1. Fixed Assets:
1.1 The immovable properties owned by bank [Premises oc Land -
referred to as immovable propertiess] other than properties
purchased/acquired during the preceding 12 months have been revalued
during the year. The said revaluation has been carried out in
accordance with the policy laid down by Board. Accordingly, the
value of all such immovable properties owned by bank, [excluding
properties where there are certain claims by third parties in regard to
the said propertys] has been taken as valued by independent valuers as
at 31 st of March 2008. The net appreciation in value Rs. 387.56 crores
as determined by valuers has been credited to Capital Reserves
1.2 A similar exercise of revaluation had been undertaken to deteimine
the value of properties as at 30,h of September 2007. However, since
the Reserve Bank of India had raised certain procedural issues in
regard to the said revaluation, the value so determined in respect of
the said immovable properties as at 30th September 2007 has been
ignored in preparation of these financial statements. A fresh
revaluation of said immovable properties has been carried out to
determine the value of said immovable properties as at 31st March
2008. The revised valuation based primarily on market survey and
enquiries by Valuers as required by guidelines has resulted in
a net enhancement in value of immovable properties by Rs. 387.56
crores [after making allowance as decided by [he Boards]. Consequent
upon the said Revaluation as at 31st March 2008 the amount of
Revaluation recognised in the balance sheet earlier has been fully
reversed & the original carrying value enhanced by amount of
Revaluation of Rs. 387.56 crores as mentioned above. Depreciation on
the original carrying cost has been provided for year in accordance
with the policy mentioned in para 4 of Schedule 17.
1.3 Registration formalities are pending in respect of properties
valuing Rs.4.97 crores [previous year: Nils]
2. Intangible Assets:
2.1 In accordance with Accounting Standard [ASs] 26 on 'Intangible
Assets' issued by Institute of Chartered Accountants of India
[ICAIs], operating & banking software, integral to banking business
having book value of Rs. 0.28 crores [previous year Rs. 0.79 croress] is
capitalized to computers subjected to depreciation & other software
of non-integral nature amounting to Rs.0.04crores [previous year Rs.
0.09 croress] is charged off to Profit and Loss A/c.
3. Foreign Exchange Transactions:
3.1 In accordance with Accounting Standard 11 [Reviseds] on Accounting
for the effects of changes in foreign exchange rates issued by the
Institute of Chartered Accountants of India, the Bank had translated
the year end balances at Balance Sheet date at FEDAI rates.
3.2 As per paragraph 10 of AS 11, the transactions relating to foreign
currency assets [PCFC/EBRD/Loans etc.s] & liabilities [FCNRB/ EEFC/
RFC etc.s] are recorded at notional rates revised on monthly basis. All
foreign currency assets & liabilities ate revalued at weekly FEDAI
rates to reflect the weekly position at current rates.
4.3 The Guidance on Implementing AS 15 [Revised 2005s] Employee benefits
issued by Accounting Standard Board [ASBs] states that benefit
involving employer established provident funds, which require interest
short fall to be recompensated are to be considered as defined benefit
plans. Pending issuance of guidance note from the Actuarial Society
of India, the Bank is unable to reliably measure provident fund
liability. Accotdingly, the Bank is unable to exhibit the related
4.4 The change in accounting policy for provision of employee benefits
pursuant to the application of revised AS 15 has resulted in higher
provision being made. The exact impact of such change, however, has not
Further to the above, certain transactions with Directors / other
parties are disclosed hereunder as a matter of good governance,
although these transactions do not fall within the meaning of 'Related
Parties', within the meaning of clause 49 of Listing Agreement.
as] Prior to Shri Magh Raj Calla becoming Director of Bank, a
Housing loan of Rs.20 lacs was released in May 2005 in the name of Shri
Parkosh Calla & Shri Magh Raj Calla, Director of Bank. Shri
Maghraj Calla was appointed as Director of Bank w.e.f. 25th
bs] Prior to Shri K.N.Bhandari becoming Director of Bank, a term
loan of Rs.5000 lacs was sanctioned on lst February 2005 for a period
of 10 years to M/s Hindalco Industries limited in which Shri K.N.Bhandari
is also a Director. Shri K.N. Bhandari was appointed as Director
w.e.f. 25th February 2006.
cs] A Flat No.704, measuring 855 sq.ft. built up area situated at Prime
Rose Cooperative Housing Society, Andheii [Ws] Mumbai was sold to Shri
P.RKapoor, the then Director on the Banks Board, being highest bidder,
at a consideration of Rs.60.55 lacs which was approved by Board in
its meeting held on 27* July 2007.
ds] Bank has taken on lease the Branch office premises at Pulgaon
admeasuring 600 sq.ft. area on a lease rem of Rs. 10000/- per month
from Pulgaon Cotton Mills which is a 100% subsidiary of Jaibharat
Textile Ltd., a Comp. in which Shri Saurabh Tayal, son of Dr. Pravin
KumarTayal, brother of Shri Sanjay Kumar Tayal [Director ot the Banks]
cs] Bank has taken on lease the branch office premises at Brahmani
Kamleshwar admeasuring 600 sq.ft. area on a lease rent of Rs. 10000/-
per month from Kamleshwar Textiles Mills limited which is a 100%
subsidiary of KSL Realties & Infrastructure Ltd., a Comp. in which
Shri Saurabh Tayal, son of Dr. Pravin Kumar Tayal, brother of Shri
Sanjay KumarTayal [Director of Banks] is director.
0 Bank has taken on lease the branch office premises at Piparia
[Silvasas] admeasuring 600 sq.ft. area on a lease rent of Rs.7500/- per
month from M/s Eskay Knt [Indias] Ltd., a Comp. in which Shri Navin
Kumar Tayal, brother or Shri Sanjay Kumar Tayal [Director of Banks]
gs] Bank has taken on lease the branch office premises at Samarvani
[Silvasas] admeasuring 800 sq.ft. area on a lease rent of Rs. 12000/-
per month from M/s Krishna Knitwear Technology Ltd., a Comp. in which
Shri Sanjay Kumar Tayal, Director of Bank is director.
hs] Bank has taken on lease the branch office premises at Umergaon
[Silvasas] admeasuring 1000 sq.ft. area on a lease rent ofRs.10,000/-
per month from M/s Krishna Lifestyle Technologies limited in which Shri
Navin KumarTayal, brother of Shri Sanjay KumarTayal [Director of the
Banks] is director.
is] Following premises have been taken on lease / purchased by Bank
from the various parties who are having business relations with Krishna
Group of Companies in which Tayal family is interested :
[is] Corporate Office premises on lease at Mumbai at a monthly rent
ofRs.l 5,42,250/- from M/s Solid Vision Pvt. Ltd.
[iis] Premises on lease at Vithalwadi, Thane for storage of old records
at monthly rent of Rs.3,32,090/- from M/s Satellite Consultancy
Services Pvt. Ltd.
[iiis] Premises of Regional Office, Mumbai on lease at a monthly rent
including service charges Rs.5,95,125/- p.m. from M/s Delux Polymers
limited M/s Ambika Silk Mills Comp. limited has sub-leased the premises to
Shri Sanjay KumarTayal & Shri Praveen KumarTayal, admeasuring 3000
sq.ft. each which was further sub- leased to M/s Delux Polymers Pvt.
limited which is lessor of premises of Regional Office, Mumbai.
Tayal family is neither having any directorship nor having shareholding
in the above-mentioned companies.
9. Contingent Liabilities:
9.1 Contingent Liability of Rs.1335.86 crores [previous year Rs.l
174.48 croress] disclosed in Schedule 12 includes disputed tax liability
of Rs.0.09 crores [previous year Rs.9.91 croress].
9.2 In accordance with Accounting Standard 29 on Provisions, Contingent
Liabilities & Contingent Assets issued by Institute of Chartered
Accountants of India, the Bank has carried out financial assessment of
the contingent liabilities & determination of provision for probable
losses. The amount of losses estimated were Rs.0.16 crores [previous
year Rs.0.24 croress] which have been charged to Profit and Loss Account.
10.1 Investments include application money in Mewar Aanchalik Gramin
Bank, a Regional Rural Bank [RRBs] amount to Rs. 4.73crores [previous
year Rs.4.73 croress]. Out of this, Rs. 0.35.crores [previous year
Rs.0.35 croress] is included in Investments under 'Held to Maturity'
category & balance of Rs. 4.38 crores [previous year Rs. 4.38 croress]
pending allotment of shares is included under 'Other Assets'. As per
Reserve Bank of India [RBIs] guidelines, no provision towards diminution
in the value of Investment in RRB has been made in the accounts.
10.2 The Bank transfers securities, in respect of which, principal
amount is due for redemption to overdue Investments. In case where
principal / interest is overdue for more than 90 days, Investments is
treated as NPA & provision for depreciation has been made in line
with prudential norms of RBI [refer note 12.21 belows].
10.3 The Bank in the past had contributed to a trust as senior
contributor for purchase of beneficial interest in secured home loan
receivables [mortgage backed receivabless] originated by another bank.
The above are continued to be redeemed & are included in Investments
under 'Available For Sale' category. The said amount is Rs.45.65 crores
[previous year Rs.56.79 croress].
10.4 As per RBI guidelines, an amount of Rs. 0.08 crores [previous
year: Nils] being profit on sale of securities classified under 'Held to
maturity' category has been transferred to 'Capital Reserves'.
10.5 Qualitative Disclosure
The Bank has in place various guidelines related to Internal Control of
foreign exchange business, which covers various risk limits for FX
dealing room operations.
The Bank offers the facility of foreign exchange transactions and
booking of forward contracts to its merchant exporters, importers and
other clients to cover/hedge their foreign exchange risk. All the
forward contracts are covered for respective tenors, based on market
lots & available tenor swaps.
11 Details of Credit Exposures in case of single borrower or group
borrower limit where the Bank had exceeded the Prudential Exposure
during the year.
During the year 2007-08, there is no borrowal Acc. [either single
borrower or group borrowers] where advance exceeded the exposure ceiling
of the Bank.
12 The Bank has not made any financing for margin trading during the
year & also not securitized any assets.
13 As the Banks net funded exposure for die year ended 31st March 2008
in respect of foreign exchange transactions with each country is
below 1% of total assets of Bank, no provision & disclosure
are required as per RBI circular DBOD.BP.BC. 96/21.04.103/2003-04 dated
17th June 2004.
14. For the fortnight from 12.05.2007 to 25.05.2007, there was a
nominal shortfall in maintenance of Cash Reserve Ratio [CRRs] because of
calculation error. The Reserve Bank of India has charged an amount of
Rs.4,141 being penal interest on die shortfall.
Advances given to units which have become sick, including those under
nursing/ rehabilitation/restructuring program, & other advances
classified as doubtful or loss, have been considered secured/
recoverable to the extent of estimated/ realizable value of
security carrying first/second charge based on assessment of value of
properties/assets mortgaged & other data available with the Bank.
16. Additional Disclosures
16.1 Other income includes fees for services Rs. 14.63 crores being the
fees received as per contract entered into with M/s AVTVA Life
Insurance Co. limited The Bank has been advised by its legal advisors that
the consideration due/ received under the contract is apportionable
between the services rendered. Accordingly, the said income arising
under the contract has been recognised on an accrual basis in
accordance with the opinion of an expert in regard to apportionment
between various types of services rendered to M/s AVTVA Life Insurance
Co. limited by Bank. The amount apportioned & considered as not
accrued during the current period [Rs.3.37 croress] has been reflected
as advance consideration received.
16.2 During the year, the Bank has issued 26899574 equity shares
ofRs.10/- each as fully paid up bonus shares byway of capitalization of
share premium. Due to this, paid up capital of Bank has increased
from Rs. 107.57 crores to Rs. 134.46 crores as on 31st March 2008 and
Reserves and Surplus has decreased by equivalent amount. The issue of
7892 shares out of present bonus issue [being the shares relatable
to 31,565 shares earlier kept in abeyances] has also been kept in
17. Balancing of Books & Reconciliation :
Reconciliation of transactions in interbranch Acc. is completed
upto 31.3.2008 & adjustment of outstanding entries is in progress.
Sundry & Suspense Accounts contain entries pending adjustment to
appropriate head of accounts. On determination of actuarial value, the
liability in regard to pension shows an excess balance of Rs.0.43
crores, reconcili- ation of which is in progress. The consequential
effect of same is not material.
18. All the Accounting Standards referred to in Section 211 [3Cs] of
the Companies Act, to the extent applicable to the Bank & mandatory
in nature have been complied with.
19. Corresponding figures of previous year have been
regrouped/rearranged to the extent necessary/practicable.