Bank of Baroda - India's International Bank - Financials - Annual Report - FY 2009

Financials > Annual Report - FY 2009 - Notes to Account

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SCHEDULE -18 NOTES ON ACCOUNTS

A Disclosure in terms of RBI requirements

1. Capital

Items	Current Year		Previous Year
	Basel I	Basel II	Basel I	Basel II
CRAR (%)	12.88%	14.05%	12.91%	12.94%
CRAR - Tier I capital (%)	7.79%	8.49%	7.63%	7.64%
CRAR - Tier II Capital (%)	5.09%	5.56%	5.28%	5.30%
Percentage of the shareholding of the Government of India in bank	53.81%	53.81%	53.81%	53.81%
Amount of subordinated debt raised as Tier-II capital (during the year)	Rs. 1500 Crores		Rs. 2704 Crores

2. Investments

(Rs. in Crores)

Items	Current Year	Previous Year
(1) Value of Investments
(i) Gross Value of Investments
(a) In India	49157.38	40652.49
(b) Outside India,	4205.83	3656.65
(ii) Provisions for Depreciation
(a) In India	555.60	338.34
(b) Outside India,	361.73	100.74
(iii) Net Value of Investments
(a) In India	48601.78	40314.15
(b) Outside India,	3844.10	3555.92
2) Movement of provisions held towards depreciation on investments
(i) Opening balance	439.08	446.84
(ii) Add: Provisions made during the year	611.02	94.65
(iii) Less: Write-off / write-back of excess provisions during the year	132.77	102.41
(iv) Closing balance	917.33	439.08

2.1 Repo Transactions

(Rs. in Crores)

	Minimum outstanding during the year	Maximum outstanding during the year	Daily Average outstanding during the year	As on March 31,2009
Securities sold under repos	200	4500	627.74	900
Securities purchased under reverse repos	400	3000	185.69	-

2.2 Non-SLR Investment Portfolio

i) Issuer composition of Non SLR investments

(Rs. in Crores)

No.	Issuer	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)	PSUs	1393.12	795.72	67.07	8.31	54.90
(ii)	FIs	1589.40	913.04	78.47	0.00	111.64
(iii)	Banks	3640.03	1473.79	125.4	16.23	319.40
(iv)	Private Corporate	1036.10	363.09	103.94	108.79	199.73
(v)	Subsidiaries /Joint Ventures	*1019.72	1019.72	0.00	0.00	311.74
(vi)	Others	#3598.08	10.14	120.00	781.65	1303.96
(vii)	Provision held towards depreciation	-909.67	-0.71	-11.75	-29.37	-40.17
	Total	11366.78	4574.79	483.19	885.61	2261.20
* Includes Investments in Overseas subsidiary of Rs. 284.44 Crores.
# Includes Investments in GOI NON SLR Oil Bond Rs. 20.41 Crores.

ii) Non-performing Non-SLR investments

(Rs. in Crores)

Particulars	Current Year	Previous Year
Opening balance	174.78	186.00
Additions during the year since 1st April	1.23	9.39
Reductions during the above period	18.21	20.61
Closing balance	157.80	174.78
Total provisions held	154.99	173.78

2.3 Derivatives

2.3.1 Forward Rate Agreement / Interest Rate Swap

(Rs. in Crores)

	Items	Current Year	Previous Year
i)	The notional principal of swap agreements	4135.42	6186.53
ii)	Losses which would be incurred if counter parties failed to fulfill their obligations under the agreements	120.37	84.34
iii)	Collateral required by the bank upon entering into swaps	—	—
iv)	Concentration of credit risk arising from the swaps	217.36	175.11
v)	The fair value of the swap book	139.11	47.88

Forward Rate Agreement/Interest Rate Swaps were undertaken for market making, hedging of FCNR (B) Deposit Portfolio, deposits and call lending and hedging market making exposures and for hedging Bank�s Tier II Bonds.

All the forward rate agreement/interest rate swaps undertaken to hedge were on the basis of �Receive fixed and pay floating�.

2.3.2 Exchange Traded Interest Rate Derivatives:

(Rs. in Crores)

Sr. No.	Particulars	Amount
i)	Notional principal amount of exchange traded interest rate derivatives undertaken during the year (instrument-wise)	NIL
	a)
	b)
	c)
ii)	Notional principal amount of exchange traded interest rate derivatives outstanding as on 31st March 2008 (instrument-wise)	NIL
	a)
	b)
	c)
iii)	Notional principal amount of exchange traded interest rate derivatives outstanding and not �highly effective� (instrument-wise)	NIL
	a)
	b)
	c)
iv)	Mark-to-market value of exchange traded interest rate derivatives outstanding and not �highly effective� (instrument-wise)	NIL
	a)
	b)
	c)

2.3.3 Disclosures on risk exposure in derivatives

Qualitative Disclosure

The Treasury Policy of the Bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk. The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and upto date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, apprises the risk profile to the Risk Management Committee of Directors which is presided over by the Bank�s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

Conversion factor to be applied on notional principal amount

Residual Maturity	Interest Rate Contract	Exchange Rate Contract
Less than one year	0.50%	2.00%
One year and above	1.00%	10.00%

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are markedto- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any, is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

Quatitative Disclosure

(Rs. in Crores)

Sr. No.	Particulars	Currency Derivatives	Interest rate Derivatives
i)	Derivatives (Notional Principal Amount)	773.13	4066.80
	a) For hedging	378.04	3046.08
	b) For trading	395.09	1020.72
ii)	Marked to Market Positions [1]	-128.33	271.58
	a) Asset (+)	3.04	272.66
	b) Liability (-)	-131.37	-1.08
iii)	Credit Exposure [2]	69.51	188.31
iv)	Likely impact of one percentage change in interest rate (100*PV01)	1.08	121.11
	a) on hedging derivatives	1.08	120.18
	b) on trading derivatives	NIL	0.93
v)	Maximum and Minimum of 100*PV01 observed during the year	4.40&1.078	150.97&92.24
	a) On hedging	4.40&1.078	148.51&91.31
	b) On trading	NIL	2.46&0.93

2.4 Asset Quality

2.4.1 Non-Performing Asset

(Rs. in Crores)

	Items	Current Year	Previous Year
i)	Net NPAs to Net Advances (%)	0.31%	0.47%
ii)	Movement of NPAs (Gross)
	(a) Opening balance	1981.38	2092.14
	(b) Additions during the year	1001.89	1002.15
	(c) Reductions during the year	1140.35	1112.91
	(d) Closing balance	1842.92	1981.38
iii)	Movement of Net NPAs (net of floating provisions)
	(a) Opening balance	493.55	501.67
	(b) Additions during the year	680.47	729.75
	(c) Reductions during the year	722.87	737.87
	(d) Closing balance	451.15	493.55
iv)	Movement of provisions for NPAs ((other than floating provision and provisions on standard assets)
	(a) Opening balance	894.22	991.45
	(b) Provisions made during the year	395.97	262.72
	(c) Write-off / write-back of excess provisions	481.24	359.95
	(d) Closing balance	808.95	894.22

2.4.2 Details of Loan Assets subjected to Restructuring

a) Details of Loan Assets subjected to Restructuring up to 26.08.2008.

(Rs. in Crores)

	Item	Current Year	Previous Year
i)	Total amount of loan assets subjected to restructuring, rescheduling, renegotiation;	237.35	357.28
	- Of which under CDR	160.98	208.93
	- Of which under SME	31.18	33.01
ii)	The amount of Standard assets subjected to restructuring, rescheduling, renegotiation;	233.35	356.90
	- Of which under CDR	160.98	208.81
	- Of which under SME	27.18	32.75
iii)	The amount of Sub-Standard assets subjected to restructuring, rescheduling, renegotiation;	4	-
	- Of which under CDR	-
	- Of which under SME	4	-
iv)	The amount of Doubtful assets subjected to restructuring, rescheduling, renegotiation;	-	0.38
	- Of which under CDR	-	0.12
	- Of which under SME	-	0.26
	Note: [(i) = (ii)+(iii)+(iv)]

b) Details of Loan Assets subjected to Restructuring from 27.08.2008.

(Rs. in Crores)

		CDR Mechanism	SME Debt Restructuring	Others
Standard advances restructured	No. of Borrowers	1	6590	31272
	Amount outstanding	38.93	792.29	1531.86
	Sacrifice (diminution in the fair value)	4.77	11.80	44.40
Sub standard advances restructured	No. of Borrowers	1	186	1985
	Amount outstanding	16.70	16.05	23.66
	Sacrifice (diminution in the fair value)	0.22	0.14	1.13
Doubtful advances restructured	No. of Borrowers		2	41
	Amount outstanding		0.97	0.74
	Sacrifice (diminution in the fair value)		0.05	0.04
	No. of Borrowers	2	6778	33298
TOTAL	Amount outstanding	55.63	809.32	1556.26
TOTAL	Sacrifice (diminution in the fair value)	4.99	11.99	45.57

Note: In accordance with RBI guidelines, the Bank has made a provision of 5% on ad-hoc basis to cover the sacrifice amount in present value terms in respect of restructured accounts with exposure less than Rs. 1 crore.

c) Additional disclosures regarding restructured accounts (as certified by the Management and not verified by the Auditors).

S.No.	Disclosures	Number	Amount (in Rs.Crore )
1	Application received up to March 31, 2009 for restructuring, in respect of accounts which were standard as on September 1, 2008.	39406	3976.28
2	Of (1), proposals approved and implemented as on March 31, 2009 and thus became eligible for special regulatory treatment and classified as standard assets as on the date of the balance sheet.	37859	2359.94
3	Of (1), proposals approved and implemented as on March 31, 2009 but could not be upgraded to the standard category.	4	3.14
4	Of (1), proposals under process/implementation which were standard as on March 31, 2009.	1540	1551.80
5	Of (1), proposals under process/implementation which turned NPA as on March 31, 2009 but are expected to be classified as standard assets on full implementation of the package.	3	61.40

2.4.3 Details of financial assets sold to Securitisation / Reconstruction Company for Asset Reconstruction

(Rs. in Crores)

	Item	Current Year*	Previous Year
i)	No. of accounts	34	103
ii)	Aggregate value (net of provisions) of accounts sold to SC / RC	—	167.86
iii)	Aggregate consideration	41.86	269.79
iv)	Additional consideration realized in respect of accounts transferred in earlier years	—	—
v)	Aggregate gain / (loss) over net book value.	41.86	101.93

* Financial assets also includes the debts written off at corporate level.

2.4.4 Details of non-performing financial assets purchased/sold

A. Details of non-performing financial assets purchased:

During The financial year bank has not purchased any non-performing assets.

B. Details of non-performing financial assets sold:

(Rs. in Crores)

Particulars	Current Year	Previous Year
1. No. of accounts sold	34	103
2. Aggregate outstanding	207.60	634.24
3. Aggregate consideration received	41.86	269.79

2.4.5 Provisions on Standard Asset

(Rs. in Crores)

Item	Current Year	Previous Year
Provisions towards Standard Assets as per RBI norms	591.26	504.71
Other contingent provision towards Standard Assets	122.95	68.03

2.5 Business Ratio

(Rs. in Crores)

	Items	Current Year	Previous Year
(i)	Interest Income as a percentage to Average Working Funds	7.78%	7.63%
(ii)	Non-interest income as a percentage to Average Working Funds	1.42%	1.32%
(iii)	Operating Profit as a percentage to Average Working Funds	2.22%	1.96%
(iv)	Return on Assets	1.09%	0.89%
(v)	Business (Deposits plus advances) per employee (Rs. in Lac)	914	710
(vi)	Profit per employee (Rs. in Lac)	6.05	3.94

2.6 Asset Liability Management

Maturity pattern of certain items of assets and liabilities (As compiled by the Management and relied upon by the auditors)

(Rs. in Crores)

	1 day	2 to 7 days	8 to 14 days	15 to 28 days	29 days to 3 months	Over 3 months & up to 6 months	Over 6 months & up to 1 year	Over 1 year & up to 3 years	Over 3 years & up to 5 years	Over 5 years	Total
Deposits	4037.94	5819.08	5932.57	5952.98	22165.57	28900.31	43289.11	37265.38	6506.50	32527.51	192396.95
Advances	2482.18	1540.05	3009.64	3403.21	22893.77	17330.94	17709.17	37010.03	15980.25	22626.66	143985.90
Investments	222.81	437.13	151.68	564.25	1802.39	2424.92	5263.79	8198.54	6523.73	26856.63	52445.87
Borrowings	32.91	70.16	138.49	205.98	699.32	2476.45	210.03	1792.17	8.46	2.12	5636.09
Foreign Currency assets	2790.71	4439.87	1792.32	3521.53	12488.53	7887.75	6860.76	6980.20	7867.23	3927.59	58556.49
Foreign Currency liabilities	6492.48	2655.83	2982.86	4275.34	10904.51	9220.03	7658.72	7137.39	6051.11	4151.20	61529.47

2.7 Lending to Sensitive Sector

2.7.1 Exposure to Real Estate Sector

Rs. in Crores

Category	Current Year	Previous Year
a) Direct exposure
(i) Residential Mortgages �	8276.17	6744.90
Lendings fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented;
Of which individual housing loans eligible for inclusion in priority sector advances	6662.86	5861.64
(ii) Commercial Real Estate �	3869.23	4030.10
Lendings secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure includes non-fund based (NFB) limits;
(iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures �
a. Residential,	13.99	18.10
b. Commercial Real Estate.	-	-
b) Indirect Exposure
Fund based and non-fund based exposures on-
i) National Housing Bank (NHB)	19.62	19.92
ii) Housing Finance Companies (HFCs)	3633.07	2916.65

2.7.2 Exposure to Capital Market

(Rs. in Crores)

	Items	Current Year	Previous Year
(i)	Direct Investments in equity shares, convertible bonds, convertible debentures and units of equity oriented mutual funds the corpus of which is not exclusively invested in corporate debt	875.11	769.26
(ii)	Advances against shares/bonds/debentures or other securities or on clean basis to individuals for investment in shares (including IPOs/ESOPs), convertible bonds, convertible debentures and units of equity oriented mutual funds;	-	49.99
(iii)	Advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as primary security;	2.94	-
(iv)	Advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares/convertible bonds/convertible debentures/units of equity oriented mutual funds does not fully cover the advances	6.01	-
(v)	Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers	168.88	127.46
(vi)	Loans sanctioned to corporates against 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 resource	-	-
(vii)	Bridge loans to companies against expected equity flows/issues	-	-
(viii)	Underwriting commitments taken up by banks in respect of primary issue of shares or convertible bonds/debentures or units of EOMF	-	-
(ix)	Financing to stockbrokers for margin trading	0.06	-
(x)	All exposures to venture capital funds both registered and unregistered will be deemed to be on par with equity and hence will be reckoned for compliance with the capital market exposure ceilings (both direct and indirect)	289.40	172.71
	Total Exposure to Capital Market (i+ii+iii+iv+v+vi+vii+viii+ix+x)	1342.40	1119.42

The exposure to Capital Market Rs 1342.40Crores is within the limit of Rs 4554.88 Crores (i.e. 40% of Bank�s Net Worth Rs 11387.19 Crores). The direct exposure to Capital Market is Rs1167.51 Crores and is with in 20% of the Bank�s Net Worth (Rs2277.44 Crores)

2.7.3 Risk Category wise Country Exposure

(Rs. in Crores)

Risk Category	Exposure (net) as at 31st March 09	Provision held as at 31st March 09	Exposure (net) as at 31st March 08	Provision held as at 31st March 08
Insignificant	10844.32	6.47	8412.56	-
Low	6581.10	8.28	4692.52	4.44
Moderate Low	752.84	-	1180.66	-
Moderate	47.78	-	316.68	-
Moderate High	1204.31	-	1322.70	-
High	1.13	-	15.05	-
Very High	4.25	-	7.99	-
Total	19435.73	14.75	15948.16	4.44

2.7.4 Details of Single Borrower Limit (SGL), Group Borrower Limit (GBL) exceeded by the bank.

(Rs. in Crores)

Name of the borrower	Single borrower exposure limit	Total Limit sanctioned	Balance as on 31.3.2009
National Aviation Company of India Ltd	2157.18	2532.58	1924.85
Cotton corporation of India	1797.65	2516.72	1722.19
Reliance Industries Ltd	2157.18	2653.64	1184.16

2.8 Miscellaneous

2.8.1 Amount of Provisions made for Income-tax during the year

(Rs. in Crores)

	Current Year	Previous Year
Provision for Income Tax	1150.34	831.08
Less Reversal of income tax provisions relating to previous years	34.60	67.33
Net Provision for Income Tax	1115.74	763.75

2.8.2 Disclosure of penalties imposed by RBI

During the financial year 2008-09, bank is not subjected to any penalty for contraventions of the any of the provisions of the Act or non-compliance with any other requirements of the Banking Regulation Act, 1949, rules or condition specified by the Reserve Bank of India under the act.

3. SLR Investments

(Rs. in Crores)

Particulars	As on 31.3.2009		As on 31.3.2008
	Book Value	Market Value	Book Value	Market Value
Government Securities � SLR(CG,SG & TB)	40114.31	40114.26	33392.62	33354.64
Approved Securities � SLR	972.45	966.65	1165.05	1152.61

4. Break up of Provisions and Contingencies

4.1 The break-up of provisions and contingencies appearing in Profit & Loss Account is as under

(Rs. in Crores)

Particulars	Current Year	Previous Year
Provision for depreciation on investment	536.75	41.76
Bad Debts written off / Provision made towards NPA	268.60	435.98
Provision for standard assets	75.47	108.80
Provision for taxes (including Deferred Taxes, Fringe Benefit and Wealth tax)	1115.74	771.63
Other Provision and Contingencies -
Provision towards sacrifice of interest in restructured standard and sub-standard accounts	68.98	89.90
Provision for Country Risk Management		-6.87
Provision for staff welfare expenses	15	15
Others	-2.74	136.83
Total	2077.80	1593.03

4.2 Floating Provisions � Comprehensive Disclosures

(Rs. in Crores)

Particulars	Current Year	Previous Year
a. Opening balance in the floating provisions account	550.35	450.35
b. The quantum of floating provisions made in the accounting year	-	100
c. Amount of draw down made during the accounting year	-	-
d. Closing balance in the floating provisions account.	550.35	550.35

4.3 Draw Down from Reserves

During the financial year 2008-09 there is no Draw Down of the Reserves.

5. Disclosure of complaints

A Customer Complaints

(a)	No. of complaints pending at the beginning of the year	97
(b)	No. of complaints received during the year	3806
(c)	No. of complaints redressed during the year	3828
(d)	No. of complaints pending at the end of the year	75

B. Awards passed by the Banking Ombudsman

(a)	No. of unimplemented Awards at the beginning of the year	1
(b)	No. of Awards passed by the Banking Ombudsman during the year	-
(c)	No. of Awards implemented during the year	-
(d)	No. of unimplemented Awards at the end of the year*	1

*An appeal has been filed against the award of the Banking Ombudsman with appropriate authority.

6. Status of Letters of Comfort

(a) Letters of Comfort (LOC�s) issued during the Current Financial Year.

During the current financial year Bank has not issued any Letter of Comfort to meet the requirements of the overseas / domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

(b) Cumulative position of LOC�s outstanding on 31.03.2009.

Bank has no outstanding Letter of Comfort issued in favour of the foreign / domestic regulators for the purpose of establishing subsidiaries / opening of branches except as mentioned in A above.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India:

1. Net Profit or Loss for the Period, prior period items and changes in accounting policies (AS-5)

1.1 Exceptional items of Rs. 95.01 Crores (Net of Tax Rs. 62.70 Crores) represents profit on winding up of Bank of Baroda (Hongkong) Ltd, a subsidiary of the Bank. and Profit on sale of 51% holding in BOB AMC Ltd.

1.2 Depreciation on revalued assets has been provided on written down value as per the Companies Act, 1956 and not on the basis of the remaining useful life of the assets.

2. Employee Benefits (AS-15)

During the year Bank has adopted the Accounting Standard ( AS-15) issued by ICAI and effective from 07.12.2006. The standard has been revised and notified on 17.12.2007. The provisions contained in AS-15 gives option to the bank, to charge the transitional liability as an expense in its Profit and Loss Account spread over a period of 5 years. Bank has exercised this option and accordingly made an incremental provision for employee benefits such as pension, gratuity, leave encashment and other retirement benefits to the extent of 1/5th of the total transitional liabilitycommencing from financial year 2007-08, which is crystallized on Actuarial valuation at Rs. 901.00 crores.

Gratuity

The Bank pays gratuity to employees who retire or resign from Bank�s service. The Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the gratuity fund�s rules, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit actuarial method.

The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of 3 different schemes and the entitlement is based on what is most beneficial to employees.

Pension

Bank of Baroda pays pension, a defined benefit and deferred retirement plan covering the employees who have opted for pension and also to the employees joining the bank�s service on or after 29.9.1995. The plan provides for a pension on a monthly basis to these employees on their cessation from Bank�s service based on the respective employees salary and years of qualifying service with the Bank. Employees covered under Bank of Baroda (Employees�) Pension Regulations, 1995 are not eligible for Bank�s contribution to Provident Fund.

Pension fund is managed by in-house trustees.

Provident Fund

Bank of Baroda is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees. This fund is managed by in-house trustees. Each employee contributes 10% of his or her basic salary and Bank of Baroda contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.However, on resignation, an employee is entitled to get encashment of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

Additional Retirement Benefit

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ death shall be eligible for payment of �6- months emoluments as additional retirement benefit, provided he had completed 25 years of service in the Bank.

In the same manner, award staff member on Retirement / Voluntary Retirement / Death shall be eligible for additional retirement benefit, provided he had completed �30- years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation additional retirement benefit shall not be payable, irrespective of any number of years of service.

Principal Acturial Assumptions
[Expressed as Weighted Averages]

	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
Discount rate	7.50%	7.50%	7.50%	7.50%
Salary Escalation Rate	4.00%	8.00%	8.00%	8.00%
Attrition Rate	1.00%	1.00%	1.00%	1.00%
Expected Rate of Return on plan Assets	8.00%	0	8.00%	0

RECONCILIATION OF OPENING AND CLOSING BALANCE OF LIABILITY

(Rs. in Crores)

TYPE OF PLAN	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) PVO as at 1/4/2008	2079.00	395.00	840.00	375.00
b) Interest Cost	160.74	30.88	65.21	29.48
c) Current Service Cost	171.80	21.95	32.73	18.85
d) Benefits Paid	-139.40	-18.12	-49.74	-13.03
e)Actuarial loss/gain(-) on obligation	396.05	-11.71	15.37	4.70
f) PVO as at 31.03.2009	2668.19	418.00	903.57	415.00

RECONCILIATION OF OPENING & CLOSING BALANCE OF FAIR VALUE OF PLAN ASSETS

(Rs. in Crores)

TYPE OF PLAN	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) Fair Value of plan assets as on 1/4/2008	2032.95	0	693.43	0
b) Expected Return on Plan Assets	175.96	0	56.53	0
c) Contributions	472.57	18.12	76.20	13.03
d) Benefits Paid	-139.40	-18.12	-49.74	-13.03
e) Actuarial gain/(-)loss	87.11	0	14.35	0
f) Fair Value of Plan Assets as on 31.03.2009	2629.19	0	790.77	0

AMOUNT RECOGNISED IN THE BALANCE SHEET

(Rs. in Crores)

TYPE OF PLAN	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) PV of obligation	2668.19	418.00	903.57	415.00
b) Fair value of plan assets	2629.19	0	790.77	0
c)Difference	39.00	418.00	112.80	415.00
d) Unrecognised transitional liability	-39.00	-117.60	-112.80	-136.20
e)Liability Recognised in the BS	0	300.40	0	278.80

AMOUNT RECOGNISED IN THE PROFIT & LOSS ACCOUNT

(Rs. in Crores)

TYPE OF PLAN	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) Current Service Cost	171.80	21.95	32.73	18.85
b) Interest Cost	160.74	30.88	65.21	29.48
c) Expected Return on Plan Assets	-175.96	0	-56.53	0
d) Net Actuarial Loss/gain(-)	308.94	-11.71	1.02	4.70
e) Transitional liability recognised in the year	13.00	39.20	37.60	45.40
Expenses Recognised in Profit & Loss Account	478.52	80.32	80.03	98.43

3. Segment Reporting (AS-17)

Part A -Business Segments

Rs. in Crores

Business Segments	Treasury		Corporate / Wholesale Banking		Retail Banking		Banking Operations		Total
	Current Yr	Prev Year	Current Yr	Prev Year	Current Yr	Prev Year	Current Yr	Prev Year	Current Yr	Prev Year
Revenue	4442.29	3576.98	5247.37	4156.59	5383.10	3960.40	2776.48	2170.54	17849.24	13864.51
Results	1019.57	788.79	845.23	175.14	1406.50	937.37	1769.39	1500.22	5040.69	3401.52
Unallocated Expense									1697.74	1194.37
Operating Profit									3342.95	2207.15
Income taxes									1115.75	771.63
Extra-ordinary Profit/loss
Net Profit									2227.20	1435.52
Other Information
Segment Assets	61492.10	56945.78	57141.55	52061.82	49647.20	32441.49	56217.01	35572.60	224497.86	177021.69
Unallocated Assets									2908.87	2577.83
Total Assets									227406.73	179599.52
Segment Liabilities	58021.30	53444.07	53916.29	48860.44	46844.97	30446.60	53043.95	33385.18	211826.51	166136.29
Unallocated Liabilities									15580.22	13463.23
Total Liabilities									227406.73	179599.52

Part B - Geographic Segments

Rs. in Crores

Segments	Domestic		International		Total
Particulars	Year Ended		Year Ended		Year Ended
Particulars	31.03.09	31.03.08	31.03.09	31.03.08	31.03.09	31.03.08
Revenue	15465.20	11895.14	2384.04	1969.37	17849.24	13864.51
Assets	177106.26	142520.03	50300.47	37079.49	227406.73	179599.52

Notes on Segment Reporting :

1. As per guidelines of RBI on compliance with Accounting Standards, Bank has adopted Treasury Operations, Wholesale, Retail and Other Banking Operations as Primary business segments and Domestic and International as Secondary / Geographic segments for the purpose of compliance with AS-17 on Segment reporting issued by ICAI.

2. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

3. Segment revenue represents revenue from external customers.

4. Capital employed for each segment has been allocated proportionate to the assets of the segment.

4. Related Party disclosures (AS - 18)

Names of the Related Parties and their relationship with the Bank:

(a) Subsidiaries:

BOB Capital Markets Limited
BOB Cards Limited
The Nainital Bank Limited
Bank of Baroda (Botswana) Limited
Bank of Baroda (Kenya) Limited
Bank of Baroda (Uganda) Limited
Bank of Baroda (Hong Kong) Limited
Bank of Baroda (Guyana) Inc.
Bank of Baroda (UK) Limited
Bank of Baroda (Tanzania) Limited
Baroda Capital Markets (Uganda) Limited.
(Subsidiary of Bank of Baroda Uganda Ltd.)
BOB Trinidad & Tobago Ltd
Bank of Baroda (Ghana) Ltd..
Baroda (New Zealand) Ltd.

(b) Associates :

Baroda Uttar Pradesh Gramin Bank
Nainital-Almora Kshetriya Gramin Bank
Baroda Rajasthan Gramin Bank
Baroda Gujarat Gramin Bank
Jhabua-Dhar Kshetriya Gramin Bank
Indo Zambia Bank Limited
UTI Asset Management Company Ltd.
UTI Trustee Company Pvt. Limited
Baroda Pioneer Asset Management Co. Ltd.

(c) Key Management Personnel :

Mr. M.D. Mallya, CMD
(From 07.05.2008 onwards)
Dr. A.K.Khandelwal (Ex-CMD)

Mr.V.Santhanaraman, ED
Mr. Satish C. Gupta, ED
(Upto 05.11.2008)
Mr. Rajiv Kumar Bakshi, ED
(From 06.11.2008 onwards)

Aggregate Remuneration paid to Key Management Personnel Rs. 38.12 lacs (Previous year Rs. 17.60 l lacs)

Related Party Disclosures-

Rs. in Crores

Items / Related Party	Subsidiaries	Associates/ Joint Ventures	Key Management Personnel	Relatives of Key Management Personnel	Total
Borrowings :
Outstanding as on 31.3.09
Maximum Outstanding during the year
Deposit :
Outstanding as on 31.3.09	419.96	2800.71			3220.67
Maximum Outstanding during the year	531.17	2834.71			3371.88
Placement of Deposits
Outstanding as on 31.3.09
Maximum Outstanding during the year
Advances
Outstanding as on 31.3.09	59.81	134.73			194.54
Maximum Outstanding during the year	150.33	388.18			538.51
Investments
Outstanding as on 31.3.09	693.02	326.63			1019.65
Maximum Outstanding during the year	693.02	326.63			1019.65
Non-funded commitments
Outstanding as on 31.3.09	6.32	0.05			6.37
Maximum Outstanding during the year	6.37	0.05			6.42
Leasing/HP arrangements availed
Outstanding as on 31.3.09
Maximum Outstanding during the year
Leasing/HP arrangements provided
Outstanding as on 31.3.09
Maximum Outstanding during the year
Purchase of fixed assets
Sale of fixed Assets	0.04				0.04
Interest paid	23.34	170.76			194.10
Interest received	4.83	15.03			19.86
Rendering of services	3.52	0.05	0.05		3.62
Receiving of services	15.93	0.01			15.94
Management contracts	3.50				3.50

5. Earning Per Share (AS-20)

Particulars	Current Year	Previous Year
Net Profit after tax available for equity shareholders (Rs. in Crores)	2227.20	1435.52
Weighted Average Number of Equity shares	364266500	364266400
Basic & Diluted earning per share	61.14	39.41
Nominal value per equity share	Rs. 10.00	Rs. 10.00

6. Accounting for Taxes on Income (AS-22)

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax assets as on 31st March 2009 amounting to Rs. 43.69 Crores (Previous Year DTA of Rs.56.22 Crores) consists of the following:

Rs. in Crores

	31.03.2009		31.03.2008
	Asset	Liability	Asset	Liability
Difference between book depreciation and Depreciation under Income Tax Act on fixed assets		47.78		51.77
Deduction under section 36(1)(viii) of the Income-tax Act, 1961		74.78
Provision for doubtful debts and advances (foreign)	51.00	-	36.46	-
Amount Disallowable U/S 40(a)(ia) of the IT Act	16.86
Provision for leave encashment	98.39	-	71.53	-
Total	166.25	122.56	107.99	51.77
Net Deferred Tax Asset	43.69	-	56.22	-

Decrease in net Deferred Tax Assets of Rs.12.53 Crores for the year ended 31st March 2009 (Previous year increase of Rs. 3.12 Crores) has been recognized in the Profit & Loss Account.

7. Discontinuing operations (AS24)

During the financial year 2008-09 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

8. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of Accounting Standard-28 “Impairment of Assets”, no impairment of fixed assets is required for in respect of current financial year.

9. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

9.1 Movement of provisions for Liabilities (excluding provisions for others)

( Rs. in Crores)

Particulars	Legal Cases / contingencies
Balance as on 1st April 2008	13.43
Provided during the year	-
Balance as at 31st March 2009	13.43
Timing of outflow / uncertainties	Outflow on settlement/crystallization

The Bank has provided for claims against the bank which have not been acknowledged as debt as per a policy framed by it.

9.2 Contingent Liabilities:

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon, the outcome of court, arbitration, out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

1. Balancing of Books and Reconciliation

1.1 The balancing / Reconciliation of control accounts with subsidiary ledgers / registers is in progress in certain branches.

1.2 Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.12.2008, the reconciliation of which is in progress.

1.3 Reconciliation of accounts with banks, Nostro, Drafts / TTs payable, Suspense, dividend / Interest / refund orders paid / payable etc. is in progress.The impact, if any, on the Profit and Loss Account and the Balance Sheet, though not quantified, in the opinion of the management will not be material.

1.4 Net credit of Rs. 441.09 crores representing other liabilities on account of foreign currency translation of assigned capital, unremitted profit, accumulatedloss and head office interest free funds, for which reconciliation is pending, has been included under other liabilities.

2. Capital Reserves

2.1 Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects / Industrial Export Projects for small / medium scale industries.

2.2 During the current financial year, the Bank has revalued two foreign immoveable properties by an amount of Rs. 0.59 Crores. The amount of revaluation has been shown as an addition to Fixed Assets and credited to Revaluation Reserve Account under Capital Reserves as part of Reserves and Surplus.

3. Investments

3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in “Available for Sale” category to “Held to Maturity” category. The resultant depreciation of Rs.38.22 Crores (previous year Rs. 37.08 Crores) has been charged to the Profit & Loss Account.

3.2 Profit on sale of investments held under “Held to maturity” category amounting to Rs.723.64 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs.358.26 crores has been appropriated to the Capital Reserve, net of taxes and transfer to Statutory Reserve under section 17 of the Banking Regulation Act, 1949

4. Provision for Taxes.

4.1 Provision for Taxes are arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

4.2 Tax paid in advance / tax deducted at source appearing under “Other Assets” amounting to Rs. 1019.84 Crores (previous year Rs 1092.51 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands as in the bank’s view, duly supported by counsels’ opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

4.3 The Bank has claimed deduction under section 36(1)(viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs.220 Crores to the corresponding Special Reserve account. The Bank has also transferred a sum of Rs.200 Crores from the General Reserve to Special Reserve account for the previous year.

5. During the year, the bank has annulled the forfeiture of 100 equity shares (previous year 400 equity shares).

6. Premises-

6.1 Execution of conveyance deeds is pending in respect of certain properties aggregating to Rs 79.72 Crores (Previous year Rs.78.74 Crores) – (original cost).

6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year-end is Rs.1766.66 Crores (Previous Year Rs.1765.99 Crores) and net of depreciation the revaluation amounts to Rs. 1448.34 Crores (Previous year Rs.1519.09 Crores).

6.3 Premises include assets under construction / acquisition amounting to Rs.74.79 Crores (Previous year Rs.87.48 Crores).

7. During the year ended March 31, 2009, Tier II Bonds amounting to Rs. 409.10 Crores have been redeemed and Tier I Bonds amounting to Rs. 300.20 crores and Tier II Bonds amounting to Rs. 1500.00 Crores (Previous year Rs.2703.62 Crores including Rs.1203.62 Crores corresponding to US $ 300 Million issued by way of Medium Term Loans) were raised.

8. Other Reserves include an amount of Rs.673.95 Crores (previous year Rs.253.95 Crores) on account of special reserves created under requirements of Income Tax Act.

9. Bank has made a provision of Rs. 325.00 Crores (Previous year Rs 100 Crores) on an estimated basis for salary revision of officers & award staff due w.e.f. November 1, 2007.

10. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same. BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007. The legal formalities for the same are under process and pending such formalities; no impact of the same is given in accounts.

11. In terms of Agricultural Debt Waiver Relief Scheme 2008, framed by the Government of India, the Bank has lodged a provisional claim of Rs 506.04 Crores out of which a sum of Rs. 208.91 crores has already been received by it.

12. Previous year figures have been regrouped / rearranged wherever considered necessary.


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