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Company Information

Home » Market » Company Information

Karur Vysya Bank Ltd.

Mar 20, 02:27
71.00 -0.65 ( -0.91 %)
 
VOLUME : 33278
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71.65
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Offer PRICE (Qty.) 71.05 (244)
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63.40
 
 
 
100.95
Mar 20, 02:19
71.00 -0.50 ( -0.70 %)
 
VOLUME : 442749
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Open Price 71.50
TODAY'S LOW / HIGH
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Offer PRICE (Qty.) 71.00 (2226)
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100.90
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Market Cap. ( ₹ ) 5675.06 Cr. P/BV 0.91 Book Value ( ₹ ) 78.37
52 Week High/Low ( ₹ ) 101/63 FV/ML 2/1 P/E(X) 16.42
Bookclosure 18/08/2018 TTM EPS ( ₹ ) 2.52 Div Yield (%) 3.14
NOTES TO ACCOUNTS
You can view the entire text of Notes to accounts of the company for the latest year
Year End :2018-03 

A. BACKGROUND

The Karur Vysya Bank Limited, incorporated in Karur, India is a publicly held banking company governed by the Banking Regulation Act, 1949 and is engaged in providing a wide range of banking and financial services including commercial banking and treasury operations.

B. BASIS OF PREPARATION

The financial statements are prepared following the going concern concept, on historical cost basis and conform to the Generally Accepted Accounting Principles (GAAP) in India which encompasses applicable statutory provisions, regulatory norms prescribed by the Reserve Bank of India (RBI) from time to time, notified Accounting Standards (AS) issued under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 to the extent applicable and current practices prevailing in the banking industry in India.

Use of Estimates:

The preparation of the financial statements require management to make estimates and assumptions that affect the reported amounts of assets and liabilities including contingent liabilities as of the date of the financial statement and the reported income and expenses during the reported period. The Management believes that the estimates and assumptions used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. The differences, if any between estimates and actual will be dealt appropriately in future periods.

1. INTER BRANCH TRANSACTIONS:

Inter Branch / Office accounts reconciliation has been completed upto 31.03.2018 and all the inter branch entries have been reconciled upto 31.03.2018.

2. BALANCING OF BOOKS:

The books of accounts have been balanced and tallied in all branches of the Bank as on 31.03.2018.

3. DISCLOSURES AS PER RESERVE BANK OF INDIA REQUIREMENTS:

3.1.1 Disclosure on rights issue:

During the quarter ended 31st December 2017, Bank has offered 11,87,81,048 Equity shares of Rs. 2/- each at a price of 76/- including the premium of Rs. 74/- per share [comprising of 10,16,21,048 Equity shares on rights basis in the ratio of 1:6 (i.e. one Equity share for every six fully paid-up Equity shares held as on the record date viz. 13th October 2017) aggregating to Rs. 772.32 crore and reservation of up to 1,71,60,000 Equity shares for the eligible employees of the Bank aggregating up to Rs. 130.42 crore]. Bank has allotted 11,73,17,101 shares (including 1,59,14,160 shares to employees under employee reservation portion), after keeping in abeyance entitlements to the extent of 2,18,107 shares, aggregating to Rs. 891.61 crore under the Rights Issue of Equity shares, on 22nd November 2017.

Pursuant to the Rights issue, Earnings Per Share (EPS) in respect of previous year / periods has been restated as per Accounting Standard (AS) 20 on “Earnings Per Share”, prescribed under Section 133 of the Companies Act, 2013.

The Rights issue has resulted in an increase of Rs. 23.46 crore in Share Capital and Rs. 864.96 crore (net of share issue expenses amounting to Rs. 3.18 crore) in Share Premium account.

Note on Spreading of MTM Losses:-

As per RBI Circular DBR.No.BP.BC.102/21.04.048/2017-18 dated 02.04.2018 Banks are permitted to spread the provisioning on MTM losses on Investments held in AFS and HFT for the quarters ended December 31, 2017 and March 31, 2018. The provisioning for each of these quarters may be spread equally over up to four quarters, commencing with the quarter in which the loss is incurred. Accordingly, the Bank has spread the provisioning on MTM losses for the quarters ended December 31, 2017 and March 31, 2018 as follows:

(a) For the quarter ended December 2017, out of total depreciation of Rs. 18.80 crore on SLR Investments under AFS portfolio, a provision of 50% (i.e. Rs. 9.40 crore) has been made as on 31-03-2018 and balance 50% would be provided during the next 2 quarters i.e. June 2018 (i.e. Rs. 4.70 crore) & September 2018 (i.e. Rs. 4.70 crore) each 25% respectively.

(b) For the quarter ended March 2018, out of an incremental depreciation of Rs. 17.40 crore on SLR Investments under AFS portfolio, a provision of 25% (i.e. Rs. 4.35 crore) has been made as on 31-03-2018 and balance 75% would be provided during the next 3 quarters i.e. June 2018 (i.e. Rs. 4.35 crore), September 2018 (i.e. Rs. 4.35 crore) and December 2018 (i.e. Rs. 4.35 crore) each 25% respectively.

3.2.1 Sale and transfers to / from HTM Category

Sale of securities from HTM category did not exceed 5% of the book value of investments held in HTM category at the beginning of the year.

3.2.2 The percentage of SLR investment under HTM (Held to Maturity) category as on 31.03.2018 was 19.49% of Demand and Time Liability of the bank (previous year 18.49%) which is within permissible limit as per RBI guidelines.

3.2.3 In accordance with RBI guidelines, during the first quarter of the current financial year securities amounting to Rs. 723.60 crore (Face Value Rs. 700 crore) were transferred from HTM to AFS category and the resultant appreciation of Rs. 26.58 crore has been ignored.

3.2.4 RBI vide its circular RBI/2017-18/70 DBR.No.Ret.BC.90/12.02.001/2017-18 dated October 4, 2017 advised banks that in order to align the ceiling on the SLR holdings under HTM category with the mandatory SLR, it was advised to reduce the ceiling from 20.50% to 19.50% in a phased manner i.e. 20.00% by December 31, 2017 and 19.50% by March 31, 2018 and allowed shifting / sale of excess securities from HTM. Accordingly, the bank has shifted securities worth Rs. 360.86 crore (Face Value Rs. 360.37 crore) during the third quarter and Rs. 119.26 crore (Face Value Rs. 120.00 crore) during the fourth quarter from HTM to AFS category and the resultant appreciation of Rs. 20.52 crore and Rs. 2.72 crore respectively were ignored.

3.3.1 Disclosures on risk exposure in derivatives: Qualitative Disclosure: Structure, Organisation, Scope, Nature of risk management in derivatives:

The organization structure consists of Treasury Department which is segregated into three functional areas i.e., front office, mid office and back office.

Rupee derivative deals are executed for hedging or for trading. The risk in the derivatives portfolio is monitored by assessing the mark to market (MTM) position of the portfolio on a daily basis and the impact on account of probable market movements. The overall portfolio is operated within the risk limit fixed by the Bank.

Forex derivative deals are offered to clients on back-to-back basis. The outstanding deals are marked to market on monthly basis. The MTM values are informed to the clients every month and margin topped up where required.

The Board reviews the risk profile of the outstanding portfolio at regular intervals.

Accounting:

Accounting Policies as per RBI guidelines have been adopted. The hedge swaps are accounted for like a hedge of the asset or liability. The income / expense on hedge swaps are accounted on accrual basis except where swap transactions whose underlying is subjected to mark to market. Such hedge swaps are marked to market on a monthly basis and the gain / losses are recorded as an adjustment to the designated asset / liability. The non-hedge swaps are marked to market every month and the MTM losses in the basket are accounted in the books while MTM profits are ignored.

Collateral Security:

As per market practice, no collateral security is insisted on for the contracts with counter parties like Banks / PDs etc. For deals with Corporate Clients, appropriate collateral security / margin etc. are stipulated whenever considered necessary.

Credit Risk Mitigation:

Most of the deals are contracted with Banks / major PDs/ highly rated clients and no default risk is anticipated on the deals with them.

Dealing in derivatives is centralized in the treasury of the Bank. Derivative transactions are entered into by the treasury front office. Treasury middle office conducts an independent check of the transactions entered into by the front office and ensures compliance with various internal and regulatory guidelines. Back Office undertakes activities such as confirmation, settlement, accounting, risk monitoring and reporting.

The market making and the proprietary trading activities in derivatives are governed by the derivatives policy of the Bank, which lays down the position limits, stop loss limits as well as other risk limits. As far as forex derivatives are concerned, they are undertaken on back-to-back basis only.

Risk monitoring on derivatives portfolio is done on a daily basis. The Bank measures and monitors risk using PVBP (Price Value of a Basis Point) approach. Risk reporting on derivatives forms an integral part of the management information system and the marked to market position and the PVBP of the derivatives portfolio is reported on a daily basis to the top management.

Risk monitoring on forex derivatives is done on a monthly basis. It is reported to the top management and related clients on monthly basis.

3.4.1.1 Strategic Debt Restructuring (SDR) and Others

During the year, Bank has been allotted the following equity shares / OCDs under Strategic Debt Restructuring (SDR), Scheme for Sustainable Structuring of Stressed Assets (S4A) and Corporate Debt Restructuring (CDR):

(a) 1,02,43,423 number of equity shares with face value of 10/- each at the rate of 10/- per share amounting to a book value of Rs. 10.24 crore on account of SDR mechanism in respect of one borrowal account with an aggregate exposure of Rs. 58.44 crore under consortium arrangement.

(b) 17,93,453 number of equity shares with face value of Rs. 10/- each at the rate of Rs. 146.03 per share amounting to a book value of Rs. 26.19 crore and 31,626 number of OCD’s with face value of Rs. 1,000/- each at the rate of Rs. 1,000/- per unit amounting to a book value of Rs. 3.16 crore on account of S4A mechanism in respect of one borrowal account with an aggregate exposure of Rs. 78.89 crore under consortium arrangement.

(c) In one borrowal account, 1,33,000 number of NCD’s with face value of Rs. 100/- each at the rate of Rs. 100/- per unit amounting to a book value of Rs. 1.33 crore on account of “Right of Recompense” for exiting CDR.

Note: In terms of RBI guidelines vide circular DBR.No.BP.BC.102/21.04.048/2015-16 dated 13.06.2016, the Bank had debited General Reserves an amount of Rs. 185.07 crore as on 31.03.2017, being unamortised loss on sale of NPAs to ARCs during 2015-16, which was to be proportionately debited to Profit and Loss account during the current financial year i.e. Rs. 63.18 crore each in the quarter ended June 2017 and September 2017 and the remaining Rs. 58.71 crore during the quarter ending December 2017. However, the entire amount of Rs. 185.07 crore has been debited to Profit and Loss account and credited to General Reserves during the half year ended 30th September 2017.

The net funded exposure of the bank in respect of foreign exchange transactions with each country is within 1% of the total assets of the Bank and hence no provision is required in terms of RBI guidelines.

3.5.1. Details of Single Borrower Limit (SBL), Group Borrower Limit (GBL) exceeded by the bank:

The Bank has not exceeded the prudential credit exposure limits in respect of Single Borrower Limit and Group Borrower Limit other than food credit.

3.5.2. Unsecured Advances:

The total of advances for which intangible securities such as charge over the rights, licenses, authorisations, etc. have been taken as securities is NIL.

3.6 Disclosure of penalties imposed by RBI:

During the year RBI has levied penalty of Rs. 8,50,350/emanating out of deficiencies found while processing the notes remitted by currency chests. The penalties levied are pertaining to Specified Bank Notes (SBN) remittances of Currency Chests and Karolbagh, Delhi branch to RBI (as Bank does not have a currency chest at Delhi, Karolbagh branch acted as pooling branch and remitted the SBNs received from customers of Delhi branches to RBI).

4. 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:

4.1 Net Profit or loss for the period, Prior Period Items and Changes in Accounting Policies (AS-5):

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, 2017.

4.2 Revenue Recognition (AS-9):

Income / Expenditure items recognized on cash basis are either not material or does not require disclosure under AS-9.

4.3. 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 applicable guidelines.

c. In respect of Leave encashment, provision has been made based on actuarial valuation.

d. Ministry of Labour and Employment, Government of India, on 29th March, 2018 enhanced the ceiling on gratuity payable to an employee under Payment of Gratuity Act, 1972 from Rs. 10 lakh to Rs. 20 lakh. Bank has provided for the entire amount of additional liability during the year and has not availed the dispensation of spreading the provision over a period of four quarters as permitted by RBI.

4.4 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 31.03.2018. Major components of Deferred Tax Assets and Deferred Tax Liabilities are as under:

4.5. 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 31.03.2018 requiring recognition in terms of Accounting Standard 28.

4.6. The Bank has deposited an amount of Rs. 255.57 crore (previous year Rs. 250.32 crore) towards disputed tax liability. In the opinion of the Management, no provision is considered necessary based on favourable decisions by various courts.

@The Bank had made a provision of Rs. 35.52 crore being 15% of the outstanding food credit availed by the State Government of Punjab as at 31.03.2016. During the year ended March 31, 2018 an excess provision of Rs. 15.67 crore was written back. (Also refer to Note 10)

5.1 Addition to Reserves General Reserve

In terms of RBI guidelines vide circular DBR.No.BP.BC.102/21.04.048/2015-16 dated 13.06.2016, the Bank had debited General Reserves an amount of Rs. 185.07 crore as on 31.03.2017, being unamortised loss on sale of NPAs to ARCs during 2015-16, which was to be proportionately debited to Profit and Loss account during the current financial year i.e. Rs. 63.18 crore each in the quarter ended June 2017 and September 2017 and the remaining Rs. 58.71 crore during the quarter ending December 2017. However, the entire amount of Rs. 185.07 crore has been debited to Profit and Loss account and credited to General Reserves during the half year ended 30th September 2017.

# Includes ATM failed transactions complaints received and redressed of 83,376 during FY 2017-18 (Previous Year 17,742 complaints). The increase is due to migration of NFS message format for ATM / BNRM transactions routed through our switch. There were also frequent network fluctuations due to increase in the number of ATM / BNRM transactions during the financial year 2017-18 which was set right after December 2017.

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.

5.2 Disclosure of Letter of Comfort (LOCs) :

The amount of Letter of comfort issued during the year 2017-18 was Rs. 3,875.39 crore (Previous year Rs. 3,664.13 crore) and outstanding as on 31.03.2018 was Rs. 1,180.45 crore (Previous year Rs. 1,284.61 crore)

5.3 Provision Coverage Ratio (PCR)

The Provision Coverage Ratio as on 31.03.2018 is 56.50%.

5.4 Bancassurance Business:

The bank has received an amount of Rs. 15.60 crore (Life Insurance Rs. 10.93 crore and Non-Life Insurance Rs. 4.67 crore) towards fee /remuneration in respect of the bancassurance business undertaken during 01.04.2017 to 31.03.2018. [Previous year Rs. 9.36 crore (Life Insurance Rs. 6.66 crore and Non-Life Insurance Rs. 2.70 crore)].

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

NIL

5.6 Unamortised Pension and Gratuity Liabilities

NIL

5.7 Disclosures on Remuneration Qualitative Disclosure

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

The Nomination & Remuneration Committee (NRC) of the Board consists of five 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:

1. Recommendation of appointment / reappointment of Directors, MD&CEO / WTD of the Bank.

2. Recommending to the Board a policy relating to the remuneration for the MD&CEO / WTD, Part-time (Non-Executive) Chairman of the Bank and President & COO.

3. Devising a policy on diversity of Board Of Directors.

4. Framing of guidelines for the ESOS and considering granting of ESOS, administering and supervising the ESOS with particular reference to quantum of options to be granted, grant price, vesting price, exercise period etc., to the eligible employees.

5. No external consultants’ advice had been sought by the Bank in the remuneration process.

6. Compensation Policy of the Bank, is approved by the Board, pursuant to the guidelines issued by RBI. The Policy is applicable to the MD&CEO / WTD, Non-Executive Directors, Part-time (Non-Executive) Chairman and President & COO. All other employees’ upto Scale III cadre are covered under Industry level Bi-partite settlements of IBA.

7. 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:

NRC is entrusted with the responsibility of recommending to the Board an appropriate compensation payable to the Part-time (Non-Executive) Chairman, MD&CEO / WTD and the President & COO in the light of the guidance from the regulator from time to time.

The Compensation payable to MD&CEO / WTD of the Bank is divided into fixed and variable components. The fixed remuneration represents a significant proportion of total remuneration taking into account all relevant factors including the prevalent industry practices. Variable pay shall relate to the performance of the Bank and there is proper balance between fixed pay and variable pay. Variable pay must be paid on the basis of achievement of certain basic targets such as reaching business figures including net profits and other qualitative factors taking into account the extraordinary items, appropriate risk management and efficient consumption of capital and comparison of results with industry performance.

As the Bank is a party to the Bipartite settlement of IBA, the compensation of staff engaged in control functions like Risk and Compliance are covered under these Bipartite settlement which cover all employees upto the scale VII cadre. Recently, Bank has given its mandate to cover all employees till the Scale III cadre.

(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:

NRC may use a wide variety of measures of credit, market and liquidity risks in implementation of risk adjustment. The risk adjustment methods should preferably have both quantitative and judgmental elements. Bank has system of measuring and reviewing these risks.

The risk parameters used for setting of performance objectives and for measuring performance which includes besides financial performance, adherence to internal processes and compliance. Compensation is effectively aligned in both fixed and variable pay. There is a proper balance between fixed and variable pay. Bank shall not offer any guaranteed bonus based on its performance in tune with the sound risk management principles. The Bank shall not grant any severance pay to the MD&CEO/ WTD and Bank shall not provide any facility or fund or permit MD&CEO/ WTD to insure or hedge his/her compensation structure to offset the risk alignment effects embedded in the compensation package.

(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.

The variable pay could be in cash, stock linked instruments or a mix of both. Variable pay shall relate to the performance of the Bank.

Variable pay is considered only for MD&CEO / WTD of the Bank. Variable pay shall not exceed 40% of the fixed pay in any year.

For the Part-time (Non-Executive) Chairman of the Bank, only fixed pay / salary is payable apart from the sitting fees payable for attending the Board or Board Committee Meetings.

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 clawback 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:

For MD&CEO / WTD: If the variable pay is significant, then the bank would defer the payment over a period of three years.

(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 has paid only fixed remuneration to MD&CEO / WTD for the year 2017-18 as per RBI approval.

NRC may recommend a reasonable number of Stock Options under the ESOS to MD&CEO / WTD while granting ESOS as per SEBI Regulation. ESOS shall not form part of the total compensation of MD&CEO / WTD as per the Compensation Policy.

The Bank shall not grant any severance pay (other than the terminal benefits and gratuity as per the provisions) to the MD&CEO / WTD.

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

5.8 Disclosures relating to Securitisation

The bank has not sponsored any SPVs for Securitization transactions.

5.9 Credit Default Swaps

Bank has not initiated any trade in Credit Default Swaps.

5.10 Intra Group Exposures

NIL

5.11 Provision for Unhedged Foreign Currency Exposure :

The Bank has made a provision of Rs. 1.40 crore (Previous Year Rs. 1.54 crore) towards unhedged forex exposure for its clients for the year ended 31.03.2018.

5.12 During the financial year 2017-18, the Bank has not granted any stock options.

6.1 Qualitative disclosure around LCR

The 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:

The 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 LCR requirement is binding on banks from January 1, 2015; with a view to provide a transition time for banks, the requirement has been fixed at minimum 60% for the calendar year 2015 i.e. with effect from January 1, 2015 and rise in equal steps to reach the minimum required level of 100% from January 1, 2019 as per the time line given below:

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.

7. Basel III disclosures

In accordance with RBI circular DBOD. No. BP.BC.1/21.06.201/2015-16 dated 01.07.2015, read together with RBI circular DBR. No.BP.BC.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 - https://www.kvb.co.in/footer/pillarIII_disclosures.html. These disclosures have not been subjected to audit by the Statutory Central Auditors.

8. Corporate Social Responsibility

The bank has incurred an expenditure of Rs. 3,69,74,106/- towards Corporate Social Responsibility after carrying out the process of identifying various projects and its appropriateness for spending (Previous year Rs. 1.60 crore).

9. UDAY Scheme

In compliance with RBI communication DBR.BP.No.11657/21.04.132/2015-16 dated 17th March 2016, the investments in DISCOM bonds of Rs. 24.33 crore (which were envisaged to be converted into SDL) have been classified as Non Performing Investments and provision of Rs. 9.73 crore has been made therefor.

10. Provision for Food Credit

The Bank had made a provision of Rs. 35.52 crore being 15% of the outstanding food credit availed by the State Government of Punjab as at 31.03.2016. During the year ended March 31, 2018 an excess provision of Rs. 15.67 crore was written back as per RBI circular DBR(BP) No. /3992/21.04.048/2016-17 dated October 3, 2016 and balance provision of Rs. 7.17 crore is held as on March 31st, 2018.

11. Status with regard to Ind-AS Implementation

As per RBI notification DBR.BP.BC.No.76/21.07.001/2015-16 dated February 11, 2016, Bank has to disclose the strategy for Ind-AS implementation, including the progress made in this regard.

Implementation Strategy & Progress during the year

The Bank has set up a Steering Committee for implementation of Ind-AS. The Steering Committee of Bank is analyzing the current accounting framework and Ind-AS for changes in significant accounting policies, preparation of disclosures, documentation. Assessment of the software / solution offered by selected vendors has been undertaken during the year.

Bank has submitted Proforma Ind-AS Financial Statement to RBI for the half-year ended September 30th, 2016 and also for the quarter ended June 30th, 2017 as per RBI guidelines.

12. Ministry of Labour and Employment, Government of India on 29th March, 2018 enhanced the ceiling on gratuity payable to an employee under Payment of Gratuity Act, 1972 from Rs. 10 lakh to Rs. 20 lakh. Bank has provided for the entire amount of additional liability during the year and has not availed the dispensation of spreading the provision over a period of four quarters as permitted by RBI.

13. Disclosure on Investor Education and Protection Fund

As per the Companies Act 2013, dividend unclaimed 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, 2018 has been transferred without any delay.

14. The Board of Directors recommends a dividend of Rs. 0.60 per equity share of Rs. 2/- each for the year 2017-18, subject to the approval of the members at the ensuing Annual General Meeting. In accordance with AS-4, Contingencies and Events Occurring after the Balance Sheet date notified by the MCA on March 30, 2016, the proposed dividend including corporate dividend tax amounting to Rs. 52.46 crore has not been shown as an appropriation from the Profit and Loss appropriation account as of March 31, 2018 and correspondingly not reported under Other Liabilities and Provisions as at March 31, 2018. For computation of capital adequacy ratio as at 31.03.2018, Bank has adjusted the proposed dividend and tax thereon for determining capital funds.

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