bank of america n.a. (india branches) - businesses and

BANK OF AMERICA N.A.(INDIA BRANCHES)(Incorporated in U.S.A. With Limited Liability)

Economic & Political Weekly EPW july 20, 2013 vol xlviII no 29 1

Independent Auditors’ Report

To the Chief Executive OfficerBank of America N.A. – India branches

Report on the Financial Statements

1. We have audited the accompanying financial statements of Bank of America N.A. India branches (‘the Bank’), which comprise the Balance Sheet as at 31 March 2013 and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

2. Management is responsible for preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 211 of the Companies Act, 1956 and circulars and guidelines issued by the Reserve Bank of India from time to time. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of the Bank including its branches in accordance with Standards on Auditing (‘the Standards') 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 of material misstatements.

4. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bank’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the 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 for our audit opinion.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon give the information required by the Banking Regulation Act, 1949 as well as the Companies Act, 1956, in the manner so required for banking companies and give a true and fair view in conformity with accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Bank as at 31 March 2013;

(b) in the case of the Statement of Profit and Loss, of the profit of the Bank for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Bank for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. The Balance Sheet, Statement of Profit and Loss and the Cash flow Statement have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.


july 20, 2013 vol xlviII no 29 EPW Economic & Political Weekly2

8. 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 purpose 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;

(c) during the course of our audit we have visited 2 branches. Since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein.

9. In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extent they are not inconsistent with the accounting policies prescribed by the Reserve Bank of India.

10. We further report that:

(i) the Balance Sheet and the Statement of Profit and Loss dealt with by this report are in agreement with the books of account;

(ii) the financial accounting systems of the Bank are centralised and, therefore, accounting returns are not submitted by the Branches;

(iii) in our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books; and

(iv) the requirements of Section 274(1)(g) of the Companies Act, 1956 are not applicable considering the Bank is a branch of Bank of America N.A, which is incorporated and registered in Charlotte, U.S.A.

For B S R & Co. Chartered Accountants Firm’s Registration No.: 101248W Sd/- Manoj Kumar VijaiMumbai Partner25 June 2013 Membership No: 046882



BALANCE SHEET AS AT MARCH 31, 2013

This is the Balance Sheet referred to in our report of even date For B S R & Co. For BANK OF AMERICA N.A. – INDIA BRANCHES Chartered Accountants Firm Registration No. 101248W Sd/- Sd/- Sd/- Manoj Kumar Vijai Kaku Nakhate Kumar ShahPartner Chief Executive Officer Chief Financial OfficerMembership Number: 046882

Mumbai: June 25, 2013 Mumbai: June 25, 2013 Mumbai: June 25, 2013

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2013

Year Ended Year Ended March 31, March 31, 2013 2012 Schedule (Rs. '000) (Rs. '000)

I. INCOME

Interest earned 13 13,351,642 11,131,212 Other income 14 4,735,116 5,078,777

TOTAL 18,086,758 16,209,989

II. EXPENDITURE

Interest expended 15 5,731,336 4,238,846 Operating expenses 16 4,306,690 4,054,998 Provisions and contingencies 17 3,355,412 2,661,557

TOTAL 13,393,438 10,955,401

III. PROFIT

Net profit for the year 4,693,320 5,254,588 Profit/(loss) brought forward 3,940,941 –

TOTAL 8,634,261 5,254,588

IV. APPROPRIATIONS

Transfer to Statutory Reserves 1,173,330 1,313,647 Transfer to Investment Reserve Account 27,456 – Transfer to Capital Reserve 179,440 – Balance carried over to Balance Sheet 7,254,035 3,940,941

TOTAL 8,634,261 5,254,588

Significant accounting policies and notes to the Financial Statements 18

Schedules referred to above form an integral part of the Profit and Loss Account

This is the Profit and Loss Account referred to in our report of even date

As at As at March 31, March 31, 2013 2012 Schedule (Rs. '000) (Rs. '000)

CAPITAL ANDLIABILITIES

Capital 1 9,853,492 9,853,492 Reserves and Surplus 2 35,306,073 30,612,753 Deposits 3 73,779,951 59,648,638 Borrowings 4 57,133,353 53,143,704 Other Liabilities and Provisions 5 8,298,607 8,520,449

TOTAL 184,371,476 161,779,036

ASSETS

Cash and balances with Reserve Bank of India 6 4,241,056 4,196,962 Balances with banks and money at call and short notice 7 7,288,155 2,424,095 Investments 8 88,335,084 82,258,155 Advances 9 76,230,005 62,053,674 Fixed Assets 10 489,626 422,786 Other Assets 11 7,787,550 10,423,364

TOTAL 184,371,476 161,779,036

Contingent Liabilities 12 4,257,029,543 5,463,364,167

Bills for Collection 56,801,720 60,705,511

Significant accounting policies and notes to the Financial Statements 18

Schedules referred to above form an integral part of the Balance Sheet .



Year Ended Year EndedPARTICULARS March 31, 2013 March 31, 2012 (Rs. '000) (Rs. '000)

Cash flow from Operating ActivitiesNet profit before taxation 8,111,348 7,879,324 Adjustments for: Depreciation 165,131 112,479 Interest on subordinated debt – 1,926 Loss/(Profit) on sale of fixed assets (410,918) 551 Provision for leave enchashment and sick leave 6,977 39,605 (Writeback)/Provision for country risk provision 528 (2,800)Provision/(Writeback) for depreciation on investments (63,144) 39,621 Operating profit before working capital changes 7,809,922 8,070,706 Adjustments for: (Increase) in investments (6,013,785) (33,691,834)Increase in advances (14,176,331) (3,462,269)Decrease/(Increase) in other assets 2,453,450 (732,968)Increase/(Decrease) in deposits 14,131,313 (40,417)(Decrease)/Increase in other liabilities and provisions (229,347) 863,869 Increase in borrowings 3,989,649 34,856,503 Cash Generated from Operations 7,964,871 5,863,590 Less: Direct Taxes Paid (net of refunds received) (3,235,664) (3,340,783)Net Cash generated from Operating Activities (A) 4,729,207 2,522,807

Cash flow from Investing Activities Purchase of fixed assets (248,100) (233,166)Proceeds from sale of fixed assets 427,047 8,320Net Cash generated from/(used in) from Investing Activities (B) 178,947 (224,846)

Cash flow from Financing Activities Repayment of subordinated debt – (1,114,875)Interest paid on subordinated debt – (1,936)Net Cash (used in) Financing Activities (C) – (1,116,811)

Net change in cash and cash equivalents (A+B+C) 4,908,154 1,181,150Cash and Cash equivalents at the beginning of the year as per Schedule 6 and 7 6,621,057 5,439,907 Cash and Cash equivalents at the end of the year as per Schedule 6 and 7 11,529,211 6,621,057 4,908,154 1,181,150

Notes to the Cash Flow Statement1) The above cash flow statement has been prepared under Indirect method set out in Accounting Standard 3 issued by The Institute of

Chartered Accountants of India and notified by the Companies (Accounting Standards) Rules 2006. 2) Previous year figures have been regrouped and reclassified wherever necessary to conform to current year’s presentation.

This is the Cash Flow Statement referred to in our report of even date.

For B S R & Co. For BANK OF AMERICA N.A. – INDIA BRANCHES Chartered Accountants Firm Registration No. 101248W Sd/- Sd/- Sd/- Manoj Kumar Vijai Kaku Nakhate Kumar ShahPartner Chief Executive Officer Chief Financial OfficerMembership Number: 046882

Mumbai: June 25, 2013 Mumbai: June 25, 2013 Mumbai: June 25, 2013

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2013



SCHEDULES FORMING PART OF THE BALANCE SHEET

As at As at March 31, March 31, 2013 2012 (Rs. '000) (Rs. '000)

SCHEDULE 3 – Deposits

A. I. Demand Deposits i) From Banks 1,917,943 1,707,894 ii) From Others 38,854,452 27,644,785

II. Savings Bank Deposits 2,298,829 1,988,325

III. Term Deposits i) From Banks – – ii) From Others 30,708,727 28,307,634

TOTAL (I, II and III) 73,779,951 59,648,638

B. i) Deposits of Branches in India 73,779,951 59,648,638 ii) Deposits of Branches outside India – –

TOTAL 73,779,951 59,648,638

SCHEDULE 4 – Borrowings

I. Borrowings in India

i) Reserve Bank of India 12,750,000 8,200,000 ii) Other Banks 4,200,000 8,000,000 iii) Other Institutions and Agencies 25,014,352 27,098,106

41,964,352 43,298,106

II. Borrowings outside India 15,169,001 9,845,598

TOTAL (I and II) 57,133,353 53,143,704

Secured borrowings in I and II above 37,764,352 35,298,106

SCHEDULE 5 – Other Liabilities and Provisions

I. Bills payable 1,090,993 1,217,186 II. Inter-office adjustments – net 44,240 68,374 III. Interest accrued 251,096 260,121 IV. Provisions against standard assets (Refer Note 13 – Schedule 18) 767,415 767,415 V. Others [including provisions] (Refer Note 8 – Schedule 18) 6,144,863 6,207,353

TOTAL 8,298,607 8,520,449


SCHEDULE 1 – CapitalI. Amount of deposit kept with Reserve Bank of India under Section 11(2)(b)(ii) of the Banking Regulation Act, 1949 9,070,000 8,030,00 II. Amount brought in as start-up capital 2,000 2,000 Tier I Capital augmented by Head Office 9,851,492 9,851,492 TOTAL 9,853,492 9,853,492Note: Capital infused during the year: Rs. Nil (Previous Year Rs. Nil)

SCHEDULE 2 – Reserves and Surplus I. Statutory Reserves Opening balance 8,518,094 7,204,447 Add : Transfer from Profit and Loss Account 1,173,330 1,313,647 9,691,424 8,518,094 II. Capital Reserves Opening balance 3,221,517 3,221,517 Add : Transfer from Revaluation Reserves 56,700 – Add : Transfer from Profit and Loss Account 179,440 – 3,457,657 3,221,517 III. Amount Retained in India for meeting Capital to Risk- Weighted Assets Ratio (CRAR) Opening balance 14,875,501 9,077,363 Add : Transfer from Revenue and Other Reserves – 5,798,138 14,875,501 14,875,501 IV. Revaluation Reserves 56,700 56,700 Less : Transfer to Capital Reserve 56,700 – – 56,700V. Investment Reserve Account Opening balance – – Add : Transfer from Profit and Loss Account 27,456 – 27,456 – VI. Revenue and Other Reserves Opening balance – 5,798,138 Add : Transfer from Profit and Loss Account – – – 5,798,138 Less : Transfer to amount retained in India for meeting Capital to Risk-Weighted Assets Ratio (CRAR) – 5,798,138 – –VII. Balance in Profit and Loss Account 7,254,035 3,940,941TOTAL (I, II, III, IV, V, VI and VII) 35,306,073 30,612,753





SCHEDULE 6 – Cash and Balances with Reserve Bank of India

I. Cash in hand (including foreign currency notes) 79,695 59,236

II. Balances with Reserve Bank of India

(i) In Current account 4,161,361 4,137,726

(ii) In Other accounts – –

TOTAL (I and II) 4,241,056 4,196,962

SCHEDULE 7 – Balances with Banks and Money at Call and Short Notice

I. In India

i) Balances with banks

a) In Current accounts 266,999 184,400

b) In Other deposit accounts 4,000,000 –

ii) Money at call and short notice

a) with banks 2,000,000 –

b) with other institutions – 1,592,228 TOTAL (i and ii) 6,266,999 1,776,628

II. Outside India

i) In Current accounts 1,021,156 647,467

ii) In Other deposit accounts – –

iii) Money at call and short notice – –

1,021,156 647,467

TOTAL (I and II) 7,288,155 2,424,095


SCHEDULE 8 – Investments

I. Investments in India (i) Government securities* 61,301,197 57,159,707 (ii) Other approved securities – – (iii) Shares 600 600 (iv) Debentures and bonds 50,577 101,756 (v) Subsidiaries and/or joint ventures – – (vi) Others (including certificate of deposits and pass through certificates) 26,989,390 25,065,916

Gross Investments 88,341,764 82,327,979 Less : Provision for depreciation 6,680 69,824

88,335,084 82,258,155

II. Investments outside India – –

TOTAL (I and II) 88,335,084 82,258,155 * Includes securities of Face Value Rs. 22,980,000,000/– deposited

with Clearing Corporation of India Limited as margin deposit (Previous Year: Face Value: Rs. 25,350,000,000/–)

* Includes securities of Face Value Rs. 9,070,000,000/– kept with Reserve Bank of India under section 11(2)(b)(ii) of Banking Regulation Act, 1949 (Previous Year: Face Value: Rs. 8,030,000,000/–)

* Includes securities of Face Value Rs. 13,390,000,000/– pledged with Reserve Bank of India for funds borrowed under Liquidity Adjustment Facility (Previous year: Face Value: Rs. 8,610,000,000)

SCHEDULE 9 – Advances

A. (i) Bills purchased and discounted * 12,796,047 4,317,192 (ii) Cash credits, overdrafts and loans repayable on demand 60,909,580 57,735,791 (iii) Term loans 2,524,378 691

TOTAL 76,230,005 62,053,674

B. (i) Secured by tangible assets (including book debts) 3,021,985 5,834,682 (ii) Covered by Bank/ Government guarantees – – (iii) Unsecured 73,208,020 56,218,992

TOTAL 76,230,005 62,053,674





SCHEDULE 9 – (Contd)C. I. Advances in India (i) Priority Sector 20,949,425 14,843,422 (ii) Public sector – – (iii) Banks 528,951 410,044 (iv) Others 54,751,629 46,800,208

76,230,005 62,053,674

II. Advances outside India – –

TOTAL (I and II) 76,230,005 62,053,674

* net of Bills re-discounted amounting to Rs. Nil [Previous year 3,695,563 ('000s)] SCHEDULE 10 – Fixed Assets I. Premises At Cost on March 31 of preceding year 80,743 80,743 Additions during the year – –

80,743 80,743

Deductions during the year 80,743 –

– 80,743

Accumulated depreciation – 72,946

– 7,797

Capital Works in Progress – –

– 7,797

II. Other Fixed Assets (including Furniture and Fixtures)* At Cost on March 31 of preceding year 919,265 742,663 Additions during the year 263,374 214,379

1,182,639 957,042

Deductions during the year 25,319 37,777

1,157,320 919,265

Accumulated depreciation/ amortization 687,645 539,476

469,675 379,789 Capital Works in Progress 19,951 35,200

489,626 414,989

TOTAL (I and II) 489,626 422,786 * (Refer Note 34 – Schedule 18)


SCHEDULE 11 – Other Assets

I. Interest Accrued 332,757 162,128

II. Advance tax and tax deducted at source 1,514,513 1,670,018 (net of Provision for taxation – Refer Note 21 – Schedule 18)

III. Stationery and Stamps – –

IV. Deferred tax assets (Refer Note 20 – Schedule 18) 261,804 212,062

V. Others (Refer Note 8 – Schedule 18) 5,678,476 8,379,156

TOTAL 7,787,550 10,423,364

SCHEDULE 12 – Contingent Liabilities

I. Claims against the Bank not acknowledged as Debts (including tax related matters) 854,806 458,116

II. Liability for partly paid investments – –

III. Liability on account of outstanding forward exchange contracts 1,738,719,215 2,123,994,203

IV. Liability on account of outstanding derivative contracts 2,479,168,938 3,304,274,652

V. Guarantees given on behalf of constituents (a) in India 11,729,204 10,286,182 (b) outside India 10,727,648 3,153,301

VI. Acceptances, endorsements and other obligations 7,242,682 9,533,517

VII. Other items for which the Bank is contingently liable – Committed lines of credit 8,587,050 7,968,633 – Bills re-discounted – 3,695,563

TOTAL 4,257,029,543 5,463,364,167



Year Ended Year Ended March 31, March 31, 2013 2012 (Rs. '000) (Rs. '000)

SCHEDULE 13 – Interest Earned

I. Interest/discount on advances/bills 5,916,089 6,735,738

II. Income on investments 7,127,961 4,324,613

III. Interest on balances with Reserve Bank of India and other inter-bank funds 185,482 20,758

IV. Others 122,110 50,103

TOTAL 13,351,642 11,131,212

SCHEDULE 14 – Other Income

I. Commission, exchange and brokerage 390,372 466,790

II. Profit/(Loss) on sale of investments (net) 1,277,683 291,688

III. Profit/(Loss) on revaluation of investments (net) – –

IV. Profit/(Loss) on sale of land, buildings and other assets (net) 410,918 (551)

V. Profit on exchange/derivative transactions (net) 1,835,512 3,623,915

VI. Miscellaneous Income (Refer Note 24 – Schedule 18) 820,631 696,935 TOTAL 4,735,116 5,078,777

SCHEDULE 15 – Interest Expended

I. Interest on deposits 2,575,944 3,000,425

II. Interest on Reserve Bank of India/inter-bank borrowings 439,678 406,198

III. Others 2,715,714 832,223

TOTAL 5,731,336 4,238,846

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

Year Ended Year Ended March 31, March 31, 2013 2012 (Rs. '000) (Rs. '000)

SCHEDULE 16 – Operating Expenses

I. Payments to and provisions for employees 2,434,095 2,097,736 II. Rent, taxes and lighting 278,418 207,163 III. Printing and stationery 47,087 44,975 IV. Advertisement and publicity 55,285 – V. Depreciation on Bank's property 165,131 112,479 VI. Directors' fees, allowances and expenses – – VII. Auditors' fees and expenses 3,184 2,773 VIII. Law Charges 13,204 3,366 IX. Postages, Telegrams, Telephones, etc 196,801 206,169 X. Repairs and maintenance 91,961 58,005 XI. Insurance 63,242 67,182 XII. Other expenditure (Refer Note 23 – Schedule 18) 958,282 1,255,150 TOTAL 4,306,690 4,054,998 SCHEDULE 17 – Provisions and Contingencies

I. Provision for standard assets – – II. Provision/(Write-back of provision) for country risk 528 (2,800)III. Provision for Taxation (Refer Note 21– Schedule 18) 3,467,624 2,713,646 IV. Deferred tax (Refer Note 20 – Schedule 18) (49,742) (84,436)V. Provision/(Write-back of provision) for wealth tax 146 (4,474)VI. (Write-back of provision)/ Provision for depreciation on investments (63,144) 39,621

TOTAL 3,355,412 2,661,557



SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013

SCHEDULE 18 – SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

A) Background The financial statements for the year ended March 31, 2013 comprise the accounts of the India branches of Bank of America,

N.A. (the Bank), which is incorporated in the United States of America with limited liability.

B) Basis of preparation The financial statements are prepared and presented under the historical cost convention on accrual basis of accounting, unless

otherwise stated and are in accordance with the Generally Accepted Accounting Principles, statutory provisions prescribed under the Banking Regulation Act, 1949, circulars and guidelines issued by The Reserve Bank of India (RBI) from time to time and Accounting Standards (AS) issued by The Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006, to the extent applicable and conform to the statutory requirements prescribed by the RBI from time to time and current practices prevailing within the banking industry in India.

The financial statements are presented in Indian Rupees rounded off to the nearest thousand unless otherwise stated.

C) Use of Estimates The preparation of financial statements, in conformity with the Generally Accepted Accounting Principles, requires management

to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities as at the date of the financial statements. Actual results could differ from those estimates and difference between the actual results and estimates are recognized in the period in which the results are known. Any revision to the accounting estimates is recognized in the current and future periods as appropriate.

D) Significant Accounting Policies 1) Revenue recognition Interest income is recognized in the Profit and Loss Account on an accrual basis, except in case of interest on non-performing

advances which is recognized as income upon receipt in accordance with the RBI prudential norms.

Interest income on discounted instruments is recognized over the tenor of the instrument on a constant effective yield basis.

Commission on guarantees and letters of credit is recognized upfront.

2) Foreign Exchange Transactions Transactions in foreign currency are recorded and translated at exchange rates prevailing on the date of the transaction.

Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currencies are translated at the balance sheet date at exchange rates notified by the Foreign Exchange Dealers' Association of India (FEDAI) and the resulting exchange differences are recognized in the Profit and Loss Account.

Outstanding forward exchange contracts are revalued at rates of exchange notified by FEDAI and the resulting gains/losses are included in the Profit and Loss Account.

Contingent liabilities on account of foreign exchange contracts, guarantees and acceptances, endorsements and other obligations denominated in foreign currencies are disclosed at the year-end closing rates of exchange notified by FEDAI.

3) Derivatives The Bank enters into derivative contracts such as interest rate swaps, cross-currency swaps, currency options, forward

exchange contracts, as well as exchange-traded interest rate futures, currency futures and currency options.

All derivative transactions are classified as trading derivatives. Outstanding derivative contracts, other than exchange-traded interest rate futures, currency futures and currency options, are valued at the estimated realizable market price (fair value). Resulting gains/losses are recognized in the Profit and Loss Account under 'Other Income' with the corresponding net unrealized amounts reflected under 'Other Assets' or 'Other Liabilities' on the Balance Sheet.

Fair value is determined by reference to a quoted market price or by using a valuation model. In case the market prices do not appropriately represent the fair value that would be realized for a position or portfolio, valuation adjustments such as market risk close-out costs and bid-offer adjustments are made to arrive at the appropriate fair value. These adjustments are calculated on a portfolio basis, and are reported together with/or as a part of the carrying value of the positions being valued, thus reducing trading assets or increasing trading liabilities.



Valuation models, where used, calculate the expected cash flows under terms of the specific contracts, taking into account the relevant market factors viz. interest rates, foreign exchange rates, volatility, prices etc.

Exchange-traded interest rate futures, currency futures and currency options are marked-to-market using the closing price of relevant contract as published by the exchanges/clearing corporation. Margin money deposited with the exchanges is presented under 'Other Assets'.

The Bank also maintains provisions on the current mark-to-market value of the contract, arising on account of derivative and foreign exchange transactions in accordance with the RBI Master circular (DBOD.No.BP.BC.9/21.04.048/2012-13 dated July 2, 2012) on prudential norms on income recognition, asset classification and provisioning pertaining to advances.

Any overdue receivables representing positive mark-to-market value of derivative and foreign exchange transactions are treated as non-performing assets, if remaining unpaid for a period of 90 days or more pursuant to the above guidelines.

4) Investments Investments are accounted for in accordance with the RBI Master Circular (DBOD No. BP. BC. 13/21.04.141/2012-13

dated July 2, 2012) on prudential norms for classification, valuation and operation of investment portfolio by banks.

Classification Investments are classified as “Held to Maturity” (HTM), “Held for Trading” (HFT) and “Available for Sale” (AFS) at

the time of purchase in accordance with RBI norms. Under each of these classifications, investments are further categorized as i) Government Securities ii) Other approved securities iii) Shares iv) Debentures and Bonds v) Subsidiaries and/or joint ventures and vi) Others.

Valuation Investments held under HTM classification are carried at acquisition cost. If the acquisition cost is more than the face

value, the premium is amortized over the remaining tenor of the investments.

Investments classified under HFT and AFS portfolio are marked to market on a monthly basis. Investments classified under HFT and AFS portfolio are valued as per rates declared by the Primary Dealers Association of India (PDAI) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA) and in accordance with the RBI guidelines. Consequently net depreciation, if any, under each of the classifications in respect of any category mentioned in 'Schedule 8-Investments' is provided for in the Profit and Loss Account. The net appreciation, if any, under any classification is ignored, except to the extent of any depreciation provided previously. The book value of the individual securities is not changed consequent to periodic valuation of investments.

Treasury Bills, Commercial Paper and Certificates of Deposit, being discounted instruments, are valued at carrying cost.

Investments in Pass Through Certificates (PTCs) are valued by adopting the base yield curve and corporate bond spread relative to weighted average maturity of the security.

Investment Reserve Account In accordance with the aforesaid Master Circular, in case the provision on account of depreciation in the HFT and AFS

categories is found to be in excess of the required amount, the excess is credited to the Profit and Loss Account and an equivalent amount (net of taxes, if any and transfer to Statutory Reserve as applicable to such excess provision) is appropriated to an Investment Reserve Account.

The provision required to be created on account of depreciation in investments in AFS & HFT categories is debited to the Profit and Loss Account and an equivalent amount (net of tax benefit, if any and net of consequent reduction in transfer to Statutory Reserves) is transferred from the Investment Reserve Account to the Profit and Loss Account, to the extent available.

Transfer between classifications Transfer of investment between categories is accounted for in accordance with the extant RBI guidelines, as under:

a) Transfer from AFS/HFT to HTM is made at the lower of book value or market value at the time of transfer.

b) Transfer from HTM to AFS/HFT is made at acquisition price/book value if originally placed in HTM at a discount and at amortized cost if originally placed in HTM at a premium.

c) Transfer from AFS to HFT category or vice-versa is made at book value and the provision for the accumulated depreciation, if any, held is transferred to the provisions for depreciation against the HFT securities and vice-versa.




Repurchase transactions Repurchase and Reverse Repurchase transactions including those under the Liquidity Adjustment Facility (LAF) with RBI

are accounted for as secured borrowing and lending transactions in accordance with RBI guidelines. Brokerage and Commission Brokerage and Commission paid at the time of acquisition of a security is charged to Profit and Loss Account. Broken period interest Broken period interest paid at the time of acquisition of the security is charged to the Profit and Loss Account. 5) Fixed Assets Fixed Assets are stated at cost less accumulated depreciation/amortization. Tangible Assets Except for items forming part of (i) and (ii) below, depreciation is provided, prorata for the period of use, by straight

line method (SLM), based on management estimate of useful lives of the fixed assets, or the SLM rates prescribed in Schedule XIV to the Companies Act, 1956 whichever is higher at the following rates:

Asset category Depreciation rate per annum

Building 5% Server, networking and other computer equipment 20% – 50% Furniture and fixtures 10% Vehicles 20% Other equipment (mechanical/electronic) 15% – 33.33%

i) Assets costing less than the rupee equivalent of USD 2,500 are fully depreciated in the year of purchase. ii) Leasehold improvements are depreciated over the lease period including the renewal periods (if any). Assets associated

with premises taken on lease are depreciated on straight line basis using the rates derived from the lease or at the rates mentioned above, whichever is higher.

Profit on disposal of properties is recognised in the Profit and Loss Account and subsequently appropriated to Capital Reserve (net of taxes, if any and applicable transfer to Statutory Reserve); losses are recognised in the Profit and Loss Account.

Intangible Assets The Company capitalizes software, where it is reasonably estimated that the software has an enduring useful life. Software

is amortized over an estimated useful life of 2 to 5 years. Software individually costing less than the rupee equivalent of USD 10,000/- is fully amortized in the year of purchase. Impairment of Assets In accordance with AS-28 on 'Impairment of Assets', an asset is considered as impaired, when at the balance sheet date

there are indications of impairment and the carrying amount of the asset, or where applicable, the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset's net selling price and value-in-use). The Bank assesses at each balance sheet date whether there is any indication that an asset may be impaired based on internal/external factors. If any such indication exists, the Bank estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than the carrying amount, the carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Profit and Loss Account.

6) Advances Classification and provisioning for advances is carried out in accordance with RBI Master Circular (DBOD.No.BP.

BC.9/21.04.048/ 2012-13 dated July 2, 2012) on prudential norms on income recognition, asset classification and provisioning pertaining to advances.

Advances are stated net of bills re-discounted, specific loan loss provisions and interest-in-suspense for non-performing advances in accordance with the prudential norms.

The Bank also maintains general provisions on standard assets over and above the specific provisions to cover potential credit losses inherent in any loan portfolio.

Provision for Standard Assets and Country Risk Exposure is made in accordance with the norms prescribed by the RBI and disclosed under Schedule 5 – 'Other Liabilities and Provisions'.




7) Employee Benefits Provident fund Provident fund was contributed to a trust set up by the Bank for all eligible employees till March 31, 2012 with the interest

rate payable to the members of the trust not being lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Shortfall, if any, was contributed by the Bank and to that extent this was a defined benefit plan. Contributions made to the trust were charged to the Profit and Loss Account.

With effect from April 1, 2012, the Bank has started making provident fund contributions to a Government administered provident fund in respect of its employees. Further, the accumulated balances as at March 31, 2012 with the Trust set up by the Bank have also been transferred to the government administered provident fund. Liability/Obligation, if any, arising out of the transfer to the Government administered provident fund would be borne by the Bank.

Gratuity The Bank has a gratuity scheme, a defined benefit plan, for all eligible employees, which is administered by a trust set up

by the Bank. The costs of providing benefits under the gratuity scheme are determined using the Projected Unit Credit Method on the basis of actuarial valuation carried out by an independent actuary at each balance sheet date. The Bank makes periodical contributions to the trust. Gratuity benefit obligations recognised on the Balance Sheet represent the present value of the obligations as reduced by the fair value of plan assets. Actuarial gains and losses are recognised in the Profit and Loss Account in the year in which they arise.

Compensated Absences Liability for sick leave and privilege leave defined benefit plans for all eligible employees is recognized based on actuarial

valuation carried out by an independent actuary as at the balance sheet date. Pension The Bank has a pension scheme, a defined contribution plan, for all eligible employees, which is administered by a trust

set up by the Bank. The Bank's contribution towards the pension scheme is accounted for on an accrual basis and charged to the Profit and Loss Account.

8) Taxation Taxes on income are accounted for in accordance with Accounting Standard 22 on “Accounting for Taxes on Income” and

comprise current and deferred tax. Current tax is measured at the amount expected to be paid in respect of taxable income for the year in accordance with

the Income tax-Act, 1961. The tax effect of timing differences that result between taxable income and accounting income and are capable of reversal

in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. These are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets arising on account of carry forward losses and unabsorbed depreciation under tax laws are recognized only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.

9) Accounting for leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are

classified as operating leases. For operating leases, lease payments are recognized as an expense in the statement of Profit and Loss Account on a straight line basis over the lease term.

10) Provisions and contingent liabilities A provision is recognized when there is a present obligation as a result of a past event that probably requires an outflow

of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the best available estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and the related income are recognized in the period in which the change occurs.




Additional Disclosures in terms of RBI Master Circular on Disclosure in Financial Statements – Notes to Accounts no. DBOD.BP.BC. No.14/21.04.018/2012-13 dated July 2, 20121. Ratio of capital funds to risk weighted assets as at March 31, 2013 is stated below Sr. No. Particulars As at As at March 31, 2013 March 31, 2012 i) CRAR – BASEL II 18.40% 17.59% ii) CRAR – Tier I Capital (Basel II) 18.02% 17.21% iii) CRAR – Tier II Capital (Basel II) 0.38% 0.38% iv) CRAR – BASEL I 19.95% 19.12% v) CRAR – Tier I Capital (Basel I) 19.53% 18.71% vi) CRAR – Tier II Capital (Basel I) 0.42% 0.41% vii) Percentage of the shareholding of the Government of India in nationalized banks Nil Nil viii) Amount of subordinated debt raised during the year as Tier II capital Nil Nil ix) Amount raised by issue of Innovative Perpetual Debt Instruments during the year Nil Nil x) Amount raised by issue of Upper Tier II instruments during the year Nil Nil

CRAR – Capital to Risk Weighted Assets Ratio

2. Investments (Rs. '000)

Particulars As at As at March 31, 2013 March 31, 2012 1) Value of Investments i) Gross Value of Investments (a) In India 88,341,764 82,327,979 (b) Outside India Nil Nil ii) Provisions for Depreciation (a) In India 6,680 69,824 (b) Outside India Nil Nil iii) Net Value of Investments (a) In India 88,335,084 82,258,155 (b) Outside India Nil Nil 2) Movement of provisions held towards depreciation on investments i) Opening balance 69,824 30,203 ii) Add: Provisions made during the year Nil 39,621 iii) Less: Write-back of excess provision during the year (63,144) Nil iv) Closing balance 6,680 69,824

3. Information on Repurchase Agreement and Reverse Repurchase Agreement (Rs. '000) For the Year ended Minimum Maximum Daily Average Outstanding

March 31, 2013* Outstanding Outstanding Balance as at during the year during the year Outstanding March 31, 2013 Securities Sold under Repurchase Agreement ● Government Securities Nil 78,967,520 14,867,952 17,119,890 ● Corporate debt securities Nil Nil Nil Nil Securities Purchased under Reverse Repurchase Agreement ● Government Securities Nil 4,467,756 421,308 Nil ● Corporate debt securities Nil Nil Nil Nil

* Includes repurchase and reverse repurchase agreements under the Liquidity Adjustment Facility (LAF) with Reserve Bank of India.





(Rs. '000)

For the Year ended Minimum Maximum Daily Average Outstanding March 31, 2012* Outstanding Outstanding Balance as at

during the year during the year Outstanding March 31, 2012

Securities Sold under Repurchase Agreement ● Government Securities Nil 29,129,072 5,886,614 16,950,118 ● Corporate debt securities Nil Nil Nil Nil Securities Purchased under Reverse Repurchase Agreement ● Government Securities Nil 8,352,578 659,805 1,592,228 ● Corporate debt securities Nil Nil Nil Nil

* Includes repurchase and reverse repurchase agreements under the Liquidity Adjustment Facility (LAF) with Reserve Bank of India.

4. Issuer Composition of Non-SLR Investments As at March 31, 2013 (Rs. '000) Sr. No. Issuer Amount Extent of Extent of 'below Extent of Extent of (Book Value) private investment 'unrated' 'unlisted' placement grade' securities securities securities (1) (2) (3) (4)# (5)# (6)# (7)# 1) Public Sector Undertakings@ 50,577 Nil Nil Nil Nil 2) Financial Institutions 1,674,642 1,674,642 Nil Nil 1,674,642 3) Banks 25,314,748 25,314,748 Nil Nil 25,314,748 4) Private corporate Nil Nil Nil Nil Nil 5) Subsidiaries/Joint ventures Nil Nil Nil Nil Nil 6) Others 600 600 Nil 600 600 7) Provision held towards depreciation (1,074) (987) Nil Nil (987) Total 27,039,493 26,989,003 Nil 600 26,989,003

@ Comprises 9.02% Rural Electrification Ltd 2022. # Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

As at March 31, 2012 (Rs. '000) Sr. No. Issuer Amount Extent of Extent of 'below Extent of Extent of (Book Value) private investment 'unrated' 'unlisted' placement grade' securities securities securities (1) (2) (3) (4)# (5)# (6)# (7)#

1) Public Sector Undertakings* 101,756 Nil Nil Nil Nil 2) Financial Institutions 2,569,803 2,569,803 Nil Nil 2,569,803 3) Banks 22,496,113 22,496,113 Nil Nil 22,496,113 4) Private corporate Nil Nil Nil Nil Nil 5) Subsidiaries/Joint ventures Nil Nil Nil Nil Nil 6) Others 600 600 Nil 600 600 7) Provision held towards depreciation (33,433) (31,357) Nil Nil (31,357)

Total 25,134,839 25,035,159 Nil 600 25,035,159

* Comprises 9.61% Power Finance Corporation Limited 2021. # Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.



5. Non-Performing Non-SLR Investments as at March 31, 2013 There are no non-performing non-SLR Investments as at March 31, 2013. (Previous year Rs. Nil)6. Forward Rate Agreements/Interest Rate Swaps

(Rs. '000) Sr. No. Particulars As at As at March 31, 2013 March 31, 2012 i) The notional principal value of interest rate swaps 2,299,521,929 3,042,129,359 ii) Losses which would be incurred if counterparties failed to fulfill their obligations under the agreements 9,835,242 18,224,683 iii) Collateral required by the bank upon entering into swaps Nil Nil iv) Concentration of credit risk arising from the swaps (in the banking industry) 89% 97% v) The fair value of interest rate swaps – Gains/(Losses) 723,103 2,088,872

Notes:

a) Swaps undertaken with counterparties are based on established market benchmarks. b) The counterparties for the swaps undertaken are Banks/Corporates and are within approved credit exposure limits. c) There are no forward rate agreements as on March 31, 2013. (Previous year Rs. Nil) d) For accounting policies relating to the Interest Rate Swaps refer Note (D)(3) – Schedule 18.

7. Exchange Traded Interest Rate Derivatives (Rs. '000) Sr. No. Particulars As at As at March 31, 2013 March 31, 2012

1) Notional principal amount of exchange traded interest rate derivatives undertaken during the year, – Interest rate futures Nil 2,152,800 2) Notional principal amount of exchange traded interest rate derivatives outstanding as on March 31, – Interest rate futures Nil Nil 3) Notional principal amount of exchange traded interest rate derivatives outstanding and not "highly effective" – Interest rate futures Nil Nil 4) Mark-to-market value of exchange traded interest rate derivatives outstanding and not "highly effective" – Interest rate futures Nil Nil

8. Disclosure on Risk Exposure in Derivatives a. Qualitative Disclosure ● The Bank enters into derivative contracts for the purposes of trading and to meet customer requirements to manage their risks.

● The Bank has comprehensive policies in place for measurement, reporting, monitoring and mitigating credit, market and operational risk.

o Credit risk is managed based on the risk profile of the borrower or counterparty, repayment sources and other support given the current events, conditions and expectations. Credit risk for a derivative contract is sum of the potential future changes in value and the replacement cost, which is the positive mark-to-market value of the contract.

o The Bank uses Value-at-Risk (VaR) modeling and stress testing to measure and manage market risk. Trading limits and VaR are used to manage day-to-day risks and are subject to testing where expected performance is compared to actual performance. All limit excesses are communicated to senior management for review.

o There exists an organizational set up for the management of risk. All lines of business are responsible for the risks within the business including operational risks. Such risks are managed through corporate-wide and/or line of business specific policies and procedures, controls, and monitoring tools.




● Treasury front-office, mid-office and back-office are managed by officials with necessary systems support and clearly defined responsibilities.

● There exist policies for recording derivative transactions, recognition of income, valuation of outstanding contracts, provisioning and credit risk mitigation. The gains or losses are aggregated product-wise and reported under the head 'Profit on exchange/derivative transactions' in the Profit and Loss account and either “Other assets” or “Other Liabilities” depending upon whether the present value of the aggregate outstanding derivative instruments is a receivable or payable.

● The details in respect of the mark-to-market positions for forward exchange contracts, interest rate swaps, cross currency interest rate swaps, currency futures & options which are aggregated product-wise and disclosed net on the Balance Sheet under 'Other assets' or 'Other Liabilities' in Schedule 11 or Schedule 5 respectively are as under:

As at March 31, 2013 (Rs. '000)

Particulars Asset (+) Liability (-) Net Forward exchange contracts 23,289,816 (20,255,820) 3,033,996 Interest rate swap 9,835,242 (9,112,139) 723,103 Cross currency interest rate swap 10,197,373 (13,484,638) (3,287,265) Currency Futures Nil (346) (346) Options 134,641 (70,398) 64,243 Total 43,457,072 (42,923,341) 533,731

As at March 31, 2012 (Rs. '000)

Particulars Asset (+) Liability (-) Net

Forward exchange contracts 45,721,134 (41,711,908) 4,009,226 Interest rate swap 18,224,683 (16,135,811) 2,088,872 Cross currency interest rate swap 18,110,497 (20,965,754) (2,855,257) Currency Futures Nil (36,311) (36,311) Options 2,059,730 (347,104) 1,712,626

Total 84,116,044 (79,196,888) 4,919,156

b. Quantitative Disclosure (Rs. '000) Sr. No. Particulars Currency Interest Rate Derivatives** Derivatives* As at As at March 31, 2013 March 31, 2013 1) Derivatives (Notional Principal Amount) a) For hedging Nil Nil b) For trading 179,647,009 2,299,521,929 2) Marked to Market Positions a) Asset (+) 10,332,014 9,835,242 b) Liability (-) (13,555,383) (9,112,139) 3) Credit Exposure# 25,351,964 26,629,591 4) Likely impact of one percentage change in interest rate (100*PV01) a) on hedging derivatives Nil Nil b) on trading derivatives (173,794) 96,811 5) Maximum and Minimum of 100*PV01 observed during the year a) on hedging Nil Nil b) on trading (Maximum) (1,028) 3,462,526 c) on trading (Minimum) (1,498,120) (474,312)

* Interest Rate derivatives comprise Interest Rate swaps. ** Currency Derivatives includes Currency futures, Cross Currency interest rate swaps and options. # Credit exposure represents sum of potential future exposure and positive mark-to-market value of contracts.





(Rs. '000)

Sr. No. Particulars Currency Interest Rate Derivatives** Derivatives*

As at As at March 31, 2012 March 31, 2012

1) Derivatives (Notional Principal Amount) a) For hedging Nil Nil b) For trading 262,145,293 3,042,129,359 2) Marked to Market Positions a) Asset (+) 20,170,227 18,224,683 b) Liability (-) (21,349,170) (16,135,811) 3) Credit Exposure# 41,126,187 41,149,904 4) Likely impact of one percentage change in interest rate (100*PV01) a) on hedging derivatives Nil Nil b) on trading derivatives 47,730 1,667,637 5) Maximum and Minimum of 100*PV01 observed during the year a) on hedging Nil Nil b) on trading (Maximum) 367,228 1,779,821 c) on trading (Minimum) (150,670) (514,112)

* Interest Rate derivatives comprise Interest Rate swaps and interest rate futures. ** Currency Derivatives includes Currency futures, Cross Currency interest rate swaps and options. # Credit exposure represents sum of potential future exposure and positive mark-to-market value of contracts.

c. Nature and terms of interest rate swaps (Rs. '000)

Nature Benchmark No. of trades as at Notionals as at No. of trades as at Notionals as at March 31, 2013 March 31, 2013 March 31, 2012 March 31, 2012

Trading MIBOR* 2,053 1,837,035,187 2,887 2,510,485,008 Trading MIFOR** 614 296,212,274 681 333,866,514 Trading INBMK*** 52 24,850,000 54 26,000,000 Trading Others 121 141,424,468 145 171,777,836

Total 2,840 2,299,521,929 3,767 3,042,129,358

* Mumbai Interbank Offer Rate ** Mumbai Interbank Forward Rate *** India Benchmark

9. Movement in Non Performing Assets (Funded) (Rs. '000) Particulars As at As at March 31, 2013 March 31, 2012

Gross NPAs as on April 01 (Opening Balance) 6,978 6,978 Additions (Fresh NPAs during the year) Nil Nil Sub-total (A) 6,978 6,978 Less: - (i) Upgradations Nil Nil (ii) Recoveries (excluding recoveries made from upgraded accounts) Nil Nil (iii) Write-offs 6,978 Nil Sub-total (B) 6,978 Nil Gross NPAs as on March 31 (Closing balance) (A-B) Nil 6,978




(Rs. '000) Sr. No. Item As at As at March 31, 2013 March 31, 2012

1) Net NPAs to Net Advances (%) Nil Nil 2) Movement of NPAs (Gross) (a) Opening balance 6,978 6,978 (b) Additions during the year Nil Nil (c) Reductions during the year 6,978 Nil (d) Closing balance Nil 6,978 3) Movement of Net NPAs (a) Opening balance Nil Nil (b) Additions during the year Nil Nil (c) Reductions during the year Nil Nil (d) Closing balance Nil Nil 4) Movement of provisions for NPAs (excluding provisions on standard assets) (a) Opening balance 6,978 6,978 (b) Provisions made during the year Nil Nil (c) Write-off/write back of excess provisions 6,978 Nil (d) Closing balance Nil 6,978

10. Disclosure on accounts subject to restructuring (as required by RBI guidelines under reference DBOD.BP.BC No.80/21.04.132/2012-13 dated January 31, 2013):

(Rs. in Crore)

Sl Type of Restructuring → Under CDR Mechanism Under SME Debt Others Total No Restructuring Mechanism Asset Classification → Stand- Sub- Doubt- Loss Total Stand- Sub- Doubt- Loss Total Stand- Sub- Doubt- Loss Total Stand- Sub- Doubt- Loss Total ard Stand- ful ard Stand- ful ard Stand- ful ard Stand- ful Details ↓ ard ard ard ard

1 Restructured Accounts No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil as on April 1, 2012* Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Provision thereon Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 2 Fresh restructuring No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil during the year Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Provision thereon Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 3 Upgradations to No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil restructured standard Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil category during Provision thereon Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil the FY 2012-2013 4 Restructured standard No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil advances which cease Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil to attract higher Provision thereon Nil Nil Nil Nil Nil Nil Nil Nil provisioning and/or additional risk weight at the end of the FY 2012-2013 and hence need not be shown as restructured standard advances at the beginning of the next FY 2013-2014 5 Downgradations of No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil restructured accounts Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil during the FY Provision thereon Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 6 Write-offs of No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil restructured accounts Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil during the FY 2012-13 7 Restructured Accounts No. of borrowers Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil as on 31/03/2013* Amount outstanding Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Provision thereon Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

* Excluding the figures of Standard Restructured Advances which do not attract higher provisioning or risk weight (if applicable).



11. No Financial assets were sold during the year to Securitization/Reconstruction Company for asset reconstruction (Previous year Rs. Nil).

12. Details of non-performing financial assets purchased/sold

a) Non-performing financial assets purchased (Rs. '000)

Sr. No. Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

1 (a) No. of accounts purchased during the year Nil Nil

(b) Aggregate outstanding Nil Nil

2 (a) Out of these, number of accounts restructured during the year Nil Nil

(b) Aggregate outstanding Nil Nil

Total Nil Nil

b) Non-performing financial assets sold (Rs. '000)


1) No. of accounts sold during the year Nil Nil

2) Aggregate outstanding as at March 31 Nil Nil

3) Aggregate consideration received Nil Nil

13. Provision for standard assets are as follows (Rs. '000)

Sr. No. Particulars As at As at March 31, 2013 March 31, 2012

1) Loans and advances 287,408 287,408

2) Foreign exchange contracts and derivatives 480,007 480,007

Total 767,415 767,415

14. Important Financial Ratios


a) Interest income as a percentage to working funds* 7.32% 7.67%

b) Non-interest income as a percentage to working funds* 2.60% 3.50%

c) Operating Profit as a percentage to working funds* 4.19% 5.46%

d) Return on assets* 2.57% 3.62%

e) Business (Deposits plus Advances) per employee (Rs. '000) 380,699 339,928

f) Profit per employee (Rs. '000) 12,065 14,886

* Working funds and assets are the Average of Total assets as reported in Form X to RBI under Section 27 of the Banking Regulation Act, 1949.





15. Maturity Pattern of Assets and Liabilities The maturity pattern of assets and liabilities as at March 31, 2013 is as under (Rs. Crores) Particulars Day 1 2 to 7 8 to 14 15 to 28 29 days Over 3 Over 6 Over 1 Over 3 Over 5 Total

days days days and months months year and years years upto 3 and upto and upto upto and upto months 6 months 1 year 3 years 5 years Advances 681 1,151 734 1,493 1,381 682 162 1,213 125 1 7,623 Investments in Securities 6,834 331 139 701 100 38 48 628 2 13 8,834 Deposits 348 1,141 925 497 464 105 41 3,855 2 Nil 7,378 Borrowings 5,713 Nil Nil Nil Nil Nil Nil Nil Nil Nil 5,713 Foreign Currency Assets 8 11 11 653 665 547 91 Nil Nil Nil 1,986 Foreign Currency Liabilities 1,512 19 19 Nil Nil Nil Nil 466 Nil Nil 2,016

Note: Foreign currency assets include balances in respect of Advances and foreign currency liabilities include balances in respect of Deposits & Borrowings

The maturity pattern of assets and liabilities as at March 31, 2012 is as under (Rs. Crores) Particulars Day 1 2 to 7 8 to 14 15 to 28 29 days Over 3 Over 6 Over 1 Over 3 Over 5 Total

days days days and months months year and years years upto 3 and upto and upto upto and upto months 6 months 1 year 3 years 5 years Advances 104 593 411 581 2,041 459 1,853 163 Nil Nil 6,205 Investment in Securities 2,886 3,922 62 37 984 98 5 223 Nil 9 8,226 Deposits 218 1,059 583 326 387 863 44 2,483 1 1 5,965 Borrowings 80 4,911 100 205 8 Nil 10 Nil Nil Nil 5,314 Foreign Currency Assets 4 223 63 59 522 268 10 Nil Nil Nil 1,149 Foreign Currency Liabilities 50 930 50 6 8 Nil 10 558 Nil Nil 1,612

Note: Foreign currency assets include balances in respect of Advances and foreign currency liabilities include balances in respect of Deposits & Borrowings

16. Exposure to Sensitive Sectors A) Exposure to Real Estate Sector (Rs.'000) Category As at As at March 31, 2013 March 31, 2012

Direct Exposure i) Residential Mortgages Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented; 6,204 6,556 ii) Commercial Real Estate Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non-fund based (NFB) limits Nil Nil iii) Investment in mortgage backed securities(MBS) and other securitized exposures a. Residential, b. Commercial Real Estate. Nil Nil Indirect Exposure Fund based and non-fund based exposures to National Housing Bank and Housing Finance Companies 10,658,880 14,853,950

Total Exposure to Real Estate Sector 10,665,084 14,860,506




B) Exposure to Capital Market (Rs. '000) Sr. No. Particulars As at As at March 31, 2013 March 31,2012

1) Direct investment in equity shares, convertible bonds, convertible debentures and units of equity oriented mutual funds the corpus of which is not exclusively invested in corporate debt; ● Investment in equity shares 600 600 2) Advances against shares/bonds/ debentures or other securities or on clean basis to individuals for investment in shares (including IPOs/ESOPs), convertible bonds, convertible debentures and units of equity oriented mutual funds; Nil Nil 3) 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; Nil Nil 4) Advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity 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; Nil Nil 5) Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers; Nil 508,750 6) Loans sanctioned to corporate against the security of shares/bonds/ debentures or other securities or on clean basis for meeting promoter's contribution to the equity of new companies in anticipation of raising resources; Nil Nil 7) Bridge loans to companies against expected equity flows/issues; Nil Nil 8) Underwriting commitments taken up by the Bank in respect of primary issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds; Nil Nil 9) Financing to stockbrokers for margin trading; Nil Nil 10) All exposures to Venture Capital Funds (both registered and unregistered) Nil Nil

Total Exposure to Capital Market 600 509,350

17. Country Risk Exposure Provision for Country Risk exposure in terms of RBI Master Circular on Disclosure in Financial Statements – Notes to Accounts

no. DBOD.BP.BC.No.14/21.04.018/2012-13 dated July 2, 2012 is as follows: (Rs. '000) Risk Category Exposure (net) Provision held Exposure (net) Provision held as at as at as at as at March 31, 2013 March 31, 2013 March 31, 2012 March 31, 2012

Insignificant 6,773,093 3,728 5,540,072 3,200 Low 342,831 Nil 1,536,511 Nil Moderate 1,169,268 Nil 249,262 Nil High 102,150 Nil Nil Nil Very High Nil Nil Nil Nil Restricted Nil Nil Nil Nil Off-Credit Nil Nil Nil Nil Total 8,387,342 3,728 7,325,845 3,200




18. Single and Group Borrower limits

a) During the year, the Bank has exceeded the regulatory prescription of 15% of single borrower limit, but has remained within the extended 20% limit for the following clients:

● Chennai Petroleum Corporation Limited

● Cognizant Technology Solutions Pvt. Ltd.

b) Further, exposure to Housing Development Finance Corporation Limited continue to remain in excess of the prescribed limits of 15% and the extended limit of 20%.

For the above excesses, the Local Management Team has approved the exposures as per RBI Master Circular on Exposure Norms DBOD No. Dir. BC. 3/13.03.00/ 2012-13 dated July 2, 2012. The Bank has also complied with all other requirements under the above mentioned circular.

During the year ended March 31, 2013, the Bank did not exceed the group borrower limits in respect of any of its clients.

19. Unsecured Advances

Unsecured advances have been appropriately classified under 'Schedule 9 – Advances'. During the year ended March 31, 2013, the Bank has not given loans against intangible securities such as rights, licenses, authority etc.

20. Deferred Tax

The Deferred Tax Asset (DTA) as at March 31, 2013 amounting to Rs. 261,804 thousand (Previous year Rs. 212,062 thousand) represents timing difference on account of depreciation on fixed assets and disallowances under section 43B of Income-tax Act, 1961. An increase in DTA for the year ended March 31, 2013 amounting to Rs. 49,742 thousand has been credited to the Profit and Loss account (Previous year Rs. 84,436 thousand credited to Profit and Loss account).

The components that gave rise to the deferred tax assets included in the balance sheet are as follows: (Rs. '000)

Particulars As at As at March 31, 2013 March 31, 2012

Deferred tax assets Depreciation on fixed assets 41,555 26,042 Disallowances under section 43B of Income-tax Act 1961 220,249 186,020

Total 261,804 212,062

21. Provision for Current Taxation (Rs. '000)

Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

Income Tax for the year 3,497,000 3,385,000 Wealth Tax for the year 350 800 Income tax adjustments for prior years (29,376) (671,354) Wealth tax adjustments for prior years (204) (5,274)

Total 3,467,770 2,709,172

22. The Reserve Bank of India imposed a penalty of Rs. 500,000/- on December 28, 2012 for inadequate balance of security in the Subsidiary General Ledger (“SGL”) deal executed on December 14, 2012.

23. Other expenditure in 'Schedule 16 – Operating Expenses' includes Head office administration expenditure of Rs. 430,000 thousand (Previous year Rs. 420,000 thousand) and data processing & network services expenses amounting to Rs. Nil (Previous year Rs. 308,526 thousand) attributable to the Bank's operations in India.




24. Miscellaneous Income includes service fee income of Rs. 671,845 thousand (Previous year Rs. 608,453 thousand) from overseas branches and affiliates.

25. Outstanding commitments as of March 31, 2013 relating to securities purchase and sale contracts stood at Rs. 5,309,347 thousand & Rs. 5,807,430 thousand respectively (Previous year Rs. 8,023,798 thousand and Rs. 5,608,374 thousand respectively)

26. Letters of Comfort issued The Bank has not issued any Letter of Comfort during the year ended March 31, 2013 (Previous year Rs. Nil).

27. Draw down from Reserves

During the year ended March 31, 2013, there has been no drawdown from Reserves (Previous year Rs. Nil). Also refer Schedule 2 – Reserves and Surplus.

28. Disclosure of Complaints/Unimplemented awards of Banking Ombudsmen

In accordance with RBI Master Circular on Customer Services in Banks DBOD No.Leg.BC.21/09.07.006/2012-13 dated July 2, 2012 details of customer complaints and awards passed by Banking Ombudsman are as follows:

A. Customer complaints

Sr. no. Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

a) No. of complaints pending at the beginning of the year Nil Nil

b) No. of complaints received during the year 10 47

c) No. of complaints redressed during the year 10 47

d) No. of complaints pending at the end of the year Nil Nil

B. Awards passed by the Banking Ombudsmen

Sr. no. Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

a) No. of unimplemented awards at the beginning of the year Nil Nil

b) No. of awards passed by the Banking Ombudsmen during the year Nil Nil

c) No. of awards implemented during the year Nil Nil

d) No. of unimplemented awards at the end of the year Nil Nil

29. Segmental Reporting

In accordance with the RBI guidelines, the Bank has identified two primary segments: Treasury and Corporate Banking. These segments are identified based on nature of services provided, risk and returns, organizational structure of the Bank and the internal financial reporting system.

Treasury operations comprise derivatives trading, money market operations, investments in bonds, treasury bills, government securities and foreign exchange operations. The revenues of this segment consist of interest earned on investments and gains on sale of securities, profits/losses on exchange and derivative transactions. The principal expenses of this segment consist of interest expense on funds borrowed, occupancy expenses, personnel costs, other direct overheads and allocated expenses.

Corporate Banking primarily comprises funded and non-funded facilities, cash management activities and fee-based activities. Revenues of this segment consist of interest earned on loans given to clients and fees received from non-fund based activities like letters of credit, guarantees etc. and cash management services. The principal expenses of this segment consist of interest expenses on funds borrowed, occupancy expenses, personnel costs, other direct overheads and allocated expenses.

Unallocated expenses are reviewed for attribution to the primary segment on an ongoing basis.




The Bank does not have Retail banking and residual operations hence no segmental disclosures for Retail banking and other banking operations have been made.

(Rs. '000) Business Segments For the year ended March 31, 2013 For the year ended March 31, 2012

Treasury Corporate Unallocated Total Treasury Corporate Unallocated Total Banking Banking

Segment Revenue 10,465,911 6,943,948 676,899 18,086,758 8,324,180 7,764,055 121,754 16,209,989 Segment Result (Operating Profit) 6,158,852 1,363,946 525,934 8,048,732 5,853,021 2,091,050 (27,926) 7,916,145 Provisions and Contingencies 63,144 (528) – 62,616 (39,621) 2,800 – (36,821) Income taxes (3,418,028) (2,624,736) Net profit 4,693,320 5,254,588 Segment Assets 97,787,088 78,921,672 7,662,716 184,371,476 91,017,351 68,524,168 2,237,517 161,779,036 Total Assets 184,371,476 161,779,036 Segment liabilities 45,507,225 93,218,712 485,974 139,211,911 46,841,577 73,511,938 959,271 121,312,786 Capital and Reserves 45,159,565 40,466,250 Total Liabilities 184,371,476 161,779,036

The Bank operates as a single unit in India and as such has no identifiable geographical segments subject to dissimilar risks and returns. Hence, no information relating to geographical segments are presented.

30. The following disclosure in relation to securitization activities undertaken by the Bank are made in accordance with the RBI circular on Securitization of Standard Assets DBOD.NO.BP.BC.60/21.04.048/ 2005-06 dated February 1, 2006.

(Rs. '000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

1) Total number of loans securitized Nil Nil 2) Book value of loans securitized Nil Nil 3) Sale Consideration (net of interest accrued) Nil Nil 4) Gains/(losses) on securitization recognized in the Profit and Loss account Nil Nil 5) Form of credit enhancement N.A. N.A. 6) Quantum of credit enhancement Nil Nil

31. Disclosures under Employee Benefits – Revised AS 15 The Bank has classified the various benefits provided to employees as under:-

a) Defined Contribution Plan – Pension Fund During the year, the Bank has recognized Rs. 51,345 thousand (Previous year Rs. 54,377 thousand) in the Profit and Loss

account as Employers' Contribution to Pension Fund.

b) Defined Benefit Plan – Contribution to Gratuity Fund In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the defined benefit

plan based on the following assumptions

Principal actuarial assumptions:


Discount rate (per annum) 8.00% 8.50% Basic salary increases allowing for price inflation For officers – 7% For officers – 8% and others-9% and others-7% Employee Turnover 8.00% 8.00% Normal retirement age 60 years 60 years



Reconciliation of projected benefit obligation: (Rs.'000)


Projected Benefit Obligation at the beginning of the year 222,245 197,884 Current Service Cost 28,593 23,320 Interest Cost 20,469 17,464 Contribution by plan participation Nil Nil Actuarial Losses/(Gains) due to change in assumptions 174 2,614 Benefits Paid (20,046) (19,037) Past service cost Nil Nil Amalgamations Nil Nil Curtailments Nil Nil Settlements Nil Nil Projected Benefit Obligation at the end of year 251,435 222,245

Change in fair value of assets: (Rs. '000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

Plan Asset at beginning of year 191,733 84,738 Expected Return on Plan Asset 16,742 11,542 Employer Contribution 30,512 121,166 Employee Contribution Nil Nil Benefits Payment (20,046) (19,037) Asset Gains/(Losses) 9,679 (6,676) Amalgamations Nil Nil Settlements Nil Nil Ending Asset 228,620 191,733

Amounts recognised in Balance Sheet: (Rs. '000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

Projected Benefit Obligation at the end of year 251,435 222,245 Ending Asset 228,620 191,733 Fund Status asset/(liability) (22,815) (30,512) Unrecognized past service cost – non vested benefits 395 791 Asset/(liability) recognized in the Balance sheet (22,420)* (29,721)*

*the Bank has contributed Rs. 22,420 thousand (Previous year Rs. 30,512 thousand) to the fund on March 22, 2013

Amounts recognised in Profit and Loss Account: (Rs. '000)


Current Service Cost 28,593 23,320 Interest Cost 20,469 17,464 Expected return on plan asset (16,742) (11,542) Net Actuarial losses /(gains) recognized in the year (9,505) 9,290 Past Service Cost 395 395 Effect of Curtailments Nil Nil Income (-)/Expenses (+) recognized in the statement of Profit and Loss account 23,210 38,927




Experience Adjustments: (Rs. '000)

Particulars For the year For the year For the year For the year For the year ended March ended March ended March ended March ended March 31, 2013 31, 2012 31, 2011 31, 2010 31, 2009

Present Value of defined benefit obligation 251,435 222,245 197,884 94,994 112,813 Fair Value of plan assets 228,620 191,733 84,737 85,147 97,987 (Surplus)/deficit in the plan 22,815 30,512 113,147 9,847 14,826

Experience Adjustment Liability Experience (Gain)/Loss 174 2,614 104,706 (3,127) 5,664 Asset Asset (Gain)/Loss 9,679 (6,676) 8,577 12,820 2,050

Investment details of plan assets Majority of the plan assets are invested in Government securities and corporate bonds.

c) Provident Fund With effect from April 1, 2012, the Bank started making contributions to Government administered Provident Fund for all

the eligible employees. Until the previous year end March 31, 2012, provident fund contributions were made to a trust established by the Bank for the purpose, with the interest payable to the members of trust not being lower than the statutory rate of interest declared by the Central Government.

For the year ended March 31, 2013, Bank's contribution to provident fund was Rs. 66,274 thousand.

During the previous year, Bank had contributed Rs. 58,761 thousand to the trust established by the Bank. Further, the details in respect of actuarial valuation for provident fund benefit carried out for the previous year in accordance with Accounting Standard 15 (revised 2005) are furnished below:


Particulars Year ended March 31, 2012

Discount rate (per annum) 8.50% Employee Turnover 8.00% Normal retirement age 60 years

Reconciliation of projected benefit obligation: (Rs.'000)


Projected Benefit Obligation at the beginning of the year 773,948 Current Service Cost 56,196 Interest Cost 57,588 Actuarial(Gain)/Loss (7,272) Benefits Paid (56,061) Employee Contribution 149,277 Amalgamations Nil Transfer In 39,949 Settlements Nil Change in Reserves (11,390) Projected Benefit Obligation at the end of year 1,002,235




Change in fair value of assets: (Rs. '000)


Plan Asset at beginning of year 773,948 Return on Plan Asset 70,115 Employer Contribution 56,196 Transfer In 39,949 Employee Contribution 149,277 Asset Gains/(Losses) (29,895) Benefits Payment (56,061) Amalgamations Nil Settlements Nil Change in Reserves Nil Ending Asset 1,003,529

Amounts recognised in Balance Sheet: (Rs. '000)


Projected Benefit Obligation at the end of year 1,002,234 Ending Asset 1,003,529 Fund Status surplus/(deficit) 1,295 Asset/(liability) recognized in the Balance sheet 1,295



Current Service Cost 56,196 Interest Cost 57,588 Expected return on plan asset (70,115) Net Actuarial losses /(gains) recognized in the year 22,623 Past Service Cost Nil Effect of Curtailments/Settlements Nil Income (-)/Expenses (+) recognized in the statement of Profit and Loss account 66,292

d) Compensated Absences The Bank has provided for sick leave and privilege leave for all its eligible employees, based on valuation carried out by

an independent actuary.

Sick Leave In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done based on the following assumptions



Discount rate (per annum) 8.00% 8.50% Basic salary increases allowing for price inflation For officers – 7% For officers – 8% and others – 9% and others – 7% Employee Turnover 8.00% 8.00% Normal retirement age 60 years 60 years

The provision for sick leave as on March 31, 2013 is Rs. 33,396 thousand (Previous year Rs. 32,025 thousand). The increase in the provision of Rs. 1,371 thousand is debited to Profit and Loss account for the year ended March 31, 2013. (Previous year Rs. 5,581 thousand debited to Profit and Loss account).




Privilege Leave In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the defined benefit

plan based on the following assumptions:-



Discount rate (per annum) 8.00% 8.50% Basic salary increases allowing for price inflation For officers – 7% For officers – 8% and others – 9% and others – 7% Employee Turnover 8.00% 8.00% Normal retirement age 60 years 60 years

Reconciliation of projected benefit obligation: (Rs.'000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

Projected Benefit Obligation at the beginning of the year 155,206 121,182 Current Service Cost 33,621 24,953 Interest Cost 15,461 11,856 Contribution by plan participation Nil Nil Actuarial (Gains)/Losses due to change in assumptions (29,601) 2,066 Benefits Paid (13,874) (4,851) Past service cost Nil Nil Amalgamations Nil Nil Curtailments Nil Nil Settlements Nil Nil Projected Benefit Obligation at the end of year 160,813 155,206

Change in fair value of assets: (Rs. '000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

Plan Asset at beginning of year Nil Nil Expected Return on Plan Asset Nil Nil Employer Contribution Nil Nil Employee Contribution Nil Nil Benefits Payment Nil Nil Asset Gains/(Losses) Nil Nil Amalgamations Nil Nil Settlements Nil Nil Ending Asset Nil Nil Total actuarial gain/(loss) recognized immediately Nil Nil

Amounts recognised in Balance Sheet: (Rs. '000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

Projected Benefit Obligation at the end of year 160,813 155,206 Ending Asset Nil Nil Funded Status asset/(liability) (160,813) (155,206) Unrecognized past service cost – non vested benefits Nil Nil Liability (-)/Asset (+) recognized in Balance Sheet (160,813) (155,206)






Current Service Cost 33,621 24,953 Interest Cost 15,461 11,856 Expected return on plan asset Nil Nil Net Actuarial (gains)/losses recognized in the year (29,601) 2,066 Past Service Cost Nil Nil Effect of Curtailments Nil Nil Income (-)/Expenses (+) recognized in the statement of Profit and Loss account 19,481 38,875

Experience Adjustments: (Rs. '000)

Particulars For the For the For the year ended year ended year ended March 31, 2013 March 31, 2012 March 31, 2011

Present Value of defined benefit obligation 160,813 155,206 121,182 Fair Value of plan assets Nil Nil Nil (Surplus)/ deficit in the plan 160,813 155,206 121,182 Experience Adjustment Liability Experience (Gain)/Loss (29,601) 2,066 Nil Asset Asset (Gain)/Loss Nil Nil Nil

32. Related Party Disclosures:

a) Head Office*

Bank of America N.A. and its branches.

b) Ultimate Controlling Enterprise*

Bank of America Corporation

c) Subsidiaries of Head Office

● Banc of America Securities (India) Private Limited

● Bank of America Singapore Limited

● Banc of America Securities Asia Limited

d) Fellow Subsidiaries of Head Office

● BA Continuum India Private Limited

● DSP Merrill Lynch Limited

● DSP Merrill Lynch Capital Limited

● Merrill Lynch, Pierce, Fenner & Smith Incorporated

e) Key Management Personnel*

Mrs. Kaku Nakhate, Chief Executive Officer




Transactions with related parties are in the ordinary course of business (Current year figures are shown in bold. Previous year's figures are shown in brackets):

(Rs. '000) Items/Related Party Subsidiaries Fellow Subsidiaries of Head office of Head office Transactions during the year Sales/Redemption of Securities 44,266,801 99,975 (30,950,154) (148,864) Purchase of securities Nil Nil (974,390) (Nil) Purchase of Car Nil Nil (Nil) (1,450) Term Deposits (note 1) Nil 26,321,923 (Nil) (25,369,892) Documentary Collections Nil 340,897 (Nil) (264,019) Guarantees issued Nil 10,658 (Nil) (3,000) Interest Paid Nil 709,554 (Nil) (672,033) Depository Participant charges Nil 42 (Nil) (20) Commission Received Nil 1,083 (Nil) (542) Bank charges Received Nil 72 (Nil) (20) Reimbursement of Expenditure Nil 95,561 (Nil) (2,394) Rendering of Services 3,889 140,419 (2,573) (83,064) Receipt of Services Nil 151,425 (Nil) (149,680) Outstanding at the year end Term Deposits (note 1) Nil 2,188,679 (Nil) (9,328,679) Demand Deposits 22,824 11,274,168 (28,315) (1,826,818) Other Assets 427 65,823 (714) (12,051) Other Liabilities Nil 68,660 (Nil) (69,157) Guarantees Nil 33,211 (Nil) (30,914) Maximum outstanding during the year Term Deposits (note 1) Nil 14,718,679 (Nil) (24,528,679) Guarantees Nil 12,798 (Nil) (30,914)

Note 1: Includes deposits which are lien marked.




Material related party transactions #:

(Rs.'000) Particulars Subsidiaries Fellow Subsidiaries of Head office of Head office Sales/Redemption of Securities Bank of America Singapore Limited 44,266,801 Nil (30,950,154) (Nil) DSP Merrill Lynch Capital Limited Nil 99,975 (Nil) (148,864) Purchase of securities Bank of America Singapore Limited Nil Nil (974,390) (Nil) Purchase of Car DSP Merrill Lynch Limited Nil Nil (Nil) (1,450) Depository Participant Charges DSP Merrill Lynch Limited Nil 42 (Nil) (20) Reimbursement of Expenditure DSP Merrill Lynch Limited Nil 95,561 (Nil) (2,394) Rendering of Services BA Continuum India Private Limited Nil 55,731 (Nil) (29,413) DSP Merrill Lynch Limited Nil 84,689 (Nil) (53,692) Banc of America Securities (India) Private Limited 3,889 Nil (2,590) (Nil) Receipt of Services DSP Merrill Lynch Limited Nil 148,942 (Nil) (149,680)

* In accordance with RBI Master Circular (DBOD.BP.BC.No.14/21.04.018/2012-13 dated July 2, 2012) on 'Disclosure in Financial Statements – Notes to Accounts', where there is only one entity/person in any category of related parties, the Bank has not disclosed any details pertaining to that related party other than the relationship with that related party.

# In accordance with the Accounting Standard 18, a specific related party transaction is disclosed as a material related party transaction when it exceeds 10% of total related party transactions in that category, other than cases which are in the nature of banker – customer relationships, where the Bank has obligation under the law to maintain confidentiality.

33. Leases Information in respect of commercial and residential branch premises taken on operating lease of non cancellable nature is

as under: (Rs. '000) Sr. No. Future minimum lease payments As at As at March 31, 2013 March 31, 2012

1) Up to 1 year Nil Nil 2) More than 1 year and up to 5 years Nil Nil 3) More than 5 years Nil Nil




● The lease payments, recognized in the Profit and Loss account: Rs. 213,419 thousand (Previous year Rs. 167,994 thousand). ● The Bank has not sub-leased any part of the above premises. ● There are no lease payments recognized in the statement of Profit and Loss for contingent rent. ● The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. ● There are no undue restrictions or onerous clauses in the agreements.

34. Other Fixed Assets (including furniture & fixtures) Other Fixed Assets under Schedule 10(II) include software acquired by the Bank, details for which are given below:

(Rs. '000) Particulars For the year ended For the year ended March 31, 2013 March 31, 2012

At Cost as at March 31, of preceding year 72,676 66,298 Additions during the year 3,209 6,378 Deductions during the year (-) (-) At Cost as at March 31 75,885 72,676 Accumulated amortization (55,477) (42,744) Written down value as at March 31 20,408 29,932

35. Employee share-based payments The eligible employees of the Bank have been granted stocks of the ultimate holding company, Bank of America Corporation,

under employee share-based payment schemes. The Bank has recognized an amount of Rs. Nil (Previous year Rs. 338,772 thousand) under the head 'Payments to and provisions for employees', as cost towards account of share-based payments under Schedule 16 – Operating Expenses.

36. Disclosures on Remuneration The Bank's compensation policies including that of CEO's, is in conformity with the Financial Stability Board principles and

standards. In accordance with the requirements of the RBI Circular No. DBOD No.BC.72/29.67/001/2011-12 dated January 13, 2012; the Regional Office of the Bank has submitted a declaration to RBI confirming the aforesaid matter.

37. Provisions, Contingent liabilities and Contingent Assets Contingent Liabilities stated in Schedule 12 are as under:

a) Claims against the Bank not acknowledged as Debts The Bank is a party to various legal proceedings in the normal course of business. It also includes claims/demands raised

by Income tax authorities which are disputed by the Bank.

b) Liability on account of forward exchange and derivative contracts The Bank enters into forward exchange contracts, options, currency swaps, currency futures and interest rate swaps with

interbank participants on its own account and for its customers.

Forward exchange contracts are commitments to buy or sell foreign currency at a future date at a contracted rate. Swaps are commitments to exchange cash flows by the way of interest/principal in one currency against another, based on predetermined rates.

Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts that are recorded as contingent liabilities are used for the calculation of interest.

c) Guarantees given on behalf of Constituents, Acceptances, Endorsements and other obligations As a part of its corporate banking activities, the Bank issues documentary credit and guarantees on behalf of its customers.

Documentary credits such as letters of credit enhance the credit standing of the customer of the Bank. Guarantees generally represent irrevocable assurances that the Bank will make payment in the event of customer failing to fulfill its financial or performance obligations.

d) Other items for which the Bank is contingently liable ● Committed Lines of Credit ● Bills Re-discounted




Movement in Provision for Contingencies (Rs. '000)


Opening Provision 20,678 20,743 Additions Nil Nil Reversals Nil 65 Closing Provision 20,678 20,678

38. Floating Provisions (Rs. '000) Sr. No. Particulars As at As at March 31, 2013 March 31, 2012

1) Opening balance in the floating provisions account Nil Nil 2) The quantum of floating provisions made in the accounting year Nil Nil 3) Amount of draw down made during the accounting year Nil Nil 4) Closing balance in the floating provision account Nil Nil

39. Additional disclosure on call money as required for Primary Dealers vide RBI Master circular on Operational Guidelines to Primary Dealers no. IDMD.PDRD.01/03.64.00/2012-13 dated July 2, 2012.

(Rs. crores) For the year ended March 31, 2013 Average* Peak Borrowing 493 2,250 Lending 101 380

(Rs. crores)

For the year ended March 31, 2012 Average* Peak

Borrowing 516 2,450 Lending 107 720

* Average is calculated in respect of days on which balance was outstanding.

40. Micro, Small and Medium Enterprises Development Act, 2006

There are no delays in payments to micro and small enterprises as required to be disclosed under The Micro, Small and Medium Enterprises Development Act, 2006. The determination has been made to the extent such parties were identified based on the information available.

41. The Bank is not into the business of Bancassurance and has not received any fees/remuneration in respect of the same during the year ended March 31, 2013(Previous year Rs. Nil).

42. Concentration of Deposits, Advances, Exposures and NPAs 1) Concentration of Deposits

(Rs. '000) Particulars As at As at March 31, 2013 March 31, 2012

Total Deposits of twenty largest depositors 44,348,587 33,162,209

Percentage of Deposits of twenty largest depositors to Total Deposits of the bank 60.11% 55.60%





2) Concentration of Advances (Rs. '000)


Total Advances to twenty largest borrowers 59,436,056 69,068,266

Percentage of Advances to twenty largest borrowers to Total Advances of the bank 46.25% 59.75%

3) Concentration of Exposures (Rs. '000)


Total Exposure of twenty largest borrowers/customers 59,486,633 69,139,338

Percentage of Exposure to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers 45.68% 58.46%

4) Concentration of NPAs (Rs. '000)


Total Exposure of top four NPA accounts Nil 6,978*

* Only one account is NPA.

I. Sector-wise NPA

Sr. No. Sector Percentage of NPAs to Percentage of NPAs to Total Advances in Total Advances in that sector as that sector as March 31, 2013 March 31, 2012

1 Agriculture and allied activities Nil Nil

2 Industry – Engineering Sector Nil 0.10%

3 Services Nil Nil

4 Personal loans Nil Nil

Note: The NPA is disclosed under the category 'Engineering' under the DSB return on Asset Quality – IV submitted to RBI on a monthly basis.

II. Overseas Assets, NPAs and Revenue (Rs. '000)

Particulars March 31, 2013 March 31, 2012

Total Assets Nil Nil

Total NPAs Nil Nil

Total Revenue Nil Nil

III. Off-balance sheet SPVs (Domestic & Overseas) sponsored – NIL




43. Provision Coverage ratio

As on March 31, 2013 (Rs. '000)

1 2 3 4 5

Gross NPA @ Specific Provisions held including Ratio of (4) plus Technical/ provisions for Diminution in fair to (3) Prudential value of the restructured accounts Write-off classified as NPAs plus Technical/ Prudential write-off

1. Sub-Standard Advances Nil Nil Nil

2. Doubtful Advances (a+b+c) Nil Nil Nil a < 1 year Nil Nil Nil b 1-3 years Nil Nil Nil c >3 years Nil Nil Nil

3. Advances classified as Loss Assets Nil Nil Nil

4. Total Nil Nil Nil

5. Floating Provisions for Advances (only to the extent they are not used as Tier II Capital) Nil

6. DICGC/ECGC claims received and held pending adjustments Nil

7. Part payment received and kept in Suspense Account for any other similar account Nil

8. Total (Sum of column 4 of Row 4 + Row 5 + Row 6 + Row 7) Nil

9. Provision Coverage Ratio {(8/Total of column 3 of Row 4)*100} Nil

@ Gross NPAs to be computed in terms of the Master circular on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances DBOD.BP.BC.9/21.04.048/2012-13 dated July2, 2012

44. Unamortised Pension and Gratuity Liabilities – Rs. Nil (Previous year Rs. Nil).45. Previous year figures have been regrouped and reclassified wherever necessary to confirm to current year's presentation.

For B S R & Co. For BANK OF AMERICA N.A. – INDIA BRANCHES Chartered Accountants Firm Registration No. 101248W Sd/- Sd/- Sd/- Manoj Kumar Vijai Kaku Nakhate Kumar ShahPartner Chief Executive Officer Chief Financial OfficerMembership Number: 046882

Mumbai: June 25, 2013



PILLAR III – MARKET DISCIPLINE FOR THE YEAR ENDED MARCH 31, 2013

BASEL II – PILLAR III DISCLOSURES1. Scope of application Qualitative Disclosures The Basel II Pillar III disclosures contained herein relate to Bank of America, N.A. – India Branches (hereafter referred to as the

“Bank” or “BANA India”) for the year ended March 31, 2013. Bank of America Corporation (“BAC” or “the Corporation”) has a subsidiary, Bank of America, N.A. (“BANA”) into which BANA India is consolidated. The Pillar III disclosures are compiled in accordance with Reserve Bank of India (the “RBI”) regulations on Prudential guidelines on Capital Adequacy and Market Discipline – New Capital Adequacy Framework (“NCAF”) vide DBOD. No. BP.BC. 16/ 21.06.001/ 2012-13 dated July 2, 2012.

The provisions of Accounting Standard (“AS”) 21 - Consolidated Financial statements, AS 23 Accounting for Investments in Associates in Consolidated Financial statements & AS 27 - Financial Reporting of Interest in Joint Ventures, issued by The Institute of Chartered Accountants of India (‘ICAI’) and notified by the Companies (Accounting Standards) Rules 2006 do not apply to the Bank. Further the Bank does not have any interest in insurance entities. Hence the qualitative disclosures are only made for BANA India as a standalone entity.

Quantitative Disclosures For the reasons mentioned above, the quantitative disclosures are only made for BANA India as a standalone entity2. Capital Structure Qualitative Disclosures The capital funds of the Bank include the following: Tier I Capital ● Interest-free funds from Head office (BANA) specifically for the purpose of meeting the capital adequacy norms prescribed

by the RBI. These include amount brought in as start-up capital and Tier 1 capital augmented by BANA. ● Statutory reserves upon transfer of 25% of profits of each year, in accordance with Section 17 of The Banking Regulation

Act, 1949. ● Remittable surplus retained in Indian books which the Bank has undertaken not to repatriate and credited to a separate

account titled as ‘Amount retained in India for the purposes of Capital to Risk Weighted Assets Ratio (“CRAR”)’. ● Capital reserves representing surplus arising out of sale of assets in India and held in a separate account and not eligible

for repatriation so long as the Bank operates in India. Tier II Capital ● Revaluation reserves on account of revaluation of the premises owned by the Bank. As per the RBI guidelines, a discount

of 55 percent is considered while determining the value for inclusion in Tier II capital. ● Reserves included under Tier II comprise reserves that are not attributable to the actual diminution in value or identifiable

potential loss in any specific asset and are available to meet unexpected losses. The Bank includes the ‘Provision on Standard Assets’, ‘Provisions held for Country Exposures’, ‘Investment Reserve Account’ and ‘General Provisions’ in Tier II capital. These are reckoned for Tier II capital up to a maximum of 1.25% of the total risk-weighted assets.

Quantitative Disclosures Table 1: Tier I Capital (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12 Amount brought in as start-up capital 2,000 2,000 Tier I Capital augmented by Head office 9,851,492 9,851,492 Statutory Reserves 9,691,424 8,518,094 Amount retained in India for the purposes of CRAR 14,875,501 14,875,501 Capital Reserves 3,457,657 3,221,517 37,878,074 36,468,604 Less: Deductions Deferred Tax Asset 261,804 212,062 Software 20,408 29,932 Suspense assets 465 1,506 282,677 243,500

Tier 1 Capital 37,595,397 36,225,104



Table 2: Tier II Capital (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Revaluation Reserves – 25,515 General Provisions 6,000 6,000 Provision held for Country Risk 3,728 3,200 Provision for Standard Assets 767,415 767,415 Investment Reserve Account 27,456 – Subordinated Debt – –

Tier 2 Capital 804,599 802,130

Table 3: Debt capital instruments eligible for inclusion in Upper Tier II capital (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Total amount outstanding – – Of which amount raised during the year – – Amount eligible to be reckoned as Capital funds – –

Table 4: Total Eligible Capital (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Tier I 37,595,397 36,225,104 Tier II 804,599 802,130

Total 38,399,996 37,027, 234

3. Capital Adequacy Qualitative disclosures Internal Capital Adequacy Assessment Process (“ICAAP”) The Bank is required to comply with all applicable laws and regulations in India including guidelines issued by RBI and other

relevant regulatory bodies. The Local Management Team (“LMT”) of the Bank is responsible for ensuring that the Bank complies with global policies,

procedures and corporate governance practices. These include policies relating to Basel II and, in particular, the ICAAP framework. The LMT is chaired by the Country Executive. It is the primary body which provides strategic direction to the Bank and ensures compliance to regulatory requirements and internal policies of the Bank. It is responsible for branch governance and oversight of Branch Operations. LMT reviews and approves the ICAAP.

ICAAP establishes a framework for banks to perform a comprehensive assessment of the risks they face and relate capital to those risks. The capital analysis performed by the Bank is expected to encompass all risks, not just the risks captured by the Basel II Pillar 1 minimum regulatory capital calculation. Successful risk identification and measurement requires having a comprehensive process to quantify, measure and aggregate these various risks in order to ensure that the Bank’s capital resources are sufficient to cushion volatility in earnings due to unexpected losses.

Broadly, the ICAAP process can be summarized as follows: The authority to develop the ICAAP document is delegated to the Finance department. The Bank’s Chief Financial Officer

(“CFO”) is responsible for the production of the ICAAP with inputs from the primary Lines of business (“LOBs”), and Governance and Control Functions (“GCFs”) including Risk Management and Compliance. Enterprise-wide functions, including Enterprise Stress Testing (“EST”), Enterprise Capital Management (“ECM”) and CFO Risk, also review the ICAAP to ensure consistency with firm practices.

Based on inputs from LOBs and the LMT, Finance prepares financial projections and forecasts the Risk Weighted Assets over the ICAAP Planning Horizon. This determines the projected capital requirements for ICAAP purposes. The stress scenarios and methodology adopted for developing the ICAAP document are reviewed by senior management. The document is presented to the LMT for final review and approval. The ICAAP is an annual process in the Bank and is also validated by Internal/External Audit periodically, as required under RBI guidelines.




Pillar 1

The Bank has adopted Standardized Approach (“SA”) for credit risk, Standardized Duration Approach (“SDA”) for market risk and Basic Indicator Approach (“BIA”) for operational risk for computing its capital requirement.

Under the Standardized Approach for credit risk, ratings assigned by the eligible external credit rating agencies support the measure of credit risk. The Bank relies upon the ratings issued by the external credit rating agencies specified by the RBI for assigning risk weights for capital adequacy purposes under the Basel II guidelines. The risk weights applicable for claims against bank, sovereign, corporate, retail portfolio (employee loans) are as per the Basel II guidelines.

In compiling the credit exposures, the Bank does not reduce cash collateral received against credit exposures as eligible credit mitigants, as permitted by the RBI.

Under the Standardized Duration Approach for computing the capital requirement for market risk, the Bank has adopted the “duration” method.

The minimum capital requirement is computed in terms of:

● "Specific risk" charge for each security, to protect against an adverse movement in the price of an individual security owing to factors related to the individual issuer.

● "General market risk" charge towards interest rate risk in the portfolio, where long and short positions in different securities or instruments can be offset.

Under the Basic Indicator Approach, the Bank holds capital for operational risk equal to 15% of average positive gross annual income for the previous three financial years.

Quantitative disclosures Table 5: Capital requirement and CRAR (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Capital requirements for credit risk: – Portfolios subject to standardised approach 14,405,376 14,632,279 – Securitisation exposures 33,473 50,769

Capital requirements for market risk: (Standardised duration approach) – Interest rate risk 3,556,585 3,996,004 – Foreign exchange risk (including gold) 925,000 600,000 – Equity risk 90 90

Capital requirements for operational risk: 1,944,614 1,767,409 (Basic indicator approach)

Total capital requirements 20,865,138 21,046,551 Total capital ratio 18.40% 17.59% Tier I capital ratio 18.02% 17.21%

4. Credit Risk: General Disclosures Qualitative Disclosures Credit Risk The Bank has comprehensive policies in place for measurement, reporting, monitoring and mitigation of credit risk.

The Bank is focused on quality of assets, return on those assets/risk capital required on account of these assets and select target segment of corporate with strong credit profiles. The Bank examines its portfolio and monitors these factors on an on-going basis. Consequently the Bank exits relationships on account of credit concerns or inadequate returns on the risk capital required to continue the lending relationship, as and when warranted. The Bank believes that this exercise has improved the overall quality of credit portfolio, and has also made credit portfolio more resilient to industry and economic downturns.





The Bank manages credit risk based on the risk profile of the borrower or counterparty, repayment sources, the nature of underlying collateral, and other support given current events, conditions and expectations. Credit risk management begins with an assessment of the credit risk profile of the borrower or counterparty based on an analysis of their financial position. As part of the overall credit risk assessment of a borrower or counterparty, credit exposures are assigned a risk rating and are subject to approval based on defined credit approval standards. Subsequent to loan origination, risk ratings are monitored on an ongoing basis. If necessary, risk ratings are adjusted to reflect changes in the financial condition, cash flow or financial situation of a borrower or counterparty. Risk ratings are also a factor in determining the allowance for credit losses.

The Bank has a policy of internal rating on a scale of Risk Rating (“RR”) 1-11, and the RR is continuously monitored with a change in RR as and when it is warranted. Exposures with RR of 8 or more are subject to intensive scrutiny by the senior management.

Tight credit risk management controls as above have ensured strong credit risk management systems as demonstrated by no non-performing assets (“NPA”) as of March 31, 2013 (Previous year - 0.01% of total advances). Net NPA levels have consistently been at zero percent over the past several years. The Bank’s strong credit risk management systems are reflected in the selective client base, stringent and regular monitoring and conservative Criticized Asset policy. As a result, Bank is able to start tracking potential problem assets in the initial stage itself and can manage early exit, resulting in low or nil NPAs.

NORMS FOR DETERMINING WHEN TO CLASSIFY VARIOUS TYPES OF ASSETS AS NON-PERFORMING

● Term loans are treated as non-performing if the interest and/or installments of principal remain overdue for a period of more than 90 days.

● Cash credits & overdrafts are treated as non-performing if these remain out of order for a period of more than 90 days.

An account will be treated “out of order” if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In case where the outstanding balance is less than the sanctioned limit/drawing power, but there are no credits continuously for three months as on balance-sheet date or credits are not enough to cover the interest debited during the same period, these accounts will be treated as out of order.

● Bills purchased/discounted are treated as non-performing if the bill remains overdue and unpaid for a period of more than 90 days during the financial year.

● Any overdue receivables representing positive mark-to-market value of a foreign exchange and interest rate derivative contracts will be treated as non-performing asset if these remain unpaid for 90 days or more, upon becoming due.

Any other facility will be treated as non-performing if any amount to be received remains overdue for a period of more than 90 days during the financial year.

Quantitative Disclosures Table 6: Total Gross credit exposures # (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Fund Based 94,329,135 160,453,397

Non-Fund Based * 136,321,685 195,631,022

Table 7: Geographic distribution (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Domestic Overseas Domestic Overseas

Fund Based 94,329,135 – 160,453,397 –

Non-Fund Based * 136,321,685 – 195,631,022 –

# Un-realized gains on derivative instruments are considered on a gross basis in arriving at the credit exposure, which are presented net of un-realized losses product-wise under “Other Assets” or “Other Liabilities” on the Balance Sheet.

* Includes market as well as non-market related exposures.



Table 8: Distribution of Exposures by sector/industry (Rs. in ‘000)

Sr no Particulars 31-Mar13 31-Mar-12

Funded Non-Funded Funded Non-Funded Exposure Exposure* Exposure Exposure*

1. Agriculture & Allied Activities – – – –

1. Total – – – –

2. Industry (Micro & Small, Medium and Large) a. Food Processing 3,559,358 175,780 1,229,145 19,474

b. Textiles 861,245 – 1,246,969 1,222

c. Leather & leather products 413,445 40 2,044,138 951

d. Paper & paper products 1,290,733 444 1,627,045 8,517

e. Petroleum, coal products and nuclear fuels 1,472,550 1,587,514 4,115,436 1,308,410

f. Chemicals and chemical products 10,496,969 3,149,088 6,318,960 2,283,071

g. Rubber, plastic & their products – 700,000 3,816 737,091

h. Glass and glassware – – – –

i Cement and cement products 669,903 – – –

j Basic metal and metal products 12,260,347 1,298,401 4,480,702 3,407,083

k All Engineering 11,985,468 6,224,340 7,217,744 7,311,142

l Vehicles, vehicle parts and

transport equipments 8,811,865 1,914,508 6,883,295 2,260,044

m Gems and jewellery – – – –

n Construction 622,682 470,333 470,765 585,681

o Infrastructure 4,505,178 153,922 16,343,261 843,055

p Others 5,168,266 914,696 5,703,501 1,053,137

2. Total 62,118,009 16,589,066 57,684,777 19,818,879

3. Services a. Non-banking financial companies (NBFCs) 6,674,100 15,815,225 15,800,352 19,114,715

b. Banking and Finance other than

NBFCs and MFs 7,913,087 92,322,682 72,397,266 150,113,058

c. Other Services 11,574,572 10,794,014 8,365,182 6,126,255

3. Total 26,161,759 118,931,921 96,562,801 175,354,027

4. Sovereign 6,038,079 800,698 6,194,318 458,116

4. Total 6,038,079 800,698 6,194,318 458,116

5. Personal Loans 11,288 – 11,502 –

5. Total 11,288 – 11,502 –

Grand Total 94,329,135 136,321,685 160,453,397 195,631,022

* Includes market as well as non-market related exposures.




PILLAR III – MARKET DISCIPLINE FOR THE YEAR ENDED MARCH 31, 2013.

Table 9: Residual contractual maturity pattern for assets* (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12 Advances Investments Advances Investments

Next day 6,813,227 68,336,023 1,040,474 28,858,543 2 to 7 days 11,506,752 3,309,909 5,925,905 39,216,539 8 to 14 days 7,343,311 1,387,344 4,107,406 620,333 15 to 28 days 14,933,706 7,011,623 5,813,856 371,001 29 days and up to 3 months 13,809,838 1,004,982 20,408,089 9,850,998 Over 3 months and upto 6 months 6,821,568 377,227 4,585,326 978,628 Over 6 months and upto 1 year 1,614,268 482,239 18,540,270 49,398 Over 1 year and upto 3 years 12,129,603 6,284,945 1,632,348 2,225,481 Over 3 years and upto 5 years 1,250,638 15,167 – 653 Over 5 years 7,094 125,625 – 86,581

Total 76,230,005 88,335,084 62,053,674 82,258,155

* maturity pattern of assets is given with reference to advances and investments.

Table 10: Amount of NPAs (Gross) (Rs. in ‘000) Category of NPA 31-Mar-13 31-Mar-12

Substandard – – Doubtful 1 – – Doubtful 2 – – Doubtful 3 – – Loss – 6,978

● Net NPAs – Nil (Previous Year: Nil)

● NPA ratios

– Gross NPA to Gross Advances: Nil (Previous Year : 0.01%)

– Net NPA to Net Advances: Nil (Previous Year : Nil)

Table 11: Movement of NPAs (Gross) and Provisions for NPAs (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Movement of NPAs (Gross)

● Opening balance 6,978 6,978 ● Additions during the year – – ● Reductions during the period 6,978 – ● Closing balance – 6,978

Movement of provisions for NPAs*

● Opening balance 6,978 6,978 ● Provisions made during the year – – ● Write-off 6,978 – ● Write-back of excess provisions – – ● Closing balance – 6,978

* (excluding provision for standard assets) ● Non-Performing Investments: Nil (Previous Year: Nil) ● Provisions for Non-Performing Investments: Nil (Previous Year: Nil)




Table 12: Movement of Provisions for Depreciation on Investments (Rs. ‘000)

Particulars 31-Mar-13 31-Mar-12

Provisions for depreciation on investments ● Opening balance 69,824 30,203 ● Provisions made during the year – 39,621 ● Write-off – – ● Write-back of excess provisions 63,144 – ● Closing balance 6,680 69,824

5. Credit risk: Disclosures for portfolios subject to the standardised approach Qualitative disclosures The Bank adopts the following basis: ● All exposures to scheduled banks for the purpose of Pillar 1 calculation, have been applied a 20% risk weight, since these

exposures are made to counterparty banks having capital adequacy ratio of 9% and above. ● Ratings for foreign banks have been sourced from Standard & Poor’s. ● Where the obligors have obtained rating of the facility from any of the accredited credit rating agencies viz. CRISIL Limited

(CRISIL), Credit Analysis & Research Limited (CARE), ICRA Limited (ICRA), Fitch, Brickwork Ratings India Pvt. Limited (Brickwork) as specified by the RBI, the Bank has applied the risk weights relevant to the ratings assigned by the credit rating agencies. Further, where the long-term rating is worse off than the short-term rating and vice-versa, the Bank has applied the most conservative risk weight across the portfolio.

● Where the obligors have not obtained a rating, the exposures are taken as unrated and appropriate risk weights applied.

Quantitative disclosures Table 13: Gross Credit Exposures # (Rs. ‘000) Fund-Based 31-Mar-13 31-Mar-12 Below 100% risk weight 19,851,436 99,344,047 100% risk weight 74,477,699 61,109,350 More than 100% risk weight – – Deducted – – Total 94,329,135 160,453,397

Non-Fund Based* 31-Mar-13 31-Mar-12 Below 100% risk weight 93,406,846 147,872,606 100% risk weight 42,914,839 47,504,041 More than 100% risk weight – 254,375 Deducted – – Total 136,321,685 195,631,022

# Un-realized gains on derivative instruments are considered on a gross basis in arriving at the credit exposure, which are presented net of un-realized losses product-wise under “Other Assets” or “Other Liabilities” on the Balance Sheet.

* Includes market as well as non-market related exposures

6. Credit risk mitigation: disclosures for standardised approaches Qualitative disclosures In determining credit risk capital, the Bank has not reduced the facility amounts by any corresponding eligible collateral amount

in the form of cash margins. The Bank assesses the credit facility based on the future projection of the cash flows, financial soundness, and liquidity profile and repayment capacity, of the potential/existing clients. The Bank lays more emphasis on cash flow of the client and not on the units, stocks or assets mortgaged/pledged by the client. Hence conservative view is taken by not reducing the collaterals.




Further, credit portfolio also includes responsibility credits (R-credits), which are used to offer credit facilities to subsidiaries and affiliates of existing credit takers that are located in areas served by credit jurisdictions other than one serving the parent entity and are unable to access credit facilities without parent support. Here the facility is provided to the Indian borrower on the support of the parent credit taker. These are secured by corporate guarantees from the parent companies or standby letter of credit from the concerned branches.

The risk weighted assets are computed based on the gross outstanding facility amount.

Quantitative disclosures The Bank has not availed Credit Mitigation Techniques (“CMT”) as at March 31, 2013.

7. Securitisation Exposures: Disclosure for Standardised Approach Qualitative disclosures The Bank has investments in Pass Through Certificates (“PTC”) of third party originated securitisation transactions.

Rating of securitisation exposures: Bank has used the ratings obtained from the external credit rating agencies, viz. Fitch and ICRA in order to compute the risk

weighted assets on the securitisation exposures

Quantitative disclosures 7.1 Banking Book ● Total amount of exposures securitised by the Bank: Nil (Previous Year: Nil)

● Amount of assets intended to be securitised within a year: Nil (Previous Year: Nil)

● Total amount of assets securitised and unrecognized gain or losses on sale: Nil (Previous Year: Nil)

Table 14: Aggregate amount of on-balance sheet and off-balance sheet securitization exposures* purchased and break-up by exposure type:

(Rs. ‘000) Nature As at 31-Mar-13 As at 31-Mar-12

Exposure Type Exposure Amount Exposure Type Exposure Amount

On Balance Sheet Vehicle/Auto Loan 1,673,656 Vehicle/Auto Loan 2,538,446

Off Balance Sheet – – – –

Total 1,673,656 2,538,446

*represent investments in PTC’s of third party originated securitization transactions.

Table 15: Securitization exposures purchased and the associated capital charge by different risk weight bands: As at March 31, 2013 (Rs. ‘000) Risk Weight Bands Exposure Risk Weighted Assets Capital Requirement Below 100% risk weight 1,673,656 334,731 33,473 100% risk weight – – – More than 100% risk weight – – – Total 1,673,656 334,731 33,473

As at March 31, 2012 (Rs. ‘000) Risk weight Bands Exposure Risk weighted assets Capital Requirement

Below 100% risk weight 2,538,446 507,689 50,769 100% risk weight – – – More than 100% risk weight – – –

Total 2,538,446 507,689 50,769




● Securitisation Exposures deducted entirely from Tier 1 capital, credit enhancing Interest Only Strips (I/Os) deducted from total capital, and other exposures deducted from total capital: Nil (Previous Year : Nil)

7.2 Trading Book

● Aggregate amount of exposures securitised by Bank for which bank has retained some exposures and which is subject to market risk approach: Nil (Previous Year: Nil)

● Aggregate amount of on-balance sheet securitisation exposures retained or purchased: Nil (Previous Year: Nil)

● Aggregate amount of off-balance sheet securitisation exposures: Nil (Previous Year: Nil)

● Aggregate amount of securitization exposures retained or purchased subject to Comprehensive Risk Measure for specific risk : Nil (Previous Year: Nil)

● Aggregate amount of securitization exposures retained or purchased subject to securitization framework for specific risk broken into different risk weight bands: Nil (Previous Year: Nil)

● Aggregate amount of capital requirements for the securitisation exposures subject to securitisation framework : Nil (Previous Year: Nil)

● Securitisation Exposures deducted entirely from Tier 1 capital, credit enhancing Interest Only Strips (I/Os) deducted from total capital, and other exposures deducted from total capital: Nil (Previous Year: Nil)

8. Market risk in trading book

Qualitative disclosures

Market Risk

Market risk is defined as the risk of losses in on-balance sheet and off-balance sheet positions arising from movements in market prices. The market risk positions subject to capital charge requirement are:

● The risks pertaining to interest rate related instruments and equities in the trading book; and

● Foreign exchange risk throughout the Bank.

The minimum capital requirement is expressed in terms of two separately calculated charges:

● "Specific risk" charge for each security, to protect against an adverse movement in the price of an individual security owing to factors related to the individual issuer; and

● "General market risk" charge towards interest rate risk in the portfolio, where long and short positions in different securities or instruments can be offset.

The general market risk charge captures the risk of loss arising from changes in market interest rates. The capital charge is the sum of four components:

● the net short/long position in the whole trading book;

● a small proportion of the matched positions in each time band – vertical disallowance;

● a larger proportion of the matched positions across different time bands – horizontal disallowance, and

● a net charge for positions in options.

The general market risk charge is measured by using the modified duration method.

Foreign exchange open positions are risk-weighted at 100%. These open positions, limits or actual, whichever is higher, attract capital charge at 9%.

The option risk is the sum of capital charges arising from delta risk, gamma and vega risk.




Quantitative disclosures

Table 16: Capital requirement for Market Risk (Rs. ‘000) Particulars 31-Mar-13 31-Mar-12

Capital requirements for: Interest rate risk – general market risk 3,222,465 3,682,750 – specific risk 334,120 313,254 Equity position risk – general market risk – – – specific risk 90 90 Foreign exchange risk 925,000 600,000

Total 4,481,675 4,596,094

9. Operational Risk Operational Risk: It is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external

events. This definition includes legal risk.

Operational Risk Events: Inadequate or failed internal processes, people, systems and external events may result in unexpected or undesired consequences including a financial loss, an unexpected gain, a near miss and/or an opportunity cost (lost future revenue). The events associated with these unintended and/or undesired consequences are termed as operational risk events.

Operational Loss: An operational loss is the recorded financial consequence (excluding insurance reimbursements or tax effects) resulting from an operational loss event, including all expenses associated with an operational loss event except for opportunity costs, foregone revenue, and costs related to risk management and control enhancements implemented to prevent future operational losses. Operational loss events can also result in unintended financial gains. BAC classifies operational losses using the Basel II categories and definitions: Internal Fraud; External Fraud; Employment Practices and Workplace Safety; Clients, Products, and Business Practices; Damage to Physical Assets; Business Disruption and System Failures; and Execution, Delivery, and Process Management.

BAC manages the operational risks of its business activities using the enterprise-wide Operational Risk Framework. Enterprise-wide Operational Risk policies, processes, tools, and standards are established by Corporate Operational Risk – “COR” (Global Function) and implemented by the Lines of Business (“LOBs”)/Enterprise Control Functions (“ECFs”) with oversight from the Independent LOB/ECF Risk Teams (Regional Function). Each have a quality assurance role and through direct action or oversight, these stakeholders are collectively responsible for execution of the Operational Risk Program requirements, achievement of risk management objectives, and ensuring timely action is taken in response to concerns and issues.

Governance of Operational Risk Governance of BAC’s operational risk is accomplished through formal oversight by the Board of Directors (“the Board”), the

Chief Risk Officer (“CRO”) and through LMT and risk oversight groups aligned to the BAC’s overall risk governance framework and practices.

Risk Management Process The BAC Enterprise-wide Operational Risk Management Program includes processes for identification, measurement, mitigating,

controlling, monitoring, testing, reviewing and reporting operational risk information to management and the Board. This is implemented through 1) Risk and Control Self Assessment (“RCSA”), 2) Operational Risk Appetite, Key Risk Indicators (“KRIs”), 3) Scenario Analysis, 4) Operational Loss Event Data, 5) External Operational Loss Events, 6) Issues Management Process, 7) Quality Assurance (“QA”) & Validation Framework. Certain elements of bank’s operational risk program may only be performed at global level and/or at regional level. The results, relevant to Bank are shared with management committee.

10. Interest Rate Risk in the Banking Book (“IRRBB”) Qualitative Disclosure IRRBB represents the banking book’s exposure to adverse movements in interest rates. Client facing activities, primarily lending

and deposit taking, create interest rate sensitive positions on the balance sheet. This exposes the Bank to risk from changes in interest rates. These assets and liabilities essentially reside in the banking book.



IRRBB is measured using both earnings perspective (traditional gap analysis) and economic value perspective (duration gap analysis) and reviewed by the Asset Liability Committee (“ALCO”) on a regular basis.

Earnings perspective (traditional gap analysis): measures the sensitivity of net interest income to changes in interest rates over the next 12 months. It involves bucketing of rate sensitive assets and liabilities in the banking book as per residual maturity/re-pricing dates in various time bands and computing the change in net interest income change over a one year time horizon for 200 basis points upward and downward rate shocks.

Economic value perspective (duration gap analysis): measures the changes in the Market Value of Equity of the Bank for a 200 basis points upward and downward rate shock. It involves bucketing the interest rate sensitive assets and liabilities as per residual maturity in various time bands and computing the Modified Duration Gap (“MDG”). The MDG is used to evaluate the impact of the upward and downward rate movement on the Market Value of Equity of the Bank.

Quantitative disclosures: The increase/(decline) in earnings and economic value (on a pre-tax basis) for an upward/downward rate shock of 200 basis

points, broken down by currency is as below:

Table 17: Impact on net interest income over the next 12 months (earnings perspective) (Rs. ‘000) Currency If Interest rate were to go down If Interest rate were to go up by 200 basis points by 200 basis points March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012

INR (26,231) (168,934) 26,231 168,934

USD (7,537) (24,452) 7,537 24,452

Others (1,170) 5,277 1,170 (5,277)

Total (34,938) (188,109) 34,938 188,109

Table 18: Impact on market value of equity (economic value perspective): (Rs. ‘000) Currency If Interest rate were to go down If Interest rate were to go up by 200 basis points by 200 basis points March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012

INR (882,943) (457,512) 882,943 457,512

USD (94,527) (142,984) 94,527 142,984

Others 94 (30,774) (94) 30,774

Total (977,376) (631,270) 977,376 631,270


bank of america n.a. (india branches) - businesses and

Documents