1
CONTENTS
Managing Director & CEO’s Letter to Shareholders
3
Board of Directors
4
Snap Shot of Key Financial Indicators : 2010-2014
5
Highlights
6
Directors’ Report
7
Management’s Discussion & Analysis
16
Auditors’ Report
30
Balance Sheet
32
Profit and Loss Account
33
Cash Flow Statement
34
Schedules Forming Part of Balance Sheet
36
Schedules Forming Part of Profit and Loss Account
42
Significant Accounting Policies
43
Notes to Accounts
51
Auditors’ Certificate on Corporate Governance
93
Corporate Governance
94
Auditors’ Report on Consolidated Financial Statements
111
Consolidated Financial Statements
112
Disclosures under Basel III Capital Regulations
155
3
MANAGING DIRECTOR & CEO’S LETTER
TO THE SHAREHOLDERS
It gives me great pleasure to write to you as your Bank celebrates its twentieth anniversary this
year. The growth of the Bank and its performance in these two decades is the result of a large
customer franchise built by a workforce of committed men and women - who number more
than 40,000 today. It is a matter of pride for us that our clientele continues to grow strongly
across geographies.
We have had a challenging year marked by slow growth, persistent inflation, currency volatility
and high interest rates. However, improving fundamentals, especially towards the end of fiscal
2014 have restored stability in the markets. Your Bank has fared well despite the challenges
and our strategy of diversifying business mix, both on the liabilities as well as the assets side
of the balance sheet, has helped deliver another year of consistent performance. The core
revenue streams of the Bank have contributed solidly across businesses and we have continued
to improve operating efficiency and manage costs through system and process refinements. I
am happy to report that our profit after tax for the current year has crossed a billion US dollars
(`6,218 crores).
During the year, we opened 455 branches, 298 of which were opened in unbanked areas. We
believe considerable potential for business exists at these centres and also serves our objectives
of providing banking facilities to segments of our population who do not have access to these
at present. As we grow and transform our businesses to take on some of the competitive
challenges that lie before us, we also remain deeply committed to our responsibility as a
corporate citizen. One of the initiatives launched in 2011 by the Bank under its Corporate Social
Responsibility program through the Axis Bank Foundation was to help provide sustainable
livelihood to one million Indians by 2017 through a variety of programs involving vocational
training, advanced agricultural practices, providing market linkages for farmers etc. We have
made good progress towards this goal. As on March 31, 2014, the Axis Bank Foundation had
supported 39 programs covering over 185 districts in 24 states and had reached out to 4.42 lac
beneficiaries.
I take this opportunity to thank all our stakeholders, past and present for supporting us in our
endeavour.
Shikha Sharma
25
th
April, 2014
4
BOARD OF DIRECTORS*
Sanjiv Misra Chairman
Shikha Sharma Managing Director & CEO
K. N. Prithviraj Director
V. R. Kaundinya Director
S. B. Mathur Director
Prasad R. Menon Director
R. N. Bhattacharyya Director
Samir K. Barua Director
Som Mittal Director
Ireena Vittal Director
Rohit Bhagat Director
Usha Sangwan Director
Somnath Sengupta Executive Director & Head (Corporate Centre)
V. Srinivasan Executive Director & Head (Corporate Banking)
Sanjeev Kapoor Company Secretary
THE CORE MANAGEMENT TEAM*
R. K. Bammi Executive Director (Retail Banking)
P. Mukherjee President - Large Corporate & International Banking
S. S. Bajaj President & Chief Audit Executive
Bapi Munshi President & Chief Risk Officer
C. Babu Joseph Executive Trustee & CEO - Axis Bank Foundation
Sanjeev K. Gupta President & Chief Financial Officer
V. K. Bajaj President - Mid Corporates & SME
Sidharth Rath President - Treasury & Business Banking
A. R. Gokulakrishnan President - Wholesale Banking Operations
Rajendra D. Adsul President - SME
R. V. S. Sridhar President - IT & Retail Operations
Lalit Chawla President - Corporate Credit
Rajesh Kumar Dahiya President - Human Resources
Sharad Bhatia President - Stressed Assets
Jairam Sridharan President - Consumer Lending & Payments
Rajiv Anand President - Retail Banking
*as on 31
st
March 2014
M/s Deloitte Haskins & Sells Auditors
Chartered Accountants
M/s Karvy Computershare Private Limited Registrar and Share Transfer Agent
UNIT: AXIS BANK LIMITED
Plot No. 17 to 24, Vittalrao Nagar, Madhapur, Hyderabad - 500 081.
Tel. No. : 040-23420815 to 23420824 Fax No. : 040-23420814
Registered Office
‘Trishul’, 3
rd
Floor, Opp. Samartheshwar Temple, Law Garden, Ellisbridge, Ahmedabad - 380 006.
CIN : L65110GJ1993PLC020769
Tel. No. : 079-2640 9322 Fax No. : 079-2640 9321
Email: [email protected]
Website: www.axisbank.com
Corporate Office
‘Axis House’, C-2, Wadia International Centre, Pandurang Budhkar Marg, Worli, Mumbai - 400 025.
Tel. No. : 022-24252525/43252525 Fax No. : 022-24251800
5
SNAP SHOT OF KEY FINANCIAL INDICATORS : 2010 - 2014
(` in crores)
FINANCIAL HIGHLIGHTS 2009 - 2010 2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 CAGR
(5 Years)
Total Deposits 141,300.22 189,237.8 0 220,104.30 252,613.59 280,944.56 19.07%
- Savings Bank Deposits 33,861.80 40,850.31 51,667.96 63,777.73 77,775.94 24.67%
- Current Account Deposits 32,167.74 36,917.09 39,754.07 48,322.10 48,686.40 14.42%
Total Advances 104,340.95 142,407.83 169,759.54 196,965.96 230,066.76 23.05%
- Retail Advances 20,820.73 27,759.23 37,570.33 53,959.79 74,491.24 35.93%
Total Investments 55,974.82 71,991.62 93,192.09 113,737.5 4 113,548.43 19.64%
Shareholders' Funds 16,044.45 18,998.83 22,808.54 33,107.86 38,220.48 30.20%
Total Assets/Liabilities 18 0,647.85 242,713.37 285,627.79 340,560.66 383,244.89 21.01%
Net Interest Income 5,004.49 6,562.99 8,017.75 9,666.26 11,951.64 26.52%
Other Income 3,945.78 4,632.13 5,420.22 6,551.11 7,405.22 20.65%
Operating Revenue 8,950.27 11,195.12 13,437.97 16,217.37 19,356.86 24.07%
Operating Expenses 3,709.72 4,779.43 6,0 07.10 6,914.24 7,900.77 22.55%
Operating Profit 5,240.55 6,415.69 7,430.87 9,303.13 11,456.09 25.19%
Provisions and Contingencies 2,726.02 3,027.20 3,188.66 4,123.70 5,238.42 22.36%
Net Profit 2,514.53 3,388.49 4,242.21 5,179.43 6,217.67 27.92%
FINANCIAL RATIOS 2009 - 2010 2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014
Earnings Per Share (Basic) (in `) 65.78 82.95 102.94 119.67 132.56
Book Value (in `) 395.99 462.77 551.99 707.50 813.47
Return on Equity 19.89% 20.13% 21.22% 20.51% 18.23%
Return on Assets 1.67% 1.68% 1.68% 1.70% 1.78%
Capital Adequacy Ratio (CAR) 15.80% 12.65% 13.66% 17.0 0 % 16.07%
Tier - I Capital Adequacy Ratio 11.18% 9.41% 9.45% 12.23% 12.62%
Dividend Per Share (in `) 12.00 14.00 16.00 18.00 20.00
Dividend Payout Ratio 22.57% 19.78% 18.15% 19.06% 17.71%
6
HIGHLIGHTS
Profit after tax up 20.05% to `6,217.67 crores
Net Interest Income up 23.64% to `
11,951.64 crores
Fee & Other Income up 15.75% to `
6,709.23 crores
Deposits up 11.22% to `
280,944.56 crores
Demand Deposits up 12.81% to `
126,462.34 crores
Advances up 16.81% to `
230,066.76 crores
Retail Assets up 38.05% to `
74,491.24 crores
Network of branches and extension counters increased from 1,947 to
2,402
Total number of ATMs went up from 11,245 to 12,922
Earnings per share (Basic) increased from `119.67 to `132.56
Proposed Dividend up from 180% to 200%
Capital Adequacy Ratio under Basel III stood at 16.07% as against the minimum regulatory norm
of 9%
Tier - I Capital Adequacy Ratio under Basel III stood at
12.62%
7
DIRECTORS’ REPORT : 2013-14
The Board of Directors is pleased to present the Twentieth Annual Report of the Bank together with the Audited Statement of
Accounts, Auditors’ Report and the report on business and operations of the Bank for the financial year ended 31
st
March 2014.
FINANCIAL PERFORMANCE
The financial highlights for the year under review are presented below:
(` in crores)
PARTICULARS 2013-14 2012-13 GROWTH
Deposits
Out of which
l Savings Bank Deposits
l Current Account Deposits
280,944.56
77,775.94
48,686.40
252,613.59
63,777.73
48,322.10
11. 22%
21.95%
0.75%
Advances
Out of which
l Retail Advances
l Non-retail Advances
230,066.76
74,491.24
155,575.52
196,965.96
53,959.79
143,0 06.17
16.81%
38.05%
8.79%
Total Assets/Liabilities 383,244.89 340,560.66 12.53%
Net Interest Income 11,951.64 9,666.26 23.64%
Other Income
Out of which
l Trading Profit
(1)
l Fee and other income
7,4 05. 22
695.99
6,709.23
6,551.11
754.60
5,796.51
13.04%
(7.77%)
15.75%
Operating Expenses (excluding depreciation) 7,53 6.8 4 6,562.51 14.85%
Profit before Depreciation, Provisions and Tax 11, 820.02 9,654.86 22.43%
Depreciation 363.93 351.73 3.47%
Provision for Tax 3,130.96 2,373.26 31.93%
Other Provisions and Write offs 2,107.46 1,750.44 20.40%
Net Profit 6,217.67 5,179.43 20.05%
Appropriations:
Transfer to Statutory Reserve 1,554.42 1,294.86 20.05%
Transfer to Investment Reserve 50.03 53.46 (6.42%)
Transfer to Capital Reserve 38.87 141.46 (72.52%)
Transfer to Reserve Fund 1.05 2.61 (59.77%)
Proposed Dividend 1,101.12 987.24 11.54%
Surplus carried over to Balance Sheet 3,472.18 2,699.80 28.61%
(1)
Excluding Merchant Exchange Profit
KEY PERFORMANCE INDICATORS 2013-14 2012-13
Interest Income as a percentage of working funds* 8.78% 8.90%
Non-interest Income as a percentage of working funds* 2.12% 2.15%
Net Interest Margin 3.81% 3.53%
Return on Average Net Worth 18.23% 20.51%
Operating Profit as a percentage of working funds* 3.28% 3.05%
Return on Average Assets 1.78% 1.70%
Profit per Employee** `15.42 lacs `14.58 lacs
Business (Deposits less inter-bank deposits + Advances) per employee** `12.30 crores `12.15 crores
Net non-performing assets as a percentage of net customer assets*** 0.40% 0.32%
* Working funds represent average total assets.
** Productivity ratios are based on average number of employees for the year.
*** Customer assets include advances and credit substitutes.
Previous year figures have been re-grouped wherever necessary.
8
The Bank continued to deliver a steady growth
in both business and earnings, in the midst of a
moderation in economic growth and intensifying
competitive financial landscape. The Bank reported
a net profit of `6,217.67 crores for the year ended
31
st
March 2014, registering a growth of 20.05%
over the net profit of `5,179.43 crores last year. The
healthy growth in earnings was a result of robust
business growth across banking segments indicative
of a clear strategic focus. During the year, the Basic
Earnings Per Share (EPS) was `132.56 and a Return
on Equity (ROE) was 18.23%.
During the year, the Bank’s total income increased by
12.78% to reach `38,046.38 crores as compared to
`33,733.68 crores last year. Operating revenue over
the same period increased by 19.36% to `19,356.86
crores while operating profit increased by 23.14%
to `11,456.09 crores. The growth in earnings was
mainly due to a strong growth in net interest income
(NII). During the year, NII increased by 23.64% to
`11,951.64 crores from `9,666.26 crores last year
and constituting 61.74% of the operating revenue.
Fee, trading and other income increased by 13.04%
to `7,405.22 crores from `6,551.11 crores last year.
The operating expenses grew at a slower pace by 14.27% to `7,900.77 crores from `6,914.24 crores last year.
During the year under review, the growth in NII was attributable to an expansion in the balance sheet size, healthy growth in
low-cost Current Account and Savings Bank (CASA) deposits and continued focus on increasing retail term deposits. During
2013-14, the total earning assets on a daily average basis increased by 14.63% to `313,775 crores, compared to `273,738
crores last year. The cost of funds improved over the year to 6.24% from 6.55% last year due to a combination of various
factors. The healthy growth in low-cost CASA deposits, which on a daily average basis, increased to `93,506 crores from `80,941
crores, comprised 38.89% of total deposits compared to 36.28% in the previous year. Secondly, the increase in the share of
retail term deposits at 54.53% of total term deposits, compared to 43.67% last year, enabled the Bank to contain its cost of
funds apart from providing a stable funding base in the midst of significant volatility in interest rates witnessed mainly during
the second quarter of the year. The raising of equity capital in the fourth quarter of the last financial year also contributed to
the lowering of the cost of funds. During the year, the cost of deposits decreased to 6.43% from 6.73% last year primarily due
to decrease in cost of term deposits by 27 basis points (from 9.10% to 8.83%). During the same period, the yield on earning
assets decreased by 16 basis points to 9.59% from 9.75% last year.
Other income comprising fees, trading profit and miscellaneous income increased by 13.04% to `7,405.22 crores in 2013-14
from `6,551.11 crores last year and constituted 38.26% of the operating revenue of the Bank. Fee income increased by 8.41%
to `5,985.45 crores from `5,520.93 crores last year and remains very well diversified with 32% from retail banking, 30% from
corporate banking and balance contributed by treasury, business banking, SME and agriculture segments. The main sources of
fee income are client-based merchant foreign exchange trade, service charges on liability accounts, transaction banking (including
cash management services), syndication and placement fees, processing fees from loans and commission on non-funded products
(such as letters of credit and bank guarantees) and fee income from the distribution of third-party investment products. Fee
income though has moderated slightly but continues to remain a significant part of the earnings and constituted 30.92% of
the operating revenue of the Bank. A key factor for the muted growth in fee income has been slowdown in corporate banking
fees which has been impacted by the economic slowdown resulting in lower corporate credit demand and lack of fresh new
investments and projects being undertaken. During the year, proprietary trading profits decreased by 7.77% to `695.99 crores
from `754.60 crores last year. Miscellaneous income increased to `723.79 crores from `275.58 crores last year.
RISING PROFITABILITY
Operating Revenue
(` in crores)
2011-12 2012-13
2009-10 2010-11
11,195
8,950
13,438
16,217
2013-14
19,357
Net Profit
(` in crores)
2011-12 2012-13 2013-14
2009-10 2010-11
2,515
3,388
4,242
5,179
6,218
822
497
362
755
696
TRADING PROFITS
FEE & OTHER INCOME
(` in crores) (` in crores)
3,123
4,135
5,059
5,797
6,709
2009-10 2010-11 2011-12 2012-13 2013-14 2009-10 2010-11 2011-12 2012-13 2013-14
9
During the year, the operating revenue of the Bank increased by 19.36% to `19,356.86 crores from `16,217.37 crores last
year. The core income streams (NII, fee and miscellaneous income) now constitute 96.40% of the operating revenue, reflecting
the sustainability of the Bank’s earnings. The Bank continued to focus on business process re-engineering to reduce transaction
costs besides ensuring smoothness in operations and increasing productivity. As a result, the operating expenses increased at
a slower pace by 14.27% to `7,900.77 crores from `6,914.24 crores last year. The increase in operating expenses was largely
due to the growth of the Bank’s network and other infrastructure required for supporting the existing and new businesses. The
Cost to Income ratio of the Bank was 40.82% compared to 42.63% last year.
The operating profit of the Bank increased 23.14% to `11,456.09 crores during the year, compared to `9,303.13 crores last year.
During this period, the Bank created total provisions (excluding provisions for tax) of `2,107.46 crores compared to `1,750.44 crores
last year. The Bank provided `1,295.98 crores towards non-performing assets compared to `1,179.22 crores last year and `290.23
crores towards provision for standard assets compared to `196.68 crores last year. The Bank also provided `194.76 crores compared
to `103.95 crores last year against restructured assets. The Bank has also created a contingent provision of `405.00 crores against
advances and other exposures as a prudent measure. As on 31
st
March 2014, the Bank had outstanding contingent provision of
`780.00 crores. During 2013-14, the Bank restructured loans of `3,456.95 crores. The ratio of Gross NPAs to gross customer
assets was 1.22% compared to 1.06% last year and Net NPA ratio (Net NPAs as percentage of net customer assets) was 0.40%
compared to 0.32% last year. With higher levels of provisions built over and above regulatory norms during the year, the Bank’s
provision coverage
stood at 78.10%
after considering
prudential write-
offs.
The various financial
parameters and
ratios continue to
remain healthy.
Basic Earnings Per
Share (EPS) was
`132.56 compared
to `119.67 last
year, while the
Diluted Earnings Per Share was `132.23 compared to `118.85 last year. Return on Equity (RoE) was 18.23% compared to
20.51% last year and Book Value Per Share increased from `707.50 to `813.47. Return on Assets (RoA) was 1.78% compared
to 1.70% last year. The Net Interest Margin (NIM) for the year was 3.81% compared to 3.53% last year.
The Bank has continued to focus on the quality of growth and displayed healthy growth in key balance sheet parameters for the
year ended 31
st
March 2014. The total assets increased by 12.53% to `383,245 crores on 31
st
March 2014 from `340,561 crores
on 31
st
March 2013. The total deposits of the Bank increased by 11.22% to `280,945 crores against `252,614 crores last year.
Savings Bank deposits increased by 21.95% to `77,776 crores, while Current Account deposits increased by 0.75% to `48,686
crores. Low-cost CASA deposits increased by 12.81% to `126,462 crores as on 31
st
March 2014 compared to `112,100 crores
last year. As on 31
st
March 2014, CASA deposits constituted 45.01% of total deposits as compared to 44.38% last year. On a
daily average basis, Savings Bank deposits increased by 19.11% to `62,225 crores, while Current Account deposits increased
by 9.00% to `31,281 crores. The percentage share of CASA in total deposits, on a daily average basis, improved to 38.89%
from 36.28% last year. The Bank’s endeavour over the last few years has been to diversify its term deposit mix in favour of retail
deposits. As on 31
st
March 2014, the retail term deposits grew 37.29% and stood at `84,233 crores, constituting 54.53% of
the total term deposits compared to 43.67% last year. As on 31
st
March 2014, domestic retail term deposits grew 36.46%
YoY and stood at `83,010 crores, constituting 58.97% of the total domestic term deposits compared to 47.93% last year.
However, excluding the FCNR(B) deposits raised to avail the concessional swap facility provided by RBI, domestic retail term
deposits grew 20.87%, constituting 56.01% of domestic term deposits. During the year, the Bank mobilised foreign currency
funds amounting to ~ USD 1.8 billion, including funds raised under the FCNR (B) deposit scheme, to avail the concessional
swap facility provided by RBI. As on 31
st
March 2014, CASA and retail Term Deposits constituted 75% of total deposits. The
domestic CASA and Retail Term Deposits constituted 78.36% of total domestic deposits.
396
463
552
708
813
SHAREHOLDER RETURNS
19.9
20.1
21.2
20.5
18.2
2012-132013-142009-102010-11 2011-122012-132013-142009-102010-11 2011-122012-132013-142009-10 2010-11 2011-12
Book value per Share (`
) Return on Equity (%) Return on Assets (%)
1.67
1.68 1.68
1.70
1.78
10
The slowdown in economic growth was reflected in the slower loan growth of corporate loans. Total advances of the Bank as
on 31
st
March 2014, increased by 16.81% to `230,067 crores from `196,966 crores as on 31
st
March 2013 primarily driven
by retail and SME segments. Corporate advances (comprising large, infrastructure and mid-corporate accounts) increased by
4.07% to `102,238 crores, SME loans increased by 18.65% to `35,502 crores, retail loans increased by 38.05% to `74,491
crores and agricultural loans (including micro finance) increased by 20.14% to `17,836 crores. Excluding the effect of retail
lending undertaken against FCNR(B) deposits raised under RBI’s special window, the growth in retail loans would have been
31.18% and comprised 31.27% of total loans compared to 27.40% last year. The retail loan portfolio continues to be focused
on secured products, predominantly mortgages. However, the strategic intent as indicated in the previous year to further diversify
into multi-product portfolio continued during the current financial year. Secured loans accounted for 87% of the total retail
loans. The total investments of the Bank decreased by 0.17% to `113,548 crores and investments in Government and approved
securities, held mainly for SLR requirement, decreased by 4.02% to `69,600 crores. Other investments, including corporate
debt securities, increased by 6.62% to `43,948 crores. As on 31
st
March 2014, the total assets of the Bank’s overseas branches
stood at `43,130 crores, constituting 11.25% of the Bank’s total assets.
As one of the key drivers
of business growth and
customer-acquisition, the
Bank continued to enlarge
its distribution network.
Widening geographical
reach is seen to be critical
for tapping growth
opportunities in newer
markets, especially low-
cost CASA deposits, lending
to retail, agriculture and
SME segments and the
distribution of third-party
products. During the year under review, the Bank added 455 new branches, taking the total number of branches and extension
counters (ECs) to 2,402, of which 1,254 branches/ECs are in semi-urban and rural areas and 1,148 branches in metropolitan
and urban areas. As on 31
st
March 2014, the Bank has 438 branches in rural unbanked areas. The Bank also increased its
ATM network to 12,922, as compared to 11,245 ATMs last year. The overseas operations of the Bank are spread over its
seven international offices with branches at Singapore, Hong Kong, DIFC (Dubai International Financial Centre), Colombo and
Shanghai and representative offices at Dubai and Abu Dhabi. During the year, the Bank has upgraded its representative office
in Shanghai, China to a branch to become the first Indian private sector bank to set up a branch in China. During the year, the
Bank’s overseas subsidiary namely Axis Bank UK Ltd. commenced banking operations. The international operations of the Bank
have generally catered to the needs of Indian corporates who have expanded their businesses overseas and have focused on
corporate lending, trade finance, syndication, investment banking and liability businesses.
CAPITAL & RESERVES
In terms of RBI guidelines, banks are required to compute
and disclose capital adequacy ratios under Basel III capital
regulations from the quarter ended 30
th
June 2013. The
Bank is well capitalised with an overall Capital Adequacy
Ratio (CAR) computed under Basel III norms as on 31
st
March 2014 of 16.07%, well above the benchmark
requirement of 9% stipulated by Reserve Bank of India
(RBI). Of this, the Common Equity Tier I CAR was 12.62%
(against minimum regulatory requirement of 5%) and
Tier I CAR was 12.62% (against minimum regulatory
requirement of 6.5%). The capital adequacy ratio of the
Bank computed under Basel II norms as on 31
st
March
2013 was 17.00% with Tier I CAR of 12.23% and Tier
II CAR of 4.77%.
INCREASING REACH
643
921
1,050
1,263
1,636
Centres covered
983
1,390
1,622
1,947
2,402
2009-10 2010-11 2011-12 2012-13 2013-14 2009-10 2010-11 2011-12 2012-13 2013-14 2009-10 2010-11 2011-12 2012-13 2013-14
Branches + Extn. Counters
4,293
6,270
9,924
11,245
12,922
ATMs
ENHANCING SHAREHOLDER VALUE
2009-10 2010-112012-13 2013-142011-12 2009-10 2010-112012-13 2013-142011-12
64.31
81.61
102.20
118.85
132.23
Earning Per Share (Diluted) `
120
140
160
180
200
Dividend (%)
11
During the year, 1,890,085 equity shares were allotted to employees of the Bank/subsidiary companies pursuant to the exercising
of options under the Employee Stock Option Scheme. The paid-up capital of the Bank has risen to `469.84 crores, as compared
to `467.95 crores last year. The shareholding pattern of the Bank as of 31
st
March 2014 was as under:
Sr. No. Name of Shareholders % of Paid-up Capital
i. Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) 11.70
ii. Life Insurance Corporation of India (LIC) & its group entities
(1)
13.72
iii. General Insurance Corporation and four PSU insurance companies 4.22
iv. Overseas investors (including FIIs/OCBs/NRIs) 49.13
v. Foreign Direct Investment (GDR issue) 3.26
vi. Other Indian financial institutions/mutual funds/banks 5.37
vii. Others 12.60
Total 100.00
(1)
Includes 63,978,711 equity shares, equivalent to 13.62% of the total paid-up capital of the Bank, held by LIC.
The Bank’s shares are listed on the NSE and the BSE. The GDRs issued by the Bank are listed on the London Stock Exchange
(LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees
relating to all stock exchanges for the current year have been paid.
Sub-Division of the Bank’s Equity Shares
In order to make equity shares of the Bank affordable for small retail investors, the Board of Directors has considered and
approved the sub-division of one equity share of the Bank having a face value of `10 each into five equity shares of face
value of `2 each. The sub-division of shares is subject to approval of the shareholders and any other statutory and regulatory
approvals, as applicable.
DIVIDEND
The Bank’s Diluted Earnings Per Share (EPS) for 2013-14 has risen to `132.23 from `118.85 last year. In view of the overall
performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a
healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend of `20.00
per equity share, compared to `18.00 per equity share declared last year. This dividend shall be subject to tax on dividend to be
paid by the Bank. This increase reflects our confidence in the Bank’s ability to consistently grow earnings over time.
BOARD OF DIRECTORS
During the year, some changes in the composition of the Board of Directors have taken place. Shri A. K. Dasgupta, nominee of
Life Insurance Corporation of India (LIC), resigned as Director with effect from 4
th
June 2013 consequent upon his appointment
as Insurance Ombudsman at Mumbai. Smt. Usha Sangwan was nominated by LIC as its nominee Director in place of
Shri A. K. Dasgupta and was, accordingly, appointed as an Additional Director of the Bank with effect from 17
th
October 2013.
The Board places on record its appreciation for the valuable services rendered by Shri A. K. Dasgupta during his tenure as
Director of the Bank.
In order to comply with the provisions of the Companies Act, 2013, Shri K. N. Prithviraj and Shri V. Srinivasan are being considered
for retiring by rotation at the Twentieth Annual General Meeting and, being eligible, offer themselves for re-appointment as
Directors of the Bank.
SUBSIDIARIES
As on 31
st
March 2014, the Bank has eight subsidiaries: Axis Capital Ltd., Axis Securities Ltd., Axis Finance Ltd., Axis Private Equity
Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd., Axis Mutual Fund Trustee Ltd. and Axis Bank UK Ltd.
Axis Capital Ltd. provides services relating to investment banking, equity capital markets, institutional stock broking, mergers
and acquisition advisory etc. During the year, the business of marketing of credit cards and retail asset products and the business
of retail broking services undertaken by Axis Capital Ltd. were demerged into Axis Securities Ltd., a wholly-owned subsidiary of
Axis Capital Ltd. Subsequently, during the year, the Bank also acquired the remaining stake of Axis Capital Ltd. in Axis Securities
Ltd. and consequently Axis Securities Ltd. has become a wholly-owned subsidiary of the Bank. Axis Securities Ltd. is primarily
in the business of marketing of credit cards and retail asset products and also provides retail broking services. Axis Finance
Ltd., is an NBFC and carries on the activities of loan against shares, margin funding, IPO financing etc. Axis Private Equity Ltd.
primarily carries on the activities of managing equity investments and provides venture capital support to businesses. Axis Trustee
12
Services Ltd. is engaged in trusteeship activities, acting as debenture trustee and as trustee to various securitisation trusts. Axis
Asset Management Company Ltd. undertakes the activities of managing the mutual fund business. Axis Mutual Fund Trustee
Ltd. acts as the trustee for the mutual fund business. Axis Bank UK Ltd. commenced banking operations during the year after
receipt of approval from the Financial Services Authority on 19
th
April 2013.
In terms of the General Circular No. 2/2011 dated 8th February 2011 issued by the Ministry of Corporate Affairs, Government
of India, the copies of Directors’ Reports, Auditors’ Reports and the financial statements of the eight subsidiaries have not been
attached to the accounts of the Bank for the financial year ended 31
st
March 2014. Any shareholder who may be interested in
obtaining a copy of the aforesaid documents may write to the Company Secretary at the Registered Office of the Bank. These
documents will also be available for examination by shareholders of the Bank at its Registered Office. The documents related
to individual subsidiaries will similarly be available for examination at the respective registered offices of the companies. In line
with the Accounting Standard 21 (AS-21) issued by the Institute of Chartered Accountants of India, the consolidated financial
results of the Bank along with its subsidiaries for the year ended 31
st
March 2014 are enclosed as an Annexure to this report.
EMPLOYEE STOCK OPTION PLAN (ESOP)
The Bank has instituted an Employee Stock Option Scheme. The objective of the Scheme is to enhance employee motivation,
enable employees to participate, whether directly or indirectly, in the long-term growth and financial success of the Bank, to act
as a retention mechanism by enabling employee participation in the business as an active stakeholder to usher in an ‘owner-
manager’ culture. Under the Scheme 48,017,400 options can be granted to the employees of the Bank and its subsidiaries
including Whole-time Directors. The employee stock option scheme is in accordance with the Securities and Exchange Board of
India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options
to be granted to an employee is determined on the basis of the employee’s work performance and is approved by the Board
of Directors.
Over the period February 2001 to July 2013, the Bank’s shareholders approved plans for the issuance of stock options to
employees on six occasions. Under the first two plans and upto the grant made on 29
th
April 2004, the option conversion price
was set at the average daily high-low price of the Bank’s equity shares traded during the 52 weeks preceding the date of grant
at the Stock Exchange which has had the maximum trading volume of the Bank’s equity share during that period. Under the
third plan and with effect from the grant made by the Bank on 10
th
June 2005, the pricing formula has been changed to the
closing price on the day previous to the grant date. The HR and Remuneration Committee and the erstwhile Remuneration
and Nomination Committee granted options under these plans on thirteen occasions: 1,118,925 during 2000-01, 1,779,700
during 2001-02, 2,774,450 during 2003-04, 3,809,830 during 2004-05, 5,708,240 during 2005-06, 4,695,860 during 2006-
07, 6,729,340 during 2007-08, 2,677,355 during 2008-09, 4,413,990 during 2009-10, 2,915,200 during 2010-11, 3,268,700
during 2011-12, 2,516,000 during 2012-13 and 2,003,000 during 2013-14. The options granted, which are non-transferable,
vest at rates of 30%, 30% and 40% on each of three successive anniversaries following the grant, subject to standard vesting
conditions, and must be exercised within three years of the date of vesting. As of 31
st
March 2014, 29,080,743 options had
been exercised and 10,845,556 options were in force.
Other statutory disclosures as required by the SEBI guidelines on ESOPs are given in the Annexure to this report.
CORPORATE GOVERNANCE
The Bank is committed to achieve the highest standards of corporate governance, and it aspires to benchmark itself with
international best practices in this regard. The corporate governance practices followed by the Bank are enclosed as an Annexure
to this report. The Ministry of Corporate Affairs had issued Corporate Governance Voluntary Guidelines 2009. The Corporate
Governance framework of the Bank incorporates majority of the recommendations contained in the above guidelines.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board of Directors hereby declares and confirms that:
l The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations
have been furnished, relating to material departures.
l Accounting policies have been selected and applied consistently and reasonably, and prudent judgments and estimates
have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit and Loss of the Bank
for the financial year ended 31
st
March 2014.
13
l Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the
provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank, and for preventing and
detecting fraud and other irregularities.
l The annual accounts have been prepared on a going concern basis.
l The Bank has in place a system to ensure compliance of all laws applicable to the Bank.
STATUTORY DISCLOSURE
Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to
conservation of energy and technology absorption do not apply to the Bank. The Bank is, however, constantly pursuing its goal
of technological upgradation in a cost-effective manner for delivering quality customer service.
The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the
rules hereunder is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1)(iv) of the
Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested
in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.
BUSINESS RESPONSIBILITY REPORT
The Securities and Exchange Board of India (SEBI) through its circular CIR/CFD/DIL/8/2012 dated 13
th
August 2012 has mandated
the inclusion of Business Responsibility (BR) Report as part of the Annual Report for top 100 listed entities based on market
capitalisation at Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) as on 31
st
March 2012. The Bank’s Business
Responsibility Report has been hosted on the Bank’s website, www.axisbank.com. Any shareholder interested in obtaining a
physical copy of the same may write to the Company Secretary at the Registered Office of the Bank.
AUDITORS
M/s Deloitte Haskins & Sells, Chartered Accountants, had been appointed by the shareholders at the Nineteenth Annual General
Meeting as Statutory Auditors of the Bank for the year 2013-14 and will be retiring at the conclusion of the forthcoming Annual
General Meeting. Deloitte Haskins & Sells have been the Statutory Auditors of the Bank since 2010-11. As per the regulations
of Reserve Bank of India, the same auditors cannot be re-appointed for a period beyond 4 years. It is, accordingly, proposed
to appoint M/s S. R. Batliboi & Co. LLP, Chartered Accountants, as the Bank’s new Statutory Auditors subject to the approval
by the shareholders. The shareholders are requested to consider their appointment on the remuneration to be decided by the
Audit Committee of the Board. The Board of Directors places on record their appreciation of the professional services rendered
by Deloitte Haskins & Sells, as the Statutory Auditors of the Bank.
ACKNOWLEDGEMENTS
The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities,
financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of
the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage.
The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong work ethic, excellent
performance, professionalism, teamwork, commitment and initiative, which has led to the Bank making commendable progress
in today’s challenging environment.
For and on behalf of the Board of Directors
K. N. Prithviraj
Director
Shikha Sharma
Managing Director & CEO
Place : Mumbai
Date : 26
th
April 2014
Somnath Sengupta
Executive Director
& Head (Corporate Centre)
V. Srinivasan
Executive Director
& Head (Corporate Banking)
14
STATUTORY DISCLOSURES REGARDING ESOP
(FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31
st
MARCH 2014)
Options Granted 44,410,590
Options Exercised & Shares Allotted* 29,080,743
Options lapsed/cancelled 4,484,291
Total Options (in force) as on 31
st
March 2014 10,845,556
Options Vested 6,042,426
Money realised by exercise of options (` in lacs) 97,559.14
* One (1) share would arise on exercise of one (1) stock option
Other details are as under:
Pricing Formula Fixed Price i.e. The average daily high - low price of the shares
of the Bank traded during the 52 weeks preceding the date
of grant at that stock exchange which has had the maximum
trading volume of the Bank’s share during that period.
For options granted on and after 10
th
June 2005, the exercise
price considered is the closing market price as on the day
preceding the date of the grant at that stock exchange which
has had the maximum trading volume of the Bank’s share.
Variation in terms of ESOP None
Details of options granted:
l Employee wise details of grants to Senior managerial
personnel
Managing Director & CEO: 875,000 options
Executive Director
& Head (Corporate Centre): 503,880 options **
Executive Director
& Head (Corporate Banking): 390,000 options **
l Employees who were granted, during any one year,
options amounting to 5% or more of the options granted
during the year
Managing Director & CEO : 200,000 options granted during
the year
l Identified employees who were granted options, during
any one year, equal or exceeding 1% of the issued capital
(excluding outstanding warrants and conversions) of the
Bank under the grant
None
Diluted Earnings Per Share pursuant to issue of shares on
exercise of options calculated in accordance with Accounting
Standard AS-20 ‘Earnings Per Share’
`132.23 per share
Weighted average exercise price of Options whose:
l Exercise price equals market price Weighted average exercise price of the stock options granted
during the year is `1,444.80.
l Exercise price is greater than market price Nil
l Exercise price is less than market price Nil
** Includes options granted prior to appointment as Executive Director
ANNEXURE
15
Weighted average fair value of Options whose:
l Exercise price equals market price Weighted average fair value of the stock options granted
during the year is `438.87.
l Exercise price is greater than market price Nil
l Exercise price is less than market price Nil
Fair Value Related Disclosure
l Increase in the employee compensation cost computed
at fair value over the cost computed using intrinsic cost
method
`103.48 crores
l Net Profit, if the employee compensation cost had been
computed at fair value
`6,114.19 crores
l Basic EPS, if the employee compensation cost had been
computed at fair value
`130.36 per share
l Diluted EPS, if the employee compensation cost had been
computed at fair value
`130.07 per share
Significant Assumptions used to estimate fair value
l Risk free interest rate 7.45% to 7.57%
l Expected life 2 to 4 years
l Expected Volatility 33.86% to 36.93%
l Dividend Yield 1.36%
l Price of the underlying share in the market at the time of
option grant
`1,444.80
16
MANAGEMENT’S DISCUSSION AND ANALYSIS
MACRO-ECONOMIC ENVIRONMENT
Fiscal 2014 saw a combination of various external and internal events that kept markets turbulent, interest rates high and
investor confidence low, resulting in shrinking investment and GDP growth. Due to apprehensions of an impending ‘taper’ of
the US Federal Reserve’s Quantitative Easing programme, emerging markets, including India, experienced foreign investment
outflows and currency volatility. India’s macroeconomic imbalances at the beginning of the year exposed it to this volatility as
well, forcing stringent policy responses. However, improving fundamentals have gradually restored some stability in the markets.
Indian economic growth had slowed rapidly from 8.9% in 2010-11 to an officially estimated 4.9% in fiscal 2014, caused in large
part by structural factors impeding investment activity. Decline in financial savings, sluggish growth in fixed capital formation over
successive quarters, persistence of high inflation and low business confidence contributed to the decline in potential growth,
particularly in the absence of adequate structural policy measures.
Inflation had emerged as the central concern during the year and in combination with the current account and fiscal deficits,
had forced Reserve Bank of India (RBI) to raise its policy Repo rate by 75 basis points. While most of the slowdown was due to a
steep drop in investment, a cut in the Government’s spending in order to contain the fiscal deficit at less than the budgeted 4.8%
of GDP also contributed to a slowdown in consumption. For fiscal 2014, fiscal deficit has been revised down to 4.6% of GDP.
The biggest turnaround was in the Current Account Deficit, which had shrunk from $88 billion in fiscal 2013 to $31 billion in
the first 3 quarters of fiscal 2014. For fiscal 2014, the current account deficit is expected to be ~2% of GDP. With large capital
inflows via Foreign Currency Non-Resident (FCNR-B) deposits and bank capital, the Rupee has stabilised at around 60-62/USD
and has been one of the best performing emerging market currencies over the past few months.
The Repo rate increases have pushed up the floor for rates and despite liquidity infusion by RBI, short term interest rates have
remained high. One of the consequences of the slowdown and high inflation has been a contraction of financial savings of
households, with a preference for investment in assets like gold and real estate. This has, in turn, affected deposit accretion
with banks. The exceptional liquidity tightening measures of RBI leading to higher rates had resulted in a temporary spike in
credit growth in favour of banks compared to credit substitutes in the money market, but this had gradually normalised. On
the resources front, strong NRI inflows through the FCNR(B) deposits route have helped improve deposit growth. For the fiscal
2014, deposit growth in the system was 14.6%, while credit growth was 14.3%.
Prospects for Fiscal 2015
While the medium term prospects point towards an improving growth scenario, given the improved macroeconomic fundamentals
it is likely that there will only be a modest economic recovery in fiscal 2015. Globally, many emerging markets still look vulnerable
and periodic flights to safe haven US Government securities could result in portfolio fund outflows. Although markets appear
to have factored in a steady taper trajectory with relative stability, expectations of rising interest rates in the US in 2015 could
result in a resumption of volatility.
Inflation remained the key determinant for calibrating monetary and fiscal policies, including setting of policy interest rates.
Headline CPI inflation is likely to meet the RBI glide path to 8% by January 2015. A consolidation of the fiscal environment might
provide additional space for modest monetary policy stimulus. Interest rates across the yield curve are likely to move down from
current levels. The extent of this drop will also be determined by the US Federal Reserve stance in increasing interest rates in 2015.
Both the gradual expected downward shift in inflation and moderating fiscal stress might allow RBI to ease its tight monetary
policy stance later in the year, although this is contingent upon future inflation expectations. Measures to remove bottlenecks
by the Government will also bring capex on track. Expected global recovery will help exports, adding to the growth revival. In
fiscal 2015, RBI expects GDP growth to pick up and be in the range of 5-6%.
Financial savings are likely to improve with economic recovery and moderating inflation. This will push up bank deposits in fiscal
2015. We expect deposit growth in the range of 14-15% and credit growth between 15-16%.
OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE
During 2013-14, the operating environment for the banking system continued to be challenging with persistent high inflation,
muted growth, slowdown in credit off-take, concerns regarding growing non-performing assets and a high incidence of assets
being restructured. Despite these challenges, the Bank’s strategy to build its business upon strong customer franchises, while
adopting a prudent approach, had resulted in delivering strong results. The underlying performance of the business remained
strong with revenue growth remaining well ahead of cost growth. The Bank reported a net profit of `6,217.67 crores for the year
ended 31
st
March 2014, registering a growth of 20.05% over the net profit of `5,179.43 crores last year. The healthy growth in
earnings was driven by contribution from all segments. The Bank continued to focus on the quality of growth and displayed strong
17
growth in key balance sheet parameters for the year
ended 31
st
March 2014. The total assets increased by
12.53% to `383,245 crores, total deposits increased
by 11.22% to `280,945 crores while total advances
increased by 16.81% to `230,067 crores.
During the year, the Bank continued to expand its
network, with increased focus on the semi-urban
and rural areas. Both the Retail and SME segments
continued to benefit from this network expansion and
have justifiably remained the key growth drivers for
the Bank during the year. The Bank remains committed
to a customer-centric approach in dealing with its
clientele aided by dependable technology and simple
processes. A well distributed branch banking channel
complemented by a robust alternate distribution
channel have helped the Bank to deliver a wide range
of products and services to its customers across the country and overseas.
The Bank continued to enhance shareholder value by delivering healthy financial return ratios in difficult economic conditions.
Basic Earnings Per Share (EPS) was `132.56 compared to `119.67 last year, while the Diluted Earnings Per Share was `132.23
compared to `118.85 last year. Return on Equity (RoE) was 18.23% compared to 20.51% last year, impacted mainly due to the
equity capital raising in the last quarter of 2012-13. However, Return on Assets (RoA) was 1.78% compared to 1.70% last year.
The Net Interest Margin (NIM) for the year was 3.81%
compared to 3.53% last year. The asset quality remained
stable with ratio of Gross NPAs to gross customer assets
at 1.22% compared to 1.06% last year and Net NPA
ratio (Net NPAs as percentage of net customer assets)
was 0.40% compared to 0.32% last year.
CAPITAL MANAGEMENT
The Bank strives for continual enhancement of
shareholder value by efficiently using capital in order
to maximise return on equity. Aiming to achieve this
objective, the Bank endeavours to develop an asset
structure that will be sensitive to the importance of
increasing the proportion of low risk weighted assets.
The Bank’s capital management framework helps ensure
an appropriate composition of capital and an optimal
mix of businesses.
RBI has issued Guidelines based on the Basel III reforms on capital regulation to the extent applicable to banks operating in India.
These guidelines require among other things, higher levels of Tier I capital and common equity, capital conservation buffers,
higher deductions from common equity and Tier I capital for investments in subsidiaries and changes in the structure of non-
equity instruments eligible for inclusion under Tier I capital. The Basel III capital regulation has been implemented from 1
st
April
2013 in India in a phased manner and is to be fully implemented as on 31
st
March 2019. This will also align full implementation
of Basel III in India closer to the internationally agreed date of 1
st
January 2019.
Accordingly, the Bank has computed Capital Adequacy Ratio (CAR) as on 31
st
March 2014 in terms of regulatory guidelines on
Basel III, wherein the capital charge for operational risk is computed under the Basic Indicator Approach and the capital charge
for credit and market risk is computed under the Standardised Approach. As on 31
st
March 2014, the Bank’s CAR under Basel III
was 16.07% (against the minimum regulatory requirement of 9%). Of this, the Common Equity Tier I (CET I) CAR was 12.62%
(against minimum regulatory requirement of 5%) and Tier I CAR was 12.62% (against minimum regulatory requirement of
6.5%). As on 31
st
March 2014, the Bank’s Tier II CAR was 3.45%. The capital adequacy ratio of the Bank computed under
Basel II norms as on 31
st
March 2013 was 17.00% with tier I CAR of 12.23% and tier II CAR of 4.77%
2009-10 2010-112012-13 2013-142011-12
3.75
3.65
3.59
3.53
3.81
Net Interest Margins (%)
2009-10 2010-112012-13
2013-14
2011-12
5,004
6,563
8,018
9,666
11,952
Net Interest Income (` in crores)
2009-102010-11 2012-13 2013-142011-12 2009-10 2010-112012-13 2013-142011-12
46.73
41.10
41.54
44.38
45.01
Demand Deposits as % Share of Total Deposits
LOW COST OF FUNDS
5.20
4.96
6.28
6.55
6.24
Cost of Funds (%)
18
The following table sets forth the capital, risk-weighted assets and capital adequacy ratios computed as on 31
st
March 2014
(under Basel III) and 31
st
March 2013 (under Basel II).
(` in crores)
AS ON 31
ST
MARCH 2014
(under Basel III)
2013
(under Basel II)
Tier I Capital 35,805.48 31,596.80
Tier II Capital 9,790.55 12,334.32
Out of which
- Tier II capital Instruments 8,802.04 11, 48 3.19
- Other eligible for Tier II capital 988.51 851.13
Total Capital qualifying for computation of Capital Adequacy Ratio 45,596.03 43,931.12
Total Risk-Weighted Assets and Contingencies 283,807.26 258,355.49
Total Capital Adequacy Ratio 16.07% 17.0 0 %
Out of above
- Common Equity Tier I capital ratio 12.62% 12.23%
- Tier I capital ratio 12.62% 12.23%
- Tier II capital ratio 3.45% 4.77%
BUSINESS OVERVIEW
An overview of various business segments along-with their performance during financial 2013-14 and future strategies is
presented below.
RETAIL BANKING
The Retail Banking segment is one of the key drivers of the Bank’s growth strategy,
encompassing a wide range of products delivered through multiple channels to
its customers. The Bank today offers a complete suite of products across deposits,
loans, investment solutions, payments and cards to its customers. The Bank is
committed to developing long-term relationships with its customers by providing
high-quality services and products through regular customer engagement in an easy
and convenient manner. During the year, the Bank engaged in ‘Lakshya’, a retail
banking transformation initiative, which is currently live in more than 1,100 branches,
comprising around 80% of the Bank’s low-cost deposit business. Various initiatives
under the Lakshya program have helped increase sales productivity and operational
efficiency while at the same time focusing on increasing customer satisfaction and
improving employee work life balance.
The Bank has over the years built its retail deposit franchise by pursuing a very robust
and effective customer segmentation strategy. During the year, the Bank continued
to focus on increasing its retail deposits base, particularly demand deposits. Savings
Bank deposits have grown at a Compounded Annual Growth Rate (CAGR) of 24.67%
over the last five years. During the year, Savings Bank deposits grew by 21.95% to `77,776 crores from `63,778 crores last
year. On a daily average basis, Savings Bank deposits grew by 19.11% to `62,225 crores. As on 31
st
March 2014, the Bank
had 133 lac savings account customers. With an objective to widen the retail deposit base, the Bank also continued its focus
on increasing share of retail term deposits. As on 31
st
March 2014, retail term deposits grew 37.29% YoY to `84,233 crores.
However, excluding the FCNR(B) deposits raised to avail the concessional swap facility provided by RBI, domestic retail term
deposits grew 20.87%, constituting 56.01% of domestic term deposits. As on 31
st
March 2014, CASA and retail term deposits
constituted 75% of total deposits compared to 69% a year ago. The domestic CASA and retail term deposits constituted 78%
of total domestic deposits.
2012-13 2013-142009-10 2010-11 2011-12
33,862
40,850
51,668
63,778
77,776
SB DEPOSITS
RETAIL LIABILITIES
(` in crores)
19
The Bank continued its focus on increasing share of retail loans to total advances. The
retail assets portfolio of the Bank has increased to `74,491 crores as on 31
st
March
2014 from `53,960 crores last year, thereby registering a growth of 38.05%. As on
31
st
March 2014, retail loans constituted 32% of total advances as compared to 27%
a year ago. Excluding loans against FCNR(B) deposits, the share of core retail loans was
31%. Secured loan products accounted for
86% of domestic retail loans, with home
loans and loan against property accounting
for 72% of the book, of which, home loan
accounted for 63%. Auto loans accounted
for 12%. Personal loans and credit cards
were 10%, while non-schematic loans
comprising loans against deposits, other
securities etc. accounted for 4%. The Bank
has further increased its geographical reach
for sourcing retail loans. The Bank sources retail loans through 132 Asset Sales
Centres. Retail loans are also originated from 1,716 branches. The Bank focused on
increasing its retail loans by cross selling to internal customers. More than a third of
the incremental retail loans are now sourced through branches and existing liability
customers contribute almost two third of this incremental business. The credit quality
of retail loans remained steady.
The cards business is an integral part of the Bank’s retail strategy with ever-increasing number of transactions moving to the
electronic mode. The Bank is one of the largest debit card issuers in the country, with a base of 133.2 lac. The Bank had 13.8
lac credit cards in force as of 31
st
March 2014 which made it the 5
th
largest credit card issuer in the country. The Bank is also
one of the largest acquirers of point-of-sale terminals in the country with an installed base of 2.48 lac.
The Bank offers a complete suite of banking and investment products under its NRI Services for Indians living and working
overseas. As on 31
st
March 2014, the Bank’s aggregate NRI deposits (Savings + Term Deposits) stood at `27,959 crores registering
a growth of 113%. One of the reasons for this sharp growth was mobilisation of FCNR(B) Deposits in the light of various
liberalised measures announced by RBI, which also included the concessional swap window for banks. The Bank has mobilised
FCNR(B) Deposits amounting to USD 1.58 billion under this window. The Bank has 49 branches authorised to issue Portfolio
Investment Scheme (PIS) permissions to NRI/PIO who want to trade in the Indian secondary markets through a registered stock
broker on a recognised exchange. The Bank has a strong focus on customer service and provides a 24x7 integrated helpdesk
for NRI customers with the facility of toll-free numbers from key geographies.
The products offered in the area of retail forex and remittances include travel currency cards, inward and outward wire transfers,
traveller’s cheques, foreign currency notes and remittance facilities through online portals as well as through collaboration
with correspondent banks, exchange houses and money transfer operators. The Bank continued to have a market leadership
position in Travel Currency Cards with 11 currency options other than INR. Additionally, the Bank offers a Multicurrency Forex
Card, aimed at frequent travellers to multiple countries. The aggregate load value on travel currency cards crossed USD 4 billion
during the year. The volumes of retail remittances rose by 44% during the year and the Bank processed outward remittances
of USD 1.02 billion and inward remittances of USD 5.63 billion.
‘Axis Bank Privée’, offers private banking solutions to meet the personalised investment needs of high net worth individuals as
well as the corporate advisory needs of families in business. Axis Bank Privée brings solutions offered by various business groups
(retail and corporate) within the Bank and various group entities under one integrated platform.
The Bank also distributes third party products such as mutual funds, Bancassurance products (life and general insurance),
online trading and gold coins through its branches. The Bank is one of the leading banking distributors of mutual funds in India
and distributes mutual fund products of all major asset management companies. These products are sold through the Bank’s
branch distribution network based on client requirements. The Bank distributes life insurance products of Max Life Insurance
Company. During the year, more than 2.4 lac lives were insured, with a collection of `1,052 crores towards annual premiums.
In general insurance, the Bank has a tie up with Tata AIG (American International Group) and during the year sold more than
3.2 lac policies and collected `163 crores of premium. The Bank has consciously shifted its focus on health related products
RETAIL ASSETS
20,821
27,759
37,570
53,960
74,491
2012-13 2013-142009-10 2010-11 2011-12
(` in crores)
Personal Loans
Credit Cards
Auto loans
Housing loans
Loans against Property Others
8%
2%
12%
63%
9%
6%
COMPOSITION OF DOMESTIC RETAIL LOANS
20
and has also created an additional avenue for selling general insurance products by launching outbound tele sales. The Bank
offers online trading services to its customers in collaboration with Axis Securities Ltd. (a 100% subsidiary of the Bank) under
the name Axis Direct, an enhanced and simplified online trading platform, which is now also available to NRI customers. During
the year, the Bank opened more than 1.2 lac online trading accounts.
During the year, the Bank has introduced electronic know-your-customer (e-KYC) facility. Axis Bank has been the first Bank to
introduce the e-KYC facility which facilitates Aadhaar-registered individuals to step into a branch and open an account, merely
by providing his/her unique identification number and through biometric identification simplifying the KYC process and thereby
providing a seamless customer experience.
In April 2013, the Bank launched India’s first bank-wide customer loyalty program ‘eDGE Loyalty Rewards’. ‘eDGE Loyalty’
rewards is designed to reward customers for every relationship they have with the Bank across savings accounts, cards and
electronic channel transactions, providing multiple opportunities for the customer to earn rewards.
The Bank’s organically built branch network over the last twenty years has helped it to strategically carve out one of the best
pan India branch distribution networks. In the last few years, a higher share of branches have been added to semi-urban and
rural areas, which comprise 52% of total branches as of 31
st
March 2014. During the year, the Bank added 455 branches of
which 298 were rural unbanked branches. The geographical reach of the Bank extended to 29 states and 5 Union Territories,
covering 1,636 centres and 535 districts. The Bank also added 1,677 ATMs during the year to reach a network size of 12,922
as on 31
st
March 2014 compared to 11,245 ATMs last year. The Bank has deployed 615 Automated Deposit Machines (for cash
deposits into customer accounts) and has extended this 24x7 facility in certain branches, which have integrated self-service
lobbies. Besides the ATM network, internet banking, mobile banking and phone banking have developed as important alternate
distribution channels for the Bank.
CORPORATE CREDIT
The sustained slowdown in economic growth especially deceleration in the momentum of investments has reflected in the
corporate sector loan growth. Certain initiatives taken by the Government during the year resulted in a minor uptick in the
execution of the existing projects; however demand and growth of credit remained subdued. The corporate credit portfolio
of the Bank comprising of advances to large and mid-corporates (including infrastructure) grew by 4.07% to `102,238 crores
from `98,239 crores last year. As on 31
st
March 2014, large corporate advances at `53,706 crores decreased 1.13% comprising
23.34% of total advances, mid corporate advances at `21,422 crores grew 7.06% comprising 9.31% and infrastructure
advances stood at `27,110 crores which grew 13.39% and comprised 11.78% of total advances. The Bank witnessed growth
in its infrastructure loans mainly due to disbursements from earlier sanctions, in line with the progress in project execution. As
on 31
st
March 2014, the corporate advances at overseas branches amounted to `31,716.17 crores (equivalent to USD 5.29
billion) and mainly comprised of loans to Indian corporates and their subsidiaries, which grew by 5.82% and accounted for
13.79% of total advances.
The relationship model introduced in earlier years, maintained its focus on increasing the Bank’s wallet share by cross-selling a
wide range of banking products to corporate customers and thereby increasing customer engagement. The Bank continued
its focus on trade finance, treasury and other fee-based businesses. The Bank has been following a sectoral approach to credit
where the focus is on identifying sector-specific opportunities and risk. The tracking of industry, group and company specific
exposure limits are undertaken continuously with a view to identify and mitigate risk so as to facilitate proactive decision making.
Portfolio diversification is also ensured through this continuous monitoring.
Despite the macroeconomic slowdown, the Bank actively managed its corporate credit portfolio, maintained asset quality
and also pursued new lending opportunities in a judicious manner. The entire corporate credit portfolio of the Bank has been
internally rated. Presently, 61% of outstanding loans and more than 80% of incremental sanctions during the year were rated
‘A’ and above in respect of total corporate loans. The share of loans rated ‘AAA’ was 11% as on 31
st
March 2014.
The Bank continued to retain its leadership position in the loan syndication market and syndicated an aggregate amount of
`22,996 crores by way of Rupee loans and USD 1,977 million of foreign currency loans during the year.
TREASURY
The Treasury Group in the Bank includes the Global Markets Team dealing in interest rates and foreign exchange. Treasury plays
an important role in the sovereign debt market, participating in primary auctions of RBI and market activities in Government
securities. The Foreign Exchange Trading Group under Treasury is an active participant in the inter-bank/financial institutions space.
21
It also maintains proprietary positions to generate trading income for the Bank. Money Market and Balance Sheet Management
groups within Treasury take care of asset-liability mismatches and interest rate sensitivities of the Bank’s portfolio, along with the
responsibility for liquidity management for the domestic operations and foreign branches in the different geographies. Over the
last few years, the Bank has emerged as one of the leading banks providing foreign exchange and derivatives solutions along
with trade finance services. Through its various verticals, the Treasury serves customers across various industries, segments and
regions.
The Bank is a dominant player in the Debt Capital Market (DCM) Segment. During the current financial year, the Bank arranged
`122,556 crores of bonds and debentures for various PSUs and corporates. For the sixth year in a row, the Bank has been
ranked number one in Bloomberg league table for domestic corporate bonds in India. The Bank has also been ranked number
one bank by The Asset Benchmark Research in local Asian Currency primary and secondary corporate bond markets. During the
year, the Bank won the award for the ‘Best Domestic Debt House - India’ by Asia Money, Best Bond House in India by Finance
Asia and Best Debt House - India by Euro Money.
The Global Financial Institutions Division (GFID) within Treasury is responsible for fostering business relationships with financial
institutions (FI) across geographies and undertakes foreign currency fund raising. Global Trade Service Division (GTSD), housed
in Treasury is entrusted with the responsibility of transforming Trade Finance business into a key flow business for the Bank by
providing trade solutions for corporates as well as the FI clients of the Bank. The Customer Trade and Forex Group (CTFG), as
part of Treasury, drives cross-border trade finance, remittances, capital account transactions and derivatives from all segments
of corporate relationships through its dedicated and experienced Relationship Managers across the Bank.
BUSINESS BANKING
Business Banking provides payments and transaction banking solutions across corporates, SMEs, financial institutions, Government
segments and small business customers. The key products offered are current accounts, collection and payment solutions,
custodial and demat services.
Current accounts are a key focus area for the Bank, forming the bedrock of its transaction banking and payments franchise.
Current account products are categorised into value-based products, segmented products for specific industry sectors (e.g.
financial services, pharmaceuticals etc.) and need-based products (e.g. escrows, dividend payments etc.). The Bank leverages its
distribution network and technology platform to deliver a seamless banking experience to its customers. The current accounts
group is focused on augmenting its electronic channels and has rolled out an award-winning mobile application for its current
account customers. The Business Banking team also works on various process redesign initiatives to deliver a simple, easy and
user-friendly customer experience. The Bank had more than 16 lac live current account customers as on 31
st
March 2014, a
YOY growth of 16%. As on 31
st
March 2014, Current account deposits stood at `48,686 crores and constituted 17.33% of
total deposits. During the year, current account balances (on a daily average basis) grew by 9% to `31,281 crores from `28,698
crores last year.
The Bank has adopted a two-pronged approach in the collection and payments business - introducing new products, features
and channels on the one hand and developing sector-specific solutions on the other. The Bank has made a significant technology
investment in terms of an enterprise-wide payment hub, which when fully implemented is expected to augment the Bank’s
capabilities in the transaction banking business, across domestic and foreign currency transactions. The Bank offers advanced
products such as Power Access
®
, which enable corporates and institutions to ensure straight-through transaction processing
with multi-layered security protocols and customised MIS. The Bank has also been in the forefront of the rollout of the newly
introduced NACH (National Automated Clearing House) mechanism and has taken the lead in terms of processing transactions
on the NACH platform.
The Bank has identified select industry sectors as focus areas and has rolled out customised solutions to cater to the specific
needs of clients in these sectors. Operational excellence is a key success factor in the collection and payments business and the
Bank has embarked on a process improvement initiative to provide a solid platform for service delivery. The Bank processed
transactions to the tune of `2,034,866 crores during 2013-14, a growth of 28% over the previous year. The Bank has one of
the largest distribution channels to support the collections and payments business, with 959 locations enabled for collections
and 421 branches enabled for remote printing of instruments. The Bank also acts as a Sponsor of White Labelled ATM deployers,
being only the second Bank in the country to do so.
The Bank, in its capacity as an agency bank for various Central Government ministries, departments, State Governments and
Union Territories, accepts income and other direct taxes. The Bank also handles the disbursement of civil and defence pension
22
through the Centralised Pension Processing Centre (CPPC). In addition, the Bank provides collection and payment services to four
Central Government ministries/departments and 13 State Governments and Union Territories. The Bank rolled out customised
solutions such as PFMS (Public Financial Management System), e-procurement and e-freight to meet the unique needs of the
Government segment. The Bank is the nodal bank for collection of subscription to the National Pension Scheme. During the
year, the Bank also commenced opening of accounts under the Public Provident Fund scheme. The total Government business
throughput during the year was `100,318 crores. The Bank has been awarded the mandate for handling ‘Trustee Bank’ services
under National Pension System.
The Bank is a SEBI-registered custodian and offers custodial services to both domestic and offshore customers. As on
31
st
March 2014, the Bank held assets around `11,000 crores under its custody and had 3,459 demat accounts in the corporate
and institutional segment.
LENDING TO SMALL AND MEDIUM ENTERPRISES
The Small and Medium Enterprises (SME) business thrives on relationship building and nurturing the entrepreneurial talent
available. The Bank extends working capital, term loan, project finance as well as trade finance facilities to SMEs. This segment
has been identified as one of the key growth areas for the Bank.
The Bank has segmented its SME business into three groups: Medium Enterprises Group (MEG), Small Enterprises Group (SEG) and
Supply Chain Finance (SCF), which comprises 47%, 41% and 12% of SME advances respectively. During the year, advances to
SMEs increased by 18.65% to `35,502 crores from `29,922 crores last year and constituted 15.43% of the Bank’s total advances
as compared to 15.19% at the end of last year. The Bank currently operates from 38 SME Centres and 16 SME Cells across
the country compared to 32 SME Centres and 9 SME Cells last year, to service customers effectively covering 1,000 branches.
Keeping in mind the changing economic environment, the Bank has enhanced its risk management capabilities by developing
an ‘early warning system’ model based on holistic customer information. The Bank has also adopted a granular approach in
growing the SME portfolio by focussing primarily on better rated SME accounts. Incremental loan growth in SME is mainly
driven by higher rated SME 1 to 3 categories which correspond to a single ‘A’ rating. The loan book remained well diversified
and carried lower concentration risk with 80% of the outstanding loans being rated between SME 1 and SME 3. The SME
business continues to perform well and the portfolio behaviour remained healthy.
The Bank also sponsors and supports initiatives and trade fairs to encourage SME growth. The Bank was a ‘Presenting Partner’
at Chennai, Ludhiana, Indore and Ahmedabad for Engineering Expos 2013, India’s Largest SME Gathering on Manufacturing
& Engineering. On the operational efficiency front, the Bank has implemented lean processes in the dealer finance business
which has helped the Bank in significantly improving the turn-around time.
AGRICULTURE
The Bank continued its focus on providing need-based products to farmers and to participants within the agriculture value
chain. Activity and geography specific products and product variants were introduced to effectively reach out to the various
value chain participants and to meet their credit requirements. The Bank also continued to ally with reputed corporates in agro
based industries to provide value to the farmers and value chain participants.
The hub and spoke model of branches supported by agriculture clusters and Agriculture Business Centres (ABC) continued in
2013-14 with increase in footprint. The agriculture business footprint of the Bank improved from 759 branches in 2012-13 to
1,073 branches which are supported by 111 agriculture clusters and 22 ABCs. New ABCs were formed in Hubli and Lucknow
to improve market penetration in these regions.
In addition to credit support, the Bank provides a forum for knowledge sharing among farmers by aiding formation of farmer’s
clubs in co-ordination with National Bank for Agriculture and Rural Development (NABARD). As on 31
st
March 2014, the Bank
had formed 124 farmer’s clubs.
To support the weaker sections of society, the Bank undertakes direct lending to Joint Liability Groups (JLGs) in addition to
funding Micro Finance Institutions (MFI) for on-lending. Under its direct social collateral lending initiative ‘Axis Sahyog’, the
Bank uses technology to reach out to rural poor in the States of Madhya Pradesh, Bihar and Uttar Pradesh with the involvement
of 43 branches and a loan book of `70.58 crores. Biometric technology enabled IT architecture is used for enrolment and for
authorising transactions. The Bank also uses the services of institutional business correspondents for sourcing and servicing
micro loans in a Southern State.
During the year, agriculture loans grew 20.14% to `17,836 crores and constituted 7.75% of the Bank’s total advances as on
31
st
March 2014.
As on 31
st
March 2014, the Bank has achieved its overall priority sector lending requirements.
23
Financial Inclusion
Financial Inclusion (FI) remains a key driver in the Bank’s strategy to extend its reach in the rural market. The Bank’s Financial
Inclusion initiatives gathered momentum and scale this year with the Bank opening around 14 lac basic savings bank accounts
through its branches and Business Correspondent (BC) network. The Bank now has a FI customer base of around 74 lac
customers being serviced through a network of 576 rural branches and more than 74,000 BC agents spread over more than
47,000 villages. Around 24% of the Bank’s branches are in rural areas and 76% of the Bank’s rural branches are in unbanked
locations. The Bank has consolidated its strong position in G2C (Government to Consumer) payments, disbursing close to `764
crores of Government payments to around 31 lac beneficiaries across 28 districts in 9 states during 2013-14.
The Bank has further consolidated its position in C2C (Customer to Customer) transfers and has done more than `1,700 crores
of domestic money transfers over 47 lac remittance transactions. The Bank has a KCC (Kisan Credit Card) book of `6,083 crores
and a GCC (General Purpose Credit Card) book of `2,490 crores.
The Bank has taken a leadership position in the industry with respect to Aadhaar related initiatives. The Bank has opened 16
lac Aadhaar enabled bank accounts and handled `69 crores of Government benefits through APBS (Aadhaar Payments Bridge
System). The Bank is at No.1 position amongst all banks with respect to Aadhaar enabled payments, having done close to 19
lac AEPS (Aadhaar Enabled Payment System) transactions amounting to `86 crores. The Bank was the first amongst all banks
to launch the facility of account opening this year for the FI customers in a paperless and near instant fashion through the BC
channel via the e-KYC route and has opened more than 26,000 accounts through this route in just one district (Adilabad) of A.P.
INTERNATIONAL BANKING
The international operations of the Bank continue to be at the core of its strategy to expand the horizon of the product offerings,
and delivery channels to various geographies and across client segments, covering a wide spectrum of retail and corporate banking
solutions. During the year, the Bank expanded its overseas branch network by upgrading its representative office in Shanghai
into a branch. The Bank is the first Indian private sector bank to set up a branch in China. Further during the year, the Bank’s
first overseas banking subsidiary - Axis Bank UK Limited commenced its operations. The Bank now has overseas presence in six
countries with network of five branches at Singapore, Hong Kong, DIFC – Dubai, Colombo (Sri Lanka) and Shanghai (China),
two representative offices at Dubai and Abu Dhabi and an overseas banking subsidiary in the United Kingdom.
While corporate banking, trade finance, treasury and risk management solutions are the primary offerings through its overseas
branches, the Bank also offers retail liability products from its branches at Hong Kong and Colombo. Further, the Bank’s Gulf
Co-operation Council (GCC) initiatives in the form of representative offices in Dubai and Abu Dhabi and alliances with banks
and exchange houses in the Middle East provide the support for leveraging the business opportunities emanating from the
large NRI diaspora present in these countries.
As on 31
st
March 2014, the total assets at overseas branches stood at USD 7.20 billion compared to USD 6.84 billion last year.
Axis Bank UK Limited, the Bank’s overseas banking subsidiary, has managed to breakeven in its first year of operations and its
total assets stood at USD 372 million as on 31
st
March 2014.
RISK MANAGEMENT
The risk management objective of the Bank is to balance the trade-off between risk and return, and ensure optimum risk-adjusted
return on capital. The risk is managed through a risk management architecture as well as through policies and processes approved
by the Board of Directors encompassing independent identification, measurement and management of risks across the various
businesses of the Bank. An independent risk management function ensures that the Bank operates within the Board approved
risk appetite. The risk management function in the Bank strives to proactively anticipate vulnerabilities at the transaction as well
as at the portfolio level, through quantitative or qualitative examination of the embedded risks. The Bank continued to focus
on refining and improving its risk measurement systems not only to ensure compliance with regulatory requirements, but also
to ensure better risk-adjusted return and optimal capital utilisation, keeping in view its business objectives.
The overall risk appetite and philosophy of the Bank is defined by its Board of Directors. Further, the Individual Capital Adequacy
Assessment Process (ICAAP) of the Bank assesses all the significant risks associated with various businesses. The independent
risk management structure within the Bank is responsible for managing the credit risk, market risk, liquidity risk, operational risk
and exercising oversight on risks associated with subsidiaries. The risk management processes are guided by well-defined policies
appropriate for the various risk categories viz. credit risk, market risk, operational risk, liquidity risk, counterparty risk, country risk
and subsidiaries risk, supplemented by periodic validations of the methods used and monitoring through the sub-committees
24
of the Board. The Risk Management Committee (RMC), a committee constituted by the Board, approves policies related to risk
and reviews various aspects of risk arising from the businesses undertaken by the Bank. The Committee of Directors (COD) and
the Audit Committee of the Board (ACB) supervises certain functions and operations of the Bank, which ultimately enhances
the risk and control governance framework within the Bank. Various senior management credit and investment committees,
Credit Risk Management Committee (CRMC), Asset-Liability Committee (ALCO), Operational Risk Management Committee
(ORMC) and Subsidiaries Risk Management Committee (SRMC) operate within the broad policy framework of the Bank.
Credit Risk
Credit risk is the risk of financial loss if a client, issuer of securities that the Bank holds or any other counterparty fails to meet
its contractual obligations. Credit risk arises from all transactions that give rise to actual, contingent or potential claims against
any counterparty, borrower or obligor. The goal of credit risk management is to maximise the Bank’s risk-adjusted rate of return
on capital by maintaining targeted asset quality and managing the credit risk inherent in individual exposures as well as at the
portfolio level. The emphasis is placed, both on evaluation and containment of risk at the individual exposures and analysis of
the portfolio behaviour.
The Bank has a structured and standardised credit approval processes, including a well-established procedure of comprehensive
credit appraisal. Every extension of credit facility or material change to a credit facility to any counterparty requires credit approval
at the appropriate authority level. Internal risk rating remains the foundation of the credit assessment process, which provides
standardisation and objectivity to the process. All sanctioning processes including the delegation of powers are linked to the
ratings and the sizes of the exposure. The monitoring frequency applicable to the exposure also depends on the rating of the
exposure. Individual borrower exposure ceilings linked to the internal rating and sector specific caps are laid down in the Credit
Policy to avoid concentration risk. For the retail portfolio including small businesses and small agriculture borrowers, the Bank uses
different product-specific scorecards. Both credit and market risk expertise are combined to manage risks arising out of traded
credit products such as bonds and market related off-balance sheet transactions. Model validation is carried out periodically by
objectively assessing its discriminatory power, calibration accuracy and stability of ratings both by the Risk Department as well
as independently by a Validation Committee.
The Bank continuously monitors portfolio concentrations by segment, borrower, groups, industry and geography, where
applicable. Portfolio level delinquency matrices are tracked at frequent intervals with focus on detection of early warning signals
of stress. Key sectors are analysed in detail to suggest strategies for business, considering both risks and opportunities. Such
analysis is reviewed by the Credit Risk Management Committee to arrive at the appropriate industry ceilings as well as define
the origination and account management strategy for the sector. The Risk Management Committee of the Board periodically
reviews the impact of the stress scenarios resulting from various scenarios like increased provisioning requirements, rating
downgrades, or drop in the asset values in case of secured exposures, on the portfolio. The portfolio level risk analytics provide
insight into the capital allocation required to absorb unexpected losses at a defined confidence level.
Market Risk
Market risk is the risk of losses in ‘on and off-balance sheet’ positions arising from the movements in market price as well as
the volatilities of those changes, which may impact the Bank’s earnings and capital. The risk may pertain to interest rate related
instruments (interest rate risk), equities (equity price risk) and foreign exchange rate risk (currency risk). Market Risk for the
Bank emanates from its trading and investment activities, which are undertaken both for the customers and on a proprietary
basis. The market risk management framework of the Bank aims at maximising the risk adjusted rate of return by providing
inputs regarding the extent of market risk exposures, the performance of portfolios vis-à-vis the risk exposure and comparable
benchmarks. The Bank adopts a comprehensive approach to market risk management for its banking book as well as its trading
book for both its domestic and overseas operations. The market risk management framework of the Bank provides necessary
inputs regarding the extent of market risk exposures, the performance of portfolios vis-à-vis the risk exposure and comparable
benchmarks which assists in maximising the risk-adjusted rate of return of the Bank’s trading and investment portfolio.
Market risk management is guided by well-laid policies, guidelines, processes and systems for the identification, measurement,
monitoring and reporting of exposures against various risk limits set in accordance with the risk appetite of the Bank. Treasury
Mid-Office independently monitors the Bank’s investment and trading portfolio in terms of risk limits stipulated in the Market
Risk Management Policy and reports deviations, if any, to the appropriate authorities as laid down in the policy. The Bank utilises
both statistical as well as non-statistical measures for the market risk management of its trading and investment portfolios.
The statistical measures include Value at Risk (VaR), stress tests, back tests and scenario analysis while position limits, marked-
25
to-market (MTM), stop-loss limits, alarm limits, gaps and sensitivities (duration, PVBP, option greeks) are used as non-statistical
measures of market risk management.
Historical simulation and its variants are used to compute VaR for the trading portfolio which is calculated at a 99% confidence
level for a one-day holding period over a time horizon of 250 days. VaR models for different portfolios are back-tested on an
ongoing basis and the results are used to maintain and improve the efficacy of the model. VaR measurements are supplemented
with a series of stress tests and sensitivity analysis as per a well laid stress testing framework.
Liquidity Risk
The Asset Liability Management Policy of the Bank stipulates broad framework for liquidity risk management to ensure that the
Bank is in a position to meet its daily liquidity obligations as well as to withstand a period of liquidity stress from, bank-wide
factors, market-wide factors or a combination of both.
The liquidity profile of the Bank is analysed on a static as well as on a dynamic basis by using the gap analysis technique
supplemented by monitoring of key liquidity ratios and conduct of liquidity stress tests periodically. The liquidity position is
monitored for both domestic as well as overseas operations. The Bank has laid down liquidity risk policies for its overseas branches
in line with host country regulations and the asset-liability management framework as stipulated for domestic operations.
Periodical liquidity positions and liquidity stress results of overseas branches are reviewed by the Bank’s ALCO.
RBI has released draft guidelines on liquidity risk management and the Basel III framework on liquidity standards. The Bank has
taken appropriate steps to ensure adoption of these guidelines within the timeframe stipulated by RBI. The liquidity guidelines
have been integrated into the asset liability management framework of the Bank through suitable amendments in order to
ensure adherence to RBI guidelines on monitoring and management of liquidity including liquidity ratios.
Operational Risk
Operational risks may emanate from inadequate and/or missing controls in internal processes, people and systems or from
external events or a combination of all the four. The Bank has in place an Operational Risk Management (ORM) Policy to manage
the operational risk in an effective, efficient and proactive manner. The policy aims at assessing and measuring the magnitude
of risks, monitoring and mitigating them through well-defined framework and governance structure.
The RMC at the apex level is the policy making body and is supported by the Operational Risk Management Committee (ORMC),
responsible for the implementation of the Operational Risk framework of the Bank and the management of operational risks
across the Bank. A sub-committee of the ORMC, Sub-ORMC has been constituted to assist the ORMC in discharging its functions.
All new products and processes are subjected to risk evaluation by the Bank’s Product Management Committee and Change
Management Committee. Outsourcing arrangements are examined and approved by the Bank’s Outsourcing Committee. The
IT Security Committee of the Bank provides directions for mitigating operational risk in the information systems. The Bank has
set up a comprehensive Operational Risk Measurement System (ORMS) through the implementation of a software solution.
Recognising its responsibility to ensure continuity of service to its large customer base, the Bank has placed a well-defined
Business Continuity Framework. The effectiveness of the approved Business Continuity Plan (BCP) framework is tested for all
identified critical internal activities to ensure readiness to meet various contingency scenarios. The learning from the BCP exercises
are used as inputs to further refine the framework.
The Bank has set up a Financial Crime Management Unit within the Risk department covering oversight on Anti-Money
Laundering / Combating Financial Terrorism (AML/CFT), Continuous Offsite Monitoring and Surveillance (COSMOS), Off-Site
Audit and Fraud Management and MIS.
OPERATIONS
The business process re-engineering carried out over the past few years, has resulted in a separation of the production and
distribution functions. The Bank now carries out most significant back-office functions on a centralised basis with product sales
and customer handling (the distribution technology) primarily carried out at the branches. This has not only helped in reduction
of transaction costs but has also ensured smoothness in operations and increase in productivity. To bring about greater precision
in the management of operations in both the corporate and retail side of the Bank’s businesses, operational processes were
constantly refined from the perspective of implementation of best practices, risk identification and containment. Operational
instructions were issued on a continual basis and efforts were made to introduce risk-free working at branches.
26
Retail Banking Operations
The Retail Banking Operations (RBO) unit oversees the operations carried out under branch banking with a focus on service
delivery, risk containment and regulatory compliance. This unit operates closely with the Retail Liabilities Team as well as with
the Control Units and ensures that branch services meet the business objectives along with risk and compliance requirements.
It carries out oversight through continuous remote monitoring as well as visits to branches on a periodical basis. It ensures that
the branch operations are efficient and plays a valuable role in delivering services to customer at branches.
The Retail Business Processes (RBP) team manages the centralised back-end processing for various activities, such as data
processing for new customers, servicing of transactions and reconciliation activities related to retail banking, cards, consumer
lending, business banking, depository services, rural and agricultural banking. The team brings efficiencies of scale to the above
mentioned business lines. Operations are managed through two National Processing Centers supported by 23 Regional Centers
through a hub and spoke network.
Wholesale Banking Operations
Wholesale Banking Operations (WBO) is structured into four key verticals - Treasury Operations, Corporate Banking Operations,
Trade and Forex Operations (TFO) and Centralised Collection and Payment Hub (CCPH). These verticals are responsible for
providing best-in-class service to non-retail customers of the Bank, while addressing various regulatory requirements and
internal compliance.
Treasury Operations carries out the functions of settlement and accounting of treasury-related transactions and operates the
centralised electronic payment hubs for RTGS (Real Time Gross Settlement) and NEFT (National Electronic Funds Transfer).
Corporate Banking Operations (CBO) ensures delivery, control, monitoring and administration of credit facilities of large corporates,
mid corporates, SME and corporate agriculture segments. It also processes domestic trade finance, channel finance and micro
finance transactions. CBO operates through Corporate Banking Branches (CBBs) located at 8 major centres, 59 Mini-Credit
Management Centres (MCMCs) at Tier II cities and Corporate Credit Operations Hub (CCOH) at Hyderabad and Gurgaon. These
units, manned by experienced professionals, are trained to handle corporate credit function in close co-ordination with the
business verticals responsible for sourcing and sanction of credit facilities to corporates. The Trade and Forex Operations (TFO)
handles remittances and trade finance transaction processing on behalf of distribution channels dealing in trade finance and
foreign exchange through 202 ‘B’ category branches and state-of-the-art centralised knowledge processing centres located
at Mumbai and Hyderabad. TFO intrinsically has a high level of regulatory requirements, which is effectively addressed by the
specialised staff at TFO units. The Centralised Collections & Payment Hub (CCPH) handles payments and collections and operates
through 2 units located at Mumbai and Hyderabad. Further, in order to extend operational support and customer hand-holding
at the local level, 36 Transaction Banking Centres (TBCs) have been set-up under CCPH, which are manned by skilled resources.
CCPH works in close association with the Business Banking team of the Bank, thereby ensuring efficient service delivery coupled
with control over operations.
INFORMATION TECHNOLOGY
The Bank’s continuous endeavour has been to use technology to further improve the customer’s experience while transacting
with the Bank. In this regard, it has empowered its relationship managers with a complete 360 degree view of the customer’s
relationship with the Bank. Thus, it has concisely captured the customers’ existing relationship and likely future needs leading to
superior service, better business opportunities through higher cross sell using a seamless multi-channel experience. To further the
Bank’s green initiatives, technology has helped in issuance of Green Pin through ATM and IVR channels for new to bank debit
card customers resulting in cost savings in deliverables management. Further, technology has been one of the key contributors
in the Bank’s launch of multi-currency travel cards. A new and faster platform was implemented to enable foreign exchange
money transfers for retail customers. The Bank has also re-vamped its loan system architecture with in-memory computing, a
much faster process to achieve higher volumes and faster turnaround time in loan processing.
The Bank’s Financial Inclusion (FI) initiatives have also benefited from efficient use of technology. Ultra small branches set up to
cater to FI customers are enabled with systems for account opening and transaction processing through biometric authentication.
FI gateway was setup to integrate BC’s (Business correspondent) System to the Core banking System and regulatory bodies such as
UIDAI (Unique Identification Authority of India), NPCI (National Payments Corporation of India) to facilitate online authentication
and transaction processing. Information Technology has also aided in improving the Bank’s services to its corporate clients. An
Electronic Payments Hub is being implemented to enable faster processing of large volumes of transactions, which facilitated
efficient cash management for corporates.
27
The recent years have seen high adoption of internet and mobile technologies in banking. As more and more people are
moving towards digital channels for their banking needs, technology continues to be a key enabler of business growth as well
as a source of competitive advantage. The Bank has recognised digital channels as focus areas for enabling superior customer
experience leading to increased business opportunities. To achieve this objective, the Bank has made strategic investments in
electronic channels with the launch of the new Axis Mobile Application for its customers in August 2013. Post the launch, the
Bank has achieved over 10 lac downloads. The Axis Mobile Application offers personalisation depending on the user segments
and has social media integration capabilities. Since its launch, the Application has contributed to an increase of almost 200%
in the overall mobile user base.
The Bank has taken a series of steps to improve risk management and control. The Bank has completed reissuance of chip
cards in case of eligible debit cards and all credit cards as per RBI mandate. New system has been implemented for better credit
assessment of customers via multi-bureau connectivity. Real-time risk scoring and transaction stoppage mechanism has been
implemented to ensure robust fraud management control for cards, channels and core banking systems. Fraud monitoring is
done for both offline and online transactions giving the Bank 24x7 capability for detection of suspected frauds. Security features
of the Bank’s website have been fortified with risk based adaptive authentication, cooling period on beneficiary registration
and presenting security questions to validate customers identity based on customer’s geographic location, internet protocol (IP)
address and machine fingerprint. On the Information Security aspect, the Bank has rolled out data leakage prevention solution
to protect the sensitive data pertaining to the Bank and customers from being misused.
The Bank has made significant progress in implementing the recommendations of the RBI Working Group issued in
April 2011 on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds. The Bank is committed
to implementing the recommendations on the various subject areas indicated in the guidelines. The Bank has put in place the
appropriate organisational framework as recommended in the guidelines. Several information security solutions have been
implemented like Data Leakage Prevention (DLP), Distributed Denial-of-Service (DDoS) attack mitigation, ISO 27001:2005 standard,
Privileged Identity Access Management, Information Rights Management (IRM), Database encryption, Laptop encryption etc.
to protect customer data, prevent external attacks as well as strengthening internal controls.
The Security Website http://www.axisbank.com/SecurityPortal/index.aspx was developed by the Bank for its customers to make
them aware on safe e-banking practices. Policies and procedures of the Bank have also been reviewed and suitably modified.
The progress in each area of the recommendations has been closely monitored by the top management and the status of
implementation has been reported to the Board and RBI at regular intervals.
COMPLIANCE
The Bank has always adhered to the highest standards of compliance and corporate governance. It has put in place controls
and an appropriate structure to monitor that the operating and business units strictly comply with regulatory and internal
guidelines. The Compliance function facilitates in instilling and strengthening a Compliance Culture within the Bank through
various enablers like dissemination of regulatory changes and spreading compliance knowledge through training, newsletters
and direct interaction. The level of compliance is monitored through a Compliance Testing Programme, which is undertaken
twice a year. As the focal point of contact with RBI and other regulatory entities, the Compliance Department periodically
apprises both the Bank’s management as well as the Board of Directors on the compliance status of the Bank and changes in
regulatory environment.
Introduction of new as well as changes to the existing products and processes are subjected to scrutiny to ensure that they are in
adherence with the relevant regulatory guidelines. The Bank has implemented the first stage of an Enterprise-wide Governance
Risk and Compliance Framework, an online tool, which would address operational, compliance and financial reporting risks
and help in bringing efficiency in processes and improvement in compliance levels. Significant aspects of the Bank’s compliance
culture are the Whistle-blower Policy, Code of Right Sell and zero tolerance for fraud, corruption and financial irregularities.
The Department also propagates and monitors a Group Compliance approach encompassing the Bank and its subsidiaries.
INTERNAL AUDIT
The Bank’s Internal Audit function aims at providing an independent assessment on the adequacy and effectiveness of
the processes for controlling its activities and also managing its significant risks. The Internal Audit function undertakes a
comprehensive risk-based audit in respect of auditee units. The Bank has adopted a well-defined policy for undertaking Risk
Based Internal Audit. This policy includes the risk assessment methodology for identifying the risk areas based on which the
audit plan is drawn. The audit plan is aligned vis-à-vis the strategic objectives of the Bank. Accordingly, the Bank undertakes
28
internal audit of its auditee units at a frequency synchronised to the risk profile of each auditee unit in line with the spirit of
guidelines relating to Risk-Based Internal Audit (RBIA). The scope of RBIA, besides examining the adequacy and effectiveness of
internal control systems and external compliance, also evaluates the risk residing at the auditee units. The RBIA approach has
been structured taking into account regulatory guidelines and international best practices. To complement the Internal Audit
function, the Bank has put in place a robust Concurrent Audit system.
To ensure independence of the Audit function and in line with the best corporate governance practices, the Internal Audit
Department functions independently under the supervision of the Audit Committee of the Board, which reviews the performance
of the internal audit function and effectiveness controls laid down by the Bank and compliance with regulatory guidelines.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Bank appreciates its role as an agent of change and development for the communities it serves. Axis Bank Foundation (ABF)
was set up as a Public Trust in 2006 to carry out the Corporate Social Responsibility initiatives of the Bank. ABF’s philosophy
is to strive to improve the standard of living of underprivileged people in India, by providing them education, healthcare and
sustainable livelihoods. The Foundation also aims to help create capabilities in terms of skills and employment opportunities
for disadvantaged/differently abled people, especially children. The Bank contributes one percent of its net profit annually to
the Foundation under its CSR initiatives. Presently, the Foundation is running 39 programs over 185 districts in 24 states and
has reached out to 4.42 lac beneficiaries.
The Foundation, presently, runs 20 programs in the field of education covering 20 districts in 10 states providing education to
underprivileged individuals across India through special education, supplementary education, primary education, vocational
training etc. As of 31
st
March 2014, the cumulative disbursals for the various education programs were to the tune of `43.40
crores. Through these programs the Foundation has touched almost 1.5 lacs lives. The Foundation has been partnering with
Lifeline Foundation since 2007 providing highway trauma care and medical relief which ensures free evacuation of accident
victims from the accident spot to the nearest hospital. As of 31
st
March 2014, 19,660 accident victims were attended to in the
states of Rajasthan, Maharashtra, Kerala and Gujarat.
In 2011, the Foundation ventured into the domain of providing sustainable livelihoods which aim at alleviating poverty and
providing livelihood options for economically weak households. The Foundation aims to provide one million livelihoods to
the underprivileged in some of the most backward regions of the country by 2017, 60% of the beneficiaries being women.
Presently, 18 programs are running in the field of livelihood covering over 165 districts in 23 states. As of 31
st
March 2014, the
cumulative disbursals for the various livelihood programs were to the tune of `86.98 crores.
The Foundation provides Axis Bank staff opportunities to volunteer and participate in its various initiatives and also runs a
payroll program to collect contributions from the employees. During the year, 8,019 employees of the Bank have enrolled for
the payroll program and the monthly collection amounted to `15.19 lac.
HUMAN RESOURCES
The Human Resource (HR) function in the Bank remains focused on improving organisational effectiveness, developing
frontline leaders, promoting employee empowerment and maintaining stability and
sustainability amidst growth and a rapidly changing business environment.
The Bank focuses on innovative strategies in building talent pipelines, by entering into
arrangements and tie-ups with educational institutes and universities of repute, for
ensuring adequate supply of skilled manpower with day zero productivity to support
its growing business. Leadership Development is another element in the Bank’s HR
objectives with particular focus on developing strategic leadership capabilities in
future leaders. The Bank partners with the best-in-class leadership trainers to impart
leadership training. To develop a common leadership language, a culture of leadership
development and most importantly, a leadership pipeline, Axis Leadership Practices
(ALPs) have been defined for employees at different levels of the hierarchy to promote
desired behaviours and are integrated to people processes like Talent Acquisition,
Performance Management System, Leadership Development and Feedback.
CA/CS/ICWA/CFA Graduates/Post Graduate/Diploma MBA/Masters
Engg/Tech Doctorate Bankers/Law Prof.
49.52%
1.57%
39.17%
7.54%
0.03%
2.17%
INTELLECTUAL CAPITAL
29
The Bank has built a learning infrastructure where the Learning Maps are aligned to the overall development plan of employees
and facilitate learning process across all levels through a blended learning approach of classroom programmes, external
programmes, certification programmes as well as e-learning modules. The Bank’s online learning management system ‘Axis
Academy’ reaches out to the dispersed employee base in a cost effective and timely manner.
The Bank promotes a healthy and safe work environment for its employees by offering several health and wellness initiatives and
campaigns throughout its network for a positive health and safety culture. The Bank fosters work-life balance and condemns
any kind of unfair treatment in the workplace. Regulation and compliance have remained as the major focus areas for the Bank.
The Bank enforces a strict compliant and ethical culture with adequate channels for raising concerns supported by a grievance
handling mechanism.
To foster a spirit of connectedness, the Bank hosts several employee engagement
programmes through online and offline channels to connect its thinly-spread employee
population across a widely dispersed geographical network. Through these platforms,
employees can share their unique experiences, best practices and cast their opinion
and feedback about the Bank’s products and services. The Bank conducts Employee
Engagement surveys to seek regular feedback from employees on the policies and
practices to strengthen its journey towards creating a team of empowered employees
oriented towards the realisation of the Bank’s corporate vision.
The strength of the workforce was 42,420 at the end of the year as compared to
37,901 last year. A young and engaged workforce with an average age of 29 years and
the Bank’s policy on being an equal opportunity employer continued to significantly
contribute towards the Axis Bank brand.
The Bank is also a socially responsible employer. In addition to the activities carried
out through ‘Axis Bank Foundation’, the Bank partners with ‘Teach for India’ in its mission to reform education and seek an
innovative solution to ending educational inequality in India by deputing employees as Fellows in their programme. The Bank
continued to strive towards realisation of its vision of being the preferred financial service provider excelling in customer delivery
through insight, empowered employees and smart use of technology, which has contributed in a big way to the increase in
employee productivity year-on-year.
Below 30 Years Above 30 yrs to 40 yrs
Above 40 yrs to 50 yrs
Above 50 yrs to 60 yrs
64.15%
31.65%
3.54%
0.66%
PROFILE BY AGE
30
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF
AXIS BANK LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of AXIS BANK LIMITED (“the Bank”), which comprise the Balance
Sheet as at 31 March, 2014, the Profit and Loss Account and the Cash Flow Statement of the Bank for the year then ended
and a summary of the significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
The Bank’s Management is responsible for the 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 the provisions of Section 29
of the Banking Regulation Act, 1949, Accounting Standards notified under the Companies Act, 1956 (which continue
to be applicable in respect of section 133 of the Companies Act, 2013 in terms of the General Circular 15/2013 dated
13
th
September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted
in India, in so far as they apply to the banks and the Guidelines issued by the Reserve Bank of India. 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.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require
that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the 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 the 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, but not for the purpose of expressing an opinion on
the effectiveness of the Bank’s internal control. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial
statements give the information required by the Banking Regulation Act, 1949; the Companies Act, 1956 in the manner so
required for banking companies and the Guidelines issued by the Reserve Bank of India from time to time and give a true and
fair view in conformity with the 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, 2014;
(b) in the case of the Profit and Loss Account, 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
1. As required by Section 227(3) of the Companies Act,1956 and Section 30 of the Banking Regulation Act,1949, we report
that:
(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary
for the purposes of our audit and found them to be satisfactory.
(b) In our opinion, proper books of account as required by law have been kept by the Bank so far as it appears from our
examination of those books.
31
(c) In our opinion, the transactions of the Bank which have come to our notice have been within the powers of the Bank.
(d) The financial accounting systems of the Bank are centralised and, therefore, accounting returns are not required to
be submitted by the Branches.
(e) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in
agreement with the books of account.
(f) In our opinion, the Balance Sheet, the Profit and Loss Account, and the Cash Flow Statement comply with the
Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the
Companies Act, 2013 in terms of General Circular 15/2013 dated 13
th
September, 2013 of the Ministry of Corporate
Affairs).
(g) On the basis of the written representations received from the Directors as on 31
st
March, 2014 taken on record by the
Board of Directors, we report that none of the Directors is disqualified as on 31
st
March, 2014 from being appointed
as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
2. We report that during the course of our audit we have visited 150 Branches. Since the key operations of the Bank are
completely automated with the key applications integrated to the core banking systems, the audit is carried out centrally
at the Head Office as all the necessary records and data required for the purposes of our audit are available therein and
the Branches are not required to submit any financial returns.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117365W)
Z. F. Billimoria
Partner
(Membership No. 42791)
Date : 25
th
April, 2014
Place : Mumbai
32
AXIS BANK LIMITED - BALANCE SHEET
BALANCE SHEET AS AT 31 MARCH, 2014
Schedule No.
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
CAPITAL AND LIABILITIES
Capital 1
4,698,446
4,679,545
Reserves & Surplus 2
377,506,419
326,399,054
Deposits 3
2,809,445,649
2,526,135,881
Borrowings 4
502,909,425
439,510,984
Other Liabilities and Provisions 5
137,888,943
108,881,120
TOTAL 3,832,448,882
3,405,606,584
ASSETS
Cash and Balances with Reserve Bank of India 6
170, 413,196
147,920,883
Balances with Banks and Money at Call and Short Notice 7
111,973,750
56,428,716
Investments 8
1,135,484,344
1,137,375,370
Advances 9
2,300,667,584
1,969,659,574
Fixed Assets 10
24,102,106
23,556,420
Other Assets 11
89,807,9 02
70,665,621
TOTAL 3,832,448,882
3,405,606,584
Contingent Liabilities 12
5,748, 447,9 00
5,481,158,951
Bills for Collection
366,015,787
278,948,780
Significant Accounting Policies and Notes to Accounts 17 & 18
Schedules referred to above form an integral part of the Balance Sheet
In terms of our report attached. For Axis Bank Ltd.
For Deloitte Haskins & Sells
Chartered Accountants
Shikha Sharma
Managing Director & CEO
Z. F. Billimoria
Partner
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
33
In terms of our report attached. For Axis Bank Ltd.
For Deloitte Haskins & Sells
Chartered Accountants
Shikha Sharma
Managing Director & CEO
Z. F. Billimoria
Partner
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
AXIS BANK LIMITED - PROFIT & LOSS ACCOUNT
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2014
Schedule No.
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
I INCOME
Interest earned 13
306,411,554
271,825,744
Other income 14
74,052,247
65,511,063
TOTAL 380,463,801
337,336,807
II EXPENDITURE
Interest expended 15
186,895,220
175,163,111
Operating expenses 16
79,007,739
69,142,375
Provisions and contingencies 18 (1.1.1)
52,384,176
41,236,992
TOTAL 318,287,135
285,542,478
III NET PROFIT FOR THE YEAR (I - II) 62,176,666
51,794,329
Balance in Profit & Loss Account brought forward from previous year 100,292,624 73,294,476
IV AMOUNT AVAILABLE FOR APPROPRIATION 162,469,290
125,088,805
V APPROPRIATIONS :
Transfer to Statutory Reserve
15,544,167
12,948,583
Transfer to Investment Reserve
500,289
534,571
Transfer to Capital Reserve 18 (1.2.2)
388,664
1,414,579
Transfer to Reserve Fund 18 (1.2.3)
10,465
26,084
Proposed dividend (includes tax on dividend) 18 (1.2.6)
11,011,244
9,872,364
Balance in Profit & Loss Account carried forward
135,014,461
100,292,624
TOTAL 162,469,290
125,088,805
VI EARNINGS PER EQUITY SHARE
18 (1.2.4)
(Face value `10/- per share) (Rupees)
Basic
132.56
119.67
Diluted
132.23
118 .85
Significant Accounting Policies and Notes to Accounts 17 & 18
Schedules referred to above form an integral part of the Profit and Loss Account
34
AXIS BANK LIMITED - CASH FLOW STATEMENT
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2014
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
Cash flow from operating activities
Net profit before taxes
93,486,266 75,526,929
Adjustments for:
Depreciation on fixed assets 3,639,307 3,517, 343
Depreciation on investments (1,002,934) (1,039,359)
Amortisation of premium on Held to Maturity investments 741,629 674,599
Provision for Non Performing Assets (including bad debts) 12,959,797 11,792,245
Provision on standard assets 2,902,257 1,966,686
Provision for wealth tax 4,200 3,800
(Profit)/Loss on sale of fixed assets (net) 142,344 44,662
Provision for country risk - (96,300)
Provision for restructured assets 1,947,624 1,039,492
Provision for other contingencies 4,263,632 3,837,828
119,084,122 97,267,925
Adjustments for:
(Increase)/Decrease in investments 139,416,485 (95,527,142)
(Increase)/Decrease in advances (344,886,856) (28 4,769,149 )
Increase/(Decrease) in deposits 283,309,768 325,092,849
(Increase)/Decrease in other assets (15,824,833) (3,340,140)
Increase/(Decrease) in other liabilities & provisions 20,351,130 14,760,950
Direct taxes paid (34,424,254) (26,294,900)
Net cash flow from operating activities
167,025,562 27,190,393
Cash flow from investing activities
Purchase of fixed assets (5,894,258) (4,718,705)
(Increase)/Decrease in Held to Maturity investments (131,889,049) (109,099,212)
(Increase)/Decrease in Investment in Subsidiaries (6,378,202) (718,875)
Proceeds from sale of fixed assets 1,686,699 193,531
Proceeds from transfer of net assets acquired under demerger to subsidiary - 2,741,502
Net cash used in investing activities
(142,474,810) (111,601,759 )
35
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
Cash flow from financing activities
Proceeds from issue of subordinated debt, perpetual debt & upper Tier II
instruments (net of repayment) (1,341,919) 19,654,731
Increase/(Decrease) in borrowings (excluding subordinated debt,
perpetual debt & upper Tier II instruments) 64,740,359 79,139,533
Proceeds from issue of share capital 18,901 426,605
Proceeds from share premium (net of share issue expenses) 1,356,819 56,227,263
Payment of dividend (9,872,689) (7,702,16 4 )
Net cash generated from financing activities
54,901,471 147,745,96 8
Effect of exchange fluctuation translation reserve (1,414,876) 1,675,840
Net increase in cash and cash equivalents 78,037,347 65,010,442
Cash and cash equivalents at the beginning of the year 204,349,599 139,339,157
Cash and cash equivalents at the end of the year 282,386,946 204,349,599
Notes to the Cash Flow Statement:
Cash and cash equivalents includes the following
Cash and Balances with Reserve Bank of India (Refer Schedule 6) 170,413,196 147,920,883
Balances with Banks and Money at Call and Short Notice (Refer Schedule 7) 111,973,750 56,428,716
Cash and cash equivalents at the end of the year 282,386,946 204,349,599
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2014
In terms of our report attached. For Axis Bank Ltd.
For Deloitte Haskins & Sells
Chartered Accountants
Shikha Sharma
Managing Director & CEO
Z. F. Billimoria
Partner
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
36
AXIS BANK LIMITED - SCHEDULES
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 1 - CAPITAL
Authorised Capital
850,000,000 (Previous year - 850,000,000) Equity Shares of `10/- each
8,500,000
8,500,000
Issued, Subscribed and Paid-up capital
469,844,553 (Previous year - 467,954,468) Equity Shares of `10/- each fully paid-up
4,698,446
4,679,545
The Board of Directors have on 25 April, 2014 considered and approved the sub-
division of one equity share of the Bank having a face value of `10 each into five
equity shares of face value of `2 each. The sub-division of shares is subject to
approval of the shareholders and any other statutory and regulatory approvals, as
applicable
SCHEDULE 2 - RESERVES AND SURPLUS
I. Statutory Reserve
Opening Balance
51,374,446
38,425,863
Additions during the year
15,544,167
12,948,583
66,918,613
51,374,4 46
II. Share Premium Account
Opening Balance
157,614,872
101,387,610
Additions during the year
1,356,819
56,626,088
Less: Share issue expenses
-
(398,826)
158,971,691
157,614, 872
III. Investment Reserve Account
Opening Balance
534,571
-
Additions during the year
500,289
534,571
1,034,860
534,571
IV. General Reserve
Opening Balance
3,543,100
3,543,100
Additions during the year
-
-
3,543,100
3,543,100
V. Capital Reserve
Opening Balance
9,460,164
5,424,982
Additions during the year [Refer Schedule 18 (1.2.2)]
388,664
4,035,182
9,848,828
9,460,164
VI.
Foreign Currency Translation Reserve [Refer Schedule 17 (4.5)]
Opening Balance
3,553,193
1,877,353
Additions/deductions during the year (net)
(1,414,876)
1,675,840
2,138,317
3,553,193
VII. Reserve Fund
Opening Balance
26,084
-
Additions during the year [Refer Schedule 18 (1.2.3)]
10,465
26,084
36,549
26,084
VIII.Balance in Profit & Loss Account 135,014,461
100,292,624
TOTAL 377,506,419
326,399,054
37
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 3 - DEPOSITS
A. I. Demand Deposits
(i) From banks
32,988,992
29,255,626
(ii) From others
453,875,002
453,965,348
II. Savings Bank Deposits
777,759,443
637,777,349
III. Term Deposits
(i) From banks
118,566,234
151,218,877
(ii) From others
1,426,255,978
1,253,918,681
TOTAL 2,809,445,649
2,526,135,881
B. I. Deposits of branches in India
2,669,187,357
2,386,893,082
II. Deposits of branches outside India
140,258,292
139,242,799
TOTAL 2,809,445,649
2,526,135,881
SCHEDULE 4 - BORROWINGS
I. Borrowings in India
(i) Reserve Bank of India
2,790,000
-
(ii) Other banks #
28,653,700
22,367,200
(iii) Other institutions & agencies **
155,918,476
144,085,033
II. Borrowings outside India $
315,547,249
273,058,751
TOTAL 502,909,425
439,510,984
Secured borrowings included in I & II above
-
-
# Borrowings from other banks include Subordinated Debt of `407.60 crores (previous year `557.60 crores) in the nature
of Non-Convertible Debentures, Perpetual Debt of Nil (previous year Nil) and Upper Tier II instruments of `59.10 crores
(previous year `59.10 crores) [Also refer Notes 18 (1.1.2) & 18 (1.1.3)]
** Borrowings from other institutions & agencies include Subordinated Debt of `9,943.20 crores (previous year `10,071.70
crores) in the nature of Non-Convertible Debentures, Perpetual Debt of `214.00 crores (previous year `214.00 crores)
and Upper Tier II instruments of `248.40 crores (previous year `248.40 crores) [Also refer Notes 18 (1.1.2) & 18 (1.1.3)]
$ Borrowings outside India include Perpetual Debt of `275.61 crores (previous year `249.71 crores) and Upper Tier II
instruments of `1,257.44 crores (previous year `1,139.03 crores) [Also refer Note 18 (1.1.3)]
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I. Bills payable
35,781,997
35,288,16 4
II. Inter-office adjustments (net)
-
-
III. Interest accrued
11,428,311
8,267,309
IV. Proposed dividend (includes tax on dividend)
10,990,706
9,852,151
V. Contingent provision against standard assets
12,970,256
9,766,369
VI. Others (including provisions) @
66,717,673
45,707,127
TOTAL 137,888,943
108,881,120
@ Includes provision for tax (net of advance tax and tax deducted at source) of `20.70 crores as at 31 March, 2014
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2014
38
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I. Cash in hand (including foreign currency notes)
41,646,443
40,538,842
II. Balances with Reserve Bank of India :
(i) in Current Account
128,766,753
107,382,041
(ii) in Other Accounts
-
-
TOTAL 170, 413,196
147,920,883
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I. In India
(i) Balance with Banks
(a) in Current Accounts
2,218,145
3,353,513
(b) in Other Deposit Accounts
10,252,205
9,491,675
(ii) Money at Call and Short Notice
(a) With banks
-
-
(b) With other institutions
6,587,734
-
TOTAL 19,058,084
12,845,188
II. Outside India
(i) in Current Accounts
13,926,856
11,4 40,321
(ii) in Other Deposit Accounts
27,706,630
13,474,234
(iii) Money at Call & Short Notice
51,282 ,180
18,668,973
TOTAL 92,915,666
43,583,528
GRAND TOTAL (I+II) 111,973,750
56,428,716
SCHEDULE 8 - INVESTMENTS
I. Investments in India in -
(i) Government Securities ## **
690,967,197
722,498,592
(ii) Other approved securities
-
-
(iii) Shares
6,118,086
7,549,074
(iv) Debentures and Bonds
236,365,878
260,74 4,089
(v) Investment in Subsidiaries/Joint Ventures
7,596,865
4,214,375
(vi) Others (Mutual Fund units, CD/CP, Priority Sector deposits, PTC etc.) @
183,325,790
133,587,622
Total Investments in India 1,124,373,816
1,128,593,752
II. Investments outside India in -
(i) Government Securities (including local authorities)
5,037,042
2,683,274
(ii) Subsidiaries and/or joint ventures abroad (amount less than `1,000 for previous
year) 2,995,713 -
(iii) Others
3,077,773
6,098,344
Total Investments outside India 11,110,528
8,781,618
GRAND TOTAL (I+II) 1,135,484,344
1,137,375,370
## Includes securities costing `5,224.77 crores (previous year `4,766.66 crores) pledged for availment of fund transfer
facility, clearing facility and margin requirements
** Inclusive of Repo Lending of `2,600.00 crores (previous year `7,350.00 crores) and net of Repo borrowing of Nil (previous
year Nil) under the Liquidity Adjustment Facility in line with the RBI requirements
@ Includes Priority Sector deposits of `11,006.97 crores (previous year `6,980.42 crores) and PTC’s of `2,328.21 crores
(previous year `1,471.03 crores) net of depreciation, if any
39
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 9 - ADVANCES
A. (i) Bills purchased and discounted *
32,128,953
56,079,021
(ii) Cash credits, overdrafts and loans repayable on demand @
688,438,246
54 6, 437, 28 4
(iii) Term loans #
1,580,100,385
1,367,143,269
TOTAL 2,300,667,584
1,969,659,574
B. (i) Secured by tangible assets $
1,888,972,790
1,613,648,122
(ii) Covered by Bank/Government Guarantees &&
30,464,715
18,089,151
(iii) Unsecured
381,230,079
337,922,301
TOTAL 2,300,667,584
1,969,659,574
C. I. Advances in India
(i) Priority Sector
627,610,775
484,982,533
(ii) Public Sector
37,642,652
39,189,817
(iii) Banks
2,088,299
449,490
(iv) Others
1,275,998,080
1,143,709,623
TOTAL 1,943,339,806
1,668,331,463
II. Advances Outside India
(i) Due from banks
6,211,853
10,371,975
(ii) Due from others -
(a) Bills purchased and discounted
2,455,311
2,687,649
(b) Syndicated loans
104,660,986
109,4 87,19 6
(c) Others
243,999,628
178,781,291
TOTAL 357,327,778
301,328 ,111
GRAND TOTAL (CI+CII) 2,300,667,584
1,969,659,574
* Net of borrowings under Bills Rediscounting Scheme `2,800.00 crores (previous year `1,000.00 crores)
@ Net of borrowings under Inter Bank Participation Certificate/Funded Risk Participation `4,129.04 crores (previous
year `205.89 crores)
# Net of borrowings under Inter Bank Participation Certificate `11,908.59 crores (previous year `10,256.09 crores)
$ Includes advances against book debts
&& Includes advances against L/Cs issued by banks
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2014
40
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 10 - FIXED ASSETS
I. Premises
Gross Block
At cost at the beginning of the year
9,041,075
9,001,944
Additions during the year
-
39,131
Deductions during the year
-
-
TOTAL
9,041,075
9,041,075
Depreciation
As at the beginning of the year
409,511
262,236
Charge for the year
147,276
147,275
Deductions during the year
-
-
Depreciation to date
556,787
40 9,511
Net Block 8,484,288
8,631,564
II. Other fixed assets (including furniture & fixtures)
Gross Block
At cost at the beginning of the year
30,404,839
26,834,786
Additions during the year
6,148,638
4,136,185
Deductions during the year
(4,045,707)
(566,132)
TOTAL
32,507,770
30,404,839
Depreciation
As at the beginning of the year
16,731,046
13,688,918
Charge for the year
3,492,031
3,370,068
Deductions during the year
(2,336,441)
(327,9 4 0 )
Depreciation to date
17,886,636
16,731,046
Net Block 14,621,134
13,673,793
III. CAPITAL WORK-IN-PROGRESS (including capital advances)
996,684
1,251,063
GRAND TOTAL (I+II+III) 24,102,106
23,556,420
SCHEDULE 11 - OTHER ASSETS
I. Inter-office adjustments (net)
-
-
II. Interest Accrued
33,854,722
27,143,759
III. Tax paid in advance/tax deducted at source (net of provisions)
-
270,351
IV. Stationery and stamps
12,598
11, 221
V. Non banking assets acquired in satisfaction of claims
438,108
209,600
VI. Others #
55,502,474
43,030,690
TOTAL 89,807,902
70,665,621
# Includes deferred tax assets of `1,733.55 crores (previous year `1,374.77 crores) [Refer Schedule 18 (1.2.11)]
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2014
41
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 12 - CONTINGENT LIABILITIES
I. Claims against the Bank not acknowledged as debts
2,370,182
1,667,558
II. Liability for partly paid investments
-
-
III. Liability on account of outstanding forward exchange and derivative contracts :
(a) Forward Contracts
2,312,741,992
2,320,162,574
(b) Interest Rate Swaps, Currency Swaps, Forward Rate Agreement
& Interest Rate Futures
2,299,486,452
2,210,541,350
(c) Foreign Currency Options
202,687,973
80,228,625
TOTAL (a+b+c)
4,814,916,417
4,610,932,549
IV. Guarantees given on behalf of constituents
In India
529,708,072
517, 03 6,8 41
Outside India
133,640,480
111,222,14 4
V. Acceptances, endorsements and other obligations
238,821,561
228,015,939
VI. Other items for which the Bank is contingently liable
28,991,188
12,283,920
GRAND TOTAL (I+II+III+IV+V+VI)[Refer Schedule 18 (1.2.16)]
5,748, 447,9 00
5,481,158,951
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31 MARCH, 2014
42
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
SCHEDULE 13 - INTEREST EARNED
I. Interest/discount on advances/bills
219,504,303
191,662,356
II. Income on investments
83,431,301
77,4 69, 805
III. Interest on balances with Reserve Bank of India and other inter-bank funds
1,667,839
1,112,621
IV. Others
1,808,111
1,580,962
TOTAL 306,411,554
271,825,744
SCHEDULE 14 - OTHER INCOME
I. Commission, exchange and brokerage
53,937,636
50,251,479
II. Profit/(Loss) on sale of investments (net) [Refer Schedule 18 (1.2.1)]
3,275,775
5,863,030
III. Profit/(Loss) on sale of fixed assets (net)
(142,344)
(44,662)
IV. Profit on exchange/derivative transactions (net)
15,176,525
6,640,744
V. Income earned by way of dividends etc. from
subsidiaries/companies and/or joint venture abroad/in India
18,750
15,000
VI. Miscellaneous income
1,785,905
2,785,472
[including recoveries on account of advances/investments written off in earlier years
`183.91 crores (previous year `268.51 crores) and net loss on account of portfolio
sell downs/securitisation `20.57 crores (previous year net loss of `5.88 crores)]
TOTAL 74,052,247
65,511,063
SCHEDULE 15 - INTEREST EXPENDED
I. Interest on deposits
154,588,983
150,155,486
II. Interest on Reserve Bank of India/Inter-bank borrowings
9,006,843
4,596,175
III. Others
23,299,394
20,411,450
TOTAL 186,895,220
175,163,111
SCHEDULE 16 - OPERATING EXPENSES
I. Payments to and provisions for employees
26,013,494
23,769,825
II. Rent, taxes and lighting
8,047,786
7,50 6,0 45
III. Printing and stationery
1,136, 346
1,003,940
IV. Advertisement and publicity
959,548
1,196,483
V. Depreciation on bank’s property
3,639,307
3,517,3 43
VI. Directors’ fees, allowance and expenses
10,377
15,355
VII. Auditors’ fees and expenses
13,180
11,0 8 8
VIII. Law charges
105,915
179,019
IX. Postage, telegrams, telephones etc.
2,805,292
2,791,263
X. Repairs and maintenance
6, 257,4 86
5,858,902
XI. Insurance
3,166,611
2,622,194
XII. Other expenditure
26,852,397
20,670,918
TOTAL 79,007,739
69,142,375
SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2014
43
17 Significant accounting policies for the year ended 31 March, 2014
1 Background
Axis Bank Limited (‘the Bank’) was incorporated in 1993 and provides a complete suite of corporate and retail banking
products.
2 Basis of preparation
The financial statements have been prepared and presented under the historical cost convention on the accrual basis
of accounting in accordance with the generally accepted accounting principles in India to comply with the, statutory
requirements prescribed under the Banking Regulation Act, 1949, the circulars and guidelines issued by the Reserve
Bank of India (‘RBI’) from time to time and the Accounting Standards notified under Section 211(3C) of the Companies
Act, 1956 (“ the 1956 Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013
(“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs)
and the relevant provisions of the 1956 Act/ 2013 Act, as applicable and current practices prevailing within the banking
industry in India.
3 Use of estimates
The preparation of the financial statements in conformity with the generally accepted accounting principles requires the
Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues
and expenses and disclosure of contingent liabilities at the date of the financial statements. Actual results could differ
from those estimates. The Management believes that the estimates used in the preparation of the financial statements
are prudent and reasonable. Any revisions to the accounting estimates are recognised prospectively in the current and
future periods.
4 Significant accounting policies
4.1 Investments
Classification
In accordance with the RBI guidelines, investments are classified at the time of purchase as:
• HeldforTrading(‘HFT’);
• AvailableforSale(‘AFS’);and
• HeldtoMaturity(‘HTM’).
Investments that are held principally for sale within a short period are classied as HFT securities. As per the RBI
guidelines,HFTsecurities,whichremainunsoldforaperiodof90daysarereclassiedasAFSsecurities.
InvestmentsthattheBankintendstoholdtillmaturityareclassiedundertheHTMcategory.Investmentsintheequity
ofsubsidiaries/jointventuresarecategorisedasHTMinaccordancewiththeRBIguidelines.
AllotherinvestmentsareclassiedasAFSsecurities.
However, for disclosure in the Balance Sheet, investments in India are classied under six categories - Government
Securities, Other approved securities, Shares, Debentures and Bonds, Investment in Subsidiaries/Joint Ventures and
Others.
Investments made outside India are classified under three categories – Government Securities, Subsidiaries and/or Joint
Ventures abroad and Others.
Transfer of security between categories
Transfer of security between categories of investments is accounted as per the RBI guidelines.
44
Acquisition cost
Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to the
Profit and Loss Account.
Broken period interest is charged to the Profit and Loss Account.
Cost of investments is computed based on the weighted average cost method.
Valuation
InvestmentsclassiedundertheHTMcategoryarecarriedatacquisitioncostunlessitismorethanthefacevalue,in
which case the premium is amortised over the period remaining to maturity on a constant yield to maturity basis. In
termsofRBIguidelines,discountonsecuritiesheldunderHTMcategoryisnotaccruedandsuchsecuritiesareheldat
the acquisition cost till maturity.
Investments classied under the AFS and HFT categories are marked-to-market. The market/fair value of quoted
investmentsincludedin the‘AFS’and‘HFT’ categories isthe marketpriceofthescripas availablefrom thetrades/
quoteson thestockexchangesorprices declaredbyPrimaryDealersAssociationofIndia (‘PDAI’)jointlywithFixed
IncomeMoneyMarketandDerivativesAssociationofIndia(‘FIMMDA’),periodically.Netdepreciation,ifany,within
each category of each investment classification is recognised in the Profit and Loss Account. The net appreciation if any,
under each category of each investment classification is ignored. The book value of individual securities is not changed
consequent to the periodic valuation of investments.
TreasuryBills,ExchangeFundedBills,CommercialPaperandCerticateofDepositsbeingdiscountedinstruments,are
valued at carrying cost.
Units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund.
Market value of investments where current quotations are not available, is determined as per the norms prescribed by
the RBI as under:
• incaseofunquotedbonds,debenturesandpreferenceshareswhereinterest/dividendisreceivedregularly(i.e.not
overdue beyond 90 days), the market price is derived based on the YTM for Government Securities as published by
FIMMDA/PDAIandsuitablymarkedupforcreditriskapplicabletothecreditratingoftheinstrument.Thematrix
forcreditriskmark-upforeachcategoriesandcreditratingsalongwithresidualmaturityissuedbyFIMMDAis
adoptedforthispurpose;
• incaseofbondsanddebentures(includingPassThroughCerticates)whereinterestisnotreceivedregularly(i.e.
overdue beyond 90 days), the valuation is in accordance with prudential norms for provisioning as prescribed by
RBI;
• equityshares,forwhichcurrentquotationsarenotavailableorwherethesharesarenotquotedonthestock
exchanges,arevaluedatbreak-upvalue(withoutconsideringrevaluationreserves,ifany)whichisascertained
from the company’s latest Balance Sheet. In case the latest Balance Sheet is not available, the shares are valued at
`1percompany;
• unitsofVentureCapitalFunds(‘VCF’)heldunderAFScategorywherecurrentquotationsarenotavailableare
markedtomarketbasedontheNetAssetValue(‘NAV’)shownbyVCFasperthelatestauditednancialsofthe
fund. In case the audited financials are not available for a period beyond 18 months, the investments are valued
at `1perVCF.InvestmentinunquotedVCFafter23
rd
August,2006arecategorisedunderHTMcategoryforthe
initial period of three years and valued at cost as per RBI guidelines and
• security receipts are valued as per the NAV obtained from the issuing Reconstruction Company/Securitisation
Company.
Investmentsinsubsidiaries/jointventuresarecategorisedasHTMandassessedforimpairmenttodeterminepermanent
diminution, if any, in accordance with the RBI guidelines.
45
RealisedgainsoninvestmentsundertheHTMcategoryarerecognisedintheProtandLossAccountandsubsequently
appropriated to Capital Reserve account in accordance with the RBI guidelines. Losses are recognised in the Profit and
Loss Account.
All investments are accounted for on settlement date, except investments in equity shares which are accounted for on
trade date as the corporate actions are effected in equity on the trade date.
Repurchase and reverse repurchase transactions
Repurchase and reverse repurchase transactions in government securities and corporate debt securities [excluding those
conductedundertheLiquidAdjustmentFacility(‘LAF’)andMarginalStandbyFacility(‘MSF’)withRBI]areaccountedas
collateralisedborrowingandlendingrespectively.SuchtransactionsdoneunderLAFandMSFareaccountedasoutright
sale and outright purchase respectively.
Short Sales
In accordance with the RBI guidelines, the Bank undertakes short sale transactions in Central Government dated
securities. The short positions are reflected in ‘Securities Short Sold (‘SSS’) A/c’, specifically created for this purpose.
SuchshortpositionsarecategorisedunderHFTcategory.Thesepositionsaremarked-to-marketalongwiththeother
securitiesunderHFTportfolioandtheresultantmark-to-marketgains/lossesareaccountedforaspertherelevantRBI
guidelines for valuation of investments discussed earlier.
4.2 Advances
Advancesareclassiedintoperformingandnon-performingadvances(‘NPAs’)aspertheRBIguidelinesandarestated
netofspecicprovisionsmadetowardsNPAsandoatingprovisions.Further,NPAsareclassiedintosub-standard,
doubtfuland lossassetsbased onthecriteriastipulatedby theRBI.Provisionsfor NPAs aremade forsub-standard
and doubtful assets at rates as prescribed by the RBI with the exception for agriculture advances and schematic retail
advances.Inrespectofschematicretailadvances,provisionsaremadeintermsofabucket-wisepolicyuponreaching
specified stages of delinquency (90 days or more of delinquency) under each type of loan, which satisfies the RBI
prudentialnormsonprovisioning.Provisionsinrespectofagricultureadvancesclassiedintosub-standardanddoubtful
assets are made at rates which are higher than those prescribed by the RBI.
In addition to the above, the Bank on a prudential basis, makes provision for expected losses against advances or other
exposurestospecicassets/industry/sectoreitheronacase-by-casebasisorforagroupofassets,basedonspecic
information or general economic environment. These are classified as contingent provision and included under Schedule
5-OtherLiabilitiesinthebalancesheet.
Lossassetsandunsecuredportionofdoubtfulassetsareprovided/writtenoffaspertheextantRBIguidelines.NPAsare
identified by periodic appraisals of the loan portfolio by the Management.
Amounts recovered against debts written off are recognised in the Profit and Loss account.
Forrestructured/rescheduledassets,provisionismadeinaccordancewiththeguidelinesissuedbyRBI,whichrequires
the diminution in the fair value of the assets to be provided at the time of restructuring.
The Bank maintains a general provision on standard advances at the rates prescribed by RBI. In case of overseas branches,
general provision on standard advances is maintained at the higher of the levels stipulated by the respective overseas
regulator or RBI.
Under its home loan portfolio, the Bank offers housing loans with certain features involving waiver of Equated Monthly
Installments (‘EMIs’) of a specific period subject to fulfilment of a set of conditions by the borrower. The Bank makes
provision on an estimated basis against the probable loss that could be incurred in future on account of waivers to
eligible borrowers in respect of such loans. This provision is classified under Schedule 5 – Other Liabilities in the balance
sheet.
46
4.3 Country risk
In addition to the provisions required to be held according to the asset classification status, provisions are held for
individual country exposure (other than for home country as per the RBI guidelines). The countries are categorised into
sevenriskcategoriesnamelyinsignicant,low,moderate,high,veryhigh,restrictedandoff-creditandprovisionismade
onexposuresexceeding180dayson agraded scale rangingfrom0.25%to100%.Forexposureswithcontractual
maturity of less than 180 days, 25% of the normal provision requirement is held. If the country exposure (net) of the
Bank in respect of each country does not exceed 1% of the total funded assets, no provision is maintained on such
country exposure.
4.4 Securtisation
The Bank enters into purchase/sale of corporate and retail loans through direct assignment/Special Purpose Vehicle
(‘SPV’). In most cases, post securtisation, the Bank continues to service the loans transferred to the assignee/SPV. The
Bank also provides credit enhancement in the form of cash collaterals and/or by subordination of cash flows to Senior
Pass Through Certificate (‘PTC’) holders. In respect of credit enhancements provided or recourse obligations (projected
delinquencies, future servicing etc.) accepted by the Bank, appropriate provision/disclosure is made at the time of sale
inaccordancewithAS-29,Provisions,ContingentLiabilitiesandContingentAssetsasnotiedunderSection211(3C)of
the Companies Act, 1956.
In accordance with RBI guidelines of 7 May, 2012 on ‘Guidelines on Securitisation of Standard Assets’, gain on
securtisation transaction is recognised over the period of the underlying securities issued by the SPV as prescribed under
RBI guidelines. Loss on securtisation is immediately debited to the Profit and Loss Account.
4.5 Foreign currency transactions
In respect of domestic operations, transactions denominated in foreign currencies are accounted for at the rates
prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are translated at the Balance
SheetdateatratesnotiedbyForeignExchangeDealersAssociationofIndia(‘FEDAI’).Allprots/lossesresultingfrom
year end revaluations are recognised in the Profit and Loss Account.
Financial statements of foreign branches classied as non-integral foreign operations as per the RBI guidelines are
translated as follows:
• Assetsandliabilities(bothmonetaryandnon-monetaryaswellascontingentliabilities)aretranslatedatclosing
ratesnotiedbyFEDAIattheyearend.
• Incomeandexpensesaretranslatedattheratesprevailingonthedateofthetransactions.
• Allresultingexchangedifferencesareaccumulatedinaseparate‘ForeignCurrencyTranslationReserve’tillthe
disposal of the net investments.
• AnyrealisedgainsorlossesarerecognisedintheProtandLossAccount.
Outstanding forward exchange contracts (excluding currency swaps undertaken to hedge foreign currency assets/
liabilities and funding swaps which are not revalued) and spot exchange contracts are revalued at year end exchange
ratesnotiedbyFEDAIforspeciedmaturitiesandatinterpolatedratesforcontractofinterimmaturities.Theresulting
gainsorlossesonrevaluationareincludedintheProtandLossAccountinaccordancewithRBI/FEDAIguidelines.The
forwardexchangecontractsoflongermaturitieswhereexchangeratesarenotnotiedbyFEDAIarerevaluedatthe
forward exchange rates implied by the swap curves in respective currencies. The resultant gains or losses are recognised
in the Profit and Loss Account.
Premium/discount on currency swaps undertaken to hedge foreign currency assets and liabilities and funding swaps is
recognisedasinterestincome/expenseandisamortisedonapro-ratabasisovertheunderlyingswapperiod.
Contingent liabilities on account of forward exchange and derivative contracts, guarantees, acceptances, endorsements
andotherobligationsdenominatedinforeigncurrenciesaredisclosedatclosingratesofexchangenotiedbyFEDAI.
47
4.6 Derivative transactions
Derivative transactions comprise of forward contracts, swaps and options which are disclosed as contingent liabilities.
The forwards, swaps and options are categorised as trading or hedge transactions. Trading derivative contracts are
revalued at the Balance Sheet date with the resulting unrealised gain or loss being recognised in the Profit and Loss
Accountandcorrespondinglyinotherassetsorotherliabilitiesrespectively.Forhedgetransactions,theBankidenties
the hedged item (asset or liability) at the inception of transaction itself. The effectiveness is ascertained at the time
ofinceptionofthehedgeandperiodicallythereafter.Hedgeswapsareaccountedforonaccrualbasisexceptincase
of swaps designated with an asset or liability that is carried at market value or lower of cost or market value in the
nancial statements. In such cases the swaps are marked-to-market with the resulting gain or loss recorded as an
adjustment to the market value of designated asset or liability. The premium on option contracts is accounted for as per
FEDAIguidelines.PursuanttotheRBIguidelinesanyreceivablesunderderivativecontractscomprisingofcrystallised
receivablesaswellaspositiveMark-to-Market(MTM)inrespectoffuturereceivableswhichremainoverdueformore
than 90 days are reversed through the Profit and Loss account and are held in separate Suspense Account.
Currencyfuturescontractsaremarked-to-marketusingdailysettlementpriceonatradingday,whichistheclosingprice
of the respective futures contracts on that day. While the daily settlement price is computed based on the last half an
hour weighted average price of such contract, the final settlement price is taken as the RBI reference rate on the last
trading day of the futures contract or as may be specified by the relevant authority from time to time. All open positions
are marked to market based on the settlement price and the resultant marked to market profit/loss is daily settled with
the exchange.
Valuation of Exchange Traded Currency Options (ETCO) is carried out on the basis of the daily settlement price of each
individualoptionprovidedbytheexchangeandvaluationofInterestRateFutures(IRF)iscarriedoutonthebasisofthe
daily settlement price of each contract provided by the exchange.
4.7 Revenue recognition
Interestincomeisrecognisedonanaccrualbasisexceptinterestincomeonnon-performingassets,whichisrecognised
onreceiptinaccordancewithAS-9,RevenueRecognitionasnotiedunderSection211(3C)oftheCompaniesAct,1956
and the RBI guidelines.
Feesandcommissionincomeisrecognisedwhendue,exceptforguaranteecommissionwhichisrecognisedpro-rata
over the period of the guarantee.
Arrangership/syndication fee is accounted for on completion of the agreed service and when right to receive is
established.
Dividend is accounted on an accrual basis when the right to receive the dividend is established.
Gain/loss on sell down of loans and advances through direct assignment is recognised at the time of sale.
GainorlossarisingonsaleofNPAsisaccountedaspertheguidelinesprescribedbytheRBI.
4.8 Fixed assets and depreciation/impairment
Fixedassetsarecarriedatcostofacquisitionlessaccumulateddepreciationandimpairment,ifany.Costincludesfreight,
duties, taxes and incidental expenses related to the acquisition and installation of the asset.
Capitalwork-in-progressincludescostofxedassetsthatarenotreadyfortheirintendeduseandalsoincludesadvances
paid to acquire fixed assets.
Depreciationisprovidedonthestraight-linemethodfromthedateofaddition.Theratesofdepreciationprescribedin
Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the Management’s estimate of the
useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is
shorter, then depreciation is provided at a higher rate based on the Management’s estimate of the useful life/remaining
useful life. Pursuant to this policy, depreciation has been provided using the following estimated useful lives:
48
Asset Estimated useful life
Owned premises 61 years
Assets given on operating lease 20 years
Computer hardware including printers 3 years
Application software 5 years
Vehicles 4 years
EPABX, telephone instruments 8 years
CCTV and video conferencing equipment 3 years
Mobile phone 2 years
Locker cabinets/cash safe/strong room door 16 years
Modem, scanner, routers, hubs, switches, racks/cabinets for IT equipment 5 years
UPS, VSAT, fax machines 5 years
Cheque book/cheque encoder, currency counting machine, fake note detector 5 years
Assets at staff residence 3 years
All other fixed assets 10 years
All fixed assets individually costing less than `5,000 are fully depreciated in the year of installation.
Depreciationonassetssoldduringtheyearisrecognisedonapro-ratabasistotheProtandLossAccounttillthedate
of sale.
The carrying amounts of assets are reviewed at each Balance Sheet date to ascertain if there is any indication of
impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an
asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value
in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted
average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the asset over its
remaining useful life.
Profit on sale of premises is appropriated to Capital Reserve Account in accordance with RBI instructions.
4.9 Lease transactions
Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are
classified as operating lease. Lease payments for assets taken on operating lease are recognised as an expense in the
ProtandLossAccountonastraight-linebasisovertheleaseterm.
4.10 Retirement and other employee benefits
Provident Fund
Retirement benefit in the form of provident fund is a defined benefit plan wherein the contributions are charged to the
Profit and Loss Account of the year when the contributions to the fund are due and when services are rendered by the
employees.Further,anactuarialvaluationisconductedbyanindependentactuarytodeterminethedeciency,ifany,
in the interest payable on the contributions as compared to the interest liability as per the statutory rate.
Gratuity
The Bank contributes towards gratuity fund (defined benefit retirement plan) administered by various insurers for eligible
employees. Under this scheme, the settlement obligations remain with the Bank, although various insurers administer
the scheme and determine the contribution premium required to be paid by the Bank. The plan provides a lump sum
payment to vested employees at retirement or termination of employment based on the respective employee’s salary
and the years of employment with the Bank. Liability with regard to gratuity fund is accrued based on actuarial valuation
conducted by an independent actuary using the Projected Unit Credit Method as at 31 March each year. In respect of
employees at overseas branches (other than expatriates) liability with regard to gratuity is provided on the basis of a
prescribed method as per local laws, wherever applicable.
49
Compensated Absences
Short term compensated absences are provided for based on estimates of encashment/availment of leave. The Bank
provides long term compensated absences based on actuarial valuation conducted by an independent actuary. The
actuarial valuation is carried out as per the Projected Unit Credit Method as at 31 March each year.
Superannuation
Employees of the Bank are entitled to receive retirement benefits under the Bank’s Superannuation scheme either under
acash-outoptionthroughsalaryorunderadenedcontributionplan.Throughthedenedcontributionplan,theBank
contributes annually a specified sum of 10% of the employee’s eligible annual basic salary to LIC, which undertakes to
pay the lumpsum and annuity benefit payments pursuant to the scheme. Superannuation contributions are recognised
in the Profit and Loss Account in the period in which they accrue.
Actuarial gains/losses are immediately taken to the Profit and Loss Account and are not deferred.
4.11 Reward points
The Bank runs a loyalty program which seeks to recognize and reward customers based on their relationship with
the Bank. Under the program, eligible customers are granted loyalty points redeemable in future, subject to certain
conditions. In addition, the Bank continues to grant reward points in respect of certain credit cards (not covered under
the loyalty program). The Bank estimates the probable redemption of such loyalty/reward points using an actuarial
method at the Balance Sheet date by employing an independent actuary. Provision for the said reward points is then
made based on the actuarial valuation report as furnished by the said independent actuary.
4.12 Taxation
Income tax expense is the aggregate amount of current tax and deferred tax charge. Current year taxes are determined in
accordance with the Income Tax Act, 1961. Deferred income taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet
date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income
levied by same governing taxation laws.
Deferred tax assets are recognised 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 realised. The impact of changes in the deferred
tax assets and liabilities is recognised in the Profit and Loss Account.
Deferred tax assets are recognised and reassessed at each reporting date, based upon the Management’s judgement
as to whether realisation is considered as reasonably certain. Deferred tax assets are recognised on carry forward of
unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing evidence that such
deferred tax asset can be realised against future profits.
4.13 Share issue expenses
Share issue expenses are adjusted from Share Premium Account in terms of Section 78 of the Companies Act, 1956.
4.14 Earnings per share
TheBankreportsbasicanddilutedearningspershareinaccordancewithAS-20,EarningsperShare,asnotiedunder
Section 211(3C) of the Companies Act, 1956. Basic earnings per share is computed by dividing the net profit after tax
by the weighted average number of equity shares outstanding for the year.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity
shares were exercised or converted during the year. Diluted earnings per share is computed using the weighted average
number of equity shares and dilutive potential equity shares outstanding at the year end.
50
4.15 Employee stock option scheme
The 2001 Employee Stock Option Scheme (‘the Scheme’) provides for grant of stock options on equity shares of the
Bank to employees and Directors of the Bank and its subsidiaries. The Scheme is in accordance with the Securities and
Exchange Board of India (SEBI) (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
(‘the Guidelines’). The Bank follows the intrinsic value method to account for its stock based employee compensation
plans as per the Guidelines. Options are granted at an exercise price, which is equal to/less than the fair market price of
the underlying equity shares. The excess of such fair market price over the exercise price of the options as at the grant
dateisrecognisedasadeferredcompensationcostandamortisedonastraight-linebasisoverthevestingperiodofsuch
options.
The fair market price is the latest available closing price, prior to the date of grant, on the stock exchange on which the
shares of the Bank are listed. If the shares are listed on more than one stock exchange, then the stock exchange where
there is highest trading volume on the said date is considered.
4.16 Provisions, contingent liabilities and contingent assets
A provision is recognised when the Bank has a present obligation as a result of past event where it is probable that
an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on best estimate required to settle the
obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current
best estimates.
A disclosure of contingent liability is made when there is:
• apossibleobligationarisingfromapastevent,theexistenceofwhichwillbeconrmedbyoccurrenceornon-
occurrenceofoneormoreuncertainfutureeventsnotwithinthecontroloftheBank;or
• apresentobligationarisingfromapasteventwhichisnotrecognisedasitisnotprobablethatanoutowof
resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be
made.
When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is
remote, no provision or disclosure is made.
Contingentassetsarenotrecognisedinthenancialstatements.However,contingentassetsareassessedcontinually
and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in
the period in which the change occurs.
51
18 Notes forming part of the financial statements for the year ended 31 March, 2014
(Currency: In Indian Rupees)
1 Statutory disclosures as per RBI
1.1.1 ‘Provisions and contingencies’ recognised in the Profit and Loss Account comprise of:
(` in crores)
For the year ended
31 March, 2014
31 March, 2013
Provision for income tax
-Currenttaxfortheyear
3,489.74
2,720.58
-Deferredtaxfortheyear(Refer1.2.11)
(358.78)
(347.32)
3,130.96
2,373.26
Provision for wealth tax
0.42
0.38
Provisionfornon-performingassets
(including bad debts written off and write backs) 1,295.98 1,179.22
Provision for restructured assets
194.76
103.95
Provision towards standard assets
290.23
196.68
Provision for depreciation in value of investments
(100.29)
(103.94)
Provision for country risk
-
(9.63)
Provision for other contingencies
426.36
383.78
Total 5,238.42
4,123.70
1.1.2 The capital adequacy ratio of the Bank, calculated as per the RBI guidelines (under Basel III) is set out below:
(` in crores)
31 March, 2014
Capital adequacy
Common Equity Tier I 35,805.48
Tier I 35,805.48
Tier II 9,790.55
Total capital 45,596.03
Total risk weighted assets and contingents 283,807.26
Capital ratios
Common Equity Tier I 12.62%
Tier I 12.62%
Tier II 3.45%
CRAR 16.07%
Amount of equity capital raised -
Amount of additional Tier I capital raised of which:
PerpetualNon-CumulativePreferenceShares(PNCPS) -
Perpetual Debt Instruments (PDI) -
Amount of Tier II capital raised of which:
Debt capital instrument -
Preferential capital instrument -
52
The capital adequacy ratio of the Bank, calculated as per the RBI guidelines under Basel II is set out below:
(` in crores)
31 March, 2014 31 March, 2013
Capital adequacy
Tier I 36,074.20 31,596.80
Tier II 11,939.42 12,334.32
Total capital
48,013.62 43,931.12
Total risk weighted assets and contingents 282,873.02 258,355.49
Capital ratios
Tier I 12.75% 12.23%
Tier II 4.22% 4.77%
CRAR
16.97% 17.00%
Amount raised by issue of Innovative Perpetual Debt Instruments (IPDI) - -
Amount raised by issue of Upper Tier II instruments - -
Amount of Subordinated Debt raised as Tier II capital (details given below) - `2,500 crores
The Bank has not raised subordinated debt during the year ended 31 March, 2014.
During the year ended 31 March, 2013, the Bank raised subordinated debt of `2,500 crores, the details of which are
set out below:
Date of allotment Period Coupon Amount
31 December, 2012 120 months 9.15% 2,500.00 crores
During the year ended 31 March, 2014, the Bank redeemed subordinated debt of `278.50 crores, the details of which
are set out below:
Date of maturity Period Coupon Amount
26 April, 2013 117 months 7.00 % `65.00 crores
22 June, 2013 87 months 8.50% `125.00 crores
22 June, 2013 87 months 8.32% `5.00 crores
28 September, 2013 87 months 8.95% `33.50 crores
15 October, 2013 117 m onths 6.50% `50.00 crores
During the year ended 31 March, 2013, the Bank redeemed subordinated debt of `622 crores, the details of which are
set out below:
Date of maturity Period Coupon Amount
20 June, 2012 117 m onths 9.30% `62.00 crores
25 July, 2012 84 months 8.67% `500.00 crores
21 September, 2012 117 months 8.95% `60.00 crores
1.1.3 The Bank has not raised any hybrid capital during the years ended 31 March, 2014 and 31 March, 2013.
53
1.1.4 The key business ratios and other information is set out below:
As at
31 March, 2014 31 March, 2013
% %
Interest income as a percentage to working funds
#
8.78
8.90
Non-interestincomeasapercentagetoworkingfunds
#
2.12
2.15
Operating profit as a percentage to working funds
#
3.28
3.05
Return on assets (based on working funds)
#
1.78
1.70
Business(depositslessinter-bankdepositsplusadvances)peremployee** `12.30 crores `12.15 crores
Protperemployee** `0.15 crore `0.15 crore
Netnon-performingassetsasapercentageofnetcustomerassets*
0.40
0.32
# WorkingfundsrepresentaverageoftotalassetsasreportedtoRBIinFormXunderSection27oftheBanking
Regulation Act, 1949 during the year
* NetCustomerassetsincludeadvancesandcreditsubstitutes
** Productivityratiosarebasedonaverageemployeenumbersfortheyear
1.1.5 The provisioning coverage ratio of the Bank computed in terms of the RBI guidelines as on 31 March, 2014 was 78.10%
(previous year 79.15%).
1.1.6 Asset Quality
i) Netnon-performingassetstonetadvancesissetoutbelow:
31 March, 2014 31 March, 2013
% %
Netnon-performingassetsasapercentageofnetadvances 0.44 0.36
ii) Movementingrossnon-performingassetsissetoutbelow:
(` in crores)
31 March, 2014
Advances
Investments Others*
Total
GrossNPAsasatthebeginningoftheyear 2,371.41 10.29 11.72 2,393.42
Intra Category Transfer 5.11 1.76 (6.87) -
Additions(freshNPAs)duringtheyear 2,387.4 4 159.67 0.52 2,5 47.63
Sub-total (A) 4,763.96 171.72 5.37 4,941.05
Less:-
(i) Upgradations 331.32 - - 331.32
(ii) Recoveries (excluding recoveries made from
upgraded accounts) 534.94 8.23 - 543.17
(iii)Technical/PrudentialWrite-offs 761.55 - 5.29 766.84
(iv)Write-offsotherthanthoseunder(iii)above 134.73 18.58 - 153.31
Sub-total (B) 1,762.54 26.81 5.29 1,794.64
Gross NPAs as at the end of the year (A-B) 3,001.42 144.91 0.08 3,146.41
54
(` in crores)
31 March, 2013
Advances
Investments Others*
Total
GrossNPAsasatthebeginningoftheyear 1,720.23 79.46 6.61 1,806.30
Intra Category Transfer 18.75 (18.75) - -
Additions(freshNPAs)duringtheyear 2,015.13 3.12 5.11 2,023.36
Sub-total (A) 3,754.11 63.83 11.72 3,829.66
Less:-
(i) Upgradations 329.15 - - 329.15
(ii) Recoveries (excluding recoveries made from
upgraded accounts) 253.90 1.21 - 255.11
(iii) Technical/PrudentialWrite-offs 725.96 - - 725.96
(iv) Write-offsotherthanthoseunder(iii)above 73.69 52.33 - 126.02
Sub-total (B) 1,382.70 53.54 - 1,436.24
Gross NPAs as at the end of the year (A-B) 2,371.41 10.29 11.72 2,393.42
*representsamountoutstandingunderapplicationmoneyclassiedasnon-performingasset
iii) Movementinnetnon-performingassetsissetoutbelow:
(` in crores)
31 March, 2014
Advances Investments
Others Total
Opening balance at the beginning of the year 70 4.13 - - 704.13
Additions during the year 1,180.30 25.88 0.08 1,206.26
Effect of exchange rate fluctuation (1.61) (0.07) - (1.68)
Reductions during the year (873.75) ( 8.11) - (881.86)
InterestCapitalisation-RestructuredNPA
Accounts 6.06 (8.21) (0.08) (2.23)
Closing balance at the end of the year
#
1,015.13 9.49 - 1,024.62
#netofbalanceoutstandingininterestcapitalisation-restructuredNPAaccountsamountingto`35.50 crores
(` in crores)
31 March, 2013
Advances Investments
Others Total
Opening balance at the beginning of the year 455.58 15.94 1.12 472.64
Additionsduringtheyear* 834.07 (15.68) (1.12) 817.27
Effect of exchange rate fluctuation - - - -
Reductions during the year (565.06) 2.81 - (562.25)
InterestCapitalisation-RestructuredNPA
Accounts (20.46) (3.07) - (23.53)
Closing balance at the end of the year
#
704.13 - - 704.13
*includestransferfromnon-performinginvestmentstonon-performingloansamountingto`18.75 crores
#netofbalanceoutstandingininterestcapitalisation-restructuredNPAaccountsamountingto`33.27 crores
55
iv) Movementinprovisionsfornon-performingassetsissetoutbelow:
(` in crores)
31 March, 2014
Advances Investments Others Total
Opening balance at the beginning of the year
1,637.0 8 7. 22 11.72 1,656.02
Intra-CategoryTransfer
5.11 1.32
(6.43)
-
Provisions made during the year
1,153.40 134.23
-
1,287.63
Effect of exchange rate fluctuation
1.61 0.07
-
1.68
Transfer from restructuring provision
53.74 -
-
53.74
Write-offs/(writeback)ofexcessprovision
(888.79)* (18.70)
(5.29)
(912.78)
Closing balance at the end of the year
1,962.15 124.14 - 2,086.29
*includesprovisionutilisedforsaleofNPAsamountingto`1.50 crores
(` in crores)
31 March, 2013
Advances Investments
Others
Total
Opening balance at the beginning of the year
1,254.91 63.52 5.49 1,323.92
Provisions made during the year
1,185.92 0.05 6.23 1,192.20
Effect of exchange rate fluctuation
- - - -
Transfer from restructuring provision
13.89 - - 13.89
Write-offs/(writeback)ofexcessprovisions
( 817.64) (56.35) - (873.99)
Closing balance at the end of the year
1,637.08 7.22 11.72 1,656.02
v) Movement in technical/prudential written off accounts is set out below:
(` in crores)
31 March, 2014
31 March, 2013
Opening balance at the beginning of the year
1,143.00
720.25
Add:Technical/Prudentialwrite-offsduringtheyear
766.84
725.96
Sub-total (A) 1,909.84
1,446.21
Less:Recoverymadefrompreviouslytechnical/prudentialwritten-off
accounts during the year
(155.85)
(193.97)
Less:Sacricemadefrompreviouslytechnical/prudentialwritten-off
accounts during the year
(59.86)
(109.24)
Sub-total (B) (215.71)
(303.21)
Closing balance at the end of the year (A-B) 1,694.13
1,143.00
vi) Totalexposuretotopfournon-performingassetsisgivenbelow:
(` in crores)
31 March, 2014
31 March, 2013
TotalexposuretotopfourNPAaccounts
650.77
938.23
vii) Non-performingassetsaspercentageoftotalassetsinthatsectorissetoutbelow:
Sr. No. Sector 31 March, 2014
%
31 March, 2013
%
1. Agriculture and allied activities
2.29
2.36
2. Industry (Micro & Small, Medium and Large)
1.17
0.59
3. Services*
2.27
2.53
4. Personal loans
0.61
0.64
*includes0.14%(previousyear0.01%)NPAsinrespectofcommercialrealestateand0.33%(previousyear
0.08%) in respect of trade segment
56
1.1.7 Duringtheyearended31March,2014;noneoftheexposurestoIndiancorporatesatoverseasbranchesoftheBank
havebeenclassiedasNPAbyanyhostbankingregulatorforreasonsotherthanrecordofrecovery.
1.1.8 Movement in floating provision is set out below:
(` in crores)
For the year ended 31 March, 2014 31 March, 2013
Opening balance at the beginning of the year 3.25 3.25
Provisions made during the year - -
Draw down made during the year - -
Closing balance at the end of the year 3.25 3.25
The Bank has not made any draw down out of the floating provision during the current and the previous year.
1.1.9 Provision on Standard Assets
(` in crores)
31 March, 2014 31 March, 2013
Provision towards Standard Assets [includes `38.14 crores (previous year
`18.47crores)ofstandardprovisiononderivativeexposures] 1, 297.03 976.64
1.1.10 Details of Investments are set out below:
(i) Value of Investments:
(` in crores)
31 March, 2014 31 March, 2013
1) Gross value of Investments
a) In India
112,743.29
113,127.94
b) Outside India
1,052.60
840.43
2) (i) Provision for Depreciation
a) In India
(184.94)
(261.34)
b) Outside India
61.62
37.73
(ii) ProvisionforNon-PerformingInvestments
a) In India
(120.97)
(7.22)
b) Outside India
(3.17)
-
3) NetvalueofInvestments
a) In India
112,437.38
112, 859.3 8
b) Outside India
1,111.05
878.16
(ii) Movement of provisions held towards depreciation on investments:
(` in crores)
31 March, 2014 31 March, 2013
Opening balance
223.61
327.55
Add: Provisions made during the year
53.44
-
Less:Write-offs/writebackofexcessprovisionsduringtheyear
153.73
103.94
Closing balance
123.32
223.61
1.1.11 A summary of lending to sensitive sectors is set out below:
(` in crores)
As at
31 March, 2014 31 March, 2013
A. Exposure to Real Estate Sector
1) Direct Exposure
(i) Residential mortgages 52,684.58 41,550.75
-ofwhichhousingloanseligibleforinclusioninprioritysector
advances 16,914.94 13,312.69
57
As at
31 March, 2014 31 March, 2013
(ii) Commercial real estate
18,101.75
11,356.68
(iii) Investments in Mortgage Backed Securities (MBS) and other
securitisedexposures-
a. Residential - -
b. Commercial real estate - -
2) Indirect Exposure
Fundbasedandnon-fundbasedexposuresonNationalHousingBank
(NHB)andHousingFinanceCompanies(HFCs) 10,768.87 9,113. 26
Total Exposure to Real Estate Sector 81,555.20 62,020.69
B. Exposure to Capital Market
1. Direct investments in equity shares, convertible bonds, convertible
debenturesandunitsofequity-orientedmutualfundsthecorpusof
which is not exclusively invested in corporate debt 789.15 1,205.59
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-orientedmutualfunds 1.53 1.73
3. Advances for any other purposes where shares or convertible bonds
or convertibledebentures or unitsof equity-oriented mutual funds
are taken as primary security 1,010.47 1,249.18
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 primary security
other than shares/convertible bonds/convertible debentures/units of
equity-orientedmutualfundsdoesnotfullycovertheadvances 3,207.00 1,171.95
5. Secured and unsecured advances to stockbrokers and guarantees
issued on behalf of stockbrokers and market makers 2,845.30 2,603.33
6. Loans sanctioned to corporates 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 13.94 22.90
7. Bridge loans to companies against expected equity flows/issues 0.31 3.38
8. Underwriting commitments taken up in respect of primary issue of
shares or convertible bonds or convertible debentures or units of
equity-orientedmutualfunds - -
9. Financingtostockbrokersformargintrading - -
10. All exposures to Venture Capital Funds (both registered and
unregistered) 105.31 106.78
Total exposure to Capital Market (Total of 1 to 10)
7,973.01 6,364.84
(` in crores)
58
1.1.12 During the year ended 31 March, 2014 & 31 March, 2013 there are no unsecured advances for which intangible
securities such as charge over the rights, licenses, authority etc. has been taken as collateral by the Bank.
1.1.13 DetailsofNon-SLRinvestmentportfolioaresetoutbelow:
i) Issuercompositionasat31March,2014ofnon-SLRinvestments*:
(` in crores)
No. Issuer Total
Amount
Extent of
private
placement
Extent of
“below
investment
grade”
securities
Extent of
“unrated”
securities
Extent of
“unlisted”
securities
(1) (2) (3) (4) (5) (6) (7)
i. Public Sector Units 5,552.52 4,418.59 - - 48.41
ii. FinancialInstitutions 13,557.22 12,453.61 - - 11,0 0 6.97
iii. Banks 4,785.11 80.00 - - 4,569.50
iv. Private Corporates 18,901.86 16,323.46 1,525.62 430.76 2,335.50
v. Subsidiaries/Joint Ventures 1,059.26 1,059.26 - - 1,059.26
vi. Others 799.01 302.89 - - 736.68
vii. Provision held towards
depreciation on investments (79.13 )
viii Provision held towards non
performing investments (124.14 )
Total 44,451.71 34,637.81 1,525.62 430.76 19,756.32
Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.
Issuercompositionasat31March,2013ofnon-SLRinvestments*:
(` in crores)
No. Issuer Total
Amount
Extent of
private
placement
Extent of
“below
investment
grade”
securities
Extent of
“unrated”
securities
Extent of
“unlisted”
securities
(1) (2) (3) (4) (5) (6) (7)
i. Public Sector Units 6,0 45.10 5,275.03 - - 44.78
ii. FinancialInstitutions 10,621.91 9,145.77 - - 6,980.42
iii. Banks 4,984.86 1,126.60 - - 4,343.95
iv. Private Corporates 17,859. 4 4 15,143.54 1,274.01 142.67 3,152.9 0
v. Subsidiaries/Joint Ventures 421.44 421.44 - - 421.44
vi. Others 1,785.74 1,508.48 - - 1,599.99
vii. Provision held towards
depreciation on investments (223.59)
viii Provision held towards non
performing investments (7.22)
Total
41,487.68 32,620.86 1,274.01 142.67 16,543.48
Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.
*excludesinvestmentsinnon-SLRgovernmentsecuritiesamountingto`172.09 crores (previous year `127.91 crores)
59
ii) Non-performingnonSLRinvestmentsissetoutbelow:
(` in crores)
31 March, 2014 31 March, 2013
Opening balance
10.29
79.46
Transfer from Other Assets
1.76
-
Additions during the year
159.67
3.12
Reductions during the year
(26.81)
(72.29)*
Closing balance 144.91 10.29
Total provisions held 124.14 7.22
*includestransferfromnon-performinginvestmentstonon-performingloansamountingto`18.75 crores
1.1.14 Details of securities sold/purchased (in face value terms) during the years ended 31 March, 2014 and 31 March, 2013
underrepos/reverserepos(excludingLAFtransactions):
Year ended 31 March, 2014 (` in crores)
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily Average
outstanding
during the year
As at
31 March, 2014
Securities sold under repos
i. Government Securities - 5,123.17 196.25 -
ii. Corporate debt Securities - 202.21 47.56 -
Securities purchased under reverse repos
i. Government Securities - 5,178.69 330.24 688.46
ii. Corporate debt Securities - - - -
Year ended 31 March, 2013 (` in crores)
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily Average
outstanding
during the year
As at
31 March, 2013
Securities sold under repos
i. Government Securities - 119.35 0.62 -
ii. Corporate debt Securities - - - -
Securities purchased under reverse repos
i. Government Securities - 6,036.59 416.78 -
ii. Corporate debt Securities - - - -
1.1.15 Details of financial assets sold to Securtisation/Reconstruction companies for Asset Reconstruction:
(` in crores)
31 March, 2014
31 March, 2013
Numberofaccounts*
3
-
Aggregate value (net of provisions) of accounts sold
269.78
-
Aggregate consideration
265.03
-
Additional consideration realised in respect of accounts transferred in
earlier years - -
Aggregate gain/(loss) over net book value
(4.75)
-
* Excludes 12 accounts already written-off from books amounting to `32.13 crores (previous year 30 accounts
amounting to `93.15 crores)
60
1.1.16 Duringtheyearsended31March,2014and31March,2013therewerenoNon-PerformingFinancialAssetspurchased/
soldbytheBankfrom/tootherbanks/FIs/NBFCs(excludingsecuritisation/reconstructioncompanies).
1.1.17 Details of securtisation transactions undertaken by the Bank are as follows:
(` in crores)
Sr.
No.
Particulars 31 March, 2014
31 March, 2013
1 No.ofSPVssponsoredbythebankforsecuritisationtransactions - -
2 Total amount of securitised assets as per books of the SPVs sponsored
by the Bank - -
3 Total amount of exposures retained by the bank to comply with MRR
as on the date of balance sheet
a) Off-balancesheetexposures
Firstloss - -
Others - -
b) On-balancesheetexposures
Firstloss - -
Others - -
4 Amount of exposures to securitisation transactions other than MRR
a) Off-balancesheetexposures
i) Exposure to own securitisations
Firstloss - -
Loss - -
ii) Exposure to third party securitisations
Firstloss - -
Others - -
b) On-balancesheetexposures
i) Exposure to own securitisations
Firstloss - -
Loss - -
ii) Exposure to third party securitisations
Firstloss - -
Others - -
1.1.18 The information on concentration of deposits is given below:
(` in crores)
31 March, 2014
31 March, 2013
Total deposits of twenty largest depositors
38,298.32
35,083.32
Percentage of deposits of twenty largest depositors to total deposits
13.63
13.89
61
1.1.19 Theinformationonconcentrationofadvances*isgivenbelow:
(` in crores)
31 March, 2014
31 March, 2013
Total advances to twenty largest borrowers
44,144.64
39,764.46
Percentage of advances to twenty largest borrowers
to total advances of the Bank 11.00 10.59
*Advancesrepresentcreditexposure(fundedandnon-funded)includingderivativeexposureasdenedbyRBI
1.1.20 Theinformationonconcentrationofexposure*isgivenbelow:
(` in crores)
31 March, 2014
31 March, 2013
Total exposure to twenty largest borrowers/customers
55,126.86
48,982.01
Percentage of exposures to twenty largest borrowers/customers
to total exposure on borrowers/customers 12.49 11.82
*Exposureincludescreditexposure(fundedandnon-funded),derivativeexposureandinvestmentexposure(including
underwriting and similar commitments)
1.1.21 During the year ended 31 March, 2014 and 31 March, 2013, the Bank’s credit exposure to single borrower and group
borrowers was within the prudential exposure limits prescribed by RBI.
1.1.22 Details of Risk Category wise Country Exposure:
(` in crores)
Risk Category
Exposure (Net) as at
31 March, 2014
Provision Held as at
31 March, 2014
Exposure(Net)asat
31 March, 2013
ProvisionHeldasat
31 March, 2013
Insignificant - - 553.49 -
Low 10,981.18 - 11, 220.91 -
Moderate 3,401.42 - 2,290.54 -
High 1,763.33 - 2,369.79 -
VeryHigh 1,122.48 - 761.53 -
Restricted - - 0.17 -
Off-Credit - - - -
Total
17,268.41 - 17,196.43 -
1.1.23 A maturity pattern of certain items of assets and liabilities at 31 March, 2014 and 31 March, 2013 is set out below:
Year ended 31 March, 2014 (` in crores)
1 day 2 days to
7 days
8 days to
14 days
15 days to
28 days
29 days
and upto
3 months
Over 3
months
and upto
6 months
Over 6
months
and upto
1 year
Over 1
year and
upto 3
years
Over 3
years and
upto 5
years
Over 5
years
Total
Deposits 3,135.21 8,425.45 5,552.27 6,897.19 24,101.11 32,802.80 49,916.39 26,416.62 18,844.33 10 4,853.19 280,944.56
Advances*
2,645.96 2,188.01 757.19 2,001.85 9,114.02 8,276.42 14,787.17 52,732.45 28,931.58 10 8 , 632.11 230,066.76
Investments
7,70 0.68 4,875.59 2,746.36 2,664.58 7, 4 82.62 10,064.69 12,817.34 17,872.01 8,914.47 38,410.09 113,548.43
Borrowings 4.17 - 3.00 627.84 5,906.63 4,599.39 6,283.64 16 ,017.90 8,101.69 8,746.68 50,290.94
Foreign
Currency
Assets 3,061.25 5,653.40 204.05 576.70 3,774.27 3,169.66 4,116. 25 17,741.8 0 6,074.12 19,627.33 63,998.83
Foreign
Currency
Liabilities 144.51 1,657.77 303.00 748.47 6,992.40 6,894.70 9,958.86 28,012.90 7,08 4.74 1,263.15 63,060.50
62
Year ended 31 March, 2013 (` in crores)
1 day 2 days to
7 days
8 days to
14 days
15 days to
28 days
29 days
and upto
3 months
Over 3
months
and upto
6 months
Over 6
months
and upto
1 year
Over 1
year and
upto 3
years
Over 3
years and
upto 5
years
Over 5
years
Total
Deposits 2,738.92 10,164.38 5,246.82 6,590.52 26,258.30 28,536.37 35,326.44 33,216.55 22,444.23 82,091.06 252,613.59
Advances*
2,317.4 4 1,959.35 1,777.23 2,438.04 10,197. 27 11,220.30 12,348.87 45,312.01 26,146.22 83,249.23 196,965.96
Investments
6,816.23 9,369.90 2,850.59 2,496.50 8,249.24 9,327.9 8 11,780.01 20,263.99 9,049.77 33,533.33 113,737.54
Borrowings 65.02 568.94 386.33 786.68 3,918.49 4,049.95 6,605.00 7,605.93 9,370.80 10,593.96 43,951.10
Foreign
Currency
Assets 1,927.10 2,779.48 403.75 4,388.79 7,679.14 4,063.19 3,013.13 6,743.88 7,194.70 9,655.30 47,848.46
Foreign
Currency
Liabilities 141.57 2,206.50 317.82 1,426.23 4,823.23 5,423.32 12,361.81 7, 496.34 9,070.70 4,340.63 47,608.15
Classification of assets and liabilities under the different maturity buckets is based on the same estimates and
assumptions as used by the Bank for compiling the return submitted to the RBI, which has been relied upon by the
auditors. Maturity profile of foreign currency assets and liabilities is excluding off balance sheet items.
*Forthepurposeofdisclosingthematuritypattern,loansandadvancesthathavebeensubjecttoriskparticipation
vide Inter-BankParticipationCerticates (‘IBPCs’) andFunded RiskParticipation(‘FRPs’)havebeenclassiedinthe
maturity bucket corresponding to the contractual maturities of such underlying loans and advances gross of any
riskparticipation.TheIBPCandFRPamountshavebeenclassiedintherespectivematuritiesofthecorresponding
underlying loans.
1.1.24 Details of loans subjected to restructuring during the year ended 31 March, 2014 are given below:
(` in crores)
Type of Restructuring Under CDR Mechanism Under SME Debt Restructuring Mechanism
Asset Classification Standard Sub-
Standard
Doubtful Loss Total Standard Sub-
Standard
Doubtful Loss Total
Restructured accounts
asonApril1oftheFY
(Opening Balance)
No.ofborrowers 30 3 2 4 39 7 1 1 5 14
Amount Outstanding – Restructured facility 2,237. 42 85.82 71.22 90.41 2,484.87 144.05 3.03 0.03 24.46 171.57
Amount Outstanding – Other facility 47.35 22.24 - 2.34 71.93 3.86 - - 3.83 7.69
Provision thereon 186.73 10.65 3.12 - 200.50 8.71 - - - 8.71
Movement in balance for
accounts appearing under
opening balance
1
No.ofborrowers (4) (1) - 1 (4) (1) (1) - 1 (1)
Amount Outstanding – Restructured facility (233.48) (7.19 ) (4.99) 18.81 (226.85) (13.05) (3.03) (0.02) 0.13 (15.97)
Amount Outstanding – Other facility 70.81 (20.38) - 1.59 52.02 0.05 - - - 0.05
Provision thereon (75.39) (10.65) (1.03) - ( 87.07 ) (1.95) - - - (1.95)
FreshRestructuringduring
the year
2,3
No.ofborrowers 24 - - - 24 1 - - - 1
Amount Outstanding – Restructured facility 2,939.51 - - - 2,939.51 19.00 - - - 19.00
Amount Outstanding – Other facility 359.13 - - - 359.13 - - - - -
Provision thereon 224.38 - - - 224.38 1.83 - - - 1.83
Upgradation to
restructured standard
categoryduringtheFY
No.ofborrowers - - - - - - - - - -
Amount Outstanding – Restructured facility - - - - - - - - - -
Amount Outstanding – Other facility - - - - - - - - - -
Provision thereon - - - - - - - - - -
Restructured Standard
Advances which cease to
attract higher provisioning
and/or additional risk
weightattheendofFY
No.ofborrowers - - - -
Amount Outstanding – Restructured facility - - - -
Amount Outstanding – Other facility - - - -
Provision thereon - - - -
Downgradation of
restructured accounts
duringtheFY
4
No.ofborrowers (5) 2 1 2 - (1) - 1 - -
Amount Outstanding – Restructured facility (223.63) 100.78 78.87 43.98 - (12.41) - 12.41 - -
Amount Outstanding – Other facility (6.72) 0.78 - 5.94 - (1.50) - 1.50 - -
Provision thereon (16.25) 0.50 15.75 - - (0.62) - 0.62 - -
Write-offsofrestructured
accountsduringtheFY
5,6
No.ofborrowers - (3) - (2) (5) - - (1) (3) (4)
Amount Outstanding – Restructured facility - (170.83) - (27.07) (197.9 0 ) - - (0.01) (21.13) (21.14 )
Amount Outstanding – Other facility - (2.64) - (2.34) (4.98) - - - (3.70) (3.70)
Restructured accounts as
onMarch31oftheFY
(closing figures)
No.ofborrowers 45 1 3 5 54 6 - 1 3 10
Amount Outstanding – Restructured facility 4,719.82 8.58 145.10 126.13 4,999.63 137.59 - 12.41 3.46 153.46
Amount Outstanding – Other facility 470.57 - - 7.53 478.10 2.41 - 1.50 0.13 4.04
Provision thereon 319.47 0.50 17.84 - 337. 81 7.97 - 0.62 - 8.59
63
(` in crores)
Type of Restructuring Others Total
Asset Classification Standard Sub-
Standard
Doubtful Loss Total Standard Sub-
Standard
Doubtful Loss Total
Restructured accounts
asonApril1oftheFY
(Opening Balance)
No.ofborrowers 1,311 92 17 18 1,438 1,348 96 20 27 1,491
Amount Outstanding – Restructured facility 1,616.44 11.19 26.01 18.71 1,672.35 3,9 97.91 100.04 97. 26 133.58 4,328.79
Amount Outstanding – Other facility 77.13 2.93 0.51 0.09 80.66 128.34 25.17 0.51 6.26 160.28
Provision thereon 52.93 0.09 0.10 - 53.12 248.37 10.74 3.22 - 262.33
Movement in balance for
accounts appearing under
opening balance
1
No.ofborrowers (116 ) (90) 66 12 (128 ) (121) (92) 66 14 (133)
Amount Outstanding – Restructured facility (34 4.16 ) (11.17) (14.81) 22.17 (347.97) (590.69) (21.39) (19.82) 41.11 (590.79)
Amount Outstanding – Other facility 31.82 (2.92) 1.26 0.61 30.77 102.68 (23.30) 1.26 2.20 82.84
Provision thereon (20.94) (0.09) (0.10 ) - (21.13) (98.28) (10.74) (1.13) - (110.15)
FreshRestructuringduring
the year
2, 3
No.ofborrowers 473 - - - 473 498 - - - 498
Amount Outstanding – Restructured facility 915.80 - - - 915.80 3,874.31 - - - 3,874.31
Amount Outstanding – Other facility 299.29 - - - 299.29 658.42 - - - 658.42
Provision thereon 70.97 - - - 70.97 297.18 - - - 297.18
Upgradation to restructured
standard category during
theFY
No.ofborrowers - - - - - - - - - -
Amount Outstanding – Restructured facility - - - - - - - - - -
Amount Outstanding – Other facility - - - - - - - - - -
Provision thereon - - - - - - - - - -
Restructured Standard
Advances which cease to
attract higher provisioning
and/or additional risk
weightattheendofFY
No.ofborrowers (16) (16) (16) (16)
Amount Outstanding – Restructured facility (2.29) (2.29) (2.29) (2.29)
Amount Outstanding – Other facility (0.37) (0.37) (0.37) (0.37)
Provision thereon - - - -
Downgradation of
restructured accounts
duringtheFY
4
No.ofborrowers (55) 63 1 4 13 (61) 65 3 6 13
Amount Outstanding – Restructured facility (22.73) 5.75 0.58 17.38 0.98 (258.77) 106.53 91.86 61.36 0.98
Amount Outstanding – Other facility (6.46) 1.30 0.03 5.19 0.06 (14.68) 2.08 1.53 11.13 0.06
Provision thereon (0.07) 0.07 - - - (16.94) 0.57 16.37 - -
Write-offsofrestructured
accountsduringtheFY
5,6
No.ofborrowers - (5) (1) (4) (10) - (8) (2) (9) (19)
Amount Outstanding – Restructured facility - (0.02) - (0.05) (0.07) - (170.85) (0.01) (48.25) (219.11)
Amount Outstanding – Other facility - (0.02) - - (0.02) - (2.66) - (6.04) (8.70)
Restructured accounts as
onMarch31oftheFY
(closing figures)
No.ofborrowers 1,597 60 83 30 1,770 1,648 61 87 38 1,834
Amount Outstanding – Restructured facility 2,163.0 6 5.75 11.78 58.21 2,238.80 7, 020. 47 14.33 169.29 187. 80 7,391. 89
Amount Outstanding – Other facility 401.41 1.29 1.80 5.89 410.39 874.39 1.29 3.30 13.55 892.53
Provision thereon 102.89 0.07 - - 102.96 430.33 0.57 18.46 - 449.36
Amount outstanding under restructuring facilities and other facilities is as on 31 March, 2014
1
Includes accounts closed during the year on account of payment of outstanding facilities by the borrower
2
Amount reported here represents outstanding as on 31 March, 2014. Actual amount subjected to restructuring determined as on the date of approval of restructuring proposal is `3,456.95 crore for
theFY2013-14
3
Includesaccountsonaccountofre-workofrestructuringandtheseaccountsarenotincludedinopeningbalanceofstandardrestructuredaccounts
4
Includesaccountswhichwerenotattractinghigherprovisioningand/oradditionalriskweightatthebeginningofFY
5
Includesaccountspartiallywritten-offduringtheyear
6
Amountoutstandingunderrestructuringfacilitiesandotherfacilitiesisasonthedateofwrite-offinthebooks
7
The cumulative value of net restructured advances after reducing the provision held for diminution in fair value and balance in interest capitalisation account upto 31 March, 2014 aggregated `6,079.12
crores
Details of loan assets subjected to restructuring during the year ended 31 March, 2013 are given below:
(` in crores)
Type of Restructuring Under CDR Mechanism Under SME Debt Restructuring Mechanism
Asset Classification Standard Sub-
Standard
Doubtful Loss Total Standard Sub-
Standard
Doubtful Loss Total
Restructured accounts
asonApril1oftheFY
(Opening Balance)
No.ofborrowers 16 - 1 3 20 7 1 - 9 17
Amount Outstanding – Restructured facility 904.77 - 4.19 55.78 964.74 92.54 0.03 - 24.89 117. 4 6
Amount Outstanding – Other facility 21.97 - - 2.34 24.31 6.09 - - 5.29 11. 38
Provision thereon 136.74 - - - 136.74 3.51 - - - 3.51
Movement in balance for
accounts appearing under
opening balance
1
No.ofborrowers - - - - - (1) - - (3) (4)
Amount Outstanding – Restructured facility 162.55 - 0.11 - 162.66 (1.49) - - (2.78) (4.27)
Amount Outstanding – Other facility 4.56 - - - 4.56 0.43 - - (1.11) (0.68)
Provision thereon (53.06) - - - (53.06) (1.40) - - - (1.40)
FreshRestructuringduring
the year
2,3
No.ofborrowers 18 - 1 - 19 2 - - - 2
Amount Outstanding – Restructured facility 1,393.05 - 66.92 - 1,459.97 55.63 - - - 55.63
Amount Outstanding – Other facility 23.22 - - - 23.22 - - - - -
Provision thereon 124.98 - 3.12 - 128.10 6.60 - - - 6.60
Upgradation to
restructured standard
categoryduringtheFY
No.ofborrowers 1 - (1) - - - - - - -
Amount Outstanding – Restructured facility 84.33 - (84.33) - - - - - - -
Amount Outstanding – Other facility - - - - - - - - - -
Provision thereon 17. 22 - (17.22) - - - - - - -
64
(` in crores)
Type of Restructuring Under CDR Mechanism Under SME Debt Restructuring Mechanism
Asset Classification Standard Sub-
Standard
Doubtful Loss Total Standard Sub-
Standard
Doubtful Loss Total
Restructured Standard
Advances which cease to
attract higher provisioning
and/or additional risk
weightattheendofFY
No.ofborrowers (2) (2) (1) (1)
Amount Outstanding – Restructured facility (133.83) (133.83) (2.63) (2.63)
Amount Outstanding – Other facility (2.40) (2.40) (2.66) (2.66)
Provision thereon (18.13) (18.13 ) - -
Downgradation of
restructured accounts
duringtheFY
4
No.ofborrowers (3) 3 1 1 2 - - 1 2 3
Amount Outstanding – Restructured facility (173.45) 85.82 84.33 58.30 55.00 - 3.00 0.03 3.50 6.53
Amount Outstanding – Other facility - 22.24 - - 22.24 - - - 2.50 2.50
Provision thereon (21.02) 10.65 17.22 - 6.85 - - - - -
Write-offsofrestructured
accountsduringtheFY
5,6
No.ofborrowers - - - - - - - - (3) (3)
Amount Outstanding – Restructured facility - - - (23.67) (23.67) - - - (1.15 ) (1.15)
Amount Outstanding – Other facility - - - - - - - - (2.85) (2.85)
Restructured accounts as
onMarch31oftheFY
(closing figures)
No.ofborrowers 30 3 2 4 39 7 1 1 5 14
Amount Outstanding – Restructured facility 2,237. 42 85.82 71.22 90.41 2,484.87 144.05 3.03 0.03 24.46 171.57
Amount Outstanding – Other facility 47.35 22.24 - 2.34 71.93 3.86 - - 3.83 7.69
Provision thereon 186.73 10.65 3.12 - 200.50 8.71 - - - 8.71
(` in crores)
Type of Restructuring Others Total
Asset Classification Standard Sub-
Standard
Doubtful Loss Total Standard Sub-
Standard
Doubtful Loss Total
Restructured accounts
asonApril1oftheFY
(Opening Balance)
No.ofborrowers 256 18 15 12 301 279 19 16 24 338
Amount Outstanding – Restructured facility 1,044.90 24.18 2.65 40.56 1,112. 29 2,042.21 24.21 6.84 121.23 2,194.49
Amount Outstanding – Other facility 54.93 1.49 - - 56.42 82.99 1.49 - 7.63 92.11
Provision thereon 4.44 0.20 - - 4.64 144.69 0.20 - - 144.89
Movement in balance for
accounts appearing under
opening balance
1
No.ofborrowers (23) (3) (4) - (30) (24) (3) (4) (3) (34)
Amount Outstanding – Restructured facility (193.55) 0.65 (0.88) (2.21) (195.99) (32.49) 0.65 (0.77) (4.99) (37.60 )
Amount Outstanding – Other facility 10.43 (0.71) - - 9.72 15.42 (0.71) - (1.11) 13.60
Provision thereon 26.75 (0.09) - - 26.66 (27.71) (0.09) - - (27.80 )
FreshRestructuringduring
the year
2, 3
No.ofborrowers 1,167 - - - 1,167 1,187 - 1 - 1,188
Amount Outstanding – Restructured facility 831.22 - - - 831.22 2,279.90 - 66.92 - 2,346.82
Amount Outstanding – Other facility 18.17 - - - 18.17 41.39 - - - 41.39
Provision thereon 21.86 - - - 21.86 153.44 - 3.12 - 156.56
Upgradation to restructured
standard category during
theFY
No.ofborrowers - - - - - 1 - (1) - -
Amount Outstanding – Restructured facility - - - - - 84.33 - (84.33) - -
Amount Outstanding – Other facility - - - - - - - - - -
Provision thereon - - - - - 17. 22 - (17.22) - -
Restructured Standard
Advances which cease to
attract higher provisioning
and/or additional risk
weightattheendofFY
No.ofborrowers (5) (5) (8) (8)
Amount Outstanding – Restructured facility (5.42) (5.42) (141.88 ) (141.88)
Amount Outstanding – Other facility (3.71) (3.71) (8.77) (8.77)
Provision thereon (0.05) (0.05) (18.18) (18.18)
Downgradation of
restructured accounts
duringtheFY
4
No.ofborrowers (84) 99 7 8 30 (87) 102 9 11 35
Amount Outstanding – Restructured facility (60.71) (12.81) 24.25 50.91 1.64 (23 4.16 ) 76.01 108.61 112.71 63.17
Amount Outstanding – Other facility (2.69) 2.43 0.51 0.09 0.34 (2.69) 24.67 0.51 2.59 25.08
Provision thereon (0.07) (0.02) 0.10 - 0.01 (21.09) 10.63 17.32 - 6.86
Write-offsofrestructured
accountsduringtheFY
5,6
No.ofborrowers - (22) (1) (2) (25) - (22) (1) (5) (28)
Amount Outstanding – Restructured facility - (0.83) (0.01) (70.55) (71.39) - (0.83) (0.01) (95.37) (96.21)
Amount Outstanding – Other facility - (0.28) - - (0.28) - (0.28) - (2.85) (3.13)
Restructured accounts as
onMarch31oftheFY
(closing figures)
No.ofborrowers 1,311 92 17 18 1,438 1,348 96 20 27 1,491
Amount Outstanding – Restructured facility 1,616.44 11.19 26.01 18.71 1,672.35 3,9 97.91 100.04 97.26 133.58 4,328.79
Amount Outstanding – Other facility 77.13 2.93 0.51 0.09 80.66 128.34 25.17 0.51 6.26 160.28
Provision thereon 52.93 0.09 0.10 - 53.12 248.37 10.74 3.22 - 262.33
Amount outstanding under restructuring facilities and other facilities is as on 31 March, 2013
1
Includes accounts closed during the year on account of payment of outstanding facilities by the borrower
2
Amount reported here represents outstanding as on 31 March, 2013. Actual amount subjected to restructuring determined as on the date of approval of restructuring proposal is `1,985.30 crore for
theFY2012-13
3
Includesaccountsonaccountofre-workofrestructuringandtheseaccountsarenotincludedinopeningbalanceofstandardrestructuredaccounts
4
Includesaccountswhichwerenotattractinghigherprovisioningand/oradditionalriskweightatthebeginningofFY
5
Includesaccountspartiallywritten-offduringtheyear
6
Amountoutstandingunderrestructuringfacilitiesandotherfacilitiesisasonthedateofwrite-offinthebooks
65
1.1.25 DisclosureinrespectofInterestRateSwaps(IRS),ForwardRateAgreement(FRA)andCrossCurrencySwaps(CCS)
outstanding is set out below:
(` in crores)
Sr.
No.
Items
As at
31 March, 2014
As at
31 March, 2013
i) Notionalprincipalofswapagreements
229,690.75
221,054.14
ii) Losses which would be incurred if counterparties failed to fulfill their
obligations under the agreements 3,206.47 1,697.05
iii) Collateral required by the Bank upon entering into swaps
387.66
364.53
iv) Concentration of credit risk arising from the swaps
Maximum single industry exposure with Banks
(previous year with Banks)
-InterestRateSwaps/FRAs
3,115.12
2,288.76
-CrossCurrencySwaps
1,132.13
615.67
v) Fairvalueoftheswapbook(hedging&trading)
-InterestRateSwaps/FRAs
(106.35)
261.50
-CurrencySwaps
820.12
334.55
The nature and terms of the IRS as on 31 March, 2014 are set out below:
(` in crores)
Nature Nos. Notional Principal Benchmark Terms
Hedging 16 4,589.49 LIBOR Fixedreceivablev/soatingpayable
Hedging 5 3,091.61 LIBOR Floatingreceivablev/sxedpayable
Trading 1 105.00 OTHERS Fixedpayablev/sxedreceivable
Trading 44 1,547.0 0 INBMK Fixedreceivablev/soatingpayable
Trading 182 13,814.39 LIBOR Fixedreceivablev/soatingpayable
Trading 711 70,543.16 MIBOR Fixedreceivablev/soatingpayable
Trading 287 11, 677.0 0 MIFOR Fixedreceivablev/soatingpayable
Trading 61 3,681.00 INBMK Floatingreceivablev/sxedpayable
Trading 263 17, 873.76 LIBOR Floatingreceivablev/sxedpayable
Trading 785 76,191.19 MIBOR Floatingreceivablev/sxedpayable
Trading 144 6,584.00 MIFOR Floatingreceivablev/sxedpayable
Trading 20 1,851.37 LIBOR Floatingreceivablev/soatingpayable
Trading 3 93.25 LIBOR Pay cap
Trading 1 416.25 LIBOR Pay cap/receive floor
Trading 1 416.25 LIBOR Pay floor/receive cap
Trading 3 93.25 LIBOR Receive cap
2,527 212,567.97
66
The nature and terms of the IRS as on 31 March, 2013 are set out below:
(` in crores)
Nature Nos. Notional Principal Benchmark Terms
Hedging 38 10,938.43 LIBOR Fixedreceivablev/soatingpayable
Trading 50 1,799.10 INBMK Fixedreceivablev/soatingpayable
Trading 65 3, 867.0 0 INBMK Floatingreceivablev/sxedpayable
Trading 143 8,096.09 LIBOR Fixedreceivablev/soatingpayable
Trading 220 11,656.12 LIBOR Floatingreceivablev/sxedpayable
Trading 12 835.99 LIBOR Floatingreceivablev/soatingpayable
Trading 3 81.43 LIBOR Pay cap
Trading 3 81.43 LIBOR Receive cap
Trading 884 79,333.63 MIBOR Fixedreceivablev/soatingpayable
Trading 924 77,695.32 MIBOR Floatingreceivablev/sxedpayable
Trading 203 8,045.00 MIFOR Fixedreceivablev/soatingpayable
Trading 100 4,222.00 MIFOR Floatingreceivablev/sxedpayable
Trading 1 150.00 OTHERS Fixedpayablev/sxedreceivable
Trading 1 4 47.85 LIBOR Pay cap/receive floor
Trading 1 4 47.85 LIBOR Pay floor/receive cap
2,648 207,697.24
TherewerenoFRA’soutstandingason31March,2014.
ThenatureandtermsoftheFRA’sason31March,2013aresetoutbelow:
(` in crores)
Nature Nos. Notional Principal Benchmark Terms
Hedging 2 2,171.40 LIBOR Fixedreceivablev/soatingpayable
2 2,171.40
The nature and terms of the CCS as on 31 March, 2014 are set out below:
(` in crores)
Nature Nos. Notional Principal Benchmark Terms
Hedging 1 95.77 Principal &
Coupon Swap
Fixedpayablev/sxedreceivable
Hedging 1 299.58 LIBOR Fixedreceivablev/soatingpayable
Hedging 1 248.05 LIBOR Floatingreceivablev/sxedpayable
Trading 50 3,552.62 Principal &
Coupon Swap
Fixedpayablev/sxedreceivable
Trading 53 3,801.80 LIBOR Fixedreceivablev/soatingpayable
Trading 63 5,499.02 LIBOR Floatingreceivablev/sxedpayable
Trading 5 1,079.70 LIBOR/MIFOR Floatingreceivablev/soatingpayable
Trading 12 557.33 Principal Only Fixedreceivable
Trading 30 1,988.90 Principal Only Fixedpayable
216 17,122.77
67
AgreementswithBanks/FinancialInstitutionsandcorporatesareunderapprovedcreditlines.
The nature and terms of the CCS as on 31 March, 2013 are set out below:
(` in crores)
Nature Nos. Notional Principal Benchmark Terms
Hedging 1 79.29 Principal & Coupon
Swap
Fixedpayablev/sxedreceivable
Hedging 1 274.12 LIBOR Fixedreceivablev/soatingpayable
Trading 33 2,720.49 LIBOR Fixedreceivablev/soatingpayable
Trading 52 4,006.36 LIBOR Floatingreceivablev/sxedpayable
Trading 1 48.86 LIBOR/INBMK Floatingreceivablev/soatingpayable
Trading 6 270.43 Principal Only Fixedreceivable
Trading 80 3,785.95 Principal Only Fixedpayable
174 11,185.50
AgreementswithBanks/FinancialInstitutionsandcorporatesareunderapprovedcreditlines.
Details of Exchange Traded Interest Rate Derivatives for the year ended 31 March, 2014 are set out below:
(` in crores)
Sr. No. Particulars As at 31 March, 2014
i)
Notional principal amount of exchange traded interest rate derivatives
undertaken during the year
883GS2023 5,776.30
5,776.30
ii)
Notional principal amount of exchange traded interest rate derivatives
outstanding as on 31 March, 2014
883GS2023 257.90
257.90
iii)
Notional principal amount of exchange traded interest rate derivatives
outstanding as on 31 March, 2014 and “not highly effective”
N.A.
iv)
Mark-to-market value of exchange traded interest rate derivatives
outstanding as on 31 March, 2014 and “not highly effective”
N.A.
Details of Exchange Traded Interest Rate Derivatives for the year ended 31 March, 2013 are set out below:
(` in crores)
Sr. No. Particulars As at 31 March, 2013
i)
Notional principal amount of exchange traded interest rate derivatives
undertaken during the year
-
-
ii)
Notional principal amount of exchange traded interest rate derivatives
outstanding as on 31 March, 2013
-
-
iii)
Notional principal amount of exchange traded interest rate derivatives
outstanding as on 31 March, 2013 and “not highly effective”
N.A.
iv)
Mark-to-market value of exchange traded interest rate derivatives
outstanding as on 31 March, 2013 and “not highly effective”
N.A.
The Bank has not undertaken any transactions in Credit Default Swaps (CDS) during the year ended 31 March, 2014
and 31 March, 2013.
68
1.1.26 Disclosure on risk exposure in Derivatives
Qualitative disclosures:
(a) Structure and organisation for management of risk in derivatives trading, the scope and nature of
risk measurement, risk reporting and risk monitoring systems, policies for hedging and/or mitigating
risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigants:
Derivatives are financial instruments whose characteristics are derived from an underlying asset, or from
interest and exchange rates or indices. The Bank undertakes over the counter and Exchange Traded derivative
transactions for Balance Sheet management and also for proprietary trading/market making whereby the Bank
offers derivative products to the customers to enable them to hedge their interest rate and currency risks within
the prevalent regulatory guidelines.
ProprietarytradingincludesInterestRateFutures,CurrencyFuturesandRupeeInterestRateSwapsunderdifferent
benchmarks(viz.MIBOR,MIFORandINBMK),andCurrencyOptionsforUSD/INRpair(bothOTCandexchange
traded). The Bank also undertakes transactions in Cross Currency Swaps, Principal Only Swaps, Coupon Only
SwapsandLongTermForexContracts(LTFX)forhedgingitsBalanceSheetandalsooffersthemtoitscustomers.
These transactions expose the Bank to various risks, primarily credit, market and operational risk. The Bank has
adopted the following mechanism for managing risks arising out of the derivative transactions.
ThereisafunctionalseparationbetweentheTreasuryFrontOfce,RiskandTreasuryBackOfcetoundertake
derivative transactions. The derivative transactions are originated by Treasury Front Ofce, which ensures
compliance with the trade origination requirements as per the Bank’s policy and the RBI guidelines. The Market
Risk Group within the Bank’s Risk Department independently identifies measures and monitors the market risks
associated with derivative transactions and apprises the Asset Liability Management Committee (ALCO) and
the Risk Management Committee of the Board (RMC) on the compliance with the risk limits. The Treasury Back
Office undertakes activities such as trade confirmation, settlement, ISDA documentation, accounting and other
MIS reporting.
The derivative transactions are governed by the derivative policy, market risk management policy, hedging policy
and the suitability and appropriateness policy of the Bank as well as by the extant RBI guidelines. The Bank
has also put in place a detailed process flow for customer derivative transactions for effective management of
operational risk/reputation risk.
Variousrisklimitsaresetupandactualexposuresaremonitoredvis-à-visthelimitsallocated.Theselimitsare
set up taking into account market volatility, business strategy and management experience. Risk limits are in
place for risk parameters viz. Modified Duration Limits, PV01, VaR, Stop Loss, Delta, Gamma and Vega. Actual
positions are monitored against these limits on a daily basis and breaches, if any, are reported promptly. Risk
assessment of the portfolio is undertaken periodically. The Bank ensures that the Gross PV01 (Price value of a
basispoint)positionarisingoutofallnon-optionrupeederivativecontractsarewithin0.25%ofnetworthof
the Bank as on Balance Sheet date.
HedgingtransactionsareundertakenbytheBanktoprotectthevariabilityinthefairvalueorthecashowofthe
underlying Balance Sheet item. These deals are accounted on an accrual basis except the swap designated with
an asset/liability that is carried at market value or lower of cost or market value. In that case, the swap is marked
to market with the resulting gain or loss recorded as an adjustment to the market value of designated asset or
liability. These transactions are tested for hedge effectiveness and in case any transaction fails the test, the same
isre-designatedasa tradingdealwith theapprovalof thecompetentauthority andappropriate accounting
treatment is followed.
(b) Accounting policy for recording hedge and non-hedge transactions, recognition of income, premiums
and discounts, valuation of outstanding contracts
TheHedgingPolicyapprovedbytheRMCgovernstheuseofderivativesforhedgingpurpose.Subjecttothe
prevailing RBI guidelines, the Bank deals in derivatives for hedging fixed rate and floating rate coupon or foreign
currencyassets/liabilities.Transactionsforhedgingandmarketmakingpurposesarerecordedseparately.For
hedge transactions, the Bank identifies the hedged item (asset or liability) at the inception of the transaction
69
itself.Theeffectivenessisascertainedatthetimeofinceptionofthehedgeandperiodicallythereafter.Hedge
derivative transactions are accounted for in accordance with the hedge accounting principles. Derivatives for
market making purpose are marked to market and the resulting gain/loss is recorded in the Profit and Loss
Account.Thepremiumonoption contracts is accountedforas per FEDAI guidelines. Derivative transactions
are covered under International Swaps and Derivatives Association (ISDA) master agreements with respective
counterparties. The exposure on account of derivative transactions is computed as per the RBI guidelines and is
marked against the credit limits approved for the respective counterparties.
(c) Provisioning, collateral and credit risk mitigation
Derivative transactions comprise of swaps and options which are disclosed as contingent liabilities. The swaps
are categorised as trading or hedging and all the options are categorised as the trading book. Trading swaps/
options are revalued at the Balance Sheet date with the resulting unrealised gain or loss being recognised in the
ProtandLossAccountandcorrespondinglyinotherassetsorotherliabilitiesrespectively.Hedgedswapsare
accounted for as per the RBI guidelines. Pursuant to the RBI guidelines, any receivables (crystallised receivables
and positive MTM) under derivatives contracts, which remain overdue for more than 90 days, are reversed
through the Profit and Loss Account and are held in a separate Suspense account.
Collateral requirements for derivative transactions are laid down as part of credit sanction terms on a case by
case basis. Such collateral requirements are determined, based on usual credit appraisal process. The Bank retains
the right to terminate transactions as a risk mitigation measure in certain cases.
The credit risk in respect of customer derivative transactions is sought to be mitigated through a laid down policy
on sanction of Loan Equivalent Risk (LER) limits, monitoring mechanism for LER limits and trigger events for
escalation/margin calls/termination.
Quantitative disclosure on risk exposure in derivatives*:
(` in crores)
As at 31 March, 2014
Currency Derivatives Interest rate
Derivatives
Sr. No. Particulars Forward
Contracts
CCS Options
1
Derivatives (Notional Principal Amount)
a) Forhedging 18 ,197.07 643.40 - 7,6 81.10
b) Fortrading 213,077.13 16,479.37 20,268.80 204,886.87
2
Marked to Market Positions
#
a) Asset (+) 432.03 839.12 - -
b) Liability(-) - - (35.33) (175.88)
3
Credit Exposure
@
7,58 0.14 3,267.62 385.76 3,651.88
4
Likely impact of one percentage change in
interest rate (100*PV01) (as at 31 March, 2014)
a) on hedging derivatives 253.29 5.99 - 30.26
b) on trading derivatives 25.76 191.02 4.54 393.23
5
Maximum and Minimum of 100*PV01
observed during the year
a) on hedging
I) Minimum 24.59 5.52 - 1.61
II) Maximum 291.02 11.45 - 261.47
b) on Trading
I) Minimum 1.91 7.43 0.02 210.88
II) Maximum 33.94 220.20 8.21 650.88
# Only on trading derivatives and represents net position
@ Includes accrued interest
70
(` in crores)
As at 31 March, 2013
Currency Derivatives Interest rate
Derivatives
Sr. No. Particulars Forward
Contracts
CCS Options
1
Derivatives (Notional Principal Amount)
a) Forhedging 13,218.41 353.41 - 13,109.83
b) Fortrading 218,797.85 10,832.09 8,022.86 196,758.81
2
Marked to Market Positions
#
a) Asset (+) 328.93 338.93 - -
b) Liability(-) - - (13.64) (108.35)
3
Credit Exposure
@
7,76 4.61 1,835.46 130.78 2,743.39
4
Likely impact of one percentage change in
interest rate (100*PV01) (as at 31 March, 2013)
a) on hedging derivatives 0.24 9.49 - 307.66
b) on trading derivatives 2.38 191.19 1.34 417.04
5
Maximum and Minimum of 100*PV01 observed
during the year
a) on hedging
I) Minimum - 9.49 - 275.34
II) Maximum 1.31 12.82 - 353.77
b) on Trading
I) Minimum 1.57 62.22 0.21 242.62
II) Maximum 6.60 193.67 6.78 419.32
# Only on trading derivatives and represents net position
@ Includes accrued interest
*onlyOverTheCounterderivativesincluded
Duringtheyearended31March,2014,theRBIhadintroducedaUSDollar-RupeeswapwindowforFCNR(B)dollar
funds mobilised for a minimum tenor of three years and over. The Bank has swapped USD 1,565 million (`9,705.76
crores) during the special swap window of RBI.
Pursuant to RBI guidelines, the Bank has started dealing in Exchange Traded Currency Options. The outstanding
notional principal amount of these derivatives as at 31 March, 2014 was `Nilcrores(previousyear`Nilcrores)andthe
mark-to-marketvaluewas`Nil(previousyear`Nilcrores).
1.1.27 Details of penalty levied by RBI during the year ended 31 March, 2014 is as under:
Sr.
No.
Amount
(` in crores)
Reason for levy of penalty by RBI Date of payment
of penalty
1. 5.00 Non-compliance of instructions with respect to direction on Know
YourCustomer(KYC)norms/AntiMoneyLaundering(AML)standards/
Combating of Financial Terrorism/Obligation of banks under the
PreventionofMoneyLaunderingAct,2002andunderForeignExchange
ManagementAct,1999(FEMA).PenaltywasimposedintermsofSection
47A 1(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949
andsub-section(3)ofSection11ofFEMA.
12 June, 2013
2. 0.05 Non-compliance with instructions on issuance and operations of
Pre-PaidInstruments(PPIs)
20 August, 2013
Nopenalty/strictureshavebeenimposedontheBankduringtheyearended31March,2013.
71
1.1.28 Disclosure of Customer Complaints
31 March, 2014
31 March, 2013
a. No.ofcomplaintspendingatthebeginningoftheyear
1,757
2,188
b. No.ofcomplaintsreceivedduringtheyear
193,788
197,733
c. No.ofcomplaintsredressedduringtheyear
191,183
198,16 4
d. No.ofcomplaintspendingattheendoftheyear
4,362
1,757
The above information does not include complaints redressed within 1 working day and is as certified by the
Management and relied upon by the auditors.
1.1.29 Disclosure of Awards passed by the Banking Ombudsman
31 March, 2014
31 March, 2013
a. No.ofunimplementedawardsatthebeginningoftheyear
3
-
b. No.ofawardspassedbytheBankingOmbudsmanduringtheyear
4
4
c. No.ofawardsimplementedduringtheyear
5
1
d. No.ofunimplementedawardsattheendoftheyear
2*
3
*underappeal
The above information is as certified by the Management and relied upon by the auditors.
1.1.30 Draw Down from Reserves
The Bank has not undertaken any drawdown from reserves during the year.
1.1.31 Letter of Comfort
The Bank has not issued any Letter of Comfort (LoC) on behalf of its subsidiaries.
1.1.32 Disclosure on Remuneration
Qualitative disclosures
a) Information relating to the composition and mandate of the Remuneration Committee
TheHRandRemunerationCommitteeoftheBoardoverseestheframing,reviewandimplementationofthe
compensation policy of the Bank on behalf of the Board. The Committee works in close coordination with the
Risk Management Committee of the Bank, in order to achieve effective alignment between remuneration and
risks.
Ason31March,2014and31March,2013,theHRandRemunerationCommitteecomprisesofthefollowing
non-executiveindependentdirectors.
1. ShriPrasadR.Menon-Chairman
2. ShriK.N.Prithviraj
3. ShriV.R.Kaundinya
4. Prof.SamirK.Barua
TheHRandRemunerationCommitteeoftheBoard,functionswiththefollowingmainobjectives:
a. To review and recommend to the Board for approval, the overall remuneration philosophy and policy of
theBank,includingthelevelandstructureofxedpay,variablepay,perquisites,bonuspool,stock-based
compensation to employees of the Bank, and any other form of compensation as may be included from
time to time, keeping in mind the strategic objectives, market environment and the regulatory framework
as may exist.
b. To review and recommend to the Board for approval, the total increase in manpower cost budget of the
Bank as a whole, at an aggregate level, for the next year.
72
c. To review and recommend to the Board for approval, the talent management and succession policy and
process in the Bank for ensuring business continuity, especially at the level of Managing Director and
ChiefExecutiveOfcer(MD&CEO),theotherWhole-timeDirectors(WTDs),seniormanagersonelevel
below the Board position and other key roles.
d. To review organisation health through feedback from employee surveys conducted on a regular basis.
e. ToreviewtheCodeofConductandHRstrategy,policyandperformanceappraisalprocesswithinthe
Bank, as well as any fundamental changes in organisation structure which could have wide ranging or
high risk implications.
f. To review and recommend to the Board for approval, of the creation of new positions, one level below
the MD & CEO.
g. To review appointments, promotions and exits of senior managers, one level below the MD & CEO.
h. To set the goals, objectives and performance benchmarks for the Bank and for MD & CEO, the other
WTDs for the financial year and over the medium to long term.
i. To review the performance of the MD & CEO, other WTDs at the end of each year.
j. To recommend to the Board the remuneration package for the MD & CEO, the other WTDs and senior
managersonelevelbelowtheBoard-includingthelevelandstructureofxedpay,variablepay,stock-
basedcompensationandperquisites;
k. To recommend to the Board the compensation payable to the Chairman of the Bank, including fixed and
variable pay and perquisites.
b) Information relating to the design and structure of remuneration processes and the key features and
objectives of remuneration policy
Objectives of the Remuneration Policy
The compensation philosophy of the Bank aims to attract, retain and motivate professionals in order to enable the
Bank to attain its strategic objectives and develop a strong performance culture in the competitive environment
in which it operates. To achieve this, the following principles are adopted.
- Competitivenessintalentmarket
- Payforjobthroughxedpay
- Payforperformancetodrivemeritocracythroughvariablepay
- EmployeeStockOptionsforlong-termvaluecreation
- Benetsandperquisitesareofferedtoemployeestoremainalignedwithmarketpracticesandprovide
flexibility
- Affordability:Paytoreectproductivityimprovementstoretaincost-incomecompetitiveness
Apart from the above, the compensation structure for MD & CEO & WTDs is aligned to RBI’s guidelines for sound
compensationpractices(effectiveFY2012-13)andaddressesthegeneralprinciplesof:
- Effectiveandindependentgovernanceandmonitoringofcompensation.
- Alignmentofcompensationwithprudentrisk-takingthroughwelldesignedandconsistentcompensation
structures.
- Clearandtimelydisclosuretofacilitatesupervisoryoversightbyallstakeholders.
Accordingly, the Compensation Policy for MD & CEO and WTDs seeks to:
a) Ensure that the compensation, in terms of structure and total amount, is in line with the best practices,
aswellascompetitivevis-à-visthatofpeerbanks.
b) Establish the linkage of compensation with individual performance as well as achievement of the
corporate objectives of the Bank.
73
c) Includeasignicantvariablepaycomponenttiedtotheachievementofpre-establishedobjectivesinline
with Bank’s scorecard while ensuring that the compensation is aligned with prudent risk taking.
d) Encourage attainment of long term shareholder returns through inclusion of equity linked long-term
incentives as part of compensation.
Design & Structure of Remuneration process
Compensation is structured in terms of fixed pay, variable pay and employee stock options (for selective
employees), with the last two being strongly contingent on employee performance. The compensation policy of
theBankisapprovedbytheHRandRemunerationCommittee.AdditionalapprovalfromShareholdersandRBI
is obtained specifically for compensation of MD & CEO and WTD’s.
c) Description of the ways in which current and future risks are taken into account in the remuneration
process
Categorization of employees under Risk alignment of compensation framework
The MD & CEO, WTD’s and employees in the Grade of Vice President and above engaged in the functions of
Risk Control and Compliance are included in the policy of risk alignment of compensation.
Performance Parameters aligned to relevant risk measures
The following relevant risk measures are included in the scorecards of MD & CEO and WTDs
• NPA-netslippages
• RatioofRiskWeightedAssetstoTotalAssets
• LiquidityCoverageRatio
Inclusion of the above measures ensure that performance parameters are aligned to risk measures at the time of
performance evaluation
Deferral of Variable Pay
Toensurethatriskmeasuresdonotfocusonlyonachievingshorttermgoals;variablepayoutisdeferred,ifit
exceeds 40% of the fixed pay.
Other Risk Takers
Forotherstaff(includingrisktakers)apolicyonsimilarlinesisproposedtobeputinplaceinfuture.
d) Description of the ways in which the Bank seeks to link performance during a performance
measurement period with levels of remuneration
The Bank’s performance management and compensation philosophies are structured to support the achievement
oftheBank’son-goingbusinessobjectivesbyrewardingachievementofobjectiveslinkeddirectlytoitsstrategic
business priorities. These strategic priorities are cascaded through annualised objectives to the employees.
The Bank follows the balanced scorecard approach in designing its performance management system. Adequate
attention is given to robust goal setting process to ensure alignment of individual objectives to support the
achievementofbusinessstrategy,nancialandnon-nancialgoalsacrossandthroughtheorganization.The
non-nancial goals for employees includes customer service, process improvement, adherence to risk and
compliancenorms,self-capabilitydevelopmentandbehaviourssuchasintegrityandteammanagement.
Appraisalsareconductedannuallyandinitiatedbytheself-appraisalofanemployee.Theimmediatesupervisor
reviews the appraisal ratings in a joint consultation meeting with the employee and assigns the performance
rating. The final rating is discussed by a Moderation Committee comprising of senior officials of the Bank.
Both relative and absolute individual performance is considered in the moderation process. Individual fixed pay
increases, variable pay and ESOPs are linked to the final performance ratings. In addition, the fixed pay increase
is also influenced by an employee’s position in the salary range.
e) Bank’s policy on deferral and vesting of variable remuneration and Bank’s policy and criteria for
adjusting deferred remuneration before vesting and after vesting
Thepolicyforriskalignmentofcompensationeffectivefromnancialyear2012-13providesforthedeferralof
variable pay for MD & CEO and WTD’s.
74
The following clauses with regard to deferral are included in the policy.
• Ifthevariablepayexceeds40%ofthexedpay,45%ofthevariablepayisdeferredproportionatelyover
a period of three years.
• Thedeferredvariablepayamountofreferenceyearisheldbackincaseofanymisrepresentationorgross
inaccuracy resulting in a wrong risk assessment.
• Also,asharpfallinprot,saytotheextentof30%ofthereferenceyeartriggersfurtherexaminationof
thecausesandtheHRandRemunerationCommitteethereaftertakesdecisiononholdingbackorrelease
of deferred variable pay.
f) Description of the different forms of variable remuneration (i.e. Cash, Shares, ESOPs and other forms)
that the Bank utilises and the rationale for using these different forms
Different forms of variable remuneration are as mentioned below:
• Variable Pay: Variable Pay is linked to corporate performance, business performance and individual
performance and ensures differential pay based on the performance levels of employees.
• ESOPs:ESOPsaregiventoselectivesetofemployeesatseniorlevelsbasedontheirlevelofperformance
and role. ESOP scheme has an inbuilt deferral vesting design which helps in retention of employees along
with providing an opportunity of long term wealth creation for the employees.
Quantitative disclosures
The quantitative disclosures pertaining to the MD & CEO and WTDs identified as risk takers for the year ended
31 March, 2014 & 31 March, 2013 are given below:
31 March, 2014
31 March, 2013
a. i) Number of meetings held by the
Remuneration Committee during the
financial year 5 6
ii) Remuneration paid to its members
(sitting fees) `380,000 `340,000
b. Number of employees having received a
variable remuneration award during the
financial year 3* 1
c. Numberandtotalamountofsign-onawards
made during the financial year N.A. N.A.
d. Details of guaranteed bonus, if any, paid as
joining/sign on bonus N.A. N.A.
e. Details of severance pay, in addition to
accrued benefits, if any N.A. N.A.
f. Total amount of outstanding deferred
remuneration, split into cash, shares and
share-linkedinstrumentsandotherforms. N.A. N.A.
g. Total amount of deferred remuneration paid
out in the financial year N.A. N.A.
h. Breakdown of amount of remuneration
awards for the financial year to show fixed
andvariable,deferredandnon-deferred
Fixed - `6.32 crores#
Variable - `1.96 crores*
Deferred - Nil
Non-deferred - `1.96 crores*
Fixed-`3.76 crores
Variable-`0.38 crores
Deferred-Nil
Non-deferred-`0.38 crores
75
31 March, 2014
31 March, 2013
i. Total amount of outstanding deferred
remuneration and retained remuneration
exposed to ex-post explicit and/or implicit
adjustments N.A. N.A.
j. Total amount of reductions during the
nancial year due to ex-post explicit
adjustments N.A. N.A.
k. Total amount of reductions during the
nancial year due to ex-post implicit
adjustments N.A. N.A.
* pertainstoFY2012-13paidtoMD&CEOandWTDs(previousyearpertainstoFY2011-12paidtoMD&CEO)
# FixedRemunerationincludesbasicsalary,leavefareconcession,houserentallowance,superannuationallowance
and contribution towards provident fund
1.1.33 Bancassurance Business
Details of income earned from Bancassurance business are as under:
(` in crores)
Sr. No. Nature of Income*
31 March, 2014
31 March, 2013
1. Forsellinglifeinsurancepolicies
468.11
336.76
2. Forsellingnon-lifeinsurancepolicies
18.16
19.41
3. Forsellingmutualfundproducts
149.43
79.99
4. Others (selling of gold coins, wealth advisory,
RBI and other bonds etc.) 26.27 74.45
Total 661.97
510.61
*includesreceiptsonaccountofmarketingactivitiesundertakenonbehalfofbancassurancepartners
1.1.34 The Bank has not sponsored any special purpose vehicle which is required to be consolidated in the consolidated
financial statements as per accounting norms.
1.1.35 Amountoftotalassets,non-performingassetsandrevenueofoverseasbranchesisgivenbelow:
(` in crores)
Particulars 31 March, 2014
31 March, 2013
Total assets
43,129.73
37,151.9 4
TotalNPAs
254.28
219.29
Total revenue
2,304.87
2,161.26
1.1.36 Duringtheyearended31March,2014and31March,2013,thevalueofsales/transfersofsecuritiesto/fromHTM
category(excludingone-timetransferofsecuritiesandsalestoRBIunderOMOauctions)waswithin5%ofthebook
valueofinvestmentsheldinHTMcategoryatthebeginningoftheyear.
1.2 Other disclosures
1.2.1 During the year, the Bank has booked loss of `114.25 crores on transfer of Government securities with book value
of `7,566.36croresfromAvailableforSalecategorytoHeldtoMaturitycategoryatavalueof`7,452.11 crores in
accordance with RBI guidelines.
76
1.2.2 During the year, the Bank has appropriated `38.87 crores (previous year `141.46 crores), net of taxes and transfer to
statutoryreservetotheCapitalReserve,beingthegainonsaleofHTMinvestmentsinaccordancewithRBIguidelines.
1.2.3 During the year, the Bank has appropriated an amount of `1.05 crores (previous year `2.61crores)toReserveFund
account in accordance with guidelines issued by Central Bank of Sri Lanka in respect of Sri Lanka branch operations.
1.2.4 Earnings Per Share (‘EPS’)
The details of EPS computation is set out below:
31 March, 2014 31 March, 2013
BasicandDilutedearningsfortheyear(Netprotaftertax)(` in crores) 6,217.67 5,179.43
Basic weighted average no. of shares (in crores)
46.90
43.28
Add: Equity shares for no consideration arising on grant of stock options
under ESOP (in crores) 0.12 0.30
Diluted weighted average no. of shares (in crores)
47.02
43.58
Basic EPS (`)
132.56
119.67
Diluted EPS (`)
132.23
118 .85
Nominalvalueofshares(`) 10.00 10.00
Dilution of equity is on account of 1,169,588 (previous year 2,975,646) stock options.
1.2.5 Employee Stock Options Scheme (‘the Scheme’)
In February 2001, pursuant to the approval of the shareholders at the Extraordinary General Meeting, the Bank
approved an Employee Stock Option Scheme. Under the Scheme, the Bank is authorised to issue upto 13,000,000
equity shares to eligible employees. Eligible employees are granted an option to purchase shares subject to vesting
conditions. The options vest in a graded manner over 3 years. The options can be exercised within 3 years from the
dateofthevesting.Further,overtheperiodJune2004toJuly2013,pursuanttotheapprovaloftheshareholdersat
Annual General Meetings, the Bank approved an ESOP scheme for additional options aggregating 35,017,400. Within
the overall ceiling of 48,017,400 stock options approved for grant by the shareholders as stated earlier, the Bank is also
authorised to issue options to employees and directors of the subsidiary companies.
42,407,590 options have been granted under the Scheme till the previous year ended 31 March, 2013.
On 25 April, 2013, the Bank granted 2,003,000 stock options (each option representing entitlement to one equity
share of the Bank) to its employees including the MD & CEO and employees of certain subsidiaries of the Bank at a
price of `1,444.80 per option.
Stock option activity under the Scheme for the year ended 31 March, 2014 is set out below:
Options
outstanding
Range of exercise
prices (`)
Weighted
average
exercise
price (`)
Weighted average
remaining
contractual life
(Years)
Outstanding at the beginning of the year 10,865,025 468.90 to 1,447.55 1,090.43 2.69
Granted during the year 2,003,000 1,444.80 1,444.80 -
Forfeitedduringtheyear (60,004) 468.90 to 1,447.55 1,152.16 -
Expired during the year (72,380) 468.90 to 824.40 562.84 -
Exercised during the year (1,890,085) 468.90 to 1,447.55 727. 86 -
Outstanding at the end of the year 10,845,556 503.25 to 1,447.55 1,222.24 2.44
Exercisable at the end of the year 6,042,426 503.25 to 1,447.55 1,143.45 1.42
The weighted average share price in respect of options exercised during the year was `1,314.00.
77
Stock option activity under the Scheme for the year ended 31 March, 2013 is set out below:
Options
outstanding
Range of exercise
prices (`)
Weighted
average
exercise
price (`)
Weighted average
remaining
contractual life
(Years)
Outstanding at the beginning of the year 11, 428 ,248 319.00 to 1,447.55 965.90 2.79
Granted during the year 2,516,000 1,086.65 1,086.65 -
Forfeitedduringtheyear (175,698) 319.00 to 1,447.55 1,14 4.00 -
Expired during the year (80,954) 319.00 to 824.40 568.70 -
Exercised during the year (2,822,571) 319.00 to 1,447.55 594.48 -
Outstanding at the end of the year 10,865,025 468.90 to 1,447.55 1,090.43 2.69
Exercisable at the end of the year 5,372,105 468.90 to 1,447.55 941.06 1.57
The weighted average share price in respect of options exercised during the year was `1, 217.66.
Fair Value Methodology
OnapplyingthefairvaluebasedmethodinGuidanceNoteon‘AccountingforEmployeeShare-basedPayments’the
impact on reported net profit and EPS would be as follows:
31 March, 2014
31 March, 2013
Net Profit (as reported) (` in crores) 6,217.67
5,179.43
Add: Stock based employee compensation expense
included in net income (` in crores) - -
Less: Stock based employee compensation expense determined under fair
value based method (proforma) (` in crores)
(103.48)
(117.0 8 )
Net Profit (Proforma) (` in crores) 6,114 .19
5,062.35
Earnings per share: Basic (in `)
As reported
132.56
119.67
Proforma
130.36
116 .97
Earnings per share: Diluted (in `)
As reported
132.23
118 .85
Proforma
130.07
116 .27
ThefairvalueoftheoptionsisestimatedonthedateofthegrantusingtheBlack-Scholesoptionspricingmodel,with
the following assumptions:
31 March, 2014
31 March, 2013
Dividend yield 1.36% 1.20%
Expected life 2-4 years 2-4years
Risk free interest rate 7.45% to 7.57% 8.14% to 8.33%
Volatility 33.86% to 36.93% 35.92% to 50.25%
Volatility is the measure of the amount by which a price has fluctuated or is expected to fluctuate during a period.
ThemeasureofvolatilityusedintheBlack-Scholesoptionspricingmodelistheannualisedstandarddeviationofthe
continuouslycompoundedratesofreturnonthestockoveraperiodoftime.Forcalculatingvolatility,thedailyvolatility
ofthestockpricesontheNationalStockExchange,overaperiodpriortothedateofgrant,correspondingwiththe
expected life of the options has been considered.
The weighted average fair value of options granted during the year ended 31 March, 2014 is `438.87 (previous year
`387.24 ).
78
1.2.6 Dividend paid on shares issued on exercise of stock options
The Bank may allot shares between the Balance Sheet date and record date for the declaration of dividend pursuant to
the exercise of any employee stock options. These shares will be eligible for full dividend for the year ended 31 March,
2014, if approved at the ensuing Annual General Meeting. Dividend relating to these shares has not been recorded in
the current year.
Appropriation to proposed dividend during the year ended 31 March, 2014 includes dividend of `2.05 crores (previous
year `2.02 crores) paid pursuant to exercise of 975,266 employee stock options after the previous year end but before
the record date for declaration of dividend for the year ended 31 March, 2013.
1.2.7 Segmental reporting
The business of the Bank is divided into four segments: Treasury, Retail Banking, Corporate/Wholesale Banking and
Other Banking Business. These segments have been identified based on the RBI’s revised guidelines on Segment
Reportingissuedon18April,2007videCircularNo.DBOD.No.BP.BC.81/21.04.018/2006-07.Theprincipalactivitiesof
these segments are as under.
Segment Principal Activities
Treasury Treasury operations include investments in sovereign and corporate debt, equity
and mutual funds, trading operations, derivative trading and foreign exchange
operations on the proprietary account and for customers. The Treasury segment
also includes the central funding unit.
Retail Banking Constitutes lending to individuals/small businesses through the branch network
and other delivery channels subject to the orientation, nature of product,
granularity of the exposure and the quantum thereof. Retail Banking activities
also include liability products, card services, internet banking, mobile banking,
ATMservices,depository,nancialadvisoryservicesandNRIservices.
Corporate/Wholesale Banking Includes corporate relationships not included under Retail Banking, corporate
advisory services, placements and syndication, project appraisals, capital market
related services and cash management services.
Other Banking Business Includes para banking activities like third party product distribution and other
banking transactions not covered under any of the above three segments.
Revenues of the Treasury segment primarily consist of fees and gains or losses from trading operations and interest
income on the investment portfolio. The principal expenses of the segment consist of interest expense on funds
borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct
overheads and allocated expenses.
Revenues of the Corporate/Wholesale Banking segment consist of interest and fees earned on loans given to
customers falling under this segment and fees arising from transaction services and merchant banking activities such
as syndication and debenture trusteeship. Revenues of the Retail Banking segment are derived from interest earned on
loans classified under this segment, fees for banking and advisory services, ATM interchange fees and cards products.
Expenses of the Corporate/Wholesale Banking and Retail Banking segments primarily comprise interest expense on
deposits and funds borrowed from other internal segments, infrastructure and premises expenses for operating the
branch network and other delivery channels, personnel costs, other direct overheads and allocated expenses.
Segment income includes earnings from external customers and from funds transferred to the other segments.
Segment result includes revenue as reduced by interest expense and operating expenses and provisions, if any, for
thatsegment. Segment-wiseincomeand expensesincludecertainallocations. Inter segmentinterest income and
interestexpenserepresentthetransferpricereceivedfromandpaidtotheCentralFundingUnit(CFU)respectively.
Forthispurpose,thefundstransferpricingmechanismpresentlyfollowedbytheBank,whichisbasedonhistorical
matched maturity and internal benchmarks, has been used. Operating expenses other than those directly attributable
tosegmentsareallocatedtothesegmentsbasedonanactivity-basedcostingmethodology.AllactivitiesintheBank
aresegregatedsegment-wiseandallocatedtotherespectivesegment.
79
Segmental results are set out below:
(` in crores)
31 March, 2014
Treasury Corporate/
Wholesale
Banking
Retail
Banking
Other
Banking
Business
Total
Segment Revenue
Gross interest income (external customers) 8,690.80 12,605.67 9,344.69 - 30,6 41.16
Other income 2,102.78 3,016.49 1,619.06 666.89 7, 405.22
Total income as per Profit and Loss Account 10,793.58 15,622.16 10,963.75 666.89 38,046.38
Add/(less) inter segment interest income 35,606.40 3,802.28 11,295. 25 - 50,703.93
Total segment revenue 46,399.98 19,424.44 22,259.00 666.89 88,750.31
Less: Interest expense (external customers) 9,904.69 383.58 8,401.25 - 18,689.52
Less: Inter segment interest expense 33,763.53 9,370.03 7,570.37 - 50,703.93
Less: Operating expenses 384.68 2,012.82 5,405.82 97.45 7,9 0 0.77
Operating profit 2,347.08 7,658.01 881.56 569.44 11,456.09
Less:Provisionfornon-performingassets/others* 11. 34 1,765.41 330.29 0.42 2,107.46
Segment result 2,335.74 5,892.60 551.27 569.02 9,348.63
Less: Provision for tax 3,130.96
Extraordinary profit/loss -
Net Profit 6,217.67
Segment assets 143,268.32 132,124.20 105,609.76 383.62 381,385.90
Unallocated assets 1,858.99
Total assets 383,244.89
Segment liabilities 123,757.71 69,718.11 150, 297.09 25.94 343,798.85
Unallocated liabilities 1,225.55
Total liabilities 345,024.40
Net assets 19,510.61 62,406.09 ( 44,687. 33) 357.68 38,220.49
Capital expenditure for the year 20.48 157.66 432.03 4.69 614.86
Depreciation on fixed assets for the year 12.12 93.32 255.71 2.78 363.93
80
(` in crores)
31 March, 2013
Treasury Corporate/
Wholesale
Banking
Retail
Banking
Other
Banking
Business
Total
Segment Revenue
Gross interest income (external customers) 8,016.33 12,034.57 7,131.67 - 27,182.57
Other income 1,581.20 2,843.97 1,610.88 515.06 6,551.11
Total income as per Profit and Loss Account 9,597.53 14,878.54 8,742.55 515.06 33,733.68
Add/(less) inter segment interest income 32,939.38 3,371.64 9,547.31 - 45,858.33
Total segment revenue 42,536.91 18,250.18 18,289.86 515.06 79,592.01
Less: Interest expense (external customers) 10,205.87 285.85 7,024 .59 - 17,516.31
Less: Inter segment interest expense 30,866.09 9,18 4.4 8 5,8 07.76 - 45,858.33
Less: Operating expenses 443.10 1,621.19 4,712.86 137.09 6,914.24
Operating profit 1,021.85 7,158.66 744.65 377.97 9, 303.13
Less:Provisionfornon-performingassets/others* (94.48) 1,614.12 230.42 0.38 1,750.44
Segment result 1,116.33 5,544.54 514.23 377.59 7,552.69
Less: Provision for tax 2,373.26
Extraordinary profit/loss -
Net Profit 5,179.43
Segment assets 135,490.74 128,119.81 75,260.84 247.45 339,118.84
Unallocated assets 1,441.82
Total assets 340,560.66
Segment liabilities 124,981.57 63,289.17 118 ,121.0 4 31.20 306,422.98
Unallocated liabilities 1,029.82
Total liabilities 307,452.80
Net assets 10,509.17 64,830.64 (42,860.20) 216.25 33,107.86
Capital expenditure for the year 20.79 99.37 288.91 8.46 417.53
Depreciation on fixed assets for the year 17.52 83.71 243.38 7.12 351.73
*representsmaterialnon-cashitemsotherthandepreciation
Geographic Segments
(` in crores)
Domestic International Total
31 March,
2014
31 March,
2013
31 March,
2014
31 March,
2013
31 March,
2014
31 March,
2013
Revenue
35,741.51
31,572.42
2,304.87
2,161.26
38,046.38
33,733.68
Assets
340,115.16
303,408.72
43,129.73
37,151.9 4
383,244.89
340,560.66
Capital Expenditure
incurred 60 8.18 415.53 6.68 2.00 614.86 417.53
Depreciation provided
361.74
350.18
2.19
1.55
363.93
351.73
81
1.2.8 Related party disclosure
The related parties of the Bank are broadly classified as:
a) Promoters
The Bank has identified the following entities as its Promoters.
• AdministratoroftheSpeciedUndertakingoftheUnitTrustofIndia(SUUTI)
• LifeInsuranceCorporationofIndia(LIC)
• GeneralInsuranceCorporationandfourGovernment-ownedgeneralinsurancecompanies-NewIndia
Assurance Co. Limited, National Insurance Co. Limited, United India Insurance Co. Limited and The
Oriental Insurance Co. Limited.
b) Key Management Personnel
• Mrs.ShikhaSharma(ManagingDirector&ChiefExecutiveOfcer)
• Mr.SomnathSengupta[ExecutiveDirector&Head(CorporateCentre)]
• Mr.V.Srinivasan[ExecutiveDirector&Head(CorporateBanking)]
c) Relatives of Key Management Personnel
Mr. Sanjaya Sharma, Mrs. Usha Bharadwaj, Mr. Tilak Sharma, Ms. Tvisha Sharma, Dr. Sanjiv Bharadwaj,
Dr. Prashant Bharadwaj, Dr. Brevis Bharadwaj, Dr. Reena Bharadwaj, Mrs. Chaitaly Sengupta, Mrs. Renukona
Sengupta,Mr.NiloySengupta,Mrs.GayathriSrinivasan,Mrs.VanjulamVaradarajan,Mr.V.Satish,Mrs.Camy
Satish,Ms.AnanyaSrinivasan,Ms. AnaghaSrinivasan,Ms. Geetha N.,Ms.ChitraR.,Ms.SumathiN.,Mr. S.
RanganathanandMr.R.Narayan.
d) Subsidiary Companies
• AxisCapitalLimited
• AxisPrivateEquityLimited
• AxisTrusteeServicesLimited
• AxisAssetManagementCompanyLimited
• AxisMutualFundTrusteeLimited
• AxisBankUKLimited(formerlyAxisU.K.Limited)
• AxisFinanceLimited(formerlyAxisFinancePrivateLimited)
• AxisSecuritiesLimited*
*On28October,2013,theBankpurchased15.92%stakeinAxisSecuritiesLimitedfromAxisCapitalLimitedat
a consideration of `38.25 crores thus making it a wholly owned subsidiary of the Bank.
e) Step down Subsidiary Companies
• EnamInternationalLimited
• AxisSecuritiesEuropeLimited(formerlyEnamSecuritiesEuropeLimited)
f) Associate
• BussanAutoFinanceIndiaPrivateLimited
TheaboveinvestmentdoesnotfallwithinthedenitionofaJointVentureasperAS-27,FinancialReporting
of Interest in Joint Ventures, notified under Section 211(3C) of the Companies Act, 1956 and the said
accountingstandardisthusnotapplicable.However,pursuanttoRBIguidelines,theBankhasclassied
the same as investment in joint ventures in the Balance Sheet. Such investment has been accounted as an
AssociateinConsolidatedFinancialStatementsasperAS-23,AccountingforInvestmentsinAssociatesin
ConsolidatedFinancialStatements,notiedunderSection211(3C)oftheCompaniesAct,1956.Based
on RBI guidelines, details of transactions with Associates are not disclosed since there is only one entity/
party in this category.
82
The significant transactions between the Bank and related parties during the year ended 31 March, 2014 are
given below. A specific related party transaction is disclosed as a significant related party transaction wherever
it exceeds 10% of the aggregate value of all related party transactions in that category:
• Dividend paid: Administrator of The Specied Undertaking of the Unit Trust of India `175.00 crores
(previous year `155.56 crores), Life Insurance Corporation of India `78.77 crores (previous year `64.06
crores)
• Dividendreceived:AxisTrusteeServicesLtd.`1.88 crores (previous year `1.50 crores)
• Interestpaid:LifeInsuranceCorporationofIndia`928.77 crores (previous year `731.58 crores)
• Interestreceived:AxisBankUKLtd.`6.52crores(previousyearNil)andAxisFinanceLtd.`1.27 crores
(previousyearNil)
• InvestmentoftheBank:AxisBankUKLtd.`299.57crores(previousyearNil)andAxisFinanceLtd.`250
crores(previousyearNil)
• InvestmentofrelatedpartyintheBank:Mrs.ShikhaSharma`7.35 crores (previous year `1.48 crores) and
Mr. V. Srinivasan `2.43 crores (previous year `2.04 crores)
• Redemptionofsubordinateddebt:LifeInsuranceCorporationofIndia`25.00 crores (previous year `80
crores) and General Insurance Corporation of India `15crores(previousyearNil)
• Sale of Investments: Life Insurance Corporation of India `221.71 crores (previous year `1,030.60
crores), General Insurance Corporation of India `181.37 crores (previous year `85.00crores),NewIndia
Assurance Company Ltd. `147.51crores(previousyearNil),NationalInsuranceCompanyLtd.`109.97
crores (previous year `191.79 crores), United India Insurance Company Ltd. `79.12 crores (previous year
`115.03 crores)
• ManagementContracts:AxisSecuritiesLimited`4.76 crores (previous year `6.41 crores), Axis Trustee
Services Ltd. `2.63 crores (previous year `2.46crores)andAxisFinanceLtd.`2.52 crores (previous year
Nil),Mrs.ShikhaSharma`4.07 crores (previous year `2.83 crores), Mr. Somnath Sengupta `2.30 crores
(previous year `0.70 crores) and Mr. V. Srinivasan `2.18 crores (previous year `0.72 crores)
• Contributiontoemployeebenetfund:LifeInsuranceCorporationofIndia`15.49 crores (previous year
`14.58 crores)
• Non-fundedcommitments:LifeInsuranceCorporationofIndia`0.02crores(previousyearNil),Oriental
Insurance Company Ltd. `0.04crores(previousyearNil)
• Call/Termborrowingfromrelatedparty:AxisBankUKLtd.`143.99crores(previousyearNil)
• Call/Termlendingtorelatedparty:AxisBankUKLtd.`12.65crores(previousyearNil)
• Swap/forwardcontracts:AxisBankUKLtd.`413.52crores(previousyearNil)
• Advancegranted(net):AxisBankUKLtd.`148.48crores(previousyearNil)andAxisFinanceLtd.`62.12
crores(previousyearNil)
• Advancerepaid:LifeInsuranceCorporationofIndia`27.91 crores (previous year `15.51 crores)
• Selldownofloansandadvances:AxisBankUKLtd.`694.79crores(previousyearNil)
• Advancetorelatedpartyagainstrenderingofservices:AxisSecuritiesLtd.`25.00 crores (previous year
Nil)
• Receiving of services: Oriental Insurance Company Ltd. `51.20 crores (previous year `2,924), Axis
Securities Limited `241.95 crores (previous year `198.65 crores)
• Renderingofservices:AxisAssetManagementCompanyLtd.`15.97 crores (previous year `14.83 crores),
AxisBankUKLtd.`4.15crores(previousyearNil)andAxisCapitalLtd.`7.66 crores (previous year `6.75
crores)
83
• Purchaseofequitysharesfromrelatedparty:AxisCapitalLtd.`38.25crores(previousyearNil)
• Otherreimbursementfromrelatedparty:AxisSecuritiesLtd.`1.01crores(previousyearNil),AxisAsset
Management Company Ltd. `1.73 crores (previous year `1.05 crores),Axis BankUK Ltd.`2.17 crores
(previousyearNil)andAxisCapitalLtd.`3.56 crores (previous year `8.68 crores)
• Otherreimbursementtorelatedparty:LifeInsuranceCorporationofIndia`0.39 crores (previous year
`0.76 crores) and Axis Securities Ltd. `0.40 crores (previous year `0.62 crores)
The details of transactions of the Bank with its related parties during the year ended 31 March, 2014 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives
of Key
Management
Personnel
Subsidiaries Step down
Subsidiaries
Total
Dividend paid 286.21 0.13 - - - 286.34
Dividend received - - - 1.88 - 1.88
Interest paid 994.86 0.78 0.08 27.09 - 1,022.81
Interest received 0.27 0.17 - 7.85 - 8.29
Investment of the Bank - - - 599.57 - 599.57
Investment of related party in the Bank - 10.68 - - - 10.68
Investment of related party in Subordinated
Debt/HybridCapitaloftheBank - - - - - -
Redemption of Subordinated Debt 40.00 - - - - 40.00
Purchase of investments - - - - - -
Sale of investments 754.46 - - - - 754.46
Management contracts - 8.55 - 10.08 - 18.63
Contribution to employee benefit fund 15.49 - - - - 15.49
Purchase of fixed assets - - - - - -
Sale of fixed assets - - - - - -
Non-fundedcommitments 0.06 - - - - 0.06
Call/Term borrowing - - - 143.99 - 143.99
Call/Term lending - - - 12.65 - 12.65
Swaps/Forwardcontracts - - - 413.52 - 413.52
Advance granted (net) - 0.83 - 210.59 - 211.42
Advance repaid 27.91 1.26 - - - 29.17
Sell down of loans and advances - - - 694.79 - 694.79
Advance to related party against rendering
of services - - - 25.00 - 25.00
Receiving of services 67.6 0 - - 244.98 - 312.58
Rendering of services 2.45 - - 31.16 - 33.61
Consideration received towards demerger - - - - - -
Consideration paid towards acquisition of
subsidiary - - - - - -
Purchase of equity shares from related party - - - 38.25 - 38.25
Other reimbursements from related party - - - 9.05 - 9.05
Other reimbursements to related party 0.39 - - 0.42 - 0.81
84
The balances payable to/receivable from the related parties of the Bank as on 31 March, 2014 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives
of Key
Management
Personnel
Subsidiaries Step down
Subsidiaries
Total
Borrowings from the Bank - - - - -
-
Deposits with the Bank 10,097.26 9.77 1.23 414.00 - 10,522.26
Placement of deposits 0.15 - - - - 0.15
Advances 0.78 1.61 - 212.16 - 214.55
Investment of the Bank - - - 1,020.26 - 1,020.26
Investment of related party in the Bank 138.78 0.10 - - - 138.88
Non-fundedcommitments 3.07 - - 4.35 - 7.42
Investment of related party in Subordinated
Debt/HybridCapitaloftheBank 2,765.00 - - - - 2,765.00
Advance for rendering of services - - - - - -
Other receivables (net) - - - 77.52* - 77.52
Other payables (net) - - - 7.0 4 - 7.04
Swap/Forwardcontracts - - - 81.84 - 81.84
The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2014 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives
of Key
Management
Personnel
Subsidiaries Step down
Subsidiaries
Total
Borrowings from the Bank - - - - - -
Deposits with the Bank 10,836.28 12.89 1.76 519.80 - 11,370.73
Placement of deposits 0.16 - - - - 0.16
Advances 66.57 2.04 - 309.78 - 378.39
Investment of the Bank - - - 1,020.26 - 1,020.26
Investment of related party in the Bank 169.76 0.10 - - - 169.86
Non-fundedcommitments 3.09 - - 4.35 - 7.44
Call borrowing - - - 143.99 - 143.99
Call lending - - - 12.65 - 12.65
Swaps/Forwardcontracts - - - 161.62 - 161.62
Investment of related party in
SubordinatedDebt/HybridCapitalofthe
Bank 3, 817.30 - - - - 3,817.30
Other receivables (net) - - - 77.52 - 77.52
Other payables (net) - - - 41.15 - 41.15
85
The details of transactions of the Bank with its related parties during the year ended 31 March, 2013 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives
of Key
Management
Personnel
Subsidiaries Step down
Subsidiaries
Total
Dividend paid 247.25 0.02 - - - 247. 27
Dividend received - - - 1.50 - 1.50
Interest paid 768.37 0.16 0.03 13.54 1.73 783.83
Interest received 0.02 0.10 - 0.03 0.01 0.16
Investment of the Bank - - - 25.00 - 25.00
Investment of related party in the Bank 811.47 4.60 - - - 816.07
Investment of related party in Subordinated
Debt/HybridCapitaloftheBank 1,000.00 - - - - 1,000.00
Redemption of Subordinated Debt 90.00 - - - - 90.00
Purchase of investments - - - - - -
Sale of investments 1,442.84 - - - - 1,442.84
Management contracts - 4.25 - 8.91 - 13.16
Contribution to employee benefit fund 14.58 - - - - 14.58
Purchase of fixed assets - - - 1.17 - 1.17
Sale of fixed assets - - - - - -
Non-fundedcommitments 0.06 - - - 4.35 4.41
Call/Term borrowing - - - - - -
Call/Term lending - - - - - -
Swaps/Forwardcontracts - - - - - -
Advance granted (net) - - - - - -
Advance repaid 15.51 0.14 - - - 15.65
Sell down of loans and advances - - - - - -
Receiving of services 60.79 - - 201.73 0.08 262.60
Rendering of services 2.07 - - 22.97 0.09 25.13
Consideration received towards demerger - - - 274.15 - 274.15
Consideration paid towards acquisition of
subsidiary - - - 90.40 - 90.40
Purchase of equity shares from related
party - - - - - -
Other reimbursements from related party - - - 10.13 - 10.13
Other reimbursements to related party 0.76 - - 0.97 - 1.73
86
The balances payable to/receivable from the related parties of the Bank as on 31 March, 2013 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives
of Key
Management
Personnel
Subsidiaries Step down
Subsidiaries
Total
Borrowings from the Bank - - - - -
-
Deposits with the Bank 9,915.42 4.23 0.51 434.32 30.15 10,384.63
Placement of deposits 0.16 - - - - 0.16
Advances 28.13 2.04 - - - 30.17
Investment of the Bank - - - 382.44 - 382.44
Investment of related party in the Bank 158.52 0.08 - - - 158.60
Non-fundedcommitments 3.07 - - - 4.35 7.42
Investment of related party in
SubordinatedDebt/HybridCapitalofthe
Bank 3,817.30 - - - - 3,817. 30
Advance for rendering of services - - - - - -
Other receivables (net) - - - 49.92
*
- 49.92
Other payables (net) - - - 23.30 - 23.30
Swaps/Forwardcontracts - - - - - -
The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2013 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives
of Key
Management
Personnel
Subsidiaries Step down
Subsidiaries
Total
Borrowings from the Bank - - - - - -
Deposits with the Bank 9,915.42 9.01 3.91 464.43 35.79 10,428.56
Placement of deposits 0.16 - - - - 0.16
Advances 46.54 2.16 - 23.93 5.96 78.59
Investment of the Bank - - - 382.44 - 382.44
Investment of related party in the Bank 158.52 0.08 - - - 158.60
Non-fundedcommitments 3.07 - - 16.00 4.35 23.42
Call borrowing - - - - - -
Call lending - - - - - -
Swaps/ForwardContracts - - - - - -
Investment of related party in
SubordinatedDebt/HybridCapitalofthe
Bank 3, 817.30 - - - - 3,817.30
Other receivables - - - 49.92 - 49.92
Other payables - - - 35.06 - 35.06
87
ThetransactionswithPromotersandKeyManagementPersonnelexcludingthoseundermanagementcontractsarein
natureofthebanker-customerrelationship.
Details of transactions with Axis Mutual Fund and Axis Infrastructure Fund-I, the funds oated by Axis Asset
Management Company Ltd. and Axis Private Equity Ltd., the Bank’s subsidiaries have not been disclosed since these
entities do not qualify as Related Parties as defined under the Accounting Standard 18, Related Party Disclosure, as
notified under Section 211(3C) of the Companies Act, 1956 and as per RBI guidelines.
*TheBankhas enteredintoanarrangementwithAxisAsset ManagementCompanyLtd.(Axis AMC),theBank’s
subsidiary, in terms of which payment of brokerage in respect of distribution of certain schemes is scheduled over
the period of the schemes. This arrangement, however, has no effect on the accounting policy of the Bank, as such
brokerage income is recognised by the Bank as and when the same is due. Other receivables include such brokerage
recoverable from Axis AMC as on the reporting date.
1.2.9 Leases
Disclosure in respect of assets taken on operating lease
This comprise of office premises/ATMs, cash deposit machines, staff quarters, electronic data capturing machines and
IT equipment.
(` in crores)
31 March, 2014 31 March, 2013
Futureleaserentalspayableasattheendoftheyear:
-Notlaterthanoneyear
565.48
575.90
-Laterthanoneyearandnotlaterthanveyears
1,789.58
1,689.30
-Laterthanveyears
850.00
816.07
Total of minimum lease payments recognised in the Profit and Loss Account
for the year 634.80 602.76
Totaloffutureminimumsub-leasepaymentsexpectedtobereceivedunder
non-cancellablesubleases - -
Sub-leasepaymentsrecognisedintheProtandLossAccountfortheyear
0.15
0.60
TheBankhassub-leasedcertainofitspropertiestakenonlease.
There are no provisions relating to contingent rent.
The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements.
There are generally no undue restrictions or onerous clauses in the agreements.
1.2.10 OtherFixedAssets(includingfurniture&xtures)
The movement in fixed assets capitalised as application software is given below:
(` in crores)
Particulars 31 March, 2014 31 March, 2013
At cost at the beginning of the year
457.40
378.88
Additions during the year
127.14
78.73
Deductions during the year
(1.61)
(0.21)
Accumulated depreciation as at 31 March
(380.25)
(311. 30 )
Closing balance as at 31 March
202.68
146.10
Depreciation charge for the year
69.07
53.45
88
1.2.11 The major components of deferred tax assets and deferred tax liabilities arising out of timing differences are as under:
(` in crores)
As at 31 March, 2014 31 March, 2013
Deferred tax assets on account of provisions for loan losses
1,197.57
924.57
DeferredtaxassetsonaccountofamortisationofHTMinvestments
191.25
192.52
Deferred tax assets on account of provision for employee benefits
69.37
106.76
Deferred tax assets on account of other contingencies
317.95
176.43
Deferred tax assets
1,776.14
1,400.28
Deferred tax liabilities on account of depreciation on fixed assets
42.59
25.51
Deferred tax liabilities 42.59 25.51
Net Deferred tax assets 1,733.55 1,374.77
1.2.12 Employee Benefits
Provident Fund
The contribution to the employee’s provident fund amounted to `95.40 crores (previous year `80.78 crores) for the
year.
The rulesof theBank’sProvidentFund administered byaTrustrequirethatiftheBoardofTrusteesareunableto
payinterestattheratedeclaredforEmployees’ProvidentFundbytheGovernmentunderpara60oftheEmployees’
ProvidentFundScheme,1952forthereasonthatthereturnoninvestmentislessorforanyotherreason,thenthe
deficiency shall be made good by the Bank. Based on an actuarial valuation conducted by an independent actuary,
there is no deficiency as at the Balance Sheet date. The principal assumptions used by the actuary are as under.
31 March, 2014 31 March, 2013
Discount rate for the term of the obligation
9.15%
7.9 0%
Average historic yield on the investment portfolio
8.88%
9.13%
Discount rate for the remaining term to maturity of the investment portfolio
9.03%
7.9 4%
Expected investment return
9.00%
9.09%
Guaranteed rate of return
8.75%
8.50%
Superannuation
The Bank contributed `15.22 crores (previous year `14.35 crores) to the employees’ superannuation plan for the year.
Leave Encashment
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Bank
is given below:
(` in crores)
31 March, 2014 31 March, 2013
Privileged leave 179.10 313.92
Sick leave - 22.80
Total actuarial liability 179.10 336.72
Total Expense included in Schedule 16(I) (114.72) 96.46
Assumptions
Discount rate 9.15% p.a. 7.9 0% p.a.
Salary escalation rate
7.00% p.a.
7.00 % p.a.
Gratuity
The following tables summarise the components of net benefit expenses recognised in the Profit and Loss Account and
funded status and amounts recognised in the Balance Sheet for the Gratuity benefit plan.
89
Profit and Loss Account
Netemployeebenetexpenses(recognisedinpaymentstoandprovisionsforemployees)
(` in crores)
31 March, 2014 31 March, 2013
Current Service Cost
23.19
16.98
Interest on Defined Benefit Obligation
12.01
8.70
Expected Return on Plan Assets
(10.68)
(7.25)
NetActuarialLosses/(Gains)recognisedintheyear
(10.53)
16.80
Past Service Cost
-
5.50
Total included in “Employee Benefit Expense”
13.99
40.73
Actual Return on Plan Assets
13.01
9.32
Balance Sheet
Details of provision for gratuity
(` in crores)
31 March, 2014 31 March, 2013
FairValueofPlanAssets
163.35
146.22
PresentValueofFundedObligations
(157.72 )
(137.6 0 )
Net Asset
5.63
8.62
Amounts in Balance Sheet
Liabilities
-
-
Assets
5.63
8.62
Net Asset (included under Schedule 11 – Other Assets)
5.63
8.62
Changes in the present value of the defined benefit obligation are as follows:
(` in crores)
31 March, 2014
31 March, 2013
Change in Defined Benefit Obligation
Opening Defined Benefit Obligation
137.60
93.40
Current Service Cost
23.19
16.98
Interest Cost
12.01
8.70
Actuarial Losses/(Gains)
(8.20)
18.87
Past service cost
-
5.50
Benefits Paid
(6.88)
(5.85)
Closing Defined Benefit Obligation
157.72
137.60
Changes in the fair value of plan assets are as follows:
(` in crores)
31 March, 2014
31 March, 2013
Change in the Fair Value of Assets
Opening Fair Value of Plan Assets
146.22
97.91
Expected Return on Plan Assets
10.68
7.25
Actuarial Gains/(Losses)
2.33
2.07
Contributions by Employer
11.00
44.84
Benefits Paid
(6.88)
(5.85)
Closing Fair Value of Plan Assets
163.35
146.22
90
Experience adjustments
(` in crores)
31 March,
2014
31 March,
2013
31 March,
2012
31 March,
2011
31 March,
2010
Defined Benefit Obligations
157.72
137.60 93.40 60.65 42.56
Plan Assets
163.35
146.22 97.91 63.43 43.97
Surplus/(Deficit)
5.63
8.62 4.51 2.78 1.41
Experience Adjustments on Plan Liabilities
7.67
4.58 27.08 1.40 1.16
Experience Adjustments on Plan Assets
2.33
2.07 0.48 (0.78) 0.46
Major categories of plan assets (managed by Insurers) as a percentage of fair value of total plan assets
31 March, 2014
31 March, 2013
% %
Government securities 41.24 40.87
Bonds, debentures and other fixed income instruments 48.22 38.48
Money market instruments 7.85 18.45
Equity shares 2.34 2.20
Others 0.35 -
31 March, 2014
31 March, 2013
Principal actuarial assumptions at the Balance Sheet date:
Discount Rate 9.15% p.a. 7.90 % p.a.
Expected Rate of Return on Plan Assets 7.50% p.a. 7.50% p.a.
Salary Escalation Rate 7.00% p.a. 7.00 % p.a.
Employee Turnover
-21to30(ageinyears)
19.00%
20.14%
-31to44(ageinyears)
8.00%
10.00%
-45to59(ageinyears)
4.00%
1.00%
The estimates of future salary increases considered in actuarial valuation take account of inflation, seniority, promotion
and other relevant factors.
Theexpectedrateofreturnonplanassetsisbasedontheaveragelong-termrateofreturnexpectedoninvestments
oftheFundduringtheestimatedtermoftheobligations.
As the contribution expected to be paid to the plan during the annual period beginning after the balance sheet date
is based on various internal/external factors, a best estimate of the contribution is not determinable.
The above information is as certified by the actuary and relied upon by the auditors.
1.2.13 Provisions and contingencies
a) Movement in provision for frauds included under other liabilities is set out below:
(` in crores)
31 March, 2014 31 March, 2013
Opening balance at the beginning of the year 13.97 17.35
Additions during the year 1.00 4.57
Reductions on account of payments during the year (0.41) (5.57)
Reductions on account of reversals during the year (0.50) (2.38)
Closing balance at the end of the year 14.06 13.97
91
b) Other liabilities include provision for reward points made on actuarial basis, the movement of which is set out
below:
(` in crores)
31 March, 2014 31 March, 2013
Opening provision at the beginning of the year 67.89 43.28
Provision made during the year 22.88 28.03
Reductions during the year (5.46) (3.42)
Closing provision at the end of the year 85.31 67. 89
c) Movement in provision for other contingencies is set out below:
(` in crores)
31 March, 2014 31 March, 2013
Opening provision at the beginning of the year 396.46 15.38
Provision made during the year 785.93 561.65
Reductions during the year (360.78) (180.57)
Closing provision at the end of the year 821.61 396.46
The above provision includes contingent provision for advances/other exposures, legal cases and other
contingencies.
1.2.14 Unclaimed Shares:
Details of unclaimed shares as of 31 March, 2014 and 31 March, 2013 are as follows:
31 March, 2014 31 March, 2013
Aggregate number of shareholders at the beginning of the year 29 29
Total outstanding shares in Unclaimed Suspense Account at the beginning of
the year 3,600 3,600
Numberofshareholderswhoapproachedtoissuerfortransferofsharesfrom
Unclaimed Suspense Account during the year - -
Number of shareholders towhom shares were transferred from Unclaimed
Suspense Account during the year - -
Aggregate number of shareholders at the end of the year 29 29
Total outstanding shares in Unclaimed Suspense Account at the end of the year 3,600 3,600
1.2.15 Small and Micro Industries
Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October,
2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been
no reported cases of delays in payments to micro and small enterprises or of interest payments due to delays in such
payments. The above is based on the information available with the Bank which has been relied upon by the auditors.
1.2.16 Description of contingent liabilities:
a) Claims against the Bank not acknowledged as debts
These represent claims filed against the Bank in the normal course of business relating to various legal cases
currently in progress. These also include demands raised by income tax authorities and disputed by the Bank.
b) Liability on account of forward exchange and derivative contracts
The Bank enters into foreign exchange contracts, currency options/swaps, interest rate/currency futures and
forwardrateagreementsonitsownaccountandforcustomers.Forwardexchangecontractsarecommitments
to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to
exchange cash flows by way of interest/principal in two currencies, based on ruling spot rates. Interest rate swaps
are commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardised,
exchange-tradedcontractsthatrepresentapledgetoundertakeacertaininterestratetransactionataspecied
92
price, on a specied future date. Forward rate agreements are agreements to pay or receive a certain sum
based on a differential interest rate on a notional amount for an agreed period. A foreign currency option is an
agreement between two parties in which one grants to the other the right to buy or sell a specified amount
of currency at a specific price within a specified time period or at a specified future time. An Exchange Traded
Currency Option contract is a standardised foreign exchange derivative contract, which gives the owner the right,
butnottheobligation,toexchangemoneydenominatedinonecurrencyintoanothercurrencyatapre-agreed
exchangerateonaspecieddateonthedateofexpiry.CurrencyFuturescontractisastandardised,exchange-
traded contract, to buy or sell a certain underlying currency at a certain date in the future, at a specified price.
c) Guarantees given on behalf of constituents
As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit
standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the
customer failing to fulfill its financial or performance obligations.
d) Acceptances, endorsements and other obligations
These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank’s
customers that are accepted or endorsed by the Bank.
e) Other items
Other items represent outstanding amount of bills rediscounted by the Bank, estimated amount of contracts
remaining to be executed on capital account, commitments towards underwriting and investment in equity
through bids under Initial Public Offering (IPO) of corporates as at the year end and demands raised by statutory
authorities (other than income tax) and disputed by the Bank.
1.2.17 Previous year figures have been regrouped and reclassified, where necessary to conform to current year’s presentation.
For Axis Bank Ltd.
Shikha Sharma
Managing Director & CEO
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head(CorporateCentre)
V. Srinivasan
Executive Director &
Head(CorporateBanking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President&CFO
Date : 25 April, 2014
Place: Mumbai
93
AUDITORS’ CERTIFICATE
TO THE MEMBERS OF
AXIS BANK LIMITED
We have examined the compliance of conditions of corporate governance by AXIS BANK LIMITED (“the Bank”) for the
year ended 31
st
March, 2014, as stipulated in clause 49 of the Listing Agreement of the said Bank with the stock exchanges.
The compliance of conditions of corporate governance is the responsibility of the Management. Our examination was
limited to procedures and implementation thereof, adopted by the Bank for ensuring the compliance of the conditions of
the corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the Bank.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Bank
has complied with the conditions of corporate governance as stipulated in the above mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or
effectiveness with which the Management has conducted the affairs of the Bank.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117365W)
Z. F. Billimoria
Partner
(Membership No.42791)
Date : 26
th
April, 2014
Place: Mumbai
94
(Forming Part of the Directors’ Report for the year ended 31
st
March 2014)
1. Philosophy on Code of Governance
The Bank’s policy on Corporate Governance has been:
I. To enhance the long term interest of its shareholders, provide good management, adopt prudent risk management
techniques and comply with the required standards of capital adequacy, thereby safeguarding the interest of its
other stakeholders such as depositors, creditors, customers, suppliers and employees.
II. To institutionalise accountability, transparency and equality of treatment for all stakeholders, as central tenets
of good corporate governance and to articulate this approach in the day-to-day functioning of the Bank and in
dealing with all the stakeholders of the Bank.
2. Board of Directors
The composition of the Board of Directors of the Bank is governed by the Companies Act, 1956, the Banking Regulation
Act, 1949 and Clause 49 of the Listing Agreement. The Bank’s Board comprises a combination of executive and non-
executive Directors. The Board presently consists of 14 Directors and its mix provides a combination of professionalism,
knowledge and experience required in the banking business. There are 7 Independent Directors constituting one-half of
the Board’s membership with Shri S. B. Mathur designated as the Lead Independent Director. The Board is responsible
for the management of the Bank’s business. The functions, responsibilities, role and accountability of the Board are well
defined. In addition to monitoring corporate performance, the Board also carries out functions such as taking care of all
the statutory agenda, approving the Business Plan and all major policies, reviewing and approving the annual budgets,
borrowing limits and fixing exposure limits. It ensures that the Bank keeps shareholders informed about plans, strategies
and performance. The detailed reports of the Bank’s performance are periodically placed before the Board.
The composition of the Bank’s Board includes the representatives of the Administrator of the Specified Undertaking of
the Unit Trust of India (SUUTI) and the Life Insurance Corporation of India (LIC), the Bank’s promoters. The following
members constitute the Board:
Sanjiv Misra Chairman
Promoter – Nominee of SUUTI
Shikha Sharma Managing Director & CEO
K. N. Prithviraj Promoter – Nominee of SUUTI
V. R. Kaundinya Independent
S. B. Mathur Independent
Prasad R. Menon Independent
R. N. Bhattacharyya Promoter – Nominee of SUUTI
Samir K. Barua Independent
Som Mittal Independent
Ireena Vittal Independent
Rohit Bhagat Independent
Usha Sangwan Promoter - Nominee of LIC
Somnath Sengupta Executive Director and Head (Corporate Centre)
V. Srinivasan Executive Director and Head (Corporate Banking)
Dr. Sanjiv Misra (Chairman), Smt. Shikha Sharma, Shri V. R. Kaundinya, Shri S. B. Mathur, Shri Prasad R. Menon,
Shri R. N. Bhattacharyya, Prof. Samir K. Barua, Smt. Ireena Vittal, Shri Rohit Bhagat, Shri Somnath Sengupta and
Shri V. Srinivasan attended the last Annual General Meeting held on 19th July 2013 at Ahmedabad.
In all, 6 meetings of the Board were held during the year on 24
th
April 2013, 25
th
April 2013, 18
th
July 2013, 17
th
October
2013, 18
th
October 2013 and 16
th
January 2014.
CORPORATE GOVERNANCE
95
Dr. Sanjiv Misra, Smt. Shikha Sharma, Shri V. R. Kaundinya, Shri S. B. Mathur, Shri Prasad R. Menon, Shri R. N.
Bhattacharyya, Prof. Samir K. Barua, Shri Rohit Bhagat, Shri Somnath Sengupta and Shri V. Srinivasan attended all the
six meetings. Shri K. N. Prithviraj and Smt. Ireena Vittal attended five meetings, Shri Som Mittal attended four meetings
and Smt. Usha Sangwan attended all the three meetings for which she was eligible. Shri A. K. Dasgupta attended two
meetings for which he was eligible.
The details of directorship, membership and chairmanship in other companies for each director of the Bank are as
follows:
Name of Director Number of Other directorship Number of Committee
memberships in other
companies
(2)
of other Indian Public
Limited Companies
of other
Companies
(1)
Sanjiv Misra 3 - 2(1)
Shikha Sharma 2 1 -
K. N. Prithviraj 4 4 3
V. R. Kaundinya 1 1 -
S. B. Mathur 12 3 7(3)
Prasad R. Menon 7 2 4(1)
R. N. Bhattacharyya - - -
Samir K. Barua 4 - 4(1)
Som Mittal - 3 -
Ireena Vittal 6 - -
Rohit Bhagat - - -
Usha Sangwan 1 2 -
Somnath Sengupta - 1 -
V. Srinivasan 4 2 3(1)
(1)
Includes foreign companies and private limited companies, Section 25 companies in India
(2)
Includes only memberships of Audit Committee, Investor’s Grievance Committee of all Public Limited companies
Figures in brackets indicate number of Committee Chairmanships as per Clause 49 of the Listing Agreement.
The business of the Board is also conducted through the following Committees constituted by the Board to deal with
specific matters and delegated powers for different functional areas:
a) Committee of Directors
The Committee of Directors exercises powers delegated to it by the Board relating to loans, credit policy, credit
portfolio, monitoring of exposures (both credit and investment), expenditures, investment, branch expansion,
compliance with the statutory and regulatory framework, proposals relating to the Bank’s operations covering all
departments and business segments and important issues relating to day to day affairs/problems and to take such
steps as may be deemed necessary for the smooth functioning of the Bank.
The Committee of Directors also exercises functions relating to all routine matters other than the strategic matters
and review of policies other than strategic policies, like Credit Policy, Investment Policy and other policies which
the Committee of Directors may consider necessary or Reserve Bank of India (RBI) may specifically require to be
reviewed by the Board.
9 meetings of the Committee of Directors were held during the year on 20
th
May 2013, 29
th
July 2013,
3
rd
September 2013, 25
th
October 2013, 25
th
November 2013, 20
th
December 2013, 30
th
January 2014,
26
th
February 2014 and 19
th
March 2014. The composition and details of meetings attended by the directors are
as follows:
96
Name of Director No. of Meetings Attended
K. N. Prithviraj – Chairman 7
Shikha Sharma 6
S. B. Mathur 8
Prasad R. Menon 6
R. N. Bhattacharyya 8
Somnath Sengupta 8
V. Srinivasan 9
b) Audit Committee
The Audit Committee of the Board of Directors functions with the following main objectives:
i. To provide direction and to oversee the operation of the audit function.
ii. To review the internal audit system with special emphasis on its quality and effectiveness.
iii. To review internal and concurrent audit reports of large branches with a focus on all major areas of
housekeeping, particularly inter-branch adjustment accounts, arrears in the balancing of the books and
un-reconciled entries in inter-bank and Nostro accounts and frauds.
iv. To discuss matters related to frauds.
v. To discuss and follow up for audit issues related to Long Form Audit Report.
vi. To discuss and follow up for issues related to RBI Inspection Report(s).
vii. To review the system of appointment and remuneration of concurrent auditors and external auditors.
viii. To oversee the Bank’s financial reporting process and the disclosure of its financial information, to ensure
that the financial statements are correct, sufficient and credible.
ix. To recommend to the Board, the appointment, re-appointment, and if required, the replacement or removal
of the Statutory Auditor and to fix their audit fees.
x. To approve payments to Statutory Auditors for any other services rendered by them.
xi. To review, with the management, the annual financial statements before submission to the Board for its
approval with particular reference to:
• Matters required tobe included in the Director’sResponsibility Statement in the Board’sreport in
terms of Clause (2AA) of Section 217 of the Companies Act, 1956.
• Changes,ifany,inaccountingpolicies&practicesandreasonsforthesame.
• Majoraccountingentriesinvolvingestimatesbasedontheexerciseofjudgmentbythemanagement.
• Signicantadjustmentsmadeinthenancialstatementsarisingoutofauditndings.
• Compliancewithlistingandotherlegalrequirementsrelatingtonancialstatements.
• Disclosureofanyrelatedpartytransactions.
• Qualicationsinthedraftauditreport.
xii. To review, with the management, the quarterly financial statements before submission to the Board for its
approval.
xiii. To review, with the management, the statement of uses/application of funds raised through an issue (public
issue, rights issue, preferential issue etc.), the statement of funds utilised for purposes other than those
stated in the offer document/prospectus/notice and the report submitted by the agency monitoring the
utilisation of proceeds of a public or rights issue and making appropriate recommendations to the Board for
taking steps in the matter.
xiv. To review, with the management, performance of statutory and internal auditors, and adequacy of the
internal control systems.
xv. To obtain and review quarterly/half yearly reports of the Compliance Officer appointed in the Bank in terms
of RBI instructions.
97
xvi. To review the adequacy of internal audit function, if any, including the structure of the internal audit
department, staffing, seniority of the official heading the department, reporting structure, coverage and
frequency of internal audit.
xvii. To discuss with internal auditors any significant audit findings and follow up thereon.
xviii. To review the findings of any internal investigations by the internal auditors into matters where there is
suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the
matter to the Board.
xix. To discuss with Statutory Auditors, before the commencement of audit, the nature and scope of audit as
also conduct post-audit discussion to ascertain any area of concern.
xx. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,
shareholders (in case of non-payment of declared dividends) and creditors.
xxi. To review the functioning of the Whistleblower Mechanism.
xxii. To approve the appointment of the Chief Financial Officer before finalisation of the same by the management.
The Audit Committee, while approving the appointment, shall assess the qualifications, experience &
background etc. of the candidate; and
xxiii. Carrying out any other function as is mentioned in terms of reference of the Audit Committee.
11 meetings of the Audit Committee were held during the year on 24
th
April 2013, 20
th
May 2013, 9
th
July 2013,
18
th
July 2013, 26
th
August 2013, 1
st
October 2013, 16
th
October 2013, 25
th
November 2013, 27
th
December 2013,
15
th
January 2014 and 19
th
February 2014. The composition and details of meetings attended by the directors are
given below:
Name of Director No. of Meetings Attended
S. B. Mathur – Chairman 11
K. N. Prithviraj 9
V. R. Kaundinya 7
Samir K. Barua 9
c) Risk Management Committee
The Risk Management Committee of the Board of Directors functions with the following main objectives:
i. To perform the role of Risk Management in pursuance of the Risk Management Guidelines issued periodically
by RBI and Board.
ii. To oversee and advise to the Board on:
• Deningriskappetite,tolerancethereofandreviewthesame,asappropriate.
• Systems of risk management framework, internal control and compliance to identify, measure,
aggregate, control and report key risks.
• AlignmentofbusinessstrategywiththeBoard’sriskappetite;and
• Maintenance and development of a supportive culture, in relation to the management of risk,
appropriately embedded through procedures, training and leadership actions so that all employees
are alert to the wider impact on the whole organisation of their actions and decisions.
iii. To advise the Board on all high level risk matters.
iv. To obtain regular risk management reports from management which enable the Committee to assess the
risks involved in the Bank’s business and how they are controlled and monitored by management, and give
clear focus to current and forward-looking aspects of risk exposure.
v. To review the effectiveness of the Bank’s internal control and risk management framework, in relation to its
core strategic objectives and to seek such assurance as may be appropriate.
vi. To review the Asset Liability Management (ALM) of the Bank on a regular basis.
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vii. To consider any major regulatory issues that may have bearing on the risks and risk appetite of the Bank.
viii. To provide to the Board with such additional assurance as it may require regarding the quality of risk
information submitted to it.
ix. To decide the policy and strategy for integrated risk management containing various risk exposures of the
Bank including the credit, market, liquidity, operational and reputation risk; and
x. To review risk return profile of the Bank, capital adequacy based on the risk profile of the Bank’s balance
sheet, Basel implementation, assessment of Pillar II risk under Internal Capital Adequacy Assessment Process
(ICAAP), business continuity plan and disaster recovery plan, key risk indicators and significant risk exposures.
5 meetings of the Risk Management Committee were held during the year on 1
st
June 2013, 18
th
July 2013,
4
th
September 2013, 16
th
October 2013 and 20
th
March 2014. The composition and details of meetings attended
by the directors are as follows:
Name of Director No. of Meetings Attended
Samir K. Barua – Chairman 5
Sanjiv Misra 4
Shikha Sharma 5
K. N. Prithviraj 2
Ireena Vittal 5
Shri Rohit Bhagat attended one meeting as an invitee.
d) Shareholders/Investors Grievance Committee
The primary objective of the Shareholders/Investors Grievance Committee is to look into redressal of shareholders’
and investors’ grievances relating to non-receipt of dividend, refund orders, shares sent for transfer, non-receipt of
Annual Report and other similar grievances.
5 meetings of the Shareholders/Investors Grievance Committee were held during the year on 24
th
April 2013,
18
th
July 2013, 16
th
September 2013, 25
th
November 2013 and 15
th
January 2014. The composition and details of
meetings attended by the directors are given below:
Name of Director No. of Meetings Attended
S. B. Mathur – Chairman 5
R. N. Bhattacharyya 5
Somnath Sengupta 4
The details of the status of the references/complaints received for the year are given in the following statement:
Status of the References/Complaints from 1
st
April 2013 to 31
st
March 2014
Sr. No. Nature of Reference/Complaints Received Disposed Off Pending
i. Change of Address 262 262 -
ii. Bank Mandates 18 18 -
iii. ECS 334 334 -
iv. Nomination 43 43 -
v. Non-receipt of Share Certificates 17 17 -
vi. Correction of names 10 10 -
vii. Non-receipt of Annual Report 27 27 -
viii. SEBI 9 9 -
ix. NSDL/CDSL 1 1 -
x. Stock Exchange 4 4 -
xi. Receipt of Dividend Warrant for Revalidation 244 244 -
99
Sr. No. Nature of Reference/Complaints Received Disposed Off Pending
xii. Non-receipt of Dividend 777 777 -
xiii. Transfer of Shares 282 282 -
xiv. Transmission & Deletion of Name 62 62 -
Shri Sanjeev Kapoor, Company Secretary, is the Compliance Officer for SEBI/Stock Exchange related issues.
e) HR and Remuneration Committee
The HR and Remuneration Committee of the Board of Directors functions with the following main objectives:
i. To review and recommend to the Board for approval the overall remuneration philosophy and policy of
the Bank, including the level and structure of fixed pay, variable pay, perquisites, bonus pool, stock-based
compensation to employees of the Bank, and any other form of compensation as may be included from time
to time, keeping in mind the strategic objectives, market environment and the regulatory framework as may
exist.
ii. To review and recommend for the approval of the Board, the total increase in manpower cost budget of the
Bank at an aggregate level, for the next year.
iii. To review and recommend to the Board for approval the talent management and succession policy and
process in the Bank for ensuring business continuity, especially at the level of MD & CEO, the other Whole
Time Directors, senior managers one level below the Board and other key roles.
iv. To review organisation health through feedback from employee surveys conducted on a regular basis.
v. To review the Code of Conduct and HR strategy, policy and performance appraisal process within the Bank,
as well as any fundamental changes in organization structure which could have wide ranging or high risk
implications.
vi. To review and recommend to the Board for approval of the creation of new positions one level below MD &
CEO.
vii. To review appointments, promotions and exits of senior managers one level below the MD & CEO.
viii. To set the goals, objectives and performance benchmarks for the Bank and for MD & CEO, the other Whole
Time Directors for the financial year and over the medium to long term.
ix. To review the performance of the MD & CEO and other Whole Time Directors at the end of each year.
x. To recommend to the Board the remuneration package for the MD & CEO, the other Whole Time Directors
and senior managers one level below the Board.
xi. To recommend to the Board the compensation payable to the Chairman of the Bank.
5 meetings of HR and Remuneration Committee were held during the year on 4
th
April 2013, 22
nd
April 2013,
19
th
July 2013, 17
th
October 2013 and 16
th
January 2014. The composition and details of the meetings attended by
the directors are given below:
Name of Director No. of Meetings Attended
Prasad R. Menon - Chairman 5
K. N. Prithviraj 4
V. R. Kaundinya 5
Samir K. Barua 5
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Disclosure in terms of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013
The Bank takes all necessary measures to ensure a harassment-free workplace and has instituted an Internal
Complaints Committee for redressal of complaints and to prevent sexual harassment. During the year, the Bank
has received 14 complaints relating to sexual harassment of which 9 complaints have been disposed off and the
remaining 5 complaints are being investigated.
Remuneration Policy
The compensation philosophy of the Bank aims to attract, retain and motivate professionals in order to enable the
Bank to attain its strategic objectives and develop a strong performance culture in the competitive environment
in which it operates. To achieve this, the Bank follows the principles of competitiveness in the talent market, pay
for job through fixed pay, pay for performance to drive meritocracy through variable pay, employee stock options
for long-term value creation and aligning the benefits and perquisites with market practices and affordability.
The compensation structure for the Managing Director & CEO, Whole-Time Directors (WTDs) and employees at
the level of Vice President and above in Risk Control and Compliance functions, is aligned to RBI’s guidelines for
sound compensation practices. It addresses the general principles of effective and independent governance and
monitoring of compensation, alignment of compensation with prudence in risk-taking through well designed
and consistent compensation structures and clear and timely disclosure for facilitating supervisory oversight by all
stakeholders.
Remuneration of Directors
i. Dr. Sanjiv Misra was appointed as Non-Executive Chairman of the Bank for a period of three years
w.e.f. 8
th
March 2013. The details of remuneration of Dr. Sanjiv Misra during the year under review are:
Salary of `15 lacs per annum. The Bank has received approval of RBI, shareholders and of the Central
Government under the provisions of Section 309(4) of the Companies Act, 1956 for payment of salary to
Dr. Sanjiv Misra.
Expenses for maintenance of office `1,25,000 per month. Approvals of the Board, RBI, the shareholders and
the Central Government have been obtained for the same.
ii. Smt. Shikha Sharma was re-appointed as the Managing Director & CEO of the Bank for a period of three
years w.e.f. 1
st
June 2012. The details of remuneration paid to Smt. Shikha Sharma during the year under
review are given below in sub-para vi.
Smt. Shikha Sharma was granted 8,75,000 options in total under various tranches under the Employee
Stock Option Plan. From these tranches, 4,55,000 options were vested out of which 1,07,500 options were
exercised up to 31
st
March 2014 and 3,47,500 options were unexercised. 4,20,000 options were unvested
as on 31
st
March 2014.
iii. Shri Somnath Sengupta was appointed as the Executive Director of the Bank and he took charge with effect
from 15
th
October 2012. The term of Shri Somnath Sengupta is up to 31
st
May 2015, the last day of the
month in which he reaches the age of superannuation. The details of remuneration paid to Shri Somnath
Sengupta during the year under review are given below in sub-para vi.
Shri Somnath Sengupta was granted 5,03,880 options in total under various tranches under the Employee
Stock Option Plan. From these tranches, 3,10,380 options were vested out of which 1,49,604 options were
exercised up to 31
st
March 2014 and 1,60,776 options were unexercised. 1,93,500 options were unvested as
on 31
st
March 2014.
iv. Shri V. Srinivasan was appointed as the Executive Director of the Bank and he took charge with effect from
15
th
October 2012. The term of Shri V. Srinivasan is for a period of three years i.e. up to 14
th
October 2015.
The details of remuneration paid to Shri V. Srinivasan during the year under review are given below in
sub-para vi.
Shri V. Srinivasan was granted 3,90,000 options in total under various tranches under the Employee Stock
Option Plan. From these tranches, 1,96,500 options were vested out of which 43,500 options were exercised
up to 31
st
March 2014 and 1,53,000 options were unexercised. 1,93,500 options were unvested as on
31
st
March 2014.
v. The Bank does not grant ESOPs to Non-Executive Directors.
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vi. The details of remuneration paid to the Whole-time Directors during 2013-14 are as under:
(In `)
Smt. Shikha
Sharma
Shri Somnath
Sengupta
Shri V. Srinivasan
For the Period 1.4.2013 to 31.3.2014 1.4.2013 to 31.3.2014 1.4.2013 to 31.3.2014
Salary (Basic) 2,12,40,000 1,24,48,600 1,35,33,550
Leave Fare Concession
facility
13,90,410 5,41,664 5,41,664
House Rent Allowance 64,48,000 Bank’s accommodation Bank’s accommodation
Variable pay 84,35,483 57,82,400 53,98,724
Medical 24,532 39,017 1,02,692
Utility Reimbursement - 68,717 46,267
Provident Fund 12% of basic pay with
equal contribution by
the Bank or as may be
decided upon by the
Board/Trustees from time
to time
12% of basic pay with
equal contribution by
the Bank or as may be
decided upon by the
Board/Trustees from
time to time
12% of basic pay with
equal contribution by
the Bank or as may be
decided upon by the
Board/Trustees from
time to time
Gratuity One month’s salary for
each completed year of
service or part thereof
One month’s salary for
each completed year of
service or part thereof
(on pro-rata basis)
One month’s salary for
each completed year of
service or part thereof
(on pro-rata basis)
Superannuation
Allowance
10% of Basic Pay p.a. 10% of Basic Pay p.a. 10% of Basic Pay p.a.
Perquisites (evaluated as per Income Tax Rules, wherever applicable, or otherwise at actual cost to the
Bank) such as the benefit of the Bank’s furnished accommodation, electricity, water and furnishings, club
fees, personal accident insurance, loans, use of car and telephone at residence, leave encashment, medical
reimbursement, travelling and halting allowances, newspapers and periodicals, and others were provided in
accordance with the Rules of the Bank.
vii. All Directors of the Bank, except for Smt. Shikha Sharma, Shri Somnath Sengupta and Shri V. Srinivasan were
paid sitting fees of `20,000 for every meeting of the Board and also for every meeting of the committee
attended by them. During the year, sitting fees of `41,40,000 was paid to the directors of the Bank.
Sitting Fees
The details of sitting fees paid to the directors during 2013-14 are as follows:
Sr. No. Name of Director Sitting Fees (`)
i. Dr. Sanjiv Misra 2,40,000
ii. Shri K. N. Prithviraj 5,40,000
iii. Shri V. R. Kaundinya 4,60,000
iv. Shri S. B. Mathur 6,60,000
v. Shri Prasad R. Menon 4,40,000
vi. Shri R. N. Bhattacharyya 4,20,000
vii. Prof. Samir K. Barua 6,80,000
viii. Shri Som Mittal 1,60,000
ix. Smt. Ireena Vittal 3,00,000
x. Shri Rohit Bhagat 1,40,000
xi. Smt. Usha Sangwan 60,000
xii. Shri A. K. Dasgupta 40,000
TOTAL 41,40,000
None of the non-whole time Directors hold any equity shares of the Bank as on 31
st
March 2014 except
Shri V. R. Kaundinya, who holds 1,000 equity shares.
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f) Nomination Committee
The Nomination Committee of the Board of Directors functions with the following main objectives:
i. To undertake a process of due diligence to determine the suitability of any person for appointment/
continuing to hold appointment as a director on the Board, based upon qualification, expertise, track record,
integrity and other ‘fit and proper’ criteria.
ii. To examine the vacancies that will come up at the Board on account of retirement or otherwise.
iii. To evaluate the skills that exist, and those that are absent but needed at the Board level, and search for
appropriate candidates who have the profile to provide such skill sets.
iv. To create a recommendatory list of Directors for deliberation and decision-making at the Board-level; and
v. To review the composition of Committees of the Board, and identify and recommend to the Board, the
Directors who can best serve as members of each Board Committee.
2 meetings of Nomination Committee were held during the year on 22
nd
April 2013 and 16
th
October 2013. The
composition and details of meetings attended by the directors are as follows:
Name of Director No. of Meetings Attended
S. B. Mathur – Chairman 2
V. R. Kaundinya 2
Samir K. Barua 2
g) Special Committee of the Board of Directors for Monitoring of Large Value Frauds
The major functions of the Special Committee are to monitor and review all the frauds of `1 crore and above, so
as to:
i. Identify the systemic lacunae, if any, which facilitated perpetration of the fraud and put in place measures to
plug the same.
ii. Identify the reasons for delay, if any, in detection and reporting to top management of the Bank and RBI.
iii. Monitor progress of CBI/Police investigation and recovery position.
iv. Ensure that staff accountability is examined at all levels in all the cases of frauds and staff related action, if
required, is completed quickly without loss of time.
v. Review the efficacy of the remedial action taken to prevent recurrence of frauds, such as, strengthening of
internal controls; and
vi. Put in place other measures as may be considered relevant to strengthen preventive measures against frauds.
3 meetings of Special Committee of the Board of Directors for Monitoring of Large Value Frauds were held during
the year on 9
th
July 2013, 25
th
November 2013 and 20
th
March 2014. The composition and details of the meetings
attended by the directors are given below:
Name of Director No. of Meetings Attended
Shikha Sharma – Chairperson 3
V. R. Kaundinya 3
R. N. Bhattacharyya 2
Samir K. Barua 3
h) Customer Service Committee
The Customer Service Committee of the Board of Directors functions with the following main objectives:
i. Overseeing the functioning of the Bank’s internal committee set-up for customer service.
ii. To review the level of customer service in the Bank including customer complaints and the nature of their
resolution.
iii. Provide guidance in improving the customer service level.
iv. Review any award by the Banking Ombudsman to any customer on a complaint filed with the Ombudsman.
v. To ensure that the Bank provides and continues to provide, best-in-class service across all its category of
customers which will help the Bank in protecting and growing its brand equity.
103
vi. The Committee could address the formulation of a Comprehensive Deposit Policy, incorporating the issues
such as the treatment of death of a depositor for operations of his/her account, the product approval
process, the annual survey of depositor satisfaction and the triennial audit of such services.
vii. To examine any other issues having a bearing on the quality of customer service rendered; and
viii. To ensure implementation of directives received from RBI with respect to rendering services to customers of
the Bank.
4 meetings of the Customer Service Committee were held during the year on 1
st
June 2013, 4
th
September 2013,
13
th
December 2013 and 20
th
March 2014. The composition and the details of the meetings attended by the
directors are given below:
Name of Director No. of Meetings Attended
Ireena Vittal – Chairperson 4
Sanjiv Misra 2
Shikha Sharma 3
Samir K. Barua 4
i) Committee of Whole-Time Directors
The Committee of Whole-time Directors exercises powers delegated to it by the Board, for managing the affairs of
the Bank, for review and efficient control of various operational areas such as treasury, branch banking etc., and
for ensuring speedy disposal of matters requiring immediate approval.
The Committee consists of all Whole-time Directors of the Bank.
j) Acquisitions, Divestments and Mergers Committee
The main function of the Committee is to discuss and consider any idea or proposal for merger and acquisition.
This Committee will consider and give its in-principle approval in the matter and the proposal will then be placed
before the Board of Directors for its final decision.
One meeting of Acquisitions, Divestments and Mergers Committee was held during the year on 1
st
June 2013. The
composition and the details of meeting attended by the directors are as follows:
Name of Director No. of Meetings Attended
Prasad R. Menon – Chairman 1
Shikha Sharma 1
K. N. Prithviraj 0
S. B. Mathur 1
Ireena Vittal 1
k) IT Strategy Committee
The IT Strategy Committee functions with the following main objectives:
i. Approving IT strategy and policies.
ii. Ensuring that management has an effective strategic planning process in place.
iii. Ensuring that the business strategy is aligned with the IT strategy.
iv. Ensuring that the IT organizational structure serves business requirements and direction.
v. Oversight over implementation of processes and practices that ensures IT delivers value to businesses.
vi. Monitoring the method that management uses to determine the IT resources needed to achieve strategic
goals and provide high-level direction for sourcing, and use of IT resources.
vii. Ensuring proper balance of IT investments for sustaining the Bank’s growth.
viii. Assess exposure to IT risks and its controls, and evaluating effectiveness of management’s monitoring of IT
risks.
104
ix. Assessing management’s performance in implementing IT strategies.
x. Assessing if IT architecture has been designed to derive maximum business value.
xi. Reviewing IT performance measurement and contribution to businesses; and
xii. Approving capital and revenue expenditure in respect of IT procurements.
4 meetings of IT Strategy Committee were held during the year on 26
th
June 2013, 20
th
September 2013,
27
th
December 2013 and 12
th
March 2014. The composition and the details of meetings attended by the directors
are given below:
Name of Director No. of Meetings Attended
Som Mittal – Chairman 4
Shikha Sharma 4
Prasad R. Menon 4
Somnath Sengupta 3
l) Corporate Social Responsibility Committee
The Board has constituted a Corporate Social Responsibility Committee which comprises of Shri Som Mittal,
Smt. Usha Sangwan and Shri Somnath Sengupta. Shri Som Mittal, Independent Director is the Chairman of the
Committee.
The Committee will be operationalised in the financial year 2014-15.
3. General Body Meetings:
The last three Annual General Meetings were held as follows:
Annual General
Meeting
Date and Day Time Location
17
th
17.6.2011 - Friday 10.00 a.m. J. B. Auditorium, Ahmedabad
Management Association, AMA Complex, ATIRA,
Dr. Vikram Sarabhai Marg, Ahmedabad-380 015
18
th
22.06.2012 - Friday 10.00 a.m. J. B. Auditorium, Ahmedabad
Management Association, AMA Complex, ATIRA,
Dr. Vikram Sarabhai Marg, Ahmedabad-380 015
19
th
19.07.2013 - Friday 10.00 a.m. J. B. Auditorium, Ahmedabad
Management Association, AMA Complex, ATIRA,
Dr. Vikram Sarabhai Marg, Ahmedabad-380 015
The special resolutions passed during the last three Annual General Meetings/Postal Ballot were as under:
Annual General
Meeting
Date of Annual
General Meeting
Special Resolutions
17
th
17.6. 2011 • ResolutionNo.5-AppointmentofStatutoryAuditorsunderSection
224A of the Companies Act, 1956.
18
th
22.6.2012 • ResolutionNo.5-AppointmentofStatutoryAuditorsunderSection
224A of the Companies Act, 1956.
Resolution passed
through Postal Ballot
Date of Scrutinizer’s
Report - 28.1.2013
• Special Resolution for alteration of articles relating to increase in
authorised share capital from `500 crores to `850 crores.
• Special Resolution for raising of Tier I Capital.
19
th
19.07.2013 • ResolutionNo.6-AppointmentofStatutoryAuditorsunderSection
224A of the Companies Act, 1956.
• Resolution No. 14 – Approval of the shareholders of the Bank
pursuant to Section 81 of the Companies Act, 1956 authorising the
Board of Directors of the Bank to issue, offer and allot equity stock
options under the Employees Stock Option Scheme of the Bank.
105
No resolutions were passed through postal ballot during the financial year 2013-14.
No Resolution in the notice of the proposed Twentieth Annual General Meeting is proposed to be passed by Postal
Ballot.
4. Dividend History of Last Five Years
Sr. No. Financial Year Rate of Dividend Date of Declaration
(AGM)
Date of Payment
(Date of Dividend
Warrant)
i. 2008-09 100% (`10.00 per share) 1.6.2009 2.6.2009
ii. 2009-10 120% (`12.00 per share) 8.6.2010 9.6.2010
iii. 2010 -11 140% (`14.00 per share) 17.6. 2011 18.6 .2011
iv. 2011-12 160% (`16.00 per share) 22.6.2012 23.6.2012
v. 2012-13 180% (`18.00 per share) 19.7. 2013 20.7.2013
Unclaimed Dividends:
All shareholders whose dividends are unpaid have been intimated individually to claim their dividends. Under the
Transfer of Unclaimed Dividend Rules, it would not be possible to claim the dividend amount once deposited in Investors’
Education & Protection Fund (IEPF). Shareholders are, therefore, again requested to claim their unpaid dividend, if not
already claimed.
Transfer to Investor Protection Fund:
Pursuant to Section 205C of the Companies Act, 1956, dividends that are unclaimed for a period of seven years are
transferred to the Investors’ Education and Protection Fund administered by the Central Government. Listed in the table
below are the dates of dividend declaration since 2006-07 and the corresponding dates when unclaimed dividends are
due to be transferred to the Central Government.
Year Dividend-Type Date of Declaration Due Date of Transfer
2006-07 Final 1.6.2007 1.7. 2014
2007-08 Final 6.6.2008 6.7. 2015
2008-09 Final 1.6.2009 1.7.2016
2009-10 Final 8.6.2010 8.7.2017
2010 -11 Final 17.6. 2011 17.7. 2018
2011-12 Final 22.6.2012 22.7. 2019
2012-13 Final 19.7. 2013 19.8.2020
5. Disclosures
• There were no transactions of a material nature undertaken by the Bank with its promoters, directors or the
management, their subsidiaries or relatives that may have a potential conflict with the interests of the Bank.
• There are no instances of non-compliance by the Bank, penalties and strictures imposed by Stock Exchanges and
SEBI/other statutory authorities on any matter related to capital markets during the last three years other than the
following:
i. During the financial year 2012-13, there were 2 instances wherein penalty of `150/- and `50/- was imposed
by National Securities Depository Limited (NSDL) on the Bank for data entry errors while capturing PAN
details in demat accounts in NSDL system.
ii. The inspection of depository services (CDSL & NSDL) was conducted by Securities and Exchange Board
of India (SEBI) in June, 2012. Subsequently, SEBI vide their letter dated 6
th
November 2012 had issued
administrative warning to the Bank for delay in redressal of investor grievances and for submitting wrong
information in reply to pre-inspection questionnaire.
106
iii. SEBI (through its Adjudicating Officer) vide its letter reference no. EAD-5/PG/SPV/22106/2012 dated
3
rd
October 2012 had issued a notice to the Bank informing that the Adjudicating Officer had been
appointed to inquire into and adjudge under Sections 15G and 15HB of the SEBI Act, the alleged violation
of various provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992, SEBI (Substantial Acquisition
of Shares and Takeovers) Regulations, 1997, the SEBI (Merchant Bankers) Regulations, 1992, while acting
as the Manager to the open offers of KSK Energy Ventures Limited and Bombay Rayon Fashions Limited.
The Bank had submitted its preliminary response to the Show cause Notice on 11
th
January 2013, wherein
it had refuted the various violation charges levelled against it. In the personal hearing held on 5
th
February
2013, the Bank had once again reiterated its above stand. The adjudicating officer, vide order dated
28
th
March 2013, indicated that no charges were established under SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997. No penalty was levied on the Bank.
iv. National Securities Clearing Corporation Limited (NSCCL) had levied a penalty of ` 40,507.81 in September
2012 on account of short reporting of margin in currency segment of NSE.
• Whistleblower Policy: A centraltenet in the Bank’sPolicy on Corporate Governanceis commitmentto ethics,
integrity, accountability and transparency. To ensure that the highest standards are maintained in these aspects
on an on-going basis and to provide safeguards to various stakeholders (including shareholders, depositors and
employees) the Bank has formulated a ‘Whistleblower Policy’. The Policy provides employees with the opportunity
to address serious concerns arising from irregularities, malpractices and other misdemeanours committed by the
Bank’s personnel by approaching a Committee set-up for the purpose (known as the Whistleblower Committee).
In case, senior management commits an offence, the Policy enables the Bank’s staff to report the concerns
directly to the Audit Committee of the Board. The Policy is intended to encourage employees to report suspected
or actual occurrence of illegal, unethical or inappropriate actions, behaviour or practices by staff without fear of
retribution. The employees use this Policy regularly as a tool to voice their concerns on irregularities, malpractices
and other misdemeanours. To ensure smooth flow and management of complaints under Whistleblower policy,
a new web-based application - ‘Corporate Whistleblower’ has been set up which also provides an option for
anonymous reporting thereby enabling the employees to lodge their complaints online over a secure platform
without fear of revelation of identity. This would create a business culture of honesty, integrity and compliance
and would encourage employees to speak up so that preventive action is initiated. It is hereby affirmed that the
Bank has not denied personal access to the Audit Committee of the Board and that the Policy contains provisions
protecting Whistleblowers from unfair termination and other unfair prejudicial, and employment practice. The
Audit Committee of the Board reviews, on a quarterly basis, a synopsis of the complaints received and the
resolution thereof.
• TheBankhas compliedwiththemandatoryrequirementsregarding the Board ofDirectors, Audit Committee
and other Board Committees and other disclosures as required under the provisions of Clause 49 of the Listing
Agreement. The Bank has also complied with non-mandatory requirements like formation of HR & Remuneration
Committee and Nomination Committee, the performance evaluation of all directors under ‘Fit & Proper’ Criteria
laid down by RBI, unqualified financial statements and establishment of a Whistleblower Policy.
6. Means of Communication
• Quarterly/Half-yearlyresultsarecommunicatedthroughnewspaperadvertisements,pressreleasesandbyposting
information on the Bank’s website.
• TheresultsaregenerallypublishedintheEconomicTimesandSandeshorDivyaBhaskar.
• Addressofourofcialwebsiteiswww.axisbank.com where the information is displayed.
• Generally,afterthehalf-yearlyandtheannualresultsareapprovedbytheBoard,formalpresentationsaremade
to analysts by the management and the same is also placed on the Bank’s website.
• TheManagement’sDiscussionandAnalysisReportfortheyear2013-14ispartoftheAnnual Report.
7. General Shareholder Information
• AGM: Date, time and venue - 27
th
June 2014 – 10.00 A.M.
At J. B. Auditorium
Ahmedabad Management Association
AMA Complex, ATIRA, Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015.
107
• Financial Year/Calendar - 1
st
April 2014 to 31
st
March 2015. The meetings to consider quarterly results
for the quarter ending June 2014, September 2014 and December 2014 are
proposed to be held during second half of July 2014, October 2014 and January
2015.ThemeetingtoconsiderauditedannualaccountsandQ4resultsisalso
proposed to be held during the second half of April 2015.
• Date of Book Closure - 16
th
June 2014 to 27
th
June 2014 (both days inclusive)
The Dividend will be paid to the shareholders whose names stand on the
Register of Members at the close of business hours of 14
th
June 2014.
• Dividend Payment Date - The despatch of the dividend warrants/ECS credit would commence on
28
th
June 2014 and is expected to be completed on or before 8
th
July 2014.
• The Bank’s shares are listed on the following Stock Exchanges:
• TheBSELimited,P.J.Towers,DalalStreet,Mumbai–400001.
• The National Stock Exchange of India Limited, Exchange Plaza, Plot No. C/1, “G” Block, Bandra-Kurla
Complex, Bandra (East), Mumbai – 400 051.
• TheBank’sGlobalDepositaryReceipts(GDRs)arelistedandtradedontheLondonStockExchange,10Paternoster
Square, London EC4M 7LS, UK.
• Listingofequityshares/GDRsonStockExchanges(withstockcode):
Name of Stock Exchange Stock Code
The BSE Limited 532215
The National Stock Exchange of India Limited AXISBANK
London Stock Exchange AXB
The annual fees for financial year 2014-15 have been paid to all the Stock Exchanges where the shares are listed.
ISIN for equity shares : INE 238A01026
Name of Depositories : i. National Securities Depository Limited
ii. Central Depository Services (India) Limited
ISIN for GDRs : US05462W1099
• MarketPriceData:ThepriceoftheBank’sShare-High,LowduringeachmonthinthelastnancialyearonNSE
was as under:
MONTH HIGH (`) LOW (`)
April 2013 1,520.00 1,198.00
May 2013 1,549.90 1,411.0 0
June 2013 1,444.00 1,207.90
July 2013 1,354.90 1,015.55
August 2013 1,162.50 784.00
September 2013 1,172.80 763.40
October 2013 1,261.50 1,012.95
November 2013 1,257.40 1,010.55
December 2013 1,342.60 1,158.00
January 2014 1,325.00 1,105.0 0
February 2014 1,271.60 1,082.60
March 2014 1,475.00 1, 247.6 0
• TheBank’ssharepricehasmovedinaccordancewiththemovementofNIFTY.Ittouchedahighof`1,549.90 in
May, 2013 and low of ` 763.40 in September, 2013 on the National Stock Exchange.
108
Performance in comparison to NIFTY
• ThehighandlowclosingpricesoftheBank’sGDRstradedduringthelastnancialyearontheLondonStock
Exchange are given below:
MONTH HIGH (USD) LOW (USD)
April 2013 28.18 21.66
May 2013 28.59 25.17
June 2013 26.04 20.39
July 2013 23.57 16.82
August 2013 20.50 11.72
September 2013 18.70 11.26
October 2013 20.76 16.40
November 2013 20.05 16.15
December 2013 22.78 19.00
January 2014 20.98 17.4 6
February 2014 20.68 17.42
March 2014 26.20 19.88
• RegistrarandShareTransferAgents:
Karvy Computershare Private Limited
Unit : Axis Bank Limited
Plot No. 17 to 24, Vittalrao Nagar
Madhapur, Hyderabad – 500 081
Phone No. 040-23420815 to 23420824
Fax No. 040-23420814
Email: einward.ris@karvy.com
Contact Persons: Shri V. K. Jayaraman, GM (RIS)/Ms. Varalakshmi, Sr. Manager (RIS)
• ShareTransferSystem
A Share Committee comprising Head (Law) and the Company Secretary of the Bank has been formed to look
after the matters relating to the transfer of shares, issue of duplicate share certificates in lieu of mutilated share
certificates and other related matters. The resolutions passed by the Share Committee are confirmed at subsequent
Board meetings. The Bank’s Registrar and Share Transfer Agents, Karvy Computershare Private Limited, Hyderabad
looks after the work relating to transfers.
The Bank ensures that all transfers are effected within a period of 15 days from the date of their lodgement.
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
109
The equity shares of the Bank are to be compulsorily traded in Demat form by all investors. The Bank has entered
into agreements with the National Securities Depository Limited (NSDL) and the Central Depository Services (India)
Limited (CDSL) so as to provide the members an opportunity to hold and trade shares of the Bank in electronic
form.
The number of equity shares of the Bank transferred/processed during the last three years (excluding electronic
transfer of shares in dematerialised form) is given below:
2011-12 2012-13 2013-14
Number of transfer deeds 421 324 282
Number of shares transferred 32,601 18,10 0 15,78,10 0
As required under Clause 47(c) of the listing agreement, a practicing Company Secretary has examined the records
relating to share transfer deeds, memorandum of transfers, registers, files and other related documents on a half-
yearly basis and has certified compliance with the provisions of the above clause of the listing agreement. The
certificates are forwarded to BSE and NSE where the Bank’s equity shares are listed and also placed before the
Shareholders/Investors Grievance Committee.
As required by SEBI, a Share Capital Audit is conducted on a quarterly basis by a practicing Company Secretary, for
the purpose of, inter alia, reconciliation of the total admitted equity share capital with the depositories and in the
physical form with the total issued/paid-up equity capital of Axis Bank Limited. Certificates issued in this regard are
placed before the Shareholders/Investors Grievance Committee and forwarded to BSE and NSE, where the equity
shares of Axis Bank Limited are listed.
Shareholders of Axis Bank with more than one per cent holding at 31
st
March 2014
Name of Shareholder No. of Shares % to total No. of shares
Life Insurance Corporation of India and its group entities* 6,44,60,459 13.72%
Administrator of the Specified Undertaking of the Unit Trust of
India (SUUTI)
5,49,68,181 11.70 %
Europacific Growth Fund 2,32,24,864 4.94%
The Bank of New York Mellon (Depositary for GDR holders) 1,53,13,779 3.26%
Centaura Investments (Mauritius) Pte Ltd 1,07,18 ,74 6 2.28%
ICICI Prudential Life Insurance Company Limited 92,75,662 1.97%
Genesis Indian Investment Company Limited - General Sub Fund 85,42,861 1.82%
General Insurance Corporation of India 82,53,099 1.76%
Lazard Asset Management LLC A/C Lazard Emerging Markets
Portfolio
67,29,792 1.43%
New World Fund Inc 66,22,628 1.41%
Government Pension Fund Global 66,06,578 1.41%
American Funds Insurance Series International Fund 63,27,13 4 1.35%
Citigroup Global Markets Mauritius Private Limited 55,06,310 1.17%
The New India Assurance Company Limited 54,89,18 0 1.17%
Vanguard Emerging Markets Stock Index Fund, A series of
Vanguard International Equity Index Fund
50,99,370 1.09%
* Includes 6,39,78,711 equity shares, equivalent to 13.62% of the total paid-up capital of the Bank, held by LIC.
• Distributionofshareholdingason31
st
March 2014
Total nominal value ` : 469,84,45,530
Nominal value of each equity share ` : 10
Total number of equity shares : 46,98,44,553
Distinctive numbers : 1 to 46,98,44,553
110
Shareholding of
Nominal Value
Shareholders Share Amount
Nominal Value
` `
Numbers % to total
Shareholders
In ` % to total Capital
Up to 5,000 1,41,355 95.24 9,55,07,780 2.04
5,001 10,000 3,488 2.35 2,55,54,170 0.54
10,001 20,000 1,396 0.94 2,04,21,750 0.43
20,001 30,000 464 0.31 1,15,31,210 0.25
30,001 40,000 236 0.16 82,54,310 0.18
40,001 50,000 170 0.11 77,50,8 8 0 0.16
50,001 100,000 342 0.23 2,44,25,060 0.52
100,001 Above 984 0.66 4,50,50,00,370 95.88
Total 1,48,435 100.00 4,69,84,45,530 100.00
As on 31
st
March 2014, out of total equity shares of the Bank, 46,61,30,513 shares representing 99.21% of the
total shares have been dematerialised.
• TheBankhasissuedinthecourseofinternationalofferingstoinvestorsoverseas,securitieslinkedtoordinary
shares in the form of Global Depositary Receipts (GDRs) during March/April 2005, July 2007 and September 2009
and the GDRs have been listed and traded on the London Stock Exchange. The Bank has simultaneously issued
the underlying shares to the Global Depositary Receipts (GDRs) to the investors overseas. The underlying equity
shares have been listed and permitted to be traded on the NSE and BSE. The number of outstanding GDRs as on
31
st
March 2014 were 1,53,13,779.
• Apartfromtheabove,theBankhasnotissuedanyADRs/Warrantsoranyotherconvertibleinstruments.
• AddressforCorrespondence:
The Company Secretary
Axis Bank Limited
Registered Office
‘Trishul’, 3
rd
Floor, Opp. Samartheshwar Temple, Law Garden, Ellisbridge, Ahmedabad - 380 006.
CIN : L65110GJ1993PLC020769
Tel. No. : 079-2640 9322 Fax No. : 079-2640 9321
Email: [email protected]
Website: www.axisbank.com
Name and contact details of the Trustees appointed by the Bank for Debentures.
IDBI Trusteeship Services Limited
Registered Office
Asian Building, Ground Floor,
17, R. Kamani Marg, Ballard Estate,
Mumbai – 400001.
Phone No. 022-4080 7000
Compliance with the Code of Conduct - FY 2013-14
I confirm that for the year under review all Directors and members of the Senior Management have affirmed compliance with
the Code of Conduct of the Bank.
Shikha Sharma
Managing Director & CEO
26
th
April 2014
111
AXIS BANK LIMITED GROUP - AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT
TO THE BOARD OF DIRECTORS
OF AXIS BANK LIMITED
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of AXIS BANK LIMITED (“the Bank”), its subsidiaries
(the Bank and its subsidiaries constitute “the group”), which comprise the Consolidated Balance Sheet as at 31
st
March, 2014,
the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year then ended, and a summary
of the significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
The Bank’s Management is responsible for the preparation of these consolidated financial statements that give a true and fair
view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in
accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation
and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that
give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our
audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards
require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers the internal control relevant to the Bank’s preparation and presentation of the consolidated financial
statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by
the Management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration
of the reports of the other auditors on the financial statements/financial information of the subsidiaries referred to below in
the Other Matters paragraphs, the aforesaid consolidated financial statements give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31 March, 2014;
(b) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and
(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
Other Matters
We did not audit the financial statements of 9 subsidiaries, whose financial statements reflect total assets (net) of `4,436.72
crores as at 31
st
March, 2014, total revenues of `492.36 crores and net cash flows amounting to `278.50 crores for the year
ended on that date, as considered in the consolidated financial statements. These financial statements have been audited by
other auditors whose reports have been furnished to us by the Management and our opinion, in so far as it relates to the
amounts and disclosures included in respect of these subsidiaries, is based solely on the reports of the other auditors.
The consolidated financial statements also include the Group’s share of net profit of `1.36 crores for the year ended
31
st
March, 2014, as considered in the consolidated financial statements, in respect of an associate, whose financial statements
have not been audited.
Our report is not qualified in respect of these matters.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Registration No. 117365W)
Z. F. Billimoria
Partner
(Membership No. 42791)
Date : 25
th
April, 2014
Place: Mumbai
112
AXIS BANK LIMITED GROUP - BALANCE SHEET
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
Schedule No.
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
CAPITAL AND LIABILITIES
Capital 1
4,698,446
4,679,545
Reserves & Surplus 2
379,262,043
326,904,199
Minority Interest 2A
129,421
125,337
Deposits 3
2,805,410,738
2,521,491,177
Borrowings 4
527,392,236
441,050,984
Other Liabilities and Provisions 5
146,607,709
111,326,074
TOTAL 3,863,500,593
3,405,577,316
ASSETS
Cash and Balances with Reserve Bank of India 6
170,413,647
147,921,100
Balances with Banks and Money at Call and Short Notice 7
115,407,921
57,078,130
Investments 8
1,130,927,767
1,133,780,559
Advances 9
2,323,817,273
1,969,901,405
Fixed Assets 10
24,472,596
23,873,291
Other Assets 11
98,461,389
73,022,831
TOTAL 3,863,500,593
3,405,577,316
Contingent Liabilities 12
5,748,541,620
5,481,234,674
Bills for Collection
366,015,787
278,948,780
Significant Accounting Policies and Notes to Accounts 17 & 18
Schedules referred to above form an integral part of the Consolidated Balance Sheet
In terms of our report attached. For Axis Bank Ltd.
For Deloitte Haskins & Sells
Chartered Accountants
Shikha Sharma
Managing Director & CEO
Z. F. Billimoria
Partner
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
113
CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2014
Schedule No.
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
I
INCOME
Interest earned 13
307,359,589
272,019,752
Other income 14
77,662,500
68,328,045
TOTAL 385,022,089
340,347,797
II
EXPENDITURE
Interest expended 15
187,029,665
175,133,879
Operating expenses 16
82,095,228
71,405,164
Provisions and contingencies 18 (1.1.1)
52,805,544
41,470,830
TOTAL
321,930,437
288,009,873
III
NET PROFIT FOR THE YEAR 63,091,652
52,337,924
Minority interest
(4,084)
(2,473)
Share in Profit/(Loss) of Associate
13,594
12,193
IV
CONSOLIDATED NET PROFIT ATTRIBUTABLE TO GROUP 63,101,162
52,347,644
Balance in Profit & Loss Account brought forward from previous year
100,454,029
72,004,480
Profit of business acquired under demerger
-
1,123,298
V
AMOUNT AVAILABLE FOR APPROPRIATION 163,555,191
125,475,422
VI
APPROPRIATIONS:
Transfer to Statutory Reserve
15,544,167
12,948,583
Transfer to Reserve Fund u/s 45 IC of RBI Act, 1934
67,000
81,100
Transfer to Investment Reserve
500,289
534,571
Transfer to Capital Reserve
388,664
1,414,579
Transfer to General Reserve
17,797
141,678
Transfer to Reserve Fund
10,465
26,084
Proposed dividend (includes tax on dividend) 18 (1.1.6)
11,014,430
9,874,798
Balance in Profit & Loss Account carried forward
136,012,379
100,454,029
TOTAL 163,555,191
125,475,422
VII
EARNINGS PER EQUITY SHARE
18 (1.1.4)
(Face value `10/- per share) (Rupees)
Basic
134.53
120.95
Diluted
134.20
120.12
Significant Accounting Policies and Notes to Accounts 17 & 18
Schedules referred to above form an integral part of the Consolidated Profit and Loss Account
AXIS BANK LIMITED GROUP - PROFIT & LOSS ACCOUNT
In terms of our report attached. For Axis Bank Ltd.
For Deloitte Haskins & Sells
Chartered Accountants
Shikha Sharma
Managing Director & CEO
Z. F. Billimoria
Partner
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
114
AXIS BANK LIMITED GROUP - CASH FLOW STATEMENT
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2014
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
Cash flow from operating activities
Net profit before taxes 94,790,061
76,243,422
Adjustments for:
Depreciation on fixed assets
3,754,553
3,587,667
Depreciation on investments
(1,002,934)
(982,186)
Amortisation of premium on Held to Maturity investments
773,624
674,599
Provision for Non Performing Assets (including bad debts)
12,959,797
11,791,902
Provision on standard assets
2,930,732
1,966,379
Provision for wealth tax
4,200
3,800
(Profit)/loss on sale of fixed assets (net)
147,378
44,308
Provision for country risk
-
(96,300)
Provision for restructured assets
1,947,624
1,039,492
Provision for other contingencies
4,263,632
3,839,773
120,568,667
98,112,856
Adjustments for:
(Increase)/Decrease in investments
138,284,240
(94,626,080)
(Increase)/Decrease in advances
(367,794,715)
(284,638,942)
Increase/(Decrease) in deposits
283,919,561
321,779,561
(Increase)/Decrease in other assets
(22,083,749)
(2,927,589)
Increase/(Decrease) in other liabilities & provisions
26,803,462
14,693,370
Direct taxes paid
(35,061,503)
(26,659,402)
Net cash flow from operating activities 144,635,963
25,733,774
Cash flow from investing activities
Purchase of fixed assets
(6,077,888)
(4,838,186)
(Increase)/Decrease in Held to Maturity investments
(136,191,642)
(108,709,212)
Proceeds from sale of fixed assets
1,696,430
226,674
Net cash used in investing activities (140,573,100)
(113,320,724)
115
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2014
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
Cash flow from financing activities
Proceeds from issue of subordinated debt, perpetual debt & upper Tier II
instruments (net of repayment) (1,341,919) 19,654,731
Increase/(Decrease) in borrowings (excluding subordinated debt, perpetual debt
& upper Tier II instruments) 87,683,172 80,679,532
Proceeds from issue of share capital
18,901
426,605
Proceeds from share premium (net of share issue expenses)
1,356,819
56,329,659
Payment of dividend
(9,875,875)
(7,901,877)
Increase in minority interest
4,084
125,337
Net cash generated from financing activities 77,845,182
149,313,987
Effect of exchange fluctuation translation reserve
(1,085,707)
1,677,300
Net cash and cash equivalents on business acquired under demerger
-
2,252,587
Net increase in cash and cash equivalents
80,822,338
65,656,924
Cash and cash equivalents at the beginning of the year
204,999,230
139,342,306
Cash and cash equivalents at the end of the year
285,821,568
204,999,230
Notes to the Cash Flow Statement:
Cash and cash equivalents includes the following
Cash and Balances with Reserve Bank of India (Refer Schedule 6)
170,413,647
147,921,100
Balances with Banks and Money at Call and Short Notice (Refer Schedule 7)
115,407,921
57,078,130
Cash and cash equivalents at the end of the year
285,821,568
204,999,230
In terms of our report attached. For Axis Bank Ltd.
For Deloitte Haskins & Sells
Chartered Accountants
Shikha Sharma
Managing Director & CEO
Z. F. Billimoria
Partner
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
116
AXIS BANK LIMITED GROUP - SCHEDULES
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
SCHEDULE 1 - CAPITAL
Authorised Capital
850,000,000 (Previous year - 850,000,000) Equity Shares of `10/- each
8,500,000
8,500,000
Issued, Subscribed and Paid-up capital
469,844,553 (Previous year - 467,954,468) Equity Shares of `10/- each fully paid-up
The Board of Directors have on 25 April, 2014 considered and approved the
sub-division of one equity share of the Bank having a face value of `10 each into five
equity shares of face value of `2 each. The sub-division of shares is subject to approval
of the shareholders and any other statutory and regulatory approvals, as applicable
4,698,446
4,679,545
SCHEDULE 2 - RESERVES AND SURPLUS
I. Statutory Reserve
Opening Balance
51,374,446
38,425,863
Additions during the year
15,544,167
12,948,583
66,918,613
51,374,446
II. Share Premium Account
Opening Balance
157,717,269
101,387,610
Additions during the year
1,356,819
56,626,088
Less: Share issue expenses
-
(296,429)
159,074,088
157,717,269
III. Investment Reserve Account
Opening Balance
534,571
-
Additions during the year
500,289
534,571
1,034,860
534,571
IV. General Reserve
Opening Balance
3,706,495
3,564,817
Additions during the year
17,797
141,678
3,724,292
3,706,495
V. Capital Reserve
Opening Balance
9,460,164
5,424,982
Additions during the year
388,664
4,035,182
9,848,828
9,460,164
VI.
Foreign Currency Translation Reserve [Refer Schedule 17 (4.5)]
Opening Balance
3,550,041
1,877,353
Additions/deductions during the year (net)
(1,085,707)
1,672,688
2,464,334
3,550,041
VII. Reserve Fund
Opening Balance
26,084
-
Additions during the year
10,465
26,084
36,549
26,084
VIII. Reserve Fund u/s 45 IC of RBI Act, 1934
Opening Balance
81,100
-
Additions during the year
67,000
81,100
148,100
81,100
IX. Balance in Profit & Loss Account 136,012,379
100,454,029
TOTAL 379,262,043
326,904,199
117
SCHEDULE 2A - MINORITY INTEREST
I. Minority Interest
Opening Balance
125,337
-
Increase/(Decrease) during the year
4,084
125,337
Closing Minority Interest 129,421
125,337
SCHEDULE 3 - DEPOSITS
A. I. Demand Deposits
(i) From banks
32,988,192
29,255,626
(ii) From others
453,304,398
452,753,586
II. Savings Bank Deposits
777,760,612
637,777,349
III. Term Deposits
(i) From banks
118,566,234
151,218,877
(ii) From others
1,422,791,302
1,250,485,739
TOTAL 2,805,410,738
2,521,491,177
B. I. Deposits of branches in India
2,665,048,202
2,382,248,378
II. Deposits of branches/subsidiaries outside India
140,362,536
139,242,799
TOTAL 2,805,410,738
2,521,491,177
SCHEDULE 4 - BORROWINGS
I. Borrowings in India
(i) Reserve Bank of India
2,790,000
-
(ii) Other banks #
31,257,308
22,367,200
(iii) Other institutions & agencies **
160,702,121
145,625,033
II. Borrowings outside India $
332,642,807
273,058,751
TOTAL
527,392,236
441,050,984
Secured borrowings included in I & II above
-
-
# Borrowings from other banks include Subordinated Debt of `407.60 crores (previous year `557.60 crores) in the
nature of Non-Convertible Debentures, Perpetual Debt of Nil (previous year Nil) and Upper Tier II instruments of
`59.10 crores (previous year `59.10 crores) [Also refer Notes 18 (1.1.2) & 18 (1.1.3)]
** Borrowings from other institutions & agencies include Subordinated Debt of `9,943.20 crores (previous year
`10,071.70 crores) in the nature of Non-Convertible Debentures, Perpetual Debt of `214.00 crores (previous year
`214.00 crores) and Upper Tier II instruments of `248.40 crores (previous year `248.40 crores) [Also refer Notes 18
(1.1.2) & 18 (1.1.3)]
$ Borrowings outside India include Perpetual Debt of `275.61 crores (previous year `249.71 crores) and Upper Tier II
instruments of `1,257.44 crores (previous year `1,139.03 crores) [Also refer Note 18 (1.1.3)]
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
118
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I. Bills payable
35,778,486
35,288,164
II. Inter-office adjustments (net)
-
-
III. Interest accrued
11,523,939
8,343,254
IV. Proposed dividend (includes tax on dividend)
10,990,706
9,852,151
V. Contingent provision against standard assets
12,999,356
9,766,994
VI. Others (including provisions)
75,315,222
48,075,511
TOTAL 146,607,709
111,326,074
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I. Cash in hand (including foreign currency notes)
41,646,894
40,539,059
II. Balances with Reserve Bank of India :
(i) in Current Account
128,766,753
107,382,041
(ii) in Other Accounts
-
-
TOTAL 170,413,647
147,921,100
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I. In India
(i) Balance with Banks
(a) in Current Accounts
2,258,352
3,473,308
(b) in Other Deposit Accounts
10,259,234
9,853,149
(ii) Money at Call and Short Notice
(a) With banks
-
-
(b) With other institutions
6,587,734
-
TOTAL 19,105,320
13,326,457
II. Outside India
(i) in Current Accounts
14,228,168
11,608,466
(ii) in Other Deposit Accounts
28,425,610
13,474,234
(iii) Money at Call & Short Notice
53,648,823
18,668,973
TOTAL 96,302,601
43,751,673
GRAND TOTAL (I+II) 115,407,921
57,078,130
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
119
SCHEDULE 8 - INVESTMENTS
I. Investments in India in -
(i) Government Securities ## **
690,967,197
722,498,592
(ii) Other approved securities
-
-
(iii) Shares
6,118,086
7,549,074
(iv) Debentures and Bonds
237,263,911
260,744,089
(v) Investment in Joint Ventures $
380,812
367,217
(vi) Others (Mutual Fund units, CD/CP, Priority Sector deposits, PTC etc.) @
183,485,029
133,809,991
Total Investments in India
1,118,215,035
1,124,968,963
II. Investments outside India in -
(i) Government Securities (including local authorities)
5,335,986
2,683,274
(ii) Subsidiaries and/or joint ventures abroad [Refer Schedule 17.2b] 29,978 29,978
(iii) Others
7,346,768
6,098,344
Total Investments outside India
12,712,732
8,811,596
GRAND TOTAL (I+II) 1,130,927,767
1,133,780,559
## Includes securities costing `5,224.77 crores (previous year `4,766.66 crores) pledged for availment of fund transfer
facility, clearing facility and margin requirements
** Inclusive of Repo Lending of `2,600.00 crores (previous year `7,350.00 crores) and net of Repo borrowing of Nil
(previous year Nil) under the Liquidity Adjustment Facility in line with the RBI requirements
$ Represents investment accounted as an Associate in line with AS-23, Accounting for Investments in Associates in
Consolidated Financial Statements, as notified under Section 211(3C) of the Companies Act,1956 [Refer Schedule
17.2e]
@ Includes Priority Sector deposits of `11,006.97 crores (previous year `6,980.42 crores) and PTC’s of `2,328.21 crores
(previous year `1,471.03 crores) net of depreciation, if any
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
120
SCHEDULE 9 - ADVANCES
A. (i) Bills purchased and discounted *
32,128,953
56,079,021
(ii) Cash credits, overdrafts and loans repayable on demand @
687,817,066
546,679,115
(iii) Term loans #
1,603,871,254
1,367,143,269
TOTAL 2,323,817,273
1,969,901,405
B. (i) Secured by tangible assets $
1,910,512,994
1,613,889,953
(ii) Covered by Bank/Government Guarantees &&
30,564,480
18,089,151
(iii) Unsecured
382,739,799
337,922,301
TOTAL
2,323,817,273
1,969,901,405
C. I. Advances in India
(i) Priority Sector
627,610,775
484,982,533
(ii) Public Sector
37,642,652
39,189,817
(iii) Banks
590,421
449,490
(iv) Others
1,286,421,107
1,143,951,454
TOTAL 1,952,264,955
1,668,573,294
II. Advances Outside India
(i) Due from banks
6,211,853
10,371,975
(ii) Due from others -
(a) Bills purchased and discounted
2,455,311
2,687,649
(b) Syndicated loans
114,599,256
109,487,196
(c) Others
248,285,898
178,781,291
TOTAL 371,552,318
301,328,111
GRAND TOTAL (CI+CII) 2,323,817,273
1,969,901,405
* Net of borrowings under Bills Rediscounting Scheme `2,800.00 crores (previous year `1,000.00 crores)
@ Net of borrowings under Inter Bank Participation Certificate/Funded Risk Participation `4,129.04 crores (previous year
`205.89 crores)
# Net of borrowings under Inter Bank Participation Certificate `11,908.59 crores (previous year `10,256.09 crores)
$ Includes advances against book debts
&& Includes advances against L/Cs issued by banks
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
121
SCHEDULE 10 - FIXED ASSETS
I. Premises
Gross Block
At cost at the beginning of the year
9,041,075
9,001,944
Additions during the year
-
39,131
Deductions during the year
-
-
TOTAL
9,041,075
9,041,075
Depreciation
As at the beginning of the year
409,511
262,236
Charge for the year
147,276
147,275
Deductions during the year
-
-
Depreciation to date
556,787
409,511
Net Block 8,484,288
8,631,564
II. Other fixed assets (including furniture & fixtures)
Gross Block
At cost at the beginning of the year
30,785,629
27,125,650
Additions on demerger
-
127,556
Additions during the year
6,485,895
4,173,021
Deductions during the year
(4,091,248)
(640,598)
TOTAL
33,180,276
30,785,629
Depreciation
As at the beginning of the year
16,968,110
13,822,155
Additions on demerger
-
75,179
Charge for the year
3,607,277
3,440,392
Deductions during the year
(2,367,218)
(369,616)
Depreciation to date
18,208,169
16,968,110
Net Block 14,972,107
13,817,519
III. CAPITAL WORK-IN-PROGRESS (including capital advances)
1,016,201
1,424,208
GRAND TOTAL (I+II+III) 24,472,596
23,873,291
SCHEDULE 11 - OTHER ASSETS
I. Inter-office adjustments (net)
-
-
II. Interest Accrued
33,982,920
27,157,882
III. Tax paid in advance/tax deducted at source (net of provisions)
304,981
581,969
IV. Stationery and stamps
12,598
11,221
V. Non banking assets acquired in satisfaction of claims
438,108
209,600
VI. Others #
63,722,782
45,062,159
TOTAL
98,461,389
73,022,831
# Includes deferred tax assets of `1,741.27 crores (previous year `1,378.09 crores) [Refer Schedule 18 (1.1.11)]
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
122
SCHEDULE 12 - CONTINGENT LIABILITIES
I. Claims against the Group not acknowledged as debts
2,394,352
1,676,197
II. Liability for partly paid investments
-
-
III. Liability on account of outstanding forward exchange and derivative contracts :
(a) Forward Contracts
2,312,788,803
2,320,162,574
(b) Interest Rate Swaps, Currency Swaps, Forward Rate Agreement & Interest
Rate Futures 2,299,486,452 2,210,541,350
(c) Foreign Currency Options
202,687,973
80,228,625
TOTAL (a+b+c)
4,814,963,228
4,610,932,549
IV. Guarantees given on behalf of constituents
In India
529,708,072
517,036,841
Outside India
133,640,480
111,222,144
V. Acceptances, endorsements and other obligations
238,821,561
228,015,939
VI. Other items for which the Group is contingently liable
29,013,927
12,351,004
GRAND TOTAL (I+II+III+IV+V+VI) [Refer Schedule 18 (1.1.14)]
5,748,541,620
5,481,234,674
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31 MARCH, 2014
As at
31-03-2014
(` in Thousands)
As at
31-03-2013
(` in Thousands)
123
SCHEDULE 13 - INTEREST EARNED
I. Interest/discount on advances/bills
220,225,195
191,712,828
II. Income on investments
83,610,660
77,469,806
III. Interest on balances with Reserve Bank of India and other inter-bank funds
1,680,713
1,112,621
IV. Others
1,843,021
1,724,497
TOTAL
307,359,589
272,019,752
SCHEDULE 14 - OTHER INCOME
I. Commission, exchange and brokerage
57,476,245
52,655,041
II. Profit/(Loss) on sale of investments (net)
3,414,542
6,346,482
III. Profit/(Loss) on sale of fixed assets (net)
(147,378)
(44,308)
IV. Profit on exchange/derivative transactions (net)
15,171,705
6,640,573
V. Income earned by way of dividends etc. from
subsidiaries/companies and/or joint venture abroad/in India
-
-
VI. Miscellaneous Income
1,747,386
2,730,257
[including recoveries on account of advances/investments written off in earlier
years `183.91 crores (previous year `268.51 crores) and net loss on account of
portfolio sell downs/securitisation `16.22 crores (previous year net loss of `5.88
crores)]
TOTAL 77,662,500
68,328,045
SCHEDULE 15 - INTEREST EXPENDED
I. Interest on deposits
154,318,570
150,002,762
II. Interest on Reserve Bank of India/Inter-bank borrowings
9,214,419
4,596,175
III. Others
23,496,676
20,534,942
TOTAL 187,029,665
175,133,879
SCHEDULE 16 - OPERATING EXPENSES
I. Payments to and provisions for employees
29,730,476
26,753,665
II. Rent, taxes and lighting
8,239,448
7,666,611
III. Printing and stationery
1,164,981
1,030,852
IV. Advertisement and publicity
978,125
1,238,348
V. Depreciation on Group’s property
3,754,553
3,587,667
VI. Directors’ fees, allowance and expenses
13,124
18,240
VII. Auditors’ fees and expenses
19,145
15,851
VIII. Law charges
241,836
179,019
IX. Postage, telegrams, telephones etc.
2,891,395
2,869,492
X. Repairs and maintenance
6,425,327
5,960,356
XI. Insurance
3,171,922
2,626,618
XII. Other expenditure
25,464,896
19,458,445
TOTAL 82,095,228
71,405,164
SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2014
Year ended
31-03-2014
(` in Thousands)
Year ended
31-03-2013
(` in Thousands)
124
1 Principles of Consolidation
The consolidated financial statements comprise the financial statements of Axis Bank Limited (‘the Bank’) and its
subsidiaries, which together constitute ‘the Group’.
The Bank consolidates its subsidiaries in accordance with AS-21, Consolidated Financial Statements under Section
211(3C) of the Companies Act, 1956 on a line-by-line basis by adding together the like items of assets, liabilities,
income and expenditure. All significant inter-company accounts and transactions are eliminated on consolidation.
Further, the Bank accounts for investments in associates in accordance with AS-23, Accounting for Investments in
Associates in Consolidated Financial Statements, notified under Section 211(3C) of the Companies Act, 1956 by the
equity method of accounting.
2 Basis of preparation
a) The financial statements have been prepared and presented under the historical cost convention on the accrual
basis of accounting in accordance with the generally accepted accounting principles in India to comply with the,
statutory requirements prescribed under the Banking Regulation Act, 1949, the circulars and guidelines issued by
the Reserve Bank of India (‘RBI’) from time to time and the Accounting Standards notified under Section 211(3C)
of the Companies Act, 1956 (“the 1956 Act”) (which continue to be applicable in respect of Section 133 of the
Companies Act, 2013 (“the 2013 Act”) in terms of General Circular 15/2013 dated 13 September, 2013 of the
Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/2013 Act, as applicable and current
practices prevailing within the banking industry in India.
b) The consolidated financial statements present the accounts of Axis Bank Limited with its following subsidiaries
and associates:
Name Relation Country of
Incorporation
Ownership
Interest
Axis Capital Ltd. Subsidiary India 100.00%
Axis Private Equity Ltd. Subsidiary India 100.00%
Axis Trustee Services Ltd. Subsidiary India 100.00%
Axis Mutual Fund Trustee Ltd. Subsidiary India 75.00%
Axis Asset Management Company Ltd. Subsidiary India 75.00%
Axis Finance Ltd. Subsidiary India 100.00%
Axis Securities Ltd.
(see ‘d’ below)
Subsidiary India 100.00%
Axis Bank UK Ltd. Subsidiary U.K. 100.00%
Bussan Auto Finance India Private Ltd.
(see ‘e’ below)
Associate India 26.00%
The consolidated financial statements also include the results of Axis Securities Europe Ltd., the step down
subsidiary of the Bank. The financial statements of Enam International Ltd., a step down subsidiary of the Bank,
have not been consolidated since the company is under voluntary dissolution as on 31 March, 2014.
c) The audited financial statements of the above subsidiaries (including step down subsidiaries) and the unaudited
financial statements of the associate have been drawn up to the same reporting date as that of the Bank,
i.e. 31 March, 2014.
d) On 28 October, 2013 the Bank purchased 15.92% stake in Axis Securities Limited from Axis Capital Limited at a
consideration of `38.25 crores thus making it a wholly owned subsidiary of the Bank.
e) This investment does not fall within the definition of a Joint Venture as per AS-27, Financial Reporting of Interest
in Joint Ventures, notified under Section 211(3C) of the Companies Act, 1956 and the said accounting standard
17 Significant accounting policies for the year ended 31 March, 2014
125
is thus not applicable. However, pursuant to RBI guidelines, the Bank has classified the same as investment in
joint ventures in the Balance Sheet. Such investment has been accounted as an Associate in line with AS-23,
Accounting for Investment in Associates in Consolidated Financial Statements notified under Section 211(3C) of
the Companies Act, 1956.
3 Use of estimates
The preparation of the financial statements in conformity with the generally accepted accounting principles requires the
Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues
and expenses and disclosure of contingent liabilities at the date of the financial statements. Actual results could differ
from those estimates. The Management believes that the estimates used in the preparation of the financial statements
are prudent and reasonable. Any revisions to the accounting estimates are recognised prospectively in the current and
future periods.
4 Significant accounting policies
4.1 Investments
Axis Bank Ltd.
Classification
In accordance with the RBI guidelines, investments are classified at the time of purchase as:
• HeldforTrading(‘HFT’);
• AvailableforSale(‘AFS’);and
• HeldtoMaturity(‘HTM’).
Investments that are held principally for sale within a short period are classified as HFT securities. As per the RBI
guidelines, HFT securities, which remain unsold for a period of 90 days are reclassified as AFS securities.
Investments that the Bank intends to hold till maturity are classified under the HTM category. Investments in the
equity of subsidiaries/joint ventures are categorised as HTM in accordance with the RBI guidelines.
All other investments are classified as AFS securities.
However, for disclosure in the Balance Sheet, investments in India are classified under six categories - Government
Securities, Other approved securities, Shares, Debentures and Bonds, Investment in Subsidiaries/Joint Ventures
and Others.
Investments made outside India are classified under three categories – Government Securities, Subsidiaries and/
or Joint Ventures abroad and Others.
Transfer of security between categories
Transfer of security between categories of investments is accounted as per the RBI guidelines.
Acquisition cost
Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged
to the Profit and Loss Account.
Broken period interest is charged to the Profit and Loss Account.
Cost of investments is computed based on the weighted average cost method.
Valuation
Investments classified under the HTM category are carried at acquisition cost unless it is more than the face
value, in which case the premium is amortised over the period remaining to maturity on a constant yield to
maturity basis. In terms of RBI guidelines, discount on securities held under HTM category is not accrued and
such securities are held at the acquisition cost till maturity.
126
Investments classified under the AFS and HFT categories are marked to market. The market/fair value of quoted
investments included in the ‘AFS’ and ‘HFT’ categories is the market price of the scrip as available from the
trades/quotes on the stock exchanges or prices declared by Primary Dealers Association of India (‘PDAI’) jointly
with Fixed Income Money Market and Derivatives Association of India (‘FIMMDA’), periodically. Net depreciation,
if any, within each category of each investment classification is recognised in the Profit and Loss Account. The net
appreciation if any, under each category of each investment classification is ignored. The book value of individual
securities is not changed consequent to the periodic valuation of investments.
Treasury Bills, Exchange Funded Bills, Commercial Paper and Certificate of Deposits being discounted instruments,
are valued at carrying cost.
Units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund.
Market value of investments where current quotations are not available, is determined as per the norms
prescribed by the RBI as under:
• incaseofunquotedbonds,debenturesandpreferenceshareswhereinterest/dividendisreceivedregularly
(i.e. not overdue beyond 90 days), the market price is derived based on the YTM for Government Securities
as published by FIMMDA/PDAI and suitably marked up for credit risk applicable to the credit rating of the
instrument. The matrix for credit risk mark-up for each categories and credit ratings along with residual
maturity issued by FIMMDA is adopted for this purpose;
• incaseofbondsanddebentures(includingPassThroughCerticates)whereinterestisnotreceivedregularly
(i.e. overdue beyond 90 days), the valuation is in accordance with prudential norms for provisioning as
prescribed by RBI;
• equityshares,forwhichcurrentquotationsarenotavailableorwherethesharesarenotquotedonthe
stock exchanges, are valued at break-up value (without considering revaluation reserves, if any) which is
ascertained from the company’s latest Balance Sheet. In case the latest Balance Sheet is not available, the
shares are valued at `1 per company;
• unitsofVentureCapitalFunds(‘VCF’)heldunderAFScategorywherecurrentquotationsarenotavailable
are marked to market based on the Net Asset Value (‘NAV’) shown by VCF as per the latest audited financials
of the fund. In case the audited financials are not available for a period beyond 18 months, the investments
are valued at `1 per VCF. Investment in unquoted VCF after 23 August, 2006 are categorised under HTM
category for the initial period of three years and valued at cost as per RBI guidelines and
• securityreceiptsarevaluedaspertheNAVobtainedfromtheissuingReconstructionCompany/Securitisation
Company.
Investments in joint ventures are categorised as HTM and assessed for impairment to determine permanent
diminution, if any, in accordance with the RBI guidelines.
Realised gains on investments under the HTM category are recognised in the Profit and Loss Account and
subsequently appropriated to Capital Reserve account in accordance with the RBI guidelines. Losses are
recognised in the Profit and Loss Account.
All investments are accounted for on settlement date, except investments in equity shares which are accounted
for on trade date as the corporate actions are effected in equity on the trade date.
Repurchase and reverse repurchase transactions
Repurchase and reverse repurchase transactions in government securities and corporate debt securities [excluding
those conducted under the Liquid Adjustment Facility (‘LAF’) and Marginal Standby Facility (‘MSF’) with RBI] are
accounted as collateralised borrowing and lending respectively. Such transactions done under LAF and MSF are
accounted as outright sale and outright purchase respectively.
127
Short Sales
In accordance with the RBI guidelines, the Bank undertakes short sale transactions in Central Government
dated securities. The short positions are reflected in ‘Securities Short Sold (‘SSS’) A/c’, specifically created for this
purpose. Such short positions are categorised under HFT category. These positions are marked-to-market along
with the other securities under HFT portfolio and the resultant mark-to-market gains/losses are accounted for as
per the relevant RBI guidelines for valuation of investments discussed earlier.
Subsidiaries
Investments which are readily realisable and intended to be held for not more than one year from the date on
which such investments are made, are classified as current investments. All other investments are classified as
long term investments.
Current investments are carried in the financial statements at lower of cost and fair value determined on an
individual investment basis. Any reduction in the carrying amount and any reversal of such reductions are
charged or credited to the Profit and Loss Account.
Long term investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the
value of such investments.
4.2 Advances
Axis Bank Ltd.
Advances are classified into performing and non-performing advances (‘NPAs’) as per the RBI guidelines and are
stated net of specific provisions made towards NPAs and floating provisions. Further, NPAs are classified into sub-
standard, doubtful and loss assets based on the criteria stipulated by the RBI. Provisions for NPAs are made for
sub-standard and doubtful assets at rates as prescribed by the RBI with the exception for agriculture advances
and schematic retail advances. In respect of schematic retail advances, provisions are made in terms of a bucket-
wise policy upon reaching specified stages of delinquency (90 days or more of delinquency) under each type
of loan, which satisfies the RBI prudential norms on provisioning. Provisions in respect of agriculture advances
classified into sub-standard and doubtful assets are made at rates which are higher than those prescribed by the
RBI.
In addition to the above, the Bank on a prudential basis, makes provision for expected losses against advances or
other exposures to specific assets/industry/sector either on a case-by-case basis or for a group of assets, based on
specific information or general economic environment. These are classified as contingent provision and included
under Schedule 5 - Other Liabilities in the balance sheet.
Loss assets and unsecured portion of doubtful assets are provided/written off as per the extant RBI guidelines.
NPAs are identified by periodic appraisals of the loan portfolio by the Management.
Amounts recovered against debts written off are recognised in the Profit and Loss account.
For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by RBI, which
requires the diminution in the fair value of the assets to be provided at the time of restructuring.
The Bank maintains a general provision on standard advances at the rates prescribed by RBI. In case of overseas
branches, general provision on standard advances is maintained at the higher of the levels stipulated by the
respective overseas regulator or RBI.
Under its home loan portfolio, the Bank offers housing loans with certain features involving waiver of Equated
Monthly Installments (‘EMIs’) of a specific period subject to fulfilment of a set of conditions by the borrower. The
Bank makes provision on an estimated basis against the probable loss that could be incurred in future on account
of waivers to eligible borrowers in respect of such loans. This provision is classified under Schedule 5 - Other
Liabilities in the balance sheet.
128
4.3 Country risk
Axis Bank Ltd.
In addition to the provisions required to be held according to the asset classification status, provisions are held
for individual country exposure (other than for home country as per the RBI guidelines). The countries are
categorised into seven risk categories namely insignificant, low, moderate, high, very high, restricted and off-
credit and provision is made on exposures exceeding 180 days on a graded scale ranging from 0.25% to 100%.
For exposures with contractual maturity of less than 180 days, 25% of the normal provision requirement is held.
If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total funded
assets, no provision is maintained on such country exposure.
4.4 Securtisation
Axis Bank Ltd.
The Bank enters into purchase/sale of corporate and retail loans through direct assignment/Special Purpose
Vehicle (‘SPV’). In most cases, post securtisation, the Bank continues to service the loans transferred to the
assignee/SPV. The Bank also provides credit enhancement in the form of cash collaterals and/or by subordination
of cash flows to Senior Pass Through Certificate (‘PTC’) holders. In respect of credit enhancements provided or
recourse obligations (projected delinquencies, future servicing etc.) accepted by the Bank, appropriate provision/
disclosure is made at the time of sale in accordance with AS-29, Provisions, Contingent Liabilities and Contingent
Assets as notified under Section 211(3C) of the Companies Act, 1956.
In accordance with RBI guidelines of 7 May, 2012 on ‘Guidelines on Securitisation of Standard Assets’, gain on
securtisation transaction is recognised over the period of the underlying securities issued by the SPV as prescribed
under RBI guidelines. Loss on securtisation is immediately debited to the Profit and Loss Account.
4.5 Foreign currency transactions
Axis Bank Ltd.
In respect of domestic operations, transactions denominated in foreign currencies are accounted for at the rates
prevailing on the date of the transaction. Monetary foreign currency assets and liabilities are translated at the
Balance Sheet date at rates notified by Foreign Exchange Dealers Association of India (‘FEDAI’). All profits/losses
resulting from year end revaluations are recognised in the Profit and Loss Account.
Financial statements of foreign branches classified as non-integral foreign operations as per the RBI guidelines
are translated as follows:
• Assetsandliabilities(bothmonetaryandnon-monetaryaswellascontingentliabilities)aretranslatedat
closing rates notified by FEDAI at the year end.
• Incomeandexpensesaretranslatedattheratesprevailingonthedateofthetransactions.
• Allresultingexchangedifferencesareaccumulatedinaseparate‘ForeignCurrencyTranslationReserve’till
the disposal of the net investments.
• AnyrealisedgainsorlossesarerecognisedintheProtandLossAccount.
Outstanding forward exchange contracts (excluding currency swaps undertaken to hedge foreign currency
assets/liabilities and funding swaps which are not revalued) and spot exchange contracts are revalued at year
end exchange rates notified by FEDAI for specified maturities and at interpolated rates for contract of interim
maturities. The resulting gains or losses on revaluation are included in the Profit and Loss Account in accordance
with RBI/FEDAI guidelines. The forward exchange contracts of longer maturities where exchange rates are not
notified by FEDAI are revalued at the forward exchange rates implied by the swap curves in respective currencies.
The resultant gains or losses are recognised in the Profit and Loss Account.
Premium/discount on currency swaps undertaken to hedge foreign currency assets and liabilities and funding
swaps is recognised as interest income/expense and is amortised on a pro-rata basis over the underlying swap
period.
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Contingent liabilities on account of forward exchange and derivative contracts, guarantees, acceptances,
endorsements and other obligations denominated in foreign currencies are disclosed at closing rates of exchange
notified by FEDAI.
Subsidiaries
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at
the closing rate on that date. Non-monetary items, which are measured in terms of historical cost denominated
in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items,
which are measured at fair value or other similar valuation denominated in a foreign currency, are translated
using the exchange rate at the date when such value was determined. The exchange differences, if any, either
on settlement or translation are recognised in Profit and Loss Account.
4.6 Derivative transactions
Axis Bank Ltd.
Derivative transactions comprise of forward contracts, swaps and options which are disclosed as contingent
liabilities. The forwards, swaps and options are categorised as trading or hedge transactions. Trading derivative
contracts are revalued at the Balance Sheet date with the resulting unrealised gain or loss being recognised
in the Profit and Loss Account and correspondingly in other assets or other liabilities respectively. For hedge
transactions, the Bank identifies the hedged item (asset or liability) at the inception of transaction itself. The
effectiveness is ascertained at the time of inception of the hedge and periodically thereafter. Hedge swaps are
accounted for on accrual basis except in case of swaps designated with an asset or liability that is carried at
market value or lower of cost or market value in the financial statements. In such cases the swaps are marked
to market with the resulting gain or loss recorded as an adjustment to the market value of designated asset
or liability. The premium on option contracts is accounted for as per FEDAI guidelines. Pursuant to the RBI
guidelines any receivables under derivative contracts comprising of crystallised receivables as well as positive
Mark to Market (MTM) in respect of future receivables which remain overdue for more than 90 days are reversed
through the Profit and Loss Account and are held in separate Suspense Account.
Currency futures contracts are marked to market using daily settlement price on a trading day, which is the
closing price of the respective futures contracts on that day. While the daily settlement price is computed based
on the last half an hour weighted average price of such contract, the final settlement price is taken as the RBI
reference rate on the last trading day of the futures contract or as may be specified by the relevant authority from
time to time. All open positions are marked to market based on the settlement price and the resultant marked
to market profit/loss is daily settled with the exchange.
Valuation of Exchange Traded Currency Options (ETCO) is carried out on the basis of the daily settlement price
of each individual option provided by the exchange and valuation of Interest Rate Futures (IRF) is carried out on
the basis of the daily settlement price of each contract provided by the exchange.
4.7 Revenue recognition
Axis Bank Ltd.
Interest income is recognised on an accrual basis except interest income on non-performing assets, which is
recognised on receipt in accordance with AS-9, Revenue Recognition as notified under Section 211(3C) of the
Companies Act, 1956 and the RBI guidelines.
Fees and commission income is recognised when due, except for guarantee commission which is recognised
pro-rata over the period of the guarantee.
Arrangership/syndication fee is accounted for on completion of the agreed service and when right to receive is
established.
Dividend is accounted on an accrual basis when the right to receive the dividend is established.
Gain/loss on sell down of loans and advances through direct assignment is recognised at the time of sale.
Gain or loss arising on sale of NPAs is accounted as per the guidelines prescribed by the RBI.
130
Subsidiaries
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured. Fee income is recognised on the basis of accrual when all the services are
performed.
Interest income is recognised on an accrual basis.
Dividend income is recognised when the right to receive payment is established by the balance sheet date.
Income from sale of investments is determined on weighted average basis and recognised on the trade date
basis.
Axis Capital Limited
Brokerage income in relation to stock broking activity is recognised on a trade date basis. Gains/losses on dealing
in securities are recognised on a trade date basis.
Revenue from issue management, loan syndication, financial advisory services is recognised based on the stage
of completion of assignments and terms of agreement with the client.
Selling commissions/brokerage generated from primary market operations i.e. procuring subscriptions from
investors for public offerings of companies, mutual funds, etc. are recorded on determination of the amount
due to the Company, once the allotment of securities are completed.
Axis Private Equity Limited
Management fee is recognised on accrual basis.
Axis Trustee Services Limited
Trusteeship fees are recognised, on a straight line basis, over the period when services are performed. Initial
acceptance fee is recognised as and when the ‘Offer Letter’ for the services to be rendered is accepted by the
customer.
Axis Asset Management Company Limited
Management fees are recognised on accrual basis at specific rates, applied on the average daily net assets of
each scheme. The fees charged are in accordance with the terms of scheme information documents of respective
schemes and are in line with the provisions of SEBI (Mutual Funds) Regulations, 1996 as amended from time to
time.
Portfolio Management Fees are recognised on an accrual basis as per the terms of the contract with the
customers.
Marketing Advisory fees and fees received for acting as Point of Service (‘POS’) for CDSL Ventures Ltd., an agency
mandated by the Mutual Fund industry to handle the Know Your Clients (‘KYC’) documentation and necessary
database are recognised on an accrual basis.
Axis Mutual Fund Trustee Limited
Trustee fee is recognised on accrual basis, at the specific rates/amount approved by the Board of Directors of the
Company, within the limits specified under the Deed of Trust, and is applied on the net assets of each scheme of
Axis Mutual Fund.
Axis Finance Limited
Interest and other dues are accounted on accrual basis except in the case of non-performing loans where it is
recognised upon realisation, as per the income recognition and asset classification norms prescribed by the RBI.
Income on discounted instruments is recognised over the tenure of the instrument on a straight-line method.
Front end fees on processing of loans are recognised upfront as income.
131
Axis Securities Limited
Business sourcing and resource management fee is recognised on accrual basis when all the services are
performed.
Income from Super Value Plan to the extent of account opening fees is recognised upfront and balance is
amortised over the validity of plan. Income from other existing prepaid plans is recognised on utilisation of
complementary turnover limit or validity of plan, whichever is earlier.
Selling commissions/brokerage generated from primary market operations i.e. procuring subscriptions from
investors for public offerings of companies, mutual funds etc. are recorded on determination of the amount due
to the company, once the allotment of securities are completed.
Brokerage income in relation to stock broking activity is recognised on a trade date basis.
Depository fees are recognised on completion of the transaction.
Portfolio management fees are accounted on accrual basis as follows:
In case of fees based on fixed percentage of the corpus/fixed amount, income is accrued at the end of the
quarter/month.
In case of fees, based on the returns of the portfolio, income is accounted on each anniversary as per the
agreement.
4.8 Scheme expenses
Axis Asset Management Company Limited
Fund Expenses
Expenses of schemes of Axis Mutual Fund in excess of the stipulated limits as per SEBI (Mutual Fund) Regulations,
1996 and expenses incurred directly (inclusive of advertisement/brokerage expenses) on behalf of schemes of
Axis Mutual Fund are charged to the Profit and Loss Account.
New fund offer expenses
Expenses relating to new fund offer of Axis Mutual Fund are charged to the Profit and Loss Account in the year
in which they are incurred.
Brokerage
Upfront brokerage on close ended and fixed tenure schemes is amortised over the tenure of the respective
scheme and in case of Equity Linked Saving Scheme (ELSS), upfront brokerage is amortised over 3 years. The
unamortised portion of the brokerage is carried forward as prepaid expense. Any other brokerage is expensed
out in the year in which they are incurred.
4.9 Fixed assets and depreciation / impairment
Group
Fixed assets are carried at cost of acquisition less accumulated depreciation and impairment, if any. Cost includes
freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset.
Capital work-in-progress includes cost of fixed assets that are not ready for their intended use and also includes
advances paid to acquire fixed assets.
Depreciation is provided on the straight-line method from the date of addition. The rates of depreciation prescribed
in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the Management’s
estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life
on a subsequent review is shorter, then depreciation is provided at a higher rate based on the Management’s
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estimate of the useful life/remaining useful life. Pursuant to this policy, depreciation has been provided using the
following estimated useful lives:
Asset Estimated useful life
Owned premises 61 years
Assets given on operating lease 20 years
Computer hardware including printers 3 years
Application software 5 years
Vehicles 4 years
EPABX, telephone instruments 8 years
CCTV and video conferencing equipment 3 years
Mobile phone 2 years
Locker cabinets/cash safe/strong room door 16 years
Modem, scanner, routers, hubs, switches, racks/cabinets for IT equipment 5 years
UPS, VSAT, fax machines 5 years
Cheque book/cheque encoder, currency counting machine, fake note detector 5 years
Assets at staff residence 3 years
All other fixed assets 10 years
All fixed assets individually costing less than `5,000 are fully depreciated in the year of installation.
Depreciation on assets sold during the year is recognised on a pro-rata basis to the Profit and Loss Account till
the date of sale.
The carrying amounts of assets are reviewed at each Balance Sheet date to ascertain if there is any indication of
impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling
price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present
value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
Axis Bank Ltd.
Profit on sale of premises is appropriated to Capital Reserve Account in accordance with RBI instructions.
4.10 Lease transactions
Group
Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease
term are classified as operating lease. Lease payments for assets taken on operating lease are recognised as an
expense in the Profit and Loss Account on a straight-line basis over the lease term.
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4.11 Retirement and other employee benefits
Provident Fund
Axis Bank Ltd.
Retirement benefit in the form of provident fund is a defined benefit plan wherein the contributions are charged
to the Profit and Loss Account of the year when the contributions to the fund are due and when services are
rendered by the employees. Further, an actuarial valuation is conducted by an independent actuary to determine
the deficiency, if any, in the interest payable on the contributions as compared to the interest liability as per the
statutory rate.
Subsidiaries
Contributions to a recognised Provident Fund scheme, which is a defined contribution scheme are accounted for
on an accrual basis and charged to Profit and Loss Account.
Gratuity
Axis Bank Ltd.
The Bank contributes towards gratuity fund (defined benefit retirement plan) administered by various insurers
for eligible employees. Under this scheme, the settlement obligations remain with the Bank, although various
insurers administer the scheme and determine the contribution premium required to be paid by the Bank. The
plan provides a lump sum payment to vested employees at retirement or termination of employment based on
the respective employee’s salary and the years of employment with the Bank. Liability with regard to gratuity
fund is accrued based on actuarial valuation conducted by an independent actuary using the Projected Unit
Credit Method as at 31 March each year. In respect of employees at overseas branches (other than expatriates)
liability with regard to gratuity is provided on the basis of a prescribed method as per local laws, wherever
applicable.
Subsidiaries
Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation using
Projected Unit Credit Method made at the end of each financial year.
Actuarial gains/losses are immediately taken to the Profit and Loss Account and are not deferred.
Compensated Absences
Group
Short term compensated absences are provided for based on estimates of encashment/availment of leave. The
Group provides long term compensated absences based on actuarial valuation conducted by an independent
actuary. The actuarial valuation is carried out as per the Projected Unit Credit Method as at 31 March each year.
Superannuation
Axis Bank Ltd.
Employees of the Bank are entitled to receive retirement benefits under the Bank’s Superannuation scheme either
under a cash-out option through salary or under a defined contribution plan. Through the defined contribution
plan the Bank contributes annually a specified sum of 10% of the employee’s eligible annual basic salary to LIC,
which undertakes to pay the lumpsum and annuity benefit payments pursuant to the scheme. Superannuation
contributions are recognised in the Profit and Loss Account in the period in which they accrue.
Actuarial gains/losses are immediately taken to Profit and Loss Account and are not deferred.
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4.12 Long Term Incentive Plan (LTIP)
Axis Asset Management Company Limited
The Company has initiated Axis AMC - Long Term Incentive plan. The points granted to employees as per the
guidelines laid down in the plan are encashable after they are held for a specified period as per the terms of the
plan. The Company accounts for the liability arising on points granted proportionately over the period from the
date of grant till the end of the exercise window. The liability is assessed and provided on the basis of valuation
carried out by an independent valuer.
4.13 Reward points
Axis Bank Ltd.
The Bank runs a loyalty program which seeks to recognize and reward customers based on their relationship
with the Bank. Under the program, eligible customers are granted loyalty points redeemable in future, subject to
certain conditions. In addition, the Bank continues to grant reward points in respect of certain credit cards (not
covered under the loyalty program). The Bank estimates the probable redemption of such loyalty/reward points
using an actuarial method at the Balance Sheet date by employing an independent actuary. Provision for the said
reward points is then made based on the actuarial valuation report as furnished by the said independent actuary.
4.14 Taxation
Group
Income tax expense is the aggregate amount of current tax and deferred tax charge. Current year taxes are
determined in accordance with the Income Tax Act, 1961. Deferred income taxes reflects the impact of current
year timing differences between taxable income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the
taxes on income levied by same governing taxation laws.
Deferred tax assets are recognised 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 realised. The impact of changes
in the deferred tax assets and liabilities is recognised in the Profit and Loss Account.
Deferred tax assets are recognised and reassessed at each reporting date, based upon the Management’s
judgement as to whether realisation is considered as reasonably certain. Deferred tax assets are recognised on
carry forward of unabsorbed depreciation and tax losses only if there is virtual certainty supported by convincing
evidence that such deferred tax asset can be realised against future profits.
4.15 Share issue expenses
Axis Bank Ltd.
Share issue expenses are adjusted from Share Premium Account in terms of Section 78 of the Companies Act,
1956.
4.16 Earnings per share
Group
The Group reports basic and diluted earnings per share in accordance with AS-20, Earnings per Share, as notified
under Section 211(3C) of the Companies Act, 1956. Basic earnings per share is computed by dividing the net
profit after tax by the weighted average number of equity shares outstanding for the year.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue
equity shares were exercised or converted during the year. Diluted earnings per share is computed using the
weighted average number of equity shares and dilutive potential equity shares outstanding at the year end.
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4.17 Employee stock option scheme
Axis Bank Ltd.
The 2001 Employee Stock Option Scheme (‘the Scheme’) provides for grant of stock options on equity shares
of the Bank to employees and Directors of the Bank and its subsidiaries. The Scheme is in accordance with the
Securities and Exchange Board of India (SEBI) (Employees Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 (‘the Guidelines’). The Bank follows the intrinsic value method to account for its stock
based employee compensation plans as per the Guidelines. Options are granted at an exercise price, which is
equal to/less than the fair market price of the underlying equity shares. The excess of such fair market price
over the exercise price of the options as at the grant date is recognised as a deferred compensation cost and
amortised on a straight-line basis over the vesting period of such options.
The fair market price is the latest available closing price, prior to the date of the grant, on the stock exchange on
which the shares of the Bank are listed. If the shares are listed on more than one stock exchange, then the stock
exchange where there is highest trading volume on the said date is considered.
4.18 Provisions, contingent liabilities and contingent assets
Group
A provision is recognised when the Group has a present obligation as a result of past event where it is probable
that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can
be made. Provisions are not discounted to its present value and are determined based on best estimate required
to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted
to reflect the current best estimates.
A disclosure of contingent liability is made when there is:
• apossibleobligationarisingfromapastevent,theexistenceofwhichwillbeconrmedbyoccurrenceor
non-occurrence of one or more uncertain future events not within the control of the Group; or
• apresentobligationarisingfromapasteventwhichisnotrecognisedasitisnotprobablethatanoutow
of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation
cannot be made.
When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Contingent assets are not recognised in the financial statements. However, contingent assets are assessed
continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income
are recognised in the period in which the change occurs.
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18 Notes forming part of the consolidated financial statements for the year ended
31 March, 2014
(Currency: In Indian Rupees)
1 Other Disclosures
1.1.1 ‘Provisions and contingencies’ recognised in the Profit and Loss Account comprise of:
(` in crores)
For the year ended
31 March, 2014
31 March, 2013
Provision for income tax
- Current tax for the year
3,533.43
2,740.53
- Deferred tax for the year (Refer 1.1.11)
(363.18)
(349.73)
3,170.25
2,390.80
Provision for wealth tax
0.42
0.38
Provision for non-performing assets
(including bad debts written off and write backs)
1,295.98
1,179.19
Provision for restructured assets
194.76
103.95
Provision towards standard assets
293.07
196.64
Provision for depreciation in value of investments
(100.29)
(98.22)
Provision for country risk
-
(9.63)
Provision for other contingencies
426.36
383.97
Total 5,280.55
4,147.08
1.1.2 The Bank has not raised subordinated debt during the year ended 31 March, 2014.
During the year ended 31 March, 2013, the Bank has raised subordinated debt of `2,500 crores, the details of which
are set out below:
Date of allotment Period Coupon Amount
31 December, 2012 120 months 9.15% `2,500.00 crores
During the year ended 31 March, 2014, the Bank redeemed subordinated debt of `278.50 crores, the details of which
are set out below:
Date of maturity Period Coupon Amount
26 April, 2013 117 months 7.00% `65.00 crores
22 June, 2013 87 months 8.50% `125.00 crores
22 June, 2013 87 months 8.32% `5.00 crores
28 September, 2013 87 months 8.95% `33.50 crores
15 October, 2013 117 months 6.50% `50.00 crores
During the year ended 31 March, 2013, the Bank redeemed subordinated debt of `622 crores, the details of which
are set out below:
Date of maturity Period Coupon Amount
20 June, 2012 117 months 9.30% `62.00 crores
25 July, 2012 84 months 8.67% `500.00 crores
21 September, 2012 117 months 8.95% `60.00 crores
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1.1.3 The Bank has not raised any hybrid capital during the year ended 31 March, 2014 and year ended 31 March, 2013.
1.1.4 Earnings Per Share (‘EPS’)
The details of EPS computation is set out below:
As at
31 March, 2014 31 March, 2013
Basic and Diluted earnings for the year (Net profit after tax)
(` in crores) 6,310.12 5,234.76
Basic weighted average no. of shares (in crores)
46.90
43.28
Add: Equity shares for no consideration arising on grant of stock options
under ESOP (in crores) 0.12 0.30
Diluted weighted average no. of shares (in crores)
47.02
43.58
Basic EPS (`)
134.53
120.95
Diluted EPS (`)
134.20
120.12
Nominal value of shares (`) 10.00 10.00
Dilution of equity is on account of 1,169,588 (previous year 2,975,646) stock options.
1.1.5 Employee Stock Options Scheme (‘the Scheme’)
In February 2001, pursuant to the approval of the shareholders at the Extraordinary General Meeting, the Bank
approved an Employee Stock Option Scheme. Under the Scheme, the Bank is authorised to issue upto 13,000,000
equity shares to eligible employees. Eligible employees are granted an option to purchase shares subject to vesting
conditions. The options vest in a graded manner over 3 years. The options can be exercised within 3 years from the
date of the vesting. Further, over the period June 2004 to July 2013, pursuant to the approval of the shareholders at
Annual General Meetings, the Bank approved an ESOP scheme for additional options aggregating 35,017,400. Within
the overall ceiling of 48,017,400 stock options approved for grant by the shareholders as stated earlier, the Bank is also
authorised to issue options to employees and directors of the subsidiary companies.
42,407,590 options have been granted under the Scheme till the previous year ended 31 March, 2013.
On 25 April, 2013, the Bank granted 2,003,000 stock options (each option representing entitlement to one equity
share of the Bank) to its employees including the MD & CEO and employees of certain subsidiaries of the Bank at a
price of `1,444.80 per option.
Stock option activity under the Scheme for the year ended 31 March, 2014 is set out below:
Options
outstanding
Range of exercise
prices (`)
Weighted
average
exercise
price (`)
Weighted average
remaining
contractual life
(Years)
Outstanding at the beginning of the year 10,865,025 468.90 to 1,447.55 1,090.43 2.69
Granted during the year 2,003,000 1,444.80 1,444.80 -
Forfeited during the year (60,004) 468.90 to 1,447.55 1,152.16 -
Expired during the year (72,380) 468.90 to 824.40 562.84 -
Exercised during the year (1,890,085) 468.90 to 1,447.55 727.86 -
Outstanding at the end of the year 10,845,556 503.25 to 1,447.55 1,222.24 2.44
Exercisable at the end of the year 6,042,426 503.25 to 1,447.55 1,143.45 1.42
The weighted average share price in respect of options exercised during the year was `1,314.00.
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Stock option activity under the Scheme for the year ended 31 March, 2013 is set out below:
Options
outstanding
Range of exercise
prices (`)
Weighted
average
exercise
price (`)
Weighted average
remaining
contractual life
(Years)
Outstanding at the beginning of the year 11,428,248 319.00 to 1,447.55 965.90 2.79
Granted during the year 2,516,000 1,086.65 1,086.65 -
Forfeited during the year (175,698) 319.00 to 1,447.55 1,144.00 -
Expired during the year (80,954) 319.00 to 824.40 568.70 -
Exercised during the year (2,822,571) 319.00 to 1,447.55 594.48 -
Outstanding at the end of the year 10,865,025 468.90 to 1,447.55 1,090.43 2.69
Exercisable at the end of the year 5,372,105 468.90 to 1,447.55 941.06 1.57
The weighted average share price in respect of options exercised during the year was `1,217.66.
Fair Value Methodology
On applying the fair value based method in Guidance Note on ‘Accounting for Employee Share-based Payments’ the
impact on reported net profit and EPS would be as follows:
31 March, 2014
31 March, 2013
Net Profit (as reported) (` in crores)
6,310.12 5,234.76
Add: Stock based employee compensation expense included in net
income (` in crores) - -
Less: Stock based employee compensation expense determined under
fair value based method (proforma) (` in crores) (103.48) (117.08)
Net Profit (Proforma) (` in crores) 6,206.64
5,117.68
Earnings per share: Basic (in `)
As reported
134.53
120.95
Proforma
132.33
118.25
Earnings per share: Diluted (in `)
As reported
134.20
120.12
Proforma
132.04
117.54
The fair value of the options is estimated on the date of the grant using the Black-Scholes options pricing model, with
the following assumptions:
31 March, 2014
31 March, 2013
Dividend yield 1.36% 1.20%
Expected life 2-4 years 2-4 years
Risk free interest rate 7.45% to 7.57% 8.14% to 8.33%
Volatility 33.86% to 36.93% 35.92% to 50.25%
Volatility is the measure of the amount by which a price has fluctuated or is expected to fluctuate during a period.
The measure of volatility used in the Black-Scholes options pricing model is the annualised standard deviation of the
continuously compounded rates of return on the stock over a period of time. For calculating volatility, the daily volatility
of the stock prices on the National Stock Exchange, over a period prior to the date of grant, corresponding with the
expected life of the options has been considered.
139
The weighted average fair value of options granted during the year ended 31 March, 2014 is `438.87 (previous year
`387.24).
1.1.6 Dividend paid on shares issued on exercise of stock options
The Bank may allot shares between the Balance Sheet date and record date for the declaration of dividend pursuant to
the exercise of any employee stock options. These shares will be eligible for full dividend for the year ended 31 March,
2014, if approved at the ensuing Annual General Meeting. Dividend relating to these shares has not been recorded in
the current year.
Appropriation to proposed dividend during the year ended 31 March, 2014 includes dividend of `2.05 crores (previous
year `2.02 crores) paid pursuant to exercise of 975,266 employee stock options after the previous year end but before
the record date for declaration of dividend for the year ended 31 March, 2013.
1.1.7 Segmental reporting
The business of the Bank is divided into four segments: Treasury, Retail Banking, Corporate/Wholesale Banking, and
Other Banking Business. These segments have been identified and based on RBI’s revised guidelines on Segment
Reporting issued on 18 April, 2007 vide Circular No. DBOD.No.BP.BC.81/21.04.018/2006-07. The principal activities of
these segments are as under.
Segment Principal Activities
Treasury Treasury operations include investments in sovereign and corporate debt, equity and
mutual funds, trading operations, derivative trading and foreign exchange operations on
the proprietary account and for customers. The Treasury segment also includes the central
funding unit.
Retail Banking Constitutes lending to individuals/small businesses through the branch network and other
delivery channels subject to the orientation, nature of product, granularity of the exposure
and the quantum thereof. Retail Banking activities also include liability products, card
services, internet banking, mobile banking, ATM services, depository, financial advisory
services and NRI services.
Corporate/Wholesale
Banking
Includes corporate relationships not included under Retail Banking, corporate advisory
services, placements and syndication, project appraisals, capital market related services and
cash management services.
Other Banking Business Includes para banking activities like third party product distribution and other banking
transactions not covered under any of the above three segments.
Business segments in respect of operations of the subsidiaries (including step down subsidiaries) have been identified
and reported taking into account the customer profile, the nature of product and services and the organisation
structure.
Revenues of the Treasury segment primarily consist of fees and gains or losses from trading operations and interest
income on the investment portfolio. The principal expenses of the segment consist of interest expense on funds
borrowed from external sources and other internal segments, premises expenses, personnel costs, other direct
overheads and allocated expenses.
Revenues of the Corporate/Wholesale Banking segment consist of interest and fees earned on loans given to customers
falling under this segment and fees arising from transaction services and merchant banking activities such as syndication
and debenture trusteeship. Revenues of the Retail Banking segment are derived from interest earned on loans classified
under this segment and fees for banking and advisory services, ATM interchange fees and cards products. Expenses of
the Corporate/Wholesale Banking and Retail Banking segments primarily comprise interest expense on deposits and
funds borrowed from other internal segments, infrastructure and premises expenses for operating the branch network
and other delivery channels, personnel costs, other direct overheads and allocated expenses.
140
Segment income includes earnings from external customers and from funds transferred to the other segments. Segment
result includes revenue as reduced by interest expense and operating expenses and provisions, if any, for that segment.
Segment-wise income and expenses include certain allocations. Inter segment interest income and interest expense
represent the transfer price received from and paid to the Central Funding Unit (CFU) respectively. For this purpose,
the funds transfer pricing mechanism presently followed by the Bank, which is based on historical matched maturity
and internal benchmarks, has been used. Operating expenses other than those directly attributable to segments are
allocated to the segments based on an activity-based costing methodology. All activities in the Bank are segregated
segment-wise and allocated to the respective segment.
Segmental results are set out below:
(` in crores)
31 March, 2014
Treasury Corporate/
Wholesale
Banking
Retail
Banking
Other
Banking
Business
Total
Segment Revenue
Gross interest income
(external customers) 8,703.49 12,636.64 9,395.83 - 30,735.96
Other income 2,102.41 3,227.59 1,693.35 742.90 7,766.25
Total income as per Profit and Loss Account 10,805.90 15,864.23 11,089.18 742.90 38,502.21
Add/(less) inter segment interest income 35,606.40 3,802.28 11,295.25 - 50,703.93
Total segment revenue 46,412.30 19,666.51 22,384.43 742.90 89,206.14
Less: Interest expense (external customers) 9,897.99 391.39 8,413.59 - 18,702.97
Less: Inter segment interest expense 33,763.53 9,370.03 7,570.37 - 50,703.93
Less: Operating expenses 389.48 2,179.71 5,472.46 167.87 8,209.52
Operating profit 2,361.30 7,725.38 928.01 575.03 11,589.72
Less: Provision for non-performing assets/others* 11.34 1,765.41 333.13 0.42 2,110.30
Segment result 2,349.96 5,959.97 594.88 574.61 9,479.42
Less: Provision for tax 3,170.25
Net Profit before minority interest and
earnings from Associate 6,309.17
Less: Minority Interest
0.41
Add: Share of Profit in Associate
1.36
Extraordinary profit/loss
-
Net Profit
6,310.12
Segment assets 143,030.97 134,096.24 106,883.93 441.62 384,452.76
Unallocated assets
1,897.30
Total assets
386,350.06
Segment liabilities 125,146.04 70,390.58 151,144.98 54.47 346,736.07
Unallocated liabilities
(1)
1,217.94
Total liabilities 347,954.01
Net assets 17,884.93 63,705.66 (44,261.05) 387.15 38,396.05
Capital Expenditure for the year 23.64 173.81 443.54 7.60 648.59
Depreciation on fixed assets for the year 12.93 97.73 260.63 4.17 375.46
(1)
Includes minority interest of `12.94 crores
141
(` in crores)
31 March, 2013
Treasury Corporate/
Wholesale
Banking
Retail
Banking
Other
Banking
Business
Total
Segment Revenue
Gross interest income (external customers) 8,016.33 12,046.51 7,139.11 0.03 27,201.98
Other income 1,610.93 3,000.09 1,653.78 568.00 6,832.80
Total income as per Profit and Loss Account 9,627.26 15,046.60 8,792.89 568.03 34,034.78
Add/(less) inter segment interest income 32,939.38 3,371.64 9,547.31 - 45,858.33
Total segment revenue 42,566.64 18,418.24 18,340.20 568.03 79,893.11
Less: Interest expense (external customers) 10,205.87 298.17 7,009.35 - 17,513.39
Less: Inter segment interest expense 30,866.09 9,184.48 5,807.76 - 45,858.33
Less: Operating expenses 443.10 1,733.43 4,767.90 196.09 7,140.52
Operating profit 1,051.58 7,202.16 755.19 371.94 9,380.87
Less: Provision for non-performing assets/others
*
(94.48) 1,619.84 230.55 0.37 1,756.28
Segment result 1,146.06 5,582.32 524.64 371.57 7,624.59
Less: Provision for tax 2,390.80
Net Profit before minority interest and
earnings from Associate 5,233.79
Less: Minority Interest 0.25
Add: Share of Profit in Associate 1.22
Extraordinary profit/loss -
Net Profit 5,234.76
Segment assets 135,106.04 128,353.67 75,319.35 302.34 339,081.40
Unallocated assets 1,476.33
Total assets 340,557.73
Segment liabilities 124,877.36 63,506.02 117,923.41 49.97 306,356.76
Unallocated liabilities
(1)
1,042.60
Total liabilities 307,399.36
Net assets 10,228.68 64,847.65 (42,604.06) 252.37 33,158.37
Capital Expenditure for the year 20.79 99.48 291.58 9.37 421.22
Depreciation on fixed assets for the year 17.52 84.80 247.74 8.71 358.77
(1)
Includes minority interest of `12.53 crores
*represents material non-cash items other than depreciation
142
Geographic Segments
(` in crores)
Domestic International Total
31 March,
2014
31 March,
2013
31 March,
2014
31 March,
2013
31 March,
2014
31 March,
2013
Revenue
36,132.99
31,873.52
2,369.22
2,161.26
38,502.21
34,034.78
Assets
341,431.89
303,396.13
44,918.17
37,161.60
386,350.06
340,557.73
Capital Expenditure for
the year
622.68
419.22
25.91
2.00
648.59
421.22
Depreciation on fixed
assets for the year
368.38
357.22
7.08
1.55
375.46
358.77
1.1.8 Related party disclosure
The related parties of the Group are broadly classified as:
a) Promoters
The Bank has identified the following entities as its Promoters:
• AdministratoroftheSpeciedUndertakingoftheUnitTrustofIndia(SUUTI)
• LifeInsuranceCorporationofIndia(LIC)
• GeneralInsurance Corporation and four Government-owned general insurance companies - New India
Assurance Co. Limited, National Insurance Co. Limited, United India Insurance Co. Limited and The Oriental
Insurance Co. Limited.
b) Key Management Personnel
• Mrs.ShikhaSharma(ManagingDirector&ChiefExecutiveOfcer)
• Mr.SomnathSengupta[ExecutiveDirector&Head(CorporateCentre)]
• Mr.V.Srinivasan[ExecutiveDirector&Head(CorporateBanking)]
c) Relatives of Key Management Personnel
Mr. Sanjaya Sharma, Mrs. Usha Bharadwaj, Mr. Tilak Sharma, Ms. Tvisha Sharma, Dr. Sanjiv Bharadwaj,
Dr. Prashant Bharadwaj, Dr. Brevis Bharadwaj, Dr. Reena Bharadwaj, Mrs. Chaitaly Sengupta, Mrs. Renukona
Sengupta, Mr. Niloy Sengupta, Mrs. Gayathri Srinivasan, Mrs. Vanjulam Varadarajan, Mr. V. Satish,
Mrs. Camy Satish, Ms. Ananya Srinivasan, Ms. Anagha Srinivasan, Ms. Geetha N., Ms. Chitra R., Ms. Sumathi N.,
Mr. S. Ranganathan and Mr. R. Narayan.
d) Associate
• BussanAutoFinanceIndiaPrivateLimited
Based on RBI guidelines, details of transactions with Associates are not disclosed since there is only one
entity/party in this category. [Refer Schedule 17(2)]
The significant transactions between the Bank and related parties during the year ended 31 March, 2014 are given
below. A specific related party transaction is disclosed as a significant related party transaction wherever it exceeds 10%
of the aggregate value of all related party transactions in that category:
• Dividendpaid:AdministratorofTheSpeciedUndertakingoftheUnitTrustofIndia`175.00 crores (previous
year `155.56 crores), Life Insurance Corporation of India `78.77 crores (previous year `64.06 crores)
• Interestpaid:LifeInsuranceCorporationofIndia`928.77 crores (previous year `731.58 crores)
143
• Interest received: Life Insurance Corporation of India `0.16 crores (previous year `33,159), New India
Assurance Company Ltd. `0.09 crores (previous year `0.01 crores) and Mr. Somnath Sengupta `0.17 crores
(previous year `0.09 crores)
• InvestmentofrelatedpartyintheBank:Mrs.ShikhaSharma`7.35 crores (previous year `1.48 crores) and
Mr. V. Srinivasan `2.43 crores (previous year `2.04 crores)
• Redemptionofsubordinateddebt:LifeInsuranceCorporationofIndia`25.00 crores (previous year `80.00
crores) and General Insurance Corporation of India `15.00 crores (previous year Nil)
• SaleofInvestments:LifeInsuranceCorporationofIndia`221.71 crores (previous year `1,030.60 crores),
General Insurance Corporation of India `181.37 crores (previous year `85.00 crores), New India Assurance
Company Ltd. `147.51 crores (previous year Nil), National Insurance Company Ltd. `109.97 crores (previous
year `191.79 crores), United India Insurance Company Ltd. `79.12 crores (previous year `115.03 crores)
• Management Contracts: Mrs. Shikha Sharma `4.07 crores (previous year `2.83 crores), Mr. Somnath
Sengupta `2.30 crores (previous year `0.70 crores) and Mr. V. Srinivasan `2.18 crores (previous year `0.72
crores)
• Contributiontoemployeebenetfund:LifeInsuranceCorporationofIndia`15.49 crores (previous year
`14.58 crores)
• Non-fundedcommitments: LifeInsurance Corporation of India`0.02 crores (previous year Nil), Oriental
Insurance Company Ltd. `0.04 crores (previous year Nil)
• Advancegranted(net):Mr.SomnathSengupta`0.83 crores (previous year Nil)
• Advancerepaid:LifeInsuranceCorporationofIndia`27.91 crores (previous year `15.51 crores)
• Receivingofservices:OrientalInsuranceCompanyLtd.`51.20 crores (previous year `2,924)
• Renderingofservices:LifeInsuranceCorporationofIndia`1.93 crores (previous year `1.82 crores) and New
India Assurance Company Ltd. `0.28 crores (previous year `0.25 crores)
• Otherreimbursementtorelatedparty:LifeInsuranceCorporationofIndia`0.39 crores (previous year `0.76
crores)
The details of transactions of the Bank with its related parties during the year ended 31 March, 2014 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Dividend paid 286.21 0.13 - 286.34
Interest paid 994.86 0.78 0.08 995.72
Interest received 0.27 0.17 - 0.44
Investment of related party in the Bank - 10.68 - 10.68
Investment of related party in Subordinated
Debt/Hybrid Capital of the Bank - - - -
Redemption of Subordinated Debt 40.00 - - 40.00
Purchase of investments - - - -
Sale of investments 754.46 - - 754.46
Management contracts - 8.55 - 8.55
Contribution to employee benefit fund 15.49 - - 15.49
144
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Purchase of fixed assets - - - -
Sale of fixed assets - - - -
Non-funded commitments 0.06 - - 0.06
Advance granted (net) - 0.83 - 0.83
Advance repaid 27.91 1.26 - 29.17
Receiving of services 67.60 - - 67.60
Rendering of services 2.45 - - 2.45
Other reimbursements from related party - - - -
Other reimbursements to related party 0.39 - - 0.39
The balances payable to/receivable from the related parties of the Bank as on 31 March, 2014 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Borrowings from the Bank - - - -
Deposits with the Bank 10,097.26 9.77 1.23 10,108.26
Placement of deposits 0.15 - - 0.15
Advances 0.78 1.61 - 2.39
Investment of related party in the Bank 138.78 0.10 - 138.88
Non-funded commitments 3.07 - - 3.07
Investment of related party in Subordinated
Debt/Hybrid Capital of the Bank 2,765.00 - - 2,765.00
Advance for rendering of services - - - -
Other receivables (net) - - - -
Other payables (net) - - - -
The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2014 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Borrowings from the Bank - - - -
Deposits with the Bank 10,836.28 12.89 1.76 10,850.93
Placement of deposits 0.16 - - 0.16
Advances 66.57 2.04 - 68.61
Investment of related party in the Bank 169.76 0.10 - 169.86
Non-funded commitments 3.09 - - 3.09
Investment of related party in Subordinated
Debt/Hybrid Capital of the Bank 3,817.30 - - 3,817.30
Other receivables (net) - - - -
Other payables (net) - - - -
145
The details of transactions of the Bank with its related parties during the year ended 31 March, 2013 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Dividend paid 247.25 0.02 - 247.27
Interest paid 768.37 0.16 0.03 768.56
Interest received 0.02 0.10 - 0.12
Investment of related party in the Bank 811.47 4.60 - 816.07
Investment of related party in Subordinated
Debt/Hybrid Capital of the Bank 1,000.00 - - 1,000.00
Redemption of Subordinated Debt 90.00 - - 90.00
Purchase of investments - - - -
Sale of investments 1,442.84 - - 1,442.84
Management contracts - 4.25 - 4.25
Contribution to employee benefit fund 14.58 - - 14.58
Purchase of fixed assets - - - -
Sale of fixed assets - - - -
Non-funded commitments 0.06 - - 0.06
Advance granted (net) - - - -
Advance repaid 15.51 0.14 - 15.65
Receiving of services 60.79 - - 60.79
Rendering of services 2.07 - - 2.07
Other reimbursements from related party - - - -
Other reimbursements to related party 0.76 - - 0.76
The balances payable to/receivable from the related parties of the Bank as on 31 March, 2013 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Borrowings from the Bank - - - -
Deposits with the Bank 9,915.42 4.23 0.51 9,920.16
Placement of deposits 0.16 - - 0.16
Advances 28.13 2.04 - 30.17
Investment of related party in the Bank 158.52 0.08 - 158.60
Non-funded commitments 3.07 - - 3.07
Investment of related party in Subordinated
Debt/Hybrid Capital of the Bank 3,817.30 - - 3,817.30
Advance for rendering of services - - - -
Other receivables (net) - - - -
Other payables (net) - - - -
146
The maximum balances payable to/receivable from the related parties of the Bank during the year ended 31 March,
2013 are given below:
(` in crores)
Items/Related Party Promoters Key
Management
Personnel
Relatives of Key
Management
Personnel
Total
Borrowings from the Bank - - - -
Deposits with the Bank 9,915.42 9.01 3.91 9,928.34
Placement of deposits 0.16 - - 0.16
Advances 46.54 2.16 - 48.70
Investment of related party in the Bank 158.52 0.08 - 158.60
Non-funded commitments 3.07 - - 3.07
Investment of related party in Subordinated
Debt/Hybrid Capital of the Bank 3,817.30 - - 3,817.30
Other receivables (net) - - - -
Other payables (net) - - - -
1.1.9 Leases
Disclosure in respect of assets taken on operating lease
This comprise of office premises/ATMs, cash deposit machines, electronic data capturing machines and IT equipment.
(` in crores)
31 March, 2014 31 March, 2013
Future lease rentals payable as at the end of the year:
- Not later than one year
578.38
591.44
- Later than one year and not later than five years
1,828.59
1,731.72
- Later than five years
860.94
831.28
Total of minimum lease payments recognised in the Profit and Loss
Account for the year 647.81 613.67
There are no provisions relating to contingent rent.
The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements.
There are generally no undue restrictions or onerous clauses in the agreements.
1.1.10 Other Fixed Assets (including furniture & fixtures)
The movement in fixed assets capitalised as application software is given below:
(` in crores)
Particulars 31 March, 2014 31 March, 2013
At cost at the beginning of the year
470.90
391.34
Additions during the year
137.97
80.78
Deductions during the year
(1.85)
(1.22)
Accumulated depreciation as at 31 March
(391.62)
(318.58)
Closing balance as at 31 March
215.40
152.32
Depreciation charge for the year
73.41
56.16
147
1.1.11 The major components of deferred tax assets and deferred tax liabilities arising out of timing differences are as under:
(` in crores)
As at 31 March, 2014
31 March, 2013
Deferred tax assets on account of provisions for doubtful debts
1,198.60
924.57
Deferred tax assets on account of amortization of HTM investments
191.25
192.52
Deferred tax assets on account of provision for employee benefits
69.83
106.76
Other deferred tax assets
325.17
180.43
Deferred tax assets 1,784.85
1,404.28
Deferred tax liability on account of depreciation on fixed assets
43.58
26.19
Deferred tax liabilities 43.58
26.19
Net deferred tax asset 1,741.27
1,378.09
1.1.12 Employee Benefits
Group
Provident Fund
The contribution to the employee’s provident fund of the Group amounted to `104.43 crores for the year ended
31 March, 2014 (previous year `86.96 crores)
Axis Bank Ltd.
The rules of the Bank’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay
interest at the rate declared for Employees’ Provident Fund by the Government under para 60 of the Employees’
Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the
deficiency shall be made good by the Bank. Based on an actuarial valuation conducted by an independent actuary,
there is no deficiency as at the Balance Sheet date for the Bank. The principal assumptions used by the actuary are as
under:
31 March, 2014
31 March, 2013
Discount rate for the term of the obligation
9.15%
7.90%
Average historic yield on the investment portfolio
8.88%
9.13%
Discount rate for the remaining term to maturity of the investment portfolio
9.03%
7.94%
Expected investment return
9.00%
9.09%
Guaranteed rate of return
8.75%
8.50%
Superannuation
The Bank contributed `15.49 crores to the employee’s superannuation plan for the year ended 31 March, 2014
(previous year `14.58 crores).
148
Group
Leave Encashment
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the
Group is given below.
(` in crores)
As at 31 March, 2014
Axis Bank Ltd. Axis Capital Ltd. Axis Securities Ltd.
Privileged leave 179.10 0.11 0.06
Sick leave - - -
Total actuarial liability 179.10 0.11 0.06
Total Expense included under Schedule 16(I) (114.72) 0.05 0.03
Assumptions
Discount rate 9.15% p.a. 9.02% p.a. 8.70% p.a.
Salary escalation rate 7.00% p.a. 7.00% p.a. 7.00% p.a.
(` in crores)
As at 31 March, 2013
Axis Bank Ltd. Axis Capital Ltd.
Privileged leave 313.92 0.10
Sick leave 22.80 -
Total actuarial liability 336.72 0.10
Total Expense included under Schedule 16(I) 96.46 (1.24)
Assumptions
Discount rate 7.90% p.a. 7.80% p.a.
Salary escalation rate 7.00% p.a. 6.00% p.a.
Group
Gratuity
The following tables summarize the components of net benefit expenses recognised in the Profit and Loss Account and
the funded status and amounts recognised in the Balance Sheet for the Gratuity benefit plan.
Profit and Loss Account
Net employee benefit expenses (recognised in payments to and provisions for employees)
(` in crores)
31 March, 2014
31 March, 2013
Current Service Cost
24.68
18.49
Interest on Defined Benefit Obligation
12.81
9.30
Expected Return on Plan Assets
(11.14)
(7.65)
Net Actuarial Losses/(Gains) recognised in the year
(11.17)
17.89
Past Service Cost
-
5.50
Total included in “Employee Benefit Expense” 15.18
43.53
Actual Return on Plan Assets
13.49
9.63
149
Balance Sheet
Details of provision for gratuity
(` in crores)
31 March, 2014
31 March, 2013
Present Value of Funded Obligations
(168.99)
(147.25)
Fair Value of Plan Assets
171.76
152.17
Net Asset 2.77
4.92
Amounts in Balance Sheet
Liabilities
(2.86)
(3.70)
Assets
5.63
8.62
Net Asset (included under Schedule 11 – Other Assets) 2.77
4.92
Changes in the present value of the defined benefit obligation are as follows:
(` in crores)
31 March, 2014
31 March, 2013
Change in Defined Benefit Obligation
Opening Defined Benefit Obligation 147.25
94.83
Current Service Cost
24.68
18.49
Interest Cost
12.81
9.29
Actuarial Losses/(Gains)
(8.71)
19.91
Past Service Cost
-
5.50
Liabilities assumed on acquisition
-
5.85
Liabilities transferred in
0.22
-
Benefits Paid
(7.26)
(6.62)
Closing Defined Benefit Obligation 168.99
147.25
Changes in the fair value of plan assets are as follows:
(` in crores)
31 March, 2014
31 March, 2013
Opening Fair Value of Plan Assets 152.17
98.21
Expected Return on Plan Assets
11.14
7.65
Actuarial Gains/(Losses)
2.46
2.02
Contributions by Employer
13.25
46.08
Assets acquired on acquisition
-
4.83
Benefits Paid
(7.26)
(6.62)
Closing Fair Value of Plan Assets 171.76
152.17
150
Experience adjustments
(` in crores)
31 March,
2014
31 March,
2013
31 March,
2012
31 March,
2011
31 March,
2010
Defined Benefit Obligations
168.99
147.25 94.82 61.43 43.02
Plan Assets
171.76
152.17 98.21 63.62 44.08
Surplus/(Deficit)
2.77
4.92 3.39 2.19 1.06
Experience Adjustments on Plan
Liabilities 7.45 4.66 27.31 1.55 1.27
Experience Adjustments on Plan Assets
2.30
2.07 0.48 (0.78) 0.46
Axis Bank Ltd.
Major categories of plan assets (managed by Insurers) as a percentage of fair value of total plan assets
31 March, 2014
31 March, 2013
%
%
Government securities
41.24
40.87
Bonds, debentures and other fixed income instruments
48.22
38.48
Money market instruments
7.85
18.45
Equity shares
2.34
2.20
Others
0.35
-
31 March, 2014
31 March, 2013
Principal actuarial assumptions at the balance sheet date:
Discount Rate
9.15% p.a.
7.90% p.a.
Expected rate of Return on Plan Assets
7.50% p.a.
7.50% p.a.
Salary Escalation Rate
7.00% p.a.
7.00% p.a.
Employee Turnover
- 21 to 30 (age in years)
19.00%
20.14%
- 31 to 44 (age in years)
8.00%
10.00%
- 45 to 59 (age in years)
4.00%
1.00%
The estimates of future salary increases considered take into account the inflation, seniority, promotion and other
relevant factors.
The expected rate of return on plan assets is based on the average long-term rate of return expected on investments
of the Fund during the estimated term of the obligations.
As the contribution expected to be paid to the plan during the annual period beginning after the balance sheet date
is based on various internal/external factors, a best estimate of the contribution is not determinable.
The above information is as certified by the actuary and relied upon by the auditors.
151
Axis Capital Ltd.
31 March, 2014
31 March, 2013
The major categories of plan assets* as a percentage of fair value of total
plan assets – Insurer Managed Funds
100.00
100.00
*composition of plan assets is not available
31 March, 2014
31 March, 2013
Principal actuarial assumptions at the balance sheet date:
Discount Rate
9.38% p.a.
7.80% p.a.
Expected rate of Return on Plan Assets
9.38% p.a.
7.50% p.a.
Salary Escalation Rate
7.00% p.a.
6.00% p.a.
Employee Turnover (Sales and Retail Broking Segment)
- 21 to 44 (age in years) N.A. 70.00%
- 45 to 59 (age in years)
N.A.
1.00%
Employee Turnover (Capital Market Segment)
7.00%
7.00%
The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion
and other relevant factors, such as supply and demand in the employment market.
The overall expected rate of return on assets is determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.
The Company expects to contribute `0.98 crores as gratuity in the year 2014-15.
Axis Asset Management Company Ltd.
31 March, 2014
31 March, 2013
Principal actuarial assumptions at the balance sheet date:
Discount Rate
8.98% p.a.
7.94% p.a.
Expected rate of Return on Plan Assets
N.A.
N.A.
Salary Escalation Rate
9.00% p.a.
9.00% p.a.
Employee Turnover
10.00%
10.00%
The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion
and other relevant factors, such as supply and demand in the employment market.
Axis Securities Ltd.
31 March, 2014
31 March, 2013
The major categories of plan assets* as a percentage of fair value of total
plan assets – Insurer Managed Funds
100.00
100.00
*composition of plan assets is not available
31 March, 2014
31 March, 2013
Principal actuarial assumptions at the balance sheet date:
Discount Rate
8.70% p.a.
7.80% p.a.
Expected rate of Return on Plan Assets
7.50% p.a.
N.A.
Salary Escalation Rate
7.00% p.a.
6.00% p.a.
Employee Turnover
7.00%
7.00%
The estimates of future salary increases considered take into account the inflation, seniority, promotion and other
relevant factors.
152
The expected rate of return on plan assets is based on the average long-term rate of return expected on investments
of the Fund during the estimated term of the obligations.
The Company expects to contribute `0.58 crores as gratuity in the year 2014-15.
Axis Finance Ltd.
31 March, 2014
The major categories of plan assets* as a percentage of fair value of total plan assets – Insurer
Managed Funds
100.00
*composition of plan assets is not available
31 March, 2014
Principal actuarial assumptions at the balance sheet date:
Discount Rate
9.38% p.a.
Expected rate of Return on Plan Assets
9.38% p.a.
Salary Escalation Rate
7.00% p.a.
Employee Turnover
2.00%
The estimates of future salary increases considered in actuarial valuation, take account of inflation, seniority, promotion
and other relevant factors, such as supply and demand in the employment market.
1.1.13 Provisions and contingencies
a) Movement in provision for frauds included under other liabilities is set out below:
(` in crores)
31 March, 2014
31 March, 2013
Opening balance at the beginning of the year
13.97
17.35
Additions during the year
1.00
4.57
Reductions on account of payments during the year
(0.41)
(5.57)
Reductions on account of reversals during the year
(0.50)
(2.38)
Closing balance at the end of the year 14.06
13.97
b) Other liabilities include provision for reward points made on actuarial basis, the movement of which is set out
below:
(` in crores)
31 March, 2014
31 March, 2013
Opening provision at the beginning of the year
67.89
43.28
Provision made during the year
22.88
28.03
Reductions during the year
(5.46)
(3.42)
Closing provision at the end of the year 85.31
67.89
153
c) Movement in provision for other contingencies is set out below:
(` in crores)
31 March, 2014
31 March, 2013
Opening provision at the beginning of the year
396.46
15.38
Provision made during the year
785.93
561.65
Reductions during the year
(360.78)
(180.57)
Closing provision at the end of the year 821.61
396.46
The above provision includes contingent provision for advances/other exposures, legal cases and other
contingencies.
1.1.14 Description of contingent liabilities:
a) Claims against the Group not acknowledged as debts
These represent claims filed against the Group in the normal course of business relating to various legal cases
currently in progress. These also include demands raised by income tax authorities and disputed by the Group.
b) Liability on account of forward exchange and derivative contracts
The Bank enters into foreign exchange contracts, currency options/swaps, interest rate/currency futures and
forward rate agreements on its own account and for customers. Forward exchange contracts are commitments
to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to
exchange cash flows by way of interest/principal in two currencies, based on ruling spot rates. Interest rate swaps
are commitments to exchange fixed and floating interest rate cash flows. Interest rate futures are standardised,
exchange-traded contracts that represent a pledge to undertake a certain interest rate transaction at a specified
price, on a specified future date. Forward rate agreements are agreements to pay or receive a certain sum
based on a differential interest rate on a notional amount for an agreed period. A foreign currency option is an
agreement between two parties in which one grants to the other the right to buy or sell a specified amount
of currency at a specific price within a specified time period or at a specified future time. An Exchange Traded
Currency Option contract is a standardised foreign exchange derivative contract, which gives the owner the right,
but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed
exchange rate on a specified date on the date of expiry. Currency Futures contract is a standardised, exchange-
traded contract, to buy or sell a certain underlying currency at a certain date in the future, at a specified price.
c) Guarantees given on behalf of constituents
As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit
standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the
customer failing to fulfill its financial or performance obligations.
d) Acceptances, endorsements and other obligations
These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank’s
customers that are accepted or endorsed by the Bank.
e) Other items for which the Group is contingently liable
Other items represent outstanding amount of bills rediscounted by the Bank, estimated amount of contracts
remaining to be executed on capital account, commitments towards underwriting and investment in equity
through bids under Initial Public Offering (IPO) of corporates as at the year end and demands raised by statutory
authorities (other than income tax) and disputed by the Group.
154
1.1.15 Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies
In terms of General Circular No. 2/2011 of the Ministry of Corporate Affairs, Government of India dated 8 February,
2011.
(` in crores)
For the year ended 31 March, 2014
Axis
Capital Ltd.
Axis
Private
Equity Ltd.
Axis
Trustee
Services
Ltd.
Axis
Mutual
Fund
Trustee Ltd.
Axis
Asset
Management
Company Ltd.
Axis Bank
UK Ltd.
@
Axis Finance
Ltd.
Axis
Securities
Ltd.
Axis
Securities
Europe
Ltd.#^
Capital 73.50 15.00 1.50 0.05 174.00 329.53 255.75 144.50 9.98
Reserves and Surplus 112.74 2.46 30.08 0.09 (122.36) 13.22 156.35 11.96 8.77
Total Assets (Fixed Assets +
Investments + Other Assets) 904.93 24.01 52.67 0.17 155.43 2,227.89 1,218.41 305.89 18.82
Total Liabilities (Deposits +
Borrowings + Other Liabilities
+ Provisions) 718.69 6.55 21.09 0.03 103.79 1,885.14 806.31 149.43 0.07
Investments 11.60 3.54 - 0.12 15.80 456.79 89.80 - -
Total Income 189.92 5.96 27.97 0.18 87.70 75.03 76.03 314.53 -
Profit/(Loss) Before Taxation 33.65 4.53 21.95 0.03 1.62 16.53 50.51 12.57 (0.09)
Provision for Taxation 11.60 1.23 7.46 0.01 - 2.96 17.03 (1.00) -
Profit/(Loss) After Taxation 22.05* 3.30 14.49 0.02 1.62 13.57 33.48 13.57* (0.09)
Proposed Dividend and Tax
(including cess thereon) - 6.14 12.28 - - - - - -
@ Asset/Liability items are stated in INR equivalent of USD ($1 = `59.915 as on 31 March, 2014). Profit and loss items
reported in INR based on rates prevailing on the date of transactions
# Amount in INR equivalent of GBP (£1 = `99.765 as on 31 March 2014)
^ Axis Securities Europe Ltd. is a wholly owned subsidiary of Axis Capital Ltd. (a wholly owned subsidiary of Axis Bank Ltd.)
* Excludes `1.42 crores of loss of business demerged by Axis Capital Ltd. to Axis Securities Ltd. from appointed date i.e.
20 October, 2012 to 31 March, 2013
1.1.16 Comparative Figures
Previous year figures have been regrouped and reclassified, where necessary to conform to current year’s presentation.
For Axis Bank Ltd.
Shikha Sharma
Managing Director & CEO
K. N. Prithviraj
Director
V. R. Kaundinya
Director
S. B. Mathur
Director
Samir K. Barua
Director
Somnath Sengupta
Executive Director &
Head (Corporate Centre)
V. Srinivasan
Executive Director &
Head (Corporate Banking)
Sanjeev Kapoor
Company Secretary
Sanjeev K. Gupta
President & CFO
Date : 25 April, 2014
Place: Mumbai
155
I. SCOPE OF APPLICATION AND CAPITAL ADEQUACY
Name of the head of the banking group to which the framework applies: Axis Bank Limited
Axis Bank Limited (the ‘Bank’) is a commercial bank, which was incorporated on the 3
rd
December 1993. The Bank is the
controlling entity for all group entities. The consolidated financial statements of the Bank comprise the financial statements
of Axis Bank Limited and its subsidiaries (including step-down subsidiaries) that together constitute the ‘Group’. The Bank
consolidates its subsidiaries in accordance with Accounting Standard 21 (AS-21) ‘Consolidated Financial Statements’
issued by The Institute of Chartered Accountants of India on a line-by-line basis by adding together the like items of assets,
liabilities, income and expenditure.
(i) Qualitative Disclosures
The list of group entities considered for consolidation is given below:
Name of the
Entity/Country of
Incorporation
Included
under
Accounting
Scope of
Consolidation
Method of
Consolidation
Included
under
Regulatory
Scope of
Consolidation
Method of
Consolidation
Reasons for
difference
in the
Method of
Consolidation
Reasons, if
Consolidated
under only
one of the
Scopes of
Consolidation
Axis Asset
Management
Company Limited/
India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Axis Bank UK
Limited/UK
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Axis Capital
Limited/India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Axis Finance
Limited/India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Axis Mutual Fund
Trustee Limited/
India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Axis Private Equity
Limited/India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
DISCLOSURES UNDER BASEL III CAPITAL REGULATIONS
(CONSOLIDATED) FOR THE YEAR ENDED 31
ST
MARCH 2014
* NA – Not Applicable
156156
Name of the
Entity/Country of
Incorporation
Included
under
Accounting
Scope of
Consolidation
Method of
Consolidation
Included
under
Regulatory
Scope of
Consolidation
Method of
Consolidation
Reasons for
difference
in the
Method of
Consolidation
Reasons, if
Consolidated
under only
one of the
Scopes of
Consolidation
Axis Securities
Limited/India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Axis Trustee
Services Limited/
India
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
Bussan Auto
Finance India
Private Limited/
India
Yes Equity Method
(1)
No Treated as an
Associate
NA Bank’s
investment
has been risk
weighted
Axis Securities
Europe Limited/
UK
(2)
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
Yes Consolidated in
accordance with
AS-21, Consolidated
Financial Statements
NA NA
* NA – Not Applicable
(1)
As per Accounting Standard (AS-23), “Accounting for Investments in Associates in Consolidated Financial
Statements” as issued by The Institute of Chartered Accountants of India.
(2)
Step-down subsidiary. 100% of its share capital is owned by Axis Capital Limited, a wholly owned subsidiary of
the Bank.
The list of group entities not considered for consolidation both under the accounting and regulatory scope of
consolidation is given below:
Name of the
Entity/Country
of Incorporation
Principal
Activity of the
Entity
Total Balance
Sheet Equity
Percentage
Bank’s Holding
in the Total
Equity
Regulatory
treatment
of Bank’s
Investments
Total Balance
Sheet Assets
Enam
International
Limited/UAE
Arranging
credit or deals
in investments
and advising on
financial products
AED 6.61million* 100% held by
Axis Capital
Limited, which
is the wholly -
owned subsidiary
of Axis Bank
Limited
Risk Weighted Company
under voluntary
dissolution with
effect from 17
th
January 2013
*as on March 2012
157
(ii) Quantitative Disclosures
The list of group entities considered for consolidation as on 31
st
March 2014 is given below:
(Amt. in millions)
Name of the Entity/Country of
Incorporation
Principal Activity of the Entity Total Balance
Sheet Equity*
Total Balance
Sheet Assets
Axis Asset Management Company
Limited/India
Asset Management company for Axis
Mutual Fund
`1,740 `1,554
Axis Bank UK Limited/UK Retail Banking, Corporate Banking,
Commercial Banking and Treasury
Services
`3,295
(USD 55)
`22,279
(USD 372)
Axis Capital Limited/India Merchant Banking, Institutional
Broking and Investment Banking
Business
`735 `9,049
Axis Finance Limited/India Non-Banking Financial activities `2,558 `12,184
Axis Mutual Fund Trustee Limited/India Trustee company for Axis Mutual Fund `1 `2
Axis Private Equity Limited/India Managing investments, venture capital
funds and off-shore funds
`150 `240
Axis Securities Limited/India Marketing of Retail Asset Products,
Credit Cards and Retail Broking
`1,445 `3,059
Axis Trustee Services Limited/India Trusteeship services `15 `527
Axis Securities Europe Limited/UK To advise and arranging deals in
investments
`100
(GBP 1)
`188
(GBP 2)
* Paid up Equity Capital
Note - The investment in Bussan Auto Finance India Private Limited is not deducted from capital funds of the Bank
but it is assigned risk weights as an investment.
There is no capital deficiency in any subsidiary, which is not included in the regulatory scope of consolidation.
As on 31
st
March 2014, the Bank does not have controlling interest in any insurance entity.
There are no restrictions or impediments on transfer of funds or regulatory capital within the banking group.
158158
II. CAPITAL ADEQUACY
The Bank is subject to the capital adequacy guidelines stipulated by RBI, which are based on the framework of the Basel
Committee on Banking Supervision. As per Basel III guidelines, the Bank is required to maintain a minimum Capital to
Risk Weighted Assets Ratio (CRAR) of 9% {11.5% including Capital Conservation Buffer (CCB)}, with minimum Common
Equity Tier I (CET1) of 5.5% (8% including CCB) as on 31
st
March 2019. These guidelines on Basel III has been implemented
on 1
st
April 2013 in a phased manner. The minimum capital required to be maintained by the Bank for the year ended
31
st
March 2014 is 9% with minimum Common Equity Tier 1 (CET1) of 5%.
An assessment of the capital requirement of the Bank is carried out through a comprehensive projection of future businesses
that takes cognizance of the strategic intent of the Bank, profitability of particular businesses and opportunities for
growth. The proper mapping of credit, operational and market risks to this projected business growth enables assignment
of capital that not only adequately covers the minimum regulatory capital requirement but also provides headroom for
growth. The calibration of risk to business is enabled by a strong risk culture in the Bank aided by appropriate, technology-
based risk management systems. As part of the Internal Capital Adequacy Assessment Process (ICAAP), the Bank also
assesses the adequacy of capital under stress. A summary of the Bank’s capital requirement for credit, market and
operational risk and the capital adequacy ratio as on 31
st
March 2014 is presented below:
(` in millions)
Capital Requirements for various Risks Amount
CREDIT RISK
Capital requirements for Credit Risk
- Portfolios subject to standardised approach 220,761
- Securitisation exposures -
MARKET RISK
Capital requirements for Market Risk
- Standardised duration approach 18,280
- Interest rate risk 16,176
- Foreign exchange risk (including gold) 451
- Equity risk 1,653
OPERATIONAL RISK
Capital requirements for Operational risk
- Basic indicator approach 20,002
Capital Adequacy Ratios Consolidated Standalone
Common Equity Tier – 1 CRAR 12.75% 12.62%
Tier – 1 CRAR 12.75% 12.62%
Total CRAR 16.30% 16.07%
159
III. RISK MANAGEMENT: OBJECTIVES AND ORGANISATION STRUCTURE
The wide variety of businesses undertaken by the Bank requires it to identify, measure, control, monitor and report
risks effectively. The key components of the Bank’s risk management rely on the risk governance architecture,
comprehensive processes and internal control mechanism based on approved policies and guidelines. The Bank’s risk
governance architecture focuses on the key areas of risk such as credit, market (including liquidity) and operational risk
and quantification of these risks, wherever possible, for effective and continuous monitoring and control.
Objectives and Policies
The Bank’s risk management processes are guided by well-defined policies appropriate for various risk categories,
independent risk oversight and periodic monitoring through the sub-committees of the Board of Directors. The Board sets
the overall risk appetite and philosophy for the Bank. The Committee of Directors, the Risk Management Committee and
the Audit Committee of the Board, which are sub-committees of the Board, review various aspects of risk arising from the
businesses of the Bank. Various senior management committees operate within the broad policy framework as illustrated
below:
The Bank has put in place policies relating to management of credit risk, market risk, operational risk and asset-liability
both for the domestic as well as overseas operations along with overseas subsidiaries as per the respective host regulatory
requirements and business needs. The overseas policies are drawn based on the risk perceptions of these economies and
the Bank’s risk appetite.
The Bank has formulated a comprehensive Stress Testing Policy to measure impact of adverse stress scenarios on the
adequacy of capital. The stress scenarios are idiosyncratic, market wide and a combination of both.
Structure and Organisation
The Risk Department reports to the Executive Director and Head (Corporate Centre) and the Risk Management Committee
of the Board oversees the functioning of the Department. The Department has five separate teams for Credit Risk, Market
Risk (including Treasury Mid Office), Enterprise & Operational Risk, Enterprise Governance Risk and Compliance (EGRC)
and Financial Crime Management Unit (FCMU) and the head of each team reports to the Chief Risk Officer.
Chief Risk Officer
Credit Risk Market Risk
Treasury Mid Office
Enterprise &
Operational Risk
EGRC
Financial Crime
Management
160160
IV. CREDIT RISK
Credit risk refers to the deterioration in the credit quality of the borrower or the counter-party adversely impacting
the financial performance of the Bank. The losses incurred by the Bank in a credit transaction could be due to
inability or wilful default of the borrower in honouring the financial commitments to the Bank. The Bank is exposed
to credit risk through lending and capital market activities.
Credit Risk Management Policy
The Board of Directors establishes parameters for risk appetite which are defined through strategic business plan
as well as the Corporate Credit Policy. Credit Risk Management Policy lays down the roles and responsibilities,
risk appetite, key processes and reporting framework. Corporate credit is managed through rating of borrowers
and the transaction and thorough risk vetting of individual exposures at origination and thorough periodic review
after sanctioning. Retail credit to individuals and small business is managed through definition of product criteria,
appropriate credit filters and subsequent portfolio monitoring.
Credit Rating System
The foundation of credit risk management rests on the internal rating system. Rating linked single borrower exposure
norms, delegation of powers and review frequency have been adopted by the Bank. The Bank has developed
rating tools specific to market segments such as large and mid-corporates, SME, financial companies, microfinance
companies and project finance to objectively assess underlying risk associated with such exposures.
The credit rating model uses a combination of quantitative and qualitative inputs to arrive at a ‘point-in-time’ view
of the risk profile of counterparty. Each internal rating grade corresponds to a distinct probability of default over
one year. Expert scorecards are used for various SME schematic products and retail agriculture schemes. Statistical
application and behavioural scorecards have been developed for all major retail portfolios.
The Bank recognises cash margin, central/state government, bank and corporate guarantees, exclusive mortgage of
properties and lease rental securitisation for the purpose of credit enhancement to arrive at a facility rating.
Model validation is carried out annually by objectively assessing the discriminatory power, calibration accuracy and
stability of ratings. The Bank has completed the estimation and validation of PD, LGD and CCF models for corporate
and retail portfolios.
Credit Sanction and Related Processes
The guiding principles behind the credit sanction process are as under:
l ‘Know Your Customer’ is a leading principle for all activities.
l The acceptability of credit exposure is primarily based on the sustainability and adequacy of borrower’s normal
business operations and not based solely on the availability of security.
The Bank has put in place a hierarchical committee structure based on the size and rating of the exposures for credit
sanction and review; with sanctioning authority rested with higher level committees for larger and lesser rated
exposures. Committee of Directors (COD) is the topmost committee in the hierarchy which is a sub-committee of the
Board.
All management level sanctioning committees require mandatory presence of a representative from Risk Department
for quorum.
161
Review and Monitoring
l All credit exposures, once approved, are monitored and reviewed periodically against the approved limits. Borrowers
with lower credit rating are subject to more frequent reviews.
l Credit audit involves independent review of credit risk assessment, compliance with internal policies of the Bank
and with the regulatory framework, compliance of sanction terms and conditions and effectiveness of loan
administration.
l Customers with emerging credit problems are identified early and classified accordingly. Remedial action is initiated
promptly to minimize the potential loss to the Bank.
Concentration Risk
The Bank manages concentration risk by means of appropriate structural limits and borrower-wise limits based on
credit-worthiness. Credit concentration in the Bank’s portfolios is monitored for the following:
l Large exposures to the individual clients or group: The Bank has individual borrower-wise exposure ceilings based
on the internal rating of the borrower as well as group-wise borrowing limits which are continuously tracked and
monitored.
l Geographic concentration for real estate exposures.
l Concentration of unsecured loans to total loans and advances.
l Concentration by Industry: Industry analysis plays an important part in assessing the concentration risk within
the loan portfolio. Industries are classified into various categories based on factors such as demand-supply, input
related risks, government policy stance towards the sector and financial strength of the sector in general. Such
categorisation is used in determining the expansion strategy for the particular industry.
Portfolio Management
Portfolio level risk analytics and reporting to senior management examines optimal spread of risk across various rating
classes, undue risk concentration across any particular industry segments and delinquencies. Borrowers or portfolios are
marked for early warning when signs of weakness or financial deterioration are envisaged in order that timely remedial
actions may be initiated. In-depth sector specific studies are undertaken on portfolios vulnerable to extraneous shocks
and the results are shared with the business departments. The Bank has a well-defined stress testing policy in place and
at least on a quarterly basis, stress testing is undertaken on various portfolios to gauge the impact of stress situations
on the health of portfolio, profitability and capital adequacy.
A dedicated risk surveillance team supports the Credit Risk team by feeding it and updating it with lead indicators of
stress in sectors which includes potential delinquencies, sector updates, negative news on borrower corporate and
external rating downgrades.
As regards retail lending, the focus has been on increasing lending to secured portfolios (mortgage, auto), while
maintaining a cautious approach to unsecured lending (personal loans and credit card business). The Bank is continuously
endeavoring to improve the quality of incremental origination through better credit underwriting standards using
improved scorecards. Portfolio delinquency/irregularity trends are monitored periodically.
162162
Definitions and Classification of Non-Performing Assets
Advances are classified into performing and non-performing asset (NPAs) as per RBI guidelines.
A non-performing asset (NPA) is a loan or an advance where;
l interest and/or installment of principal remains overdue for a period of more than 90 days in respect of a term loan,
l the account remains ‘out-of-order’ for a period of more than 90 days in respect of an Overdraft or Cash Credit (OD/
CC),
l the bill remains overdue for a period of more than 90 days in case of bills purchased and discounted,
l a loan granted for short duration crops will be treated as an NPA if the installments of principal or interest thereon
remain overdue for two crop seasons,
l a loan granted for long duration crops will be treated as an NPA if the installments of principal or interest thereon
remain overdue for one crop season,
l in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative
contract, if these remain unpaid for a period of 90 days from the specified due date for payment.
l the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction
undertaken in terms of guidelines on securitisation dated February 1, 2006.
NPAs are further classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. A sub-
standard asset is one, which has remained a NPA for a period less than or equal to 12 months. An asset is classified as
doubtful if it has remained in the sub-standard category for more than 12 months. A loss asset is one where loss has been
identified by the Bank or internal or external auditors or during RBI inspection but the amount has not been written off
fully.
Definition of Impairment
At each balance sheet date, the Bank ascertains if there is any impairment in its assets. If such impairment is detected, the
Bank estimates the recoverable amount of the asset. If the recoverable amount of the asset or the cash-generating unit to
which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is recognised in the profit and loss account.
CREDIT RISK EXPOSURES
Total Gross Credit Risk Exposure Including Geographic Distribution of Exposure – Position as on 31
st
March
2014
(` in millions)
Domestic
(Outstanding)
Overseas
(Outstanding)
Total
Fund Based 3,069,706 423,062 3,492,768
Non Fund Based * 782,947 148,213 931,160
Total 3,852,653 571,275 4,423,928
* Non-fund based exposures are bank guarantees issued on behalf of constituents and acceptances and endorsements.
163
Distribution of Credit Risk Exposure by Industry Sector – Position as on 31
st
March 2014
(` in millions)
Industry Classification
Amount
Fund Based
(Outstanding)
Non-Fund Based
(Outstanding)
Banking and Finance 313,025 87,101
Beverage and Tobacco 6,495 388
Cement and Cement Products 30,331 4,464
Chemicals and Chemical products 78,400 56,892
- of which Petro Chemicals 17,228 22,615
- of which Drugs and Pharmaceuticals 24,509 8,353
Commercial Real Estate 100,009 11,863
Computer Software 21,919 17,365
Construction 18,319 29,760
Cotton Textiles 40,131 1,956
Edible Oils and Vanaspati 6,836 15,333
Engineering 61,117 112,265
- of which Electronics 4,274 1,179
Entertainment & Media 12,056 15,901
Food Processing 71,683 1,013
Gems and Jewellery 15,065 1,678
Glass and Glassware 4,835 2,395
Infrastructure (excluding Power) 200,129 153,456
- of which Roads and Ports 79,339 17,222
- of which Telecommunications 33,924 34,969
Iron and Steel 76,329 47,335
Jute Textiles 165 3
Leather and Leather Products 1,395 118
Metal and Metal Products 27,954 16,499
Mining and Quarrying (incl. Coal) 20,692 10,841
NBFCs 24,071 14,536
Other Textiles 20,559 2,881
Paper and Paper Products 10,628 2,950
Petroleum Coal Products and Nuclear Fuels 10,350 30,481
Power Generation & Distribution 121,145 121,664
Professional Services 42,274 9,853
Rubber Plastic and their products 12,372 3,148
Shipping Transportation & Logistics 37,430 10,431
Sugar 8,681 2,045
Tea 1,529 813
Trade 125,690 59,591
Vehicles, Vehicle Parts and Transport Equipments 29,926 6,006
Wood and Wood Products 4,483 1,644
Other Industries 178,278 47,520
Residual Exposures 1,758,467 30,971
- of which Other Assets 98,834 -
- of which Banking Book Investments 635,273 -
- of which Retail, Agriculture & Others 1,024,360 30,971
Total 3,492,768 931,160
164164
As on 31
st
March 2014, the Bank’s exposure to the industries stated below was more than 5% of the total gross credit
exposure (outstanding):
Sr. No. Industry Classification Percentage of the total gross credit exposure
1. Banking & Finance 9%
2. Infrastructure 8%
3. Power Generation & Distribution 5%
Residual Contractual Maturity Breakdown of Assets – Position as on 31
st
March 2014*
(` in millions)
Maturity Bucket Cash Balances
with RBI
Balances
with other
banks#
Investments Advances Fixed
Assets
Other
assets
1 day 41,647 30,630 25,156 77,165 26,460 - 1,978
2 to 7 days - 1,563 51,579 48,756 22,227 - 14,017
8 to 14 days - 2,894 1,318 27,464 7,572 - 8,053
15 to 28 days - 2,783 1,540 26,646 20,783 - 20,102
29 days to 3 months - 8,285 8,138 74,826 92,957 - 1,910
Over 3 months and upto 6 months - 10,327 11,764 100,647 85,660 - 9,515
Over 6 months and upto 12 months - 15,004 7,460 128,173 152,072 - 7,256
Over 1 year and upto 3 years - 11,774 12,393 181,544 539,045 - 4,037
Over 3 years and upto 5 years - 6,949 - 91,448 292,378 - 144
Over 5 years - 38,558 - 384,559 1,086,683 24,488 32,916
Total 41,647 128,767 119,348 1,141,228 2,325,837 24,488 99,928
* Intra-group adjustments are excluded
# including money at call and short notice
Movement of NPAs and Provision for NPAs (including NPIs) – Position as on 31
st
March 2014
(` in millions)
Particulars Amount
A. Amount of NPAs (Gross)*
31,464
- Substandard 10,915
- Doubtful 1 2,604
- Doubtful 2 4,814
- Doubtful 3 710
- Loss 12,421
165
(` in millions)
Particulars Amount
B. Net NPAs
10,246
C. NPA Ratios
- Gross NPAs (including NPIs) to gross advances (%) 1.34%
- Net NPAs (including NPIs) to net advances (%) 0.44%
D. Movement of NPAs (Gross)
- Opening balance as on 1
st
April 2013 23,934
- Additions 25,476
- Reductions 17,946
- Closing balance as on 31
st
March 2014 31,464
E. Movement of Provision for NPAs
- Opening balance as on 1
st
April 2013 16,560
- Provision made in 2013-14# 12,893
- Transfer from restructuring provision 537
- Write-offs/Write-back of excess provision (9,127)
- Closing balance as on 31
st
March 2014 20,863
* includes `1 million outstanding under application money classified as non-performing asset.
# includes `17 million due to effect of exchange rate fluctuation.
NPIs and Movement of Provision for Depreciation on Investments – Position as on 31
st
March 2014
(` in millions)
Amount
A. Amount of Non-Performing Investments 1,449
Amount of Non-Performing Investments - Others* 0.8
B. Amount of Provision held for Non-performing investments 1,241
Amount of Provision held for Non-performing investments - Others* -
C. Movement of provision for depreciation on investments
- Opening balance as on 1
st
April 2013 2,236
- Provision made in 2013-14 534
- Write-offs/Write-back of excess provision (1,537)
- Closing balance as on 31
st
March 2014 1,233
* represents amount outstanding under application money classified as non-performing asset.
166166
Credit Risk: Use of Rating Agency under the Standardised Approach
The RBI guidelines on capital adequacy require banks to use ratings assigned by specified External Credit Assessment
Agencies (ECAIs) namely Brickworks, CARE, CRISIL, ICRA, India Ratings and SMERA for domestic counterparties and
Standard & Poor’s, Moody’s and Fitch for foreign counterparties.
The Bank is using issuer ratings and short-term and long-term instrument/bank facilities’ ratings which are assigned by
the accredited rating agencies viz. Brickworks, CARE, CRISIL, ICRA, India Ratings and SMERA and published in the public
domain to assign risk-weights in terms of RBI guidelines. In respect of claims on non-resident corporates and foreign
banks, ratings assigned by international rating agencies i.e. Standard & Poor’s, Moody’s and Fitch is used. For exposures
with contractual maturity of less than one year, a short-term rating is used. For cash credit facilities and exposures with
contractual maturity of more than one year, long-term rating is used.
Issue ratings would be used if the Bank has an exposure in the rated issue and this would include fund-based and non-
fund based working capital facilities as well as loans and investments. In case the Bank does not have exposure in a rated
issue, the Bank would use the issue rating for its comparable unrated exposures to the same borrower, provided that
the Bank’s exposures are pari-passu or senior and of similar or lesser maturity as compared to the rated issue. Structured
Obligation (SO) ratings are not used unless the Bank has a direct exposure in the ‘SO’ rated issue. If an issuer has a long-
term or short-term exposure with an external rating that warrants a risk weight of 150%, all unrated claims on the same
counterparty, whether short-term or long-term, also receive 150% risk weight, unless the Bank uses recognised credit risk
mitigation techniques for such claims.
Issuer ratings provide an opinion on the general credit worthiness of the rated entities in relation to their senior unsecured
obligations. Therefore, issuer ratings would be directly used to assign risk-weight to unrated exposures of the same
borrower.
Details of Gross Credit Risk Exposure (Fund based and Non-fund based) based on Risk-Weight – Position as on
31
st
March 2014
(` in millions)
Amount
Below 100% risk weight 2,779,879
100% risk weight 1,209,363
More than 100% risk weight 434,686
Deduction from capital funds -
V. CREDIT RISK MITIGATION
The Bank uses various collaterals both financial as well as non-financial, guarantees and credit insurance as credit risk
mitigants. The main financial collaterals include bank deposits, National Savings Certificate/Kisan Vikas Patra/Life Insurance
Policy and gold, while main non-financial collaterals include land and building, plant and machinery, residential and
commercial mortgages. The guarantees include guarantees given by corporate, bank and personal guarantees. This also
includes loans and advances guaranteed by Export Credit & Guarantee Corporation Limited (ECGC), Credit Guarantee
Fund Trust for Small Industries (CGTSI), Central Government and State Government.
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The Bank has in place a collateral management policy, which underlines the eligibility requirements for Credit Risk
Mitigants (CRM) for capital computation as per Basel III guidelines. The Bank reduces its credit exposure to counterparty
with the value of eligible financial collateral to take account of the risk mitigating effect of the collateral. To account for
the volatility in the value of collateral, haircut is applied based on the type, issuer, maturity, rating and re-margining/
revaluation frequency of the collateral. The Bank revalues various financial collaterals at varied frequency depending on
the type of collateral. The Bank has a valuation policy that covers processes for collateral valuation and empanelment of
valuers.
Details of Total Credit Exposure (after on or off Balance Sheet Netting) as on 31
st
March 2014
(` in millions)
Amount
Covered by :
- Eligible financial collaterals after application of haircuts 130,850
- Guarantees/credit derivatives 109,044
VI. SECURITISATION
The primary objectives for undertaking securitisation activity by the Bank are enhancing liquidity, optimisation of usage of
capital and churning of the assets as part of risk management strategy.
The securitisation of assets generally being undertaken by the Bank is on the basis of ‘True Sale’, which provides 100%
protection to the Bank from default. All risks in the securitised portfolio are transferred to a Special Purpose Vehicle (SPV),
except where the Bank provides sub-ordination of cash flows to Senior Pass-Through Certificate (PTC) holders by retaining
the junior tranche of the securitised pool. The Bank has not sponsored any special purpose vehicle which is required to be
consolidated in the consolidated financial statements as per accounting norms.
The Bank may also invest in securitised instruments which offer attractive risk adjusted returns. The Bank enters into
purchase/sale of corporate and retail loans through direct assignment/SPV. In most cases, post securitisation, the Bank
continues to service the loans transferred to the assignee/SPV. The Bank however does not follow the originate to distribute
model and pipeline and warehousing risk is not material to the Bank.
Valuation of securitised exposures is carried out in accordance with the Fixed Income Money Market and Derivatives
Association (FIMMDA)/RBI guidelines. Gain on securitisation is recognised over the period of the underlying securities issued
by the SPV. Loss on securitisation is immediately debited to profit and loss account. In respect of credit enhancements
provided or recourse obligations (projected delinquencies, future servicing etc.) accepted by the Bank, appropriate
provision/disclosure is made at the time of sale in accordance with AS-29 ‘Provisions, contingent liabilities and contingent
assets’.
The Bank follows the standardized approach prescribed by the RBI for the securitisation activities. The Bank uses the
ratings assigned by various external credit rating agencies viz. Brickworks, CARE, CRISIL, ICRA, India Ratings and SMERA
for its securitisation exposures.
All transfers of assets under securitisation were effected on true sale basis. However, in the financial year ended 31
st
March
2014, the Bank has not securitised any asset.
168168
A. Banking Book
Details of Exposure Securitised by the Bank and subject to Securitisation Framework
(` in millions)
Sr. No. Type of Securitisation Amount
i Total amount of exposures securitised -
ii Losses recognised by the Bank during the current period -
iii Amount of assets intended to be securitised within a year -
Of which
- Amount of assets originated within a year before securitisation -
iv Amount of exposures securitised
- Corporate Loans -
v Unrecognised gain or losses on sale
- Corporate Loans -
Aggregate amount of Securitisation Exposures Retained or Purchased as on 31
st
March 2014 is given below
(` in millions)
Sr. No. Type of Securitisation On Balance Sheet Off Balance Sheet
i Retained - -
ii Securities purchased - -
iii Liquidity facility - -
iv Credit enhancement (cash collateral) - -
v Other commitments - -
Risk-weight wise Bucket Details of the Securitisation Exposures on the Basis of Book-Value
(` in millions)
Amount Capital charge
Below 100% risk weight - -
100% risk weight - -
More than 100% risk weight - -
Deductions
- Entirely from Tier I capital - -
- Credit enhancing I/Os deducted from Total Capital - -
- Credit enhancement (cash collateral) - -
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B. Trading Book
Details of Exposure Securitised by the Bank and subject to Securitisation Framework
(` in millions)
Sr. No. Type of Securitisation Amount
i Aggregate amount of exposures securitised by the Bank for which the Bank has
retained some exposures and which is subject to the market risk approach
-
Aggregate amount of Securitisation Exposures Retained or Purchased as on 31
st
March 2014 is given below
(` in millions)
Sr. No. Type of Securitisation On Balance Sheet* Off Balance Sheet
i Retained - -
ii Securities purchased
- Corporate Loans 2,118 -
- Retail Auto Loans 16,901 -
- Retail Micro Loans 4,434 -
iii Liquidity facility - -
iv Credit enhancement (cash collateral) - -
v Other commitments - -
* includes outstanding balance of PTCs purchased in earlier years also
Risk-weight wise Bucket Details of the Securitisation Exposures on the Basis of Book-Value
(` in millions)
Amount Capital charge
i Exposures subject to Comprehensive Risk Measure for
specific risk
- Retained - -
- Securities purchased - -
ii Exposures subject to the securitisation framework for
specific risk
Below 100% risk weight 23,453 837
100% risk weight - -
More than 100% risk weight - -
iii Deductions
- Entirely from Tier I capital - -
- Credit enhancing I/Os deducted from Total Capital - -
- Credit enhancement (cash collateral) - -
170170
VII. MARKET RISK IN TRADING BOOK
Market risk is the risk of loss to the Bank’s earnings and capital due to changes in the market level of interest rates, price
of securities, foreign exchange rates and equities’ price, as well as the volatilities of those changes. The Bank is exposed
to market risk through its investment activities and also trading activities, which are undertaken for customers as well as
on a proprietary basis. The Bank adopts a comprehensive approach to market risk management for its trading, investment
and asset/liability portfolios. For market risk management, the Bank has:
l Board approved market risk policies and guidelines which are aligned to the regulatory guidelines and based on
experiences gained over the years. The policies are reviewed periodically keeping in view regulatory changes, business
requirements and market developments.
l Process manual which are updated regularly to incorporate and document the best practices.
l Market risk identification through elaborate mapping of the Bank’s main businesses to various market risks.
l Statistical measures like Value at Risk (VaR), supplemented by stress tests, back tests and scenario analysis.
l Non-statistical measures like position limits, marked-to-market (MTM), gaps and sensitivities (mark-to-market,
position limits, duration, PVBP, option Greeks).
l Management Information System (MIS) for timely market risk reporting to senior management functionaries. Key risk
metrics are presented to the Risk Management Committee of the Board through Risk Dash-Boards.
Risk limits such as position limits, stop-loss limits, alarm limits, gaps and sensitivities (duration, PVBP, option Greeks) are
set up and reviewed periodically, based on a number of criteria including regulatory guidelines, relevant market analysis,
business strategy, size of the investment and trading portfolio, management experience and the Bank’s risk appetite.
These limits are monitored on an intra-day/daily basis by the Treasury Mid-office and the exceptions are put up to ALCO
and Risk Management Committee of the Board.
The Bank uses Historical Simulation and its variants for computing VaR for its trading portfolio. VaR is calculated and
reported on a daily basis for the trading portfolios at a 99% confidence level for a one-day holding period, using 250
days of historical data or one year of relative changes in historical rates and prices. The model assumes that the risk factor
changes observed in the past are a good estimate of those likely to occur in the future and is, therefore, limited by the
relevance of the historical data used. The method, however, does not make any assumption about the nature or type of
the loss distribution. The VaR models for different portfolios are back-tested at regular intervals and the results are used
to maintain and improve the efficacy of the model.
The VaR measure is supplemented by a series of stress tests and sensitivity analysis that estimates the likely behaviour of a
portfolio under extreme but plausible conditions and its impact on earnings and capital. The Bank undertakes stress tests
for market risks for its trading book, IRS, forex open position and forex gaps on a monthly basis as well as for liquidity
risk at the end of each quarter. The Bank has built its capabilities to migrate to advanced approach i.e. Internal Models
Approach for assessment of market risk capital.
Concentration Risk
The Bank has allocated the internal risk limits in order to avoid concentrations, wherever relevant. For example, the
Aggregate Gap Limit, Net Open Position and daylight limits are allocated to various currencies and maturities into
Individual Gap Limits to monitor concentrations. Similarly, stop-loss limits and duration limits have been set up for different
categories within a portfolio. Within the overall PV01 limit, a sub limit is set up which is not expected to be breached by
trades linked to any individual benchmark. Some of the limits like currency-wise net open position, stop loss limits and
PV01 limits are allocated dealer-wise also, based on their skill and experience, to avoid build up of positions in a single
dealer’s book.
Liquidity Risk
Liquidity Risk is the current and prospective risk to earnings or capital arising from a bank’s inability to meet its current or
future obligations on the due date. Liquidity risk is two-dimensional viz., risk of being unable to fund portfolio of assets
171
at appropriate maturity and rates (liability dimension) and the risk of being unable to liquidate an asset in a timely manner
at a reasonable price (asset dimension).
The goal of Liquidity Risk Management is to meet all commitments on the due date and also be able to fund new
investment opportunities by raising sufficient funds in the form of increasing fresh liabilities or by expeditious asset sell-off
without incurring unacceptable losses, both under normal and adverse conditions. These objectives are ensured by setting
up policies, operational level committees, measurement tools and monitoring and reporting mechanism using effective
use of IT systems for availability of quality data.
The Bank manages its liquidity on a static as well as dynamic basis using various tools such as gap analysis, ratio analysis,
dynamic liquidity statements and scenario analysis. The Bank’s ALM policy defines the tolerance limits for its structural
liquidity position. The Liquidity Policy for the domestic operations as well as for the overseas branches lay down the
operational framework for prudent risk management in the Bank. The liquidity profile of the Bank is analysed on a
static basis by tracking all cash inflows and outflows in the maturity ladder based on the actual maturity and expected
occurrence (for non-maturity items) of cash flows. The liquidity profile of the Bank is also estimated on a dynamic basis
by considering the growth in deposits and loans, investment obligations, etc. for a short-term period of three months.
The Bank undertakes behavioral analysis of the non-maturity products viz. savings and current deposits and cash credit/
overdraft accounts on a periodic basis, to ascertain the volatility of residual balances in those accounts. The renewal
pattern and premature withdrawals of term deposits and drawdown of unavailed credit limits are also captured through
behavioral studies. The concentration of large deposits is monitored on a periodic basis.
The Bank’s ability to meet its obligations and fund itself in a crisis scenario is critical and accordingly, liquidity stress tests
are conducted under different scenarios at periodical intervals to assess the impact on liquidity to withstand stressed
conditions. The liquidity positions of overseas branches are managed in line with the Bank’s internal policies and host
country regulations. Such positions are also reviewed centrally by the Bank’s ALCO along with domestic positions.
Counterparty Risk
The Bank has a Counterparty Risk Management Policy incorporating well laid-down guidelines, processes and measures
for counterparty risk management. The policy includes separate counterparty rating models for commercial banks, foreign
banks and co-operative banks for determining maximum permissible exposure limits for counterparties. The key financials,
quality of management and the level of corporate governance are captured in the counterparty rating model. Counterparty
limits are monitored and reported daily and internal triggers have been put in place to guard against breach in limits.
Credit exposures to issuer of bonds, advances etc. are monitored separately under the prudential norms for exposure to
a single borrower as per the Bank’s Corporate Credit Risk Policy or Investment Policy, as applicable. The counterparty
exposure limits are reviewed at periodic intervals based on the financials of the counterparties, business need, past
transaction experiences and market conditions. The Bank has also put in place the ‘Suitability & Appropriateness Policy’
and Loan Equivalent Risk (LER) Policy to evaluate counterparty risk arising out of all customer derivatives contracts.
Country Risk
The Bank has a country risk management policy containing the guidelines, systems and processes to effectively identify,
assess, monitor and control its country risk exposures. Based on the risk profiling, countries are classified under seven
categories i.e. insignificant, low, moderate, high, very high, restricted and off-credit. Risk profiling is based on the ratings
provided by Export Credit Guarantee Corporation of India Ltd. (ECGC), Dun & Bradstreet, inputs received from overseas
branches/business departments, reports published by various agencies viz. Moody’s, Standard & Poor’s, Fitch and other
publications of repute. The categorisation of countries is reviewed at quarterly intervals or at more frequent intervals if
situations so warrant. An exposure to a country comprises all assets, both funded and non-funded, that represents claims
on residents of another country. The Bank has in place both category wise and country wise exposure limits. The Bank
monitors country risk exposures through a process of trigger limits as well as prior approval system for select categories
viz. high, very high, restricted and off-credit to ensure effective monitoring and management of exposures. As a proactive
measure of country risk management, Risk department issues ‘Rating Watch’ from time to time. Further, based on
country-specific developments, the concerned business departments are provided updates on countries which have high
probability of a rating downgrade.
172172
Risk Management Framework for Overseas Operations
The Bank has put in place separate risk management policies for each of its overseas branches in Singapore, Hong Kong,
Dubai, Colombo and Shanghai. These country-specific risk policies are based on the host country regulators’ guidelines
and in line with the practices followed for the Indian operations. The Asset Liability Management and all the risk exposures
for the overseas operations are monitored centrally at the Corporate Office.
Capital Requirement for Market Risk – Position as on 31
st
March 2014
(` in millions)
Type Amount of Capital Required
Interest rate risk 16,176
Equity position risk 1,653
Foreign exchange risk (including gold) 451
VIII. OPERATIONAL RISK
Strategies and Processes
Operational Risk (OR) is the risk of loss resulting from inadequate or failed internal processes, people or systems, or
from external events. The operational risk management policy documents the Bank’s approach towards management
of operational risk and defines the roles and responsibilities of the various stakeholders within the Bank. The policy also
comprises the detailed framework for operational risk loss data collection, risk and control self-assessment and key risk
indicator framework.
Based on the above policy the Bank has initiated several measures to manage operational risk. The Bank has put in
place a hierarchical structure to effectively manage operational risk through the formation of several internal committees
viz., Operational Risk Management Committee, Product Management Committee, Change Management Committee,
Outsourcing Committee, Software Evaluation Committee and IT Security Committee. The functioning of these committees
has stabilised.
Structure and Organisation
The Risk Management Committee (RMC) of the Board at the apex level is the policy making body. The RMC is supported by
the Operational Risk Management Committee (ORMC), consisting of Senior Management personnel, which is responsible
for implementation of the Operational Risk policies of the Bank. This internal committee oversees the implementation of
the OR framework and oversees the management of operational risks across the Bank. A sub-committee of ORMC (Sub-
ORMC) has been constituted to assist the ORMC in discharging its functions by deliberating the operational risk issues in
detail and escalating the critical issues to ORMC. The Operational Risk function, a distinct unit reporting to the Chief Risk
Officer of the Bank, ensures implementation of the procedures for management of operational risk. A representative of
the Risk department is also a permanent member of control committees on product management covering approval of
new products, change management of processes, outsourcing, software evaluation and IT Security.
The bank has a Financial Crime Management Unit (FCMU), within Risk Department, for dealing with the entire range of
financial crimes in the Bank. The Bank’s transaction monitoring activities from AML and fraud perspective are handled by
FCMU. Head-FCMU is the Principal Officer (Money Laundering Reporting Officer) of the Bank. FCMU has three teams:
AML, Continuous Offsite Monitoring and Surveillance and Fraud Risk Management.
Scope and Nature of Operational Risk Reporting and Measurement Systems
A systematic process for reporting risks, losses and non-compliance issues relating to operational risks has been developed
and implemented. The information gathered is being used to develop triggers to initiate corrective actions to improve
controls. All critical risks and potential loss events are reported to the Senior Management/ORMC.
The Bank has further enhanced its capability for effective management of operational risk with the implementation of
an Enterprise Governance Risk and Compliance platform (SAS-EGRC). The IT platform would act as the single repository
173
of processes and operational, compliance and financial reporting risks. It facilitates capturing of individual risks and the
effectiveness of their controls, tagging of identified risks to processes and products, originates action plans and acts as
a repository of all operational risk events. The roll out of the SAS-EGRC system has been completed. A management
dashboard template is also being designed as an output.
Policies for Hedging and Mitigating Operational risk
An Operational Risk Management Policy approved by the Risk Management Committee of the Board details the framework
for managing and monitoring operational risk in the Bank. Business units put in place basic internal controls as approved
by the Product Management Committee to ensure appropriate controls in the operating environment throughout the
Bank. As per the policy, all new products are being vetted by the Product Management Committee to identify and assess
potential operational risks involved and suggest control measures to mitigate the risks. Each new product or service
introduced is subject to a risk review and sign-off process. Similarly, any changes to the existing products/processes are
being vetted by the Change Management Committee.
The Bank has adopted specific policies on Business Continuity Management and IT Disaster Recovery. The Bank has
framed processes for identification of non-IT BCP teams, conducting training and awareness sessions, handling loss or
inaccessibility of staff, identifying backup personnel for critical positions, identifying alternative premises and coordination
of contingency plans at the Bank level.
Approach for Operational Risk Capital Assessment
As per the RBI guidelines, the Bank has followed the Basic Indicator Approach for computing the capital for operational
risk for the year ending 31
st
March 2014. Based on the measures outlined above, the Bank is preparing itself for migration
to the Advanced Measurement Approach of capital computation for operational risk under Basel III.
IX. INTEREST RATE RISK IN THE BANKING BOOK (IRRBB)
Interest Rate Risk in the Banking Book is measured and monitored according to the guidelines laid out in the Bank’s Asset
Liability Management (ALM) Policy based on the guidelines of RBI presented in the document “Guidelines on Banks’ Asset
Liability Management Framework – Interest Rate Risk” dated 4
th
November 2010. Interest Rate Risk is measured for the
(a) entire balance sheet and (b) banking book only through Earnings at Risk and Market Value of Equity Approach as
described below.
The Bank employs Earnings at Risk (EaR) measures to assess the sensitivity of its net interest income to parallel movement
in interest rates over the 1 year horizon. The Bank measures the level of its exposure of the present value of all assets
and liabilities to interest rate risk in terms of sensitivity of Market Value of its Equity (MVE) to interest rate movements as
stipulated in the relevant RBI guidelines. Computation of EaR and MVE is done through the ALM software used by the
Bank. The Bank prepares Structural Liquidity reports and Interest Rate Sensitivity reports for domestic operations on the
daily basis which are reviewed against Regulatory and Internal limits. Internal limits have been established for (a) Earnings
at Risk for a 1% parallel shift in interest rates over the horizon of 1 year, and (b) 2% parallel shift in interest rates for
Market Value of Equity impact which are reported monthly to ALCO. Any review of the internal interest rate risk limits is
approved by the ALCO and is ratified by the Risk Management Committee of the Board.
Interest Rate Risk for Banking Book from both Earnings at Risk perspective as well as Market Value of Equity perspective is
computed and reported quarterly in the Stress Testing results of the Bank. Stress testing results are submitted to the Risk
Management Committee of the Board as well as the senior management of the Bank for their review.
Interest Rate Risk bucketing of non-maturity based Liability items is based on the Behavioral Analysis policy approved by
the ALCO for identification of core and non-core components. Behavioral Analysis is conducted annually by the Bank
as well as back tested subsequently. Historical trends in (product-wise) daily aggregate balances and their associated
volatilities in non-maturity based items over a time period of past 3 years are used to estimate the likelihood of the drop
in balances over specified time intervals. The confidence level for the analysis is considered at 85%, which corresponds to
one standard deviation over the mean. 85% confidence level is considered adequate as the structural liquidity analysis is
done on a daily basis. Bucketing rules of core and non-core portions in the interest rate sensitivity statements are laid out
in the ALM policy. The Bank does not use any assumptions for prepayment of loans for preparation of interest rate risk
sensitivity reports.
174174
The findings of the various IRRBB measures are submitted to the ALCO, which is the apex committee for providing
strategic guidance and direction for the ALM measures.
Details of increase/(decrease) in earnings and economic value for upward and downward rate shocks based on balance
sheet as on 31
st
March 2014 are given below:
Earnings Perspective
(` in millions)
Currency Interest Rate Shock
+200bps -200bps
INR 12,472 (12,472)
USD 1,979 (1,979)
Residual 249 (249)
Total 14,700 (14,700)
Economic Value Perspective
(` in millions)
Currency Interest Rate Shock
+200bps -200bps
INR 22,181 (22,181)
USD 5,506 (5,506)
Residual 443 (443)
Total 28,130 (28,130)
Note: Interest Rate Risk in Banking Book is computed only for banks/bank like entities where the inherent business is
maturity transformation of assets and liabilities, thereby resulting in interest rate mismatch. Other subsidiaries whose core
business is not banking activity, IRRBB need not be computed.
X. EXPOSURES RELATED TO COUNTERPARTY CREDIT RISK
The Bank has a Counterparty Risk Management Policy incorporating well laid-down guidelines, processes and measures
for counterparty risk management. The policy includes separate counterparty rating models for commercial banks, foreign
banks and co-operative banks for determining maximum permissible limits for counterparties. Counterparty limits are
monitored daily and internal triggers are put in place to guard against breach in limits. Credit exposures to issuer of bonds,
advances etc. are monitored separately under the prudential norms for exposure to a single borrower as per the Bank’s
Corporate Credit Risk Policy or Investment Policy, as applicable. The counterparty exposure limits are reviewed at periodic
intervals based on financials of the counterparties, business need, past transaction experiences and market conditions.
The Bank has also put in place the “Suitability & Appropriateness Policy” and Loan Equivalent Risk (LER) Policy to evaluate
counterparty risk arising out of all customer derivatives contracts.
Methodology used to assign economic capital and credit limits for counterparty credit exposures
The Bank currently does not assign economic capital for its counterparty credit exposures. The Bank has adopted a
methodology of computing economic capital within the framework of Individual Capital Adequacy Assessment Process
(ICAAP) and assesses the economic capital requirement within this framework. The Bank is adequately capitalized in terms
of projected growth for the next three years and has sufficient capital buffer to account for Pillar II risks.
The Bank has set up credit limits for counterparty credit exposures in consonance with the regulatory guidelines and as per
the Board approved internal policies. The Bank has a Counterparty Risk Management Policy incorporating the rating models
for Banks/Financial Institutions for determining maximum permissible limits. Counterparty limits are monitored daily and
175
internal triggers are put in place to guard against breach in limits. Credit exposures to issuer of bonds, advances etc. are
monitored separately under the prudential norms for exposure to a single borrower as per the Bank’s Corporate Credit
Risk Policy or Investment Policy, as applicable. The counterparty exposure limits are reviewed at periodic intervals based
on changes in the financials of the counterparty, business needs, past transaction experiences and market conditions.
The Bank has put in place the “Suitability & Appropriateness Policy” and Loan Equivalent Risk (LER) Policy to evaluate
counterparty risk arising out of all customer derivatives contracts.
Policies for securing collateral and establishing credit reserves
The Bank has a policy framework through its Credit Risk Management policy and Collateral Management Policy which
stipulates the eligible credit risk mitigants and management thereof. The Bank has adopted the Comprehensive Approach
as suggested by RBI, which allows fuller offset of collateral against exposures, by effectively reducing the exposure
amount by the value ascribed to the collateral. Under this approach, the Bank takes eligible financial collateral (e.g.,
cash or securities) on an account-by-account basis, to reduce the credit exposure to counterparty while calculating the
capital requirements to take account of the risk mitigating effect of the collateral. The Bank also has a well-defined NPA
management & recovery policy for establishing credit reserves on a prudential basis apart from being in consonance with
the regulatory guidelines.
Policies with respect to wrong-way risk exposures
Wrong way risk associated with counterparty credit exposures can be of two types – General i.e. when the PD of
counterparties is positively correlated with general market risk factors and Specific i.e. when the exposure to a particular
counterparty and the PD of the counterparty providing credit risk mitigation for the exposure are highly correlated. The
Bank currently does not have a complete policy framework to address the wrong way risk. In the interim, the general
wrong way risk is taken care of through monitoring of concentration of counterparty credit exposures on account of
derivatives. Also as per the credit risk management policy, collaterals whose values have a material positive correlation
with the credit quality of the borrower is likely to provide little or no credit protection during stress, are not recognized for
credit enhancement, thus mitigating any specific wrong way risk.
Impact of the amount of collateral the Bank would have to provide given a credit rating downgrade
The Bank currently assesses the liquidity impact and related costs of a possible downgrade as part of the bank-wide stress
testing exercise. The Bank has already adopted Credit Value Adjustment (CVA) based on the regulatory guidelines on the
asset side for capital computation purposes. The current regulatory guidelines do not require estimation of changes in
collateral requirement in case of a likely rating downgrade of a Bank and the Bank also does not make such an assessment
currently. However, the Bank is in the process of developing an internal methodology to estimate the changes in liabilities
to counterparties in the event of its rating downgrade.
Quantitative Disclosures
(` in millions)
Particulars IRS/CCS/FRA OPTIONS
Gross Positive Fair Value of Contracts 94,595 2,865
Netting Benefits - -
Netted Current Credit Exposure 94,595 2,865
Collateral held (e.g. Cash, G-sec, etc.) - -
Net Derivatives Credit Exposure 94,595 2,865
Exposure amount (under CEM) 193,620 5,905
Notional value of Credit Derivative hedges - -
Credit derivative transactions that create exposures to CCR - -
176176
XI. COMPOSITION OF CAPITAL
(` in millions)
Sr.
No.
Particulars
Amount Amounts
Subject to
Pre-Basel III
Treatment
Reference No.
Common Equity Tier 1 capital: instruments and reserves
1 Directly issued qualifying common share capital plus related
stock surplus (share premium)
163,772 A1+A2
2 Retained earnings 216,689 B1+B2+B3+
B4+B5
3 Accumulated other comprehensive income (and other reserves) -
4 Directly issued capital subject to phase out from CET1 (only
applicable to non-joint stock companies)
-
Public sector capital injections grandfathered until 1
January 2018
-
5 Common share capital issued by subsidiaries and held by third
parties (amount allowed in group CET1)
-
6
Common Equity Tier 1 capital before regulatory
adjustments
380,461
Common Equity Tier 1 capital: regulatory adjustments
7 Prudential valuation adjustments -
8 Goodwill (net of related tax liability) -
9 Intangibles other than mortgage-servicing rights (net of related
tax liability)
-
10 Deferred tax assets 6,965 10,448 E1-E2
11 Cash-flow hedge reserve -
12 Shortfall of provisions to expected losses -
13 Securitisation gain on sale -
14 Gains and losses due to changes in own credit risk on fair
valued liabilities
-
15 Defined-benefit pension fund net assets -
16 Investments in own shares (if not already netted off paid-in
capital on reported balance sheet)
-
17 Reciprocal cross-holdings in common equity 12 19
18 Investments in the capital of banking, financial and insurance
entities that are outside the scope of regulatory consolidation,
net of eligible short positions, where the bank does not own
more than 10% of the issued common share capital (amount
above 10% threshold)
-
19 Significant investments in the common stock of banking,
financial and insurance entities that are outside the scope of
regulatory consolidation, net of eligible short positions (amount
above 10% threshold)
-
20 Mortgage servicing rights (amount above 10% threshold) -
177
Sr.
No.
Particulars
Amount Amounts
Subject to
Pre-Basel III
Treatment
Reference No.
21 Deferred tax assets arising from temporary differences (amount
above 10% threshold, net of related tax liability)
-
22 Amount exceeding the 15% threshold -
23 of which: significant investments in the common stock of
financial entities
-
24 of which: mortgage servicing rights -
25 of which: deferred tax assets arising from temporary
differences
-
26 National specific regulatory adjustments(26a+26b+26c+26d) -
26a of which: Investments in the equity capital of the unconsolidated
insurance subsidiaries
-
26b of which: Investments in the equity capital of unconsolidated
non-financial subsidiaries
-
26c of which: Shortfall in the equity capital of majority owned
financial entities which have not been consolidated with the
bank
-
26d of which: Unamortised pension funds expenditures -
Regulatory Adjustments Applied to Common Equity Tier 1 in
respect of Amounts Subject to Pre-Basel III Treatment
-
of which: [INSERT TYPE OF ADJUSTMENT]
For example: filtering out of unrealised losses on AFS debt
securities (not relevant in Indian context)
-
of which: [INSERT TYPE OF ADJUSTMENT]
of which: [INSERT TYPE OF ADJUSTMENT]
27 Regulatory adjustments applied to Common Equity Tier 1 due
to insufficient Additional Tier 1 and Tier 2 to cover deductions
6,486
28
Total regulatory adjustments to Common equity Tier 1 13,463
29
Common Equity Tier 1 capital (CET 1) 366,998
Additional Tier 1 capital: instruments
30 Directly issued qualifying Additional Tier 1 instruments plus
related stock surplus (31+32)
-
31 of which: classified as equity under applicable accounting
standards (Perpetual Non-Cumulative Preference Shares)
-
32 of which: classified as liabilities under applicable accounting
standards (Perpetual debt Instruments)
-
33 Directly issued capital instruments subject to phase out from
Additional Tier 1
3,962 D1
34 Additional Tier 1 instruments (and CET1 instruments not
included in row 5) issued by subsidiaries and held by third
parties (amount allowed in group AT1)
-
35 of which: instruments issued by subsidiaries subject to
phase out
-
36
Additional Tier 1 capital before regulatory adjustments 3,962
(` in millions)
178178
Sr.
No.
Particulars
Amount Amounts
Subject to
Pre-Basel III
Treatment
Reference No.
Additional Tier 1 capital: regulatory adjustments
37 Investments in own Additional Tier 1 instruments -
38 Reciprocal cross-holdings in Additional Tier 1 instruments -
39 Investments in the capital of banking, financial and insurance
entities that are outside the scope of regulatory consolidation,
net of eligible short positions, where the bank does not own
more than 10% of the issued common share capital of the
entity (amount above 10% threshold)
-
40 Significant investments in the capital of banking, financial and
insurance entities that are outside the scope of regulatory
consolidation (net of eligible short positions)
-
41 National specific regulatory adjustments (41a+41b) -
41a Investments in the Additional Tier 1 capital of unconsolidated
insurance subsidiaries
-
41b Shortfall in the Additional Tier 1 capital of majority owned
financial entities which have not been consolidated with the
bank
-
Regulatory Adjustments Applied to Additional Tier 1 in respect
of Amounts Subject to Pre-Basel III Treatment
10,448
of which: DTA 10,448
of which: [INSERT TYPE OF ADJUSTMENT e.g. existing
adjustments which are deducted from Tier 1 at 50%]
-
of which: [INSERT TYPE OF ADJUSTMENT] -
42 Regulatory adjustments applied to Additional Tier 1 due to
insufficient Tier 2 to cover deductions
-
43
Total regulatory adjustments to Additional Tier 1 capital 10,448
44
Additional Tier 1 capital (AT1) (6,486)
44a
Additional Tier 1 capital reckoned for capital adequacy -
45
Tier 1 capital (T1 = CET1 + AT1) (29 + 44a) 366,998
Tier 2 capital: instruments and provisions
46 Directly issued qualifying Tier 2 instruments plus related stock
surplus
-
47 Directly issued capital instruments subject to phase out from
Tier 2
88,020 D1
48 Tier 2 instruments (and CET1 and AT1 instruments not included
in rows 5 or 34) issued by subsidiaries and held by third parties
(amount allowed in group Tier 2)
-
49 of which: instruments issued by subsidiaries subject to
phase out
-
50 Provisions 14,110 F1+F2+F3+F4
51
Tier 2 capital before regulatory adjustments 102,130
(` in millions)
179
Sr.
No.
Particulars
Amount Amounts
Subject to
Pre-Basel III
Treatment
Reference No.
Tier 2 capital: regulatory adjustments
52 Investments in own Tier 2 instruments -
53 Reciprocal cross-holdings in Tier 2 instruments 86 129
54 Investments in the capital of banking, financial and insurance
entities that are outside the scope of regulatory consolidation,
net of eligible short positions, where the bank does not own
more than 10% of the issued common share capital of the
entity (amount above the 10% threshold)
-
55 Significant investments in the capital banking, financial and
insurance entities that are outside the scope of regulatory
consolidation (net of eligible short positions)
-
56 National specific regulatory adjustments (56a+56b) -
56a of which: Investments in the Tier 2 capital of unconsolidated
subsidiaries
-
56b of which: Shortfall in the Tier 2 capital of majority owned financial
entities which have not been consolidated with the bank
-
Regulatory Adjustments Applied To Tier 2 in respect of Amounts
Subject to Pre-Basel III Treatment
-
of which: [INSERT TYPE OF ADJUSTMENT e.g. existing
adjustments which are deducted from Tier 2 at 50%]
-
of which: [INSERT TYPE OF ADJUSTMENT] -
57
Total regulatory adjustments to Tier 2 capital 86
58
Tier 2 capital (T2) 102,044
58a
Tier 2 capital reckoned for capital adequacy
102,044
58b
Excess Additional Tier 1 capital reckoned as Tier 2 capital
-
58c
Total Tier 2 capital admissible for capital adequacy
(58a + 58b)
102,044
59
Total capital (TC = T1 + T2) (45 + 58c) 469,042
Risk Weighted Assets in respect of Amounts Subject to
Pre-Basel III Treatment
1,368
of which: [INSERT TYPE OF ADJUSTMENT] -
of which: … -
60
Total risk weighted assets (60a + 60b + 60c) 2,878,256
60a of which: total credit risk weighted assets 2,452,904
60b of which: total market risk weighted assets 203,111
60c of which: total operational risk weighted assets 222,241
Capital ratios
61 Common Equity Tier 1 (as a percentage of risk weighted assets) 12.75%
62 Tier 1 (as a percentage of risk weighted assets) 12.75%
(` in millions)
180180
Sr.
No.
Particulars
Amount Amounts
Subject to
Pre-Basel III
Treatment
Reference No.
63 Total capital (as a percentage of risk weighted assets) 16.30%
64 Institution specific buffer requirement (minimum CET1
requirement plus capital conservation and countercyclical
buffer requirements, expressed as a percentage of risk
weighted assets)
5.00%
65 of which: capital conservation buffer requirement 0.00%
66 of which: bank specific countercyclical buffer requirement -
67 of which: G-SIB buffer requirement -
68 Common Equity Tier 1 available to meet buffers (as a percentage
of risk weighted assets)
-
National minima (if different from Basel III)
69 National Common Equity Tier 1 minimum ratio (if different
from Basel III minimum)
5.50%
70 National Tier 1 minimum ratio (if different from Basel III
minimum)
7.00%
71 National total capital minimum ratio (if different from Basel III
minimum)
9.00%
Amounts below the thresholds for deduction (before risk weighting)
72 Non-significant investments in the capital of other financial
entities
8,767
73 Significant investments in the common stock of financial
entities
390
74 Mortgage servicing rights (net of related tax liability) NA
75 Deferred tax assets arising from temporary differences (net of
related tax liability)
NA
Applicable caps on the inclusion of provisions in Tier 2
76 Provisions eligible for inclusion in Tier 2 in respect of exposures
subject to standardised approach (prior to application of cap)
14,110
77 Cap on inclusion of provisions in Tier 2 under standardised
approach
30,661
78 Provisions eligible for inclusion in Tier 2 in respect of exposures
subject to internal ratings-based approach (prior to application
of cap)
NA
79 Cap for inclusion of provisions in Tier 2 under internal ratings-
based approach
NA
Capital instruments subject to phase-out arrangement
(only applicable between March 31, 2017 and March 31, 2022)
80 Current cap on CET1 instruments subject to phase out
arrangements
NA
81 Amount excluded from CET1 due to cap (excess over cap after
redemptions and maturities)
NA
(` in millions)
181
Sr.
No.
Particulars
Amount Amounts
Subject to
Pre-Basel III
Treatment
Reference No.
82 Current cap on AT1 instruments subject to phase out
arrangements
NA
83 Amount excluded from AT1 due to cap (excess over cap after
redemptions and maturities)
NA
84 Current cap on T2 instruments subject to phase out
arrangements
NA
85 Amount excluded from T2 due to cap (excess over cap after
redemptions and maturities)
NA
* NA – Not Applicable
XII. THE RECONCILIATION OF REGULATORY CAPITAL ITEMS AS ON 31
st
MARCH 2014 IS GIVEN BELOW:
Step 1
(` in millions)
Sr. No. Particulars Balance sheet as in
financial statements
Balance sheet under
regulatory scope of
consolidation
A Capital & Liabilities
I Paid-up Capital 4,698 4,698
Reserves & Surplus 379,262 379,262
Minority Interest 129 129
Total Capital 384,089 384,089
II Deposits 2,805,411 2,805,411
of which: Deposits from banks 151,555 151,555
of which: Customer deposits 2,653,856 2,653,856
III Borrowings 527,392 527,392
i. Borrowings in India 194,749 194,749
(a) From RBI 2,790 2,790
(b) From banks 31,257 31,257
(c) From other institutions & agencies 160,702 160,702
ii. Borrowings Outside India 332,643 332,643
of which: Capital Instruments 124,053 124,053
IV Other liabilities & provisions 146,608 146,608
Total 3,863,500 3,863,500
(` in millions)
182182
Step 1
(` in millions)
Sr. No. Particulars Balance sheet as in
financial statements
Balance sheet under
regulatory scope of
consolidation
B Assets
I Cash and balances with Reserve Bank of India 170,413 170,413
Balance with banks and money at call and short notice 115,408 115,408
II Investments 1,130,928 1,130,928
of which: Government securities 696,303 696,303
of which: Other approved securities - -
of which: Shares 6,874 6,874
of which: Debentures & Bonds 243,854 243,854
of which: Subsidiaries/Joint Ventures/Associates 411 411
of which: Others (Commercial Papers, Mutual Funds etc.)
183,486 183,486
III Loans and advances 2,323,817 2,323,817
IV Fixed assets 24,473 24,473
V Other assets 98,461 98,461
of which: Goodwill and intangible assets - -
of which: Deferred tax assets (Net) 17,413 17,413
VI Goodwill on consolidation - -
VII Debit balance in Profit & Loss account - -
Total Assets 3,863,500 3,863,500
Step 2
(` in millions)
Sr. No. Particulars Balance sheet
as in financial
statements
Balance sheet
under regulatory
scope of
consolidation
Reference No.
A Capital and Liabilities
I Paid-up Capital 4,698 4,698
A1
Reserves & Surplus 379,262 379,262
-
of which:
Statutory Reserve 66,919 66,919 B1
Share Premium 159,074 159,074 A2
Investment Reserve Account 1,035 1,035 F1
General Reserve 3,724 3,724 B2
Capital Reserve 9,849 9,849 B3
Foreign Currency Translation Reserve 2,464 2,464 -
Reserve Fund 185 185 B4
Balance in Profit/Loss A/c 136,012 136,012 B5
Minority Interest 129 129
-
of which: considered under capital
funds
- - -
Total Capital 384,089 384,089 -
183
Step 2
(` in millions)
Sr. No. Particulars Balance sheet
as in financial
statements
Balance sheet
under regulatory
scope of
consolidation
Reference No.
II Deposits 2,805,411 2,805,411
-
of which: Deposits from banks 151,555 151,555 -
of which: Customer deposits 2,653,856 2,653,856 -
III Borrowings 527,392 527,392
-
i. Borrowings in India 194,749 194,749 -
(a) From RBI 2,790 2,790 -
(b) From banks 31,257 31,257 -
(c) From other institutions & agencies 160,702 160,702 -
ii. Borrowings Outside India 332,643 332,643 -
of which: Capital Instruments 124,053 124,053 D1
IV Other liabilities & provisions 146,608 146,608
-
of which: Provision for Standard
Advances
12,999 12,999 F2
of which: Excess Provision on sale of
NPA
42 42 F3
of which: Deferred Tax Liability 255 255 E2
Total 3,863,500 3,863,500
B Assets
I
Cash and balances with Reserve Bank of
India
170,413 170,413 -
Balance with banks and money at call and
short notice
115,408 115,408 -
II Investments
1,130,928 1,130,928 -
of which: Government securities 696,303 696,303 -
of which: Other approved securities - - -
of which: Shares 6,874 6,874 -
of which: Debentures & Bonds 243,854 243,854 -
of which: Subsidiaries/Joint Ventures/
Associates
411 411 -
of which: Others (Commercial Papers,
Mutual Funds etc.)
183,486 183,486 -
184184
Step 2
(` in millions)
Sr. No. Particulars Balance sheet
as in financial
statements
Balance sheet
under regulatory
scope of
consolidation
Reference No.
III Loans and advances
2,323,817 2,323,817 -
floating provision adjusted in loans &
advances
33 33 F4
IV Fixed assets
24,473 24,473 -
V Other assets
98,461 98,461 -
of which: Goodwill and intangible
assets
- - -
of which: Deferred tax assets 17,668 17,668 E1
VI Goodwill on consolidation
- - -
VII Debit balance in Profit & Loss account
- - -
Total Assets 3,863,500 3,863,500 -
DF XIII, XIV & XV
Disclosures pertaining to main features of equity and debt instruments, terms and conditions of equity and debt instruments
and remuneration of Key Management Personnel have been disclosed separately on the Bank’s website under the ‘Regulatory
Disclosure Section’. The link to this section is as follows:
http://www.axisbank.com/investor-corner/baselIII-disclosures.aspx.
1
Twentieth Annual Report 2013-14
NOTICE is hereby given that the Twentieth Annual General Meeting of the members of Axis Bank Limited will be held on
Friday, the 27
th
June, 2014 at 10.00 A.M. at J. B. Auditorium, Ahmedabad Management Association, AMA Complex, ATIRA,
Dr. Vikram Sarabhai Marg, Ahmedabad 380 015 to transact the following business:
ORDINARY BUSINESS:
1. To receive, consider and adopt the Balance Sheet as at 31
st
March, 2014, Profit & Loss Account and Cash flow statement
for the year ended 31
st
March, 2014 and the Reports of Directors and Auditors thereon.
2. To appoint a Director in place of Shri K. N. Prithviraj, who retires by rotation and, being eligible, offers himself for
re-appointment as a Director.
3. To appoint a Director in place of Shri V. Srinivasan, who retires by rotation and, being eligible, offers himself for
re-appointment as a Director.
4. To declare a dividend on the Equity Shares of the Bank.
5. To consider and pass with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED THAT pursuant to the provisions of the Companies Act, 2013 and the Banking Regulation Act, 1949,
S. R. Batliboi & Co. LLP, Chartered Accountants, Mumbai, ICAI Registration Number 301003E, be and are hereby
appointed as the Statutory Auditors of the Bank in place of Deloitte Haskins & Sells, the retiring Auditors of the Bank,
to hold office from the conclusion of the Twentieth Annual General Meeting until the conclusion of the Twenty Fourth
Annual General Meeting subject to approval of the Reserve Bank of India each year and ratification at every annual
general meeting, on such remuneration as may be approved by the Audit Committee of the Board.”
SPECIAL BUSINESS:
6. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT Smt. Usha Sangwan, who was appointed as an Additional Director at the meeting of the Board of
Directors held on 17
th
October, 2013 and who holds office as such upto the date of this Annual General Meeting and in
respect of whom notice under Section 160 of the Companies Act, 2013 has been received from a member signifying its
intention to propose Smt. Usha Sangwan as a candidate for the office of Director of the Bank is hereby appointed as a
Director of the Bank, liable to retire by rotation.”
7. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT subject to the approval of the Reserve Bank of India and such other statutory authorities as may be
required, remuneration for Dr. Sanjiv Misra be revised as under with effect from 8
th
March, 2014:
Particulars Amount
Remuneration* : `25 lacs p.a.
Company Car : Free use of Bank’s car for official and private purposes.
Club Membership & Entertainment : Club Membership and Corporate Card for official entertainment to be
provided by the Bank.
Sitting fees : As payable to other Non-executive Directors.
*Remuneration to be paid on monthly basis and is inclusive of running and maintenance of office and other utility
expenses.”
8. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT subject to approval of the Reserve Bank of India, approval of the Members of the Bank is hereby
given for revising the remuneration by way of salary, allowances and perquisites payable to Smt. Shikha Sharma,
Managing Director & CEO of the Bank, with effect from 1
st
June, 2014, as per the following terms and conditions:
a. Basic Salary: `2,26,84,894 per annum.
b. House Rent Allowance in lieu of Bank’s owned / leased accommodation be paid at `75,76,907 per annum.
c. Utility Bills be reimbursed at actual upto a limit of `3,30,000 per annum.
d. Leave Fare Concession facility be paid at `12,26,500 per annum.
AXIS BANK LIMITED
NOTICE
2
Twentieth Annual Report 2013-14
e. Variable Pay to be paid as decided by the Board.
f. Company Car and Driver: As per Bank’s Policy.
g. All other terms and conditions of her employment to remain unchanged.”
9. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT subject to approval of the Reserve Bank of India, approval of the Members of the Bank is hereby
given for revising the remuneration by way of salary, allowances and perquisites payable to Shri Somnath Sengupta,
Executive Director & Head (Corporate Centre) of the Bank, with effect from 1
st
June, 2014, as per the following terms
and conditions:
a. Basic Salary: `1,40,30,409 per annum.
b. House Rent Allowance in lieu of Bank’s owned / leased accommodation be paid at `34,00,000 per annum.
c. Utility Bills be reimbursed at actual upto a limit of `1,32,000 per annum.
d. Leave Fare Concession facility be paid at `5,50,000 per annum.
e. Variable Pay to be paid as decided by the Board.
f. Company Car and Driver: As per Bank’s Policy.
g. Club Membership: Membership of two clubs (excluding life membership fees). All official expenses in connection
with such membership incurred would be reimbursed by the Bank, as per the Bank’s policy.
h. All other terms and conditions of his employment to remain unchanged.”
10. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT subject to approval of the Reserve Bank of India, approval of the Members of the Bank is hereby
given for revising the remuneration by way of salary, allowances and perquisites payable to Shri V. Srinivasan, Executive
Director & Head (Corporate Banking) of the Bank, with effect from 1
st
June, 2014, as per the following terms and
conditions:
a. Basic Salary: `1,58,14,350 per annum.
b. House Rent Allowance in lieu of Bank’s owned / leased accommodation be paid at `34,00,000 per annum.
c. Utility Bills be reimbursed at actual upto a limit of `1,32,000 per annum
d. Leave Fare Concession facility be paid at `5,50,000 per annum.
e. Variable Pay to be paid as decided by the Board.
f. Company Car and Driver: As per Bank’s Policy.
g. Club Membership: Membership of two clubs (excluding life membership fees). All official expenses in connection
with such membership incurred would be reimbursed by the Bank as per the Bank’s policy.
h. All other terms and conditions of his employment to remain unchanged.”
11. To consider and pass with or without modification(s), the following resolution, as a Special Resolution:
“RESOLVED THAT in partial modification of the special resolution passed at the Nineteenth Annual General Meeting of
the Bank held on 19
th
July, 2013 (“said resolution”) and pursuant to Section 62 of the Companies Act, 2013 and Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
and any other applicable regulatory requirement, approval of the members of the Bank be and is hereby accorded for
amendment in the exercise period from 3 years to 5 years from the date of vesting of options, in respect of options
granted with effect from April, 2014 onwards.”
“RESOLVED FURTHER THAT without prejudice to the generality of the above, but subject to the terms, as approved
by the members, the Board/HR and Remuneration Committee, is authorised to implement the scheme (with or without
modifications and variations) in one or more tranches in such manner as the Board/HR and Remuneration Committee
may determine.”
“RESOLVED FURTHER THAT the Board is authorised to delegate all or any of the powers herein conferred to the HR
and Remuneration Committee constituted for this purpose or to the Managing Director & CEO of the Bank.”
“RESOLVED FURTHER THAT the Equity Shares to be issued as stated aforesaid shall rank pari-passu with all existing
Equity Shares of the Bank, including for the purpose of payment of dividend.”
3
Twentieth Annual Report 2013-14
12. To consider and pass with or without modification(s), the following resolution, as a Special Resolution:
“RESOLVED THAT in supersession of the resolution passed by the shareholders of the Bank on 17
th
June, 2011, the
consent of the Bank under the provisions of Section 180(1)(c) and other applicable provisions, if any, of the Companies
Act, 2013 be and is accorded to the borrowings by the Bank from time to time, subject to any restriction imposed by
the terms of the agreements as may have been entered into or may be entered into from time to time for grant of any
assistance to the Bank, of all moneys deemed by them to be required or proper for the purpose of carrying on business
of the Bank; provided however, that the total amount of such borrowings outstanding at any time shall not exceed
`1,00,000 crores, notwithstanding that the moneys to be borrowed together with the moneys already borrowed by
the Bank (apart from temporary loans, if any, obtained from the bankers of the Bank in the ordinary course of business)
exceeds the aggregate of the paid up capital of the Bank and its free reserves.”
13. To consider and pass with or without modification(s), the following resolution, as a Special Resolution:
“RESOLVED THAT pursuant to provisions of Section 42 of the Companies Act, 2013, Companies (Prospectus and
Allotment of Securities) Rules, 2014, Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008 as amended from time to time and other applicable laws, if any, each as may be applicable, and the
provisions of the Memorandum and Articles of Association of the Bank and subject to such approval(s), consent(s),
permission(s) and sanction(s) as may be necessary from concerned statutory or regulatory authority(ies), the approval of
the Members of the Bank be and is hereby accorded for borrowing / raising funds in Indian currency / foreign currency
by issue of debt instruments in domestic and/or overseas market, in one or more tranches, as per the structure and
within the limits permitted by the Reserve Bank of India and other regulatory authorities, to eligible investors of an
amount not exceeding:
(i) `7,500 crores for issuance forming part of Tier I / Tier II capital and
(ii) US$ 1.5 billion (or equivalent in other currency) for foreign currency issuances in the overseas market either under
the Bank’s MTN Programme or by way of standalone issuance.‘‘
“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorised to do all such acts, deeds, things,
matters, as may be necessary and expedient for giving effect to the above resolution. “
“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorised to delegate all or any of its powers
herein conferred to any Committee or any one or more executives of the Bank.”
14. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT pursuant to the provisions of Section 61 and other applicable provisions, if any, of the Companies
Act, 2013, (including any statutory modification or re-enactment thereof for the time being in force) and in accordance
with the provisions of the Memorandum and Articles of Association of the Bank and subject to such other approval(s),
consent(s), permission(s) and sanction(s) as may be necessary from the concerned Statutory Authority(ies), including
the Reserve Bank of India, and subject to such conditions as may be agreed by the Board of Directors of the Bank (which
expression also includes a committee thereof), each Equity Share of the Bank having a face value of `10 each fully paid-
up be sub-divided into 5 (Five) Equity Shares of the face value of `2 each fully paid-up.”
“RESOLVED FURTHER THAT the 5 (Five) Equity Shares of the face value of `2 each on sub-division to be allotted in lieu
of existing one equity share of `10 each shall be subject to the terms of the Memorandum and Articles of Association of
the Bank and shall rank pari passu in all respects with the existing fully paid shares of `10 each of the Bank and shall be
entitled to participate in full in any dividends to be declared after the sub-divided equity shares are allotted.”
“RESOLVED FURTHER THAT upon sub-division of Equity Shares as aforesaid, the existing share certificate(s) in
relation to the existing Equity Shares of the face value of `10 each held in physical form shall be deemed to have been
automatically cancelled and be of no effect on and from the Record date and the Bank may, without requiring the
surrender of the existing share certificate(s), issue and dispatch the new share certificate(s) of the Bank in lieu of such
existing share certificate(s) subject to the provisions of the Companies (Share Capital and Debentures) Rules, 2014
and in the case of Shares held in the dematerialised form, the number of sub-divided Equity Shares be credited to
the respective beneficiary accounts of the Shareholders with the depository participants, in lieu of the existing credits
representing the Equity Shares of the Bank before sub-division.”
“RESOLVED FURTHER THAT the Board of Directors of the Bank (which expression also includes a Committee thereof)
be and is hereby authorized to make appropriate adjustments due to the sub-division of Equity Shares as aforesaid, to
stock options which have been granted to employees of the Bank under its employee stock option scheme pursuant to
the Securities and Exchange Board of India (Employee Stock Options and Employee Stock Purchase Scheme) Guidelines,
4
Twentieth Annual Report 2013-14
1999 and any amendments thereto from time to time, such that the exercise price for all employee stock options
which are outstanding as on the Record date (vested and unvested options) shall be proportionately adjusted and
stock options which are available for grant and those already granted but not exercised as on Record Date shall be
appropriately adjusted.”
“RESOLVED FURTHER THAT subject to approval(s), consent(s), permission(s) and sanction(s) as may be necessary
from the concerned Statutory Authority(ies), the consent of the Bank be and is hereby accorded for revision in the ratio
of Bank’s Global Depositary Receipts (“GDRs”) to equity shares, due to the sub-division of Equity Shares of the Bank as
aforesaid, from the existing ‘one GDR representing one underlying equity shares of the Bank’ to ‘one GDR representing
five underlying equity shares of the Bank’ and the Board of Directors of the Bank (which expression shall also include a
Committee thereof) is hereby authorised to take all such necessary steps to give effect to this resolution including the
delegation of all or any of its powers herein conferred to any Whole-Time Director(s), the Company Secretary or any
other officer(s) of the Bank to do all such deeds, matters, and things as also to execute such writings or documents, as
may be necessary to give effect to this resolution.“
“RESOLVED FURTHER THAT the Board of Directors of the Bank (which expression shall also include a Committee
thereof) be authorised to take such steps as may be necessary including the delegation of all or any of its powers
herein conferred to any Director(s), the Company Secretary or any other officer(s) of the Bank for obtaining approvals,
statutory, contractual or otherwise, in relation to the above and to settle all matters arising out of and incidental
thereto, and to execute all deeds, applications, documents and writings that may be required, on behalf of the Bank
and generally to do all acts, deeds, matters and things that may be necessary, proper, expedient or incidental for the
purpose of giving effect to this Resolution.”
15. To consider and pass with or without modification(s), the following resolution, as an Ordinary Resolution:
“RESOLVED THAT pursuant to the provisions of Section 13 and all other applicable provisions of the Companies Act,
2013 and subject to such other approval(s), consent(s), permission(s) and sanction(s) as may be necessary from the
concerned Statutory Authority(ies), including the Reserve Bank of India, the first paragraph of the existing clause V of
the Memorandum of Association of the Bank relating to Capital be replaced by the following paragraph:
“The capital of the Company is `850,00,00,000/- (Rupees Eight Hundred Fifty Crores only) divided into 425,00,00,000
(Four Hundred Twenty Five Crores) Equity Shares of `2/- (Rupees Two only) each.”
‘‘RESOLVED FURTHER THAT the Board of Directors of the Bank (which expression shall also include a Committee
thereof) be authorised to take such steps as may be necessary including the delegation of all or any of its powers
herein conferred to any Director(s), the Company Secretary or any other officer(s) of the Bank for obtaining approvals,
statutory, contractual or otherwise, in relation to the above and to do all acts, deeds, matters and things that may be
necessary, proper, expedient or incidental for the purpose of giving effect to this Resolution.‘‘
16. To consider and pass with or without modification(s), the following resolution, as a Special Resolution:
“RESOLVED THAT pursuant to Section 14 and all other applicable provisions, if any, of the Companies Act, 2013,
and subject to such other approvals or consents as may be required under applicable law or from concerned Statutory
Authority(ies), the existing Articles of Association of the Bank be altered in the following manner:
(i) Article 2 A (xi) be replaced by the following:
“Equity Shares” means the equity shares of the Company, presently having a face value of `2/- per equity share;
(ii) In Article 3 (1), the first sentence be replaced with the following:
“The Authorised Share Capital of the Company is `850,00,00,000/- (Rupees Eight Hundred Fifty Crores only)
divided into 425,00,00,000 (Four Hundred Twenty Five Crores) Equity Shares of `2/- (Rupees Two only) each.”
‘‘RESOLVED FURTHER THAT the Board of Directors of the Bank (which expression shall also include a Committee
thereof) be authorised to take such steps as may be necessary including the delegation of all or any of its powers
herein conferred to any Director(s), the Company Secretary or any other officer(s) of the Bank for obtaining approvals,
statutory, contractual or otherwise, in relation to the above and to do all acts, deeds, matters and things that may be
necessary, proper, expedient or incidental for the purpose of giving effect to this Resolution.‘‘
By order of the Board
Place: Mumbai Sanjeev Kapoor
Date: 26
th
April, 2014 Company Secretary
5
Twentieth Annual Report 2013-14
Notes:
1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO
ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. PROXIES IN ORDER TO
BE VALID AND EFFECTIVE MUST BE DELIVERED AT THE REGISTERED OFFICE OF THE BANK NOT LATER THAN
FORTY-EIGHT HOURS BEFORE THE COMMENCEMENT OF THE MEETING.
2. Shri V. R. Kaundinya, Shri S. B. Mathur, Shri Prasad R. Menon, Prof. Samir K. Barua, Shri Som Mittal, Smt. Ireena
Vittal and Shri Rohit Bhagat, Independent Directors have been appointed/re-appointed as Directors of the Bank by the
shareholders in their Annual General Meetings under the provisions of the Companies Act, 1956. They have complied
with the prescribed independence criteria and will continue to act as Independent Directors of the Bank till completion
of their term, subject to Reserve Bank of India regulations.
3. The relevant explanatory statement pursuant to the provisions of Section 102 of the Companies Act, 2013 in respect of
item Nos. 5 to 16, is annexed hereto.
4. The Register of Members and the Share Transfer Books of the Bank will remain closed from Monday, the 16
th
day of
June, 2014 to Friday, the 27
th
day of June, 2014 (both days inclusive).
5. The Dividend would be paid to the shareholders whose names stand on the Register of Members on the close of
business hours of 14
th
June, 2014. ECS credit/dispatch of the dividend warrants would commence on 28
th
June, 2014
and is expected to be completed on or before 8
th
July, 2014.
6. Shareholders holding shares in physical form are requested to immediately notify change in their address, if any, to the
Registrar and Share Transfer Agents, Karvy Computershare Private Limited, Hyderabad or to the Registered Office of the
Bank, quoting their Folio number(s).
In order to avoid fraudulent encashment of dividend warrants, the details of your Bank Account will be printed on the
dividend warrants. We, therefore, request you to send to our Registrar and Share Transfer Agents, Karvy Computershare
Private Limited, Hyderabad or to the Registered Office of the Bank, on or before 14
th
June, 2014, a Bank Mandate
(providing details of name of the Bank, branch and place with PIN code No., where the account is maintained and the
Bank Account No) or changes therein, if not provided earlier, under the signature of the Sole/First holder quoting their
Folio number.
The Bank is offering the facility of ECS/NECS in centres wherever available. The ECS Mandate Form is annexed. This
facility could also be used by the shareholders instead of the Bank Mandate System, for receiving the credit of dividends.
7. Shareholders holding shares in dematerialised mode are requested to intimate all changes pertaining to their bank details,
ECS mandates, email addresses, nominations, power of attorney, change of address/name etc. to their Depository
Participant (DP) only and not to the Bank or its Registrar and Share Transfer Agents. Any such changes effected by the
DPs will be automatically reflected in the records of the Bank subsequently.
8. Shareholders may avail of the Nomination Facility under Section 72 of the Companies Act, 2013. The relevant Nomination
Form is annexed.
9. Shareholders seeking any information with regard to accounts are requested to write to the Bank at an early date to
enable the Management to keep the information ready.
10. SEBI has made it mandatory for every participant in the securities/capital market to furnish the details of Income tax
Permanent Account Number (PAN). Accordingly, all the shareholders holding shares in physical form are requested to
submit their details of PAN along with a photocopy of both sides of the PAN card, duly attested, to the Registrar and
Share Transfer Agents of the Bank.
11. In accordance with Section 101 of the Companies Act, 2013 and Companies (Management and Administration) Rules,
2014, the Annual Report (Audited Financial Statements, Directors Report, Auditors Report etc.) is being sent to the
shareholders in electronic form to the email address registered with their Depository Participant (in case of electronic
shareholding)/the Bank’s Registrar and Share Transfer Agents (in case of physical shareholding).
We, therefore request and encourage you to register your email ID in the records of your Depository Participant (in case
of electronic holding)/the Bank’s Registrar and Share Transfer Agents (in case of physical shareholding) mentioning your
folio no./demat account details.
However, in case you wish to receive the above shareholder communication in paper form, you may write to the Bank’s
Registrar and Share Transfer Agents, Karvy Computershare Private Limited, Unit: Axis Bank Limited, Plot No. 17 to 24,
6
Twentieth Annual Report 2013-14
Vittalrao Nagar, Madhapur, Hyderabad – 500 081, or send an email at axisgogreen@karvy.com mentioning your folio
no./demat account details.
The Shareholders are requested to write to the Company Secretary or to the Registrar and Share Transfer Agents
regarding transfer of shares and for resolving grievances at the below address:
The Company Secretary,
Axis Bank Limited
Registered Office :
‘Trishul’, 3
rd
Floor, Opp. Samartheshwar Temple,
Law Garden, Ellisbridge, Ahmedabad – 380 006.
Email: shareholders@axisbank.com
Website : www.axisbank.com
CIN : L65110GJ1993PLC020769
Phone : 079-26409322
Fax : 079-26409321
Karvy Computershare Private Limited
Unit: Axis Bank Limited
Plot No. 17 to 24, Vittalrao Nagar, Madhapur, Hyderabad – 500 081.
Phone No. 040-23420815 to 23420824
Fax No. 040-23420814
Email: einward.ris@karvy.com
Contact Persons: Shri V. K. Jayaraman, GM (RIS)/Smt. Varalakshmi, Sr. Manager (RIS)
12. E-Voting:
I. The Bank is pleased to provide E-voting facility through Karvy Computershare Pvt Ltd., for all shareholders of the
Bank to enable them to cast their votes electronically on the items mentioned in this notice of the 20
th
Annual
General Meeting of the Bank. The Bank has appointed Shri Nimai G. Shah, Chartered Accountant (Membership
No. 100932) and Partner, Chandabhoy & Jassoobhoy, Chartered Accountants or failing him Shri Gautam N.
Shah, Chartered Accountant (Membership No. 012679) and Partner, Chandabhoy & Jassoobhoy, Chartered
Accountants as the Scrutinizer for conducting the e-voting process in a fair and transparent manner. E-voting is
optional. The voting rights of shareholders shall be in proportion to their shares of the paid up equity share capital
of the Bank, subject to the provisions of the Banking Regulation Act, 1949, as on the cut-off date of 16
th
May,
2014. The instructions for E-Voting are as under:
(i) To use the following URL for e-voting:
From Karvy website: http://evoting.karvy.com
(ii) Shareholders of the Bank holding shares either in physical form or in dematerialized form, as on the cut-off
date, may cast their vote electronically.
(iii) Enter the login credentials [i.e., user id and password mentioned in the attendance slip of the AGM]. Your
Folio No/DP ID Client ID will be your user ID.
(iv) After entering the details appropriately, click on LOGIN.
(v) You will reach the Password change menu wherein you are required to mandatorily change your password.
The new password shall comprise of minimum 8 characters with at least one upper case (A-Z), one lower
case (a-z), one numeric value (0-9) and a special character. The system will prompt you to change your
password and update any contact details like mobile, email etc on first login. You may also enter the
secret question and answer of your choice to retrieve your password in case you forget it. It is strongly
recommended not to share your password with any other person and take utmost care to keep your
password confidential.
(vi) You need to login again with the new credentials.
(vii) On successful login, the system will prompt you to select the EVENT i.e., Axis Bank.
(viii) On the voting page, enter the number of shares as on the cut-off date under FOR/AGAINST or alternately
you may enter partially any number in FOR and partially in AGAINST but the total number in FOR/AGAINST
taken together should not exceed the total shareholding. You may also choose the option ABSTAIN.
7
Twentieth Annual Report 2013-14
(ix) Shareholders holding multiple folios / demat account shall choose the voting process separately for each
folios / demat account.
(x) Cast your vote by selecting an appropriate option and click on SUBMIT. A confirmation box will be displayed.
Click OK to confirm else CANCEL to modify. Once you confirm, you will not be allowed to modify your vote.
During the voting period, shareholders can login any number of times till they have voted on the resolution.
(xi) Once the vote on the resolution is cast by the shareholder, he shall not be allowed to change it subsequently.
(xii) Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to send scanned copy
(PDF/JPG Format) of the relevant Board Resolution/ Authority letter etc. together with attested specimen
signature of the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail
to cnjabd@vsnl.net with a copy marked to evoting@karvy.com.
(xiii) The e-voting period commences on Saturday, 21
st
June, 2014 (9:00 A.M.) and ends on Monday, 23
rd
June,
2014 (6:00 P.M.). During this period shareholders’ of the Bank, holding shares either in physical form or
in dematerialized form, as on the cut-off date of 16
th
May, 2014, may cast their vote electronically. The
e-voting module shall be disabled by Karvy for voting thereafter. Once the vote on a resolution is cast by
the shareholder, the shareholder shall not be allowed to change it subsequently. Further, the shareholders
who have cast their vote electronically shall not be able to vote by way of poll at the AGM.
(xiv) In case of any queries, you may refer the Frequently Asked Questions (FAQs) for shareholders and e-voting
User Manual for shareholders available at the download section of http://evoting.karvy.com or contact
Karvy Computershare Pvt. Ltd at Tel No. 1800 345 4001 (toll free).
II. The Scrutinizer shall within a period not exceeding three working days from the conclusion of the e-voting period
unblock the votes in the presence of at least two witnesses not in the employment of the Bank and make a
Scrutinizer’s Report of the votes cast in favour or against, if any, forthwith to the Chairman of the Bank.
III. The Results on resolutions shall be declared on or after the AGM of the Bank and shall be deemed to be passed
on the date of the AGM. The Results declared alongwith the Scrutinizer’s Report shall be placed on the Bank’s
website www.axisbank.com and on the website of Karvy within two days of passing of the resolutions at the
AGM of the Bank and communicated to the Stock Exchanges.
IV. Poll will also be conducted at the AGM and any Shareholder who has not cast his vote through e-voting facility,
may attend the AGM and cast his vote.
13. Information regarding Directors retiring by rotation:
i) Shri K. N. Prithviraj has done Masters in Economics. At present, he is the Administrator of the Specified
Undertaking of the Unit Trust of India (SUUTI). He is former Chairman and Managing Director of Oriental Bank of
Commerce and former Executive Director of United Bank of India. He has also served in Punjab National Bank in
various capacities (1969-2003). As on 31
st
March, 2014, he was the Chairman of the Committee of Directors and
member of Audit Committee, Risk Management Committee, HR and Remuneration Committee and Acquisitions,
Divestments and Mergers Committee of the Bank’s Board. He does not hold any equity share of the Bank. The
details of directorship, membership and chairmanship in other companies of Shri K. N. Prithviraj are as follows:
Sr. No. Name of the Company Nature of Interest
1. UTI Infrastructure Technology & Services Limited Chairman
2. Surana Industries Limited Director/Member – Audit Committee
3. Surana Mines and Minerals Limited Director/Member – Audit Committee
4. Dwarikeshwar Sugar Industries Limited Director/Member – Audit Committee
5. IL&FS Infra Asset Management Limited Director/Member – Audit Committee
6. PNB Investment Services Pvt. Limited Director/Member – Audit Committee
7. Brickwork Ratings (India) Pvt. Limited Director/Member – Audit Committee
8. National Financial Holdings Pvt. Limited Director
8
Twentieth Annual Report 2013-14
ii) Shri V. Srinivasan is a qualified engineer from the College of Engineering, Anna University, Chennai and
completed his PGDBM from the Indian Institute of Management, Calcutta in 1990. He began his career in the
financial services industry with ICICI Ltd., in its Merchant Banking Division, in 1990. He was a part of the start-up
team of ICICI Securities and Finance Co. Ltd (I-Sec), the joint venture between ICICI and J.P. Morgan and headed
the Fixed Income business there. Since 1999, he has worked with J. P. Morgan, India and in his last assignment
was their Managing Director and Head of Markets, wherein he had the dual responsibility of CEO, J.P. Morgan
Chase Bank, Mumbai Branch as well as Chairman, J. P. Morgan Securities (I) Pvt. Ltd. He has served on various RBI
Committees such as the Technical Advisory Committee of RBI, Committee of Repos, STRIPS etc. and is a member of
the Banking Committee, CII. He has also served as Chairman of FIMMDA, the key self-regulatory body for market
participants and PDAI, the self-regulatory organization for primary dealers. He joined the Bank in September,
2009 and presently, he is the Executive Director and Head (Corporate Banking). As on 31
st
March, 2014, he
is a member of Committee of Directors and Committee of Whole Time Directors of the Bank’s Board. As on
31
st
March, 2014 he held 43,500 equity shares of the Bank. The details of directorship, membership and
chairmanship in other companies of Shri V. Srinivasan are as follows:
Sr. No. Name of the Company/Institution Nature of Interest
1. Axis Trustee Services Limited Chairman
2. Axis Finance Limited Chairman/Chairman - Audit Committee/Chairman -
Remuneration Committee /Chairman - Credit Committee /
Chairman – Nomination Committee
3. Axis Bank UK Limited Director/Chairman - Human Resources, Remuneration &
Negotiation Committee/Member - Committee of Directors/
Member - Risk Management Committee
4. Axis Capital Limited Director/Member - Audit Committee/Member - Risk
Committee/Member - Remuneration Committee
5. Axis Private Equity Limited Director/Member - Audit & Remuneration Committee/
Member - Nomination Committee
6. Axis Securities Europe Limited Director
By order of the Board
Place: Mumbai Sanjeev Kapoor
Date: 26
th
April, 2014 Company Secretary
9
Twentieth Annual Report 2013-14
ANNEXURE TO NOTICE - EXPLANATORY STATEMENT U/S 102 OF THE COMPANIES ACT, 2013
Item No. 5:
Deloitte Haskins & Sells, Chartered Accountants, who had been reappointed by the members at their Nineteenth Annual
General Meeting as the Statutory Auditors of the Bank for the year 2013-14 would be retiring at the conclusion of the
forthcoming Annual General Meeting. They have been statutory auditors of the Bank for four consecutive years, which is the
maximum term for statutory auditors of banking companies as per the guidelines issued by Reserve Bank of India.
The Board at its meeting held on 25
th
April, 2014 had, based on the recommendation of the Audit Committee of the Board,
appointed, subject to approval of the shareholders, S. R. Batliboi & Co. LLP, Chartered Accountants, as the Statutory Auditors
of the Bank, to hold office from the conclusion of the Twentieth Annual General Meeting until the conclusion of the Twenty
Fourth Annual General Meeting. In terms of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors)
Rules, 2014, the appointment shall be subject to ratification by the shareholders in every annual general meeting. As required,
S. R. Batliboi & Co. LLP, Chartered Accountants have forwarded a certificate to the Bank stating that the appointment, if
made, will be within the statutory limits. The Reserve Bank of India has approved the appointment of S. R. Batliboi & Co. LLP,
Chartered Accountants, as the Statutory Auditors of the Bank for the year 2014-15.
The Directors recommend the appointment of S. R. Batliboi & Co. LLP, Chartered Accountants, as the Statutory Auditors of
the Bank.
None of the Directors, Key Managerial Personnel of the Bank and their relatives are financially or otherwise concerned with or
interested in the resolution at Item No. 5 of the Notice.
Item No. 6:
Smt. Usha Sangwan was appointed as an Additional Director of the Bank w.e.f. 17
th
October, 2013. Under Section 161 of the
Companies Act, 2013, read with Article 91 of the Articles of Association of the Bank, she continues to hold office as a Director
until the conclusion of the ensuing Annual General Meeting. As required under Section 160 of the Companies Act, 2013, the
Bank has received notice from a member signifying its intention to propose Smt. Sangwan as a candidate for the office of
Director of the Bank and the requisite deposit of `1,00,000 has also been received by the Bank along with such notice. It is
proposed that Smt. Sangwan will be liable to retire by rotation. She does not hold any equity share of the Bank.
Smt. Usha Sangwan, Managing Director of Life Insurance Corporation holds a Master’s Degree in Economics and a Post
Graduate Diploma in Human Resource Management. She joined LIC as Direct Recruit Officer in 1981. She has worked in
almost all core areas of life insurance including Marketing, Personnel, Operations, Housing Finance, Group Business, Direct
Marketing, International Operations and Corporate Communications. She has held various important positions, such as
Divisional Manager-Incharge of Delhi Division, Regional Manager (Personnel & Industrial Relations), Regional Manager and
General Manager (LIC Housing Finance), Executive Director (Direct Marketing & International Operations) and Executive
Director (Corporate Communication). Her expertise lies in analytics, strategy, execution, people skill, use of technology
particularly in marketing and servicing and setting up of systems. She has been awarded the “Women Leadership Award” in
BFSI sector by Institute of Public Enterprise and “Brand Slam Leadership Award” by CMO Asia. She has also been awarded
“Women Leadership Role Model” by Top Rankers Management Consultants and “Corporate Leadership Award for 2014” by
Colour TV. She was also felicitated by Free Press Journal and Doordarshan for Women in Leadership Role. As on 31
st
March,
2014, Smt. Sangwan is a member of Corporate Social Responsibility Committee. The details of directorship, membership and
chairmanship in other companies of Smt. Usha Sangwan are as follows:
Sr. No. Name of the Company Nature of Interest
1. Life Insurance Corporation of India Managing Director/Member – Policyholder Protection
Committee/Member – Risk Management Committee
2. LIC HFL Care Homes Limited Chairperson
3. LIC (Singapore) PTE Limited Director
The Directors recommend approval of the resolution.
Except for Smt. Usha Sangwan, no other Director, Key Managerial Personnel of the Bank and their relatives are financially or
otherwise, concerned with or interested in the resolution at Item No. 6 of the Notice.
Item No. 7:
Dr. Sanjiv Misra was appointed as the Chairman of the Bank for a period of three years from 8
th
March 2013. The Bank has grown
and progressed under the guidance of Dr. Sanjiv Misra. In view of this, the HR and Remuneration Committee of the Board, which
met on 16
th
January, 2014, examined the remuneration of Dr. Sanjiv Misra, in comparison with the remuneration of the Chairmen
of the other peer group banks and recommended a revision in the remuneration to be paid to Dr. Sanjiv Misra.
10
Twentieth Annual Report 2013-14
The Board of Directors of the Bank at its meeting held on 16
th
January, 2014 has approved the revision in remuneration payable
to Dr. Sanjiv Misra with effect from 8
th
March, 2014.
The Directors recommend approval of the resolution.
Except for Dr. Sanjiv Misra, no other Director, Key Managerial Personnel of the Bank and their relatives are financially or
otherwise concerned with or interested in the resolution at Item No. 7 of the Notice.
Item No. 8:
During the year ended 31
st
March, 2014, under the leadership of Smt. Shikha Sharma, the Bank has shown consistent growth
and has continued to deliver on profitability as well as return to shareholders. In the economic and macro environment
existing in the country, the Bank has been able to consistently deliver profitability as well as return to its shareholders under
her leadership. The NPAs and restructured assets have been kept in control, with strong focus on guardrails. The Bank has
formulated Vision 2020 thus ensuring long term sustenance of business strategy while keeping in mind our customer ethos
as well as employee growth and well-being. One of the major focus areas this year has been on the compliance front as
well PSL achievements. For the capability building of employees, cross functional movements have been actively encouraged
and a framework for competency building was put in place. In view of this, the HR and Remuneration Committee of the
Board, which met on 25
th
April, 2014, examined the remuneration of Smt. Shikha Sharma, the Managing Director & CEO, in
comparison with the remuneration of the Managing Director of the peer group banks and recommended a revision in the
emoluments to be paid to Smt. Shikha Sharma.
The Board of Directors of the Bank at its meeting held on 26
th
April, 2014 has approved the revision in remuneration by way
of salary and perquisites payable to Smt. Shikha Sharma with effect from 1
st
June, 2014.
The Directors recommend approval of the resolution.
Except Smt. Shikha Sharma, no Director, Key Managerial Personnel of the Bank and their relatives are financially or otherwise
concerned with or interested in the Resolution at Item No. 8 of the Notice.
Item No. 9:
During the year ended 31
st
March, 2014, Shri Somnath Sengupta effectively managed the broader role of the Corporate
Center Head and set of diverse portfolios which included Audit and Compliance in addition to Risk, IT, Operations and Finance.
The EGRC framework was implemented in the Bank giving it a strong foundation with regards to risk management capability
across business functions. Through focus on the SOX documentation initiative, the Bank is now in a position to be completely
SOX compliant by next year. The strategy and execution areas of IT function have been strengthened. A pan Bank project has
been initiated to simplify critical processes which will help the long term sustainability and customer franchise of the Bank. On
the subsidiary governance function, all the key policies are aligned across all group subsidiaries and all monitoring mechanisms
are in place. In view of this, the HR and Remuneration Committee of the Board, which met on 25
th
April, 2014, reviewed the
remuneration being paid to Shri Somnath Sengupta in comparison with the remuneration of Executive Directors of peer group
banks and recommended a revision in the emoluments to be paid to him.
The Board of Directors of the Bank at its meeting held on 26
th
April, 2014 has approved the revision in remuneration by way
of salary and perquisites payable to Shri Somnath Sengupta with effect from 1
st
June, 2014.
The Directors recommend approval of the resolution.
Except Shri Somnath Sengupta, no Director, Key Managerial Personnel of the Bank and their relatives are financially or
otherwise concerned with or interested in the Resolution at Item No. 9 of the Notice.
Item No. 10:
The year ended 31
st
March, 2014 witnessed challenging economic environment in which Shri V. Srinivasan has been
instrumental in protecting and growing the profit pool of the Bank. In spite of the stress that has been seen across different
sectors and corporates, the Bank has been able to stay on course and contain the asset quality within defined limits under
his leadership. The synergies between Retail and Corporate Bank have gained momentum and are now ingrained as a core
activity for Corporate Banking Relationship Managers. Considerable time has been spent in building investor confidence and
ensuring coverage of key officials at the regulator’s side. Axis Bank UK started operations in FY 14 and achieved its business
plan. This was also the year when a key strategy of improving the quality of the Corporate Bank franchise was implemented,
account plans were drawn out, executed and monitored rigorously. In view of this, the HR and Remuneration Committee of
the Board, which met on 25
th
April, 2014, reviewed the remuneration being paid to Shri V. Srinivasan in comparison with the
remuneration of Executive Directors of peer group banks and recommended a revision in the emoluments to be paid to him.
The Board of Directors of the Bank at its meeting held on 26
th
April, 2014 has approved the revision in remuneration by way
of salary and perquisites payable to Shri V. Srinivasan with effect from 1
st
June, 2014.
11
Twentieth Annual Report 2013-14
The Directors recommend approval of the resolution.
Except Shri V. Srinivasan, no Director, Key Managerial Personnel of the Bank and their relatives are financially or otherwise
concerned with or interested in the Resolution at Item No. 10 of the Notice.
Item No. 11:
The Bank has instituted an Employee Stock Option Scheme (ESOS) in the year 2001 to enable its employees and the employees
of its subsidiaries including Whole-time Directors, to participate in the future growth and financial success of the Bank. The
employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option
and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee
is determined on the basis of the employee’s work performance and is approved by the Board of Directors based on the
recommendation of HR and Remuneration Committee. The ESOS has been approved by the Board of Directors and the
shareholders of the Bank.
The ESOS of the Bank, has an exercise period of three years from the date of vesting. Keeping in mind the spirit of the scheme
and also prevailing practice in peer group of banks, it is proposed to increase the exercise period from the existing three years
to five years. This will ensure retention of key employees and participation in the long term growth of the Bank thus meeting
the stated objectives of the Bank’s ESOS.
Considering the above, the HR and Remuneration Committee at its meeting held on 4
th
April, 2014 has recommended
increasing the exercise period from the existing three years to five years. The Board of Directors at its meeting held on
26
th
April, 2014 has accepted the recommendation of the HR and Remuneration Committee.
The Directors recommend approval of the resolution.
No Director and their relatives are financially or otherwise concerned with or interested in the Resolution at Item No. 11 of the
Notice except the Whole-time Directors of the Bank who would be eligible/qualified to avail benefits of ESOS, to the extent
of offer of options which may be made to them.
The Key managerial personnel of the Bank who would be eligible/qualified to avail benefits of ESOS, to the extent of offer of
options which may be made to them shall be deemed to be concerned with or interested in the resolution.
Item No. 12:
In terms of Section 180(1)(c) of the Companies Act, 2013, borrowings by the Bank (apart from temporary loans, if any,
obtained from the Bankers of the Bank and deposits accepted in the ordinary course of business) in excess of the paid up
capital of the Bank and its free reserves, require the approval of the members by way of a special resolution. As per the
General Circular no. 04/2014 dated 25
th
March, 2014 issued by the Ministry of Corporate Affairs, the resolution passed under
Section 293(1)(d) of the Companies Act, 1956 is valid for a period one year from the date of notification (i.e. 12
th
September,
2013) of Section 180 of the Companies Act, 2013. The members of the Bank at their annual general meeting held on 17
th
June,
2011 had passed a resolution approving the borrowing limit of `1,00,000 crores under Section 293(1)(d) of the Companies
Act, 1956. In view of the above circular, this resolution is valid upto 11
th
September, 2014.
Considering the above, the Board of Directors at its meeting held on 26
th
April, 2014 has approved obtaining the consent of
the members of the Bank by way of a special resolution under Section 180(1)(c) of the Companies Act, 2013.
The Directors of the Bank recommend approval of the resolution.
None of the Directors, Key Managerial Personnel and their relatives are financially or otherwise concerned with or interested
in the resolution at Item No. 12 of the Notice except to the extent that it is proposed to authorise them to borrow monies as
stated in the resolution.
Item No. 13:
Section 42 of the Companies Act, 2013 read with Companies (Prospectus and Allotment of Securities) Rules, 2014 provides that
a company can make private placement of securities subject to the condition that the proposed offer of securities or invitation to
subscribe securities has been previously approved by the shareholders of the company, by a Special Resolution, for each of the
Offers or Invitations. In case of offer or invitation for non-convertible debentures, it shall be sufficient if the company passes a
previous special resolution only once in a year for all the offers or invitation for such debentures during the year.
Keeping in view the Bank’s projections in domestic and overseas operations, the Bank may need to raise additional funds in
one or more tranches in Indian as well as overseas market in the form of capital to maintain the desired capital to risk weighted
assets ratio (CRAR) by issuing Tier I and Tier II debt instruments and/or other debt instruments including issuance under the
Medium Term Note Programme of the Bank.
Considering the above, the Board of Directors at its meeting held on 26
th
April, 2014 has proposed to obtain the consent of the
members of the Bank for borrowing/raising funds in Indian currency/ foreign currency by issue of debt instruments in domestic
12
Twentieth Annual Report 2013-14
and/or overseas market, in one or more tranches as per the structure and within the limits permitted by Reserve Bank of India
and other regulatory authorities to eligible investors of an amount not exceeding (i) ` 7,500 crores for issuance forming part
of Tier I / Tier II capital and (ii) US$ 1.5 billion (or equivalent in other currency) for foreign currency issuances in the overseas
market either under the Bank’s MTN Programme or by way of standalone issuance. The debt instruments would be issued
by the Bank in accordance with the applicable statutory guidelines, for cash either at par or premium or at a discount to face
value depending upon the prevailing market conditions.
The Directors of the Bank recommend approval of the resolution.
None of the Directors, Key Managerial Personnel and their relatives are financially or otherwise concerned with or interested
in the resolution at Item No. 13 of the Notice.
Item Nos. 14, 15 and 16:
The Equity shares of your Bank are listed and actively traded on the BSE Limited and the National Stock Exchange of India
Limited (BSE/NSE). In order to make equity shares of the Bank affordable for small retail investors, the Board of Directors has
considered and approved the sub-division of one equity share of the Bank having a face value of ` 10 each into five equity
shares of face value of ` 2 each. The sub-division of shares is subject to approval of the shareholders and any other statutory
and regulatory approvals, as applicable. The Record Date for the aforesaid sub-division of the Equity Shares will be fixed by
the Board after approval of the shareholders is obtained.
The sub-division of Equity shares would, inter alia, require appropriate adjustments with respect to stock options which have
been granted by the Bank and remain outstanding as on the record date, which would include proportionate adjustments to
the exercise price and adjustments to the stock options available for grant as well stock options which have been granted but
not exercised in accordance with the provisions of the Employees Stock Option Scheme of the Bank and the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. Further,
the sub-division of equity shares would also necessitate appropriate adjustments to the ratio between the Bank’s GDRs and
the underlying equity shares such that ‘one GDR representing one underlying equity share of the Bank’ will be changed to
‘one GDR representing five underlying equity shares of the Bank’.
Presently, the Authorised Share Capital of your Bank is ` 850 crores divided into 85,00,00,000 Equity shares of ` 10 each. The
issued and paid-up capital of the Bank as on 31
st
March, 2014 was ` 4,69,84,45,530 divided into 46,98,44,553 Equity Shares
of ` 10 each.
The sub-division as aforesaid would require consequential amendments to the existing Clause V of the Memorandum of
Association and Articles 2 (A) (xi) and 3 (1) of the Articles of Association of the Bank as set out in Item Nos. 15 and 16 of the
Notice respectively.
Accordingly, the Resolutions at Item Nos. 14 to 16 seek approval of the Shareholders for the proposed sub-division of face
value of the Equity Shares and the consequent amendments to the existing Clause V of the Memorandum of Association and
Articles 2 (A) (xi) and 3 (1) of the Articles of Association of the Bank.
The Board of Directors is of the opinion that the aforesaid sub-division of the face value of Equity Shares, is in the best
interest of the Bank and the investors and hence recommends passing of the Resolutions at Item Nos. 14 and 15 as Ordinary
Resolutions and the Resolution at Item No. 16 as a Special Resolution.
A copy of the existing Memorandum and Articles of Association of the Bank along with the proposed draft amendments is
available for inspection by any shareholder at the Registered Office of the Bank between 11 A.M. and 2.00 P.M. on all working
days (except Saturdays, Sundays and Public Holidays) upto 27
th
June, 2014.
None of the Directors, Key Managerial Personnel and their relatives are financially or otherwise concerned with or interested
in the resolution at Item Nos. 14, 15 and 16 of the Notice except to the extent of their shareholding in the Bank.
By order of the Board
Place: Mumbai Sanjeev Kapoor
Date: 26
th
April, 2014 Company Secretary
Axis Bank Limited
Registered Office :
‘Trishul’, 3
rd
Floor, Opp. Samartheshwar Temple,
Law Garden, Ellisbridge, Ahmedabad – 380 006.
CIN : L65110GJ1993PLC020769
Phone : 079-26409322, Fax : 079-26409321
Email address: shareholders@axisbank.com, Website : www.axisbank.com
AXIS BANK LIMITED
Registered Office: ‘Trishul’, 3
rd
Floor, Opp. Samartheshwar Temple,
Law Garden, Ellisbridge, Ahmedabad – 380 006
CIN - L65110GJ1993PLC020769
Tel No. 079 – 26409322, Fax No. 079 – 26409321
Email ID - [email protected], Website - www.axisbank.com
ATTENDANCE SLIP
PLEASE BRING THIS ATTENDANCE SLIP TO THE MEETING HALL AND HAND IT OVER AT THE ENTRANCE
I/We hereby record my/our presence at the 20
th
Annual General Meeting of Axis Bank Limited held at J. B. Auditorium,
Ahmedabad Management Association, AMA Complex, ATIRA, Dr. Vikram Sarabhai Marg, Ahmedabad 380 015 on Friday, the
27
th
June, 2014 at 10.00 A.M.
Name of the Shareholder :
Registered Address of the Shareholder :
Ledger Folio No./CL ID/DP ID No. :
Number of shares held :
Name of the Proxy/Representative, if any :
Signature of the Member/s/Proxy :
Signature of the Representative :
……………………………………………………………………….......................................……………………………….
FOR IMMEDIATE ATTENTION OF THE SHAREHOLDERS
Shareholders may please note the user id and password given below for the purpose of e-voting in terms of Section 108 of
the Companies Act, 2013, read with rule 20 of the Companies (Management and Administration), Rules, 2014. Detailed
instructions for e-voting are given in the AGM notice.
E VOTING EVENT NUMBER USER ID PASSWORD
Form No.
MGT-11
PROXY F
O
RM
[Pursuant to section 105(6) of the Companies Act, 2013 and rule
19
(
3
) of the Companies (Management and Administration) Rules,
2014
]
CIN : L65110GJ1993PLC020769
Name of the Company :
Axis Bank Limited
Registered Office : ‘Trishul’, 3
rd
Floor, Opp. Samartheshwar Temple, Law Garden, Ellisbridge, Ahmedabad – 380 006
Phone No.: 079-26409322; Fax No.: 079-26409321
Email address: shar[email protected]; Website: www.axisbank.com
Name of the member (s) :
Registered address :
E-mail Id :
Folio No./ Client Id : DP ID :
I/We, being the member (s) of .............................................. shares of the above named company, hereby appoint
1. Name
Address
E-mail Id
or failing him
Signature
2. Name
Address
E-mail Id
or failing him
Signature
3. Name
Address
E-mail Id Signature
as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 20
th
Annual General Meeting of the Company, to be held
on the 27
th
day of June, 2014 at 10.00 a.m. at J. B. Auditorium, Ahmedabad Management Association, AMA Complex, ATIRA, Dr. Vikram
Sarabhai Marg, Ahmedabad 380 015 and at any adjournment thereof in respect of such resolutions as are indicated below:
Resolution No. Resolution Resolution No. Resolution
1.
Adoption of Financial Statements for the year
ended 31
st
March, 2014.
2.
Re-appointment of Shri K. N. Prithviraj, who retires
by rotation.
3.
Re-appointment of Shri V. Srinivasan, who retires
by rotation.
4.
Approval of Dividend on the Equity Shares of the
Bank.
5.
Appointment of S. R. Batliboi & Co. LLP, Chartered
Accountants, Mumbai, as Statutory Auditors.
6. Appointment of Smt. Usha Sangwan as a Director.
7.
Revision in remuneration of Dr. Sanjiv Misra,
Chairman.
8.
Revision in remuneration of Smt. Shikha Sharma,
Managing Director & CEO.
9.
Revision in remuneration of Shri Somnath
Sengupta, Executive Director & Head (Corporate
Centre).
10.
Revision in remuneration of Shri V. Srinivasan,
Executive Director & Head (Corporate Banking).
11. Amendment in Employee Stock Option Scheme. 12.
Borrowing limit of the Bank under section 180 (1)
(c) of the Companies Act, 2013.
13.
Borrowing/Raising funds by issue of debt
instruments.
14. Sub-division of Equity Shares.
15. Alteration in Memorandum of Association. 16. Alteration in Articles of Association.
Signed this .................. day of ......................... 2014.
Signature of shareholder :
Signature of Proxy holder(s) :
Note: This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company,
not less than 48 hours before the commencement of the Meeting.
Affix
Revenue
Stamp
FORM NO. SH-13
NOMINATION FORM
[Pursuant to section 72 of the Companies Act, 2013 and rule 19(1) of the Companies
(Share Capital and Debentures) Rules, 2014]
To
Name of the Company : ______________________________________________
Address of the Company : ______________________________________________
I/We ___________________________________________________, the holder(s) of the securities particulars of which are given hereunder
wish to make nomination and do hereby nominate the following persons in whom shall vest, all the rights in respect of such securities in
the event of my/our death.
(1) PARTICULARS OF THE SECURITIES (in respect of which nomination is being made)
Nature of Securities Folio No. No. of
Securities
Certificate
No.
Distinctive
No.
(2) PARTICULARS OF NOMINEE/S
(a) Name :
(b) Date of Birth :
(c) Father’s/Mother’s/Spouse’s name :
(d) Occupation :
(e) Nationality :
(f) Address :
(g) E-mail ID :
(h) Relationship with the security holder :
(3) IN CASE NOMINEE IS A MINOR
(a) Date of Birth :
(b) Date of attaining majority :
(c) Name of guardian :
(d) Address of guardian :
Name :
Address :
Name of the Security Holder(s) :
Signature : Witness with Name and Address
ECS MANDATE FORM
To
Karvy Computershare Private Limited
Unit : Axis Bank Limited
Plot No. 17 to 24, Vittalrao Nagar
Madhapur, Hyderabad - 500 081
FOR SHARES HELD IN PHYSICAL MODE
Please complete this form and send it to
Karvy Computershare Private Limited, Hyderabad
FOR SHARES HELD IN DEMAT MODE
Shareholders should inform their DPs directly
I hereby consent to have the amount of dividend on my equity shares credited through the National Electronic Clearing
Service (Credit Clearing) - (NECS). The particulars are:
1. Folio No.
________________________________________________________________________________
2. Name of 1
st
Registered holder ________________________________________________________________________________
3. Bank Details : ________________________________________________________________________________
• NameofBank ________________________________________________________________________________
• FulladdressoftheBranch ________________________________________________________________________________
• AccountNumber ________________________________________________________________________________
• BankLedgerNo. ________________________________________________________________________________
• AccountType:(PleaseticktherelevantboxforSavingsBankAccount,CurrentAccountorCashCreditAccount)
10 - Savings 11 - Current 12 - Cash Credit
• 9DigitCodenumberoftheBankandbranchappearingontheMICRchequeissuedbytheBank(Pleaseattacha
photocopy of a cheque for verifying the accuracy of the code number):
I hereby declare that the particulars given above are correct and complete. If the transaction is delayed because of incomplete
or incorrect information, I will not hold the Company responsible.
(Signature of the 1
st
Registered holder as per
the specimen signature with the Company)
Name : _________________________________________
Address : _________________________________________
_________________________________________
Date : _______ / _______ /2014 _________________________________________
Twentieth Annual Report 2013-14
1
Twentieth Annual Report 2013-14
The instructions for E-Voting are as under:
I. The Bank is pleased to provide E-voting facility through Karvy Computershare Pvt Ltd., for all shareholders of the Bank
to enable them to cast their votes electronically on the items mentioned in this notice of the 20
th
Annual General
Meeting of the Bank. The Bank has appointed Shri Nimai G. Shah, Chartered Accountant (Membership No. 100932) and
Partner, Chandabhoy & Jassoobhoy, Chartered Accountants or failing him Shri Gautam N. Shah, Chartered Accountant
(Membership No. 012679) and Partner, Chandabhoy & Jassoobhoy, Chartered Accountants as the Scrutinizer for
conducting the e-voting process in a fair and transparent manner. E-voting is optional. The voting rights of shareholders
shall be in proportion to their shares of the paid up equity share capital of the Bank, subject to the provisions of the
Banking Regulation Act, 1949, as on the cut-off date of 16
th
May, 2014.
(i) To use the following URL for e-voting:
From Karvy website: http://evoting.karvy.com
(ii) Shareholders of the Bank holding shares either in physical form or in dematerialized form, as on the cut-off date,
may cast their vote electronically.
(iii) Enter the login credentials [i.e., user id and password mentioned in the attendance slip of the AGM]. Your Folio
No/DP ID Client ID will be your user ID.
(iv) After entering the details appropriately, click on LOGIN.
(v) You will reach the Password change menu wherein you are required to mandatorily change your password. The
new password shall comprise of minimum 8 characters with at least one upper case (A-Z), one lower case (a-z),
one numeric value (0-9) and a special character. The system will prompt you to change your password and update
any contact details like mobile, email etc on first login. You may also enter the secret question and answer of your
choice to retrieve your password in case you forget it. It is strongly recommended not to share your password with
any other person and take utmost care to keep your password confidential.
(vi) You need to login again with the new credentials.
(vii) On successful login, the system will prompt you to select the EVENT i.e., Axis Bank.
(viii) On the voting page, enter the number of shares as on the cut-off date under FOR/AGAINST or alternately you
may enter partially any number in FOR and partially in AGAINST but the total number in FOR/AGAINST taken
together should not exceed the total shareholding. You may also choose the option ABSTAIN.
(ix) Shareholders holding multiple folios / demat account shall choose the voting process separately for each folios /
demat account.
(x) Cast your vote by selecting an appropriate option and click on SUBMIT. A confirmation box will be displayed. Click
OK to confirm else CANCEL to modify. Once you confirm, you will not be allowed to modify your vote. During the
voting period, shareholders can login any number of times till they have voted on the resolution.
(xi) Once the vote on the resolution is cast by the shareholder, he shall not be allowed to change it subsequently.
AXIS BANK LIMITED
2
Twentieth Annual Report 2013-14
(xii) Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to send scanned copy (PDF/JPG
Format) of the relevant Board Resolution/ Authority letter etc. together with attested specimen signature of the
duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail to cnjabd@vsnl.net
with a copy marked to evoting@karvy.com.
(xiii) The e-voting period commences on Saturday, 21
st
June, 2014 (9:00 A.M.) and ends on Monday, 23
rd
June,
2014 (6:00 P.M.). During this period shareholders’ of the Bank, holding shares either in physical form or in
dematerialized form, as on the cut-off date of 16
th
May, 2014, may cast their vote electronically. The e-voting
module shall be disabled by Karvy for voting thereafter. Once the vote on a resolution is cast by the shareholder,
the shareholder shall not be allowed to change it subsequently. Further, the shareholders who have cast their vote
electronically shall not be able to vote by way of poll at the AGM.
(xiv) In case of any queries, you may refer the Frequently Asked Questions (FAQs) for shareholders and e-voting
User Manual for shareholders available at the download section of http://evoting.karvy.com or contact Karvy
Computershare Pvt. Ltd at Tel No. 1800 345 4001 (toll free).
II. The Scrutinizer shall within a period not exceeding three working days from the conclusion of the e-voting period
unblock the votes in the presence of at least two witnesses not in the employment of the Bank and make a Scrutinizer’s
Report of the votes cast in favour or against, if any, forthwith to the Chairman of the Bank.
III. The Results on resolutions shall be declared on or after the AGM of the Bank and shall be deemed to be passed on the
date of the AGM. The Results declared alongwith the Scrutinizer’s Report shall be placed on the Bank’s website www.
axisbank.com and on the website of Karvy within two days of passing of the resolutions at the AGM of the Bank and
communicated to the Stock Exchanges.
IV. Poll will also be conducted at the AGM and any Shareholder who has not cast his vote through e-voting facility, may
attend the AGM and cast his vote.
