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Company Information

Home » Market » Company Information

Karur Vysya Bank Ltd.

Sep 19, 03:41
54.95 -2.70 ( -4.68 %)
 
VOLUME : 44304
Prev. Close 57.65
Open Price 57.50
TODAY'S LOW / HIGH
54.70
 
 
 
57.50
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 55.00 (753)
52 WK LOW / HIGH
55.45
 
 
 
95.00
Sep 19, 03:31
55.05 -2.75 ( -4.76 %)
 
VOLUME : 514455
Prev. Close 57.80
Open Price 57.50
TODAY'S LOW / HIGH
54.80
 
 
 
57.50
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
55.20
 
 
 
95.00
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Market Cap. ( ₹ ) 4400.26 Cr. P/BV 0.69 Book Value ( ₹ ) 80.35
52 Week High/Low ( ₹ ) 95/55 FV/ML 2/1 P/E(X) 20.87
Bookclosure 18/07/2019 TTM EPS ( ₹ ) 2.98 Div Yield (%) 4.05
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2019-03 


Notes to Account

8.3 Qualitative disclosure around LCR

Pursuant to RBI guidelines on implementation of Basel III framework applicable to banks in India with effect from January 01, 2015, LCR promotes short term resilience of banks to potential liquidity disruptions by ensuring that they have sufficient high quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days.

Objective

LCR standard aims to ensure that a bank maintains an adequate level of unencumbered HQLAs that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified by supervisors. At a minimum, the stock of liquid assets should enable the bank to survive until day 30 of the stress scenario, by which time it is assumed that appropriate corrective actions can be taken.

The bank has consistently maintained LCR above 100% during FY 2018-19 as against the regulatory minimum of 90% (till December 2018) / 100% (from January 2019). The quarterly daily average LCR of the Bank for the quarter ended March 2019 is 253.27%.

Composition of HQLA

Cash in hand

Excess CRR balance as on that particular day Excess Government Securities in excess of minimum SLR requirement

Government Securities within the mandatory SLR requirement to the extent allowed by RBI under MSF (Presently to the extent of 2% of NDTL as allowed for MSF)

Facility to avail liquidity for liquidity coverage ratio at 9% of NDTL

AAA rated bonds and AA- & above bonds and adding marketable securities representing claims guaranteed by sovereigns having risk weights higher than 20% but not higher than 50% Common equity shares not issued by the bank/financial institution/NBFC or any of its affiliated entities and included in NSE CNX Nifty and / or S & P BSE Sensex indices.

9. Disclosure requirement as per Accounting Standards (AS)

In compliance with the guidelines issued by the RBI regarding disclosure requirements of the various Accounting Standards, the following information is disclosed:

9.1 There are no material prior period income and expenditure included in the Profit & Loss account, which requires a disclosure as per AS-5.

For the preparation of these financial results, the bank has followed the same accounting policies and generally accepted practices adopted for the preparation of audited financial statements for the year ended March 31, 2019.

9.2 Employee Benefits (AS -15)

The Bank is following AS-15 (Revised 2005) 'Employee Benefits' as under:

a. In respect of Contributory Plan, viz., Provident Fund, the Bank pays fixed contribution at pre-determined rates to a separate trust, which invests in permitted securities. The obligation of the Bank is limited to such fixed contribution.

b. In respect of Defined Benefit Plans, viz., Gratuity and Pension, provision has been made based on actuarial valuation as per the guidelines.

c. In respect of Leave Encashment, provisioning requirement has been made based on actuarial valuation.

d. As per industry settlement dated April 27, 2010, employees who have joined on or after 01.04.2010 are covered under National Pension System (NPS) regulated by Provident Fund Regulatory Development Authority (PFRDA). Employer's contribution to NPS has been recognised as expenditure in the profit and loss account.

e. The disclosure requirements as per the AS-15 are given below Principal Actuarial Assumptions

Particulars

Gratuity

Pension

Privilege Leave

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Discount Rate (%)

7.78

7.71

7.79

7.71

7.78

7.71

Salary escalation rate (%)

5.50

5.50

5.50

5.50

5.50

5.50

Attrition rate (%)

0.50

1.62

0.50

2.57

0.50

1.01

Expected rate of return on Plan Assets (%)

7.78

8.26

7.79

8.85

-

-

Expenses recognized in Profit and Loss Account

Rs in crore

Particulars

Gratuity

Pension

Privilege Leave

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Current Service Cost

10.26

7.44

14.46

12.78

0.84

0.74

Past Service Cost

-

22.24

-

-

-

-

Interest cost on benefit obligation

12.40

9.23

35.03

30.92

8.94

8.09

Expected return on plan assets

(13.30)

(11.52)

(40.93)

(35.77)

-

-

Net Actuarial (gain) / loss recognised in the year

0.60

8.21

108.97

25.75

9.42

3.40

Expenses recognised in the Profit and Loss Account

9.96

35.60

117.53

33.68

19.20

12.23

Changes in the present value of the defined benefit obligation

(Rs in crore)

Particulars

Gratuity

Pension

Privilege Leave

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Present value of obligation at the beginning of the year

160.85

123.09

454.29

423.67

115.89

107.84

Current Service Cost

10.26

7.44

14.46

12.78

0.84

0.74

Past Service Cost

-

22.24

-

-

-

-

Interest Cost

12.40

9.23

35.03

30.92

8.94

8.09

Net actuarial (gain) / loss on obligation

(0.43)

7.34

92.50

17.46

9.42

3.40

Benefits Paid

(15.03)

(8.49)

(62.70)

(30.54)

(6.35)

(4.18)

Present value of the defined benefit obligation at the end of the year

168.05

160.85

533.58

454.29

128.74

115.89

Change in the fair value of plan assets

(Rs in crore)

Particulars

Gratuity

Pension

Privilege Leave

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Mar. 31, 2019

Mar. 31, 2018

Fair value of plan assets at the beginning of the year

161.03

126.62

462.46

437.55

-

-

Expected Return on plan assets

13.30

11.52

40.93

35.77

-

-

Contribution by employer

9.79

32.25

109.37

27.97

6.35

4.18

Benefits Paid

(15.03)

(8.49)

(62.70)

(30.54)

(6.35)

(4.18)

Actuarial gain / (loss)

(1.03)

(0.87)

(16.47)

(8.29)

-

-

Fair value of plan assets at the end of the year

168.06

161.03

533.59

462.46

-

-

9.3 Segment Reporting: (AS-17)

A. Business Segments

For the purpose of segment reporting, the reportable segments are identified into Treasury, Corporate/Wholesale banking, Retail banking and other banking operations, in compliance with RBI guidelines. Brief description of activities of each segment and revenue attributable thereto is as under:

1. Treasury portfolio comprises of investments in Central and State Government securities, debt instruments of Banks, FIs, Insurance companies, PSUs and corporates, certificate of deposits, equity shares, mutual funds, security receipts etc. as well as forward contracts, derivatives and foreign exchange operations on proprietary account and for customers, including trading in these instruments as well as borrowing and lending operations.

Treasury income is primarily earned through interest on investments, forex income as well as income from securities trading; expenditure includes interest on funds borrowed and other allocated overheads.

2. Corporate/ Wholesale banking is based on RBI definition and comprises of credit facilities and other banking services provided to corporate and other clients where value of individual exposure exceeds Rs 5 crore.

Revenue comprises of interest and fees / charges earned from such clients and expenses are those incurred on interest towards funds utilized and other allocated overheads.

3. Retail banking comprises of lending and other banking services to individuals/small business customers, other than corporate/wholesale banking customers.

Revenue comprises of interest and fees / charges earned from such clients and expenses are those incurred on interest towards utilised and other allocated overheads.

4. Other Banking Operations includes items not included above i.e. para-banking activities like bancassurance, third party product distribution, demat services and other banking transactions and includes items like deposits in RIDF, MSME Funds etc.

Income earned from such services and costs related thereto are reported thereunder.

B. Geographical Segment

The Bank operates only in India and hence the reporting consists only of domestic segment.

Segment information is prepared on the basis of management estimates/ assumptions and is based on internal reporting systems. Methodology adopted in compiling the above information has been relied upon by the auditors.

Part A: Business segments

Rs in crore

SN

Particulars

2018-19 (Audited)

2017-18 (Audited)

a

Segment Revenue

1. Treasury Operations

1,307.25

1,345.22

2. Corporate/Wholesale Banking Operations

1,653.86

1,709.86

3. Retail Banking Operations

3,792.50

3,526.60

4. Other Banking Operations

24.98

17.90

Total

6,778.59

6,599.58

b

Segment Results

1. Treasury Operations

345.90

382.84

2. Corporate/Wholesale Banking Operations

484.84

555.14

3. Retail Banking Operations

1,098.55

1,045.55

4. Other Banking Operations

22.19

16.18

Total

1,951.48

1,999.71

c

Unallocated Income/Expenses

240.69

222.39

d

Operating Profit

1,710.79

1,777.32

e

Income Taxes

111.37

157.98

f

Other Provisions

1,388.55

1,273.67

g

Exceptional Item

Nil

Nil

h

Net Profit

210.87

345.67

i

Other Information

Nil

Nil

j

Segment Assets

1. Treasury Operations

15,604.18

16,555.43

2. Corporate/Wholesale Banking Operations

13,598.70

14,029.84

3. Retail Banking Operations

34,982.11

30,770.30

4. Other Banking Operations

Nil

Nil

5. Unallocated Assets

5,155.12

5,585.86

Total Segment Assets

69,340.11

66,941.43

k

Segment Liabilities

1. Treasury Operations

14,462.91

16,479.82

2. Corporate/Wholesale Banking Operations

12,260.53

12,307.40

3. Retail Banking Operations

31,542.55

26,992.90

4. Other Banking Operations

Nil

Nil

5. Unallocated Liabilities

4,651.62

4,897.12

Total (a)

62,917.31

60,677.24

1

Capital Employed (Segment Assets-Segment Liabilities)

1. Treasury Operations

1,141.27

1547.57

2. Corporate/Wholesale Banking Operations

1,338.17

1,311.82

3. Retail Banking Operations

3,439.86

2,876.60

4. Other Banking Operations

Nil

Nil

5. Unallocated Liabilities

503.50

528.20

Total (b)

6,422.80

6,264.19

Total Segment Liabilities (a b)

69,340.11

66,941.43

Part B: Geographic segments

Geographical Segment consists only of the Domestic Segment since the Bank does not have any foreign branch.

9.4 Related Party Transactions (AS-18)

Disclosure about transactions with Key Management Personnel

Key Management Personnel

Designation

Item

Amount (Rs )

Shri. B. Swaminathan (retired on Jan,19, 2019)

Chairman

Honorarium

7,20,968.00

Shri. N.S. Srinath (with effect from Mar.26, 2019)

Chairman

Honorarium

Nil

Shri. P.R. Seshadri

MD & CEO

Remuneration

1,28,98,416.00

(Rs in crore)

Items/ Related Party

Parent (as per ownership or control)

Subsidiaries

Associates/ Joint ventures

Key Management Personnel

Relatives of Key Management Personnel

Total

March 31st

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

Borrowings

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Deposit

Nil

Nil

Nil

Nil

Nil

Nil

3.05 (maximum during the year 6.12)

2.51 (maximum during the year 4.32)

Nil

Nil

3.05

2.51

Placement of deposits

Advances

Investments

Non-funded commitments

Leasing/HP arrangements availed

NIL

Leasing/HP arrangements provided

Purchase of fixed assets

Sale of fixed assets

Interest paid

Nil

Nil

Nil

Nil

Nil

Nil

0.13

0.17 Ni

Nil

0.13

0.17

Interest received

Rendering of services

Receiving of services Management contracts

NIL

9.5 Earnings per Share (AS-20)

(Rs in crore)

Computation of Basic EPS (before and after Extraordinary items)

SN

Particulars

2018-19

2017-18

1

Net Profit (Rs in crore)

210.87

345.67

2

Weighted number of shares

79,93,10,947

72,37,78,019

3

Basic EPS (A/B) (Rs)

2.64

4.78

4

Nominal Value per share (?)

2.00

2.00

Computation of Diluted EPS (before and after Extraordinary items)

SN

Particulars

2018-19

2017-18

1

Net Profit (Rs in crore)

210.87

345.67

2

Weighted number of shares (including Potential Equity Shares)

79,93,19,500

72,37,78,019

3

Diluted EPS (A/B) (Rs)

2.64

4.78

4

Nominal Value per share (?)

2.00

2.00

Note -There are no extraordinary items recognised in the profit and loss account during FY 2018-19 and FY 2017-18; accordingly, EPS is disclosed as above.

9.6 Accounting for Taxes on Income (AS-22)

The Bank has recognized Deferred Tax Asset/ Liability (DTA/DTL) and has accounted for the Net Deferred Tax as on March 31, 2019. Major components of Deferred Tax Assets and Deferred Tax Liabilities are as under:

Deferred Tax Liabilities

(Rs in crore)

Particulars

2018-19

2017-18

1 . Depreciation on Fixed Asset

17.70

19.04

2. Special Reserve u/s 36(1)(viii) of the Income Tax Act,1961

111.82

102.09

TOTAL

129.52

121.13

Deferred Tax Assets

(Rs in crore)

Particulars

2018-19

2017-18

1 . Provision for leave encashment

44.99

44.26

2. Provision for Bad and doubtful debts

22.41

36.24

3. Others

19.63

23.80

TOTAL

87.03

104.30

Note : The provision for Income Tax has been worked based on the Income Computation and Disclosures Standards (ICDS).

9.7 Impairment of Assets (AS - 28)

In the opinion of the Management, there is no impairment of its Fixed Asset to any material extent as at March 31,2019 requiring recognition in terms of Accounting Standard 28.

9.8 Description of Contingent Liabilities.

a) Claims against the Bank not acknowledged as debts

These represent claims filed against the Bank in the normal course of business relating to various legal cases currently in progress. These also include demands raised by income tax and other statutory authorities and disputed by the Bank.

b) Liability on account of forward exchange and derivative contracts

The Bank presently enters into foreign exchange contracts and interest rate swaps with interbank counterparties and customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows in the same currency based on fixed rates or benchmark reference. The notional amounts of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank's exposure to credit or price risks. The fluctuation of market rates and prices cause fluctuations in the value of these contracts and the contracted exposure become favorable (assets) or unfavorable (liabilities).

c) Guarantees given on behalf of constituents

As a part of its banking activities, the Bank issues guarantees on behalf of its customers to enhance their credit standing. Guarantees represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfill its financial or performance obligations.

d) Acceptances, endorsements and other obligations

These include documentary credit issued by the Bank on behalf of its customers and bills drawn by the Bank's customers that are accepted or endorsed by the Bank.

e) Other items for which the bank is contingently liable

Includes Capital commitments and amount transferred to RBI under the Depositor Education and Awareness Fund (DEAF). (Refer schedule 12 for amounts relating to contingent liability.)

10. ADDITIONAL DISCLOSURES

10.1 Disclosure of Complaints

(a) Customer Complaints (including ATM transaction complaints) as on 31.03.2019

Particulars

2018-19

2017-18

No. of complaints pending at the beginning of the year

39

52

No. of complaints received during the year*

59,110

84,105

No. of complaints redressed #

59,107

84,118

No. of complaints pending at the end of the year

42

39

# Includes ATM failed transactions complaints received and redressed of 58,414 during FY 2018-19 (Previous Year 83,376 complaints).

(b) Awards passed by Banking Ombudsman

Particulars

2018-19

2017-18

1 . No. of unimplemented awards at the beginning of the year

Nil

Nil

2. No. of awards passed by Banking Ombudsman during the year

3. No. of awards implemented during the year

4. No. of unimplemented awards at the end of the year

Note: The above data has been compiled on the basis of the guidelines of RBI and certain assumptions made by management and have been relied upon by auditors.

10.2 Disclosure of Letter of Comfort (LOCs)

The amount of Letter of Comfort issued during the year 2018-19 was Nil (Previous year Rs 3,875.39 crore) and outstanding as on March 31, 2019 was Nil (Previous year Rs 1,180.45 crore).

10.3 Bancassurance Business

The bank has received an amount of Rs 22.52 crore (Life Insurance Rs 16.48 crore and Non-Life Insurance Rs 6.04 crore) towards fee/remuneration in respect of the bancassurance business undertaken during FY 2018-19. [Previous year Rs 15.60 crore (Life Insurance Rs 10.93 crore and Non-Life Insurance Rs 4.67 crore)]

10.4 Transfers to Depositor Education and Awareness Fund (DEAF):

As per RBI guidelines, the credit balance in accounts which have not been operated upon for a period often years or any deposit or any amount remaining unclaimed for a period exceeding ten years is transferred to DEAF as per details given below.

Particulars

2018-19

2017-18

Opening balance of amounts transferred to DEAF

98.56

83.60

Add : Amounts transferred to DEAF during the year

15.84

16.22

Less : Amounts reimbursed by DEAF towards claims

2.30

1.26

Closing balance of amounts transferred to DEAF

112.10

98.56

10.5 Disclosure on Priority Sector Lending Certificates sold/purchased during the year

(Rs in crore)

Particulars

2018-19

2017-18

PSLC purchased during the year

(I) PSLC -Agriculture

Nil

Nil

(II) PSLC- SF/MF

300.00

(III) PSLC- Micro Finance

Nil

(IV) PSLC- General

Nil

Total

300.00

PSLC sold during the year

(I) PSLC -Agriculture

Nil

Nil

(II) PSLC- SF/MF

500.00

500.00

(III) PSLC- Micro Finance

200.00

Nil

(IV) PSLC- General

1,300.00

300.00

Total

2,000.00

800.00

10.6 Disclosure on Provisioning relating to frauds

(Rs in crore)

SN

Particulars

2018-19

2017-18

A

Number of Frauds reported during the year

51

14

B

Amount involved in fraud net of recoveries / interest reversal on NPA

73.25

19.43

C

Provisions made during the year

73.25

19.43

D

Quantum of unamortised provision debited from 'Other Reserves' at the end of the year

Nil

Nil

(Rs in crore)

10.7 Disclosure of Remuneration Qualitative Disclosure

a) Information relating to the composition and mandate of the Nomination and Remuneration Committee (NRC):

The Nomination & Remuneration Committee (NRC) of the Board consists of four Directors, majority being Independent Directors. The Composition complies with RBI guidelines, provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 ('SEBI LODR').

The mandate of Nomination and Remuneration Committee includes:

a) To formulate criteria for determining qualifications, positive attributes and independence of a director, in terms of fit and proper criteria issued by the RBI.

b) To devise a policy on Board Diversity;

c) To formulate/review criteria for evaluation of performance of Chairman, Independent Directors, Board of Directors, Committees of Board.

d) To recommend persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the board of directors their appointment and removal.

e) To frame/review Compensation Policy towards ensuring effective alignment between remuneration and risk. Directors and Senior Management Personnel shall be part of the Compensation Policy.

f) To also review and recommend to the board, all remuneration, in whatever form, payable to Directors & senior management.

g) To consider grant of stock options to employees, administer and supervise the Employee Stock Option Plans in conformity with statutory provisions and guidelines;

h) To provide inputs to Board for making disclosures regarding policies, appointments, remuneration etc. of Directors and Senior Management personnel in the Annual Reports/ Directors Reports/Financial Statements etc. as may be required by the regulations from time to time.

i) To perform any other functions or duties as stipulated by the Companies Act, RBI, SEBI, Stock Exchanges and any other regulatory authority or under any applicable laws as may be prescribed from time to time.

b) Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy:

The Bank has Board approved Compensation Policy in terms of the RBI guidelines. NRC shall work in close co-ordination with the Risk Management and Asset Liability Management Committee of the Board in order to achieve effective alignment between remuneration and risks.

The Compensation Policy of the Bank covers the compensation payable to all the employees including the Part-time (Non-Executive) Chairman, MD&CEO/WTD, Key Managerial Personnel and Senior Management as per the guidelines of RBI. NRC will review the policy from time to time.

As the Bank is a party to the Bi-partite settlements at all India level in respect of workmen cadre employees and Officer Employees for the payment of salary and other emoluments, the Bank follows the emoluments / compensation as arrived at in each Bi-partite settlement. Currently bank has given its mandate to Bi-partite settlement at all India level that all employees up to the Scale III cadre would be subjected to such emoluments / compensation structure. Presently Bank is following the emoluments/compensation structure as arrived at the Bi-partite settlements from Scale IV to VII cadres. Taking into account the said Bi-partite salary structure, the policy excludes all risk takers who are under contract of employment. Compensation for employees appointed under CTC basis is determined based on the industry standards, the exposure, skill sets, talent and qualification attained. Bank shall ensure that the salary package payable to them shall be in line with RBI guidelines.

Objective of the Compensation policy is to align the compensation with prudent risk taking; Compensation must be adjusted for all types of risks Compensation outcomes must be symmetric with risk outcomes Compensation pay-out schedules must be sensitive to the time horizon of risks The proportion of cash, equity and other forms of compensation must be consistent with risk alignment.

c) Description of the ways in which current and future risks are taken into account in the remuneration processes. It should include the nature and type of the key measures used to take account of these risks:

Compensation Policy adopted by the Bank address the issues pertaining to current and future risks. Risk measures in the policy are reviewed on timely basis and are updated to suit the skill gaps and current day needs. A wide variety of measures of credit, market and liquidity risks are used by the bank in implementation of risk adjustment. This risk adjustment has both quantitative and qualitative elements. The Policy effectively aligns the compensation with prudent risk taking and shall be symmetrical with risk outcomes as well as sensitive to the time horizon of risk.

Bank being a party to IBA settlement all emoluments / compensation are as arrived in IBA structure. Further Bank also has (Cost to Company) CTC structure for which a comprehensive framework has been adopted. Bank also recognises long term incentives in the form of ESOPS. The remuneration system strives to maintain the ability to attract, retain, reward and motivate the talent in order to enable the Bank to attain its strategic objectives.

Board of Directors of the Bank through its NRC shall exercise oversight & effective governance over the framing and implementing the Compensation policy.

d) Description of the ways in which the bank seeks to link performance during a performance measurement period with levels of remuneration:

Bank would ensure that the compensation is adjusted to all types of risk, symmetrical with risk outcomes as well as sensitive to the time horizon of risk. Bank follows a performance-based remuneration, which motivates and rewards high performers who strengthen long-term customer relations, and generate income and shareholder value.

The Bank while designing the compensation structure ensures that there is a proper balance between fixed pay and variable pay. The variable pay could be in cash, stock linked instruments or a mix of both, However Employees Stock Option shall not form part of the total compensation as per the policy adopted in line with the RBI Guidelines. Bank ensures that variable pay shall relate to the performance of the Bank.

While fixing the Variable Pay, performance parameters under financial and non-financial areas of operations are assessed. The financial performance of the bank is factored while determining the amount of variable remuneration to be paid. The Bank's compensation policy stipulates that Variable pay shall not exceed 40% of the fixed pay in any year.

In the event of negative growth of the bank and or the relevant line of business in any year, the deferred compensation shall be subjected to malus and claw back arrangements in tune with the RBI guidelines.

e) A discussion of the bank's policy on deferral and vesting of variable remuneration and a discussion of the bank's policy and criteria for adjusting deferred remuneration before vesting and after vesting:

As per the Compensation Policy, variable pay is eligible on the achievement of certain business/compliance targets fixed by the management. Compensation policy of the Bank prescribes the maximum variable pay, which shall not exceed 40 per cent of the fixed pay. In terms of the RBI extant guidelines, the variable pay is fixed to 70 per cent of the fixed pay and deferral arrangement for payment of variable pay is necessitated where such proposed variable pay exceeds substantial portion of the fixed pay, i.e. 50% or more. However, as the variable pay limit fixed by the Bank is less than the threshold limit for having the deferral arrangement of variable remuneration. Hence, the criteria for adjusting deferred remuneration do not arise to the Bank.

f) Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms) that the bank utilizes and the rationale for using these different forms:

The Bank ensures that the compensation structure is comprehensive and considers both, qualitative and quantitative performance measures. Bank uses an optimum mix of cash, non-cash, ESOPS to decide the compensation of all employees. Variable pay is purely based on performance and is measured through score cards.

Bank subscribes to different forms of variable pay such as performance linked incentives, Ex-gratia for other employees, non-cash incentives, Bonus, any other incentives by whatever name called having the similar features.

Bank has Employees Stock Option Scheme or Plan i.e. ESOS or ESOP NRC may grant stock options under the Employees Stock Options Plan/Scheme from time to time in terms of SEBI (Share Based Employee Benefits) Regulations, 2015. Such Stock Options will be excluded from the components of variable pay.

The Bank shall not grant any severance pay (other than the terminal benefits and gratuity as per the provisions).

Bank shall not provide any facility or funds or permit to insure or hedge his/her compensation structure to offset the risk alignment effects embedded in the compensation package.

Quantitative Disclosures:

Particulars

2018-19

2017-18

a) Number of meetings held by the Remuneration Committee during the financial year and remuneration paid to its members.

5 Meetings and remuneration of Rs 3.80 lakh

5 Meetings and remuneration of Rs 4.80 lakh

b) Number of employees having received a variable remuneration award during the financial year

Nil

Nil

c) Number and total amount of sign-on awards made during the financial year

d) Details of guaranteed bonus, if any, paid as joining / sign on bonus

e) Details of severance pay, in addition to accrued benefits, if any

f) Total amount of outstanding deferred remuneration, split into cash, shares and share-linked instruments and other forms

g) Total amount of deferred remuneration paid out in the financial year

h) Breakdown of amount of remuneration awards for the financial year to show fixed and variable, deferred and non-deferred

i) Total amount of outstanding deferred remuneration and retained remuneration exposed to ex post explicit and / or implicit adjustments

j) Total amount of reductions during the financial year due to ex-post explicit adjustments

k) Total amount of reductions during the financial year due to ex-post implicit adjustments

10.8 Stock options

Bank has granted 7,25,000 Stock Options to its Senior Management & other employees under KVB ESOS 2011 and ESOS 2018 Schemes. Further Nomination and Remuneration Committee granted 10,00,000 stock options under KVB ESOS 2018 to MD&CEO subject to the approval of RBI and the same was not acceded by the Reserve Bank of India. A sum of Rs 0.29 crore has been provided as Employee Compensation Cost being the proportionate accounting value in respect of stock option.

10.9 Disclosure on Investor Education and Protection Fund

As per the Companies Act 2013, dividend unclaimed (including respective shares) for more than seven years from the date of declaration is to be transferred to Investor Education and Protection Fund. In compliance with the above provisions, the unclaimed dividend amount due to be transferred to the Investor Education and Protection Fund (IEPF) during the year ended March 31, 2019 has been transferred without any delay.

10.10 The Bank has deposited an amount of Rs 387.94 crore towards disputed tax liability. In the opinion of the Bank, no provision is considered necessary based on favourable decisions by various courts.

10.11 Basel III disclosures

In accordance with RBI circular DBOD. No. BPBC.1/21.06.201/2015-16 dated 01.07.2015, read together with RBI circular DBR. No.BPBC.80/21.06.201/2014-15 dated 31.03.2015, Banks are required to make Pillar 3 disclosures under Basel III capital regulations. Accordingly, Pillar 3 disclosures under Basel III capital regulations have been made available on the Bank's website at the following link- http://www.kvb.co.in/footer/pillarlll_disclosures.html. These disclosures have not been subjected to audit by the Statutory Central Auditors.

10.12 Corporate Social Responsibility (CSR)

The bank has incurred an expenditure of Rs1.99 crore and has provided Rs 13.39 crore towards CSR, after carrying out the process of identifying various projects and its appropriateness for spending (Previous year Rs 3.70 crore).

10.13 Inter-branch transactions

Inter Branch/Office accounts reconciliation has been completed upto March 31, 2019 and all the inter branch entries have been reconciled upto March 31, 2019.

10.14 Balancing of books

The books of accounts have been balanced and tallied in all branches of the Bank as on March 31, 2019.

10.15 Disclosure of penalties imposed by RBI

During the year RBI has levied the following penalties -

1. Rs 4,11,300/- emanating out of deficiencies found while processing the notes remitted by our currency chests.

2. Rs Five crore and Rs One crore for non-compliance of IRAC norms, need for discipline at time of opening current accounts and directions issued on time bound implementation and strengthening of SWIFT related controls.

10.16 Status with regard to Ind AS Implementation

As per RBI notification DBR.BPBC.No.76/21.07.001/2015-16 dated February 11, 2016, the progress, status and strategy for Ind AS implementation is given below :

The Bank has formed a Steering Committee for implementation of Ind AS. Bank has engaged a consultant to assist in the preparation of proforma Ind AS financial statements as well as process changes required for implementation of Ind AS. The

analysis of current accounting framework, policies, data extraction, documentation etc. have been undertaken and are being continuously updated as a part of this process. Further, discussions have also been held with vendors to identify an appropriate solution to handle the Ind AS measurement, accounting and reporting requirements. These activities will be continued during the year 2019-20, in view of RBI directives on extension in time lines for implementation of Ind AS by Banks. As a prudential safeguard, Bank has taken various measures in preparation of migration to IndAS standards, including increasing CRAR so as to meet the capital requirements, if any, which may arise on migration. During the year 2018-19, Bank has prepared and submitted proforma IndAS statements on quarterly basis, including the opening proforma IndAS financial statements as on 1st April 2018, in compliance of RBI instructions.

11. Figures of the previous year have been regrouped/rearranged/reclassified wherever necessary

N. S. SRINATH

P.R.SESHADRI

Dr. V.G. MOHAN PRASAD

CHAIRMAN

MD & CEO

DIRECTOR

M.K. VENKATESAN

A.K. PRABURAJ

CA K.L. VIJAYALAKSHMI

DIRECTOR

DIRECTOR

DIRECTOR

M.V. SRINIVASAMOORTHI

Dr. K.S. RAVICHANDRAN

R. RAMKUMAR

DIRECTOR

DIRECTOR

DIRECTOR

SRIRAM RAJAN

J. NATARAJAN

ADDITIONAL DIRECTOR

PRESIDENT & COO

T. SIVARAMA PRASAD

M. SRINIVASA RAO

As per our report of even date

GENERAL MANAGER & CFO

COMPANY SECRETARY

For Walker Chandiok & Co. LLP,

Chartered Accountants

Firm Regn. No: 001076N/N500013

Krishnakumar Ananthasivan

Partner

Membership No.: 206229

Place: Karur

Date: May 15th 2019