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

Financials > Annual Report - FY 2010 - 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 (%)	12.84	14.36	12.88	14.05
CRAR - Tier I capital (%)	8.22	9.20	7.79	8.49
CRAR - Tier II Capital (%)	4.62	5.16	5.09	5.56
Percentage of the shareholding of the Government of India in bank	53.81%	53.81%	53.81%	53.81%
Amount raised by issue of IPDI	Rs. 900.00 Crores		Rs. 300.20 Crores
Amount raised by issue of Upper Tier II instruments	Rs. 1000.00 Crores		Rs. 1000.00 Crores

2. Investments

(Rs. in Crores)

Items	Current Year	Previous Year
(1) Value of Investments
(i) Gross Value of Investments
(a) In India	57911.71	49157.38
(b) Outside India,	3798.46	4205.83
(ii) Provisions for Depreciation
(a) In India	350.07	555.60
(b) Outside India,	177.73	361.73
(iii) Net Value of Investments
(a) In India	57561.64	48601.78
(b) Outside India,	3620.73	3844.10
2) Movement of provisions held towards depreciation on investments
(i) Opening balance	917.33	439.08
(ii) Add: Provisions made during the year	64.41	611.02
(iii) Less: Write-off / write-back of excess provisions during the year	453.94	132.77
(iv) Closing balance	527.80	917.33

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, 2010
Securities sold under repos	5.00	1043.00	3.44	NIL
Securities purchased under reverse repos	150.00	5000.00	1530.47	NIL

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	995.60	417.50	65.00	0.00	21.03
(ii)	FIs	785.04	540.88	78.47	5.00	83.46
(iii)	Banks	2245.37	1145.36	182.00	55.58	145.41
(iv)	Private Corporate	1338.39	815.71	373.52	111.97	170.07
(v)	Subsidiaries /Joint Ventures	1085.46	1085.46	0.00	0.00	0.00
(vi)	Others	3988.41	235.27	0.00	794.83	1233.70
(vii)	Provision held towards depreciation	-474.71	0.00	-4.33	-100.38	-92.78
	Total	9963.56	4240.18	694.66	867.00	1560.88

ii) Non-performing Non-SLR investments

(Rs. in Crores)

Particulars	Current Year	Previous Year
Opening balance	157.80	174.78
Additions during the year since 1st April	89.41	1.23
Reductions during the above period	15.63	18.21
Closing balance	231.58	157.80
Total provisions held	228.71	154.99

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	7585.15	4135.42
ii)	Losses which would be incurred if counter parties failed to fulfill their obligations under the agreements	103.79	120.37
iii)	Collateral required by the bank upon entering into swaps	—	—
iv)	Concentration of credit risk arising from the swaps	182.89	217.36
v)	The fair value of the swap book	187.57	139.11

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)	53.04
(ii)	Notional principal amount of exchange traded interest rate derivatives outstanding as on 31st March 2010 (instrument-wise)	NIL
(iii)	Notional principal amount of exchange traded interest rate derivatives outstanding and not "highly effective" (instrument-wise)	NIL
(iv)	Mark-to-market value of exchange traded interest rate derivatives outstanding and not "highly effective" (instrument-wise)	NIL

2.3.3Disclosures 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 up to 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%
Over five years	3.00%	15.00%

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to-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)	401.07	7535.16
	a) For hedging	151.92	3069.97
	b) For trading	249.15	4465.19
(ii)	Marked to Market Positions [1]	-43.52	205.88
	a) Asset (+)	1.01	205.88
	b) Liability (-)	-44.53	0.00
(iii)	Credit Exposure [2]	15.73	188.14
(iv)	Likely impact of one percentage change in interest rate (100*PV01)	0.09	221.60
	a) on hedging derivatives	0.08	117.38
	b) on trading derivatives	0.01	104.22
(v)	Maximum and Minimum of 100*PV01 observed during the year	1.61&0.11	207.36&142.10
	a) On hedging	1.53&0.10	105.54&55.46
	b) On trading	0.08&0.01	101.82&86.64

2.4 Asset Quality

2.4.1 Non-Performing Asset

A. Movement of NPAs

(Rs. in Crores)

	Items	Current Year	Previous Year
	Gross NPAs as on 1st April 2009 (Opening Balance)	1842.92	1981.38
	Additions (Fresh NPAs) during the year	1671.22	1001.89
	Sub-Total (A)	3514.14	2983.27
	Less : -
(i)	Upgradations *	215.37	168.20
(ii)	Recoveries (excluding recoveries made from upgraded accounts)	383.27	567.19
(iii)	Write-offs	514.81	404.96
	Sub-total (B)	1113.45	1140.35
	Gross NPAs as on 31st March 2010 (Closing balance) (A-B)	2400.69	1842.92

* includes amount of exchange difference.

B) Non-Performing Assets

	Items	Current Year	Previous Year
(i)	Net NPAs to Net Advances (%)	0.34	0.31
(ii)	Movement of NPAs (Gross)
	(a)Opening balance	1842.92	1981.38
	(b)Additions during the year	1671.22	1001.89
	(c)Reductions during the year	1113.45	1140.35
	(d)Closing balance	2400.69	1842.92
(iii)	Movement of Net NPAs (net of floating provisions)
	(a)Opening balance	449.04	493.55
	(b)Additions during the year	1085.95	680.47
	(c)Reductions during the year	932.67	724.98
	(d)Closing balance	602.32	449.04
(iv)	Movement of provisions for NPAs (other than provision on standard assets)
	(a)Opening balance	1373.16	1458.43
	(b)Provisions made during the year	648.96	395.97
	(c)Write-off/ write-back of excess provisions	234.61	481.24
	(d)Closing balance	1787.51	1373.16

C) Sector-wise NPAs

Sl. No.	Sector	Percentage of NPAs to Total Advances in that sector
		Current Year	Previous Year
1	Agriculture & allied activities	3.33	1.55
2	Industry (Micro & small, Medium and Large)	1.06	0.92
3	Services	0.82	1.18
4	Personal Loans	3.68	4.85

D) Overseas Assets, NPAs and Revenue

Particulars	Current Year	Previous Year
Total Assets	68375.49	51164.72
Total NPAs	204.63	178.65
Total Revenue	2646.07	2670.13

2.4.2 Particulars of Accounts Restructured.

(Rs. in Crores)

		CDR Mechanism	SME Debt Restructuring	Others	Total
Standard advances restructured	No. of Borrowers	7	817	19591	20415
	Amount outstanding	355.76	402.37	1662.31	2420.44
	Sacrifice (diminution in the fair value)	20.83	8.31	39.90	69.04
Sub standard advances restructured	No. of Borrowers	-	4	305	309
	Amount outstanding	-	29.28	4.62	33.90
	Sacrifice (diminution in the fair value)	-	0.03	0.23	0.26
Doubtful advances restructured	No. of Borrowers	-	1	24	25
	Amount outstanding	-	0.53	0.17	0.70
	Sacrifice (diminution in the fair value)	-	0.03	-	.03
TOTAL	No. of Borrowers	7	822	19920	20749
	Amount outstanding	355.76	432.18	1667.10	2455.04
	Sacrifice (diminution in the fair value)	20.83	8.37	40.13	69.33

(Rs. in Crores)

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

(Rs. in Crores)

	Item	Current Year*	Previous Year
i)	No. of accounts	33	33
ii)	Aggregate value (net of provisions) of accounts sold to SC / R C	-	-
iii)	Aggregate consideration	15.43	36.86
iv)	Additional consideration realized in respect of accounts transferred in earlier years	-	-
v)	Aggregate gain / (loss) over net book value.	15.43	36.86

B) Details of financial assets sold to Banking Company for Asset Reconstruction Company

(Rs. in Crores)

	Item	Current Year*	Previous Year
i)	No. of accounts	2	1
ii)	Aggregate value (net of provisions) of accounts sold to SC / R C	-	-
iii)	Aggregate consideration	6.11	5.00
iv)	Additional consideration realized in respect of accounts transferred in earlier years	-	-
v)	Aggregate gain / (loss) over net book value.	6.11	5.00

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	35	34
2. Aggregate outstanding	67.31	207.60
3. Aggregate consideration received	21.54	41.86

2.4.5 Provisions on Standard Asset

(Rs. in Crores)

Item	Current Year	Previous Year
Provisions towards Standard Assets as per RBI norms	688.71	591.26
Other contingent provision towards Standard Assets	6.07	122.95

2.5 Business Ratio

(Rs. in Crores)

	Items	Current Year	Previous Year
(i)	Interest Income as a percentage to Average Working Funds	6.86	7.78
(ii)	Non-interest income as a percentage to Average Working Funds	1.15	1.42
(iii)	Operating Profit as a percentage to Average Working Funds	2.03	2.22
(iv)	Return on Assets	1.21	1.09
(v)	Business (Deposits plus advances) per employee (Rs. in Crores)	9.81	9.14
(vi)	Profit per employee (Rs. in Crores)	0.08	0.06

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	2655.49	11651.49	9746.87	8935.37	27384.95	26009.25	60527.82	49668.99	7428.72	37035.31	241044.26
Advances	2414.38	6732.35	7286.21	4236.88	18555.40	21852.56	24019.68	42803.62	31101.69	16032.51	175035.28
Investments	380.38	1122.24	841.19	890.38	2766.73	2155.92	1313.42	5394.97	13949.21	32367.93	61182.37
Borrowings	26.10	11.57	0.00	236.56	168.97	903.07	1077.70	2287.00	400.99	8238.12	13350.08
Foreign Currency assets	4226.55	5776.31	982.46	5430.92	17026.15	12773.93	11117.21	10057.75	6493.71	4259.99	78144.98
Foreign Currency liabilities	3097.08	5982.43	3069.82	6385.87	16548.57	11748.63	12790.93	8351.76	6660.77	5761.57	80397.43

2.7 Exposures

2.7.1 Exposure to Real Estate Sector

Rs. in Crores

Category	Current Year	Previous Year
a) Direct exposure
(i) Residential Mortgages –
Lendings fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented;	10601.48	8276.17
of which individual housing loans eligible for inclusion in priority sector advances	7059.02	6662.86
(ii) Commercial Real Estate –	4607.13	3869.23
Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure includes non-fund based (NFB) limits.
(iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures –
a. Residential,	50.64	13.99
b. Commercial Real Estate.	97.84	-
b) Indirect Exposure
Fund based and non-fund based exposures on-
National Housing Bank (NHB)	14.62	19.62
Housing Finance Companies (HFCs)	7201.26	3633.07
Total Exposure to Real Estate Sector	22572.97	15812.08

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	1219.72	875.11
(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;	5.68	-
(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;	450.28	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	2.74	6.01
(v)	Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers	140.69	168.88
(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 resources	-	-
(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)	725.73	289.40
	Total Exposure to Capital Market (i+ii+iii+iv+v+vi+vii+viii+ix+x)	2544.84	1342.40

The exposure to Capital Market Rs 2544.84 Crores is within the limit of Rs 5514.06 Crores (i.e. 40% of Bank’s Net worth Rs 13785.14 Crores). The direct exposure to Capital Market is Rs 2401.41 Crores and is within 20% of the Bank’s Net Worth (Rs 2757.03 Crores).

2.7.3 Risk Category wise Country Exposure

(Rs. in Crores)

Risk Category	Exposure (net) as at 31st March 10	Provision held as at 31st March 10	Exposure (net) as at 31st March 09	Provision held as at 31st March 09
Insignificant	10678.11	4.03	10844.32	6.47
Low	8843.90	11.31	6581.10	8.28
Moderately Low	520.57	-	752.84	-
Moderate	257.46	-	47.78	-
Moderately High	1208.94	-	1204.31	-
High	3.75	-	1.13	-
Very High	-	-	4.25	-
Total	28913.00	15.34	19435.73	14.75

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

A. Single borrower

(Rs. in Crores)

Name of the borrower	Single borrower exposure limit	Total Limit sanctioned	Balance as on 31.3.2010
HDFC Ltd	3032.06	3169.65	3085.30
Cotton corporation of India	2414.22	2500.00	59.00
National Aviation Co of India Ltd	2414.22	2654.91	2668.73

B. Group borrower
NIL

2.7.5 Unsecured Advances
The amount of advances for which intangible securities such as charge over the rights, licences, authority etc. have been taken as security is Rs.3731.01 crores and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances is 8.74%.

2.7.6 Concentration of Deposits, Advances, Exposures and NPAs

a) Concentration of Deposits

(Rs. in Crores)

Particulars	Current Year	Previous Year
Total Deposits of twenty largest depositors	16964.32	11083.99
Percentage of Deposits of twenty largest depositors to Total Deposits of the bank	7.04	5.76

b) Concentration of Advances

(Rs. in Crores)

Particulars	Current Year	Previous Year
Total Advances to twenty largest borrowers	34528.36	30739.38
Percentage of Advances to twenty largest borrowers to Total Advances of the bank	19.73	21.35

c) Concentration of Exposures

(Rs. in Crores)

Particulars	Current Year	Previous Year
Total Exposure to twenty largest borrowers/customers	35215.36	32511.23
Percentage of Exposures to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers	13.48	15.43

d) Concentration of NPAs

(Rs. in Crores)

Particulars	Current Year	Previous Year
Total Exposure to top four NPA accounts	259.39	227.27

e) Provision Coverage Ratio (PCR) for Advances

(Rs. in Crores)

Particulars	Current Year	Previous Year
PCR to Gross NPAs	74.90%	75.63%

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	1319.98	1150.34
Less reversal of Income Tax provisions relating to previous years	140.25	34.60
Net Provision for Income Tax	1179.73	1115.74

2.8.2 Disclosure of penalties imposed by RBI

During the financial year 2009-10, the Bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949, or any rules or conditions specified by the Reserve Bank of India in accordance with the said Act.

2.8.3 Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

(Rs. in Crores)

Name of the SPV sponsored
Domestic	Overseas
NIL	NIL

3. SLR Investments

(Rs. in Crores)

Particulars	As on 31.3.2010		As on 31.3.2009
	Book Value	Market Value	Book Value	Market Value
Government Securities – SLR(CG,SG & TB)	49456.44	49422.55	40114.31	40114.26
Approved Securities – SLR	800.61	857.15	972.45	966.65

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	-380.74	536.75
Bad debts written off / Provision made towards NPA	900.65	268.60
Provision for standard assets	106.63	75.47
Provision for taxes (including deferred taxes, and Wealth tax)	1179.73	*1115.74
Other Provision and Contingencies -
Provision towards sacrifice of interest in restructured standard and sub-standard accounts	54.81	68.98
Provision for Country Risk Management
Provision for staff welfare expenses	15.00	15.00
Others	0.85	-2.74
Total	1876.93	2077.80

* The amounts includes Fringe Benefit Tax also.

4.2 Floating Provisions � Comprehensive Disclosures

(Rs. in Crores)

Particulars	Current Year	Previous Year
a. Opening balance in the floating provisions account	550.35	550.35
b. The quantum of floating provisions made in the accounting year	-	-
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 2009-10 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	75
(b)	No. of complaints received during the year	3647
(c)	No. of complaints redressed during the year	3631
(d)	No. of complaints pending at the end of the year	91

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	18
(c)	No. of Awards implemented during the year	17
(d)	No. of unimplemented Awards at the end of the year	2

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 31.03.2010.

During the financial year 2008-09, Bank has issued only one Letter of Comfort to meet the requirements of the overseas / domestic regulators while seeking their approval for establishing subsidiaries / opening of branches. The Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank’s subsidiary in that country.

The subsidiary Bank of Baroda (New Zealand) Ltd. has been registered as a Bank in New Zealand on 01.09.2009 but is not yet operationalised. Therefore no amount is quantified as on 31st March 2010.

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)

The depreciation on revalued assets has been provided during the year on the basis of remaining useful life of the assets as ascertained by the valuers as against the earlier practice of charging depreciation on original useful life of the assets. This has resulted into additional depreciation of Rs. 67.22 crores during the year. Resultantly the depreciation on original block charged to Profit & Loss account has increased by Rs. 6.58 crores and the Revaluation Reserve has reduced additionally by Rs. 60.64 crores.

2. Employee Benefits (AS-15)

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 liability commencing 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 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 employee’s 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 eligible allowances 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 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]

TYPE OF PLAN
	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
Discount rate	8.00%	8.00%	8.00%	8.00%
Salary Escalation Rate	4.00%	4.00%	4.00%	4.00%
Attrition Rate	2.00%	2.00%	2.00%	2.00%
Expected Rate of Return on plan Assets	8.00%	0.00%	8.00%	0.00%

RECONCILIATION OF OPENING AND CLOSING BALANCE OF LIABILITY

(Rs. in Crores)

TYPE OF PLAN
	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) PVO as at 1/4/2009	2668.19	418.00	903.57	415.00
b) Interest Cost	197.01	31.75	68.41	31.07
c) Current Service Cost	45.38	16.26	38.15	6.84
d) Benefits Paid	-173.53	-21.77	-59.29	-15.14
e)Actuarial loss/gain(-) on obligation	124.05	64.51	72.90	-6.49
f) PVO as at 31.03.2010	2861.10	508.75	1023.74	431.28

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 1/4/2009	2629.19	0	790.77	0
b) Expected Return on Plan Assets	203.39	0	60.89	0
c) Contributions	-	21.77	-	15.14
d) Benefits Paid	-173.53	-21.77	-59.29	-15.14
e) Actuarial gain/(-)loss	42.84	0	-13.36	0
f) Fair Value of Plan Assets as on 31.03.2010	2701.89	0	779.01	0

AMOUNT RECOGNISED IN THE BALANCE SHEET

(Rs. in Crores)

TYPE OF PLAN
	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) PV of obligation	2861.10	508.75	1023.74	431.28
b) Fair value of plan assets	2701.89	0	779.01	0
c)Difference	-159.21	-508.75	-244.73	-431.28
d) Unrecognised transitional liability	26.00	39.20	75.00	45.40
e)Liability Recognised in the BS	-133.21	-469.55	-169.73	-385.88

AMOUNT RECOGNISED IN THE PROFIT & LOSS ACCOUNT

(Rs. in Crores)

TYPE OF PLAN
	PENSION	LEAVE ENCASHMENT	GRATUITY	ARB
a) Current Service Cost	45.38	16.26	38.15	6.84
b) Interest Cost	197.01	31.75	68.41	31.07
c) Expected Return on Plan Assets	-203.39		-60.89
d) Net Actuarial Loss/gain(-)	81.12	39.20	86.26	45.40
e) Transitional liability recognised in the year	13.00	64.51	38.00	-6.49
Expenses Recognised in Profit & Loss Account	133.21	151.72	169.93	76.82

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	4599.16	4442.29	7324.24	5247.37	4956.91	5383.10	2624.39	2776.48	19504.70	17849.24
Results	1047.70	1019.57	1585.36	845.23	778.65	1406.50	2732.42	1769.39	6144.13	5040.69
Unallocated Expense									1906.07	1697.74
Operating Profit									4238.06	3342.95
Income taxes									1179.73	1115.75
Extra-ordinary Profit/loss
Net Profit									3058.33	2227.20
Other Information
Segment Assets	69474.04	61492.10	87163.85	57141.55	45007.87	49647.20	74311.52	56217.01	275957.28	224497.86
Unallocated Assets									2359.42	2908.87
Total Assets									278316.70	227406.73
Segment Liabilities	65703.15	58021.30	82432.80	53916.29	42564.94	46844.97	70278.06	53043.95	260978.96	211826.51
Unallocated Liabilities									17337.74	15580.22
Total Liabilities									278316.70	227406.73

Part B - Geographic Segments

Rs. in Crores

Segments	Domestic		International		Total
Particulars	Current Yr	Prev. Yr	Current Yr	Prev. Yr	Current Yr	Prev. Yr
Particulars	31.03.10	31.03.09	31.03.10	31.03.09	31.03.10	31.03.09
Revenue	17014.16	15465.20	2490.54	2384.04	19504.70	17849.24
Assets	210329.67	177106.26	67987.03	50300.47	278316.70	227406.73

Notes on Segment Reporting :

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments.

2. Segment revenue represents revenue from external customers.

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

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 (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.
Bank of 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
Baroda Pioneer Asset Management Co. Ltd.

(c) Joint Ventures :

IndiaFirst Life Insurance Company Ltd

(D) Key Management Personnel:

S.No	Name	Designation	Remuneration
			Current Year	Previous Year
1	Shri M.D.Mallya	Chairman & Managing Director	* 23,30,494	6,07,401
2	Shri V.Santhanaraman	Ex-Executive Director (Up to 31.08.2009)	* 18,74,019	6,12,977
3	Shri Rajiv Kumar Bakshi	Executive Director	* 13,93,184	2,44,827
4	Shri N.S.Srinath	Executive Director (w.e.f. 07.12.2009)	3,20,093	-

* Amount includes arrears on account of VI pay commission and incentives.

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS)-18 Related Parties Disclosure, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled.

5. Earning Per Share (AS-20)

Particulars	Current Year	Previous Year
Net Profit after tax available for shareholders (Rs. in Crores)	3058.33	2227.20
Number of shares	364266500	364266500
Basic & Diluted earning per share	83.96	61.14
Nominal value per 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 liabilities as on 31st March 2010 amounting to Rs. 92.75 Crores (Previous Year DTA of Rs.43.69 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		26.02		47.78
Deduction under section 36(1)(viii) of the Income-tax Act, 1961		234.47		74.78
Provision for doubtful debts and advances (foreign)		-	51.00	-
Amount Disallowable U/S 40(a)(ia) of the IT Act	11.32		16.86
Provision for leave encashment	156.42	-	98.39	-
Total	167.74	260.49	166.25	122.56
Net Deferred Tax Asset/Liabilities	-	92.75	43.69	-

7. Discontinuing operations (AS24)

During the financial year 2009-10 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 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	Current Year	Previous Year
Balance as on 1st April 2009	13.43	13.43
Provided during the year	-8.68	-
Balance as on 31st March 2010	4.75	13.43
Timing of outflow / uncertainties	Outflow on settlement/crystallization	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 31.03.2010, 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.

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 one foreign immovable property by an amount of Rs. 3.10 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.3.25 Crores (previous year Rs. 38.22 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.255.43 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs.126.59 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 has been 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. 1293.49 Crores (previous year Rs 1019.84 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.270 Crores to the corresponding Special Reserve account.

5. During the year, the bank has not annulled the forfeiture of any equity shares (previous year 100 equity shares).-

6. Premises-

6.1 Execution of conveyance deeds is pending in respect of certain properties aggregating to Rs 65.30 Crores (Previous year Rs.79.72 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.1768.34 Crores (Previous Year Rs.1766.66 Crores) and net of depreciation the revaluation amounts to Rs. 1321.25 Crores (Previous year Rs.1448.34 Crores).

6.3 Premises include assets under construction / acquisition amounting to Rs.96.87 Crores (Previous year Rs.74.79 Crores).

7. During the year ended March 31, 2010, Tier II Bonds amounting to Rs. 320.00 Crores have been redeemed and Tier I Bonds amounting to Rs. 900.00 Crores and Tier II Bonds amounting to Rs. 1000.00 Crores (Previous year Rs.1800.20 Crores) were raised.

8. Other Reserves include an amount of Rs.943.95 Crores (previous year Rs.673.95 Crores) on account of special reserves created under requirements of Income Tax Act.

9. Bank has made a provision of Rs. 300.00 Crores (Previous year Rs 325.00 Crores) for the year on an estimated basis for salary revision of officers & award staff. The accumulated provision on this account is Rs. 725 crores on 31.03.2010 against such revision 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.
Bank has approved the merger of M/s. BOB Fiscal Services Limited with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court. Accordingly, the legal formalities for the merger are under process and pending such formalities; no impact of the same is given in accounts.

11. During the year Bank has sold 6.5% stake in UTI AMC Ltd. and UTI Trustee Co Pvt Ltd resulting which Bank’s stake has reduced to 18.5% in both the companies. Accordingly these companies have been derecognized as associates.

12. Income earned for marketing third party products

(Rs. in Crores)

Sr. No	Nature of Income	Amount
1	For selling life insurance policies	4.88
2	For selling non life insurance policies	1.20
3	For selling mutual fund products	1.13
4	For selling of life mutual fund products	0.47
5	Bancassurance business	2.48

13. As per the RBI circular DBOD.No.BP.BC.82/21.04.048/2009-10 dated 30-03-2010, the last date for payment of 75% of the overdue portion of the other farmers have been extended from 31-12-2009 to 30-06-2010 and the banks are allowed to treat such accounts as standard assets. However, keeping in view of the inherent weakness in such accounts, as a prudent measure, bank has continued to classify such accounts as NPA.

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


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