................................................................................... 16

DEFINITIONS AND ABBREVIATIONS ..................................................................................................................................... 17

SUMMARY OF THE ISSUE ......................................................................................................................................................... 24

SUMMARY OF BUSINESS .......................................................................................................................................................... 26

SUMMARY OF FINANCIAL INFORMATION ........................................................................................................................... 33

RISK FACTORS ............................................................................................................................................................................ 37

MARKET PRICE INFORMATION .............................................................................................................................................. 60

USE OF PROCEEDS ..................................................................................................................................................................... 63

CAPITALIZATION STATEMENT ............................................................................................................................................... 64

CAPITAL STRUCTURE ............................................................................................................................................................... 65

DIVIDEND POLICY ..................................................................................................................................................................... 67

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ... 68

SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IND-AS ............................................................................... 89

SELECT STATISTICAL INFORMATION ................................................................................................................................... 95

INDUSTRY OVERVIEW ............................................................................................................................................................ 107

BUSINESS ................................................................................................................................................................................... 122

REGULATIONS AND POLICIES .............................................................................................................................................. 149

PRINCIPAL SHAREHOLDERS ................................................................................................................................................. 174

ISSUE PROCEDURE................................................................................................................................................................... 177

PLACEMENT AND LOCK UP ................................................................................................................................................... 187

SELLING RESTRICTIONS ......................................................................................................................................................... 189

TRANSFER RESTRICTIONS ..................................................................................................................................................... 195

THE SECURITIES MARKET OF INDIA ................................................................................................................................... 198

DESCRIPTION OF EQUITY SHARES ...................................................................................................................................... 202

TAXATION .................................................................................................................................................................................. 206

LEGAL PROCEEDINGS ............................................................................................................................................................. 215

INDEPENDENT ACCOUNTANTS ............................................................................................................................................ 225

GENERAL INFORMATION ....................................................................................................................................................... 226

FINANCIAL STATEMENTS ...................................................................................................................................................... 228

DECLARATION .......................................................................................................................................................................... 229

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NOTICE TO INVESTORS

Our Bank has furnished and accepts full responsibility for all of the information contained in this Placement Document

and confirms that to its best of knowledge and belief, having made all reasonable enquiries, this Placement Document

contains all information with respect to our Bank and the Equity Shares that is material in the context of the Issue.

The statements contained in this Placement Document relating to our Bank and the Equity Shares are, in all material

respects, true, accurate and not misleading. The opinions and intentions expressed in this Placement Document with

regard to our Bank and the Equity Shares are honestly held, have been reached after considering all relevant

circumstances and are based on reasonable assumptions and information presently available to our Bank. There are

no other facts in relation to our Bank and the Equity Shares, the omission of which would, in the context of the Issue,

make any statement in this Placement Document misleading in any material respect. Further, our Bank has made all

reasonable enquiries to ascertain such facts and to verify the accuracy of all such information and statements.

The Book Running Lead Managers (“BRLMs”) have not separately verified the information contained in this

Placement Document (financial, legal or otherwise). Accordingly, neither the BRLMs, nor any of their respective

shareholders, employees, counsel, officers, directors, representatives, agents or affiliates make any express or implied

representation, warranty or undertaking, and no responsibility or liability is accepted by the BRLMs or any of their

respective shareholders, employees, counsels, officers, directors, representatives, agents or affiliates, as to the

accuracy or completeness of the information contained in this Placement Document or any other information supplied

in connection with the Equity Shares or their distribution. Each person receiving this Placement Document

acknowledges that such person has not relied either on the BRLMs or on any of their respective shareholders,

employees, counsel, officers, directors, representatives, agents or affiliates in connection with its investigation of the

accuracy of such information or its investment decision, and each such person must rely on its own examination of

our Bank and the merits and risks involved in investing in the Equity Shares. Prospective investors should not construe

the contents of this Placement Document as legal, tax, accounting or investment advice.

No person is authorized to give any information or to make any representation not contained in this Placement

Document and any information or representation not so contained must not be relied upon as having been authorized

by or on behalf of our Bank or by or on behalf of the BRLMs. The delivery of this Placement Document at any time

does not imply that the information contained in it is correct as of any time subsequent to its date.

The Equity Shares have not been approved, disapproved or recommended by any other regulatory authority

in any jurisdiction including the U.S. Securities and Exchange Commission, any other federal or state

authorities in the United States or the securities authorities of any non-United States jurisdiction or any other

United States or non-United States regulatory authority. No authority has passed on or endorsed the merits of

the Issue or the accuracy or adequacy of this Placement Document. Any representation to the contrary is a

criminal offense in the United States and may be a criminal offense in other jurisdictions.

The distribution of this Placement Document and the issuance of Equity Shares pursuant to this Issue may be restricted

by law in certain jurisdictions. As such, this Placement Document does not constitute, and may not be used for or in

connection with, an offer or solicitation by any one in any jurisdiction in which such offer or solicitation is not

authorised or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been

taken by our Bank and the BRLMs which would permit an issue of the Equity Shares or distribution of this Placement

Document in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity

Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any other Issue-

related materials in connection with the Equity Shares may be distributed or published in or from any country or

jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of

any such country or jurisdiction.

The Equity Shares have not been and will not be registered under the U.S. Securities Act, or any state securities laws

of the United States and unless so registered may not be offered, sold or delivered within the United States except

pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities

Act and applicable U.S. state securities laws. Accordingly, the Equity Shares are being offered and sold outside the

United States in offshore transactions in reliance on Regulation S. The Equity Shares are only being offered and sold

outside the United States in offshore transactions in reliance on Regulation S and the applicable laws of the

jurisdictions where those offers and sales are made. For a description of these and certain further restrictions on offers,

sales and transfers of the Equity Shares and distribution of this Placement Document, see “Selling Restrictions” and

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“Transfer Restrictions” beginning on page 189 and 195, respectively. Purchaser of the Equity Shares will be deemed

to make the representations, warranties, acknowledgments and agreements set forth in the sections “Representations

by Investors”, “Selling Restrictions” and “Transfer Restrictions”.

The distribution of this Placement Document or the disclosure of its contents without the prior consent of our Bank to

any person, other than QIBs whose names are recorded by our Bank prior to the invitation to subscribe to the Issue,

in consultation with the BRLMs or its representatives, and those retained by QIBs to advise them with respect to their

purchase of the Equity Shares is unauthorised and prohibited. Each prospective investor, by accepting delivery of this

Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document

or any documents referred to in this Placement Document.

In making an investment decision, prospective investors must rely on their own examination of our Bank, and the

terms of the Issue, including the merits and risks involved. Investors should not construe the contents of this Placement

Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as

to business, legal, tax, accounting and related matters concerning this Issue. In addition, neither our Bank nor the

BRLMs is making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an

investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or

regulations.

Each subscriber of the Equity Shares in the Issue is deemed to have acknowledged, represented and agreed

that it is eligible to invest in India and in our Bank under Indian law, including Chapter VIII of the ICDR

Regulations, and that it is not prohibited by SEBI or any other statutory authority from buying, selling or

dealing in the securities including the Equity Shares. Each subscriber of the Equity Shares in the Issue also

acknowledges that it has been afforded an opportunity to request from our Bank and review information

relating to our Bank and the Equity Shares.

This Placement Document contains a summary of some terms of certain documents, which are qualified in their

entirety by the terms and conditions of such documents.

The information on our Bank’s website, www.unitedbankofindia.com, or any website directly or indirectly linked to

our Bank’s website does not constitute or form part of this Placement Document. Prospective investors should not

rely on the information contained in, or available through such websites.

NOTICE TO INVESTORS IN CERTAIN OTHER JURISDICTIONS

For information for investors in certain other jurisdictions, please see sections “Selling Restrictions” and “Transfer

Restrictions” beginning on pages 189 and 195, respectively.

4

REPRESENTATIONS BY INVESTORS

All references herein to “you” or “your” is to the prospective investors in the Issue. By subscribing to any Equity

Shares in the Issue, you are deemed to have represented, warranted, acknowledged and agreed to our Bank and the

BRLMs, as follows:

you (i) are a QIB as defined in Regulation 2(1)(zd) of the ICDR Regulations and are not excluded pursuant to

Regulation 86(1)(b) of the ICDR Regulations except public sector undertakings; (ii) have a valid and existing

registration under applicable laws and regulations of India (as applicable); and (iii) undertake to acquire, hold,

manage or dispose of any Equity Shares that are Allocated to you in accordance with Chapter VIII of the ICDR

Regulations and undertake to comply with the ICDR Regulations and all other applicable laws, including any

reporting obligations;

if you are not a resident of India, but a QIB, (i) you are an Eligible FPI as defined in this Placement Document

including a FII (including a sub-account other than a sub-account which is a foreign corporate or a foreign

individual) and have a valid and existing registration with SEBI under the applicable laws in India; or (ii) a

multilateral or bilateral development financial institution or (iii) an FVCI and have a valid and existing registration

with SEBI under applicable laws in India. Further, you are aware and understand that non-resident QIBs may

only invest in the Issue under the portfolio investment scheme pursuant to Schedule 2 and 2A of FEMA 20. You

will make all necessary filings with appropriate regulatory authorities, including the RBI, as required pursuant to

applicable laws. Further, if you are a non-resident QIB, then the investment amount will be paid out of inward

remittance of foreign exchange received through normal banking channels and as per RBI’s notification no.

FEMA 20/2000 - RB dated May 3, 2000, as amended from time to time;

you are eligible to invest in India under applicable laws, including the Foreign Exchange Management (Transfer

or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended and any notification,

circulars or clarification issued thereunder, and have not been prohibited by SEBI or any other regulatory authority

from buying, selling or dealing in securities;

if you are Allotted Equity Shares pursuant to this Issue, you shall not, for a period of one year from the date of

Allotment, sell the Equity Shares so acquired except on floor of the Stock Exchanges;

you are aware that this Placement Document has not been, and will not be, registered as a prospectus under the

Companies Act, 2013 and the ICDR Regulations or under any other law in force in India. You are aware that this

Placement Document has not been reviewed, verified or affirmed by SEBI, RBI or the Stock Exchanges or any

other regulatory or listing authority and is intended for use only by QIBs. This Preliminary Placement Document

has been filed with the Stock Exchanges for record purposes only and the Placement Document has been displayed

on the websites of our Bank and the Stock Exchanges;

you are entitled and have necessary capacity to subscribe for , and acquire the Equity Shares under the laws of all

relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all such

governmental and other consents in each case which may be required there under and complied with all necessary

formalities and have obtained all necessary consents and authorities to enable you to commit to participation in

this Issue and to perform your obligations in relation thereto (including, in the case of any person on whose behalf

you are acting, all necessary consents and authorisations to agree to the terms set out or referred to in this

Placement Document) and will honour such obligations;

neither our Bank nor the BRLMs nor any of their respective shareholders, directors, officers, employees, counsel,

representatives, agents or affiliates is making any recommendation to you or, advising you regarding the

suitability of any transactions it may enter into in connection with this Issue; your participation in this Issue is on

the basis that you are not, and will not, up to Allotment, be a client of the BRLMs and that neither the BRLMs

nor its respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates have

any duty or responsibilities to you for providing the protection afforded to their clients or customers for providing

advice in relation to this Issue and are not in any way acting in any fiduciary capacity;

5

you confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by us

or our agents (“Bank Presentations”) with regard to us or this Issue; or (ii) if you have participated in or attended

any Bank Presentations: (a) you understand and acknowledge that the BRLMs may not have knowledge of the

statements that we or its agents may have made at such Bank Presentations and are therefore unable to determine

whether the information provided to you at such Bank Presentations may have included any material

misstatements or omissions, and, accordingly you acknowledge that the BRLMs have advised you not to rely in

any way on any information that was provided to you at such Bank Presentations, and (b) confirm that you have

not been provided any material information relating to our Bank and this Issue that was not publicly available;

all statements other than statements of historical fact included in this Placement Document, including, without

limitation, those regarding our financial position, business strategy, plans and objectives of management for future

operations (including development plans and objectives relating to our products), are forward-looking statements.

Such forward-looking statements involve known and unknown risks, uncertainties and other important factors

that could cause actual results to be materially different from future results, performance or achievements

expressed or implied by such forward-looking statements. Such forward-looking statements are based on

numerous assumptions regarding our present and future business strategies and environment in which we will

operate in the future. You should not place reliance on forward looking statements, which speak only as at the

date of this Placement Document. We assume no responsibility to update any of the forward-looking statements

contained in this Placement Document;

You are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to

the general public, and the Allotment of the same shall be on a discretionary basis at the discretion of our Bank

and the BRLMs;

You are aware that if you are Allotted more than 5% of the Equity Shares in this Issue, our Bank shall be required

to disclose your name and the number of the Equity Shares Allotted to you to the Stock Exchanges and the Stock

Exchanges will make the same available on their websites and you consent to such disclosures;

you have been provided a serially numbered copy of the Preliminary Placement Document and this Placement

Document and have read in its entirety including, in particular “Risk Factors” beginning on page 37;

in making your investment decision (i) you have relied on your own examination of our Bank and the terms of

this Issue, including the merits and risks involved; (ii) you have made your own assessment of our Bank, the

Equity Shares and the terms of this Issue based solely on the information contained in this Placement Document

and no other disclosure or representation by us or any other party; (iii) you have consulted your own independent

advisors (including tax advisors) or otherwise have satisfied yourself concerning, without limitation, the effects

of local laws and taxation matters; (iv) you have relied solely on the information contained in this Placement

Document and no other disclosure or representation by us or the BRLMs or any other party; (v) you have received

all information that you believe is necessary or appropriate in order to make an investment decision in respect of

us and the Equity Shares; and (vi) relied upon your investigation and resources in deciding to invest in this Issue.

You are seeking to subscribe to/acquire the Equity shares in this Issue for your own investment and not with a

view to resale or distribution;

neither the BRLMs nor any of its respective shareholders, directors, officers, employees, counsels, advisors,

representatives, agents or affiliates has provided you with any tax advice or otherwise made any representations

regarding the tax consequences of purchase, ownership and disposal of the Equity Shares (including but not

limited to the Issue and the use of the proceeds from the Equity Shares). You will obtain your own independent

tax advice from a reputable service provider and will not rely on the BRLMs or any of their respective

shareholders, directors, officers, employees, counsels, advisors, representatives, agents or affiliates when

evaluating the tax consequences in relation to the Equity Shares (including but not limited to the Issue and the

use of the proceeds from the Equity Shares). You waive, and agree not to assert any claim against our Bank or

the BRLMs or any of their respective shareholders, directors, officers, employees, counsels, advisors,

representatives, agents or affiliates with respect to the tax aspects of the Equity Shares or as a result of any tax

audits by tax authorities, wherever situated;

6

you are a sophisticated investor and have such knowledge and experience in financial and business matters as to

be capable of evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for

which you are subscribing to the Equity Shares: (i) are each able to bear the economic risk of the investment in

the Equity Shares; (ii) will not look to us, the BRLMs or its respective shareholders, directors, officers, employees,

counsel, representatives, agents or affiliates for all or part of any such loss or losses that may be suffered including

losses arising out of nonperformance by our Bank of any of its respective obligations or any breach of any

representations and warranties by our Bank, whether to you or otherwise; (iii) are able to sustain a complete loss

on the investment in the Equity Shares; (iv) have no need for liquidity with respect to the investment in the Equity

Shares; and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise,

which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares. You

acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares

are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in the Issue for your

own investment and not with a view to resell or distribute;

where you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that you

are authorised in writing, by each such managed account to acquire the Equity Shares for each managed account

and to make (and you hereby make) the representations, warranties, acknowledgements and agreements herein

for and on behalf of each such account, reading the reference to “you” to include such accounts;

you are not a Promoter and you are not related to the Promoter, except for Public Sector Enterprises, either directly

or indirectly and your Bid does not directly or indirectly represent the Promoter or a person related to any of the

Promoter;

you have no rights under a shareholders’ agreement or voting agreement with the Promoter or persons related to

the Promoter, no veto rights or right to appoint any nominee director on the Board of Directors of our Bank other

than such rights acquired, if any, in the capacity of a lender not holding any Equity Shares of our Bank, the

acquisition of which shall not deem you to be a Promoter, a person related to the Promoter;

you have no right to withdraw your Bid after the Issue Closing Date;

you are eligible to Bid and hold the Equity Shares so Allotted together with any Equity Shares held by you prior

to this Issue. You further confirm that your aggregate holding upon this Issue of the Equity Shares shall not exceed

the level permissible as per any applicable regulations including but not limited to the Banking Regulation Act,

1949, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and in the event of your holding

of our Equity Shares reaches any applicable limits may be prescribed you will make the appropriate disclosures

and obtain the necessary permissions in this regard from the relevant authorities / RBI;

the Bid submitted by you would not eventually result in triggering a tender offer under the Securities and

Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended

(“Takeover Code”);

your aggregate holding, together with other QIBs participating in this Issue that belong to the same group or are

under common control as you, pursuant to the Allotment under the present Issue, shall not exceed 50% of this

Issue. For the purposes of this representation:

(a) the expression “belongs to the same group” shall be interpreted by applying the concept of “companies under

the same group” as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

(b) “Control” shall have the same meaning as is assigned to it under Regulation 2 (i)(e) of the Takeover Code;

you shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time that

the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges;

you are aware that (i) applications for in-principle approval, in terms of Regulation 28(1) of the Listing

Regulations, for listing and admission of the Equity Shares and for trading on the Stock Exchanges, were made

and an approval has been received from each of the Stock Exchanges, and (ii) the application for the listing and

trading approval will be made only after Allotment. There can be no assurance that the approvals for listing and

7

trading in the Equity Shares will be obtained in time or at all. We shall not be responsible for any delay or non-

receipt of such approvals for listing and trading or any loss arising from such delay or non-receipt;

you are aware and understand that the BRLMs have entered into a placement agreement with our Bank (the

“Placement Agreement”) whereby the BRLMs have, subject to the satisfaction of certain conditions set out

therein, agreed to manage the Issue and use their reasonable endeavors to seek to procure subscriptions for the

Equity Shares on the terms and conditions set forth herein;

the contents of this Placement Document are our exclusive responsibility and neither the BRLMs nor any person

acting on their behalf, nor any of its respective shareholders, directors, officers, employees, counsel, advisors,

representatives, agents or affiliates has, or shall have, any liability for any information, representation or statement

contained in this Placement Document or any information previously published by or on behalf of us and will not

be liable for your decision to participate in this Issue based on any information, representation or statement

contained in this Placement Document or otherwise. By accepting a participation in this Issue, you agree and

confirm that you have neither received nor relied on any other information, representation, warranty or statement

made by or on behalf of either of the BRLMs or us or any other person and neither the BRLMs, nor we or our

respective directors, officers, employees, counsel, advisors, representatives, agents or affiliates or any other

person will be liable for your decision to participate in this Issue based on any other information, representation,

warranty or statement that you may have obtained or received;

the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire

the Equity Shares, is contained in this Placement Document, such information being all that you deem necessary

to make an investment decision in respect of the Equity Shares issued in pursuance of this Issue and that you have

neither received nor relied on any other information given or representations, warranties or statements made by

BRLMs (including any view, statement, opinion or representation expressed in any research published or

distributed by the BRLMs or its respective affiliates or any view, statement, opinion or representation expressed

by any staff (including research staff) of the BRLMs or its respective affiliates) or our Bank or any of their

respective shareholders, directors, officers, employees, counsel, advisors, representatives, agents or affiliates and

neither the BRLMs nor our Bank or any of their respective shareholders, directors, officers, employees, counsel,

advisors, representatives, agents or affiliates will be liable for your decision to accept an invitation to participate

in the Issue based on any other information, representation, warranty, statement or opinion;

you understand that neither the BRLMs nor its respective affiliates have any obligation to purchase or acquire all

or any part of the Equity Shares purchased by you in this Issue or to support any losses directly or indirectly

sustained or incurred by you for any reason whatsoever in connection with this Issue, including non-performance

by us of any of our obligations or any breach of any representations or warranties by us, whether to you or

otherwise;

you agree to indemnify and hold us and the BRLMs and its respective affiliates harmless from any and all costs,

claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach

of the representations, warranties, acknowledgements and agreements made by you in this Placement Document.

You agree that the indemnity set forth in this section shall survive the resale of the Equity Shares by, or on behalf

of, the managed accounts;

you agree that any dispute arising in connection with the Issue will be governed by and construed in accordance

with the laws of India, and the courts in Kolkata, West Bengal, India shall have exclusive jurisdiction to settle

any disputes which may arise out of or in connection with the Preliminary Placement Document and this

Placement Document;

each of the representations, warranties, acknowledgements and agreements set out above shall continue to be true

and accurate at all times up to and including the Allotment, listing and trading of the Equity Shares in the Issue;

our Bank, the BRLMs, their respective affiliates and others will rely on the truth and accuracy of the foregoing

representations, warranties, acknowledgements, undertakings and agreements which are given to the BRLMs on

its own behalf and on behalf of us and are irrevocable and it is agreed that if any of such representations,

8

warranties, acknowledgements, undertakings and agreements are no longer accurate, you will promptly notify to

the BRLMs;

you are a sophisticated investor who is seeking to purchase the Equity Shares for your own investment and not

with a view to distribution. In particular, you acknowledge that (i) an investment in the Equity Shares involves a

high degree of risk and that the Equity Shares are, therefore, a speculative investment, (ii) you have sufficient

knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the

merits and risk of the purchase of the Equity Shares, and (iii) you are experienced in investing in private placement

transactions of securities of companies in a similar stage of development and in similar jurisdictions and have

such knowledge and experience in financial, business and investment matters that you are capable of evaluating

the merits and risks of your investment in the Equity Shares;

you understand that the Equity Shares have not been and will not be registered under the U.S. Securities Act or

with any securities regulatory authority of any state of the United States, and accordingly, may not be offered,

sold or delivered within the United States, except pursuant to an exemption from, or in a transaction not subject

to, the registration requirements of the U.S. Securities Act, and that the Equity Shares are only being offered and

sold outside the United States in offshore transactions in reliance on Regulation S of the U.S. Securities Act;

you have made, or been deemed to have made, as applicable, the representations, warranties, acknowledgments

and agreements set forth in this section and in “Selling Restriction” and “Transfer Restrictions” beginning on

pages 189 and 195, respectively.

9

Offshore Derivative Instruments (P-Notes)

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of

Regulation 22 of the Securities and Exchange Board of India (Foreign Portfolio Investors Regulations, 2014 (“SEBI

FPI Regulations”), a FPI (other than a Category III foreign portfolio investors and unregulated broad based funds

which are classified as Category II FPI by virtue of their investment manager being appropriately regulated), including

the affiliates of the BRLM, may issue, subscribe or otherwise deal in offshore derivative instruments as defined under

the SEBI (FPI) Regulations as any instrument, by whatever name called, which is issued overseas by a FPI against

securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as its underlying

and all such offshore derivative instruments are referred to herein as “P-Notes” for which they may receive

compensation from the purchasers of such P-Notes. These P-Notes may be issued only in favour of those entities

which are regulated by any appropriate foreign regulatory authorities in the countries of their incorporation or

establishment subject to compliance with “know your client” requirements. An FPI must ensure that the P-Notes are

issued in compliance with all applicable laws including Regulation 22 of the SEBI (FPI) Regulations and circular no.

CIR/IMD/FIIC/20/2014 dated November 24, 2014 issued by SEBI. P-Notes have not been and are not being offered

or sold pursuant to this Placement Document. This Placement Document does not contain any information concerning

P-Notes, including, without limitation, any information regarding any risk factors relating thereto. Any P-Notes that

may be issued are not securities of our Bank and do not constitute any obligations of, claim on, or interests in our

Bank. Our Bank has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes,

or in the preparation of any disclosure related to any P-Notes.

Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our

Bank. Our Bank and the BRLMs do not make any recommendation as to any investment in P-Notes and do not accept

any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of

the BRLMs and do not constitute any obligations of, or claims on, the BRLMs. FPI affiliates (other than Category III

FPI and unregulated broad based funds which are classified as FPI by virtue of their investment manager being

appropriately regulated) of the BRLMs may purchase, to the extent permissible under law, Equity Shares in this Issue,

and may issue P-Notes in respect thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosure

as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such

P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any

disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting

and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in

compliance with applicable laws and regulations.

10

DISCLAIMER CLAUSE OF STOCK EXCHANGES

As required, a copy of the Preliminary Placement Document was submitted to each of the Stock Exchanges and a copy

of this Placement Document has been filed with the Stock Exchanges. The Stock Exchanges do not in any manner:

(1) warrant, certify or endorse the correctness or completeness of any the contents of this Placement Document;

(2) warrant that the Equity Shares pursuant to this Issue will be listed or will continue to be listed on the Stock

Exchanges; or

(3) take any responsibility for the financial or other soundness of our Bank, its Promoter, its management or any

scheme or project of our Bank,

The filing of this Placement Document should not for any reason be deemed or construed to mean that this Placement

Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise

acquires any Equity Shares of our Bank may do so pursuant to an independent inquiry, investigation and analysis and

shall not have any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by

such person consequent to or in connection with, such subscription or acquisition, whether by reason of anything

stated or omitted to be stated herein, or for any other reason whatsoever.

11

CERTAIN CONVENTIONS, CURRENCY OF PRESENTATION AND FINANCIAL DATA

Certain Conventions

All references to “you”, “your”, “offeree”, “purchaser”, “subscriber”, “recipient”, “investors”, “prospective investors”

and “potential investors” are to the prospective investors of the Equity Shares to be issued pursuant to this Issue.

References in this Placement Document to “India” are to the Republic of India, to the “Government” or the “Central

Government” are to the Government of India and to any “State Government” are to the relevant state government in

India.

Currency of Presentation

All references in this Placement Document to “₹”, “Rupees”, “Rs.”, “Indian Rupees” and “INR” are to Indian Rupees,

the official currency of India. All references to “US$”, “U.S. Dollars”, “U.S. Dollar”, “dollars”, “US

Dollars”, “USD” or “$” are to United States Dollars, the official currency of the United States of America. All

references to “euro”, “EUR” or “€” are to the single currency of the participating Member States in the Third Stage

of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from

time to time. All references to “British pounds” or “£” are to the lawful currency of the United Kingdom.

Financial Data

The audited financial statements of our Bank for the years ended March 31, 2016, March 31, 2015 and March 31,

2014 together with the respective reports thereon (“Audited Financial Statements”) included in this Placement

Document have been prepared in accordance with the Companies Act and Indian GAAP, while the unaudited financial

results for the nine months ended December 31, 2016 and selected explanatory notes, together with the limited review

report (“Unaudited Financial Statements”) have been prepared and presented in accordance with Standard on

Review Managements (SRE) 2410 and the requirements under the Listing Regulations with the Stock Exchanges.

Our Bank publishes its financial statements in Indian Rupees. Our Bank prepares its financial statements in accordance

with Indian Generally Accepted Accounting Principles (“Indian GAAP”). Indian GAAP differs in certain significant

respects from International Financial Reporting Standards (“IFRS”) and United States Generally Accepted Accounting

Principles (“U.S. GAAP”). We do not provide a reconciliation of our financial statements to IFRS or U.S. GAAP. We

also do not provide a summary of differences between Indian GAAP, IFRS and U.S. GAAP. Accordingly, the degree

to which the financial statements prepared in accordance with Indian GAAP included in this Placement Document

will provide meaningful information is entirely dependent on the reader’s level of familiarity with the respective

accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial

disclosures presented in this Placement Document should accordingly be limited and we urge you to consult your own

advisors regarding such differences and their impact on the financial data.

Accounting policies and principles under Ind-AS differ in certain material respects from Indian GAAP. In addition,

Indian GAAP and Ind-AS also differ in certain material respects from U.S. GAAP and IFRS. In pursuance to the

budget announcement by the Union Finance Minister, after consultation with the Reserve Bank of India (“RBI”),

Insurance Regulatory and Development Authority (“IRDA”) and Pension Fund Regulatory and Development

Authority (“PFRDA”), the Ministry of Corporate Affairs (“MCA”) issued a press release on January 18, 2016,

announcing the Ind-AS roadmap for scheduled commercial banks (excluding regional rural banks (“RRBs”)), insurers/

insurance companies and non-banking financial companies (“NBFCs”). Ind-AS implementation has been made

mandatory for accounting periods beginning from April 1, 2018 onwards for Scheduled commercial banks (excluding

RRBs). For certain qualitative information on the differences between Indian GAAP and Ind-AS, see “Significant

Differences between Indian GAAP and Ind-AS” beginning on page 89. Investors are advised to avail independent

financial and accounting advice to analyse the impact of the application of Ind-AS to the preparation and presentation

of our financial statements. We cannot assure you that we have completed a comprehensive analysis of the effect of

Ind-AS on our future financial information or that the application of Ind-AS will not result in a materially adverse

effect on our future financial information.

In this Placement Document, the terms “loans”, “advances” and “loans and advances” have been used interchangeably

and unless otherwise stated, “loans”, “advances” or “loans and advances” represent the amount of loans outstanding

12

net of provisions for non-performing assets. “Gross loans”, “gross advances” or “gross loans and advances” represent

the amount of loans outstanding before deducting the provisions held for non-performing assets. Further, the stand-

alone expressions “profit” and “net profit” have been used interchangeably to represent the profit earned for the period

net of all provisions including provision for taxes.

In this Placement Document, certain monetary thresholds have been subjected to rounding adjustments; accordingly,

figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. The

financial/fiscal year of our Bank commences on April 1 of each calendar year and ends on March 31 of the succeeding

calendar year, so, unless otherwise specified or if the context requires otherwise, all references to a particular

‘Financial Year’, ‘fiscal year’ or ‘Fiscal’ or ‘FY’ are to the twelve month period ended on March 31 of that year.

References to the singular also refer to the plural and one gender also refers to any other gender, wherever applicable.

Our Bank has presented certain numerical information in this Placement Document in the denomination of “crore”

and “lakh” s. One lakh or lac represents “100 thousand” and the word “crore” means “10 million” or “100 lakh”.

13

INDUSTRY AND MARKET DATA

Information regarding markets, market size, market share, market position, growth rates and other industry data

pertaining to our Bank's business contained in this Placement Document consists of estimates/forecasts based on data

reports compiled by governmental bodies, professional organisations and analysts, on data from other external sources,

and knowledge of the markets in which our Bank competes. In certain cases, there is no readily available external

information (whether from trade associations, government bodies or other organisations) to validate market-related

analyses and estimates, requiring us to rely on internally developed estimates.

The statistical information included in this Placement Document relating to the business of a bank has been reproduced

from various trade, industry and government publications and websites. This data is subject to change and cannot be

verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations

and uncertainties inherent in any statistical survey.

Neither our Bank nor the Book Running Lead Managers or any of their respective affiliates and advisors or any other

person connected with the Issue has independently verified this information. Industry sources and publications

generally state that the information contained therein has been obtained from sources believed to be reliable, but their

accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and

accordingly, investment decisions should not be based on such information. Industry sources and publications are also

prepared based on information as of specific dates and may no longer be current or reflect current trends. Accordingly,

the Book Running Lead Managers and we do not take any responsibility for the data, projections, forecasts,

conclusions or any other information contained in this section. Certain information contained herein pertaining to prior

years is presented in the form of estimates as they appear in the respective reports/ source documents. The actual data

for those years may vary significantly and materially from the estimates so contained.

The extent to which the market and industry data used in this Placement Document is meaningful depends on the

reader’s familiarity with and understanding of the methodologies used in compiling such data.

14

FORWARD – LOOKING STATEMENTS

Certain statements contained in this Placement Document that are not statements of historical fact constitute ‘forward

looking statements’. Investors can generally identify forward-looking statements by terminology such as ‘aim’,

‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘objective’, ‘plan’, ‘potential’,

‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or phrases of similar import. Similarly, statements

that describe the strategies, objectives, plans or goals of our Bank are also forward-looking statements. However, these

are not the exclusive means of identifying forward-looking statements.

Actual results may differ materially from those suggested by the forward looking statements due to risks or

uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the

industries in India in which we have our businesses and our ability to respond to them, our ability to successfully

implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general

economic and political conditions in India which have an impact on our business activities or investments, the

monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange

rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in

domestic laws, regulations and taxes and changes in competition in our industry. Important factors that could cause

actual results, performance or achievements to differ materially from any of our Bank’s forward-looking statements

include, among others:

Volatility in interest rates and other market conditions;

Our ability to maintain or reduce the level of our non – performing assets and the levels of stressed assets;

Our ability to maintain our income from treasury operations;

Our ability to sustain the growth of our retail banking business;

Performance of the agricultural and MSME sectors in India;

Rate of growth of our deposits, advances and investments;

Our ability to successfully implement our strategy, growth and expansion plans;

Significant change in the Government's economic liberalization and deregulation policies;

The ability of the borrowers of our structured loans to perform as expected;

Competition in the Indian and global banking industry;

Our ability to successfully diversify our products and services; and

General economic and business conditions in India.

Additional factors that could cause actual results, performance or achievements to differ materially include, but are

not limited to, those discussed under the sections titled “Management’s Discussion and Analysis of Financial

Condition and Results of Operations”, “Industry Overview” and “Business” beginning on pages 68, 107 and 122,

respectively. The forward-looking statements contained in this Placement Document are based on the beliefs of

management, as well as the assumptions made by, and information currently available to, the management. Although

our Bank believes that the expectations reflected in such forward-looking statements are reasonable at this time, it

cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are

cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties

materialize, or if any of our Bank’s underlying assumptions prove to be incorrect, our Bank’s actual results of

operations or financial condition could differ materially from that described herein as anticipated, believed, estimated

or expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in

their entirety by reference to these cautionary statements.

15

ENFORCEMENT OF CIVIL LIABILITIES

United Bank of India was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act.

All of our Directors and senior management are residents of India. Further, substantially a large percentage of the

assets of our Bank are located in India. As a result, it may be difficult for investors outside India to effect service of

process upon us or such persons outside India, or to enforce judgments obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Sections 13 and 44A of the Code of Civil

Procedure, 1908, as amended (the “Civil Procedure Code”). Section 13 of the Civil Procedure Code provides that

foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except:

where the judgment has not been pronounced by a court of competent jurisdiction;

where the judgment has not been given on the merits of the case;

where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international

law or a refusal to recognize the law of India in cases to which such law is applicable;

where the proceedings in which the judgment was obtained were opposed to natural justice;

where the judgment has been obtained by fraud; or

where the judgment sustains a claim founded on a breach of any law then in force in India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.

However, Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a

superior court, within the meaning of such section, in any country or territory outside India which the Government

has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as

if the judgment had been rendered by an appropriate court in India. Section 44A of the Civil Procedure Code is

applicable only to monetary decrees not being in the nature of amounts payable in respect of taxes, other charges of a

similar nature or fines or other penalties and does not apply to arbitration awards.

Each of the United Kingdom, Singapore and Hong Kong have been declared by the Government to be reciprocating

territories for the purposes of Section 44A of the Civil Procedure Code, but the United States has not been so declared.

A judgment of a court of a country which is not a reciprocating territory may be enforced only by a suit upon the

judgment and not by proceedings in execution. The suit is required to be filed in India within three years from the date

of such foreign judgment in the same manner as any other suit filed to enforce a civil liability in India.

It is unlikely that a court in India would award damages on the same basis as a foreign court if an action was brought

in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of

damages awarded as excessive or inconsistent with Indian public policy. A party seeking to enforce a foreign judgment

in India is required to obtain the prior approval of the RBI to repatriate outside India any amount recovered pursuant

to the execution of such a judgment. It is uncertain as to whether an Indian court would enforce foreign judgments

that would contravene or violate Indian law. In addition, any judgment denominated in a foreign currency would be

converted into Indian rupees on the date of the judgment and not on the date of payment.

16

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the

Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S.

Dollars of any cash dividends paid in Rupees on the Equity Shares. The exchange rate between the Rupee and the

U.S. Dollar has been volatile over the past year.

The following table sets forth information concerning exchange rates between the Rupee and the U.S. dollar for the

periods indicated. Exchange rates are based on the reference rates released by the RBI. No representation is made that

any Rupee amounts could have been, or could be, converted into U.S. dollars at any particular rate, the rates stated

below or at all. On March 20, 2017 the exchange rate (RBI reference rate) was ₹ 65.38 to US$.

(₹ per US$)

Period End Average(1) High(1) Low(1)

Fiscal Year Ended:

March 31, 2016 66.33 65.46 68.78 62.16

March 31, 2015 62.59 61.15 63.75 58.43

March 31, 2014 60.10* 60.50 68.36 53.74

Month ended:

February 28, 2017 66.74 67.08 67.65 66.72

January 31, 2017 67.81 68.08 68.23 67.79

December 31, 2016 67.95** 67.90 68.37 67.43

November 30, 2016 68.53 67.63 68.72 66.43

October 31, 2016 66.86*** 66.75 66.89 66.53

September 30, 2016 66.66 66.74 67.06 66.36

Source: www.rbi.org.in

(1) Represents the high, low and average of the reference rates released by the RBI on every working day of the relevant period

* Exchange rate as on March 28, 2014, as March 29, 2014 and March 30, 2014 and March 31, 2014 were non trading days

**Exchange rate as on December 30, 2016, as December 31, 2016 was a non-trading day

*** Exchange rate as on October 28, 2016 as October 29, 2016, October 30, 2016 and October 31, 2016 were non-trading days

Although our Bank has translated selected Indian rupee amounts in this Placement Document into U.S. dollars for convenience,

this does not mean that the Indian rupee amounts referred to could have been, or could be, converted to U.S. dollars at any particular

rate or, the rates stated above, or at all. There are certain restrictions on the conversion of Indian rupees into U.S. dollars.

17

DEFINITIONS AND ABBREVIATIONS

This Placement Document uses the definitions and abbreviations set forth below, which you should consider when

reading the information contained herein. The following list of certain capitalised terms used in this Placement

Document is intended for the convenience of the reader/prospective investor only and is not exhaustive

Unless otherwise defined or the context otherwise indicates or requires, certain capitalized terms used in this

Placement Document have the meanings set forth below. Further any references to any statute or regulations or policies

shall include amendments thereto, from time to time:

Bank Related Terms

Term Description

“United Bank of India”,

“UBI”, the “Bank”, “we”,

“us” and “our”

United Bank of India constituted under the Banking Companies (Acquisition and

Transfer of Undertakings) Act, 1970 and nationalized on July 19, 1969. The Head

Office of our Bank is located at United Tower, 11 Hemanta Basu Sarani, Kolkata –

700001, West Bengal, India.

Auditors The Statutory Central Auditors of our Bank namely M/s. Nundi & Associates; M/s.

Mookherjee, Biswas & Pathak and; M/s. Arun K. Agarwal & Associates.

Board of Directors or

Board

Board of Directors of our Bank and any Committee constituted thereof.

Constitutional Documents The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 read

with the Banking Regulation Act, 1949 and the Nationalised Banks (Management and

Miscellaneous Provisions) Scheme, 1970, the United Bank of India (Shares and

Meetings) Regulation, 2010

Director(s) The Director(s) of our Bank.

EDs Executive Directors of our Bank

Equity Shares or Shares The equity shares of our Bank of face of value ₹ 10 each.

Equity Shareholders Equity Shareholders of our Bank.

Head Office The head office of our Bank situated at United Tower, 11 Hemanta Basu Sarani,

Kolkata – 700 001, West Bengal, India.

Managing Director and

Chief Executive Officer

The Managing Director and Chief Executive Officer of our Bank

Promoter The President of India, acting through the Ministry of Finance, Government of India.

Issue Related Terms

Term Description

Allocated or Allocation The allocation of Equity Shares following the determination of the Issue Price to

QIBs on the basis of Application Forms submitted by such QIBs, in consultation

with the Book Running Lead Managers and in compliance with Chapter VIII of the

ICDR Regulations.

Allottees Successful Bidders to whom Equity Shares are issued and allotted pursuant to the

Issue.

Allotment / Allotted The issue and allotment of Equity Shares pursuant to this Issue.

Application or Bid Indication of interest from a QIB to subscribe for a specified number of Equity

Shares in this Issue on the terms set out in the Application Form to our Bank.

Application Form or Bid

cum Application Form

The form, including all revisions and modifications thereto, pursuant to which a QIB

submits an Application.

Bidder

Any prospective investor, being a QIB, who makes a Bid pursuant to the terms of

the Preliminary Placement Document and the Application Form.

Bidding / Issue Period The period between the Bid/Issue Opening Date and Bid/Issue Closing Date,

inclusive of both dates, during which prospective Bidders can submit Bids.

Book Running Lead

Managers / BRLMs

SBI Capital Markets Limited and Motilal Oswal Investment Advisors Private

Limited

18

Term Description

CAN or Confirmation of

Allocation Note

Note or advice or intimation to successful Bidders confirming Allocation of Equity

Shares to such successful Bidders after determination of the Issue Price and

requesting payment for the entire applicable Issue Price for all Equity Shares

Allocated to such successful Bidders.

Category III foreign

portfolio investor(s)

FPIs who are registered as “Category III foreign portfolio investors” under the SEBI

(FPI) Regulations

Closing Date On or about March 27, 2017, the date on which the Allotment is expected to be made.

Cut-off Price The Issue Price of the Equity Shares, which shall be determined by our Bank, in

consultation with the Book Running Lead Managers.

Designated Date The date of credit of Equity Shares to the Eligible QIB’s demat account as applicable

to the respective Eligible QIBs.

Eligible QIBs QIBs, as defined in regulation 2(1)(zd) of the ICDR Regulations which are not, (a)

excluded pursuant to regulation 86 of the ICDR Regulations, (b) registered FPIs,

FIIs, FVCIs, bilateral and multilateral financial institutions or any other QIB that is

a Non-Resident or (c) ‘owned’ or ‘controlled’ by Non-Residents / persons resident

outside India, as defined under FEMA, except as specifically set forth in this

Placement Document who are outside of the United States acquiring Equity Shares

in an offshore transaction in reliance on Regulation S

Escrow Bank United Bank of India through its branch located at Fort, Mumbai.

Escrow Account The non-interest bearing, no-lien, escrow bank account without any cheque or

overdraft facilities opened by our Bank with the Escrow Bank under the arrangement

between our Bank and the Escrow Bank.

Escrow Agreement Agreement dated March 21, 2017, entered into amongst our Bank, the Escrow Bank

and the Book Running Lead Managers for collection of the Bid Amounts and for

remitting refunds, if any, of the amounts collected, to the Bidders

Floor Price The floor price of ₹ 24.44 per Equity Share, calculated in accordance with Regulation

85 of the ICDR Regulations. Our Bank may offer a discount of not more than 5.00%

on the Floor Price in terms of Regulation 85(1) of the ICDR Regulations.

ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009, as amended.

Issue The offer and sale of the Equity Shares to QIBs, pursuant to Chapter VIII of the

ICDR Regulations.

Issue Closing Date or Bid

Closing Date

March 24, 2017, the date on which our Bank (or the Book Running Lead Managers

on behalf of our Bank) shall cease acceptance of Application Forms.

Issue Opening Date or Bid

Opening Date

March 21, 2017, the date on which our Bank (or the Book Running Lead Managers

on behalf of our Bank) shall commence acceptance of Application Forms.

Issue Price The price per Equity Share of ₹ 23.22 including a premium of ₹ 13.22 per Equity

Share. Under the ICDR Regulations, the Issue Price cannot be lower than the Floor

Price subject to discount of not more than 5% on the Floor Price which may be

considered by our Bank.

Issue Size The issue of 54,906,211 Equity Shares aggregating ₹ 127.49 Crore.

Listing Agreement The agreement entered into between our Bank and each of the Stock Exchanges in

relation to listing of the Equity Shares on each of the Stock Exchanges pursuant to

requirements of Regulation 109 of the Listing Regulations.

Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015, as amended

Pay-in Date The last date specified in the CAN for payment of application monies by the QIBs.

Placement Agreement The Placement Agreement, dated March 21, 2017, among our Bank and the Book

Running Lead Managers.

Placement Document This placement document issued by our Bank in accordance with Chapter VIII of the

ICDR Regulations.

Preliminary Placement

Document

The preliminary placement document issued in accordance with Chapter VIII of the

ICDR Regulations.

QIB or Qualified

Institutional Buyer

Any Qualified Institutional Buyer as defined under Regulation 2(1) (zd) of the ICDR

Regulations.

19

Term Description

QIP Private placement to QIBs under Chapter VIII of the ICDR Regulations.

Relevant Date March 21, 2017 which is the date of the meeting of the Board of Directors or any

committee duly authorised by the Board of Directors deciding to open the Issue.

Industry Related Terms

Term Description

Additional Tier I capital Comprises of Innovative perpetual debt instruments and perpetual non-cumulative

preference shares eligible for inclusion in Tier I Capital which comply with the

specified current regulations as reduced by equity investments in subsidiaries,

(under transition provisions) reciprocal investments capital of banking, financial

and insurance entities, deferred tax assets (under transition provisions), intangible

assets (under transition provisions

Adjusted Net Bank Credit

/ ANBC

Net Bank credit plus investment made by Bank in non SLR bond held in Held to

Maturity Category

AFS Available for Sale

ALCO Asset and Liability Management Committee

AML Anti – money laundering

ATM Automated Teller Machines

AUM Assets under management

Base Rate Minimum lending rate set by our Bank in accordance with applicable laws and

regulations.

Basel Committee Basel Committee on Banking Supervision

Basel II Revised framework on “International Convergence of Capital Measurement and

Capital Standards” by RBI for International Settlements.

Basel III A global regulatory framework for more resilient banks and banking systems

(December 2010 (rev. June 2011)) published by our Bank for International

Settlements. RBI issued guidelines on the implementation of Basel III capital

regulations in India on May 2, 2012 and revised as per notification issued by the

RBI on March 27, 2014.

BPLR Benchmark Prime Lending Rate

bps Basis points

CAR Capital adequacy ratio.

CAGR Compounded annual growth rate (calculated by taking the nth root of the total

percentage growth rate, where n is the number of years in the period being

considered).

CASA Current Accounts (Demand Deposits) and Saving Accounts

CBS Core Banking Solutions

CGTMSE Credit Guarantee Fund Trust of Micro and Small Enterprises

CMS Cash Management Services

CTS Cheque Truncation System

Director(s) Director(s) of our Bank, unless specified

DRC Disaster Recovery Centre

ECS Electronic Clearing Services

FEDAI Foreign Exchange Dealers’ Association of India

Financial Year/ Fiscal/

Fiscal Year/ FY

Any period of twelve months ended March 31 of that particular year, unless

otherwise stated.

Gross NPA /GNPA Gross non-performing asset

HFT The securities acquired by our Bank with the intention to trade by taking advantage

of the short term price/ interest rate movements will be classified under Held for

Trading

HTM The securities acquired by our Bank with the intention to hold them up to maturity

will be classified as Held to Maturity

IBA Indian Banks’ Association

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Term Description

ICAAP Internal Capital Adequacy Assessment Process

KYC Norms Know Your Customer norms stipulated by the RBI

NPA Non-Performing Asset

Net NPA / NNPA Net NPA means Gross NPAs less loan loss provision, Deposit Insurance and Credit

Guarantee Corporation/Export Credit Guarantee Corporation claims received and

held and any partial payments received and held.

SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement of Security

Interest Act, 2002, as amended

SLR Statutory Liquidity Ratio

Tier II Bonds Unsecured subordinated non – convertible bonds issued for Tier II capital

adequacy purposes.

Tier I capital The core capital of a bank, which provides the most permanent and readily available

support against unexpected losses. It comprises paid up capital and reserves,

consisting of any statutory reserves, free reserves, capital reserves and other

disclosed free reserves, revaluation reserve as reduced by equity investments and

subsidiaries, intangible assets and losses in the current period and those brought

forward from the previous period.

Tier II capital The undisclosed reserves and cumulative perpetual preference shares, general

provisions and loss reserves, hybrid debt capital instruments (which combine certain

features of both equity and debt securities), investment fluctuation reserves and

subordinated debts.

Total Gross Credit

Exposure

Gross advances outstanding

General Terms / Abbreviations

Term Description

AGM Annual general meeting

AIF(s) Alternative investment funds, as defined and registered with SEBI under the

Securities and Exchange Board of India (Alternative Investment Funds) Regulations,

2012, as amended

AMC Asset management company

AOP Association of persons

AS Accounting Standards issued by ICAI

AY Assessment year

Bank Acquisition Act Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, as

amended

Bank Regulations United Bank of India (Officers’) Service Regulations, 1979, United Bank of India

(Employees’) Pension Regulations, 1995, as amended, which have been made by the

Board of Directors in the exercise of powers conferred under section 19 of the Bank

Acquisition Act after consultation with the RBI and with previous sanction of the GoI,

Banking Division, Government of India, Ministry of Finance, Department of

Economic Affairs (Banking Division) and United Bank of India (Share and Meetings)

Regulations, 2010.

Banking Regulation Act The Banking Regulation Act, 1949, as amended

Banking Division Government of India, Ministry of Finance, Department of Banking Services (Banking

Division)

Banking Ombudsman

Scheme

The Banking Ombudsman Scheme, 2006

Brickwork Brickwork Rating India Private Limited

BSE BSE Limited

CAGR Compounded Annual Growth Rate

CARE Credit Analysis & Research Limited

CDR Corporate Debt Restructuring

21

Term Description

CDR System A joint forum of banks and financial institutions in India established in 2001 as an

institutional mechanism for corporate debt restructuring

CDSL Central Depository Services (India) Limited

CPIs Consumer price indices

CESTAT Central Excise and Service Tax Appellate Tribunal

CRISIL Credit Rating Information Services of India Limited

Depositories Act The Depositories Act, 1996, as amended

Depository A depository registered with SEBI under the Securities and Exchange Board of India

(Depositories and Participant) Regulations, 1996, as amended

Depository Participant A depository participant as defined under the Depositories Act

DICGC Deposit Insurance and Credit Guarantee Corporation of India

EaR Earnings at risk

EBITDA Earnings before interest, tax, depreciation and amortization

ECB External commercial borrowing

ECS Electronic clearing service

EGM Extraordinary general meeting

Eligible FPIs FPIs that are eligible to participate in this Issue and do not include qualified foreign

investors and Category III Foreign Portfolio Investors who are not allowed to

participate in the Issue

EPS Earnings per share

ETL Expected tail loss

FCCBs Foreign currency convertible bonds

FCNR(B) Foreign currency non-resident (bank)

FEDAI Foreign Exchange Dealers’ Association of India

FEMA The Foreign Exchange Management Act, 1999 read with rules and regulations

promulgated there under and any amendments thereto.

FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person

Resident Outside India) Regulations, 2000, as amended

FIIs Foreign institutional investors as defined under the SEBI FPI Regulations

FIMMDA Fixed Income Money Market and Derivatives Association of India

FPI Foreign portfolio investors as defined under the SEBI FPI Regulations and includes

person who has been registered under the SEBI FPI Regulations. Any foreign

institutional investor or qualified foreign investor who holds a valid certificate of

registration is deemed to be a foreign portfolio investor till the expiry of the block of

three years for which fees have been paid as per the Securities and Exchange Board

of India (Foreign Institutional Investors) Regulations, 1995

FRA/IRS Forward rate agreements/interest rate swaps

FVCI Foreign venture capital investors as defined and registered with SEBI under the

Securities and Exchange Board of India (Foreign Venture Capital Investors)

Regulations, 2000, as amended

GAAP Generally accepted accounting principles

GAAR General Anti-Avoidance Rules

GDP Gross domestic product

GIR General index registrar

GoI/Government Government of India, unless otherwise specified

GST Goods and services tax; a proposed reform to Indian tax laws relating to indirect

taxes on goods and services

HFCs Housing finance companies

HLAC High Level Advisory Committee of the RBI

HNIs High net worth individuals

HUF Hindu undivided family

ICRA ICRA Limited

IFRS International Financial Reporting Standards of the International Accounting

ITES Information Technology Enabled Services

22

Term Description

Ind-AS Indian accounting standards converged with IFRS, as per the roadmap issued by the

Ministry of Corporate Affairs, Government of India

Indian GAAP Indian GAAP Generally accepted accounting principles in India as applicable to

Banks

Insolvency Code The Bankruptcy and Insolvency Code, 2016

MAT Minimum alternate tax

MSEs Micro and small enterprises

NEAT National Exchange for Automated Trading

NEFT National electronic fund transfer

New Banks Licensing

Guidelines

Guidelines for Licensing of New Banks in the Private Sector issued by RBI on

February 22, 2013

NRE Non-resident (external)

NRI Non-resident Indian

NRO Non-resident Ordinary

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

NABARD National Bank for Agriculture and Rural Development

Nationalised Bank

Scheme

The Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970

notified under section 9 of the Bank Acquisition Act

OFAC Office of Foreign Assets Control of the U.S. Treasury Department

PAN Permanent account number

PDAI Primary Dealers Association of India

PFRDA Pension Fund Regulatory and Development Authority

PMLA The Prevention of Money Laundering Act, 2002, as amended

Prudential Norms Prudential norms on income recognition, asset classification and provisioning issued

by the RBI on July 1, 2015

PTC Pass through certificate

RBI Reserve Bank of India

Reserve Bank of India

Act/ RBI Act

The Reserve Bank of India Act, 1943, as amended

RRB Regional Rural Bank

RRB Act Regional Rural Banks Act, 1934, as amended

RONW Return on Net Worth

RWA Risk weighted assets

SCBs Scheduled commercial banks

SCR (SECC) Rules Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)

Regulations, 2012, as amended

SCRA The Securities Contracts (Regulation) Act, 1956, as amended.

SCRR The Securities Contracts (Regulation) Rules, 1957, as amended.

Securities Shall have the meaning given to such term under the SCRA.

SEBI Securities and Exchange Board of India

SEBI Act Securities and Exchange Board of India Act, 1992, as amended

SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investment Funds) Regulations,

2012, as amended

SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations,

2014, as amended

SENSEX An index of 30 constituent stocks traded on BSE representing a sample of

large, liquid and representative companies

SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended.

Stock Exchanges BSE and NSE

STT Securities and Transaction Tax

Takeover Code Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011, as amended.

23

Term Description

TDS Tax Deducted at Source.

U.K. United Kingdom.

U.S. or U.S.A. United States of America, its territories and its possessions and the District of

Columbia.

USD or US Dollar or

U.S. Dollar

United States Dollar

U.S. GAAP Generally accepted accounting principles followed in the United States.

U.S. Securities Act The U.S. Securities Act of 1933, as amended.

VAT Value Added Tax

VCF A venture capital fund as defined under the erstwhile Securities and Exchange Board

of India (Venture Capital Funds) Regulations, 1996

WPI Wholesale Price Index

24

SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is

qualified in its entirety by, the more detailed information appearing elsewhere in this Placement Document, including

under the sections “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue Procedure” and “Description of Equity

Shares”.

Issuer United Bank of India.

Face value ₹ 10 per Equity Share

Issue Price per Equity Share ₹ 23.22.

Minimum Offer Size Minimum value of offer or invitation to subscribe to each QIB is ₹ 20,000

of the face value of the Equity Shares

Issue Size The issue of up to 5,49,06,211 Equity Shares aggregating up to ₹ 127.49

Crores.

A minimum of 10 % of the Issue Size i.e. at least 54,90,621.10 Equity

Shares shall be available for Allocation to Mutual Funds only, and the

balance 4,94,15,589.90 Equity Shares shall be available for Allocation to

all QIBs, including Mutual Funds. In case of under-subscription in the

portion available for Allocation only to Mutual Funds, such portion or part

thereof may be Allocated to other eligible QIBs.

Date of Board Resolution

authorizing the Issue

January 28, 2016

Date of Shareholders’ Resolution authorizing the Issue

June 28, 2016

Equity Shares issued and

outstanding immediately prior to

the Issue

1,33,94,49,372 Equity Shares at a face value of ₹ 10 per share.

Equity Shares issued and

outstanding immediately after

the Issue

1,39,43,55,583 Equity Shares at a face value of ₹ 10 per share.

Eligible Investors QIBs as defined in regulation 2(1)(zd) of the ICDR Regulations and

Chapter VIII of the ICDR Regulations to whom the Preliminary Placement

Document and the Application Form are circulated and who are eligible to

bid and participate in the Issue and QIBs not excluded pursuant to

Regulation 86 (1)(b) of the ICDR Regulations, except for such eligible

QIBs who are Public Sector Enterprises. Only QIBs which are FIIs and

Eligible FPIs are permitted to participate in this Issue.

Floor Price The floor price has been calculated in accordance with Chapter VIII

Regulation 85 of the ICDR Regulations. Under the ICDR Regulations, the

Issue Price cannot be lower than the Floor Price subject to discount of not

more than 5% on the Floor Price which may be considered by our Bank.

The Floor Price, net of discount of 5% is ₹ 1.22.

Listing (i) Our Bank has obtained in-principle approvals dated March 21, 2017 in

terms of regulation 28(1) of the Listing Regulations with the Stock

Exchanges and (ii) the application for the final listing and trading approval,

for listing and admission of the Equity Shares and for trading on the Stock

Exchanges, will be made only after Allotment of the Equity Shares in the

Issue.

Transferability Restrictions The Equity Shares being allotted pursuant to this Issue cannot be sold for a

period of one year from the date of Allotment, except if sold on the floor of

the Stock Exchanges. For further details, see the section “Transfer

Restrictions” and “Selling Restrictions” beginning on pages 189 and 195,

respectively.

Closing Date The Allotment of the Equity Shares offered pursuant to the Issue is expected

to be made on or about March 27, 2017 (the “Closing Date”).

25

Use of Proceeds The gross proceeds of the Issue are expected to be approximately ₹ 127.49

Crore. The net proceeds from the Issue, after deducting fees, commissions

and expenses of the Issue, will be approximately ₹ 125.69 Crore and will

be used to augment the Tier I Capital of our Bank that will help increase

our capital adequacy ratio and provide capital for the future growth of our

business. For further details, please see the section “Use of Proceeds”

beginning on page 63.

Pay-in Date Last date specified in the CAN sent to the successful Bidders for payment

of application money.

Lock - up Please see the sub-section titled “Lock-up” of “Placement Agreement” on

page 187 for a description of restrictions on our Bank in relation to Equity

Shares

Risk Factors For a discussion of certain risks in connection with an investment in the

Equity Shares, please see the section “Risk Factors” beginning on page 37.

Ranking of equity shares The Equity Shares being issued shall rank pari passu in all respects with the

existing Equity Shares including rights in respect of dividends. The

shareholders will be entitled to participate in dividends and other corporate

benefits, if any, declared by our Bank after the date of Issue. For details,

see “Description of the Equity Shares” beginning on page 202.

Security codes for the Equity

Shares

ISIN: INE695A01019;

BSE Code: 533171;

NSE Symbol: UNITEDBNK

26

SUMMARY OF BUSINESS

Overview

We are a scheduled public sector commercial bank in India offering a wide range of banking and financial products

and services to both large and mid-corporates, micro, small and medium enterprises (“MSME”), retail and agricultural

customers. As on January 31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them

under Core Banking Solution “CBS” platform) including 180 MSME specialized branches catering to the specific

clientele segment, 24 Retail Hubs, 5 specialised women branches. As of January 31, 2017, we had 2,200 ATMs, 22

E-zones, 36 regional offices, 5 extension counters and 2 representative offices in Bangladesh and Myanmar. As of

January 31, 2017, we had a customer base of approximately 4.22 crore.

We provide a wide range of products and services aimed at different kinds of customers and companies across a wide

range of sectors of the economy. Our business is principally divided into Retail banking, Agricultural banking,

Corporate banking, International banking, MSME banking, Priority sector lending, Treasury operations and other

financial services such as demat /trading services and merchant banking services, distribution of third party products

such as insurance, mutual fund products, money transfer services, merchant acquiring services, pension and tax

collection services.

Our retail banking business offers financial products and services including consumer lending and deposit services to

our retail customers. We offer a wide range of consumer credit products, including loans and advances for housing,

trade, automobiles, consumer durables, education, personal loans, mortgage loans and other retail products. We have

various deposit products, such as current, savings and term deposits for our customers.

Our commercial banking business largely caters to corporate customers, including large, mid-sized and small

businesses and government entities. Our loan products include term loans to finance capital expenditure of assets

across various industries as well as short-term loans, cash credit, export credit and other working capital financing and

bill discounting facilities. We also provide credit substitutes, such as letter of credit and letter of guarantee.

Our international banking services includes forex services, international trade finance and NRI services comprising

foreign exchange operations, remittance facilities for resident Indian, foreign currency loans, lending and deposit

services to non-resident Indians. We also cater to the financial requirements of Indian exporters and importers.

We offer products and services for MSME banking to our customers. The MSME banking business provides a similar

range of products and services as our corporate banking unit with some differentiation following evaluation of each

customer’s profile and dynamics. Our MSME customers are also important for maintaining our CASA ratio.

We offer direct financing to farmers for production and investment, as well as indirect financing for infrastructure

development and credit to suppliers of agricultural inputs. We also finance tea plantation and rubber plantation. We

offer various products in the rural and semi-urban areas which would also help our Bank to meet its financial inclusion

targets mandated by RBI. For creating awareness among the borrower farmers about necessity of availing bank finance

for agriculture operations and maintaining it in performing status, we have actively taken part in a state government

assisted programme under the banner ‘Bangla Farmers’ Financial Inclusion Fortnight’ in the months of November

and December 2016. We also take adequate and appropriate steps for extending various benefits to the farming

community to protect them from the related uncertainties and to minimize the financial burden. Those are

implementation of crop insurance scheme under Pradhan Mantri Fasal Bima Yojana (“PMFBY”) and Interest

Subvention Scheme from Short Term Production Credit.

Our treasury operations being the interface with the financial markets,consist primarily of statutory reserves

management, liquidity management, investment and trading activities, money market and foreign exchange related

activities. We actively trade in major currencies of the world and participate in the forward market. We also offer fee

based products which includes fees and charges for services such as remittance services, documentary credits, letters

of credit and issuance of guarantees and collect service charges and processing fees on customer advances. Fee-based

income also includes income from commissions on sale of third party products, such as insurance and mutual funds.

27

We also offer a wide range of general banking services to our customers including debit cards, cash management,

remittance services and collection services. In addition, we have agency function for collection of Central Government

Revenue viz. direct and indirect taxes through physical mode by authorized branches and through e-mode by all

branches of our Bank. We also act for various state governments and the Government of India on numerous matters

including the collection of state revenue and taxes, mobilization of Government deposits under PMJDY, and payment

of school teacher’s salary and pension of Central Government, State Government and different autonomous

organizations.

We are one of the 14 banks which were nationalized on July 19, 1969. After nationalization, we have expanded branch

network pan India and actively participated in the developmental activities, particularly in the rural and semi - urban

areas in conformity with the objectives of nationalization. As of March 31, 2014, March 31, 2015 and March 31, 2016,

the total number of branches of our Bank were 2,001, 2,004 and 2,011, respectively and it was further increased to

2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1,912

as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased to 2,200 as of January 31, 2017. As of

January 31, 2017, our domestic branch network of 2,021 branches comprised 772 rural, 411 semi-urban, 477 urban

and 361 metropolitan branches.

We have been designated as the lead bank by RBI in 34 districts of the States of West Bengal, Assam, Manipur and

Tripura. We are also the convener of the State Level Bankers' Committees (“SLBC”) for the States of West Bengal

and Tripura. We have been designated as Treasury Bank in major district of Assam and Tripura by respective state

governments. Further, the President of India and Ministry of Coal have accounts solely with our Bank to handle the

government funds. We intend to leverage our lead bank status and brand recall, to expand our presence across select

geographies in India by increasing our branch network and distribution infrastructure across India.

As of January 31, 2017, the Core Banking Solution (“CBS”), which is a suite of software applications that facilitate

centralized operations through a single data base, has been implemented in all of our branches and extension counters,

covering 100% of our business. In addition, we have digital banking channels including mobile banking, internet

banking. We have developed micro-payment and branchless banking solutions as well as a business correspondent

network to expand our customer reach beyond the traditional branch service area. We deliver our products and services

through our branches, extension counters, ATMs, internet banking and mobile banking. Our Bank has adopted

technology based products as a strategy and pioneered in various state of art technology driven products.

As on January 31, 2017, our Bank has installed 2,200 ATMs, 22 E-Zones, Internet Banking, Mobile Banking, E -

Wallet, E- Passbook Services. Our Bank is issuing Rupay and Visa bonded debit cards including image card on Rupay

Platinum Platform. Our Bank has implemented online saving account facility, POS machines, online payment of bills

and taxes. Our Bank has also implemented a product wherein instant fund transfer across bank through beneficiary

mobile number. Our Bank has installed Unified Payment Interface (“UPI”) from first day of its launch. Our Bank is

also having direct debit facility for booking of rail ticket through debit card. We have played significant role in the

spread of banking services in different parts of the country, especially in the eastern and north eastern and we have

sponsored four Regional Rural Banks (“RRBs”) in collaboration with the Central Government and the state

governments of West Bengal, Assam, Manipur and Tripura.

In fiscal year 2016, we made a net loss of ₹ 281.96 crore and had a total credit portfolio of ₹ 71,412 crore and a net

worth of ₹ 4,685 crore. For the nine months ended December 31, 2016, we made a net profit of ₹ 145.94 crore and

had a total credit portfolio of ₹ 67,866 crore and net worth of ₹ 5,473 crore. We have experienced growth in deposits

and advances, with deposits growing at a compounded annual rate of 4.97 % during the last three fiscals, gross and

net advances growing at a compounded annual rate of 0.81% and (0.44)% during the same period. Our total business

for the third quarter of fiscal year 2017 was ₹ 195,558 crore.

COMPETITIVE STRENGTHS

We believe that our success can be attributed to a combination of the following competitive strengths:

High Current Account - Saving Account (CASA) Deposits

We have traditionally maintained high CASA deposits because of our large retail customer base spread across India

particularly in eastern and north eastern regions. As of December 31, 2016, our share of CASA deposits was at 47.75%

28

of total deposits, out of which saving deposits which are less volatile accounted for 40.15% of total deposits, while

current deposits accounted for 7.60% of total deposits. Out of our total deposits, core deposits constitute 97.34% and

bulk deposits account for 2.66% (inclusive of CD). This provides us with significant cost advantages over our peers.

Wide distribution network and customer base

Our branch network, which was historically concentrated in West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur

and Tripura, has now expanded across India through a growing network of branches and ATMs. As of March 31,

2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2,004 and 2,011,

respectively and it further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased

from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased

to 2,200 as of January 31, 2017. As of January 31, 2017, our network of BC agents increased to 4,252. As on January

31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution

“CBS” platform). As of January 31, 2017, details of our network are as follows:

Metro Urban Semi - Urban Rural Total

Total number of branches 361 477 411 772 2,021

ATMs 295 602 573 730 2,200

Further, we also have 22 E-zones, 36 regional offices, 2 representative offices in Bangladesh and Myanmar. For our

agricultural customers, our Bank has, as of January 31, 2017 a network of 1,183 branches in rural and semi urban

areas, constituting approximately 58.53% of our total branch network, which support agricultural development, the

MSME sector and retail banking.

Multiple delivery channels and large distribution infrastructure has resulted in giving us access to a large customer

base spread across the country. As of January 31, 2017, we had a customer base of approximately 4.22 crore compared

to 3.93 crore customers as of March 31, 2016 and 3.60 crore customers as of March 31, 2015. We offer a user-friendly

internet banking facility that allows our customers to conduct a comprehensive range of banking transactions online

without visiting our branches or ATMs. We offer online saving account opening facility, POS machines, online

payment of bills and taxes and instant fund transfer facility across bank through beneficiary mobile number. We have

installed Unified Payment Interface (“UPI”) from first day of its launch and direct debit facility for booking of rail

ticket through debit card. Our distribution network as complemented by our multi-channel electronic banking system

is capable of providing a comprehensive suite of products to customers, provides us with a strong sales platform in

the areas in which we operate, enables us to cross-sell products and to deliver high-quality, convenient and

comprehensive services to a range of customers. Our extensive network allows us to provide banking services to a

wide variety of customers, including large and small to medium corporations, institutions and state-owned enterprises,

as well as commercial, agricultural, industrial and retail customers throughout India.

Diverse products and service mix

We are engaged in wide variety of banking activities such as corporate, micro, small and medium enterprises

(“MSME”) and retail banking, and offer a wide range of financial products and services to corporate, SMEs and retail

customers including both resident and non – resident Indians. We also provide funding to sectors identified by the

Government of India as priority sector with specific focus on agriculture and MSME. We also cater to the needs of

corporate and SME Banking services offering working capital, short term credit, cash management, forex loan

products such as export import credit, Letter of Credit and Guarantee and buyers credit. Our treasury operations consist

primarily of statutory reserves management, liquidity management, investment and trading activities, money market

and foreign exchange activities. Our retail banking services include consumer lending and deposit services. We offer

a wide range of consumer credit products, including personal loans, home loans, vehicle loans, education loans,

mortgage loans, gold loans, etc. Our deposit products include saving accounts, time deposits, tailored deposits,

products for customer in various sectors. Our other businesses include marketing of life and non-life insurance

products, mutual fund products, corporate cash management services, agricultural lending etc.

Our Bank has set up 14 numbers of Rural Self Employment Training Institutes (“RSETIs”) in the state of West

Bengal, Assam and Tripura for imparting training to the potential entrepreneurs for the financially weaker section of

the society. Our Bank is the convener of the SLBC in the state of West Bengal and Tripura. Our Bank is entrusted

29

with Lead Bank responsibility in 34 district spread across four states, 10 districts in West Bengal, 12 in Assam, 8 in

Tripura and 4 in Manipur. Our Bank has also organized social camps for issuance of Kisan Credit Cards to bring in

more number of new farmers under the KCC net. Our Bank jointly with Kotak Securities has launched its share trading

product – U Connect Trio which enables the customer to open 3-in-1 account i.e. Bank Account, Demat Account &

Share trading Account and trade seamlessly on the net from the comfort of their home. We intend to leverage our lead

bank status and brand recall, to expand our presence across select geographies in India by increasing our branch

network and distribution infrastructure across India.

We provide banking facilities to our customers through our various alternate delivery channel initiatives such as

ATMs, internet banking, mobile banking. Further, our internet banking services can be used for online shopping,

payment of utility bills, creating online term deposits, online trading, etc. We have established e – kiosks, IMPS based

24x7 funds transfer facility through internet banking, instant interbank fund transfer on the basis of mobile number

named as UFT (United Fund Transfer), mobile and internet based wallet services named United Wallet, e – passbook,

etc. We have also implemented innovative offering like online saving bank account opening by prospective customers

and launched balance enquiry on missed call, mini statement and fixed deposit on missed call.

Scalable operating model and centralised operational structure

Our current operating model is scalable, which we expect will enable us to expand our business and services. We

strongly emphasize on technology in our business as a means of improving the efficiency and competitiveness of our

business operations. We have devoted substantial resources to achieve seamless integration of our people, processes,

data and applications. All our branches are under CBS, covering 100% of our business to facilitate centralized

operations through a central data base. It has networked our domestic branches, allowing our customers to operate

their accounts from remote locations and avail banking services from any of our branches, regardless of wherever the

account is maintained. We have a Disaster Recovery Centre at Vashi, Navi Mumbai, which replicates all data on a

near real time basis for the critical applications. As on date, all the branches of our Bank have been migrated to the

CBS (Finacle) platform. Bank has been regularly upgrading its systems for development of new products and

improvising the processes for operational convenience. We believe that factors such as our scalable operating model,

technology and data platform and centralized banking system shall expand our business in geographies that offer

strong opportunities for us to grow further.

Professional and experienced management

We have an experienced Board and senior management and presently have a team of one chief vigilance officer and

12 General Managers. Our Bank’s executive directors and senior management have on an average more than 20 years

of banking and financial experience. The expertise of our Board and management team contributes to our in-depth

understanding of the sector-specific aspects of our business and each part of our operations. We have been able to

build a team of professionals with relevant experience, including credit management, risk management, treasury,

information technology and marketing, restructuring balance sheet and business mix, improving operating efficiency

and in-depth knowledge of banking operations and management. We have inducted qualified persons, including

MBAs, engineers, chartered accountants, company secretaries and cost accountants, risk managers, equity research

analysts, marketing officials and credit officers. For additional details see section titled “Board of Directors and Senior

Management” on page 164.

BUSINESS STRATEGIES

We intend to grow our market share, including our retail and MSME deposit base, and to continue to achieve balanced

growth in our balance sheet, profitability (improving our return on assets and our return on equity) and efficiency

(improving our cost to income ratio) across all segments of our operations. Our key strategies to achieve these goals

are set out below:

Maintaining high CASA deposits

The presence of our branches, particularly in Eastern and North Eastern part Including, West Bengal, Orissa, Bihar,

Jharkhand, Assam, Manipur, Meghalaya, Tripura of North East Region, allows us to attract interest-free current

account and low cost savings account deposits. We have in the past focused our efforts on growing our CASA ratio

and CASA deposits stood at ₹ 45,755.09 Crores for the fiscal year 2015 and the same increased to ₹ 48,791.04 Crores

30

for fiscal year 2016. As at December 31, 2016, our Bank’s CASA deposits were at ₹ 60,970.05 crores. Our CASA

deposits as a percentage of total domestic deposits was at 42.05 % for the fiscal year 2015 and 42.00%, for the fiscal

year 2016 and 47.75% as at December 31, 2016.

We seek to increase our CASA deposits in order to reduce cost of funds and improve our core deposits. In order to

attract retail customers and increase our CASA deposits, we intend to introduce new products and promote our

products through marketing campaigns. We believe that by leveraging CBS, internet and mobile banking systems will

enable us to increase our customer base, thereby increasing CASA deposits.

Accelerate growth in loans and advances to the MSME and retail sectors

Although we have experienced significant growth in our loans and advances to the MSME sector in recent past, with

growth of 2.21% and 7.16% in the fiscal year 2014, fiscal year 2015, respectively, however during the fiscal year 2016

the growth is (8.22)%. Our aim is to continue growing our loans and advances by expanding our relationship with

corporates and public sector organizations. We have opened number of MSME branches and deployed specialized

officers at MSME centric locations. As on January 31, 2017, we have 180 specialized MSME Branches to cater our

MSME customers. We also have four corporate finance branches in four metros. We propose to strengthen, our

relationship with these MSME by giving them various facilities at competitive terms and thereby expand our business.

We have installed a dedicated toll free telephone connection at our head office to address all queries of entrepreneurs

in the MSME sector. We have set up a MSME care centre at all of our regional offices to improve lending and to

redress the grievances of our customers under this sector. We also cater to some of the banking requirements of various

public sector organizations. Our goal is to leverage these relationships for mutually beneficial business growth. We

also plan to introduce a central pension processing system at our corporate office to take care of pension disbursements

for our retail customers.

We have identified the retail loan segment as a key area for increasing our credit portfolio. Loans and advances to the

retail sector (which includes housing loans) has been increased by 16.35% in fiscal year 2014 – 2015 and further

increased by 4.99% for the fiscal year 2016. However, as a share to our total (gross) loans and advances, it represented

17.72% of our total outstanding loans as of March 31, 2016. In our retail business, we intend to increase our share of

higher-margin asset products, such as loans against property, personal loans and gold loans. As on January 31, 2017,

we have 24 retail hubs to cater to our customers and have a centralized system for processing applications and

approvals of retail loans. Our aim is to substantially increase our loans and advances portfolio to the retail sector by

simplifying our current processes, launching new products and services and developing our distribution channels. We

believe this will help us spread risk, increase our interest income and better efficiency in capital utilization. Further,

this will enhance our customer base and provide us business opportunities through relationship banking and cross

selling.

As on the date of this Placement Document, the basic banking services are being offered to approximately 88.36 lakh

customers under the Financial Inclusion programme of our Bank through a robust network of 4,252 Bank Mitras

spread across 12 states of the country. Since launch of PMJDY, our Bank has focused on building a self-sustaining

business model of Financial Inclusion by bringing the financially excluded population under the ambit of formal

banking and offering suitable banking services at their doorstep. Each Bank Mitra is equipped with an inter-operable

handheld device (micro ATM) for rendering services to the customers. Today our Bank provides an array of services

through our Bank Mitra network including e-KYC based SB account opening, biometric/AePS/RuPay based online

cash withdrawal and deposit facilities at micro ATMs, various remittance products including IMPS and AePS,

Recurring Deposits, micro insurance (PMSBY and PMJJBY) products and micro Pension product (APY) apart from

micro credit facility under JLG scheme.

Grow our pan India presence and augmenting alternate delivery channels

We primarily cover the Eastern and North Eastern part of the country including West Bengal, Orissa, Bihar, Jharkhand,

Assam, Manipur and Tripura. As of January 31, 2017, we had 2021 branches out of which 1,175 and 358 were located

in eastern and north eastern India, respectively. We intend to increase our branch network and infrastructure across

India, through a growing network of branches, ATMs, BC agents and cross sell our products at competitive costs to

gain a larger pan-India market share in terms of advances and deposits. Working towards this goal, we plan to, and

have received approval from our Board to open 276 new branches during the fiscal year 2017 – 2018, which will

further increase our branch network. We are in the process to file an application with RBI for obtaining license for

31

opening of 276 new branches. Further we have received RBI clearance for opening of 4 link offices and we have

already opened 1 link office at Pune. We will open another 3 link offices in the fiscal year 2017. We are focused on

expanding our network to cover states with higher per capita income and key economic centers. In rural areas, we

look to add branches in locations that complement and leverage our agricultural & development banking partners and

to build our brand in rural communities. We strive to open branches in such areas which are unbanked or under-

banked.

In addition to our Bank’s plan to open 276 branches in the fiscal year 2017 - 2018, our Bank also intends to strengthen

its alternate delivery channels by encouraging customers from less cash to cash less environment. Our Bank has put

in place robust internet banking system, mobile banking and UPI platform. Our Bank also provides facility of instant

fund transfer through IMPS, utility bill payment and QR Code Based transactions and installed POS machines for

merchant acquiring business with a target to install 10,000 POS machines. Our Bank will also empower its business

correspondence to provide entire gamut of its services and products to the rural and unbanked population.

Increase in non – interest income

We intend to focus on increasing our fee-based income by expanding our third-party product offerings, by increasing

our fee-based services and alliances and by cross-selling our offerings to our existing customers. For example, we

have entered into agreements with LIC and Bajaj Allianz General Insurance Company Limited for distribution of life

and other insurance policies. We also entered into an agreement with Kotak Securities Limited for the distribution of

mutual fund and equity based products. We intend to increase this revenue stream by entering into additional agency

and distribution agreements and by promoting certain products and services, including depository services. We have

a presence in Myanmar and Bangladesh and we anticipate higher incomes from letters of credit and bank guarantees

as Indo-Myanmar trade increases. We have an integrated treasury and our income from the same for fiscal years 2014,

2015, 2016 and the nine months ended December 31, 2016 was ₹ 1,206.87 Crores, ₹ 1,746.91 Crores, ₹ 1,467.53

Crores and ₹ 1,865.32 Crores, respectively representing CAGR of 17.16% from fiscal year 2014 to fiscal year 2016.

We intend to increase the share of business in the emerging corporate group segment. We intend to follow a

relationship based approach by providing and expanding our third party product offerings including mutual fund and

insurance products, money transfer and foreign exchange services. We also intend to pursue strategic relationships

with corporate entities and the Government to provide our products to their employees and customers.

Reduce our gross NPA levels and to improve quality of assets

Though the reduction of impaired assets and improvement in the quality of assets through recovery were our key

focus area in recent past, we continue to endeavor to reduce our NPA level and upgrade the quality of our assets. The

share of gross NPAs as a percentage of total advances increased from 9.49% as of March 31, 2015 to 13.26% as of

March 31, 2016. Our gross NPA stood at ₹ 9,471.01 crore and Net NPA stood at ₹ 6,110.71 crore as on March 31,

2016. Our strategies for reducing NPAs include improving the quality of credit by ensuring that our well documented

loan sanction policies and procedures are complied with and by actively monitoring our loan accounts (particularly

Special Mention Accounts (SMA)) and reassessing their credit ratings at least once a year or more frequently, if

required. Further, we have taken several initiatives to contain slippages and continue to take such action and speed up

recovery from overdue loan accounts including identification of stressed accounts for restructuring (or rephrasing in

time), regular follow-up of overdues in loan accounts, conducting e-auctions for the sale of seized assets to ARCS and

initiation of stringent recovery measures against willful defaulters.

We organize recovery camps and lok adalats with the help of government officials, enter into one time settlement and

we have delegated the powers to all functional heads for settlement of NPAs and written off accounts. We are also

managing our NPAs by selling off stressed assets to asset reconstruction companies. We have appointed recovery

agents for the expeditious recovery of NPAs and written off accounts. Our Bank will also formulate plan of action for

enforcing the SARFESI, the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s

corporate debt restructuring (“CDR”) mechanism and Bankruptcy Code more strictly and stringently and encourage

OTS proposal for non – cooperative borrowers. For better recovery, our Bank started to participate in Community

Based Recovery Mechanism (CBRM) with the assistance from State Rural Livelihood Mission (SRLM) which has

placed Bank Sakhi/ Bank Mitras at branches. To create general awareness among the public our Bank took the

initiative by putting up silent road shows and peaceful demonstrations before the establishments of defaulting

borrowers.

32

Enhanced focus on credit monitoring

Our Bank has put in place a robust credit monitoring policy and created a dedicated department for successfully

monitoring the accounts. The credit monitoring is a regular process of day to day management of the credit portfolio

by the credit monitoring department. While all branch heads continue to be responsible for monitoring their respective

loan portfolio, an additional layer of oversight is provided by the credit monitoring department. Our Bank will continue

to follow and strengthen the practice of credit monitoring and to improve the asset quality.

33

SUMMARY OF FINANCIAL INFORMATION

The following summary financial information has been extracted from our Audited Financial Statements as of and for

fiscal years ended March 31, 2014, 2015 and 2016 and should be read together with “Management's Discussion and

Analysis of Financial Condition and Results of Operations” beginning on page 68 and our financial statements,

including the notes thereto and the reports thereon, which appear in the section “Financial Statements” beginning on

page 228.

SUMMARY BALANCE SHEET INFORMATION

(₹ in crores)

PARTICULARS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014

CAPTIAL AND LIABILITIES

Capital 839.52 839.52 1,354.75

Share Application Money Pending Allotment 480.00 - -

Reserves & Surplus 4,999.67 4,988.52 3,927.91

Deposits 1,16,401.28 1,08,817.60 1,11,509.71

Borrowings 2,912.51 4,061.73 4,460.24

Other Liabilities and Provisions 3,798.78 4,320.21 3,852.35

TOTAL 1,29,431.75 1,23,027.58 1,25,104.95

ASSETS

Cash and balances with Reserve Bank of India 6,070.45 5,815.60 6,269.78

Balances with Banks and Money at Call and

Short Notice 2,255.21 214.94 4,542.06

Investments 44,723.38 43,245.49 41,813.38

Advances 68,060.20 66,763.04 65,767.51

Fixed Assets 1,210.92 877.41 938.73

Other Assets 7,111.59 6,111.09 5,773.48

TOTAL 1,29,431.75 1,23,027.58 1,25,104.95

Contingent Liabilities 11,583.91 6,450.34 9,908.33

Bills for collection 1,959.97 2,416.51 2,880.71

See accompanying notes forming part of the unaudited condensed financial statements

34

SUMMARY PROFIT AND LOSS STATEMENT

(₹ in crores)


INCOME

Interest Earned 9,936.67 10,180.48 10,599.29

Other Income 1,467.53 1,746.91 1,206.87

TOTAL: 11,404.20 11,927.39 11,806.16

EXPENDITURE

Interest Expended 7,656.11 7,689.82 8,036.47

Operating Expenses 2,972.78 2,438.00 2,915.46

Provisions and Contingencies 1,057.27 1,543.58 2,067.68

TOTAL: 11,686.16 11,671.40 13,019.61

PROFIT

Net Profit for the year/period (281.96) 255.99 (1,213.45)

TOTAL: (281.96) 255.99 (1,213.45)

APPROPRIATIONS:

Transfer to Statutory Reserve - 64.00 -

Transfer to Capital Reserve 18.64 1.15 -

Proposed Dividend:

Equity - - -

PNCPS - - -

Tax on Dividend - - -

Transfer to Revenue Reserve (300.60) 190.85 (1,213.45)

Balance carried forward to Balance Sheet - - -

TOTAL: (281.96) 255.99 (1,213.45)

Basic & Diluted Earnings per Share (₹) (3.36) 3.78 (28.68)


35

SUMMARY CASH FLOW INFORMATION

(₹ in crores)


CASH FLOW FROM OPERATING

ACTIVITIES

Net Profit after Tax (281.96) 255.99 (1,213.45)

Add: Income Tax - 220.00

Less: MAT Recoverable - 220.00

Add: Deferred Tax Assets (428.73) 198.11

Profit before Tax (710.69) 454.10 (1,213.45)

Adjustment for

Depreciation on Fixed Assets 102.76 105.72 69.19

Less: Amount drawn from Revaluation Reserve (16.08) (14.82) (15.59)

Profit/Loss on Sale of Fixed Assets (Net) 0.04 0.58 (0.04)

Depreciation/Provision for Investments (Net) (1.09) (70.43) 144.88

Provision for Standard Assets (423.77) 325.82 200.76

Provision for NPA Advances 1,769.17 844.87 1,908.62

Other Provisions (Net) 749.44 1,071.69 1,020.93

Interest on Subordinated Bonds 222.85 233.25 223.06

Operating Profit before changes in Operating

Assets and Liabilities 1,692.63 2,950.78 2,338.36

Adjustment for net change in Operating Assets

and Liabilities

Decrease/(Increase) in Investment (1,476.80) 1,701.27 (11,557.82)

Decrease/(Increase) in Advances (3,066.33) (1,840.39) 1,232.53

Increase/(Decrease) in Deposits 7,583.68 (2,692.11) 10,858.17

Increase/(Decrease) in Borrowings (849.22) (398.51) (982.47)

Decrease/(Increase) in Other Assets (681.76) (3,492.68) (272.08)

Increase/(Decrease) in Other Liabilities &

Provisions (847.10) (929.65) (334.87)

Increase/(Decrease) in Revenue Reserve (37.67) - (72.03)

Increase/(Decrease) in Other Reserve 0.18 4.22

Cash Generated from Operating Activities 2,317.60 - 1,209.79

Tax (Paid)/ Refund 110.00 (106.00) (41.00)

Net Cash from Operating Activities (A) 2,427.60 (4,803.07) 1,168.79

CASH FLOW FROM INVESTING

ACTIVITIES

Fixed Assets (Net) (89.63) (44.99) (150.83)

Net Cash from Investing Activities (B) (89.63) (44.99) (150.83)

CASH FLOW FROM FINANCING

ACTIVITIES

Issue of Share Capital 480.00 (515.23) 180.04

Share Premium - 815.23 519.96

Subordinate Bonds Issued (300.00) - 500.00

Interest on Subordinated Bonds (222.85) (233.25) (223.06)

Dividend and tax thereon paid - - (171.62)

Net Cash from Financing Activities (C) (42.85) 66.75 805.32

Net increase in Cash and Cash equivalents

(A+B+C) 2,295.12 (4,781.30) 1,823.28

Cash and Cash equivalents at the beginning

of the year 6,030.54 10,811.84 8,988.56

36


Cash in hand 503.02 433.60 357.44

Balances with Reserve Bank of India 5,312.58 5,836.18 3,489.17


Short Notice 214.94 4,542.06 5,141.94

Cash and Cash equivalents at the end of the

year 8,325.66 6,030.54 10,811.84

Cash in hand 558.81 503.02 433.60

Balances with Reserve Bank of India 5,511.64 5,312.58 5,836.18


Short Notice 2,255.21 214.94 4,542.06


37

RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider each of the following risk

factors and all other information set forth in this Placement Document, including the risks and uncertainties described

below, before making an investment in the Equity Shares. This section should be read together with “Industry

Overview”, “Business”, “Selected Statistical Information” and “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” as well as the financial statements, including the notes thereto, and other

financial information included elsewhere in this Placement Document.

The risks and uncertainties described below are not the only risks that we currently face. Additional risks and

uncertainties not presently known to us, or that we currently believe to be immaterial, may also adversely affect our

business, prospects, financial condition and results of operations and cash flow. If any or some combination of the

following risks, or other risks that are not currently known or believed to be material, actually occur, our business,

financial condition and results of operations and cash flow could suffer, the trading price of, and the value of your

investment in, Equity Shares could decline and you may lose all or part of your investment. In making an investment

decision you must rely on your own examination of us and the terms of this Issue, including the merits and risks

involved.

This Placement Document also contains forward-looking statements that involve risks and uncertainties. Our results

could differ materially from such forward-looking statements as a result of certain factors including the considerations

described below and elsewhere in this Placement Document.

1. If we are not be able to effectively manage increases in our asset portfolio and our NPA levels arising from

our growth, the quality of our loan portfolio and other assets may decrease and our business and financial

performance could be adversely affected.

Our quantum of gross NPA position were ₹ 7,118.01 Crore as on March 31, 2014, ₹ 6,552.91 Crore as at March 31,

2015 and ₹ 9,471.01 Crore as on March 31, 2016. However, our percentage of gross NPA has decreased from 10.47%

as on March 31, 2014 to 9.49% as on March 31, 2015 and subsequently increased to 13.26% as on March 31, 2016.

The restructured amount of our Bank has increased from ₹ 10,168 crores for the fiscal year 2015 to ₹ 10,334 crore for

the fiscal year 2016 registering a growth of 1.63% on year on year basis. The restructured amount of our Bank has

increased from ₹ 6,340 crores for the fiscal year 2014 to 10,168 crores for the fiscal year 2015 registering a growth of

60.37% on year on year basis. Out of the restructured accounts, standard restructured advances was ₹ 6,780 crore and

₹ 3,554 crore were in NPA category for the fiscal year 2016. As on March 31, 2016, the restructured accounts

constituted 14.47% of total advance as compared to 14.72% as on March 31, 2015.

As of December 31, 2016, 19.49% of our standard advances were to borrowers whom we rate in the low risk category,

51.65% of our advances were to borrowers whom we rate in the moderate risk category and 28.86% of our advances

were to borrowers whom we rate in the high risk category. Further, our banking advances for MSME and retail

portfolio were ₹ 24,997.96 Crores, ₹ 24,537.36 Crores and ₹ 24,149.95 Crores for the fiscal year ended March 31,

2015, March 31, 2016 and nine months period ended December 31, 2016, respectively. Given the nature of the targeted

borrowers, retail banking and business banking advances may carry a higher risk of delinquency if there is a prolonged

recession or a sharp rise in interest rates. As a result, we may be required to increase our provision for defaulted

advances. Borrowers in the high risk category could be especially vulnerable if economic conditions worsen or

economic growth is slow, which could adversely affect our business, results of operations and financial conditions.

We have been able to reduce our net non-performing advances through recoveries, upgrading of NPAs to “performing”

categories and provisioning. Our net NPA was 9.04% of our net advances as of March 31, 2016 and was 10.62% of

our net advances as of December 31, 2016. Our ability to reduce or contain the level of our gross and net NPAs may

be affected by a number of factors that are beyond our control, such as increased competition, a recession in the

economy, including in respect of specific industries to which we are exposed, decreases in agricultural production,

decline in commodity and food grain prices, adverse fluctuations in interest and exchange rates or adverse changes in

government policies, laws or regulations. In addition, the expansion of our business may also cause the level of our

NPAs to increase. As of December 31, 2016, approximately 63.68% of our gross non-performing assets were

concentrated in the industrial sector. Economic downturn and clean-up of stressed assets by our Bank has led to steep

rise in the volume of the NPAs. Although our loan portfolio contains loans to a wide variety of businesses, adverse

market conditions in the industrial sector could increase our level of NPAs. Future increases in our NPAs may have a

material adverse effect on our business and financial condition.

38

Also, as of December 31, 2016, we did not have any floating provision (provision for NPAs over and above the

required provisions as per RBI prudential norms). The extant guidelines of RBI on the Prudential norms on Income

recognition, Asset classification and Provisioning pertaining to advances advised all commercial banks (excluding

RRBs) that their board of directors should lay down approved policy regarding the level to which the floating

provisions can be created. The floating provisions can be used only for contingencies under extraordinary

circumstances for meeting specific contingencies after obtaining the Board’s approval and with the RBI’s prior

permission. Our Bank has a Board approved policy on floating provision. We may not be able to utilize our floating

provision in future, if any created to meet other contingencies unless we receive RBI’s prior permission. If we further

increase our floating provision, this may affect our future profitability adversely.

2. We may not be able to maintain or grow our CASA ratio, which may result in higher cost of deposits.


particularly in eastern and north eastern regions. As of December 31, 2016, the share of CASA deposits was at 47.75%

of total deposits, out of which saving deposits accounted for 40.15% of total deposits, while current account deposits

accounted for 7.60% of total deposits. Our strategy is to grow our CASA ratio, in order to reduce cost of funds and

improve our core deposits. In order to attract retail customers and increase our CASA deposits, we intend to introduce

new products and promote our products through marketing campaigns. We believe that by leveraging CBS, internet

and mobile banking systems will enable us to increase our customer base, thereby increasing CASA deposits.

However, attracting customer deposits in the Indian market is competitive. The interest rates that we must pay to

attract customer deposits are determined by numerous factors such as the prevailing interest rate structure, competitive

landscape, Indian monetary policy and inflation. However, there is no assurance that we will be successful in growing

our CASA base. If we fail to maintain or grow our CASA ratio, our Bank’s financial condition and cash flows may

be materially and adversely affected.

3. Our Bank had incurred a loss in the fiscal year 2016. In the event our net loss continues to increase, it may

adversely affect our business and financial condition.

We have made net profit/ (loss) of ₹ (1,213.44) crore, ₹ 255.99 crore and ₹ (281.96) crore for the fiscal year ended

March 31, 2014, March 31, 2015 and March 31, 2016, respectively. Further, our net profit has increased by 11.34%

to ₹ 145.94 crore for the period of nine-months ended on December 31, 2016 from ₹ 131.08 crore for the period of

nine months ended on December 31, 2015. Due to sharp increase of NPA level on the back of Asset Quality Review

conducted by RBI and slippages of some bigger corporate accounts, our Bank reported net loss of ₹ 281.96 crores in

the fiscal year 2016 as compared to a profit of ₹ 255.99 crores in fiscal year 2015. Further, the operating profit of our

Bank came down to ₹1,812 crore for fiscal year 2016 from last years' ₹ 2,428 crore largely due to fall in treasury

income and other income components. Despite consecutive rate cut announcements by the RBI, market yields

persisted at an elevated level, which prevented our Bank from booking profit on its treasury portfolio. In the event of

further increase of NPA level, our interest earnings and net profits will be impacted and subsequently, our financial

condition would be adversely affected.

4. Our results of operations depend to a significant extent on net interest income, which in turn is sensitive to

changes in interest rates. Any changes in the interest rate environment that may cause the costs on our interest-

bearing liabilities to increase disproportionately to the income from our interest-earning assets may adversely

impact our business and financial results.

Our results of operations depend to a significant extent on our net interest income. During the fiscal years ended March

31, 2014, March 31, 2015 and March 31, 2016, interest earned represented 89.78%, 85.35% and 87.13%, respectively,

of our operating income, which includes our interest income and other income. For the period of nine months ended

on December 31, 2016 our interest earned represented 78.80% of our operating income. Interest income represents

the excess of interest earned from interest-bearing assets (performing assets and investments) over the interest paid on

customer deposits and borrowings. Interest rates are highly sensitive to many external factors beyond our control,

including growth rates in the economy, inflation, money supply, RBI’s monetary policies, deregulation of the financial

sector in India, domestic and international economic and political conditions and other factors. In addition, an increase

in interest expense relative to interest income may lead to a reduction in our interest income, which could materially

and adversely affect our results of operations.

39

Changes in interest rates could affect the interest rates we charge on our interest-earning assets in a manner different

from the interest rates we pay on our interest-bearing liabilities because of the different maturity periods applying to

our assets and liabilities and also because of the time lag in re-pricing of our assets and liabilities. The difference could

result in an increase in interest expense relative to interest income leading to a reduction in our interest income, which

could materially and adversely affect our results of operations.

If the yield on our interest-earning assets does not increase at the same time or to the same extent as our cost of funds,

or if our cost of funds does not decline at the same time or to the same extent as the decrease in the yield on our

interest-earning assets, our net interest income and net interest margin would be adversely impacted. Any systemic

decline in low-cost funding available to banks in the form of current and savings account deposits would adversely

impact our net interest margin.

Any volatility or increase in interest rates or other market conditions may also adversely affect the rate of growth of

certain sectors of the Indian economy and the value of our marked-to-market fixed-income securities portfolio, which

may adversely impact our business and financial results. Furthermore, in the event of rising interest rates, our

borrowers may not be willing to pay correspondingly higher interest rates on their borrowings and may choose to

repay/pre-pay their loans with us, particularly if they are able to switch to more competitively priced loans offered by

other banks. Our inability to retain customers as a result of rising interest rates may adversely impact our earnings in

future periods.

5. We are regionally concentrated as majority of our branch network is located in eastern and north eastern India

and therefore, dependent on the general economic conditions and activities in these region.

Our business and services are more concentrated in West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur and

Tripura. As of January 31, 2017, out of our 2,021 branches, 1,175 branches are located in eastern India and 358

branches are located in north eastern India, constituting 76% of our total branch network. While our concentration in

the eastern and north eastern regions facilitates our access to low cost fund, it also exposes us to any adverse economic

and/or political circumstances in that region as compared to other public and private sector banks that have diversified

national presence. Although our geographic concentration in eastern and north eastern India is decreasing in recent

years, we remain relatively more exposed to any adverse economic, social and/or political circumstances in those

regions. If there is a sustained downturn in the economies of Eastern and North Eastern India or any disruption,

disturbance or breakdown in the economy of Eastern and North Eastern India, our business, financial result and

operating results could be adversely affected. We may not be able to successfully manage the risks of such an

expansion, which could have a material adverse effect on our business, financial condition, cash flows and results of

operations.

6. Any inability to maintain the minimum capital adequacy requirements under the capital regulation framework

due to change in regulations or lack of access to capital or otherwise could materially and adversely affect our

reputation, results of operations and financial condition.

We are subject to regulations relating to capital adequacy of banks, which determines the minimum amount of capital

we must hold as a percentage of the risk-weighted assets on our portfolio, or capital-to-risk weighted asset ratio. On

July 1, 2015, the RBI issued a master circular on Basel III capital regulations, consolidating all relevant guidelines on

Basel III issued up to June 30, 2015 (together, the “Basel III Guidelines”). The Basel III Guidelines came into effect

on April 1, 2013, and, subject to a series of transitional arrangements to be phased in over a period of time, will be

fully implemented by March 31, 2019. The Basel III Guidelines require, inter alia, improving the quantity, quality

and transparency of Common Equity Tier I capital (“CET – I”), capital conservation buffers, maintenance of a

minimum prescribed leverage ratio on a quarterly basis, and meeting heightened liquidity requirements. As of March

31, 2019, banks are required to maintain a common equity Tier I adequacy ratio of 5.5%, minimum Tier I capital of

7.0%, minimum total capital of 9.0% and a capital conservation buffer of 2.5%. However, the implementation of the

capital conservation buffer commenced from March 31, 2016.

As of December 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.84% with

Tier I capital adequacy ratio of 8.66% and CET I capital adequacy ratio of 8.47%. As of March 31, 2016, our capital

adequacy ratio under the RBI Basel III Capital Regulations was 10.08%. In particular, our Tier I capital adequacy

ratio was 7.93% and our CET I capital adequacy ratio was 7.74%.

40

Although we currently meet the applicable capital adequacy requirements, certain adverse developments including

deterioration in our asset quality, declines in the values of our investments and changes in the minimum capital

adequacy requirements could affect our ability to continue to satisfy the capital adequacy requirements,. Furthermore,

our ability to support and grow our business could be limited by a declining capital adequacy ratio if we are unable to

access or have difficulty accessing the capital markets or have difficulty obtaining capital in any other manner. We

cannot assure you that we will be able to obtain additional capital on commercially reasonable terms in a timely

manner, or at all. If we fail to meet capital adequacy requirements, the RBI may take certain actions, including

restricting our lending and investment activities and the payment of dividends by us. These actions could materially

and adversely affect our reputation, results of operations and financial condition.

7. Our financial performance may be materially and adversely affected by an inability to generate and sustain

non-interest income.

We generated income from distribution of third party products such as insurance, mutual fund products, money

transfer services, merchant acquiring services, pension and tax collection services. We earn fee-based income from

corporate banking and advisory services for structured finance and loan processing fees, and are provided to large and

medium-sized companies. We also earn fee-based income from our foreign exchange and treasury operations business,

management of foreign currency and interest rate exposure of our corporate and business banking customers.

There can be no assurance that we will be able to sustain current levels of income from, or effectively manage the

risks associated with, these businesses in the future. Further, as part of our growth strategy, we have been diversifying

and expanding our product and service offerings to retail customers in order to build a more balanced portfolio. New

initiatives, products and services entail a number of risks and challenges, including risks relating to execution, the

failure to identify new segments, the inability to attract customers and the inability to make competitive offerings. If

we are unable to successfully diversify our products and services while managing the related risks and challenges,

returns on such products and services may be less than anticipated, which may materially and adversely affect our

business, financial condition and results of operations.

8. The value of the collateral provided by our borrowers against advances may decrease or we may experience

delays in enforcing our collateral if borrowers default on their obligations.

As on December 31, 2016, 90.63% of our advances were secured by collateral, including real estate assets, property,

gold ornaments, plant, equipment, inventory, receivables, current assets and pledges or charges on fixed assets, bank

deposits or financial assets such as marketable securities and guarantees provided by our borrowers based on extant

rules. The value of the collateral securing our loans, including, in particular, any property and gold jewellery, may

significantly fluctuate or decline due to factors beyond our control, including those affecting the Indian and global

economy in general. While we ensure that there is a buffer for reduction in value, this may not be sufficient if the

value of the collateral reduces dramatically. This is especially important in cases of advances that are secured by

highly depreciating fixed assets such as vehicles, agricultural implements etc.

In the event our borrowers default on the repayment of loans, we may not be able to realize the full value of the

collateral due to various reasons, including a possible decline in the realizable value of the collateral, defective title or

pledge of spurious items as security, prolonged legal proceedings and fraudulent actions by borrowers, or we may not

be able to foreclose on collateral at all. Further, certain kinds of loans that are advanced by us are not secured by any

assets. In terms of the Banking Regulation Act, 1949, a banking company is not permitted to hold any immovable

property (except as is required for its own use), for any period exceeding seven years, or as may be extended by RBI

for a period not exceeding five years, on a case to case basis. Such restriction may force us to dispose the collateral,

upon foreclosure, without realizing the full value of such collateral.

In India, foreclosure on collateral may be subject to delays and administrative requirements that may result, or be

accompanied by, a decrease in the value of the collateral. Until recently, there were multiple overlapping laws and

adjudicating fora dealing with financial failure and insolvency of companies and individuals in India.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended

(the “SARFAESI Act”), the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s

corporate debt restructuring (“CDR”) mechanism have strengthened the ability of lenders to resolve NPAs by granting

them greater rights to enforce security and recover amounts owed from secured borrowers. In India, foreclosure on

41

collateral generally requires a written petition to an Indian court or tribunal. Although special tribunals have been set

up for expeditious recovery of debts due to banks, any proceedings brought may be subject to delays and administrative

requirements that may result in, or be accompanied by, a decrease in the value of the collateral. In addition, pursuant

to RBI prudential guidelines on restructuring of advances by banks, we may not be allowed to initiate recovery

proceedings against a corporate borrower where the borrower's aggregate total debt is ₹10 crore or more and 60.00%

of the lenders by number and holding at least 75.00% or more of the borrower's debt by value decide to restructure

their advances. In such a situation, we are restricted to a restructuring process only as approved by the majority lenders.

If we own 25.00% or less of the debt of a borrower, we could be forced to agree to an extended restructuring of debt

which may not be in our interests.

A decline in the value of the security could impair our ability to realize the secured assets upon any foreclosure, which

may require us to increase our provision for loan losses. In the event of a default with respect to any of these loans,

the amounts we receive upon sale of the secured assets may be insufficient to recover the outstanding principal and

interest on the loan. If we are required to re-value the assets securing a loan to satisfy the debt during a period of

reduced asset values or to increase our allowance for loan losses, our profitability could be adversely affected, which

could have a material adverse effect on our business, financial condition, results of operations and prospects.

9. We lend to borrowers that are engaged in varied sectors. Deterioration in the performance of any of the

industry sectors where we have significant exposure may adversely impact our business.

Our credit exposure to borrowers is dispersed across various sectors including textiles (viz. cotton and jute),

infrastructure, gems and jewellery, iron and steel, food and food products, chemicals and chemical products,

construction and other industries. Our funded exposure in the Infrastructure sector is the largest component of our

total exposure. As of December 31, 2016, this was ₹ 14,173.80 crore which constituted 20.88% of our total funded

exposure. Typically, the infrastructure sector is susceptible to long gestation periods and are impacted more severely

by economic downturns. Details of credit exposure to the borrowers as on December 31, 2016 are as follows:

Sr. No Sector Amount outstanding as

of December 31, 2016

(₹ in Crore)

% to total

funded exposure

1. Infrastructure 14,173.80 20.88%

2. Basic Metal and Metal Products 4,687.20 6.91%

3. Food Processing 1,675.01 2.47%

4. All Engineering 1,284.12 1.89%

5. Textiles 1,280.86 1.89%

6. Construction 1,168.79 1.72%

7. Chemicals and Chemical Products 1,032.24 1.52%

8. Other Industries 738.70 1.09%

9. Cement and Cement Products 690.35 1.02%

10. Vehicles, Vehicle Parts and Transport

equipment

645.67

0.95%

11. Gems and Jewellery 375.71 0.55%

12. Beverage and tobacco 313.78 0.46%

13. Leather and Leather Products 200.79 0.30%

14. Rubber, Plastic & their Products 196.96 0.29%

15. Petroleum, Coal Products and Nuclear fuels 164.06 0.24%

16. Wood & Wood Products 153.28 0.23%

17. Paper & Paper Products 127.46 0.19%

18. Mining and quarrying (including Coal) 76.84 0.11%

19. Glass and Glassware 18.00 0.03%

Total 29,003.62 42.74%

Any significant deterioration in the performance of a particular sector, including due to regulatory action or policy

announcements by Government or State government authorities, could adversely impact the ability of borrowers in

that industry to service their debt obligations owed to us.

42

Our Bank is also exposed to infrastructure projects which are still under development and are open to risks arising out

of delay in execution, failure of borrowers to execute projects on time, delay in getting approvals from necessary

authorities and breach of contractual obligations by counterparties, all of which may adversely impact the projected

cash flows. There can be no assurance that these projects will perform as anticipated. Risks arising out of a recession

in the economy, a delay in project implementation or commissioning could lead to rise in delinquency rates and in

turn, adversely impact our Bank’s financial performance and results of operations.

10. We are involved in certain legal and other proceedings which, if determined against us, could have a material

adverse impact on our financial condition.

We are currently involved in certain legal and other proceedings in India. The majority of these cases arise in the

normal course of business. These legal proceedings are pending at different levels of adjudication before various

courts, tribunals, statutory and regulatory authorities/ other judicial authorities. For further details of these legal

proceedings, please refer to chapter titled “Legal Proceedings” beginning on page 215.

We can give no assurance that these legal proceedings will be decided in our favour and we may incur significant

expenses and management time in such proceedings and may have to make provisions in our financial statements,

which could increase our expenses and liabilities. If any new developments arise, for example, rulings against us by

the appellate courts or tribunals, we may face losses and may have to make provisions in our financial statements,

which could increase our expenses and our liabilities. If such claims are determined against us, there could be a

material adverse effect on our reputation, business, financial condition and results of operations, which could adversely

affect the trading price of our Equity Shares.

11. We may not be able to obtain, renew or maintain our statutory and regulatory permits and approvals required

to grow or operate our business on time or at all, and may be subject to penalties pursuant to inspection and

supervision by regulatory authorities including RBI and SEBI.

We have to obtain licence from the RBI and various statutory or regulatory provisions require us to comply with

certain terms and conditions for us to continue our banking operations. In the event that we are unable to comply with

any or all of these terms and conditions, or seek waivers or extensions of time for complying with these terms and

conditions, it is possible that the RBI may revoke this license or may place stringent restrictions on our operations.

This may result in the interruption of all or some of our operations and may have a material adverse effect on our

business, financial condition, results and cash flow.

12. The Government will continue to hold a majority interest in our Bank following the Issue and will therefore

be able to determine the outcome of shareholder voting and hence shareholders other than the Government

may not be able to exercise effective control over the Bank.

Under Section 9 of the Banking Acquisition Act, the Government has the power to appoint Directors on our Board.

After the completion of the Issue, the Government will continue to have a controlling interest in our Bank and will

also be able to determine a majority of our Board of Directors. This requirement could result in restrictions in the

equity capital raising efforts of our Bank as the Government may not be able to fund any further investments that

would allow it simultaneously to maintain its stake at a minimum of 51.00% and seek funding from the capital markets.

If our Bank is unable to grow its capital base in step with demand, its business, financial prospects and profitability

may be materially and adversely affected

At times, the Government’s interests may conflict with our interests or those of our other shareholders. Furthermore,

the Banking Acquisition Act provides that no shareholder of the corresponding new bank other than the Government

shall be entitled to exercise voting rights in respect of any shares held by such person in excess of 1% of the total

voting rights of all the shareholders of the corresponding new bank. Therefore, the outcome of most proposals for

corporate action requiring the approval of our shareholders will be controlled by the Government unless and until such

time its shareholding is diluted to below a controlling majority. For further details refer to the section titled

“Regulations and Policies” at page 149.

13. Our contingent liabilities could materially and adversely affect our financial condition and results of

operations.

43

As of March 31, 2016, we had contingent liabilities amounting to ₹ 11,583.91 crores. The table below sets forth the

details of contingent liabilities:

(₹ in crores)

Particulars Fiscal Year 2016

Claims against our Bank not acknowledged as debts 9.02

Liability for partly paid investments 19.07

Liability on account of outstanding forward exchange contracts 5,365.95

Guarantees given on behalf of constituents (net of cash margin) :

a. In India 3,157.91

b. Outside India 1,233.28

c. Bank Guarantee invoked but not paid (in India) 4.64

Acceptances, endorsements and other obligations (net of cash margin) 1,768.67

Other items for which our Bank is contingently liable 25.38

TOTAL 11,583.91

Most of the liabilities have been incurred in the normal course of business. If these contingent liabilities were to fully

materialize or materialize at a level higher than we expect, it may materially and adversely impact our business,

financial conditions, result of operations and prospects. If we are unable to recover payment from our customers in

respect of the commitments that we are called upon to fulfill, our business, financial condition, cash flows, results of

operations and prospects may be materially and adversely impacted.

14. The level of restructured/stressed advances in our portfolio may increase and the failure of such advances to

perform as expected could adversely affect our financial condition and results of operations.

Our standard assets include restructured standard advances. Our standard assets of ₹ 61,941 crore as at March 31,

2016 included restructured standard loans of ₹ 6,780 crore, constituting 10.95% of our standard assets, compared to

our standard assets of ₹ 62,517 crore at March 31, 2015 which included restructured standard loans of ₹ 8,476 crore,

constituting 13.08% of our standard assets, at that date. However, as on December 31, 2016, our standard assets of ₹

5,7021 crore included restructured standard loans of ₹ 5,797 crore, constituting 10.17% of our standard assets. Our

borrowers’ need to restructure their loans which can be attributed to several factors, including any downturn and

tightening of liquidity in the money markets, increased competition arising from economic liberalization in India,

variable industrial growth, the high level of debt in the financing of projects and capital structures of companies in

India and the high interest rates in the Indian economy during the period in which a large number of projects contracted

their borrowings.

Resolution of large borrowal accounts which are facing severe financial difficulties may inter alia require co -

ordinated deep financial restructuring under the SDR/S4A schemes of the RBI, which often involves a substantial

write-down of debt and/or making of large provisions. While the ‘stand still’ clause in asset classification is permitted

in both SDR/S4A process in order to provide reasonable time to lenders to review the processes involved in the

resolution plan, if the account fails to get mandate and resolution within the time frame stipulated under the guidelines

relating to SDR/S4A, then the asset classification will be as per the extant asset classification norms, assuming there

was no such “stand still”.

The failure of these borrowers to perform as expected or a significant increase in the level of restructured loans in our

portfolio could materially and adversely affect our business, results of operations and financial condition. Further,

RBI has recently increased provisioning norms and any further increase may adversely affect our business, results of

operations and financial condition.

15. We are exposed to fluctuation in foreign exchange rates. Volatility in foreign exchange rates could adversely

affect our future financial performance and the market price of our Equity Shares.

As a financial organisation with operations in various countries, our Bank is exposed to exchange rate risk. Our Bank

complies with regulatory limits upon its unhedged foreign currency exposure by making foreign currency loans on

terms that are generally similar to its foreign currency borrowings and thereby transferring the foreign exchange risk

44

to the borrower or through active use of cross-currency swaps and forwards to generally match the currencies of its

assets and liabilities. However, our Bank is exposed to fluctuations in foreign currency rates for its unhedged exposure.

Adverse movements in foreign exchange rates may also impact adversely the Bank’s borrowers, which may in turn

impact the quality of its exposure to these borrowers. Volatility in foreign exchange rates could adversely affect our

Bank’s business, future financial performance and the trading price of the Equity Shares.

16. Our risk management policies and procedures may not adequately address unanticipated risks. Inability to

develop and implement effective risk management policies may adversely affect our business, financial

condition and results of operations.

We have devoted significant resources to develop our risk management policies and procedures and expect to continue

to do so in the future. Despite this, our policies and procedures to identify, monitor and manage risks may not be fully

effective in capturing unexpected events in future. Some of our methods of managing risk are based upon the use of

observed historical market behavior. As a result, these methods may not accurately predict future risk exposures which

could be significantly greater than indicated by historical measures. Management of operations, legal and regulatory

risk requires, among other things, policies and procedures to properly record and verify a large number of transactions

and events, and these policies and procedures may not be fully effective. As we seek to expand the scope of our

operations, we also face the risk that we may be unable to develop risk management policies and procedures that are

properly designed for those new business areas or to manage the risks associated with the growth of our existing

businesses. Implementation and monitoring may prove particularly challenging with respect to businesses that we plan

on developing. Inability to develop and implement effective risk management procedures may adversely affect our

business, prospects, financial condition and results of operation.

Our success will also depend, in part, on our ability to respond to new technological advances and emerging banking,

capital market and other financial services industry standards and practices on a cost-effective and timely basis. The

development and implementation of such technology entails significant technical and business risks. There can be no

assurance that we will successfully implement new technologies or adapt our transaction processing systems to

customer requirements or improving market standards.

17. Non Compliance with RBI inspection/observations may have a material adverse effect on our business,

financial condition or results of operation.

We are subject to an annual financial inspection (“AFI”) by RBI under the Banking Regulation Act. In the past certain

observations were made by RBI during the AFI regarding our business and operations in its AFI reports. In these

reports, the RBI has identified certain deficiencies in the operations of our Bank in, inter-alia, the following areas:

credit appraisal practices;

priority sector lending;

monitoring and detection of frauds;

KYC compliance; and

Adherence to internal policy, procedure and limits.

While we attempt to be in compliance with all regulatory provisions applicable to us, in the event we are not able to

comply with the observations made by the RBI, we could be subject to penalties and restrictions which may be

imposed by the RBI. Imposition of any penalty or restriction by RBI may have a material adverse effect on our

reputation, financial condition and results of operations.

The RBI conducts annual on-site inspections on all matters addressing our banking operations and relating to, among

other things, our Bank’s portfolio, risk management systems, credit concentration risk, counterparty credit risk,

internal controls, credit allocation and regulatory compliance. During the course of finalizing this inspection, the RBI

inspection team shares its findings and recommendations with us and provides us an opportunity to provide

clarifications, additional information and, where necessary, justification for a different position, if any, than that

observed by the RBI. The RBI incorporates such findings in its final inspection report and, upon final determination

by the RBI of the inspection results, we are required to take actions specified therein by the RBI to its satisfaction,

45

including, without limitation, requiring us to make provisions, impose internal limits on lending to certain sectors and

tighten controls and compliance measures and restricting our lending and investment activities.

Any significant deficiencies identified by the RBI that we are unable to rectify to the RBI’s satisfaction could lead to

sanctions and penalties imposed by the RBI, as well as expose us to increased risks. Furthermore, the RBI is currently

in the process of implementing risk-based supervision in a phased manner.

18. We may face labor disruptions that could interfere with our operations and we may be unable to manage our

employee costs and expenses.

We are exposed to the risk of strikes and other industrial actions by our employees as well as trade unions that our

employees are part of. As on January 31, 2017, out of our 16,221 employees, 8,426 workmen were members of trade

unions. Majority of our employees are members of United Bank of India Employee Association, United Bank of India

Employees Union, United Bank of India Sramik Karmchari Samiti, and United Bank of India Employee Congress.

Our employees who are members of either of the organisations as above, participated in 3, 3 and 4 nation-wide strikes

in fiscal year 2015, fiscal year 2016 and fiscal year 2017(up to February 28, 2017), respectively.

We cannot guarantee that our employees will not undertake or participate in strikes, work stoppage or other industrial

action in the future. Any such employee unrest events could disrupt our operations, possibly for a significant period

of time and other benefits or otherwise have a material adverse effect on our business, financial condition or results

of operation.

Further, there are several cases filed against us by our former or current employees before various courts and tribunals,

in relation to claims for allegedly wrongful termination of service, reinstatement along with back wages, promotions,

transfers, claims pertaining to terminal benefits and disciplinary actions taken against them. If any of the cases pending

are decided against us, we may be subject to payment of back-wages, compensations or may even be required to re-

instate the employees, which could increase our personnel retention and administrative costs and adversely affect our

financial condition and results of operation.

19. Our business is highly dependent on our information technology systems, which require significant investment

for regular maintenance, upgrades and improvements. Any failure to improve or upgrade our information

technology systems could materially and adversely impact our business.

Our information technology systems are a critical part of our business that help us manage, among other things, our

risk management, regulatory compliance, deposit servicing and loan origination functions, as well as our increasing

portfolio of products and services in all our business segments. We depend on our computer systems to process a large

number of transactions on an accurate and timely basis, and to store and process substantially all of our business and

operating data. We seek to protect our computer systems and network infrastructure from physical break-ins as well

as security breaches and other disruptive problems. These concerns could intensify with our increased use of

technology, internet based resources and advanced internet banking platform.

Computer break-ins and power disruptions could affect the security of information stored in and transmitted through

these computer systems and network infrastructure. Our Bank’s computer systems and network infrastructure have

achieved 100% coverage of its branches under Core Banking Solution (“CBS”) platform. Certain parts of the system

may not be properly protected from security breaches and other attacks. Our Bank employs security systems including

firewalls and password encryption, designed to minimise the risk of security breaches.

Although our Bank intends to continue to implement security technology and establish operational procedures to

prevent break-ins, damage and failures, there can be no assurance that these security measures will be adequate or

successful or be sufficient to prevent frauds, break-ins, damage and failure. A failure of security measures could have

a material adverse effect on our Bank’s business, its future financial performance and the trading price of the Equity

Shares. We may also be subject to disruptions of our operating systems, arising from events that are wholly or partially

beyond our control (including, for example, computer viruses or electrical or telecommunication outages), which may

give rise to deterioration in customer service and to loss or liability to us.

Further, we offer internet banking, mobile banking and many other technology based products and services to our

customers. We are therefore directly and indirectly exposed to various cyber-threats such as phishing and data theft.

46

There is also the risk of our customers blaming us and terminating their accounts with us for a cyber-incident that

might have occurred on their own system or with that of an unrelated third party. The RBI has, on June 2, 2016, issued

a framework for cyber-security for banks, prescribing measures to be adopted by banks to address security risks

including putting in place a cyber-security policy and requiring banks to report all unusual cyber-security incidents to

the RBI. We strive to comply with the guidelines issued by RBI or any other regulatory body from time to time.

We need to regularly upgrade and improve our information technology systems, including our software, back-up

systems and disaster recovery operations, at substantial cost so that we remain competitive. Our success will also

depend, in part, on our ability to respond to new technological advances and emerging banking and other financial

services industry standards and practices on a cost-effective and timely basis. The development and implementation

of such technology entails significant technical and business risks. The high cost to upgrade and improve our

information technology systems, whether to comply with changes in regulatory requirements, to remain competitive

or otherwise, could be prohibitive due to the relatively small size of our Bank. There can be no assurance that we will

successfully implement new technologies or adapt to our transaction processing systems to customer requirements or

improving market standards. Any failure to improve or upgrade our information technology systems effectively or in

a timely manner could materially and adversely affect our competitiveness, financial condition and results of

operations.

20. If we do not satisfy the eligibility criteria for the opening of new branches in Tier 1 centres, the growth of our

business would be adversely affected.

The opening of new branches and shifting of existing branches of banks is governed by the provisions of the Banking

Regulation Act. Scheduled commercial banks are permitted to open branches in Tier 2 to Tier 6 centres without

permission from the RBI, subject to reporting requirements. Further, pursuant to the RBI circulars dated September

19, 2013 and October 21, 2013, domestic scheduled commercial banks are permitted to open branches in Tier 1 centres

without permission from the RBI, subject to the following conditions being satisfied:

1. At least 25.0% of the total number of branches opened during a financial year (excluding entitlement for

branches in Tier 1 centres given by way of incentive), must be opened in unbanked rural (Tier 5 and Tier 6)

centres (i.e. centres which do not have a brick and mortar structure of any scheduled commercial banks for

customer based banking transactions); and

2. The total number of branches opened in Tier 1 centres during the financial year (excluding entitlement for

branches in Tier 1 centres given by way of incentive) cannot exceed to total number of branches opened in

Tier 2 to Tier 6 centres and all centres in the North Eastern States and Sikkim.

As of January 31, 2017, we had 838 branches in Tier 1 centres and 1,183 branches in Tier 2 to Tier 6 centres. If we

do not satisfy the eligibility criteria for the opening of new branches in Tier 1 centres, the growth of our business

would be adversely affected.

21. Our banking business entails various operational risks, including unidentified or unanticipated risks

associated with the financial industry which, if materialised, may have an adverse impact on our business.

The proper functioning of our financial control, risk management, accounting or other data collection and processing

systems, together with the communication networks connecting our various branches and offices is critical to our

operations and ability to compete effectively. We are exposed to many types of operational risks, including:

fraud or other misconduct by employees or outsiders;

unauthorised transactions by employees and third parties (including violation of regulations for prevention

of corrupt practices, and other regulations governing our business activities);

misreporting or non-reporting with respect to statutory, legal or regulatory reporting and disclosure

obligations; and

operational errors, including clerical or record keeping errors or errors resulting from faulty computer or

telecommunications systems.

47

Our growth exposes us to additional operational and control risks. The increasing size of our operations, which use

automated control and recording systems as well as manual checks and recordkeeping, exposes us to the risk of errors

in control and record keeping. Given our high volume of transactions, certain errors may be repeated or compounded

before they are discovered and successfully rectified. In addition, our dependence upon automated systems to record

and process transactions may further increase the risk that technical system flaws or employee tampering or

manipulation of those systems will result in losses that are difficult to detect. As a result, we face the risk that the

design of our controls and procedures prove inadequate, or are circumvented, thereby causing delays in detection or

errors in information. We also outsource some functions, like collections, to other agencies. We are therefore further

exposed to the risk that external vendors may be unable to fulfill their contractual obligations to us (or will be subject

to the same risk of fraud or operational errors by their respective employees as we are), and to the risk that our (or our

vendors’) business continuity and data security systems prove not to be sufficiently adequate.

Although we maintain a system of controls designed to keep operational risk at appropriate levels, there can be no

assurance that we will not suffer losses from operational risks in the future that may be material in amount, and our

reputation could be adversely affected by the occurrence of any such events involving our employees, customers or

third parties.

22. Any failure or material weakness of our internal control system or any material damages caused by

manifestation of any operational risks which we are subject to could adversely affect our reputation and

profitability.

We are responsible for establishing and maintaining adequate internal measures commensurate with the size of our

Bank and complexity of operations. Our Bank’s internal inspection/concurrent audit functions are equipped to make

an independent and objective evaluation of the adequacy and effectiveness of internal controls on an ongoing basis to

ensure that business units adhere to compliance requirements and internal circular guidelines.

While we continue to periodically test and update, as necessary, our internal control systems, we are exposed to

operational risks arising from inadequacy or failure of internal processes or systems, and our actions may not be

sufficient to result in an effective internal control environment. Given our high volume of transactions, errors may be

repeated or compounded before they are discovered and rectified. Our management information systems and internal

control procedures that are designed to monitor our operations and overall compliance may not be able to identify

non-compliance and/or suspicious transactions in a timely manner or at all. Where internal control weaknesses are

identified, our actions may not be sufficient to fully correct such internal control weakness. In addition, certain banking

processes are carried out manually, which may increase the risk that human error, tampering or manipulation will

result in losses that may be difficult to detect. As a result, we may suffer monetary losses.

In the ordinary course of our banking business as well, we experience numerous frauds which are committed against

our Bank, by either the employees of our Bank, our customers or third parties. While our Bank is required to report to

the RBI each instance of frauds committed equal to or above ₹ 0.01 Crore, in the prescribed format (Form FMR-1),

we also undertake internal investigations and departmental inquiries, as well as initiate legal action against the

responsible parties in certain cases. Despite such actions and insurance coverage, such frauds may not be adequately

covered by our insurance and the costs incurred to deal with such frauds and legal proceedings initiated may be

significant, thereby adversely affecting our profitability and results of operations. Such instances may also adversely

affect our reputation. For the nine months ended December 31, 2016, we had total identified fraud cases amounting

to ₹ 1,256.40 crores.

23. We may be subject to volatility in income from our treasury operations that could materially and adversely

impact our financial results.

We derived ₹ 3,280 crores, ₹ 4,314 crores, ₹ 3,999 crores and ₹ 3,805 crores in the fiscal years ended March 31, 2014,

March 31, 2015, March 31, 2016 and nine months period ended December 31, 2016, respectively, from interest income

on investments, profit on sale of investments (net) and profit on exchange transactions (net) amounted to 27.78%,

36.17%, 35.07% and 43.24% of our total income in the fiscal years ended March 31, 2014, March 31, 2015, March

31, 2016 and nine months period ended December 31, 2016, respectively. Our income from treasury operations is

sensitive to changes in government policies, interest rates, exchange rates, equity prices and other factors. Though our

income from trading activities of our treasury operations has been growing over the last three years, there is no

guarantee that, in the future, our Bank will not experience volatility in our income from treasury operations. Our

48

treasury operations are vulnerable to changes in interest rates and exchange rates as well as other factors, all of which

are trading risks that are faced by us. Any decrease in income from our treasury operations could adversely affect our

business if we are unable to offset the same by increasing returns on our loan assets. Further, any significant or

sustained decline in income generated from treasury operations resulting from market volatility may adversely impact

our Bank’s financial performance and the market price of the Equity Shares.

24. In the past, penalties have been imposed against us by certain regulatory authorities in relation to certain non-

compliances.

Penalties have been levied against us in the past for non-compliance with the regulations applicable to us. SEBI vide

its order dated September 10, 2015, imposed a penalty of ₹ 0.02 Crore on our Bank stating that our Bank has violated

ILDS Regulations and did not disseminate all information and reports on debt securities including compliance reports

filed by the issuers and the Debenture Trustees regarding the debt securities to the investors and the general public by

placing them on their websites. Further our Bank did not comply with certain provisions of the SEBI (Debenture

Trustee) Regulations, 1993.

Pursuant to the press release dated July 15, 2013, we, along with 21 other commercial banks, were subjected to a

penalty by RBI for violation its instruction inter alia on KYC norms and anti-money laundering guidelines. Further,

Financial Intelligence Unit – India, Ministry of Finance (“FIU”), vide its order dated April 29, 2014 imposed a penalty

of ₹ 2.50 crores for non – maintenance and non – reporting of records of certain reportable transactions to the Director,

FIU relating to specific cash transactions, suspicious transactions, counterfeit currency transactions and non-profit

organization transaction reports thereby not complying with the provisions of PMLA and the rules made thereunder.

Further, RBI also levied penalty of ₹ 0.01 Crore on our Bank for default in maintaining required percentage of CRR

on daily basis on one day on February 28, 2014 during the fortnight ended on March 7, 2014. Any additional failure

to meet other RBI or SEBI requirements could materially and adversely affect our reputation, business, financial

condition, results of operations, pending applications or requests with RBI and our ability to obtain the regulatory

permits and approvals required to expand our business. If similar penalties are levied against us in the future, it could

have an adverse effect on our business and results of operations.

25. We depend on the accuracy and completeness of information provided to us about our customers and

counterparties which if inaccurate and incomplete may have a negative impact on our financial condition.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we base our

decisions on information furnished to us by or on behalf of customers and counterparties, including financial

statements and other financial information. We may also rely on certain representations as to the accuracy and

completeness of that information and, with respect to financial statements, on reports of independent auditors. For

example, in deciding whether to extend credit, we may assume that a customer’s audited financial statements conform

with generally accepted accounting principles and present fairly, in all material respects, the financial condition, results

of operations and cash flows of the customer. For example, in deciding whether to extend credit, our Bank may assume

that a customer’s audited financial statements conform to generally accepted accounting principles and present fairly,

in all material respects, the financial condition, results of operations and cash flows of the customer.

Our financial condition and results of operations could be negatively affected by relying on financial statements that

do not comply with generally accepted accounting principles or other information that is materially misleading. In

addition, unlike several developed economies, a nationwide credit bureau has also become operational in India. This

may affect the quality of information available to us about the credit history of our borrowers, especially individuals

and small businesses. As a result, our ability to effectively manage our credit risk may be adversely affected.

26. Majority of our branches are located on premises taken by us on lease or on leave and license basis. We may

not be able to renew these agreements for our branches upon acceptable terms or at all which could have an

adverse effect on our business and results of operations.

Majority of our branches are located on premises taken by us on lease or leave and licence basis. As of January 31,

2017, 69 of our branches/offices are situated on properties owned by our Bank and 1,992 branches/offices are under

lease. In case of non-renewal of our leases for our existing branches, we will be forced to procure alternative space

for our existing branches. Although we procure space that satisfies the safety, operational and financial criteria for our

branches, we cannot assure you that we will be able to identify such space at commercially reasonable terms or at all.

49

Failure to identify such space can adversely affect our financial condition and results of operation. Additionally, we

cannot assure you that all the lease agreements for our branches are adequately stamped as per the requirements of

applicable laws. Any such irregularity may result in our inability to enforce our rights under such lease agreements,

which may disrupt our operations and adversely affect our business, financial condition and result of operations.

Further, our ATMs are primarily located on leased premises. Any failure to renew lease agreements for these premises

on terms and conditions favourable to our Bank may require it to shift the concerned ATMs to new premises. This

might affect our business operations.

27. Banking is a heavily regulated industry and material changes in the regulations which govern our Bank could

cause its business to suffer.

Banks in India are subject to detailed regulation and supervision by the RBI. In addition, banks are generally subject

to changes in Indian law, as well as to changes in regulations, government policies and accounting principles. The

laws and regulations governing the banking sector, including those governing the products and services that our Bank

provide or proposes to provide, such as asset management business, or derivatives and hedging products and services,

could change in the future. Any such changes may adversely affect our Bank’s business, future financial performance

and the trading price of the Equity Shares by, for example, requiring a restructuring of our Bank’s activities or

increasing its operating costs. See “Regulations and Policies”.

The lending norms of the RBI require every scheduled commercial bank to extend 40.0% of its net bank credit to

certain eligible sectors, such as agriculture, small-scale industries and individual housing finance up to ₹ 25 lacs (which

are categorised as “priority sectors”). Economic difficulties are likely to affect those borrowers in priority sectors more

severely. As of December 31, 2016 and March 31, 2016, our Bank’s lending to priority sectors accounted for 38.42%

and 41.16%, respectively, of adjusted net bank credit, with 15.25 % and 17.40%, respectively, of net credit going to

the agricultural sector.

Our business could be directly affected by any changes in laws, regulations and policies for banks. For example, in

November, 2016, in terms of Gazette Notification No 2652 dated November 8, 2016 issued by Government of India,

₹ 500 and ₹ 1,000 denominations of old bank notes of the then existing series issued by RBI ceased to be legal tender

to the extent specified in the notification. Bank branches were designated to be the primary agencies through which

the members of public and other entities were to exchange the Specified Bank Notes (SBN) or depositing the same

for crediting to their accounts, up to and including the December 30, 2016. Any change in the laws and regulations

governing the banking sector in India may materially and adversely affect our business, financial condition and results

of operations.

28. We may be unable to detect money laundering and other illegal activities which may adversely affect our

business, financial condition and results of operations and expose us to additional liability and harm our

business and reputation. We are required to comply with applicable AML and anti-terrorism laws, including Know Your Customer (“KYC”)

policies and procedures and to report suspicious and large transactions to the applicable regulatory authorities in

different jurisdictions. While we believe that we have adopted policies and procedures aimed at detecting and

preventing the use of our banking networks for money laundering activities and by terrorists and terrorist related

organizations and individuals generally, such policies and procedures may not completely eliminate instances where

our products or services may be used by other parties to engage in money-laundering and other illegal or improper

activities due to, in part, the short history of these policies and procedures. The adoption of anti-money laundering

and compliance procedures in all our branches, may not be effective.

Further, there can be no assurance that attempts to launder money using us as a vehicle will not be made and that such

measures will be fully successful in preventing the violation of AML and KYC procedures and consequently the

adverse effects such violations would have to our business, results of operations and financial condition.

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29. Any downgrade in our credit rating could materially and adversely affect our business, financial condition and

results of operations.

Our debt is rated by various agencies. We obtain funds from the issuance of non-convertible subordinated debt

securities, which qualify as capital under RBI guidelines for assessing capital adequacy. Details of Tier II Bond are as

follows:

Sr. No. Nomenclature of the Bond Credit Rating

1. Lower Tier-II (Series-V) A+ by CARE and A+ by ICRA

2. Upper Tier-II (Series-I) Basel I A- by CARE and A- by ICRA

3. Lower Tier-II (Series-VI) Basel I A+ by CARE and A+ by ICRA

4. Lower Tier –II (Series–VII) Basel II A+ by CARE and AA- by CRISIL

5. IPDI-Tier I (Series I) Basel II A- by CARE and A by CRISIL Ltd.

6. Lower Tier-II (Series-VIII) Basel III Compliant AA- by Brickwork and AA- by CRISIL

7. AT-1 Basel III Compliant BBB by India Rating

Any downgrade in our credit ratings may negatively affect our ability to obtain funds and increase our financing costs

by increasing the interest rates of our outstanding debt or the interest rates at which we are able to refinance existing

debt or incur new debt, which may materially and adversely affect our business, financial condition and results of

operations.

30. New product/services offered by us may not be successful which may stagnate our growth and have a material

adverse effect on our business, financial condition or results of operations. As part of our growth strategy, we have been diversifying and expanding by introducing our new products and services

to explore new business opportunities on a regular basis. If we are unable to successfully diversify our products and

services while managing the associated risks and challenges, our returns on such products and services may be less

than anticipated, which may materially and adversely affect our liquidity, business, prospects, financial condition, and

results of operations. We cannot assure you that all our new products/services will gain customer acceptance and this

may result in our incurring pre-operative expenses and launch costs. For further details, see “Business” beginning on

page 122.

31. Our success depends on our management team and skilled personnel and our inability to attract and retain

such professionals may materially and adversely impact our business.

Our business is growing more complex as we expand our operations and our product lines. Our growth and continued

success depends in part on the continued service of key members of our management team and our ability to continue

to attract, train, motivate and retain professionals is a key element of our strategy and we believe it to be a significant

source of competitive advantage.

The successful implementation of our strategy depends on the availability of skilled manpower, both at our head office

and at each of our other offices and international locations and on our ability to attract, train and retain young

professionals. As we generally pay remuneration that is lower than those paid by private sector banks, it could

adversely affect our ability to hire and retain qualified employees. If we or one of our business units or other functions

fail to staff their operations appropriately, or lose one or more of our key senior executives or qualified young

professionals and fail to replace them in a satisfactory and timely manner, our business, future financial performance

and operations, including our control and operational risks, may be adversely affected.

32. A portion of our advances are unsecured. If we are unable to recover such advances in a timely manner or at

all, our financial condition and results of operations may be adversely affected.

As of March 31, 2016 and December 31, 2016, 8.79% (i.e. ₹ 6,280.88 crore) and 8.43% (i.e. ₹ 5,721.82 crore),

respectively, of our net advances were unsecured.

While we have been selective in our lending policies and strive to satisfy ourselves with the credit worthiness and

repayment capacities of our customers, there can be no assurance that we will be able to recover the interest and

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principal advanced by us in a timely manner. Any failure to recover the unsecured advances given to our customers

would expose us to a potential loss, which could adversely affect our financial condition and results of operations.

33. If we fail to effectively manage our growth, it may adversely impact our business.

As of March 31, 2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001,

2,004 and 2,011, respectively and it was further increased to 2,021 as of January 31, 2017. Our total number of ATMs

has also increased from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016,

and further was increased to 2,200 as of January 31, 2017. Our total assets have grown from ₹ 123,027.57 crore as of

March 31, 2015 to ₹ 1,29,431.75 as of March 31, 2016 and further increase to ₹ 1,41,026.21 Crore as of December

31, 2016.

In line with our business strategy, we intend to deepen our presence in pan India. Working toward this goal, we plan

to, and have received approval from our Board to open 276 new branches during the fiscal year 2018 - 2019, which

will further increase our branch network. We are in the process to file an application with RBI for obtaining its

approval licence for opening of 276 new branches.

Our ability to effectively manage our growth depends primarily upon our ability to manage key issues, such as

selecting and retaining skilled manpower, establishing additional branches, achieving cost efficiencies, maintaining

an effective technology platform that can be continually upgraded, developing profitable products and services to cater

to the needs of our existing and potential customers, improving our risk management systems, developing a knowledge

base to face emerging challenges. Failure to effectively manage our expansion may lead to increased costs and reduced

profitability and may adversely affect our growth prospects. There can be no assurance that we will be able to achieve

our business strategy of expanding into existing or new territories and expanding our services.

34. We are subject to restrictions on payments of dividends under Indian law and may not be able to pay dividends

without writing off capitalized expenses.

We have not paid dividend in last three preceding years and there can be no assurance that we will pay dividends in

the future and, if we do, as to the level of such future dividends. If we were to raise capital in the future, the payment

of any dividends would be after payment of interest on such capital. The payment of dividend is governed by

Government of India and RBI guidelines and in accordance with dividend policy framed by the Board. We have

dividend policy named as the United Bank of India Dividend Distribution Policy being framed per Securities and

Exchange Board of India’s Notification No. SEBI/LAD-NRO/GN/2016-17/008 dated July 8, 2016. The declaration,

payment and amount of any future dividends will depend upon, among other factors, our earnings, financial position,

cash requirements, terms and conditions of our indebtedness, capital expenditures and availability of profits, as well

as the provisions of relevant laws and regulations in India from time to time. RBI prescribed maximum permissible

range of dividend payout ratio based on the level of capital adequacy ratio and net NPA ratio. Furthermore, taxes

applicable to dividend payments may be subject to change from time to time and are beyond our Bank’s control.

35. The regional rural banks sponsored by us may have operations in a few locations which may be common to

those branches where we have our branches resulting in conflict of interest which may adversely affect our

revenues and results of operations in those places.

We have sponsored four regional rural banks in the state of West Bengal, Assam, Tripura and Manipur. The Regional

Rural Banks are as follows: (i) Bangiya Gramin Vikash Bank; (ii) Assam Gramin Vikash Bank; (iii) Tripura Gramin

Bank; and (iv) Manipur Rural Bank. The regional rural banks may compete with us at a few locations where we also

have our branches; this may result in conflict of interest and may adversely affect our revenues and results of

operations.

36. Any further issuance of Equity Shares to satisfy our capital needs may dilute your shareholding and adversely

affect the trading price of the Equity Shares.

We may need to raise additional capital from time to time, depending on our business requirements. We may not be

able to raise such additional capital at the time it is needed or on terms and conditions favorable to us or to the existing

shareholders. Further, any issuance of Equity Shares by us may lead to dilution of the shareholding in our Bank thereby

adversely affecting the trading price of our Equity Shares and our ability to raise capital through an issue of our

52

securities. In addition, any perception by investors that such issuances or sales might occur could also affect the trading

price of our Equity Shares. Additionally the disposal, pledge or encumbrance of Equity Shares by any of our major

shareholders, or the perception that such transactions may occur may affect the trading price of the Equity Shares. We

are unable to assure you that we will not issue Equity Shares or that such shareholders will not dispose of, pledge or

encumber their Equity Shares in the future.

37. Our insurance coverage may not adequately protect us against all losses. To the extent that we suffer loss or

damage which is not covered by insurance or exceeds our insurance coverage our financial condition and

result of operations could be adversely affected.

Our Bank has obtained insurance coverage in respect of certain risks. We maintain various insurance policies to insure

our assets including buildings, furniture, office machinery, electrical fittings, ATMs, etc. In addition, we maintain

Group Accident Policy to insure our permanent employees, Third Party Insurance to insure persons other than our

staff and Bankers’ Indemnity Policy to insure cash holding, cash in transit and cash at ATM. While we believe that

the insurance coverage we maintain would reasonably be adequate to cover all normal risks associated with the

operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will

be honoured fully, in part or on time, nor have we taken out sufficient insurance to cover all material losses. In addition,

there can be no assurance that the coverage will be available in sufficient amounts to cover one or more large claims.

To the extent that we suffer loss or damage for which we do not obtain or maintain insurance or exceeds our insurance

coverage, the loss would have to be borne by us and our results of operations and financial performance could be

adversely affected.

38. If our existing customers and targeted customers are not receptive to any changes to our brand identity or

promotional activities, our business and results of operations could be adversely affected.

To increase our business we intend to further strengthen our brand which may include changes to our brand identity.

Promoting and positioning our brand will depend largely on the success of our marketing efforts and our ability to

provide high quality services. Brand promotion activities may not yield increased revenues, and even if they do, any

increased revenues may not offset the expenses we incur in building our brand. Further, our existing customers and

targeted customers may not be receptive of our new brand. If we fail to promote and maintain our brand, our business,

financial condition and results of operations could be adversely affected.

39. Any future issuance of Equity Shares may dilute your shareholding, and sales of the Equity Shares by our

major shareholders may adversely affect the trading price of our Equity Shares.

Any future equity issuances by our Bank, post this Issue may lead to the dilution of your shareholding in our Bank. In

addition, any sales of substantial amounts of the Equity Shares in the public market after the completion of this Issue,

including by our major shareholders, or the perception that such issuance or sales may occur could adversely affect

the trading price of the Equity Shares and could significantly impair our future ability to raise capital through offerings

of the Equity Shares. We cannot predict the effect, if any, market sales of the Equity Shares held by the major

shareholders of our Bank or the availability of these Equity Shares for future sale will have on the market price of our

Equity Shares.

External Risk Factors

40. All of our revenue is derived from business in India, and a decline in economic growth in India could adversely

affect our business.

We derive all of our revenue from our operations in India and so the performance and the growth of our business is

dependent on the performance of the Indian economy. In the past, Indian economy has been affected by global

economic uncertainties and liquidity crisis, domestic policy and political environment, volatility in interest rates,

currency exchange rates, commodity and electricity prices, adverse conditions affecting agriculture, rising inflation

rates and various other factors. GDP growth in the fiscal year 2016 increased to 7.6% from 7.2% in the fiscal year

2015. The World Bank has estimated the growth rate for the fiscal year 2017 will be in the region of 7.8%.

Risk management initiatives by banks in challenging economic circumstances could affect the availability of funds in

the future or the withdrawal of our existing credit facilities. The Indian economy is undergoing many changes and it

53

is difficult to predict the impact of certain fundamental economic changes on our business. Conditions outside India,

such as a slowdown or recession in the economic growth of other major countries, especially the United States, have

an impact on the growth of the Indian economy. Additionally, an increase in trade deficit, a downgrading in India’s

sovereign debt rating or a decline in India’s foreign exchange reserves could negatively affect interest rates and

liquidity, which could adversely affect the Indian economy and our business.

41. We face intense competition from banks and financial institutions that are much larger than we are and have

an established presence all over India. If we are unable to effectively respond to competitive pressures it may

adversely affect our business and growth.

We compete with public and private sector Indian commercial banks as well as foreign commercial banks. Some of

our competitors are large institutions, and may have much larger customer and deposit bases, larger branch networks

and more capital than us. Some of our competitors may be better positioned to take advantage of market opportunities

than us. We face competition in some or all of our products and services from Indian and foreign commercial banks,

NBFCs, mutual funds and other entities operating in the Indian financial sector. In particular, private banks in India

may have operational advantages in implementing new technologies, rationalising branches and recruiting employees

through incentive-based compensation.

Liberalisation of the Indian financial sector could also lead to a greater presence or new entries of Indian and foreign

banks offering a wider range of products and services, which could adversely affect our competitive environment. In

this respect, the RBI has liberalized its licensing regulations and intends to issue licenses on an on-going basis, subject

to the RBI’s qualification criteria. In 2014, the RBI has granted licenses to two applicants to set up new full scale

universal banks. On February 22, 2013, the RBI issued Guidelines for Licencing New Banks in the Private Sector,

which spells out a comprehensive framework for granting licences to increase the number of banks. RBI has also

issued final guidelines for newer category of banks: small finance banks and payments banks. In 2015, the RBI granted

“in-principle” approval to 10 applicants for a small finance bank licence and 11 applicants for a payment bank licence.

The RBI has also released guidelines with respect to a continuous licensing policy for universal banks in August,

2016.

We also compete with foreign banks with operations in India. These competitors include a number of large

multinational banks and financial institutions. In November 2013, the RBI released a framework for the setting up of

wholly owned subsidiaries in India by foreign banks. The framework encourages foreign banks to establish a presence

in India by granting rights similar to those received by Indian banks, subject to certain restrictions and safeguards.

Under the current framework, wholly-owned subsidiaries of foreign banks are allowed to raise Rupee resources

through issue of non-equity capital instruments. Further, wholly-owned subsidiaries of foreign banks may be allowed

to open branches in Tier 1 to Tier 6 centres (except at a few locations considered sensitive on security considerations)

without having the need for prior permission from RBI in each case, subject to certain reporting requirements. The

guidelines may result in increased competition from foreign banks.

Increased competitive pressure may have an adverse impact on our earnings, our future financial performance and the

market price of the Equity Shares. We may face attrition and difficulties in hiring at senior management and other

levels due to competition from existing Indian and foreign banks, as well as new banks entering the market. Our future

success will depend in large part on our ability to respond in an effective and timely manner and our ability to compete

effectively.

42. The proposed new taxation system could adversely affect our business and the price of the shares.

The Government has proposed two major reforms in Indian tax laws, namely the goods and services tax (“GST”) and

provisions relating to GAAR. The Government of India has proposed a comprehensive GST regime that will combine

taxes and levies by the Central and State Governments into a unified rate structure. In this regard, the Constitution

(101 Amendment) Act 2016, which received Presidential assent on September 8, 2016, enables the Government of

India and state governments to introduce GST. While the Government of India and certain state governments have

announced that all committed incentives will be protected following the implementation of the GST, given the limited

availability of information in the public domain concerning the GST, we cannot provide you with any assurance as to

this or any other aspect of the tax regime following implementation of the GST. The implementation of this

rationalized tax structure may be affected by any disagreement between certain state governments, which may create

54

uncertainty. Any future increases or amendments may affect the overall tax efficiency of companies operating in India

and may result in significant additional taxes becoming payable.

With regard to GAAR, the provisions have been introduced in the Finance Act, 2012 to come into effect from April

1, 2017. If GAAR provisions are invoked, then the tax authorities have wide powers, including denial of tax benefit.

As the taxation system is intended to undergo the said overhaul, its consequent effects on our Bank cannot be

determined at present and there can be no assurance that such effects would not adversely affect our business, future

financial performance and the trading price of the Equity Shares.

We may incur increased costs relating to compliance with such new requirements, which may also require significant

management time and other resources, and any failure to comply may adversely affect our business, results of

operations and prospects. Uncertainty in the interpretation or implementation of any amendment to, or change in,

governing law, regulation or policy, including by reason of an absence, or a limited body, of administrative or judicial

precedent may be time consuming as well as costly for us to resolve and may impact the viability of our current

business or restrict our ability to grow our business in the future.

43. Political instability or a change in economic liberalization and deregulation policies could adversely affect our

business and economic conditions in India generally and our business in particular. Our business and customers are predominantly located in India or are related to and influenced by the Indian economy.

The Indian government has traditionally exercised, and continues to exercise, a dominant influence over many aspects

of the economy. Government policies could adversely affect business and economic conditions in India, our ability to

implement our strategy and our future financial performance. Since 1991, successive Indian governments have

pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector and

encouraging the development of the Indian financial sector. For the past several years, coalition governments have

governed India. The leadership of India and the composition of the coalition in power are subject to change and

election results are sometimes not along expected lines. It is difficult to predict the economic policies that will be

pursued by the Government. The rate of economic liberalization could change and specific laws and policies affecting

banking and finance companies, foreign investment, currency exchange and other matters affecting investment in our

securities could change as well. Any significant change in India’s economic liberalization and deregulation policies

could adversely affect business and economic conditions in India generally and our business in particular.

44. We will be required to prepare financial statements under IND-AS from April 1, 2018 onwards.

The Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Rules, 2015 on February

16, 2015 (the “IND-AS”). The Ministry of Corporate Affairs, in its press release dated January 18, 2016, issued a

roadmap for implementation of IND-AS converged with IFRS for scheduled commercial banks, insurers, insurance

companies and non-banking financial companies. For banking companies, non-banking finance companies and

insurance companies, preparation of IND-AS based financial statements are required for the accounting periods

beginning from April 1, 2018 onwards with comparatives for the periods ending March 31, 2018. The RBI, by its

circular dated February 11, 2016, requires all scheduled commercial banks to comply with IND-AS for financial

statements for the periods stated above. The RBI does not permit banks to adopt IND-AS earlier than the above

timeline and the guidelines also state that the RBI shall issue necessary instruction, guidance, and clarification on the

relevant aspects for implementation of the IND-AS as and when required. Accordingly, we will be required to report

our financials as per IND-AS from April 1, 2018 onwards.

Further, the new accounting standards may change, among other things, our Bank’s methodology for estimating

allowances for probable loan losses and for classifying and valuing our investment portfolio and revenue recognition

policy. There can be no assurance that our Bank’s financial condition, results of operations, cash flows or changes in

shareholders’ equity will not appear materially worse under IND-AS than under Indian GAAP. In our Bank’s transition

to IND-AS reporting, our Bank may encounter difficulties in the ongoing process of implementing and enhancing its

management information systems. Moreover, there is increasing competition for the small number of IFRS-

experienced accounting personnel available as more Indian companies begin to prepare IND-AS financial statements.

Further, there is no significant body of established practice on which to draw in forming judgments regarding the new

system’s implementation and application. There can be no assurance that our Bank’s adoption of IND-AS will not

adversely affect our reported results of operations, cash flows or financial condition and any failure to successfully

adopt IND-AS could adversely affect our Bank’s business, financial condition, cash flows and results of operations.

55

45. Significant differences exist between Indian GAAP and other accounting principles with which investors may

be more familiar.

Our financial statements are prepared in conformity with Indian GAAP as applicable to banks. GAAP as applied in

India differs in certain significant respects from IFRS, U.S. GAAP and other accounting principles and accounting

standards with which prospective investors may be familiar with in other countries. We do not provide a reconciliation

of our financial statements to IFRS or U.S. GAAP or a summary of principal differences between Indian GAAP, IFRS

and U.S. GAAP relevant to our business. Furthermore, we have not quantified or identified the impact of the

differences between Indian GAAP and IFRS or between Indian GAAP and U.S. GAAP as applied to our financial

statements. As there are significant differences between GAAP as applied in India and IFRS and between GAAP as

applied in India and U.S. GAAP, there may be substantial differences in our results of operations, cash flows and

financial position if we were to prepare our financial statements in accordance with IFRS or U.S. GAAP instead of

Indian GAAP. Prospective investors should review the accounting policies applied in the preparation of our financial

statements, and consult their own professional advisors for an understanding of the differences between Indian GAAP

and IFRS.

46. Civil unrest, acts of violence including terrorism or war involving India and other countries could materially

and adversely affect the financial markets and our business.

Civil unrest, acts of violence including terrorism or war, may negatively affect the Indian markets where our Equity

Shares will be traded and also materially and adversely affect the worldwide financial markets. These acts may also

result in a loss of business confidence, make travel and other services more difficult and ultimately materially and

adversely affect our business. While the GoI has been trying to engage in conciliatory efforts any further tension or

deterioration of relations might result in investor concern about stability in the region, which could materially and

adversely affect the price of the Equity Shares.

India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well as other

adverse social, economic and political events in India could have an adverse impact on us. Such incidents could also

create a greater perception that investment in Indian companies involves a higher degree of risk and could have an

adverse impact on our business, financial condition, results of operations and the price of the Equity Shares.

47. Trade deficits could materially and adversely affect our Bank’s business and the price of our Bank’s Equity

Shares

India’s trade relationships with other countries and its trade deficit, driven to a major extent by global crude oil prices,

may adversely affect Indian economic conditions. If trade deficits increase or are no longer manageable because of

the rise in global crude oil prices or otherwise, the Indian economy, and therefore our Bank’s business, its financial

performance, shareholders’ funds and the price of its Equity Shares could be materially and adversely affected.

48. Financial difficulty and other problems in certain financial institutions in India could adversely affect our

business and the price of our Equity Shares.

As an Indian bank, we are exposed to the risks of the Indian financial system which may be affected by the financial

difficulties faced by certain Indian financial institutions because the commercial soundness of many financial

institutions may be closely related as a result of credit, trading, clearing or other relationships. This risk, which is

sometimes referred to as “systemic risk”, may adversely affect financial intermediaries, such as clearing agencies,

banks, securities firms and exchanges with whom we interact on a daily basis and who may default on their obligations

due to bankruptcy, lack of liquidity, operational failure or other reasons. Any such difficulties or instability of the

Indian financial system in general could create an adverse market perception about Indian financial institutions and

banks and hence adversely affect our business. As the Indian financial system operates within an emerging market, it

faces risks of a nature and extent not typically faced in more developed economies, including the risk of deposit runs

notwithstanding the existence of a national deposit insurance scheme.

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49. Any downgrading of India’s debt rating by an international rating agency could adversely affect our business

and the price of our Equity Shares.

India's sovereign debt rating could be downgraded due to various factors, including changes in tax or financial policy

or a decrease in India's foreign exchange reserves, improvement in the political climate in India. Any decline in foreign

exchange reserves, changes in tax and financial policy could result in reduced liquidity that could adversely affect our

future financial performance and the market price of the Equity Shares and could result in a downgrade of India's debt

ratings. There is no assurance that India’s credit ratings will not be downgraded in the future. Any adverse revisions

to India's credit ratings for domestic and international debt by international rating agencies may adversely impact our

business and limit our access to capital markets, increase the cost of funds, adversely impact our liquidity position,

our shareholders’ funds and the price of our Equity Shares.

50. Investors may not be able to enforce a judgment of a foreign court against us.

The enforcement by investors in our Equity Shares of civil liabilities, including the ability to affect service of process

and to enforce judgments obtained in courts outside of India may be affected adversely by the fact that we are

incorporated under the laws of the Republic of India and almost all of our executive officers and directors reside in

India. Nearly all of our assets and the assets of our executive officers and directors are also located in India. As a

result, it may be difficult to enforce the service of process upon us and any of these persons outside of India or to

enforce outside of India, judgments obtained against us and these persons in courts outside of India.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.

Recognition and enforcement of foreign judgments are provided for under Section 13 and Section 44A of the Civil

Procedure Code respectively. The Government of India has under Section 44A of the Civil Procedure Code notified

certain countries as reciprocating countries, as discussed below. Section 13 of the Civil Procedure Code provides that

a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment

has not been pronounced by a court of competent jurisdiction, (ii) where the judgment has not been given on the merits

of the case, (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of

international law or a refusal to recognize the law of India in cases in which such law is applicable, (iv) where the

proceedings in which the judgment was obtained were opposed to natural justice, (v) where the judgment has been

obtained by fraud, or (vi) where the judgment sustains a claim founded on a breach of any law in force in India.

Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a court in any

country or territory outside India, which the Government has by notification declared to be a reciprocating territory,

it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in

India. However, Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the

nature of any amounts payable in respect of taxes or other charges of a similar nature or in respect of a fine or other

penalties and does not include arbitration awards. The United Kingdom and some other countries have been declared

by the Government to be a reciprocating territory for the purposes of Section 44A. However, the United States has not

been declared by the Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a

court in the United States may be enforced in India only by a suit upon the judgment, subject to Section 13 of the Civil

Procedure Code and not by proceedings in execution.

The suit must be brought in India within three years from the date of the judgment in the same manner as any other

suit filed to enforce a civil liability in India. Generally, there are considerable delays in the disposal of suits by Indian

courts. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is

brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the

amount of damages awarded as excessive or inconsistent with public policy in India. A party seeking to enforce a

foreign judgment in India is required to obtain prior approval from the RBI under FEMA to repatriate any amount

recovered pursuant to execution and any such amount may be subject to income tax in accordance with applicable

laws. Any judgment or award in a foreign currency would be converted into Indian Rupees on the date of the judgment

or award and not on the date of the payment. Generally, there are considerable delays in the processing of legal actions

to enforce a civil liability in India, and therefore it is uncertain whether a suit brought in an Indian court will be

disposed off in a timely manner or be subject to considerable delays.

57

51. Applicants to the Issue are not allowed to withdraw their Bids after the Bid/Issue Closing Date.

In terms of the Regulations 86 of the ICDR Regulations, applicants in the Issue are not allowed to withdraw their Bids

after the Bid/Issue Closing Date. The Allotment of the Equity Shares in this Issue and the credit of such Equity Shares

to the applicant’s demat account with its depository participant could take approximately seven days and up to ten

days from the Bid/Issue Closing Date. There is no assurance, however, that material adverse changes in the national

and international monetary, financial, political or economic conditions or other events in the nature of force majeure,

material adverse changes in our business, results of operation or financial condition, or other events affecting the

applicant’s decision to invest in the Equity Shares, would not arise between the Bid/Issue Closing Date and the date

of Allotment of Equity Shares in the Issue. Occurrence of any such events after the Bid/Issue Closing Date could also

impact the market price of the Equity Shares. The applicants shall not have the right to withdraw their Bids in the

event of any such occurrence.

52. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a

shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

We are subject to a daily circuit breaker imposed by all stock exchanges in India which does not allow transactions

beyond a certain level of volatility in the price of the Equity Shares. This circuit breaker operates independently of the

index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit

on our circuit breaker is set by the stock exchanges based on the historical volatility in the price and trading volume

of the Equity Shares. The stock exchanges do not inform us of the percentage limit of the circuit breaker from time to

time, and may change it without our knowledge. This circuit breaker effectively limits upward and downward

movements in the price of the Equity Shares. As a result of this circuit breaker, we cannot give any assurance regarding

the ability of shareholders to sell the Equity Shares or the price at which shareholders may be able to sell their Equity

Shares at a particular point in time.

53. We cannot guarantee that the Equity Shares will be listed on the Stock Exchanges in a timely manner, if at

all.

In accordance with Indian law and practice, after our Board or committee passes the resolution to allot the Equity

Shares but prior to crediting such Equity Shares into the Depository Participant accounts of the QIBs, we are required

to apply to the Stock Exchanges for listing and trading approvals. After receiving the listing and trading approvals

from the Stock Exchanges, we will credit the Equity Shares into the Depository Participant accounts of the respective

QIBs and apply for the final listing and trading approvals from the Stock Exchanges. There could be a delay in

obtaining these approvals from the Stock Exchanges, which in turn could delay the listing of the Equity Shares on the

Stock Exchanges. Any delay in obtaining these approvals would restrict your ability to dispose of your Equity Shares.

54. An investor will not be able to sell any of the Equity Shares other than on a recognized Indian stock exchange

for a period of 12 months from the date of this Issue.

The Equity Shares are subject to restrictions on transfers. Pursuant to the SEBI ICDR Regulations, for a period of 12

months from the date of the issue of the Equity Shares, QIBs to whom the Equity Shares are allotted under the Issue

may only sell such Equity Shares on the Stock Exchanges and may not enter into any off market trading in respect of

these Equity Shares. We cannot be certain that these restrictions will not have an impact on the price and liquidity of

the Equity Shares.

55. Investing in securities that carry emerging market risks can be affected generally by volatility in the emerging

markets.

The markets for securities bearing emerging market risks, such as risks relating to India, are, to varying degrees,

influenced by economic and securities market conditions in other emerging market countries. Although economic

conditions differ in each country, investors’ reactions to developments in one country may affect securities of issuers

in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets

may cause increased volatility in Indian financial markets and the Indian economy in general. Any worldwide financial

instability could also have a negative impact on the Indian economy, including the movement of exchange rates and

interest rates in India, which could adversely affect the Indian financial sector in particular. Any such disruption could

have an adverse effect on our Bank’s business, future financial performance, financial condition and results of

58

operations, and affect the price of our Bank’s Equity Shares Accordingly, the price and liquidity of our Equity Shares

may be subject to significant fluctuations, which may not necessarily be directly or indirectly related to our financial

performance.

56. Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.

The Indian securities markets are smaller and may be more volatile than securities markets in more developed

economies. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and

other participants differ, in some cases significantly, from those in the U.S. and Europe. Indian stock exchanges have

in the past experienced substantial fluctuations in the prices of listed securities.

Indian stock exchanges have, in the past, experienced problems that have affected the market price and liquidity of

the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes

by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities

from trading, limited price movements and increased margin requirements. Further, disputes have occurred on

occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases,

have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity

of the Equity Shares could be adversely affected. A closure of, or trading stoppage on, either the BSE or the NSE

could adversely affect the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative

of the prices at which the Equity Shares will trade in the future.

There can be no assurance that an active trading market for our Equity Shares will be sustained after this Issue, or that

the prices at which our Equity Shares have historically traded will correspond to the price at which the Equity Shares

are offered in this Issue or the prices at which our Equity Shares will trade in the market subsequent to this Issue. The

Indian stock markets have witnessed significant volatility in the past and our Equity Share price may be volatile and

may decline post listing.

57. You will be subject to market risks until the Equity Shares credited to your demat account are listed and

permitted to trade.

You can start trading the Equity Shares allotted to you only after they have been credited to your demat account, and

are listed and permitted to trade on the Stock Exchanges. Since our Equity Shares are currently traded on the BSE and

the NSE, investors will be subject to market risk from the date they pay for the Equity Shares to the date when trading

approval is granted for the same. Further, there can be no assurance that the Equity Shares allocated to you will be

credited to your demat account or that trading in the Equity Shares will commence in a timely manner.

58. The Issue Price of our Equity Shares may not be indicative of the market price of our Equity Shares after the

Issue.

The Issue Price of the Equity Share may not be indicative of the market price for our Equity Shares after the Issue.

The market price of our Equity Shares could be subject to significant fluctuations after the Issue, and may decline

below the Issue Price. There can be no assurance that the investor will be able to resell their shares at or above the

Issue Price. Among the factors that could affect our share price are:

quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net

income and revenues;

changes in revenue or earnings estimates or publication of research reports by analysts;

speculation in the press or investment community;

Domestic and international economic, legal and regulatory factors unrelated to our performance; and

general market conditions;

59. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are

generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than

12 months will not be subject to capital gains tax in India if STT has been paid on the transaction. STT will be levied

59

on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realized on the sale of

equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognized stock

exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain

realized on the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital

gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in

cases where the exemption from taxation in India is provided under a treaty between India and the country of which

the seller is resident. Generally, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a

result, residents of other countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the

sale of the Equity Shares. See subsection titled “Taxation” beginning on page 206.

60

MARKET PRICE INFORMATION

The Equity shares of our Bank are listed on the BSE and the NSE with effect from the year 2010. Stock market data

for our equity shares has been given separately for the BSE and the NSE. As our Equity shares are traded on both the

BSE and the NSE, stock market data has been given separately for each of these Stock Exchanges.

The following tables set forth the reported high and low market prices, the number of Equity Shares traded and the

total trading volume on the dates on which such high and low prices were recorded and the average closing prices of

the Equity Shares, on the NSE and the BSE during the fiscal years ended March 31, 2016, March 31, 2015 and March

31, 2014.

NSE

Year

ending

March

High Date of

high

No of

Equity

Shares

traded on

date of

high

Total

volume

traded on

date of

high (₹

Lacs)

Low Date of low

No of

Equity

Shares

traded on

date of

low

Total

volume

traded

on date

of low (₹

Lacs)

Average

price for

the year*

FY 16 30.85 April 13,

2015 833,994 257.47 17.05

February

11, 2016 1,261,897 220.93 22.57

FY 15 59.30 July 4,

2014 19,780,116 11,495 26.95

March 25,

2015 683,976 186.42 41.78

FY 14 60.30 April 30,

2013 104,938 63.03 24.20

February

17, 2014 1,086,449 266.13 38.62

(Source: www.nseindia.com)

Notes:

* Average of the daily closing price

(1) In case of two days with the same closing price, the date with the higher volume has been considered

(2) ‘Year’ considered as ‘Financial Year’.

BSE

Year

ending

March

High Date of

high

No of

Equity

Shares

traded on

date of

high

Total

volume

traded on

date of

high (₹

Lacs)

Low Date of low

No of

Equity

Shares

traded on

date of

low

Total

volume

traded on

date of low

(₹ Lacs)

Average

price for

the

year*

FY 16 31.00 April 13,

2015 145,439 45.03 17.00

February 11,

2016 287,433 49.78 22.58

FY 15 59.00 July 4,

2014 3,623,366 2,097.61 26.95

March 25,

2015 93,080 25.34 41.80

FY 14 60.35 April 22,

2013 20,278 12.28 24.25

February 18,

2014 395,436 96.85 38.66

(Source: www.bseindia.com) Notes:

Notes:



(2) ‘Year’ considered as ‘Financial Year’.

61

The following tables set forth the reported high, low, the number of Equity Shares traded and the total trading volume

on the dates on which such high and low prices were recorded and the average closing prices of the Equity Shares, on

the NSE and the BSE during the last six months:

NSE

Month High Date of

high

No of

Equity

Shares

traded

on date

of high

Total

volume

traded on

date of

high (₹

Lacs)

Low Date of low

No of

Equity

Shares

traded on

date of

low

Total

volume

traded on

date of

low (₹

Lacs)

Averag

e price

for the

month*

February,

2017 27.95

February 7,

2017

69,54,66

1 1,933.34 21.45

February 1,

2017 1,80,447 38.75 24.87

January,

2017 21.50

January 30,

2017 241,356 51.76 20.15

January 2,

2017 81,171 16.38 20.84

December,

2016 21.25

December

9, 2016 121,765 25.88 19.50

December

26, 2016 143,029 28.22 20.57

November,

2016 23.70

November

15, 2016

1,053,64

5 250.35 20.35

November 9,

2016 517,393 101.99 21.51

October,

2016 21.90

October 20,

2016 389,636 84.49 21.10

October 17,

2016 108,340 22.87 21.36

September,

2016 22.95

September

8, 2016 730,900 168.48 20.15

September

29, 2016 446,601 92.42 21.67

(Source: www.nseindia.com)

Notes:



BSE

Month High Date of

high

No of

Equity

Shares

traded on

date of

high

Total

volume

traded on

date of

high (₹

Lacs)

Low Date of low

No of

Equity

Shares

traded on

date of low

Total

volume

traded on

date of low

(₹ Lacs)

Average

price for

the month*

February,

2017 28.05

February

7, 2017 11,60,282 321.23 21.50

February 1,

2017 40,771 8.76 24.87

January,

2017 21.50

January

31, 2017 62,653 13.52 20.10

January 2,

2017 9,705 1.96 20.85

December,

2016 21.20

December

2, 2016 16,785 3.54 19.50

December

26, 2016 18,124 3.58 20.57

November

, 2016 23.85

November

15, 2016 250,488 59.63 20.40

November

9, 2016 112,511 22.18 21.52

October,

2016 21.85

October

20, 2016 53,630 11.66 21.00

October 17,

2016 22,346 4.71 21.35

September

, 2016 23.00

Septembe

r 8, 2016 95,227 21.95 20.25

September

29, 2016 52,465 10.91 21.70

(Source: www.bseindia.com)

Notes:



62

The following table sets forth the market price on the Stock Exchanges on January 29, 2016, the first working day

following the approval of the Board of Directors for the Issue:

Date NSE BSE

January 29, 2016 Open High Low Close Open High Low Close

Price of the Equity Shares (₹) 19.35 19.55 19.00 19.25 19.55 19.60 19.05 19.20

Number of Equity Shares Traded 1,53,226 20,518

Volume (₹ In Lacs) 29.51 3.96

Source: www.nseindia.com, www.bseindia.com

63

USE OF PROCEEDS

The gross proceeds from the Issue are expected to be approximately ₹ 127.49 crore.

The net proceeds from the Issue, after deducting fees and commissions for the Issue, are expected to be approximately

₹ 125.69 crore (the “Net Proceeds”). Subject to compliance with applicable laws and regulations, we intend to use

the Net Proceeds of the Issue, for meeting capital requirements in accordance with the capital adequacy norms and

ensuring adequate capital to support growth and expansion, including enhancing our solvency and capital adequacy

ratio and general corporate purposes.

None of the Directors are making any contribution either as part of the Issue or separately in furtherance of the objects

of the Issue.

64

CAPITALIZATION STATEMENT

The following table sets forth our Bank’s capitalisation and total debt, as on March 31, 2016, derived from our Bank’s

audited financial statements for the fiscal year ended on March 31, 2016 and unaudited financials as of and nine

months period ended on December 31, 2016 and as adjusted to reflect the receipt of the gross proceeds of the Issue

and the application thereof.

This table should be read with the section “Summary Financial Information”, “Risk Factors” “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Statements” beginning

on pages 33, 37, 68 and 228, respectively.

(₹ in Crore)

As of March 31,

2016

As of December 31,

2016

As Adjusted for the

Issue(1)

Liabilities

Deposits

Demand Deposits

1. From banks 1,188.08 1,632.32 1,632.32

2. From others 6,793.34 8,065.30 8,065.30

Saving Bank Deposits 40,809.62 51,272.92 51,272.92

Term Deposits

1. From banks 1251.57 892.82 892.82

2. From others 66,358.67 65,828.87 65,828.87

Total Deposits 11,6401.28 1,27,692.23 1,27,692.23

Other Liabilities

Borrowings 2,912.50 2478.22 2478.22

Total Other Liabilities and Provisions 3,798.78 3728.88 3728.88

Shareholders Fund

Share capital 839.52 1,339.45 1,394.36

Share Application Money Pending

Allotment

480.00 - -

Reserves and Surplus 4,999.67 5,787.43 5,860.02

Total shareholder’s funds 6,319.19 7,126.88 7,254.38

Total Liabilities 1,29,431.75 1,41,026.21 1,41,153.71

Note:

(1) Share capital, reserves, surplus (adjusted) and post-issue capitalisation can be determined only on the conclusion

of the Issue.

65

CAPITAL STRUCTURE

The Equity Share capital of our Bank, as on the date of this Placement Document is set forth below:

No. Particulars Amount in ₹ Crore

Aggregate nominal value

A. Authorised Share Capital

300 Crore Equity Shares of ₹ 10 each 3,000.00

B. Issued, Subscribed and Paid-up Share Capital before the Issue

1,33,94,49,372 Equity Shares of ₹ 10 each 1,339.45

C. Present Issue in terms of this Placement Document

54,906,211 Equity Shares of ₹ 10 each(1) 54.90

D. Issued, Subscribed and Paid-Up Share Capital after the Issue

1,394,355,583 Equity Shares of ₹ 10 each 1,394.36

E. Securities Premium Account

Before the Issue 2,666.89

After the Issue 2,739.48

Note:

1. The Issue has been authorised by the Board of Directors vide a resolution passed at its meeting held on January

28, 2016 and by the shareholders of our Bank vide a special resolution passed at the AGM held on June 28, 2016.

NOTES TO THE CAPITAL STRUCTURE

1. History of Equity Share Capital of our Bank

The following is the history of the equity share capital of our Bank since incorporation:

Year Increase/ Decrease

in Capital(₹ in

Crores)

Cumulative

Paid up

Capital(₹ in

Crores)

Nature of

Consideration

Mode

At the time of

nationalization

- 2.69 -- Share capital acquired by the

GoI on nationalisation

1984 0.12 2.81 Cash Contribution to capital by the

GoI

1985 12.19 15.00 Other than Cash# Contribution to capital by the

GoI


GoI


GoI


GoI


GoI


GoI


GoI

66

Year Increase/ Decrease

in Capital(₹ in

Crores)

Cumulative

Paid up

Capital(₹ in

Crores)

Nature of

Consideration

Mode

1995 471.43 1,049.43 Other than Cash# Contribution to capital by the

GoI


GoI


GoI


GoI


GoI

2006 (278.44) 1,532.43 - Adjustment of accumulated

losses against capital##

2009 (1,266.00) 266.43 - Return of capital to GoI###

2010 50.00 316.43 Cash Initial Public Offering

2011 27.99 344.42 Cash Preferential allotment to GoI

2012 16.58 361.00 Cash Preferential allotment to Life

Insurance Corporation of India



2014 77.40 632.15 Other than cash Conversion of perpetual non –

cumulative preference shares

held by GoI

2014 84.51 716.66 Cash Preferential allotment to Life

Insurance

2015 122.86 839.52 Other than cash Conversion of perpetual non –

cumulative preference shares

held by GoI

2016 232.44 1,071.96 Cash Preferential allotment to GoI

2016 267.49 1,339.45 Cash Preferential allotment to GoI

# Contribution to capital by the GoI through recapitalisation Bonds/Special Securities.

# # The Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) vide letter No.

F.No.11/25/2005-BOA (i) dated April 27, 2006 permitted our Bank to net off of the accumulated unabsorbed losses of ₹ 278.44

crore against its equity capital of ₹ 1,810.87 crore with effect from March 31, 2006 and the capital after set off stood at ₹ 1,532.43

crore.

# # # As per GoI letter no. 11/25/2005-BOA dated July 7, 2009, the Government has approved the restructuring of paid up equity

capital of our Bank by returns of an amount of ₹ 1,266 crore to the GoI and simultaneously infusion of this amount in the Capital

Reserve of our Bank during the year 2009 – 2010, thereby reducing the paid-up equity capital of our Bank to ₹ 266.43 crore.

2. Details of allotments made in the last one year

Except as mentioned above, our Bank has not issued any Equity Shares in the last one year preceding the date of this

Placement Document.

3. Employee Stock Option Plan

Our Bank does not have an employee stock option plan.

67

DIVIDEND POLICY

The payment of dividend is governed by Government of India and RBI guidelines and in accordance with dividend

policy framed by the Board. We have a dividend policy named as the United Bank of India Dividend Distribution

Policy being framed as per Securities and Exchange Board of India’s Notification No. SEBI/LAD-NRO/GN/2016-

17/008 dated July 8, 2016 (“Dividend Policy”).

As per the Dividend Policy, our Bank may declare and pay dividend, subject to the following ceilings:

CET-1 ratio after including

current year’s retained earnings

Minimum Capital Conservation

Ratios

Payment by way of dividend/bonus

5.5% - 6.125% 100% NIL

6.125% - 6.75% 80% 20%

6.75% - 7.375% 60% 40%

7.375% - 8.0% 40% 60%

>8.0% 0% 100%

In case the profit for the relevant period includes any extra-ordinary profits/income, the pay-out ratio shall be

computed after excluding such extra-ordinary items for reckoning compliance with the prudential pay-out ratio. The

financial statements pertaining to the financial year for which our Bank is declaring dividend should be free of any

qualifications from the Statutory Auditors, which have an adverse bearing on the profit during that year. In case of

any qualification to that effect, the net profit should be suitably adjusted while computing the dividend payout ratio.

As per Ministry of Finance Notification F. No. 10/3/2010 – BOA, our Bank shall pay a minimum dividend of 20% of

paid-up capital or 20% of post-tax profits, whichever is higher for a financial year. In case our Bank is not able to pay

the minimum dividend, as stated above, our Bank shall seek special permission from the Central Government for not

paying dividend at a rate lower than the minimum rate prescribed.

Our Bank has not declared any dividend in preceding three years.

68

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together

with our audited financial statements for the years ended March 31, 2014, March 31, 2015 and March 31, 2016 and

our limited reviewed interim financial statements for the nine-month period ended December 31, 2016 included in

this Placement Document. Also refer the sections “Selected Financial and Other Information” and “Selected

Statistical Information” included in this Placement Document.

We prepare our financial statements in accordance with Indian GAAP. The financial statements reflect applicable

statutory requirements and regulatory guidelines and accounting practices in India. These requirements, guidelines

and practices change from time to time and in accordance with Indian GAAP, adjustments to reflect such changes are

made on a prospective basis and the financial statements for earlier periods are not restated. For the purposes of a

comparative analysis in the discussion below, previous years’ figures have been reclassified wherever necessary.

Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year are to the

twelve-month period ended on March 31 of that year. Unless otherwise specified, all information regarding cost, yield

and average balances are based on daily average of balances outstanding during the relevant period.

This discussion contains forward-looking statements and reflects our current views with respect to future events and

financial performance. Actual results may differ materially from those anticipated in these forward-looking

statements as a result of certain factors, including those set forth under the section “Forward-Looking Statements”

beginning on page 14, the section “Risk Factors” beginning on page 37 and elsewhere in this Placement Document.

Certain portions of the following discussion include information publicly available from the RBI and other sources.

Overview





clientele segment, 24 Retail Hubs, 5 specialised women branches . As of January 31, 2017, we had 2,200 ATMs, 22




















69














Our treasury operations being the interface with the financial markets, consist primarily of statutory reserves












organizations.





2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1912





Tripura. We are also the convener of the State Level Bankers' Committees (“SLBC”) for the States of West Bengal

and Tripura. We have been designated as Treasury Bank in major district of Assam and Tripura by respective state

governments. Further, the President of India and Ministry of Coal have accounts solely with our Bank to handle the

government funds. We intend to leverage our lead bank status and brand recall, to expand our presence across select

geographies in India by increasing our branch network and distribution infrastructure across India.

As of January 31, 2017, the Core Banking Solution (“CBS”), which is a suite of software applications that facilitate










70












for the third quarter of fiscal year 2017 was ₹ 1, 95,558 crore.

Critical Accounting Policies

We have set forth below some of our critical accounting policies under Indian GAAP. Our audited financial statements

of and for the fiscal years ended March 31, 2014, 2015 and 2016 are prepared in accordance with Indian GAAP as

applicable to banks. The preparation of the financial statements requires us to make estimates and judgments that

affect the reported amounts of assets, liabilities, income and expenses as well as the disclosure of contingent liabilities.

The notes to the financial statements contain a summary of our significant accounting policies. Certain of these policies

are critical to the portrayal of our financial condition, since they require management to make subjective judgments,

some of which may relate to matters that are inherently uncertain. Below is a discussion of these critical accounting

policies. We base our estimates and judgments on historical experience and other factors that are believed to be

reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or

conditions. As a result of changes in applicable statutory requirements, regulatory guidelines and accounting practices

in India, our accounting policies may have undergone changes during the periods covered by this discussion.

Accordingly, this discussion should be read in conjunction with our financial statements and notes as applicable during

the respective fiscal year.

Set forth below are some of our critical accounting policies under Indian GAAP for the fiscal year 2016:

1. Basis of Preparation

1.1. The accompanying financial statements are prepared on historical cost basis, except as otherwise stated,

following the “Going Concern” concept and conform to the Generally Accepted Accounting Principles(GAAP)

in India, applicable statutory provisions, regulatory norms prescribed by the Reserve Bank of India (RBI),

applicable mandatory Accounting Standards (AS)/Guidance Notes/ pronouncements issued by the Institute of

Chartered Accountants of India (ICAI) and practices prevailing in the banking industry in India.

2. Use of Estimates

2.1. The preparation of financial statements requires the management to make estimates and assumptions for

considering the reported assets and liabilities (including contingent liabilities) as on the date of financial

statements and the income and expenses for the reporting period. We believe that the estimates used in the

preparation of the financial statements are prudent and reasonable.

3. Recognition of Income and Expenditure

3.1. The Revenues and Expenses are accounted for on accrual basis unless otherwise stated.

3.2. Income from Performing Assets is recognized on accrual basis and income from Non-Performing Assets (NPAs)

is recognized on realization. The amount realised/recovered during the year is appropriated first to income on

Sub-standard Assets. Amounts realized /recovered in Doubtful and Loss Assets and Suit Filed and Decreed

Accounts are first appropriated against outstanding balances.

3.3. Unrealized income on advances, classified as NPA, is reversed.

71

3.4. Income from Commission (except on Government Transactions and Bancassurance), exchange, brokerage,

claims, locker rent and dividend on shares are accounted for on cash basis.

3.5. Performance linked incentive to whole time directors is accounted for on cash basis.

4. Foreign Currency Transactions

4.1. Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency, are

revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers Association

of India (“FEDAI”). Outstanding forward exchange contracts are revalued at the forward rates announced by

FEDAI. The difference between the revalued amount and the contracted amount is recognized as profit or loss,

as the case may be.

4.2. Income and expenditure items are recorded at the exchange rates prevailing on the date of transaction.

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot rates

announced by FEDAI.

4.4. Representative Office of our Bank has been classified as 'Integral Foreign Operation' in accordance with AS-11

on “The Effects of Changes in Foreign Exchange Rates”.

4.5. Foreign currency transactions relating to 'Integral Foreign Operation' are recorded on initial recognition in the

reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency

and the foreign currency on the date of transaction.

4.6. Foreign currency non-monetary items that are carried in terms of historical costs are reported using the exchange

rates on the dates of transactions.

5. Investments

5.1. For the purpose of disclosure in the Financial Statements, the investments are classified into six categories as

stipulated in Form A of the third schedule to the Banking Regulation Act, 1949 as under:

a. Government Securities

b. Other approved securities

c. Shares

d. Debentures and Bonds

e. Subsidiaries/Joint Ventures

f. Others

5.2. The Investment portfolio is categorized, in accordance with the RBI guidelines, into:

a. “Held to Maturity” (“HTM”) comprising Investments acquired with an intention to hold till maturity

b. “Held for Trading” (“HFT”) comprising Investments acquired with an intention to trade

c. “Available for Sale” (“AFS”) comprising Investments not covered by (a) and (b) above.

Classification of an investment is done at the time of acquisition.

5.3. In determining acquisition cost of an investment:

a. Brokerage, Commission and Incentives received on subscription to securities, are deducted from the cost of

securities,

b. Brokerage, Commission etc. paid in connection with acquisition of securities are treated as revenue expenses

and

c. Interest accrued up to the date of acquisition/ sale of securities i.e., broken period interest is credited/ charged

to Profit and Loss Account.

72

5.4. Investments are valued as per RBI/ Fixed Income Money Market & Derivatives Association (FIMMDA)

guidelines, on the following basis:

a. Held to Maturity (“HTM”)

i) Investments held under this category are carried at acquisition cost. Wherever the book value is

higher than the face value/redemption value, the premium is amortized over the remaining period

of maturity.

ii) Investments in RIDF, STC(Refinance Fund), MSME(Refinance)SIDBI, MSME(Risk

Capital)SIDBI, Rural Housing Development Fund-NHB, Micro Finance Development and Equity

Fund-NABARD (classified as shares) held under this category are valued at carrying cost.

iii) Investments in sponsored regional rural banks held under this category and are valued at carrying

cost.

iv) Investment in venture capital funds held under this category is valued at carrying cost for the first 3

years from their respective disbursement dates in accordance with Prudential Guidelines issued by

RBI. Thereafter the same is transferred to AFS category.

b. “Held for Trading” and “Available for Sale”

a) Govt. Securities

1. Central Govt. Securities

2. State Govt. Securities

At prices published by FIMMDA

On Yield to Maturity (“YTM”) basis by adding appropriate mark-

up on the Base Yield Curve as per FIMMDA/RBI guidelines

b) Discounted Instruments (Treasury

Bills, Commercial Papers and

Certificate of Deposit)

At carrying cost

c) Bonds and Debentures

On YTM basis by adding appropriate credit spread on the Base

Yield Curve as per FIMMDA/RBI guidelines

d) Equity

i) Quoted

ii) Un-quoted

At market price

At break-up value, as per latest Balance Sheet (not more than one

year old), otherwise at Re1/- per company.

e) Preference Shares At market price, if quoted or on YTM basis by adding appropriate

mark-up on the Base Yield Curve as per FIMMDA/RBI guidelines

f) Security Receipt/Venture Capital Fund At Net Asset Value (NAV) as per FIMMDA/RBI guidelines

g) Mutual Funds At Market Price, if quoted and at re-purchase price/NAV if

unquoted

5.5. Shifting of securities from and to HFT category is done in accordance with RBI guidelines with the approval of

Board of Directors.

5.6. The individual scrip in the HFT and AFS category are marked to market at monthly or at more frequent intervals

if required and provision for the same is made.

5.7. Income from Zero Coupon Bonds, being the difference between cost and face value, is recognized on a time

proportion basis.

5.8. Profit or loss on sale of investments in any category is taken to Profit and Loss Account. In case of profit on sale

of Investments in HTM category, an equivalent amount is appropriated to “Capital Reserve Account” at the end

of the period. For calculating the surplus / deficit on sale of securities, weighted average method is adopted.

73

5.9. For the purpose of calculating holding period in case of HFT category, FIFO method is applied.

5.10. Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudential norms

of RBI for NPI Classification. The depreciation/provision in respect of non-performing securities is not set off

against the appreciation in respect of the other performing securities.

5.11. The derivatives transactions are undertaken for trading or hedging purposes and valuation has been done in

accordance with RBI guidelines.

5.12. Our Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and Reverse

Repo transactions.

6. FINANCIAL ASSETS SOLD TO ASSETS RECONSTRUCTION COMPANY (ARC)/

SECURITIZATION COMPANY (SC)

6.1. In the case of financial assets sold to ARC/SC, if the sale is for a value higher than the Net Book Value (NBV),

the excess provision is not reversed but utilized for meeting any shortfall on account of sale of other financial

assets to ARC/SC. If the sale is at a price below the NBV the shortfall after adjusting the available surplus if any,

is debited to the Profit and Loss Account.

6.2. The sale of financial assets to ARC/SC is recognized in the books of our Bank at lower of either redemption

value of the Security Receipts issued by the Trust created by the ARC/SC for such sale or the net value of such

financial assets.

6.3. The Security Receipts are classified as Non-SLR Investment in the books of our Bank and accordingly the

valuation, classification and other norms prescribed by RBI in respect of Non-SLR Securities are applicable.

6.4. In case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income.

7. ADVANCES

7.1. Advances are classified as Performing/Non-Performing Assets and provision thereon are made in conformity

with the prudential norms prescribed by RBI.

7.2. Non-performing assets are stated net of provisions and claims received from credit guarantee institutions.

7.3. Provision held for performing assets is shown under the head ‘Other Liabilities and Provisions’.

7.4. Restructuring of Advances and provisioning thereof have been made as per RBI guidelines.

8. FIXED ASSETS AND DEPRECIATION

8.1. Premises (including leasehold), other fixed assets and Capital work in progress are stated at historical cost. In

case of revaluation, the same are stated at the revalued amount and the appreciation is credited to Revaluation

Reserve.

8.2. Leasehold assets are amortized over the period of lease.

8.3. Depreciation on assets other than computers and Automated Teller Machines (“ATMs”) is provided for under

written down value method, in the manner and as per the rates prescribed under Schedule II to the Companies

Act, 2013 after retaining 5% residual value.

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on straight-line method @

33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (including revalued assets) are recognized in accordance with AS -

28 on “Impairment of Assets”.

74

9. ACCOUNTING FOR GOVERNMENT GRANTS

9.1. In accordance with AS-12 Government Grants/subsidies received is presented in the Balance Sheet by showing

the Grant/Subsidy as a deduction from the Gross Value of the assets concerned in arriving at the book value. The

grant/subsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets by way of

reduced depreciation charged.

9.2. Government Grant subsidies received, of revenue nature, is recognized in the Profit & Loss Account by reducing

the related cost if received during the same financial year otherwise, the same is shown under “Other Income” if

received after the close of the relevant financial year.

10. EMPLOYEE BENEFITS

10.1. Employee Benefits are recognized in accordance with AS – 15 on “Employee Benefits”.

10.2. Short Term employee benefits are measured at cost.

10.3. Long Term employee benefits and post-retirement benefits namely gratuity, pension and leave encashment are

measured on a discounted basis under the Projected Unit Credit Method on the basis of annual third party

actuarial valuations.

10.4. In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to a

recognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based on

actuarial valuation.

10.5. Long Term employee benefits recognized in the Balance Sheet represent the present value of the obligation as

adjusted for unrecognized past service cost, if any, and as reduced by the fair value of plan assets, wherever

applicable and actuarial gain/loss is recognized in Profit and Loss Account.

11. TAXATION

Provision for tax is made for both current and deferred taxes in accordance with AS – 22 on “Accounting for Taxes

on Income”.

12. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance with AS-29 on “Provisions Contingent Liabilities and Contingent Assets,” our Bank recognizes:

a. Provisions only when it has a present obligation as a result of a past event and 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.

b. Contingent Liability is recognized/disclosed when a possible obligation from a past event, the existence of

which is confirmed by the occurrence/non-occurrence of one or more uncertain future events not wholly

within the control of bank. Contingent Liability is also recognized/disclosed when there is a present

obligation from past events but is not recognized because of a remote possibility of outflow of resources

embodying the economic benefits to settle the obligation or a reliable estimate of the amount of the obligation

cannot be made

c. Contingent Assets are not recognized in the Financial Statements.

13. NET PROFIT

The Net Profit is arrived at after accounting for the following:

75

a) Provision for Taxation

b) Provision on Standard Assets

c) Provision for NPAs and Depreciation on investments as per prudential norms of RBI

d) Other usual and necessary provisions.

Factors Affecting Results of Operations and Financial Condition

The world economy continues to dabble with weak growth and dwindling inflation. Global markets continue to remain

sluggish with the impact of US returning to normalcy with a rate hike, lower commodity markets and a strengthening

dollar. Asset classes across the board witnessed volatile movements during the year with uncertainty rising from the

Chinese slowdown and US unwinding of quantitative measures. Going forward, the Chinese rebalancing from an

investment led economy to one driven by consumption apart from the US Fed rate movement would be closely

watched by investors across the globe. We believe next year is likely to remain a constrained year for global growth

with headwinds emerging from the above mentioned factors and no or limited scope for acceleration in growth in

other major economies of the world.

The Indian economy bucked the trend in 2015 when most of the emerging market economies witnessed significant

external vulnerabilities owing to positive external balance and a stable public policy. Although the rising NPAs in the

banking system and strong headwinds in the global economy did have an impact on Indian economy, it was largely

stable when compared to its peers.

The Indian economy currently stands at a strong footing with the interest rate rolling downwards, key macro variables

like Current Account Deficit and Fiscal deficit mostly under control and the governments continued push for reforms

and ease of doing business. International agencies continue to remain positive on India with an expected growth for

2016 pegged at 7.50 percent.

The Indian banking industry is regulated by the RBI and operates within a framework that provides guidelines on

capital adequacy, corporate governance, management, anti-money laundering and provisioning for NPAs. The

framework also stipulates required levels of lending to “priority sectors,” such as agriculture, which may expose our

Bank to higher levels of risk than it otherwise might face. Being the Banking Regulator, RBI is empowered to alter

any of these policies at any time and can introduce new regulations to control any particular line of business. See

“Regulations and Policies - The RBI and its regulations”.

The RBI responds to fluctuating levels of economic growth, concerns about banks’ liquidity position and inflationary

pressures in the economy by adjusting the required Cash Reserve Ratio (“CRR”) of Indian banks. When the CRR

increases, our Bank must hold more cash in its reserves, which constrains our Bank’s ability to deploy those funds by

making advances to customers or investing the funds for potential gains.

Discussion on our results from operations

Our Bank’s asset portfolio, financial condition and results of operations have been, and are expected to be, influenced

by numerous factors. These are expected to affect the overall growth prospects of our Bank, including its ability to

expand its deposit base, the quality of its assets, the level of credit disbursed by our Bank, the value of its asset portfolio

and its ability to implement its strategy.

Our total income consists of interest and dividend income as well as non-interest income. Our interest and dividend

income is primarily generated by interest on loans, dividends from securities excluding dividend from associate

companies, and other activities. We offer a range of loans to retail customers and working capital and term loans to

corporate customers. The primary components of our investments portfolio are statutory liquidity ratio (SLR)

investments, debentures and bonds and other investments. SLR investments principally consist of Government of

India treasury securities. Other investments include asset-backed securities, mortgage-backed securities, deposit

certificates issued by banks, placements made to comply with the extant Reserve Bank of India guidelines on shortfalls

in directed lending sub-limits as well as equity and units of mutual funds. Interest income from other activities consists

primarily of interest from inter-bank placements.

Our interest expense includes interest on deposits as well as on borrowings including interest expense on our inter-

bank borrowings (including deposits taken under the credit support annex agreements), bills re-discounted (BRDS)

76

transactions, interbank participation certificate (IBPC) transactions and securities sold under repurchase agreements

(repo transactions) with the RBI, such as under the RBI’s liquidity adjustment facility/marginal standing facility of

the RBI. Our interest income and expense are affected by fluctuations in interest rates as well as volume of activity.

Our interest expense is also affected by the extent to which we fund our activities with savings and current account

deposits, and the extent to which we rely on borrowings. Our provisions and contingencies include specific provisions

for non-performing assets (NPAs), general provisions on standard assets, floating provisions and provisions for legal

and other contingencies.

We also use net interest margin and spread to measure our results. Net interest margin represents the ratio of net

interest income to average earning assets. Spread represents the difference between yield on average interest earning

assets and the cost of average interest-bearing liabilities, including current accounts which are noninterest bearing.

Components of Income and Expenditure

Income

Our income comprises of income from interest earned and other income.

Income from interest earned

Income from interest earned comprises of interest on advances and discounts on bills, income from investments,

interest received from balances maintained with the RBI and other inter-bank funds and other interest income. Income

from investments consists of interest on securities and other investments. Our securities portfolio consists primarily

of Government securities and we meet our SLR requirements through these investments. We also hold debentures and

bonds issued by public sector undertakings and other corporations, commercial paper, certificate of deposits, equity

shares, preference shares, mutual fund units and security receipts.

Other Income

Other income consists of income from non-interest bearing sources including income from commission, exchange and

brokerage which include fees from opening Letter of credit and negotiating bills under Letter of credit, issuance of all

types of Guarantees, Loan processing fees etc., profit on sale of investments, profit on exchange transactions, and

miscellaneous income. Miscellaneous income primarily includes commission received from the sales of third party

products, mutual fund products and fees collected from customers like folio charges, commitment charges etc.

Expenditure

Interest Expended

Our interest expended consists of interest on deposits and interest on borrowing from the RBI and inter-bank

borrowing, and interest on other borrowings. Both our interest income and expenditure are affected by fluctuations in

interest rates as well as the volume of activity. Our interest expenditure is also affected to the extent we fund our

activities with low interest or non interest deposits (CASA), and to the extent to which we rely on other borrowings.

Operating Expenses

Our operating expenses consist principally of employee expenses, rent, taxes and lighting expenses, printing and

stationery expenses, advertisement and publicity expenses, depreciation on our Bank's property, allowances, expenses

of Auditors’ fees including branch auditors, law charges, postage, telegrams, telephones expenses, repairs &

maintenance, insurance expenses and other expenditure.

Provisions and Contingencies

Our provisions and contingencies predominantly comprises provision towards standard assets, provision towards non-

performing assets, provision for MAT credit, provision for gratuity, provision for depreciation in market value of

investments, provision for foreign currency unhedged, provision for other assets and provision for income tax.

77

Nine month period ended December 31, 2016 vs nine month period ended December 31, 2015

(₹ in Crore)

Particulars

Nine Month Period

Ended December 31,

2016

Nine Month Period

Ended December 31,

2015

Interest Earned 6,933.41 7,557.82

Other Income 1,865.32 1,094.03

Total Income 8,798.73 8,651.85

Expenditure

Interest Expended 5,650.54 5,682.71

Operating Expenses 1,854.26 2,072.86

Provisions and Contingencies 1,147.99 765.20

Total Expenditure 8,652.79 8,520.77

Net Profit (+) / Loss (-) for the period 145.94 131.08

Interest Earned

The following table sets out the components of interest earned:

(₹ in Crore)

As on December 31

% Change 2016 2015

Interest / Discount on Advances/Bills 4,431.00 5,087.25 -12.90%

Income on Investments 2,302.61 2,268.85 1.49%

Interest on balances with Reserve Bank of India

and other Inter-Bank Funds 49.19 25.18 95.35%

Others 150.61 176.54 -14.69%

TOTAL: 6,933.41 7,557.82 -8.26%

Interest Income for our Bank decreased by 8.26% to ₹ 6,933.41 crore for the nine-month period ended December 31,

2016 from ₹ 7,557.82 crore for the nine-month period ended December 31, 2015 on account of increase of NPAs and

periodic revision of benchmark rates by our Bank.

Other Income

The following table sets out the components of other income:

(₹ in Crore)

Details of Income Earned As on December 31

% change 2016 2015

Commission, Exchange and Brokerage 115.50 135.80 -14.95%

Profit on sale of Investments 1,366.40 629.44 117.08%

Less : Loss on sale of Investments -3.05 -1.51 101.99%

Profit on revaluation of Investments

Less : Loss on revaluation of Investments

Profit on sale of land, buildings and other assets 0.05 0.00 -

Less : Loss on sale of land, buildings and other assets -0.05 0.00 -

Profit on exchange transactions 139.09 98.22 41.61%

Less : Loss on exchange transactions

Income earned by way of dividend etc., from subsidiaries,

companies and/or joint ventures abroad/ in India

Miscellaneous Income 247.38 232.08 6.59%

TOTAL : 1,865.32 1,094.03 70.50%

78

Other income for our Bank increased by 70.50% to ₹ 1,865.32 crores for the nine-month period ended December 31,

2016 from ₹ 1,094.03 crore in fiscal year 2015 for the nine-month period ended December 31, 2015 on account of

higher profit from trading income from investments, exchange transaction by our Bank as well as other income.

Interest expended

The components of our interest expended are as follows:

(₹ in Crore)

As on December 31 % Change

2016 2015

Interest on Deposits 5,356.65 5,336.55 0.38%

Interest on Reserve Bank of India/inter-Bank borrowings 101.22 121.36 -16.60%

Others 192.67 224.80 -14.29%

TOTAL : 5,650.54 5,682.71 -0.57%

Interest expended for our Bank was marginally decreased by 0.57% to ₹ 5,650.54 crores for the nine-month period

ended December 31, 2016 from ₹ 5,682.71 crore for the nine-month period ended December 31, 2015 due to increase

in CASA and reduction in high cost term deposit rate.

Operating Expenses

The components of our operating expenses are as follows:

(₹ in Crore)

December 31, 2016 December 31, 2015 % Change

Payments to and Provisions for Employees 1,174.54 1,472.15 -20.22%

Rent, Taxes and Lighting 111.60 108.70 2.67%

Printing and Stationery 19.56 16.35 19.63%

Advertisement and Publicity 3.94 3.70 6.49%

Depreciation on Bank's property 76.55 71.77 6.66%

Less : Transfer from Revaluation Reserve

76.55 71.77 6.66%

Directors' fees, allowances and expenses 0.66 1.05 -37.14%

Auditors' fees and expenses 4.94 4.76 3.78%

(including branch auditors' fees and expenses)

Law Charges 6.49 6.28 3.34%

Postage, Telegrams, Telephones etc. 24.14 26.08 -7.44%

Repairs and Maintenance 18.65 18.09 3.10%

Insurance 100.77 89.08 13.12%

Other Expenditure 312.42 254.84 22.60%

TOTAL : 1,854.26 2,072.85 -10.55%

Operating expenses for our Bank was decreased by 10.55 % to ₹ 1,854.26 crores for the nine-months period ended on

December 31, 2016 from ₹ 2,072.85 crore for the nine-month period ended on December 31, 2015 primarily due to

decline in provision requirement as per AS 15 from ₹ 670.19 Crore for the nine-month period ended on December 31,

2015 to ₹ 318.77 crore for the nine-month period ended December 31, 2016 and stringent cost control.

Provisions and contingencies

Due to various pressures on the sectors/businesses that our clients operate in, there were slippages for which we had

to increase the provisioning for non-performing assets. Our provisions and contingencies increased by 50.02% to ₹

1,147.99 crore for the nine-month period ended on December 31, 2016 from ₹ 765.20 crore in fiscal year 2015 for the

nine-month period ended on December 31, 2015, primarily due to regulatory provision required for aging of NPAs.

Net Profit

79

Our Net Profit increased by 11.34% to ₹ 145.94 crore for the nine-month period ended on December 31, 2016 from ₹

131.08 crore for the nine-month period ended on December 31, 2015 as a result of abovementioned factors.

Fiscal year ended on March 31, 2016 vs. Fiscal year ended on March 31, 2015

The table below provides the data for the fiscal years 2016 and 2015, expressed in absolute values as well as expressed

as percentage of total income of the respective years.

Particulars

Fiscal year ended on March 31,

2016 2015

Amount(₹ in

Crore

% of Total

income

Amount (₹ in

Crore

% of Total

income

INCOME

Interest earned 9,936.67 87.13% 10,180.48 85.35%

Other income 1,467.53 12.87% 1,746.91 14.65%

TOTAL INCOME 11,404.20 100.00% 11,927.39 100.00%

EXPENDITURE

Interest expended 7,656.11 67.13% 7,689.82 64.47%

Operating expenses 2,972.78 26.07% 2,438.00 20.44%

Provisions & Contingencies

(Net) 1,057.27 9.27% 1,543.58 12.94%

TOTAL EXPENDITURE 11,686.16 102.47% 11,671.40 97.85%

Net Profit / (Loss) for the

year -281.96 -2.47% 255.99 2.15%

Interest Earned


(₹ in Crore)

Details of Income Earned Year Ended March 31 % change

2016 2015



Interest on balances with RBI and other Inter-Bank Fund 38.44 90.17 -57.37%

Others 231.06 170.16 35.79%

Total 9,936.67 10,180.48 -2.39%

Owing to the challenging economic scenario in the country and the sectors that our clients operate in, our interest

earned fell by 2.39% from ₹ 10,180.48 crore for the fiscal year ended March 31, 2015 to ₹ 9,936.67 crore for the fiscal

year ended March 31, 2016. This was primarily on account of Asset Quality Review (“AQR”) and slippages during

the period thereby reducing the interest earning assets for such period as reduction of benchmark rates from time to

time.

Other Income

The components of our other income are as follows:

(₹ in crore)

Year Ended on

March 31, 2016

Year Ended on

March 31, 2015

% change

Commission, exchange and brokerage 178.44 202.81 -12.02%

Profit on sale of investments 825.24 1168.65 -29.39%

80

Year Ended on

March 31, 2016

Year Ended on

March 31, 2015

% change

Less: loss on sale of investments -1.52 -0.90 68.89%

Profit on revaluation of investments - - -

Less: loss on revaluation of investments - - -

Profit on sale of land, buildings and

other assets 0.05 0.65 -92.31%

Less: loss on sale of land, buildings and

other assets -0.01 -0.07 -85.71%

Profit on exchange transactions 136.07 97.64 39.36%

Less: loss on exchange transactions - - -

Income earned by way of dividend etc.

from subsidiaries, companies and / or

joint ventures abroad / in India - -

Miscellaneous Income 329.26 278.13 18.38%

Total 1,467.53 1,746.91 -15.99%

Other income of our Bank for the fiscal year 2016 reduced by 15.99% to ₹ 1,467.53 crore in the fiscal year 2016 from

₹ 1,746.91 crore in fiscal year 2015. This was primarily due to decline in profit on sale of investment.

Interest Expended


(₹ in crore)

Year Ended on

March 31, 2016

Year Ended on

March 31, 2015

% change

Interest on deposits 7,184.18 7,253.66 -0.96%

Interest on Reserve Bank of India / Inter

– Bank borrowings 176.03 82.53 113.29%

Others 295.90 353.63 -16.32%

Total 7,656.11 7,689.82 -0.44%

The interest expended marginally decreased by 0.44% to ₹ 7,656.11 crore in the fiscal year 2016 from ₹ 7,689.82

crore in fiscal year 2015. This decrease was mainly due to non-renewal of high cost bulk deposit.

Operating expenses


(₹ in Crore)

Year Ended on March

31, 2016

Year Ended on March 31,

2015

% change

Payments to and provisions for

employees 2,133.91 1,666.66 28.04%

Rent taxes and lighting 148.29 139.94 5.97%

Printing and stationery 23.51 26.41 -10.98%

Advertisement and publicity 6.23 5.62 10.85%

Depreciation on bank’s property 102.76 105.72 -2.80%

Less: Transfer from revaluation

reserve 0 0 -

162.76 105.72 -2.80%

Director’s fees, allowances and

expenses 1.32 1.16 13.79%

Auditor’s fees and expenses

(including branch auditor’s fees and

expenses) 15.71 14.60 7.60%

81

Year Ended on March

31, 2016


2015

% change

Law charges 9.77 8.15 19.87%

Postage, telegrams, telephones etc. 34.54 23.54 46.73%

Repairs and maintenance 22.78 33.88 -32.77%

Insurance 118.19 103.38 14.33%


Total 2,972.78 2,438.00 21.94%

Our operating expenses increased by 21.94% to ₹ 2,972.78 crore in fiscal year 2016 from ₹ 2,438.00 crore fiscal year

2015. This rise was primarily due to increase in provision requirement as per AS 15 subsequent to the wage revision

by our Bank during the year.


Our provisions and contingencies decreased to ₹ 1,057.27 crores for the fiscal year 2016 as compare to ₹ 1,543.58

crores for the fiscal year 2015 primarily due to reversal of provision on restructured standard assets as revised RBI

Norms.

Net Profit

Due to the pressure on our business, caused by the performance of our assets, our net profit reduced by -210.14% to

a loss of ₹ 281.96 crore in fiscal year 2016 from ₹ 255.99 crore in fiscal year 2015.

Fiscal year ended on March 31, 2015 vs. Fiscal year ended on March 31, 2014

The table below provides the data for the fiscal years 2015 and 2014, expressed in absolute values as well as expressed

as percentage of total income of the respective years.

Particulars (₹crore)

Fiscal year ended March 31,

2015 2014

Amount(₹ in

Crore

% of Total

income

Amount(₹ in

Crore

% of Total

income

INCOME

Interest earned 10,180.48 85.35% 10,599.29 89.78%

Other income 1,746.91 14.65% 1,206.87 10.22%

TOTAL INCOME 11,927.39 100.00% 11,806.16 100.00%

EXPENDITURE

Interest expended 7,689.82 64.47% 8,036.47 68.07%

Operating expenses 2,438.00 20.44% 2,915.46 24.69%

Provisions & Contingencies

(Net) 1,543.58 12.94% 2,067.68 17.51%

TOTAL EXPENDITURE 11,671.40 97.85% 13,019.61 110.28%

Net Profit / (Loss) for the

year 255.99 2.15% -1,213.45 -10.28%

Interest Earned


(₹ in Crore)

82

Details of Interest Earned Year Ended on March 31

2015 2014 % change



Interest on balances with RBI and other Inter-Bank Fund 90.17 141.09 -36.09%

Others 170.16 195.38 -(12.91)%

Total 10,180.48 10,599.29 -3.95%

Our interest income fell by 3.95% from ₹ 10,599.29 crore for the fiscal year ended March 31, 2014 to ₹ 10,180.48

crore for the fiscal year ended March 31, 2015. This was primarily on account of decrease of interest rate by our Bank

and fresh slippage of NPAs.

Other Income

The components of our other income are as follows:

(₹ in Crore)


2015


2014

% change

Commission, exchange and

brokerage 202.81 202.47 0.17%

Profit on sale of investments 1,168.65 534.52 118.64%

Less: loss on sale of investments -0.90 -8.54 -89.46%

Profit on revaluation of

investments

Less: loss on revaluation of

investments

Profit on sale of land, buildings

and other assets 0.65 0.06 983.33%

Less: loss on sale of land,

buildings and other assets -0.07 -0.02 250.00%

Profit on exchange transactions 97.64 155.98 -37.40%

Less: loss on exchange

transactions - - -

Miscellaneous Income 278.13 322.41 -13.73%

Total 1,746.91 1,206.87 44.75%

Other income of our Bank was increased by 44.75 % to ₹ 1,746.91 crore in the fiscal year 2015 from ₹ 1,206.87 crore

in fiscal year 2014 primarily due to profit on sale of investment. Profit on sale of investment was increased by 118.64%

to ₹ 1,168.65 crore in the fiscal year 2015 from ₹ 534.52 crore in fiscal year 2014.

Interest Expended


(₹ in crore)


2015


2014

% change

Interest on deposits 7,253.66 7,569.14 -4.17%

Interest on Reserve Bank of

India / Inter – Bank borrowings 82.53 94.12 -12.31%

Others 353.63 373.21 -5.25%

Total 7,689.82 8,036.47 -4.31%

The interest expended decreased by 4.31% to ₹ 7,689.82 crore in the fiscal year 2015 from ₹ 8,036.47 crore in fiscal

year 2014 primarily due to increase in share of CASA deposit by 507 bps from 36.98% as on March 31, 2014 to

42.05% March 31, 2015.

83

Operating expenses


(₹ in Crore)


2015


2014

% Change

Payments to and provisions for

employees 1,666.66 2,221.85 -24.99%

Rent taxes and lighting 139.94 125.52 11.49%

Printing and stationery 26.41 30.01 -12.00%

Advertisement and publicity 5.62 10.45 -46.22%

Depreciation on bank’s property 105.72 84.78 24.70%

Less: Transfer from revaluation

reserve - 15.59 -100%

105.72 69.19 52.80%

Director’s fees, allowances and

expenses 1.16 2.00 -42.00%

Auditor’s fees and expenses

(including branch auditor’s fees

and expenses) 14.60 14.60 0.00%

Law charges 8.15 5.25 55.24%

Postage, telegrams, telephones etc. 23.54 23.20 1.47%

Repairs and maintenance 33.88 17.71 91.30%

Insurance 103.38 111.18 -7.02%


Total 2,438.00 2,915.46 -16.38%

Our operating expenses decreased by 16.38% to ₹ 2,438.00 crore in fiscal year 2015 from ₹ 2,915.46 crore fiscal year

2014. This increase was primarily due to decline in the expenses related to employees by 25.00% and increase in profit

due to decline in provision requirement as per AS 15.


Our provisions and contingencies decreased by 25.35% to ₹ 1,543.58 crore for fiscal year 2015 from ₹ 2,067.68 crore

for fiscal year 2014. This was on account of decline in provision for NPA advances from ₹ 1,960.59 crores in the

fiscal year 2014 to ₹ 844.87 crore in the fiscal year 2015 and due to creation of DTA of ₹ 339.26 crore in fiscal year

2015 against reversal of DTA of ₹ 342.77 crores in fiscal year 2014.

Net Profit

Due to the recovery and reduction of NPA, our net profit stood at ₹ 255.99 crore for the fiscal year 2015 visa viz loss

of ₹ 1,213.45 crore in fiscal year 2014.

Capital

We are a banking company within the meaning of the Banking Regulation Act. We are registered with and subject to

supervision by the RBI. Failure to meet minimum capital requirements could lead to regulatory actions by the RBI,

which, if undertaken, could have a material effect on our financial position. The RBI issued detailed guidelines for

implementation of Basel III capital regulations in May 2012. The minimum capital requirements under Basel III are

being phased in as per the guidelines prescribed by the RBI. Accordingly, we were required to maintain a minimum

Common Equity Tier I ratio of 6.125% including Capital Conservative Buffer (“CCB”) of 0.625%, a minimum total

Tier I capital ratio of 7.625 % including CCB of 0.625% and a minimum total capital ratio of 9.625% including CCB

of 0.625% as of March 31, 2016. We migrated to the new framework effective April 1, 2013. Previous year figures of

regulatory capital and capital adequacy ratios were calculated under the then applicable Basel I and Basel II

84

frameworks. In May 2013, the RBI withdrew the requirement of parallel run and the prudential floor for

implementation of Basel II vis-à-vis Basel I.

Our regulatory capital and capital adequacy ratios calculated under Basel III as of March 31, 2014, 2015, 2016 and as

of December 31, 2016 are as follows:

(₹ in crore)

Particulars As at March 31, As at December 31,

2014 2015 2016 2015 2016

Common equity tier I (CET

I)

3,987.02 5,020.58 5659.73 5,180.20 6,318.32

Additional tier I capital 0 0.00 137.18 97.02 144.11

Tier I capital 3,987.02 5,020.58 5,796.91 5,277.22 6,462.43

Tier II capital 1993.51 2,034.21 1,572.54 2,072.96 1624.92

Total capital 5,980.53 7,054.79 7,369.45 7,350.18 8,087.35

Risk weighted assets 61,007.05 66,798.28 73,079.44 74,058.63 74,612.99

CET I ratio (%) 6.54% 7.52% 7.74% 6.99% 8.47%

Tier I capital ratio 6.54% 7.52% 7.93% 7.12% 8.66%

Tier II capital ratio 3.27% 3.05% 2.15% 2.80% 2.18%

Total capital ratio 9.81% 10.57% 10.08% 9.92% 10.84%

Notes:

Tier I and Tier II capital, risk weighted assets and capital adequacy ratios for fiscal year 2013 have been calculated in

accordance with RBI guidelines (New Capital Adequacy Framework, generally referred to as Basel II) and capital

adequacy ratios for fiscal year 2016 and half-year ended December 31, 2016 have been calculated in accordance with

RBI guidelines (Basel III Capital Regulations, generally referred to as Basel III) and therefore are not directly

comparable.

We have adopted a Board-approved policy on our internal capital adequacy and assessment process, which defines

and sets processes to review and improve the techniques used for identification, measurement and assessment of all

material risks and resultant capital requirements.

Tier I capital consists of equity capital, statutory reserves, other disclosed free reserves, capital reserves and innovative

perpetual debt instruments eligible for inclusion in Tier I capital. The Tier II capital consists of general provision and

loss reserves, upper Tier II instruments and subordinate debt instruments eligible for inclusion in Tier II capital.

RBI required us to maintain a minimum CRAR of 9.625% (including capital conservation buffer) by March 31, 2016.

We moved to RBI Basel III Capital Regulations as implemented by RBI from April 1, 2013. Indian banks have to

comply with the regulatory limits and requirements as prescribed under RBI Basel III Capital Regulations, on an

ongoing basis, with full implementation of such regulations by March 31, 2019. As per capital adequacy guidelines

under Basel III, by March 31, 2019 we are required to maintain a minimum capital adequacy ratio of 9% (excluding

the Capital conservation buffer of 2.50%), with minimum Common Equity Tier I (CET I) capital adequacy ratio of

5.50% (excluding capital conservation buffer of 2.50%).

As of December 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.84% with

Tier I capital adequacy ratio of 8.66% and Common Equity Tier 1 (“CET1”) capital adequacy ratio of 8.47%. As of

March 31, 2016, our capital adequacy ratio under the RBI Basel III Capital Regulations was 10.08%. In particular,

our Tier I capital adequacy ratio was 7.93% and our CET I capital adequacy ratio was 7.74%.

Our current sources of funding (other than equity capital) are deposits and borrowings (which include the unsecured

Tier II bonds). The cost of funds obtained is sensitive to interest rate fluctuations, which expose us to the risk that

increasing interest rates will reduce our margins, if we are unable to pass on the increased rates to our customers.

Cash Flows

85

The table below summarizes our cash flows for the fiscal years ended on March 31, 2016, 2015 and 2014:

(₹ in Crores)

Fiscal Year

2016

Fiscal Year

2015

Fiscal Year

2014

Net cash flow from operating activities (A) 2,427.60 (4,803.07) 1,168.79

Net cash flow used in investing activities (B) (89.63) (44.98) (150.83)

Net cash flow from financing activities (C) (42.85) 66.75 805.32

Net cash inflow/(outflow) (A+B+C) 2,295.12 (4,781.30) 1,823.28

Cash and Cash equivalents at the beginning of the year 6,030.54 10,811.84 8,988.56

Cash and Cash equivalents at the end of the year 8,325.66 6,030.54 10,811.84

Cash Flows from operating activities

(₹ in Crores)

Fiscal Year

2016

Fiscal Year

2015

Fiscal Year

2014

Net Cash Flow from Operating Activities 2,427.60 (4,803.07) 1,168.79

Operating Profit before changes in Operating Assets &

Liabilities 1,692.63 2,950.78 2,338.36

Decrease/(Increase) in Investment (1,476.80) 1,701.27 (11,557.82)

Decrease/(Increase) in Advances (3,066.33) (1,840.39) 1,232.53

Increase/(Decrease) in Deposits 7,583.68 (2,692.11) 10,858.17

Increase/(Decrease) in Borrowings (849.22) (398.51) (982.47)

Decrease/(Increase) in Other Assets (681.76) (3,492.68) (272.08)

Increase/(Decrease) in Other Liabilities & Provisions (847.10) (929.65) (334.87)

Tax (Paid) /Refund 110.00 (106.00) (41.00)

Net cash generated from operations in fiscal year 2016 was ₹ 2,427.60 crore. Our net profit before taxes was ₹ (710.69)

crore, which was primarily on account of provision and contingencies of ₹ 2,522.48 crore excluding tax expense.

Net cash generated from operations in fiscal year 2015 was ₹ (4,803.07) crore. Our net profit before taxes was ₹ 595.25

crore, which was primarily on account of provision and contingencies of ₹ 1,832.69 crore excluding tax expense.

Net cash generated from operations in fiscal year 2014 was ₹ 1,168.79 crore. Our net profit before taxes was ₹

(1,213.45) crore, which was primarily on account of provision and Contingencies of ₹ 3,617.96 crore excluding tax

expense.

Cash Flows from Investing Activities

Our net cash flow from investing activities was ₹ (89.63) crore, ₹ (44.98) crore and ₹ (150.83) crore as of and at March

31, 2016, 2015 and 2014.

Our net cash flow from investing activities reflects investments consisting of the purchase and sale of fixed assets.

Cash Flows from Financing Activities

Our net cash flow from financing activities was ₹ (42.85) crore, ₹ 66.75 crore and ₹ 805.32 crore as of and at March

31, 2016, 2015 and 2014.

Assets

The following table sets forth the principal components of our assets as at March 31, 2016, March 31, 2015 and March

31, 2014:

(₹ in Crore)

86

ASSETS Fiscal Year 2016 Fiscal Year 2015 Fiscal Year 2014

Cash and balances with Reserve Bank of

India 6,070.45 5,815.60 6,269.78


Short Notice 2,255.21 214.94 4,542.06

Investments 44,723.38 43,245.49 41,813.38

Advances 68,060.20 66,763.04 65,767.51

Fixed Assets 1,210.92 877.41 938.73

Other Assets 7,111.59 6,111.09 5773.48

TOTAL 1,29,431.75 1,23,027.58 1,25,104.95

Our total assets marginally decreased by 1.66 % from ₹ 1,25,104.95 crore as of March 31, 2014 to ₹ 1,23,027.58 crore

as of March 31, 2015, and subsequently increased by 5.21 % to ₹ 1,29,431.75 crore as of March 31, 2016. The most

significant elements of these changes were increases in investments and advances as a result of a general increase in

our business activities.

Our net investments increased slightly by 3.42% from ₹ 41,813.38 crore as of March 31, 2014 to ₹ 43,245.49 crore as

of March 31, 2015 and subsequently increased by 3.42% to ₹ 44,723.38 crore as of March 31, 2016.

Our advances increased by 1.51% from ₹ 65,767.51 crore as of March 31, 2014 to ₹ 66,763.04 crore as of March 31,

2015, and thereafter increased by 1.94 % to ₹ 68,060.20 crore as of March 31, 2016.

Other assets, which included interest accrued, tax paid, tax deducted at source, stationery and stamps, deferred tax

asset, amortization of transitional liability, amortization of liability under Accounting Standard – 15 (revised),

investment in RRBs and non-banking assets acquired in satisfaction of claims, increased by 5.85% from ₹ 5,773.48

crore as of March 31, 2014 to ₹ 6,111.09 crore as of March 31, 2015, and subsequently increased by 16.37% to ₹

7,111.59 crore as of March 31, 2016.

Financial Instruments and Off-balance sheet items

Contingent Liabilities

(₹ in Crore)

Fiscal Year 2016

Claims against our Bank not acknowledged as debts 9.02

Liability for partly paid investments 19.07

Liability on account of outstanding forward exchange contracts 5,365.95

Guarantees given on behalf of constituents (net of cash margin) :

a. In India 3,157.91

b. Outside India 1,233.28

c. Bank Guarantee invoked but not paid (in India) 4.64

Acceptances, endorsements and other obligations (net of cash margin) 1,768.67

Other items for which our Bank is contingently liable 25.38

TOTAL 11,583.91

Risk Management Policies:

To address various risks like credit risk, market risk, operational risk, liquidity risk, forex risk and other pillar-2 risks,

our Bank has formulated various risk management policies to identify, manage and mitigate such risks that our Bank

is exposed to. The major policies formulated and approved by the Board of Directors of our Bank to address such risks

are lending policy, policy on ICAAP, operational risk management policy, business line, mapping policy, asset

liability management policy, market risk management policy, integrated treasury policy, disclosure policy, credit audit

policy, stress testing policy, and policy on credit risk mitigation technique & collateral management etc.

Credit Risk:

87

To address the credit risk, our Bank has formulated a lending policy which lays down policy guidelines for credit

management covering all areas of operation where credit risk is involved. The policy enables our Bank to enhance the

risk management capabilities by undertaking lending decisions guided by the policy framework for a steady and

healthy growth in its loan portfolio.

Our Bank has set various prudential limits to individual borrowers, group borrowers, entry level exposure norms,

substantial exposure limits, benchmark financial ratios, borrower standards, exposure limits/ceilings to industries,

sensitive sectors, rating category etc. in alignment with RBI directives. The Board of Directors of our Bank has

reviewed such limits during the year. During the year, analysis of various exposure norms has been undertaken on

half yearly basis to ensure Bank's various exposures are within the exposure limits/ceilings fixed by RBI/ Board of

Directors of our Bank. Our Bank has made its loan appraisal function independent of risk rating function. Internal risk

rating of loan accounts is carried through a software based rating model to assess the credit proposal and rating of a

borrower.

During the fiscal year 2016, Bank conducted the credit portfolio analysis on quarterly interval, to study the impact of

a particular industry / sector on the credit portfolio of our Bank and adopt strategies to improve the quality of credit

portfolio and reduce the potential adverse impact of concentration risk. Our Bank has also undertaken the rating

migration analysis of its borrowers on half yearly interval to analyze the stability rate, up-gradation rate, down -

gradation rate and default rate for a one year, two years, three years and four years’ time horizons and appropriate

corrective actions are initiated to protect the portfolio quality.

Market Risk:

Our Bank has in place a Board approved Market Risk Management Policy for management of market risk, which

emphasises on measuring, monitoring and managing liquidity, interest rates, foreign exchange and equity risk of our

Bank. The market risk in trading book is monitored and managed as per appropriate control mechanism in place.

Market position, funding patterns, duration, counterparty limits and various sensitive parameters are also monitored

by our Bank on regular basis. The advanced risk management tools such as Value at Risk (“VaR”), Earnings at Risk

(“EaR”), Net Overnight Open Position Limits (“NOOPL”) and modified duration limits are used in managing market

risk. Our Bank measures and monitors liquidity risk for all items of balance sheet through structural liquidity

statements and stock ratios on regular basis.

Our Bank also monitors its Interest rate risk through interest rate sensitivity gap reports. Our Bank has formulated and

reviewed its treasury policy to set operating guidelines for its treasury functions. Our Bank has also put in place an

asset liability management policy to address the liquidity risk, interest rate risk etc. These policies comprise

management practices, procedures, prudential risk limits, review mechanisms and reporting systems etc. These

policies are reviewed periodically in line with changes in financial and market conditions.

Our Bank has an “Integrated Treasury Management System (ITMS)” software to monitor its investment and treasury

portfolio on an ongoing basis along with automated computation of capital charge for Market Risk as well as

strengthening the internal control system of investment portfolio of our Bank.

Operational Risk:

Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from

external events. Operational risk includes legal risk but excludes strategic and reputation risks. Our Bank has framed

an operational risk management policy for managing the operational risk in an effective manner. Our Bank has also

formulated business line mapping policy for mapping various products, activities, and income into different business

lines. Bank's Operational Risk Management Committee (“ORMC”) has the responsibility of monitoring the

operational risk of our Bank. ORMC also reviews the operational risk loss event data, new products, process and

systems adopted by our Bank and provides suggestions for taking corrective/preventive measures to strengthen the

internal systems and procedures.

The Operational Risk Management Policy adopted by our Bank outlines organization structure and detailed processes

for management of operational risk. The basic objective of the policy is to closely integrate operational risk

management system into the day-to-day risk management processes of our Bank by clearly assigning roles for

effectively identifying, assessing, monitoring and controlling / mitigating operational risks and by timely reporting of

88

operational risk exposures, including material operational risk losses. Operational risks in our Bank are managed

through comprehensive and well-articulated internal control frameworks.

Interest rate risk in the Banking Book

Interest rate risk refers to fluctuations in our Bank's net interest income and the value of its assets and liabilities arising

from internal and external factors. Internal factors include the composition of our Bank's assets and liabilities, quality,

maturity, interest rate and re-pricing period of deposits, borrowings, loans and investments. External factors cover

general economic conditions. Rising or falling interest rates impact our Bank depending on Balance Sheet

composition. Interest rate risk is prevalent on both the asset as well as the liability sides of our Bank's balance sheet.

The Asset-Liability Management Committee (ALCO) periodically monitors and controls the risks and returns, funding

and deployment, setting Bank's lending and deposit rates and directing the investment activities of our Bank. Our

Bank identifies the risks associated with the changing interest rates through earnings at risk approach and duration

gap approach.

Implementation of Indian Accounting Standards (“Ind AS”)

MCA notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015, pursuant to which

the banking companies were exempted to comply with Ind AS for preparation of financial statements. However, in

terms of the MCA press release dated January 18, 2016, the scheduled commercial banks are required to prepare Ind

AS based financial statements on consolidated and standalone basis in relation to accounting period beginning from

April 1, 2018 onwards, with comparatives for the period ending March 31, 2018 or thereafter and not even voluntarily

before that. Further, pursuant to the notification dated February 11, 2016, RBI has advised scheduled commercial

banks to inter alia, set up a Steering Committee headed by an official of the rank of an Executive Director (or

equivalent) comprising members from cross-functional areas of the bank to immediately initiate the Ind AS

implementation process.

Material Developments post March 31, 2016

Through notifications dated November 8, 2016 issued by the Ministry of Finance, Government of India and the RBI,

₹ 500 and ₹ 1,000 denominations of bank notes of then existing series issued by the RBI have ceased to be legal tender.

Pursuant to this currency demonetisation, these high denomination notes have no value and cannot be used for

transactions or exchange purposes with effect from November 9, 2016. These notes are currently being replaced with

a new series of bank notes. In an effort to monitor replacement of demonetised notes, the Government of India has

presently specified restrictive limits for exchange and withdrawal of currency all over India. The process of

demonetisation and replacement of these high denomination notes may for the time being reduce the liquidity in the

Indian economy which has significant reliance on cash.

Owing to the de-monetisation our customers may have been transacting extensively with us since the announcement.

Such transactions may among others also include making deposits into the accounts maintained by our customers.

89

SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IND-AS

The financial information included herein is prepared and presented in accordance with Indian GAAP. Certain

differences exist between Indian GAAP and Ind-AS which might be material to the financial information herein and

are summarized below. Our Bank is responsible for preparing the Summary below. Our Bank has not prepared a

complete reconciliation of its financial statements and related footnote disclosures between Indian GAAP and Ind-AS

and has not quantified such differences. Accordingly, no assurance is provided that the following summary of

differences between Indian GAAP and Ind-AS is complete. In making an investment decision, investors must rely upon

their own examination of our Bank, the terms of the offering and the financial information. Potential investors should

consult their own professional advisors for an understanding of the differences between Indian GAAP and Ind-AS,

and how those differences might affect the financial information herein.

Sr.

No.

Particulars Indian GAAP Ind-AS

1.

Presentation of

Financial

Statements

Statement of Change in Equity:

Under Indian GAAP, a statement of

changes in equity is not required.

Movements in share capital, retained

earnings and other reserves are presented

in the Schedules to Financial

Statements.

Statement of Change in Equity: Ind

AS-1 requires the presentation of a

statement of changes in equity showing:

a) Transactions with owners in their

capacity as owners, showing

separately contributions by and

distributions to equity holders.

b) The total comprehensive income for

the period. Amounts attributable to

owners of the parent and non-

controlling interests are to be shown

separately.

c) Effects of retrospective application

or restatement on each component

of equity.

d) For each component of equity, a

reconciliation between the opening

and closing balances separately

disclosing each change.

Other Comprehensive Income: There is

no concept of 'Other Comprehensive

Income' under Indian GAAP.

Other Comprehensive Income: Ind

AS 1 introduces the concept of Other

Comprehensive Income ("OCI"). Items

of income and expenses that are not

recognized in profit and loss as required

or permitted by other Ind ASs are

presented under OCI.

Other disclosures: There are no specific

disclosure requirements under Indian

GAAP for :

(a) Critical judgments made by the

management in applying accounting

policies;

(b) Key sources of estimation uncertainty

that have a significant risk of causing a

material adjustment to the carrying

amounts of assets and liabilities within the

next financial period; and

Other disclosures: Ind AS-1 requires

disclosure of:

(a) Critical judgments made by the

management in applying accounting

policies;

(b) Key sources of estimation

uncertainty that have a significant risk of

causing a material adjustment to the

carrying amounts of assets and liabilities

within the next financial period; and

90

Sr.

No.


(c) Information that enables users of its

financial statements to evaluate the entity’s

objectives, policies and processes for

managing capita

(c) Information that enables users of its

financial statements to evaluate the

entity’s objectives, policies and

processes for managing capital.

Extraordinary items: Under Indian

GAAP, extraordinary items are disclosed

separately in the statement of profit and

loss and are included in the determination

of net profit or loss for the period. Items of

income or expense to be disclosed as

extraordinary should be distinct from the

ordinary activities and are determined by

the nature of the event or transaction in

relation to the business ordinarily carried

out by an entity.

Extraordinary items: Under Ind AS,

presentation of any items of income or

expense as extraordinary is prohibited.

Change in Accounting Policies: Indian

GAAP requires changes in accounting

policies should be presented in the

financial statements on a prospective basis

(unless transitional provisions, if any, of an

accounting standard require otherwise)

together with a disclosure of the impact of

the same, if material. If a change in the

accounting policy has no material effect on

the financial statements for the current

period, but is expected to have a material

effect in the later periods, the same should

be appropriately disclosed.

Change in Accounting Policies: Ind

AS requires retrospective application of

changes in accounting policies by

adjusting the opening balance of each

affected component of equity for the

earliest prior period presented and the

other comparative amounts for each

period presented as if the new

accounting policy had always been

applied, unless transitional provisions of

an accounting standard require

otherwise.

Dividends: Under Indian GAAP,

declaration of dividend is an adjusting

event and dividend proposed after the

balance sheet date but before approval of

the financial statements will have to be

recorded as a provision

Dividends: Ind AS requires liability for

dividends declared to holders of equity

instruments are recognized in the period

in which it is declared. It is a non-

adjusting event

Errors: Under Indian GAAP, prior period

errors are included in determination of

profit or loss for the period in which the

error is discovered and are separately

disclosed in the statement of profit and loss

in a manner that the impact on current

profit or loss can be perceived.

Errors: As per Ind AS 8 material prior

period errors shall be corrected

retrospectively in the first set of

financial statements either by restating

the comparative amounts for the prior

period(s) presented in which the error

occurred or if the error occurred before

the earliest prior period presented,

restating the opening balances of assets,

liabilities and equity.

2 Cash Flow

statements

1. Bank overdrafts are considered as

financing activities.

2. Cash flows from items disclosed as

extraordinary are classified as arising

from operating, investing or financing

activities as appropriate, and

separately disclosed.

1. As on IND AS 7, it should be included

as cash and cash equivalents if they form

an integral part of an entity’s cash

management.

2. As presentation of items as

extraordinary is not permitted, the cash

flow statement does not reflect any items

of cash flow as extraordinary.

91

Sr.

No.


3

Deferred Taxes Under Indian GAAP, the Company

determines deferred tax to be recognized in

the financial statements with reference to

the income statement approach i.e. with

reference to the timing differences between

profit offered for income taxes and profit

as per the financial statements.

As per Ind AS 12 Income Taxes,

deferred tax is determined with

reference to the balance sheet approach

i.e. based on the differences between

carrying value of the assets/ liabilities

and their respective tax base. Using the

balance sheet approach, there could be

additional deferred tax charge/income

on account of:

i. All Ind AS opening balance sheet

adjustments

ii. Actuarial gain and losses accounted in

OCI.

iii. Indexation of freehold land

iv. Fair valuation adjustments

(employee loans, security deposits etc.)

4

Property, plant

and equipment —

reviewing

depreciation and

residual value

Under Indian GAAP, the Company

currently provides depreciation on straight

line method and on other assets

depreciation under WDV method, based

on the useful life prescribed in Schedule II

to the Companies Act, 2013. or as

estimated by the Management based on

technical evaluation

Ind AS 16 mandates reviewing the

method of depreciation, estimated useful

life and estimated residual value of an

asset at least once in a year. The effect

of any change in the estimated useful

and residual value shall be taken

prospectively. Ind AS 101 allows

current carrying value under Indian

GAAP for items of property, plant and

equipment to be carried forward as the

cost under Ind AS.

5. Property, plant

and equipment-

Provision for site

restoration

expenses

Currenly, under Indian GAAP, the

company does not have recognises

provision for Site restoration expenses

Under Ind AS 16, the cost of an item of

property, plant and equipment includes

the initial estimate of the costs of

dismantling and removing the item and

restoring the site on which it is located,

the obligation for which an entity incurs

either when the item is acquired or as a

consequence of having used the item

during a particular period for purposes

other

than to produce inventories during that

period.

6. Leases Leasehold Land: Leasehold land

is recorded and classified as fixed

assets and is excluded from lease

standard.

Leasehold Land: Land lease is

classified as operating or finance as per

the criteria under Ind AS 17. When a

lease includes both land and

building elements, an entity assesses the

classification of each element as a

finance or operating lease separately.

Operating Lease Rentals: Under Indian

GAAP, lease payments under an operating

lease are recognized as an expense in the

statement of profit and loss on a straight

line basis over the lease term, unless

another systematic basis is more

representative of the time pattern of the

users benefit.

Operating Lease Rentals: Under Ind

AS 17, lease payments under an

operating lease are recognized as an

expense in the statement of profit and

loss on a straight line basis over the lease

term unless either of the below:

92

Sr.

No.


a) another systematic basis is more

representative of the time pattern of the

user's benefit, or

b) the payments to the lessor are

structured to increase in line with

expected general inflation for cost

increases.

Determining whether an arrangement

contains a lease: There is no such

requirement if it does not take the legal

form of a lease.

Determining whether an arrangement

contains a lease: An arrangement that

does not take the legal form of a lease

but fulfilment of which is dependent on

the use of specific assets and which

conveys the right to use the assets is

accounted for as a lease in accordance

with Ind AS 17.

7.

Accounting for

Employee

benefits

Currently under Indian GAAP the

Company recognizes all short term and

long term employee benefits in the profit

and loss account as the services are

received. For long term employee benefit,

the Company uses actuarial valuation to

determine the liability.

Under Ind AS 19, the change in liability

is split into changes arising out of

service, interest cost and re-

measurements and the change in asset is

split between interest income and re-

measurements. Changes due to service

cost and net interest cost/ income need

to be recognized in the income statement

and the changes arising out of re-

measurements are to be recognized

directly in OCI.

8. Segment

Disclosures -

Determination of

segments:

Currently under Indian GAAP, segment

information is prepared in conformity with

the accounting policies adopted for

preparing and presenting the financial

statements of the enterprise as a whole.

Segment revenue, segment expense,

segment result, segment asset and segment

liability have been defined. Disclosures are

required based on classification of segment

as primary or secondary. Disclosure

requirements for secondary reporting

format are less detailed than those required

for primary reporting segments.

Ind AS 108 requires segment disclosure

based on the components of the entity

that

Management monitors in making

decisions about operating matters (the

'management approach'). Such

components (operating segments) are

identified on the basis of internal reports

that the entity's Chief Operating

Decision Maker (CODM) regularly

reviews in allocating resources to

segments and in assessing their

performance. The term 'chief operating

decision maker' identifies a function, not

necessarily a manager with a specific

title. That function is to allocate

resources to and assess the performance

of the operating segments of an entity.

Often the chief operating decision maker

of an entity is its chief executive officer

or chief operating officer but, for

example, it may be a group of executive

directors or others.

9 Business

combinations

Upon acquisition, any excess of the

amount of the purchase consideration over

the value of net assets of the transferor

company acquired by the transferee

company is recognized in the transferee

As per IND AS 103, All business

combinations are to be accounted at fair

value using the "Acquisition method".

Upon acquisition, all assets acquired and

liabilities assumed are recorded at fair

93

Sr.

No.


company's financial statements as

goodwill on acquisition. All acquisitions

have been accounted in line with treatment

prescribed in the court approval or in case

of amalgamation, as prescribed under AS

14.

value on the acquisition date.

Contingent consideration payable shall

be considered as part of total

consideration while arriving at goodwill

or gain on acquisition, as the case may

be. However, common control

transactions are scoped out and can be

accounted for using the "book value"

approach Lastly, Ind AS 101 provides

exemptions for past business

combinations from accounting

prescribed under Ind AS 103 and the

entity can elect to continue the

accounting it had adopted under Indian

GAAP.

10. Classification of

Financial

Instruments and

subsequent

measurement

Currently under Indian GAAP the

Company classifies all its financial assets

and liabilities as short term or long term.

Long term investments are carried at cost

less any permanent diminution in the value

of such investments determined on a

specific identification basis. Current

investments are carried at lower of cost and

fair value. Financial liabilities are carried

at their transaction values.

Ind AS 109 requires all Financial assets

to be either classified as measured at

amortized cost or measured at fair value.

Where assets are measured at fair value,

gains and losses are either recognized

entirely in profit or loss (FVTPL), or

recognized in other comprehensive

income (FVTOCI). Financial assets

include equity and debts investments,

interest free deposits, loans, trade

receivables etc., There are two

measurement categories for financial

liabilities —FVTPL and amortized cost.

Fair value adjustment on transition shall

be adjusted against opening retained

earnings on the date of transition.

Provision for doubtful debts:

Under Indian GAAP, provisions are made

for specific receivables based on

circumstances such as credit default of

customer or disputes with customers. An

enterprise should assess the provision of

doubtful debts at each period end which, in

practice, is based on relevant information

such as past experience, actual financial

position and cash flows of the debtors.

Different methods are used for making

provisions for bad debts, including ageing

analysis and individual assessment of

recoverability.

Provision for doubtful debts: In

addition to the specific provisions under

Indian GAAP, under Ind AS, at each

reporting date, an entity shall assess

whether the credit risk on trade

receivables has increased significantly

since initial recognition. When making

the assessment, an entity shall use the

Expected Credit Loss model to provide

for a loss allowance over and above any

provision for doubtful debts in the profit

and loss statement. An entity shall

measure expected credit losses to reflect

the following:

an unbiased and probability weighted

amount that is determined by evaluating

a range of possible outcomes;

the time value of money; and

reasonable and supportable information

that is available without undue cost or

effort at the reporting date about past

94

Sr.

No.


events, current conditions and forecasts

of future economic condition

Fair valuation of corporate guarantee given

Under Indian GAAP. The company does

not account for the Corporate Guarantee

revenue

Under IND as 109, For a financial

guarantee contract, the entity is required

to make payments only in the event of a

default by the debtor in accordance with

the terms of the instrument that is

guaranteed. Accordingly, cash shortfalls

are the expected payments to reimburse

the holder for a credit loss that it incurs

less any amounts that the entity expects

to receive from the holder, the debtor or

any other party. If the asset is fully

guaranteed, the estimation of cash

shortfalls for a financial guarantee

contract would be consistent with the

estimations of cash shortfalls for the

asset subject to the guarantee. Hence,

such costs are to be recorded in books

Recognition and measurement of Financial

liabilities at amortized cost: Bank

borrowings and debentures were measured

at initial recognition minus the principal

repayments.

Financial liabilities at amortized cost

shall be measured at initial recognition

minus the principal repayments, plus or

minus the cumulative amortization

using the effective interest method of

any difference between that initial

amount and the maturity amount.

11. Other income Interest income is accounted on accrual

basis. Dividend income is accounted for

when the right to receive it is established.

Ind AS 18 requires interest to be

recognised using effective interest rate

method as per Ind AS 109

12. Revenues -

Measurement:

Revenue is recognized at the nominal

amount of consideration receivable.

Revenue is recognised at fair value of

the consideration receivable. Fair value

of revenue from sale of goods and

services when the inflow of cash and

cash equivalents is deferred is

determined by discounting all future

receipts using an imputed rate of

interest. The difference between the fair

value and the nominal amount of

consideration is recognized as interest

revenue using the effective interest

method.

95

SELECT STATISTICAL INFORMATION

The following unaudited information should be read together with our financial statements, including the notes

thereto, and the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

appearing elsewhere in this Placement Document. Whenever relevant, ratios for the nine-month periods are presented

on an annualized basis. Footnotes appear at the end of each related section of tables where applicable.

We prepare our financial statements in accordance with Indian GAAP and all amounts presented in this section are

in accordance with Indian GAAP. The financial statements reflect applicable statutory requirements and regulatory

guidelines and accounting practices in India. These requirements, guidelines and practices change from time to time

and, in accordance with Indian GAAP, adjustments to reflect such changes are made on a prospective basis and the

financial statements for earlier periods are not restated. For the purposes of a comparative analysis in the discussion

below, previous years’ figures have been reclassified wherever necessary. See “Risk Factors—Significant differences

exist between Indian GAAP and other accounting principles, such as U.S. GAAP and IFRS, which investors may be

more familiar with and may consider material to their assessment of our financial condition.”

Average Balance Sheet

The table below presents the average balances for interest-earning assets and interest-bearing liabilities together with

the related interest income and expense amounts, resulting in the presentation of the average yields and cost for the

periods indicated.

Average Balance: The average balance is the fortnightly average of balances outstanding.

Average Yield on Average Interest-Earning Assets: The average yield on average interest-earning assets is the ratio of

interest income to average interest-earning assets.

Average Cost on Average Interest-Bearing Liabilities: The average cost on average interest-bearing liabilities is the

ratio of interest expense to average interest-bearing liabilities. For purposes of calculating spread, interest bearing

liabilities include non-interest bearing demand deposits.

Average Balance of Advances: The average balances of advances are net of average balances of bills rediscounted

(“BRDS”) and bank risk participation (“IBPC”), consistent with our balance sheet presentation, as mandated by the

RBI. Accordingly, interest expended on BRDS and IBPC transactions is netted off from interest income on advances

for the purposes of the information on average yield/cost. The interest expended on these transactions is included

under interest expense on borrowings in our financial statements for each of the periods presented.

Average Balance of Investments: The average balances of investments are net of average balances of securities sold

under repurchase agreements (repo transactions) with the RBI and include average balances of securities purchased

under agreements to resell (reverse repo transactions) with the RBI, consistent with our balance sheet presentation, as

mandated by the RBI. Accordingly, interest expended on these repo transactions is netted off from interest income on

investments, and interest income on the reverse repo transactions is included under interest income on investments for

the purposes of the information on average yield/cost. The interest expended on the repo transactions is included under

interest expense on borrowings and the interest income on the reverse repo transactions is included under interest

income on balances with the RBI and other inter-bank funds in our financial statements for each of the periods

presented.

Particulars

(All Figures in ₹ Crore)

Year ended March 31, 2014 Year ended March 31, 2015 Year ended March 31, 2016

Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Interest-earning

assets:

Advances 72,207.52 7,816.56 10.83 65,220.53 7,040.83 10.80 66,783.54 6,628.44 9.93

Investments 30,859.38 2,597.62 8.42 35,610.53 2,879.32 8.08 37,775.29 3,038.73 8.04

Others 10,811.83 185.11 1.71 15,126.29 260.32 1.72 8,325.66 269.50 3.24

Total interest-earning

assets 1,13,878.73 10,599.29 9.31 1,15,957.35 10,180.48 8.78 1,12,884.49 9,936.67 8.80

96

Particulars



Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Non-interest-earning

assets:

Fixed assets 938.73 NA NA 877.41 NA NA 1,210.92 NA NA

Other assets 2,710.52 NA NA 6,111.09 NA NA 7,111.59 NA NA

Total non-interest

earning assets 3,649.25 NA NA 6,988.50 NA NA 8,322.51 NA NA

Total assets 1,17,527.98 10,404.68 9.14 1,22,945.85 10,180.48 8.28 1,21,207.00 9,936.67 8.20

Interest-bearing

liabilities:

Deposits 1,06,009.94 7,569.14 7.14 1,05,378.25 7,253.66 6.88 1,09,138.43 7,184.17 6.58

Borrowings 4,460.24 467.33 10.48 4,061.73 436.16 10.74 2,912.51 471.94 16.20

Total interest-bearing

liabilities 1,10,470.18 8,036.47 7.27 1,09,439.98 7,689.82 7.03 1,12,050.94 7,656.11 6.83

Non-interest-bearing

liabilities

Capital and reserves 5,282.66 NA NA 5,828.04 NA NA 6,319.19 NA NA

Other liabilities 1,775.14 NA NA 7,677.83 NA NA 2,836.87 NA NA

Total non-interest-

bearing liabilities 7,057.80 NA NA 13,505.87 NA NA 9,156.06 NA NA

Total liabilities 1,17,527.98 8,036.47 7.27 1,22,945.85 7,689.82 6.25 1,21,207.00 7,656.11 6.32

Particulars (All Figures in ₹ Crore)

Nine Months ended December 31, 2015 Nine Months ended December 31, 2016

Average

Balance

Interest

Income /

Expense

Average

yield/cost (%)

Average

Balance

Interest

Income /

Expense

Average

yield/cost

(%)

Interest-earning assets:

Advances 65,353.52 5,087.25 7.78 67,601.91 4,431.00 6.55

Investments 37,627.77 2,231.36 5.93 38,719.68 2,302.61 5.95

Others 5,547.99 201.73 3.64 26,754.61 199.80 0.75

Total interest-earning assets 1,08,529.28 7,557.82 6.96 1,33,076.20 6,933.41 5.21

Non-interest-earning assets:

Fixed assets 858.06 NA NA 1,183.79 NA NA

Other assets 6,936.16 NA NA 12,652.00 NA NA

Total non-interest earning assets 7,794.22 NA NA 13,835.79 NA NA

Total assets 1,16,323.50 7,557.82 6.96 1,46,911.99 6,933.41 4.72

Interest-bearing liabilities:

Deposits 1,05,770.88 5,336.55 5.05 1,16,778.62 5,356.66 4.59

Borrowings 4,562.79 346.16 7.59 2,027.20 293.89 14.50

Total interest-bearing liabilities 1,10,333.67 5,682.71 5.15 1,18,805.82 5,650.55 4.76

Non-interest-bearing liabilities

Capital and reserves 5,959.12 NA NA 7,126.86 NA NA

Other liabilities 30.71 NA NA 20,979.31 NA NA

Total non-interest-bearing liabilities 5,989.83 NA NA 28,106.17 NA NA

Total liabilities 1,16,323.50 5,682.71 5.15 1,46,911.99 5,650.55 4.76

Analysis of Changes in Interest Income and Interest Expense

The following table sets forth, for the periods indicated, the allocation of the changes in our interest income and interest

expense between average balance and average rate. The changes in net interest income between periods have been

reflected as attributed either to average balance or average rate changes. For purposes of the below tables, changes

which are due to both average balance and average rate have been allocated solely to changes in average rate.

97

Particulars


Fiscal year 2013 vs Fiscal year 2014 Increase

(decrease) due to


(decrease) due to

Net change

Change in

average

balance

Change in

average rate Net change

Change in

average

balance

Change in

average rate

Interest income:

Advances 917.28 11,245.13 -0.48 -775.73 -6,986.97 -0.03

Investments 332.05 4,177.53 0.01 434.33 4,751.55 0.16

Others 92.20 996.65 NA -93.67 4,315.07 NA

Total Interest Income 1,347.79 1,291.89 NA -418.81 2,078.62 NA

Interest expense:

Deposits 1,338.06 18,219.03 -0.06 -315.48 -631.69 -0.26

Borrowings -65.82 28,670.20 NA -31.17 -398.51 NA

Total interest expense 1,272.24 46,889.23 NA -346.65 -1030.20 NA

Particulars



(decrease) due to

Nine months ended December 31, 2015 vs Nine

months ended December 31, 2016 Increase

(Decrease) due to

Net change

Change in

average

balance

Change in

average rate Net change

Change in

average

balance

Change in

average rate

Interest income:

Advances -412.39 1,563.00 -0.87 -656.25 2,248.39 -1.22

Investments 158.42 2,164.77 -0.04 35.80 1,091.91 -0.01

Others 178.06 52.35 NA 1.93 21,206.92 NA

Total Interest Income -243.81 926.34 NA -624.40 24,546.92 NA

Interest expense:

Deposits -69.49 3,760.18 -0.30 20.11 11,007.74 -0.49

Borrowings 35.78 5,845.21 NA -52.28 -2,535.59 NA

Total interest expense -33.71 9,605.39 NA -32.17 8,472.15 NA

Return on Equity and Assets

The following table presents selected financial ratios for the periods indicated

Particulars


Year ended March 31 Nine Month Ended

December 31

2014 2015 2016 2015 2016

Net profit (1,213.45) 255.99 (281.95) 131.08 145.94

Average total assets 1,22,323.85 1,20,632.38 1,24,306.15 1,24,167.02 1,33,076.20

Average total shareholders’ equity 3,412.37 4,961.05 4,691.35 3,901.19 4,053.88

Return on assets (net profit as a percentage of average total

assets) (0.99) 0.21 (0.23) 0.11 0.06

Return on equity (net profit as a percentage of average total

shareholders’ equity) -35.56 5.16 -6.01 3.36 3.60

Average total shareholders’ equity as a percentage of average

total assets

2.79 4.11 3.77 3.14 3.05

Investment Portfolio

The following tables set forth, as of the dates indicated, information related to our investments classified under the

held to maturity (HTM), available for sale (AFS) and held for trading (HFT) categories:

Particulars

(All figures in ₹ crore)

At March 31, 2014 At March 31, 2015

HTM AFS HFT Total HTM AFS HFT Total

Government Securities 25,962.76 9,121.29 - 35,084.05 24,166.22 10,854.23 - 35,020.45

Other Approved Securities 16.43 - - 16.43 - - - -

Shares 3.85 434.96 - 438.81 3.85 339.59 - 343.44

Debentures and Bonds - 2,152.15 - 2,152.15 16.43 2,096.26 - 2,112.69

98

Particulars


At March 31, 2014 At March 31, 2015


Joint Venture & Subsidiaries - - - - - - - -

Others 3,092.09 4,343.97 - 7,436.06 25.81 5,937.66 - 5,963.47

Total 29,075.13 16,052.37 - 45,127.50 24,212.31 19,227.74 - 43,440.05

Particulars


At March 31, 2016 At December 31, 2016


Government Securities 24,166.50 12,074.16 - 36,240.66 24,790.48 22,581.28 - 47,371.76

Other Approved Securities - - - - - - - -

Shares 3.85 353.95 - 357.80 3.85 499.40 - 503.25

Debentures and Bonds 166.43 1,983.93 - 2,150.36 166.43 2,506.00 - 2,672.43

Joint Venture & Subsidiaries - - - - - - - -

Others 32.16 6,153.04 - 6,185.20 26.47 10,272.46 - 10,298.93

Total 24,368.94 20,565.08 - 44,934.02 24,987.23 35,859.14 - 60,846.37

Residual Maturity Profile

The following table sets forth, for the periods indicated, an analysis of the residual maturity profile of our government

and debt securities and their market yields.

Particulars

(All figures in ₹crore)

Year ended March 31, 2016

Up to one year One to five years Five to ten years

Amount Yield (%) Amount Yield (%) Amount Yield (%)

Government Securities 273.48 7.91 9,010.36 7.69 16,237.38 8.17

Other Debt Securities 230.99 8.90 785.79 9.09 787.42 8.39

Total 504.47 9,796.15 17,024.80

Particulars


Nine months ended December 31, 2016

Up to one year One to five years Five to ten years

Amount Yield (%) Amount Yield (%) Amount Yield (%)

Government Securities 1,297.44 7.77 6,816.20 7.69 23,750.95 7.65

Other Debt Securities 195.87 9.23 793.04 8.55 1,075.54 8.08

Total 1,493.31 7,609.24 24,826.49

Funding

Total Deposits All figures in ₹crore

Particular

s

Year ended March 31 Nine months ended December 31

2014 2015 2016 2015 2016

Amount % of

Total Amount

% of

Total Amount

% of

Total Amount

% of

Total Amount

% of

Total

Demand

deposits 8,077.00 7.24 8,944.00 8.22 7,981.00 6.86 6,648.00 5.91 9,697.00 7.59

Savings

deposits 33,154.00 29.73 36,811.00 33.83 40,810.00 35.06 39,246.00 34.89 51,273.00 40.16

Time

deposits 70,279.00 63.02 63,063.00 57.95 67,610.00 58.08 66,582.00 59.20 66,722.00 52.25

Total 1,11,510.00 100.00 1,08,818.00 100.00 1,16,401.00 100.00 1,12,476.00 100.00 1,27,692.00 100.00

Short-term Borrowings

The following table sets forth, for the periods indicated, information related to our short-term borrowings, which are

comprised primarily of money-market borrowings. Short-term borrowings include securities sold under repurchase

agreements with market participants but exclude those with the RBI. For the purpose of the below table, short-term

borrowings exclude our interbank deposits taken under the credit support annex arrangements.

99

Particulars (All figures in ₹ crore) Year ended March 31 Nine months ended December 31

2014 2015 2016 2015 2016

Period end 0 0 0 250.0 0

Average balance during the period 156.14 218.87 663.33 658.33 599.77

Average interest rate during the period 8.08 7.67 7.10 7.20 6.39

Average interest rate at period end 0 0 0 6.96 0

Subordinated Debt

As at December 31, 2016

Type Cur Year of

Issue

Year of

Maturity

Average

Tenor

(Years)

Interest

Rate

(%)

Year of call Step-up rate

(%)

Face

Value

(₹crore)

Lower Tier II (SERIES V) INR March 27,

2007

April 27,

2017 10.08 10.10 No No 100

Upper Tier-II (Series-I)

Basel I INR

June 18,

2007

June 18,

2022 15.00 10.65

June 18,

2017 11.15 575

Lower Tier -II (Series-VI)

Basel I INR

March 25,

2009

March 25,

2019 10.00 9.30 No No 250

Lower Tier -II (Series-VII)

Basel II INR

December

28, 2011

December

28, 2021 10.00 9.20 No No 200

IPDI-Tier I(Series I) Basel

II INR

December

5, 2012

December

5, 2022 Perpetual 9.27

Call option

after 10

years from

the date of

issue with

approval of

RBI

No 300

Lower Tier -II (Series-

VIII) Basel III Compliant INR

June 25,

2013

June 25,

2023 10.00 8.75 No No 500

AT-1 Basel III Compliant INR September

29, 2015

September

29, 2020 Perpetual 11.95

Call option

after 05

years from

the date of

issue with

approval of

RBI

No 150

Interest Coverage Ratio

Particulars


Year ended March 31, Nine months ended December

31,

2014 2015 2016 2015 2016

Net Profit (A) (1,213.45) 255.99 (281.95) 131.08 145.94

Depreciation on Bank's Property (B) 69.19 105.72 102.76 71.77 76.55

Interest expended (C) 8,036.47 7,689.82 7,656.11 5,682.71 5,650.54

Total (D = A+B+C) 6,892.21 8,051.53 7,476.92 5,885.56 5,873.03

Interest Coverage Ratio (D C) 0.86 1.05 0.98 1.04 1.04

Asset Liability Gap

The following table sets forth, for the periods indicated, our asset-liability gap position:

Particulars (All

figures in ₹ crore)

As of December 31, 2016

0-28 Days 29-90

Days

91-180

Days

6-12

Months

Total

within one

year

Over 1

year to 3

years

Over 3

years to 5

years

Over 5

years Total

Cash and balances

with Reserve Bank of

India 2,018.99 177.08 258.66 376.87 2,831.60 726.68 515.20 2,840.77 6,914.26

Balances with banks

and money at call and

short notice 407.95 0 0 0 407.95 0 0 0 407.95

Investments 23,108.32 6,044.16 2,523.52 3,355.36 35,031.36 2,641.07 1,967.67 20,967.25 60,607.35

Advances 9,954.65 4,473.48 1,969.45 3,157.23 19,554.82 9,990.41 8,544.24 25,605.84 63,695.30

100

Particulars (All

figures in ₹ crore)

As of December 31, 2016

0-28 Days 29-90

Days

91-180

Days

6-12

Months

Total

within one

year

Over 1

year to 3

years

Over 3

years to 5

years

Over 5

years Total

Fixed assets 0 0 0 0 0 0 0 1,183.80 1,183.80

Other assets 1,608.22 626.33 304.09 1,541.96 4080.59 897.05 1,646.84 5,319.78 11,944.26

Total assets 37,098.13 11,321.05 5,055.72 8,431.42 61,906.32 14,255.21 12,673.95 55,917.44 1,44,752.92

Capital 0 0 0 0 0 0 0 1,339.45 1,339.45

Reserves and surplus 0 0 0 0 0 0 0 5,787.43 5,787.43

Deposits 8,749.69 4,753.72 6,324.69 9,065.04 28,893.14 17,812.11 12,783.37 68,203.61 1,27,692.23

Borrowings 1.47 134.90 100.00 86.41 322.79 422.17 208.26 1,525.00 2,478.22

Other liabilities and

provisions 1,330.28 775.91 974.63 2,349.85 5,430.66 31.2 0 1,993.73 7,455.59

Total liabilities 10,081.44 5,664.53 7,399.32 11,501.30 34,646.59 18,265.48 12,991.63 78,849.22 1,44,752.92

Liquidity gap 27,016.69 5,656.52 -2,343.6 -3,069.9 27,259.73 -4,010.27 -317.68 -22,931.8 0

Cumulative Liquidity

gap 27,016.69 32,673.20 30,329.6 27,259.7 27,259.70 23,249.46 2,2931.78 26,964.00 0

Cumulative liabilities 10,081.44 15746 2,3145.3 34,646.6 34,646.60 52,912.07 65,903.7 1,44,752.9 1,44,752.90

Cumulative liquidity

gap as a percentage of

cumulative liabilities

(%)

267.98% 207.50% 131.04% 78.68% 78.68% 43.94% 34.80% 0.00% 0.00%

Loan Portfolio

The following table sets forth, for the periods indicated, our gross loan portfolio (including loans made by our overseas

branches) classified by product group. Loans are classified into retail based on the criteria of orientation, the nature of

the product, granularity of the exposure and quantum thereof as laid down by the Basel committee. See the section

“Supervision and Regulation”. For a description of our retail and wholesale loan products, see the “Business” section.

Gross Loans -Industry


Year ended March 31, Nine month ended December 31,

2014 2015 2016 2015 2016

Auto loans 648.24 513.03 518.79 496.76 577.51

Personal loans / Credit Cards 3,125.31 3,685.27 3,233.97 3,040.62 2,866.32

Retail business banking 53,575.32 53,346.47 54,053.65 53,793.11 50,615.26

Commercial vehicle and 1,435.64 1,026.62 956.13 956.16 965.59

construction equipment finance 934.66 1,027.61 1,757.28 1,738.16 1,168.79

Housing loans 4,381.50 5,092.74 5,969.67 5,618.12 6,695.97

Other retail loans 2,201.77 2,759.92 2,930.11 2,918.10 2,920.15

Gross retail loans 10,356.82 12,050.96 12,652.36 12,073.60 13,059.95

Gross wholesale loans 1,679.27 1,618.26 1,991.33 1,681.55 2,056.43

Total gross loans 67,981.71 69,069.92 71,412.00 70,242.58 67,866.02

Concentration of Domestic Loans

Pursuant to the guidelines of the RBI, our exposure to individual borrowers is limited to 15% of our capital funds (as

defined by the RBI and calculated under Indian GAAP), and our exposure to a group of companies under the same

management is limited to 40% of our capital funds. In the case of infrastructure projects, such as power,

telecommunications, road and port projects, an additional exposure of up to 5% of capital funds is allowed in respect

of individual borrowers and up to 10% in respect of group borrowers. We may, in exceptional circumstances, with the

approval of our Board of Directors, consider enhancement of exposure to a borrower by a further 5% of capital funds.

The following table sets forth, for the periods indicated, our gross loans outstanding by the borrower’s industry or

economic activity and as a percentage of our gross loans (where such percentage exceeds 2.0% of the total). We do

not consider retail loans a specific industry for this purpose.

101

Particulars


As at March 31, As at December 31,

2014 2015 2016 2015 2016

Wholesale Trade 1,679.27 1,618.26 1,991.33 1,681.55 2,056.43

Agriculture and Allied Activities 9,724.81 8,594.61 9,460.65 7,992.61 8,596.57

Automobile & Auto Ancilliary 648.24 513.03 518.79 496.76 577.51

Road Transportation 1,435.64 1,026.62 956.13 956.16 965.59

Retail Trade 2,651.06 2,539.47 2,866.04 2,475.76 2,403.41

Services 14,879.35 16,011.60 16,858.06 15,892.11 14,803.96

NBFC / Financial Intermediaries 5,270.12 6,128.48 6,183.99 6,106.60 5,021.79

Food & Beverage 1,216.48 1,291.70 1,766.30 1,525.81 1,675.01

Power 9,664.66 9,484.11 9,335.32 10,943.70 10,394.60

Iron & Steel 4,920.60 5,005.35 4,751.18 4,840.26 4,612.51

Coal & Petroleum Products 225.90 200.10 221.99 201.54 240.90

Others (including unclassified retail) 15,665.58 16,656.59 16,502.22 17,129.72 16,517.74

Total 67,981.71 69,069.92 71,412.00 70,242.58 67,866.02

Directed Lending

The RBI has established guidelines requiring Indian banks to lend 40% of their adjusted net bank credit (ANBC), as

computed in accordance with RBI guidelines, or the credit equivalent amount of off balance sheet exposures,

whichever is higher, as of March 31 of the previous fiscal to certain sectors called “priority sectors”. Priority sectors

are broadly comprised of agriculture, micro and small enterprises (MSEs), including retail trade, micro credit,

education and housing, subject to certain limits.

The following table sets forth, for the periods indicated, our directed lending broken down by sector:

Particulars (All figures in ₹crore) As at March 31, As at December 31,

2014 2015 2016 2015 2016

Directed lending:

Agriculture 12,297.00 9,073.00 12,605.00 10,944.00 11,277.00

Micro and small enterprises 11,238.00 12,273.00 10,998.00 10,835.00 10,219.00

Other 5,415.00 7,215.00 6,206.00 5,887.00 6,918.00

Total directed lending 28,950.00 28,561.00 29,809.00 27,666.00 28,414.00

Non-Performing Assets

Recognition of Non-Performing Assets

The RBI has issued guidelines on income recognition, asset classification, provisioning standards and the valuation

of investments applicable to banks, which are revised from time to time. The principal features of the RBI guidelines

are set forth below.

An asset, including a leased asset, becomes non-performing once it ceases to generate income for our Bank. The RBI

guidelines stipulate the criteria for determining and classifying a non-performing asset (NPA). A NPA is a loan or an

advance where:

interest and/or an installment of principal remains overdue (as defined below) for a period of more than 90

days in respect of a term loan;

the account remains “out-of-order” (as defined below) in respect of an overdraft or cash credit for more than

90 days;

the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted;

102

in the case of a loan granted for short duration crops, the installments of principal or interest thereon remain

overdue for two crop seasons;

in the case of a loan granted for long duration crops, the installments of principal or interest thereon remain

overdue for one crop season;

the amount of a liquidity facility remains outstanding for more than 90 days, in respect of securitization

transactions undertaken in accordance with the RBI guidelines on securitization; or

in respect of derivative transactions, the overdue receivables representing the positive mark-to-market value

of a derivative contract, remain unpaid for a period of 90 days from the specified due date for payment.

Banks should classify an account as a NPA if the interest imposed during any quarter is not fully repaid within ninety

days from the end of the relevant quarter. For additional information regarding the RBI’s guidelines regarding the

classification of NPAs into categories, please refer to the section “Supervision and Regulation”.

“Overdue”

Any amount due to our Bank under any credit facility is “overdue” if it is not paid on the due date fixed by our Bank.

“Out-of-Order” Status

An account should be treated as “out-of-order” if the outstanding balance remains continuously in excess of the

sanctioned limit/drawing power. In circumstances where the outstanding balance in the principal operating account is

less than the sanctioned limit/drawing power, but (i) there are no credits continuously for a period of 90 days as on

the date of the balance sheet of the bank or (ii) the credits are not sufficient to cover the interest debited during the

same period, these accounts should be treated as “out-of-order”.

The following table sets forth, for the periods indicated, information about our NPAs:

Particulars (All figures in ₹ crore) As at March 31, As at December 31,

2014 2015 2016 2015 2016

Gross NPAs 7,118.01 6,552.91 9,471.01 6,721.53 10,845.31

Provision for NPAs 2,399.24 2,430.68 3,351.75 2,748.72 4,076.68

DICDC/ECGC Claim (unadjusted) 54.66 40.85 8.55 7.68 38.74

Net NPAs 4,664.11 4,081.38 6,110.71 3,965.13 6,729.89

Gross Advances 67,981.71 69,069.92 71,412.00 70,242.58 67,866.02

Gross NPAs as a percentage of gross advances (%) 10.47 9.49 13.26 9.57 15.98

Provisions coverage ratio 52.25 58.50 53.36 60.89 54.62

Classification of Non-Performing Assets

As per RBI guidelines, banks are required to classify their NPAs into substandard, doubtful and loss asset categories.

Substandard assets

A substandard asset is one which has remained an NPA for a period of less than or equal to 12 months. In such cases,

the current net worth of the borrower / guarantor or the current market value of the security charged is not enough to

ensure recovery of the dues to the banks in full. In other words, such an asset will have well defined credit weaknesses

that jeopardize the liquidation of the debt and are characterized by the distinct possibility that banks will sustain some

loss, if deficiencies are not corrected.

Doubtful assets

A doubtful asset is one which has remained an NPA for a period exceeding 12 months. A loan classified as doubtful

has all the weaknesses inherent in assets that were classified as substandard, with the added characteristic that the

103

weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly

questionable and improbable.

Loss assets

A loss asset is one where loss has been identified by our Bank or internal or external auditors or the RBI inspection

but the amount has not been written off wholly. In other words, such an asset is considered uncollectible and of such

little value that its continuance as a bankable asset is not warranted although there may be some salvage or recovery

value. The following table sets forth, for the periods indicated, the classification of our gross NPAs in accordance with

the RBI guidelines:

Particulars

All figures in ₹crore

As at March 31 As at December 31

2014 2015 2016 2015 2016

Substandard 4,161.60 2,221.07 2,506.56 1,403.92 2,214.67

Doubtful 2,809.14 4,294.31 6,931.44 5,076.00 8,490.55

Loss 147.27 37.53 33.01 241.61 140.09

Gross NPAs 7,118.01 6,552.91 9,471.01 6,721.53 10,845.31

Provisioning Policy for Non-Performing Assets

Specific loan loss provisions in respect of non-performing advances are made based on management’s assessment of

the degree of impairment of wholesale and retail advances, subject to the minimum provisioning level prescribed by

the RBI. The specific provision levels for retail NPAs are also based on the nature of product and delinquency levels.

In relation to non-performing derivative contracts, as per the extant RBI guidelines, we make provision for the entire

amount of overdue and future receivables relating to positive marked to market value of the said derivative contracts.

Provisions for substandard, doubtful and loss asset categories are required to be made as per the RBI guidelines

described below. These provisioning requirements are the minimum provisions that have to be made in accordance

with the RBI guidelines.

Substandard assets

A general provision of 15.0% on total outstanding loans is required without making any allowance for the Export

Credit Guarantee Corporation of India guarantee cover and securities available. The unsecured exposures which are

identified as sub-standard are subject to an additional provision of 10.0% (i.e. a total of 25.0% on the outstanding

balance). However, unsecured loans classified as substandard, where certain safeguards such as escrow accounts are

available, are subject to an additional provision of only 5.0% (i.e. a total of 20.0% on the outstanding balance).

Doubtful assets

A 100.0% provision is made against the unsecured portion of the doubtful asset. The value assigned to the collateral

securing a loan is the realizable value determined by third party appraisers. In cases where there is a secured portion

of the asset, depending upon the period for which the asset remains doubtful, a 25.0% to 100.0% provision is required

to be made against the secured asset as follows:

Up to one year: 25.0% provision.

One to three years: 40.0% provision.

More than three years: 100.0% provision.

Loss assets

The entire asset is required to be written off or 100.0% of the outstanding amount is required to be provided for.

Analysis of Non-Performing Loans by Industry Sector

The following table sets forth, for the periods indicated, our non-performing loans by borrowers’ industry or economic

activity in each of the respective periods and as a percentage of our loans in the respective industry or economic

activity sector.

104

Industry

All figures in ₹ crore


Gross

Loans

Non-

Performing

Loans

(NPL)

NPL as a

% of

loans in

the

Industry

Gross

Loans

Non-

Performing

Loans

(NPL)

NPL as a

% of

loans in

the

Industry

Gross

Loans

Non-

Performing

Loans

(NPL)

NPL as a

% of

loans in

the

Industry

Information Technology 23.98 3.44 14.35 27.78 19.03 68.50 14.46 8.57 59.27

Paper, Printing and

Stationery 132.22 53.52 40.48 95.64 8.49 8.88 122.91 7.50 3.10

Iron and Steel 4,920.60 1,027.81 20.89 5,005.35 758.99 15.16 4,763.47 2,063.96 43.33

Engineering 1,481.47 192.31 12.98 1,625.44 265.94 16.36 1,369.20 315.44 23.04

Mining and Minerals 81.58 18.64 22.85 66.01 29.24 44.30 208.57 86.99 41.71

Road Transportation 714.75 122.06 17.08 558.49 106.90 19.14 491.94 94.58 19.23

Retail Assets 6,426.70 304.41 4.74 6,906.93 277.12 4.01 6,654.44 285.10 4.28

Textiles & Garments 1,527.81 371.57 24.32 1,512.57 169.10 11.18 1,558.39 313.59 20.12

Gems and Jewellery 418.51 231.52 55.32 435.79 49.22 11.29 426.40 79.98 18.76

NBFC / Financial

Intermediaries 6,270.12 - - 6,128.48 - - 6,183.99 - -

Wholesale Trade 1,679.27 333.04 19.83 1,618.26 300.13 18.55 1,992.58 491.70 24.68

Real Estate & Property

Services 6,569.90 324.07 4.93 6,875.81 219.31 3.19 7,913.18 284.88 3.60

Construction and

Developers 934.66 116.83 12.50 1,027.61 85.36 8.31 1,757.28 238.69 13.58

(Infrastructure)

Automobile & Auto

Ancillary 478.39 222.69 46.55 603.87 5.96 0.91 605.65 5.42 0.89

Agriculture and Allied

Activities 9,724.81 1,285.45 13.22 8,594.61 1,322.96 15.39 9,461.52 1,121.48 11.85

Retail Trade 2,651.06 610.26 23.02 2,539.47 487.81 19.21

Chemical and Products 824.45 308.61 37.43 599.75 133.51 22.26 473.79 2.59 0.55

Capital Market

Intermediaries 3.61 0.38 10.53 2.61 0.62 23.75 1.65 0.63 38.18

Wood & Products 143.55 28.06 19.55 147.03 23.69 16.11 145.66 33.42 22.94

Power 9,664.66 25.31 0.26 10,484.1

1 - -

11,335.3

2 166.38 1.47

Plastic & Products 220.37 35.01 15.89 190.08 41.55 21.86 190.64 33.88 17.77

Services 1,320.33 257.06 19.47 1,375.73 286.40 20.82 1,625.19 354.89 21.84

Food and Beverage 1,445.96 268.30 18.56 1,630.55 314.02 19.26 1,912.06 360.35 18.85

Consumer Durables 78.62 12.90 16.41 51.29 11.20 21.84 28.25 9.55 33.81

Telecom 1,076.71 17.91 1.66 971.68 87.17 8.97 803.86 17.91 2.23

Housing Finance

Companies 2,785.44 - - 3,227.12 - - 3,272.76 - -

Drugs and

Pharmaceuticals 326.39 160.98 49.32 313.30 231.07 73.75 480.86 229.10 47.64

Fertilisers & Pesticides 201.23 0.71 0.35 233.02 0.59 0.25 294.51 0.60 0.20

Glass & Products 6.87 0.40 5.82 6.96 1.15 16.52 5.53 1.45 26.22

Other Industries 5,847.69 784.76 13.42 6,214.58 1,316.38 21.18 7,317.94 2,862.38 39.11

Total gross non-

performing loans 67,981.71 7,118.01 10.47

69,069.9

2 6,552.91 9.49

71,412.0

0 9,471.01 13.26

Industry



Gross Loans Non-Performing

Loans (NPL)

NPL as a %

of loans in the

Industry


Loans (NPL)

NPL as a %

of loans in the

Industry

Information Technology 26.21 18.90 72.11 13.29 8.48 63.81

Paper, Printing and Stationery 105.49 6.69 6.34 127.46 7.43 5.83

Iron and Steel 4,840.26 1,040.75 21.50 4,612.51 3,228.18 69.99

Engineering 1,223.32 181.31 14.82 1,284.12 271.66 21.15

Mining and Minerals 89.67 17.51 19.53 76.84 5.18 6.74

Road Transportation 491.08 99.75 20.31 497.48 95.72 19.24

Retail Assets 6,422.18 293.71 4.57 6,346.58 303.02 4.77

Textiles & Garments 1,276.71 208.76 16.35 1,280.86 753.29 58.81

Gems and Jewellery 396.61 50.33 12.69 375.71 79.80 21.24

NBFC / Financial Intermediaries 6,106.60 - - 5,021.79 15.57 0.31

Wholesale Trade 1,681.55 331.80 19.73 2,056.43 794.32 38.63

Real Estate & Property Services 7,499.94 288.67 3.85 8,662.99 368.21 4.25

Construction and Developers 1,738.16 255.69 14.71 1,168.79 261.75 22.39

105

Industry




Loans (NPL)

NPL as a %

of loans in the

Industry


Loans (NPL)

NPL as a %

of loans in the

Industry

(Infrastructure)

Automobile & Auto Ancillary 579.48 5.78 1.00 645.67 4.78 0.74

Agriculture and Allied Activities 7,992.61 1,342.19 16.79 8,596.57 1,233.70 14.35

Retail Trade 2,475.76 492.70 19.90 2,403.41 601.83 25.04

Chemical and Products 474.05 2.59 0.55 516.50 2.55 0.49

Capital Market Intermediaries 1.73 0.34 19.65 11.97 0.76 6.35

Wood & Products 138.81 24.26 17.48 153.28 34.12 22.26

Power 10,943.70 65.86 0.60 10,394.60 282.66 2.72

Plastic & Products 182.73 31.45 17.21 196.96 33.90 17.21

Services 1,338.03 266.06 19.88 1,358.99 353.20 25.99

Food and Beverage 1,886.83 359.08 19.03 1,988.79 420.22 21.13

Consumer Durables 33.30 10.28 30.87 17.40 8.94 51.38

Telecom 922.51 17.91 1.94 769.14 17.91 2.33

Housing Finance Companies 3,381.10 - - 3,054.97 - -

Drugs and Pharmaceuticals 380.02 229.31 60.34 248.86 172.24 69.21

Fertilisers & Pesticides 269.46 0.61 0.23 266.88 0.59 0.22

Glass & Products 5.85 1.18 20.17 18.00 9.04 50.22

Other Industries 7,338.83 1,077.76 14.69 5,338.96 1,460.37 27.35

Total gross non-performing loans 70,242.58 6,721.53 9.57 67,866.02 10,845.31 15.98

Remediation Strategy for Non-Performing Loans

Movement of Provisions for Non-Performing Assets

Particulars


As at March 31 As at December 31

2014 2015 2016 2015 2016

Specific provisions at the beginning of the period 971.93 2,399.24 2,430.68 2,430.68 3,299.91

Provisions made during the period, 1,908.63 792.12 1,769.17 893.92 1,208.83

Provisions no longer required on account of write-offs 481.37 760.68 848.10 575.88 432.06

Specific provisions at the end of the period 2,399.24 2,430.68 3,351.75 2,748.72 4,076.68

General Provisions on Standard Assets and Floating Provisions

We maintain general provision for standard assets including credit exposures computed as per the current marked to

market values of interest rate and foreign exchange derivative contracts, and gold at levels stipulated by the RBI from

time to time. General provision for standard assets is included under Other Liabilities. Banks are required to make

general provisions for standard assets for the funded outstanding on a global portfolio basis. The provisioning

requirement for housing loans at teaser rates is 2.00% and will reduce to 0.40% after one year from the date on which

the teaser rates are reset at higher rates if the accounts remain standard. In November 2012, the RBI increased the

provisioning requirement for restructured standard assets from 2.0% to 2.75%. In May 2013, the RBI increased the

provisioning requirement for all types of accounts restructured to 5.0% with effect from June 1, 2013. For the stock

of restructured standard accounts as of May 31, 2013, this increase is required to be implemented in a phased manner

by March 31, 2016. The provisioning requirements for other loans range from 0.25% to 1.00% on the outstanding

loans based on the type of exposure. Derivative exposures, such as credit exposures computed as per the current

marked to market value of the contract arising on account of the interest rate and foreign exchange derivative

transactions and gold are subject to the same provisioning requirement applicable to the loan assets in the standard

category of the concerned counterparties. All conditions applicable for the treatment of the provisions for standard

assets would also apply to the aforesaid provisions for derivatives and gold exposures. Provisions made in excess of

these regulatory requirements or provisions which are not made with respect to specific NPAs are categorized as

floating provisions. Creation of floating provisions is considered by our Bank up to a level approved by the Board of

Directors.

Restructured Assets

The RBI has issued prudential guidelines on the restructuring of assets by banks. The guidelines essentially deal with

the norms/conditions, the fulfillment of which is required to maintain the category of the restructured account as a

‘standard asset’. Similar guidelines apply to assets categorized as substandard. Substandard accounts which have been

106

subjected to restructuring, whether in respect of principal installment or interest amount, are eligible to be upgraded

to the standard category only after the specified period, i.e. a period of one year after the date when the first payment

of interest or principal, whichever is earlier, falls due, subject to satisfactory performance during the period. If there

is a failure to meet payment or other terms of a restructured loan, it may be considered a failed restructuring, in which

case it is no longer classified as a restructured loan. We restructure assets on a case-by-case basis after our management

has determined that restructuring is the best means of maximizing realization of the asset.

Capital Adequacy

The following table sets forth, for the periods indicated, our capital adequacy ratios computed as per applicable RBI

guidelines:

Particulars



2014 2015 2016 2015 2016

Common equity tier I (CET I) 3,987.02 5,020.58 5,659.73 5,180.20 6,318.32

Additional tier I capital - - 137.18 97.02 144.11

Tier I capital 3,987.02 5,020.58 5,796.91 5,277.22 6,462.43

Tier II capital 1,993.51 2,034.21 1,572.54 2,072.96 1,624.92

Total capital 5,980.53 7,054.79 7,369.45 7,350.18 8,087.35

Risk weighted assets 61,007.05 66,798.28 73,079.44 74,058.62 74,612.99

CET I ratio (%) 6.54% 7.52% 7.74% 6.99% 8.47%

Tier I capital ratio 6.54% 7.52% 7.93% 7.12% 8.66%

Tier II capital ratio 3.27% 3.05% 2.15% 2.80% 2.18%

Total capital ratio 9.81% 10.57% 10.08% 9.92% 10.84%

The following table sets forth, for the periods indicated, our risk weighted assets (RWA) pertaining to credit risk,

market risk and operational risk computed as per applicable the RBI guidelines:

Particulars



2014 2015 2016 2015 2016

Basel III Basel III Basel III Basel III Basel III

Credit risk RWA 51,652.68 54,864.02 58,044.81 58,769.65 55,554.01

Market risk RWA 4,058.17 6,092.75 7,819.76 8,074.10 11,725.22

Operational risk RWA 5,296.20 5,841.51 7,214.87 7,214.87 7,333.76

Total risk weighted assets 61,007.05 66,798.28 73,079.44 74,058.62 74,612.99

107

INDUSTRY OVERVIEW

The information in this section has been extracted from publicly-available documents, including officially-prepared

materials from the Government of India and its various ministries, the RBI and its publications, industry or general

publications and other third-party sources as cited in this section. Industry websites and publications generally state

that the information contained therein has been obtained from sources believed to be reliable, but their accuracy and

completeness are not guaranteed and their reliability cannot be assured.

While we have exercised reasonable care in compiling and reproducing such official, industry, market and other data

in this document, it has not been independently verified by BRLMs, us or any of our advisors, and thus should not be

relied on as if it had been so verified. Statements in this section that are not statements of historical fact constitute

“forward looking statements”. Such forward-looking statements are subject to various risks, assumptions and

uncertainties, and certain factors could cause actual results or outcomes to differ materially.

Overview of the Indian Economy

India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO)

and International Monetary Fund (IMF). (Source: http://indiainbusiness.nic.in/). The Union Budget for 2017-18 has

been announced by the Union Minister for Finance, Government of India, in Parliament on February 1, 2017 and the

Economic growth is expected at 6.5 per cent in 2016-17. IMF expects India to grow at 7.2 per cent in 2017 and 7.7

per cent in 2018. (Source: Union Budget for Financial Year 2017-18)

The Indian economy has emerged as a bright spot in the world economy, becoming one of the fastest growing large

economies in the world. The 7.6 per cent growth in the GDP at constant market prices in 2015-16, according to the

advanced estimates of the Central Statistics Office, compares favorably with growth in the previous three years; 7.2

per cent in 2014-15, 6.6 per cent in 2013-14 and 5.6 per cent in 2012-13. It is noteworthy that this growth is estimated

to be achieved despite subdued global demand that dampened India's exports significantly, and two consecutive below-

normal monsoons that impacted farm output and productivity. (Source: RBI, Macro-Economic Framework Statement,

2016-17).

(Source: IMF)

Indian economy at this juncture stands out amongst emerging market cohorts in terms of growth and investment

potential. However, gross fixed capital formation needs a fillip while maintaining robust trends in consumption to

sustain higher levels of growth. With the Government’s commitment to continue on the path of fiscal discipline, the

efforts on containing the revenue deficit and rationalising subsidies need to be reinforced. India’s external sector

indicators show a relatively stronger position. However, a faster growth in India’s oil import in terms of volume in

recent years makes it imperative to be alert to the risks of commodity cycle reversals. (Source: RBI Financial Stability

Report – June 2016)

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As at November, 2016, the CPI increased to 131.2 Index Points from 126.6 Index Points in November 2015 while the

WPI increased to 183.1 Index Points from 177.5 Index Points. As at December 16, 2016, the Call Money Rate

percentage was 6.09%, and the 10 year government security yields and 91 days treasury bill yield were 6.59% and

6.19%, respectively. According to the International Monetary Fund, India’s real GDP growth rate in market prices is

projected to remain at 7.6% in fiscal year 2017. (Sources: RBI Weekly Statistical Supplement Vol.31 No.52 December

23, 2016 and https://www.imf.org/external/country/IND/index.htm, as available on November 11, 2016)

Indian Banking Industry

The financial sector primarily exists to serve the needs of the real economy by channelising savings towards productive

purposes. As activity in the real economy expands and diversifies, the financial sector is also expected to grow, both

in scale and scope, to facilitate the process of economic growth and development. While there is a significant

relationship between economic growth and financial sector development, the causation may run both ways. Production

and distribution of economic information, allocation of resources, monitoring and control over the use of resources,

facilitating the diversification and management of risks among others have been identified as some of the key functions

of the financial sector which aid economic growth. The efficiency and resilience with which a financial system carries

out these vital functions define the stability of the system, which in turn is important for sustainable economic growth.

While India continues to be a bank dominated financial system, recent trends show that the flow of resources through

non-bank sources is comparable to that from banks. With banks undertaking the much needed balance sheet repairs

and a section of the corporate sector coming to terms with deleveraging, the onus of providing credit falls on the other

actors. Amidst sluggish bank credit growth, capital markets do seem to be supporting the needs of the commercial

sector. However, the increasing use of short term debt instruments and the private placement route (as against long

term public issuance of debt securities) indicate that the debt markets have to go a long way before they can effectively

supplement bank credit and share risks. Previous FSRs have focussed on asset quality, capital levels and profitability

related challenges facing Indian banks, especially public sector banks (PSBs). While the deterioration in performance

parameters of Indian banks was primarily caused by the economic downturn, other factors, such as weaknesses in

governance, appraisal and risk management processes and imprudence of banks coupled with the corporate sector’s

excessive leverage, and in some cases misdemeanours also played a role. With PSBs having a dominant share in the

banking sector, the Government has taken some concrete steps for addressing the entire spectrum of issues for

improving the governance, capital-base and performance of PSBs, including establishing the Banks Board Bureau and

introducing key performance indicators (KPIs).

(Source: RBI Financial Stability Report – June 2016)

The Indian banking system consists of 27 public sector banks, 21 private sector banks, 47 foreign banks, 56 regional

rural banks. As at end of March 2016, India’s co-operative banking sector comprised of 1,574 urban cooperative banks

and 93,913 rural cooperative banks, including short-term and long-term credit institutions (Source:

https://www.rbi.org.in/scripts/PublicationsView.aspx?id=17410). Public-sector banks control nearly 80 percent of the

market, thereby leaving comparatively much smaller shares for its private peers. Banks are also encouraging their

customers to manage their finances using mobile phones. Standard & Poor’s estimates that credit growth in India’s

banking sector would improve to 11-13 per cent in FY17 from less than 10 per cent in the second half of CY14. Indian

banking industry has recently witnessed the roll out of innovative banking models like payments and small finance

banks. The central bank granted in-principle approval to 11 payments banks and 10 small finance banks in FY 2015-

16. RBI’s new measures may go a long way in helping the restructuring of the domestic banking industry.

(Source: Sectoral Report as on February, 2017 available at http://www.ibef.org/industry/banking-india.aspx)

However, Tech Mahindra, Cholamandalam Finance and Dilip Shanghvi-IDFC Bank-Telenor JV have surrendered

their payment bank licence. Of the ten entities awarded in-principle SFB licenses, two entities have already

commenced operations as SFBs, while various entities have applied to the RBI for their final license.

Constituents of the Indian Banking Industry

The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank

of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently

moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though

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originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of

India. The Reserve Bank of India performs this function under the guidance of the Board for Financial Supervision

(BFS). The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve

Bank of India.

The main functions of the RBI are as follows:

Monetary Authority: it formulates, implements and monitors the monetary policy with the objective of

maintaining price stability and ensuring adequate flow of credit to productive sectors.

Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within

which the country's banking and financial system functions with the objective of maintaining public confidence

in the system, protect depositors' interest and provide cost-effective banking services to the public.

Manager of Foreign Exchange: Manages the Foreign Exchange Management Act, 1999 with the objective of

facilitating external trade and payment and promote orderly development and maintenance of foreign exchange

market in India.

Issuer of currency: Issues and exchanges or destroys currency and coins not fit for circulation to give the public

adequate quantity of supplies of currency notes and coins and in good quality.

Development role: Performs a wide range of promotional functions to support national objectives.

The related functions of the RBI are as follows:

Banker to the Government: performs merchant banking function for the central and the state governments; also

acts as their banker.

Banker to banks: maintains banking accounts of all scheduled banks.

(Source: https://www.rbi.org.in/Scripts/AboutusDisplay.aspx)

Types of Banks

i) Public Sector Banks

Government of India continued to maintain more than the statutory minimum shareholding of 51 per cent in all PSBs.

The maximum non-resident shareholding during the year among PSBs was 11.9 per cent as against 72.7 per cent in

the case of PVBs. (Source: RBI Report on Trend and Progress of Banking in India 2015 – 16)

The Department of Financial Services (DFS) is mainly responsible for policy issues relating to Public Sector Banks

(PSBs) and Financial Institutions including their functioning. The Government had announced “Indradhanush” a plan

to revamp PSBs and as part of that, a programme of capitalization to ensure that PSBs remain BASEL-III compliant

was also announced under which Rs. 70,000 crore is supposed to be provided between 2015-19. It has been decided

that the minimum Common Equity Tier 1 capital of 5.5% will be maintained alongwith capital conservation buffer

(CCB) of 2.5% which will sum upto 8%. The minimum total capital of 9% will have to be achieved by March 31,

2019 excluding CCB. (Source: Master Circular – Basel III Capital Regulations dated July 1, 2015 issued by RBI).

Further, large banks were also given growth capital to support credit needs of the growing economy. Post AQR

exercise by RBI to clean the balance sheets of PSBs, the numbers are being re-looked at and a revised programme of

capitalization will be issued as part of “Indradhanush 2.0”. The Government has already infused a sum of ₹ 19,950

crore in 13 PSBs during the current financial year.

Previously, Government had put in place a mechanism of Statement of Intent on Annual Goals (SOI) to monitor the

performance of the PSBs on various performance parameters wherein annual targets were given to the PSBs after

having detailed discussion with their top management. While fixing the target of SOI for PSBs on parameters such as

deposits, advances priority sector lending, reduction in Non-Performing Assets (NPAs), recovery in written-off

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accounts, profit, CRAR, net interest margin (NIM), return on assets (ROA), cost toincome ratio etc. various factors

are taken into consideration viz. the actual performance of the bank during the preceding financial year, growth trends

in the industry, future plans of the bank, acceptability of the targets by the banks etc. From 2015-16 onwards, SOI has

been replaced by Key Performance Indicators (KPI) to make the targets generic rather the bank specific so that need

to interact with bank authority is eliminated/ minimized.

(Source: RBI Annual Report – 2015 – 2016)

ii) Private Sector Banks

Over the last two decades, the RBI licensed twelve banks in the private sector. This happened in two phases. Ten

banks were licensed on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001

based on the experience gained from the functioning of these banks and fresh applications were invited. Entities /

groups in the private sector that are ‘owned and controlled by residents’ as defined in Department of Industrial Policy

and Promotion (DIPP) Press Note 2, 3 and 4 of 2009 / FEMA Regulations as amended from time to time and entities

in public sector shall be eligible to promote a bank through a wholly-owned Non-Operative Financial Holding

Company (NOFHC). Promoters / Promoter Groups with an existing non-banking financial company (NBFC) will be

eligible to apply for a bank license. Promoter / Promoter Group will be permitted to set up a bank only through a

wholly-owned Non-Operative Financial Holding Company (NOFHC).

The minimum voting equity capital requirements for banks and shareholding by NOHFC are as follows –

The initial minimum paid-up voting equity capital for a bank shall be ₹ 5 billion. Any additional voting equity

capital to be brought in will depend on the business plan of the Promoters.

The NOFHC shall hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall

be locked in for a period of five years from the date of commencement of business of the bank.

Shareholding by NOFHC in the bank in excess of 40 per cent of the total paid-up voting equity capital shall be

brought down to 40 per cent within three years from the date of commencement of business of the bank.

In the event of the bank raising further voting equity capital during the first five years from the date of

commencement of business, the NOFHC should continue to hold 40 per cent of the enhanced voting equity

capital of the bank for a period of five years from the date of commencement of business of the bank. Voting

equity capital, other than the holding by NOFHC, could be raised through public issue or private placements.

The shareholding by NOFHC shall be brought down to 20 per cent of the paid-up voting equity capital of the

bank within a period of 10 years, and to 15 per cent within 12 years from the date of commencement of business

of the bank.

The capital requirements for the regulated financial services entities held by the NOFHC shall be as prescribed

by the respective sectoral regulators. The bank shall be required to maintain a minimum capital adequacy ratio

of 13 per cent of its risk weighted assets (RWA) for a minimum period of 3 years after the commencement of its

operations subject to any higher percentage as may be prescribed by RBI from time to time. On a consolidated

basis, the NOFHC and the entities held by it shall maintain a minimum capital adequacy of 13 per cent of its

consolidated RWA for a minimum period of 3 years.

The bank shall get its shares listed on the stock exchanges within three years of the commencement of business

by the bank.

(Source: RBI Guidelines for Licensing of New Banks in the Private Sector, February 22, 2013)

iii) Foreign Banks

At present, foreign banks have presence in India only through branches. At present, foreign banks, if eligible, are

allowed by the Reserve Bank of India (RBI) to set up business in India through a single mode of presence i.e. either

branch mode or a wholly owned subsidiary (WOS) mode. It has been decided, as hitherto to, allow foreign banks to

operate in India either through branch presence or they can set up a wholly owned subsidiary (WOS) with near national

treatment. The foreign banks have to choose one of the above two modes of presence and shall be governed by the

principle of single mode of presence. Subsequently, Reserve Bank, in terms of the powers conferred on it under Section

35A read with Section 44A of the Banking Regulation Act, 1949, in the public interest and in the interest of banking

policy issued a ‘Scheme for Setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India’.

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The factors taken into account while considering applications for setting up WOS in India would include the following:

Economic and political relations with the country of incorporation of the parent bank,

Reciprocity with home country of the parent bank,

Financial soundness,

Ownership pattern,

International and home country ranking of the parent bank by a reputed agency,

Home country/parent bank rating by a rating agency of international repute such as Moody Investors Service,

Standard & Poor’s and Fitch Ratings,

International presence of the bank,

Adequate risk management and internal control systems.

A foreign bank, which obtains an in-principle approval from the Reserve Bank for opening a WOS in India has to

apply to the Registrar of Companies for registering the subsidiary as a company under the Companies Act, 1956 (Act

1 of 1956) and shall be required to comply with the provisions of that Act, to the extent they are applicable to banking

companies as defined in Banking Regulation Act, 1949.

(Source: Scheme for Setting up of Wholly Owned Subsidiaries (WOS) by foreign banks in India)

iv) Co-operative Banks

Cooperative banks cater to the financing needs of agriculture, small industry and self-employed businessmen in urban,

semi-urban and rural areas of India. The state land development banks and the primary land development banks

provide long-term credit for agriculture. The Banking Regulation (Amendment) and Miscellaneous Provisions Act,

2004, which came into effect from September 24, 2004, specifies that all multi-state cooperative banks are under the

supervision and regulation of the RBI. Accordingly, the RBI is currently responsible for the supervision and regulation

of urban cooperative societies, NABARD, state cooperative banks and district central cooperative banks. The wide

network of co-operative banks, both rural and urban, supplements the commercial banking network for deepening

financial intermediation by bringing a large number of depositors/borrowers under the formal banking network.

(Source: The Banking Regulation Act, 1949)

As at end of March 2016, India’s co-operative banking sector comprised of 1,574 urban cooperative banks (UCBs)

and 93,913 rural co-operative credit institutions, including short-term and long term credit institutions. The number

of UCBs came down from 1,579 in 2015 to 1,574 in 2016. While the number of scheduled multi-state UCBs increased

from 29 to 31, non-scheduled single-state UCBs decreased from 1,507 to 1,502 by end-March 2016. (Source:

https://www.rbi.org.in/scripts/PublicationsView.aspx?id=17410)

MSME Sector

During 2015-16, efforts were directed at fostering a more conducive environment for flow of credit to priority sectors,

in particular to the micro, small and medium enterprises (MSME) sector. A national programme for capacity building

of bankers was launched with the sole objective of upgrading skills related to the financing of the MSME sector. In

August 2015, banks were advised to review their existing lending policies to the micro and small enterprises (MSEs)

sector and fine - tune them by allowing for standby credit facilities in case of term loans, additional working capital

limits, mid-term review of regular working capital limits and timelines for credit decisions. (Source: RBI Annual

Report – 2015 – 16)

To provide a simpler and faster mechanism to address stress in the accounts of Micro, Small and Medium Enterprises

(MSMEs), in March 2016, a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’

was issued to banks, in consultation with Government of India. Under this framework, the revival and rehabilitation

of MSME units having loan limits up to ₹ 250 million would be undertaken. (Source: RBI Report on Trend and

Progress of Banking in India 2015 – 16)

Priority Sector Lending

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Priority sectors refer to those sectors of the economy such as agriculture, small enterprises and housing for poor people

which, though viable and creditworthy, may not get timely and adequate credit in the absence of a special dispensation.

The priority sector lending policy of the Reserve Bank envisages that banks extend credit to the priority sector as part

of their normal business operations and not as a corporate social responsibility. Towards this end, pricing of all credit

has been made free, though with the expectation that it will not be exploitative. (Source: RBI Report on Trend and

Progress of Banking in India 2015-16)

A scheme of PSLCs was introduced in April 2016. The Reserve Bank provided a platform to enable trading in the

certificates through its core banking solution (CBS) portal (e-Kuber). All scheduled commercial banks (including

RRBs), urban co-operative banks, small finance banks (when they become operational) and local area banks are

eligible to participate in trading. Priority Sector Lending Certificates (PSLCs) were introduced as a mechanism for

incentivising banks having surplus in lending to different categories of the priority sector thereby enhancing lending

to these sectors.

The objective of priority sector lending is to ensure that timely and adequate credit is available to vulnerable sections

of society. Priority sector loans include small value loans to farmers for agriculture and allied activities; MSMEs;

loans up to ₹ 2.5 million for low cost housing and up to ₹ 1 million to students for education; social infrastructure and

renewable energy; and to other low income groups and weaker sections of society.

(Source: RBI Annual Report – 2015 – 16)

Monetary Policy

Amendments to the Reserve Bank of India Act, which came into force on June 27, 2016 will empower the conduct of

monetary policy in India. For the first time in its history, the RBI has been explicitly provided the legislative mandate

to operate the monetary policy framework of the country. The primary objective of monetary policy has been defined

explicitly for the first time – “to maintain price stability while keeping in mind the objective of growth.” The

amendments also provide for the constitution of a monetary policy committee (MPC) that shall determine the policy

rate required to achieve the Inflation target, another landmark in India’s monetary history. The composition of the

MPC, terms of appointment, information flows and other procedural requirements such as implementation of and

publication of its decisions, and failure to maintain the Inflation target as well as remedial actions have been specified

and subsequently gazetted. The Government and the RBI have constituted the six member MPC. All conditions are,

therefore, in place for the MPC to take its first decision on October 4 under the Reserve Bank’s fourth bi-monthly

monetary policy review for 2016-17. The amended RBI Act establishes the procedures for MPC meetings.

On August 5, 2016 the Government set out the Inflation target as four per cent with upper and lower tolerance levels

of six per cent and two per cent, respectively. The September round of the Reserve Bank’s survey of professional

forecasters indicates a greater degree of anchoring of their Inflation expectations, relative to other agents, around the

Reserve Bank’s Inflation targets. They expect Inflation to ease to 4.7 per cent by Q4 of 2016-17 and to 4.4 per cent

by Q2 of 2017-18, both lying within the Reserve Bank’s Inflation target band. While their medium-term Inflation

expectations (five years ahead) have remained unchanged at 5 per cent, their longer-term expectations (10 years ahead)

have moved down to 4.5 per cent from 4.8 per cent polled in the immediately preceding round of the survey.

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(Source: https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=17385)

Development of the Indian Banking Sector

Indian banks are increasingly focusing on adopting integrated approach to risk management. Banks have already

embraced the international banking supervision accord of Basel II. According to RBI, majority of the banks already

meet capital requirements of Basel III, which has a deadline of March 31, 2019. Most of the banks have put in place

the framework for asset-liability match, credit and derivatives risk management.

Indian banking sector credit growth has grown at a healthy pace

Credit off-take has been surging ahead over the past decade, aided by strong economic growth, rising

disposable incomes, increasing consumerism and easier access to credit;

As on April 4, 2016 the median overnight MCLR of 26 banks, accounting for about 83 per cent of total bank

credit, was 50 bps lower than the median base rate, while the median MCLR across all tenors was lower by

25 bps (Source: https://rbi.org.in/scripts/PublicationsView.aspx?id=16823);

On a year-on-year (y-o-y) basis, non-food bank credit increased by 4.0 per cent in December 2016 as

compared with an increase of 9.3 per cent in December 2015. (Source:

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=39420)

Demand has grown for both corporate and retail loans.

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Rising incomes are expected to enhance the need for banking services in rural areas and therefore drive the growth of

the sector; programmes like MNREGA have helped in increasing rural income aided by the recent Jan Dhan Yojana.

The Reserve Bank of India (RBI) has relaxed its branch licensing policy, thereby allowing banks (which meet certain

financial parameters) to set-up new branches in tier-2 to tier-6 centers, without prior approval from RBI. It has

emphasised the need to focus on spreading the reach of banking services to the un-banked population of India. Deposits

under Pradhan Mantri Jan Dhan Yojana (PMJDY) are growing. As on November 09, 2016, US$ 6,971.68 million

were deposited, while 255.1 million accounts were opened.

During FY06–16, deposits grew at a CAGR of 11.47 per cent and reached 1.46 trillion in FY16. Strong growth in

savings amid rising disposable income levels are the major factors influencing deposit growth. Deposits under Pradhan

Mantri Jan Dhan Yojana (PMJDY), have also increased. As of October 2016, US$ 6,755.5 million were deposited,

while 249.8 million accounts were opened.

(Source: IBEF)

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Key Trends in banking Industry

The year 2015-16 saw an increase in financial stability concerns for emerging market economies (EMEs) though such

concerns eased for advanced economies. The performance of most EMEs was marked by severe domestic imbalances

emanating from economic slowdown and downturn in credit growth coupled with rising stress in corporate and

financial sectors making them vulnerable to the changing external financing conditions. The banking sector, however,

was under stress primarily on account of the burden of non-performing assets (NPAs) which increased sharply during

the year.

Regulatory Reinforcements

As part of the framework for revitalizing distressed assets, on June 13, 2016, the Reserve Bank introduced the Scheme

for Sustainable Structuring of Stressed Assets (S4A) for a deep financial restructuring of large accounts. Also, the

process of selling stressed assets by banks was further streamlined to facilitate better valuation, price discovery and

creation of a vibrant stressed assets market.

To complement the existing risk-based capital standards and to provide a back-stop measure to contain concentration

risks, the Large Exposures Framework was issued on December 1, 2016 to limit a bank’s exposure to a single counter-

party or a group of connected counter-parties. Alongside, a complementary framework for discouraging large

borrowers to depend solely on banks for their funding needs was released on August 25, 2016 to contain concentration

risks for the banking system as a whole.

As part of liquidity risk management, on May 28, 2015 draft guidelines for the Net Stable Funding Ratio (NSFR),

measuring the funding resilience of a bank over a longer time horizon, were laid down. This is expected to limit the

banks’ reliance on short-term wholesale funding and promote funding stability. The Reserve Bank issued draft

guidelines on June 22, 2016 with regard to counter-party credit risks and exposures to central counter-parties in over-

the-counter (OTC) derivative transactions.

The Central Repository of Information on Large Credits (CRILC) has proved to be an important tool for effective off-

site supervision. Efforts were made to further improve the quality of CRILC data by modifying its reporting

mechanism with respect to external ratings and industry. Additionally, the dates of assets turning into NPAs and

special mention accounts (SMAs) were captured in the database for an insight into the ageing of stressed accounts.

Measures for deepening access to finance

There were two major developments during 2015-16 which will shape the financial landscape in the years to come

and will also be instrumental in furthering financial inclusion. First, in-principle approvals for setting up payments

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banks to eleven applicants were granted on August 19, 2015 and on September 16, 2015, in-principle approvals were

granted to ten applicants for setting up small finance banks (“SFBs”). However, Tech Mahindra, Cholamandalam

Finance and Dilip Shanghvi-IDFC Bank-Telenor JV have surrendered their payment bank licence. Of the ten entities

awarded in-principle SFB licenses, two entities have already commenced operations as SFBs, while various entities

have applied to the RBI for their final license.

For providing a greater impetus to card-based retail payments, an Acceptance Development Fund (ADF) is being

designed to step up the card acceptance infrastructure. Further, the Unified Payments Interface (UPI) was launched

on August 25, 2016 to give a boost to mobile banking. Additionally, Bharat Interface for Money (BHIM) was launched

on January 25, 2017 as a common platform across the nation for making simple, easy and quick payment transactions

using UPI. (Source: Press release dated January 25, 2017 of National Payments Corporation of India). This is

expected to revolutionise retail payments given the high degree of penetration of mobile phones in the country. Apart

from the use of technology by the mainstream banking institutions, recent years have also witnessed the entry of

several alternative nonfinancial institutions providing financial services, typically known as Fin Tech. Accordingly,

on July 14, 2016 the Reserve Bank set up an inter-regulatory working group to examine various aspects related to Fin

Tech innovations and the related risks and opportunities.

Further, on November 26, 2015 the Central Registry of Securitisation Asset Reconstruction and Security Interest in

India (CERSAI) was notified as the Central KYC Records Registry (CKYCR) for receiving, storing and retrieving

KYC records of customers in digital form. This will ensure a single KYC across all financial products and thus make

financial access more convenient. The CKYCR has started its ‘live run’ with effect from July 15, 2016.

Other measures

In recent years, a general guiding principle for the regulation of the co-operative and nonbanking financial segments

has been minimizing regulatory arbitrage between banks and these segments. In pursuance of this principle, steps were

taken to further harmonise the regulatory treatment of NBFCs, for instance, regulations on the framework for

revitalising distressed assets, reporting frauds and options on refinancing of project loans.

The existence of unlicensed district central co-operative banks (DCCBs) has been a regulatory concern. With the

implementation of the revival scheme announced by the central government, the number of unlicensed DCCBs was

reduced to only three as at end-September 2016 from 23 as at end- June 2013.

(Source: RBI Report on Trend and Progress of Banking in India 2015-16)

Marginal Cost of Funds based Lending Rate (“MCLR”)

The RBI vide its press release dated December 17, 2015 released the final guidelines on computing interest rates on

advances based on the marginal cost of funds. The guidelines come into effect from April 1, 2016. Apart from helping

improve the transmission of policy rates into the lending rates of banks, these measures are expected to improve

transparency in the methodology followed by banks for determining interest rates on advances. The guidelines are

also expected to ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.

Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long run value

and contribution to economic growth.

The highlights of the guidelines are as under –

(i) All rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 will be priced with reference to the

Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark for such purposes.

(ii) The MCLR will be a tenor linked internal benchmark.

(iii) Actual lending rates will be determined by adding the components of spread to the MCLR.

(iv) Banks will review and publish their MCLR of different maturities every month on a pre-announced date.

(v) Banks may specify interest reset dates on their floating rate loans. They will have the option to offer loans

with reset dates linked either to the date of sanction of the loan/credit limits or to the date of review of MCLR.

(vi) The periodicity of reset shall be one year or lower.

(vii) The MCLR prevailing on the day the loan is sanctioned will be applicable till the next reset date, irrespective

of the changes in the benchmark during the interim period.

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(viii) Existing loans and credit limits linked to the Base Rate may continue till repayment or renewal, as the case

may be. Existing borrowers will also have the option to move to the Marginal Cost of Funds based Lending

Rate (MCLR) linked loan at mutually acceptable terms.

(ix) Banks will continue to review and publish Base Rate as hitherto.

(Source: https://rbi.org.in/SCRIPTs/BS_PressReleaseDisplay.aspx?prid=35749)

Recent Developments in Banking Industry

The Reserve Bank has since the last decade made the following policy interventions in the area of financial inclusion.

Correspondent Banking

The Reserve Bank permitted banks to utilize the services of intermediaries in providing banking services through the

use of business facilitators and Business Correspondents (BCs). The BC model allows banks to do ‘cash in-cash out’

transactions at a location much closer to the rural population, thus addressing the problems of last mile reach.

Providing banking services in villages with population more than 2,000

In order to provide door step banking facilities in all the unbanked villages in the country, a phase wise approach has

been adopted. During Phase-I (2010-13), all unbanked villages with population more than 2,000 were identified and

allotted to various banks (public sector banks, private sector banks and regional rural banks) through State Level

Bankers’ Committees (SLBCs) for coverage through various modes – Branch or BC or other modes such as ATMs,

mobile vans, etc. During Phase-I, as reported by SLBCs, banking outlets have been opened in 74,414 unbanked

villages with population more than 2,000. Such newly opened banking outlets comprised of 69,589 outlets opened

through BCs and 2,332 by other modes, apart from 2,493 branches.

After the completion of the first phase of the roadmap, the second phase (2013-16) to provide banking services in

unbanked villages with populations less than 2000 was rolled out. About 4,90,298 unbanked villages with population

less than 2000 have been identified and allotted to various banks (public sector banks, private sector banks and regional

rural banks) through SLBCs across the country for coverage in a time bound manner. As on June 30, 2016, as reported

by SLBCs, 4,52,151 villages have been provided banking services; 14,976 through branches, 4,16,636 through BCs

and 20,539 by other modes viz. ATMs, mobile vans, etc. thereby achieving 92.2% of the target.

Financial Inclusion Plans

All domestic Scheduled Commercial Banks (SCBs) – both in the public sector and private sector – were advised to

draw up board-approved Financial Inclusion Plans (FIPs) as an integral part of their business strategy based on their

competitive advantage. FIPs are submitted to the Reserve Bank and are implemented over blocks of three years. These

plans broadly include self-set targets with respect to: opening rural brick and mortar branches; Business

Correspondents (BCs) employed; coverage of unbanked villages through branches/ BCs/ other modes, opening of

Basic Savings bank deposit accounts (BSBDAs) including through BC-ICT; issuance of Kisan Credit Cards (KCC)

and General Credit Cards (GCC) and other specific products aimed at the financially excluded segments.

Revised priority sector lending guidelines

Drawing upon the recommendations of an Internal Working Group set up by the Reserve Bank, revised guidelines

on priority sector lending were issued in April 2015. The salient features are –

(a) Separate targets of 8 per cent for small and marginal farmers (within the agriculture target of 18 per cent) and

7.5 per cent for micro enterprises to be achieved by 2017;

(b) Coverage of the priority sector widened to include medium enterprises, social infrastructure and renewable

energy (Bank loans of up to ₹ 150 million for solar-based power generators, biomass-based power generators,

wind mills, micro-hydel plants, etc. For individual households, the loan limit is ₹ 1 million per borrower).

(c) Priority sector lending compliance to be monitored on a ‘quarterly’ average basis from 2016-17

https://rbi.org.in/SCRIPTs/BS_PressReleaseDisplay.aspx?prid=35749

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(d) Educational loans (including loans for vocational courses) up to ₹ 1 million irrespective of the sanctioned amount

made eligible for the priority sector

(e) Export credit up to 32 per cent made eligible as part of the priority sector for foreign banks with less than 20

branches

Phase III of FIP

With the conclusion of Phase II (2013-16) of FIP in March 2016 all domestic scheduled commercial banks (including

RRBs) were advised to set new board approved FIP targets for the next three years, viz. 2016-19.

Financial Inclusion Advisory Committee (FIAC)

The Reserve Bank had set up the Financial Inclusion Advisory Committee (FIAC) in 2012 to review Financial

Inclusion (FI) policies on an on-going basis and to provide expert advice on additional efforts under FI. Considering

the need for convergence of the FI efforts of various stakeholders, FIAC was reconstituted in July 2015 with

representation from the Government of India, SEBI, IRDA, PFRDA with renewed focus on review and monitoring

of FI and financial literacy (FL) policies and progress; impact evaluation and preparing a national strategy for

financial inclusion (NSFI).

Framework for the revival and rehabilitation of micro, small and medium enterprises

To provide a simpler and faster mechanism to address stress in the accounts of Micro, Small and Medium Enterprises

(MSMEs), in March 2016, a ‘Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises’

was issued to banks, in consultation with Government of India. Under this framework, the revival and rehabilitation

of MSME units having loan limits up to ₹ 250 million would be undertaken.

Financial Literacy Initiatives

Target specific content for five target groups viz. farmers, small entrepreneurs, self-help groups (SHGs), school

students and senior citizens is being designed for tailored financial literacy programmes conducted by Financial

Literacy Centres (FLCs). A pilot project for setting up 100 Centres for Financial Literacy (CFL) at the block level to

scale up the existing FLC infrastructure has been initiated. Guidelines for banks’ financial literacy centres and the

operational guidelines for conducting camps by FLCs and rural bank branches were revised in January 2016. As on

March 2016, 1,384 FLCs were operational. During 2015-16, 87,710 financial literacy activities (outdoor camps) were

conducted by FLCs.

Kiosk Project

About 100 kiosks (30 interactive kiosks and 70 non-interactive LFDs) are being set up in five states on a pilot basis

in public places like banks, post offices, collector’s offices and primary health centres to promote financial awareness.

The kiosks will display messages in different languages controlled from a central location.

Scaling-up the BC model

The Reserve Bank of India has prepared the framework for graded certification/training programme for BCs. BCs

with a good track record who would undergo advanced training and receive certification shall be entrusted with more

complex tasks such as handling/delivery of financial products that go beyond deposits and remittances. In order to

have a tracking system of BCs, a framework for a Registry of BC agents covering all BCs, both existing and new,

has been created. The registry is intended to capture basic details including the identity of a BC, location of fixed

point BCs and nature of operations.

(Source: RBI Report on Trend and Progress of Banking in India 2015-16)

Strategic Debt Restructuring Scheme

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Strategic Debt Restructuring Scheme was launched with view to ensuring more stake of promoters in reviving

stressed accounts and providing banks with enhanced capabilities to initiate change of ownership, where necessary,

in accounts which fail to achieve the agreed critical conditions and viability milestones. Banks have been advised to

consider using SDR only in cases where change in ownership is likely to improve the economic value of the loan

asset and the prospects of recovery of their dues. (Source:

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10293&Mode=0 )

Legislative Framework for Recovery of Debts due to Banks

In fiscal year 2003, the Indian Parliament passed the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (the “SARFAESI Act”). The SARFAESI Act provides that a secured

creditor may, in respect of loans classified as non-performing in accordance with RBI guidelines, give notice in

writing to the borrower requiring it to discharge its liabilities within 60 days, failing which the secured creditor may

take possession of the assets constituting the security for the loan, and exercise management rights in relation thereto,

including the right to sell or otherwise dispose of the assets. The SARFAESI Act also provides for the setting up of

asset reconstruction companies regulated by the RBI to acquire assets from banks and financial institutions. The RBI

has issued guidelines for asset reconstruction companies in respect of their establishment, registration and licensing

by the RBI, and operations. Asset Reconstruction Company (India) Limited, set up by the Industrial Development

Bank of India, State Bank of India and certain other banks and institutions, received registration from the RBI and

commenced operation in August 2003. Foreign direct investment is now permitted in the equity capital of asset

reconstruction companies and investment in security receipts issued by asset reconstruction companies by foreign

institutional investors registered with the SEBI is permitted, subject to certain conditions and restrictions.

Several petitions challenging the constitutional validity of the SARFAESI Act were filed before the Indian Supreme

Court. The Supreme Court, in April 2004, upheld the constitutionality of the SARFAESI Act, other than the

requirement originally included in the Act that the borrower deposit 75.0% of the dues with the debt recovery tribunal

as a pre-condition for appeal by the borrower against the enforcement measures. In November 2004, the Government

issued an ordinance amending the SARFAESI Act. The Indian Parliament has subsequently passed this ordinance as

an act. This act, as amended, now provides that a borrower may make an objection or representation to a secured

creditor after a notice is issued by the secured creditor to the borrower under the act demanding payment of dues.

The secured creditor has to give reasons to the borrower for not accepting the objection or representation. The act

also introduces a deposit requirement for borrowers if they wish to appeal the decision of the debt recovery tribunal.

Further, the Act permits a lender to take over the business of a borrower under the SARFAESI Act under certain

circumstances (unlike the earlier provisions under which only assets could be taken over).

Earlier, following the recommendations of the Narasimham Committee, the Recovery of Debts Due to Banks and

Financial Institutions Act, 1993 was enacted. This legislation provides for the establishment of a tribunal for speedy

resolution of litigation and recovery of debts owed to banks or financial institutions. The Act created tribunals before

which the banks or the financial institutions can file a suit for recovery of the amounts due to them. However, if a

scheme of reconstruction is pending before the BIFR, under the Sick Industrial Companies (Special Provisions) Act,

1985, no proceeding for recovery can be initiated or continued before the tribunals. This protection from creditor

action ceases if the secured creditor takes action under SARFAESI Act. While presenting its budget for fiscal year

2002, the Government announced measures for the setting up of more debt recovery tribunals and the eventual repeal

of the Sick Industrial Companies (Special Provisions) Act, 1985. To date, however, this Act has not been repealed.

Corporate Debt Restructuring Forum

The RBI has devised a corporate debt restructuring system as an institutional mechanism for the restructuring of

corporate debt. The objective of this framework is to ensure a timely and transparent mechanism for the restructuring

of corporate debts of viable entities facing problems, outside the purview of the BIFR, debt recovery tribunals and

other legal proceedings. In particular, this framework aims to preserve viable corporations that are affected by certain

internal and external factors and minimise the losses to the creditors and other stakeholders through an orderly and

coordinated restructuring program. The corporate debt restructuring system is a non-statutory mechanism and a

voluntary system based on debtor-creditor and inter-creditor agreements. (Source: Revised Guidelines on Corporate

Debt Restructuring (CDR) Mechanism)

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Sale of Stressed Assets

In order to further strengthen banks’ ability to resolve their stressed assets effectively, RBI has been decided to put

in place an improved framework governing sale of such assets by banks to SCs/RCs/other banks/Non-Banking

Financial Companies /Financial Institutions etc. The policy, inter alia, shall cover the following aspects:

(i) Financial assets to be sold;

(ii) Norms and procedure for sale of such financial assets;

(iii) Valuation procedure to be followed to ensure that the realisable value of financial assets is reasonably

estimated;

(iv) Delegation of powers of various functionaries for taking decision on the sale of the financial assets; etc.

In order to enhance he transparency in the entire process of sale of stressed assets, it is decided as under –

(i) Identification of stressed assets beyond a specified value, as may be determined by bank’s policy, for sale

shall be top-down i.e., the head office/corporate office of the bank shall be actively involved in identification

of stressed assets, including assets which are classified as Special Mention Account, to be put on sale. Early

identification will help in low vintage and better price realisation for banks;

(ii) At least once in a year, preferably at the beginning of the year, banks shall, with the approval of their Board,

identify and list internally the specific financial assets identified for sale to other institutions, including

SCs/RCs;

(iii) At a minimum, all assets classified as ‘doubtful asset’ above a threshold amount should be reviewed by the

board/board committee on periodic basis and a view, with documented rationale, is to be taken on exit or

otherwise. The assets identified for exit shall be listed for the purpose of sale as indicated above;

(iv) Prospective buyers need not be restricted to SCs/RCs. Banks may also offer the assets to other

banks/NBFCs/FIs, etc. who have the necessary capital and expertise in resolving stressed assets.

Participation of more buyers will result in better price discovery;

(v) In order to attract a wide variety of buyers, the invitation for bids should preferably be publicly solicited so

as to enable participation of as many prospective buyers as possible. In such cases, it would be desirable to

use e-auction platforms. An open auction process, apart from attracting a larger set of borrowers, is expected

to result in better price discovery.. Banks should lay down a Board approved policy in this regard;

(vi) Banks must provide adequate time for due diligence by prospective buyers which may vary as per the size

of the assets, with a floor of two weeks;

(vii) Banks should have clear policies with regard to valuation of assets proposed to be sold. In particular it must

be clearly specified as to in which cases internal valuation would be accepted and where external valuation

would be needed. However, in case of exposures beyond ₹ 50 crore, banks shall obtain two external

valuation reports;

(viii) The cost of valuation exercise shall be borne by the bank, to ensure that the bank's interests are protected;

(ix) The discount rate used by banks in the valuation exercise shall be spelt out in the policy. This may be either

cost of equity or average cost of funds or opportunity cost or some other relevant rate, subject to a floor of

the contracted interest rate and penalty, if any.

(Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10588&Mode=0)

Demonetization

Through notifications dated November 8, 2016 issued by the Ministry of Finance, the Government of India (vide

Notification no. 2652) and the RBI (RBI/2016-17/1142 DCM (Plg) No. 1226/10.27.00/2016-17), ₹ 500 and ₹ 1,000

denominations of banknotes of then existing series issued by the RBI have ceased to be legal tender (the

“Demonetisation of Banknotes”). According to an RBI press release, the Demonetisation of banknotes is aimed at

redressing counterfeiting of Indian banknotes, reduce cash hoarding and curb funding of terrorism with counterfeit

banknotes.

(Source: RBI’s press release 2016-2017/1142, dated November 8, 2016).

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10588&Mode=0

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Union Budget for Financial Year 2017-18

The Union Budget for 2017-18 has been announced by the Union Minister for Finance, Government of India, in

Parliament on February 1, 2017. Economic growth expected at 6.5 per cent in 2016-17. IMF expects India to grow

at 7.2 per cent in 2017 and 7.7 per cent in 2018. CPI inflation has come down to 3.4 per cent in December 2016 from

6.0 per cent in July 2016. Foreign exchange reserves have reached US$ 361 billion as on January 20, 2017. Lending

target under Pradhan Mantri Mudra Yojana to be set at ₹ 2.44 lakh crore (US$ 36.1 billion). Priority will be given to

Dalits, Tribals, Backward Classes and Women. In line with the ‘Indradhanush’ roadmap, ₹ 10,000 crore (US$ 1.48

billion) for recapitalisation of Banks provided in 2017-18. The Union Budget has also proposed allowable provision

for Non-Performing Asset of Banks increased from 7.5% to 8.5%. Interest taxable on actual receipt instead of accrual

basis in respect of NPA accounts of all non-scheduled cooperative banks also to be treated at par with scheduled

banks

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BUSINESS

Some of the information contained in the following discussion, including information with respect to our plans and

strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section

“Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements and also

the section “Risk Factors” for a discussion of certain factors that may affect our business, financial condition or

results of operations. Our actual results may differ materially from those expressed in or implied by these forward-

looking statements.

Overview





clientele segment, 24 Retail Hubs, 5 specialised women branches . As of January 31, 2017, we had 2,200 ATMs, 22

































Our treasury operations being the interface with the financial markets, consist primarily of statutory reserves


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organizations.





2,021 as of January 31, 2017. Our total number of ATMs has also increased from 1,602 as of March 31, 2014, to 1912





Tripura. We are also the convener of the SLBC for the States of West Bengal and Tripura. We have been designated

as Treasury Bank in major district of Assam and Tripura by respective state governments. Further, the President of

India and Ministry of Coal have accounts solely with our Bank to handle the government funds. We intend to leverage

our lead bank status and brand recall, to expand our presence across select geographies in India by increasing our

branch network and distribution infrastructure across India.

As of January 31, 2017, the Core Banking Solution CBS, which is a suite of software applications that facilitate





















for the third quarter of fiscal year 2017 was ₹ 1,95,558 crore.

AWARDS

The table below set forth the details of awards received by our Bank in recent past:

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COMPETITIVE STRENGTHS

We believe that our success can be attributed to a combination of the following competitive strengths:

High Current Account - Saving Account (CASA) Deposits


particularly in eastern and north eastern regions. As of December 31, 2016, our share of CASA deposits was at 47.75%

of total deposits, out of which saving deposits which are less volatile accounted for 40.15% of total deposits, while

current deposits accounted for 7.60% of total deposits. Out of our total deposits, core deposits constitute 97.34% and

bulk deposits account for 2.66% (inclusive of CD). This provides us with significant cost advantages over our peers.

Wide distribution network and customer base

Our branch network, which was historically concentrated in West Bengal, Orissa, Bihar, Jharkhand, Assam, Manipur

and Tripura, has now expanded across India through a growing network of branches and ATMs. As of March 31,

2014, March 31, 2015 and March 31, 2016, the total number of branches of our Bank were 2,001, 2004 and 2,011,

respectively and it further increased to 2,021 as of January 31, 2017. Our total number of ATMs has also increased

from 1,602 as of March 31, 2014, to 1,912 as of March 31, 2015, to 2,044 as of March 31, 2016, and further increased

to 2,200 as of January 31, 2017. As of January 31, 2017, our network of BC agents increased to 4,252. As on January

31, 2017, we had 2,021 branches in 29 States and 5 Union Territories in India (all of them under Core Banking Solution

“CBS” platform). As of January 31, 2017, details of our network are as follows:

Metro Urban Semi - Urban Rural Total

Total number of branches 361 477 411 772 2,021

ATMs 295 602 573 730 2,200

Further, we also have 22 E-zones, 36 regional offices, 2 representative offices in Bangladesh and Myanmar. For our

agricultural customers, our Bank has, as of January 31, 2017 a network of 1,183 branches in rural and semi urban

areas, constituting approximately 58.53% of our total branch network, which support agricultural development, the

MSME sector and retail banking.

Multiple delivery channels and large distribution infrastructure has resulted in giving us access to a large customer

base spread across the country. As of January 31, 2017, we had a customer base of approximately 4.22 crore compared

to 3.93 crore customers as of March 31, 2016 and 3.60 crore customers as of March 31, 2015. We offer a user-friendly

internet banking facility that allows our customers to conduct a comprehensive range of banking transactions online

without visiting our branches or ATMs. We offer online saving account opening facility, POS machines, online

payment of bills and taxes and instant fund transfer facility across bank through beneficiary mobile number. We have

installed Unified Payment Interface (“UPI”) from first day of its launch and direct debit facility for booking of rail

ticket through debit card. Our distribution network as complemented by our multi-channel electronic banking system

is capable of providing a comprehensive suite of products to customers, provides us with a strong sales platform in

the areas in which we operate, enables us to cross-sell products and to deliver high-quality, convenient and

comprehensive services to a range of customers. Our extensive network allows us to provide banking services to a

Year Awards

2013 –

2014

Best Banker Award in Priority Sector by The Sunday Standard

2014 –

2015

Award of excellence – PMJDY by Government of India

2016 –

2017

Skoch order of merit for United wallet

National Award under Prime Minister Employment Guarantee Programme in north east zone from the

Ministry of MSME, Government of India

Certificate of appreciation – MNRE by Government of India

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wide variety of customers, including large and small to medium corporations, institutions and state-owned enterprises,

as well as commercial, agricultural, industrial and retail customers throughout India.

Diverse products and service mix

We are engaged in wide variety of banking activities such as corporate, micro, small and medium enterprises

(“MSME”) and retail banking, and offer a wide range of financial products and services to corporate, SMEs and retail

customers including both resident and non – resident Indians. We also provide funding to sectors identified by the

Government of India as priority sector with specific focus on agriculture and MSME. We also cater to the needs of

corporate and SME Banking services offering working capital, short term credit, cash management, forex loan

products such as export import credit, Letter of Credit and Guarantee and buyers credit. Our treasury operations consist

primarily of statutory reserves management, liquidity management, investment and trading activities, money market

and foreign exchange activities. Our retail banking services include consumer lending and deposit services. We offer

a wide range of consumer credit products, including personal loans, home loans, vehicle loans, education loans,

mortgage loans, gold loans, etc. Our deposit products include saving accounts, time deposits, tailored deposits,

products for customer in various sectors. Our other businesses include marketing of life and non-life insurance

products, mutual fund products, corporate cash management services, agricultural lending etc.

Our Bank has set up 14 numbers of Rural Self Employment Training Institutes (“RSETIs”) in the state of West

Bengal, Assam and Tripura for imparting training to the potential entrepreneurs for the financially weaker section of

the society. Our Bank is the convener of the SLBC in the state of West Bengal and Tripura. Our Bank is entrusted

with Lead Bank responsibility in 34 district spread across four states, 10 districts in West Bengal, 12 in Assam, 8 in

Tripura and 4 in Manipur. Our Bank has also organized social camps for issuance of Kisan Credit Cards to bring in

more number of new farmers under the KCC net. Our Bank jointly with Kotak Securities has launched its share trading

product – U Connect Trio which enables the customer to open 3-in-1 account i.e. Bank Account, Demat Account &

Share trading Account and trade seamlessly on the net from the comfort of their home. We intend to leverage our lead

bank status and brand recall, to expand our presence across select geographies in India by increasing our branch

network and distribution infrastructure across India.

We provide banking facilities to our customers through our various alternate delivery channel initiatives such as

ATMs, internet banking, mobile banking. Further, our internet banking services can be used for online shopping,

payment of utility bills, creating online term deposits, online trading, etc. We have established e – kiosks, IMPS based

24x7 funds transfer facility through internet banking, instant interbank fund transfer on the basis of mobile number

named as UFT (United Fund Transfer), mobile and internet based wallet services named United Wallet, e – passbook,

etc. We have also implemented innovative offering like online saving bank account opening by prospective customers

and launched balance enquiry on missed call, mini statement and fixed deposit on missed call.

Scalable operating model and centralised operational structure

Our current operating model is scalable, which we expect will enable us to expand our business and services. We

strongly emphasize on technology in our business as a means of improving the efficiency and competitiveness of our

business operations. We have devoted substantial resources to achieve seamless integration of our people, processes,

data and applications. All our branches are under CBS, covering 100% of our business to facilitate centralized

operations through a central data base. It has networked our domestic branches, allowing our customers to operate

their accounts from remote locations and avail banking services from any of our branches, regardless of wherever the

account is maintained. We have a Disaster Recovery Centre at Vashi, Navi Mumbai, which replicates all data on a

near real time basis for the critical applications. As on date all the branches of our Bank have been migrated to the

CBS (Finacle) platform. Bank has been regularly upgrading its systems for development of new products and

improvising the processes for operational convenience. We believe that factors such as our scalable operating model,

technology and data platform and centralized banking system shall expand our business in geographies that offer

strong opportunities for us to grow further.

Professional and experienced management

We have an experienced Board and senior management and presently have a team of one chief vigilance officer and

12 General Managers. Our Bank’s executive directors and senior management have an average more than 20 years of

banking and financial experience. The expertise of our Board and management team contributes to our in-depth

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understanding of the sector-specific aspects of our business and each part of our operations. We have been able to

build a team of professionals with relevant experience, including credit management, risk management, treasury,

information technology and marketing, restructuring balance sheet and business mix, improving operating efficiency

and in-depth knowledge of banking operations and management. We have inducted qualified persons, including

MBAs, engineers, chartered accountants, company secretaries and cost accountants, risk managers, equity research

analysts, marketing officials and credit officers. For additional details see section titled “Board of Directors and Senior

Management” beginning on page 164.

BUSINESS STRATEGIES

We intend to grow our market share, including our retail and MSME deposit base, and to continue to achieve balanced

growth in our balance sheet, profitability (improving our return on assets and our return on equity) and efficiency

(improving our cost to income ratio) across all segments of our operations. Our key strategies to achieve these goals

are set out below:

Maintaining high CASA deposits

The presence of our branches, particularly in Eastern and North Eastern part Including, West Bengal, Orissa, Bihar,

Jharkhand, Assam, Manipur, Meghalaya, Tripura of North East Region, allows us to attract interest-free current

account and low cost savings account deposits. We have in the past focused our efforts on growing our CASA ratio

and CASA deposits stood at ₹ 45,755.09 Crores for the fiscal year 2015 and the same increased to ₹ 48,791.04 Crores

for fiscal year 2016. As at December 31, 2016, our Bank’s CASA deposits were at ₹ 60,970.05 crores. Our CASA

deposits as a percentage of total domestic deposits was at 42.05 % for the fiscal year 2015 and 42.00%, for the fiscal

year 2016 and 47.75% as at December 31, 2016.

We seek to increase our CASA deposits in order to reduce cost of funds and improve our core deposits. In order to

attract retail customers and increase our CASA deposits, we intend to introduce new products and promote our

products through marketing campaigns. We believe that by leveraging CBS, internet and mobile banking systems will

enable us to increase our customer base, thereby increasing CASA deposits.

Accelerate growth in loans and advances to the MSME and retail sectors

Although we have experienced significant growth in our loans and advances to the MSME sector in recent past, with

growth of 2.21% and 7.16% in the fiscal year 2014, fiscal year 2015, respectively, however during the fiscal year 2016

the growth is (8.22)%. Our aim is to continue growing our loans and advances by expanding our relationship with

corporates and public sector organizations. We have opened number of MSME branches and deployed specialized

officers at MSME centric locations. As on January 31, 2017, we have 180 specialized MSME Branches to cater our

MSME customers. We also have four corporate finance branches in four metros. We propose to strengthen, our

relationship with these MSME by giving them various facilities at competitive terms and thereby expand our business.

We have installed a dedicated toll free telephone connection at our head office to address all queries of entrepreneurs

in the MSME sector. We have set up a MSME care centre at all of our regional offices to improve lending and to

redress the grievances of our customers under this sector. We also cater to some of the banking requirements of various

public sector organizations. Our goal is to leverage these relationships for mutually beneficial business growth. We

also plan to introduce a central pension processing system at our corporate office to take care of pension disbursements

for our retail customers.

We have identified the retail loan segment as a key area for increasing our credit portfolio. Loans and advances to the

retail sector (which includes housing loans) has been increased by 16.35% in fiscal year 2014 – 2015 and further

increased by 4.99% for the fiscal year 2016. However, as a share to our total (gross) loans and advances, it represented

17.72% of our total outstanding loans as of March 31, 2016. In our retail business, we intend to increase our share of

higher-margin asset products, such as loans against property, personal loans and gold loans. As on January 31, 2017,

we have 24 retail hubs to cater to our customers and have a centralized system for processing applications and

approvals of retail loans. Our aim is to substantially increase our loans and advances portfolio to the retail sector by

simplifying our current processes, launching new products and services and developing our distribution channels. We

believe this will help us spread risk, increase our interest income and better efficiency in capital utilization. Further,

this will enhance our customer base and provide us business opportunities through relationship banking and cross

selling.

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As on the date of the Preliminary Placement Document, the basic banking services are being offered to approximately

88.36 lakh customers under the Financial Inclusion programme of our Bank through a robust network of 4,252 Bank

Mitras spread across 12 states of the country. Since launch of PMJDY, our Bank has focused on building a self-

sustaining business model of Financial Inclusion by bringing the financially excluded population under the ambit of

formal banking and offering suitable banking services at their doorstep. Each Bank Mitra is equipped with an inter-

operable handheld device (micro ATM) for rendering services to the customers. Today our Bank provides an array of

services through our Bank Mitra network including e-KYC based SB account opening, biometric/AePS/RuPay based

online cash withdrawal and deposit facilities at micro ATMs, various remittance products including IMPS and AePS,

Recurring Deposits, micro insurance (PMSBY and PMJJBY) products and micro Pension product (APY) apart from


Grow our pan India presence and augmenting alternate delivery channels

We primarily cover the Eastern and North Eastern part of the country including West Bengal, Orissa, Bihar, Jharkhand,

Assam, Manipur and Tripura. As of January 31, 2017, we had 2,021 branches out of which 1,175 and 358 were located

in eastern and north eastern India, respectively. We intend to increase our branch network and infrastructure across

India, through a growing network of branches, ATMs, BC agents and cross sell our products at competitive costs to

gain a larger pan-India market share in terms of advances and deposits. Working towards this goal, we plan to, and

have received approval from our Board to open 276 new branches during the fiscal year 2017 - 2018, which will

further increase our branch network. We are in the process to file an application with RBI for obtaining license for

opening of 276 new branches. Further we have received RBI clearance for opening of 4 link offices and we have

already opened 1 link office at Pune. We will open another 3 link offices in the fiscal year 2017. We are focused on

expanding our network to cover states with higher per capita income and key economic centers. In rural areas, we

look to add branches in locations that complement and leverage our agricultural & development banking partners and

to build our brand in rural communities. We strive to open branches in such areas which are unbanked or under-

banked.

In addition to our Bank’s plan to open 276 branches in the fiscal year 2017 - 2018, our Bank also intends to strengthen

its alternate delivery channels by encouraging customers from less cash to cash less environment. Our Bank has put

in place robust internet banking system, mobile banking and UPI platform. Our Bank also provides facility of instant

fund transfer through IMPS, utility bill payment and QR Code Based transactions and installed POS machines for

merchant acquiring business with a target to install 10000 POS machines. Our Bank will also empower its business

correspondence to provide entire gamut of its services and products to the rural and unbanked population.

Increase in non – interest income

We intend to focus on increasing our fee-based income by expanding our third-party product offerings, by increasing

our fee-based services and alliances and by cross-selling our offerings to our existing customers. For example, we

have entered into agreements with LIC and Bajaj Allianz General Insurance Company Limited for distribution of life

and other insurance policies. We also entered into an agreement with Kotak Securities Limited for the distribution of

mutual fund and equity based products. We intend to increase this revenue stream by entering into additional agency

and distribution agreements and by promoting certain products and services, including depository services. We have

a presence in Myanmar and Bangladesh and we anticipate higher incomes from letters of credit and bank guarantees

as Indo-Myanmar trade increases. We have an integrated treasury and our income from the same for fiscal years 2014,

2015, 2016 and the nine months ended December 31, 2016 was ₹ 1,206.87 Crores, ₹ 1,746.91 Crores, ₹ 1,467.53

Crores and ₹ 1,865.32 Crores, respectively representing CAGR of 17.16% from fiscal year 2014 to fiscal year 2016.

We intend to increase the share of business in the emerging corporate group segment. We intend to follow a

relationship based approach by providing and expanding our third party product offerings including mutual fund and

insurance products, money transfer and foreign exchange services. We also intend to pursue strategic relationships

with corporate entities and the Government to provide our products to their employees and customers.

Reduce our gross NPA levels and to improve quality of assets

Though the reduction of impaired assets and to improve the quality of assets through recovery were our key focus area

in recent past, we continue to endeavor to reduce our NPA level and upgrade the quality of our assets. The share of

gross NPAs as a percentage of total advances increased from 9.49% as of March 31, 2015 to 13.26% as of March 31,

128

2016. Our gross NPA stood at ₹ 9,471.01 crore and Net NPA stood at ₹ 6,110.71 crore as on March 31, 2016. Our

strategies for reducing NPAs include improving the quality of credit by ensuring that our well documented loan

sanction policies and procedures are complied with and by actively monitoring our loan accounts (particularly Special

Mention Accounts (SMA)) and reassessing their credit ratings at least once a year or more frequently, if required.

Further, we have taken several initiatives to contain slippages and continue to take such action and speed up recovery

from overdue loan accounts including identification of stressed accounts for restructuring (or rephrasing in time),

regular follow-up of overdues in loan accounts, conducting e-auctions for the sale of seized assets to ARCS and

initiation of stringent recovery measures against wilful defaulters.

We organize recovery camps and lok adalats with the help of government officials, enter into one time settlement and

we have delegated the powers to all functional heads for settlement of NPAs and written off accounts. We are also

managing our NPAs by selling off stressed assets to asset reconstruction companies. We have appointed recovery

agents for the expeditious recovery of NPAs and written off accounts. Our Bank will also formulate plan of action for

enforcing the SARFESI, the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 and the RBI’s

corporate debt restructuring (“CDR”) mechanism and Bankruptcy Code more strictly and stringently and encourage

OTS proposal for non – cooperative borrowers. For better recovery, the Bank started to participate in Community

Based Recovery Mechanism (“CBRM”) with the assistance from State Rural Livelihood Mission (SRLM) which has

placed Bank Sakhi/ Bank Mitra at branches. To create general awareness among the public our Bank took the initiative

by putting up silent road shows and peaceful demonstrations before the establishments of defaulting borrowers.

Enhanced focus on credit monitoring

Our Bank has put in place a robust credit monitoring policy and created a dedicated department for successfully

monitoring the accounts. The credit monitoring is a regular process of day to day management of the credit portfolio

by the credit monitoring department. While all branch heads continue to be responsible for monitoring their respective

loan portfolio, an additional layer of oversight is provided by the credit monitoring department. Our Bank will continue

to follow and strengthen the practice of credit monitoring and to improve the asset quality.

Our business division

Our business units primarily consist of Retail Banking, Corporate Banking and MSME banking and treasury

operations.

As of December 31, 2016, we had total (gross) outstanding loans of ₹ 67,866 crore. As of March 31, 2016, we had

outstanding total (gross) loans amounting to ₹ 71,412 crore which is an increase of 3.39% compared with ₹ 69,070

crore as of March 31, 2015. The table below sets forth the composition of our loan assets by business divisions as of

March 31, 2014, March 31, 2015 and March 31, 2016 and December 31, 2016:

Particulars As of March 31,

2014

As of March 31,

2015

As of March 31,

2016

As of December

31, 2016

Amount

( ₹

crore)

% Amount

( ₹

crore)

% Amount

( ₹

crore)

% Amount

( ₹

crore)

%

Retail 10,357 15.23% 12,051 17.44% 12,652 17.70% 13,060 19.24%

Corporate 43,171 63.50% 43,267 62.64% 42,205 59.04% 40,169 59.19%

Others (including priority

sector)

14,454 21.27% 13,752 19.92% 16,555 23.18% 14,637 21.57%

Total Outstanding Loans 67,982 100 69,070 100 71,412 100 67,866 100

The table below sets forth our loans and advances by product type and as a percentage of total advances for the periods

indicated therein:

129

Particulars As of March 31, 2014 As of March 31, 2015 As of March 31, 2016 As of December 31,

2016

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Term Loans 47,754 70.24% 47,696 69.05% 49,296 69.03% 47,079 69.37%

Cash

Credit/Over

draft and

others

19,303 28.39% 20,974 30.37% 21,585 30.22% 20,401 30.06%

FCNR (B)

Loan

Bills

Purchases /

Bills

discounted

925 1.37% 400 0.58% 531 0.75% 386 0.57%

Total 67,982 100 69,070 100 71,412 100 67,866 100

Of which

Foreign

currency

loan under

Term Loan

(INR at

Fedai Rate)

462 0.68% 417 0.60% 500 0.70% 498 0.73%

RETAIL BANKING

Retail banking is one of our core business activities. Our retail banking services include retail loans, including housing

loans, education loans, car loans, personal loans, loan against term deposit, and debit card services and constitute a

significant portion of our operating income. We offer a broad range of services to retail customers through our branch

outlets as well as our multi-channel electronic banking system that includes 2,200 ATMs as of January 31, 2017

comprising 1,029 onsite and 1,171 offsite ATMs, Internet banking and mobile banking (available 24 hours a day / 7

days a week). Our retail banking business enables us to (i) reduce the cost of funds, (ii) reduce our reliance on volatile

wholesale time deposits, (iii) balance our asset portfolio, (iv) increase the yield on assets and (v) increase fee income

opportunities.

Our CASA ratio, comprised primarily of retail demand and savings deposits, was at 42.05% as of March 31, 2015,

41.92 % as of March 31, 2016 and then improved to 47.75 % as of December 31, 2016. As a percentage of total

deposits, retail deposits accounted for 86.01%, 94.51%, 95.02% and 97.35% as of March 31, 2014, March 31, 2015,

March 31, 2016 and December 31, 2016, respectively. As a percentage of total net advances, retail advances accounted

for 15.75%, 18.05%, 18.59% and 20.50% as of March 31, 2014, March 31, 2015, March 31, 2016 and December 31,

2016, respectively.

Loans and Advances

We have identified the growth of our loans and advances to the retail sector as a priority initiative for the past few

years. As of December 31, 2016, we had total (gross) outstanding retail loans of ₹ 13,060 crore which represented

19.24% of our total (gross) outstanding loans and advances as of that date. Our total (gross) outstanding retail loans

were ₹ 12,652 crore as of March 31, 2016, compared with ₹ 12,051 crore as of March 31, 2015, which represented

17.72% and 17.44% of our total (gross) outstanding loans and advances as of March 31, 2016 and March 31, 2015,

respectively.

The following table classifies our outstanding retail loans and advances for the periods indicated therein:

130

Particul

ars

As of March 31, 2014 As of March 31, 2015 As of March 31, 2016 As of December 31,

2016

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Housing

Finance

4,381 42.3% 5,093 42.26% 5,970 47.18% 6,696 51.27%

Personal

and other

loans

4,797 46.33% 5,956 49.42% 5,695 45.02% 5,333 40.84%

Car Loan 648 6.25% 513 4.26% 519 4.10% 578 4.42%

Educatio

n Loan

531 5.12% 489 4.06% 468 3.70% 453 3.47%

Total 10,357 100 12,051 100 12,652 100 13,060 100

We have introduced various retail products over the years to cater to the needs of the general public and to provide

quick and easy access to us.

a. Housing finance scheme: We offer various housing finance schemes for purchase / construction / extension

/ repairs / renovations / furnishing of residential house / flat including the purchase of land and construction

thereon. We also offer housing loan scheme for purchase of long term lease, (minimum 10 years) of house/flat

from Government Organisation / PSUs (unexpired lease period should exceed at least 5 years of repayment

period of loan). We also provide housing loans of up to ₹ 25 lakh to individuals for purchase/construction of

dwelling unit per family and loans all given for repairs to the damaged dwelling units of families up to ₹ 1

lakh in rural and semi-urban areas and up to ₹ 2 lakh in urban and metropolitan areas. We offer a products in

the name of United Affordable Housing Loan scheme under Prime Minister Awas Yojana launched with

subsidy coverage for the economically weaker sections and low income groups, roof top solar lighting

scheme has been launched to popularize it as a part of Housing loan.

b. Car Loan: We offer loans for the purchase of new cars, which can be up to 85% of a car’s value. We make

available loans for the purchase of new and used commercial vehicles. We offer United Car Loan Scheme

for our customers.

c. Education Loan: We offer financial support to those who have the minimum educational qualification, as

required by the institution / organization running the course eligible under the scheme. We offer United

Education Loan Scheme for vocational education and training and United Superb Education Loan Scheme

for our retail customers. We provide educational loans to individuals up to ₹ 10 lakh for studies in India and

₹ 20 lakh for studies abroad.

d. Personal Loan: We offer a loan scheme for assisting individuals to meet their various family and personal

needs during their service or after retirement. We offer United Personal Loan Scheme for Salaried Persons

and United Personal Loan Scheme for Pensioners.

e. Other Lending services: We also offer loans for which we accept gold ornaments as security, loans for

which customers may pledge securities in our favour, offer business purpose loans against residential and

commercial property as collateral.

In addition to above, we offer other banking services to our retail customers such as utilities and lockers. We offer

customers a means to pay their electricity and other utility bills such as mobile phone bills and credit card bills. Our

lockers are available in different sizes, are protected by advanced security systems and may be nominated to others.

Retail Hub:

We have established Retail Hubs for faster appraisal and professional approach in processing of loan proposals,

thereby making loan sanctioning process hassle free and reducing Turn Around Time (“TAT”). During fiscal year

131

2016, 24 Retail Hubs functioning in 23 Regions of our Bank sanctioned 6,955 retail credit proposals amounting to ₹

1,028.83 Crore as against 5,373 proposals amounting to ₹ 756.93 Crore during the fiscal year 2015.

CORPORATE BANKING

Our corporate banking business has a customer-focused approach that caters to the business needs of varied enterprises

and corporate entities both in public and private sector. Our products for corporate customers include term loans and

advances for the creation or improvement of assets and also working capital funding. We also provide non fund-based

services such as letters of credit (“LCs”), guarantees and foreign currency conversion/remittances. We provide finance

to corporates through the syndication of loans done by various financial institutions. We offer fee-based services, such

as cash management and remittance services. We cross sell and distribute life insurance products, general insurance

products and mutual funds to corporate customers and their owners and employees.

In order to give focused attention to corporate clients and to reduce our response time to their loan applications, we

have a specialized Corporate Business Group (“CBG”) at our Head Office, Kolkata, which exclusively caters to the

credit requirements of corporate clients through our Corporate Finance Branches in Mumbai, Delhi and Kolkata and

through other branches at Hyderabad, Bangalore, Bhubaneswar, and various other state capitals and important centers

throughout the country.

As a percentage of total deposits, corporate banking deposits accounted for 13.98%, 5.49%, 4.97% and 2.66% as of

March 31, 2014, March 31, 2015, March 31, 2016 and nine months period ended on December 31, 2016, respectively.

We offer the following range of loans and advances to assist our corporate customers in meeting their financial needs

under sole as well as consortium/multiple banking arrangement:

Term Loans: Our term loans primarily finance the creation and improvement of fixed and other assets,

including long term projects.

Cash Credit and Other Working Capital Facilities: Cash credit and bill financing facilities are the most

common form of working capital financing in India. We offer revolving credit facilities secured by working

capital assets, such as inventory and receivables.

Foreign Currency Loans: We provide loan facilities in foreign currencies to our customers. Foreign

currency-denominated loans in India are granted out of our FCNR (B) funds or borrowing from the inter-

bank markets pursuant to RBI guidelines.

Export Credit: We offer both pre and post-shipment credit to Indian exporters through Rupee denominated

loans as well as foreign currency loans in India.

Import Finance: We provide various types of credit facilities and other services to importers in their import

business including collecting import bills, establishing import letters of credit, arranging short-term foreign

currency loans through our correspondent banks and issuing guarantees on behalf of importers.

Letters of Credit: We provide letter of credit facilities, buyers credit / letter of comfort with our fee varying

with the term of the facility and the amount of commitment, which are often partially or fully secured by

assets, including cash deposits, documents of title to goods, stocks and receivables or some other form of

security.

Guarantees: We issue guarantees on behalf of our customers to guarantee their financials, performance and

bid bond obligations, which are generally secured by account indemnities, counter guarantees and/or a fixed

or floating charge on the assets of the borrower, including cash deposits.

OUR PERFORMANCE UNDER PRIORITY SECTOR CREDIT

We actively extend financial support and finance to sectors identified as “Priority Sectors” by the Government and

the RBI to promote the development of the rural economy. Our Priority Sector advances include loans to the

132

agriculture, small-scale industries and services, loans to certain sectors targeted as requiring special assistance, such

as education, food and agriculture based processing sectors, loans to the housing sector.

The RBI’s guidelines state that banks should extend at least 40% of their adjusted net bank credit to the priority sector,

which includes the agriculture and MSE sector. In addition, under the RBI guidelines, banks should extend 18% of

their adjusted net bank credit to the agriculture sector. In case of any shortfall, they are required to place the difference

between the required lending level and the actual amount lent in the priority sector and agriculture sector in an account

with the National Bank for Agriculture and Rural Development under Rural Infrastructure Development Fund

Scheme, where the applicable interest rates are generally found to be lower than market rates for lending to the priority

sector.

The following table presents data on our outstanding priority sector lending, including as a percentage of our adjusted

net bank credit, as at the last Friday of the months indicated.

Particula

rs


2016

Amount

Outstandi

ng

(₹ crore)

% of

Adjuste

d Net

Bank

Credit

Amount

Outstandi

ng

(₹ crore)

% of

Adjuste

d Net

Bank

Credit

Amount

Outstandi

ng

(₹ crore)

% of

Adjuste

d Net

Bank

Credit

Amount

Outstandi

ng

(₹ crore)

% of

Adjuste

d Net

Bank

Credit

Agricultur

e Credit

12,297 13.31% 9,073 12.86% 12,605 17.40% 11,277 15.25%

MSE

Credit

11,238 15.57% 12,273 17.40% 10,998 15.19% 10,219 13.82%

Other

Priority

Sector

Credit(1)

5,415 7.5% 7,215 10.23% 6,206 8.57% 6,918 9.36%

Total 28,950 40.11% 28,561 40.48% 29,809 41.16% 28,414 38.42% (1) Includes loans for retail trade, housing and education.

The RBI also requires commercial banks to advance at least 10.0% of adjusted net bank credit to weaker sections

identified by the RBI. Under the DRI scheme, we extend loans to the lower-income sections of the community that

are engaged in productive ventures at an interest rate of 4.0% per annum to meet their credit requirements.

Agriculture Sector

As of December 31, 2016, we had an outstanding loan portfolio to the agriculture sector of ₹ 11,277 crores of our total

outstanding loans and advances as of that date. Further, as of March 31, 2016, we had an outstanding loan portfolio

to the agriculture sector of ₹ 12,605 crores of our total outstanding loans and advances as of that date, compared with

₹ 9,073 crore as of March 31, 2015, representing year-on-year growth of 38.93%. Abolition of the concept of Direct

& Indirect Agriculture removing capping of 4.5% to Indirect Agri has caused such a steep growth.

We offer a wide variety of products and schemes under agricultural financial services, including both direct and

indirect advances. We have various area-specific schemes suitable to different agro-climatic conditions and

agricultural practices, including credit for tea plantation, short term credit for seasonal agricultural operations and

working capital limits to allied activities of agriculture. We also extend credit to set up and maintain rubber plantation

thus boosting agriculture sector of the economy. We provide credit facilities to farmers for the purchase of three

wheelers and four wheelers. We also lend money to small and marginal farmers for the purchase of agricultural land.

In addition, we provide farmers with credit facilities for the rescheduling and rephasing of existing loans if they are

unable to repay their existing loans due to various reasons, including natural calamities. To ensure hassle free, need

based and timely disbursement of agriculture credit, we have simplified the forms for Kisan Credit Card Scheme

(“KCC”), joint liability group scheme (“JLG”), differential rate of interest scheme (“DRI”) and other agriculture loans

incorporating space on itself for certification on land holding, income, residence etc. by the appropriate authorities,

which in turn has also facilitated in minimizing the turnaround time.

133

In order to give a fillip to financing against pledge of warehouse receipt, which, in turn, would facilitate considerable

growth in the agriculture sector, we have entered into a tie-up arrangement with M/s. Star Agri Collateral Management

Limited, where in they provide risk management tools relating to commodities and inventories which, inter alia,

include collateral management services, field warehousing arrangements, inventory audit services, storage and

preservation services, procurement services, testing and certification services, inspection services and monitoring

services.

We have revised our existing KCC scheme in accordance with the directions of the Government of India. Under the

revised scheme, it is envisaged that all the KCC holders, existing as well as new, would be issued with a smart

card/Debit card (biometric smart card) compatible for use in the ATMs/Hand held swipe machines and capable of

storing adequate information on farmers identity, assets, land holding and credit profilers. We also launched the

RuPAY based KCC scheme on a pilot basis in the districts of Murshidabad, Nadia and Hooghly in West Bengal.

We have organized several special camp for issuance of Kisan Credit Cards to bring more number of new farmers

under KCC net as per revised scheme. We have issued 94,799 fresh KCCs during fiscal year 2016 with credit limits

of ₹ 538 crore. Total number of outstanding KCCs as on March 31, 2016 stands at 5,59,923 with aggregate outstanding

balance of ₹ 2,266.56 crore. In line with the Government guidelines on issuance of Rupay based ATM enabled cards

to all the KCC holders, we have issued 3.60 lakh ATM cards to the KCC holders till March 31, 2016 which is 93% of

eligible KCC holders (excluding illiterate, unwilling and NPA KCC holders).

We also take adequate and appropriate steps for extending various benefits to the farming community to protect them

from the related uncertainties and to minimize the financial burden. Those are implementation of crop insurance

scheme under Pradhan Mantri Fasal Bima Yojana (PMFBY) and Interest Subvention Scheme from Short Term

Production Credit. We have made available the benefit of interest subvention to the tune of ₹ 13.26 crore for the fiscal

years 2014, ₹ 16.67 crore for the fiscal years 201 and ₹ 13.87 crore for the fiscal years 2016. For creating awareness

among the borrower farmers about necessity of availing bank finance for agriculture operations and maintaining it in

performing status, we have actively taken part in a state government assisted programme under the banner ‘Bangla

Farmers’ Financial Inclusion Fortnight’ in the months of November and December 2016.

Micro and Small Enterprise (MSE) Sector

With a view to enlarge our credit exposure in the MSE sector, we have initiated several sector friendly measures at

highly competitive interest rates based on the enactment of the government on Micro, Small & Medium Enterprises

Development (MSMED) Act, 2006.

A sizable share of our total lending is allocated to this sector. As of March 31, 2016, we had an outstanding loan

portfolio of ₹ 11,885 crore, compared with ₹ 12,949 crore as of March 31, 2015. We offer a wide variety of product

and schemes to cater to the needs of this sector. We believe that MSMEs are a major driving force behind India’s

recent economic success. Accordingly, our Bank has dedicated specific resources to this customer segment.

We have opened number of MSME branches and deployed specialized officers at MSME centric locations. We

propose to strengthen our relationship with these corporates by giving them various facilities at competitive terms and

thereby expand our business. We have installed a dedicated toll free telephone connection at our head office to address

all queries of entrepreneurs in the MSEE sector. We have set up a MSME care centre at all our regional offices to

improve lending and to redress the grievances of our customers under this sector. We also offer loans under the

schemes of Pradhan Mantri Mudra Yojana (“PMMY”) to provide funding to the non-corporate, non-farm sector

income generating activities of micro and small enterprises whose credit needs are below ₹10 Lakh.

Other Priority Sector Credit

We provide micro credit (loans not exceeding ₹ 50,000 per borrower) to persons belonging to economically

disadvantaged sections of the society, irrespective of the place of residence, for taking up any income generating

activities, falling within the purview of the priority sector.

DEPOSITS

134

We offer a range of deposit accounts with tenures normally ranging from a minimum of 14 days to a maximum of 10

years. We offer several deposit accounts to Non-Resident Indians, including deposits in foreign currencies. Our

deposits are broadly classified into current (also known as demand) deposits, savings deposits and term deposits,

which are briefly discussed as under:

a. Current deposits are non-interest bearing deposits;

b. Savings deposits are deposits on which an interest of 4% is offered;

c. Term deposits are deposits on which interest is paid, either on maturity or at stipulated intervals depending upon

the deposit schemes under which money is placed. Term deposits are classified as:

• Retail term deposit, where amount of deposit is below ₹ 1 crore; and

• Bulk term deposit, where amount of deposit is ₹ 1 crore and above.

Term deposits mainly include:

• Term deposits on which a fixed rate of interest is paid at fixed, regular intervals;

• Re-investment deposits, under which the interest is compounded quarterly and paid on maturity, along with

the principal amount of the deposit; and

• Recurring deposits, under which a fixed amount is deposited at regular intervals for a fixed term and the

repayment of principal and interest is made at the end of the term.

The average cost (interest expense divided by average of fortnightly balances) of savings deposits was 4% as of

December 31, 2016, 4% in fiscal year 2016, 4% in fiscal year 2015 and 4% in fiscal year 2014. The average cost of

term deposits was 8.39% as of December 31, 2016, 8.13% in fiscal year 2016, 8.80% in fiscal year 2015. The average

cost of total deposits was 6.09% as of December 31, 2016, 6.58% in fiscal year 2016, 6.88% in fiscal year 2015 and

7.14% in fiscal year 2014. Current deposits do not bear interest, and are therefore carried at zero cost.

The following table sets forth our outstanding deposits and the percentage composition by each category of deposits

for the periods indicated therein:

Particul

ars


2016

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Current

deposits

(A)

8,077 7.24% 8,944 8.22% 7,981 6.86% 9,697 7.59%

-From

banks

1,315 1.18% 1,261 1.16% 1,188 1.02% 1,632 1.28%

-From

others

6,762 6.06% 7,683 7.06% 1,252 5.84% 8,065 6.31%

Savings

deposits

(B)

33,154 29.73% 36,811 33.83% 40,810 35.06% 51,273 40.15%

Term

deposits

(C)

70,279 63.03% 63,063 57.95% 67,610 58.08% 66,722 52.26%

-From

banks

2,116 1.90% 1,761 1.62% 1,252 1.07% 893 0.70%

135

Particul

ars


2016

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

Amount

Outstand

ing

(₹ crore)

% of

Total

Outstand

ing

-From

others

68,163 61.13% 61,302 56.33% 66,358 57.01% 65,829 51.56%

Total

deposits

A+B+C

1,11,510 100 1,08,818 100 1,16,401 100 1,27,692 100

TREASURY OPERATIONS

Our treasury operations are our interface with the financial markets. Our treasury operations consist primarily of

statutory reserves management, liquidity management, investment and trading activities, money market and foreign

exchange activities. Our treasury department manages our treasury operations on a day-to-day basis subject to

oversight by our Investment Committee and ultimately by our Board. Through our treasury operations, we manage

our funds, invest in debt and equity products and maintain required regulatory reserves. We run a proprietary trading

book in debt, equity and foreign exchange within the framework of our treasury policy.

Our interest income on investments of treasury operations was ₹ 2,597.62 Crores, ₹ 2,879.32 Crores, ₹ 3,038.73

Crores, and ₹ 2,302.61 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March 31, 2016 and the

nine months ended December 31, 2016, respectively. Our non-interest income from our treasury operations, consisting

of profit and loss from the sale of investments and foreign exchange transactions was ₹ 681.95 Crores, ₹ 1,265.39

Crores, ₹ 959.80 Crores, and ₹ 1,502.44 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March

31, 2016 and the nine months ended December 31, 2016, respectively.

Our overseas presence covered two countries namely Myanmar and Bangladesh with one Representative Office each

at Dhaka, Bangladesh and Yangoan, Myanmar. Substantial part of Indo-Myanmar trade is routed through our Bank.

As on March 31, 2016, Twenty five (25) banks of Bangladesh maintain thirty eight (38) Vostro accounts in USD and

EUR and fifteen (15) banks of Myanmar maintain Twenty three (23) Vostro accounts in EUR, USD, INR and SGD

with our Bank. Further, Global IME bank Limited, Nepal is maintaining Vostro accounts in INR and USD with our

Bank.

The following table sets forth the allocation of our net investment portfolio for the periods indicated therein:

Securities As of March 31,

2014

As of March 31,

2015

As of March 31,

2016

As of December 31,

2016

Amount

(₹ crore)

% Amount

(₹ crore)

% Amount

(₹ crore)

% Amount

(₹ crore)

%

SLR

Government

securities

35,084 77.74% 35,021 74.83% 36,009 80.14% 47,092 77.40%

Other approved

Securities

16 0.04% 0 0 0 0 0 0

Sub total 35,100 77.78% 35,021 74.83% 36,009 80.14% 47,092 77.40%

Non-SLR

Subsidiaries and Joint

Ventures

– – – – – – – –

Debentures and

Bonds

2,152 4.77% 2,113 4.52% 2,150 4.78% 2,672 4.39%

Re-cap bonds

(including

Special Securities )

– – – – – – – –

Shares 439 0.97% 343 0.73% 358 0.80% 503 0.83%

136


2014

As of March 31,

2015

As of March 31,

2016

As of December 31,

2016

Amount

(₹ crore)

% Amount

(₹ crore)

% Amount

(₹ crore)

% Amount

(₹ crore)

%

Other 7,437 16.48% 9,321 19.92% 6,417 14.28% 10,579 17.38%

Sub total 10,028 22.22% 11,777 25.17% 8,925 19.86% 13,754 22.60%

Total 45,128 100 46,798 100 44,934 100 60,846 100

The following table sets forth the category wise allocation of our investment portfolio for the periods indicated therein:


2014

As of March 31,

2015

As of March 31,

2016

As of December 31,

2016

Amount

(₹ crore)

% Amount

(₹ crore)

% Amount

(₹ crore)

% Amount

(₹ crore)

%

Held to Maturity

(HTM)

29,075 64.43% 27,570 58.91% 24,369 54.23% 24,987 41.07%

Available for Sale

(AFS)

16,053 35.57% 19,228 41.09% 20,565 45.77% 35,859 58.93%

Held for Trading

(HFT)

0 0 0 0 0 0 0 0

Total 45,128 100 46,798 100 44,934 100 60,846 100

Yield 8.00 8.04 8.02 7.67

Modified Duration

HFT

0 0 0 0

Modified Duration

HTM

5.47 5.42 5.41 5.58

Modified Duration

AFS

1.96 3.59 3.73 3.21

GENERAL BANKING SERVICES

We offer a wide range of general banking services to our retail, corporate and priority sector customers, including

those services described below.

Debit Cards

We offer debit cards which may be used for cash-less transactions in India and abroad. Our debit cards include ATM

Debit Card, United VISA Debit Card, United EMV Debit Card, United RuPay Debit Card, United RuPay Kisan Debit

Card, Rupay EMV Card, Rupay Platinum EMV card. United International ATM cum debit card enables instant access

to the money in your account anywhere anytime avoiding the hassles of carrying cash. These cards support the

financial inclusion of the urban un-banked population and disbursal of small loans to semi-urban and rural unbanked

population. Our debit cards can also be used at point of sale.

Integrated Cash Management Services

We had introduced Integrated Cash Management Services under United Global Cash Management Services. United

Global Cash Management Services is a software application that facilitates management of customer’s fund,

particularly, of corporate customers. United Global Cash Management Services is based on robust technology capable

of collection/receivables, Payment/Payable, Liquidity Management, Public Issues Collection & Payments and Fund

Distribution requirement of –

Government Departments and Ministries

Large Corporate

Small and Medium Enterprises

137

All of our above services provide our customers with enhanced liquidity and better cash management and help them

in reducing their operational and administrative costs. This advanced technology helps us in delivering superior

products and services. Our income from service charges under Integrated Cash Management Services were ₹ 1.89

Crores, ₹ 3.13 Crores, ₹ 3.90 Crores, and ₹ 3.35 Crores for the fiscal years ended March 31, 2014, March 31, 2015,

March 31, 2016 and the nine months ended December 31, 2016, respectively.

Depository and Trading Services

We are registered as a Depository Participant with the CDSL and NSDL and provides depository services to our

Bank’s customers under the umbrella of “United Demat”, which aims at providing hassle-free, fast and accurate

transactions under depository environment. We also facilitates share trading for our customers through two products

under the umbrella “U-Connect” - in association with Kotak Securities Limited by the brand name ‘Trio’ which

enables the customer to open 3-in-1 account i.e. bank account, demat account and share trading account and trade

seamlessly on the net from the comfort of their home.

These products are feature-rich with facilities of investment, trading, exposure, margin trading, funding, IPO

applications through ASBA, systematic investment, placing aftermarket orders and future orders valid for 365 days,

all being made available at an extremely competitive pricing. Our income from depository service were ₹ 0.28 Crores,

₹ 0.16 Crores, ₹ 0.18 Crores, and ₹ 0.25 Crores for the fiscal years ended March 31, 2014, March 31, 2015, March

31, 2016 and the nine months ended December 31, 2016 respectively.

DISTRIBUTION OF THIRD PARTY PRODUCTS

Bancassurance

We distribute life insurance products and general insurance products through our branches. We have entered into

corporate agency agreements with LIC and Bajaj Allianz General Insurance Company Limited to distribute their

various insurance products, for which we are paid a commission. Our income from bancassurance business was ₹

10.01 Crores, ₹ 6.16 Crores, ₹ 5.87 Crores, and ₹ 4.63 Crores for the fiscal years ended March 31, 2014, March 31,

2015, March 31, 2016 and the nine months ended December 31, 2016, respectively

Mutual Funds

We have entered into agreements with various entities including, UTI Mutual Fund, HDFC Mutual Fund, Franklin

Templeton Investments, ICICI Prudential Mutual Fund, Reliance Mutual Fund, Kotak Mahindra Mutual Fund, SBI

mutual Fund, PNB Principal Mutual Fund and Peerless Mutual Funds for marketing their mutual fund units.

Inward Money Remittance

We offer services for receipt of funds acquired either locally or from offshore locations and use the platform of UAE

Exchange and Financial Services Limited for inward money remittance.

DELIVERY CHANNELS AND ACCESSIBILITY

Our customers in metropolitan and rural areas can access a range of delivery methods to take advantage of our products

and services. These include access to physical branches and extension counters. Round the clock access to select

banking services are offered through ATMs, internet banking and mobile banking. As on January 31, 2017, we had

2,021 branches in 29 States and 5 Union Territories in India (all of them under CBS platform). As of January 31, 2017,

we had 2,200 ATMs, 36 regional offices, 5 extension counters and 2 representative offices in Bangladesh and

Myanmar. As of January 31, 2017, we had a customer base of approximately 4.22 crore.

The following table sets out details of our branches as of January 31, 2017:

State and Union Territories Metro Urban Semi -

Urban

Rural Total Number of

district

Ext.

Counter

Andaman & Nicobar – 1 1 – 2 1

138

State and Union Territories Metro Urban Semi -

Urban

Rural Total Number of

district

Ext.

Counter

Andhra Pradesh 2 12 1 1 16 10

Arunachal Pradesh – – 3 1 4 2

Assam – 35 68 144 247 27 1

Bihar 11 24 25 34 94 31

Chandigarh – 4 0 0 4 1

Chattisgarh 3 11 12 1 27 14

Dadra & NH 0 – 1 – 1 1

Delhi 35 – – – 35 1 1

Goa – 1 3 – 4 2

Gujarat 10 13 5 2 30 21 1

Haryana 2 18 4 2 26 19

Himachal Pradesh – 1 3 – 4 3

Jammu & Kashmir – 1 – – 1 1

Jharkhand 11 19 21 27 78 21 1

Karnataka 15 15 2 – 32 17

Kerala – 10 6 – 16 9

Madhya Pradesh 7 6 – – 13 10

Maharashtra 38 9 2 – 49 13

Manipur – 7 8 4 19 9

Meghalaya – 4 4 8 16 5

Mizoram – 3 4 – 7 1

Nagaland – 2 1 – 3 2

Orissa – 32 38 68 138 30 –

Pondicherry – 2 – – 2 1 –

Punjab 3 9 7 – 19 14 –

Rajasthan 7 15 3 10 35 17 –

Sikkim – 1 2 – 3 2 –

Tamil Nadu 18 11 7 4 40 16 –

Telangana 12 6 1 – 19 8 –

Tripura – 14 17 33 64 8 –

Uttar Pradesh 42 35 9 20 106 44 –

Uttarakhand – 7 1 – 8 4 –

West Bengal 145 149 152 413 859 19 1

TOTAL 361 477 411 772 2,021 384 5

Population group-wise composition of total branch network:

Number of Branches (% of total)

March 31, 2014 March 31, 2015 March 31, 2016 January 31, 2017

Metropolitan 332 (16.59%) 330 (16.47%) 330 (16.41%) 361(17.86)

Urban 461 (23.04%) 463 (23.10%) 466 (23.17%) 477(23.60)

Semi-Urban 409 (20.44%) 411 (20.51%) 415 (20.64%) 411(20.34)

Rural 799 (39.93%) 800 (39.92%) 800 (39.78%) 772(38.20)

Total 2,001 2,004 2,011 2,021

Population group-wise composition of total branch network:



Eastern Region 1,168 (58.37%) 1,169 (58.33%) 1,169 (58.13%) 1,175 (58.13%)

North Eastern

Region

351(17.54%) 352 (17.56%) 356 (17.70%) 358 (17.71%)

139



Western Region 85 (4.25%) 85 (4.24%) 85 (4.23%) 86 (4.26%)

Northern Region 125 (6.25%) 123 (6.14%) 123 (6.12%) 123 (6.09%)

Southern Region 118 (5.90%) 121 (6.05%) 124 (6.16%) 125 (6.19%)

Central Region 154 (7.69%) 154 (7.68%) 154 (7.66%) 154 (7.62%)

Total 2,001 2,004 2,011 2,021

As on January 31, 2017, our Bank has 247 specialized branches, catering to the specific clientele segment;

Sr. No. Specialized Branches No. of branch

1. MSME Branch 186

2. Retail Hub 24

3. Service Branch 19

4. Women Branch 5

5. Corporate Finance Branch 4

6. Asset Recovery Management 4

7. Overseas Banking Business Branch 3

8. MSME Loan Processing Cell 1

9. Treasury Branch 1

Total 247

As on January 31, 2017, our Bank has 2,200 ATMs including 295 ATMs in Metros, 602 ATMs in Urban region, 573

ATMs in Semi Urban region and 730 ATMs in Rural region. The following table sets out details of our ATMs, state

wise, both onsite and offsite, as of January 31, 2017:

State ATMs State ATMs

Andaman & Nicobar 1 Maharashtra 40

Andhra Pradesh 16 Manipur 21

Arunachal Pradesh 1 Meghalaya 9

Assam 298 Mizoram 9

Bihar 87 Nagaland 3

Chandigarh 3 Orissa 197

Chhattisgarh 21 Pondicherry 2

Dadra & Nagar Haveli 1 Punjab 14

Delhi 51 Rajasthan 36

Goa 4 Sikkim 3

Gujarat 28 Tamil Nadu 35

Haryana 21 Telangana 16

Himachal Pradesh 3 Tripura 81

Jharkhand 64 Uttar Pradesh 93

Karnataka 14 Uttarakhand 11

Kerala 14 West Bengal 979

Madhya Pradesh 24

We offer a user-friendly internet banking facility that allows our customers to conduct a comprehensive range of

banking transactions online without visiting our branches or ATMs. These transactions include account management,

money transfer and settlement and fee payment. We seek to provide a competitive, functional and usable internet

banking platform that meets our customer expectations of banking without paperwork. We offer services 24 hours a

day, seven days a week through internet banking and mobile phone account services. The Bank also provides facility

of instant fund transfer through IMPS, utility bill payment and QR Code Based transaction.

Subordinated Debt (Lower Tier II Capital)

140

We obtain funds from the issuance of unsecured non-convertible subordinated debt securities, which qualify as Tier

II capital under RBI guidelines for assessing capital adequacy. Details of Tier II Bond are as follows:

Sr.

No.

Name of the Bond Date of

Issue

Coupon Rate (%) Date of

Maturity

Credit Rating

1. Lower Tier-II (Series-V) March 27,

2007

10.10 (annual) April 27,

2017

A+ by CARE and A+ by

ICRA

2. Upper Tier-II (Series-I)

Basel I

June 18,

2007

10.65 (annual)* June 18,

2022

A- by CARE and A- by

ICRA

3. Lower Tier-II (Series-

VI) Basel I

March 25,

2009

9.30 (annual) March 25,

2019

A+ by CARE and A+ by

ICRA

4. Lower Tier –II (Series–

VII) Basel II

December

28, 2011

9.20 (annual) ***

December

28, 2021

A+ by CARE and AA- by

CRISIL

5. IPDI-Tier I (Series I)

Basel II

December

5, 2012

9.27 (annual) December

5, 2022**

A- by CARE and A by

CRISIL Ltd.

6. Lower Tier-II (Series-

VIII) Basel III

Compliant

June 25,

2013

8.75 (annual)

June 25,

2023

AA- by Brickwork and AA-

by CRISIL

7. AT-1 Basel III

Compliant

September

29, 2015

11.95% (annual) September

29, 2020*

*

BBB by India Rating

* Step up to 11.15 after 10 years, if Call Option is not exercised

**With prior approval of RBI

***Tier II (Series VII) - Simple interest at the rate of 9.20% p.a. for the broken period from the Deemed Date of

Allotment i.e., December 28, 2011 till March 31, 2012 was paid initially. Thereafter, simple interest at the rate of

9.20% p.a. will be payable annually on the first working day of April of each subsequent year till March 31, 2021.

Interest from April 1, 2021 to December 27, 2021 shall be paid on the date of redemption.

Regional Rural Banks

We have sponsored four Regional Rural Banks (“RRBs”) in collaboration with the Central Government and the state

governments of West Bengal, Assam, Manipur and Tripura. We have sponsored Bangiya Gramin Vikash Bank in

West Bengal, Assam Gramin Vikash Bank in Assam, Tripura Gramin Bank in Tripura and Manipur Rural Bank in

Manipur (“MRB”). As on March 31, 2016, the total network of branches of these RRBs stands at 1169 (including 8

non-functional Branches). As on March 31, 2016, the total business of these RRBs was ₹ 35,213 crore with total

Deposit of ₹ 23,678 Crore and advance of ₹ 11,535 crore. Total profit earned by these RRBs were ₹ 97.56 crore after

adjusting ₹ 3.23 crore loss increased by MRB. Average Gross NPA was 13.61 %.

RISK MANAGEMENT

Our risk management system comprises policies, procedures, organizational structures and control systems for the

identification, measurement, monitoring and control of various risks. Our risk management policy documents are in

line with RBI requirements and have evolved over time to meet the changing needs of our business.

The three main risk exposures we face are credit risk, market risk and operational risk. We have implemented the

Basel – III framework for computation of capital requirements under Pillar-I risks like credit risk, market risk and

operational risk as well as Pillar-II risks like credit concentration risk, liability concentration risk, liquidity risk etc.

We are making disclosures under Pillar-III in conformity with Basel – III guidelines. Also, in keeping with the said

guidelines our risk management system is subjected to assessment, both offsite and onsite by the regulator.

Credit Risk

Lending Policy

141

We have a credit risk management system, as a part of our lending policy, which is reviewed from time to time and

circulated to all our branches, regional offices and head office (including all its departments). The policy and

procedures under this system have been prepared on the basis of and in compliance with Basel – III guidelines.

The main objective of the policy is to ensure that the operations are in line with the business strategies of the top

management within the regulatory framework and government directives. The policy aims at ensuring that there is no

excessive concentration in particular segment of individual assets within the portfolio. It also aims at continued

improvement of the overall quality of assets at the portfolio level, by establishing a commonality of approach regarding

credit basics, appraisal skills, documentation standards and awareness of institutional concerns and strategies, while

leaving enough room for flexibility and innovation.

Credit Risk Management

For the identification and assessment of credit risk, in addition to relying on rating by external agencies, we have

developed and refined our own internal credit risk rating models to assess counterparty risk, by taking into account

various risks categorized broadly into financial, business, industry, project and management risks. The credit

concentration risk of our Bank is monitored through the prudential exposure ceiling limit fixed by our Bank. However,

to internally monitor the management of the concentration risk, Bank assesses its risk appetite for industry

prioritization and concerned risk.

The management of credit risk includes, inter-alia, setting up exposure limits to achieve a well-diversified portfolio

across dimensions such as companies, group companies, industries as well as appraisal, pricing, deciding credit

approval authority, documentation, reporting and monitoring, review and renewal of credit facilities, managing of

problem loans, credit monitoring and loan review mechanism.

For better risk management and avoidance of credit concentration risks, internal guidelines on prudential exposure

norms in respect of individual and group borrower, industry-wise exposure limit, sensitive sectors including capital

markets and real estate are in place. We have an elaborate credit appraisal format to take care of different

parameters/aspects of credit risk. We have a credit rating based pricing system and have systems and procedures in

place to take care of both standard and non-standard documentation involving borrowal accounts. We have a system

of reporting sanction, documentation, disbursement, operation and status of borrowal accounts as well as periodic

monitoring of the same. We also have a system for the review and renewal of credit facilities as well as managing of

stressed accounts by taking suitable measures including restructuring and rehabilitation. We follow a multi layered

discretionary power structure backed by a committee approach for sanction of credit facilities.

Our Bank provides capital based on regulatory guidelines using the standardized Approach for estimation of minimum

capital requirement for its Credit Risk.

Loan Review Mechanism

We have a credit audit policy and a document audit system as a part of loan review mechanism. On-site credit audit

is conducted by visiting the branches, scrutiny of the processed notes and other documents, operation in the account

and verification of fulfillment of the terms of sanction as per policy. We also have a system in place for identification

of credit weaknesses including tracking early warning signals of credit weaknesses and for the surveillance and

monitoring of procedures adopted at various stages of our lending operations. Document audit is undertaken for both

standard as well as non-standard documents immediately after execution of documents.

Stress Testing Policy and Analysis

Stress Test refers to a range of techniques used to assess the vulnerability of a portfolio. Stress test techniques provide

a way to quantify the impact of changes in a number of risk factors on the assets and liabilities of our Bank. Stress

Testing has become an integral part of Bank’s Risk Management system and is used to evaluate its potential

vulnerability to certain unlikely but plausible events or movements in financial variables. Our Bank formulated its

Policy on Stress Testing and the same is reviewed annually. Our Bank also undertakes Stress Testing Analysis on

quarterly basis and places the same before the Board of Directors for noting.

142

The choice of test depends on our Bank’s portfolio, complexity of its operation, the risk factor to be stressed and the

technical ability to collect and process data at required intervals. In the scope of application of Internal Capital

Adequacy Assessment Policy (“ICAAP”), it is considered that the business operation of our Bank is “Simple.” There

are broadly two categories of stress tests used in banks viz. sensitivity tests and scenario tests.

Sensitivity test estimates the impact on a bank’s financial position due to predefined movements in a single risk factor

like interest rate, foreign exchange rate or equity prices, shift in probabilities of defaults (PDs), etc. Scenario Tests

include simultaneous changes in a number of variables based on a single event experienced in the past and assessment

of their impact on our Bank’s financial position. Accordingly, our Bank has adopted the Sensitivity test at individual

portfolio level & Scenario test method at aggregate portfolio level of our Bank and analyzed impact under various

stress scenarios as per our Bank’s policy.

Macro Level Analysis of Credit Portfolio

The macro level analysis of the whole credit portfolio is done at quarterly intervals to assess the quality of the credit

portfolio as per segmentation by industries/ sectors, interest rates (in relation to MCLR/Base Rate/ BPLR). Portfolio

analysis of major industries or sectors at regular intervals is being undertaken to study the impact of the prevalent

market scenario of a particular industry or sector on our credit portfolio.

Risk Rating Migration Analysis

We are conducting analysis on risk rating migration for large borrowal accounts. The findings of the analysis are being

utilized to decide and implement appropriate strategies to maintain ratings of better rated accounts, improve the ratings

of inferior rated accounts and arrest migration to inferior rated accounts.

Credit Risk Mitigation Techniques and Collateral Management

We have a policy on credit risk mitigation techniques and collateral management describing various mitigants of credit

risks and appropriate collaterals taking into account the spirit of Basel III or RBI guidelines and measures to be adopted

to optimize their benefit in credit risk mitigation as well as in computation of capital charge as per rules and regulations

laid down in Basel III or RBI guidelines.

Market Risk

We have formulated Market Risk Management Policy, Asset Liability Management Policy and Integrated Treasury

Policy for management of market risk, liquidity risk, interest rate risk and forex risk. Risk Management and reporting

is based on various parameters including modified duration, maximum permissible exposures, net open position limits,

gap limits and Value at Risk (VaR) in line with the industry practices.

Our market risks are essentially managed by our treasury department, which handles our treasury operations. The

treasury department has clear-cut demarcations between its front office functions, and back office functions. The mid

office, which is independent from treasury and reports directly to our senior management and also to the ALCO, is

also responsible for implementation of our market management system including interest rate risk.

Interest Rate Risk

Interest rate risk refers to fluctuations in our net interest income, net worth and the value of our assets due to changes

in market rate of interest arising out of internal and external factors. Internal factors include the composition of our

assets and liabilities, quality, maturity, interest rate and re-pricing period of deposits, borrowings, loans and

investments. Among external factors rising or falling interest rates impact us depending on our balance sheet

positioning. Interest rate risk is prevalent on both the asset as well as the liability sides of our balance sheet. We assess

the interest rate risk to which we are exposed through traditional gap analysis, duration gap analysis and stress tests.

Asset - Liability Management

The Asset - Liability Management Committee (“ALCO”) periodically monitors and controls the risks and returns,

mobilization and deployment of funds, setting our lending and deposit rates, and directing our investment activities.

143

We identify the risks associated with the changing interest rates from earnings at risk perspective, which is computed

based on the traditional gap analysis on a static position as well as economic value perspective which is done based

on computing the changes in the modified duration of different rate sensitive assets and liabilities.

For financing liquidity gap in an adverse situation, we have adequate contingency plan including, liquid mutual fund,

liquid money market securities, easily marketable securities, surplus SLR securities, export refinance and special

refinance / repo etc.

The RBI has stipulated monitoring of interest rate risk at monthly intervals through a statement of interest rate

sensitivity to be prepared as the last reporting day of each month. ALCO reviews interest rate sensitivity statement on

monthly basis.

Computation of capital charge for Market Risk on an ongoing basis

We use a software to compute capital charge for market risk under Standardised Duration Approach (“SDA”). It can

compute the capital charge on an ongoing basis and have the scope of switching over to Internal Model Approach

with necessary customization.

Operational Risk

We have formulated an operational risk management policy and Business Line Mapping Policy in line with RBI

guidelines. The operational risk management policy adopted by us outlines organization structure and detailed

processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk

management system into our day-to-day risk management processes by clearly assigning roles for effectively

identifying, assessing, monitoring and controlling, mitigating operational risks and by timely reporting of operational

risk exposures, including material operational losses. Our operational risks are managed through internal control

frameworks.

Our Bank provides capital based on regulatory guidelines using the Basic Indicator Approach (“BIA”) for estimation

of minimum capital requirement for Operational Risk. For migration to Advance Measurement Approach (“AMA”),

we have initiated the process of identifying the loss events and collecting the necessary data on such events.

The Business Line Mapping Policy addresses various activities of Bank into different business lines as per RBI

guidelines.

Other Information

We have an ICAAP and ICCAP Document to evaluate and document different risks and substantiate appropriate

capital allocation. Apart from maintaining regulatory capital for Pillar-I risks and also capital for Pillar-II risks, we

maintain additional capital as cushion so as to protect our Bank as well as depositors and general creditors against

unforeseen losses.

The capital requirement is affected by the economic environment, the regulatory requirement and by the risk arising

from our activities. The purpose of our capital planning is to ensure the adequacy of capital at the times of changing

economic conditions, even at times of economic recession. Our capital planning process reviews:

Our current capital requirement

The targeted and sustainable capital in terms of business strategy and risk appetite.

The future capital planning is done on a three-year outlook.

The capital plan is revised on an annual basis. We have a policy to maintain capital to take care of the future growth

in business so that the minimum capital required is maintained on continuous basis. On the basis of the estimation, we

raise capital in Tier-1 or Tier-2 with the approval of our Board. Our capital adequacy position is reviewed by our

Board on quarterly basis.

Interest Rate Risk in the Banking Book

144

The earnings or economic value changes are the main focus of the banking book. We currently have in place

measurement systems to assess the effect of rate changes on both earnings and economic value such as gap analysis

for addressing changes in net interest income and duration gap analysis for addressing changes in economic value.

Liquidity Risk

Liquidity risk is the current and prospective risk to earnings or capital arising from a Bank’s inability to meet its

obligations when they become due without incurring unacceptable losses. Liquidity risk includes the inability to

manage unplanned decreases or changes in funding sources. Liquidity risk also arises from the failure to recognize or

address changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

Our liquidity risk management system includes:

Analysis of liquidity by tracking cash flow mismatches.

Establishment of limits for mismatches and cumulative gaps for all other time buckets, limits for prudential

liquidity ratios and monitoring as per the RBI’s requirements.

Measuring and managing our net funding requirements by the use of a maturity ladder and the calculation of

cumulative surplus or deficit of funds at different maturity dates, as recommended by the RBI.

Estimating the liquidity profile on a dynamic basis by giving due recognition to seasonal patterns of deposits

and loans and the potential liquidity needs for meeting loan commitments.

Foreign Exchange Risk

Foreign exchange rate risk is the risk that we may suffer losses as a result of adverse foreign exchange rate movements

during a period in which we have an open position, either spot or forward or a combination of both in an individual

currency. Foreign exchange rate risk can arise out of changes on foreign exchange spot and forward rates. Foreign

exchange open positions are managed through limits fixed at the individual currency level as well as aggregate

currencies as follows: (a) Intra-day limit, (b) overnight limit and (c) stop loss limits for our trading book.

Foreign exchange forward rate risk caused due to gaps or mismatches in merchant trading transactions and the

corresponding cover operations in respect of maturities and quantum is managed by individual gap limits, aggregate

gap limits and by assessing the value at risk on a daily basis. Foreign exchange sensitive gaps are measured using the

value at risk model developed by Foreign Exchange Dealers’ Association of India (FEDAI) and is monitored on a

daily basis. Besides setting appropriate limits for both open positions and gaps, we monitor our foreign risk exposures

through maturity pattern statements and interest rate sensitivity statements, which are prepared and submitted to the

RBI on a monthly basis.

Commodity Risk

At present, we are not facing any commodity price risk as we are not dealing in any commodity directly. We may face

commodity risk indirectly through our borrowers who deal in commodities like metal, gold, etc. Such risks are

mitigated by fixing prudential limits on exposure.

Equity Price Risk

Exposure to capital market automatically attracts equity price risk. We periodically review the exposure in capital

market in the light of changing circumstances and its expectations about future movements in prices. We monitor the

movement in prices on a daily basis.

TECHNOLOGY

As on date of this Placement Document, the CBS had been implemented at all our branches and extension counters,

covering 100% of our business. We have implemented CBS through an application called FINACLE that has the

capability to connect all our multiple delivery channels to a common platform. CBS facilitates networking of branches,

145

which enables customers to operate their accounts, and avail banking services from any of our branches on CBS

network, regardless of where that customer maintains their account.

We have a dedicated data centre at our head office in Kolkata and a Disaster Recovery Centre, at Vashi, Navi Mumbai.

We have implemented several RBI-led technology projects designated to facilitate greater inter-bank connectivity and

faster clearing and settlement. We have implemented Real Time Gross Settlement (RTGS) and National Electronic

Funds Transfer (NEFT) in all of our branches. We have implemented the image based Cheque Truncation System

(CTS) in all three grids viz. Delhi, Chennai Mumbai as a part of RBI CTS Project Guidelines. We have also

implemented NACH and APBS within our integrated payment Hub solution.

As on January 31, 2017, we have installed 22 E-Zones, Internet Banking, Mobile Banking, E - Wallet, E- Passbook

Services. Our Bank is issuing Rupay and Visa bonded debit cards including image card on Rupay Platinum Platform.

With an aim to leverage technology, our Bank has introduced electronic Passbook (United ePassbook) facility for the

customers as a mobile application to view account transactions. Our Bank has implemented online saving account

facility, POS machines, online payment of bills and taxes. Our Bank has also implemented a product wherein instant

fund transfer across bank through beneficiary mobile number.

Our Bank has installed Unified Payment Interface (“UPI”) from first day of its launch. Our Bank is also having direct

debit facility for booking rail tickets through debit card. We use the Aadhaar Enabled Payment System (AEPS) which

allows banks to authenticate customers using biometric verification with UIDAI. To be able to service customers who

do not have accounts with us, we launched a remittance engine. We use this application to initiate interbank electronic

fund transfer services via mobile phones, Immediate Mobile Payment Service, or IMPS and NEFT transactions for

such customers at a nominal fee.

As on date of this Placement Document, the basic banking services are being offered to approximately 90 lakh

customers under the Financial Inclusion Programme of our Bank through a robust network of 4,252 Bank Mitras

spread across 12 states of the country. Since launch of PMJDY, our Bank has focused on building a self-sustaining

business model of Financial Inclusion by bringing the financially excluded population under the ambit of formal

banking and offering suitable banking services at their doorstep. Each Bank Mitra is equipped with an inter-operable

handheld device (micro ATM) for rendering services to the customers. Today our Bank provides an array of services

through the Bank Mitras network including e-KYC based SB account opening, biometric/AePS/RuPay based online

cash withdrawal and deposit facilities at micro ATMs, various remittance products including IMPS and AePS,

Recurring Deposits, micro insurance (PMSBY and PMJJBY) products and micro Pension product (“APY”) apart from


Connectivity Infrastructure

All our branches and extension counters are connected through Multiprotocol Label Switching (“MPLS”) based on

Virtual Private Network (“VPN”). Last mile connectivity in the branches is provided through leased lines, Integrated

Services Digital Networks (“ISDNs”), Very Small Aperture Terminals (“VSATs”), Radio Frequency (“RF”) and

CDMA links. As part of Wide Area Network (“WAN”) infrastructure, we have implemented Voice over IP (VOIP)

for all of our offices and branches in India excluding Branches where only VSAT link is present. Our offices and

branches are having LAN in place which is integrated with our WAN.

Our WAN is interfaced with RBI INFINET, customs and Internet for running of applications, requiring these

networks.

System Controls

We have initiated suitable control measures to protect our IT assets. As mentioned above, we have set up a data centre

in Kolkata with access card control technology. We have a Disaster Recovery Centre at Vashi, Navi Mumbai. Our

information technology security policy takes into account our CBS and ATM network. A suitable disaster recovery

mechanism and business continuity plan is also in place. Information system audit of our IT systems are carried out

on regular basis. We have also implemented onsite Security Operations Centre (SOC). Our Bank is in process of

implementing DDoS preventive system to secure our public facing application from DDoS attacks. Our Bank is also

in the process of implementing Application Delivery Control (“ADC”) module comprising Link Load Balancer, Web

Application Firewall, Server Load Balancing, Reverse Proxy, IPVS to IPV4 Convertor, SSL – VPN, SSL – Off Loader

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etc. which will strengthen the Perimeter Information Security of our Bank. We also have in place appropriate

provisions for backing-up data at offsite locations in case of loss at a primary location.

INTERNAL CONTROL SYSTEM

We have a separate Audit and Inspection Department which subjects all the branches including international division,

investment cell, service branches and every department of the administrative office to regular inspection. Audit

Committee of the Board (ACB) has been constituted in line with the RBI guidelines. Our Audit Committee reviews

the adequacy of the audit and compliance function, including the policies, procedures, techniques and other regulatory

requirements as prescribed by RBI.

In compliance with RBI guidelines, we do a Risk Based Internal Audit (RBIA) of all our branches to promote effective

operations, reliable reporting and safeguarding of assets, ensure compliance with regulations and policies and assess

and measure various risks and their direction on an ongoing basis.

Concurrent Audit, Revenue Audit and Information System Audit are also conducted at the Branches/Offices through

out the year.

Inspection / Audit function also ensures timely compliance of all comments / observations of Annual Financial

Inspection (AFI) conducted by RBI.

We have a compliance function which ensures observance to statutory and regulatory guidelines, internal procedures

and policies. The compliance function is overseen by the ACB.

CUSTOMER CARE AND RELATIONSHIP MANAGEMENT

As directed by the RBI, we have constituted a Board Level Committee chaired by our Managing Director and Chief

Executive Officer and a Standing Committee on Customer Services chaired by our Executive Director. These

committees assess the complaints from our customers, and provide necessary directions, from time to time, to improve

our customer services. We have introduced a number of customer service initiatives in order to maintain a high

standard of customer service.

Citizens’ Charter

We have a citizens’ charter in place that outlines our code of conduct in relation to our customers and provides

information on our various activities. This document is available at our branches and on our website.

Customer Education Material

We have created a range of materials in booklet and brochure format that outline the salient features of our products

and delivery channels.

Fair Practice Code

We have adopted the Fair Practice Code drafted by the IBA and intended to be followed by the entire banking system

in dealing with individual customers. Important characteristics of the code include standards for fair banking practices.

Copies of the Fair Practice Code are available at our branches.

CORPORATE AND SOCIAL RESPONSIBILITY

We have set up a trust named United Bank Rural Development and Self Employment Trust (“UBRSETI”) with an

objective to set up rural development and self-employment training institute for training the weaker section of society

to enable them to take up self-employment. As of December 31, 2016, we had 14 Rural Development and Self-

Employment Training Institutes – 6 in West Bengal, 6 in Assam and 2 in Tripura, to impart skill and entrepreneurship

development training to unemployed youth, women and people belonging to weaker sections of the society to enable

them to set up their own venture for self-employment. We are providing loans to the trained entrepreneurs for setting

up their units.

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We have set up a trust named United Bank Socio-Economic Development Foundation (“UBSEDF”) Trust with a

corpus of ₹ 5 crore with an objective of improving the standard of living of the weaker section of the society with an

emphasis on distressed women and children through augmenting their income level and improving health, hygiene

and education facility.

We have also taken initiatives such as the installation of water hand pumps in remote villages of Manipur, construction

of concrete roof of the class rooms in the remotest parts of 24 Parganas (South) district and construction of Residential

Farmers' Training Centre in 24 Parganas (North) district in West Bengal. Additionally, we have also supplied small

electronic weighing machines to farmers of Sabji Mandi Berhampore, Murshidabad, dug tube well and supplied 50

pairs of benches to Joynagar Institute, Joynagar, installed street lights in Darjeeling and constructed toilets in Siliguri

Municipal Area and Barbaruah / Moran. Our obligation towards protection of environmental hazards remain in our

resolve in not taking exposure in any ozone depleting industry, providing credit to industrial units only after obtaining

environmental clearance and our commitment to the green initiatives of government. We believe in working for the

benefit of different segments of society and, in particular, in taking care of deprived, underprivileged persons and

persons with limited abilities. Our initiatives include those aimed at promoting education, preventive healthcare,

women empowerment and sustainable livelihood.

LEAD BANK RESPONSIBILITY

The RBI has assigned us with “lead bank” responsibility in 34 districts, which are located in the economically

backward areas of West Bengal (10 districts), Assam (12 Districts), Tripura (8 districts) and Manipur (4 districts). We

are the Convenor of the State Level Bankers’ Committee for West Bengal and Tripura. Our assigned lead bank

responsibilities are discharged by maintaining inter-institutional coordination in the preparation and implementation

of various development programmes in each district.

HUMAN RESOURCES

As of December 31, 2016, we had 16,221 employees of whom 49.37% were officers, 28.70% were clerical staff and

21.93% were subordinate staff. Our Bank’s employees include professionals in business management, accountancy,

engineering, law, computer science, economics and other relevant disciplines. Further, we have tie-up with NIIT

Institute of Finance Banking & Insurance Training Limited to conduct training programmes in the areas of banking,

finance, insurance and other related areas for the prospective employees of our Bank. We have conducted several

training programmes for the employees of our Bank through Administrative Staff College of India, Indian Institute of

Corporate Affairs, Centre for Advanced Financial Research and Learning, National Institute of Bank Management

and others. For continuously updating the knowledge base of existing officers and providing them with a platform for

exchange of views on various aspects of banking and finance, our Bank has also initiated an online training module

by the name “Quest”. As of March 31, 2014, March 31, 2015 and March 31, 2016, business per employee (i.e. the

sum of advances and deposits divided by the number of employees) amounted to ₹ 10.67 Crore, ₹11.51 Crore and ₹

12.37 Crore, respectively.

COMPETITION

We face strong competition in all our principal lines of business from other commercial banks and other financial

institutions in India. Our primary competitors are other public sector banks, major private sector banks, foreign banks

with operations in India and, for certain products, non-banking financial institutions. Our competition with other

commercial banks and financial institutions primarily focuses on the variety, pricing and quality of products and

services, convenience of banking facilities, reach of distribution network and brand recognition, as well as information

technology capabilities.

For more information on competition, please refer to “Risk Factors – We face intense competition from banks and

financial institutions that are much larger than we are and have an established presence all over India. If we are

unable to effectively respond to competitive pressures it may adversely affect our business and growth”.

SYSTEMS AND PROCEDURES

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We have adopted certain policies and procedures for our day-to-day functioning. The corporate directives are

periodically brought to the notice of the branches and staff through circulars. These circulars are also posted on our

intranet for ready reference by our staff.

We prepare manuals on various subjects such as deposits, agriculture, collection and remittance as reference material

for branch-level employees, which are revised periodically. These manuals define the jobs to be carried out for the

various activities described therein. The prescribed systems and procedures are subject to audit checks during

inspection. We are in the continuous process of reviewing and updating our existing systems and procedures through

procedures in terms of instructions/guidelines issued by IBA, RBI and Government Departments.

SECURITY

We have a security mechanism synergized with our operational risk management. We have instituted modern security

systems to protect our assets, confidential information and property. We train our staff on security procedures and

conduct awareness programme on a regular basis.

INTELLECTUAL PROPERTY

Our corporate logo “ ” and trade name is registered with the Trade Marks Registry, Kolkata under class 36. We

also have copyright “UBI” registered with the Copyright Office, Government of India.

PROPERTIES

Our head office (central office) is located at United Tower, 11, Hemanta Basu Sarani, Kolkata – 700 001, West Bengal,

India. As of January 31, 2017, 69 of our branches/offices are situated on properties owned by our Bank and 1,992

branches/offices are under lease. Our ATMs are primarily located on leased premises beside some of them at owned

premises. In addition, we operate out of certain owned and leased premises for other business requirements of our

Bank.

INSURANCE

We maintain various insurance policies to insure our assets including buildings, furniture, office machinery, electrical

fittings, ATMs, computers, motor car, printing kiosk, cheque book kiosk, computers and printing and stationery. In

addition, we maintain (i) Group Accident Policy and group mediclaim policy to insure our permanent employees, (ii)

Third Party Insurance to insure persons other than our staff iii) Public liability policy to insure third party legal liability,

(iv) Burglary and House Breaking Policy to insure various branch offices and ATMs, (v) Directors and officers

liability policy to protect from professional hazardous while discharging duties in the capacity of directors and officers

of our Bank, (vi) Special contingency insurance for insuring the laptops, i-pad, i-phone, e-book reader and (vii)

Bankers’ Indemnity Policy to insure cash holding, cash in transit and cash at ATM. We believe our insurance coverage

is sufficient to protect us from material loss in light of the activities we conduct.

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REGULATIONS AND POLICIES

The main legislation governing commercial banks, the Banking Regulation Act, applies to public sector banks such

as United Bank of India, only to a limited extent. Sections 34A, 36AD and section 51 of the Banking Regulation Act

are applicable to corresponding new banks constituted under the Bank Acquisition Act. In turn, section 51 of the

Banking Regulation Act makes some of its sections applicable to corresponding new banks. The Bank, as a

corresponding new bank, is governed primarily by the provisions of the Bank Acquisition Act, 1970. The Nationalised

Bank Scheme and the Bank Regulations also governs our operations. Other important laws include the Reserve Bank

of India Act, 1934, the Negotiable Instruments Act and the Bankers’ Books Evidence Act. Additionally, the RBI, from

time to time, issues guidelines, regulations, policies, notifications, press releases, circulars, etc. to be followed by us

and supervises our compliance with these guidelines. Our Bank is listed on a stock exchange in India and therefore,

our Bank will be governed by various regulations of the SEBI.

We are regulated and supervised by RBI. RBI requires us to furnish statements, information and certain details

relating to our business. It has issued guidelines on several matters including recognition of income, classification of

assets, valuation of investments, maintenance of capital adequacy and provisioning for impaired assets. The RBI has

set up a Board for Financial Supervision (BFS), under the chairmanship of the Governor of the RBI. The primary

objective of the BFS is to undertake consolidated supervision of the financial sector comprising commercial banks,

financial institutions and non-banking finance companies. The appointment of the auditors of banks is subject to the

approval of the RBI.

The description of laws and regulations set out below are not exhaustive, and are only intended to provide general

information to investors and is neither designed nor intended to be a substitute for professional legal advice. The

statements below are based on the current provisions of Indian law, and the judicial and administrative interpretations

thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial

decisions.

Reserve Bank of India Act, 1934

As per section 2(e) of the Reserve Bank of India Act, 1934, (“RBI Act”) our Bank is a scheduled bank included in

the Second Schedule.

According to the said act, RBI shall regulate the issue to Bank notes and keeping reserves with a view to securing

monetary stability in the country. Scheduled banks like our Bank are required to maintain cash reserves with the RBI.

In this regard, RBI may stipulate an average daily balance requirement to be complied with by such banks and may

direct that such banks regard a transaction or class of transactions as a liability. Further, RBI may direct any banking

company to submit returns for the collection of credit information and may also furnish such information to a banking

company upon an application by such company. RBI has the power to impose penalties against any person for inter-

alia failure to produce any book, account or other document or furnish any statement, information or particulars which

such person is duty-bound to produce or furnish under the RBI Act, or any order, regulation or direction thereunder.

Banking Regulation Act, 1949

Commercial banks in India are required to obtain a license from the RBI to carry on banking business in India. Such

license is granted to the bank subject to compliance with certain conditions including (i) that the bank has the ability

to pay its present and future depositors in full as their claims accrue; (ii) that the affairs of the bank will not be or are

not likely to be conducted in a manner detrimental to the interests of present or future depositors; (iii) that the general

character of the proposed management of the bank will not be prejudicial to the public interest or the interest of its

depositors (iv) that the bank has adequate capital and earnings prospects; and (v) that public interest will be served if

such license is granted to the bank. The RBI may cancel the license if the bank fails to meet the qualifications or if the

bank ceases to carry on banking operations in India.

We have obtained a banking license from the RBI and are regulated and supervised by the RBI. The RBI requires us

to furnish statements, information and certain details relating to our business and it has issued guidelines for

commercial banks on recognition of income, classification of assets, valuation of investments, maintenance of capital

adequacy and provisioning for non-performing and restructured assets. The RBI has set up a Board for Financial

Supervision (“BFS”), under the chairmanship of the Governor of the RBI. The primary objective of the BFS is to

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undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and

non-banking finance companies. The appointment of the auditors of the banks is subject to the approval of the RBI.

The RBI can direct a special audit in the interest of the depositors or in the public interest.

The Banking Regulation Act confers power on the RBI (in consultation with the central government) to supersede the

board of directors of a banking company for a period not exceeding a total period of 12 months, in public interest or

for preventing the affairs of the bank from being conducted in a manner detrimental to the interest of the depositors

or any banking company or for securing the proper management of any banking company.

When a bank fails to or omits to comply with the provisions of the Banking Regulation Act, the RBI may impose fine

within prescribed limits on banks and its officers or punish with imprisonment for the term provided in the law, on the

basis of the nature of the violation.

Regulatory reporting and examination procedures

The RBI is empowered under the Banking Regulation Act to call for certain information from a bank as well as to

inspect a bank. The RBI monitors prudential parameters at quarterly intervals. RBI has introduced a system of off-site

monitoring and surveillance, with the primary objective of monitoring the financial condition of banks in between on-

site examinations. To this end and to enable off-site monitoring and surveillance by the RBI, banks are required to

report to the RBI on various aspects of their business. This system of off-site monitoring and surveillance has been

migrated to a secured Online Returns Filing System (“ORFS”) in which data collection and consolidation has been

streamlined. The RBI also conducts on-site super vision of selected branches with respect of their general operations

and foreign exchange related transactions.

The RBI also conducts periodical on-site inspections on matters relating to the bank's portfolio, risk management

systems, internal controls, credit allocation and regulatory compliance, at intervals ranging from one to three years.

Maintenance of records

The Banking Regulation Act requires banks to maintain books and records in the manner specified therein and file the

same with the Registrar of Companies on a periodic basis. The provisions for production of documents and availability

of records for inspection by shareholders as stipulated under the Companies Act and the rules thereunder would apply

to our Bank as in the case of any company. The “Reserve Bank of India (Know Your Customer (KYC)) Directions,

2016” issued by the RBI dated February 25, 2016 also provide for certain records to be maintained for a minimum

period of five years from the business relationships have ended.

Regulations relating to the opening of branches

Under Section 23 of the Banking Regulation Act, banks are required to obtain the prior approval of the RBI to open

new branches. Permission is granted based on factors such as overall financial position of the bank, the history of the

bank the general character of its management, the adequacy of its capital structure, its earning prospects and public

interest.

As per the “Relaxations in Branch Authorization Policy” dated August 6, 2015 read with circulars dated September

19, 2013 and October 21, 2013, domestic scheduled commercial banks may open branches in Tier 1 to Tier 6 centres

without prior permission from RBI. Further, such banks may also shift, merge or close all branches except rural

branches and sole semi-urban branches, subject to certain conditions The RBI has further stated that, under the annual

branch expansion plan, banks are required to allocate at least 25.00% of the total number of branches proposed to be

opened during a year in unbanked rural centres and that, total number of branches opened by a bank in Tier 1 centres

during the fiscal year cannot exceed the total number of branches opened in Tier 2 to Tier 6 centres and all centres in

the North Eastern States and Sikkim.

Further, RBI has permitted installation of off-site ATMs at centres identified by banks, without the need for permission

from the RBI in each case.

Capital adequacy requirements

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The RBI has set out minimum capital adequacy standards for banks based on the guidelines of the Basel Committee

on Banking Supervision. Under the “Master Circular – on BASEL – III Capital Regulations dated July 1, 2015, a bank

is required to maintain a minimum CRAR of 9.00% with Tier – I Ratio at a minimum of 7% and Common Equity

Ratio (“CET I”) of 5.50%. Apart from this, the Bank is required to maintain Capital Conservation Buffer (“CCB”) of

2.50% in the form of Common Equity Capital by March 31, 2019.

With effect from the fiscal year 2015, banks are also required to quantify incurred credit valuation adjustment losses

and standard credit valuation adjustment capital charge on their derivatives portfolio. Further, to the notification dated

March 1, 2016, the Master Circular on Basel III Capital Regulations has been revised by the RBI to the effect that

treatment of certain balance sheet items viz., revaluation reserves, foreign currency translation reserve and deferred

tax assets, have been aligned to some extent, with the conditions prescribed by the Basel Committee on Banking

Supervision (BCBS) guidelines.

The transitional arrangements for the implementation of Basel III capital regulations in India began from April 1, 2013

and the guidelines will be fully implemented by March 31, 2019. In view of the gradual phase-in of regulatory

adjustments to the common equity component of Tier I capital under Basel III, certain specific prescriptions of the

Basel II capital adequacy framework (e.g. rules relating to deductions from regulatory capital, risk weighting of

investments in other financial entities etc.) will also continue to apply until March 31, 2017 on the remainder of

regulatory adjustments not treated in terms of Basel III rules.

Liquidity coverage ratio

The Basel III framework on ‘Liquidity Standards’ includes ‘Liquidity Coverage Ratio’, ‘Net Stable Funding Ratio’

(‘NSFR”) and liquidity risk monitoring tools. In June 2014, the RBI issued guidelines in relation to liquidity coverage

ratio (“LCR”), liquidity risk monitoring tools and LCR disclosure standards pursuant to the publication of the ‘Basel

III: The Liquidity Coverage Ratio and liquidity risk monitoring tools’ in January 2013 and the ‘Liquidity Coverage

Ratio Disclosure Standards’ in January 2014 by the Basel Committee On Banking Supervision. The objective of the

LCR standard is to ensure that a bank maintains an adequate level of unencumbered high quality liquid assets

(“HQLA”) that can be converted into cash to meet its liquidity needs for a 30 calendar day period under significantly

severe liquidity stress. The LCR is defined under the guidelines as the stock of HQLAs, divided by the net cash

outflows over the next 30 calendar days. Pursuant to the guidelines, banks are required to maintain an LCR of 60.00%,

70.00%, 80.00%, 90.00% and 100.00% with effect from January 1, 2015, January 1, 2016, January 1, 2017, January

1, 2018 and January 1, 2019, respectively.

The Basel Committee on Banking Supervision issued the final rules on ‘Net Stable Funding Ratio’ in October 2014.

RBI has issued draft guidelines on NFSR on May 28, 2015. RBI proposes to make NSFR applicable to banks in India

from January 1, 2018.

Master Circular on Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to

Advances dated July 1, 2015 (“Prudential Norms”)

An asset, including a leased asset, becomes nonperforming when it ceases to generate income for the bank. The

Prudential Norms further, specify the timeline within which specific assets are to be considered non-performing. Once

the account has been classified as a non-performing asset, the unrealized interest and other income already debited to

the account is derecognized and further interest is not recognized or credited to the income account unless collected

in cash.

The Prudential Norms require banks to further classify NPAs into the following three categories based on the period

for which the asset has remained nonperforming and the realisability of the dues (i) sub-standard assets;

(ii) doubtful assets; and (iii) loss assets. These norms also specify provisioning requirements specific to the

classification of the assets.

In July 2005, the RBI issued guidelines on sales and purchases of NPAs between banks, financial institutions and

NBFCs. These guidelines require that the board of directors of a bank must establish a policy for purchases and sales

of NPAs. An asset must have been classified as non-performing for at least two years by the seller bank to be eligible

for sale. In October 2007, the RBI issued guidelines regarding valuation of NPAs being put up for sale. Further, the

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RBI pursuant to the circular on Prudential Norms has decided that banks should maintain provisioning coverage ratio,

including floating provisions, of at least 70.00%.

The RBI issued revised “Prudential Guidelines on Restructuring of Advances by Banks and Financial Institutions” on

May 30, 2013. Pursuant to those guidelines, from April 1, 2015 advances that are restructured (other than due to

extension in Date of commencement of commercial operation (DCCO) of Infrastructure and non-Infrastructure

project) would be immediately classified as sub-standard on restructuring and the nonperforming assets, upon

restructuring, would continue to have the same asset classification as prior to restructuring and slip into further lower

asset classification categories as per the extant asset classification norms with reference to the pre restructuring

repayment schedule. The general provision required on restructured standard accounts would be increased to 3.50%

from 31 March 2014 and further to 4.25% from 31 March 2015 and 5.00% from 31 March 2016

Corporate debt restructuring mechanism (“CDR system”)

The institutional mechanism for restructuring has been set up through establishment of the CDR system in 2001. It is

a joint forum of all banks and financial institutions and operates as a non-judicial body. The CDR system operates on

the principle of super-majority amongst the participating banks and financial institutions for a particular advance. Our

Bank has signed the inter-se agreement (amongst the banks and financial institutions) and is accordingly a member of

the CDR system. The Prudential Norms as mentioned above equally apply to the accounts restructured under the CDR

system.

Scheme for Sustainable Structuring of Stressed Assets (“Scheme for Stressed Assets”)

The RBI has formulated the Scheme for Stressed Assets as an optional framework for the resolution of large stressed

accounts. The Scheme for Stressed Assets envisages determination of the sustainable debt level for a stressed

borrower, and bifurcation of the outstanding debt into sustainable debt and equity/quasi-equity instruments.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDDBFI Act”)

The RDDBFI Act was enacted for adjudication of disputes pertaining to debts due to banks and financial institutions

exceeding Rupees One Crore. The RDDBFI Act provides for the constitution of debt recovery tribunals, before which

banks and financial institutions may file applications for recovery of debts. Further, no court or other authority, except

the Supreme Court or a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution of India,

shall have, or is entitled to exercise, any jurisdiction, powers or authority in relation to the aforementioned matter. The

tribunals may pass orders for directions including inter- alia recovery of such dues by the bank as may be deemed fit

along with a recovery certificate to such effect from the presiding officer of the respective tribunal; attachment of the

secured properties towards the dues to the bank: injunctive orders restraining the debtors from alienating, transferring

or disposing of such secured properties; appointment of receivers and/or local commissioners with respect to such

secured properties and distribution of proceeds from sale of such secured properties towards dues. Pursuant to the

recovery certificate being issued, the recovery officer of the respective debt recovery tribunal shall effectuate the final

orders of the debt recovery tribunal in the application. Unless such final orders of the debt recovery tribunal have been

passed with the consent of the parties to an application, an appeal may be filed against such final orders of the debt

recovery tribunal before the debt recovery appellate tribunal, which is the appellate authority constituted under the

RDDBFI Act.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

(“SARFAESI Act”)

The SARFAESI Act provides for sale of financial assets by banks and financial institutions to asset reconstruction

companies. The SARFAESI Act provides for measures in relation to enforcement of security interests and rights of

the secured creditor in case of default. The Prudential Norms issued by the RBI describe the process to be followed

for sales of financial assets to asset reconstruction companies. The banks may not sell financial assets at a contingent

price with an agreement to bear a part of the shortfall on ultimate realization.

However, banks may sell specific financial assets with an agreement to share in any surplus realised by the asset

reconstruction company in the future. Consideration for the sale may be in the form of cash, bonds or debentures or

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security receipts or pass through certificates issued by the asset reconstruction company or trusts set up by it to acquire

the financial assets.

Banks and financial institutions are empowered to accept immovable property in full or partial satisfaction of the

bank’s claim against the defaulting borrower in times when they cannot find a buyer for the securities. Further, banks

and financial institutions can enter into settlement or compromise with the borrower and empowers Debt Recovery

Tribunals to pass an order acknowledging any such settlement or compromise. Certain amendments have been

proposed to the SARFAESI Act, inter alia, to streamline the recovery process for banks, to enable the sponsor of an

asset reconstruction company to hold up to 100.00% stake in the company and permit non-institutional investors to

invest in securitization receipts.

Priority sector lending

The “Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2016” dated July 7,

2016 sets out the broad policy in relation to priority sector lending. In accordance with this circular, the priority sectors

for all scheduled banks include (i) agriculture; (ii) micro, small and medium enterprises (“MSMEs”); (iii) export

credit; (iv) education; (v) housing; (vi) social infrastructure; (vii) renewable energy and (viii) others. Under the Master

Circular, the priority sector lending targets are linked to adjusted net bank credit as defined (“ANBC”) or credit

equivalent amount of off-balance sheet exposure, whichever is higher, as on the corresponding date of the preceding

year. Currently, the total priority sector lending target for domestic banks is 40.00% of ANBC or credit equivalent

amount of off-balance sheet exposure, whichever is higher.

Exposure norms

As a prudent measure aimed at better risk management and avoidance of concentration of credit risk, the RBI has

prescribed credit exposure limits for banks and long-term lending institutions in respect of their lending to individual

borrowers and to all companies in a single group (or sponsor group). The RBI has prescribed exposure ceiling for a

single borrower as 15.00% of capital funds and group exposure limit as 40% of capital funds comprising of Tier I and

Tier II capital. Relaxations are permitted in exceptional circumstances and lending to infrastructure sector. The total

exposure to a single NBFC has been limited to 10.00% of the bank’s capital funds while exposure to non-banking

asset finance company has been restricted to 15.00% of the bank’s capital funds. The limit may be increased to 15.00%

and 20.00%, respectively, provided that the excess exposure is on account of funds on-lent by the NBFC to the

infrastructure sector.

The aggregate exposure of a bank to the capital markets in all forms (both fund based and non-fund based) should not

exceed 40.00% of its net worth, on both standalone and consolidated basis as on March 31 of the previous year. Within

this overall ceiling, the bank’s direct investment in shares, convertible bonds / debentures, units of equity-oriented

mutual funds and all exposures to Venture Capital Funds (VCFs) (both registered and unregistered) should not exceed

20 per cent of its net worth.

Short-selling of Government securities

As per the “Master Circular on Prudential Norms for Classification, Valuation and Operation of Investment Portfolio

by Banks” dated July 1, 2015, banks and primary dealers are allowed to undertake short sale of Government dated

securities, subject to the short position being covered within a maximum period of three months, including the day of

trade and in accordance with the conditions prescribed, therein. Further, such short positions shall be covered only by

outright purchase of an equivalent amount of the same security or through a long position in the ‘when issued’ market

or allotment in primary auction.

Regulations relating to interest rates on deposits and advances

The RBI has issued “Reserve Bank of India - Interest rate on Deposits Directions, 2016” dated March 3, 2016.

Scheduled commercial banks are required to pay interest on deposits of money (other than current account deposits

accepted by them or renewed by them in their domestic, ordinary non-resident, non-resident (external) accounts and

foreign currency (non-resident) accounts (banks) scheme deposit account), subject to certain conditions prescribed by

the directions. Further, certain additional restrictions have been prescribed to determine interest rates for savings

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deposits and term deposits. Additionally, interest rates offered by banks on NRO and NRE deposits cannot be higher

than those offered by them on comparable domestic rupee term deposits.

Deposit insurance

Demand and time deposits of up to ₹ 100,000 accepted by Indian banks (other than primary co-operative societies)

have to be mandatorily insured with the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned

subsidiary of the RBI. Banks are required to pay the insurance premium for the eligible amount to the Deposit

Insurance and Credit Guarantee Corporation on a half yearly basis. The cost of the insurance premium cannot be

passed on to the customer.

Prevention of Money Laundering Act, 2002 (“PMLA”)

In order to prevent money laundering activities, the Government enacted the PMLA which seeks to prevent money

laundering and to provide for confiscation of property derived from, or involved in money laundering, and for

incidental matters connected therewith. Section 12 of the PMLA casts certain obligations on, inter alia, banking

companies in regard to preservation and reporting of customer account information.

The RBI has advised all banks to go through the provisions of the PMLA and the rules notified thereunder and to take

all steps considered necessary to ensure compliance with the requirements of Section 12 of the PMLA.

Regulations relating to Know Your Customer (“KYC”) and anti-money laundering

The RBI issued the “Reserve Bank of India (Know Your Customer (KYC) Directions, 2016” on February 25, 2016

prescribing the guidelines for KYC and anti-money laundering procedures. Banks are required to formulate a KYC

policy which shall include (i) customer acceptance policy, (ii) customer identification procedures, (iii) monitoring of

transactions and (iv) risk management. In relation to each of the above, the master direction also specifies minimum

procedures required to be followed by banks. Banks are not permitted to make payment of cheques/drafts/pay

orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three

months from the date of such instrument.

Regulations relating to maintenance of statutory reserves

A bank is required to maintain, on a daily basis, CRR, which is a specified percentage of its NDTL, excluding interbank

deposits, by way of a balance in a current account with the RBI. At present the required CRR is 4%. The RBI does

not pay any interest on CRR balances. The CRR has to be maintained on an average basis for a fortnightly period and

the minimum daily maintenance of the CRR should be 90.00% effective from the fortnight beginning April 16, 2016.

The RBI may impose penal interest at the rate of 3% above the bank rate on the amount by which the reserve falls

short of the CRR required to be maintained on a particular day and if the shortfall continues further the penal interest

charged shall be increased to a rate of 5% above the bank rate in respect of each subsequent day during which the

default continues.

In addition to the CRR, a bank is required to maintain SLR, a specified percentage of its NDTL by way of liquid assets

like cash, gold or approved unencumbered securities. The percentage of this liquidity ratio is fixed by the RBI from

time to time, pursuant to Section 24 of the Banking Regulation Act. At present, the RBI requires banks to maintain

SLR of 21.00%. Further, in December 2011, the RBI has permitted banks to avail funds from the RBI on an overnight

basis, under the Marginal Standing Facility, against their excess SLR holdings. Additionally, they can also avail

themselves of funds, on an overnight basis below the stipulated SLR, up to 1.00% of their respective NDTL

outstanding at the end of the second preceding fortnight.

Further, the RBI requires the banks to create a reserve fund to which it must transfer not less than 20.00% of the profits

of each year before dividends. If there is an appropriation from this account, the bank is required to report the same to

the RBI within 21 days, explaining the circumstances leading to such appropriation.

Regulations relating to authorised dealers for foreign exchange and cross-border business transactions

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The foreign exchange and cross border transactions undertaken by banks are subject to the provisions of the Foreign

Exchange Management Act. All branches should monitor all non-resident accounts to prevent money laundering. The

RBI master direction on External Commercial Borrowings, dated January 1, 2016, states that no financial

intermediary, including banks, will be permitted to raise external commercial borrowings or provide guarantees in

favour of overseas lenders for external commercial borrowings.

The “Master Direction on Risk Management and Interbank Dealings”, dated July 5, 2016 and as amended from time

to time, states that all categories of overseas foreign currency borrowings of AD Category I banks, including existing

external commercial borrowings and loans or overdrafts from their head office, overseas branches and correspondents

outside India, international/ multilateral financial institutions or any other entity as permitted by RBI and overdrafts

in nostro accounts (not adjusted within five days), shall not exceed 100.00% of their unimpaired Tier I capital or U.S.

Dollar 10 million (or its equivalent), whichever is higher. Overseas borrowings for the purpose of financing export

credit, subordinated debt placed by head offices of foreign banks with their branches in India as Tier II capital, capital

funds raised/augmented by the issue of innovative perpetual debt instruments and any other overseas borrowings with

the specific approval of the RBI would continue to be outside the limit of 100.00%.

Secrecy obligations

A bank’s obligations relating to maintaining secrecy arise out of Section 13 of the Banking Companies (Acquisition

and Transfer of Undertakings) Act, 1980 (for public sector banks specifically) and common law principles governing

its relationship with its customers. Subject to certain exceptions, a bank cannot disclose any information to third

parties. Further, the RBI may, in the public interest, publish the information obtained from the bank.

Foreign ownership restrictions

Presently, 20% foreign investment is allowed in Public Sector Banks subject to Government approval and provisions

of Banking Companies (Acquisition & Transfer of Undertakings) Acts 1970.

As per Basel III guidelines to Annex 4, the following provision is made:

i) Investment by FIIs in instruments raised in Indian Rupees shall be outside the ECB limit for rupee

denominated corporate debt, as fixed by the Govt. of India from time to time, for investment by FIIs in

corporate debt instruments. Investment in these instruments by FIIs and NRIs shall be within an overall

limit of 49% and 24% of the issue, respectively, subject to the investment by each FII not exceeding 10%

of the issue and investment by each NRI not exceeding 5% of the issue.

ii) Subject to the terms and conditions, if any, stipulated by SEBI / other regulatory authorities in regard to

issue of the instruments.

Guidelines on management of intra-group transactions and exposures

The RBI issued the “Guidelines on Management of Intra-Group Transactions and Exposures on February 11, 2014”.

Pursuant to the said guidelines, RBI has prescribed quantitative limits on financial intra-group transactions and

exposures and prudential measures for the non-financial intra-group transactions and exposures. The objective of these

guidelines is to ensure that banks engage in intra-group transactions and exposures in safe and sound manner in order

to contain concentration and contagion risks arising out of such transactions.

Capital and provisioning requirements for exposures to entities with unhedged foreign currency exposure

RBI issued a circular relating to “Capital and Provisioning Requirements for Exposures to entities with unhedged

Foreign Currency Exposure” on January 15, 2014. Pursuant to these guidelines, RBI has introduced incremental

provisioning and capital requirements for bank exposures to entities with unhedged foreign currency exposures. The

circular also lays down the method of calculating the incremental provisioning and capital requirements. The banks

will be required to calculate the incremental provisioning and capital requirements at least on a quarterly basis.

Framework for revitalizing distressed assets in the economy

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RBI issued the “Framework for Revitalizing Distressed Assets in the Economy” on January 30, 2014 which lays down

the corrective action plan that will incentivize early identification of problem cases, timely restructuring of accounts

which are considered to be viable, and taking prompt steps by banks for recovery or sale of unviable accounts. The

salient features of this framework include, inter alia, (i) early formation of a lenders’ committee with timelines to

agree to a plan for resolution, (ii) incentives for lenders to agree collectively and quickly to a plan - better regulatory

treatment of stressed assets if a resolution plan is underway, accelerated provisioning if no agreement can be reached,

and (iii) independent evaluation of large value restructurings mandated, with a focus on viable plans and a fair sharing

of losses (and future possible upside) between promoters and creditors.

This framework became fully effective from April 1, 2014. In this regard, the RBI issued Guidelines on a joint lenders’

forum and a corrective action plan detailing guidelines on formation of the joint lenders’ forum and adoption of the

corrective action plan for operational sing the aforementioned framework. Following the notification dated February

25, 2016, the prudential guidelines on revitalizing stressed assets in the economy, have been partially revised in

relation to inter alia, strategic debt restructuring scheme, joint lenders’ forum empowered group, restructuring of

advances, structuring of project loans and sale of financial assets to securitization company/ reconstruction company.

The Banking Ombudsman Scheme, 2006

The Banking Ombudsman Scheme, 2006 provides the extent and scope of the authority and functions of the Banking

Ombudsman for redressal of grievances against deficiency in banking services, concerning loans and advances and

other specified matters. On February 3, 2009, the said scheme was amended to provide for revised procedures for

redressal of grievances by a complainant under the scheme.

Declaration of dividend by banks

The payment of dividends by banks is subject to restrictions under the Banking Regulation Act. Section 15(1) of the

Banking Regulation Act states that no banking company may pay any dividend on its shares until all its capitalised

expenses (including preliminary expenses, organisation expenses, share-selling commissions, brokerage, amounts of

losses incurred and any other item of expenditure not represented by tangible assets) have been completely written

off. In addition, Section 17(1) of the Banking Regulation Act requires every banking company to create a reserve fund

and, out of the balance of the profit of each year as disclosed in the profit and loss account, transfer a sum equivalent

to not less than 20.00% of such profit to the reserve fund before declaring any dividend. Further, in May 2005, the

RBI issued guidelines on Declaration of Dividends by Banks, which prescribed certain conditions for declaration of

dividends by banks.

Regulations governing International Operations

The Bank’s international operations are governed by regulations in the countries in which the Bank has a presence.

Consolidated Supervision Guidelines

In 2003, the RBI issued guidelines for consolidated accounting and consolidated supervision for banks. These

guidelines became effective on August 1, 2003. The principal features of these guidelines are:

Consolidated financial statements: Banks are required to annually prepare consolidated financial statements

intended for public disclosure.

Consolidated prudential returns: Banks are required to submit to the RBI, at periodic intervals, consolidated

prudential returns reporting their compliance with various prudential norms on a consolidated basis,

excluding insurance subsidiaries.

Regulations relating to making loans

The provisions of the Banking Regulation Act govern the making of loans by banks in India. In addition, the RBI also

issues directions in relation to the loan activities of banks. Some of the major requirements that banks are to observe

are as follows:

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The RBI has prescribed norms for banks’ lending to non-bank financial companies and the financing of public sector

disinvestment. RBI introduced the ‘Base Rate’ in place of the ‘Benchmark Prime Lending Rate’ with effect from July

1, 2010. For loans sanctioned up to June 30, 2010, BPLR would be applicable. However, for those loans sanctioned

up to June 30, 2010 which come up for renewal from July 1, 2010 onwards, Base Rate would be applicable. Section

21A of the Banking Regulation Act provides that the rate of interest charged by a bank shall not be reopened by any

court on the ground that the rate of interest charged by a bank is excessive. The Banking Regulation Act provides for

protection to banks for interest rates charged by them. Section 20 of the Banking Regulation Act provides that banks

shall not grant loans on the security of their own shares. Further, banks cannot grant loans or advances to or on behalf

of their directors.

Classification and Reporting of Fraud Cases

The RBI issued a master direction on July 1, 2016 on the classification and reporting of fraud cases. The fraud cases

have been classified into misappropriation and criminal breach of trust, fraudulent encashment through forged

instruments, manipulation of books of account or through fictitious accounts and conversion of property, unauthorised

credit facilities extended for reward or for illegal gratification, negligence and cash shortages, cheating and forgery,

fraudulent transactions involving foreign exchange and any other type of fraud not coming under the specific heads

as above. Cash shortages resulting from negligence and fraudulent forex transactions involving irregularities /

violation of regulations have also to be reported as fraud if the intention to cheat/defraud is suspected or proved.

Information relating to frauds for the quarters ending June, September and December may be placed before the audit

committee of the board of directors during the month following the quarter to which it pertains. Banks are also required

to conduct an annual review of the frauds and place a note before the board of directors for information. The reviews

for the year-ended March may be put up to the Board before the end of the next quarter i.e. for the quarter ended June

30th and such reviews need not be sent to RBI.

These may be preserved for verification by the Reserve Bank’s inspecting officers. Additionally, Banks have to

constitute a special committee for monitoring and follow up of cases of frauds involving amounts of ₹ 10 million and

above exclusively. Such committee is required to meet and review as and when a fraud involving an amount of ₹ 10

million and above comes to light. Pursuant to the RBI notification dated January 21, 2016, the RBI, has inter alia,

increased the limits in relation to flash reporting to RBI of fraud cases to ₹ 50 million as against the earlier limit of ₹

10 million and above.

Liquidity Adjustment Facility

Liquidity Adjustment Facility (“LAF”) is a facility extended by RBI to scheduled commercial banks (excluding

Regional Rural Banks) and primary dealers to avail of liquidity in case of requirement or park excess funds with the

RBI in case of excess liquidity on an overnight basis against government securities as collateral. Therefore, LAF

enables liquidity management on a day to day basis and enables RBI to transmit interest rate signals to the market.

The operations of LAF are conducted by way of repurchase agreements with RBI being the counter-party to all the

transactions. The interest rate in LAF is fixed by the RBI from time to time. LAF is an important tool of monetary

policy.

Collateralized Borrowing and Lending Obligation

Collateralized Borrowing and Lending Obligation (“CBLO”) is a money market instrument operated by the Clearing

Corporation of India Limited (“CCIL”), for entities that either have no access to inter-bank call money market or have

restricted access due to ceilings on call borrowing and lending transactions. By participating in the CBLO market,

CCIL members can borrow or lend funds against the collateral of eligible securities. Eligible securities include central

government securities including treasury bills, and such other securities as specified by CCIL from time to time.

Borrowers under CBLO have to deposit the required amount of eligible securities with the CCIL based on which CCIL

fixes the borrowing limits. CCIL matches the borrowing and lending orders submitted by the members and notifies

them. While the securities held as collateral are in custody of the CCIL, the beneficial interest of the lender on the

securities is recognized through proper documentation.

Moratorium, reconstruction and amalgamation of banks

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A high court may, upon the application by a banking company which is temporarily unable to meet its obligations,

make an order staying the commencement or continuance of all actions and proceedings against a bank for a fixed

period of time on such terms and conditions as it shall think fit and proper, and may from time to time extend it for a

total moratorium period not exceeding six months. The said application is required to be accompanied by a report by

the RBI that, in its opinion, the said banking company will be able to pay its debts if the application is granted. Further,

the RBI may also make an application to the central government for an order of moratorium. During the said

moratorium, the RBI may prepare a scheme for the reconstruction of a banking company or for the amalgamation of

the banking company with any other banking institution if it is satisfied that it is necessary: a) in public interest, b) in

interests of depositors, c) to secure the proper management of the banking company, d) in interests of the banking

system of the country as a whole. The RBI may make modifications to the draft scheme pursuant to receipt of

suggestions and objections from the banking company, the transferee bank or any other banking company concerned

in the amalgamation, and from any members, depositors or other creditors of each of the banks concerned. The central

government may sanction the scheme with or without such modifications.

Submission of credit information

According to the Credit Information (Companies) Regulation Act, 2005 (“CICRA”), a “credit institution” means a

banking company and every credit institution shall become a member of at least one Credit Information Company

(“CIC”). A CIC, may, by notice in writing, require its members to furnish such credit information as it may deem

necessary. Further, RBI, through its notification dated January 15, 2015, has directed that: a) all credit institutions

shall become members of all CICs and submit data, including historical data, to them, b) credit institutions shall keep

the credit information collected/ maintained by them, updated regularly on a monthly basis or at such shorter intervals

as may be mutually agreed upon between the credit institution and the CIC under the CICRA.

Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970

The act applies to acquisition and transfer of undertaking of banking companies which shall not include foreign

companies. It caters to the developmental needs of the economy in conformity with the national policy and objectives

for the connected thereto. The Act paved way for constitution of corresponding new banks and established our Bank,

i.e. United Bank of India from the earlier corresponding United Bank of India as per Schedule I. The acts vide section

6, schedule II paid an amount of ₹ 420 lakhs compensation was paid to our Bank.

This act provided for the constitution of Board of Directors, which vests with the Central Government after

consultation with the RBI. The Central Government gives timely directions on discharge of banking functions and

matters of policy involving public interest. However, the power for appointment of Additional Directors to the bank

shall vest entirely with RBI.

Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970

The scheme is in exercise of Power of Central Government under Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970. The scheme provides for the constitution of Board by the Central Government. The director

of the bank shall be nominated by the central government from the panel of three employees furnished by the

representative union. The manner of retirement of the nominee director by rotation basis, appointment of chairman,

Managing Director is listed out in the scheme. A whole-time director can hold office for a period of maximum five

years and shall then be eligible for reappointment. The Central Government shall exercise the power for remuneration,

termination, salary, allowances after due consultation with the RBI. A director is disqualified for being appointed, if

he has at any time been adjudicated as insolvent/suspended payment/compounded its creditors; or found to be of

unsound mind and stands so declared by a competent Court; or has been convicted by a Criminal Court of an offence

which involves moral turpitude holds any office of profit under any nationalized bank or State Bank of India

constituted under sub-section (1) of section 3 of the State Bank of India Act, 1955 or subsidiary bank as per the

mentioned act. The meeting of the board shall be held at least six times in a year and at least once in each quarter.

Notice of at least 15 days to be given and such notice shall be sent to all the directors at the specified address. This

Act provides that the Board of a nationalized bank must form the following committees:

i) Management Committee

ii) Advisory Committees

iii) Regional Consultative Committees

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The paid-up capital of nationalized bank can be increased from time to time. The Board in consultation with RBI and

previous sanction of Central Government transfer a specified amount of reserve fund or make a contribution of any

specified amount to the paid-up capital of Nationalized Bank or raise the paid-up capital by public issue of shares in

manner prescribed, however Central Government shall at all times hold not less than 51% of paid-up capital of the

bank.

Law relating to Recovery of NPAs

As a part of the financial sector reforms, the Government of India promulgated SARFAESI Act. SARFAESI Act

provides banks and other lenders increased powers in the recovery of the collateral underlying NPAs.

Regulations relating to sale of assets to Asset Reconstruction Companies (ARC)

The SARFAESI Act provides for sale of financial assets by banks and financial institutions to asset reconstruction

companies. The RBI has issued guidelines to banks on the process to be followed for sale of the financial assets to the

asset reconstruction companies. These guidelines provide that a bank may sell financial assets to an asset

reconstruction company provided the asset is a non performing asset. These assets are to be sold on a ‗without

recourse‘basis only. A bank may sell a standard asset only if the borrower has a consortium or multiple banking

arrangements and at least 75% by value of the total loans to the borrower are classified as non-performing and at least

75% by the value of the banks and financial institutions in the consortium or multiple banking arrangement agree to

the sale. The banks selling financial assets should ensure that there is no known liability devolving on them and they

do not assume any operational, legal or any other type of risks relating to the financial assets sold. Further banks may

not sell financial assets at a contingent price with an agreement to bear a part of the shortfall on ultimate realisation.

However, banks may sell specific financial assets with an agreement to share in any surplus realised by the asset

reconstruction company in the future. No credit for expected profit will be taken until profit materializes on actual

sale. Whilst each bank is required to make its own assessment of the value offered in the sale before accepting or

rejecting an offer for purchase of financial assets by an asset reconstruction company, in consortium or multiple

banking arrangement where more than 75% by values of the banks or financial intuitions accept the offer, the

remaining banks or financial institutions are obliged to accept the offer. Consideration for the sale may be in the form

of cash, bonds or debentures or security receipts or pass through certificates issued by the asset reconstruction

company or trusts set up by it to acquire the financial assets.

The RBI has issued guidelines on the securitisation of standard assets with effect from February 1, 2006. The

guidelines provide that for a transaction to be treated as a securitisation, a two stage process must be followed. In the

first stage there should be a pooling and transferring of assets to a bankruptcy remote vehicle i.e. a SPV and in the

second stage repackaging and selling the security interests representing claims on incoming cash flows from the pool

of assets to the third party investors should be effected. Further, for enabling the transferred assets to be removed from

the balance sheet of the seller in securitisation structure, the isolation of assets or ―true sale‖ from the seller or

originator to the SPV is an essential prerequisite. Also, an arm’s length relation shall be maintained between the

originator or seller and the SPV.

The SARFAESI Act allows acquisition of financial assets by SC/RC from any bank/ FI on such terms and conditions

as may be agreed upon between them. This provides for sale of the financial assets on ’without recourse’ basis, i.e.,

with the entire credit risk associated with the financial assets being transferred to SC/ RC, as well as on ‗with recourse‘

basis, i.e., subject to unrealized part of the asset reverting to the seller bank/ FI. Banks/ FIs are, however, directed to

ensure that the effect of the sale of the financial assets should be such that the asset is taken off the books of the bank/

FI and after the sale there should not be any known liability devolving on the banks/ FIs. Certain regulatory norms for

capital adequacy, valuation, profit and loss on sale of assets, income recognition and prudential norms for investment

in securities issued by the SPV, provisioning for originators and service providers like credit enhancers, liquidity

support providers, underwriters, as well as investors and also the accounting treatment for securitisation transactions

and disclosure norms have been prescribed. Quarterly reporting to the audit sub-committee of the board by originating

banks of the securitisation transactions has also been prescribed. Apart from banks, these guidelines are also applicable

to financial institutions and non-banking financial institutions.

Guidelines on Sale and Purchase of NPAs

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In July 2005, the RBI issued guidelines on sale and purchase of non-performing assets between banks, financial

institutions and non-bank finance companies. These guidelines require the board of directors of the bank to establish

a policy for purchase and sale of NPAs. Purchase and sale of NPAs must be without recourse to the seller and on cash

basis and, with the entire consideration being paid up-front. An asset must have been classified as non-performing for

at least two years by the seller to be eligible for sale. The purchasing bank must hold the NPA on its books for at least

15 months before it can sell the assets to another bank. The asset cannot be sold back to the original seller.

Regulations relating to Making Loans

The provisions of the Banking Regulation Act govern the making of loans by banks in India. RBI issues directions

covering the loan activities of banks. Some of the major guidelines of RBI, which are now in effect, are as follows:

The RBI has prescribed norms for bank lending to non-bank financial companies and financing of public sector

disinvestment. The banks should charge interest on loans/advances/cash credits/overdrafts or any other financial

accommodation granted/provided/renewed by them or discount usance bills in accordance with the directives on

interest rates on advances issued by RBI from time to time. Banks are free to determine their own lending rates but

each bank must declare its benchmark prime lending rate as approved by its board of directors. Benchmark prime

lending rate is determined on the basis of various parameters, which inter alia, include actual cost of funds, operating

expenses, a minimum margin to cover the regulatory requirement of provisioning, capital charge and profit margin.

Each bank should also indicate the maximum spread over the benchmark prime lending rate for all credit exposures

other than retail loans over ₹ 200,000. The interest charged by banks on advances up to ₹ 200,000 to any one entity

(other than most retail loans) must not exceed the benchmark prime lending rate. Banks are also given freedom to lend

at a rate below the prime lending rate in respect of creditworthy borrowers and exporters on the basis of a transparent

and objective policy approved by their boards. Interest rates for certain categories of advances are regulated by the

RBI. Banks are also free to stipulate lending rates without reference to their own benchmark prime lending rates in

respect of certain specified categories of loans.

In terms of Section 20(1) of the Banking Regulation Act, a bank cannot grant any loans and advances on the security

of its own shares. A bank is also prohibited from entering into any commitment for granting any loans or advances to

or on behalf of any of its directors, or any firm in which any of its directors is interested as partner, manager, employee

or guarantor, or any company (not being a subsidiary of the banking company or a company registered under Section

25 of the Companies Act, or a Government company) of which, or the subsidiary or the holding company of which

any of the directors of the bank is a director, managing agent, manager, employee or guarantor or in which he holds

substantial interest, or any individual in respect of whom any of its directors is a partner or guarantor. There are certain

exemptions in this regard as the explanation to the Section provides that ‗loans or advances’ shall not include any

transaction which the RBI may specify by general or special order as not being a loan or advance for the purpose of

such Section. We are in compliance of this requirement.

Legislation introduced in the Indian Parliament to amend the Banking Regulation Act has proposed to prohibit lending

to relatives of directors and to non-subsidiary companies that are under the same management as the banking company,

joint ventures, associates or the holding company of the banking company. There are guidelines on loans secured by

shares, debentures and bonds, money market mutual funds, fixed deposits receipts issued by other banks, gold/silver

bullion etc. in respect of amount, margin requirement and purpose.

Issue of Long Term Bonds by Banks - Financing of Infrastructure and Affordable Housing

In order to ensure adequate credit flow to infrastructure sector also towards the affordable housing needs of the country

RBI issued guidelines on issue of long term bonds by banks on June 1, 2015. Banks can issue long-term bonds with a

minimum maturity of seven years to raise resources for lending to (i) long term projects in infrastructure sub-sectors,

and (ii) affordable housing. As a regulatory incentive these bonds exempted from computation of net demand and time

liabilities and would therefore not be subjected to CRR / SLR requirements subject to certain conditions. Eligible

bonds will also get exemption in computation of Adjusted Net Bank Credit (ANBC) for the purpose of Priority Sector

Lending (PSL).

Banker Books Evidence Act, 1891

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The act amends the law of evidence with respect to Banker’s Books. It applies to any company or corporation carrying

on the business activity. A certified copy of any entries in the banker’s books shall in all legal proceeding be received

as the prima facie evidence of the existence of such entry and shall be admitted as evidence in matters, transactions

and accounts pertaining to the books. The officer of the bank cannot be compelled to produce the entries in any case

where he is not a party to the case. The books can be made available for inspection to any party on application made

to the court. The Judge or the court may order the bank to make available such copies to the party.

Guidelines on Sale of Stressed Assets by Banks

The RBI’s circular dated September 1, 2016 on Guidelines on Sale of Stressed Assets by Banks amended the existing

guidelines relating to sale of non- performing assets (NPA) by banks to securitization companies, reconstruction

companies notified vide RBI's earlier circular dated February 26, 2014 and issued revised framework governing sale

of NPAs by banks to securitization companies/ reconstruction companies, non-banking financial companies and

financial institutions etc. The policy shall cover the aspects related to financial assets to be sold, Norms and procedure

for sale of such financial assets, Valuation procedure to be followed to ensure that the realisable value of financial

assets is reasonably estimated and Delegation of powers of various functionaries for taking decision on the sale of the

financial assets; etc. The salient features of the revised Circular are as follows:

i. At least once a year (preferably at the beginning of the year) banks with the approval of its board are required

to identify the stressed assets of a specified value, which could be determined as NPAs as per the bank’s

policy (including special mention account), and need to be offered for sale to other banks, securitization

companies, reconstruction companies, non-banking financial companies and financial institutions etc.;

ii. At a minimum, all assets classified as 'doubtful assets' above a threshold amount need to be reviewed by the

board/board committee of banks on a periodic basis and take a view on them with the documented rationale;

iii. Invitation for bids for sale of NPAs needs to be preferably publicly solicited and banks may use e-auction

platforms;

iv. Banks are required to set in place clear policies pertaining to:

a. valuation of the stressed assets that are proposed to be sold;

b. external or internal valuation of stressed assets, provided however where asset size is beyond ₹ 50

crores, then two external valuation reports are required;

v. To ensure sale of stressed assets as 'true sale' and vibrant assets market, banks need to have progressive

reduction in its investment in the security receipts backed by their own assets;

vi. To aggregate the debt faster and bring down the vintage of NPAs sold by banks:

a. Bank offering the stressed asset for sale need to offer first right of refusal to a securitization companies

/ reconstruction companies which have already acquired the highest and significant share (25%-30%)

of the asset for acquiring the asset by matching the highest bid;

b. The banks to put in place a board approved policy for adoption of the Swiss Challenge Method for

sale of their stressed assets to securitization companies / reconstruction companies /non-banking

financial companies/financial institutions etc. The broad contour of the Swiss Challenge Method is

also provided in the circular.

Lending to Micro, Small & Medium Enterprises (MSME) Sector

With a view to enlarge our credit exposure in the MSME sector, we have initiated several sector friendly measures at

highly competitive interest rates based on the enactment of the government on Micro, Small & Medium Enterprises

Development Act, 2006. The RBI has from time to time, issued a number of guidelines / instructions / circulars /

directives to banks in the matters relating to lending to Micro, Small & Medium Enterprises Sector. The updated

guidelines// instructions / circulars dated July 21, 2016 given the importance of the micro, small and medium

enterprises for India’s economy, the financing needs of this sector will continue to command special attention. The

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provisions shall apply to every Scheduled Commercial Bank (excluding Regional Rural Banks (RRBs)) licensed to

operate in India by the RBI.

A typical role for banks in mature markets is to originate loans and then distribute them to other willing players. In

this context, it is necessary to overcome the post-crisis securitization-stigma. In view of the inherent heterogeneity of

MSMEs and relatively constrained availability of credit information, it may be more difficult to achieve a necessary

level of disintermediation in the case of MSME financing. A centralized and shared database of MSMEs capturing all

available data resolving inherent information asymmetry problems associated with MSME lending, enabling

efficiency in assessing the creditworthiness of the underlying MSME loans in securitization.

The Insolvency and Bankruptcy Code, 2016

On May 5, 2016, ‘The Insolvency and Bankruptcy Code, 2016’ (IBC) was enacted and notified in the Gazette of India.

The IBC became a single law that deals with insolvency and bankruptcy - consolidating and amending various laws

relating to reorganization and insolvency resolution. The IBC covers individuals, companies, limited liability

partnerships, partnership firms and other legal entities as may be notified, except the financial service providers and

is aimed at creating an overarching framework to make it easier for sick companies to either wind up their businesses

or engineer a turnaround, and for investors to exit. The salient features of the Insolvency and Bankruptcy Code states

that:

a. The IBC provides for a clear, coherent and speedy process for early identification of financial distress and

resolution of companies and limited liability entities if the underlying business is found to be viable. Under

the provisions of the IBC, insolvency resolution can be triggered at the first instance of default and the process

of insolvency resolution has to be completed within stipulated time limit.

b. For individuals, the IBC provides for two distinct processes, namely – “Fresh Start” and “Insolvency

Resolution” and lays down the eligibility criteria for the debtor for the purposes of making an application for

a “fresh start” process.

c. The National Company Law Tribunal (NCLT) and the Debt Recovery Tribunal (DRT) are designated as the

adjudicating authorities for corporate persons and firms and individuals, respectively, for resolution of

insolvency, liquidation and bankruptcy.

d. The IBC also provides for establishing the Insolvency and Bankruptcy Board of India for regulation of

insolvency professionals, insolvency professional agencies and information utilities.

e. Insolvency professionals will assist in the completion of insolvency resolution, liquidation and bankruptcy

proceedings envisaged in the IBC. Insolvency professional agencies will develop professional standards,

code of ethics and will be first level regulators for insolvency professionals leading to the development of a

competitive industry for such professionals. Information utilities will collect, collate, authenticate and

disseminate financial information to facilitate such proceedings.

f. The IBC also proposes to establish a fund (the Insolvency and Bankruptcy Fund of India) for the purposes of

insolvency resolution, liquidation and bankruptcy of persons.

Implementation of Indian Accounting Standards (“Ind AS”)

RBI vide circular DBR.BP.BC.No.76/21.07.001t2015-16 dated February 11,2016 directed scheduled commercial

banks to be in preparedness to submit Proforma lnd AS Financial Statements to the Reserve Bank from the half-year

ended September 30, 2016, onwards. Scheduled Commercial Banks are required to comply with lnd AS for accounting

periods commencing from April 1, 2018 onwards, with comparatives for periods ending on or after March 31, 2018.

On 23 June 2016 Reserve Bank of India vide Circular No. BR.BP.BC.No.1OGl21.O7.001l2015-16 has directed all

Scheduled Commerciat Banks (excluding Regional Rural Banks) to submit Proforma lnd AS Financial Statements,

for the half year ended September 30, 2016 latest by November 30, 2016 to the Principal Chief General Manager,

Department of Banking Regulation, Central Office, Reserve Bank of India, Mumbai. Banks shall be guided by the lnd

ASs notified by the Ministry of Corporate Affairs, Government of India under the Companies (Indian Accounting

Standards) Rules, 201 5 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016, as amended from

163

time to time, in this regard. Banks shall submit Proforma lnd AS Financial Statements,for the half year ended

September 30,2016 latest by November 30, 2016. The formats are solely for the preparation and submission of

Proforma lnd AS financial statements to the Reserve Bank. The formats for the lnd AS financial statements for the

accounting periods beginning April 1, 2018 shall be notified separately by RBl.

164

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Overview

The Board of Directors (“Board of Directors”) is constituted in accordance with the Banking Companies Act, the

Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970.

As per sub-section 3 of section 9 of the Banking Acquisition Act, there should be up to 4 Whole Time Directors, one

director who is an officer of Central Government and nominated by Central Government, one director nominated by

Central Government upon recommendation by RBI, one Director from the employees of bank who is a workman

nominated by Central Government, one director from employees of our Bank who is not a workman nominated by

Central Government, one Director who has been a Chartered Accountant nominated by Government of India, subject

to not more than 6 directors nominated by Central Government on the Board of a Bank.

As on date of this Placement Document, we have six Directors on the Board including:

1. Three Whole Time Directors;

2. One Government Nominated Director;

3. One RBI Nominee Director; and

4. One Shareholder Director

Directors

The following table sets forth details regarding the Board as on the date of this Placement Document:

Name, Designation, Occupation, Term and

Nationality

Age Address:

Pawan Kumar Bajaj

Designation: Managing Director and Chief Executive

Officer

Occupation: Service

Term: With effect from August 9, 2016 up to September

30, 2018 or until further orders, whichever is earlier

Nationality: Indian

58 UBI House, 73E, Purna Das road, Kolkata –

700029, India

K.V. Rama Moorthy

Designation: Executive Director

Occupation: Service

Term: With effect from August 29, 2015 up to January

31, 2019 or until further orders, whichever is earlier

Nationality: Indian

58 Flat – 7G, 7th Floor, 28-B, Shakespeare Sarani,

Nilambar Apartment, Kolkata – 700017, West

Bengal, India

Ashok Kumar Pradhan

Designation: Executive Director

Occupation: Service

56 HIG – 116, BDA Colony / Phase – 1, near

DAV School, Pokhariput, Aerodrome area,

Khordha – 751020, Orissa, India

165

Name, Designation, Occupation, Term and

Nationality

Age Address:

Term: With effect from February 18, 2017 up to

February 17, 2020 or until further orders, whichever is

earlier

Nationality: Indian

Ashok Kumar Dogra

Designation: Government Nominee Director

Occupation: Service

Term: With effect from November 25, 2014 until further

orders.

Nationality: Indian

54 32, Shiv Shakti Apartments, GH – 15, SEC-

21C-II, Faridabad – 121001, Haryana, India

Arnab Roy

Designation: RBI Nominee Director

Occupation: Service

Term: With effect from June 18, 2015 until further

orders.

Nationality: Indian

58 House No. C – 39/ 40, First Floor, Jangpura

Extension, South Delhi, Delhi – 110 014,

India

Suryanarayana Sumayajula

Designation: Shareholder Director

Occupation: Professional

Term: For a period of three years with effect from June

11, 2015

Nationality: Indian

64 5 – 1 – 66 / 101, Veeranjaneya Colony,

Vanasthalipuram, Hyderabad – 500 070,

Telangana, India

Brief Profiles of the Directors

Pawan Kumar Bajaj, aged 58 years, is the Managing Director and Chief Executive Officer of our Bank. He holds a

Bachelor’s degree in Law and a Master’s degree in Science from University of Delhi. He is a certified associate of the

Indian Institute of Bankers. He has vast experience in the field of banking sector, working in various capacities in

different places in India and abroad. He started his career with Bank of India in the year 1982 and then joined Indian

Overseas Bank as an executive director. He was also the chief executive in Bank of India’s Singapore Centre covering

operations in Indonesia, Vietnam and Cambodia.

K.V. Rama Moorthy, aged 58 years, is an Executive Director of our Bank. He holds a Bachelor’s degree in

Agriculture from Andhra Pradesh Agricultural University. He is a certified associate of the Indian Institute of Bankers.

He has over 35 years of experience in banking. Prior to joining our Bank, he was associated with the Bank of Baroda

in various capacities including as an executive director.

166

Ashok Kumar Pradhan, aged 56 years, is an Executive Director of our Bank. He holds a Master’s degree in

Commerce from Utkal University and is a certified associate from the Indian Institute of Bankers. He has over 31

years of experience in credit and branch banking. Prior to joining our Bank, he was associated with the State Bank of

Travancore and State Bank of Bikaner & Jaipur.

Ashok Kumar Dogra, aged 54 years, is the Government of India Nominee Director of our Bank. He holds a

Bachelor’s degree in Science from University of Jammu and a Master’s degree in Business Administration in Finance

from United Business Institute, Brussels, Belgium. He has over 26 years of experience and has worked in various

departments and on various projects of Government of India covering establishment and accounts matters, auditing of

accounts, general administration, purchases, vigilance matters, etc. Prior to joining our Bank, he was on the board of

the State Bank of Hyderabad. Presently, he is working as a Deputy Secretary in Ministry of Finance.

Arnab Roy, aged 58 years, is Reserve Bank of India Nominee Director of our Bank. He holds a Master’s degree in

Business Administration and Master’s degree in Arts from University of Delhi. He has over 35 years of experience in

various departments of RBI. Prior to joining our Bank, he was on the board of National Housing Bank, Jammu and

Kashmir Bank Limited and India Mortgage Guarantee Corporation Private Limited. Presently, he is a regional director

of RBI in Rajasthan.

Suryanarayana Sumayajula, aged 64 years, is the Shareholder Director of our Bank. He holds a Bachelor’s degree

in Commerce from Andhra University and is a fellow member of the Institute of Chartered Accountants of India. He

has over 36 years of experience in banking sector covering areas like credit, risk management, information technology,

branch banking, human resources, internal audit, investor relations etc. Prior to joining our Bank, he served as the

Chief General Manager of Andhra Bank until June 30, 2012.

Relationship between Directors

None of the Directors are related to each other.

Shareholding of Directors

As per the Banking Regulation Act, the Directors are not required to hold any qualification shares of our Bank. As on

December 31, 2016, except for the following Director, none of the Directors hold Equity Shares in our Bank:

Name of the Director Number of Equity Shares Percentage shareholding in our Bank

Suryanarayana Sumayajula 200 Negligible

Remuneration of the Directors

The following table sets forth the details of remuneration paid by our Bank to the present Executive Directors of our

Bank for the 11 month period ended February 28, 2017 and fiscal years 2016, 2015 and 2014:

(₹ in crores)

Salary and Perquisites

Name of Director April 1, 2016 upto

February 28, 2017

Fiscal year 2016 Fiscal year

2015

Fiscal year

2014

Pawan Kumar Bajaj* 0.14 Nil Nil Nil K.V. Rama Moorthy** 0.35 0.10 Nil Nil Ashok Kumar Pradhan*** 0.0064 Nil Nil Nil

Total 0.50 0.10 Nil Nil *Appointed as the Managing Director and Chief Executive Officer of our Bank with effect from August 9, 2016

** Appointed as an Executive Director of our Bank with effect from August 29, 2015

***Appointed as an Executive Director of our Bank with effect from February 18, 2017

As per Government of India’s letter F. No. 15/1/2011-BO.I dated July 20, 2015, all the directors other than the whole-

time Directors, Government Nominee Director and RBI Nominee Director, are paid sitting fees of ₹ 20,000 for

attending each meeting of the Board and ₹ 10,000 for attending each meeting of the committee of the Board.

167

The following table sets forth all sitting fees paid by our Bank for 11 month period ended February 28, 2017 and fiscal

years 2016, 2015, 2014:

(₹ in crores)

Name of Directors April 1, 2016 up to

February 28, 2017

Fiscal year

2016

Fiscal year

2015

Fiscal year

2014

Ashok Kumar Dogra* Nil Nil Nil Nil Arnab Roy* Nil Nil Nil Nil Suryanarayana Sumayajula 0.05 0.04 Nil Nil

* Directors being “Official Director” are not entitled to draw any sitting fees from our Bank.

Bonus or profit sharing plan of the Directors

Pursuant to the notification No. 16/65/2011-BO-I dated May 29, 2012 from the Government of India, Ministry of

Finance, Department of Financial Services has set out broad parameters for performance linked incentives to whole

time directors on the boards of public sector banks. The performance linked incentive is given according to scores

obtained as per the performance evaluation matrix prescribed in the notification. The performance evaluation matrix

consists of qualitative and quantitative parameters. The evaluation of performance would be done by a sub-committee

of the Board that is Remuneration Committee consisting of (i) Government nominee director (ii) RBI nominee director

and (iii) two other directors.

Interest of Directors

Our Executive Directors may be deemed to be interested to the extent of salary and remuneration received by them,

perquisites and reimbursement of expenses allowed to them in the ordinary course of business in terms of Central

Government guidelines and RBI guidelines as may be applicable and to the extent of shares held by them in our Bank

and dividend payable to them, if any.

Our Non-Executive Directors may be deemed to be interested to the extent of the Sitting Fees received by them for

attending the meetings of the Board of Directors or Committees thereof, reimbursement of expenses allowed in terms

of the Government and RBI guidelines, and to the extent of shares held by them in our Bank and dividend payable to

them, if any.

Except as disclosed in this Placement Document, and except to the extent of shareholding in our Bank, our Directors

do not have any financial or other material interest in the Issue and there is no effect of such interest in so far as it is

different from the interests of other persons.

Our Bank has not entered into any contract, agreement or arrangement during the preceding two years from the date

of this Placement Document in which any of the Directors are interested, directly or indirectly, and no payments have

been made to them in respect of any such contracts, agreements, arrangements which are proposed to be made with

them.

For details of related party transactions entered into by our Bank during the two years preceding the date of this

Placement Document, the nature of transactions and the cumulative value of transactions, see “Related Party

Transactions” in the section “Financial Statements” beginning on page 228.

Corporate Governance

Our Bank has in place processes and systems and has been complying with the requirements of corporate governance

under applicable law, including the Listing Regulations and RBI guidelines, in respect of corporate governance

including constitution of the Board of Directors and committees thereof. The Board meets regularly in accordance

with the requirements of our Bank, with a minimum of six meetings per year. The Board has established the following

committees of Directors to ensure compliance with the Act and corporate governance requirements and for operational

reasons to facilitate the decision making process.

The committees constituted in accordance with the relevant provisions of the Chapter IV the Listing Regulations and

RBI Guidelines includes (i) Audit Committee, (ii) Nomination Committee, (iii) Remuneration Committee, (iv)

Stakeholders Relationship Committee and v) Risk Management Committee.

168

The details pertaining to the abovementioned committees of our Bank as of the date of this Placement Document are

as follows:

i) Audit Committee

The Audit Committee of the Board of Directors of our Bank is constituted in terms of the RBI guidelines and the roles

and responsibilities of the Audit Committee are prescribed by the RBI.

The functions of Audit Committee include the following:

Oversight of the financial reporting process and ensuring correct, adequate and credible disclosure of

financial information;

Reviewing with the Management, Periodic and Annual Financial Statements.

Reviewing efficacy of internal control system and internal audit and inspection functions;

Reviewing the findings of investigation by the concurrent auditors, revenue auditors, internal inspectors in

matters where fraud / irregularity is suspected or failure of internal control systems is observed and suggesting

means to strengthen control mechanisms.

Interaction and Analysis of Bank's performance with the Statutory Central Auditors before the finalization

of the periodic accounts and reports, focusing on the changes in accounting policies and practices, discussion

on Audit Report and audit qualifications if any, LFAR etc;

Monitoring Auditors' independence and performance;

Detailed analysis of the findings in the Annual Financial Inspection (AFI) conducted by RBI, Special Audit,

if any, conducted by RBI or other agency assigned by RBI.

Review of various audit & inspection reports;

Reviewing with the management, the performance of statutory auditors, concurrent and revenue auditors and

adequacy of internal control system, discussing with the auditors significant findings and follow up thereon.

Giving special focus on the follow up on:

a) Inter Branch Adjustment Accounts

b) Un-reconciled long standing entries in Inter Branch Accounts & NOSTRO Accounts.

c) Arrears in balancing of books at various branches.

d) Frauds

e) Major areas of housekeeping

The constitution of Audit Committee is as follows -

Committee Members Designation

Audit Committee Suryanarayana Sumayajula Chairman

K. V. Rama Moorthy Member

Ashok Kumar Dogra Member

Arnab Roy Member

ii) Nomination Committee

The Committee is constituted in terms of RBI guidelines for the purpose of determination of the prescribed ‘Fit &

Proper’ status of the candidates elected by the requisite number of shareholders for the Directorship on the Board of

our Bank as representative of the shareholders.

The Nomination Committee in Public Sector Banks is formed solely for the purpose of determining ‘fit and proper’

status in terms of the RBI guidelines of the shareholders contesting election for directorship under section 9 (3)(i) of

the Banking Acquisition Act. Our Bank will reconstitute the committee in terms of RBI guidelines close to the next

election process.

iii) Remuneration Committee

169

The Remuneration Committee has been formed in terms of Ministry of Finance Notification F. No. 20/1/2005 – BO-

I dated March 9, 2007 to deliberate on the Performance Linked incentives of whole-time directors of Public Sector

Banks, subject to achievement of broad quantitative parameters fixed under performance evaluation matrix based on

the statement of intent on goals and qualitative parameters and benchmarks based on various compliance reports

during the previous year.

The functions of Remuneration Committee include evaluating performance of the whole time directors of our Bank

in respect of broad quantitative parameters and qualitative parameters for determining eligibility of the whole-time

directors to performance linked incentive in respect of concerned previous year.

The constitution of Remuneration Committee is as follows –


Remuneration Committee Ashok Kumar Dogra Chairman

Arnab Roy Member

Suryanarayana Sumayajula Member

iv) Stakeholders Relationship Committee

The Stakeholders Relationship Committee was formed, as prescribed under Regulation 20 of the Listing Regulations,

with a view to uphold the principles of corporate governance and to safeguard the interest of all the shareholders of

our Bank, particularly the minority shareholders post the initial public offer.

The functions of the Stakeholders Relationship Committee include the following:

Speedy disposal of transfer, sub-division, rematerialisation and consolidation of shares and revalidation of

warrants;

Monitoring investor grievance mechanism and ensuring redressal thereof in a time-bound manner

The constitution of Stakeholders Relationship Committee is as follows –


Stakeholders Relationship Committee Suryanarayana Sumayajula Chairman

K.V. Rama Moorthy Member

Ashok Kumar Pradhan Member


v) Risk Management Committee

The Risk Management Committee was formed pursuant to RBI directive with the objective of devising a robust risk

management policy and gradually advancing to the integrated risk management environment.

The functions of Risk Management Committee include the following:

Devising a robust Risk Management Policy and developing a comprehensive strategy for integrated risk

management and to co-ordinate with the different risk management committees of executives of our Bank;

Framing guidelines for risk measurement;

Managing and reporting all the areas of risk;

Ensuring that risk management process encompassing people, systems, operations, limits and controls is

consistent with our Bank’s overall policy;

Ensuring implementation of strong financial models and the effectiveness of all systems used to calculate the

risk.

The constitution of Risk Management Committee is as follows –


170

Risk Management Committee Pawan Kumar Bajaj Chairman

K.V. Rama Moorthy Member

Ashok Kumar Pradhan Member

Suryanarayana Sumayajula Member


In addition there are other Board Committees which are Management Committee, Committee for reviewing services

of officers above 55 years, High Powered Committee, Recovery Committee, Special Committee to Monitor High

Value Frauds, Review Committee on Identification of Willful Defaulters, Directors’ Promotion Committee, Customer

Service Committee, IT Sub-Committee, HR Steering Committee, Credit Approval Committee, Election Committee

and Asset Liability Management Committee constituted for the smooth and supervision of various aspects of business.

ORGANIZATION STRUCTURE

Senior Managerial Personnel

In addition to the Managing Director and Chief Executive Officer and Executive Directors of our Bank following are

the Senior Managerial Personnel of our Bank.

Arun Kumar Verma, aged 58 years, is the Chief Vigilance Officer of our Bank. He holds a Master’s degree of

Science in Agriculture (Honours) from Himachal Pradesh Krishi Vishwa Vidyalaya. He is also a certified associate

of Indian Institute of Banking. Prior to joining our Bank, he was working with Canara Bank. Further, he has been

assigned an additional charge of Chief Vigilance Officer, Allahabad Bank. He joined our Bank on March 1, 2016.

Debashish Mukherjee, aged 52 years, is the General Manager Recovery, Monitoring, Legal and Corporate Client

Management of our Bank. He holds a Bachelor’s degree in Science with Honours and Master’s degree in business

administration from University of Calcutta. He is also an associate of the Indian Institute of Banking and Finance.

Prior to joining our Bank, he was associated with Punjab National Bank. He joined our Bank on September 8, 2006

Naresh Kapoor, aged 58 years, is the Chief Financial Officer of our Bank. He holds a Master’s degree in Science

from University of Allahabad. He joined our Bank on July 28, 1981 and is presently in-charge of the Corporate

Accounts, Government transactions, and MSME.

Vikas Khutwad, aged 59 years, is the Chief Risk Officer and Chief Information Security Officer of our Bank. He

holds a Bachelor’s degree of Commerce from University of Bombay and is an associate of the Indian Institute of

171

Bankers. He joined our Bank on February 23, 1997and is presently in-charge of the Risk Management, Planning and

Development departments.

Sanjay Kumar, aged 55 years, is the General Manager (Treasury and Credit) of our Bank. He holds a Master’s Degree

in Science from Magadh University, Bodh Gaya. He joined our Bank on December 16, 1985 and is presently in-charge

of the Credit, Treasury and International Banking department.

Manash Dhar, aged 58 years, is the General Manager (Priority Sector and Financial Inclusion) of our Bank. He holds

a Bachelor’s degree in Science (Agriculture) Honours from Bidhan Chandra Krishi Viswa Vidyalaya. He joined our

Bank on June 3, 1981.

Mohammed Abdul Wahid, aged 58 years, is the General Manager (Retail Banking, Marketing and Publicity) of our

Bank. He holds a Bachelor’s degree in Science (Agriculture) with Honours from Bidhan Chandra Krishi Viswa

Vidyalaya and is an associate of the Indian Institute of Bankers. He joined our Bank on August 24, 1983.

Umesh Kumar Roy, aged 57 years, is the Head (Human Resource Management and Training) of our Bank. He holds

a Master’s degree of Science in Chemistry (Honours) from Patna University. He is also a law graduate from Patna

University. He also holds a Master’s degree in Business Administration from Babasaheb Bhimrao Ambedkar Bihar

University and is an associate of the Indian Institute of Bankers. He joined our Bank on December 17, 1985.

Sunanda Basu, aged 58 years, is the General Manager (Premises and Branch Expansion) of our Bank. She holds a

Master’s degree of Arts in History from Jadavpur University. She is also an associate of the Indian Institute of Bankers.

She has been associated with our Bank since December 27, 1985.

Kuntilla Bala Raju, aged 58 years, is the General Manager (Audit and Inspection) of our Bank. He holds a Diploma

in Management from Indira Gandhi National Open University and a Bachelor’s degree of Arts from Berhampur

University. He is also an associate of the Indian Institute of Bankers. He joined our Bank on January 25, 1984.

Vinay Gandotra, aged 56 years, is the General Manager (Operations and Services) of our Bank. He holds a Master’s

degree of science in agriculture from Himachal Pradesh Krishi Vishwa Vidyalaya. He has also been awarded with the

certificate of honour from Himachal Pradesh Krishi Vishwa Vidyalaya. Further, he is an associate of the Indian

Institute of Bankers. He has been awarded certificate of honour from Himachal Pradesh Krishi Vishwa Vidyalaya. He

joined our Bank on October 27, 1983.

Gauri Prosad Sarma, aged 54 years, is the General Manager – Information Technology of our Bank. He holds a

Master’s degree of Science in Zoology from University of Gauhati and has participated in a number of training

programmes held by RBI. He joined our Bank on December 17, 1985.

Alahari Seshu Babu, aged 59 years, is the Chief Compliance Officer of our Bank. He holds a Bachelor’s degree in

Science and is a law graduate from Sri Venkateswara University. He also holds a Master’s degree in Financial

Management from Jamnalal Bajaj Institute of Management Studies and is an associate of the Indian Institute of

Bankers. He joined our Bank on December 16, 1985.

Manish Agrawal, aged 43 years, is the in – charge of Alternate Delivery Channel of our Bank. He holds a Bachelor’s

degree in electronics engineering from The Aligarh Muslim University and a post graduate diploma in operations

management from Indira Gandhi National Open University. He is also an associate of the Indian Institute of Banking

and Finance. Prior to joining our Bank, he was working with State Bank of Saurashtra. He joined our Bank on

December 1, 2006.

Bikramjit Shom, aged 43 years, is the Company Secretary and Compliance Officer of our Bank. He is a fellow

member from the Institute of Company Secretaries of India and an associate from Chartered Institute for Securities

and Investment. Further, he also holds certificate from National Institute of Securities Market. Prior to joining our

Bank, he was working with Stock Holding Corporation of India Limited, Dalmia Securities Private Limited, ABN

Amro Bank N.V. Further, he was working as a trainee in Hindustan Copper Limited. He joined our Bank on September

14, 2009.

All the Senior Managerial Personnel are permanent employees of our Bank.

172

Relationship with the Directors and other Senior Managerial Personnel

None of our Senior Managerial Personnel are related to the directors or with each other.

Shareholding of Senior Managerial Personnel

Except as stated below, none of our senior managerial personnel are holding any shares in our Bank as on December

31, 2016:

Name of Senior Managerial Personnel Number of Equity Shares

Debashish Mukherjee 1,000

Naresh Kapoor 5,00

Vikas Khutwad 1,500

Sanjay Kumar 500

Manash Dhar 1,000

Mohammad Abdul Wahid 800

Umesh Kumar Roy 500

Sunanda Basu 1,000

Kuntilla Bala Raju 500

Vinay Gandotra 500

Gauri Prosad Sarma 500

Alahari Seshu Babu 500

Bikramjit Shom 100

Bonus or a profit sharing plan to the Senior Managerial Personnel

Presently, we do not have a performance linked bonus or a profit sharing plan for the Senior Managerial Personnel.

Interests of Senior Managerial Personnel

The Senior Managerial Personnel may be deemed to be interested to the extent of the salary and remuneration received

by them, perquisites and reimbursements allowed to them for services rendered by them in the ordinary course of

business of our Bank and to the extent of the shares held by them and dividend payable to them in our Bank, if any,

and loans taken at preferential rates or otherwise, principal thereof and interest thereon.

Other than as disclosed in this Placement Document, there were no outstanding transactions other than in the ordinary

course of business undertaken by our Bank in which the Senior Managerial Personnel were the interested parties.

Related Party Transactions

For details in relation to the related party transactions entered by our Bank during the last three Fiscal Years

immediately preceding the date of this Placement Document, as per the Accounting Standard 18 issued by the Institute

of Chartered Accountants in India, see “Related Party Transactions” in the section “Financial Statements” beginning

on page 228.

Employees’ Stock Option Plan

Our Bank does not have any Employee Stock Option Scheme.

Loans to Directors and Senior Managerial Personnel

Except as mentioned herein below, none of the Directors / Senior Managerial Personnel have taken loans from us as

on January 31, 2017.

(₹ in crores)

173

Name of Senior Managerial Personnel Amount Outstanding

Debashish Mukherjee 0.45

Naresh Kapoor 0.04

Vikas Khutwad 0.10

Sanjay Kumar 0.09

Manash Dhar 0.52

Mohammed Abdul Wahid 0.31

Umesh Kumar Roy 0.37

Sunanda Basu 0.0019

Kuntilla Bala Raju 0.16

Vinay Gandotra 0.48

Gauri Prosad Sarma 0.11

Alahari Sesu Babu 0.11

Manish Agarwal 0.47

Bikramjit Shom 0.31

Policy on disclosure and internal procedure for prevention of insider trading

Regulation 9(1) of the Insider Trading Regulations applies to us and our employees and mandates implementation of

a code of internal procedures and conduct for the prevention of insider trading. Our Bank is in compliance with the

same and has implemented a code of conduct for prevention of insider trading and procedure for fair disclosure of

unpublished price sensitive information in accordance with the Insider Trading Regulations. The Company Secretary

acts as the Compliance Officer of our Bank under the aforesaid code of conduct.

174

PRINCIPAL SHAREHOLDERS

Our Promoter is the President of India. Our Promoter currently holds 88.72% of the paid-up Equity Share capital of

our Bank.

The table below represents the shareholding pattern of our Bank in accordance with Regulation 31 of the Listing

Regulations, as on December 31, 2016:

Summary statement holding of Equity Shares

Category of

shareholder

Nos. of

shareh

olders

No. of fully

paid up equity

shares held

Total nos.

shares held

Shareho

lding as

a % of

total no.

of

shares

(calculat

ed as

per

SCRR,

1957)As

a % of

(A+B+C

2

Number of Locked in

shares

Number of Shares

pledged or otherwise

encumbered

Number of equity

shares held in

dematerialized

form

No.(a) As a

%

of

total

Sha

res

held

(b)

N

o.(

a)

As a % of total

Shares held(b)

(A) Promoter &

Promoter Group

1 1,18,83,64,031 1,18,83,64,03

1

88.72 1,18,83,64,031 100.

00

0.00

1,18,83,64,031

(B) Public 82,350 15,10,85,341 15,10,85,341 11.28

0.00 0.00 15,10,62,033

(C1) Shares

underlying DRs

0.00 0.00 0.00

(C2) Shares

held by

Employee Trust

0.00 0.00 0.00

(C) Non

Promoter-Non

Public

0.00 0.00 0.00

Grand Total 82,351 1,33,94,49,372 1,33,94,49,37

2

100.00 1,18,83,64,031 88.7

2

0.00 1,33,94,26,064

Note: C=C1+C2

Grand Total=A+B+C

Statement showing shareholding pattern of the Promoter and Promoter Group

Category of

shareholder

Nos.

of

share

holder

s

No. of fully

paid up equity

shares held

Total nos.

shares held

Shareho

lding as

a % of

total no.

of

shares

(calculat

ed as

per

SCRR,

1957)As

a % of

(A+B+C

2)

Number of Locked in

shares

Number of

Shares

pledged or

otherwise

encumbere

d

Number of

equity shares

held in

dematerialized

form

No.(a) As a

% of

total

Share

s

held(b

)

N

o.

(a

)

As a

% of

total

Shares

held(b)

A1) Indian 0.00 0.00

Central

Government/

State

1 1,18,83,64,031 1,18,83,64,031 88.72

1,18,83,64,031 100.00 0.00 1,18,83,64,031

175

Category of

shareholder

Nos.

of

share

holder

s

No. of fully

paid up equity

shares held

Total nos.

shares held

Shareho

lding as

a % of

total no.

of

shares

(calculat

ed as

per

SCRR,

1957)As

a % of

(A+B+C

2)

Number of Locked in

shares

Number of

Shares

pledged or

otherwise

encumbere

d

Number of

equity shares

held in

dematerialized

form

No.(a) As a

% of

total

Share

s

held(b

)

N

o.

(a

)

As a

% of

total

Shares

held(b)

Government(

s)

President of

India 1 1,18,83,64,031 1,18,83,64,031 88.72 1,18,83,64,031 100.00 0.00 1,18,83,64,031

Sub Total A1 1 1,18,83,64,031 1,18,83,64,031 88.72 1,18,83,64,031 100.00 0.00 1,18,83,64,031

A2) Foreign

0.00 0.00 0.00

A=A1+A2 1 1,18,83,64,031 1,18,83,64,031 88.72 1,18,83,64,031 100.00 0.00 1,18,83,64,031

Statement showing shareholding pattern of the Public shareholders

Category &

Name of the

Shareholders

No. of

sharehol

der

No. of fully

paid up

equity

shares held

Total no.

shares held

Sharehol

ding %

calculate

d as per

SCRR,

1957 As a

% of

(A+B+C2

)

No. of

Voting

Rights

Total

as a

% of

Total

Voti

ng

right

Number of

Locked in

shares

Number of

equity

shares held

in

dematerializ

ed form(Not

Applicable)

No.

(a)

As a

% of

total

Share

s

held(

b)

B1)

Institutions 0 0 0.00 0.00 0.00

Mutual

Funds/ 1 3,36,000 3,36,000 0.03 3,36,000 0.03 0.00 3,36,000

Financial

Institutions/

Banks

4 1,47,038 1,47,038 0.01 1,47,038 0.01 0.00 1,47,038

Insurance

Companies 4 10,17,34,227 10,17,34,227 7.60 10,17,34,227 7.60 0.00 10,17,34,227

Life Insurance

Corporation

of India

1 10,17,28,073 10,17,28,073 7.59 10,17,28,073 7.59 0.00 10,17,28,073

Sub Total B1 9 10,22,17,265 10,22,17,265 7.63 10,22,17,265 7.63 0.00 10,22,17,265

B2) Central

Government/

State

Government(

s)/ President

of India

0 0 0.00 0.00 0.00

B3) Non-

Institutions 0 0 0.00 0.00 0.00

Individual

share capital

upto ₹ 2 Lacs

75973 3,22,90,387 3,22,90,387 2.41 3,22,90,387 2.41 0.00 3,22,90,387

Individual

share capital

145

69,15,032 69,15,032 0.52 69,15,032 0.52 0.00 69,15,032

176

Category &

Name of the

Shareholders

No. of

sharehol

der

No. of fully

paid up

equity

shares held

Total no.

shares held

Sharehol

ding %

calculate

d as per

SCRR,

1957 As a

% of

(A+B+C2

)

No. of

Voting

Rights

Total

as a

% of

Total

Voti

ng

right

Number of

Locked in

shares

Number of

equity

shares held

in

dematerializ

ed form(Not

Applicable)

No.

(a)

As a

% of

total

Share

s

held(

b)

in excess of ₹

2 Lacs

Any Other

(specify)

6223

96,62,657 96,62,657 0.72 96,62,657 0.72 0.00 96,62,657

Office

Bearers 3002 11,60,576 11,60,576 0.09 11,60,576 0.09 0.00 11,60,576

Bodies

Corporate 495 42,71,818 42,71,818 0.32 42,71,818 0.32 0.00 42,71,818

Clearing

Members 212

11,05,469

11,05,469

0.08

11,05,469

0.08 0.00

11,05,469

NRI – Repat 416 13,87,043 13,87,043 0.10 13,87,043 0.10 0.00 13,87,043

NRI – Non-

Repat 176

3,78,854

3,78,854

0.03

3,78,854

0.03 0.00

3,78,854

HUF 1915 13,11,636 13,11,636 0.10 13,11,636 0.10 0.00 13,11,636

Trusts 7 47,261 47,261 0.00 47,261 0.00 0.00 47,261

Sub Total B3 82,341 4,88,68,076 4,88,68,076 3.65 4,88,68,076 3.65 0.00 4,88,68,076

B=B1+B2+B

3 82,350 15,10,85,341 15,10,85,341 11.28 15,10,85,341 11.28 0.00 15,10,85,341

177

ISSUE PROCEDURE

The following is a summary intended to present a general outline of the procedure relating to the application, payment,

Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure followed in the Issue

may differ from the one mentioned below, and investors are presumed to have apprised themselves of the same from

our Bank or the Book Running Lead Managers. Investor is advised to inform themselves of any restrictions or

limitations that may be applicable to them. See the sections “Selling Restrictions” and “Transfer Restrictions”

beginning on pages 189 and 195, respectively.

Qualified Institutions Placement

The Issue is being made to QIBs in reliance upon Chapter VIII of the ICDR Regulations, through the mechanism of a

QIP. Under Chapter VIII of the ICDR Regulations, a listed company in India may issue equity shares, fully convertible

debentures, partly convertible debentures, non-convertible debentures with warrants or any other security (other than

warrants), which are convertible into or exchangeable with equity shares of the issuer at a later date in a qualified

institutions placement to QIBs, provided that:

a special resolution approving the QIP has been passed by our Bank’s shareholders. Such special resolution

must specify (a) that the allotment of the Equity Shares is proposed to be made pursuant to the qualified

institutions placement, and (b) the relevant date;

equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, are listed on

a recognised stock exchange in India having nation-wide trading terminals for a period of at least one year

prior to the date of issuance of notice to its shareholders for convening the meeting to pass the above-

mentioned special resolution;

the aggregate of the proposed issue and all previous QIPs made by the issuer in the same fiscal year does not

exceed five times the net worth (as defined in the ICDR Regulations) of the issuer as per the audited balance

sheet of the previous fiscal year;

the issuer shall be in compliance with the minimum public shareholding requirements set out in the SCRR.

However, our Bank has received an exemption from SEBI in respect of compliance with minimum public

shareholding as specified under the SCRR and Listing Agreement for present issue vide their letter dated April

5, 2016;

the issuer shall have completed allotments with respect to any prior offer or invitation made by the issuer or

shall have withdrawn or abandoned any prior invitation or offer made by the issuer;

the offering of securities by issue of public advertisements or utilisation of any media, marketing or

distribution channels or agents to inform the public about the issue is prohibited

At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or any

part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs.

Prospective purchasers will be deemed to have represented to us and the Book Running Lead Managers in order to

participate in the Issue that they are outside the United States and purchasing the Equity Shares in an offshore

transaction in accordance with Regulation S under the Securities Act and the applicable laws of the jurisdictions where

those offers and sales are made.

Bidders are not allowed to withdraw their Bids after the Issue Closing Date.

Additionally, there is a minimum pricing requirement under the ICDR Regulations. The Floor Price shall not be less

than the average of the weekly high and low of the closing prices of the Equity Shares of the same class of the Equity

Shares of the Issuer quoted on the stock exchange during the two weeks preceding the Relevant Date. However, a

discount of up to 5% of the Floor Price is permitted in accordance with the provisions of the ICDR Regulations.

178

The “Relevant Date” referred to above, for Floor Price, will be the date of the meeting in which the Board of Directors

or the Committee thereof decides to open the Issue and “stock exchange” means any of the recognised stock exchanges

in India on which the equity shares of the issuer of the same class are listed and on which the highest trading volume

in such equity shares has been recorded during the two weeks immediately preceding the Relevant Date.

Our Bank has applied for and received the in-principle approval of the Stock Exchanges under regulation 28(1) of the

Listing Regulations for the listing of the proposed Equity Shares on the Stock Exchanges. Our Bank has also delivered

a copy of the Preliminary Placement Document and this Placement Document to the Stock Exchanges and hosted on

our Bank’s website.

The Issue has been authorized by (i) the Board of Directors pursuant to a resolution passed on January 28, 2016, and

(ii) the shareholders, pursuant to a resolution passed at the AGM held on June 28, 2016.

The Equity Shares will be Allotted within 12 months from the date of the shareholders’ resolution approving the QIP

and within 60 days from the date of receipt of subscription money from the successful Bidders. For details of refund

of application money, please see the section “Issue Procedure – Pricing and Allocation – Designated Date and

Allotment of Equity Shares” beginning on page 185.

The Equity Shares issued pursuant to the QIP must be issued on the basis of the Preliminary Placement Document and

this Placement Document that shall contain all material information including the information specified in Schedule

XVIII of the ICDR Regulations. The Preliminary Placement Document and this Placement Document are private

documents provided to only select investors through serially numbered copies and are required to be placed on the

website of the concerned Stock Exchanges and of our Bank with a disclaimer to the effect that it is in connection with

an issue to QIBs and no offer is being made to the public or to any other category of investors.

The minimum number of allottees for each QIP shall not be less than:

two, where the issue size is less than or equal to ₹ 250 Crore; and

five, where the issue size is greater than ₹ 250 Crore

No single allottee shall be allotted more than 50% of the issue size.

QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee. For

details of what constitutes “same group” or “common control”, please see the section “Issue Procedure—Application

Process—Application Form” beginning on page 182.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment

except on the floor of a recognised stock exchange in India. Allotments made to VCFs and AIFs in the Issue are

subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements.

The Equity Shares offered hereby have not been and will not be registered under the U.S. Securities Act or any state

securities laws in the United States and may not be offered, sold or delivered within the United States except pursuant

to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and

applicable state securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States

in offshore transactions in reliance on Regulation S under the U.S. Securities Act and the applicable laws of the

jurisdictions where those offers and sales are made. For a description of certain restrictions on transfer of the Equity

Shares, please see “Transfer Restrictions”.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other

jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such

jurisdiction, except in compliance with the applicable laws of such jurisdiction.

Issue Procedure

1. Our Bank and the BRLMs has circulated serially numbered copies of the Preliminary Placement Document and

the serially numbered Application Form, either in electronic or physical form, to the QIBs and the Application

179

Form has been specifically addressed to such QIBs. Bank shall maintain complete records of Eligible QIBs to

whom the Preliminary Placement Document and the serially numbered Application Form have been dispatched.

2. Unless a serially numbered Preliminary Placement Document along with the serially numbered Application Form

is addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made to such QIB. Even

if such documentation were to come into the possession of any person other than the intended recipient, no offer

or invitation to offer shall be deemed to have been made to such person and any application that does not comply

with this requirement shall be treated as invalid.

3. QIBs may submit an Application Form, including any revisions thereof, during the Bidding Period to the BRLMs.

4. QIBs will be required to indicate the following in the Application Form:

Complete official name of the QIB to whom Equity Shares are to be Allotted;

number of Equity Shares Bid for;

price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate

that they are agreeable to submit a Bid at “Cut-off Price”; which shall be any price as may be determined by

our Bank in consultation with the Book Running Lead Managers at or above the Floor Price or a price with

not more than 5% discount on the Floor Price in terms of Regulation 85 of the ICDR Regulations, which for

the issue is ₹ 23.22;

details of the depository participant account to which the Equity Shares should be credited; and

a representation that it is outside the United States, at the time it places its buy order for the Equity Shares, it

is acquiring the Equity Shares in an offshore transaction in reliance on Regulation S and it has agreed to

certain other representations set forth in “Representation by Investors” and “Transfer Restrictions”

beginning on pages 4 and 195, respectively and certain other representations made in the Application Form.

Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign individual

will be considered as an individual QIB and separate Application Forms would be required from each such

sub-account for submitting Bids. FIIs or sub-accounts of FIIs are required to indicate SEBI FII/ sub-account

registration number in the Application Form.

5. Once a duly completed Application Form is submitted by a QIB, such Application Form constitutes an irrevocable

offer and cannot be withdrawn after the Issue Closing Date. The Issue Closing Date shall be notified to the Stock

Exchanges and the QIBs shall be deemed to have been given notice of such date after receipt of the Application

Form.

6. The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names

of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in

respect of each scheme of the Mutual Fund registered with SEBI. Upon receipt of the duly completed Application

Form, after the Issue Closing Date, our Bank shall determine the final terms, including the Issue Price of the

Equity Shares to be issued pursuant to the Issue in consultation with the Book Running Lead Managers. Upon

determination of the final terms of the Equity Shares, the Book Running Lead Managers will send the serially

numbered CAN along with this Placement Document, either in electronic form or through physical delivery, to

the QIBs who have been Allocated the Equity Shares pursuant to this Issue. The dispatch of a CAN shall be

deemed a valid, binding and irrevocable contract for the QIBs to pay the entire Issue Price for all the Equity

Shares Allocated to such QIB. The CAN shall contain details such as the number of Equity Shares Allocated to

the QIB and payment instructions including the details of the amounts payable by the QIB for Allotment of the

Equity Shares in its name and the Pay-In Date as applicable to the respective QIB. Please note that the Allocation

will be at the absolute discretion of our Bank and will be based on the recommendation of the Book Running

Lead Managers and may not be proportionate to the number of Equity Shares applied for.

180

7. Pursuant to receiving a CAN, each successful Bidder shall be required to make the payment of the entire

application monies for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer

to our Bank’s designated bank account by the Pay-In Date as specified in the CAN sent to the respective successful

Bidder. No payment shall be made by successful Bidder in cash. Please note that any payment of application

money for the Equity Shares shall be made from the bank accounts of the relevant QIBs applying for the Equity

Shares. Pending Allotment, all monies received for subscription of the Equity Shares shall be kept by our Bank

in a separate bank account with a scheduled bank and shall be utilised only for the purposes permitted under the

applicable laws and mentioned in this Placement Document.

8. Upon receipt of the application monies from the QIBs, Board of Directors of our Bank or the Committee thereof

shall approve Allotment of the Equity Shares as per the details in the CANs sent to the successful Bidder.

9. After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository participant

accounts of the successful Bidders, our Bank shall apply to the Stock Exchanges for listing approvals. Our Bank

will intimate to the Stock Exchanges the details of the Allotment.

10. After receipt of the listing approvals of the Stock Exchanges, our Bank shall credit the Equity Shares Allotted

pursuant to this Issue into the Depository Participant accounts of the respective Allottees.

11. Our Bank will then apply for the final trading approvals from the Stock Exchanges.

12. The Equity Shares that would have been credited to the beneficiary account with the Depository Participant of

the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of final listing and trading

approvals from the Stock Exchanges.

13. Upon receipt of intimation of final listing and trading approval from the Stock Exchanges, our Bank shall inform

the Allottees of the receipt of such approval. Our Bank and the Book Running Lead Managers shall not be

responsible for any delay or non-receipt of the communication of the final trading and listing permissions from

the Stock Exchanges or any loss arising from such delay or non-receipt. Final listing and trading approvals granted

by the Stock Exchanges will also be placed on their respective websites. QIBs are advised to apprise themselves

of the status of the receipt of the permissions from the Stock Exchanges or our Bank.

Qualified Institutional Buyers

Only QIBs as defined in Regulation 2(1)(zd) of the ICDR Regulations and not otherwise excluded pursuant to

Regulation 86(1)(b) of the ICDR Regulations are eligible to invest. Currently, under Regulation 2(1) (zd) of the ICDR

Regulations, a QIB means:

alternate investment funds registered with SEBI

Eligible FPIs including FIIs and eligible sub-accounts registered with SEBI;

foreign venture capital investors registered with SEBI;

insurance companies registered with Insurance Regulatory and Development Authority;

insurance funds set up and managed by army, navy or air force of the Union of India;

insurance funds set up and managed by the Department of Posts, India;

multilateral and bilateral development financial institutions;

Mutual Funds registered with SEBI;

pension funds with minimum corpus of ₹ 25 Crore;

provident funds with minimum corpus of ₹ 25 Crore;

public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the

Companies Act, 2013);

scheduled commercial banks;

state industrial development corporations;

the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of

the Government published in the Gazette of India; and

foreign venture capital funds registered with SEBI;

181

FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs are

permitted to participate through the portfolio investment scheme under Schedule 2 and Schedule 2A of FEMA

20 respectively, in this Issue. FIIs and Eligible FPIs are permitted to participate in the Issue subject to

compliance with all applicable laws and such that the shareholding of the FPIs do not exceed specified limits as

prescribed under applicable laws in this regard.

In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which means

the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to exceed 10% of our

post-Issue Equity Share capital. Further, in terms of the FEMA 20, the total holding by each FPI shall be below 10%

of the total paid-up Equity Share capital of our Bank and the total holdings of all FPIs put together shall not exceed

24% of the paid-up Equity Share capital of our Bank. The aggregate limit of 24% may be increased up to the sectoral

cap by way of a resolution passed by the Board of Directors followed by a special resolution passed by the shareholders

of our Bank. The existing limit for FIIs and FPIs in our Bank is 24% of the paid up capital of our Bank.

Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which

may be specified by the Government from time to time.

An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of the

block of three years for which fees have been paid as per the SEBI FII Regulations. An FII or sub-account (other than

a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until the expiry of its

registration as a FII or sub-account, or until it obtains a certificate of registration as FPI, whichever is earlier. If the

registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may, subject to payment

of conversion fees under the SEBI FPI Regulations, participate in the Issue. An FII or sub-account shall not be eligible

to invest as an FII after registering as an FPI under the SEBI FPI Regulations.

In terms of the FEMA 20, for calculating the aggregate holding of FPIs in a Bank, holding of all registered FPIs as

well as holding of FIIs (being deemed FPIs) shall be included.

The FPI regime has recently come into effect from June 1, 2014. FPI’s investing in this Issue should ensure that they

are eligible under the applicable law or regulation to apply in this Issue.

Allotments made to FVCIs, VCFs and AIFs are subject to the rules and regulations that are applicable to them,

including in relation to lock-in requirements.

Under Regulation 86(1)(b) of the ICDR Regulations, no allotment shall be made pursuant to the Issue, either directly

or indirectly, to our Promoter or any person related to our Promoter, except for such Eligible QIBs who are Public

Sector Enterprises. Eligible QIBs, other than in case of Eligible QIBs who are Public Sector Enterprise who have all

or any of the following rights shall be deemed to be a person related to Promoter:

rights under a shareholders’ agreement or voting agreement entered into with the Promoter or persons related

to the Promoter;

veto rights; or

right to appoint any nominee director on the Board.

Provided, however, that a QIB which does not hold any shares in our Bank and which has acquired the aforesaid rights

in the capacity of a lender shall not be deemed to be related to the Promoter.

Our Bank and the Book Running Lead Managers are not liable for any amendment or modification or change

to applicable laws or regulations, which may occur after the date of this Placement Document. QIBs are advised

to make their independent investigations and satisfy themselves that they are eligible to apply. QIBs are advised

to ensure that any single application from them does not exceed the investment limits or maximum number of

Equity Shares that can be held by them under applicable law or regulation or as specified in this Placement

Document. Further, QIBs are required to satisfy themselves that their Bids would not eventually result in

triggering a tender offer under the Takeover Code.

182

Note: Affiliates or associates of the Book Running Lead Managers who are QIBs may participate in the Issue in

compliance with applicable laws.

Application Process

Application Form

QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by our Bank and

the Book Running Lead Managers in either electronic form or by physical delivery for the purpose of making a Bid

(including revision of a Bid) in terms of this Placement Document.

By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to the

terms of this Placement Document, the QIB will be deemed to have made the following representations and warranties

and the representations, warranties and agreements made under the sections “Notice to Investors”, “Representations

by Investors”, “Selling Restrictions” and “Transfer Restrictions” beginning on pages 2, 4, 189 and 195, respectively:

1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the ICDR Regulations and is not excluded

under Regulation 86 of the ICDR Regulations, except public sector undertakings, has a valid and existing

registration under the applicable laws in India and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or indirectly

and its Application Form does not directly or indirectly represent the Promoter or Promoter Group or persons

related to the Promoter, except for such Eligible QIBs who are Public Sector Enterprises;

3. The QIB confirms that it has no rights under a shareholders’ agreement or voting agreement with the Promoter

or persons related to the Promoter, neither veto rights nor rights to appoint any nominee director on the Board

other than those acquired in the capacity of a lender which shall not be deemed to be a person related to the

Promoter;

4. The QIB acknowledges that it has no right to withdraw its Application after the Issue Closing Date;

5. The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one year from

Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;

6. The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further confirms

that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations

applicable to the QIB;

7. The QIB confirms that its Bids would not eventually result in triggering a tender offer under the Takeover Code;

8. The QIB confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to it pursuant

to the Issue, together with other Allottees that belong to the same group or are under common control, shall not

exceed 50% of the Issue Size. For the purposes of this representation:

The expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies under

the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code;

9. The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account maintained with

the Depository Participant until such time that the final listing and trading approvals for the Equity Shares are

issued by the Stock Exchanges.

10. The QIB represents that it is outside the United States and is acquiring the Equity Shares in an offshore

transaction in reliance on Regulation S and it has agreed to certain other representations set forth in the

Application Form.

11. The QIBs are aware of, acknowledge, represent and agree to the following in respect of their shareholding in our

Bank that if their aggregate holding in the paid-up share capital of our Bank, whether direct or indirect, beneficial

183

or otherwise held by them, their relatives, associate enterprises and persons acting in concert exceeds 5.00% of

the total paid-up share capital of our Bank or entitles them to exercise 5.00% or more of the total voting rights

of our Bank, they shall seek prior approval of the RBI, in accordance with the terms of the Reserve Bank of

India (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015.

QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PAN, THEIR DEPOSITORY

PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND

BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT THE

NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE

DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB ACCOUNTS OF AN FII

WOULD BE CONSIDERED AS AN INDEPENDENT QIB.

Demographic details such as address and bank account will be obtained from the Depositories as per the Depository

Participant account details given above.

The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the QIB

to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding contract on the

QIB upon issuance of the CAN by our Bank in favour of the QIB.

Submission of Application Form

All Application Forms must be duly completed with information including the number of Equity Shares applied for.

All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter shall

be submitted to the Book Running Lead Managers either through electronic form or through physical delivery at the

following address:

SBI Capital Markets Limited

202, Maker Tower E, Cuffe Parade

Mumbai 400 005

Contact: Sunita Kumari

Email: victoria @sbicaps.com

Telephone: + 91 22-22178300

Motilal Oswal Investment Advisors Private Limited

12th Floor, Motilal Oswal Tower,

Rahimtullah Sayani Road,

Opposite Parel S.T. Bus Dept.

Prabhadevi

Mumbai – 400 025

Contact: Subodh Mallya

Email:[email protected]

Telephone: +91 22 3078 5300

The Book Running Lead Managers shall not be required to provide any written acknowledgement of receipt of the

Application Form.

Permanent Account Number or PAN

Each QIB should mention its PAN allotted under the IT Act in the Application Form. The copy of the PAN card or

PAN allotment letter is required to be submitted with the Application Form. Applications without this information

will be considered incomplete and are liable to be rejected. QIBs should not submit the GIR number instead of the

PAN as the Application Form is liable to be rejected on this ground.

Pricing and Allocation

Build-up of the Book

184

The QIBs shall submit their Bids (including the revision of bids) within the Bidding Period to the Book Running Lead

Manager(s). Such Bids cannot be withdrawn after the Issue Closing Date. The book shall be maintained by the Book

Running Lead Managers.

Price Discovery and Allocation

Our Bank, in consultation with the Book Running Lead Managers, shall determine the Issue Price, which shall be at

or above the Floor Price. However, our Bank may offer a discount of not more than 5 % on the Floor Price in terms

of Regulation 85 of the ICDR Regulations.

After finalization of the Issue Price, our Bank has updated the Preliminary Placement Document with the Issue details

and filed the same with the Stock Exchanges as this Placement Document and uploaded on our Bank’s website.

Method of Allocation

Our Bank shall determine the Allocation in consultation with the Book Running Lead Managers on a discretionary

basis and in compliance with Chapter VIII of the ICDR Regulations. Bids received from the QIBs at or above the

Issue Price shall be grouped together to determine the total demand.

The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of

10 % of the Issue Size shall be undertaken subject to valid Bids being received at or above the Issue Price.

THE DECISION OF OUR BANK IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS

IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS MAY NOTE

THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE DISCRETION OF OUR

BANK IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGERS AND QIBS MAY NOT

RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS AT

OR ABOVE THE ISSUE PRICE. NEITHER OUR BANK NOR THE BOOK RUNNING LEAD MANAGERS

IS OBLIGED TO ASSIGN ANY REASON FOR ANY NON-ALLOCATION.

CAN

Based on the Application Forms received, our Bank, in consultation with the Book Running Lead Managers, in their

sole and absolute discretion, shall decide the successful Bidder to whom the serially numbered CAN shall be sent,

pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable for

Allotment of such Equity Shares in their respective names shall be notified to such successful Bidder. Additionally, a

CAN will include details of the relevant Escrow Account into which such payments would need to be made, address

where the application money needs to be sent, Pay-In Date as well as the probable designated date, being the date of

credit of the Equity Shares to the respective successful Bidder’s account.

The successful Bidders would also be sent a serially numbered Placement Document either in electronic form or by

physical delivery along with the serially numbered CAN. The dispatch of the serially numbered Placement Document

and the serially numbered CAN to the QIBs shall be deemed a valid, binding and irrevocable contract for the QIB to

furnish all details that may be required by Bank and the Book Running Lead Managers and to pay the entire Issue

Price for all the Equity Shares Allocated to such QIB.

QIBS ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO ACCEPT THE EQUITY

SHARES THAT MAY BE ALLOTTED TO THEM PURSUANT TO THE ISSUE.

Bank Account for Payment of Application Money

Our Bank has opened the “United Bank of India – QIP Escrow Account” with Fort Branch of United Bank of India

located at Mumbai in terms of the arrangement among our Bank, the Book Running Lead Managers and Fort Branch

of United Bank of the Escrow Bank. The QIB will be required to deposit the entire amount payable for the Equity

Shares Allocated to it by the Pay-In Date as mentioned in, and in accordance with, the respective CAN.

Payments are to be made only through electronic fund transfer.

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Note: Payments through cheques are liable to be rejected.

If the payment is not made favoring “United Bank of India – QIP Escrow Account” within the time stipulated in the

CAN, the Application Form and the CAN of the QIB are liable to be cancelled. Pending Allotment, our Bank

undertakes to utilise the amount deposited in “United Bank of India – QIP Escrow Account” only for the purposes of

(i) adjustment against Allotment of Equity Shares in the Issue; or (ii) repayment of application money if our Bank is

not able to Allot Equity Shares in the Issue.

In case of cancellations or default by the QIBs, our Bank, the Book Running Lead Managers has the right to reallocate

the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion.

Designated Date and Allotment of Equity Shares

1. The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the Escrow Account as stated above.

2. Subject to the satisfaction of the terms and conditions of the Placement Agreement, our Bank will ensure that the

Allotment of the Equity Shares is completed by the Designated Date provided in the CAN for the QIBs who have

paid the aggregate subscription amounts as stipulated in the CAN.

3. In accordance with the ICDR Regulations, Equity Shares will be issued and Allotment shall be made only in the

dematerialised form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they so

desire, as per the provisions of the Depositories Act.

4. Our Bank reserves the right to cancel this Issue at any time up to Allotment without assigning any reasons

whatsoever.

5. Post receipt of the listing approval of the Stock Exchanges, the Issuer shall credit the Equity Shares into the

Depository Participant account of the QIBs.

6. Following the Allotment and credit of Equity Shares into the QIBs Depository Participant account, our Bank will

apply for final listing and trading approval from the Stock Exchanges. In the case of QIBs who have been Allotted

more than five % of the Equity Shares in the Issue, our Bank shall disclose the name and the number of the Equity

Shares Allotted to such QIB to the Stock Exchanges and the Stock Exchanges will make the same available on

their website. The Escrow Bank shall release the monies lying to the credit of the Escrow Bank Account to our

Bank after the receipt of the final listing and trading approval from the Stock Exchanges.

7. In the event that we are unable to issue and Allot the Equity Shares offered in the Issue or on cancellation of the

Issue, within 60 days from the date of receipt of application money, we shall repay the application money within15

days from expiry of 60 days, failing which we shall repay that money with interest at the rate of 12% per annum

from expiry of the sixtieth day. The application money to be refunded by us shall be refunded to the same bank

account from which application money was remitted by the Eligible QIBs.

Other Instructions

Right to Reject Applications

Our Bank, in consultation with the Book Running Lead Managers, may reject Bids, in part or in full, without assigning

any reason whatsoever. The decision of our Bank and the Book Running Lead Managers in relation to the rejection of

Bids shall be final and binding.

Equity Shares in Dematerialized form with NSDL or CDSL

1. The Allotment of the Equity Shares in this Issue shall be only in dematerialised form, (i.e., not in the form of

physical certificates but be fungible and be represented by the statement issued through the electronic mode).

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2. A QIB applying for Equity Shares must have at least one beneficiary account with a Depository Participant of

either NSDL or CDSL prior to making the Bid.

3. Allotment to a successful QIB will be credited in electronic form directly to the beneficiary account (with the

Depository Participant) of the QIB.

4. Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with

NSDL and CDSL. The Stock Exchange have electronic connectivity with NSDL and CDSL. The trading of the

Equity Shares to be issued pursuant to the Issue would be in dematerialised form only for all QIBs in the demat

segment of the respective Stock Exchanges.

5. Our Bank will not be responsible or liable for the delay in the credit of the Equity Shares due to errors in the

Application Forms or on part of the QIBs.

Release of funds to our Bank

The Escrow Bank shall not release the monies lying to the credit of the Escrow Account till such time, that it receives

an instruction in pursuance to the Escrow Agreement, along with the listing and trading approval of the Stock

Exchanges for the Equity Shares offered in the Issue.

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PLACEMENT AND LOCK UP

Placement Agreement

The Book Running Lead Managers have entered into a placement agreement with us (the “Placement Agreement”),

pursuant to which the Book Running Lead Managers have agreed to use best efforts, to place the Equity Shares with

QIBs, pursuant to chapter VIII of the ICDR Regulations and our Bank has agreed to Allot the Equity Shares to such

QIBs as may be determined in consultation with the Book Running Lead Managers, pursuant to the receipt of

Application Forms and application monies from such QIBs.

This Placement Agreement contains customary representations and warranties, as well as indemnities from us and is

subject to termination in accordance with the terms contained therein.

Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on the

Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such Equity

Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity

Shares will be able to sell their Equity Shares.

This Placement Document has not been, and will not be, registered as a prospectus with the Registrar of Companies

and, no Equity Shares will be offered in India or overseas to the public or any members of the public in India or any

other class of investors, other than QIBs. No assurance can be given on liquidity or sustainability of trading market

for the Equity Shares (including the Equity Shares) post the Issue.

The Equity Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws

in the United States and may not be offered or sold within the United States, except pursuant to an exemption from,

or in a transaction not subject to, the registration requirements of U.S. Securities Act and applicable state securities

law. Accordingly, the Equity Shares are offered and sold outside the United States in offshore transactions in reliance

on Regulation S under the U.S. Securities Act and the applicable laws of the jurisdictions where those offers and sales

are made. The Equity Shares are transferable only in accordance with the restrictions described under the sections

“Selling Restrictions” and “Transfer Restrictions” on pages 189 and 195 respectively.

In connection with the Issue, the Book Running Lead Managers (or their affiliates) may, for their own accounts, enter

into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares at the same time as

the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the Book

Running Lead Managers may hold long or short positions in such Equity Shares. These transactions may comprise a

substantial portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Book

Running Lead Managers may purchase Equity Shares and be allocated Equity Shares for proprietary purposes and not

with a view to distribution or in connection with the issuance of P-Notes. See the section titled “Representations by

Investors - Offshore Derivative Instruments”.

From time to time, the Book Running Lead Managers and certain of their affiliates have provided and continue to

provide commercial and investment banking services, particularly acting as an underwriter or Book Running Lead

Managers, to us or our affiliates for which they have received and may in the future receive compensation.

Lock up

The Bank undertakes that it will not for a period commencing from the date of execution of the Placement Agreement

and ending 90 days from the date of Allotment, without the prior written consent of the Book Running Lead Managers,

directly or indirectly:

a. purchase, offer, issue, lend, sell, grant any option or contract to purchase, purchase any option or contract to

offer, issue, lend, sell, grant any option, right or warrant to purchase, any Equity Shares or any securities

convertible into or exercisable for Equity Shares (including, without limitation, securities convertible into or

exercisable or exchangeable for Equity Shares which may be deemed to be beneficially owned by the

undersigned) or file any registration statement under the U.S. Securities Act, with respect to any of the foregoing,

or

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b. enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly,

any of the economic consequences associated with the ownership of any of the Equity Shares or any securities

convertible into or exercisable or exchangeable for Equity Shares (regardless of whether any of the transactions

described in clause (a) or (b) is to be settled by the delivery of Equity Shares or such other securities, in cash or

otherwise), or

c. deposit Equity Shares with any other depository in connection with a depository receipt facility, or

d. enter into any transaction (including a transaction involving derivatives) having an economic effect similar to

that of a sale or deposit of the Equity Shares in any depository receipt facility; or

e. publicly announce any intention to enter into any transaction falling within (a) to (d) above or enter into any

transaction falling within (a) to (d) above.

Provided, however, that the foregoing restrictions do not apply to (i) the issuance of any Issue Shares, and (ii) any

issue or offer of Equity Shares by our Bank to the extent issue or offer is (a) required by Indian law and/or (b)

undertaken pursuant the instructions order or such other guidelines as maybe issued by the RBI, Central Government

of India or such other authority acting on its behalf.

Further, in accordance with Regulation 88 of the ICDR Regulations, our Bank shall not undertake a subsequent QIP

until the expiry of six months from the date of the Issue.

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SELLING RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law

in certain jurisdictions. Persons who come into possession of this Placement Document are advised to take legal

advice with regard to any restrictions that may be applicable to them and to observe such restrictions. This Placement

Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not

authorized or permitted.

General

No action has been taken or will be taken in any jurisdiction by our Bank or the Lead Managers that would permit a

public offering of the Equity Shares or the possession, circulation or distribution of this Placement Document or any

other material relating to our Bank or the Equity Shares in any jurisdiction where action for such purpose is required.

Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document

nor any offering materials or advertisements in connection with the Equity Shares may be distributed or published in

or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules

and regulations of any such country or jurisdiction. The Issue will be made in compliance with the applicable ICDR

Regulations. Each purchaser of the Equity Shares in this Issue will be deemed to have made acknowledgments and

agreements as described under “Notice to Investors – Representation by Investors”, “Distribution and Solicitation

Restrictions” and “Transfer Restrictions”.

India

This Placement Document may not be distributed, directly or indirectly, in India or to residents of India and any Equity

Shares may not be offered or sold, directly or indirectly, in India to, or for the account or benefit of, any resident of

India except as permitted by applicable Indian laws and regulations, under which an offer is strictly on a private and

confidential basis and is limited to eligible QIBs. This Placement Document is neither a public issue nor a prospectus

under the Companies Act or an advertisement and should not be circulated to any person other than to whom the offer

is made.

Australia

This Placement Document is not a disclosure document under Chapter 6D of the Corporations Act 2001 (the

“Australian Corporations Act”), and has not been lodged with the Australian Securities & Investments Commission

and does not purport to include the information required of a disclosure document under the Australian Corporations

Act. (i) The offer of the Equity Shares under this Placement Document is only made to persons to whom it is lawful

to offer the Equity Shares without disclosure to investors under Chapter 6D of the Australian Corporations Act under

one or more exemptions set out in Section 708 of the Australian Corporations Act; (ii) this Placement Document is

made available in Australia to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree

represents that the offeree is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within

Australia any Equity Share sold to the offeree within 12 months after their issue or transfer to the offeree under this

Placement Document.

Cayman Islands

No offer or invitation to purchase Equity Shares may be made to the public in the Cayman Islands.

Dubai International Financial Centre

This Placement Document relates to an exempt offer (an “Exempt Offer”) in accordance with the Offered Securities

Rules of the Dubai Financial Services Authority (the “DFSA”). This Placement Document is intended for distribution

only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The

DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA

has not approved this Placement Document nor taken steps to verify the information set out in it, and has no

responsibility for it. The Equity Shares to which this Placement Document relates may be illiquid and/or subject to

restrictions on their resale. Prospective purchasers of the Equity Shares offered in the Issue should conduct their own

due diligence on the Equity Shares. If you do not understand the contents of this Placement Document, you should

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consult an authorised financial adviser. For the avoidance of doubt, the Equity Shares are not interests in a ‘‘fund’’ or

a ‘‘collective investment scheme’’ within the meaning of either the Collective Investment Law (DIFC Law No. 2 of

2010) or the Collective Investment Rules Module of the Dubai Financial Services Authority Rulebook.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive

(each a “Relevant Member State”), an offer may not be made to the public in that Relevant Member State prior to

the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority

in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the

competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it

may, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant

Member State (the “Relevant Implementation Date”), make an offer of Equity Shares to the public in that Relevant

Member State at any time:

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or

regulated, whose corporate purpose is solely to invest in securities;

to any legal entity which has two or more of (i) an average of at least 250 employees during the last Financial

Year, (ii) a total balance sheet of more than €50,000,000, as show in its last annual consolidated accounts;

to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive)

subject to obtaining the prior consent of the Book Running Lead Managers for any such offer; or

in any other circumstances which do not require the publication of a prospectus pursuant to Article 3(2) of the

Prospectus Directive.

provided that no such offer of Equity Shares shall result in a requirement for the publication by our Bank or the Book

Running Lead Managers of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this

provision, the expression an “offer of Equity Shares to the public” in relation to any of the Equity Shares in any

Relevant Member States means the communication in any form and by any means, of sufficient information on the

terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe

for the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus

Directive in that Member State.

Hong Kong

No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong by means of

any document, other than to persons whose ordinary business is to buy or sell shares or debentures, whether as

principal agent; or to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong

Kong and any rules made under that Ordinance; or in other circumstances which do not result in the document being

a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to

the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. No document, invitation or

advertisement relating to the Equity Shares has been issued or may be issued, which is directed at, or the contents of

which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of

Hong Kong) other than with respect to the Equity Shares which are intended to be disposed of only to persons outside

Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong

Kong and any rules made under that Ordinance.

Japan

The offering of the Equity Shares has not been and will not be registered under the Financial Instruments and Exchange

Law of Japan, as amended (the “Financial Instruments and Exchange Law”). No Equity Shares have been offered

or sold, and will not be offered or sold, directly or in directly, in Japan or to, or for the benefit of, any resident of Japan

(which term as used herein means any person resident in Japan, including any corporation or other entity organized

under the laws of Japan) or to others for reoffering or re-sale, directly or indirectly in Japan or to, or for the benefit of,

191

any resident of Japan except pursuant to an exemption from the registration requirements of the Financial Instruments

and Exchange Law and otherwise in compliance with the Financial Instruments and Exchange Law and any other

applicable laws, regulations and ministerial ordinances of Japan.

Korea

The Equity Shares have not been registered under the Korean Securities and Exchange Law, and the Equity Shares

acquired in connection with the distribution contemplated hereby may not be offered or sold, directly or indirectly, in

Korea or to or for the account of any resident thereof, except as otherwise permitted by applicable Korean laws and

regulations, including, without limitation, the Korean Securities and Exchange Law and the Foreign Exchange

Transaction Laws.

Kuwait

The Equity Shares have not been authorized or licensed for offering, marketing or sale in the State of Kuwait. The

distribution of this Placement Document and the offering and sale of the Equity Shares in the State of Kuwait is

restricted by law unless a license is obtained from the Kuwaiti Ministry of Commerce and Industry in accordance with

Law 31 of 1990.

Malaysia

No approval of the Securities Commission of Malaysia has been or will be obtained in connection with the offer and

sale of the Equity Shares in Malaysia nor will any prospectus or other offering material or document in connection

with the offer and sale of the Equity Shares be registered with the Securities Commission of Malaysia. Accordingly,

the Equity Shares may not be offered or sold, directly or indirectly, nor may any document or other material in

connection therewith be distributed in Malaysia.

Mauritius

Our shares may not be offered, distributed or sold, directly or indirectly, in Mauritius or to any resident of Mauritius,

except as permitted by applicable Mauritius securities law. No offer or distribution of securities will be made to the

public in Mauritius.

New Zealand

This Placement Document is not a prospectus. It has not been prepared or registered in accordance with the Securities

Act 1978 of New Zealand (the “New Zealand Securities Act”). This Placement Document is being distributed in New

Zealand only to persons whose principal business is the investment of money or who, in the course of and for the

purposes of their business, habitually invest money, within the meaning of section 3(2)(a)(ii) of the New Zealand

Securities Act (“Habitual Investors”). By accepting this Placement Document, each investor represents and warrants

that if they receive this Placement Document in New Zealand they are a Habitual Investor and they will not disclose

this Placement Document to any person who is not also a Habitual Investor.

Oman

By receiving this Placement Document, the person or entity to whom it has been issued understands, acknowledges

and agrees that this Placement Document has not been approved by the Capital Market Authority of Oman (the

“CMA”) or any other regulatory body or authority in the Sultanate of Oman (“Oman”), nor have the Book Running

Lead Managers or any placement agent acting on their behalf received authorisation, licensing or approval from the

CMA or any other regulatory authority in Oman, to market, offer, sell, or distribute interests in the Equity Shares

within Oman.

No marketing, offering, selling or distribution of any interests in the Equity Shares has been or will be made from

within Oman and no subscription for any interests in the Equity Shares may or will be consummated within Oman.

Neither the Book Running Lead Managers nor any placement agent acting on their behalf is a company licensed by

the CMA to provide investment advisory, brokerage, or portfolio management services in Oman, nor a bank licensed

by the Central Bank of Oman to provide investment banking services in Oman. Neither the Book Running Lead

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Managers nor any placement agent acting on their behalf advise persons or entities resident or based in Oman as to

the appropriateness of investing in or purchasing or selling securities or other financial products.

Nothing contained in this Placement Document is intended to constitute Omani investment, legal, tax, accounting or

other professional advice. This Placement Document is for your information only, and nothing herein is intended to

endorse or recommend a particular course of action. You should consult with an appropriate professional for specific

advice on the basis of your situation.

Qatar

The Equity Shares have not been offered, sold or delivered, and will not be offered, sold or delivered at any time,

directly or indirectly, in the state of Qatar in a manner that would constitute a public offering. This Placement

Document has not been reviewed or registered with Qatari Government Authorities, whether under Law No. 25 (2002)

concerning investment funds, Central Bank resolution No. 15 (1997), as amended, or any associated regulations.

Therefore, this Placement Document is strictly private and confidential, and is being issued to a limited number of

sophisticated investors, and may not be reproduced or used for any other purposes, nor provided to any person other

than recipient thereof.

Saudi Arabia

This Placement Document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are

permitted under the Offers of Securities Regulations issued by the Capital Market Authority in the Kingdom of Saudi

Arabia.

The Capital Market Authority does not make any representation as to the accuracy or completeness of this Placement

Document, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon,

any part of this Placement Document. Prospective purchasers of the Equity Shares offered hereby should conduct their

own due diligence on the accuracy of the information relating to the Equity Shares. If you do not understand the

contents of this Placement Document you should consult an authorised financial adviser.

Singapore

The Book Running Lead Managers have acknowledged that this Placement Document has not been registered as a

prospectus with the Monetary Authority of Singapore. Accordingly, the Book Running Lead Managers have

represented and agreed that it has not offered or sold any Equity Shares issued pursuant to the Issue or caused such

Equity Shares to be made the subject of an invitation for subscription or purchase and will not offer or sell such Equity

Shares issued pursuant to the Issue or cause such Equity Shares to be made the subject of an invitation for subscription

or purchase, and have not circulated or distributed, nor will they circulate or distribute, this Placement Document or

any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such

Equity Shares issued pursuant to the Issue, whether directly or indirectly, to persons in Singapore other than (i) to an

institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to

a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the

conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions

of, any other applicable provision of the SFA.

Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

a corporation (which is not an accredited investor) (as defined in Section 4A of the SFA) the sole business of

which is to hold investments and the entire share capital of which is owned by one or more individuals, each

of whom is an accredited investor; or

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each

beneficiary of the trust is an individual who is an accredited investor,

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securities (as defined in Section 239(1) of the SFA) of that corporation to the beneficiaries’ rights and interest

(howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has

acquired the Equity Shares pursuant to an offer made under Section 275 except:

to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section 275(2) of

the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the

SFA;

where no consideration is or will be given for the transfer;

where the transfer is by operation of law; or

as specified in Section 276(7) of the SFA.

United Arab Emirates (excluding the Dubai International Financial Centre)

This Placement Document is not intended to constitute an offer, sale or delivery of shares or other securities under the

laws of the United Arab Emirates (the “UAE”). The Equity Shares have not been and will not be registered under

Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and the Emirates Security

and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities

market or with any other UAE exchange. the Issue, the Equity Shares and interests therein do not constitute a public

offer of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as

amended) or otherwise. This Placement Document is strictly private and confidential and is being distributed to a

limited number of investors and must not be provided to any person other than the original recipient, and may not be

reproduced or used for any other purpose. The interests in the Equity Shares may not be offered or sold directly or

indirectly to the public in the UAE.

By receiving this Placement Document, the person or entity to whom this Placement Document has been issued

understands, acknowledges and agrees that the Equity Shares have not been and will not be offered, sold or publicly

promoted or advertised in the Dubai International Financial Centre other than in compliance with laws applicable in

the Dubai International Financial Centre, governing the issue, offering or sale of securities. The Dubai Financial

Services Authority has not approved this Placement Document nor taken steps to verify the information set out in it,

and has no responsibility for it.

United Kingdom

Each Book Running Lead Manager has represented and agreed that it:

is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services and

Markets Act 2000 (the “FSMA”), being an investor whose ordinary activities involve it in acquiring, holding,

managing or disposing of investments (as principal or agent) for the purposes of its business;

has not offered or sold and will not offer or sell the Equity Shares other than to persons who are qualified

investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will acquire, hold,

manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue

of the Equity Shares would otherwise constitute a contravention of Section 19 of the FSMA by us;

has only communicated or caused to be communicated and will only communicate or cause to be

communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21

of the FSMA) received by it in connection with the issue or sale of the Equity Shares in circumstances in which

Section 21(1) of the FSMA does not apply to it; and

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has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in

relation to the Equity Shares in, from or otherwise involving the United Kingdom.

United States of America

The Equity Shares offered in the Issue have not been and will not be registered under the U.S. Securities Act or any

state securities laws in the United States and may not be offered, sold or delivered in the United States except pursuant

to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in

accordance with any applicable state securities laws. The Equity Shares are being offered and sold in the Issue only

outside the United States in accordance with Regulation S in accordance with Regulation S and the applicable laws of

the jurisdictions where those offers and sales are made. To help ensure that the offer and sale of the Equity Shares in

the Issue was made in compliance with Regulation S, each purchaser of Equity Shares in the Issue will be deemed to

have made the representations, warranties, acknowledgements and undertakings set forth in “Transfer Restrictions”

beginning on page 195.

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TRANSFER RESTRICTIONS

Allottees are not permitted to sell the Equity Shares for a period of one year from the date of Allotment except through

the Stock Exchanges. In addition to the above, allotments made to QIBs, including FVCIs, VCFs and AIFs in the Issue,

may be subject to lock-in requirements, if any, under the rules and regulations that are applicable to them.

Accordingly, purchasers are advised to consult their own legal counsel prior to making any offer, re-sale, pledge or

transfer of the Equity Shares.

Due to the following restrictions, investors are advised to consult legal counsel prior to making any resale, pledge or

transfer of the Equity Shares.

The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or

sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration

requirements of the U.S. Securities Act and applicable United States state securities laws. The Equity Shares are being

offered and sold only outside the United States in offshore transactions in reliance on Regulation S, in each case in

compliance with the applicable laws of the jurisdictions where those offers and sales are made.

If you purchase the Equity Shares in this Issue, by accepting delivery of this Placement Document, submitting a bid

to purchase the Equity Shares and accepting delivery of the Equity Shares, you will be deemed to have represented to

and agreed with our Bank and the Book Running Lead Managers as follows:

you have received a copy of the Placement Document and such other information as you deem necessary to

make an informed decision and that you are not relying on any other information or the representation concerning

the Bank or the Equity Shares and neither the Bank nor any other person responsible for this document or any

part of it or the Book Running Lead Managers will have any liability for any such other information or

representation;

you are authorised to consummate the purchase of the Equity Shares in compliance with all applicable laws and

regulations;

you will comply with all laws, regulations and restrictions (including the selling restrictions contained in this

Placement Document) which may be applicable in your jurisdiction and you have obtained or will obtain any

consent, approval or authorization required for you to purchase and accept delivery of the Equity Shares, and

you acknowledge and agree that none of our Bank, the Book Running Lead Managers or any of their respective

affiliates shall have any responsibility in this regard;

you acknowledge (or if you are a broker-dealer acting on behalf of a customer, your customer has confirmed to

you that such customer acknowledges) that such Equity Shares have not been and will not be registered under

the U.S. Securities Act, or with any securities regulatory authority of any state of the United States, and are

subject to restrictions on transfer;

you and the person, if any, for whose account or benefit you are acquiring the Equity Shares, were located outside

the United States at the time the buy order for the Equity Shares was originated and continue to be located outside

the United States and have not purchased the Equity Shares for the account or benefit of any person in the United

States or entered into any arrangement for the transfer of the Equity Shares or any economic interest therein to

any person in the United States;

you are not an affiliate (as defined in Rule 405 of the U.S. Securities Act) of our Bank or a person acting on

behalf of such affiliate; and you are not in the business of buying and selling securities or, if you are in such

business, you did not acquire the Equity Shares from our Bank or an affiliate (as defined in Rule 405 of the U.S.

Securities Act) thereof in the initial distribution of the Equity Shares;

you certify that either (A) you are, or at the time the Equity Shares are purchased will be, the beneficial owner

of the Equity Shares and are located outside the United States (within the meaning of Regulation S) or (B) you

are a broker-dealer acting on behalf of your customer and your customer has confirmed to you that (i) such

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customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares,

and (ii) such customer is located outside the United States (within the meaning of Regulation S);

you are aware of the restrictions on the offer and sale of the Equity Shares pursuant to Regulation S described

in this Placement Document and that neither the BSE nor the NSE is a “designated offshore securities market”

within the meaning of Regulation S of the U.S. Securities Act;

the Equity Shares have not been offered to you by means of any “directed selling efforts” as defined in Regulation

S; and

you acknowledge that our Bank, the Book Running Lead Managers and their respective affiliates (as defined in

Rule 405 of the U.S. Securities Act), and others will rely upon the truth and accuracy of the foregoing

acknowledgements, representations and agreements and agrees that, if any of such acknowledgements,

representations and agreements deemed to have been made by virtue of its purchase of the Equity Shares are no

longer accurate, you will promptly notify our Bank and the Book Running Lead Managers, and if you are

acquiring any of the Equity Shares as a fiduciary or agent for one or more accounts, you represent that you have

sole investment discretion with respect to each such account and that you have full power to make the foregoing

acknowledgements, representations and agreements on behalf of such accounts.

you acknowledge that the Equity Shares have not been and will not be registered under the U.S. Securities Act

or the securities law of any state of the United States and warrant to our Bank, the BRLMs and its respective

affiliates that it will not offer, sell, pledge or otherwise transfer the Equity Shares except in an offshore

transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available exemption

from registration under the U.S. Securities Act and in accordance with all applicable securities laws of the states

of the United States and any other jurisdiction, including India.

you represent and warrant to our Bank, the Book Running Lead Managers and their respective affiliates that if

it acquired any of the Equity Shares as fiduciary or agent for one or more investor accounts, it has sole investment

discretion with respect to each such account and that it has full power to make the foregoing acknowledgments,

representations and agreements on behalf of each such account.

the Bank, the Book Running Lead Managers, their respective affiliates and others will rely upon the truth and

accuracy of your representations, warranties, acknowledgements and undertakings set out in this document,

each of which is given to (a) the Book Running Lead Manager on their own behalf and on behalf of the Bank,

and (b) to the Bank, and each of which is irrevocable and, if any of such representations, warranties,

acknowledgements or undertakings deemed to have been made by virtue of your purchase of the Equity Shares

are no longer accurate, you will promptly notify the Bank.

you and any accounts for which you are subscribing to the Equity Shares (i) are each able to bear the economic

risk of the investment in the Equity Shares, (ii) will not look to the Bank or the Book Running Lead Managers

or their respective affiliates for all or part of any such loss or losses that may be suffered, (iii) are able to sustain

a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the

investment in the Equity Shares, and (v) have no reason to anticipate any change in its or their circumstances,

financial or otherwise, which may cause or require any sale or distribution by it or them of all or any part of the

Equity Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that

the Equity Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in

this Issue for your own investment and not with a view to distribution;

you have been provided access to this Placement Document which you have read in its entirety;

you are aware of the restrictions of the offer, sale and resale of the Equity Shares pursuant to Regulation S;

you agree to indemnify and hold the Bank and the Book Running Lead Managers and their respective affiliates

harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out

of or in connection with any breach of these representations and warranties. You will not hold any of the Bank

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or the Book Running Lead Managers and their respective affiliates liable with respect to its investment in the

Equity Shares. You agree that the indemnity set forth in this paragraph shall survive the resale of the Equity

Shares; and

Any resale or other transfer, or attempted resale or other transfer, of the Equity Shares made other than in

compliance with the above-stated restrictions will not be recognized by our Bank.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the website of SEBI and the Stock

Exchange and has not been prepared or independently verified by our Bank or the BRLMs or any of its respective

affiliates or advisors.

The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was established in Mumbai.

The BSE and the NSE are the significant stock exchanges in terms of the number of listed companies, market

capitalisation and trading activity.

Indian Stock Exchanges

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the Ministry of

Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the “SCRA”) and the

Securities Contracts (Regulation) Rules, 1957 (the “SCRR”). On June 20, 2012, SEBI, in exercise of its powers under

the SCRA and the Securities and Exchange Board of India Act, 1992, as amended from time to time (the “SEBI Act”),

notified the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (the

“SCR (SECC) Rules”), which regulate inter alia the recognition, ownership and internal governance of stock

exchanges and clearing corporations in India together with providing for minimum capitalisation requirements for

stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules along with various rules, bye-laws and regulations

of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership

thereof and the manner, in which contracts are entered into, settled and enforced between members of the stock

exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and intermediaries

in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent and unfair trade

practices. Regulations and guidelines concerning minimum disclosure requirements by public companies, investor

protection, insider trading, substantial acquisitions of shares and takeover of companies, buy-backs of securities,

employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, FIIs, FPIs, credit rating

agencies and other capital market participants have been notified by the relevant regulatory authority.

Listing of Securities

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws including

the Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued by SEBI and

the Listing Regulations. The SCRA empowers the governing body of each recognised stock exchange to suspend

trading of or withdraw admission to dealings in a listed security for breach of or noncompliance with any conditions

or breach of a company’s obligations under the Listing Regulations or for any reason, subject to the issuer receiving

prior written notice of the intent of the exchange and upon granting of a hearing in the matter. SEBI also has the power

to amend the Listing Regulations and bye-laws of the stock exchanges in India, to overrule a stock exchange’s

governing body and withdraw recognition of a recognized stock exchange.

All listed companies are required to ensure a minimum public shareholding at 25%. Further, where the public

shareholding in a listed company falls below 25% at any time, such company is required to bring the public

shareholding to 25% within a maximum period of 12 months from the date of such fall. Consequently, a listed

company may be delisted from the stock exchanges for not complying with the above-mentioned requirement. As on

December 31, 2016, the public shareholding in our Bank is 11.28% and our Bank has received an exemption from

SEBI in respect of compliance with minimum public shareholding as specified under the SCRR and Listing

Regulations for present issue vide their letter dated April 5, 2016.

Delisting

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SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in

relation to the voluntary and compulsory delisting of equity shares from the stock exchanges which were significantly

modified in 2015. In addition, certain amendments to the SCRR have also been notified in relation to delisting.

Disclosures under SEBI Listing Regulations

Public limited companies are required under SEBI Listing Regulations to prepare and circulate to their shareholders

audited annual accounts which comply with the disclosure requirements and regulations governing their manner of

presentation and which include provisions relating to corporate governance, related party transactions and

management’s discussion and analysis as required under the SEBI Listing Regulations. In addition, a listed company

is subject to continuing disclosure requirements pursuant to the terms of the SEBI Listing Regulations.

Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to apply daily

circuit breakers which do not allow transactions beyond a certain level of price volatility. The index based market-

wide circuit breaker system (equity and equity derivatives) applies at three stages of the index movement, at 10%,

15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading halt in all equity and equity

derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the SENSEX of

the BSE or the S&P CNX NIFTY of the NSE, whichever is breached earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise price

bands of up to 20% movements either up or down. However, no price bands are applicable on scrips on which

derivative products are available or scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.

Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

Established in 1875, the BSE is the oldest stock exchange in India. In 1956, it became the first stock exchange in India

to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its present

status as one of the premier stock exchanges of India. Pursuant to the BSE (Corporatisation and Demutualisation)

Scheme 2005 of the SEBI, with effect from August 19, 2005, the BSE was incorporated and is now a company under

the Companies Act.

NSE

The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked, screen-

based trading facilities with market-makers and electronic clearing and settlement for securities including government

securities, debentures, public sector bonds and units. The NSE was recognised as a stock exchange under the SCRA

in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital market

(equities) segment commenced operations in November 1994 and operations in the derivatives segment commenced

in June 2000.

Internet-based Securities Trading and Services

Internet trading takes place through order routing systems, which route client orders to exchange trading systems for

execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant stock

exchange and also have to comply with certain minimum conditions stipulated under applicable law. The NSE became

the first exchange to grant approval to its members for providing internet based trading services. Internet trading is

possible on both the “equities” as well as the “derivatives” segments of the NSE. The NSE became the first exchange

to grant approval to its members for providing internet-based trading services. Internet trading is possible on both the

“equities” and the “derivatives” segments of the NSE.

Trading Hours

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Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST (excluding

the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on public holidays.

The recognised stock exchanges have been permitted to set their own trading hours (in the cash and derivatives

segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.; and (ii) the stock

exchange has in place a risk management system and infrastructure commensurate to the trading hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (or

“BOLT”) facility in 1995. This totally automated screen based trading in securities was put into practice nationwide.

This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and

improving efficiency in back-office work.

The NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or

“NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth in

the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads.

Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Securities

and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended

(“Takeover Code”), which provides specific regulations in relation to substantial acquisition of shares and takeover.

The Takeover Code came into effect on October 22, 2011 and replaced the Securities and Exchange Board of India

(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Code 1997”). Once the equity shares

of a company are listed on a stock exchange in India, the provisions of the Takeover Code will apply to any acquisition

of the company’s shares/voting rights/control. The Takeover Code prescribe certain thresholds or trigger points in the

shareholding a person or entity has in the listed Indian company, which give rise to certain obligations on part of the

acquirer. Acquisitions up to a certain threshold prescribed under the Takeover Code mandate specific disclosure

requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an open offer

of the shares of the target company. The Takeover Code also provides for the possibility of indirect acquisitions,

imposing specific obligations on the acquirer in case of such indirect acquisition.

The key changes from the Takeover Code 1997 under the Takeover Code include:

the trigger for making a public offer upon acquisition of shares or voting rights has been increased from 15% to

25%;

every public offer has to be made for at least 26% of all the shares held by other shareholders;

creeping acquisition of up to 5% is permitted up to a limit of 75% of the shares or voting rights of a company;

acquisition of control in a target company triggers the requirement to make a public offer regardless of the level

of shareholding and the acquisition of shares; and

if the indirect acquisition of a target company is a predominant part of the business or entity being acquired, it

would be treated as a direct acquisition.

Insider Trading Regulations

The SEBI (Prohibition of Insider Trading) Regulations, 2015 have been notified by SEBI to prohibit and penalise

insider trading in India. An “insider” is defined to include any person who has received or has access to unpublished

price sensitive information (“UPSI”) or a “Connected Person”. A “Connected Person” includes, inter alia, any person

who is or has directly or indirectly, been associated with the company in any capacity whether contractual, fiduciary

or employment or has any professional or business relationship with the company whether permanent or temporary,

during the six months prior to the concerned act which would allow or reasonably expect to allow access, directly or

indirectly, to UPSI.

The Insider Trading Regulations also provide disclosure obligations for promoters, employees and directors, with

respect to their shareholding in our Bank, and the changes therein. An insider is, inter alia, prohibited from trading in

securities of a listed or proposed to be listed company when in possession of UPSI and to provide access to any person

201

including other insiders to the above referred UPSI except where such communication is for legitimate purposes,

performance of duties or discharge of legal obligations. UPSI shall include any information, relating to a company or

its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely

to materially affect the price of the securities. The Insider Trading Regulations also provide disclosure obligations for

shareholders holding more than 5% of equity shares or voting rights, and the changes therein. Initial disclosures are

required from promoters, key managerial personnel, directors as well as continual disclosures by every promoter,

employee or director in case value of trade exceed monetary threshold of ten lacs rupees over a calendar quarter,

within two days of reaching such threshold. The board of directors of all listed companies are required to formulate

and publish on the company’s website a code of procedure for fair disclosure of UPSI along with a code of conduct

for its employees for compliances with the Insider Trading Regulations.

Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership details and

effect transfers in book-entry form. Further, SEBI framed regulations in relation to, among other things, the formation

and registration of such depositories, the registration of participants as well as the rights and obligations of the

depositories, participants, companies and beneficial owners. The depository system has significantly improved the

operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February

2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA. Trading in

derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of

an existing stock exchange. The derivatives exchange or derivatives segment of a stock exchange functions as a self-

regulatory organisation under the supervision of the SEBI.

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DESCRIPTION OF EQUITY SHARES

Set forth below are some of the relevant regulations including United Bank of India (Shares and Meetings)

Regulations, 2010 applicable and with respect to the Equity Shares of our Bank. Our Bank was constituted as a

“corresponding new bank” in 1970 under the provisions of our Bank Acquisition Act. The Nationalised Banks

(Management and Miscellaneous Provisions) Scheme, 1970 was made by S.O. 3793 dated November 16, 1970 by the

Central Government in consultation with the Reserve Bank of India in exercise of the powers conferred by section 9

of the Bank Acquisition Act. The Bank Acquisition Act amended section 34A, 36AD and section 51 of the Banking

Regulation Act, 1949 and made these sections applicable to corresponding new banks constituted under the Bank

Acquisition Act. Our Bank follows RBI Dividend Circular relating to declaration of dividends.

General

The authorised share capital of our Bank is ₹ 3,000 crore. The Equity Shares are listed on the BSE and the NSE. As

on date of the Preliminary Placement Document, the issued, subscribed and paid up share capital of our Bank is ₹

1,339.45 crores. For further details please see section “Capital Structure” beginning on page 65.

Dividend

After making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation

funds and all other matters for which provision is necessary under any law, or which are usually provided for by

banking companies, a corresponding new bank may out of its net profits declare a dividend and retain the surplus if

any. Where, a dividend has been declared by a corresponding new bank but has not been paid or claimed within thirty

days from the date of declaration, to, or by, any shareholder entitled to the payment of the dividend, the corresponding

new bank shall, within seven days from the date of the expiry of such period of thirty days, transfer the total amount

of dividend which remains unpaid or unclaimed within the said period of thirty days, to a special unpaid dividend

account.

Any money transferred to the unpaid dividend account of a corresponding new bank which remains unpaid or

unclaimed for a period of seven years from the date of such transfer, shall be transferred by the corresponding new

bank to the Investor Education and Protection Fund established under sub-section (1) of section 205C of the

Companies Act, 1956. The money transferred under sub-section (3) to the Investor Education and Protection Fund

shall be utilised for the purposes and in the manner specified in section 205C of the Companies Act, 1956.

Further, as per regulation 43 of the Listing Regulations, a listed company shall declare and disclose the dividend on

per share basis only and shall not forfeit unclaimed dividends before the claim becomes barred by law and such

forfeiture, if effected, shall be annulled in appropriate cases. The listed company shall recommend or declare all

dividend and/or cash bonuses at least five working days (excluding the date of intimation and the record date) before

the record date fixed for the purpose.

The Equity Shares issued pursuant to the Issue shall rank pari passu with the existing Equity Shares in all respects

including entitlements to any dividends declared by our Bank.

General Meetings of Shareholders

There are two types of general meetings of the shareholders, namely, AGM and EGM. A general meeting of every

corresponding new bank which has issued capital under clause (c) of sub-section (2B) of section 3 shall be held at the

place of the head office of our Bank in each year at such time as shall from time to time be specified by the Board of

directors. Provided that such annual general meeting shall be held before the expiry of six weeks from the date on

which the balance sheet, together with the profit and loss account and Auditor’s report is under sub-section (7A) of

section 10, forwarded to the Central Government or to the Reserve Bank whichever date is earlier. The shareholders

present at an annual general meeting shall be entitled to discuss, approve and adopt the balance-sheet and the profit

and loss account of the corresponding new bank made up to the previous 31st day of March, the report of the Board

of directors on the working and activities of the corresponding new bank for the period covered by the accounts and

the Auditor’s report on the balance-sheet and counts. Nothing contained in this section shall apply during the period

for which the Board of directors of a corresponding new bank had been superseded under sub-section (1) of section

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18A. Provided that the Administrator may, if he considers it appropriate in the interest of the corresponding new bank

whose Board of directors had been superseded, call annual general meeting in accordance with the provisions of this

section.

Directors

The director referred to in Clause (e) of sub-section (3) of Section 9 of the Act, shall be nominated by the Central

Government from out of a panel of three such employees furnished to it by the representative union, within a date to

be specified by the Central Government, which date shall not be more than six weeks from the date of communication

made by the Central Government, requiring the representative union to furnish the panel of names:

Provided that where the Central Government is of the opinion that owing to the delay which is likely to occur in the

verification and certification of any union or federation as a representative union it is necessary in the interest of the

Nationalised Bank so to do, it may nominate any employee of the Nationalised Bank, who is a workman, to be a

director of that bank.

Where any arrangement entered into by a corresponding new bank with a company provides for the appointment by

the corresponding new bank of one or more directors of such company, such appointment of directors made in

pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the Companies

Act, 1956 (1 of 1956) or in any other law for the time being in force or in the memorandum, articles of association or

any other instrument relating to the company, and any provision regarding share qualification, age limit, number of

directorship, removal from office of directors and such like conditions contained in any such law or instrument

aforesaid, shall not apply to any director appointed by the corresponding new bank in pursuance of the arrangement

as aforesaid.

Any director appointed as aforesaid shall—

a. hold office during the pleasure of the corresponding new bank and may be removed or substituted by any

person by order in writing of the corresponding new bank;

b. incur any obligation or liability by reason only of his being a director or for anything done or omitted to be

done in good faith in the discharge of his duties as a director or anything in relation thereto;

c. not be liable to retirement by rotation and shall not be taken into account for computing the number of

directors liable to such retirement;

The Central Government may constitute, in consultation with the Reserve Bank, a committee of three or more persons

who have experience in law, finance, banking, economics or accountancy to assist the Administrator in the discharge

of his duties.

Register of Transfers, Register of Members and Record Date

i. Each share certificate shall bear share certificate number, a distinctive number, the number of shares in

respect of which it is issued and the name of the Shareholder to whom it is issued and his folio number

and it shall be in such form as may be specified by the Board.

ii. Every share certificate shall be issued under the common seal of our Bank in pursuance of a resolution

of the Board and shall be signed by two directors and Company Secretary or some other officer not

below the rank of Scale-III appointed by the Board for the purpose.

Provided that the signature of the directors may be printed, engraved, lithographed or impressed by such other

mechanical process as the Board may direct.

iii. A signature so printed, engraved, lithographed or otherwise impressed shall be as valid as a signature in

the proper handwriting of the signatory himself.

iv. No share certificate shall be valid unless and until it is so signed. Share Certificates so signed shall be

valid and binding notwithstanding that, before the issue thereof, any person whose signature appears

thereon may have ceased to be a person authorised to sign share certificates on behalf of our Bank.

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Issue of Share Certificates

While issuing share certificates to any Shareholder, it shall be competent for the Board to issue the certificates on the

basis of one certificate for every hundred shares or multiples thereof registered in the name of a Shareholder on any

one occasion and one additional share certificate for the number of shares in excess thereof but which are less than

hundred. If the number of shares to be registered is less than hundred, one certificate shall be issued for all the shares.

In respect of any share or shares held jointly by several persons, our Bank shall not be bound to issue more than one

certificate, and delivery of a certificate for a share to the person whose name appears first in the joint holding shall be

sufficient delivery to all such holders.

Issue of new or duplicate share certificate

If any share certificate is worn out or defaced, the Board or the Committee designated by it on production of such

certificate may order the same to be cancelled and have a new certificate issued in lieu thereof. If any share certificate

is alleged to be lost or destroyed, the Board or the Committee designated by it on such indemnity with or without

surety as the Board or the Committee thinks fit, and on publication in two newspapers and on payment to our Bank of

its costs, charges and expenses, issue a duplicate certificate in lieu thereof to the person entitled to such lost or

destroyed certificate.

Consolidation and sub-division of shares

On a written application made by the Shareholder(s), the Board or the Committee designated by it may consolidate or

sub-divide the shares submitted to it for consolidation / sub-division as the case may be and issue a new certificate (s)

in lieu thereof on payment to our Bank of its costs, charges and expenses of and incidental to the matter.

Transfer and Transmission of shares

Every transfer of the share of our Bank shall be by an instrument of transfer in form A annexed hereto or in any other

form as may be approved by our Bank from time to time and shall be duly stamped, dated and executed by or on

behalf of the transferor and transferee along with the relative share certificate. The instrument of transfer along with

the share certificate shall be submitted to our Bank at its head office and the transferor shall be deemed to remain

holder of the share until the name of the transferee is entered in share register in respect thereof. Upon receipt, the

Board or the Committee of the Board designated for the purpose shall forward the instrument of transfer along with

the share certificate to the Registrar or Share Transfer Agent for the purpose of verification that the technical

requirements are complied with. The Registrar shall return the instrument and the share certificate to the transferee

unless the instrument of transfer is duly stamped, properly executed and is accompanied by the certificate of shares to

which it relates as such other evidence as the Board may require to show the title of the transferor to make such

transfer.

Transmission of shares in the event of death, insolvency, etc.

The executors or administrators of a deceased shareholder in respect of a share, or the holder of letter of probate

or letters of administration with or without the will annexed or a succession certificate issued under Part X of

the Indian Succession Act, 1925, or the holder of any legal representation or a person in whose favour a valid,

instrument of transfer was executed by the deceased sole holder during the latter’s lifetime shall be the only

person who may be recognised by our Bank as having any title to such share.

In the case of shares registered in the name of two or more Shareholders, the survivor or survivors and on the

death of the last survivor, his executors or administrators or any person who is the holder of letters of probate or

letters of administration with or without will annexed or a succession certificate or any other legal representation

in respect of such survivor’s interest in the share or a person in whose favour a valid instrument of transfer of

share was executed by such person and such last survivor during the latter’s lifetime, shall be the only person

who may be recognised by our Bank as having any title to such share.

205

Our Bank shall not be bound to recognise such executors or administrators unless they shall have obtained

probate or letters of administration or succession certificate, as the case may be, from a court of competent

jurisdiction.

Provided, however, that in a case where the Board in its discretion thinks fit, it shall be lawful for the Board to dispense

with the production of letters of probate or letters of administration or succession certificate or such other legal

representation, upon such terms as to indemnity or otherwise as it may think fit.

Pursuant to the Listing Regulations, in the event our Bank has not effected the transfer of shares within 15 days or

where our Bank has failed to communicate to the transferee any valid objection to the transfer within the stipulated

time period of 15 days, our Bank is required to compensate the aggrieved party for the opportunity loss caused during

the period of the delay.

Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with

applicable SEBI regulations. These regulations provide the regime for the functioning of the depositories and their

participants and set out the manner in which the records are to be kept and maintained and the safeguards to be

followed in this system. Transfers of beneficial ownerships of shares held through a depository are exempt from stamp

duty.

A transfer may also be by transmission. Subject to the provisions of the Articles, any person becoming entitled to

shares in consequence of the death or insolvency of any member may, upon producing such evidence as may from

time to time properly be required by the Board, be registered as a member in respect of such shares, or may, subject

to the regulations as to transfer contained in the Articles, transfer such shares. The Articles of Association provide that

our Bank shall charge no fee for registration of transfer, transmission, probate, succession certificate and letters of

administration, certificate of death or marriage, power of attorney or other similar document.

206

TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a summary manner

only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal

of equity shares under the current tax laws presently in force in India. Several of these benefits are dependent on us

or our shareholders fulfilling conditions prescribed under relevant tax laws. We may not choose to fulfill such

conditions. This information is not exhaustive or comprehensive and is not intended to be a substitute for professional

advice. Investors are advised to consult their own tax consultant with respect to the tax implications of an investment

in the Equity Shares.

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE BANK AND ITS SHAREHOLDERS

UNDER THE APPLICABLE LAWS IN INDIA

To,

The Board of Directors

United Bank of India

11, Hemanta Basu Sarani

Kolkata – 700 001

West Bengal, India

Sub: Statement of Possible Tax Benefits

Dear Sir,

We, the statutory auditors of the Bank, hereby confirm that the possible special tax benefits available to the Bank and

the shareholders of the Bank, under the Income Tax Act, 1961, as amended (the “IT Act”), as enclosed at Annexure

A to be accurate based on the extant laws. Several of these tax benefits/consequences are dependent on the Bank or

its shareholders fulfilling the conditions prescribed under the relevant tax laws. Therefore, the ability of the Bank or

its shareholders to derive the tax benefits is dependent on fulfilling such conditions.

Annexure A is for your information and for inclusion in the preliminary placement document and the placement

document (together, the “Issue Documents), as amended or supplemented thereto or any other written material in

connection with the proposed Issue and is neither designed nor intended to be a substitute for professional tax advice.

This certificate has been issued at the request of the Bank for use in connection with the Issue and may accordingly

be furnished as required to the stock exchanges or any other regulatory authorities as required.

Sincerely,

For M/s Nundi & Associates

Chartered Accountants

FRN 309090E

Soumen Nandi

Partner

Chartered Accountant

Membership No. 059828

For Mookherjee Biswas & Pathak


FRN 301138E

Aryabir Chatterjee

Partner



For M/s Arun K. Agarwal &

Associates


FRN 003917N

Rajesh Surolia

Partner



Place: Kolkata

Date: March 20, 2017

Enclosed: Statement of Tax Benefits (Annexure ‘A’)

207

ANNEXURE A

The information provided below sets out the possible tax benefits available to the shareholders of an Indian company

in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the subscription,

ownership and disposal of equity shares, under the current tax laws presently in force in India. Several of these benefits

are dependent on the shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of

the shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which, based on business

imperatives a shareholder faces, may or may not choose to fulfill. The following overview is not exhaustive or

comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their own

tax consultant with respect to the tax implications of an investment in the Shares particularly in view of the fact that

certain recently enacted legislation may not have a direct legal precedent or may have a different interpretation on the

benefits, which an investor can avail

INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX CONSULTANT WITH RESPECT TO THE

INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING

OF EQUITY SHARES IN YOUR SITUATION.

A. STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE BANK UNDER THE INCOME

TAX ACT, 1961, (“ACT”):

1. According to Section 43D of the Act, in the case of a scheduled bank, the income by way of interest in

relation to such categories of bad or doubtful debts as may be prescribed having regard to the guidelines

issued by the Reserve Bank of India in relation to such debts shall be chargeable to tax in the previous year

in which it is credited by the scheduled bank to its profit and loss account for that year or, as the case may

be, in which it is actually received by that bank, whichever is earlier.

2. Subject to fulfillment of conditions, the Bank will be eligible, inter alia, for the following specified deductions

in computing its business income:

i. According to Section 36(1)(viia)(a) of the Act, deduction in respect of any provision for bad and doubtful

debts made by the Bank will be allowed not exceeding 7.5% of the total income (computed before making

any deduction under this clause and Chapter VIA) and an amount not exceeding ten per cent of the

aggregate average advances made by the rural branches of such bank computed in the prescribed manner.

Finance Bill 2017 has proposed to enhance above percentage from 7.5% to 8.5% of total income.

ii. According to Section 36(1)(viii) of the Act, in respect of special reserve created and maintained, by a

banking Company in the business of providing long term finance for the development of housing,

infrastructure facility, industrial or agricultural development in India , will be eligible for deduction not

exceeding 20% of the profits derived from the aforesaid business computed under the head “Profit & Gains

of Business or Profession” (before making any deduction under this clause) carried to such reserve account.

Provided that where the aggregate of the amount carried to such reserve account from time to time exceeds

twice the amount of the Paid up share capital and general reserves, no allowance under this clause shall be

made in respect of such excess.

Any amount subsequently withdrawn from such a Special reserve account will be chargeable to income tax

in the year of withdrawal, in accordance with the provisions of Section 41(4A) of the Act.

3. According to Section 72AA,subject to certain conditions, where there has been an amalgamation of a banking

company with any other banking institution under a scheme sanctioned and brought into force by the Central

Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 (10 of 1949), the

accumulated loss and the unabsorbed depreciation of such banking company shall be deemed to be the loss

or, as the case may be, allowance for depreciation of such banking institution for the previous year in which

the scheme of amalgamation was brought into force and other provisions of this Act relating to set-off and

carry forward of loss and allowance for depreciation shall apply accordingly.

208

B. STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO Bank’s SHAREHOLDERS UNDER

THE INCOME TAX ACT, 1961, (“IT ACT”) AND OTHER DIRECT TAX LAWS PRESENTLY IN

FORCE IN INDIA

1. This statement sets out below the possible tax benefits available to Bank’s shareholders under the current tax laws

presently in force in India. Several of these benefits are dependent on such shareholders fulfilling the conditions

prescribed under the relevant tax laws. Hence, the ability of bank’s shareholders to derive the tax benefits is

dependent upon fulfilling such conditions, which based on the business imperatives, the shareholders may or may

not choose to fulfill;

2. This statement sets out below the provisions of law in a summary manner only and is not a complete analysis or

listing of all potential tax consequences of the subscription, ownership and disposal of Shares. This statement is

only intended to provide general information to the investors and is neither designed nor intended to be a substitute

for a professional tax advice. In view of the individual nature of tax consequences and the changing tax laws,

each investor is advised to consult his or her or their own tax consultant with respect to the specific tax

implications arising out of their participation in the issue.;

3. In respect of non-residents, the tax rates and the consequent taxation, mentioned in this section shall be further

subject to any benefits available under the Double Taxation Avoidance Agreement, if any, between India and the

country in which the non-resident has fiscal domicile.

4. The under-mentioned tax benefits will be available only to the sole/first-named holder in case the Equity Shares

are held by joint shareholders.

5. The law stated below is as per the Income-tax Act, 1961 as amended by time to time.

I. RESIDENT SHAREHOLDERS:

1. Bank is required to pay a Dividend Distribution Tax currently at the rate of 20.358% (including applicable

surcharge and education cess) on the total amount distributed or declared or paid as dividend. Under Section

10(34) of the IT Act, income by way of dividends referred to in Section 115O of IT Act received on shares is

exempt from income tax in the hands of shareholders. However, as per Section 115BBDA of the IT Act, in case

of an Individual, Hindu Undivided Family (“HUF”) or a firm, resident in India, if aggregate of dividend income

during the year is in excess of ten lakh rupees, then such dividend shall be chargeable to tax at the rate of 10%

(plus applicable surcharge and education cess) in the hands of recipient.

Finance Bill 2017 has proposed to extend to provision of section 115BBDA of the IT Act to Private Trust also.

As per section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares are purchased

within three months prior to the record date and sold within three months from the record date, will be disallowed

to the extent such loss does not exceed the amount of dividend claimed exempt.

2. The characterization of gains/losses, arising from sale of shares, as Capital Gains or Business Income would

depend on the nature of holding in the hands of the shareholder and various other factors.

3. Section 48 of the IT Act, which prescribes the mode of computation of capital gains, provides for deduction of

cost of acquisition/improvement and expenses incurred wholly and exclusively in connection with the transfer of

a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of Long

Term Capital Gains, (“LTCG”) i.e. gains from bank’s shares being transfer of shares of Indian company held for

a period exceeding twelve months, the second proviso to Section 48 of the IT Act, substitute cost of

acquisition/improvement with the indexed cost of acquisition/improvement, which adjusts the cost of

acquisition/improvement by a cost inflation index, as prescribed from time to time.

4. Under Section 10(38) of the IT Act, LTCG arising to a shareholder on transfer of equity shares would be exempt

from tax where the sale transaction has been entered into on a recognised stock exchange of India and is

chargeable to Securities Transaction Tax (“STT”).

209

As per section 115JB of the Act income received by way of dividend whether interim of final which is exempt

u/s 10(34) of the IT Act by a company to which section 115JB is applicable will be reduced while computing

book profit. Further any LTCG exempt u/s 10(38) will be subject to book profit.

5. Under Section 112 of the IT Act and other relevant provisions of the IT Act, LTCG, (other than those exempt

under Section 10(38) of the IT Act) arising on transfer of shares would be subject to tax at the rate of 20% (plus

applicable surcharge and education cess) after indexation. The amount of such tax shall, however, be limited to

10% (plus applicable surcharge and education cess) without indexation, at the option of the shareholder in case

the shares are listed.

6. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term

capital gains (other than those exempt under Section 10(38) of the IT Act) arising on the transfer of bank’s shares

would be exempt from tax if such capital gain is invested within 6 months after the date of such transfer in the

bonds (long term specified assets) issued by:

i. National Highway Authority of India constituted under Section 3 of The National Highway Authority of India

Act, 1988;

ii. Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

iii. Other institutions notified by central government

The investment in the long term specified assets is eligible for such deduction to the extent of ₹ 5 million whether

invested during the fiscal year in which the asset is transferred or subsequent fiscal year.

If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion as the cost

of long term specified assets bears to the whole of the capital gain. However, in case the long term specified asset

is transferred or converted into money within three years from the date of its acquisition, the amount of capital

gains so exempted shall be chargeable to tax as LTCG during the year of such transfer or conversion. For this

purpose, if any loans or advance is taken as against such specified securities, than such person shall be deemed to

have converted such specified securities into money. The cost of the long term specified assets, which has been

considered under Section 54EC for calculating capital gain, shall not be allowed as a deduction from the income

under Section 80C of the IT Act.

7. As per Section 111A of the IT Act, Short Term Capital Gains (“STCG”), i.e., gains from shares held for a period

not exceeding twelve months) arising on transfer of bank’s equity share would be taxable at a rate of 15% (plus

applicable surcharge and education cess) where such transaction of sale is entered on a recognised stock exchange

in India and is liable to STT. STCG arising from transfer of bank’s shares, other than those covered by Section

111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act.

8. As per Section 74 of the IT Act, Short Term Capital Loss computed for the given year is allowed to be set off

against Short Term as well as Long Term Gains computed for the said year. The balance loss, which is not set

off, is allowed to be carried forward for subsequent eight assessment years for being set off against subsequent

years’ Short Term as well as Long Term Gains. However, the Long Term capital Loss computed for a given year

is allowed to be set off only against the LTCG. The balance loss, which is not set off, is allowed to be carried

forward for subsequent eight assessment years for being set off only against subsequent years’ LTCG.

9. In terms of Section 36(1)(xv) of the IT Act, the STT paid by the shareholder in respect of the taxable securities

transactions entered into in the course of his business of transactions/trading in shares would be eligible for

deduction from the amount of income chargeable under the head “Profit and gains of business or profession” ” if

the income arising from taxable securities transaction is included in such income. As such, no deduction will be

allowed in computing the income chargeable to tax as capital gains of such amount paid on account of STT.

II. NON-RESIDENT SHAREHOLDERS OTHER THAN FOREIGN INSTITUTIONAL INVESTOR

(“FII”S):

210

1. Banks are required to pay a Dividend Distribution Tax currently at the rate of 20.358% (including applicable


10(34) of the IT Act, income by way of dividends (whether interim or final) referred to in Section 115-O of the

IT Act, received on bank’s shares is exempt from income tax in the hands of shareholders. However it is pertinent

to note that Section 14A of the IT Act restricts claims for deduction of expenses incurred in relation to exempt

income. Thus, any expense incurred to earn the dividend income is not allowable expenditure. As per section

94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares are purchased within three

months prior to the record date and sold within three months from the record date, will be disallowed to the extent

such loss does not exceed the amount of dividend claimed exempt.

2. The characterisation of gains/losses, arising from sale of shares, as Capital Gains/loss or Business Income/loss

would depend on the nature of holding in the hands of the shareholder and various other factors.

3. Under the first proviso to Section 48 of the IT Act, in case of a non-resident shareholder, in computing the capital

gains arising from transfer of shares of the Bank acquired in convertible foreign exchange (as per exchange control

regulations) (in cases not covered by Section 115E of the IT Act, discussed hereunder), protection is provided

from fluctuations in the value of rupee in terms of foreign currency in which the original investment was made.

Cost indexation benefits will not be available in such a case. The capital gains/loss in such a case is computed by

converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively in

connection with such transfer into the same foreign currency which was utilised in the purchase of the shares.

4. Under Section 10(38) of the IT Act, LTCG arising to a shareholder, being a non-resident, on sale of equity shares

would be exempt from tax where the sale transaction has been entered into on a recognised stock exchange of

India and is chargeable to STT.

5. Under Section 112 of the IT Act and other relevant provisions of the IT Act, LTCG, (other than those exempt

under Section 10(38) of the IT Act) arising on transfer of our shares not being subject to STT, would be subject

to tax at a rate of 20% (plus applicable surcharge and education cess).

6. As per section 115JB of the Act, income received by way of dividend (whether interim or final) which is exempt

u/s. 10(34) of the IT Act, by a foreign company to which section 115JB is applicable, will be reduced while

computing book profits. Further, any LTCG exempt u/s. 10(38) will be subject to book profits.

7. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, long-term

capital gains (other than those exempt under Section 10(38) of the IT Act) arising on the transfer of our shares

would be exempt from tax if such capital gain is invested within 6 months after the date of such transfer in the

bonds (long term specified assets) issued by:

i. National Highway Authority of India constituted under Section 3 of the National Highway Authority of India

Act, 1988;





If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion asthe cost


is transferred or converted into money within three years from the date of its acquisition, the amount so exempted

shall be chargeable to tax during the year such transfer or conversion. For this purpose, if any loans or advance is

taken as against such specified securities, then such person shall be deemed to have converted such specified

securities into money. The cost of the long term specified assets, which has been considered under this Section

for calculating capital gain, shall not be allowed as a deduction from the income under Section 80C of the IT Act.

211

8. Under Section 111A of the IT Act and other relevant provisions of the IT Act, STCG (i.e., if shares are held for

a period not exceeding 12 months) arising on transfer of bank’s equity share would be taxable at a rate of 15%

(plus applicable surcharge and education cess) where such transaction of sale is entered on a recognised stock

exchange in India and is chargeable to STT. STCG arising from transfer of the shares, other than those covered

by Section 111A of the IT Act, would be subject to tax as calculated under the normal provisions of the IT Act.

9. As per Section 74 of the IT Act, Short Term Capital Loss computed for the given year is allowed to be set off

against Short Term as well as Long Term Gains computed for the said year. The balance loss, which is not set

off, is allowed to be carried forward for subsequent eight assessment years for being set off against subsequent

years’ Short Term as well as Long Term Gains. However, the Long Term capital Loss computed for a given year

is allowed to be set off only against the LTCG. The balance loss, which is not set off, is allowed to be carried

forward for subsequent eight assessment years for being set off only against subsequent years’ LTCG.

10. Where the shares have been subscribed in convertible foreign exchange, Non Resident Indians (“NRI”), i.e. an

individual being a citizen of India or person of Indian origin who is not a resident, have the option of being

governed by the provisions of Chapter XII-A of the IT Act, which inter alia entitles them to the following benefits:

i. Under section 115E of the IT Act, where shares of the company are subscribed to in convertible foreign

exchange by a NRI, the LTCG arising to the NRI shall be taxable at the rate of 10% (plus applicable surcharge

and education cess). The benefit of indexation of cost would not be available.

ii. Under Section 115F of the IT Act, LTCG (in cases not covered under Section 10(38) of the IT Act) arising to

an NRI from the transfer of the shares subscribed to in convertible foreign exchange shall be exempt from

Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If

only part of the net consideration is sore invested, the exemption shall be proportionately reduced. The amount

so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into

money within three years from the date of their acquisition.

iii. Under Section 115G of the IT Act, it shall not be necessary for an NRI to furnish his return of income under

Section 139(1) of the IT Act if his income chargeable under the IT Act consists of only investment income or

LTCG or both; arising out of assets acquired, purchased or subscribed in convertible foreign exchange and tax

deductible at source has been deducted there from as per the provisions of Chapter XVII-B of the IT Act.

iv. In accordance with the provisions of Section 115H of the IT Act, where an NRI becomes assessable as a resident

in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for

that year under Section 139 of the IT Act to the effect that the provisions of Chapter XII-A of the IT Act shall

continue to apply to him in relation to such investment income derived from the specified assets (which do not

include shares in an Indian company) for that year and subsequent assessment years until such assets are

converted into money.

v. As per provisions of Section 115-I of the IT Act, an NRI may elect not to be governed by provisions of Chapter

XII-A and compute his total income as per other provisions of the IT Act.



deduction from the amount of income chargeable under the head “Profit and gains of business or profession” if

income arising from taxable securities transaction.is included in such income. As such, no deduction will be

allowed in computing the income chargeable to tax as capital gains, such amount paid on account of STT.

12. As per section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the Double

Tax Avoidance Agreement (“DTAA”)entered between India and the country of fiscal domicile of the non-

resident, if any, to the extent they are more beneficial to the non-resident. Thus, a non-resident (including NRIs)

can opt to be governed by the provisions of the IT Act or the applicable tax treaty, whichever is more beneficial.

However, the non-resident investor will have to furnish a certificate of his being a resident in a country outside

India, to get the benefit of the applicable DTAA and such other document as may be prescribed as per the

provision of section 90(4) of IT Act.

212

13. With effect from April 1, 2017, the benefit of the DTAA will not be available to a non-resident investor if the

Tax department declares any arrangement to be an impermissible avoidance arrangement

III. NON-RESIDENT SHAREHOLDERS – FIIS:

1. Bank is required to pay a Dividend Distribution Tax currently at the rate of 20.358% (including applicable


10(34) of the IT Act, income by way of dividends (whether interim or final) referred to in Section 115-O of the

IT Act received on Bank’s shares is exempt from income tax in the hands of shareholders. However it is pertinent

to note that Section 14A of the IT Act restricts claims for deduction of expenses incurred in relation to exempt

income. As per section 94(7) of the IT Act, losses arising from sale/transfer of shares, where such shares are

purchased within three months prior to the record date and sold within three months from the record date, will be

disallowed to the extent such loss does not exceed the amount of dividend claimed exempt.

2. Section 2(14) of IT Act defining capital asset, specifically includes any securities held by an FII which has

invested in such securities in accordance with the SEBI Regulations.

3. Under the first proviso to Section 48 of the IT Act, in case of a non-resident shareholder, in computing the capital

gains arising from transfer of shares of the company acquired in convertible foreign exchange (as per exchange

control regulations), protection is provided from fluctuations in the value of rupee in terms of foreign currency in

which the original investment was made. Cost indexation benefits will not be available in such a case. The capital

gains/loss in such a case is computed by converting the cost of acquisition, sales consideration and expenditure

incurred wholly and exclusively in connection with such transfer into the same foreign currency which was

utilised in the purchase of the shares.

4. Under Section 10(38) of the IT Act, Long Term Capital Gains arising to a shareholder on transfer of equity shares

would be exempt from tax where the sale transaction has been entered into on a recognised stock exchange of

India and is liable to STT.

5. As per section 115JB of the Act, income received by way of dividend (whether interim or final) which is exempt

u/s. 10(34) of the IT Act, by a FII to which section 115JB is applicable, will be reduced while computing book

profits. Further, any LTCG exempt u/s. 10(38) will be subject to book profits.

6. Under Section 54EC of the IT Act and subject to the conditions and to the extent specified therein, LTCG (other

than those exempt under Section 10(38) of the IT Act) arising on the transfer of the shares would be exempt from

tax if such capital gain is invested within six months after the date of such transfer in the bonds (long term

specified assets) issued by:

i. National Highway Authority of India constituted under Section 3 of the National Highway Authority of India

Act, 1988;





If only part of the capital gain is so reinvested, the exemption available shall be in the same proportion as the cost


is transferred or converted into money within three years from the date of its acquisition, the amount of LTCG so

exempted shall be chargeable to tax during the year such transfer or conversion. For this purpose, if any loans or

advance is taken as against such specified securities, than such person shall be deemed to have converted such

specified securities into money.

7. Under Section 115AD (1)(ii) of the IT Act, STCG arising to an FII on transfer of shares shall be chargeable at a

rate of 30%, where such transactions are not subjected to STT, and at the rate of 15% if such transaction of sale

213

is entered on a recognised stock exchange in India and is chargeable to STT. The above rates are to be increased

by applicable surcharge and education cess.

Under Section 115AD (1)(iii) of the IT Act income by way of LTCG arising from the transfer of shares (in cases

not covered under Section 10(38) of the IT Act) held in the company will be taxable at the rate of 10% (plus

applicable surcharge and education cess). The benefits of indexation of cost and of foreign currency fluctuations

are not available to FIIs.

8. As per section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of the DTAA

entered between India and the country of fiscal domicile of the non-resident, if any, to the extent they are more

beneficial to the non-resident. Thus, a non-resident (including NRIs) can opt to be governed by the provisions of

the IT Act or the applicable tax treaty, whichever is more beneficial. However, the non-resident investor will have

to furnish a certificate of his being a resident in a country outside India, to get the benefit of the applicable DTAA

and such other document as may be prescribed as per the provision of section 90(4) of IT Act.



deduction from the amount of income chargeable under the head “Profit and gains of business or profession”

arising from taxable securities transactions. As such, no deduction will be allowed in computing the income

chargeable to tax as capital gains, such amount paid on account of STT.

10. With effect from April 1, 2017, the benefit of the DTAA will not be available to a non-resident investor if the

Tax department declares any arrangement to be an impermissible avoidance arrangement

11. As per Section 196D of IT Act, no tax is to be deducted from any income, by way of Capital Gains arising to an

FII from the transfer of securities referred to in section 115AD of the IT Act.

IV. TAX DEDUCTION AT SOURCE:

No income tax is deductible at source from income by way of capital gains arising to a resident shareholder under

the present provisions of the IT Act. However, as per the provisions of Section 195 of the IT Act, any income by

way of capital gains payable to non-residents (other than LTCG exempt u/s 10(38)) may be subject to withholding

of tax at the rate under the domestic tax laws or under the tax laws or under the DTAA, whichever is beneficial

to the assessee unless a lower withholding tax certificate is obtained from the tax authorities. However, the non-

resident investor will have to furnish a certificate of his being a resident in a country outside India, to get the

benefit of the applicable DTAA and such other document as may be prescribed as per the provision of section

90(4) of IT Act. The withholding tax rates are subject to the recipients of income obtaining and furnishing a

permanent account number (PAN) to the payer, in the absence of which the applicable withholding tax rate would

be the higher of the applicable rates or 20%, under section 206AA of the IT Act. The provisions of section 206AA

will not apply if the non- resident shareholder furnishes the prescribed documents to the payer.

Notes:

1. The above benefits are as per the current tax law as amended by time to time.

2. The above statement of possible direct tax benefits sets out the provisions of law in a summary manner only and

is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of

Shares.

3. The stated benefits will be available only to the sole/first named holder in case the shares are held by the joint

holders.

4. In respect of Non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to

any benefits available under the DTAA, if any, between India and the country in which the Non-resident has fiscal

domicile.

214

5. This statement is intended only to provide general information to the investors and is neither designed nor

intended to be substituted for professional tax advice. In view of the individual nature of tax consequences, each

investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her

participation in the scheme.

6. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views

are based on the existing provisions of law and its interpretation, which are subject to changes from time to time.

We do not assume responsibility to update the views consequent to such changes.

7. The above statement of possible Direct-tax Benefits sets out the possible tax benefits available to the Bank and

its shareholders under the current tax laws presently in force in India. Several of these benefits available are

dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws.

215

LEGAL PROCEEDINGS

Except as described below, there is no outstanding litigation, suits or civil proceedings, or criminal proceedings, or

prosecutions, statutory and other notices or tax liabilities by or against our Bank or our Directors, or our Associates,

and there are no defaults, non-payment or overdues of statutory dues, overdues to banks / financial institutions,

defaults against banks / financial institutions, defaults in dues payable to holders of any debentures, bonds, or fixed

deposits, and arrears on preference shares issued by our Bank, defaults in creation of full security as per terms of

issue/ other liabilities, proceedings initiated for economic/ civil/ and other offences (including past cases where

penalty may or may not have been awarded) that would result in a material adverse effect on our business. A

materiality threshold of ₹ 46 crore that is approximately 1% of the networth of the Bank as on March 31, 2016, has

been adopted for civil cases filed by/against the Bank. None of the aforesaid persons/ companies/ banks is on RBI’s

list of willful defaulters.

A. Cases filed against our Bank

(i) Criminal Cases:

Nil

(ii) Civil Cases:

Zoom Developers Private Limited (“Plaintiff”) has filed a suit bearing number 2001 of 2011 before the

Bombay High Court against the consortium of banks including our Bank demanding ₹ 11,000 crore under

the head of damages, loss of estimated future profits and loss of goodwill. The Plaintiff has alleged that it

established bank guarantees issued by the consortium banks which were confirmed by the foreign

intermediary banks upon aggregator’s bank and received advance payments equivalent to the bank guarantees

and executed its project. As per the Plaintiff, the bank guarantees were required to be maintained till the

completion of the liability period of the contracts entered into by the Plaintiff for various projects. The

consortium banks retained 25% of the advance received against the bank guarantees towards margin money.

The Plaintiff has alleged that after the economic crisis of 2008, most of the foreign intermediary banks

decided to reduce their exposure and decided to cut down on the risks arising out of bank guarantees and

hence foreign banks declined to renew the bank guarantees and asked the consortium banks to shift the bank

guarantees to some other banks. The Plaintiff alleges that due to failure of the consortium banks to find new

banks for shifting the bank guarantees and releasing the margin money, the Plaintiff suffered loss and

defaulted in payment of statutory and other dues. The case is pending for hearing and as on date, we cannot

ascertain the exact monetary liability of the Bank.

(iii) Banking Ombudsman Complaints:

As on January 31, 2017, details of the complaints received by the Bank and status of the complaints are as

follows:

Resolution Total complaints

received Number of

complaints resolved Total complaints

pending Head Office 131 126 5 Regional Offices 75 75 -

Total 206 201 5

(iv) Tax Cases:

Nil

(v) Other cases

216

An eviction suit bearing CS number 246 of 2012 has been filed against the Bank by India Automobiles (1960)

Limited (“Plaintiff”) before the Hon’ble High Court, Calcutta (“Court”). The Court has passed an order

dated September 11, 2015, directing the Bank to continue to occupy the premises for a period of one year

until October, 2016 subject to the payment of rent. The Court has also granted liberty to the parties to

renegotiate the continuation of occupation. Presently, the Bank is still occupying the premises and negotiation

of the terms is ongoing.

B. Cases filed by the Bank

(i) Criminal cases:

Criminal complaints initiated by our Bank against Fraud

In 2013, our Bank, in order to deal with cases pertaining to fraud, formed a Fraud Monitoring Cell (“FMC”) which

monitors and reviews frauds committed against the Bank. On the scrutiny of accounts based on any complaint received

from a customer or a government agency or whistle blowers, the branch or regional office of the Bank reports

fraud/irregularities to the Vigilance Department which conducts an internal investigation and after deciding the issue

of occurrence of fraud, it will be forwarded to FCM which in turn reports the fraud to RBI and also initiates necessary

action, after getting due approval of the competent authority, for filing FIR with CBI/police, depending on the amount

involved.

If the amount involved in the fraud is more than ₹ 10,000 but less than or equal to ₹ 0.01 crore, the matter is reported

to the police. If the amount involved in the fraud is more than ₹ 0.01 crore but less than ₹ 3 crore, the matter is reported

to the higher authority of the state police department. Based on such investigation, a charge sheet is filed and criminal

proceedings are initiated against the person against whom the complaint is filed by the Bank. If the amount involved

in the fraud is more than ₹3 crore and above, the matter is reported to the Central Bureau of Investigation (“CBI”).

CBI then investigates the mater and accordingly initiates criminal proceedings. However, though these are instances

of criminal fraud which has been committed against the Bank by its borrowers or employees, the Bank is not added

as a party to the criminal proceedings and eventually the parties to the criminal proceedings are the State and the

accused borrower or employee.

The following are the details of the complaints made by the Bank regarding fraud against its borrowers or employees.

A. Details of complaints made by the Bank against borrowers for fraud:

Year Number of complaints Amount involved (₹ in crore)

2013-2014 164 349.02

2014-2015 138 680.14

2015-2016 168 143.12

2016- January

31, 2017

26 81.89

Total 496 1,254.17

B. Details of complaints made by the Bank against its employees for fraud:

Year Number of complaints Amount involved (₹ in crore)

2013-2014 6 0.17

2014-2015 73 0.60

2015-2016 3 0.12

2016- January

31, 2017

7 1.34

Total 89 2.23

(ii) Civil Cases:

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1. Our Bank has filed an Original Application bearing number 216 of 2001 (“OA”) against BTW Industries

Limited & others (“Defendants”) before the Debts Recovery Tribunal Kolkata (“DRT”) for recovery of

outstanding amounts due to the Bank, claiming a sum of ₹ 53.10 crore. A Receiver has been appointed for

the sale of assets for recovery of the outstanding monies due to the Bank and the Bank has recovered a sum

of ₹ 1.93 crore, recovery of the balance amount of monies due is pending execution before the Recovery

Officer. Since other properties of the defendants have not been found in spite of various efforts of the bank

for attachment and sale of the same, the matters have been adjourned sine die with liberty to reopen the same.

2. Our Bank has filed an Original Application bearing number No. 55 of 2005 (“OA”) against Mining and

Allied Machinery Corporation Limited, Department of Heavy Industry, Ministry of Heavy Industries and

Public Enterprises, Government of India and the State Bank of India (“Defendants”) before the Debts

Recovery Tribunal, Kolkata (“DRT”), for recovery of outstanding amounts due to the Bank, claiming a sum

of ₹ 48. 28 crore. DRT vide its order dated December 28, 2015 have allowed the application and stated (i)

Defendant liable to pay 342.18 crore with interest at the rate of 17.5% per annum with quarterly rests from

June 25, 2003 till payment of realisation (ii) the amount of claim is secured by the mortgage to the immovable

and movable properties of the Defendant. The same may be sold for satisfaction of the dues. (iii) certificate

to be issued. The Borrower earlier became sick and was referred to BIFR, an appeal was referred to AAIFR

against the order of the BIFR, and subsequent to the order of the AAIFR dated November 13, 2003 the

Borrower was directed to be wound up. An appeal was filed by the employee association of the Borrower

with the High Court against the order of the AIFR. The High Court upheld the order of the AAIFR and

ordered the Borrower to be wound up. The Official Liquidator took over the possession of the assets and

properties of the Borrower. The Bank has received ₹ 5.53 Crore from the Official Liquidator, Calcutta High

Court out of the sale proceeds of the assets of the company (in liquidation) residual amount to be received by

the bank form the Official Liquidator is pending with Official Liquidator.

3. The Bank has filed an Original Application bearing number 42 of 2009 (“OA”) against Vishal Exports

Overseas Limited & others before the Debts Recovery Tribunal, Ahmadabad (“DRT”), for recovery of its

dues under the term loan, amounting to ₹ 64.82 crore. DRT vide order dated February 5, 2015 have allowed

the application and have stated that (i) Bank to receive the above amount along with interest at the rate of

12% per annum for the period of pendent lite and future, till realization of the debt (ii) Bank to deduct any

amount, if received from selling the secured properties of the Defendant (iii) certificate of recovery (iv)

recovery officer shall realise the amount as per the certificate of recovery. The recovery proceedings are

initiated and are pending for further proceedings.

4. Our Bank has filed an Original Application bearing number 01 of 2011 (“OA”) against M/s Zoom Developers

Private Limited & others (“Defendants”) before the Debts Recovery Tribunal – II, Mumbai (“DRT”). Our

Bank being one of the lenders in consortium of banks has filed OA for recovery of certain dues arising out

of various credit facilities sanctioned by the Bank to the Defendants. The OA has been filed inter alia seeking

relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 241.65

crore as on September 30, 2011 with further interest applicable rate from October 1, 2011; (b) the mortgaged

immovable properties to be sold either by public auction or private treaty and the net sales proceeds thereof

be paid; (c) ) injunction restraining the Defendants, their servants, agents and representatives from alienating,

dealing with, disposing off and/or creating their party rights in their assets;. The said OA is pending before

the DRT.

5. Our Bank has filed an Original Application bearing number 416 of 2012 (“OA”) in Debts Recovery Tribunal

I, Kolkata (“DRT”) against Ramsarup Industries Limited and its guarantor(s), Mr. Ashish Jhunjhunwala and

Ramsarup Investment Limited (together referred to as the “Defendants”) for recovery of dues amounting to

₹ 242.33 crore including the interest by (a) sale of the hypothecated movable and immovable assets of the

Defendants, (b) order for restraining the Defendants from disposing off or alienating the properties and (c)

appointment of receiver to take physical possession of the assets of the Defendants. The DRT vide its order

dated December 03, 2012 issued an injunction against the Defendants from transferring their personal assets.

In the meanwhile, Ramsarup Industries Limited has filed a reference on November 06, 2012 before the BIFR

for declaring it as a sick company and for rehabilitation. The said OA is currently pending before the DRT.

6. The Bank along with other banks has filed an Original Application bearing number 766 of 2013 (“OA”)

against Kingfisher Airlines Limited and others (“Defendants”) before the Debt Recovery Tribunal,

218

Bangalore (“DRT”) for recover of various credit facilities granted to the Defendants. In the OA, the Bank

has claimed recovery of various credit facilities granted to the Defendants aggregating to ₹ 379.59 crore. The

OA has been filed inter alia seeking relief / interim relief that (a) Defendants be directed to pay to the Bank

the said sum of ₹ 379.59 crore with interest at the rate of 15.20% p.a. from June 01, 2013 until payment (b)

restraining the Defendants, their servants, agents, employees, officers from disposing off, transferring,

alienating, encumbering, parting with possession, creating third party rights/title/interest/claim in any of the

movable, immovable, tangible and intangible properties (c) order an inquiry, investigation, examination,

attachment and realization of assets and properties (d) attachment and sale of current and fixed assets charged

(e) order and declare sale of secured hypothecated assets, remaining pledged shares, immovable properties

equitably mortgaged and appropriation of the net sale proceeds towards satisfaction of the amounts order

appointment of a commissioner to take inventory of the assets. The said OA is presently pending before the

DRT.


– II, Chennai (“DRT”) against Good Earth Maritime Limited and others (“Defendants”) for recovery of dues

amounting to ₹ 58.25 crore including interest. The OA has been filed inter alia, seeking relief / interim relief

for (a) order for declaration of hypothecated property in favour of the Bank, (b) appoint advocate

commissioner to take inventory, possession of goods, stocks and materials and (c) order for injunction

restraining the Defendants from selling of machineries, equipments or raw materials. The said OA is currently

pending before the DRT.

8. Our Bank has filed an Original Application bearing number 243 of 2013 (“OA”) against M/s Temptation

Foods Limited & others (“Defendants”) before the Debts Recovery Tribunal – II, Mumbai (“DRT”). Our

Bank has filed OA for recovery of various credit facilities sanctioned by it. The OA has been filed inter alia

seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹

49.80 crore inclusive of interest upto June 11, 2013 and further interest of 15.60% per annum plus penal

interest till realisation; (b) sale of movable and immovable properties and adjust the sale proceeds for the

dues, in case of failure to pay the above amount; (c) appointment of receiver/ commissioner of the immovable

property with all powers to take possession of the properties. The said OA is pending before the DRT.

9. Our Bank and others have filed an Original Application bearing number 131 of 2013 (“OA”) against M/s

Varun Industries Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Mumbai

(“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of certain

dues arising out of various credit facilities sanctioned by the Bank to the Defendants. The OA has been filed

inter alia seeking relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a

sum of ₹ 348.77 crore with further interest of 15.75% per annum compounded at monthly rests and penal

interest @ 2% per annum from August 1, 2013 till realisation of payment; (b) injunction restraining the

Defendants, their servants, agents and representatives from alienating, dealing with, disposing off and/or

creating their party rights in its properties; (c) holding and declaring the hypothecated assets are validly

hypothecated by the Defendants in favour of banks. The said OA is pending before the DRT.

10. Our Bank has filed an Original Application bearing number188 of 2013 (“OA”) against M/s. Vikash Metal

& Power Limited and others (“Defendants”) before the Debt Recovery Tribunal – 1, Kolkata (“DRT”).The

OA has been filed by the Bank for recovery of credit facilities provided to the Defendant from time to time

sanctioned by it aggregating to ₹57.19 crore. The OA has been filed praying for an order (a) directing

payment of ₹ 57.19 crore with interest at the rate of 15.75% per annum with monthly rests calculated up to

March 20, 2013 together with future interest at the rate of 15.75% per annum with monthly rests from March

21, 2013 till realisation, (b) certificate be issued for payment of ₹ 57.19 crore with interest at the rate of

15.75% per annum with monthly rests calculated up to March 20, 2013 together with future interest at the

rate of 15.75% per annum with monthly rests from March 21, 2013 till realisation (c) attachment and sale

of the hypothecated assets and mortgaged properties of the Defendants (d) injunction restraining the


creating their party rights in its properties (e) interim certificate for payment of admitted amount (f) direction

upon the Defendant to disclose their personal assets and further reliefs as the court deems fit and proper. The

said OA is pending for hearing before the DRT.

11. Our Bank has filed an Original Application bearing number 181 of 2013 (“OA”) against M/s. Varun Jewels

219

Private Limited and others (“Defendants”) before the Mumbai Debt Recovery Tribunal – II, (“DRT”).The

OA has been filed by the Bank for recovery of a sum aggregating to ₹ 72.05 crore granted under various

credit facilities provided to the Defendant from time to time. The OA has been filed praying for an order (a)

directing payment of ₹ 72.05 crore together with interest from April 4, 2013 together with further interest

at the rate of 18.1% per annum along with penal interest at the rate of 1% per annum from April 1, 2013 till

realisation, (b) declare that the dues of the Bank as set out are fully secured by a valid and subsisting

hypothecation of movable assets (c) on failure of payment, for declaration of assets, owned by the Defendant

with a direction to sell the same and adjust the sale proceeds thereof, (d) cost of application (e) injunction

restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing

off and/or creating their party rights in its properties (f) attachment and sale of the immovable properties of

the Defendants (g) appointment of a fit and proper person to be appointed as a receiver/commissioner for the

properties of the Defendants (h) the defendant to disclose their personal assets (i) appointment of a fit and

proper person to be appointed as commissioner for taking inventory and submitting report of the Properties

(j) pending hearing, the Defendants be ordered to insure all properties, assets and securities charged to the

Bank (k) such further reliefs as the court deems fit and proper. The said OA is pending for hearing before the

DRT.

12. Our Bank and others have filed an Original Application bearing number 158 of 2014 (“OA”) against

Kingfisher Airlines Limited and others (“Defendants”) before the Debt Recovery Tribunal, Bangalore

(“DRT”) for recover of various credit facilities granted to the Defendants under a consortium. In the OA, the

Bank has claimed recovery of credit facility granted to the Defendants aggregating to ₹ 63.18 crore. The OA

has been filed inter alia seeking relief / interim relief that (a) a recovery certificate be issued directing the

Defendants to jointly and severally pay a sum of ₹ 63.18 crore along with pendent lite and future interest at

the rate of SBI’s base rate plus 3.50% presently and 13.50% p.a. plus 2% p.a. penal interest until realization

(b) Defendants and their servants, agents, employees etc. by way of an interim order of injunction ex-parte

be restrained from alienating, transferring or otherwise dealing with or disposing off in any manner the

movable and immovable properties without the prior permission of DRT (c) in the event of Defendants’

failure to so furnish the security within the stipulated time, to order and direct attachment of the movable and

immovable properties of the Defendants. The said OA is presently pending before the DRT.


Jain Infraprojects Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata

(“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of working

capital loan sanctioned by it aggregating to ₹ 77.55 crore. The OA has been filed inter alia seeking relief /

interim relief that (a) issues a joint recovery certificate of a sum aggregating to ₹ 76.55 crore and further

interest thereon; (b) certificate for enforcement of securities; (c) sale of movable and immovable properties

towards satisfaction of the claims; (d) appointment of a fit and proper person to be appointed as a receiver

for the immovable and movable properties and (e) hypothecated goods and mortgaged assets be ordered to

be sold and proceeds be permitted to be appropriated towards dues. The said OA is pending before the DRT.

14. Our Bank has filed an Original Application bearing number 156 of 2014 (“OA”) against M/s Hind Buildtec

Private Limited and others (“Defendants”) before the Debts Recovery Tribunal, Lucknow (“DRT”). The

OA has been filed by the Bank for recovery of certain dues arising out of various credit facilities sanctioned

by the Bank to the Defendants. The OA has been filed inter alia seeking relief / interim relief that (a) the

Defendants be, jointly and severally be directed to pay debt aggregating to ₹ 61.87 crore and future interest

at the rate of 15.70% per annum with monthly rests till the date of payment and to draw recovery certificate;

(b) sale of hypothecated movable assets on the failure to pay the said outstanding amount; (c) injunction

restraining the Defendants, their servants, agents and representatives from alienating, dealing with, disposing

off and/or creating their party rights in its properties. The said OA is pending before the DRT.

15. Our Bank has filed an Original Application bearing number 206 of 2014 (“OA”) against M/s Bengal India

Global Infrastructure Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata

(“DRT”). Our Bank has filed OA for recovery of short term corporate loan sanctioned by it aggregating to ₹

50.00 crore. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly

and severally be directed to pay a sum of ₹ 56.53 crore inclusive of interest upto May 30, 2014 and further

interest of 13.15% per annum with monthly rests till realisation; (b) injunction restraining the Defendants

from disposing of / or alienating their assets till OA in pending; (c) appointment of receiver and for inventory

220

and sale of hypothecated and mortgaged properties. The said OA is pending before the DRT.

16. Our Bank has filed an Original Application bearing number 526 of 2014 (“OA”) against M/s Xenitis Infotech

Private Limited and others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata (“DRT”). Our

Bank has filed OA for recovery of facilities sanctioned by it. The OA has been filed inter alia seeking relief

/ interim relief that (a) certificate of ₹ 118.97 crore as on December 15, 2014 with further interest of 15.10%

per annum with monthly rest till realisation; (b) injunction restraining the Defendants, their servants, agents

and representatives from alienating, dealing with, disposing off and/or creating their party rights in their

assets; (c) appointment of receiver and for inventory and sale of the hypothecated and mortgaged properties.

The said OA is pending before the DRT.

17. Our Bank has filed an Original Application as Applicant No. 4 along with others jointly bearing number 29

of 2014 (“OA”) against M/s. Surya Vinayak Industries Limited and others (“Defendants”) before the Debt

Recovery Tribunal, Sanskriti Bhawan, Keshav Kunj, New Delhi(“DRT”).The OA has been filed by the Bank

under the consortium for recovery of working capital credit facilities provided to the Defendant sanctioned

by it and the total outstanding due to the Bank as Applicant No. 4 as on December 31, 2013 is ₹ 136.34 crore.

The OA has been filed praying for an order (a) to issue recovery certificate in favor of Bank against the

Defendants, jointly and severally for the sum of ₹136.34 crore with further interest at the rate of 18% per

annum with monthly rests plus 2% penal Interest from January 1, 2014 till realisation, (b) attachment and

sale of the hypothecated assets and mortgaged properties of the Defendants (c) injunction restraining the


creating their party rights in its properties (d) local commissioner be appointed to prepare an inventory of all

assets mentioned in the Joint Deed of Hypothecation, (e) appointment of a fit and proper person to be

appointed as a receiver for the properties of the Defendants, (f) direction upon the Defendants to disclose

their personal assets and further reliefs as the court deems fit and proper. The said OA is pending for hearing

before the DRT.

18. Our Bank has filed an Original Application bearing number 490 of 2015 (“OA”) against Vikash Smelters &

Alloys Ltd. and others, represented through the Official Liquidator (“Defendants”) before the Debt Recovery

Tribunal -1, Kolkata (“DRT”). The OA has been filed for recovery of term loan aggregating to ₹ 81.26 crore.

The OA has been filed inter alia seeking relief / interim relief that (a) to issue a certificate of recovery of a

sum of ₹ 81.26 crore with interest charged upto September 13, 2015 at the rate of 13.7% p.a. to be paid jointly

and severally by the Defendants and also pendent lite and future interest from September 14, 2015 at the rate

of 13.7% p.a. (b) to order sale of hypothecated assets and mortgaged properties and adjust the sale proceeds

toward satisfaction of the said amount (c) to pass an order of injunction directing all Defendants not to alienate

their personal movable and immovable properties (d) to appoint a receiver /special officer to make an

inventory of all movable and immovable properties. The said OA is presently pending before the DRT.

Further, please confirm whether any interim order has been passed by DRT as on date.

19. Our Bank has filed an Original Application bearing number 724 of 2015 (“OA”) against Mallikarjun Cold

Storage Private Ltd and others (“Defendants 1”) and M/s. Prafullya Cold Storage and others (“Defendants

2”) before the Debt Recovery Tribunal - , Kolkata (“DRT”). The OA has been filed for recovery of various

credit facilities sanctioned to Defendants 1 and Defendants 2 amounting to ₹ 51.38 crore and 33.12 crore

respectively. The OA has been filed inter alia seeking relief / interim relief that (a) Defendants 1 be directed

to jointly and severally pay to the Bank a sum of ₹ 51. 38 crore inclusive of interest calculated upto July 31,

2015 with further interest from August 01, 2015 at the rate of 12% p.a. till realization (b) Defendants 2 be

directed to jointly and severally pay to the Bank a sum of ₹ 33.12 crore inclusive of interest calculated upto

July 31, 2015 with further interest from August 01, 2015 at the rate of 12% p.a. till realization (c) a certificate

be issued for enforcement of securities of Defendants 1 and 2 for realization of the amount (d) an order for

injunction restraining Defendants 1 and 2 from dealing with or disposing off and or otherwise encumbering

or transferring movable and immovable properties without the leave of DRT (e) receiver be appointed to

make an inventory of the properties and take possession of the same. The said OA is presently pending before

the DRT.


I, Kolkata (“DRT”) against S.P.S. Rolling Mills Limited and others (“Defendants”) for recovery of dues

amounting to ₹ 103.97crore including interest. The OA has been filed inter alia, seeking relief / interim relief

221

for (a) order for restraining the Defendants from disposing off or alienating the properties, (b) appointment

of receiver for taking possession of hypothecated goods and (c) for inventory and sale of the hypothecated

properties of the Defendants. The said OA is currently pending.


REI Agro Limited & others (“Defendants”) before the Debts Recovery Tribunal – I, Kolkata (“DRT”). Our

Bank being one of the lenders in consortium of banks has filed OA for recovery of cash credit facility and

packing credit facility sanctioned by it aggregating to ₹ 200.00 crore for cash credit facility and 10.50 crore

for packing credit facility. The OA has been filed inter alia seeking relief / interim relief that (a) issues a

recovery certificate of a sum aggregating to ₹ 237.99 crore along with interest at the rate of 13% per annum

for cash credit facility and at the rate of 17.50% per annum for packing credit account from April 1, 2015 till

realization thereon; (b) certificate of sale relating to the properties for realisation of the dues; (c) interim

recovery certificate to be issued for admitted liabilities. The said OA is pending before the DRT.


Arvind Remedies Limited & others (“Defendants”) before the Debts Recovery Tribunal – II, Chennai

(“DRT”). Our Bank being one of the lenders in consortium of banks has filed OA for recovery of various

facilities sanctioned by it aggregating to ₹129.39 crore. The OA has been filed inter alia seeking relief /

interim relief that (a) the Defendants be, jointly and severally be directed to pay debt aggregating to ₹ 56.00

crore with interest thereon at the rate of 11.90% per annum plus penal interest at the rate of 3% (simple) per

annum, with monthly rests for the cash credit facility; (b) to issue recovery certificate for the amount ordered

and to be paid with pendentelite and further interest; (c) interim injunction restraining Defendants from

transferring or creating any encumbrance over the properties in favour of third parties and also direct sub

registrar not to effect any registration without knowledge and information of the Banks pending disposal of

this OA. The said OA is pending before the DRT.

23. Our Bank has filed an Original Application bearing number 384 of 2015 (“OA”) against M/s JSB Cement

LLP & others (“Defendants”) before the Debts Recovery Tribunal – II, Mumbai (“DRT”). Our Bank has

filed OA for recovery of various credit facilities sanctioned by it. The OA has been filed inter alia seeking

relief / interim relief that (a) the Defendants be, jointly and severally be directed to pay a sum of ₹ 46.45

crore together with pendentelite and future interest of 15.90% per annum with monthly rest till realisation

plus all costs; (b) properties mortgaged and hypothecated be attached and sold towards realization of the

debts; (c) appointment of receiver. The said OA is pending before the DRT.

24. Our Bank and others have filed an Original Application bearing number 840 of2015 (“OA”) against M/s.

Milk Specialties Limited and others (“Defendants”) before the Debts Recovery Tribunal -I, Chandigarh

(“DRT”). The OA has been filed by the Bank for recovery of credit facilities provided to the Defendant

sanctioned by it aggregating to ₹ 32.25 crore. The OA has been filed praying for an order of (a) grant of

recovery certificate of payment of ₹ 32.25 crore (b) appropriate recovery certificate / order to the effect that

the aforesaid amount may kindly be recovered besides from the Defendants personally, simultaneously from

the sale of the mortgaged property/ hypothecated assets (c) appointment of a fit and proper person to be

appointed as a receiver for the properties of the Defendants,(d) injunction restraining the Defendants, their

servants, agents and representatives from alienating, dealing with, disposing off and/or creating their party

rights in its properties (e) Defendants be directed to provide solvency to the extent of banks claim to the

Hon’ble court (f) direction upon the Defendant to disclose their personal assets and further reliefs as the court

deems fit and proper. The said OA is pending for hearing before the DRT. Subsequently the Bank has filed

an Interim application in OA before the DRT, praying for an interim order and relief in the nature of (a)

appointment of a receiver to manage the affairs/business of the firm and to take custody of the movable and

mortgaged properties, (b) attachment before Judgment and (c) pending that an interim injection restraining

the alienation /parting with possession of the mortgaged properties during the pendency of the OA be passed

as there is an apprehension that the Defendants are likely to sell with malafide intention the

mortgaged/hypothecated properties in order to defeat the recovery certificate which is likely to be granted in

favor of the Bank.

25. The Bank has filed an Original Application bearing number 221 of 2016 (“OA”) against M/s. Reacon

Engineer (India) Private Limited and others (“Defendants”) before the Debt Recovery Tribunal – 1, Kolkata

(“DRT”). The OA has been filed by the Bank for recovery of credit facilities provided to the Defendant

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sanctioned by it aggregating to ₹ 37.66 crore. The OA has been filed praying for an order of (a) grant of

certificate of payment of ₹ 37.66 crore with interest at the rate of 13.20% per annum together with future

interest starting from March 1, 2016 until full and final payment/ realisation, (b) leave to amend the plaint

towards its claim against the contingent liability of Defendants, when crystallized (c) receiver be directed to

attach and sell the hypothecated assets and mortgaged properties of the Defendants as also other assets of

the Defendants in the manner permissible with direction to pay the net sales proceeds thereof to the applicant

for appropriation in protanto satisfaction of the applicants claim (d) appointment of a fit and proper person

to be appointed as a receiver for the properties of the Defendants,(e) injunction restraining the Defendants,

their servants, agents and representatives from alienating, dealing with, disposing off and/or creating their

party rights in its properties (f) interim certificate for payment of ₹ 37.66 crore with interest from March 1,

2016 (g) direction upon the Defendant to disclose their personal assets and deposit of passport as well as

further reliefs as the court deems fit and proper. The said OA is pending for hearing before the DRT.

26. Our Bank and others have filed an Original Application bearing number 540 of 2015 (“OA”) against M/s.

KMP Expressways Limited and others (“Defendants”) before the Hon’ble Debt Recovery Tribunal – II, Delhi

(“DRT”). The OA has been filed by the Bank under the consortium for recovery of credit facilities provided

to the Defendant under the common rupee term Loan sanctioned by it and the total outstanding due to the

Bank as Applicant No. 8 as on September 30, 2015 is ₹ 72.44 crore. The OA has been filed praying for an

order (a) to issue recovery certificate in favor of Bank against the Defendants, jointly and severally for the

sum of ₹ 72.44 crore due as on September 30, 2015 with further interest and other charges thereon till

realisation, (b) attachment and sale of the charged, hypothecated, mortgaged properties of the Defendants

and proceeds thereof be appropriated toward the satisfaction of the of dues under the recovery certificate (c)

restrained from receiving any amount from the Government of Haryana or any other party/ entity in respect

of refund/ transfer of project without the permission of the DRT (d) restrain the Defendants from receiving

any book debt or receivables and direct the Defendants to issue instructions to its Debtors to make payments

directly to the DRT or to the Bank (e) injunction restraining the Defendants, their servants, agents and

representatives from alienating, dealing with, disposing off and/or creating their party rights in its properties

(f) the Defendants to disclose their personal properties and assets and further reliefs as the court deems fit

and proper. The said OA is pending for hearing before the DRT.

27. Our Bank has filed an Original Application bearing number 30 of 2016 (“OA”) against Arch Pharmalabs

Limited and others (“Defendants”) before the Debt Recovery Tribunal – 1, Mumbai. (“DRT”). The OA has

been filed by the Bank for recovery of term loan and corporate loan sanctioned by it aggregating to ₹ 85.01

crore. The OA has been filed inter alia seeking relief / interim relief that (a) the Defendants be, jointly and

severally be directed to pay the entire outstanding amount of ₹ 85.01 crore together with further interest plus

penal interest at the rate of 2% starting from December 31, 2015 until full and final payment/ realisation (b)

on the failure to pay the said outstanding amount, to order for attachment and sale of the secured assets of

the Defendants (c) injunction restraining the Defendants, their servants, agents and representatives from

alienating, dealing with, disposing off and/or creating their party rights in its properties (d) appointment of a

fit and proper person to be appointed as a receiver for the immovable and movable properties and (e)

appointment of a commissioner for taking inventory and submitting report of the properties. The said OA is

pending for hearing before the DRT.

28. Our Bank has filed an Original Application bearing number 461 of 2016 (“OA”) against Jogeshwari

Breweries Private Limited and others (“Defendants”) before the Debt Recovery Tribunal, Pune (“DRT”).

The OA has been filed for recovery of loan sanctioned aggregating to ₹ 61.98 crore. The OA has been filed

inter alia seeking relief / interim relief that (a) The Defendants be ordered to pay jointly and severally ₹ 61.98

crore plus accrued interest from December 01, 2015 together with future interest plus other charges

whatsoever (b) immovable property mentioned in the loan agreement be ordered to be attached and seized

and ordered to be sold and appropriate the proceeds towards satisfaction of the Banks claims and (c) order

of injunction restraining the Defendants from alienating or transferring the movable/immovable properties

owned by them. The said OA is pending for hearing before the DRT.


I, Mumbai (“DRT”) against P.K. International Exports Limited and others (“Defendants”) for recovery of

dues amounting to ₹ 53.31 crore including interest. The OA has been filed inter alia¸ seeking relief / interim

relief for (a) order for restraining the Defendants from disposing off or alienating the properties, (b)

223

appointment of receiver / commissioner to take possession of hypothecated goods, (c) order of attachment in

respect of hypothecated assets and (d) appointment of court commissioner for taking inventory and

submitting report of hypothecated goods. The said OA is currently pending.

30. Our Bank has filed an Original Application bearing number 456 of 2016 (“OA”) in Debts Recovery Tribunal,

Pune (“DRT”) against Bilcare Limited and others for recovery of dues amounting to ₹ 75.24 crore including

interest. The OA has been filed inter alia¸ seeking relief / interim relief for (a) declaring valid and subsisting

charge on immovable property and (b) attachment and seizure of the hypothecated assets. The said OA is

currently pending.


– I, Kolkata (“DRT”) against Shree Ganesh Jewellery House (I) Limited and others (“Defendants”) for

recovery of dues amounting to ₹ 96.37crore including interest under a consortium arrangement. The OA has

been filed inter alia, seeking relief / interim relief for (a) order of injunction for restraining the Defendants

from disposing off or alienating the assets, (b) appointment of receiver and (c) order for inventory and sale

of hypothecated properties. The said OA is currently pending.

(iii) Tax cases

A. Direct Tax

Below are the details of Income tax cases pending before CIT(A):

Sr. No. Assessment Year Amount involved (In Crore)

1. 2004 – 2005 22.19

2. 2006 – 2007 14.19

3. 2007 – 2008 15.67

4. 2008 – 2009 -

5. 2010 – 2011 44.08

6. 2011 – 2012 127.11

7. 2012 – 2013 246.45

TOTAL 469.69

B. Indirect Tax

Below are the details of indirect tax cases pending before CESTAT and CIT(A):

Sr. No. Period under dispute Forum Tax Involved (In

Crore)

Penalty involved

(In Crore)

1. July 1, 2003 to September 30,

2007 CESTAT 0.1888 0.1888

2. September 10, 2004 to

September 30, 2008 CESTAT 10.43 10.43

3. August 1, 2006 to March 31,

2008

Commissioner

(Appeals-I) 0.006 0.006

4. April 1, 2006 to March 31,

2009 CESTAT 2.16 2.09

5. May 16, 2008 to July 6, 2009 CESTAT 132.38 132.39

6. June 16,2005 to March

31,2010

Commissioner

(Appeals-I) 0.098 0.098

7. April 1, 2012 to November 30,

2104 CESTAT 24.11 24.11

TOTAL 169.38 169.32

C. Cases against our Directors

224

There is no litigation or legal action pending or taken by any ministry or department of the Government or any statutory

authority against our Directors.

D. Material Developments

There are no material developments, since the date of the last financial statements disclosed in this Placement

Document.

E. Penalties imposed on our Bank in the past

1. SEBI vide order dated September 10, 2015 had imposed a penalty of ₹ 2 lacs on our Bank in connection with

alleged violation of SEBI (Debenture Trustee) Regulations, 1993. Our Bank has paid the said penalty amount

on October 09, 2015.

2. FIU vide its order dated April 29, 2014 had imposed a penalty of ₹ 0.05 crore on our Bank for not filing Cash

Transaction Report, violating section 12 of Prevention of Money Laundering Act, 2002. Our Bank has paid

the said penalty amount.

3. RBI vide its press release dated July 15, 2013 had imposed a penalty of ₹ 2.50 crore on our Bank for non

compliance of RBI instructions on KYC/AML system. Our Bank has paid the said penalty amount.

4. RBI vide its letter dated March 24, 2014 had imposed a penalty as per section 42 of RBI Act of ₹ 0.01 crore

on our Bank for not maintaining CRR balance. Our Bank has paid the said penalty amount.

F. Actions taken by regulatory authorities in past

1. RBI vide its letter dated February 14, 2014 had imposed certain Prompt Corrective Actions (“PCA”) with

respect to structured and discretionary actions which were to be taken by our Bank. Thereafter, vide RBI

letter dated March 25, 2015 the PCA was removed for restriction on sanction of advances, participation in

restructuring proposal etc. However, relaxations for credit growth were subject to fulfilment of certain

conditions.

225

INDEPENDENT ACCOUNTANTS

The present statutory auditors of our Bank, M/s. Nundi & Associates, M/s. Mookherjee, Biswas & Pathak and M/s.

Arun K. Agarwal & Associates, are independent auditors in accordance with the guidelines issued by the ICAI.

Further, the audited financial statements as of and for the years ended March 31, 2016 and March 31, 2015 have been

audited by M/s. Ramamoorthy (N) & Co., M/s. Nundi & Associates, M/s. P C Bindal & Co., and M/s. S P M R &

Associates, and for year ended March 31, 2014 has been audited by M/s Dinesh Mehta & Co., M/s. Ramamoorthy (N)

& Co., M/s. P C Bindal & Co., and M/s. S P M R & Associates, whose audit reports are included in this Placement

Document. The unaudited financial results of the Bank as of and for the nine months ended December 31, 2016,

included in this Placement Document have been subjected to limited review by M/s. Nundi & Associates, M/s.

Mookherjee, Biswas & Pathak and M/s. Arun K. Agarwal & Associates.

226

GENERAL INFORMATION

1. Our Bank was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

on July 19, 1969. Our Bank is one of the 14 banks which were nationalised on July 19, 1969. On October 12,

1950, the name of Bengal Central Bank Limited (established in 1918 as Bengal Central Loan Company Limited)

was changed to United Bank of India Limited for the purpose of amalgamation and on December 18, 1950,

Comilla Banking Corporation Limited (established in 1914), the Comilla Union Bank Limited (established in

1922), the Hooghly Bank (established 1932) stood amalgamated with the Bank. Subsequently, other banks

namely, Cuttack Bank Limited, Tezpur Industrial Bank Limited, Hindusthan Mercantile Bank Limited and

Narang Bank of India Limited were merged with the Bank.

2. Our authorized capital is ₹ 3,000.00 crore divided into 300 crore Equity Shares of ₹ 10 each. Prior to the Issue,

the issued, subscribed and paid-up share capital of our Bank is ₹ 1,339.44 crore comprising of 1,33,94,49,372

Equity Shares of ₹ 10 each. For further details please see section “Capital Structure” beginning on page 65.

3. The Head Office of the Bank is located at United Tower, 11 Hemanta Basu Sarani, Kolkata – 700001, West

Bengal, India.

4. The Issue was authorized and approved by our Board of Directors by resolutions dated January 28, 2016 and

approved by our shareholders, pursuant to a resolution passed at the AGM held on June 28, 2016.

5. We have obtained all consents, approvals and authorizations required in connection with this Issue including

RBI recommendation dated November 29, 2016 received on December 3, 2016 and GoI Letter dated December

14, 2016 in respect of offering our equity share.

6. The Bank has received an exemption from SEBI in respect of compliance with minimum public shareholding

as specified under the SCRR and Listing Agreement for present issue vide their letter dated April 5, 2016.

7. We have applied for in-principle approvals from the Stock Exchanges under regulation 28(1) of the Listing

Regulations with the Stock Exchanges for the issue of the Equity Shares. We will apply for in-principle and

final approvals to list our Equity Shares to be issued in the Issue on the BSE and the NSE.

8. Except as disclosed in this Placement Document, we are not involved in any material legal proceedings and we

are not aware of any threatened legal proceedings, which, if determined adversely, could result in a material

adverse effect on our business, financial condition or results of operations.

9. There has been no material change in our financial or trading position since December 31, 2016, the date of the

Unaudited Financial Statements of our Bank prepared in accordance with in accordance with Standard on

Review Managements (SRE) 2410 and March 31, 2016, the date of the last audited financial statements of our

Bank prepared in accordance with Indian GAAP included in this Placement Document, except as disclosed

herein.

10. M/s. Nundi & Associates; M/s. Mookherjee, Biswas & Pathak and M/s. Arun K. Agarwal & Associates,

Chartered Accountants have consented to the inclusion of their certificate on the statement of tax benefits dated

March 20, 2017 in connection with the Issue.

11. The financial statements of our Bank included herein have been prepared in accordance with Indian GAAP as

applicable to companies in India. Unless the context otherwise requires, all financial data in this Placement

Document are derived from our Financial Statements and Interim Financial Statements. Indian GAAP differs

in certain significant respects from IFRS and U.S. GAAP.

12. Our Bank and the BRLMs accept no responsibility for statements made otherwise than in this Placement

Document and anyone placing reliance on any other source of information, including our website

www.unitedbankofindia.com, would be doing so at his or her own risk.

227

13. The Floor Price for the Issue is ₹ 24.44 per Equity Share calculated in accordance with Regulation 85 of the

ICDR Regulations as certified by M/s. Nundi & Associates; M/s. Mookherjee, Biswas & Pathak and M/s. Arun

K. Agarwal & Associates, Chartered Accountants. Our Bank offered a discount of 5% on the Floor Price in

terms of Regulation 85 of the ICDR Regulations.

14. Details of Compliance Officer:

Shri Bikramjit Shom

Company Secretary and Compliance Officer

United Tower

11 Hemanta Basu Sarani

Kolkata – 700 001

West Bengal, India

Tel: +91 33 22487472

Fax: +91 33 2248 5852

Email: [email protected]

228

FINANCIAL STATEMENTS

Financial Statements Page No

Unaudited financial results as of and for nine months period ended December 31, 2016 F – 1

Audited financial statements for the Fiscal Year ended March 31, 2016 F – 17



The Board of Directors

United Bank of lndia ^,rrrr nnoNTlls ENDED 31't December, 2016

LIMITED REVIEW REPORT FOR THE QUARTER AND NINE MONT

we have reviewed the accompanying statement of unaudited financial resurts of united Bank of lndia for

the quarter and nine,:ilHi :r"'"""'0"" 2016' rhis'*:*lJl':::ffi:;'iJ ltJ':iJ:

Bank,s Managemenr rno n* been approved by the Board of Dire

report on these financ"i'l"ut"rnt'nts based on our review'

we conducted our review in accordance with the standard "i -:,1"r:,:J:1?"il:Tiili',lrt"U:"#

of lnterim Financial rntor.otiun performed by the lndependentrTl, *" o'rnand perform the review

lnstitute of cr,'arter"o o"..or-.',0"r, of lndra' This Standard requirel ' -' *'+ori2l misstatement'

r ;:il T:iffi i';; il: iliJl* : nilt** t.=:H,ffi x':Til : : 1; ; r ; "'' ",1 : :r1

data and trl's p'o'iae'-lu" """ntt tnu-n-'n audit We n"" ""t Jti"'n1"o an audit and accordingly'

we do not express an audit t'plnion'

:::'J:Tff : ;:T : : ffi i :' :: :, * ",

"#; fiT:; "i

"':i ilir;

i: ff li i[Iil :i::::$ i ] :1

advance, po,.ttotlo o1 .n" ,,,nt â ol)iit.oi rlon-p"..t"..,^* o,,*-(*,o,);yil,,[;l.T',,;,;

December, zoro. rn-trre corrduct ", "",,",i"*, we have also relied upon Various retu

the branches of the bank'

Based on our review condrcted as above' nothing has come: ou'attention tha:::uses us to believe

rh at rh e u..o,,, n,, n f ,,,,, * " n,

", ::,IiT:J:ffi f 1*[ Itfl 1[X*,1:'-il'i:lI':l:accounrinB ,,,n0ur0,"& .tht:r '"'"*"'i::-1'::i:::[,iJ::;:1 ir'sr iLi,ting obrigations & Discrosure

ffi ffi :"* i:gi: : : lryi*: i r' ;. iilj lH ffi : : : ** ** ry* il r:::r rr :: ilr

material ''"t""'i.r"nt o"ttut it has not been prepared in acco

issued by the Reserve Bant. of rndia in ,"r*o of income ,"."r;;;;;asset ctassification' provisioning and

other related matters

; For M/s Arun K' Agarwal &

For Nundi & Associate: Associates

For M/s Mookherjee' Biswas

& Pathak

Cha

FRN

rwaI CA' Sanka

MukherjeeP a rtnerM.No 010807

a ntsntants Cha

CharteFRN

PartnerM.No.05987-8

Place: New Delhi

Date: 7'h FebruarY, 2017

FRN

Partnertvl No 082899

CACA

Charte'?d

Chatured

F - 1

i,-

I lntercst Earncd (r+b+c+d)

a) Interest/Discount on advanceVbills

b) lncome on Investment

c) Interest on balance with RBUOther interbank fund

d) Others

2 Other Incomc

3 Totrl Incomc (1+2)

4 Intcrest Expended

5 Opcreting Expcnses (i+ii)

i) Payments to and provisions for employees

ii) Other operating experu;es

6 Totrl Expenditure (4)+(5) (Excluding Provision rnd Contingencies)

7 Operrting Profit beforc Provisions and Contingencies (3)-(6)

8 Provisions (Other thon tax) & Contingcncies

9 Exceptionel Items

l0 Profit (+yloss(-) from Ordinary Activitics before tax (7-8-9)

ll Tax Erpcnsc

12 Net Prolit (+)/LossC) from Ordinrry Activities after tar (10-l l)

13 Extmordinary Items (tret of ter expenscs)

14 Net Profit (+)/LossG) for the period (12-13)

15 Paid-up equity share capital (Face Value of each share Rs. l0)

16 Reserves excldg. Revaluation reserves (As per Balance sheet ofprevious

financial year)

l7 Analyticol Rrtios(i) Percentage of Shares held by G.O.L

(ii) Capital Adequacy Ratio %

(a) CET 1 Ratio

(b) Additional Tier I Ratio

(iii) Eaming per Share (EPS)

a) Basic and diluted EPS before Extraordinary items (net oftax expense)

for the quarter,period and for the year (not annualised)

b) Basic and diluted EPS after Extraordinary items (net oflax expense)

for the quarter,period and for the year (not annualised)

(iv) NPA Ratio

(a) Amount of Gross NPAs

(b) Amount ofNet NPAs

(c) Percentage ofGross NPA

(d) Percentage ofNet NPA

Retum on Assets

BANK OF INDIAIIEAD OFFICE:KOLKATA

UNAUDITED FINANCIAL RESULTS (REVIEWED) FOR THE QUARTER AND NINE MONTHS ENDED 31St DECEMBER 2016.

Quarter Ended

31.12.2016 30.09.2016

(Reviewed) (Reviewcd)

Nine Months Ended

31.12.2016 31.12.2015

(Reviewed) (Rcviewed)

(Rs. in lacs)

Year Edded

31.03.2015

(Audited)

227198140349

80057

2016

4776

E1408

308506

r91100

64491

40s66

23925

223211

142369

74f341500

5008

66120

28933r

185571

60101

38400

2t70t

31.12.2015

(Rcviewed)

247070

164980

7585 I

962

s27't

3572t282791

186261

73061

51797

2tz$

593342

443100

230261

4919

15062

1E6532

879874

565054

r85426

117454

67972

129394

1264E3

0

29rl(11584)

r4595

0

r4595

133945

407501

8872%10.84%

8.47%

o.t9%

t29

t.29

108453 I

6't2989

15.98o/o

1062%

0.16%

755782s08725

22688s

2518

t'l654109403

8651E5

568271

2072E6

t47215

600'n

E962E

67E81

0

21741

8633

1310E

0

r3108

83952

439441

82.00%

9.92%

6.99%

0.13%

672153

3965 I 3

9.57o/o

5.91%

0 14%

993667

662844

303873

3844

23106

146753

t140420

76s6tt297278

2t3391

83887

255591

53015

5E854

0

(s839)

(122491

5410

0

6410

I 33945

40'7501

88.72%

10.84%

8.4'7%

0.19o/o

108453 |

672989

15.98%

t0.62%

0.2r%

43659

40103

0

3556

(7e7)

4353

0

4353

107196

407501

85.91%

10.88%

8.s6%

0.20%

lL13447

718521

1626%11.t9%

0.13%

2346922250

0

t2l9(48r)

1700

0

r700

83952

439441

82.00%

9.92%

6.99%

0.13%

672153

396513

9.57o/o

5.91%

00s%

245672 259322 7504E0 775557 1062889

71531

r48600

0

(71069)

(42813)

(2Er96)

0

(281e6)

83952

40750 I

8200%10.08%

7.'14%

0.19o/o

0.48

0.48

0.41

041

1.56

1.56

(3.36)

(3.36)

947101

6 I l07l1126%9.04%

-0.22%

0.20

0.20

ls

Chartered

(.

F - 2

Rs. ln

Part A:BuFlness Segmentsl

Year Ended31.03.2016

Ended31.12.2015

Ended31.L2.2016

ended31.L2.20L530.09,2016

ended3t.lz.20L

6L2

a 827667 159

7 ,7295555t47 740L7

I 01Ut 1851

15'43 791

Total

8 1535

10a 77Lt728 684522383 71 161732 95355s194L47on

93901119,769Totalnet I+t254unallocable income 5313,4695Total 67, 873103

Provision& cies 12llProfit Before Tax 87L

L z 113 10895L'70010PAT

3 962 0058876a 622749877,615749olesaleb 93,361929026100Banki '5775247,972 918727 877 797

i.e DomesticoneNote :-

The Bank has on

(

Chartered

C h arle,e C

-(Reviewed)Jflevibwed)

3,85,4244,64,8653,05,560

70,889' ' , -iji

57,125L94;,---;- ; ! !r

' : ,

d)Other Banking operation - t5,o765,2845,0118,79,8742,82,791

L.24,29650,343

(2,47,988)

-L,ZLg

89,628

8.633

2,54,807

98,09q

L,40,972 1,23,970

s.9s,912

F - 3


KOLKATA

Statement of Assets & Liabilities as on.31st l)ecember '2016

CAPITAL & LIABILITIESAs on 31.12.2016 As on 31'12'2015 As on 31'03'2016

(Rs. in lacs)

CaoitalIiStJ c"pltrl Monev Pending Allotmr:nt

Reserves & SurPlus

DePositsBorrowingsOit',er t-ia uirities and t t"*t':,".:

ASSETS

Cash and balances with Reserve Bank of lndia

ftf"""V at Call and Short Notice

As on 31.12.2016 As on 31'12'2015 As on 31'03'2016

1 33945

57874312769222

247822372889

14102621

83952

51 1 960

11247594456280383651

12683437

8395248000

49996711640127

291251379878

12943175

lnvestmentsAdvancesFixed AssetsOther Assets

691426140795

60607356369530

1 1 8380721755

14102621

5447241 0075

45998306749386

8580669361 6

12683437

607045225521

44723386806020

121092711159

12943175

a\a*

Total.l

niJ

,t

Clarle-erlAcc is

Charlered

F - 4

NorEs oN AccouNr;r'-?i',T:i"rrrll'::.:,ut:'?,'l[?u''*o*'rAL REstrLrs FoR rr{r:

QUAIITER AND NINE-N/

1 r h e a b ove r n a n c a "':'i:: J:t J1"."J J;fi::"il':xli:ii illil: ;'":'ff il i1i': ::

:;;;;' .,"tl-::l:,"^:'d have been sublect"j'tl"l''u',,. rcview bv the statutorv ('errtral

7in Fcbri'arY, ')o17 ar'

Auditors of thc llank

rhere has b*en no ctrarrg'e in thc.Acc'ou:]'iil;:::: l'J'"ff'1til'[il" ':'i;:'Jl::":':;:.,;;;r;";;Jed 3Lst December' 2016 as co

;;r":':' vt" t"ouo :i1" March' 2016'

rhe f n a n c a': "' .,

I:J,ll:,ffi: l::::[iliil" il::;:!i1irft ff,#riH * j, ffiTiarrived at, after .cor .rion for lnvestrnents olo,,,r=touli,

ur"",rion loro"rirra,""O Assc'ts and Depreciation/Provtstu"*u"r"""-t'nk of^

besides othcr usual an.norms and specific guidelines ittu"d.!y^.:..n

currency Exposure ottiot:.,'-t:::J:X,:'"t;r,

nffi;i#|:::**;ff iiili"'"ii",-:;='::i:r:f ::::::il';l::L::i;:::'1"-;..ilril on the Lrasis of actuarial "',''i:lprovision f or income t'^ t*'" O"tn made on esttmated basis'

n'i e r nr s'f R B c r cu a

: :J ?:lH :i * : tliiiliiff ii lJ

;:f, Xii'ii".:1,^,J':r* *:::::, Ii'Jilli ;;i: ff

- ;; io

: ::::1.0"il",,n.- 0,',, 1'T'.T,'liilil.11 II, ;ff :;i;;r:n m;ll:l;#'l[''T: iililrii ;; ui :: sffi ' I

"1' ;'";"-" o n' "'

o'[' m'l c d

..0"""'il'Ule o:r llank's websitc and the

review by Statutory Central Auditors'

s n accordanc" *t'l; llll,s;l;:T:,jt":"'-"),,l,tilli:i:#iiL+:j:'"'^"Jl'YlJil:having face value ot nt.1o'1-i","^"^t

"r'r" Rs.2633 crore) during

face value of Rs 2575 60 crore tBook value Ksrffi;';;:oi"*'tt'

31,,December. ,0r,, 1,,"*.ver, there is no impact on finar.rcial rest

6 prov s on or Rs 1 lll,,'j"lxj"L':';

yil"Ji;inlil:!:::t"frs":i:,l#illni:i?constituents has l,)"t:i,::l: 1', I"r*'tt 01.2014 1he Iiabilitv t

No BP Bc 85/ 2106 2ool2013-14 dated''-l.l;;;;;tn tn., o'nn

;;r;;t'; data and tinanr'ial statcments a\

7. The Provision Covtlral3e Ilatio as at 3l"December 2016 is 54 62

8 During 1511 r 11e'r quarter 'n".

blilffi,:i::iiil#i*11:'.,m*rnliilo.rooo,. 2016 to (rovernment "t ':l,',t-";J'rrlo,.ot determin.d

,n"" t including' lls 12 73 tt P'l'll'.Regulations' 'non'aft"'

rcceipt of requisite approval

g.lncompliancetol{Blletterno.DBR.No'8P.13018/21.04'048/201516dated12,04.2.016,8ankhas provrded u '"'' ot Rs s2 14 ""'"

i"'"*"i#ot'n" "'otiilf::*X''1'1"1';"il,itl'crore till t'" "iitrn# '"'ioluunder

the food credit' availed bv

2

3

4

C f,arl e,e i,l cc

F - 5

lO.lnaccordancewithUt-lAY(UiwalDiscomAssuranceYojna)Schcmeofcol,Ministryof[)owerfor operarionr, ,"0",i.r'"iL'i ,lrnnro-a'oi"Oo*"' Distributron Companies during tht: v.ar

201s-16, the banr h;r'l'u",.it.'"0 to uo'''iLn-soL UonA :l :":ff["lill,tl1j::1;t:l];

l?l;i' * Tx, TJ, :i #;r :i ;;, ry :J'::i'l'ili: if il* : #rl ],':ryi{','

u' u

a nd su bs e qu " ",

; ;;;;;i on uv .,,., r rr,,io "J*l.

rr. u. * " I :,::ii::t'r'"lr1ij i,;î::i11'n Mav ro'u,

'nl"'" ffi:il;;o':'li""o:"fii'J:'.il:1il'Ti' -;;il errect rrom the

2017.1n case of non ':onverslon' these b

date of restructurlng '^t' * O" provided accordingly'

11'Resultsforninemorrthsended3lst.December,20l.6includeincrementalprovisionoflls,78.95 crore t,t z'sJz" oi the outstandi",,;;;; .

',0 restructured standard accounts) as

Per RBI instruction'

12, I he number of invcstors' co

Decembe r,2016 is a:; under

mplaints received and disposed off during the quartt:r ended 31"

l)r.r rin11 thtl Qtrartt:r er-rclecl l)ecernber 201 6

13

N.K.KaPoor

Gencral Manager

(ACCIS,GT,MSME) & CFC'

For Nundi & Associates


FRN

PartnerM No.059828

Place: New Delhi

Date: 7'h FebruarY, 2017

o r'll Iit:t:t'ivccl l) isPtlstl ci o{f (-los it-r 11

14 14, NiI

wan Baiai

lVlanaging Director & Chief Executive Officcr

ol)

Thefiguresofprt:viousperiodhavebeenregiouped/rcclassifiedwhereverconsrderednecessary in order to make thcm comparable'

K.V.Ra ma moorttrY

Executivc Director

For M/s Arun K' Agarwal &

AssociatesChar

FRN

CA

Partner

M No 082899

For M/s Mookheriee' Biswas

& Pathak

CharteredFRN:301

CA. Sank

MukherieePartner

M.No 010807

t

CA

Chadered

Accountanls

\

I

I

I

t__

F - 6

,INDEPENDENT AUDITOR'S REPORT

ToThe Members of United Bank of India

Report on the Financial Statemente

1. We have audited the accompanying financial statements of UNITED BANK OF INDIA as at 31"t March,

2016, which comprise the Balance Sheet as at March 37,2076, and Profit and Loss Account and the cash

flow statement for the year ended on that date, and a summary of significant accounting policies and

other explanatory information. Incorporated in these financial statements are the returns of 20 branches

and treasury operations audited by us and 670 branches/retail hubs audited by branch auditors. The

branches audited by us and those audited by other auditors have been selected by the Bank inaccordance with the guidelines issued to the Bank by the Reserve Bank of India. Also incorporated in the

Balance Sheet and the Statement of Profit and Loss Account are the returns from 35 Regional Offices,

1319 branches, 1 Staff Training Colleges, 1 Cash Management System and L Central Pension Processing

Cenhe, which have not been subjected to audit. These unaudited branches account for 9.87% of gross

advances, 36.55"/" of deposits, 8.95% of interest income and 36.26o/" of interest expenses.

Management's Responsibility for the Financ ial Statements

2. Management is responsible for the preparation of these financial statements in accordance with Banking

Regulation Act 7949, Reserve Bank of India guidelines from time to time and accounting standards

generally accepted in India. This responsibility includes the design, implementation and maintenance ofinternal conkol relevant to the preparation of the financial statemenb that are free from material

misstatement, whether due to fraud or error.

Auditor/s Responsibility3. Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted out audit in accordance with the Standards on Auditing issued by the Institute of Chartered

Accountants of India. Those Standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement,

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgement, including the

assessment of the risks of material misstatement in the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal conhol relevant to the Bank's

preparation and fair presentation of the financial statements in order to design audit procedures that are

appropriate in the circumstance$, but not for the purpose of expressing an opinion on the effectiveness ofthe bank's internal control. An audit also includes evaluating the appropriateness of accounting policies

used and the reasonableness of the accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements.

5, We believe that the audit evidence we have obtained is sufficient and appropriatd to provide a basis forour audit opinion.

Opinion6. In our opinion, as shown by the books of the bank and to the best of our information and according to the

explanation given to us:

(t) The Ba lance Sheet r ead with the notes thereon is a full and fair Balance Sheet of the Bankcontaining all the necessary particulars is properly drawn up so as to exhibit a true and fair view of

Charlered red.

F - 7

state of affairs of the Bank as at 31rt Mar ch, 2016 in conformity with accounting principles

generally accepted in India;

(ii) The Profit and Loss Account, read with the notes thereon shows a true balance of Loss, inconformity with accounting principles generally accepted in India, for the year covered by the

accoun! and

(iii) The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on thatdate.

Report on Other Legal and Regulatory Requirements7. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the

provisions of section 29 of the Banking Regulation Act, 1949.

8. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by the Banking

Companies (Acquisition and Transfer of Undertakings) Act, 1970, and subject also to the limitations of

disclosure required therein, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and

belief, were necessary for the purposes of our audit and have found them to be satisfactory;

(b) The transactions of the Bank, which have come to our notice, have been within the powers of the

Bank; and

(c) The returns received from the offices and branches of the Bank have been found adequate for the

purposes of our aud it.

10. We further report that:

a) The Balance Sheet and Profit and Loss account dealt with by this report are in agreement with the

books of account and returns;b) The reports on the accounts of the branch offices audited by branch auditors of the Bank under

section 29 of the Banking Regulation Act,'1.949 have been sent to us and have been properly dealt

with by us in preparing this repor0

c) In our opinion, the Balance Sheet, Profit and Loss Account and Cash FIow Statement comply withthe applicable Accounting Standards.

Date: 17s May 2016

Place: Kolkata

For

Co.

Ramamoorthy(N) & Nundi & Aseociates. PCBindal&Co. SPMR&Associates.

Chartered AccountanB r/ Chartered Accountants Chartered Accountants Chartered Accountants

FRN:002r4FG'rI ,/ FRN:30e0ffiffi FRN:003ffi fRN:OOZSZSIJ- ),,1;,.

€fdffi \46-m-'-\

c)

ce.surl(pffifi3ffiathi CA.Soum\!$ffia-/ (e.saffi,!/ CA.Pramd{fra}ffi 1$'tlfariPartner

\-- Partner Y Partner \:7 Partner \El#t/

M.No:023837 M.No:059828 M.No:093783 M.No:085362

F - 8

ST MARCII 2I

3r.03.201s I(Au{!at) |

xs7l86 I

fi86521

3t5312

79193

67610

0

I t5E3

(R9, lr ltg!)

Ycar Ended

I

2

!t:or?-ol6 .

(A$l!ed)?e]667

t !.03.?015(AP4ltctt)

1018048?04083

i1tst2e9l7

170t617 4691

ll9z739768982

180963

103829

17134

662844

303873

3844

21106

146753

I 140420

763611

193629

109742

E3887

3

4

5

t8608!50034

26741

23293

t9236 939240! 949943

242794

197!84q

4s410

l98l I

25599

0

25599

83952

439441

82.00o/o

ll.42Yolto.51%

6

t8

I9

l0ilt2

Operollng Proflt beforG Provlslons and Contlngencles (3)-(6)

Provlslons (Other than l8x) & Conllngencles

Exceptlonal llensprrnliilll,.$tl fronr Ordlnary Acllvltles before tax (7-&9)

Tax DxPense

ll.il,-rrnr tiyL*s(-) from Ordlnory Activltles afler te r (10''l l)

Exlr0ordlnory. llems (nel of lax erptnses)

Nel Proflt (+)/Losst) for lhe perlod (l2rI3) .

Paid-up equity sltare capilal (Face Value ofeach share Rs lu)

i.."*';t li.ra, oevaluation rcscrvcs (Aq per Balancc shccl of

previous financial Year)

Analyllcsl Ratlos(i) Percentage ofshares held by G'O L

(ii) Capihl AdequacY Ratio %

a) Basel-ll

b) Basel-lll(iii) Eanring Per Share (EPS)

ii6"rl. ",iairr,"a

ipi uerore Extraordinary items (net of tax.

*p.rr.ii"t,ft" qrarter,period and for lhe year (trot afl*:lOt1l -^-

Uj nrri. ,rta diluied EPS afler Extraorfinqry itcnrs (rrct oftax cxpense)

foi rlre qtrarter,period and for lltc year (notannuallseq,1

(iv) (a) Anrourlt of Gross NPAs

(b) Amourrl of Net NPAs

(c) Percentagc ofCross NPA

(rl) Percentagc ofNet NPA

(v) Relum ort Assels (tutnualised) (%)

Public ShareholdinC

l3t4l5l6

i No. ofshares

I Percenlage of shareholding

t9 i Pronrorers and promoter group Shareholding

i a) Pledged/Encurnbcrcd

I No.ofshares

i t.t".'rrt";rr,res(as a % ofllp total shareholding ofprornoter and

ipronroter grouP)

i'p.t..rirt. "rrirre

(as i % ofthp lotal shue capilal oflhe company)

b) Non-encurnbered

No. ofshatesp","ilr"g"

"f.f,.es(as a oZ oflhe lotal shareholding of promol€r and

prornoler grouP)'t"rLr"t-t

"ftit"re (es a % oftlto lolal share capilal oflhe comPany)

21s33l17t4l

0

(e2Eto)

(5I s06)

(41 304)

0

(4llo4)83952

407501

82.00%

10.46%

10.08%

(4.e2)

(4.e2)

947101

6l l07lt3.26%9.04%-1.28%

47gqq

45781

0

tzlg(4Er)

1700

0

1790

83952

439441

82.00%

t0j|%992%

0.20

672153

3e65 I I9.57.Vo

5.9t%0.05%

I 5 1,085,34 I

18.00%

688,430,610

100%

82.00%

ll3liI

r o4s2 !. i.oi

10452 i

83ss2i419441tl

I

I

I.t

82.00%iI

r.42%l10.51%i

I

l.4l

l.4l6s52gl408 I 38

g.4g%

6.22Yo

0.!50/o

I 51,08t,34 I

18.00o/o

iNil!Nirl

I

Nitil

II

68S,430,6 I 0 i

t00%tI

i,t82.Ol%oi

..1"l

82.O)voi

rc.46%:4

t0.08%;

I

(3 36)!I

(3.36) I

947101t.

6ll07llit.zou"i9.04%l

40750

(28 le6)0

(28le6)E3952

NiIINil

Nil

I

82.00%li

1

o.2oi

J

3.78 ii

378 i655291i408r381

s.As%l6.22%.1

0.2lo/o\iI

-0.22%

I 5 1,085,34 I

l8.00YoI

i

Niri

151,085,341i

l8 00%!

688,430,610

I 009;

82.00%

Nil

Nil

NiliI

I

NiliII'iI

688,430,6101

lOOY,I

82.00%l

i

NilNil

Nil

688,430,6

'Charlered.

AccountantsCharlered

Charleredo) o

.o

*

F - 9

UNITED BANK OF INDIAKOLKATA

Statement of Assets & Liabilities as on 31st Marc 2016

PITAL & LIABIL'TIES As on 31.03.2016

83952Share Capital Money Pendi ng-Allotmgrt! 48000Re9.eryes _q 9_s.fP-lvl 499967

its 11640127B_oJgwjn"s-9- 291251Other Liabilities and Provisions 379878

Total 12943175

ASSETS As on t1 03.2016

Cash and balances with Reserve Bank of lndia 607045Mon-ey a!

-C_al!gnd Shqrt.Notice 225521

lnvestmenls 4472338nces 6806020

Fixed Assets 121092Assets 7 11159

Total 12943175

(Rs. ln lacs)

As on 31.03.2015

83952

4988521 0881 760

406173432021

12302758

As on 31.03.2015

58156021494

43245496676304

8774161 11 10

12302758

Charlered'

Chartered

Accounlanls

l

F - 10

I

Rs. ln Lacs

Segment RePortlng:

Part A:Business Segments:

Year Ended3l.o3.zo15

Year Ended31.o3.2016

3

Quarterended

1.03.2015

Quarterended

gl.l2.2o15

Quarterended

31.03.201

ntI 42L777lL 6i0a reasu 56571L5071o,lesale Bankib Co 2 ,99L6693477B

Retail Banki ,76795389523200ther Ban o 77,74L59184nallocated Incomee 192 7391 13123282 79L362Total

nt RevenueLess: I n ters 192 739l3123282 79L362Total 0000

2 ent Results:P 13t329, 1L 740rationsa asu IL1 61217 55515olesale Banl<ib Co 922I231621Retail Banki ,7 679538952320ther o eration

3I32tt7076lB6Total 00enses netLess:Unallocable

7 34loff unall ocable income ,7941B1937+7 00Total 197497 078LL77Provision& Cori 1073119Profit Be re Tax 1I3tI+8I 0

nseTax 21962I z700+PAT

3.Ca t9 1965199,06L2t I?.0 9650nsa 21 700z22L 7002L20lesal e Banl<inb Co L999026L93Retail Banki 77 34970I77,2347 0757Z 970d U nallocated 9tB5B9lz63 918tal

nt i.e Dornestic Sicalone Geoent

Note:-e Bank ltas

ChartereJtitants

\

ChartereC

F - 11

NOTES ON ACCOUNTS FORMING PART OF AUDITED TINANCIAL RESULTS FOR THEQUARTER AND YEAR ENDED 31STMARCH,2076

1,. The above financial results have been reviewed by the Audit Committee of the Board andapproved and taken on record by the Board of Directors of the Bank in.its meeting held on77u May,2016 and have been subjected to audit by the Statutory Central Auditors of theBank.

2. There has been no change in the Accounting Policies followed during the quarter / yearended 31't March, 20'1.6 as compared to those followed in the preceding financial year ended3L't March 2015.

3. The figures of quarter ended 31st March 20'1.6 are the balancing figures between auditedfigures in respect of the full financial year and year-to-date figures upto the period ended31st December 2015.

4. The financial results for the Quarter and year ended 31't March, 2015 have been arrived at,

after considering provisions for Non-Performing Assets, Standard Assets, RestructuredAssets and Depreciation/Provision for Investments on the basis of prudential norms andspecific guidelines issued by the Reserve Bank of India (RBI), provision for exposure toentities with Unhedged Foreign Currency Exposure besides other usual and necessaryprovisions. Provision for Employee Benefits pertaining to gratuity and pension has beenmade on the basis of actuarial valuation during the current quarter and year ended 3L't

March,2016.

5. Pursuant to RBI circular DBOD.NO.BP.BC./21.06.207/2013-14 dated July 01, 2013 coveringguidelines on pillar 3 disclosures under Basel III capital requirements with effect from 30th

September 2013, the disclosures are being made available on bank's website. These

disclosures have not been subjected to limited review.

6. Provision of Rs.1.11 Crores towards Unhedged Foreign Currency Exposure (UFCE) has beenmade as on 31't March, 20'1,6 in terms of RBI Circular DBOD No.BP.BC.85/2'1.06.200 /2013-1.4dated 15.01.2014. The liability has been estimated based on available data, and financialstatements available with the bank.

7. Pursuant to RBI circular DBR.BP.BC.No.31/21.04.018/201.5-16 dated 16tt July 2015, effectivequarter ended 30th June 2075, the Bank has included its deposits placed withNABARD/SIDBI/NHB on account of shortfall in priority sector targets under schedule 11-

"Other Assets". Hitherto these were included under "Investments". Interest income on thesedeposits has been included under "Interest Earned-Others". Earlier such interest income wasincluded under "Interest Earned-Income on Investment". The above change in classificationhas no impact on the profit of the Bank for the quarter and year ended 31.t March, 2016 or theprevious period presented.

8. During the quarter, as a part of Assets Quality Review (AQR), RBI has advised the bank torevise asset classification/provision in respect of certain advances over two quarters ending37.72.2015 and 31.03.2016. The Bank has accordingly classified the advances and made therequisite provisions.

9. The Provision Coverage Ratio as at 31't March, 2016 is53.36y"

\Chartered

Charteredl1t(::

J,

F - 12

L0. The bank received Rs. 480.00 crores from Government of India towards capital contributionon 30.03.20L5 and the same has been reflected under Share Application Money PendingAllotment. Bank has treated the same as a part of CET-1 capital fund as per permissionobtained from Reserve Bank of tndia on 06.04.2016. On 04.05.2016 bank allotted 23,24,45,520equity shares to Government of India on preferential basis at an issue price of Rs.20.65 pershare ( including Rs,10.65 as premium per share) determined in accordance with SEBI ICDRRegulations , 2009.

11. The bank has recognized Deferred Tax Assets of Rs.333.82 Cr., Rs 747.W Cr and Rs.14.24 Cron account of timing difference arising out of excess provision over & above the deductionfor bad and doubtful debts, Funded Interest Term Loan and provision on Food Creditrespectively under the provision of Income Tax acts 1961. Hitherto the same was notrecognized.

12. During the year bank has revalued fixed assets forming part of its Fixed Assets Schedule onthe basis of report of external independent Valuers and surplus of Rs. 346.67 Crores has beentransferred to Revaluation Reserve during the current year.

13. In compliance to RBI letter no. DBR.NO.BP.730L8/27.04.048/2075-15 dated 72.04.2076.,Bankhas provided a sum of Rs.41.14/- crores being 7.5% of the existing outstanding ofRs.548.6,0/- crores as on 31.03.2016 under the food credit availed by State Government ofPunjab.

14. ln accordance with UDAY(Ujwal Discom Assurance Yojna) scheme of GOI, Ministry ofPower for operational and financial turnaround of Power Distribution companies during theyear 207t76, the bank has subscribed to Non SLR SDL bond of Govt of Rajasthan of Rs231.78

crores and DISCOM Bond of Jaipur and |odhpur Vidyut Vitran Nigam of Rs.150 Crore. Asper RBI circular dated DRB.BP.BC.No.17637/27.04.732/2075-1.6 dated 17tt' March 20'1.6 andsubsequent clarification by circular No DRB.BP.BC.No.14185/27.04.732/2075-1.6 dated 11hMay 20'1.6, those DISCOM bond will be converted into Non SLR SDL bond by 31't March2017.In case of non conversion, these bond will be classified as NPA with effect from the dateof restructuring and to be provided accordingly.

15. Pursuant to RBI circular DBR.NO.BP.BC.27/27.04.078/2075-L6 dated 2na |uly 201.5, themethod of calculating discount rate for computing net present value of future cash flows fordetermination of erosion in fair value of advances, on restrucfuring was changed.Accordingly, there is a reduction in provisioning for diminution in fair value by Rs.467.6'1,

Crores for the year ended 31't March, 2016.

16. Persuant to RBI Circular No RBI/2014-75/535 DBR.No.BP.BC.83/27.04.048/201,4-15 dated07.04.2075, the Bank has made a provison of Rs.62.38Crores (PY Rs,2.09 Crores) during theyear ended 31't March 2076 n respect of frauds/suspected frauds and balance unprovidedamount of Rs.53.74 Crores has been debited to Revenues & Other Reserves in terms of RBI

circular No. RBI/2075-16/376DBR No.BP.BC.92.27/04.048/2075-76 dated 18m April2016.Thesame will be reversed by debit to the Profit and Loss account in subsequent quarters in thenext financial year.

17. ln terms of clause 6.5(A)(a)(ii) of Reserve Bank of India's (RBI's) Master CircularNo.DBR.No.BP.z/27.04.048/2015-1,6 dated 1't Jt1y,201,5, the Bank has utilized itscountercyclical/floating provisions held as at 1st April,2015 of Rs.52.76 crores for adjustment

Chartered Charteredtan

F - 13

DURING QTR MARCH 16 FY 2075-76

Disposed

offClosing Opening Received Disposed

offClosingOpening Received

73Nil 1.4 1.4 Nil Nil 73 Nil

l1

of loss arising out of sale of assets, below the net book value, to Assets ReconstructionCompany.

18. The number of investors' complaints received and disposed off during the quarter ended 31'tMarctu 2016 and FY 2075-16 is as under:

19. The figures of previous period have been regrouped/ reclassified wherever considerednecessary in order to make them comparable.

P. SrinivasManaging Director & Chief Executive Officer

t4/flln -.Sanjaf)(umar

General M6nager & CFO DirectorK.V. RamamoorthyExecutive Director

As per our separate report of even date annexed.

M/s. Ramamoorthy(N) & Co M/s. Nundi & Associates.Chartered Accountants Chartered AccountantsFRN:0028995

M/s. P.C. Bindal & Co. M/s. SPMR & AssociatesChartered Accountanb Chartered AccountantsFRN:003824N FRN:007578N

BharathiPartnerM.No:

Date:17h l&flay 2016

Place: Kolkata

\.\\yCA.6itGupta

PartnerM.No:093783

Nandi CA. PramodPartner

MaheehwariParbrer

M.No:059828 M.No:085362

Chartered Chartered

I

F - 14

i-

a


Balance Sheetas on 31st MARGH 2016

(Rs ln thousand)

CAPITAL & LIABILITIES Schedule As on 31.03.2016i

As on 31.03.2015

I

lCapital

lsnare nOOrlcation Money Pendlng Allotment

lReserves & Surplus

lDeposits

Borrowings

Other Liabilities and Provisions

Total :

(Audlted) (Audlted)

839 ,51 ,60I

1A

2

3

4

5

839 ,51 ,60

480 ,00 ,00

4999 ,66 ,90

116401 ,27 ,64

2912 ,50 ,65

3798 ,78 ,25

4988 ,52 ,34

108817 ,59 ,89

4061 ,72 ,g8

4320 .21 .101

129431 75 04 123027 1

ASSETS Schedule As on 31.03.2016 i As on 31.03.2015

I

IlCash and balances with Reserve Bank of lndiaI

lBalances with Banks andI

lMoney at Call and Shorl Notice

ltnvesrments

Advances

Fixed Assets

Other Assets

Total :

(Audlted)

6 6070 ,44 ,66 5815 ,60 ,12

7

8

I10

11

2255 ,21 ,23

44723 ,38 ,34

68060 ,20 ,04

1210 ,92 ,00

214 ,94 ,02

43245 ,49 ,49

66763 ,03 ,55

877 ,41 ,32

7 111 58 77 6111 1

129431 76 123027


Bills for collection

12 1t583 ,90 ,97

1959 ,97 ,05

6450 ,33 ,61

2416 ,50 ,60

Pl1

CDarlered

CharlcredCharlerecl

tan

F - 15

a

I

jl

'i'-'"iSCHEDULE 1 - CAPITAL

AUTHORISED CAPITAL

Equity Share Capltal

tPerpetual Non Cummulatlve Preference Shares(PNCPS)

;ISSUED, SUBScRIBED AND PAID- UP CAPITAL839515951 (Previous Year 839515951) Eqgity

iShares of Rs. 1 0/- each[(includilg 68843061 0

(Previous Year 688430610) held by GOll

Total

I

i

i

I

l

1

I

I

j

;

I

I

1

I

i

,

!

it'

As on 31.03.2016

3q0-g ,q0

ln thouoa

3000 ,00

839

As on 31.03.2015

!

232445520

SCHEDULE 1A - SHARE APPLICATION MONEY PENDING ALLOTMENT

As on 31.03.2016

SHARE APPLICATION MONEY PENDING ALLOTMENT" '4SO ,OO ,0ol

Total : 480 ,00 00

"Share application money pending allolmenl represents application received from Govt. of lndia which comprise ofshares of face value of 101 each fully paid up proposed to be issued at a premium of Rs, 10.65 /share.

Equity

j

ri

il'.irl

ti

'-Equity shares are expecled to be allotted against the share application money within 60days from the dale of passing specialresolution. The Bank has sufficient authorised capital to cover the share capilal amount on allotment of above shares.

Pt2

As on 31.03.2015

839 1 g3g ,51 ,60

Chartered Chartered

(Audltedl

F - 16

1*

-i

l. Statutory ReservesOpening BalanceAdd: Transfer from Profit & Loss Account

SUB-TOTAL:

ll. Capital Reservesa) Revaluation ReserveOpening BalanceAddition during the period/year

Add/(Less): Adjustment during the yearLess : Transfer to Profit & Loss Account

b)OthersOpening BalanceAdd:Transfer from Profit & Loss AccountAdd/(Less): Adjustment during the year

suB-ToTAL [(a) + (b)]

lll. Share PremiumOpening BalanceAddition during the year

SUB TOTAL

lV. Revenue and Other Reservesa). Special Reserve l.T.Opaning Balance

Less: Draw down

Add:Transfer from Profit & Loss AccountSUB TOTAL (a)

b). Revenue ReserveOpening Balance

Add: Transfer from revaluation reserveLess: Draw down for adjustment for Assets

Adj:Transfer from Profil & Loss AccountsuB ToTAL (b)

SUB-TOTAL [(a) + (b)]V. Balance in Profit & Loss Account

TOTAL l+ll+lll+

SCHEDULE 2. RESERVES & SURPLUS

As on 31 016

dited

777 ,51 J2_

777 51 12

.t591 97.,14j346 ,66 ,971

I

(1.6 r07.924 ,66

1509 ,64 ,20i

. 19 163 r87

18 .121528 ,46 ,192453 12

;: I

2078 ,82 ,02i!

-i.I

2078 ,82 ,02

As on 31.03.2015

713 ,51 ,31

63777 12

608 ,89 ,37

(14 ,82sbq 4

1508 ,49 ,531 ,14 ,67

1509 ,64 ,202103 71 34

1263 ,58 ,81

815 ,23 ,212078 82 02

220 ,00 ,00

220 00 00

-386 ,58 ,41

14 ,82 ,23(10 ,60 ,70)190 ,84 ,74

-191 14

28 ,47 ,86

t

220 ,00 ,o0

-191 ,52 ,1416 ,07 ,86

(93 ,74 p-9)

-300 ,59 ,75-529 78 I-3og ,79 ,69

" -\""

52

Chartered

1

't, 220 ,00 ,00!

Ii

F - 17

-a

As on 31.03.2015

(Audltedl

108817

108817

A3 on 31.03.2015

(Audlted)

SCHEDULE 3 . DEPOSITS

A3 on

Al. Demand Deposlts

i) From Banks

ii) From Others

1188,08,43

6793 ,33 ,56

1261 ,2s

7082 ,69

[.

I[.

Savlngs Bank Deposltg 40E09 ,62 ,35

Tsrm Deposlts

i) From Banks

ii) From Others

TOTAL :

1251 .56 ,48i 176.1 ,02 ,1

66358 61 301

I 1 6401

i) Deposits of branches in lndia

ii) Deposits ot branches outside lndia

116401 ,27 ,44 108817,59

116401

SCHEDULE 4. BORROWINGS

r As on 31.03.2016

t. Borrowlngs ln lndla

i) Reserve Bank of lndia

ii) Other Banks

iii) Other lnstitutions & Agencies #

584 ,00 ,00

85

,65

,53 4 ,91

3472 ,8129

ll. Borrowlngs outslde lndla

TOTAL 2912 4061 f2

Secured borrowings included in l&ll abov6

# lncludlng Subordinated Oebts tor Tler ll Capltal.

# lncluding lPDl lor Ti6r I Capltal.

l

'l1925 ,OO ,OOI

450 ,OO ,OOi

584 .00

2225 ,00 ,00

300 ,00

Chartered

36811 ,10

F - 18

\t

SCHEOULE 5. OTHER LIABILITIES ANO PROVISIONS

tu on 31.03.2016

t. Bills Payable

lnter-Oflice Adjustments (net)

lnleresl accrued

Contingent Provisions againsl Standard Assets

Deferred Tax Liability (net)

Proposed Dividend (including Dividend Tax)

Others (including provisions)

TOTAL:

374 ,59 ,30

121 ,10

917 ,33 ,76

636 ,32 ,00

1749

I

2100 ,00 ,001

2193

91 ,40 ,821

2255

348 ,79

67 ,81

1022 ,35 |

1060 ,09 ,00

ilt.

tv.

vt.

v[. 1821 11

SCHEOULE 6. CASH E BALANCES WITH RESERVE BANK OF INOIA

iAs .03.2015

L Cash in hand (including loreign currency notes) 558 ,80 ,

ll Balances wilh Reserve Bank ol lndia

i) ln Currenl Account

ii) ln Other Accounts

TOTAL :

503 ,02

5312 ,58 ,12

49 ,49

140 ,00 ,00

25 ,44

5511 ,63 ,73

6070

SCHEDULE 7 . BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE

As on 31.03.2016

ln lndla -

i) Balances with Banks

a) ln Current Accounts

b) ln Other Deposit Accounts

ii) Money at Call and Short Notice

a) With Banks

b) Wilh other lnstitutions

SUB.TOTAL:

Outsldo lndla


a) in Current Accounts

b) in Other Deposit Accounts

ii) Money at Call and Short Nolice

SUB-TOTAL :

TOTAL:

189

[.

25

As on 3r.03.2015

(Audlted)

As on 31.03.2015

(Audlted)

581 5 1

As on 31.03.2015

(Audltedl

214

Charlered Chartered

Accountants

t.

-l

F - 19

.r.

A8 on 31.03.2015

(Audltod)

43470 ,o4 p4

(194,54,8s)

13245 ,15 ,49

SCHEDULE 8 . INVESTMENTS

t. lnvestmente ln lndla (Gross)

Less : Provision ,or NPl, depreclatlon / amortisation

NET

As on 3l.03.20to

44934 ,02 ,73

10

44723

i

I

I

36240 ,65 ,99iI

'II

222 ,71 ,O1i

2087 ,88 ,41

12

44723

319?9 ,14

201 ,56 ,82

207? p3 ,e2

43245

ll.

Broak-up

i) GovernmentSecurities

li) Olher Approved Securities

iii) Shares

iv) Debentures and Bonds

v) Subsidiaries and/or Joint Ventures

vi) Others (Mutual Fund, CP,CD. etc.)##

SUB-TOTAL:.

lnvestmentr outslde lndla (GrosB)

Less : Provision for depreciation

NET

Broak-up


(including local authorities)

ii) Subsidlaries and/or Joint Ventures abroad

iii) Other invdstments

SUB-TOTAL :

TOTAL(r&[]

I

I

i'l

1

-i

#f, A! ps, RBI circular no.DBR.BP.BC.No.3l/21 04.018/201t16 dalod July lO.20l5, d.posit! placed wilh NABiRD/S|DBI/NHB tor meeringshorllall ln Pdonty leclor Lending by Should bo includgd undsr Schsduls 'l liotho, A!!el!' undar lhe sub hoEd 'olh.ar' ot lh€ Balsnca 3he9t

Chartered

Accountants

:

I

F - 20

As on 31.03.20t5

66763

SCHEDULE 9 . ADVANCES

As on 31.03.2016

i) Bills Purchased and Discounted 520 ,61 ,2sl 399 ,48 ,

ii) Cash Credits, Overdratls and Loans repayable

on demand

iii) Term Loans

21569,41 21567 ,02 ,91

45970 17 44796 52

TOTAL

i) Secured by tangible assets

(includes advances against Book Debt)

ii) Covered by Bank / Governmgnt.GJlelallee_g ..

iii) Unsecured

61133 38

I

2724 15 2419 p-1

4202 4852 70

TOTAL 68060

c. t. ,Advances in lndia

i) Priority Sector

ii) Public Sector

iii) Banks

iv) Others

SUB.TOTAL :

Advances outside lndia

i) Due from Banks

ii) Due rrom Others

a) Bills Purchased and Discounted

b) Syndicated Loans

c) Others

SUB-TOTAL :

TOTAL(t&il)

i2129_1_7.1 ,.001

9Ii5 ,r-3 ,qgl

_ ?p?9_t_,?9 pl5580 ,52

8 52 00! 28

[.

66763

Chartered

lAudltedl

F - 21

.|

SCHEDULE 10. FIXEO ASSETS

l. Premlses (lncludhg Lea3aholdl

At cosu Revalued as on 31 st March of precedlng year

Revaluation during the period/year

Additions during the period/ year

Less:Deduclions during the pe(iodlyeat

Depreciation to date

SUB-TOTAL:

ll. Capltal Workln-Progress

lll. Other Fired Assob (lncludlng Furnlture & Flxture)

Al cosl as on 31st March ol preceding year

Addilrons during the periodlyear

Less:Deductions during the petiodlyeat

Depreciation to dale

SUB.TOTAL :

tv lntanglble Assets

Software

At cost as on 31 st March ol preceding year

Additions during the period/ year

Less:Deductions during the period/year

Amortrsation to dale

SUB.TOTAL

TOTAL: ( l+ll+lll +lV)

3't.03.2016

979.,'18 ,?1;

916 ,qQ ,ql5

32

806,10

76 11

(2 ,85 ,96)

189 ,94

1210

858 .21

7.83 ,20

(34,10,08)

19

176

.94.,27

12

As on 31.03,2015

(Audlted)

Chartered Chartered

Accountanls

96,07,9tl

F - 22

tr

SCHEOULE 11 . OTHER ASSETS

lnter-Oflice Adjustments (n6t)

lnterest accrued

Tax Paid in advance/Tax deducted al source

Stalionery and Stamps

Non-banklng assets acquired ln satlsfaction of claims

Deferred Tax Assets (net)

Others #f

Claims against the bank not acknowledged as debts

Liability for parlly paid lnvestmenls

Liability on accounl of outstanding forward exchange conlracts

Guarantees given on behall of constituents (nei of cash margin)

a) ln lndia

b) Outside lndla

c) BG invoked but not paid (ln lndia)V. Acceptances, endorsements and other obligations (net ot cash' margin)

Vl. Other items for which the Bank is contingently llable

TOTAL

As on 31.03.2016

1032 ,48

L

[.lt t.

tv.

vt.

v[,

825 ,29 ,71

I ,06 ,08

e ,91 ,s9

19,06 ,81

5365 ,94 ,84

I

ii

3157 ,91 ,27'.

1233 ,27 ,67tj

4 ,63 ,g3l

25 37

1'1583

I ,78 ,9q

30 .45 ,-28

2163 ,68

2670 ,14 ..10

1?2 ,77

4 '69

1089 ,68 ,07

60 17

6450

620_,30

711',l ,77

B Ar p.r RBr ckc1i., no.oai.BP.8i.t'io.Sl/2r.aji.orttztit:-to ortia,l ry ic,iorr, ocpornr pric"J *h llAainorstoawna tq rirorttal tr Priotty rcctorL.ndlng by Sould b. lncbd.d od.r Sch.dd. I l.roh., AarGr!' undrr lhc aub hcld blh.[' o, S. ollDhc. aha!|.

SCHEDULE 12 - CONTINGENT LIABILITIES

As on 31.03.2016

[.

flt.

lv.

t:II

!

tt.

A! on 31.03.2015

(Audlted)

'!094 ,35 ,1 1

713 ,14 ,91

I ,80 ,63

191,58

As on 31.03.2015

(Audlted)

Charteredntants

; 1768 ,67 ,31

F - 23

This is a part of Balance Sheet as on 31.03.2016.

Managing Director & Chief Executive Officer

Arnab Roy

Renuka MuttooDirector

M/s.Nundl & Assoclates.Chartered AccountantsFRN:309090E

PartnerM.No

M/s.PCBlndal&Co.CharteredFRN

PartnerM.No:093783

K.V. RamamoorthyExecutive Director

SinhaDirector

S. SuryanarayanaDirector

M/s.SPMR&AssoclatesChartered AccountantsFRN:

eshwarlPartnerM.No:085362

)

,^{wGeneral Manager & CFO

Director

As per our separate report of even date attached.

M/s.Ramamoorthy(N) & CoChartered AccountantsFRN

ParlnerM.lJo:023837

Place:KolkataDate :17'h Mayr20l6.

\CA.thl

Chartered Charlered

Page32

I

F - 24

l.

Chartered

t.


KOLKATA

Profit & Loss Account for the year ended 31st March, 2016

: Schedule

I

I

9936 .67 .091


ln thousanYear Ended3't.03.2016

191-8_9 17 ,.

1746 91 't5

11927

...7,6q9. ,-81 !q-9

1809 ,62 ,82

217 1

1167 1 39

255

63 ,99 ,81

1 ,14 .67

190 ,84 i75

255

3.78

PI

il.

INCOME

lnlerest Earned

Other lncome

TOTAL:

EXPENDITURE

lnterest Expended

Operating Expenses

Provisions and Contingencies

TOTAL:

PROFIT

Net Profit for the period/year

ilt.

TOTAL:

IV. APPROPRIATIONS:

Transfer to Statutory Reserve

Transfer to Capital Reserve

Proposed Dividend :

Equity

PNCPS

Tax on Dividend

Transfer to Revenue Reserve

Balance carried forward to Balance Sheet

TOTAL:

Basic & Diluted Earning per Share (Rs.)

13

14

15

1467

11404 1,

7656 .11 .36i

1936 ,29 ,44

75 49

1 1686 16 ,29

-281

-281 95

18 ,63 ,87

-300 ,59 ,75

-281

-3.36

266

-t

l:

CharteredChartered

ntants

j..

F - 25

Year Ended31.03.201 5

10180 7 77

Year Ended

SCHEDULE 13 - INTEREST EARNED

(Fe, ln thousa nd


lnterest / Discount on Advances/Bills

lncome on lnvestments

lnterest on balances with Reserve Bank of

lndia and other lnter-Bank Funds

Others

TOTAL :

_ __ 6928_a13 96 79!9-9? 88

il. 303.q rz3 ,1.4 _ - 2819 ,32 ,?9

il.39 ,4-3_,qq_ 9_g,JQ,7g

IV 231 06 170 15 82

9936 67

SCHEDULE 14. OTHER INCOME

Year Ended

I-ll. Commission, Exchang_e and Brokerage 44 202 ,q,1

Profit on sale of lnvestments

Less : Loss on sale of lnvestments

_p?9 ??..7_5iI

116p ,6! ,7?

_ (90 ,9q)--l

II

II

I

:.t

____ [:!_51 ,4_q)

lll. Profit on revaluation of lnvestments

Less : Loss on revaluation of lnvestments

lV. Profit on sale of land, buildings and other assets 5 08 65 ,25

Less : Loss on 9_a!-e of lan!,_bqi!{lng_q and.glher assgls I

t--_ 17 ,23,

-,', .,'-.-' l

V Profit on exchange transactions

Less : Loss.on exchange transacfio_ns

136 ,06 ,64I

97 ,64 ,10

-tt

--. -..- -....t,.-- -

vl.

vil.

lncome earned b)rwey of dividend etc., from subsiqiarieg,

companies and/or joint ventures abroad/ in lndia

Miscellaneous lncome

TOTAL:

329 26 278 ,13 ,56

1467 1746 91 15

Pt11

Chartered

AccoChartered

ntants

I

I

I

I

!

i

178

I

l-

I

L

i

:i

i

_.t_.

F - 26

_ 7?53195 ,7_9

82 52

353 11

7689 1 55

1 809 62

SCHEDULE 15 - INTEREST EXPENDED

ln thousaYear Ended3'l.03 6

l. lnterest on Deposits

ll. lnterest on Reserve Bank of lndia/inter-Bank borrowings_

lll. Others

7181 ,17 ,17

7-9--' 03

295 51

TOTAL 7656 11 36

SCHEDULE 16 - OPERATING EXPENSESI

Year Ended Year Ended3 2016

lr.

il.

ilt.

tv.

V.

Payments t9 a1d Provqsions for Emplgyq _s _

Rent, Taxes and Lighting

Printing and Stationery

t.I

I)

_1097 ,1L,13 lq38,29 ,51

148 '29-,19 _139 ,94 \44

26 ,41 ,21

Advertisement and Publicity

?3 ,51 ,q9[i

__ _6_ r2-3 r1q I _ 5 ,.61 ,!2

Depreciation op Bank's prgpgrty _


102 ,75 ,7 5;-'a- ' _

05

19?,79 ,77 105 171 '96

Vl. .Directors' fees, a_llowances and exp_enses_

Vll. Auditors' fees and expenses ..

p? z5-l 1 5

14 ,60 ,23


l. Law Charges !

Postage, Telegrams, Telephones etc.

Repairs and Maintenance

lnsurance

Other Expenditure

TOTAL:

9 J7 ,95 P '1? '?1

23 ,53 ,71tx.

x.

xt.

xil.

34 53

2?,77 ,59 33 ,8 7 74

118.19.331 10q ,38 .1 1

355 76 308 94

1 936 29

Pt12

aae

*Cha(ered

I

i.Ii

L. -..-II

,.7 1

_ 1_5_lo

F - 27

This is a part of Profit & Loss Account as on 31.03.2016.


Arnab RoyDirector


M/s.Nundl & Assoclates.Chartered AccountantsFRN:3

PartnerM.No:059828

D

le,<K.V. RamamoorthyExecutive Director

SinhaDirectorDirector

Qtap*e<Suffinarayana

Dir.ector

,^fu,General ilIanager & CFO

M/s.PCBlndal&Co.CharteredFRN

CA.SaPartnerM.No:093783

s.

M/s.SPMR&AssociatesChartered AccountantsFRN

PartnerM.No:085362

As per our sepirate report of even date attached.


CA.SUPartnerM.No:023837

Place:KolkataDate :17'h May,20l6.

rt

C harlered

Page 33

F - 28

'$chedule -17

SIGNIFICAI{T ACCOUNTING POLICIES FOR THE YEAR ENDED 31't MARCH,2OI6

1. BASIS OF PREPARATION OF FINAI\CIAL STATEMENTS

The accompanying financial statements are prepared on historical cost basis, except as otherwise stated, following

the "Going Concern" concept and conform to the Generally Accepted Accounting Principles(GMP) in India,

applicable statutory provisions, regulatory noflns prescribed by the Reserve Bank of India (RBI), applicable

mandatory Accounting Standards (AS)/Guidance Notes/ pronouncements issued by the Institute of Chartered

Accountants of India (ICAD and practices prevailing in the banking industry in India.

2, USE OFESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions for

considering the reported assets and liabilities (including contingent liabilities) as on the date of financial

statements and the income and expenses for the reporting period. Management believes that the estimates used in

the preparation of the furancial statements are prudent and reasonable.

3. RECOGNITION OF INCOME AI\ID EXPEI\DITT'RE

3.1 The Revenues and Expenses are accounted for on accrual basis unless otherwise stated.

3.2 Income from Performing Assets is recogrized on accrual basis and income from Non-Performing Assets(NPAs) is recognized on realisation. The amount realised/recovered during the year is appropriated first toincome on Sub-standard Assets. Amounts realized /recovered in Doubtful and Loss Assets and Suit Filed and

Decreed Accounts are first appropriated against outstanding balances.

3.3 Uwealized income on advances, classified as NPA, is reversed.

3.4 Income from Commission (except on Govemment Transactions and Bancassurance), exchange, brokerage,claims, locker rent and dividend on shares are accounted for on cash basis.

3.5 Performance linked incentive to whole time directors is accounted for on cash basis

4. TRANSACTIONS IIWOLVING FOREIGN EXCHANGE

4.1. Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each curency, are

revalued at the Balance Sheet date at closing spot rates announced by the Foreigr Exchange Dealers

Association of India (FEDAI). Outstanding forward exchange contacts are revalued at the forward rates

announced by FEDAL The difference between the revalued amount and the confracted amount is recogrized as

profit or loss, as the case may be.

4.2. lncome and expendinre items are recorded at the exchange rates prevailing on the date of transaction.

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot rates

announced by FEDAL

4.4. Representative Office of the Bank has been classified as 'Integral Foreigr Operation' in accordance with AS-11on "The Effects of Changes in Foreign Exchange Rates".

4.5. Foreign currency transactions relating to 'Integral Foreign Operation' are recorded on initialrecognition in thereporting currency by applying to the foreign cunency amount, the exchange rate between the reportingcurrency and ttre foreign currency on the date oftransaction.

4.6- Foreign culrency non-monetary items that are carried in terms of historical costs are reported using theexchange rates on the dates oftansactions.

Chartered

Accou

Page

F - 29

5. INVESTMENTS

-

5.1 Forthepurpose of disclosure in the Financial Statements, the investments are classified into six categories as

stipulated in Form A of the third schedule to the Banking Regulation Act,1949 as under:a) GovemmentSecuritiesb) Other approved securitiesc) Sharesd) Debentures and Bondse) Subsidiaries/JointVentures

0 Others

5.2 The Investment portfolio of ttre Bank is categorized, in accordance with the RBI guidelines, into:a) "Held to Maturity" comprising Inveshnents acquired with an intention to hold till maturity;b) "Held for Trading" comprising Investments acquired with an intention to trade;c) "Available for Sale" comprising Invesfrnents not covered by (a) and (b) above.

Classification of an invesfinent is done at the time of acquisition.

5.3 In determining acquisition cost of an investment:a) Brokerage, Commission and lncentives received on subscription to securities, are deducted from the cost

of securities;b) Brokerage, Commission etc. paid in connection with acquisition of securities are teated as revenue

expenses;c) Interest accrued upto the date of acquisition/ sale of securities i.e., broken period interest is credited/

charged to Profit and l.oss Account.

5.4. The Bank follows "Settlement Date" for accounting of investment transactions. Investments are valued as perRBV Fixed lncome Money Market & Derivatives Association (FIMMDA) guidelines, on the following basis:

a) "Held to Maturity" (HTM)i) Investnents under "HTM" category are carried at acquisition cost. Wherever the book value is higher

than the face value/redemption value, the premium is amortized over the remaining period tomaturitY.

iD Invesfrnents in Rural lnfrastucture Development Fund, Short Term Co-operative Rural CreditRefmance Fund, Medium Small Micro Enterprise Refurance Fund - Small lndushies DevelopmentBank of India Limited, Medium Small Micro Enterprise Risk Capital Fund - Small IndustriesDevelopment Bank of India Limited, Rural Housing Development Fund-National Housing BankLimited, Micro Finance Development and Equiff Fund - National Agricultural and RuralDevelopment Bank Limited (classified as shares) are valued at carrying cost.

iiD Invesfrnents in sponsored Regional Rural Banks are valued at canying cost.iv) lnvestnent in venture capital is valued at carrying cost.

b) "Held for Tradihg" and "Available for Sale"

a) Govt. Securities1. Central Govt. Securities2. State Govt. Securities

At prices published by FIMMDAOn Yield to Maturity (YTM) basis by adding appropriate mark-upon the Base Yield Curve as per FIMMDA/RBI guidelines.

b) Discounted Instuments (Treasury

Bills, Commercial Paper and

Certifi cate of Deposits)

At carrying cost

c) Bonds and Debenhrres On YTM basis by adding appropriate Credit Spread on the BaseYield curve as per FIMMDA/RBI guidelines.

d) Equity

Dii)

QuotedUn-quoted

At market priceAt break-up value as per latest Balance Sheet (not more than oneyear old), otherwise atfJ l/- per company.

e) Preference Shares At market price, if quoted or YTM basis by adding appropriatemark-up on the base yield curve as per FIMMDA/RBI guidelines.

0 Security Receipt/Venture Capital Fund At Net Asset Value (NAV) as per FIMMDA/RBI guidelines.

Chartered

Page2

t tF - 30

g) Mutual Funds At Market Price, if quoted and at re-purchase priceA.lAV ifunquoted.

5.5. Shifting of securities from and to "HFT" category is done in accordance with RBI guidelines with the approvalof Board of Directors.

5.6. The individual scrip in the "HFT" and "AFS" category are marked to market at monthly oi at more frequentintervals, if required. Under each category, net depreciation, if any, is provided for while net appreciation, ifany, is igrored.

5.7. lncome from Zero Coupon Bonds, being the differenbe between cost and face value, is recognized on a timeproportion basis.

5.8. Profit or Loss on sale of investments in any category is taken to Profit and Loss Account. ln case of profit onsale of lnvestnents in "HTM" category, an equivalent amount is appropriated to "Capital Reserve Account" at

the end of the year. For calculating the surplus I deficit on sale of securities, weighted average method isadopted.

5.9. For the purpose of calculating holding period in case of "HFT" category, First in First out (FIFO) method isapplied.

5.10. Investments are subject to appropriate provisioning/ de-recoguition of income, in line wittr the prudential norrns

of RBI for "Non Performing Investment" (NPI) Classification. The depreciation/provision in respect of non-performing securities is not set off against the appreciation in respect of the other performing securities inaccordance with RBI guidelines.

5.11. The derivatives transactions are undertaken for trading or hedging purposes and valuation has been done inaccordance wittt RBI guidelines.

5.12. The Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and ReverseRepo tansactions.

FINAI\CIAL ASSETS SOLD TO ASSETS RECONSTRUCTION COMPAIYY (ARCYSECTJRITIZATION COMPAIYY (SC)

6.1 In the case of furancial assets sold to ARC / SC, if the sale is for a value higher than the Net Book Value

OIBV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of otherfinancial assets to ARC/SC. If the sale is at a price below the NBI the shortfall after adjusting the availablesurplus if any, is debited to the Profit and Loss Account.

6.2 The sale of furancial assets to ARC/SC is recognized in the books of 0re Bank at lower of either redemptionvalue of the Security Receipts issued by ttre Trust created by the ARC/SC for such sale or the net value of such

financial assets.

6.3 The Security Receipts are classified as Non-SLR lnvestment in ttre books of the Bank and accordingly thevaluation, classification and other nonns prescribed by RBI in respect of Non-SLR Securities are applicable.

6.4 ln case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income.

7, ADVAI\CES

7.1. Advances are classified as Performing / Non-Performing Assets and provisions thereon are made in conformitywith ttre prudentialnorrns prescribed by RBL

6

7.2.

7.3

7.4.

Non-performing assets are stated net of provisions and claims received from credit guarantee institutions.

Provision held forperforming assets is shown under the head "Other Liabilities and Provisions"

Restructuring of Advances and provisioning thereof have been made as per RBI guidelines.

Chartered

Page 3

F - 31


8.1. Premises (including leasehold), other fxed assets and Capital work in progress are stated at historical cost oramount substituted for historical cost. In case of revaluation, the same are stated at the revalued amount and theappreciation is credited to "Revaluation Reserve".

8.2

8.3

Leasehold assets are amortized over the period of lease.

Depreciation on assets other ttran computers and Automated Teller Machines (ATM$ is provided for underwritten down value method, in the manner and as per the rates prescribed under Schedule II to the CompaniesAct,20l3 after retaining 5% residual value.

Equivalent amount of depreciation on the revalued portion of the asset is hansfened to General Reserves fromRevaluation Reserve each year.

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on staighrline method

@33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (including revalued assets) are recognized in accordance with AS -

28 on "Impairment of Assets".


In accordance with AS-12 Govemment Grants/subsidies received is presented in the Balance Sheet by showingthe Grant/Subsidy as a deduction from the Gross Value of the assets concemed in arriving at the book value.The grant/subsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets byway of reduced depreciation charged.

Govemment Grant subsidies received, of revenue nature, is recogrized in the Profit & loss Account byreducing the related cost if received during the same financial year otherwise, the same is shown under "OtherIncome" if received after the close of the relevant furancial year.

IO. EMPLOYEE BENEFITS

10.1 Employee Benefits are recognized in accordance with AS-15 on "Employee Benefrts"

10.2 Short term employee benefits namely Leave Fare Concession and Medical Aid are measured at cost.

10.3 Long term employee benefits and post-retirement benefits namely gratuity, pension and leave encashment aremeasured on a discounted basis under the Projected Unit Credit Method on the basis of annual third partyactuarial valuations.

10.4 ln respect of employees who have opted for Provident Fund Scheme, matching contribution is made to arecognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based onactuarial valuation.

10.5 [,ong Term employee benefig recognized in the Balance Sheet represent the present value of the obligation asadjusted for unrecognized past service cost, if any, and as reduced by the fair value ofplan assets, whereverapplicable and actuarial gain / loss to the extent recognized in Profit and Loss Account.

10.6 The transitional liability in respect of long term employee benefits, including pension benefits, is recognized asan expense on straight line basis over a period offive years.

10.7 In terms of RBI circular, expenditure on "Re-opening of Pension option to employees of Public Sector Banksand enhancement of Gratuity limits-Prudential Regulatory Treatment" is being amortized over a period of fiveyears.

unla ntsAccountanls

Page 4

F - 32

.1I. TAXATION

Provision for tax'is made for both current and deferred taxes in accordance wittr AS-22 on "Accounting forTaxes on Income".

12, PROVISIONS. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance wittr AS-29 on "Provisions Contingent Liabilities and Contingent Assets," the Bank recognizes:

a) Provisions only when it has a present obligation as a result of a past event and it is probable that an outflowof resources embodying economic benefits will be required to settle the obligation and when a reliableestimate of the amount of the obligation can be made.

b) Contingent Liability is recognized/disclosed when a possible obligation from a past event, the existence ofwhich is confirmed by the occurrence/non-occurrencd of one or more uncertain future events not whollywithin the control of bank. Contingent Liability is also recognized/disclosed when there is a presentobligation from past events but is not recognized because of a remote possibility of outflow of resourcesembodying tlrc economic benefits to settle the obligation or a reliable estimate of the amount of theobligation cannot be made

c) Contingent Assets are not recognized in the Financial Statemens.

13. IYET PROI'IT


a) Provision for Taxationb) Provision on Standard Assetsc) Provision for NPAs and Depreciation on investments as per prudential norms of RBId) Other usual and necessary provisions.

Chartered

Page 5

F - 33

1

Schedule - 18:

Notes Forming Part of the Financial Statementfor the Year Ended 31't March 2016

Confirmation/reconciliation of balances with foreign branches, SBI and other Banks, NOSTRO Accounts,Drafts Payable, Clearing Difference, Inter office adjustrnents, etc. are in progress on an on-going basis. Pendingfinal clearance/adjustment of the above, the overall impact, if any, on the Financial Statements, in the opinion ofthe management, is not likely to be significant.

2.1 Capitala) ( ( in Crores)

b) During the Financial year 2015-16, the Bank received an amount of Rs.480 Crores from Government of lndia on30.03.2016 towards capital infusion. The bank is maintaining the same as "Share Application Money pendingallotment" as on 31.03.2016. Bank has considered the same amount as pafi of Common Equity Tierl (CET-I)capital fund as on 31.03.2016 as per the permission of Reserve Bank of India vide letter no:DBR.No.BP .l27 I 6 I 2l .01.002 I 201 5 -l 6, dated 06.04.20 16.

c) During the Financial Year 2015-16, Bank raised Additional Tier-l capital of '150.00 Crores through issuance ofBasel-I[ compliant Non Convertible Perpetual Bonds (1500 nos.) having face value of '10.00 lacs each inSeptember,20l5.

31.03.16 31.03.15 3r.03.16 31.03.15I Common EquiW Tierl Ratio (%) 7.74 7.52 NA NA

Tier I Capital Ratio (%) 7.93 7.52 7.23 7.772

Tier 2 Capital Ratio (%o) 2.15 3.05 3.23 3.6s3

10.08 10.57 10.46 rt.424 Total Capital Ratio (CRAR) (%)

5 Percentage of the shareholding of the

Government of India in the Bank's equitycapital

82.00% 82.00% 82.00% 82.00%

6 Amount of equity capital raised(' in Crores)

0 300 0 300

7 Amount of Additional Tier 1 Capital raised; ofwhich

150 NIL 150 NIL

7.1 PNCPS NIL NIL NIL NIL7.2 PDI 150 NIL 150 NIL8 Amount of Tier 2 capital raised; of which: ('

in Crores)NIL NIL NIL NIL

8.1 Debt capital instrument NIL NIL NIL NIL8.2 Preference Share Capital Instruments NIL NIL NIL NIL

Chailered

Page 6

i

F - 34

2.2 Investments(ln

a).As per RBI circular no.DBR.BP.BC.No.3ll21.04.01812015-16 dated July 16, 2015, deposits placed withNABARD/SIDBIAIHB for meeting shortfall in priority sector Lending amounting to Rs.3819.02 Cr(P.Y Rs.

Rs.3357.62 Cr) has been excluded from investment and included under Schedule I I - " Other Assets" underthe sub head "others" of the Balance Sheet. Hitherto these were included under "lnvestments". Interest incomeon these deposits has been included under "Interest Eamed-Others". Earlier such interest income was includedunder "lnterest Eamed-Income on Investment". The above change in classification has no impact on the profitof the Bank for the quarter and year ended 31" March, 2016 or the previous period presented.

b) In accordance with UDAY(Ujwal Discom Assurance Yojna) scheme of GOI, Ministry of Power foroperational and financial tumaround of Power Distribution companies during the year 2015-16, the bank has

subscribed to Non SLR SDL bond of Govt of Rajasthan of Rs231.78 Crores and DISCOM Bond of Jaipur andJodhpur Vidyut Vitran Nigam of Rs.150 Crores. As per RBI circular dated

DRB.BP.BC.No.ll637l2l.O4.l32/2015-16 dated 17ft March 2016 and subsequent clarification by circular NoDRts.BP.BC.No.l4l86/21.04.13212015-16 dated llm May 2016, those DISCOM bond will be converted intoNon SLR SDL bond by 31" March 2017.In case of non conversion those will be classified as NPA with effectfrom the date ofrestructuring and to be provided accordingly.

2.2.1 Repo transactions (ln face value terms)( in Crores

44934.03

44934.030.00

44723.3844723.38

0.00

210.64

210.64210.64

0.00

194.55123.49107.40

43440.04

43440.040.00

43245.4943245.49

0.00

194.55

251.1669.98

126.59

194.55t94.55

0.00

(2) Movement of provision held towards depreciation on investments(i) Opening balance(ii) Add: Provisions made during the Year(iii) Less :Write- offl Write -back of excess provision during the

Year(iii)Closing balance

(l) Value of trnvestments(i) Gross Value of Investments

(a) In India(b) Outside India

(ii) Provision for Depreciation(a) In India(b) Outside krdia

(iii) Net Value of Investments(a) In India(b) Outside India.

Securities sold under Repoi) Government securities

ii)Corporate Debt Securities

84.94(15.00)

0.00(0.00)

251.64(1e2e.00)

0.00(0.00)

22.70(262.78)

0.00(0.00)

0.00(584.00)

0.00(0.00)

Securities purchased underReverse Repoi) Government securities


36.48(25.00)

0.00(0.00)

37 t.96(8700.00)

0.00(0.00)

6.86(474.77)

0.00(0.00)

0.00(r40.00)

0.00(0.00)

CharleredAcco

PageT

F - 35

Figures in brackets represent Previous Year'sfigures.

2.2.2 Non-SLR Investment Portfolio(i) Issuer composition of Non-SLR Investments

(( in Crores)

Figures in brackets represent Previous Year's figures.

Non-SLR Investments in Crores

2.2.3 Sale and Transfers to/from Held to Maturity GffM) Category

(a) Securities having book value of Rs.499.49 Crores (Previous year: Rs.257.48 Crores) were sold during theyear from HTM Category.

(b) At the beginning of the year (i.e on13.04.2015), the Bank has shifted Cenhal Govt. Securities having facevalue of Rs.1859.05 Crores ( Book Value Rs.186I.73 Cr) and State Govt. Securities having face value ofRs.1260.90 Crores ( Book Value Rs.1264.72 Cr) scrip wise from Held to Maturity (HTM) to AvailableFor Sale (AFS) Category and Similarly the bank has shifted State Govt. Securities having Face value ofRs.1585.79 (Book Value of Rs.1680.75 Cr ) from AFS to HTM category. This was with the approval of theBoard of Directors.

(c) The value of sales and transfer of securities to/from HTM Category (excluding the exempted transfer) didnot exceed 5% ofbook value ofthe Investrnent in HTM Category at the beginning ofthe year.

2.2.4 T ransactions involvlng Forelgn Exchange

Monetary Assets and liabilities, excluding outstanding Forward Exchange Contracts in each currency, exceptcurrency of Bangladesh (BDT 23,03,236.26 equivalent INR 15.80lacs) which is valued at notional value due tonon availability of spot rates, are revalued at the balance Sheet date at closing spot rates announced by theForeign Exchange Dealers Association of India (FEDAD.

Sl.No. Issuer AmountExtent of'PrivatePlacement'

Extent ofInvestmentSecurities

'BelowGrade'

Extent of'Unrated'Securltles

ExtentsUnllsted'

Securltles

of

(1) (21 (3) (4) (5) (6) 0lI PSUs ll00.l7

(1282.7s)I 100. t7

(t282.7s)0.00

(0.00)150.00(0.00)

168. l I(14.66)

2 FIs 383.82(3357.62)

383.82(3357.62)

0.00(0.00)

0.00(0.00)

9.63(3357.62)

3 Banks 5789.19(s570.s4)

57E9.19

6s70.s4)0.00

(0.00)64.30

(36.97)68.15

(40.82)

4 Private Corporate 1096.01(t491.s2)

1096.01(1491.s2)

0.00(0.00)

0.00(20.00)

104.31(53.70)

5 Subsidiaries /Joint Ventures

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00.(0.00)

0.00(0.00)

6 Others (MF/CP/CD) 555.96(74.78\

555.9604.78\

0.00(0.00)

231.78(0.00)

550.96(5e.38)

Provision held towardsDepreciation / NPI

210.64( 194.55)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

Total (l to 6) - (7) 87t4.st(l1582.60

892s.15(11777.211

0.oo(0.00)

446.08(56.971

901.16(3s26.1 8)

Opening balance 199.55 181.70Addition during the Year 35.90 59.28Reduction during the Year 68.75 4t.MClosing balance 166.69 199.54

Total provlsion held 128.s5 110.63

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Page 8

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2.3 Derivatives

2.3.1 Forward Rate Agreement/Interest Rate Swap( in Crores

2.3.2 Exchange Traded Interest Rate Derivatives(ln

Disclosures on risk exposure in derivativesA) OualitativeDisclosures

a) The Bank has undertaken derivative transactions in currency futures for trading (arbitrage) &hedging purposes.

b) fusk management of derivative transactions has been segregated into three functional areas

namely,i) Front-Office for undertaking transaction;ii) Mid-Office for risk firanagement and reporting; andiii)Back-Offi ce for settlement, reconciliation and accounting.

c) The risk measurement, reporting and monitoring function is undertaken by the mid-office.The Board of Directors is the apex body to oversee the overall risk measurement, monitoringand reporting functions of the Bank including derivative transactions through RiskManagement Committee of the Board (RMCBOD). The bank also internally monitors riskmanagement through in-house Nsk management Committee, Asset Liability Committee(ALCO), Operational Risk Management Committee (ORMC) and htemal Committee onInvestrnent (ICI).

d) Identification of underlying hedge items for hedging / rnitigating credit risk, operational riskand market risk arising out of derivative transactions is done in accordance with the Boardapproved Integrated Treasury Policy. The customer related derivative transactions arecovered with counter party banks, on back to back basis for identical amounts and tenure andthe bank does not carry market risk for such tansactions. However, during the year underreview, bank has not used any derivative product to hedge its own portfolio.

2.3.3

t

NIL NILi) The notional principal of swap agreements

NIL NILii) Losses which would be incurred if counterparties failed to

fulfill their obligations under ttre agreements

Collateral required by the Bank upon entering into swaps NIL NILiii)NIL NILiv) Concentration of credit risk arising from the swapsNIL NILv) The fair value of the swap book

(D Notional principal amount of exchange traded interest ratederivatives undertaken during the Year (instrument-wise)

NIL NIL

NIL NIL(ii) Notional principal amount of exchange traded interest ratederivatives outstanding as at 31" March (instrumenrwise)

(iii) Notional principal amount of exchange traded interest ratederivatives outstanding and not "highly effective"(instrument-wise)

NIL NIL

(iv) Mark-to-market value of exchange traded interest ratederivatives outstanding and not "higtrly effective"(instrument-wise)

NIL NIL

Chadered Charlorcd

Page 9

oF - 37

e) The Integrated Treasury Policy prescribes accounting for hedge and non-hedge transactions,, income recognition and valuation procedure for outstanding contracts. The income

recognition is done as per AS-11 on "The Effects of changes in Foreign exchange Rates"and the guidelines issued by RBI / FEDAI from time to time. The integrated Treasury Policyalso prescribes various limits such as Client Level Limits, Trading Member Level Limits,Net Open Position Limits for credit risk mitigation.

B) OuantitativeDisclosuresin Crores'

2.4 Asset Quality2.4.1 Non-Performlng Assets

( in Crores

o

(i) Derivatives (Notional Principal Amount) NIL NIL NIL NILa) For hedging NIL NIL NIL NILb) For trading NIL NIL NIL NIL

NIL NIL NIL(ii) Marked to Market Positions (l) NILNILa) Asset (+) NIL NIL NIL

b) Liabilitv G) NIL NIL NIL NILNIL NIL NIL(i ii) Credit Exposure (2) NIL

NIL(iv) Likely impact of one percentage change ininterest rate ( 100*PV0l)

NIL NIL NIL

NIL NILa) on hedging derivatives NIL NILNIL NIL NIL NILb) on trading derivatives

NIL NIL NIL NIL(v) Maximum and Minimum of 100*PV0lobserved during the Year

NIL NIL NIL NILa) on hedgingNIL NIL NIL NILb) on trading

i) Net NPAs to Net Advances (7o) 9.04 6.22

Movement of NPAs (Gross)6552.91 7l18.01a) Opening Balance

b) Addition durine the Year s011.05 4087.17

c) Reduction during the Year 2092.95 4652.27

iD

d) Closing Balance 9471.01 6552.91

Movement of Net NPAs4081.38 466/.tta) Opening Balance2919.68 3308.86b) Addition during the Year

c) Reduction during the Year 890.35 3891.59

d) Closine Balance 6lt0.7l 4081.38

iii)

Movement of Provisions for NPAs(excluding provisions on standard assets)

2430.68 2399.24a) Opening BalanceAddition durine the Year 1769.17 792.12b)

c) Reduction durine the Year 848.10 760.68

Closine Balance 3351.75 2410.68

iv)

d)

Charleredo

*.* *

Page 10

F - 38

.4.2 Particulars of Accounts Restructured

lfr

No. ofborrowen 43 5 6 0 52 342 5l 1920 2 23t5 2063 201 6012 5 8281 2448 255 7938 ? 10648

Amountortstanding

4583.3 I 307-22 366.66 0.00 5257.18 111-2664.8

9108.

080.0t

284.24

37E1.404s3.6

1 391.s8 0.104626.

'718475.

97825.74

866.32

0.1 10168. l4

RestucturedAccounB as

on April ofthe FY

(Openingfigures)t 4.18 0.00

116.29

527.0)

Provisiontheteon

319.59 23.14 I1.70 0.00 414.63 3.59 2.16 1.41 0.00 7.16 143.84 28.27 53.7111.2

90.0

0598.08

5No. ofborrowers 0 0 0 93 4 0 0 97 4 I 0 0 97 ) 0 102

0.00Amount

outstanding0.00 0.00 0.00 0.00 0.00 )) <l 1.69 0.00 0.00 'ra )a 931.63

384-25

0.001321.

88960.1

7385.94 0.00

0.00

1346. I I2

Freshresfucturing

during the

)'€arProvisionthereon

0.00 0.00 0.00 0.00 0.00 1.00 0.08 0.00 0.00 1.08 0.00 0.00 0.00 0.00 0.00 1.00 0.08 0.000.0

01.08

-57 0 0No. ofborrowers 0 0 0 0 0 8 4 4 0 0 83 -26 9l -30 {l 0 0

Amountoutstanding

0.00 0.00 0.00 0.00 0.00 2r.20 20.76

0.4 0.00 0.00 2.90 -1.21 -1.69 0.00 0.00 24.tO -21.97 a.l1 0.00

0.003

torrstructued

standardcategory

during theFY Provision

thereon0.00 0.00 0.00 0.00 0.00 1.07

1.05 0.020.00 0.00 0.15 {.06 4.09 0.00 0.00 1.22 -t.l I {.ll 0.0

00.00

4

Restructuredsundardadvances

which ceaseto attacthigher

provisioning

No. ofbormwers 0 0 0 0 0 00 0

Page 11

I

0

F - 39

Amostoutstaldi[g

0.00 0.00 0.@

. ". "ili.,:i:,,,i,,i.i

': : t. ...

:pay"' :

0.00 o00

.. -.,].,:l]:,.;

;, :.,,li"it\ttl;- l-.. !

o00 0.00

t

0.00

Provision tbaou o00 0.00 000 0.00 o@ 000 o.s o.00

5

DowgradatioE ofIBtruCUrcd

ac@utsduing thc FY

No.ofbomm -18 t2 6 o -3E 39 0 o -93 63 30 0 o lil9 74 75 0 o

Amoutoutstaodbg

.1631.65 956.93 674.71 0.@ 0.m -223713.04

35.41 o@ 0.00 {3E.54 @1.37 3t.17 0.00 om ?,9256 1551.26 741.D 0.00 0.00

Prcvisim&mn -27.88 D.a7 5.01 o.@ o00 -1.t4 0.36 0.78 0.m o.00 -3.51 3.Ot 0.53 0.00 0:m -3263 26.31 6.32 o00 0.00

6

Writmft ofrcsltutuEd

a@unasdEing ttc FY

No. ofbomwas I 4 0 6 4t 395 2 450 v9 lt3 loll 1474 39r LT l4ll 3 1930

Amortoutsaoding

0.00 N.70 31241 o.o 33t.lI 5.27 10.24 18.75 0.ol 34.21 381.9r 26t.32 t58.62 o03 807.EE 3t7.18 3c8.26 ,lt9.7E o04 I lEO.25

Provisionthm !?i.2t a.o3 I 1.70 om 3t.94 oll 0.59 o2l 0.00 o9l E0.92 27.t9 t.g2 o00 1(D.t3 M.24 51.51 1293 o00 ,l5E.5t

7

RcstuctuodAccouts conMrch 3l

ofrtc FY(closingfrgres)+

No. ofborrom u l4 0 6 4 39 1559 0 1952 l70E t26 4974 4 6tl2 2495 t79 5541 4 tt20

AmoEtoutst4dirg

29st.6 123E.45 728.96 o@ 4919.07 127.36 22.v t24.30.00 n4.20 3701.4t t176.72 262.44 o07 514071 6780.50 2437.71

1u5.70 o07 10333.98

hovisionthron 2r.50 23.18 5.Ot 0.00 56.69 441 0.96 1.96 0.00 ?11 59.$ 3.40 3.60 o00 6.45 9L37 n.54 10.57 o00 r30.48

and / oradditionalrisk weight

at the end ofthe FY andhence need

not beshown

rcstrucntredstandsd

advances atfte

beginning ofthe next FY

* Excluding the figures ofstandrd Resfiucnued Advances which do not attract higherprovisioning or risk weight (ifapplicable)

1 . Thc abovc dilclo6ltrls, including sadifice, dc as coryiLd ad c€rtified by thc Brnk's Meagmt2. The quaurm of ecednic sacritrcr dEing lhc ),Ed m the Estnrct@d rssc8 bas be€a cal@laEd by the NPV M€lhod as m 31.032016 for Stsodsd Assets of

<l0laca ald above ed forNPA of <l Crores ald abovc. For thc r.Gsinitrg acseb, economic sacrfice bas b€€o provided @ 5% ofou$tatrdiag bela$€.3. Pllrsualt to RBI cirwlar DBRNOSPBC2T/21.O1.018/20I5-16 dar€d 2- Juty 2015,6. mcthod of crlclrlati4 di6c.rut late for coqllting rct lEls€ot valur

of future cash flows for detcrminati@ of crosion in &ir rzluc of rdveces, oa rcstsucbritrg vEs clldged. Accotdiogly, th€re is a rEduction in l,royisiodng fordiminutiotr in fai! vatte by Rs.467.61 CrorEs for thc ycar €aded 31r Mmh 2016.

Clurtered

*

Page 12

rli 1.,

0 -l

I ll I

8

0

F - 40

2.4.3 Details of financlal assets sold to Securitization / Reconstruction Company for Asset Reconstruction(ln

(ln

2.4.4 Details of Non-performing financial assets purchased / soldA) Details of Non-performing financial assets purchased

(ln

B) Details ofNon-performing financial assets sold-.(ln

2.4.5 Provision on Standard Assets(in

10 NIL(i) No. of accounts

(ii) Aggregate value (net of provisions) of accounts sold to SC/RC 357.35 NIL

(iii) Aggregate consideration 386.90 NIL

3.40 NIL(iv) Additional consideration realized in respect of accounts

transferred in earlier years

ft\32.9s NIL(v) Ag$egate eair/(loss) over net book value

255.77 NilBook value ofinvestments in securityreceipts

255.77 Nil Nil Nil

(ta) No. of accounts purchased during the Year NIL NILI

(b) Aggregate Outstanding NIL NIL

NIL NIL(a) Of these, number of accounts restructured during the Year

NIL NIL

2.

(b) Aggregate Outstanding

I No. of accounts sold 10 Nil

2 Aggregate Outstanding 608.56 Nil

3 Aggregate consideration received 386.90 Nil

Provision towards Standard Assets 636.32 1060.09

Charlered

Page 13

F - 41

2.4.6 ln compliance with RBI directives on the Assets Quality Review(AQR) for their classification over the twoquarters ending December 31,2015 and March 31,2016, the Bank has macle the classification of Advances andprovisioning as per directives of RBI and IRAC nonns.

2.4.7 ln compliance to RBI letter no. DBR.NO.BP.1301812l.04.04812015-16 dated 12.04.2016., Bank has provided a

sum of Rs.41.14 Crores beng7.5%o of the existing outstanding exposure of Rs.548.60 Crores as on 31.03.2016under the food credit availed by State Government of Punjab.

2.5 Business Ratios

(D Interest Income as a percentage to Working Funds 7.92% 8.430/o

(iD Non-interest income as a percentage to Working Funds 7%l.t 1.42%

(iiD Operating Profit as a percentage to Working Funds 1.44o/o r.99%

(iv) Retum on Assets -0.22% 0.21%

(v) Business (Deposits plus advances) per employee (( in Crores) 12.37 I 1.53

(vi) Gross Profit/(Loss) per employee ( ( in Lacs) 12.09 15.98

Chartered

Charlered

*

Page 14

F - 42

2.6 Asset Liabitity Managementof certain iterns of Assets and Liabilities*

*The above dkclosures are as compiled and cettfi.ed by the Bar*'s Management.Figures in braclret represent Previous Year'sfigures.

(rn

763331 I l r74.80 20771.50 I 1930.87 4987438 116401282122.18 3055.03 211022 1709.77 6019.23

Deposits(1413.r7) (207e.s3) (142s33) (1674.73) (56ss.58) (s914.02) (9876.22) (21s26.62) (l l 192.06) (48060.3' (r08t17.60)

632.06 409.8s 303.43 732.s8 3743.80 4930.84 4362.13 12822.v 10486.72 29636.24 68060.20

(171.10 ) Q892.0s) ( 305e.6e) (39s2.02) (273M.7s) ( 9684.68) ( 15134.86) (66763.rM )

Advances(337.70) ( 3e81.69) ( 204.s0)

4430.78 5384.02 278t4.72 447233t2.62 74.01 tu.82 302.23 3333.09 1598.75 1618.34

(7223.08) (28612.81 )Invesfuents

(2.e4) (133.76 ) (4e.14) (262.9r) ( 4584.55) ( 1il1.40) (1924.7s) (2697.77) ( [email protected])

0.86 0.00 0.00 0.00 100.00 334.90 134.90 604.31 12.53 1725.00 2912St

( 324.00) (0.00 ) (300.00 ) ( 210.41) (200.76) (812.le ) (36e.6i) (157e.84 ) ( 4061.73)Borrowings

(4.e2) (260.00 )

l145.81 954.26 3il.26 0.00 19.02 6t2747213.48 223522 34.47 88.17 1073.18

(r 13.90 ) (84.62) Q2e.87 ) (8e2.90 ) (1036.89 ) (0.00 ) ( 0.00) (17.94',) (39s9.4s )

ForeignCurrenqrAssets (160.0r ) (923.32)

466.81 25.s9 1704.81 l108.49 941.55 387.10 14.03 0.00 612627188.09 1289.80

( 11.92)

ForeignCurrencyLiabilities ( 185.88) ( 40r.9r) ( l11.75) (33.0e ) (1337.73 ) (874.8e ) ( e84.08) ( r7.8e) ( 0.00) ( 39s9.r4)

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F - 43

2.7 Exposures2.7.1 to Real Estate Sector*

(*The above disclosures are as compiled and certified by the Bank's Management.)

2.7.2 Exposure to Capital Market*

(rn

(m

l,.";.;i.#H ffiffiI U Resldentlal Mortgages -I Lending fully secured by mortgages on residential property that is or will be

I occupied by the borrower or that is rented;

| -of which, individual housing loans eligible for inclusion in priority sectorI advances

iD Commercial Real Estate -Lending secured by mortgages on commercial real estates (office buildings,retail space, multi-purpose commercial premises, multi-family residentialbuildings, multi-tenanted commercial premises, industrial or warehousespace, hotels, land acquisition, development and construction, etc., includingnon-fund based (NFB) limits)iii) Investments in Mortgage Backed Securities (MBS) and other securitized

exposures -a. Residential,b. Commercial Real Estate.

b) Indirect ExposureFund based and non-fund based exposures on National Housing Bank(NHB) and Housing Finance Companies (IIFCs)

|

ffiffitffiuffi

I

| 7$2.e

4495.48

3322.76

272.40

l#EHifiHlr0l&T

I

I e+sa.st

3845.73

3227.r2

376.88

NILNIL

Total Exposure to Real Estate Sector 11227.80 10102.93

(i)Direct Investments in equity shares, convertible bonds, convertible debentures

and units of equity-oriented mutual funds the corpus of which is not

exclusively invested in corporate debts

(ii) Advances against shares / bonds / debentures or other securities or on clean

basis to individuals for investments in shares (including IPOs /ESOPs),

convertible bonds, convertible debentures and units of equity-oriented mutual

funds

(iii)Advances for any other purposes where shares or convertible bonds orconvertible debentures or units of equity oriented mutual funds are taken as

primary security

(iv) Advances for any other purposes to the extent secured by the collateral

security of shares or convertible bonds or convertible debentures or units ofequity-oriented mutual funds i.e. where the primary security other than shares/

convertible bonds/ convertible debentures/units of equity-oriented mutualfunds does not fully cover the advances

(v)Secured and unsecured advances to stock brokers and guarantees issued on

behalf of stock brokers and market makers

(vi)Loans sanctioned to corporate against the security of shares/bonds/

debentures or other securities or on clean basis for meeting promoters'

contibution to the equity of new companies in anticipation of raising

t21.52

1.65

NIL

NIL

NIL

NIL

14t.65

2.61

11.25

NIL

NIL

NIL

ChafleredCharlered

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Page 16

F - 44

resources

(vii) Bridge loans to companies against expected equity flows / issues

(viii) Underwriting commitments taken up by the Bank in respect of primary

issue of shares or convertible bonds or convertible debentures or units ofequity oriented mutual funds

(ix) Financing to stock brokers for margin trading(x) All exposures to venture capital funds (both registered and un registered)

NILNIL

68.68NIL

NILNIL

NIL72.66

Total Exposure to Capital Market 191.85 228.17

(*Ihe above are as compiled and certilied by the Bank's Managanent.)

Bank has acquired shares of two companies amounting to Rs.19.97 Crores by conversion of debt into equity as

part of a strategic debt restructuring which are exempt from Capital Market Exposure limits.

2.7.3 Risk Category-wise Country ExposureThe Bank has analyzed its risk exposure to various counkies as on 31" March, 2016 and such

exposure is less than the threshold limit of l%o of the total assets of the Bank. In terms of RBIguidelines, no provision is required for this exposure.

The position of risk category-wise country exposure is given below:( in Crores

2.7.4 Details of Single Borrower Lintit (SBLy Group Borrower Limits (GBL) exceeded by theBank

ln

*In line with Bank's extant Lending Policy, the above breach of exposure ceiling was approved by theBoard of Directors' at its meetingheld on 30.05.2014.

2.7.5 UnsecuredAdvancesin Crores

Insimificant 159.31 0.00 129.33 0.00Low 15.02 0.00 29.55 0.00

3.32 0.00Moderate 6.59 0.000.00 0.00Hich 0.00 0.00

Verv Hiph 0.00 0.00 0.00 0.00Restricted 0.00 0.00 0.00 0.00Off Credit 0.00 0.00 0.00 0.00

177.65Total 0.00 t65.47 0.00

SimplexInfrastructureLtd

942.08 ,025.00 782.81

Total amount of advances outstanding against charge over intangiblesecurities such as the rights, licenses, authority, etc.

I 33.3 I 141.83

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F - 45

Estimated value of such intangible collateral securities 186.65 200.47

2.8 Penalty Imposed by RBI

a) RBI under Sec 35 A of Banking Regulation Act 1949 and RBI Directive No 3158/09.39.00 (Policy)2009-10 dated l9l1112009 a penalty of Rs.0.05 Crores imposed on United Bank of India for the FY2015-16.

3. Disclosures as per Accounting Standards (AS) in terms of RBI guidelines:

3.1. AS 5 - Net Proflt or Loss for the period, prior period ltems and changes in the Accounting Policies -There is no change in accounting policy during the year. The impact of prior period items is immaterial in theopinion of the management.

3.2 AS 9 - Revenue Recognition

Revenue is recognized as per the Accounting Policies disclosed in Schedule 17

3.3 AS 10 - Accounting for f,'lxed Assets

3.3.1 Accounting for Fixed Assets is done as per the Accounting Policies disclosed in Schedule 17.

3.3.2 During the year Bank has revalued the premises forming part of its Fixed Assets Schedule based on the

reports of external independent Valuers. The surplus arising from the revaluation amounting to Rs.

346.67 Crores is credited to " Revaluation Reserve" under " Reserves and surplus" and 45% of the same

has been reckoned in Tier 1 capital as per RBI guidelines.

3.4 AS- 12 Government Grants

During the year Rs.0.45 Crores has been received in the form of subsidies/grants/incentives from RBI and StateGovernment as below:

in Crores

3.5 AS - 15 Employee BenefitsDisclosure on accounting of employee benelits [as per AS-15 (revised)l

( in Crores

*

Govemment 0.45 0.00 0.62 0.1s

3s43.16Present value of obligation as at the beginning of the Year 466.66 159.1 llnterest cost 263.75 34.20 12.45

Current Service cost 428.75 27.84 42.51Benefits Paid 492.s4 78.25 6.96

Actuarial Loss(Gain) on Obligation 698.09 14.40 44.794441.21Present value of Obligations at the end of the Year 464.84 162.32

344s.40Fair Value of Plan assets at the beginning of the Year 476.59 157.69

306.ilExpected Retum on Plan Asset 42.32 14.00967.68 34.10Employer' s confribution l.6l492.54 78.25Benefits Paid 6.9627.3t -33.51Actuarial Loss(Gain) on Obligations 0.0031

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naF - 46

4254.49 Mt.24 166.35Fair Vhlue of Obligations at the end of the Year

4254.49 441.24 166.35Fair Value of Plan Assets at the end of the Year-186.72 -23.60 4.03Unfrrnded Net Liability recognized in Balance Sheet

27.84 42.51428.75Current Service Cost12.45263.75 34.20lnterest Cost14.00306.64 42.32Expected retum on Plan Asset

47.91 44.79670.78Net Actuarial (Gain/Loss recognized in the Year-3.83t056.64 67.63Total Expenses recognized inProfit and Loss Account

8.00% 8.00% 8.00%Discount Rate8.88% 8.88%8.90%Expected rate of retum on Plan qqets

Proiected Unit Credit MethodMethod Used*Other Benetits include Privilege Leave, Casual leave, Sick Leave and LFC/LTC.Ir{ote: The above statement is based on the report of the Actuary.

3.6 AS 17 - Segment Reporting

The Banks operations are classified into two primary business segments viz. "Treasury Operations" and

"Banking Operations". The relevant information is given hereunder in the prescribed format:

A: Buslness ( in Crores

4235 4649 5064 2468 2439 l9 l8 lll73 11756Revenue 4037

l30l I 106 t427 887 909 l9 l8 3255 3655Result t243

t443 1227Unallocatedexpcnses

l8l2 2428OperatingProIit

(42e) r98Income Taxes

ExtraordlnaryproliU loss

(282) 2s6NetProIiU(Loss)0therInformatlon

46823 43385 47059 46986 21001 19771 I 14883 I 10148SegmentAssets

t4548 12879UnallocatedAssets

12943t r23027Total Assets

o:q

q!; Chartered

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,rt1;03i15

F - 47

SegmehtLiabilities 44764 41395 44973 44829 20067 l 8869 109804 I 05093

UnallocatedLiabilities I 3308 9521

TotalLiabilities t23tt2 123026

Part B: Geographical Segment - Since the Bank does not have any overseas branch, reporting under geographicalsegment is not applicable.

3.7 Related Party Disclosures (A$18) (As Compiled by the management)

3.7.1 Names of the related parties and their relationship with the Bank:Associates:

Kev Manasement Personnel:

Rehttves of Kev Manasement Personnel:

1 Assam Gramin Vikash Bank Regional Rural Bank

2 Bangiya Gramin Vikash Bank Regional Rural Bank

3. Manipur Rural Bank Regional Rural Bank

4. Tripura Gramin Bank Regional Rural Bank

Managing Director & Chief Executive OfficerI Mr.P.Srinivas

3 Mr. Sanjay Arya Executive Director

4. Mr. K. Venkata RamaMoorthy

Executive DirectorQoin on 29.08.2015)

5 Mr.DeepakNarang Executive Director ( retired on 31.03.2015)

6. Mr. Sanjib Pati Director

7 Mr. A.K. Dogra Director

8. Smt.Renuka Mutto Director

Director9 Mr. S. Suryanarayana

10. Mr. Amab Roy Director

I Smt. Neera Arya Wife of Mr. SanjayArya

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Page 20

F - 48

3.7.2 Related Party Disclosures(rn

NIL Nil 2053.41 1470.00Borrowings 2053.00 1470.00 0.410 Nil4348.42 0.34 0.76 0.04 0.30 5546.28 4349.48Deposit 1197.48

NilPlacement of deposits NIL NIL NIL Nil NIL Nil NitNil 2053.00 t470.ttAdvances 2053.00 1470.00 NIL 0.11 NIL

200 Nos100Nos

Investnents :

Equity SharesEquity Shares

NIL NIL 400 Nos 200 Nos NIL 100Nos 400 Nos

NIL 3.8s 3.8sShares of RRB 3.85 3.85 NIL NIL NILNIL NIL 64.30 36.97Bonds 64.30 36.97 NIL NIL

NIL NIL NIL Nil NIL NilNon-fundedcommitments

NIL NIL

Leasing/HParTangements availed

NIL NIL NIL NIL NIL Nil NIL Nil

NIL Nil NIL NilLeasingAIParrangements provided NIL NIL NIL NIL

of fixedPurchaseassets

NIL NIL NIL NIL NIL Nil NIL Nil

Nil NIL NilSale of fxed assets NIL NIL NIL NIL NIL0.03 NIL Nil 1s0.66 316.73Interest paid 1s0.66 316.70 0.00

Interest received 50.49 150.s0 0.02 0.00 NIL 0.03 60.51 150.53

Nil NIL NilRendering ofservices NIL NIL NIL Nil NIL

0.890.06

Receiving of services :

- Rernuneration#- Sittinq Fees

NIL NIL 0.630.15

0.890.06

NIL Nil 0.630.15

Nil NIL NilManagement contracts NIL NIL NIL Nil NIL

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Page 21

F - 49

#Remuneratlon Pald to Key Management Personnel:

# Including performance linked incentive on cash basis.

Note: (a) No amount has been written offlwritten back in respect of dues from/to related parties.

(b) No provision is required in respect of dues to related parties.

3.8 Leases (A$19) (As compiled by the Managemen)a) Lease rent paid for operating leases are recogrrized as an expense in the Profit & Loss Account in the year to

which it relates.

b) Future Lease Rent Payable for operating lease: (As compiled and certified by Management)ln

i) Future lease rents and escalation in the rent are determined on the basis of agreed terms.ii) At the explry of the initial lease term, generally the bank has an option to extend the lease for a further

pre-determined period.

3.9 AS 20 - Earnlngs per Share

Mr.P.Srinivas Managing Director& Chief ExecutiveOfficer

Salary andemoluments 22,03,783.15 5,06,301.00

, Mr. Sanjay Arya Executive Director Salary andemoluments

24,58,617.85 21,16,054.00

Executive Director Salary andemoluments 10,04,250.00 0.00

3. Mr. K.V. Ramamoorthy

4. Mr.DeepakNarang Retired ExecutiveDirector

Incentive5,50,000.00 21,94,130.00

5. Sanjib Pati Director Salary andemoluments 7,80,822.38 6,52,171.00

a. Not later than 1 year 66.98 58.92

b. Later than I year but not later than 5 years 228.20 201.66c. Later than 5 years 182.84 t82.16

Total 478.01 442.74Amount charged to Profit & Loss Account 83.37 76.85

Net ProfiV(Loss) after tax available for Equity Share Holders ({ in Crores) (28 l.e6) 255.95

Weighted Average number of Equity Shares 83,95,15,951 67,77,93,389

Basic and Diluted Earnings per Share(() (3.36) 3.78

Nominal Value per Share(?) 10.00 10.00

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F - 50

3.10 AS 21 - Consolidated Financial Statements/AS-23-Accounting for Investments in Associates inConsolidated Financial Statements

The Bank does not have any subsidiary and as such, AS-21 and AS-23 are not applicable.

3.11 AS22 - Accountlng for Taxes on Income

(a) Provision for Tax during the year is given below: (( in Crores)

(b) The major components of Deferred Tax Assets/Liabilities are as follows: ( in Crores)

(c) The bank has recognized Deferred Tax Assets of Rs.333.82 Cr., Rs 147.09 Cr and Rs.14.24 Cr onaccount of timing difference arising out of excess provision over & above the deduction for bad and

doubtful debts, Funded Interest Term Loan and provision on Food Credit respectively under the provisionof Income Tax acts 1961. Hitherto the same was not recogrized.

3.12 AS 28 - Impairment of Assets

kr the opinion of the Bank, there is no indication of any material impairment of fixed assets and consequentlyno provision is required.

3.13 AS 29 - Provisions, Contlngent Llabilities and Contingent Assets

Movements in significant Provisions and Contingent Liabilities have been disclosed at ttre appropriate places inthe Notes forming part of the accounts.

4. Additional Dlsclosures

4.1 Provisions and ContingenciesThe break-up of'Provisions and Contingencies' shown under the head "Expenditures in Profit and LossAccount is as under:

(m

339.26Provision for Tax

Deferred Tax Assets 705.36 263.61

0.78 143.03

355.51 120.58Other items15.25 NilDepreciation on Fixed Assets

333.82 NilProvision on NPA85.05 72.03Deferred Tax LiabllltiesNit NilDepreciation on fixed assets

76.r4 72.03Special Reserve u/s.36(1)(viii) ofthe Income Tax Act, 1961

8.91 NilLoss on Sale of Assets to ARC

Provisions for depreciation on Investment (r.09) 00.43)Provision towards NPA(Loans and Advances) 1769.17 8M.87Provision towards Standard Assets including Restructured Standard (423.771 325.82

Page 23

Employees benefits

F - 51

,

AssetProvision made towards Income Tea{nqldAg Deferred Tax) (428.73) *339.26

Other Provisions and Contingencies- Provision for Employee Benefit (AS-15)- Provision for Non-Performing Investrnents- Floating Provision- Provision for Others

9r3.74M.0t

(s2.76)273.t8

628.3720.11

(s2.7s)136.70

Total 2093.75 217t.95*Provision made towards lncome Tax during the year includes reversal of excess provision of<78.85 Crores

relating to previous years.

Persuant to RBI Circular No RBV2OI4-151535 DBR.No.BP.Bc.83l2l.04.048l20l4-15 dated 01.04.2015, the

Bank has made a provison of Rs.62.38Crores (PY Rs.2.09 Crores) during the year ended 31" March 2016 inrespect of frauds/suspected frauds and balance unprovided amount of Rs.53.74 Crores has been debited to

Revenues & Other Reserves in terms of RBI circular No. RBV20I5-16/376DBRNo.BP.BC.92.2llO4.O48l20l5-16 dated 18n April 2016.The same will be reversed by debit to the Prof,rt and

Loss account in subsequent quarters in the next financial year.

4.2 Floating Provisions (Countercyclical provlsloning buffer)ln

In terms of clause 6.5(AXa)(ii) of Reserve Bank of India's (RBI's) Master CircularNo.DBR.No.BP.2/21.04.04812015-16 dated l't Ju1y,2015, the Bank has utilized its countercyclical/floatingprovisions held as at I 'r April,20l 5 of Rs.52.76 Crores for adjustment of loss arising out of sale of assets, belowthe net book value, to Assets Reconstuction Company.

4.3 Draw Down from Reserves

Persuant to RBI Circular No RBV2014-15/535 DBRNo.BP.BC.83l2l.04.048l20l4-15 dated 01.04.2015, theBank has drawn Rs.53.74 from Revenue Reserve against provision for Fraud/suspected fraud.

4.4 Disclosure of complalntsa) Customer Complaints

b) Awards passed by the Banking Ombudsman

52.76 105.51a) Opening Balance in the floating provisions account0.00 0.00b) The quantum of floating provisions nE4g 4UriltgJear52.76 52.75c) Accounting for draw down made duri4glhqJeq{0.00 52.76d) Closing balance in the floating provisions account

(a) Complaints pending at the beginning of the Year 517(b) Complaints received during the Year 47131(c) Complaints redressed during the Year 47176(d) Complaints pending at the end of the Year 472

(a) Unimplemented Awards at the begiming of the Year 0(b) Awards passed by the Banking Ombudsman during the Year 2(c) Awards implemented during the Year I(d) Unimplemented Awards at the end of the Year I

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F - 52

4.5 'Disclostrre of Lctter of Comforts (LoCs) issued by the Bank

a) During the current financial year the Bank has issued 510 nos LoCs (Previous Year 378) amounting toRs.827.25 Crores (Previous Year Rs.5187.84 Crores) for providing Buyers Credit facility.

b) There are237 nos (Previous Year 212) of outstanding LoCs as on 31.03.2016 amounting to Rs.388.46 Crores(Previous year Rs.312.71 Crores).

4.6 Provision Coverage Ratio @CR)

The provision coverage ratio (PCR) for the Bank as on 3l't March 2016 is 53.36%.

4.7 BancassuranceBusiness{ in Crores

4.8 Concentration of deposits, Advances, Exposures and NPAs4.8.1 Concentration of Deposits

( in Crores

4.8.2 Concentration of Advances-.(ln

4.8.3 Concentration of Exposures(ln

Life Insurance Business 2.87 2.62

Non-Life Insurance Business 3.29 3.25Mutual Funds Nil NILOthers 0.06 0.l l

Total Deposits of twenty largest depositors 4923.14 5380.65

Percentage of Deposits oftwenty largest depositors to TotalDeposits of the Bank

4.23% 4.94o/o

Total Advances to twenty largest borrowers fi662.22 1t767.46

Percentage of Advances to twenty largest borrowers to TotalAdvances ofthe Bank

16.33% t7.04%

Total Exposure to twenty largest borrowers/ Customers 15262.61 16225.8t

Percentage of Exposure to twenty largest borrowers/ customersto Total Exposure of the Bank on bonowers/ customers

t9.48% 15.08%

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4.8.4 Concentration of NPAs ( ( in Crores)

4.9 Sector - wise NPAs (ln

Total Exposure to top fourNPA accounts 1713.79 933.79

Prlorlty SectorA.

8594.61 1322.96 15.39IAgriculture andAllied activities

9460.65 fi26.96 I l.9l

Advances toindustries sectoreligible as

priority sectorlendinc

4428.16 989.71 22.35 5962.15 862.28 t4.46)

6044.902866.043l7E.E6

881 . l8567.283 r3.90

t4.5719.79

9.87

6381.972539.473842.50

883.43487.8 I395.62

13,8419.2r10.30

3 Services- Retail Trade- Others

6074.33 188.68 3.1 I 5478.72 162.54 2.974. Personal Loans

2600E.04 3186.53 26417.45 32i 1.21 12.23Sub-Totol(A) 12.25

B. Non-Priorlty Sector

Agriculture andAllied activities

Nil Nil Nil Nil Nil Nil

2.

Industry- Iron & Steel- Power- Others

25690.72475t.189335.32

t1604.22

5 r 80.252413.21

166.382600.66

20.1650.791.78

22.41

24020.935005.359484.1 I9531.47 1 868.1 8

2627.r7758.99

19.60

10.9315. l6

3

Services. NBFC- Banking &Finance Otherthan NBFC- Others

n769.296183.993293.34

2291.96 883. l5

883. l5 7.500.00

38.53

10656.21

6010.0E3255.86

1420.27 458.72

460.82

2.10 7.31

32.30

4.32

4 Personal Loans 6578.03 221.08 3.36 6572.24 233.54 3.55

Sub-Total(B) 4403E.04 6284.48 14.27 41249.i8 3321.5i 8.05

C.Food

Credlt(FCI)1365,92 Nlt Nll 1403.05 Nit Nit

Sub-Total(C) ri65.92 Nil Nil 140i,05 Nil Nit

Total (A+B+C) 71412.00 9471.01 12.63 69069.8E 6552.74 9.49

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a

i

:t1,,; tjful

l.

F - 54

Gross NPAs as on l't Apt',l,20l5l20l4 6552.91 7118.01

5011.05 4087.t7Additions (Fresh NPAs )during the Year

11s63.96 I 1205.18Sub-total (A)

Less:

348.93 2655.01(i) Up gradations

1236.58(ii) Recoveries (excluding recoveries made from upgraded a/cs) s41.42

586.56 708.99(iii) TechnicaUPrudential Write-offs

62.86 51.69(iv)Write-offs other than those under (iii) above

553.18(v) Sale of Assets upto 31't March 2016

2092.95 4652.27Sub-total (B)

9471.01 6552.91Gross NPAs as on 3l't March,201612015 (A-B)

4.10 Movement bf NPAs(ln

4.ll Stock of technical write-offs and recoveries made thereon

( in Crores

4.12 Overseas Assets, NPAs and Revenue(ln

4.13 Off-Balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

4.14. Unamqrtlsed Penslon and Gratuity Llabilities

The bank does not havb any Unamortised Pension and Gratuity Liabilities

3281.48 2650.10Opening balance of Technical/?rudential written-off accounts as at

April 1,2015Add: TechnicaVPrudential write-offs during the year 586.56 708.99Subtotal (A) 3868.04 3359.09Less: Recoveries made from previously technicaUprudential written-offaccounts during the year (B) 1s4.37 77.8r

3713,67 3281.48Closing balance as at March 31,201612015

61.93Total Assets (Nostro balance) 25.45

Total NPAs NIL NILTotal Revenue 7.49 2.47

NIL NIL NIL

qol

*

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F - 55

,4.15 Credit llel:rult Swans

The Bank has not undertaken any Credit Default Swaps in the year 2015-16 as well as in the year 2014-15

4.15 Intra-Groun Exposuresln

4.16 Transfer of Denosltor Education and Awareness Fund(DEAF)

m

4.17 Unhedsed Foreien Currencv Exnosure

The incremental provision/Capital requirement is arrived by considering likely loss & EBID of the borrowers as

per RBI guidelines.The Unhedged Foreign Currency Exposures, Incremental provisions and capitalrequirements that are provided by the bank as on 3l Mar 2016 are given below:

ln

4.18 Liquiditv Coverase Ratio*

4.18.1 Disclosuret.(ln

1 Total amount of intra-proup exposures Nil Nil2 Total amount of top-20 intra-group exposures Nil Nit

3Percentage of intra-group exposures to totalexposure of the bank on borrowers / customers

Nil Nil

4Details of breach of limits on intra-groupexposures and regulatory action thereon. ifany

Nil Nil

Opening balance of amounts transferred to DEAF43.73

Add : Amounts trarsferred to DEAF during the year14.16

43.73

Less : Amounts reimbursed by DEAF towards claims

Closing balance of amounts transferred to DEAF57.89

43.73

Incremental Provisioning (over and aboveextant standard asset provisioning)

Incremental Capital requirementfor Unhedged foreigr currencyexposures ofborrowers

1.11 0.32

3Total

WeighteaVa!ue

TotalWelghted

Yalue

I Total Hlgh Quallty Llquld Assets21762.03 19542.76

2 Retail deposlts and deposlts fromofsmall buslness

89599.63 5251.08 82700.08 4880.35

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whicii:

LCR as on last four quarters of the FY: 2015-16Quarter Ended on LcR (%)

June,2015 210.63September,2015 209.56December,2015 212.44March,2016 242.26

* The above disclosures are as compiled and certi/ied by the Bank's Management.

4.18.2 Oualitatlve Dlsclosure around LCRThe Liquidity Coverage Ratio (LCR) standard aims to ensure that a Bank maintains an adequate level ofunencumbered High Quality Liquid Assets (HQLAS) that can be converted into cash to meet its liquidityneeds for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified bysupervisor. Bank has implemented and is computing LCR since 1" January,2015.LCR is calculated as a ratio of HQLA to net cash outflow under stress scenario over the next 30calendar days.As per RBI guideline, Bank is required to maintain minimum 70% LCRas on 31.03.2016.

o

(i) Stabic 4eposits 74177.73 3708.89 67793.25 3389.66

15421.90 1542.19 14906.83 1490.69(ii) Less stable deposits

deposits (allOperationalcounterparties)

142.37 35.59 Nil Nil(i)

1t436.20 7t4t.t5 11436.20 6602.90(ii) deposits (allNon-operational

counterparties)

0.00 0.00 Nil Nil(iiD Unsecured debt

0.00 Nil Nil(D Outflows related

andto derivative

other collateralexposuresrequirements

Nit(iD Outflows related to loss of funding

on debt products 0.00 0.00 Nil

Credit and liquidity facilities 6049.59 1160.28 3312.61 587.83(iii)

9. Secured lending (e.g. reverse repos) 0.00 3l 1.33 Nil10.

exposuresInflows from fully performing

4719.22 4418.t7 560.25 280. l3

1415.48 827.63 2714.35 24t4.35

ffiffip.mffiffiTotal

AdJustedValue

11. Other cash inflows

Chartered

Page29

ffi0.00

':_4;: li f, EAEt3.[f]:;.j

ffiffi ffiEffiffiffi},?&Nih'r-" ,rc{rffiipidffitsP,r riii

.l{1:r.*

.tT,F.Bffi ffi rT[($InJft{mrItljrJ$ffiifiii3,

',; ; r' . t''. !it;;)' );;:!:::;!;';t1t.i

Iilil'T

ffis

F - 57

t

i CR of the Bank is assessed at242.26% which is well above the minimum requirement as prescribedby d:e regulator.

4.19 a) Registation formalities are pending in case of two properties consisting of Rs.2.57 Crores, WDV as on31.03.2016 Rs.2.37 Crores (Previous Year Rs.2.l lCrores).

b) Premises include leased properties amounting to Rs.76.90 Crores (net of amortization) as at 3lst March2016(Previous Year Rs.75.87Crores).

5. Based on information available with the bank, there are few suppliers/services who are registered as Micro,smallor Medium Enterprise under the Micro,Small and Medium Enterprise development act 2006 (MSMED ACT,2006)information in respect of micro and small enterprises as required by MSMED.

Sr.No.

Particulars CurrentYear31.03.2016

PreviousYear31.03.2015

I Principal amount and interest due thereon remaining unpaid toany supplier as at the end ofeach accounting year:Principal :

lnterest :

NILNIL

NILNIL

2 The amount of interest paid by the buyer in terms of section 16 ofMSMED Act,2006 along with the amount of the payment madeto the supplier beyond the appointed day during each accountingyear.

NIL NIL

3 The amount of interest due and payable for the period of delay inmaking payment (which have been paid but beyond the appointedday during the year) but without adding the interest specifiedunderMSMED Act,2006.

NIL NIL

4 The amount of interest accrued and remaining unpaid at the endof each accounting year. NIL NIL

5 The amount of further interest remaining due and payable even inthe succeeding years, until such date, when the interest dues as

above are actually paid to the small enterprise for the purpose ofdisallowance as deductible expenditure under section 23 of theMSMED Act 2006.

NIL NIL

6. Previous Year's figures have been regrouped / rearranged wherever considered necessary to make themcomparable with those of the current year.

ChrnercdCharteted

nlan

Page 30

F - 58

l

I

This is a part of Schedule l8 as on 31.03.2016.

ffiManaging Director & Chief Executive Officer

Director

M/s.Nundl & Assoclates. M/s.PCBlndal&Co.Chartered AccountantsAccountantsFRN:

Partner PartnerM.No:093783M.No:059828

S.Sfrryanarayanav Dtrector

r\


Pratyush SinhaDirector

M/s.SPMR&AssoclatesCharteredFRN

PartnerM.No:085362

Arnab RoyDirector


,4n ,zSanJaffumar

General Vlanager & CFO



CA.SuPartnerM.No:023837

Place:KolkataDate :17'h Mayr20l6.

\Chartered

Ac nI

Page 31

F - 59

.

ENDED TIST

BANK

3l.t M rTch 201631Bt lrch 2016

CASH FLOW FROM OPERATING ACTIVITIES

(2.819.588) 2.559-922Add: lncome Tax 2-200-oooLess: MAT Recoverable 2.200.000Add: O€tre,ed Tax Assots 14.2A7 3001 1,981,100Prollt before Tax (7.106.888) 4.541.022

Adlullment forDoproclaton on Flx6d Assets 1,027 .675 r.057.1S0Lsss: Amount drawn from Re\/aluafon Rosarvg (160.786) n4a.ProfrULoss on Sals of Flx6d Arsets (Netl 380 5.802Deprgclaton/Provlslon for lnvastmonts (Net) (10.892) (704,252

Provlslon 4.257.7001 3.258.200Pmvl3lon for NPA Advencsg I 7.691.700 aa{,a.700Other Provlslon8 (Nel) f ,4s1,111 10.710.805lntereot on Subordlnat€d Bonds 2.228.461 2.332.475

oDoratlno Proflt betore chlnse! ln ODo,lllno Asseil rnd Llabllluo! 18,920281 29.507.E06

Adlurlment for net chanoe ln ODeretlno A.Beh and Lhblllllas

Decrease/(lncrea3el ln lnveslrnEnt fi4.767.9551 17.012.716Decr6a16/(lncreasel ln Advanc€s fi8.403.94'tIlncreaso/(Decroar6) ln DaDosltr 75,030,775 (26,921,097)

lncr6ase/(Decroase) ln Bonowlnos (8.492.233) (3.985.063)

Decreas6/(lncraase) ln Other A8sals (6.817.636

lncrease/(Decrea8e) ln Other Llablll0os & Provlslons (8,471.026) (9.296,488)

lncrease/(Decr€ass) ln Revenue Roserve (370.679) 12,163lncr6ase/(Dscroasa) ln Other Resot.o 1,012

2t.176.942Carh Genoraled fom Operltlns Actlvltl.!Tax (Paldy Refund 1,100,000 (1.060,000)

Nel Calh trom Ooeratlno Actlvllle3 (Al 24.276.982 G8.030.7321

I CASH FLOW FROM INVESTING ACT]VITIES

Flxed Arsgts (Notl (896.326) (449.783)

Net C!.h from lnveltlns Acllvltlot (Bl (808.326 (,1/t0.783)

CASH FLOW FROM FINANCING ACTIVITIES

lssua of Share Caoltal 4.800.000 6.152.3211Share Prgmlum 8.152.321

(3.000.000!Subordlnated Bon& lssuedt2.332.1761lnt6ro3t on Subordlnatod Q,228,4611

Net cmh ftom Flnanclno Acllvlllca lCl /.420,46',t1 6A7,525

Net lnc.oale ln Cs.h and Caih equlvalontt (A+B+CI 22.951.175 (47.812.990)D

Ca6h lnd Ca.h oqulvalenb rt lhc beglnnlng ot th9 y9!,5.030.200 4.336.0UCash ln hand

Balance! wltr Reservo Bank of lndla 53,125,812 50.361,760Balances wlh Banks end Monsy at Call and Short Noflco 2.149.402 00.305.414 46.420.632 108,r 1 8.404

Garh rnd Cash equlvllontr rt tho end o, the yerrCash ln hand 5,588,093 5,030,200

Balanco! wlh R$orvo Bank of lndla 55,1 16,373 55,125,8122.'145.102 60.305.414Balanco8 wlth Banks and Money at Call and Shfrt Nodca 22,552,123

Nolr : The above cash tlow ltataEifnt har bgen DreDlred on lho brtl3 o, ln(

CharleredChartered

CharEred

IO T:,/T'] I II;I i FTI 'TI

F - 60

iV

This is a part of Cash Flow Statement as on 31.03.2016.

----EDrtnlvFManaging Director & Chief Executive Officer

Director


SinhaDirector

s.

M/s.SPMR&AssociatesChartered AccountantsFRN:

PartnerM.No:085362

\

Arnab RoyDirector


Zt,/sant$Kumar

GeneralManager & CFO



PartnerM.No:023837

Place:KolkataDate :l7th May,2016.

M/s.Nundi & Associates.Chartered AccountantsFRN:3

PartnerM.No:059828

M/s.PCBlndal&Co.Chartered AccountantsFRN:

PartnerM.No:093783

Chartered Charle

Page 34

-----\

F - 61

I

,INDEPENDENT AUDITOR'S REPORT

To

The President of lndiaReport On The Financial Statements

7. We have audited the accompanying financial statements of UNTTED BANK OF INDIA as at 31't March,2015, which comprises the Balance Sheet as at March 37,2015, and Profit and Loss Account and thecash flow statement for the year ended on that date, and a summary of significant accounting policiesand other explanatory information. lncorporated in these financial statements are the returns of 20branches and treasury operations audited by us and 705 branches/retail hubs audited by branchauditors. The branches audited by us and those audited by other auditors have been selected by theBank in accordance with the guidelines issued by the Reserve Bank of lndia. Also incorporated in theBalance Sheet, the Profit and Loss Account and the Cash Flow statement are the returns from 35Regional Offices, !275 branches, 2 Staff Training Colleges, 1 Cash Management System and L CentralPension Processing Centre, which have not been subjected to audit. These unaudited branches accountfor 9.30% of gross advances, 35.45% of deposits, 5.47o/o of interest income and 34.70% of interestexpense.

Monagement's Responsibility for the Financial Statements2. Management is responsible for the preparation of these financial statements in accordance with the

provisions of Section 29 of the Banking Regulation Act, 1949 and to disclose the information as may benecessary to conform to forms'A & B'respectively of the Third Schedule to the Banking Regulation Act,1949. These financial statements comply with the applicable Accounting Standards issued by thelnstitute of Chartered Accountants of lndia. This responsibility includes the design, implementation andmaintenance of internal control relevant to the preparation of the financial statements that are freefrom material misstatement, whether due to fraud or error.

Auditor's Responsi bi lity3. Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with the Standards on Auditing issued bythe lnstitute of CharteredAccountants of lndia. Those Standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgement, including theassessment of the risks of material misstatement in the financial statements, whether due to fraud orerror. ln making those risk assessments, the auditor considers internal control relevant to the Bank'spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the bank's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management, as

well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

6, Emphasis of Matter

5.1 ln accordance with Standard of Audit (SA) 706 "Emphasis of Matter Paragraph", withoutqualifying our opinion, we draw attention to Note No.3.5 in Schedule 18 regarding deferment ofpension and gratuity liability of the Bank to the extent of (89.46 crores pursuant to the exemptiongranted by the Reserve Bank of lndia from application of the provisions of Accounting Standard

4

aha4e'rdI'ct r.,;r;3;15

0tanlt

(AS)-15 on "Employee Benefits".

,De

F - 62

aI We draw attention to Note 3.5 to the financial statements, pending settlement of the proposed

wage revision effective from November 2072, an adhoc provision of ?290 crores is held as at 31'tMarch 2015,

Opinion7. Subject to what is stated above, in our opinion, and to the best of our information and according to the

explanation given to us and as shown by the books of the bank, and read with the Accounting policiesand the Notes on the Accounts, we report that:

(i) The Balance Sheet, is a full and fair Balance Sheet of the Bank containing all the necessaryparticulars, as required by the Banking Regulation Act 1949 and is properly drawn up so as toexhibit a true and fair view of state of affairs of the Bank as at 31sr March, 2015 and is inconformity with accounting principles generally accepted in lndia;

(ii) The Profit and Loss Account, shows a true balance of Profit, in conformity with accountingprinciples generally accepted in lndia, for the year covered by the account; and


Report on Other Legal and Regulatory Requirements8. ln our opinion, the Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A"

and "8" respectively of the Third Schedule to the Banking Regulation Act, L949 and is in accordancewith the provisions of section 29 of the Banking Regulation Act, 1949.

9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by theBanking Companies (Acquisition and Transfer of Undertakings) Act, L970, and subject also to thelimitations of disclosure required therein, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge andbelief, were necessary for the purposes of our audit and have found them to be satisfactory.

(b) The transactions of the Bank, which have come to our notice have been within the powers of theBank.

(c) The returns received from the offices and branches of the Bank have been found adequate forthe purposes of our audit.

10. ln our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with theapplica ble Accounting Standards.

Date : 7th May 2015Place: Kolkata

For Ramamoorthy(N) & Co. Nundi & Associates. PCBindal&Co. SPMR&Associates.Ch a rtered-A€€ollIt ta nts Chartereglrf,ftNents Charterefii@{pts Ch a rtered-AecqUnta n ts

rnru:946?*fitsNrnrrr:offi}aopN Jnru:39ft#HN rnru:0ffififfig\o

o)t

Clhao

*

o

CA,SU CA.Vire cA.Pa rtner ffrtner Pa rtn er

\::::-Parrner

MRN;023837 MRN;016359 MRN:088730 MRN:085362

ca.r'qaruffiT

F - 63

;a

199723

5876

78.92o/o;

o.tAyoi

66,578,299

NiINil

Nil

I00%:Jtss,sqt, 7921 ,792

Nit

l5l21.08%i

4E8,1

10.470/o

524032

7.18o/o

l.52Yo

_ _?uE9t4664n

7q0919.. _

BANK OF INDIA

AUplrEP FrNANc!4|!

Paralculsrt

I lnlcrcsl Eerncd (s+b+c+d)a) Intcrcst/Discount on advanccVbillsb) lncome on Invcshcntc) Infl. on balancc wirh RBUOthAB;ksd) Othcrs

Oahcr lncomeTollllncomc(l+2)lnlc16a Erpcndcd

5 Opcratlng Erpcnscsi) Paymcnts to and provisions for cmplo_yc9s.. , . .._.-.. . .-_.,ii) Olhcr opcrating cxpcnscs

6 Totsl Erpcnditurc 14y(5) (Eicluding Piovirton end '

ConllngGnclcrl7 Opcrrling Profit (tH6) (Proftt bcforc Provblons and

Contlngcncics)E Provlslons & Contlngcnc_ics (O-rLq !h.j gf) " " " _ ._ .9 Erccptlon.l Itcm!

l0 Pront (+yl.orsc) from Ordlnary Activltlcs bcforc tar (7-&9)

I I Tar Expcnscs

l2 Nel Prollt (+)il-ossc) from Ordlnary Actlvltle sfter tar (10.,

Ir)l.l Ertrrordinary lt€m! (nct of.lr: -clPltlqg)l4 Nct Prorir (+)/Loss(-) for rhc pc.jgdI 5 Paid-up cquity share capital (Face lglpc ofggch glqqc R1 !0)15 Rcscwes excldg. Rcvaluation rcscwcsl7 Anrlyticrl Ratios

(i) Pcrccntagc of Sharcs hcld by GO.I.(ii) Capital Adequacy Ratio %

a) Bascl-llb) Bescl-lll

(iii) Eaming pcr Sharc (EPS)

a) Basic and dilutcd EPS beforc Extraordinary itcms (nct oftaxexpcnsc) for thc quartcr and for thc ycar (not annualiscd)

b) Basic and diluted EPS ancr Extraoidinary iicms lnir oftax '

expensc) for the quarter and for rhc ylg Oglglu?lisg) __(rv) (a) Amount of Gross NPAs

(b) Amount ofNcl NPAS(c) Pcrccntagc ofGross NPA

1d) Pcrcentagi ofNct NPA(v) Rctum on Asscts (Annualiscd) (7o)

l8 Public Sharcholding

No. ofsharcsPerccntagc of shucholding

l9 Promotcrs and promotcr group ShgglrgldiqSa) Plcdgcd/Encumbercd

No.of shares

Percenragc ofsharcs(as a y. ofitri iotat itr.rit oUi"! oipro;orer -

and promotcr group)

Perccntagc ofshare (as a % ofthJ iomr itruc capiiar oftii. -company)

b) Non-cncumbcrcd

No. ofshares

Perccntagc ofshares(as a % ofthe total sharcholding of promoter

and promoter group)

Perccnlagc ofshare (as a % ofthe total sharc capital ofthc

rtcr Ended31.12.2014 3t.0t.20t4

- -(Berlqre!)

172018

(Rs. !n

._tLo.l.?-ql!_{Aslleq)

vs7-6t7865277467

3Yprr rn{e{.ll'9-3'?ol1

l0lE04t lgf222?

t063

3153t2- ---- ii6.bbs

939

t736 t27i

5003/t26741

23293

676t0

E06 6

EO3647

70795

6936

(tss622

2p4174

!q1?60

44576 te725852 26570

22127 17469t29t331

206169

20t44 771

. .?4ee_!5: "- .-..

242794

0

454

46937

233189i

0

I l5t3

I 13l

8235i

4037

4l , , l)21

.194]1?qief?

439441

82.00%

2-1??e :

E.let?l439441

4t7E,

78.92o/o

0

46937

190

( 12 134!)11471

331901

ll.42o/t ll tt.46yo9.81o/o

82.00%i

10.5

II

l.4l

1.4 I

65529tluibira

_ 039i__ __ 3.78

0.39

9 49%l

---.?. 'l0.21o/o,

66;7q,2ee

lE.

Nil

Nil

NiI

Nilr

_qqqJ-l ,q19t00%

_q8pJ?g.qp: _ _4qp,tl00Vol

82.00%,t2

c'9I ccc

0

26670

27675

(19312)

I

t8724

0

33 l90l 33

12.03%:

OFFICE:KOLKATA

"t"FOR YEARTIIE --1

781704083

901

t92739

103829

(t+ii) I

0

3.78

655291 7l l80l46641t

..- ----- +-. -.

F - 64

Da

Segrnent Reportlng;

Part A:Business Segments;

Rs. in Lacs

Quarter ended31.03.2015

Quarter ended3t.12.20t4

Quarter ended31.03.2014


Year Ended3L.O3.20t4

l.Segment Revenue: (Audited) (Revlewed) (Revlewed) (Audited) (Audlted)a)Treasury Operations 1 16,395 110,730 463L6 430,6L2 326,464b)Corporate/Wholesale Banking t23,7tS 124,373 tza32s 505,398 s77,605C)Retail Banking 70,934 56,460 85,916 243,991 254,s86dlOrher Banking operation 4,257 \a97 s,o72 tt,s3t 17,717e)Unallocated Income 11 7 t,749 207 4,440Total 3LS,3L2 293,467 307,378 1,792,739 r,tao,6t6Less; lntersegment Revenue

Total 315,312 293,467 3073?A 1,192,739 t,7ao,6t62,Segment Results:Pront/(Loss)

a)Treasury Operations 61,912 26,746 (20,s08) t37,ta4 9,409b)Corporate/Wholesale Banking 2t,ztt 4+,274 47,4A6 t42,740 211,362C)Retail Banking 34,432 18,593 44,670 90,922 95,449d)Other Banking operation 4,257 LAg7 5,O73 1 1,53 1 t7,7t7

Total 122,272 90,950 tt6,72t 342377 333,937Less: Unallocable Expenses net

off unallocable income 143,O191 130,673) (62,4261 (139,583) (127,7631

Total 79,193 60,277 s4,295 242,794 206,174Provision& Contingencies 67,6LO sz,o+2 26,670 197344 361,796

Profit Before Tax 1 1,583 a,235 27,625 4S,410 Itss,622lTax Expense 1,13 1 +,os7 (te,3t2) 19,811 (34.2771

PAT to,4s2 4,174 46,937 25,599 (t2t,34Sl3.Capital Employed

a)Treasury ODerations 2L4,A69 224,964 189,561 2t4,869 tag,s61b)Corporate/Wholesale Banking 215,700 t99,257 t77,273 zts,7bo 177,273

c) Retail Banking 90,809 49,731 76,455 90,809 76,455d)U nallocated 61,426 58,400 43,774 61,426 a4,976

Total sa2,ao+ s72,352 s27,067 582,804 sza,265

Note:-The Bank has only one Geographical Segment i.e Domestic Segment

0.

* *

(rn ,:etec

otu

teo k

,)

,

F - 65

I

-

2

NOTES

The above financial results have been reviewed by the Audit Committee of the Board and approved by the Boardof Directors of the Bank in their meetings held on 7th May 2015 and have been subjected to audit by theStatutory Central Auditors'of the Bank.

There has been no material change in the Accounting Policies followed during the quarter/year ended 31'tMarch 2015 as compared to those followed in the preceding financial year ended 31't March 2014 except asstated in note no.5 hereunder.

3. The figures of quarter ended 31'r March 2015 are the balancing figures between audited figures in respect of thefull financial year and year-to-date figures upto the period ended 31't December 2014.

4. The financial results for the Quarter and year ended 31't March 2015 have been arrived at after consideringprovisions for Non-Performing Assets, Standard Assets, Restructured Assets and Depreciation/Provision forlnvestments on the basis of prudential norms and specific guidelines issued by the Reserve Bank of tndia (RBt),provision for exposure to entities with Unhedged Foreign Currency Exposure besides other usual and necessaryprovisions. Provision for Employee Benefits pertaining to Gratuity and pension has been made on the basis ofactuarial valuation during the current quarter and year ended 31't March 2015,

5. The Bank has identified useful life of fixed assets as per the requirements of Schedule ll of the Companies Act,2013, and has provided depreciation on Fixed Assets accord.ingly.

Further, the additional depreciation of '10,60 crores arising due to adjustment of impact arising on the f irst-time

application of transitional provision to schedule ll has bee n charged to General Reserve.

The additional depreciation of' 14.82 crores on revalued assets has been charged to P&L account and an

amount equivalent to the additional depreciation has been transferred from revaluation reserve to GeneralReserve as per Companies Act, 2013.

6. The bank has written back excess income tax provision amounting to ' 78.85 crores during the year ended 31't

March 2015.

7. ln terms of the provisions of RBI Circular no.DBOD.BP.BC.8Ol2t.O4.Otllz17}-Lldated 9th February, 2011 on Re-

opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits,'447.37

crore was to be amortized over a period of five years with effect from Financial Year 2010-11. Accordingly '89.46

crore has been charged to the Profit and Loss account being the proportionate amount for the year ended 31"

March, 2015 ('89.46 crore for the previous year). The unamortized liability as at 31't March, 2015 stands at Nil

(Previous Year '89.47 crore).

8. Pending settlement of the proposed wage revision effective from November 2012, an adhoc provision of . 290

crores is held as at 31't March ZOiS. tn addition '124.75 crore provision has been made for incremental pension

liability due to wage revision on estimation basis.

9. During the year, with the approval of its shareholders by the resolution at the Annual General Meeting held on

18th August 2014, Bank allotted 7,74,00,000 (Seven Crore Seventy Four Lacs) equity shares of .10/-(Rupees Ten

only) each at a premium of . 25.50 (Rupees Twenty Five and Paisa Fifty only) per share to the Government of

lndiabyconversion of 27,477(IwentySevenThousandFourHundredSeventySeven) numberof Perpetual Non-

cumulative Preference Shares (PNCPS) out of total 80,000 (PNCPS) of " 1,00,000/- each held by the Government

of lndia attregating to . 274.77 crore through preferential allotment under Chapter Vll of the SEBI ICDR

Regulation 2009, as amended.

10. During the year the Eank has allotted 8,45,07,042 (Eight Crore Forty Five Lac Seven Thousand Forty Two)

i))

a

.fe:ed

of Equity Shares of . 10/- (Rupees Ten only) each um of . 25.50 Five and

tOe

.1

t

F - 66

w

UNITED BANK OF INDIAKciLKATA

"*j,

'iAudlted Balanca Sheet as on 31st March 2015i

tI

{II

i

I

I

,{

I

1

(Rs ln thousand)l

CAPITAL & LIABILITIES Schedule As on 31.03.2015 ; As on 31.03.2014

I

.,. J, ,

.

i

;

I:

i''

i

i.

123027 ,57

839 -'9-1.'90

3852 1Other Liabilities and Provisions

3927,90 ,61

111509 ,70

4460,23,61

125101

Capital

Reserves & Surplus .-.. ." .4-9pq,52 ,34

108817 ,59 ,89

._ . 4Q61.",72 p8

(Audlted)

1354 ,74 ,81

(4sdllso)

Total

ASSETS I schedule i As on 31.03.2015 As on 31.03.2014

Cash and balances with Reserve Bg$ of tndia

Balances with Banks and

Money at Call and Short Notice

lnvestments

12

6

Total

2710

125104

2753

123027

Other Assets

ixed Assets

. , (4rdilefl :

-5915 ,60 r12

(Audlted)

6269 ,77 ,

7

q

I10

11



9908,33 ,01

2880 ,71 ,07

Pl1

6450,33 ,61

2416 ,50,60

4542,06,32

44876 ,34 ,13

65767 ,51 ,14

938,73 ,47

_ ?11!94 ,02i

46603 ,11 ,41 :

06763 ,03 ,5s

877 ,41 ,32

'%.

tI

I

I

I

i

I

l

I

1

2

3,

F - 67

f

777 713

90E_:E9-r97

14594

624 .48 ,61

,0

. .fl9,5e608

-.__ _ _ - .._ (_-0_, Q-9_,

-386 ,56 ,4't

14

14 ,8?

__ ...__.1 90

4988

?9",!,7

.._i-SCHEOULE 1

I

Ii

. - .j .(Rs.!nthousand)on 31 ,Qg,-29_15 -. As on 31.03.201/t

AUTHORISED CAPITAL.oQ 00

(Audlted, -

3000 ,00

Equity Share Capital

Perpetua I No n c.umm u la t|ve- !99f 9 1en-99- s l!?I9;€ l!-c"-Pg) _ __

ISSUED, SUBSCRIBE O AND PAID. UP CAPITAL

83e51 s951 (Previous Yeat 55-4.7_a899_l )_.ECy!!y*

Shares of Rs. 1 0/- each[(includr.Ig."6_1.1999qp "

(PreviousYear488169792)t'-e.F_-qy_-G9!1.-- '!_,Q0_- --"- 151 ,7a ,81

0 (Prevlous Year 80000)

Non-Cumulative Preference. Sh,argg (Pl!g.q.S)

of Rs. 1,00,0001 each held

Total 839

SCHEDULE 2. & SURPLUS

As on 31.03.2015 As on 31.03.2014

l. Statutory Reserves

Opening Balance 71 9-.91-.9t! 713 ,51 ,31

Add: Transfer from Profit & Loss Account 63

SUB.TOTAL

ll. Capital Reserves

a) Revaluatlon Resorve

Opening Balance

Addition during the period/year

Add/(Less): Adiustment during 1le".pg-I.o*qlye?{_ .- -. .. -.Less : Transfer to Profit & Loss Account

b) Others

Opening Balancet.--

s08 1508 ,49 ,53

Add:Transfer from Profit & Loss Account't-

1508 ,49509

suB-rorAL [(") * lbll 2103 ,71 2117

lll. Share Premlum

Opening Balance

Addition during the

1263 ,qq ,.ql 743 ,62 ,93

- _--_ 'ol:5 519

1263.,95 ,

su8_.Iorl!-. ..

2078

lV. Revenue and Other Roserves

a). Specall Reserve l.T.

Opening Balance

Less. Draw down

Add :Transfer f rom Profil & -L9"s

g,Agg9gll_-...

sUB TOTAL (a)

220.00 220 .00 .00

.-t-,,Q

-,9220

b). Revenue.Roserve

Opening Balance 898 :q8 r77

Add: Transfer from revalualio,n rgggrvg

Less: Draw down for for Assels l!2,02Add:Transfer from Profit & Loss Account \12-13 ||4

suB ToTAL (b) -

suB-roTAL t(al+ Qll -(166 ,58 ,41)

Balance ln Profit & Loss Account3927 ,90 ,61TOTAL l+ll +

PN

4

839

_ .q00 r001354 ,71 ,81

-'.1

'9-a

220

F - 68

I

I

I36811 ,10 ,93;,' - .,-'i

II

I1761 ,02 ,83't 2116 ,02

I

91391 ,17 ,p3{ . q819? ,7e

331

.,07

1fi509 ,70

1261 ?96261 ,67 !33

1315 ,00 ,

108817

7_982- ps p7lI

I

t,

I

I

111909,70,86't08q!7 ,9e ,89

1088t7 111s09

t

I

584 ,OO ,OOl

4040,83,11

41.9 ,!O

44604061 ,72

4,v ,a2i-- - I3472 ,81 ,36'

I

I-t

22?5 ,OO ,OOI,

3oo ,oo ,oolt

2225 ,OO

300 ,00

SCHEDULE l -_gEPggl_rgt

4s.9r -9'!'ql,?9:!! i 4" on 31'03.2014

l. Demand Deposits

i) From Banks

ii) From Others

ll.

I

rilt.

Savlngs Bank PppSgltg

iTerm Deposlts

i)lFrom Banks

ii) jFrom Others

TOTAL:

B i)jDeposits of branghps in tnoia

ii) iDeposits of branches outside lndia

i

SCHEDULE 4. BORROWNGS

(Ri: ln

As on 3'1.03.2015 As on 31.03.2014

t. . Borrowlngs ln lndla

i) ;Reserve Bank of lndla

ii) .Other Banks

iii) iOther lnstitutions & Aggngies #

ll. Borrowlngs outslde lndla

TOTAL

Secured borowings included in l&ll above

# lncluding Subordlnate"q D9plg l"9r Tier ll Capilal.

# lncluding lPOl for Tier I Capital.

oorl

raD

a

orlered

&

c.1

a

l')

I

I

,01

F - 69

-t

f,

348 ,79 ,90'

_ 67 ,81 ,5-81

102?.s-s pll

'!590 !57 !91

169 ,1?

9s9 ,,78

372 ,98 ,77

734 !27

433 ,60-soq ro2 ,

Bills Payable

lnter-Otfice Adiustments (net)

lnterest accrued

Contingent Provislons against Sl?ndard Agggls

'Deferred Tax Liabllity (net)

lProposed Dividend (including Oividend Tax)

Others (including provislons)

TOTAL:

scHEouLE Q : CASH & BALAICE9 WlrH

l. Cash in hand (including loreign currency notes)

ll. Balances with Reserve Bank of lndia

i) ln Current Account

ii) ln Other Accounts

TOTAL:

ln Indla .

i) Balances wilh Banks

a) ln Current Accounts



a) With Banks

b) With other lnstitutions

SUB.TOTAL:

Outside lndia -


a) in Current Accounts



SUB.TQTAL:

TOTAL:

SCHEDULE 5 . OTHER LIABILITIES AND PROVTSTONS

Ai gn 3r:01.?0'tl

(R8. ln thousand)

As on 31.03.2014

BANI_( o-F- rNptA

, (Rsl !n

As on 3{.03.2015 I Ae on 31.03.201.1

)

CALL AND SHORT NOTTCEBANKS AND MONEY ATSCHEOUL-E 7. BA.LANCES WTH

49 ,49,48;

140 ,00 ,00

As 04 9l:03.2015

.(R9: !0!h,oq3indl

As on 31.03.2014

99 ,82

-j

il.

4133,39,17

348 ,84 ,61

i:l

lunttAcc

7821 11

1060 ,oql,

I

I5312 ,58 ,12"

t.;

5E36 ,17

.t.

.ll,

Iil.

tv.

'vr.

vil.

-i

25 ,44

F - 70

I

,s5)i

46757 {9 ,5027

94 o(1 ,54 (?s1

I'.,66..,-261

20.72,39 ,921 .

-l

9308 ,79 ,7{1 7417 !8:4

I

t

2_077 ,79 ,72

16 r43 ,

?80 ,2 _2?101 ,59

9s094- !9{ ,l !

SCHEDULE 8.

lnvestments ln lndla (Gross)

Less : Provision for NPl, depreciation / amortisatio_n-

NET

(Rg, tn

As on 31.03.2014

19450 ,14 ,

45409 ,26 ,95

Break-up


li) Other Approved Securities-

,iii) 56"r".

iv) 'Debentures and Bgldg

v) rSubsidiaries and/or Joint Ventures

vi) Others (Mutual Fund, CP,9P, g!9,)

SUB.TOTAL:

lnvestments outslde lndla (Grossl

Less : Provision, fol dqpregielion

NET

Break-up


(includlng local authorities)

ii) Subsidiaries and/or Joint Ventures abroad

iii) . Other investments

SUB.TOTAL:

rorAL(!&[)

I

SCHEOULE 9 - ADVANC-ES

t (Rs: in thggs4nd)

As on 31.03.2015 i Ir on 31.03.2014

908 ,09i) Bills Purchased and Discounted

ii) Cash Credits, Overdrafts and Loans repayable

on demand

iii) Term Loans

TOTAL:

399 ,48 ,52j

21567 ,O2 ,g1lt

$|pa ,sz Jll66763

9s92q 14

At.9q 3!:91:?015

i

I

il.

I

-t

I

-l

I

It

I

I

I

I

F - 71

899 ?1 J3i . _.. . 891 ,

,

-. ..-- q?.'o ljiq,?11-- .- -- ..95.3 ,?1

683

y.,L?

..... .. . 1?,q-6-,s:!t"

Ltg,688

,.._ (6?9 ,1e",33-);. . (971.16Z ,96)

9-,01

79'! .ee

9956 ,93

ltg-,-9

.._. ..1-. _. *._........,._-".., .

I

9CHEDULE 10

_A! on 31.03.2014

l. Premises (tnclHqltg "LfpgSllgldl . .

At cosu Revalued ag.glr"91i!MqFh.g!pte!9glg.ygel _ ._

Revaluation dUfit]g !h9

Additions during the- ye_ar

Less: Deductions_qqfllg lhe yg?f:

.Depreciation to',datq. . .

suB-TgTAL

ll. Capital.Work-ln-Progrese__..-

lll. ;Other Flxed Assets tFlxture)

At cost as on 91 9! Mefqh 9! pfg"9pql4g yeCt

Additions during lhe yg?l

' Less: Deductions. qvlfng thg y-ee(

Deprecialion to date

SUB.TOTAL:

lV. lntanglble AssetsI

I

Software

At cost as on 9 !tt l!4?r9h_ 9f p-r9q9q!-19 ypal _.

Additions during the year

t-..,

..20_,96,

"1 ,9q,qql__ .-?4 '?0

. "9! ,?796 911

Less:Deductions qy.nng"ltrg ygef

Amortisation to qq!9._.. . . . .. ..

SUB.TOTAL:

. G"3-,?7 .170 ,_24

1? 'QQ

.24 p2_

r-qT4L i (l+ll+lll +lvl 8f7

tAcc ianls

re0

II

--- * 1

I

i-

F - 72

Acco :ridnls

1094,35,11,

713 ,14 ,s1lI ,qo,69f

.t

:!s1 ,9q ,gol

-t

745 ,58 | 841 702 ,37 ,07

481 ,72 |

978 ,15 ,82

557 14 !78

11 .12 B0

SCHEOULE 11 . OTHER ASSETS

,.(Ri, ln

As on 31.03.2015 Ap on 3'!:09:?0-1_4

l. lnter-Omce Adjustmentg (!e!)

ll. lnterest accrued

m.

tv.

vt.

v[.

.Tax Paid in advance/Tax deducted at sourc4 (Net)

Stationery and Stamps

, Non-banking ?ssets acqlliIgO in satisfactlon of claims

Deferred Tax Assets (net)

Others

SCHEDULE 12

(Rs. ln

AE on 31.03.2014

l. Claims against the bant( no! acknowledged as debts

ll. Liability ,or partly paid investments

lll. Liability on account of outstanding foMard

exchange contraclglV. Guarantees given on behalf of constiluents (net of cash margin)

I

0.,18 ,9p1

so ,ls ,za!I

9- ,q7 .

I

!

I

I

t

I

I

iii

l

it

33 ,20 ,99

?163 ,68 ,30lt

;,0,;

5012 ,06

a) ln lndia

b) Outside lndia

c) BG invoked but not paid (ln lndia)V. Acceptances, endorsements and otherobligations (net ofcash

margin)

422 ,77 2517 ,93

109q,89

4 ,70

2670 ,14 ,10t

,63 ,83;

1089 ,68 .07 1276 ,54 ,07

Vl. Other items for the Bank is

contingenlly 21 ,11

TOTAL 9908

PN

A9_ 94 _31,Qp.20!!

c)

a

&

*'l

F - 73

This is part of the Balance Sheet as on 31.03.20

P.SrinivasManaging Director & Chief Executive Officer

Executive

\^^1Parvathy V Sundram

DirectorA.K.DograDirector

Sinha

Yp,1[


Sanjib

IWs.P C & Co.

Director

,^fu^,GenerafManager & CFO

As per our separate report ofeven date annexed.

M/s.Ramam oorthy(N) & Co

C Bharathier

MRN:023837 MRN:016369

Place :KolkataDate :7th May,20l5.

CAssociates

MaheshwariCA.PartnerMRN:088730

PartnerMRN:085362

tnr

charteredqa;

*

F - 74

(Rs in thousand)

ended 31st March, 2015


Profit & Loss Account for the

Schedule Year Ended 31.03.2015 Year Ended 31.03.2014

l. INCOME

lnterest Earned 13 10180 ,47 ,77 10599 ,29 ,03

14 1746 ,91 ,15 1206 ,87 ,10

11927 ,38 ,92 11806,16,13

Other lncome

TOTAL:

EXPENDITURE

lnterest 15 7689 ,81 ,55 8036 ,47 ,12

Operating Expenses 16 1809 ,62,82 1707 ,94 ,61

Provisions and Contingencies 2171 ,95 ,33 3275 ,18 ,80

11671 .39 .70 13019 ,60 ,53

255 ,99 .22 -(1213 ,44 ,40\

255 ,gg ,22 -(1213 ,44 ,40l

63 .99 .81

,F

TOTAL:

PROFIT

-- l-

I

i Net for theProfit

APPROPRIAT]ONS:

TOTAL:

ReserveTransfer to

I ,14 ,67

Tax on Dividend

I

I Eq,y.!v

i prucps

ReserveTransfer lo

Dividend

190 ,84 ,75 -1213 ,44 ,40

255 ,99 ,22 -1213 ,U,40

Transfer to Revenue Reserve


TOTAL:

3.78 (28.68)

Pt8

Share Rs.-t9es-tc_

& Diluted

-lCIe!ualisedAnn

I

F - 75

SCHEDULE 13. INTEREST EARNED

I

I



lnterest / Discount on Advances/Bills

lncome on lnvestments

1lt. lnterest on balances with Reserve Bank of

7040 .82 .88 7816 ,56 ,02

3048 ,20 ,72 2597 ,61 ,73

lndia and other lnter-Bank Funds 90 ,16 ,79 141 ,08 ,58

!Y, Others 1 44 70

TOTAL 10180 77 10599 03


Year Ended Year Ended

L Commission Excha and 202 81 202 46 ,55

il. on sale of lnvestments 1 168 72 534 1 54

Less : Loss on sale of lnvestments 90 53 7I

Profit on revaluation of lnvestments

Less . Loss on revaluation of lnvestments

,65 ,25 ,5 ,97

(7 ,23) ( 1 ,81)

97 ,64 ,10 155 ,97 ,93

278 ,13 ,56 322 ,40 ,62

1746 ,91 ,15 1206 ,87 ,10

P/9

rleredlan

ln

I

ll.

I

ilt.

lV. tProfit on sale of land. buildinqs and other assets

)

F - 76

SCHEDULE 15. INTEREST EXPENDED

I

(Rs ln thousand)



L lnterest on Deposits 7253 ,65 ,70 7569 ,14 ,43

il lnterest on Reserve Bank of lndia/inter-Bank borrowinqs 82.52 ,74 94 ,12,18

ill Others 353 11 373 1

TOTAL 7589 8036 12

. j.._

--.--t-_.___

SCHEDULE 16. OPERATING EXPENSES

I

I


Year Ended31.O3.2014

1038 ,28 .51 1014 ,34 ,35

139 ,94 ,44 125 ,52 ,25

26 ,41 ,21 30 ,00 ,85

5 .61 ,73 10 ,45 ,15

105 ,71 ,96 84 ,77 ,90

(15 ,59 ,24\

105 ,71 ,96 69 ,18 ,66

1 ,15 ,69 1 ,99 ,92

14 ,60 ,23 14 ,59 ,54

8 ,15 ,21 5 ,25 ,20

23 ,53 ,71 23 ,19 ,99

33 74 17 ,70 ,59

103 38 11 111 ,18 ,22

308 94 284 ,49 ,89

1809 1707 ,94 ,61

Pt10

I

i

I

l. lPayments to and Provisions for Employees

il. Taxes and

il. and

tv. Advertisement andi

V. _ iDe_preciation on Bank's property


vl. Directors' fees, allowances and expenses

Vll. iAuditors'fees and expenses

vrll.

(includino branch auditors' fees and exoenses)

Law Charoes

F - 77

This is paft of the Profit & Loss Account as on 3 l5


Executive

ilAParUathy V Sundrarn


M/s.Ra & Co M/s.N

CA.S arathiPartner erMRN:023837 MRN:016369

Place :KolkataDate :7'h May,2015.

Pratyush Sinha

SanjibD

M/s.P C Bindal & Co. lWs.S P

Partner PartnerMRN:088730 MRN:085362

irector


A.K.DograDirector

4rr./Sanif(Kumar

General fdlanager & CFO

tnl

Associates

aheshwari

qn

t

Cha rte.eC

F - 78


Statement of Assets & Liabilities as on 3lst March 2015

CAPITAL &

CaReserves & US

Depq-s1!-s-____.

Borrowings-.Other Liabilities and Provisions

Total :

ASSETS

and balances with Reserve Bank of lndiaBalances with Banks and

I and Short Noticelnvestments

ncesFixed AssetsOther Assets

Total :

Rs. in lacs) (Rs. in lacs)

As on 31.03.2015 As on 31.03.2014

83952 135475498852 392790

10881760 11150971406173 446024432021 385235

12302758 12510495

As on 31.03.2015 As on 31.03.2014

581 560 626978

454206214944487634466031 1

6576751667630487741 93874

275348 2710521251049512302758

00

oorl

o

rab

* )t

9o

oo

J

at

F - 79

Schedule -17

SIGNIFICANT ACCOUNTING POLICTES FOR THE YEAR ENDED 3l't MARCH,2LL1

I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The accompanying financial statements are prepared on historical cost basis, except as otherwise stated, followingthe "Coing Concern" concept and conform to the Generally Accepted Accounting Principles(GAAP) in Indi4applicable statutory provisions, regulatory norrns prescribed by the Reserve Bank of India (RBI), applicable

mandatory Accounting Standards (AS)/Guidance Notes/ pronouncements issued by the Institute of Chartered

Accountants of India (ICAI) and practices prevailing in the banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions forconsidering the reported assets and liabilities (including contingent liabilities) as on the date of financial

statements and the income and expenses for the reporting period. Management believes that the estimates used in

the preparation of the financial statements are prudent and reasonable.

3.

3.1

3.2

The Revenues and Expenses are accounted for on accrual basis unless otherwise stated.

Income from Performing Assets is recogrized on accrual basis and income from Non-Performing Assets(NPAs) is recognized on realisation. The amount realised/recovered during the year is appropriated first toincome on Sub-standard Assets. Amounts realized /recovered in Doubtful and Loss Assets and Suit Filed and

Decreed Accounts are first appropriated against outstanding balances.

J.J

3.4 Incorne from Commission (except on Govemment Transactions and Bancassurance), exchange, brokerage,claims, locker rent and dividend on shares are accounted for on cash basis.

3.5 Performance linked incentive to whole time directors is accounted for on cash basis

4. TRANSACTIONS INTVOLVING FOREIGN EXCHANGE

4.1. Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency, are

revalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange Dealers

Association of India (FEDAI). Outstanding forward exchange contracts are revalued at the forward ratesannounced by FEDAI. The difference between the revalued amount and the contracted amount is recognized as

profit or loss, as the case may be.

4.2. Income and expenditure items are recorded at the exchange rates prevailing on the date of transaction

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot ratesannounced by FEDAI.

4.4. Representative Office of the Bank has been classified as'lntegralForeign Operation' in accordance with AS-l I

on "The Effects of Changes in Foreign Exchange Rates".

4.5. Foreign currency transactions relatingto'lntegral Foreign Operation'are recorded on initial recognition in the

reporting currency by applying to the foreign currency amount, the exchange rate between the reportingcurrency and the foreign currency on the date oftransaction.

4.6. Foreign currency non-monetary items that are carried in terms of historical costs are

RECOGNITION OF INCOME AND EXPENDITURE

Unrealized income on advances, classified as NPA, is reversed.

I:anls

on the dates ofreported

F - 80

5. INVESTMENTS

5.1 Forthe purpose of disclosure in the Financial Statements, the investments are classified into six categories as

stipulated in Form A of the third schedule to the Banking Regulation Act, 1949 as under:a) GovemmentSecuritiesb) Other approved securitiesc) Shares

d) Debentures and Bondse) Subsidiaries/Joint Ventures

0 Others

5.2 The Investment portfolio of the Bank is categorized, in accordance with the RBI guidelines, into:a) "Held to Maturity" comprising Investments acquired with an intention to hold till maturity;b) "Held for Trading" comprising Investments acquired with an intention to trade;c) "Available for Sale" comprising Investments not covered by (a) and (b) above.


5.3 In determining acquisition cost of an investment:a) Brokerage, Commission and Incentives received on subscription to securities, are deducted from the cost

of securities;b) Brokerage, Commission etc. paid in connection with acquisition of securities are treated as revenue


charged to Profit and Loss Account.

5.4. The Bank follows "Settlement Date" for accounting of investment transactions. Investments are valued as perRBI/ Fixed Income Money Market & Derivatives Association (FIMMDA) guidelines, on the following basis:

a) "Held to Maturiry" GTM)i) Investments under "HTM" category are carried at acquisition cost. Wherever the book value is higher

than the face value/redemption value, the premium is amortized over the remaining period tornaturity.

ii) lnvestments in Rural Infrastructure Development Fund, Short Term Co-operative Rural CreditRefinance Fund, Medium Small Micro Enterprise Refinance Fund - Small Industries DevelopmentBank of India Limited, Medium Small Micro Enterprise Risk Capital Fund - Small IndustriesDevelopment Bank of India Limited, Rural Housing Development Fund-National Housing BankLimited, Micro Finance Development and Equity Fund - National Agricultural and RuralDevelopment Bank Limited (classified as shares) are valued at carrying cost.

iii) Investments in sponsored Regional Rural Banks are valued at carrying cost.iv) Investment in venture capital is valued at carrying cost.

b) "Held for Trading" and "Available for Sale"

At prices published by FIMMDAOn Yield to Maturity (YTM) basis by adding appropriate mark-upon the Base Yield Curve as per FIMMDA/RBI guidelines.

a) Govt. Securitiesl. Central Govt. Securities2. State Govt. Securities

b) Discounted Instruments (TreasuryBills, Commercial Paper and

Certifi cate of Deposits).

At carrying cost

c) Bonds and Debentures On YTM basis by adding appropriate Credit Spread on the BaseYield curve as per FIMMDA/RBI guidelines.

d) Equityi) Quotedii) Un-quoted

At market priceAt break-up value as per latest Balance Sheet (not more than oneyear old), otherwise at ' l/- per company.

e) Preference Shares At market price, if quoted or YTM basis by adding appropriatemark-up on the base yield curve as per FMMDA/RBI guidelines-

f) Security Receipt/Venture Capital Fund AtLNeLAsset Value (NAV) as per DffiBl euideline$K#

-= Accounta nts

F - 81

c) MLrtual Funds At Market Price, if quoted and at re-purchase priceAlAV ifunquoted.

5.5 Shifting of securities from and to "HFT' category is done in accordance with RBI guidelines with the approvalof Board of Directors.

5.6. The individual scrip in the "HFT'and "AFS" category are marked to market at monthly or at more frequentintervals, if required. Under each category, net depreciation, if any, is provided for while net apprecialion, ifany, is ignored.

5.7. Income from Zero Coupon Boncls, being the difference between cost and face value, is recognized on a timeproportion basis.

5.8. Profit or Loss on sale of investments in any category is taken to Profit and Loss Account. In case of profit onsale of Investments in "HTM" category, an equivalent amount is appropriated to "Capital Reserve Account" atthe end of the year. For calculating the surplus / deficit on sale of securities, weighted average method isadopted.

5.9. For the purpose of calculating holding period in case of "HFT' category, First in First out (FIFO) method is

applied.

5.1 0. Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudential normsof RBI for "Non Performing Investment" (NPI) Classification. The depreciation/provision in respect of non-performing securities is not set off against the appreciation in respect of the other performing securities inaccordance with RBI guidelines.

5.1 l. The derivatives transactions are undertaken for trading or hedging purposes and valuation has been done inaccordance with RBI guidelines.

5.12. The Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and ReverseRepo transactions.

6. FINANCIAL ASSETS SOLD TO ASSETS RECONSTRUCTION COMPANY (ARCYSECURITIZATION COMPANY (SC)

6.I In the case of financial assets sold to ARC / SC, if the sale is for a value higher than the Net Book Value(NBV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of otherfinancial assets to ARC/SC. If the sale is at a price below the NBV the shortfall after adjusting the availablesurplus if any, is debited to the Profit and Loss Account.

6.2 The sale of financial assets to ARC/SC is recognized in the books of the Bank at lower of either redemptionvalue of the Security Receipts issued by the Trust created by the ARC/SC for such sale or the net value of suchfinancial assets.

6.3 The Security Receipts are classified as Non-SLR Investment in the books of the Bank and accordingly thevaluation, classification and other norms prescribed by RBI in respect of Non-SLR Securities are applicable.

6.4

7.

7.1

In case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income

ADVANCES

Advances are classified as Performing / Non-Performing Assets and provisions thereon are made in conformitywith the prudential norms prescribed by RBI.

7.2. Non-performing assets are stated net of provisions and claims received from credit guarantee institutions

7 .3 Provision held for perforrning assets is shown under the head "Other Liabilities and Provisions"

1.4. Restructuring of Advances and provisioning thereof have been made as per

iants0)

oo

*3\eo k

qu;

* *

too

3

RBI tnes.

I

F - 82


8.r Premises (including leasehold), other fixed assets and Capital work in progress are stated at historical cost oramount substituted for historical cost. In case of revaluation, the same are stated at the revalued amount and theappreciation is credited to "Revaluation Reserve".

8.2 Leasehold assets are amortized over the period of lease.

8.3. Depreciation on assets other than computers and Automated Teller Machines (ATMs) is provided for underwritten down value method, in the manner and as per the rates prescribed under Schedule II to the CompaniesAct,2013 after retaining 5% residual value.

Equivalent amount of depreciation on the revalued portion of the asset is transferred to General Reserves fromRevaluation Reserve each year.

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on straight-line method

@33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (includingrevalued assets) are recognized in accordance with AS -

28 on "lmpainnent of Assets".


In accordance with AS-12 Govemment Grants/subsidies received is presented in the Balance Sheet by showing

the Grant/Subsidy as a deduction from the Gross Value of the assets concerned in arriving at the book value.

The grant/subsidy is recognized in the Profit & Loss Account over the useful life of the depreciable assets byway of reduced depreciation charged.

Govemment Grant subsidies received, of revenue nature, is recognized in the Profit & Loss Account by

reducing the related cost if received during the same financialyear otherwise, the same is shown under "OtherIncome" if received after the close of the relevant financial year.

IO. EMPLOYEE BENEFITS

I 0. I Ernployee Benefits are recognized in accordance with AS- l5 on "Employee Benefits"

10.2 Shorl term employee benefits namely Leave Fare Concession and Medical Aid are measured at cost.

10.3 Long term employee benefits and post-retirement benefits namely gratuity, pension and leave encashment are

measured on a discounted basis under the Projected Unit Credit Method on the basis of annual third paftyactuarial valuations.

10.4 In respect of employees who trave opted for Provident Fund Scheme, matching contribution is made to a

recognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based onactuarial valuation.

10.5 Long Term employee benefits recognized in the Balance Sheet represent the present value of the obligation as

adjusted for unrecognized past service cost, if any, and as reduced by the fair value of plan assets, whereverapplicable and actuarial gain / loss to the extent recognized in Profit and Loss Account.

10.6 The transitional liability in respect of long term employee benefits, including pension benefits, is recognized as

an expense on straight line basis over a period offive years.

10.7 In terms of RBI circular, expenditure on "Re-opening of Pension option to employees of Public Sector Banksand enhancernent of Gratuity lirnits-Prudential Regulatory Treatment" is being amortized over a period of fiveyears.

F - 83

I I. TAXATION

Provision for tax is made for both current and deferred taxes in accordance with AS-22 on "Accounting forTaxes on Income".

12. PROVISIONS. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In accordance with AS-29 on "Provisions Contingent Liabilities and Contingent Assets," the Bank recognizes:

a) Provisions only when it has a present obligation as a result of a past event and it is probable that an outflowof resources embodying economic benefits will be required to settle the obligation and when a reliableestimate of the amount of the obligation can be made.

b) Contingent Liability is recognized/disclosed when a possible obligation from a past event, the existence ofwhich is confirmed by the occurrence/non-occurrence of one or more uncertain future events not whollywithin the control of bank. Contingent Liability is also recognized/disclosed when there is a present

obligation from past events but is not recognized because of a remote possibility of outflow of resourcesembodying the economic benefits to settle the obligation or a reliable estimate of the amount of theobligation cannot be made

c) Contingent Assets are not recognized in the Financial Statements.

I3. NET PROFIT


a) Provision for Taxationb) Provision on Standard Assetsc) Provision for NPAs and Depreciation on investments as per prudential norms of RBId) Other usual and necessary provisions.

Page 5

F - 84

Schedule - I8:

Notes Forming Part of the Accounts for the Year Ended 31't March 2015

1. Confirmation/reconciliation of balances with foreign branches, SBI and other Banks, NOSTRO Accounts,Drafts Payable, Clearing Difference, Inter office adjusfrnents, etc. are in progress on an on-going basis. Pendingfinal clearance/adjustment of the above, the overall impact, if any, on the Financial Statements, in the opinion ofthe management, is not likely to be significant.

2.1 Capital

b) During the year, with the approval of its shareholders by the resolution at the Annual General Meetingheld on lSth August 2014, Bank allotted 7,74,00,000 (Seven Crore Seventy Four Lacs) equity shares of'10/-(Rupees Ten only) each at a premium of ' 25.50 (Rupees Twenty Five and Paisa Fifty only) per share

to the Govemment of India by conversion of 27,47l(Twenty Seven Thousand Four Hundred SeventySeven) number of Perpetual Non-cumulative Preference Shares (PNCPS) out of total 80,000 (PNCPS) of' 1,00,000/- each held by the Govemment of India aggregating to'274.77 crore through preferentialallotment under Chapter VII of the SEBI ICDR Regulation 2009, as amended.

c) During the year the Bank has allotted 8,45,07,042 (Eight Crore Forty Five Lac Seven Thousand ForfyTwo) number of Equity Shares of ' l0l- (Rupees Ten only) each at a premium of ' 25.50 (Rupees Twenty

Five and Paisa Fifty only) per share aggregating to 300 crore (Three Hundred Crore only) onpreferential basis to Life Insurance Corporation of India (LIC of India) under Chapter VII of the SEBIICDR Regulation 2009, as amended.

d) During the year, with the approval of its shareholders by the resolution at the Extra-ordinary GeneralMeeting held on l3'n March 2015, Bank has allotted to the Govemment of lndia 12,28,60,818 (TwelveCrore Twenty Eight Lac Sixty Thousand Eight Hundred Eighteen) number of Equity Shares of ' I0l-

3l;03,2015;rI:ri-i;;iri i:" 1... ,_ i :

.i;:3l.i -1.?0l i.rlitiii0$rw',i) Common Equity Tier I Capital Ratio (%) 7.52 6.54 NA NA

ii) Tier I Capital Ratio (%) 6.54 7.77 7.267.52

iii) Tier 2 Capital Ratio (%) 3.05 3.27 3.65 4.20

10.s7 9.81 11.42 I1.46ir) Total Capital Ratio (CRAR) (%)

v) Percentage of the shareholding of theGovernment of India in the Bank's equitycapital

82.00% 88.00% 82.00o/o 88.00%

vi) Amount of equity capital raised (' in

Crores)300.00 700.00 300.00 700.00

vii) Amount of Additional Tier I capitalraised; of which

-PNCPS:

.PDI

Nil Nil Nil Nil

(viii) Amount of Tier 2 capital raised; of which

(' in Crores)

-Debt capital instrument:

-Preference Share Capital Instruments:

NilNilNil

s00.00

500.00Nil

NilNilNil

500.00500.00

Nit

(Rupees Ten only) each at a premium of ' 32.75 (Rupees Thirty Two and Paisa Sevenry Five only) per

p-ided

lEffiil

/k att t

F - 85

share aggregating to ' 525,22,99,969.50 (Five Hundred Twenty Five Crore Twenty Two Lacs NinetyNine Thousand Nine Hundred Sixty Nine and paise Fifly only) by conversion of 52,523 units of PNCPS

of ' 1,00,000/- each under Chapter VII of the SEBI ICDR Regulation 2O09,as amended.

2.2 lnvestments

2.2.1 Repo transactions (in face value terms)

Figures in brackets represent Previous Year's figures

2.2.2 Non-SLR Investment Portfolio(i) Issuer composition of Non-SLR Investments

( ' in crore)

( ' in crore)

OJ

I ir.os:ou4679?.66

46797.66Nil

46603.11Nil

194.5s

194.55194.5s

Nil

251.1669.98

126.59

45t27.50

45127.50Nil

44876.34Nil

251.16

25t.t6251.16

Nil

195.28122.0466.16

(2) Movement of provision held towards depreciation on investments(i) Opening balance(ii) Add: Provisions made during the Year(iii) Less :Write- off/ Write -back of excess provision during the

Year(iii) Closing balance

( I ) Value of Investments(i) Gross Value of Investments


(ii) Provision for Depreciation(a) In India(b) Outside India


ParticularsMlnlmum: ,,t 1,,

outsta!{int :: ,:l

Auripglt? Y..e.C1",r.

Outstandinges on

31.03. 2015



15.00(200.00)

0.00(0 00)

t929.00(t 500.00)

0.00(0.00)

262.78(327.95)

0.00(0.00)

584.00(0.00)

0.00(0 00)



25.00(1.00)

0.00(0.00)

8700.00(478 t .00)

0.00(0.00)

474.77(680.2 t)

0.00(0.00)

r 40.00(1 t 33.0 t)

0.00(0.00)

st.No.

Issuer AmountExtent oftUn

(' in crore)

during

F - 86

(1) (21 (3) (A',) (s) (6) (71

PSUs1282.75 1282.75 0.00 0.00 14.66

(t 280.06) (1280.06) (0.00) (0.00) o.00)

) FIs3357.62 3357.62 0.00 0.00 3357.62

(3062.e6) (3062.e6) (0.00) (0.00) (0.00)

J Banks5570.54 5570.54 0.00 36.97 40.82

(4021.80) (4021.80) (0.00) (36.97) (0.00)

4 Private Corporates149l.52 1491.52 0.00 20.00 53.70

(1ss8.27) (1ss8.27) (0.00) (0.00) (0.00)

5Subsidiaries /Joint Ventures

0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

6 Others (MF/CPICD) 74.78003.92)

74.78(103.92)

0.00(0.00)

0.00(0.00)

59.38(0.00)

7

Provision heldtowardsDepreciation / NPI

194.55 194.55 0.00 0.00 0.00(2st.r6) (2s1.16) (0.00) (0.00) (0.00)

Total (l to 6) - (7)11582.66 11777.21 0.00 56.97 3526.18(977s.8s) (10027.01) (0.00) (36.e7) (0.00)


(ii) Non-performingNon-SLR Investments (' in crore)

2.2.3 Sale and Transfers tolfrom Held to Maturity (HTIVD Category

(a) Securities having book value of ' 257.48 Crores (Previous year:'47.12 Crores) were sold during the year

from HTM Category.(b) At the beginning of the year (02.06.2014} with the approval of the Board of Directors, the Bank has

shifted securities having face value of ' 325.00 Crores (Book Value ' 324.72 crore) zurd State Govemment

Securities having face value of ' 325.00 crore (Book Value ' 327.07 crore) from Held to Maturity (HTM)

Category to Available For Sale (AFS) scrip wise in accordance with RBI Guidelines.(c) The value of sales and transfer of securities to/from HTM Category (excluding the exempted transfer) did

not exceed 5% of book value of the Investment in HTM Category at the beginning of ttre year.

2.2.4 Transactions involving Foreign Exchange

Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency, exceptcurrency of Bangladesh (BDT 23,04,536.20 equivalent INR 15.81 lacs) which is valued at notional value due tonon-availability of spot rates, are revalued at the Balance Sheet date at closing spot rates announced by theForeign Exchange Dealers Association of India (FEDAI).

2.3 Derivatives

r 8r.70 60.0rOpening balanceAddition during the Year 59.28 121.79

Reduction during the Year 41.44 0.10Closing balance 199.s4 181.70

Total provision held 110.63 96.E2

SI.No1.03,2014

i) The notional principal of swap agreements NIL NIL

oorl

IleredqU;

* *ab

I

2.3.1 Forward Rate AgreemenUlnterest Rate Swap

(' in crore)

Particula rs,';.'

F - 87

ii) Losses which would be incurred if counterparties failed tofulfill their obligations under the agreements NIL NIL

iii) Collateral required by the Bank upon entering into swaps NIL NILiv) Concentration of credit risk arising from the swaps NIL NILv) The fair value of the swap book NIL NIL

SI.No. ,.31.03;2014

(i) Notional principal amount of exchange traded interest ratederivatives undertaken during the Year (instrument-wise)

NIL NIL

(ii) Notional principal amount of exchange traded interest ratederivatives outstanding as at 3l$ March (instrument-wise)

NIL NIL

(iii) Notional principal amount of exchange traded interest ratederivatives outstanding and not "highly effective"(instrument-wise)

NIL NIL

I( ) Mark-to-market value of exchange traded interest ratederivatives outstanding and not "highly effective"(instrument-wise)

NIL NIL

2.3.3

2.3.2 Exchange Traded Interest Rate Derivatives

( ' in crore)

Disclosures on risk exposure in derivativesA) QualitativeDisclosures

a) The Bank has undertaken derivative transactions in currency futures for trading (arbitrage) &hedging purposes.

b) Risk management of derivative transactions has been segregatsd into three functional areas

namely,i) Front-Office for undertaking transaction;ii) Mid-Office for risk management and reporting; andi i i)Back-Offi ce for settlement, reconcil iation and accounting.

c) The risk measurement, reporting and monitoring function is undertaken by the mid-office.The Board of Directors is the apex body to oversee the overall risk measurement, monitoringand reporting functions of the Bank including derivative transactions through RiskManagement Committee of the Board (RMCBOD). The bank also intemally monitors riskmanagement through in-house Risk management Committee, Asset Liability Committee(ALCO), Operational Risk Management Committee (ORMC) and Intemal Commiftee onInvestment (ICI).

d) Identification of underlying hedge items for hedging / mitigating credit risk, operational riskand market risk arising out of derivative transactions is done in accordance with the Boardapproved Integrated Treasury Policy. The customer related derivative transactions are

covered with counter party banks, on back to back basis for identical amounts and tenure and

the bank does not carry market risk for such transactions. However, during the year underreview, bank has not used any derivative product to hedge its own portfolio.

e) The Integrated Treasury Policy prescribes accounting for hedge and non-hedge transactions,income recognition and valuation procedure for outstanding contracts. The incomerecognition is done as per AS-l I on "The Effects of changes in Foreign exchange Rates"and the guidelines issued by RBI / FEDAI from time to time. The integrated Treasury Policyalso prescribes various limits such as Client Level Limits, Trading Member Level Limits,Net Open Position Limir for credit risk mitigation.

q)

o

4

a4* tiantsqu;

* *

B) OuantitativeDisclosures

l

ehdbd

olkat t

F - 88

('in crore)

st.No.

4

;'$trrency,.,Deitvatives

,Interest rate:derivatives

(i) Derivatives (Notional Principal Amount) NIL NIL NIL NILa) For hedging NIL NIL NIL NILb) For trading NIL NIL NIL NIL

( ii) Marked to Market Positions (l ) NIL NIL NIL NILa) Asset (+) NIL NIL NIL NILb) Liability (-) NIL NIL NIL NIL

(iii) Credit Exposure (2) NIL NIL NIL NIL(iv) Likely impact of one percentage change in

interest rate ( I 00iPV0l )NIL NIL NIL NIL

a) on hedging derivatives NIL NIL NIL NILb) on trading derivatives NIL NIL NIL NIL

(v) Maximum and Minimum of 100*PV0lobserved during the Year

NIL NIL NIL NIL

a) on hedging NIL NIL NIL NILb) on trading NIL NIL NIL NIL

2.4 Asset Quality2.4. I Non-Performing Assets

( ' in crore)

Particdlars

7.18Yoi) Net NPAs to Net Advances (7") 6.220h

Movement of NPAs (Gross)7118.01 2963.82a) Opening Balance4087.17 8007.30b) Addition during the Year

3853.1 1Reduction during the Year 46s2.27c)7l 18.01

ii)

d) Closing Balance 6s52.91

Movement of Net NPAs4664.11 1969.98a) Opening Balance

Addition durins the Year 3308.86 6065.87b)3371.74c) Reduction during the Year 389r.594664.11

iii)

d) Closing Balance 4081.38

Movement of Provisions for NPAs(excluding provisions on standard assets)

Opening Balance 2399.24 971.93a)

b) Addition during the Year 792.12 1908.68

Reduction during the Year 760.68 481.37c)2430.68 2399.24

iu)

d) Closing Balance

+

Page 10

;. ir:.'i;,,:'r',1

F - 89

4.2 Particulars of Accounts Restructured

OthersType of Restructuring -> Under CDR MechanismUnder SME Debt Restructuring

Mechanism

Asset Classification ->

Loss€,0oa

Sub-Stand-

ard

r829 2 2718 239t r805 5599 9t08 2813 7437No. ofbomwcs

2t 9 0 33 94 493 230 l t

2473.9t 503.08 206.20 3 r83. t9 t23.20 50.20 103.25 0.0r 216.66 2259.44 72.40 505.20 43.26 2t80.30 4856.55 625.68 814.65 43.27AmNnt

outstilding

0.56 1.68 0 4.47 ll7.l5 5.24 3.84 0 126.59 363. l6 65.94 13. t9 0

RcstructurcdAccounts as onApril ofthe FY

(Opening figurcs)'Prcvisionthscon

243.42 60. l4 7.67 0 3 r 1.23 2.23

/S

0 32 32 0 0.J

33 84No. ofbomwrs 23 0 0 21 29 0 0

0_l I 0 71.54 1966.20 1o2.28 o.42 2068.t7AmNtoulstmding

2209.7E 71.33 l.4t 0 22E2.59 51.31 20.t2 4227.30 193.73 2.01 0Fr6h restructuring

during 0re yu

Provisionthsm 150. I I 13.08 0 0 163. l9 r.4E 1.07 0 0 2.55 73.39 7.01 0 0 t0.l() 224.98 2r. I6 0

-6 0 0 r87 -109 -78 0 0No. ofbonows

-2 0 29 -23 219 -133 -86 0

Amoutoutstilding

222.95 - 155.80 -67. l5 0 0 0.76 -0.36 4.40 0 0 28.52 -5.03 -23.49 0 0 2s2.23 -16 t. t9 -91.04 0

0 0 2.28 -0.25 -2.03 0

Upgmdarion torcsEucturcd

stsded catcgoryduring thc FY

Provisionthcrcon

30.73 -24.42 4.31 0 0 0.04 4.02 4.02 33.05 -24.69 -t.36

lo0 0 0 0 0

Rcstrucrurcdadvmces

*trich ea* toattract highcr

provisioning md /or additional risk

weight at the ad ofthe FY md hence

No. ofbonorers

0

Disclosure of Restructured Accounts (As on 31.03.2015)

Total

ln crort

12559

6340.1:

442.29

u23.0t

2{6.t4

Total

E9

0

0

Page 11

6tr6

ar)

Doubt-Sub-

Stand-afd

i...

Losg

0

0

0

0

0-t

0 0

4 0 0

F - 90

need not [E shownrestructured

standard advances

at the be8tnning ofthe next FY

Amountout$andinB

0 0 0 0 0

Provisionthcrcon

0 0 0 0

38 6 0 0 -t76 170 6 0 0 -225No. ofbonowrs

-5 3 1 0 44 2ll t4 0

Amoutoutsteding

-3 l8_66 238.73 79.93 0 0 -49.05 45.21 3.84 0 0 -355.89 351 .20 4.69 0 0 773.60 625.t4 8E.,+6 05

Dom-gradationsof rstructurcd

acomts dwing thcFY

Provisionthcrcon

-2t.96 r0.26 I 1.70 0 0 1.07 1.07 0 0 0 -21. l9 21.t9 0 0 0 44.22 32.s2 I t.70 0

76 2tE 0 435 414 32'1 819 I 156 lNo. ofbomrcrs 3 0 5 1t 486 404 llt0 I

funoutoummding

100. l0 15.42 0 250.03 15.42 2.35 46.62 0 u.39 67.00 10.78 r59.69 43.14 280.6t 156.93 tr3.2371.51 2tt.73 43. 14

r Writcoffs off, ,csm.m-,i

tr"*,'#***" Prcvisionthseon

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

No. ofbomm l4 4 8 0 52 342 5l r920 2 23 15 2063 201 60t2 5 828r 24/5 256 7910 7

Amomtourstanding

4583.3 I 307.22 365.6 0 5257.19 I I 1.26 64.E9 108.0t 0.01 2U.24 378t.40 453.63 391.5E 0. t3 4626.71 u75.94 825.14 t65.32 0.147

RestruciurcdAccouts as on

Much 3 I of thc FY(closing figurcs)r

Provisiodrmon

319.59 23.34 I 1.70 0 4 14.63 3.59 2.t6 l.4 t 0 7.16 143.84 2t.27 4.1t 0 t76.29 521.O2 53.'17 t7.29 0

0

0

0

0

0

2000

0

1064t

595.03

t0l6t. t.

598.0E

' Excluding tu fituEs of $ddrd RBhElut d Adv B $tdch do mt dr&r hislEr provilioniq o. risk wight (if qplic{bl.)

l. The abov€ disclosures, including serilice, arc as compiled ard certified by the Bank's Management.

2. The quantum ofeconomic sac fice during the yes on the resuuctfcd assets has bcen calculated by {re NPV Method as on 31.03.2015 for Standard AssEE of'10 lacs and above and for NPA of 'l crore and above. For 0le rcmaining ass€b, e&nomic sacdfice has b€€n Fovidcd @ 5% ofoutstarding baldrc€.

Page 12

0

N 0 0 0

( 0

,/s N I I

0

F - 91

2.4.3 Details of financial assets sold to Securitization / Reconstruction Company for Asset Reconstruction

(' in crore)

SI.No.

;rri.jli iiit :rY, ea r en ded.,., rrt,, ...

ln+1Q$,zo1s ,31;03.2014(i) No. of accounts NIL NIL

(i i) Aggregate value (net of provisions) of accounts sold to SC/RC NIL NIL

(iii) Aggregate consideration NIL NIL

(iv) Additional consideration realized in respect of accountstransferred in earlier years

NIL NIL

(v) Aggregate gain(loss) over net book value NIL NIL

(' in crore)

2.4 .4 Details of Non-performing financial assets purchased / soldA) Details of Non-performing financial assets purchased

( ' in crore)

B) Details of Non-performing financial assets sold

('in crore)

,3L03.2015 31.03.2014

Particulars

Nil Nir Nil Nil NilBook value ofinvestments in securityreceipts

Nil

SI No.ended

31.03.2014

I (a) No. of accounts purchased during the Year NIL NIL

(b) Aggegate Outstanding NIL NIL

2 (a) Of these, number of accounts restructured during the Year NIL NIL

(b) Aggregate Outstanding NIL NIL

sI.No.

Particulars ;'ended

.31;03t2074

I No. of accounts sold Nil Nil

2. Aggegate Outstanding Nil Nil

3 Aggregate consideration received Nit Nil

le.ed

Particulars

o

t2'

tork a t?

2.4.5 Provision on Standard Assets

( ' in crore)

Total

F - 92

Provision towards Standard Assets r 060.09 734.27

2.5 Business Ratios

(i) lnterest Income as a percentage to Working Funds 8.43% 8.66%

(i i) Non-interest income as a percentage to Working Fturds 1.42% 099%

(iii) Operating Profit as a percentage to Working Furds 1.99% 1.69%

(iv) Retum on Assets 0.21% (0.ee%)

l l.5l 10.67( ) Business (Deposits plus advances) per employee (' in Crore)

1s.98 (7.3s)(vi) Profit(Loss) per employee ( ' in Lacs)

oo.l

qu;

o*

i&

* *

o,

oe)

o lka o

PageL4

;$tl ori:

F - 93

2.6 Asset Liability Management

Maturity pattem of certain items of Assets and Liabilities* ( in crore)

Assets/

LiabilitiesDay I 2 to 7 days

Eto14days

15 to 28days

29 days to3 months

Ovcr 3months and

upto6months

Over 6months and

uptolYear

Over I Yearand up to 3

Years

Over 3 Yearsand up to 5

Years

Over 5Years Total

Depositsl4l 3. l7 2079.53 1425.33 t6'74.73 5655.58 5914.02 9876.22 21526.62 r r t92.06 48060.3s r08817.60

(1 088.96) (t7s6.68) (2361.t7) ( t 642.60) (9629.99) (10t74.61) (t 337s.27) (232ss.53) (t t216.t9) (37008.7 t) (r t ts09.7t)

Advances337.70 3981.69 2M.50 l7l.l0 2892.0s 3059.69 3952.02 27344.75 9684.68 l5l 34.86 66763.04

(456.1 s) (3828.s4) (1 66.60) (266.8s) (2564.28) (442 t .24) (2902.27) (264 t 4.20) ( I I s76.72) ( I 3 170.25) (6s767.10)

Investments2.94 133.76 49.14 262.91 4584.55 llll.40 1924.75 2697.77 7223.08 286 12.81 46603.t I

(0.00) (269.48) (0.00) (t 322.89) (3s86.98) (3982.28) (4833.66) (6845.t t) (4394.7 t ) (1 964 t.22) (4487634)

Borrowings4.92 260.00 324.00 0.00 300.00 210.41 200.'76 8 t 2.19 369.62 1579.84 4061.73

(0.00) (2.21 ) (0.00) (0.00) (0.00) (629.82) (3ss.4 t ) (1 280.96) (604.3 t) (t 587.5 3) (1460.21)

ForeignCurrenqrAssets

160.0r 923.32 I13.90 84.62 729.87 892.90 l 036.89 0.00 0.00 17.94 3959.45

(272.83) (t 2 I 6.4s) (230.47) (89.72) (971.51) (7s2.34) 0e.34) (r 7.9s) (4.70) (0.00) (363s.sr)

ForeignCurrencyLiebilities

185.88 40t.91 I I 1.75 33.09 1337.73 874.89 984.08 r7.89 1.92 0.00 3959.r4

(s73.44) (789.s4) (326.87) (t 24.43) (t0t8.42) (722.02) (64.54) (0.00) (0.00) (17.20) (3636.46)

D

*The above disclosures are as compiled and certified by the Bank's Management.Figures in bracket represent Previous Year'sfigures.

Page 15

F - 94

2.7 Exposures

2.1 .l Exposure to Real Estate Sector*

(*The above disclosures are as compiled and certified by lhe Bank's lulanagement.)

2.7.2 Exposure to Capital Market*

( ' in crore)

( ' in crore)

,:91:03.2015 31.03.20t4a) Direct Exposure

i) Residential Mortgages -Lending fully secured by mortgages on residential property that is or will beoccupied by the borrower or that is rented;-of which, individual housing loans eligible for inclusion in priority sectoradvancesii) Commercial Real Estate -Lending secured by mortgages on commercial real estates (office buildings,retail space, multi-purpose commercial premises, multi-farnily residentialbuildings, multi-tenanted commercial premises, industrial or warehousespace, hotels, land acquisition, development and construction, etc., includingnon-fund based (NFB) limits)iii) Investments in Mortgage Backed Securities (N{BS) and other securitized

exposures -. a. Residential,

b. Commercial Real Estate.b) Indirect Exposure

Fund based and non-fund based exposures on National Housing Bank(NHB) and Housing Finance Companies (HFCs)

6498.93

3845.73

NILNIL

3',t6.88

3227.12

5390;78

3768.67

NILNIL

679.12

2185.44

Total Exposure to Real Estate Sector 10r02.93 8855.34

, 31,03.2015 31.03.20L4

141.65

2.61

t1.25

NIL

NIL

NIL.

275.90

3.61

NIL

16.42

NIL

NIL

(i)Direct Investments in equity shares, convertible bonds, convertible debentures

and units of equity-oriented mutual funds the corpus of which is not

exclusively invested in corporate debts


basis to individuals for investments in shares (including IPOs /ESOPs),

convertible bonds, convertible debentures and units of equity-oriented mutual

funds(iii)Advances for any other purposes where shares or convertible bonds or

convertible debentures or units of equity oriented mutual funds are taken as

primary security ]

(iv) Advances for any other purposes to the extent secured by the collaterd I

securiry of shares or convertible bonds or convertible debentures or units ofequity-oriented mutual funds i.e. where the primary security other than shares/

convertible bonds/ convertible debentures/units of equity-oriented mutual

funds does not fully cover the advances

(v)Secured and unsecured advances to stock brokers and guarantees issued on

behalf of stock brokers and market makers

(vi)Loans sanctioned to corporates against the security of shares/bonds/

debentures or other securities or on clean basis for meeting promoters'

contribution to the equity of new companies in anticipation of raising

:an ls a

tO)

ended

Year

F - 95

resoUrces

(vii) Bridge loans to companies against expected equity flows / issues

(viii) Underwriting commitments taken up by the Bank in respect of primaryissue of shares or convertible bonds or convertible debentures or units ofequity oriented mutual funds

(ix) Financing to stock brokers for margin trading(x) All exposures to venture capital funds (both registered and un registered)

NIL

NIL

NIL72.66

NIL

NIL

NIL76.91


(*The above disclosures are as compiled certified by the Bank's Management.)

2.7.3 Risk Category-wise Country ExposureThe Bank has analyzed its risk exposure to various countries as on 31" March,2015 and suchexposure is less than the threshold limit of 1%o of the total assets of the Bank. In terms of RBIguidelines, no provision is required for this exposure.

The position of risk category-wise country exposure is given below:

('in crore).,I

Risk Category:,,,ii,p5[.0!$,igg

' ', ' ,(rtet) ar:gti'lr' 3l;0320f,S:r;!,

,i.,.,Pi'hviiion. ,.l ..i.i'1,'' r."l:.' ''i"

il jr,1[=pf8ig$" al r.', :

rirl,:Strt Urrrtt .,

j,;{l',ffigo5gfs,r'i,, "(n.epa*4tr,. , ,3tri0$;2014,i

Prorisionheld as at31.03.2014

Insignificant 129.33 0.00 455.08 0.00Low 29.5s 0.00 36.32 0.00Moderate 6.59 0.00 56.98 0.00High 0.00 0.00 0.00 0.00Very Hieh 0.00 0,00 0.00 0.00Restricted 0.00 0.00 0.00 0.00Off Credit 0.00 0.00 0.00 0.00

Total 165.47 0.00 548.38 0.00

2,7.4 Details of Single Borrower Limit (SBL)/ Group Borrower Limits (GBL) exceeded by theBank

(' in crore)

*ln line with Bank's extant Lending Policy, the above breach of exposure ceiling was approved by the

Board of Directors' at its meeting held on 30.05.2014.

2.7.5 UnsecuredAdvances

(' in crore)

as on31.03.20tr 5 3r 4

Sr.

No BenowerName

31

SimplexInfrastructureLtd

942.08 t09t.94 1,025.00 1,175.00 782.81 740.23

Nil Nil Nil Nil Nil Nil NiI

' .'',',,P,riifitr$iaifliii ;i;i:ilrit j,'''i'' i 1 ii' i "''', i, u. i,,, . , ?A1./".ls 2Qt3-t4Total amount of advances outstanding against charge over intangiblesecurities such as the rights, licenses, authoriry, etc.

r4 r .83 108.53

Estimated value of such intangible collateral securities 200.47 172.06

o

*

oor th

olL

2.8 Penalty Imposed by RBI

F - 96

a) RBIiFIU levied penalty of '0.06 crores under section 13 of Prevention of Money Laundering Act(PMLA),2002.


3.1 . AS 5 - Net Profit or Loss for the period, prior period items and changes in the Accounting Policies

3. I . I The depreciation includes '2.93 uore for prior period charged to Profit and Loss for the year.

3.t.2 The Bank has identified useful life of fixed assets as per the requirements of Schedule II of theCompanies Act,2013, and has provided depreciation on Fixed Assets accordingly.

Further, the additional depreciation of '10.60 crores arising due to adjustment of impact arising on the

first-time application of transitional provision to schedule II has been charged to General Reserve.

3.1.3 The additional depreciation of' 14.82 crores on revalued assets has been charged to P&L account and

an amount equivalent to the additional depreciation has been transferred from revaluation reserve toGeneral Reserve as per Companies Act,20l3.


Revenue is recognized as per the Accounting Policies disclosed in Schedule 17.

3.3 AS l0 - Accounting for Fixed Assets

3.3.1 Accounting for Fixed Assets is done as per the Accounting Policies disclosed in Schedule 17.

3.3.2 As per the transitionalprovisions under Schedule II ofCompanies Act 2013 with effect from 01.04.2014:

a) Carrying amount of the existing assets will be amortized or depreciated over the remaining useful lifeof the assets keeping residual value as 5olo.

b) Where the remaining useful life of the assets is nil, may be recogtized in the opening balance ofretained earnings.

3.4 AS - 12 Government Grants

During the year '0.76 crore has been received in the form of subsidies/grants/incentives from RBI and State

Govemment as below:

(' in crore)

Sn ParticularsRevenue.' Gdpitaii, ;Revbniie , Gapitalr

I Govemment Grants/Subsidy 0.62 0.r5 NIL 0.48

3.5 AS - 15 Employee Benefits

In terms of the provisions of RBI Circular no.DBOD.BP.BC.80/21.04.018/2010-l ldated 9m February, 201 I onRe-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits,'447.3luore was to be amortized over a period of five years with effect from Financial Year 2010-ll.

Accordingly '89.46 crore has been charged to the Profit and Loss account being the proportionate amount for

F - 97

i

the year ended 3 I " March, 2015 ('89.46 crore for the previous year). The unamortized liabilify as at 31" March,

2015 stands at 'Nil crore (Previous Year '89.47 crore).

Pending settlement of the proposed wage revision effective from November 2012, an adhoc provision of ' 290

crores is held as at 31't March 2015.ln addition ' 124.75 crore provision has been made for incremental pension

liability due to wage revision on estimation basis.

( 'in crore)

*Other Benefits include Privilege Leave, Casual leave, Sick Leave and LFC/LTC.Note: The above stalement is based on lhe report of the Actuary.

3.6 AS f7- SegmentReporting


"Banking Operations". The relevant information is given hereunder in the prescribed format:

Part A: Business Segments ( ' in crore)

a) Chanse in the present. valu'o o'f:therbbliE'6'ti6iis l . ;;:r1; i ;:r P.eiision' ; Gratuity Other Benefits *

Present value of obligation as at the beginning ofthe Year 3 148.70 477.94 173.49Interest cost 238.05 34.13 t2.63Current Service cost 303.99 22.58 40.00Benefits Paid 346.06 102.70 31.31Actuarial Loss/(Gain) on Obligation 198.49 34.7 t (35.70)

Present value of Obligations at the end of the Year 3543.16 466.66 1 59.1 I

b) ChangeinFairValue:ofPIanAssd0:j,I'i",:; ri'iriil'" :' ],' 1''Fair Value of Plan assets at the beeinnine of the Year 2890.41 451.56 173.39

Expected Return on Plan Asset 267.36 42.99 16.5tEmpl oyer's contribution 620.87 87.40 00.06Benefits Paid 346.06 t02.70 3r.3rActuarial Loss(Gain) on Obligations 12.8 r (2.67\ (0.es)

Fair Value of Oblieations at the end of the Year 3445.40 476.59 t57.69

c)Es tim ated Prese nt,vahte of Ob[g1tigp i a.q,.at;i[ e:itdioiiihii,i. ;,:

PreviousYear '.,.,:;. - 'r :

Fair Value of Plan Assets at the end of the Year 3445.40 476.59 157.69

Unfunded Net Liability recognized in Balance Sheet (971.68) 9.93 (t.42)

d) Expenses Recognized in Profit and LossCurrent Service Cost 303.99 22.58 40.00lnterest Cost 238.05 34.13 12.63

Expected return on Plan Asset 267.36 42.99 I 6.51

Net Actuarial (Gain)/Loss recosnized in the Year r 85.68 37.37 (34.7s)Total Expenses recognized in Profit and Loss Account 460.35 5l .09 r.38

e) Principal actuarial ggsumptions ;,qt,the. ,p1ianc.p .Q-.hopt :Dat9(expressed as weighted, trverage) 'l ,l '. 'i'...' :,i',

Discount Rate 8.00o/o 8.00o/o 8.00%Expected rate of return on Plan Assets 9.25o/o 9.52% 9.52%Method Used Projected Unit Credit Method

BusinessSegments

TotalTreasury Operations,,

Cha

tv De*

0)

a01

19

a l'.

orka\* *

F - 98

ParticularsYearended

31.03.r5

Yearended .

31.0114 ,

Yearenrled .

3r.03.rs

Ycar ,

e4ded. ;1

3L03.1'l i

Yearended

31.03.15

Yearcnded

31.03.14

Reven ue 4306 3265 5064 5776 2440 2544 lt5 177 n925 11762

Result 1372 94 t427 2n4 909 954 il5 177 3824 3339

tlnallocatedexpenses

t396 t278

OperatingProfit 2428 206t

Income Taxes 198 (3428)

Extraordinaryprofit/ loss

NetProlit/(Loss)

2560 (1213)

OtherI nformationSegmentAssets

46743 40426 46985 504 l9 19777 I 8490 I 13505 114777

UnallocatedAssets

9521 10328

Total Assets 123026 t25105

SegmentLiabilities

46743 40426 46985 50419 197',77 r 8490 r I 3505 |4777

UnallocatedLiabilities

9521 10328

TotalLiabilities

123026 125r05

Part B: Geographical Segment - Since the Bank does not have any overseas branch, reporting under geographicalsegment is not applicable.

3.7 Related Party Disclosures (AS-18) (As Compiled by the management)

3.7.1 Names of the related parties and their relationship with the Bank:A$$a!!q!e;:

st.No

Name

I Assam Gramin Vikash Bank Regional Rural Bank

') Bangiya Gramin Vikash Bank Regional Rural Bank

J Manipur Rural Bank Regional Rural Bank

4 Tripura Gramin Bank Regional Rural Bank

Kev Monogement Personnel:

sl.No

Name

I Mr.P.Srinivas Managing Director & Chief Executive Officer

') Mrs. Archana Bhargava*(Up to 20.02.2014)

Ex-Chairperson & Managing Director

3 Mr. Deepak Narang Executive Director

4 Mr. Sanjay Arya Executive Director

:Jn lsG)

o2* I9/kat o

yeer r

:.endcd ,:';ii.or;,rs'i

I Year ;

l:- : endedl1 3r;03.15

,.r.Ycar, ,,qlgtd

31:03.14

Designation ,

F - 99

5 Pratyush Sinha Director

6 Mihir Kumar Director

7 Kiran B.Vadodaria Director

8 Pijush KantiGhosh Director

9 Sanjib Pati Director

10. Parvathy V Sundram Director

ll Sanjay Kumar CFO

t2 Bikramjit Shorn Company Secretary

sl.No

Name

I Uma Ghosh Pijush KantiGhosh

2. Anupa Ghosh Pijush KantiGhosh

J Amarrya Ghosh Pijush KantiGhosh

Relilives of Kev Manopement Personnel:

3.7.2 Related Party Disclosures

#Remuneration Paid to Key Management Personnel:

( ' in crore)

, BelifiJ,is,ri'f:16pi; :,

j:.,[-{s4pgi4H$rf., :

;

: ; Parsqiiiipll'. ''

Borrowings Nit NiI NiIDeposit 0.76 Nil 0.76Placement ol deposits Nil Nil NilAdvances 0.1 I Nit 0.1 I

Investments 200 NosEquity Shares

Nil 200 NosEquity Shares

Non-funded commitments Nil Nil NilLeasin g/HP arrangements availed Nil Nil NilLeasing/HP arrangements provided Nit Nil NitPurchase offixed assets Nit Nil NiISale of fixed assets Nit Nil NilInterest paid 0.03 Nil 0.03lnterest recei ved 0.0032 Nil 0.0032

Rendering of services Nil Nil NilReceiving ofservices :

- Remuneration#- Sitting Fees

0.880.06

Nil0.880.06

Management contracts NiI Nil Nil

st.No

Name Designation

: Yearended31.03.2014

(in')Mr.P.Srinivas Managing Director

& Chief ExecutiveOfficer

Salary andemoluments

4,73,896.00 Nil

cAcr

qU;

o

o*

1

\ /,

I

F - 100

2. Mrs. Archana Bhargava*(Up ro 20.02.20t4)

Ex-Chairperson &Managing Director

Salary andemoluments

Nil r 8,2 r,802.00

J Mr. Deepak Narang Executive Director Salary andemoluments

2t,62,594.00 t 5,88,334.00

4 Mr. Sanjay Arya Executive Director Salary andemoluments

20,77,1t5.00 t5,95,737.00

). Mr.Pijush Kanti Ghosh Director Salary andemoluments

10,62,700.00 8,66,457.00

6. Sanjib Pati Director Salary andemoluments

6,52,171.00 7,70,245.00

6. Mr.Sanjay Kumar CFO Salary andemoluments

13,79,618.70 12,56,473.15

7 Bikramjit Shom Company Secretary Salary andemoluments

9,95,429.25 9,07,767.60

# lncluding performance linked incentive on cash basis.

Note: (a) The transactions with Associates have not been disclosed in view of Para 9 of AS-18, whichexempts State Controlled Enterprises from making any disclosure pertaining to their transactionswith other related parties, which are State Controlled Enterprises.

(b) No amount has been written off/written back in respect of dues from/to related parties.

(c) No provision is required in respect of dues to related pafties.

3.8 Leases (AS-fg) (As compiled by the Management)

a) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss Account in the year towhich it relates.

b) Future Lease Rent Payable for operating lease: (As compiled and certified by Management)

('in crore)

sl.No.

Particulars :ir3I.0310I5 31:03:2014a. Not later than 1 year 58.92 56.46

b Later than 1 year but not later than 5 years 201.66 205.92

c. Later than 5 years 182.16 201.62Total 442.74 464.04

Amount charged to Profit & Loss Account 76.85 60.75

i) Future lease rents and escalation in the rent are determined on the basis of agreed terms.

ii) At the expiry of the initial lease term, generally the bank has an option to extend the lease for a furtherpre-determined period.

3.9 AS 20 - Earnings per Share

Particulars,Year ended

31.03.2014

Net Profit/(Loss) after tax available for Equity Share Holders (' in crore) 2s5.95 (t2t3.44)


r8d

:a4ls

F - 101

Basic and Diluted Earnings per Share(') 3.78 (28.68)

Nom inal Value per S hare(') - 10.00 10.00

3. l0 AS 21 - Consolidated Financial Statements/AS-23-Accounting for Investments in Associates inConsolidated Financial Statements


3.'l I AS 22 - Accounting for Taxes on Income

(a) Provision for Tax during the year is given below: (' in crore)

(b) The major components of Deferred Tax Assets/Liabilities are as follows: (' in crore)

Particulars

Deferred Tax Assets 263.61 461.72Employees benefits 143.03 82.51

Other items 120.58 379.21Depreciation on Fixed Assets Nil Nit

Deferred Tax Liabilities 72.03 72.03

Depreciation on fixed assets Nil NilSpecial Reserve u/s.36(lXviii) ofthe lncome Tax Act, l96l

220.00 220.00

3.l2- AS 28 - Impairment of Assets

In the opinion of the Bank, there is no indication of any material impairment of fixed assets and consequentlyno provision is required.

3.13 AS 29 - Provisions, Contingent Liabilities and Contingent Assets

Movements in significant Provisions and Contingent Liabilities have been disclosed at the appropriate places inthe Notes forming part of the accounts.

4. AdditionalDisclosures

4.1 Provisions and ContingenciesThe break-up of 'Provisions and Contingencies' shown under the head "Expenditures in Profit and LossAccount is as under:

( ' in crore)

3

Provision for Tax 339.26 NIL

3r.u3:201,5 31.03.2014Provisions for depreciation on Investment (70.43) 88.52

t960.s9Provision towards NPA(Loans and Advances) 844.87

F - 102

Provision towards Standard Assets 325;82 200.76Provision made towards Income Tax (Including Deferred Tax) *339.26 (342.77)Other Provisions and Contingencies- Provision for Employee Benefit (AS-15)- Provision for Non-Performing Investments- Floating Provision- Provision for Others

628.3720.11

(s2.ts)136.70

1207.5156.36

(st.e7)r56.r9

Total 2171.95 3275.19* Provision made towards Income Tax during the year includes reversal of excess provision of '78.85 crore relatipg toprevious years i

4.2 Floating Provisions (Countercyclical provisioning buffer)

(' in crore)

Prrrsuant to Reserve Bank of India's (RBI's) Circular No.DBR.No.BP.BC.79l2l.04.048/2014-15 dated 30'h

March 2015, the Bank has utilized 50% of its countercyclical/floating provisions held as at 3l't December 2014.

As per the said RBI Circular, an amount of ' 52.75 crores out of floating provision of '105.51 crores held as at

3l'' December 2014 has been utilized for making specific provisions for non-performing assets, as per thepolicy approved by the Board.

4.3 Draw Down from Reserves

There was no Draw Down from Reserves during the year.

4.4 Disclosure of complaintsa) Customer Complaints

b) Awards passed by the Banking Ombudsman

SI.No.(a) Unimplemented Awards at the beginning of the Year 0(b) Awards passed by the Banking Ombudsman during the Year 2

(c) Awards implemented during the Year )(d) Unimplemented Awards at the end of the Year 0

4.5 Disclosure of Letter of Comforts (LoCs) issued by the Bank

a) During the current financial year the Bank has issued 378 nos LoCs (Previous Year 458) amounting to

'51 87.84 crore (Previous Year '3122.00 crore) for providing Buyers Credit facility.

a) Opening Balance in the floating provisions account 105.51 157.48b) The quantum of floating provisions made during year NIL NILc) Accounting for draw down made during the year 52.75 51.97d) Closine balance in the floating provisions account 52.76 105.51

SI No ,,,

(a) Complaints pending at the beginning of the Year 521(b) Complaints received during the Year 35186(c) Complaints redressed during the Year 35190(d) Complaints pending at the end of the Year 517

i,,,,:L:,r1f,i'YeAE.

ffi:Gfffi

F - 103

I

b) There are 794 nos (Previous Year 204) of outstanding LoCs as on 31.03.2015 amounting to '300.47 crore

(Previous year ' 1043.28 crore).

4.6 Provision Coverage Ratio (PCR)

The provision coverage ratio (PCR) for the Bank as on 3lsr March 2015 is 58.50 yo, which is calculated takinginto account the total technical write offs made by the Bank.

4.7 BancassuranceBusiness

( ' in crore)


( ' in crore)

4.8.2 Concentration of Advances

( ' in crore)

4.8.3 Concentration of Exposures

( ' in crore)

4.8.4 Concentration of NPAs ('in crore)

{'

0)

aO)

t

Life Insurance Business 0.87 6.23Non-Life I nsurance Business 0.99 3.78Mutual Funds NIL NILOthers NIL NIL

r 0633Total Deposits of twenty largest depositors 5380.65

4.94% 9.54%Percentage of Deposits of twenty largest depositors to Total

its of the Bank

diiaeq

i.:,ii$;f iQ3,20t5-.iiii ,i; :lli03i20r4

Total Advances to twenty largest borrowers n767.46 r2t95.52

Percentage of Advances to twenty largest borrowers to TotalAdvances of the Bank

17.04o/o 18.54%

Particulars , , l,, ,:..\.'

Total Exposure to twenty largest borrowers/ Customers 16225.8t

iri{pf,",,;

TffiiT FI18977.46

Percentage of Exposure to twenty largest borrowers/ customersto Total Exposure ofthe Bank on borrowerV customers

r5.08% t6.65%

& 4

,,i 31103:20r5. ,l

i3nls

F - 104

Total Exposure to top four NPA accounts 933.79 103 r .04

4.9 Sector - wise NPAs ( ' in crore)

4.l0 Movement of NPAs

(' in crore)

st.No.

Sector

A. Priority Sector


8s94.61 t322.96 1s.39 9724.81 t285.45 t3.22

2.

Advances toindustries sectoreligible as

priority sectorlending

5962.15 862.28 14.46 5476.89 88s.27 16. t6

3 Selvices- Retail Trade- Others

638t.972s39.473842.50

883.43487.81

395.62

r 3.8419.2t10.30

5760.662651.063109.60

914.566t0.26304.30

15.8823.029.79

4. Personal Loans 5478.72 162.54 2.97 5333.31 208.t7 3.90

Sub-Totol(A) 26417.45 323 t.2t 12.23 26295.67 329i.45 12.52

B Non-Priority Sector


Nil Nil Nit Nil Nil NiI

2. Industry- lron & Steel- Power- Others

24020.935005.359484.t1953t.47

2627.t7758.99

1 868.1 8

r 0.93t5.16

19.60

24606.394920.609664.66

I 0021. r 3

2995.54t027.8125.31

1942.42

12.17

20.890.26t 9.38

3

Services- NBFC- Banking &Finance Otherthan NBFC- Others

10656.216010.083255.86

t420.27

460.82

2.10

458.72

4.32

7.31

32.30

10554.335270.122785.44

2498.77

569.97

569.97

5.40

22.81

4. Personal Loans 6572.24 233.54 3.5 5 5023.51 259.0s 5.l6

sub-Total(B) 4 1249.38 3321.s3 E.05 40184.23 3824.56 9.52

C.Food

Credit(FCI)1403.05 Nit Nit r50r.El Nit Nil

Sub-Total(C) 1403.05 Nil Nit t501.8r Nil Nil

Total (A+B+C) 69069.88 6s52.74 9.49 67981.71 7l lE.0l t0.47

r:i .': . :li.'. ti

I

d, :

,03.2014

/

F - 105

Cross NPAs as on l" April,20l4l20l3 7r 18.0r 2963.82

Additions (Fresh NPAs )during the Year 4087.17 8007.30

Sub-total(A) I 1205.18 10971.12

Less

(i) Up gradations 2655.0t 2287.53

(ii) Recoveries (excluding recoveries made from upgraded a/cs) 1236.s8 1084.21

(ii i) Technical/Prudential Write-offs 708.99 428.61

(iv)Write-offs other than those under (iii) above 51.69 52;76

Subrotal(B) 4652.27 3853.r r

Gross NPAs as on 31" March,20l5/2014 (A-B) 6552.9t 7118.01

4.1 I Stock of technical write-offs and recoveries made thereon

(' in crore)

4.12 Overseas Assets, NPAs and Revenue

( ' in crore)


YearName

, , ..t0Cr-Ender

-'---I,...--I,Nlffir.ififi!3it03.20f#

-

iPVlnoiiioiGdDomestic gyslseas' i : ,,:, .,l;-l)OIIlQstl9 .: , , l,':iiji.if j.

NIL NIL NIL NIL

4.14. Unamortised Pension and Gratuity Liabilities

ln terms of the provisions of RBI Circular no.DBOD.BP.BC.8O121.O4.0l8/2010-l ldated 9s February, 2011 onRe-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits,'447.3lcrore was to be amortized over a period of five years with effect from Financial Year 2010-ll. The

unamortized liability as at 31" March,2015 stands NIL (Previous Year'89.47 crore).

Opening balance of Technical/Prudential written-off accounts as atApril 1,201412013

2650.10 2347.22

Add: Technical/Prudential write-offs during the year 708.99 428.6tSub-total(A) 3359.09 2775.83Less: Recoveries made from previously technical/prudential written-off accounts during the year (B) 77.81 125.73

Closing balance as at March 31,201512014 3281.48 2650.r0

Total Assets (Nostro balance)L,t00;?;0.l,5iri

25.4sr:ls;{i0P ?0-1,{,i

348.85

TotalNPAs NIL NILTotal Revenue 2.47 6.t6

Câ,rnft

3l;03;2014

F - 106

4.15 Credit Default Swaps

The Bank has not undertaken any Credit Default Swaps in the year 2014-15 as well as in the year 2013-14

4.15 Intra-Group Exposures

(' in crore)

SINo.

... ,. " 'r:;:j(1.:::':

Pa rti c ula rs o f In t ra' G io'up ExpoSU Ees ;*'li ti ii1,,,,.,1 il;, j ri r',., ;.lli. 3jffi Il0ll* ".+i3"1i03;2014

I Total amount of intra-group exposures 30755.33 34585.282 Total amount of top-20 intra-group exposures 201 10.68 21019.40

JPercentage ofintra-group exposures to totalexposure of the bank on bonowers / customers

2855% 3034%

4Details of breach of limits on intra-groupexposures and regulatory action thereon, ifany Nil Nit

4.16 Transfer of Denositor Education and Awareness Fund(DEAF)

('in Crore)

4.1'7 Unhedged Foreisn Currency Exposure

Provision made for incremental provisioning under Unhedged Foreign Cunency Exposure (UFCE) to the tune

of '24,82,831.00 in March 2015 as per RBI Circular No.DBDO.No.BP.BC.85/21.062002001314 dated

15.01.2014. This approach of UFCE came to force first in June 2014. Capital held towards UFCE Risk inMarch 2015 is Nil as there is not a single instance where an exposure has become eligible for computingincremental capital requirement.

4.18 Liquidity Coverase Ratio*

4.18.1 Disclosure('in Crore)

ii",. lJl.H. .?r-P:$$:'

Opening balance of amounts transferred to DEAF

43;13Add : Amounts transferred to DEAF during the year

0.29Less : Amounts reimbursed by DEAF towards claims

43.44Closing balance of amounts transfened to DEAF

31.03.201431.03.2015Total

WeightedValue

TotalWeighted

Value

TotalUnweighted

Value

TotalUnweighted

Value

NA19542.76I Total High Quality Liquid Assets

NA NA82700.08., fromRetail

ootl

o,*

*

F - 107

small business customers, ofwhich:

(i) Stable deposits 67793.25 3389.66 NA NA(ii) Less stable deposits r4906.83 1490.69 NA NA

3' . , ;:':.',;;'ii",i"' t0'4i15t7-fl.::,:,.

"1 .:, .l . i.'iit....,1".i.,

f,i rj rr)!:ri-i 1 ..,. trl

.'.r,, 6602.90. :' 'ia\. -:'i:.'..'r, .. r:,,. 1i.i.,, ''$a NA

(i) Operationalcounterparties)

deposits (allNil Nil NA NA

(i i) Non-operationalcounterparties)

deposits (allt0475.77 6602.90 NA NA

( iii) Unsecured debt Nil Nit NA NA4. Securid, d,H iiieirilp,funAirie,iilii;.*;lr.5. Additiondl iiqiiiementsitltrihi6hi, iliii;r:iiNdr" I ' ', NA

(i) Outflows relatedand

to derivativeother collateralexposures i

requirements

Nil Nil NA NA

( ii) Outflows related to loss of fundingon debt products Nil Nil NA NA

( iii) Credit and liquidity facilities 33t2.61 587.83 NA NA

6. Other idiii iti NA

7, Othercontingentfunilingtib-ligii-r.onstf i ,NA

8. Total Cash, Oritho*i,,i ,,' i l,'ir|l-*ic

9. Secured lending (e.g. reverse repos) 3 l 1.33 Nil NA NA

10. Inflows from fully performingexposures

560.25 280. I 3 NA NA

ll Other cash inflows 2714.35 2694.48 NA NA

12. Totat Caih Inflows ,,1:rJS,8!i$!: ;lti: i';:j.i,,2694148i't,il .. NA NATotal

AdjustedValue

TotalAdjusted

Value

2t. TOTAL HOLA NA

22. Total Net Cash Outftois'. l'. .'tt:r.r-i:r'., A

23. Liqu id ity,Coierage Rati6,(r7o)'i :' :'.. + iiiJ tI96,62j;ii ;T,i NA

* The above disclosures are as compiled and certified by lhe Bank's Management,

4.18.2 Oualitative Disclosure around LCRBank maintained adequate liquidity during the quarter ended March 2015 which is evident from the

Bank's average Liquidity Coverage Ratio (LCR) was 196.62yo as against regulatory requirement of600/o. The co*fortuble liquidity position was on account of substantial level of High Quality Liquid

Assets (HeLA). HQLA could be mainly attributed to high level of excess SLR. Bank did not have any

exposure to derivatives; hence there was no liquidity risk on account of the same. Since Bank's

exposure to any6 foreign currency was less than 5%o of total business of the Bank, there was no

significant risk of currency wise liquidity mismatch. Bank mainly depended on diversified base of retail

deposits for its funding requirements thus there was no risk of concentration of funding sources.

4.19 a) Registration formalities are pending in case of two properties costing '3.01 crore, WDV as on 3 I .03 '20 I 5 '2. I I

crore (Previous Year '1.12 crore).

b) Premises include leased properties amounting to ' 75.87 crore (net of amortization) as at 3l't March

2015(Previous Year'76.71 crore).

Previous Year's figures have been regrouped / rearranged wherever considered necessary to make them

comparable with those of the current year.

q)

5

{ ,./*

Ce

Unsecured wholesale fqnfli4grr of.

ri,":,:irr,,NA

iNA,,: ".

F - 108

!

This is part of the Schedule l8 as on 31.03.2015

thy V Sundram

[--rRenuka Muttoo

Director


M/s.Ram & Co M/s.N


SanjibDirector

h SinhaDirector

Co. M/s.SPM R& Associates

PartnerMRN:085362

,-AD

,^{ffiGeneral Manager & CFO

CFRN

CPartnerMRN:023837

Place :KolkataDate :7th May,2015.

CA.

MRN:016369

M/s.P C

PartnerMRN:088730

rl

C h a,ieredA:,;

U'

Page 30

F - 109

I

UNITEO BANK OF INDIA

a'ln'

31st Marc I 2015 31st efch 2014CASH FLOW FROM OFERATING ACTIVITIES

2,559,92? (12.134.440Add. lncome Tax 2,200.000Less: MAT Recoverable 2.2@,WAdd: Oeffered Tax Assets 1.981.100Profit before Tax 4.541.O22 n2134.440

Adlustment forDepreciation on Fixed Assets 1.057.196 691.666Less: Amount drawn From Revaluation ReseNe (148.: (155

Pront/Loss on Sale of Fixed Assets (Net) 5,802 uDeoreciation/Provision ror lnvestments (Net) (7U.252 1,448,817Provision for Standard Assets 3.258,200 2.OO7 600Provision for NPA Advances 8.448,7N 19,086,200Other Provisions (Net) 10.716.885 10,209.263lnterest on Subordinated Bonds 2.332.475 2.230,591

operatlno Proflt before changes ln Operatlno Assets and Liabllltles 29.507.E05 23.383.557

Adlustment for net chanoo ln Opsratlnq Assets and Llabllltias

Decrease(IncrEse) in lnveslmenl fi6.563.47€Decrease/(lncrease) in Advances (18.403.941 ) 12.325.n7lncrease/(Decrease) in Oeoosits t26.921.@7 108.581.652

lncrease/(Decrease) in Borroflinos 18.264.937 (9.824.669)

Decrease/(lncrease) in Other Assets (1.350.625) (2.720,8311

lncrease/(Decrease) in Other Liabilities I Provisions (9.296.488) (3.348.651 )

lncrease/(Decrease) in Revenue Rese,ve 42.153 020.278\(24.t20.1321 12,097,874

cash cenerated from Operatlnc ActlvltlesTax (Paid)/ Refund (1.060.000) (410.000)

Net Cash from Ooeratlno Actlvlties {Al 11.681 .414

CASH FLOW FROM INVESTINC ACTIVITIES

Fixed Assets (Net) (449.783) (1.fi8.27

Net Cash from lnvestlng Actlvltles (B) (449.1 (1.508.279)

c CASH FLOW FROM FINANCINO ACTIVITIES

lssue of Share Caoital (5.152.321) 1.W.412Share Premium 8.152.321 5,199,588

Subordinated Bonds lssuedlssue of innovative Perpetual Debt lnstrumenl (lPDl)CaDital from Government(PNCPS)subordinated Bonds lssued 5 000.ooolnlerest on Subordinated Bonds Q.332.474 (2.2T.591Dividend and tax thereon paid 6.716.1621

Net cash from Financlno Actlvlties {C) 4.o53.22t

D Net lncrease ln Cash and Cash equlvalsnts (A+B+C) 18.232.822

Cash and Cash equlvalants at the beglnnlng oI ths yearCash in hand 4,336,O22 3.574.428Balances wlth Reserve Bank of lndia 58.361.750 34.891.708

alances with Banks and Monev at Call and Short Notice 45.420.632 1 08.1 I 8.404 51.419.446 89.885,582

Cash and Cash equlvalents at the end of the yearCash in hand 5,030.200 4.3ffi.022Balances with Reserve Bank of lndia 53.125.812 54.361.750Balances with Banks and Money at Call and Short Notice 2.149.4r']2 tro.3,5.414 45,420,632 106,1 1E,404

on

otl,

q!;

faD

t

Net Profit afl6r Tax

(22,tau,t_xu)

0)

* *

F - 110

This is part of the Cash FIow Statement as on 3 I 2015


AryaExecutive Director

\ÂParvathy V Sundram

irector


A.K.DograDirector

Sinha

Sa tiDirector

Co. M/s.SP MR& Associates

PartnerMRN:085362

,^ffiGeneral Manager & CFO


M/s.Ramamoorthy(N) & Co M/s.ChF

rathiPaftner Partner

MRN:016369MRN:023837

Place :KolkataDate :7th May,2015.

ates. M/s.P C

nCCPartnerMRN:088730

3 h art ereO

ALcqU;

Charte-ed

I

F - 111

INDEPENDENT AUDITOR'S REPORT

To

The President of lndiaReport On The Financial Statements

1. We have audited the accompanying financial statements of UNITED BANK OF INDIA as at 31't March,2014, which comprises the Balance Sheet as at March 3t,2Ot4, and Profit and Loss Account and thecash flow statement for the year then ended, and a summary of significant accounting policies andother explanatory information. lncorporated in these financial statements are the returns of 20branches and treasury operations audited by us and 621 branches/retail hub audited by branch

auditors. The branches audited by us and those audited by other auditors have been selected by theBank in accordance with the guidelines issued to the Bank by the Reserve Bank of lndia. Also

incorporated in the Balance Sheet, the Profit and Loss Account and the Cash Flow statement are thereturns from 35 Regional Offices. 1354 branches; 1 Staff Training College, 1 Cash Management System

and 1 Central Pension Processing Centre which have not been subjected to audit. These unauditedbranches account tor 7.73% of gross advances, 35.42% of deposits,4.94% of interest income and

33.6L% of interest expense.

M a no g e m e nt's Respo nsi bi lity fo r th e Fi na n ci a I State m e nts2. Management is responsible for the preparation of these financial statements in accordance with the

provisions of Section 29 of the Banking Regulation Act, 1949 and to disclose the information as may be

necessary to conform to forms 'A & B' respectively of the Third Schedule to the Banking Regulation Act,

1949. These financial statements comply with the applicable Accounting Standards issued by thelnstitute of Chartered Accountants of lndia. This responsibility includes the design, implementation and

maintenance of internal control relevant to the preparation of the financial statements that are freefrom material misstatement, whether due to fraud or error.

Aud itotrs Responsibi lity3. our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with the Standards on Auditing issued by the lnstitute of CharteredAccountants of lndia. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor/s judgement, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. ln making those risk assessments, the auditor considers internat control relevant to theCompany's preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the entity's internal control. An audit also includes evaiuating theappropriateness of accounting policies used and the reasonableness of the accounting estimates madeby management, as well as evaluating the overall presentation of the financial statements.

5' we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

6. Emphasis of Matter6.7 ln accordance with Standard of Audit (SA) 706 "Emphasis of Matter paragraph,,, withoutqualifying our opinion, we draw attention to Note 4,3 to the financial statements, which describesthe accounting treatment of the expenditure on creation of Deferred Tax Liability on Special

Reserve under section 36(lXviii) of the lncome Tax Act, 1961 as at 31st March 2013, pursuant to.77/27.O4.Bl's Circular No.DB BP.BC

*

3-74 dated 20th 2073

F - 112

6.2

Pending settlement of the proposed wage revision effective from November 2072, an adhoc

provision of {170 crores is held as at 31't March 2014.

ln accordance with Standard of Audit (SA) 706 "Emphasis of Matter Paragraph", withoutqualifying our opinion, we draw attention to Note No.3.4 in Schedule 18 regarding deferment ofpension and gratuity liabitity of the Bank to the extent of t89.47 crores pursuant to the exemptiongranted by the Reserve Bank of lndia from application of the provisions of Accounting Standard(AS)-15 on "Employee Benefits".

Opinion7. Subject to what is stated above, in our opinion, and to the best of our information and according to the

explanation given to us and as shown by the books of the bank, and read with the Accounting Policies

and the Notes on the Accounts, we have to report that:

(i) The Balance Sheet, is a full and fair Balance Sheet of the Bank containing all the necessary

particulars, as required by the Banking Regulation Act 1949 and is properly drawn up so as toexhibit a true and fair view of state of affairs of the Bank as at 31't March, 2014 in conformity withaccounting principles generally accepted in lndia;

(ii) The Profit and Loss Account, shows a true balance of Loss, in conformity with accounting

principles generally accepted in lndia, for the year covered by the account; and


Report on Other legal and Regulatory Requirements8. ln our opinion, the Balance Sheet and the Profit and Loss Account have been drawn up in Forms "A"

and "8" respectively of the Third Schedule to the Banking Regulation Act, 1949 and is in accordance

with the provisions of section 29 of the Banking Regulation Act, 1949.

9. Subject to the limitations of the audit indicated in paragraph 1 to 5 above and as required by theBanking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and subject also to thelimitations of disclosure required therein, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge andbelief, were necessary for the purposes of our audit and have found them to be satisfactory.

(b) The transactions of the Bank, which have come to our notice have been within the powers of theBank.

(c) The returns received from the offices and branches of the Bank have been found adequate forthe purposes of our audit.

10. ln our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with theapplicable Accounting Standards.

Date:5th MayZOL4Place: Kolkata

For Ramamoorthy(N) & Co. Dinesh Mehta & Co. P C Bindal& Co. SPMR&Associates.Chartered Accountants Chartered Accountants Cha rtered Accounta nts Chartered AccountantsFRN:002899t ) FRN:OQR FRN:00182a\ FRN:OO.4'm\

o

oCharlered o

o

hwariPa t PartnN7 Partn Partnertv|.Mo.023837 M.Mo.502386 M.No.082683 M.No.085362

a

f

M

F - 113

UNITED BANK INDIAHEAD :KOLKATA

3lst,IEWFOR AND 2014.

(Rs. in lacs)

Particulan Ouarter Endcd Year Ended

3t.03.2014 31.12.2013 31.03.2013 31.03.2014 31.03.2013

(Audited) (Revicwed) (Audited) (Audited) (Audited)I Interest Earned (a+b+crd) 276204 2336! 1059929 925149

a) Interest/Discount on advances/bills t99723 208284 171876 7El656 689927

b) Income on Investment 68869 6601 9 580s6 259762 22s931

c) Intt. on balance with RBVOther Banks 5876 2232 1420 l4l 08 6349

d) Others t736 l8 2258 4403 2942

35108.,

Other Income 3t174 22127 120687 106657

3 Total Income (l+2) 30737E 2986E0 26E7tE 1180616 103t806

4 Interest Erpended-'--

206169 200477 t77232 80116,47 676423

5 Operating Expetrses (l+ii) 46714 43695 40413 170795 1s0392

i) Payments to and provisions for employees 26570 26318 24253 101434 93252

16160 69361ii) Other operating expenses 20144 17377 57 t406 Total Expenditure (4)r(5) (Exciuding Provision and

Contingencies) 2s3083 244172 217645 974442 82681s

2061747 Opemting Profit (3F(6) (Protit before Provisions and

Contingencies) s4295 54508 51073 20499tProvisions & Continsencics (Other thatr tax) 26610 185783 75rE0 361796 175939E

9 ExceDtionrl Itcms 0 0 0 0 0

27625(t3t27s) (24807) (lss622) 29052l0 Prolit (+yt ssc) from Ordinary Activities before tax (7-&9)

ll Tax Expenses (re312) (7467',) (2792s',) (34277) (l0l3E)

(l2r34s)l2 Net Profit (+)/Loss(-) from Ordinary Activities after tax (10-

ll) 46937 (r23808) 3l t8 39190

l3 Extraordinary ltems (net oftaI erpenses) 0 0 0 0 0

l4 Net Prolit (+yloss() for the period 46937 (123808) 3118 (r2l34s) 3919{)

l5 Paid-up equity share capital (Face Value ofeach share Rs. I 0) 55475 55475 37471 55475 3747 I

l5 Reserves excldg. Revaluation reserves 33190r 0 408453 331901 408453

t7 Anolyticsl Ratios(i) Percentage ofShares held by G.O.l. 88.00% 88 00% 82.23% 88 00% 82.23o/o

(ii) Capital Adequacy Ratio %a) Basel-l N. A. N. A. 9.77% N.A. 9.77%b) Basel-ll [.46% 9.93o/o 1.66% n.46% 11.660/0

c) Basel-lll 9.81o/o 9 0lo/o N. A. 9.81o/o N.A.(iii) Earning per Share (EPS)

a) Basic and diluted EPS before Extraordinary items (net oftaxexpense) for the quarter (not annualised) 8.46 (32.2s) 0.32 (28.68) 8.64b) Basic and diluted EPS after items (net of tax

expense) for the.quarter (not annualised) 8.46 (32.2s) 0.32 (28.6E) 8.64(iv) (a) Amount of Gross NPAs 7l l80l 854550 296382 7l I 801 296382

(b) Amount ofNet NPAs 4664fi 562996 196998 466411 196998(c) Percentage ofGross NPA 10.47% 10.82o/o 4.25o/o 10.47o/o 4.25o/o

ofNet NPA 7.18% 7.44o/o 2.87% 7.tE% 2.87%Return on Assets 1.52% -3.92% 0.12o/o -0.99o/o 0.38o/o

1tNo. ofshares 66,578,299 66.578.299 66,578,299 66,578,299 66,578,299Percentage of t2.N% 12.00o/o 17.77o/o 12.00% 17 .77o/o

l9 Promoters and

No.ofshares Nil NiI Nit Nil Nila % ofthe total of promoterPercentage

promoterNil Nit Nil NiI Nit

Percentage ofshare (as a ofthe total share ofthe Nil NiI Nil Nil Nit

b) Non-encumbered

No. of 488,t69,792 488,t69,792 308, l 28,640 488,169,792 308, I 28,640total shareholding promoterPercentage shares(as a 7o

promoter group)t00% 100% l00o/o t00% 100%

capitrl of thePercentage ofshare (asa%ofthetotal 88.00% 8E.00% 82.23% 88,00% 8223%

Accountanh

I 275ss3

Public Shareholding

company)

F - 114


KOLKATA

Statement of Assets & Liabilities as on 31st March,z0l4

(Rs. in lacs)

CAPITAL & LIABILITIES As on 31.03.2014 As on 31.03.2013

Capital 135475 117471

Reserves & Surplus 392791 470901

Deposits 11150971 1 00651 54

Borrowings 446023 494270

Other Liabilities and Provisions 385235 313715

Total: 12510495 11461511

ASSETS As on 31.03.2014 As on 31.03.2013

Cash and balances with Reserve Bank of lndia 626978 384661

Balances with Banks and

Money at Call and Short Notice 454206 514195

lnvestments 4487634 3346340

Advances 6576751 6890866

Fixed Assets 93874 85705

Other Assets 271052 239744

Total : 12510495 11461511

c

F - 115

Part A: Business Segments

Quarter Ended

31.03.2014 31.12.2013 31.03.2013 3,^.o3.20L4 31.03.2013

tn

Year Ended

al r reasury upe

l.Segment Revenue:

75880 326468577605b) Corporate/Wholesale Banking L28325 165100 L2696L254386_clRetail Bglking

oioitrei sankins operation52907

4766 L7777

510149

226672

t292785916

L749s072

26

5841642152280 4440 3067e)Unallocated lncome

268717 1180516307378 298679 103180600

118061600

307378 29A679 2687170

TotalRgy-en9e

Total

2.Sesment Results:Profi t/(Loss)1031806

2368 28360a)Treasury Operations -20508

b)Corporate/Wholesale Banking

c)Retail Banking

8748644670 21971

50363 280729147 95449

94092L7362

92L55

39115

L43426

d)Other Banking operation 5073 4765 4275 177L7 12927

Total tL672t 79467 69794 333937Less:Unallocable Expenses netoffunallocable income (624261 (24esel (t87ztl (1277631

s4295 54508 sto73Total 206174

287623

__.G3q1A204991

ProyigiqQ!o4t!nge4ciesProfit Before TaxTax Expense (te312)

2667027625

185783(t3tz7s)

(7467)

75880(2+8tU7)(27e25')

361796(1SS62Z)

(34277')

175939

(10138)29052

PAT 46937 (123808) 3118 (t2t34s) 391903.Capital Employeda)Treasury Operations 189561 203279 189561b)Corporate/Wholesale Banking 177273

217153262030 254445 L77273

c)Retail Banking 76455 93370 92966 76455

203279254445

92966d)Unallocated 84976 20275 37682 84976 37682Total 528265 592A28 sa8372 52A265 5AA372

86316

Note:-The Bank has only one Geographical Segmcnt i.e Domestic Segment

75845 27899L

F - 116

NOTES

7. The above financial results have been reviewed by the Audit Commlttee of the Board and

approved by'the Board of Directors of the Bank in their meetings held on sth May 2014 and have

been subjected to audit by the Statutory Central Auditors'ofthe Bank.

2. There has been no material change in the Accounting Policies followed during the quarter/yearended 31't March 2Ol4 as compared to those followed in the preceding financial year ended

31st March 2013.

3. The figures of quarter ended 31't March 2OL4 are the balancing figures between audited figures

in respect of the full financial year and year-to-date figures upto the period ended 31't

December 2013.

4. The financial results for the quarter/year ended 31't March 2014 have been arrived at afterconsidering provisions for Non-Performing Assets(Loans), Standard Assets, Restructured

Advances and Depreciation on lnvestments on the basis of prudential norms issued by theReserve Bank of lndia(RBl).

5. ln terms of the provisions of circular DBOD.No.BP.BC.8O|2L.4.O78/2OLO-L1 dated 9th February

2011 issued by RBI on reopening of Pension Option to employees of Public Sector Banks and

enhancement in Gratuity Limits, <447.30 crores is being amortised over a period of 5 years witheffect from financial year 2010-11. Accordingly, and amount of 722.37 crores for the quarterended 31't March 2014 (<89.46 crores for the whole year) has been charged to Profit and Loss

Account. The unamortised liability as at 31't March 2014 stands at {89.46 crores.

Pending settlement of the proposed wage revision effective from November 2072, an adhocprovision of T170 crores is held as at 31't March 2014, which includes {30 crores for the quarterended 31't March 2014.

ln terms of RBI circular DBOD.No.BP.Bc.88/27.06.2o7.2072-13 dated 2g.03.2013 Banks havebeen advised to disclose capital Adequacy Ratio computed under Basel ill regulations from thequarter ended 3oth June 2013. Accordingly, corresponding details for the pr"riou, year/periodsare not furnished.

8.

6.

7

9

During the year, Government of lndia has su[scribed to 1g00 ,4L,752 Equity shares of t10/-each of the Bank at a price of t38.88 (including a premium of (2g.gg) per'share aggregating to{700'00 crore through preferential allotment in accordance with regulation 76(1) of sEBl (lcDR)Regulations, 2009' The shareholders approved the issue by a special resolution at theExtraordinary General Meeting of the Bank convened for the purpose on 23d oecemier, zorg.The Bank completed the allotment on 24th December 2013.

During the year, the Bank has raised {5oo.o0 crores through Basel lll comptiant rier-2 bonds.

10. Pursuant to Reserve Bank of lndia's (RBl,s) Circular No.DBDO.No.Bp.BC. 77/2L.04.0L8/20t3-74dated 20th December 2013, the Bank has created Deferred Tax Liability on the Special Reserveunder section 36(1 )(viii) of the tncome Tax Act, 1961. As required by the said RBt Circular, theexpenditure, amo unting to {72.03 due to the creation of DTL on Special Reserve of {220.00Crores as at 31't March 2013, not previously charged to Profit and Loss Accoun! has now beenadjusted directly from the Reserves. Had this amount been charged to the profit and LossAccount in with the generally accepted

AocountantE

Loss for the been higher by suchprinciples in lnd unt of

F - 117

d

11. Pursuant to Reserve Bank of lndia's (RBl's) Circular No.DBDO.No.BP.95l2l.O4.O48/2OL3-74

dated 7th February 2014, the Bank has utilized 33% of its countercyclical/floating provisions heldas at 31't March 2013. As per the said RBI Circular, an amount ot$St.Sl crores out of floatingprovision ofhtSl.qS crores held as at 31't March 2013 has been utilized for making specificprovisions for non-performing assets, as per the poliry approved by the Board.

12. The Provision Coverage Ratio as at 31't March,2OL4is52.25o/o.

13. The number of investors' complaint received and disposed-off during the quarter ended 31'tMarch 20L4is as under:

14. Previous period/year figures have been regrouped/reclassified wherever considered necessary.

Deepak NarangExecutive Director

M/s.Ramamoorthy(N) & Co

Chartered Accountants.FRN:002899S

M/s.Dinesh Mehta & Co.

Cha rtered Accountants.FRN:000220N

Exec

M/s.PCBindal&Co.Chartered Accountants.FRN:003824N

M/s.SPMR&AssociatesCha rtered Accountants.FRN:007578N

,ffK^",General Manager & CFO

ln terms of our separate review report of even date.

--aPartnerM.No.023837

CA.Deepak MalhotraPartner

M.No.502385

CA.P.C.Bindal

Partner

M.Nb.082683

Bharathi CA.Pra . MaheshwariPartner

M.No.085352

Place:KolkataDate :5s May,2OL4.

ChartetedAccountant8

o

F - 118

l:


as 31st f,larch 2014

(Rs ln thousand)

CAPITAL & LIAB]LITIES Schedule As on 31.03.2014 As on 31.03.2013

(Audlted) (Audlted)

Capital 1 1354 ,74 ,81 1174 ,70 ,69

Reserves & Surplus 2 3927,90,61 4709,01 ,15

Deposits 3 111509,70,86 100651 ,54 ,34

Borrowinos 4 4460 ,23.61 4942,70 ,30

Other Liabilities and Provisions 5 3852 ,35,13 3137 ,14 ,83

Total : 1251U.95 .02 fi46ls.tt .31

ASSETS Schedule As on 31.03.2014 As on 31.03.2013

(Audited) (Audited)

Cash and balances with Reserve Bank of lndia 6 -- ".':''eil6s ,tt ,tz 3846 ,61 ,36

33/]63,40 ,17

68908,66 ,21

857,05 ,18

Balances with Banks and'

7Money at Call and Short Notice 4542,06 ,32

lnvestments 8 44876,34 ,13

Advances

Fixed Assets

9 65767 ,51 ,14

10 938,73,47

Other Assets 11 2710 ,s2 ,24 2397 .43 .93

Total 125104,95 ,02 114615 ,1',| ,3',i.

9908 33 1 13137

2880 71 3309 08

Continqent Liabilities 12


Pt1

5141 ,94 ,46

F - 119

-

This is the part of Balance Sheet as on 31.03.2014

Io"fue

Executive Director

0-4 NL/^*Parvathy V Sundaram

Director


Mihir Kumar

DirectorSinha

Director

Sunil Goyal

Director

lc,uvar,ry^Kiran B. Vadodaria

Director

Pijush Kanti Ghosh

DirectorSa Pati

Director

M/s.P C Bindal& Co.

Cha rtered Accountants.24N

dal

Pa rtn erM.No.082683

6h"-",GeneraPfulanager & CFO

As per our separate report of even date annexed

tt'l/s.Ramamoorthy(N)& Co M/s.Dinesh Mehta & Co.

CharteredAccountants. CharteredAccountants.899S N

Bharathi lhotraPartn er

M.No.023837 M.No.502386

Place: Kolkata

Date: 5th May,2074

rtn er

M/s.SPMR&AssociatesChartered Accountants.

007578N

r. MaheshwariPa rtn er

M.No.085362

ChartetedAccounlants

)

F - 120

r

As on 31.03.201 4 i As on 31103.2013

(Audltedl (Audlted)AUTHORISED CAPITAL' 3000 ,00 ,00 3000 .00 .00

Equity Share capltal

Porpetual Non Cummulatlve Pr€terence Sharas(PNCPS)

ISSUEO, SUBSCRIBED AND PAIO- UP CAPITAL

554748091 (Previous Year 374706939) Equity

Shares of Rs. 10/- each[(including 488169792

(Prevlous Year 308126640) held by GOll 5U4 .74 .81 374 ,70 ,69

80000 (Previous Year E0000) Porpetual

Non-Cumulative Preference Shares (PNCPS)

of Rs. 1,00,000/- each held by GOl. 800 .00 .00 800 .00 .00

Total: 1354 ,71 ,81 1174,70 ,89

SCHEDULE 2. RESERVES A SURPLUS

As on 31.03.2014 As on 31.03.2013

(Auditedl (Auditedl

t. Statutory Reaervet

Opening Balance 713 ,51 ,31 615 ,53 ,70

Add: Transt€r from Profit & Loss A@ount 97 ,57 ,61

SUB.TOTAL 713 ,61 ,31 713 ,51 ,31

il. Capltal RoEerves

a) Rovaluagon Reserve

ODenino Balancs 624 .46 .61 640 ,73 ,89

Addition during the period/year

21 75

(16 .47 .03)

Add/(Less): Adiustrnent during the period/year

Less : Transfer to Profit & Los3 Account (15 .59.24)

60E .E9 .37 624 ,48 ,61

b) Ohers

Op€ning Balance 1506 .49 .53 1495 ,44 ,73

Add:Transfer from Profit & Loss Account 13,04 ,80

1508,4S,53 1508 ,49 ,53

SUB-ToTAL t(a) + (b)l 2117 ,3E ,90 2132 ,9E ,14

ilt. share Premlum

Opening Balance 743 .62 ,93 657 ,33 ,73

Addation during the periodrrear 519 ,95 ,88 86 ,29 ,20

SUB TOTAL 1263 ,58 ,81 743 ,62 ,93

tv. a). Revenus and Othor Rsserves

Revenue Regewe

Opening Balance 1118 ,88 ,77 ___!oqe_f? .s8

Less: Draw do$rn (72 ,O2,781

Add:Transfer from Profit & Loss Account (1213 ,44 ,40\ 109 ,26 ,19

SUB TOTAL (a) (166 ,58 ,41) 111E ,88 ,77

b). lnvestmont Reserva Account

Opening Balance

Less: Ad.iustment during the period/year

suB ToTAL (b)

SUB-TOTAL I(a) + (bl fi66 ,5E ,4r) 1118 ,88 ,77

v. Balance ln Proflt & Los! Account

TOIAL(l+ll+lll+lv+v) 3927 ,90 ,61 4709,01 ,15

Pt2

F - 121

'j'

SCHEDULE 3. DEPOSITS--rII

T

I

As on 31.03.2014 As on 31.03.2013

(Audltedl (Audltod)

t.A Demand Oepostts

D From Banks 1315 .00 .93 1203 .70 .46

iD From Others 6761 .67 .33 8329.64.42

[. Savlngs Bank Dcposlts 331il,20,87 30372 ,0E ,60

l[. Term Deposlts

i) From Banks 2116 ,O2 ,07 1450 ,33 ,67

iD From Oihers 68162 ,79 ,66 59295 ,76 ,59

TOTAL 1fi509 .70 ,86 100651 .54.34

B i) Deposits of branches ln lndia 111509.70,86 't00651 .54 .34

ii) Deposits of branches outside lndia

tt1509 ,70 ,86 ,00651 ,54,34

SCHEDULE 4 - BORROWNGS

lRs. ln thousand)

As on 31.03.2014 As on 31.03.2013

(Audited) {Audited}

t. Borrowlnos ln lndla

i) Reserve Bank of lndia 326 ,57 ,00

ii) Other Banks

iii) Olher lnstitutions & Agencies # 4040 .83 .11 3365 .18 .64

[. Borrowlngs outslde lndla 419 ,40 ,50 1250 ,94 ,66

TOTAL 4/60,23,61 4942 ,70 ,30

Secured borrowinqs induded in l&ll above 326 .57 .00

f hduding Subordinated Debts for T16, ll Capital. 2225,OO,OO 1725 ,00 ,00

f lncludlng lPDl for Tler I Caplal. 300 .00 .00 300 .00 .00

Amottfibtill

F - 122

SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS

(Rs. ln thousandl

As on 3r.03.2014 As on 31.03.2013II

Bills Payable

(Audltedl (Auditedl

t. 372 .98 .77 394 .27 .24

[. lnter-Offi ce Adlustments (net) 160 .72 .56 20 .19 .55

llt. lnterest accrued 993 ,78 ,E9 470 ,17 ,30

tv Continoenl Provisions against Strandard Assets 7U.27 .OO 533 .51 .00

v, Defened Tax Liability (net)

vl. Proposed Dividend (indudins Dividend Tax) 't71 .61 .82

vlr. Others (including provisions) 1590 .57 .91 1547 .37 .92

TOTAL 3852 ,35 ,13 3137 .14 .E3

SCHEDULE 6. CASH & BALANCES WTH RESERVE BANK OF INOIA

(Rs. ln thousand)

As on 31.03.2014 As on 31.03.2013

(Audltedl {Audltedl

t. Cash in hand (including loreign cuflency notos) 433 ,60 ,22 357 ,44 ,28

il. Balances with Reserve Bank of lndia

i) ln Curent Account 5836 .17 .50 3489 ,17 .08

iD ln Other Accounts

TOTAL: 6269 ,77 ,72 38,t6 .61 .38

SCHEDULE 7. BAI-ANCES WTH BANKS AND IIONEY AT CALL AND SHORT NOTICE

(Rs. in thousand)

As on 31.03.2014 As on 31.03.2013

(Audlted) (Auditedl

t ln lndia -


a) ln Cunent Accounts 59 ,82 ,54 56 ,78 ,36


iD Money at Call and Short Notice

a) Wilh Banks 4133 .39 .17 3473 ,27 ,40

b) With other lnstitutions

SUB.TOTAL 4193 ,21 ,71 3530 ,05 ,76

[. OutsidE lndla -


a) in Cunent Accounts 348 ,84 ,61 161't ,88 ,70



SUB.TOTAL: 3.18 ,84,61 16'fi ,8E ,70

TOTAL 4il2,06 ,32 5141 ,94.$

Pt4

€i

)t

F - 123

i8 . INVESTiIENTS

(Rs. ln thousand)

As on 31.03.2014 Ason 31.03.20{3

(Audlted) (Audlted)

t. lnvestments ln lndla (Gross) 45127 ,50 ,19 33658 .67 .75

(2s1 .16.00) n95 .27 .581Less : Provision for NPl, depreciation / amortisation

1,4676.U.13NET 3#3,4,17

Break-up

i) Govemment Securities 35084 .(X .51 25639 .25 .61

ii) Oth6r Approved Securities 16 .43 .13 26 .38 .72

iii) Shares 280 ,22 ,20 297 .71 .97

iv) Debentures and Bonds 2077 .79 .72 2222.93 .11

v) Subsidhries and/or Joint Ventures

7417 .E4 .57vi) Others (Mutual Fund, CP,CO, etc.) 5277 ,10 ,76

SUB.TOTAL 4E76 ,34,13 3fi3,4,17

[. tnvestment outslde lndla (GrGs) 71

/71\Less : Provision for depreciatlon

NET

Break-up

i) Govemment Securities

(includins local atthorities)

ii) Subsidiaries and/or Joint Ventures abroad

iii) Other inveslrnents

SUB-TOTAL

M76,34,13 33&3.4,17TOrAL(r&[]Pt5

F - 124

SCHEDULE 9 . ADVANCES

(R!. ln thousand)

A3 on 31.03.2014 As on 31.03.2013

(Audlted) (Audlted)

A i) Bills Purchased and Discounted 908 ,09 ,84 1674 ,84 ,06

ii) Cash Crsdits, Overdrafts and Loans repayable

on demand 19450 ,14 ,35 't9043.,70 ,03

45409 .26 .S5 4E190 .12 .12iiD Term Loans

65767 .51 ,14 68908 ,66 .21TOTAL

B. D Secured by tangible assets 59136 ,0E ,29 57582 ,70 .74

(includes advances against Book Debt)

iD Covered by Bank / Govemment Guarantees 2270 ,72 ,71 2149 ,21 .69

4360 .80 .14 9136 .73 .78iii) Unsecured

TOTAL: 65767,6t ,14 68908 ,66 ,21

c. t. Advances in lndia

t) Priority Sector 24907 ,42 ,OO 25147 ,58 ,28

ii) Public Sec{or 5130 .45 ,00 6947 ,85 ,07

327 ,21 ,00 898 ,14 .06iiD Banks

35402 ,13 ,14 35e15 ,08 ,80iv) Others

65767 ,6't ,14 6890E ,66 ,21SUB.TOTAL

[. Advances outside lndia

i) Due from Banks

ii) Due from Others

a) Bills Purchased dhd Oiscounted

Svndicated Loansb)

c) Others

SUB.TOTAL

65767 ,61 ,14 6E908 ,66 ,2rroTAL(r&[)P/6

Chrrtcrd

F - 125

SCHEOULE 10. FIXED ASSETS

As on 31.03.2014 As on 31.03.2013

(Audltedl (Auditod)

t. Preml3es (lncludlng Leasehold)

At cosu Revalued as on 31st March of preceding year 804 ,74 ,23 786 .37 .69

Revaluation during the year

Additions durino the year 53 .47 .50 19 .80 .25

EiE ,21 ,73 E06 .17 .94

Less:Oeductions durins the year ( .0) fi .43 .71\

Depreciation to dale (170 .19 ,56) fiu.41 .751

SUB.TOTAL 68E .02 .17 650 '32 ',|8

il. Capttal Work.ln-P.ogress t5 .16 .08 36 ,28 .87

[]. other Fked Asset! (lncludlng Fumlture &

Flxture)

At cost as on 31st March of preceding year 675 ,S5 .15 613 ,83.10

Additions during the year 116 .04 .58 69 .70 .'t1

791 .99 .73 683 .53 .21

Less:Deduclions during the year (8 ,79 ,1e) (7 ,58 ,06)

Depreciation to date (571 .67 .96) (521 .2s .15)

SUB.TOTAL 217 ,s2,s8 15{.70 .00

lntanglble Assetstv,

Software

At cost as on 31 st March of preceding year 70,06,u 51 ,30 ,33

1E ,76 ,51Additions during the year 24 ,20 ,49

94.27 .33 70 .06 .84

Less:Deduclions dudng lhe year

Amortisation to date (70 .24 .69) (54 .33 ,01)

SUB.TOTAL 24,O2,64 't5 ,73 ,83

TOTAL:(l+ll+lll+lV) 938 ,73 ,47 857 ,05 ,1E

PN

F - 126

i

SCHEDULE II . OTHER ASSETS

I

As on 31.03.20{4 As on 31.03.2013

(Audlted) (Audlted)

t. lnter€ffice Adjustments (net)

lt. lnlerest accrued s78 .15 .82 788 ,16 ,73

l[. Tax Paid in advanc€y'Tax deduded at source (Net) 557 ,14 ,78 733 .63 ,55

lV. Stationery and Stamos 11 ,12 ,60 5 ,60 ,42

v. Non-bankinq assets acauired in satisfaclion ot claims

vt. Defened Tax Assets (net) 461 .72 .00 118 .95 .00

vll. Others 702 .37 .04 751 .O8 .23

2710 .52.24 2397 .43.93

SCHEOULE 12. CONTINGENT LIABIUTIES (Rs, ln thoGandl

As on 31.03.20{4 AE oa 3{.03.2013

(Audlted) (Audltsdl

3 .87 .15L Claims aoainst the bank not ackno,vledoed as debts 5 .51 .12

t1. Liability for paruy paid investrnents 33 ,20 ,9E 44 ,32 ,63

il. Liability on account of o{Jtslanding forward

exchanoe contracts 5012 .06 .27 7180 .52 .37tv. Guarantees givefl on behalf of constituents (net of cash margin)

a) ln lndia 2517 .93 .87 1E15 ,61 ,76

b) Outside lndia 1038 .EE .69 2119 .75 ,U

c) BG invoked but not paid (ln lndia) 4 ,70 ,26 4 ,77 ,18v Acceptances, endorsements and other obligations (net of cash

marqin) 1276 .t4 .07 1908 ,24 ,E2

vl. Other items for which the Bank ls

contingenuy liable 21 .11 .72 58 ,91 ,86

TOTAL: 9908 ,33 ,01 13137 .67 .38

PIE

in

F - 127


ended 31st March 2014

KOLKATA

Profit & Loss Account for the

(Rs ln thousandlSchedule Year Ended 31.03.2014 Year Ended 31.03.2013

t. INCOME

lnterest Earned 13 10599 ,29 ,03 9251 ,49 ,',t5

1206 ,87 ,',to 1066 ,56 ,55Other lncome 14

11806 ,16 ,13 10318 ,05 ,70TOTAL:

[. EXPENDITURE

lnterest Expended 15 8036 ,47 ,',tz 67U,22,86

1707 .94 .61 1503 .91 ,52Operating Expenses 16

3275 ,18 ,80 1658 ,00 ,90Provisions and Contingencies

13019 ,60 ,53 9926 ,15 ,28TOTAL

il. PROFIT

Net Profit for the yearlperiod (1213 ,44 ,4O) 391 ,90 ,42

(1213 ,44,4O1 391 ,go ,42TOTAL:

lv APPROPRIATIONS:

97 ,97 ,61Transfer to Statutory Reserve

13 ,04 ,80Transfer to Capital Reserve

Proposed Dividend :

78 ,68 ,85Equity

68 ,00 ,00PNCPS

24 ,92 ,97Tax on Dividend

(1213 .44 .40\ 109,26,19Transfer to Revenue Reserve


(1213 ,4,401 391 ,90 ,42TOTAL:

(28.68) 8.64Basic & Diluted Earning per Share (Rs.)Pt8

F - 128

SCHEDULE 13. INTEREST EARNED

tn

Year Ended 31.O3.2O14 Year Ended 31.03.2013

t. lnterest / Discount on Advances/Bills 7816 ,56 ,02 6899 ,27,50

!t. lncome on lnvestments 2597 ,61 ,73 2259 ,30,65

il. lnterest on balances with Reserve Bank of

lndia and other lnter-Bank Funds 141 ,08.58 63 ,48 ,69

44 .02.70 29 .42.31tv. Others

10599,29,03 92s1 ,49.15TOTAL :


Year Ended 31.03.2014 Year Ended 31.03.2013

l. Commission, Exchanqe and Brokerage 202,46,55 195 ,07 ,53

[. Profit on sale of lnvestments 534,51 ,54 478 .17 .12

Less : Loss on-sale of lnvestments (8 53 ,70) (11 05 ,88)

Profit on revaluation of lnvestmentsIil.

Less : Loss on revaluation of lnvestments

,5 ,97 108,42tv Profit on sale of land, buildings and other assets

( 1 ,81) (16 ,20)Less : Loss on sale of land, buildings and other assets

1s5 ,97 ,93v Profit on exchange transactions 107 ,97 ,56

Less : Loss on exchange transactions

vt. lncome earned by way of dividend etc., from subsidiaries,

companies and/or joint ventures abroadl in lndia

295,48,00322,40 ,62vlr. Miscellaneous lncome

1206,87 ,10 1066 ,56 ,55TOTAL: I

Pt9

F - 129

SCHEDULE 15 - INTEREST EXPENDED

tn

Year Ended 31.03.2014 Year Ended 31.03.2013

t. lnterest on Deposits 7569 ,14 ,43

il. lnterest on Reserve Bank of lndia/inter-Bank borrowings 94 ,12,18

6231 ,O7 ,51

149 ,69,14

373 ,20 ,51ilt. Others 383 ,46 ,21

8036,47 ,12TOTAL: 6764,22,86

SCHEDULE 16 . OPERATING EXPENSES

Year Ended 31.03.20,14 Year Ended 31.03.2013

t. Payments to and Provisions for Employees 1014,U,35 932 ,51 ,84

[. Rent, Taxes and Lighting 125,52.25 109 ,23 ,69

I ll. Printinq and Stationery 30,00,85 23,44 .90

tv. Advertisement and Publicity 10,45,15 14 ,38 ,82

v Depreciation on Bank's property 84 ,77 ,90 77 ,29 ,08

Less : Transfer from Revaluation Reserve (15 ,59 ,24\ (16 ,47 ,03)

69.18 ,66 60 ,82 ,05

vt. Directors' fees, allowances and expenses 1 ,99 ,92

vil. 14 ,59 ,54


1 ,64 ,49

'13 ,19 ,29

vill. Law Charges 5,25 ,20

tx. Postage, Telegrams, Telephones etc. 23 ,19 ,99

5 ,01 ,13

18 ,27 ,14

17 ,70 ,59x. Repairs and Maintenance 15 ,58 ,38

xt. lnsurance 82 ,16 ,30'l't1 ,18 ,22

284 ,49,89 227 ,63,49xil.

1707 ,94,61 1503 ,91 ,52

qqq_efpglq,trr"_TOTAL:

Pt10

F - 130

This is the part of Profit and Loss Account as on 3L.O3.2O14

D arangExecutive Director

Parvathy V SundaramDirector


l*- l^.-'-

Sanjib tiDirector

M/s.P C Bindal& Co.

Chartered Accountants.

U,^,Mihir Kumar

DirectorSinha

Director

Sunil Goyal

Director

Pijush KantiGhoshDirector

lc"*"'*Kiran B. Vadodl6-ila

Director

fu^,tGeneral Manager & CFO

As per our separate report of even date annexed

M/s.Ramamoorthy(N)& Co M/s.Dinesh Mehta & Co.

Chartered Accountants. Chartered Accountants.002899S 220N

nath Bharathi MalhotraPartner

M.No.502385

24N

BindalPartn er

M.No.082683

M/s.SPMR&AssociatesCha rtered Accoun ta nts.

578N

MaheshwariPa rtn er

M.No.085362

PartnerM.No.023837

Place: Kolkata

Date: 5th May,20L4

Chadeted

F - 131

Schedule -17

SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31't MARCH,2OI4

1. BASIS 9F PREPARATTON OF FTNANCTAL STATEMENTS F

The accompanying financial statements are prepared on historical cofiSasis, except as otherwise stated,

following the "Going Concern" concept and conform to the Generally,lpepted Accounting Principles(GAAP)in Indig applicable statutory provisions, regulatory norrns prescribed'By the Reserve Bank of India (RBI),

applicable mandatory Accounting Standards (AS/Guidance Notes/ pronouncements issued by the Institute ofChartered Accountants of India (ICAD and practices prevailing in the banking industry in India.

2. USE OF ESTIMATES

The preparation of financial statements requires the management to make estimates and assumptions forconsidering the reported assets and liabilities (including contingent liabilities) as on the date of financial

statements and the income and expenses for the reporting period. Management believes that the estimates used

in the preparation of the financial statements are prudent and reasonable.

3. RECOGMTION OF INCOME AI\D DPENDITTIRE

3.1 The Revenues and Expenses are accounted for on accrual basis unless otherwise stated

3.2 Income from Performing Assets is recognized on accrual basis and income from Non-Performing Assets(NPAs) is recognized on realisation. The amount realised/recovered during the year is appropriated first toincome on Sub-standard Assets. Amounts realiz.edlrecovered in Doubtful and Loss Assets and Suit Filed andDecreed Accounts are first appropriated against outstanding balances.

3.3 Unrealized income on advances, classified as NPA, is reyersed.

3.4 Income from Commission (except on Government Transactions and Bancassurance), exchange, brokerage,claims, locker rent and dividend on shares are accounted for on cash basis.

3.5 Performance linked incentive to whole time directors is accounted for on cash basis.

4, TRANSACTIONS INVOLVING FOREIGN EXCHANGE

4.1. MonetaryAssets.and Liabilities, excluding outstanding Forward Exchange Conhacts in eactr currency, arerevalued at the Balance Sheet date at closing spot rates announced by the Foreign Exchange DealersAssociation of India (FEDAI). Outstanding forward exchange contracts are revalued at the forward ratesannounced by FEDAI. The difference between the revalued amount and the contracted amount is recognizedas profit or loss, as the case may be.

4.2. Income and expenditure items are recorded at the exchange rates prevailing on the date of transaction.

4.3. Acceptances, endorsements and other obligations including guarantees are carried at the closing spot ratesannounced by FEDAI.

4'4' Representative Office of the Bank has been classified as 'Integral Foreign Operation, in accordance with AS-I I on "The Effects of Changes in Foreign Exchange Rates,,.

4.5. Foreign currency transactions relating to 'Integral Foreign Operation, are recorded on initial recognition inthe reporting currency by applying to the foreign currency amoun! the exchange rate betweon the reporling

on the date of hansaction.currency and the foreign currency

Page 1

a,

F - 132

,4.6. Foreign currency non-monetary items that are carried in terms of historical costs are reported using the

exchange rates on the dates oftransactions.

5. NYVESTMENTS5.1 For the purpose of disclosure in the Financial Statements, the investments are classified into six categories as

stipulated in Form A of the third schedule to the Banking Regulation Act, 1949 as under:a) bovernmentSecuritiesb) Other approved securitiesc) Sharesd) Debentures and Bondse) Subsidiaries/JointVentures

0 Others

5.2 The Investment portfolio of the Bank is categorized, in accordance with the RBI guidelines, into:a) "Held to Maturity" comprising lnvestments acquired with an intention to hold till maturity;b) "Held for Trading" comprising Investments acquired with an intention to hade;c) "Available for Sale" comprising Investments not covered by (a) and (b) above.


5.3 In determining acquisition cost of an investment:a) Brokerage, Commission and Incentives received on subscription to securities, are deducted from the

cost of securities;b) Brokerage, Commission etc. paid in connection with acquisition of securities are treated as revenue


charged to Profit and Loss Account.

5.4. The Bank follows "settlement Date" for accounting of investment transactions. Investments are valued as

per RBV Fixed Income Money Market & Derivatives Association (FIMMDA) guidelines, on the followingbasis:

a) "Held to Maturity" (HTM)i) Investments under "HTM" category are carried at acquisition cost. Wherever the book value is

higher than the face value/redemption value, the premium is amortized over the remaining periodto maturity.

ii) Investments in Rural Infrastructure Development Fund, Short Term Co-operative Rural CreditRefinance Fund, Medium Small Micro Enterprise Refinance Fund - Small Industries DevelopmentBank of India Limited, Medium Small Micro Enterprise Risk Capital Fund - Small IndustriesDevelopment Bank of India Limited, Rural Housing Development Fund-National Housing BankLimited, Micro Finance Development and Equity Fund - National Agricultural and RuralDevelopment Bank Limited (classified as shares) are valued at carrying cost.

iii) Investments in sponsored Regional Rural Banks are valued at carrying cost.iv) Investment in venture capital is valued at carrying cost.

b) "Held for Trading" and "Available for Sale"

a) Govt. Securitiesl. Central Govt. Securities2. State Govt. Securities

At prices published by FIMMDAOn Yield to Maturity (YTM) basis by adding appropriate mark-u elineson the Base Yield Curve as FIMMDA/RBI

b) Discounted Instruments (TreasuryBills, Commercial Paper andQqlifigate of Deposits)

At carrying cost

c) Bonds and DebenturesOn YTM basis by adding appropriate Credit Spread on the Base

FMMDA/RBIY curve asd)

ltffi.*ffi At market

than one

Page2

F - 133

year old), otherwise at Rel/- per companye) Preference Shares At market price, if quoted or YTM basis by adding appropriate

mark-up on the base yield curve as per FIMMDA/RBIguidelines.

0 Security Receipt/Venture CapitalFund

At Net Asset Value (NAV) as per FIMMDA/RBI guidelines

i

s) Mutual Funds At Market Price, if Ouote&and at re-purchase priceAIAV ifunquoted.

u""#run"" with RBI guidelines with the5.5. Shifting of securities from and to (6LlFrT" category is done inapproval of Board of Directors.

5.6. The individual scrip in the "[IFT" and "AFS" category are marked to market at monthly or at more frequentintervals, if required. Under each category, net depreciation, if any, is provided for while net appreciation, ifany, is ignored.

5.7 . lncome from Zerc Coupon Bonds, being the difference between cost and face value, is recognized on a timeproportion basis.

5.8. Profit or Loss on sale of investments in any category is taken to Profit and Loss Account. In case of profit onsale of lnvestments in "HTM" category, an equivalent amount is appropriated to *Capital Reserve Accounf'at the end of the year. For calculating the surplus / deficit on sale of securities, weighted average method isadopted.

5.9. For the purpose of calculating holding period in case of "HFT" category, First in First out G[FO) method isapplied.

5.10. Investments are subject to appropriate provisioning/ de-recognition of income, in line with the prudentialnorms of RBI for "Non Performing Investment" (NPI) Classification. The depreciatior/provision in respectof non-performing securities is not set off against the appreciation in respect of the other performingsecurities in accordance with RBI guidelines.

5.1 l. The derivatives transactions are undertaken for hading or hedging purposes and valuation has been done inaccordanc'e with RBI guidelines.

5.12. The Bank has adopted the Accounting Procedure prescribed by the RBI for accounting of Repo and ReverseRepo transactions.

CIAL TS COMP

6.1 In the case of financial assets sold to ARC / SC, if the sale is for a value higher than the Net Book ValueO[BV), the excess provision is not reversed but utilized for meeting any shortfall on account of sale of otherfinancial assets to ARC/SC. If the sale is at a price below the NBV the shortfall after adjusting the availablesurplus if any, is debited to the Profit and Loss Account.

The sale of financial assets to ARC/SC is recognized in the books of the Bank at lower of either redemptionvalue of the Security Receipts issued by the Trust created by the ARC/SC for such sale or the net value ofsuch financial assets.

Th-e Security Receipts are classified as Non-SLR Investment in the books of the Bank and accordingly thevaluation, classification and other norms prescribed by RBI in respect of Non-SLR Securities ur. upptiiuUl".

In case of written off Assets sold to ARC/ SC, the cash proceeds are recognized as income.

6.2

6.

6.3

6.4

Page 3

F - 134

7 ADVANCES

7.2

Advances are classified as Performing / Non-Performing Assets and provisions thereon are made inccnformity with the prudential norrns prescribed by RBI.

Ncn-performing assets are stated net of provisions and claims received fgm credit guarantee irltitotionr.

Provision held for performing assets is shown under the head "Other lpbilities

and Provisions".

R-ostructuring of Advances and provisioning thereof have been made as per RBI guidelines.

7.3

7.4.


8.1. Premises (including leasehold), other fixed assets and Capital work in progress are stated at historical cost. Incase of revaluation, the same are stated at the revalued amount and the appreciation is credited to"Revaluation Reserve".

8.2 Leasehold assets are amortized over the period of lease

8.3. Depreciation on assets other than computers and Automated Teller Machines (ATMs) is provided for under

written down value method, in the manner and as per the rates prescribed under Schedule XIV to theCompanies Act, 1956 after rounding offto next absolute number. Depreciation on the revalued portion of the

assets is adjusted from "Revaluation Reserye".

8.4. Depreciation on computers, ATMs and amortization of software are accounted for on straightJine method @33.33% on pro rata basis from the date of acquisition as per RBI guidelines.

8.5. Impairment Losses, if any, on Fixed Assets (including revalued assets) are recognized in accordance with AS-28 on "Impairment of Assets".

9. ACCOT'NTING FOR GOVERNMENT GRANTS

In accordance with AS-12 Government GrantVsubsidies received is presented in the Balance Sheet byshowing the Grant/Subsidy as a deduction from the Gross Value of the assets concerned in arriving at thebook value. The granVsubsidy is recognized in the Profit & Loss Account over the useful life of thedepreciable assets by way of reduced depreciation charged.

Government Grant subsidies received, of revenue nature, is recognized in the Profit & Loss Account by:educing the related cost if received during the same financial year otherwise, the same is shown under"Other Income" if received after the close of the relevant financial year.

10. EMPLOYEE BENEFITS

l0.l Employee Benefits are recognized in accordance with AS-15 on "Employee Benef,rts"

10.2 Short term employee benefits namely Leave Fare Concession and Medical Aid are measured at cost.

10.3 Long term employee benefits and post retirement benefits namely gratuity, pension and leave encashment aremeasured on a discounted basis under the Projected Unit Credit Method on the basis of annual third partyactuarial valuations.

10.4 In respect of employees who have opted for Provident Fund Scheme, matching contribution is made to arecognized Trust. For others who have opted for Pension Scheme, contribution to Pension Fund is based onactuarial valuation.

10.5 Long Term employee benefits in the Balance the present bligationcost, if any, by theto the

forand

Page 4

and

the oassets,

I

F - 135

b**..-**m*'.**;==q+:; : :::'' --

five Years'

to emPloYees of Pub

.lgbeing amortlzeo

,lic tector Banks

over a period of

!i '

i The transitional liabilitY in resPect ofline basis over

term employee benefits' including pension benefits' is recognized

long

as an expense on straighta period offive Years

10.7 In terms of RBI circular, exPenditure on "Re-oPening of Pension oPtion

and enhancement of GratuitY limits-Prudential Regu latory Tredtment"

TAXATION

Provision for tax is

Taxes on Income"'

made for both current and deferred taxes tn

li*a#

accordance with AS-22 on "Accounting for11.

t2

l3 NET PROFIT

The Net Prpfit is arrived at after accounting for the following:

a) Provision for Taxation r--+i^l n^ffis of RBI;i ;;;;i;i." on Standard Assets -:^l:^1on investments as pe

;iProvisionfo'UiesandDepreci"ll:l*investmentsasperprudentialnormsof:i tji#""tr and necessary provistons'

Page 5

F - 136

1.

Schedule - 18:

Notes Forming Part of the Accounts for the Year Ended 31"t March2Ll4

Confirmation/reconciliation of balances with foreign branches, SBI and other Banks, NOSTRO Accounts,Drafts Payable, Clearing Difference, Inter office adiustments, etc. is in progress on an on-going basis.Pending final clearance/adjustment of the above, the overall impact, if any, on the Financial Statements,in the opinion of the management, is not likely to be significant. ,

2.1 Capital

b) During the year, Government of India has subscribed to 1800,41,152 Equity Shares of (10/- each of theBarrk at a price of (38.88 (including a premium of {28.88) per share aggregating to (700.00 croretluough preferential allotment in accordance with regulation 76(l) of SEBI (ICDR) Regulations, 2009.The shareholders approved the issue by a special resolution at the Extraordinary General Meeting of theBank convened for the purpose on 23'd December, 2013. The Bank completed the allotment on 24'hDecember 2013.

c) During the year, the Bank has raised (500.00 Crores through Basel III compliant Tier-2 bonds

i) Common Equity Tier I Capital Ratio (7o) 6.54 NA NA

ii) Tier I capital ratro (%) 6.54 7.26 8.40

iii) Tier 2 Capital (%o) 3.27 4.20 3.26

iv) Total Capial ratio (CRAR) (7d 9.81 lt.46 I1.66

v) Percentage of the shareholding of the Government ofIndia in the Bank's equity capital

88.00% 88.007o 82.23%

vi) Amount of equity capital raised(( in Crores) 700.00 700.00 NIL

vii)Amount of Additional Tier I capital raised; of which

-PNCPS:

.PDI

Nil Nil 300

viii)Arnount of Tier 2 capital raised; of which: (( in Crores)

-Debt capital instrument:

-Preference Share Capial Instruments:

500.00

500.00NiI

500.00500.00

Nil

NIL

'.-'........ Page 6

F - 137

L2 Investments

*Previous year figure has been restated to include NPI provision

2.2.1 Repo transactions (in face valuc terms)


ii)Corporate Debt Securi ties


(ln

(ln

(2) Movement of provision held towards depreciation on investments(i) Opening balance(ii) Add: Provisions made during the Year(iii) Less :Write- ofl Write -back of excess provision during the

Year(iii)Closing balance

(l) Value of Investments(i) Gross Value of Investments


(ii) Provision for Depreciation(a) In India@) Outside India


45127.50

45t27.50Nil

44876.34Nil

25t.16

251.16251.16

Nil

195.28r22.04

66.16

33658.69

33658.680.01

33463.40Nil

195.28*

t95.28t95.27

0.01

187.91t32.08r24.71

200.00(s0.00)

0.00(0 00)

1500.00(2600.00)

0.00(0.00)

327.95(50e.1 5)

0.00(0.00)

0.00(0.00)

0.00(0 00)


ii)Corporate Debt Securi ties

1.00(25.00)

0.00(0.00)

4781.00(2600.00)

0.00(0.00)

680.21(62.s3)

0.00(0.00)

1133.01(1 900.00)

0.00(0 00)

PageT

F - 138

2. 2.2'Npn-SLR Investment Portfolio(i) Issuer composition of Non-SLR Investments

( in crore)

*Previous figure has been restated to include MTM depreciationFigures in brackets represent Previous Year's figures.

Non- Non-SLR Invesfments T in crore'

2.2.3 Sale and Transfers tolfrom Ileld to Maturity (HTivt) Category

(a) Securities having book value of 7 47.12 Crores @revious year: 568.33 Crores) rvas sold during the yearfrom HTM Category.

(b) At the beginning of the year (20.04.2013), rvith the approval of the Board of Direoors, the Bauk hasshifted securities having face value of( 453.15 Crores (Previous year { 1476.00) at lower ofbook valueor ntarket value, scrip wise, from Available For Sale (AFS) to Held to Maturity (HTM) Category andsecurities having face value of (1919.25 Crores @revious year ( 319.79) from HTM to AFS inaccordance with RBI Guidelines in this regard.

(c) On the basis of special dispensation being allowed by the reserve Bank of India vide its circular No.DBOD/BP.BC.No.4|.2I.04.l4Ll20l3-14 dated 23.08.2013, the Bank also undertook shifting ofSecurities for the second time on 18.09.2013 having face value of ? 6172.66 crore from AFS to HTMCategory. In order to shift these securifies at market value, ( 89.00 crore was reduced frdm the Bookvalue being the MTM loss on the date shifting.

(d) The value of sales and transfer of securities to/from HTM Category (excluding the exempted transfer) didnot exceed 5% of book value of the Investment in HTM Category at the beginning of the year.

(1) QI (3) @l (s) (6) fftI PSUs 1280.06

(946.23)1280.06(946.2i)

0.00(0.00)

0.00(0.00)

0.00(0.00)

2 FIs 3062.96(2e6.02)

3062.96(296.02)

0.00(0.00)

0.00(0.00)

0.00(0.00)

J Banks 4021.80(170t.05)

4021.800701.05)

0.00(0.00)

0.00(0.00)

0.00(0.00)

4 Private Corporates 1558.27(2085.59)

1558.27(2085.59)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

0.00(0.00)

5 Subsidiaries /Joint Ventures

0.00(0.00)

0.00(0.00)

0.00(0.00)

t03.92(2957.66)

t03.92(29s7.66)

0.00(0.00)

0.00(0.00)

0.00(0.00)

6 Others (MF/CP/CD)

251.16(t95.28)*

0.00(0.00)

0.00(0.00)

0.00(0.00)

7 Provision heldtowardsDepreciation / NPI

0.00(0.00)

Total (1 to 6) - (7) 9775.85(779t.26)

t0027.0t(7986.54)

0.00(0.00)

, 36.97(0.00)

Opening balance' 60.01 60.01

Addition during the Year t21.79 0.00Reduction during the Year 0. l0 0.00Closing balance r81.70 60.01

Total provision held 96.82 40.46

Page 8

F - 139

2.i.4 fnnsactions invotving Foreign Exchange

Monetary Assets and Liabilities, excluding outstanding Forward Exchange Contracts in each currency exceptcurrency of Bangladesh (BDT 23,05,806 equivalent INR 15.81 lacs) which is valued at notional value due tonon-availability of spot rates, are revalued at the Balance Sheet date at closing spot rates announced by theForeign Exchange Dealers Association of India (FEDAD.

2.3 Derivatives

2.3.1 Forward Rate Agreement/Interest Rate SwapT in crore

23.2 Exchange Traded Interest Rate Derivatives( in crore

(ii)

2.3.3 Disclosures on risk exposure in derivativesA) Oualitative Disclosures

a) The Bank has undertaken derivative transactions in currency futures for trading (arbirrage) &hedging purposes.

b) Risk management organization of derivative transactions has been segregated into threefunctional areas namely,i) Front-Office for undertaking transaction;ii) Mid-Office for risk management and reporting; andi ii)Back-Offi ce for settlement, reconcil iation and accounting.

c) The risk measurement, reporting and monitoring function is undertaken by the mid-office.The Board of Directors is the apex body to oversee the overall risk measurement, monitoringand reporting functions of the Bank including derivative transactions through RiskManagement Committee of the Board (RMCBOD). The bank also internally monitors riskmanagement through in-house Risk management Committee, Asset Liability Committee(ALCO), Operational Risk Management Committee (ORMC) and lnternal Commiffee onInvestment (IC[).

hedge items for mitigatingderivative BoardPolicy.

d) risk

are

ln

9

i) The notional principal of swap agreementsii) Losses which would be incurred if counterparties failed to

fulfill their obligations under the agreementsiii) Collateral required by the Bank upon entering into swapsiv) Concenhation of credit risk arising from the swapsv) The fair value of the swap book

NIL

NIL

NILNIL

NIL

NIL

NILNIL

(i) Notional principal amount of exchange traded interest ratederivatives undertaken during the Year (instrument-wise)

NIL NIL

Notional principal amount of exchange traded interest ratederivatives outstanding (instrument-wise)

NIL NIL

(ii i) Notional principal amount of exchange traded interest ratederivatives outstanding and not "highly effective"(instrument-wise)

NIL NIL

tv( ) Mark-to-market value of exchange traded interest ratederivatives outstanding and not "highly effective"(instrument-wise)

NIL NIL

of under

i#"tffi"1.{,,}ii

-i.-9+.{:u32.#rLll

,' ,qr?&fi{{mHii-{1

mrditu{a-xil

F - 140

covered with counter party banks, on back to back basis for identical amounts and tenure andthe bank does not carry rnarket risk for such transactions. However, during the year underreview, bank has not used any derivative product to hedge its own portfolio.

e) The Integrated Treasury Policy prescribes accounting for hedge and non-hedge transactions,income recogrrition and valuation procedure for outstanding contracts. The incomereoognition is done as per AS-II ou "The Effects of changes in Foreign exchange Rates"and the guidelines issued by RBI / FEDAI from time to time. The integrated Treasury Policyalso prescribes various limits such as Client Level Linrits, Trading Member Level Limits,Net Open Position Limits for credit risk mitigation.

B) Quantitative Disclosurestn crore

2.4 Asset Quality2.4. I Non-Performing Assets

(rn

(i) Derivatives (Notional Principal Amount) NIL NIL NIL NILa) For hedging NIL NIL NIL MLb) For trading NIL NIL NIL ML

(ii) lv{arked to ldarket Positions (l) NIL NIL NIL NILML NIL NILa) Asset (+) NIL

b) Liability (-) NIL NIL NIL NIL(iii) Credit Exposure (2) NIL NIL NIL NIL(iv) Likely impact ofone percentage change in

interest rate (100*PV0l )NIL ML NIL NIL

a) on hedging derivatives NIL NIL NIL MLb) on trading derivatives NIL ML NIL NIL

(v) lv{aximum and Minimum of 100*PV0lobserved during the Year

NIL NIL NIL NIL

a) on hedging NIL ML NIL NILb) on trading NIL ML NIL NIL

i) Net NPAs to Net Advances (%) 7.18% 2.87%ii) Movement of NPAs (Gross)

a) Operung Balance

b) Addition during the Yearc) Reduction during the Year

d) Closing Balance

2963.82

8007.30

3853. I I

7l 18.01

2t76.422484.84

t697.44

2963.82iii) Movement of Net NPAs

a) Opening Balance

b) Addidon during the Year

c) Reduction during the Yeard) Closing Balance

r 969.98

6065.87

337t.74

46r,4.n

l 075.55

1497.88

603.45

I 969.98

iv) Movernent of provisions for NpAs(excluding provisions on standard assets)

a) Opening Balance

b) hovisions made during the year

c) Write offlwrite back of excess provisiond) Closing Balance

971.93

1908.68

481.37

2399.24

1055.47

10r 0.45

1093.99',

97t.93

"" Page 1.0

F - 141

.4.2 Particulars of Accounts Restr.uctuled

rn

No. ofborrowers 20 3 2 U 25 1086 419 Yt62 0 3267 565 r I 186 4852 0 t 1689 6757 1608 66 16 0 14981

Amountoutstanding 53 l3 2026 0 3672 6158 1223 6087 0 13468 7422 t67 | 8l 19 0 t72r26 0 72 l2l I 435

RestrucilredAccounts as onApril of the FY

(Openingfigures)* Provision

thereon 1550.3 6.82 27.31 0 t64.46 t54.il r1.72 72.48 0 238.U 2212.13 334.73 124.49 0 2671.35 39 17. I 413.27 224.28 0 4554.65

No. ofborrowers t28.42 1.05 3.46 0 77.246.31 0 0 t34.73 1.55 0.34 3.91 0 5.8 '12.73 202.7 7.7 7.37 0 2t7.77

Amountoutstanding

9 I I U ll 35 I 2 0 38 35 3 5 I 44 79 5 8 I 932

Freshrestructuring

during the yearProvisionthereon

1530.73 31.65 27.67 0 r590.05 66.55 10.4I 2.& 0 79.36 567.02 10.01 26.25

0

03

@3.3r 2164.30 52.07 56.3203

0

2272.72

No. ofborrowers 174.08 0 0 0 174.08 t.7 t 0.0s 0.02 0 1.78 1.68 0.05 0.01 0 r.74 177 A7 0.t 0.03 0 177.60

Amountoutstanding

0 0 0 0 0 l4 -8 -6 0 0 92 47 45 0 0 106 -55 -51 0 03

Upgradation torestructured

standardcategory during

the FYProvisionthereon 0 0 0 0 0 0.7 4.62" -0.08 0 0 8.51 4.2 -2.31 0 0 9.21 4.82 -2.39 0 0

4

Restrucurredstandard

advances whichcease to attract

higherprovisioning

No. ofborrowers

n 0 0 0 I I I I

Page 11

I

F - 142

Amounto!tstanding

0 0 lt 0 73.8 r 73.81 73.8I 73.81

Provisionthereon

0 0 0 0 I 1.52 I r.52 r1.52 11.52

5

Down-gradations ofrestructured

accounts duringthe FY

No. ofborrowers

-9 5 6 0 0 -595 485 108 2 0 -2638 l75l 886 I 0 -3242 2239 1000 3 0

Amountoutstanding -600.76

493.86

106,9 0 0 -70.26 4t.82 28.43

0

0I

0 - 181.63 63.58 r r8.02

0

0

3

0 -852.65 599.26 253.35

0

04

0

Provisionthereon 44.42 24.42 0 0 0 {.53 0.5 0.03 0 0 -5.67 5. 13 0.54 0 0 -30.62 30.05 0.57 0 0

6

Write-offs ofrcstructurcd

accounts duringthe FY

No. ofborrowers

J 0 0 4 l8t 83 344 0 608 950 23t 736 0 19r7 I 134 314 l08l 0 2529

Amountoutstanding 26.79 7.32 26.s3

0

00

60.64 r6.04 4.64 8.05

0

0I

28.74 278.78 10.4r 34.77

0

05

324.01 32t.61 22.37 69.35

0

06

4t3.39

Provisionthereon

0.12 0 0 0 0.12 0.08 0.1 I 0.14 0 0.33 0.06 0.n 0.32 0 0.65 0.26 0.38 0.46 0 Ll

7

RcstnrcturedAccounts.as onMarch 3l of the

FY (closingfrgures)*

No. ofborrowers

2l J 9 0 33 394 493 r829 2 2718 2398 1805 5599 6 9808 2813 2301 7437 8 12559

Amountoutstanding

2473.91 503.08

206.20

0

0

0

3 r83. 19 t23.20 50.20103.2

5

0

0I

276.6 2259.44 72.40 50520

43

26

2880.30 4856.55 625.68 814.65

43

)7

6340. l5

Provisionthereon

243.42 60.14 7.67 0 3r 123 2.23 0.56 1.68 0 4.47 r r7.51 5.4 3.M 0 t26.59 363.16 65.94 13.19 0 442.29

and / oradditional riskweight at theend ofthe FY

and hence neednot be shownrestrucfured

standardadvances at thebeginning of the

next FY

+ Eeluding th. figw€ of St a&rd Rc6tructur.<lAdverG which do nd sft..i tiShq potiiioirg q rid.wlight (if.pplic.Hc)

[. The abovc disclosures, including sacrifice, are as coopilcd atrd csd.6cd by fte Balt's MaDagement

2. Thc qurntum of€cononio sdorificr during thc ycar @ the testructuted assats has be€n calortrted by th€NPV Mdl|od as on 31.8.2014 for Standard Assets of{10 lscs and above and for NPA of {t crore atrd abo\rc. For 6e remaidng asscs, €conomic sa.|Ific€ hss bee! plovided @ 5% of ousl8nding balance.

tt

Page 12

I

F - 143

NILNILNIL

NILNIL

NILNILNIL

NILNIL

(i) No. of accounts

(ii) Aggregate value (net of provisions) of accounts sold to SC/RC

(iii) Aggre gate consideration

(iv) Additional consideration realized in respect of accountstransferred in earlier years

(v) Aggregate gairl(oss) over net book value

2.4.3 Details of financial assets sold to Securitization I Reconstruction Com;rany for Asset Reconstruction{ in crore

2.4.4 Details of Non-performing financial assets purchased / soldA) Details ofNon-performing financial assets purchased

(ln

B) Details ofNon-performing financial assets sold(ln

2.4.5 Provision on Standard Assets( in crore'

NIL NILl. (a) No. of accounts purchased during the Year

NIL NIL(b) Aggregate Outstanding

NIL NIL2. (a) Of these, number of accounts restructured during the Year

NIL NIL(b) Aggregate Outstanding

L No. of accounts sold Nil T6

2. Aggr egate Outstandin g Nil 39. l8

3. Aggregate consideration received Nil 24.4t


..... page 13

F - 144

2.5 Business Ratios

(D Interest Income as a percentage to Working Funds 8.66yo 8.89Y"

0.99% t.03%(ii) Non-interest income as a percentage to Working Funds

(iii) Operating Profit as a percentage to Working Funds 1.69% l.97Yo

(iv) Return on Assets (0.99y,) 0.38Yo

t0.67% 10.83(v) Business (Deposits plus advances) per employee (( in Crore)

(vi) Profit/(Loss) per employee ( ( in Lacs) (7.3s) 2.53

""'.'.-... Page 14

F - 145

2.6 Asset Liability Managementof ccrtsin of Assets and Liabilities

The above disclosures are as compiled and certified by the Bank's Management.Figures in bracket represent Previous Year'sfigures.

( t in crore

Deposits1088.%

(e4e.20)

232s5.s3

(18449.62)

I l2l6.l9

(10414.98) -

37008.71

(38664.46)

1756.68

(r72t.74)

236t.t7

(19s6.64)

1642.60

(2076.s3)

9529.99

(10349.ss)

10174.61

(s479.16)

t3375.27

(10s89.65)

1115(D.71

(1006s1.s4)

Advances456. I 5

(289.62)

26414.20

(261 86. l3)

tt576.72

(9692.07)

13170.25

(l 138s.80)

3828.54

(4233.96)

166.60

(7s8.74)

266.85

(1r4r.42)

25&.28

(s988.72)

442t.24

(s138.2s)

2%2.2'l

(40e3.96)

65767.L0

(68908.6A

Investments0.00

(0.00)

269.48

(279.7s)

0.00

(1 3 1 .41)

1322.89

(l80.er )

3586.98

(16s0.82)

3982.28

(1468.3s)

4833.65

(777.79)

6845.1 I

(4s93.30)

4394.71

(3016.4s)

rgut.22

(2t362.62)

44876.34

(33463.40)

Borrowings0.00

(0.00)

2.21

(0.3s)

0.00

(0.00)

0.00

(0.00)

629.82

(436.5s)

355.4I

(296.42)

1280.%

(1078.19)

604.31

(613.4r)

1587.53

(13s0.08)

4450.U

(4e42.70)

0.00

(1167.70)

ForeignCurrencyAssets

272.83

(1694.70)

1216.45

(s46.2s)

230.47

(36.00)

89.72

(e6.2 r)

971.5t

(6303.74)

752.34

(3112.77)

79.34

(1088.81)

t7.95

(0.00)

4.70

(0.00)

0.00

(1s.47)

3635.31

(l28e3.eo

ForeignCurreucyLiabilities

573.44

(6.es)

789.54

(r972.6s)

0.00

(l4.el)

326.87

( r 8e.22)

t24.43

(s7.01)

1018.42

(6472.21)

722.02

(30s6.6s)

u.54

(r l 19.13)

0.00

(3.e4)

r7.20

(0.00)

3636.46

(12892.67)

Page 15

F - 146

679.t2

2785.44

5390.78

3768.67

NILNIL

3901.58

2848.64

850.32

3444.40

NILNIL

a) Direct Exposurei) Residential Moftgages -Lending fully secured by mortgages on residential property that is or will be

, occupied by the borrower or that is rented;-of which, individual housing loans eligible for inclusion in priority sectoradvancesii) Commercial Real Estate -Lending secured by mortgages on commercial real estates (office buildings,retail space, multi-purpose comrnercial premises, multi-family residentialbuildings, multi-tenanted commercial premises, industrial or warehousespace, hotels, land acquisitiorq development and construction, etc., includingnon-fund based (NFB) limits)iii) Investments in Mortgage Backed Securities (MBS) and other securitized

exposures -a. Residential,b. Commercial Real Estate.

b) Indirect ExposureFund based and non-fund based exposures on National Housing Bank

and Finance

8855.34 8196.30Total Exposure to Real Estate Sector

2.7 Exposures2.7.1 ure to Real Estate Sector

(The above disclosures are as compiled and certiJied by the Bank's Management.)

2.7.2 Exposure to Capital Market

{ in crore

(ln

and units of equity-oriented mutual funds the corpus of which is notexchsively invested in corporate debts


basis to individuals for investments in shares (including IPOs IESOPs),convertible bonds, convertible debentures and units of equity-oriented mutualfunds

(iii)Advances for any other purposes where shares or convertible bonds orconvertible debentures or ruits of equity oriented nrufual fiutds are taken as

prinrary security

(iv) Advances for any other purposes to the extent secured by the collateralsecurity of shares or convertible bonds or convertible debentures or units ofequity-oriented mutual funds i.e. where the primary security other than shares/

convertible bonds/ convertible debentures/units of equity-oriented mutualfunds does not firlly cover the advances

(v)Secured and unsecured advances to stock brokers and guarantees issued onbehalf of stock brokers and market makers

(vi)Loans sanctioned to corporates against the security of shares/bonds/debentures or other securities or on crean basis for meeting promoters'contribution to the equity of new companies in anticipation of raisingreSOUfCeS I

(i)Direct Investments in equiry shares, bonds, convertible debenrures275.90

3.6t

16.42

NIL

NIL

NIL

4.91

4.40

21.57

282.33

NIL

NIL

--.. Page 1.G

F - 147

(r,ii) Bridge loans to companies against expected equiry flows / issues

(viii) Underwriting comrnitments taken up by the Bank in respect of primaryissue of shares or convertible bonds or convertible debentures or units ofequity oriented mutual funds

(ix) Financing to stock brokers for rnargin trading(x) All exposures to venture capital funds (both registered and un registered)

NIL

NIL

NIL76.9t

NIL

NIL

NIL80.54


(The above are as compiled and certilied by the Bank's Management.)

2.7.3 Risk Category-wise Country ExposureThe Bank has analyzed its risk exposure to various countries as on 31" March, 2014 and such

exposure is less than the tkeshold limit of l%o of the total assets of the Bank. ln terms of RBIguidelines, no provision is required for this exposure.

The position of risk category-wise country exposure is given below:(m

2.7.4 Details of Slngle Borrower Limit (SBL)/ Group Borrower Limits (GBL) exceederl by theBank

*In line with Bank's extant Lending Policy, the above breach of exposrue cei ng rvas approved by theBoard of Directors' at its meeting held on 26.07.2013

2.7.5 UnsecuredAdvancesin crore

ln

2.8 Penalty Imposed by RBIa) RBI levied penally of 71,27,465l- for default in maintaining required percentage of CRR on daily basis

on one day on 28e February ,2Ol4 during the fortnight endei on 7* f"fji.t, ZO1Z. -

page L7

455.08 0.00 2281.96 0.00lnsignificant36.32 0.00 722.62 0.00Low

Moderate 56.98 0.00 275'.94 0.00High 0.00 0.00 0.00 0.00

0.00 0.00 0.00Very High 0.00Restricted 0.00 0.00 0.00 0.00OffCredit 0.00 0.00 0.00 0.00

Total 548.38 0.00 3280.52 0.00

lnfrastructue Ltd I ,091.94 I 175.00* 740.23

Total amount of advances outstanding againstcharge over intangible .securities such as theriglrts, licenses, authority, etc.

108.53 1369.78

Estimated value of such intangible collateralsecurities 772.06 1684.83

F - 148

' b) RBI levied penalty of (2.50 crores for violatron of instnrctions in "Know Your Customer/Anti MoneyLaundering" norns.


3.1. AS 5 - Net Profit or Loss for the period, prior period items and changes in the Accounting Policies

There were no material prior period income/expenditure items requiring disclosure under AS-5.


Revenue is recognized as per the Accounting Policies disclosed in Schedule 17.

3.3 AS - 12 Government Grants l

During the year <48,03,480.00 has been received in the form of subsidies/grants/incentives from RBI and State

Gqvernment as below:in crore

3.4 AS - 15 Employee Benefits

ln terms of the provisions of RBI Circular no.DBOD.BP.BC.80/21.04.018/2010-lldated 9ft February, 2011 onRe-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Cnatuity Limits,744?.3lcrore is being amortized over a period of five years with effect from Financial Year 2010-ll.Accordingly (89.46 crore has been charged to the Profit and Loss account bein! the proportionate amount forthe year ended 3l't March, 2Ot4 K89.46 crore for the previous year). The unamortized liability as at 3l"t March,2014 stands at<89.47 crore @revious Year (178.93 crore).

Pending settlement of the proposed wage revision effective from Novemb er 2012, an adhoc provision of Rs. I 70 crores isheld as at 3l't March 2014.

(ln

0.48NIL

Present value of obligation as at the beginning of the Year 2317.55 527.00 tst.57Interest cost l 9l .53 42.9t 13.60Ctrrent Service cost 386.66 21.47 48.24Benehts Paid 301.79 97.34 0.00Actuarial LosV(Gain) on Obligation 554.7 5 (r 6.09) (39.92)Present value of Obligations at the end of the Year 3148.10 471.94 173.49

434.90 152.40Fair Value of Plan assets at the beginning of the Year 1790.33Expected Retum on Plan Asset 165.61 40.66 t4.25Employer's contribution t294.28 120.79 4.55Benefits Paid 301.79 97.34 0.00Actuarial Loss(Gain) on Obligations (s8.02) (47.4s\ 2.18Fair Value of Obligations at the end of the Year 2890.41 451.56 173.39

Page 18

Ctd.nd

F - 149

2890.4t 451.56Fair Value of Plan Assets at the end of the Year 173.39Unfturded Net LiabiliW recognized in Balance Sheet 258.29 26.38 0.09

48.24:,4I,::::

Current Service Cost 21.47386.66Interest Cost 191 .53 42.91 13.60Expected retum on Plan Asset 165.61 40.66 14.25Net Actuarial (Gain/Loss recogtized in the Year 612.76 31 .35 (42.11')

Total Expenses recognized in Profit and [.oss Account 1025.35 55.07 5.48

8.97 % 8.97 YoDiscowrt Rate 8.84o/o

9.25Yo 9.35% 9.35%Expected rate of return on Plan AssetsProjected Unit Credit MethodMethod Used

*Other Bene/its include Privilege Leave, Casual lem'e, Sick Leave and LFC/LTC,Note: The above statement is based on the report of the Actuary.

3.5 AS l7 - Segment Reporting


"Bankiug Operations". The relevant information is given hereunder in the prescribed format:

Part A: Business ( in crore

Revenue 326s 27e0 5776 5l0l 2544 2267 t77 t29 lr762 t0287

Result 94 391 2n4 t434 954 922 177 t29 3339 2876

Unallocatedexperuies

t278 826

OperatingProfit 2061 2050

Income Taxes (3428) ( r0l)

ExtraordinaryprofiU loss

NctPlofit/(Loss) (12r3) 392

OtherInformationSegmentAssets

40426 30159 504 l9 47307 18490 t5736 n4'177 109335

Una.llocatedAssets t0328 5281

Total Assets r25105 lt46t6SegmentLiabilities 40426 30159 504t9 47307 18490 t5'136 1t4777 109335

UnallocatedLiabilities 10328 528 I

.. ',',,,' ,,,.,,: :':,: : i: : : : l:i':,'l,',,',,,,,',,, l,ii::a:::ii::aar:::r,.1'

Liabilities 125105 lt46t6

Page 19

F - 150

?art B: Geographical Segment - Since the Bank does not have any overseas lrranch, reporting under geographical-segnient is not applicable.

3.6 Rclated Party Disclosures (AS-18) (As Compiled by the management)

3.6.1 Names of the related parties and their relationship with the Bank:Associates (Regional Rural Bank)

i. fusam Gramin Vikash Bankii. Bangiya Gramin Vikash Bank' iii. Manipur Rural Bankiv. Tripura Gramin Bank

3.6.2 Key Management Personnel

(i) Mr. Deepak Narang - Executive Director(ii) Mr. Sanjay Arya- Executive Director(iiD Mrs. ArchanaBhargava - Ex Chairperson & Managing Director

Remuneration Paid to Key Management Personnel:

IvIr. Deepak Narang ExecutiveDirector

Salary and emoluments 15,88,334.00 #14,42,756.00

2 Mr. Sanjay Arya ExecutiveDirector

Salary and emoluments t5,95,737.00 I I,r 1,826.00

Mrs. Archana Bhargava

*(Up to 28.02.2012)

Ex-Chairperson &ManagingDirector

Salary and emoluments 18,21,802.00 NILJ

# Including performance linked incentive on cash basis.

Note: (a) The transactions with Associates have not been disclosed in view of Para 9 of AS-18, whichexempts State Controlled Enterprises from making any disclosure pertaining to their transactionswith other related parties, which are State Controlled Enterprises.

(b) TIte balance payable to/receivable from Key Management Personnel is given below:(rn

(c) No amount has been written off/written back in respect of dues from/to related parties.(d) No provision is required in respect ofdues to related parties.

3.7. Leases (AS-19)

a) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss Account in the year towhich it relates.

b) Funre Lease Rent Payable for operating lease: (As compiled and certified by Management)

Payable NIL NILReceivable NIL NIL

Page 20

I

F - 151

a. Not later than I year 56.46 49.34b Later than I year but not later than 5 years 205.92 l8l. l3c. Later than 5 years 20t.62 180.54

Total 464.04 4l1.03Arnount charged to Profit & Loss Account 60.75 58.07

ln

i) Future lease rents and escalation in the rent are determined on the basis of agreed terms.ii) At the expry of the initial lease term, generally the bank has an option to extend the lease for a further

pre determined period.

3.8 AS 20 - Earnings per Share

3.9 AS 2l - Consolidated Financial Statements/AS-23-Accounting for Inyestments in Associates inConsoli dated Financi aI Statements


3. I 0 AS 22 - Accounting for Taxes on Income(a) Provision for Income Tax during the year is given below: ({ in crore)

(b) The rnajor components of Defened Tax Assets/Liabilities are as follows: (( in crore)

Net Profit/(Loss) after tax available for EquityShare Holders (( in crore)

(1213.44) 3t2.35


Basic and Diluted Earnings per Share(() (28.68) 8.64

Norninal Value per Share(() 10.00 10.00

Provision for Income Tax NIL 99.00

DglferredTax Assets 461.72 I t8.95Employees benefits 82.5t t6.22Other items 379.2t 97.t7Depreciation on Fixed Assets 5.56

72.03on on fixed assets

ReserveSpecialthe TaxIncome

72.03

Page 27

Deferyed Tax Liabilities

n/s.36(l)(viii) ofAct, 196l

F - 152

' 3.1I AS 28 - Impairment of Assets

- [n the opinion of the Bank, there is no indication of any material irnpairment of fixed assets and consequentlyno provision is required.

3.12 AS 29 - Provisions, Contingent Liabilities and Contingent AssetsMovements in significant Provisions and Contingent Liabilities have been disclosed at the appropriate places inthe Notes forming part of the accounts.

4. Additional Disclosures

4.1 Provisions and ContingenciesThe break-up of'Provisions and Contingencies' shown under the head "Expenditures in Profit and LossAccount is as under:

(in

4.2 Floating Provisions (Countercyclical provisioning buffer)ln

Pursuant to Reserve Bank of India's @BI's) Circular No.DBDO.No.BP.95/21.04.04812013-14 dated 7thFebruary 2014, the Bank has utilized 33Y, of its countercyclical/floating provisions held as at 3l't March 2013.As per the said RBI Circular, an arnount of t 51.97 crores out of floating provision of t157.48 crores leld as at3l't March 2013 has been utilized for making specific provisions for non-performiug assets, as per the policyapproved by the Board.

4.3 Drarv Doryn from Reserves

Pursuant to Reserve Bank of India's (RBI's) circular No.DBDo.No.BP.BC.77l2l.o4.olsl2o13-14 dated 20hDecember 2013' the Bank has created Deferred Tax Liability on the Special Reserve uader section 36(l)(viii) ofthe Income Tax Act, 1961. As required by the said RBI Circular, the expenditure, amountingtorTz-.oi due tothe creatiott of DTL on Special Reserve of (220.00 Crores as at 3l't ilarch 201:,;;;;eviously charged toProfit and Loss Account, has now been adjusted directly from the Reserves. Had this aniount been charged tothe Profit and Loss Account in accordance yith the generally accepted accounting prlnciptes in I1dia, thearnourt of Loss for the year would have been higher by irch u,nlunt.'

Provisions for depreciation on Investment 88.52 27.52

Provision towards NPA(Loans and Advances) 1960.59 1010.45


Provision made towards Income Tax (Including Deferred Tax) (342.77\ (101.38)

Other Provisions and Contingencies- Provision for Employee Benefit (AS-15)- Provision for Non-Performing Investments- Floating Provision- Provision for Others

1207.51

56.36(st.e7)156.19

490.3710.63

(38.76)Total 3275.19 r658.00

a) Opening Balance ir! the floating provisions account 157.48 t57.48b) The quantum of floating provisions made during year NIL NILc) Accounting for draw down made during the year 51.97 NIL

Closin balance in the l 05.5 I 157.48fl oating provisions account

F - 153

' + 4 Disclosure of complaintsa) Customer Complaints

b) Arvards passed by the Banking Ombudsman

(a) No. of unimplemented Awards at the beginning of the Year I

o) No. of Awards passed by the Banking Ombudsman during the Year 0(c) No. of Awards implemented during the Year I(d) No. of unimplemented Awards at the end of the Year 0

4.5 Disclosure of Letter of Comforts (LoCs) issued by the Bank

a) During the current financial year the Bank has issued 458 nos LoCs @revious Year ll8) amounting to<3122.00 crore @revious Year (3168.00 crore) for providing Buyers Credit facility.

b) There are204 nos @revious Year 231) of outstanding LoCs as on 31.03.2014 amounting to ( 1043.28 crore(Previous yeatT 2299.91 crore).

4.6 Provision Coverage Ratio (PCR)

The provision coverage ratio (PCR) for the Bank as on 31" March 2014 is 52.25 yo,which is calculated takinginto account the total technical write offs made by the Bank.

4.7 BancassuranceBusiness( in crore


(ln

(a) No. of complaints pending at the beginning of the Year t57o) No. of complaints received during the Year 2676(c) No. of complaints redressed during the Year 2619(d) No. of complaints pendins at the end of the Year 214

Life Insurance Business 6.23 7.45Non-Life Insumnce Business 3.78 3.25Mutual Funds NIL 0.01Others NIL NIL

Total Deposits of twenty largest depositors 10633 7036

Percentage of Deposits of twenty largest deposDeposits of the Bank

itors to Total9.54% 6.99%

"'-' Page 23

F - 154

'.t.8.2 Concentration of Advances

4.8.3 Concentration of Exposures

4.8.4 Concentration of NPAs

4.9 Sector - rvise NPAs

4.10 Movement of NPAs

{ in crore

(in

( ( in crore)

Total Advances to twenfy largest borrowers t2t95.52 tt73t.t2

18.540/0 16.83 YoPercentage of Advances to twenty largest borrowers toTotal Advances of the Bank

18977.46 13465.01Total Exposure to twenty largest borrowers/ Customers

t6.6s% ts.68%Perceutage of Exposure to twenty largest borrowers/customers to Total E4posure of the Bank on borrowers/customers

1031.04 539.72Total Exposure to top fourNPA accounts

I Agricultue and Allied activities 13.71% 4.24%

2Industry(Micro and Small,Medium and Large)

t2.44% 5.72%

3 Services 12.23% 3.46%

4. Personal Loans 6.41% r.87 %

(ln

Gross NPAs as on l" April,2013 2963.82 2t76.42

Additions (Fresh NPAs )during the Year 8007.30 2484.84

Sub+otal (A) 10971.t2 466t.26Less

(i) Up gradations 2287.53 228.14

(ii) Recoveries (excluding recoveries made from upgraded a/cs) 1084.21 375.31

Accomhnb

Page 24

F - 155

(iii) Technical/Prudential Write-offs 428.61 1041.77

(iv)Write-offs other than those under (iii) above 52.76 52.22

Sub-total (B) 3853. l l 1697.44

Gross NPAs as on 3 I't March,20 I 4 (A-B) 7l18.01 2963.82

Opening balance of Technical/Prudential written-off accounts as atApril 1,2013

2347.22 t4s7.69

Add: TechnicaL/Prudential write-offs during the year 428.61 r04t.77Subrotal (A) 2775.83 2499.46Less: Recoveries made from previously technicaUprudential written-off accounts during the year (B)

95.28 t03.49

Closing balance as at March 31,2014 2650.10 2347.22

4.ll Stock of technical write-offs and recoveries made thereon{ in crore

4.12 Overseas Assetsr IIPAs and Revenue(rn crore


4.14 a'; Registration formalities are pending in case of one property costing T1.88 crore, WDV as bn 3l.O3.ZOl4<l.lzcrores (Previous Year {1.28 crore).

b) Premises include leased properties amounting to 776.71 crore (net of amortization) as at 3l't March20 l4(Previous Year: <29.49 crore).

5' Previous Year's figures have been regrouped / reananged wherever considered necessary to make themcomparable with those of the curentyear.

Total Assets (Nostro balance) 348.85 l6ll.89Total NPAs NIL NILTotal Revenue 6.16 3.32

NIL NIL NIL NIL

Accountants

Page 25

t-'L-. ), -t .4,-{":., : : : :t,t,l ur!E'.*r! lf !r11, .1.+*X

F - 156

This is the part of Schedule - 18 as on 31'03.2014


l,rD

D

Pratyush Sinha

DirectorParvathy V-Sundaram

Director


h,u l,^-Mihir Kumar

Director

[-w'o^-^,Kiran B. Vatf6tldria

Director

PiJush Kanti Ghosh

Director

,"r"^WYDirector

Goyal

Dlrector


: 007578N

Maheshwariner

M.No.085362

"*"r"fur!.,oAs per our separate report of even date annexed

M/s.Ramamoorthy(N) & Co M/s.Dinesh Mehta & Co.

Chartered Accountants. Chartered Accountants.899S ON

nath Bharathi MalhotraPartn er

M.No.502386

M/s.P C Bindal& Co.

Cha rtered Accountants,824N

ndalner

M.No.082683Partn er

M.No.023837

Place: Kolkata

Date: 5th May,2OL4

Ghartsred

F - 157


lRs.ln ?000)

3lst Marc t 2014 3lst Marc ! 2013CASH FLOW FROM OPERAT]NG ACTIVITIES

Net ProfiU(Lossl after Tar nziu.440\ 3.919.O42Add: lncome Tax 990.000Prolit before Tax n2.1U.4401 4,909,042

Adluslment forDeorecialion on Fixed Assets 691,866 608,205

-ess: Amount drawn from Revaluation Reserve (155,924) (a2.52E1ProriuLoss on Sale of Flxed Assets (Net) (416 p.2221

Deoreclation/Provision for lnvestments (Net) 1.448.817 381,579Provision for Strandard Assets 2.007.600. 1.E16.500Provision for NPA Advances 19.0E6.200 10.104.500Other Provisions (Net) 10.209.263 3.287.511lnterest on Subordinaled Bonds 2.2fi.551 1.702.691

Operatlng Proflt belore changes ln Operatlng Asseb and Llabllltes 23.3E3.557 22.63E.278

Adlustment tor not chanEB ln Operatlng Assets and Llablllues

(1 15,578,21 3)12.325.W

(u,321,N.{68.758.18:

ln 108,5E1,652 1't5,352,E10lncreasey'(Oecrease) in Bonofl ings (9,824.669) Q.774.8551Decreascy'(lncrease) in Olher Assets e.7n.8311 (4.503,889)

(3.348,6s1) 2.392.677Draw dor rn from Revenue Reserve (720.278\

Cash Generatad from Ooeratinq Actlvltles 12,097,E74 20,o25,494Tax (PaidV Refund (410,000) (2.200,000)

N6t Cash from Operatlng Activitles (A) 11.687 .874 17.E25.494

CASH FLOW FROM INVESTING ACTIVITIES

Fixed Assets (Net) (1,50E,279) (1.119.491)

Net Cash from lnvesllng Actlvltles (B) n.508.275 (1.119,491)

CASH FLOW FROM FINANCING ACTIVITIES

lssue of Share Capilal 1.800.412 137,080Share Premium 5.199.588 862,920lssue of lnnovative Perpetual Debt lnstruments (lPDl)Subordinale Bonds lssued

3,000.000

DiVide@ and talthepo4 paid n.71A182 (1,890.240)

Net Cash from Financlng Acllvities (C) 8.O53,227 407,069

D Net lncrease ln 18.232.822 17,113,072

of theCash in hand 3.574.428 3,481.635Balances with Reserve Bank of lndia 34.891.708 47.436.259Balances wilh Banks and Monev at qall and Short Notico 51,419,U6 21.854.616 72,772,510

ln hand 433A.O22 3.574.42058,361,750 34,E91,708

at 45,420.632 't06, t 1E,404 51.419,,146 89,885,582

on irect melhod.

Decreas€/(lncr6asE) in lnvestmentDecrease/(lncrease) in Advances

lncreasey'(Decreaoo) in Other Liabililies & Provisions

lnterest on Subordinated Bonds5,000.000

Q.230.591

E9.885.582

F - 158

This is the part of Cash Flow statement as on 31.03.2014


\â t-'t,ta /n*Mihir Kumar

Dlrector

sh Sinha

Director

I Goyal

Director


: 007578N

MaheshwariFartner

M.No.085362

Parvathy V SundaramDirector


l\/o,r,,'*,Kiran B. va?o-daiia

Director

\^*Pijush Kanti Ghosh

DirectorSanjib Pati

Director

M/s.PCBindal&Co.Chartered Accountants.

24N

Bindal

PartnefM.No.082683

,"finru^,,General/Manager & CFO

As per our separate ,report of even date annexed

M/s.Ramamoorthy(N) & Co M/s.Dinesh Mehta & Co.

CharteredAccountants. CharteredAccountants.899S

Bharathi MalhotraPartner Partn er

M.No.023837 M.No.502386

Place: Kolkata

Date: 5th May,2OL4

qU;

o 'ti

rtered Charlered

F - 159

CERTIFICATE

We certify that the guidelines issued by the Reserve Bank of India, from time totime, in respect of Income Recognition, Asset Classification and Provisioninghave been complied with by United Bank of India for the year ended 31'tMarch,2014.

IWs Dinesh Mehta & Co. Iv{,/s. Ramarnoorthy (N) & CoC ants

(CA (CA

Membership No 502386 Membership No. 023837

iWs. SPMR&Associates N{/s.PC Bindal&Co

(CA

Membership No. 085362 Membership No. 082683

Place: KolkataDate: 05.05.2014

()

F - 160

t , t.

CERTIF'ICATE

This is to certiflz that the Net Worth of United Bank of India having its HeadOffice at 11, Hemanta Basu Sarani, Kolkata-700001 as on 3l't March,2014 wasRs.4188.02 crores (Rupees four thousand one hundred eighty eight crore and two laconl;r) as per computation shown below :

in crore

Mehta & CoAccountants000220N

(CA Malhotra)Partner


R & AssociatesAccountants

7578N

Kr. Maheswari )Partner


M/s. (N) & Co.Accountants

Bharathi)Partner


Bindal & Co

Bindal)Partner


99S


SI.

NoParticulars Current

Year31.03.2014

PreviousYear

31.03.20131 Paid-up Capital + Free Reserve- Share Application Money (Total

Reserves less Revaluation Reserves and Specified Reserves)4673.77 5259.23

Less

A Receivable (more than 6 months old)B. Receivable from Group CompaniesC. Intangible Assets 485.75 134.69

D Preliminary and Preoperative expenses not written offE Value of Stock Exchange CardF Loan in excess of value of pledged securitiesG Loan in excess of value of pledged assets

H -nvestments in Group CompaniesI. Net worth required for other depositorsJ Loans & advances to Group CompaniesK Statutory Contingent Liabilities2 Sub Total

(A+B+C+D+E+FtG+H+I+J+K)485.75 t34.69

Net Worth 4188.02 5124.54

AccounlenlE Chartered(@

*

Accountanlr

F - 161

CERTIFICATE

We certify that no serious irregularities came to our notice in the Bank'sworking while conducting audit of United Bank of India for the year 2013-2014which requires immediate attention.

IWs Dinesh Mehta & Co IWs. Ramamoorthy (N) & CoChartered AccountantsAccountants

. 000220N

Malhotra) (CAPartner

Membership No. 502386 Membership No. 023837

IWs. SPMR&AssociatesChartered Accountants

C Bindal & CoAccountants

824N

(CA (CA P.C. Bindal)Partner

Membership No. 082683Membership No. 085362


Chailusd

)

F - 162

CERTIFICATE ONCOMPULSORY DEPOSIT flNCOME TAX PAYERS) SCHEME. 1%

We hereby certifli that we have conducted sample audit of the deposit under theCompulsory Deposit (Income Tax Payers) Scheme, 1974 of United Bank ofIndia for the accounting year ended 3l't Marchz}l4.

There was no repayment of the installments during the year.

M/s Dinesh Mehta & Co.Chartered Accountants

000220N

alhotra)


M/s.SPMR&AssociatesChartered Accountants

578N

Maheswari )


M/s. Ramamoorthy (N) & CoChartered Accountants

002899S


M/s.PC Bindal&Co.Chartered Accountants

824N

Bindal)



Chadeted Chartered

F - 163

229

DECLARATION

Our Bank certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the ICDR Regulations

have been complied with and no statement made in this Placement Document is contrary to the provisions of Chapter

VIII and Schedule XVIII of the ICDR Regulations and that all approvals and permissions required to carry on our

business have been obtained, are currently valid and have been complied with. Our Bank further certifies that all the

statements in this Preliminary Placement Document are true and correct.

Signed by

Sd/-

___________________________________

Shri Pawan Kumar Bajaj

Managing Director and Chief Executive Officer


Place: Kolkata

I am authorized by the Board of Directors of our Bank vide resolution dated March 24, 2017 to sign this form and

declare that all the requirements of the Applicable Law and the rules made thereunder in respect of the subject matter

of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the

attachments thereto is true, correct and complete and no information material to the subject matter of this form has

been suppressed or concealed and is as per the original records maintained by our Bank.

It is further declared and verified that all the required attachments have been completely, correctly and legibly attached

to this form.

Signed by

Sd/-

___________________________________

Shri Pawan Kumar Bajaj

Managing Director and Chief Executive Officer


Place: Kolkata

230

ISSUER


HEAD OFFICE OF THE BANK

United Bank of India

United Tower


Kolkata – 700001

Tel: +91 33 2248 3857; Fax: +91 33 2248 9391

Website: www.unitedbankofindia.co.in, Email: [email protected]

ADDRESS OF THE COMPLIANCE OFFICER

Shri Bikramjit Shom

United Tower


Kolkata – 700001

Tel: +91 33 22487472; Fax: +91 33 2248 5852

Email: [email protected]

BOOK RUNNING LEAD MANAGERS

SBI Capital Markets Limited

202, Maker Tower E, Cuffe Parade,

Mumbai 400 005

Maharashtra, India

Tel: + 91 22-2217 8300

Fax: +91 22-2218 8332

Motilal Oswal Investment Advisors Private Limited

Motilal Oswal Tower, Rahimtullah Sayani Road

Opposite Parel ST Depot, Prabhadevi

Mumbai 400 025,

Maharashtra, India

Tel: +91 22 3980 4380

Fax: +91 22 3980 4315

DOMESTIC LEGAL ADVISOR TO THE ISSUE INTERNATIONAL LEGAL ADVISOR WITH

RESPECT TO INTERNATIONAL SELLING AND

TRANSFER RESTRICTIONS

M/s. Crawford Bayley & Co.

State Bank Buildings, 4th Floor

N.G.N. Vaidya Marg, Fort

Mumbai 400 023

Maharashtra, India

Squire Patton Boggs Singapore LLP

10 Collyer Quay, #03-01/03

Ocean Financial Centre

Singapore 049315

AUDITORS TO OUR BANK FOR THE ISSUE

M/s. Nundi & Associates


Hastings Chamber,

7C, Kiran Shankar Roy Road,

3rd Floor,

Kolkata – 700001, West Bengal,

India

M/s. Arun K. Agarwal &

Associates


105, First Floor, South Extension

Plaza-I, 389, Masjid Moth,

South Extensions PT – II,

New Delhi – 110049, India

M/s. Mookherjee, Biswas &

Pathak


5 and 6 Fancy Lane,

Kolkata – 700001, West Bengal,

India