Pillar-3 Disclosure as on 30.09.2018 Table DF-1: SCOPE OF APPLICATION Name of the head of the Banking group to which the framework applies: UNITED BANK OF INDIA (i) Qualitative Disclosures: a. List of group entities considered for consolidation. Name of the entity/ Country of incorpor ation Whether the entity is included under accounting scope of consolidatio n (yes/no) Explain the metho d of consoli dation Whether the entity is included under Regulatory scope of consolidati on (yes/no) Explain the method of consoli dation Explain the reasons for difference in the method of consolidation Explain the reason if consolidated under only one of the scopes of consolidation* NIL * The Bank does not have any subsidiary and as such no consolidation is required. b. List of group entities not considered for consolidation both under the accounting and regulatory scope of consolidation. Name of the entity/ Country of incorporation Principle activity of the entity Total balance sheet equity (as stated in the accounting balance sheet of the legal % of Bank s holding in the total equity Regulatory treatment of Bank s investments in the Capital instruments of the entity Total balance sheet assets(as stated in the accounting balance sheet of the legal entity) entity) NIL There are no group entities that are considered for consolidation under both the accounting scope of consolidation and regulatory scope of consolidation. The Bank has Four (4) Regional Rural Banks which are treated as associates for computation of capital adequacy ratio. Page 1 of 48
(ii)quantitative Disclosures: c. List of group entities considered for consolidation: Name of the entity/country of incorporation (as indicated in (i)a. above) Principle activity of the entity Total balance sheet equity (as stated in the accounting balance sheet of the legal entity) NIL Total balance sheet assets (as stated in the accounting balance sheet of the legal entity) d. The aggregate amount of Capital deficiencies in all subsidiaries which are not included in the regulatory scope of consolidation i.e. that are deducted: Name of the subsidiaries/country of incorporation Principle activity of the entity Total balance sheet equity (as stated in the accounting balance sheet of the legal entity) NIL % of Bank s holding in the total equity Capital deficiencies e. The aggregate amounts (e.g. current book value) of the bank s total interests in insurance entities, which are risk- weighted: Name of the Principle Total balance % of Quantitative insurance activity sheet equity Bank s impact on entities /country of the (as stated in holding in regulatory capital of incorporation entity the the total of using risk accounting balance equity/ proportion weighting method versus using the sheet of the of voting full deduction legal entity) power method. Not Applicable f. Any restrictions or impediments on transfer of funds or regulatory capital within the banking group: Not Applicable as Bank does not have any subsidiary. Page 2 of 48
Table: DF-2: CAPITAL ADEQUACY (i) Qualitative Disclosures: Bank s approach to assess the adequacy of its capital to support its current and future activities. With a view to assess its overall capital adequacy in relation to the Bank's risk profile, to effectively manage its capital requirements and to meet the regulatory norms stipulated by RBI, the Bank has put in place a robust and well defined Risk Management Structure with due focus on capital optimization and the risk profile of its businesses. Under Basel-III norms of RBI, Bank is required to maintain CET1 ratio at 5.5%, Capital conservation buffer (CCB) at 1.875% in the form of CET1 capital, Tier 1 ratio at 7.0% and total Credit to Risk Weighted Assets Ratio (CRAR) at 10.875% including CCB of 1.875%. Bank s Capital Adequacy Ratio on standalone basis was computed at 7.82% as on 30.09.2018 with CET1 & Tier1 ratio of 5.82% and Tier 2 of 2%. Bank has requested Govt. of India for equity capital infusion of Rs 2600.00 crore which is expected to be received in the Q3 of current FY. After this infusion of equity capital, Bank s capital ratios are expected to be above minimum regulatory requirement as per Basel III norms. Bank maintains adequate capital to absorb the risk arising from financial and economic stress and also cushions the risk of loss in value of exposure, businesses etc. so as to protect the depositors and general creditors against losses. Under Basel-III norms, Bank has adopted the following methods for computing its CRAR: Standardized Approach for Credit Risk. Basic Indicator Approach for Operational Risk. Standardized Duration Method for Market Risk. Bank has a well defined Internal Capital Adequacy Assessment Process (ICAAP) to comprehensively evaluate and document all types of risks and substantiate appropriate capital allocation. It s a forward looking process wherein the Bank calculates and calibrates its capital needs and resources in order to continue operations throughout a period of severely adverse conditions. The material risks are identified, measured and quantified so as to assess the level of capital required, commensurate with the institutions risk profile. To ensure smooth transition to Basel-III, appropriate transitional arrangements have been provided for meeting the minimum Basel-III capital ratios, full regulatory adjustments/deductions to the components of capital etc. Bank in its capital planning process, assesses the actual capital position of the Bank and the future required capital in terms of business planning and risk appetite and also the options available for raising capital along with the Page 3 of 48
availability of headroom. On the basis of the business projection, Bank raises capital with the approval of the Board of Directors of the Bank. As a Capital Planning measure, during Q2 of the current FY, Bank had raised equity Capital of Rs.30.81Cr through Employee Share Purchase Scheme. (ii) Quantitative Disclosures: (Rs/Cr) a) Capital requirements for Credit Risk @ 10.875% of RWA: Portfolios subject to Standardized Approach: 4768.21 Securitization Exposures: 0.00 b) Capital requirements for Market Risk Standardized Duration Approach; - Interest Rate Risk: 453.55 - Foreign Exchange Risk (including gold): 6.75 - Equity Risk: 144.02 c) Capital requirements for Operational Risk: Basic indicator approach: 567.48 d) Common Equity Tier-1 Ratio (CET) (%) 5.82 Tier 1 Capital Ratio (%): 5.82 Total Capital Ratio (%): 7.82 Table DF-3 Credit Risk: General Disclosures Qualitative Disclosures (a) In order to reflect the actual financial health in its balance sheet, Bank has adopted definitions of past due and impaired (for accounting purpose) in line with the prudential norms for income recognition, asset classification and provisioning for the advance portfolio of the banks. Non-Performing Assets (NPAs) The Bank classifies its advances into performing and non-performing assets (NPA) in accordance with the extant RBI guidelines.npa is defined as a loan or an advance where: 1. Interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan, 2. The account remains out of order for a period of more than 90 days, in respect of an Overdraft/ Cash Credit (OD/CC), 3. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, 4. The installment of principal or interest thereon remains overdue for two crop seasons for short duration crops, Page 4 of 48
5. The installment of principal or interest thereon remains overdue for one crop season for long duration crops. An account is treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power for more than 90 days. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts are treated as 'out of order'. Any amount due to the bank under any credit facility is overdue if it is not paid on the due date fixed by the bank. Further, NPAs are classified into Sub-Standard, Doubtful and Loss assets based on the criteria stipulated by RBI. A Sub-Standard asset is one, which has remained NPA for a period less than or equal to 12 months. An asset is classified as Doubtful if it has remained in the NPA category for more than 12 months. A Loss asset is one where loss has been identified by the Bank or its internal or external auditors or during RBI inspection but the amount has not been written off fully. Non-Performing Investments(NPIs) In respect of securities, where interest/principal is in arrears, the Bank does not reckon income on the securities and makes appropriate provisions for the depreciation in the value of the investment. A non-performing investment (NPI), similar to a non-performing advance (NPA), is one where 1. Interest/installment (including maturity proceeds) is due and remains unpaid for more than 90 days. 2. This applies mutates-mutandis to preference shares where the fixed dividend is not paid. 3. In the case of equity shares, in the event the investment in the shares of any company is valued at `1 per company on account of the non-availability of the latest balance sheet in accordance with the Reserve Bank of India instructions, those equity shares are also reckoned as NPI. 4. If any credit facility availed by the issuer is NPA in the books of the bank, investment in any of the securities issued by the same issuer is treated as NPI and vice versa. 5. The investments in debentures/bonds, which are deemed to be in the nature of advance, are subjected to NPI norms as applicable to investments. Page 5 of 48
Policy and Procedures The Bank has put in place well-structured Credit Risk Management system and developed various risk management policies like Lending Policy, Credit Risk Mitigation Technique & Collateral Management Policy, Stress Testing Policy etc. to address the credit risk of the Bank. The main objectives of the policies are to ensure that the operations are in line with the expectation of the management and the strategies of the top management are translated into meaningful directions to the operational level. The Policies stipulate prudential limits on large credit exposures, standards for loan collateral, portfolio management, loan review mechanism, risk concentrations, risk monitoring and evaluation, provisioning and regulatory / legal compliance. The Bank assesses the concentration risk by (a) fixing sectoral and prudential exposure limits for single and group borrowers (b) rating grade limits (c) industry wise exposure limits and (d) analyzing the geographical distribution of credit across the Zones. All the Zones are categorized under four segments namely North, South, East and West. Bank considers rating of a borrowal account as an important tool to measure the credit risk associated with any borrower and accordingly implemented software driven rating/scoring models across all Branches/ Zonal Offices. Credit Risk Management encompasses identification, assessment, measurement, monitoring and control of the credit exposures. In the processes of identification and assessment of Credit Risk, the Bank has given utmost emphasis in developing and refining the Credit Risk Rating Models to assess the Counter party Risk, by taking into account the various risks categorized broadly into Financial, Business, Industry, Project and Management Risks, each of which is scored separately. The measurement of Credit Risk includes setting up exposure limits to achieve a well-diversified portfolio across dimensions such as companies, group companies, industries, collateral type and geography. For better risk management and avoidance of concentration of Credit Risks, internal guidelines on prudential exposure norms in respect of individual and group borrower, industry-wise exposure limit, sensitive sectors such as capital market, real estate etc., are in place. The Bank follows a well defined multi layered discretionary power structure for sanction of credit facilities. The Bank has processes and controls in place in regard to various aspects of Credit Risk Management such as appraisal, pricing, credit approval authority, documentation, reporting and monitoring, review and renewal of credit facilities, managing of problem loans, credit monitoring, loan review mechanism etc. Page 6 of 48
Portfolio analysis of major industries/sectors at regular intervals is being undertaken to study the impact of that particular industry/sector on the credit portfolio of the Bank and on the prevalent market scenario. The portfolio analysis covers various aspects including quality of assets; compliance of exposure norms; levels of risk i.e. low, medium, high with corresponding yield and NPA level etc. The Bank has put in place a Board approved Stress Testing Policy which involves the usance of various techniques to assess the Bank s potential vulnerability to extreme but tenable stressed business conditions. As per the policy, Stress Testing on Liquidity Risk, Interest Rate Risk in the Banking Book, Foreign Exchange Risk, Credit Risk, Market Risk impact on capital adequacy and profitability of the Bank is being conducted on quarterly basis. The Capital maintained by the Bank is found to be adequate under such Stressed conditions as analyzed from time to time. The Bank is conducting analysis on risk rating migration for large borrowal accounts. The Bank is reviewing various exposure norms fixed by RBI/Bank s Board on halfyearly basis. The Bank has developed a software based credit risk rating model for rating of its borrowal accounts. Besides, the Bank has also put in place a policy on Credit Risk Mitigation Technique & Collateral Management with the approval of the Board which lays down the details of securities and administration of such securities to protect the interest of the Bank. These securities act as mitigants for the credit risk to which the Bank is exposed. Quantitative Disclosures: (Rs /crore) Fund Based Non Fund Based Total (b) Total gross credit exposures 66829.86 4878.45 71708.31 (c) Geographic distribution of exposure Overseas Nil Nil Nil Domestic 66829.86 4878.45 71708.31 (d) Industry Wise Distribution of Exposures (Rs /crore) Code Name of the Industry Fund Based Non-Fund Based Outstanding Outstanding 1 Coal 0.00 0.00 2 Mining including coal 276.01 0.10 3 Basic Metal & metal Products 3298.42 223.14 3.1 Iron & Steel 3213.19 223.01 3.2 Other Metal & Metal Products 85.22 0.13 4 All Engineering 1113.30 174.82 4.1 Of which Electronics 44.79 7.34 4.2 Of which Others 1068.51 167.47 Page 7 of 48
Code Name of the Industry Fund Based Outstanding Non-Fund Based Outstanding 5 Electricity 0.00 0.00 6 Textile 1165.93 70.27 6.1 Of which Cotton Textiles 257.26 61.39 6.2 Of which Jute Textiles 45.06 2.73 6.3 Of which Other Textiles 863.62 6.16 7 Food Processing 2304.44 66.19 7.1 Of which Sugar 6.61 0.00 7.2 Of Which Tea 651.93 8.86 7.3 Of which Vegetable Oil & Vanaspati 67.49 0.28 7.4 Of which others 1578.40 57.06 8 Tobacco & Tobacco Products 282.12 0.15 9 Paper & Paper Products 147.87 25.01 10 Rubber & Rubber Products 221.52 8.25 11 Infrastructure 12186.27 1491.47 11.1 Of which Power 8828.37 412.56 11.2 Of which Telecommunications 89.73 36.64 11.3 Of which Roads & Ports 2567.33 992.27 11.4 Of which other Infra 700.83 50.01 12 Cement 419.54 49.61 13 Leather & Leather Products 159.65 1.17 14 Gems & Jewellery 414.28 0.00 15 Construction 723.92 80.33 16 Petroleum 68.73 10.71 17 Automobiles including Trucks 634.44 25.85 18 Computer Software 10.59 0.29 19 Chemical, Dyes, Paints etc. 1035.64 220.10 19.1 Of which Fertilizers 356.66 0.00 19.2 Of which Petro-chemicals 611.01 214.33 19.3 Of which Drugs & pharmaceuticals 67.96 5.77 20 NBFC 4467.90 0.03 21 Other Industries 1125.86 92.15 22 Residuary Other Advances (to balance with Gross Advances) 36773.43 2338.81 23 Total 66829.86 4878.45 Fund-based and non-fund based exposure to the following industries exceeded 5% of total fund-based and total non-fund based exposure of the Bank respectively as on 30.09.2018. Page 8 of 48
Sl Fund Based (FB) Exposure Non-Fund Based (NFB) Exposure Sl Industry Name % of total FB Industry Name % of total NFB 1 Power 13.21 1 Roads & Port 20.34 2 NBFC 7.64 2 Power 8.46 (e) Residual contractual maturity break down of assets Day 1 2 to 7 days 8 to 14 days 15 to 28 days 29 days to 3 months Over 3 months & upto 6 months Over 6 month s & upto 1 year Over 1 year & up to 3 years Over 3 years & up to 5 years Over 5 years (Rs/ crore) Advances 218 295 346 195 958 2619 3009 9254 8183 35281 60358 Investments 8924 1434 158 1352 7005 8413 342 3376 3385 25381 59770 Foreign Currency Assets 159 1733 18 77 426 480 1122 0.00 248 0.36 4263 Total (f) Amount of NPAs (Gross) (Rs /crore) Category Amount Sub-Standard 2583.35 Doubtful 1 3535.86 Doubtful 2 7740.54 Doubtful 3 1256.68 Loss 46.85 TOTAL 15163.28 (g) Net NPAs 8658.10 (h) NPA Ratios (In %) (a) Gross NPAs to Gross Advances 22.69 (b) Net NPAs to Net Advances 14.36 (i) Movement of Gross NPA (Rs /crore) a) Opening balance as on 1 st April, 2018 16552.11 b) Additions upto 1321.89 c) Reductions upto 2710.72 d) Closing balance at the end of (a+b-c) 15163.28 Page 9 of 48
(j) Movement of Specific & General Provisions (Rs /crore) Movement of Provision Specific General Provisions Provisions a) Opening balance as on 1 st April, 2018 6201.57 238.47 b) Provisions made upto 1794.69 32.61 c) Write-off/ Write-back of excess provisions 1524.55 - d) Other Adjustments 0.00 - e) Closing balance at the end of (a+b-c-d) 6471.71 271.08 (k) Amount of write-offs and recoveries that have been booked directly to the income statement (Rs /crore) 35.25 (Rs /crore) (l) Amount of Non-Performing Investments 890.98 (Rs /crore) (m) Amount of provision held for Non-Performing Investment 777.07 (n) Movement of provisions for depreciation on investments (Rs /crore) i) Opening balance as on 1 st April, 2018 293.43 ii) Provisions made upto 144.35 iii) Write-off/ write-back of excess provisions 0.00 iv) Closing balance at the end of (i+ii-iii) 437.78 (o) Industry Type Distribution of Specific & General Provisions (Rs /crore) S.N Name of the Industry For the quarter As on 30.09.2018 ended 30.09.2018 Specific General Specific Gross NPA Write Off Provision Provision Provision 1 Coal 0.00 0.00 0.00 0.00 0.00 2 Mining including Coal 22.98 9.61 1.29 0.00 0.36 3 Basic Metal & metal Products 2063.30 801.90 4.84 224.62 0.00 3.1 Iron & Steel 1998.02 766.49 4.45 224.62 0.00 3.2 Other Metal & Metal Products 65.28 35.41 0.39 0.00 24.88 4 All Engineering 358.32 136.22 4.54 0.00 40.84 4.1 of which Electronics 2.11 1.02 0.40 0.00 0.00 4.2 of which Others 356.20 135.20 4.14 0.00 41.18 5 Electricity 2.00 3.00 4.00 0.00 3.00 6 Textile 564.33 236.04 4.60 22.09 0.00 6.1 of which Cotton Textiles 79.21 32.57 1.15 0.00 0.84 Page 10 of 48
S.N Name of the Industry Gross NPA As on 30.09.2018 Specific Provision General Provision For the quarter ended 30.09.2018 Specific Write Off Provision 6.2 of which Jute Textiles 15.82 4.02 0.32 0.00 0.20 6.3 of which Other Textiles 469.29 199.44 3.13 22.09 0.00 7 Food Processing 270.76 96.65 9.95 0.00 0.00 7.1 of which Sugar 0.09 0.02 0.03 0.00 0.00 7.2 of Which Tea 9.95 3.41 2.71 0.00 0.00 7.3 of which Vegetable Oil 0.00 & Vanaspati 16.06 8.39 0.29 0.02 7.4 of Which Others 244.66 84.82 6.92 0.00 0.00 8 Tobacco & Tobacco 0.00 Products 201.69 56.25 0.91 23.71 9 Paper & Paper 0.00 Products 7.34 3.37 0.73 0.04 10 Rubber & Rubber Products 34.46 15.90 1.19 0.00 3.28 11 Infrastructure 5313.13 1729.17 26.83 100.87 188.69 11.1 of which Power 3861.84 1127.93 19.89 100.87 215.96 11.2 of which Telecommunications 60.68 24.45 0.14 0.00 4.85 11.3 Of which Roads & Ports 1119.30 456.65 4.56 0.00 90.83 11.4 Of which other Infra 271.32 120.13 2.24 0.00 0.00 12 Cement 75.74 26.61 1.91 0.00 6.92 13 Leather/Leather Products 22.50 10.04 0.88 0.00 0.00 14 Gems & Jewellery 324.80 68.72 0.63 0.00 10.32 15 Construction 385.09 153.26 1.95 0.00 2.65 16 Petroleum 17.04 15.02 0.23 0.00 0.00 17 Automobiles incl.trucks 556.81 222.97 0.45 0.00 95.87 18 Computer Software 4.29 3.63 0.03 0.00 0.00 19 Chemical, Dyes, Paints etc 474.33 110.11 2.55 0.00 0.00 19.1 of which Fertilizers 347.95 52.45 0.04 0.00 0.00 19.2 of which Petro-chemicals 121.88 54.69 2.26 0.00 0.00 19.3 of which Drugs & 0.00 Pharmaceuticals 4.49 2.97 0.26 0.07 20 NBFC 0.00 0.00 20.34 0.00 0.00 21 Other Industries 460.84 42.22 5.48 0.00 0.00 22 Residuary Other Advances (to balance with Gross NPA) 4003.52 2731.02 177.73 180.31 23 Total 15163.28 6471.71 271.08 527.89 Page 11 of 48
(p) Geographic wise distribution of Gross NPA Specific Provision & General Provision (Rs /crore) Particulars Overseas Domestic Total Gross NPA - 15163.28 15163.28 Specific Provision - 6471.71 6471.71 General Provision - 271.08 271.08 Table DF-4 Credit risk: Disclosures for portfolios subject to the standardized approach Qualitative Disclosure For portfolios under the standardized approach As per RBI guidelines on Basel norms Bank is using the External Ratings of the following domestic External Credit Rating Agencies (ECRA) accredited by RBI for the purpose of CRAR calculation: 1. CARE 2. CRISIL 3. ICRA 4. INDIA RATINGS (earlier known as FITCH) 5. BRICKWORK 6. SMERA/ACUITE and 7.INFORMERICS. Ratings assigned by ECRA s is used for the following exposures: For Short Term Loan (STL) i.e for exposures with contractual maturity of less than one year (except Cash Credit Over Draft and Revolving Credit) short term rating assigned is considered. For Long term Loan (LTL) i.e contractual maturity of more than one year and for domestic Cash Credit Overdraft and Revolving Credits long term ratings are considered. The ratings available in public domain are mapped according to mapping process as envisaged in RBI guidelines on the subject. Bank uses external ratings for the purposes of computing the risk weighted assets as per the RBI norms. Bank also rates its clients internally using an internal rating model. Quantitative Disclosures: (Rs /crore) The table below discloses the amount of the Bank s Gross outstanding for credit exposures (both fund and non-fund) net of specific provision in three major risk buckets: Page 12 of 48
For exposure amounts after risk mitigation subject to the standardized approach amount of a bank s outstanding (rated and unrated) in the following three major risk buckets as well as those that are deducted. Below 100 % risk weight: 100 % risk weight: More than 100 % risk weight: (Rs /crore) 41855.09 12636.13 5662.54 Table DF-5 Credit Risk Mitigation: Disclosures for Standardized Approaches Qualitative Disclosures (a)the general qualitative disclosure requirement with respect to credit risk mitigation including: Policies and processes for and an indication of the extent to which the bank makes use of on- and off-balance sheet netting; Policies and processes for collateral valuation and management: In line with the regulatory requirement the Bank has put in place a policy on Credit Risk Mitigation Techniques & Collateral Management with the primary objective of a) Mitigation of credit risks & enhancing awareness on identification of appropriate collateral taking into account the spirit of Basel- II & III norms/rbi guidelines and (b) Optimizing the benefit of credit risk mitigation in computation of capital charge as per approaches laid down in Basel- II & III norms /RBI guidelines. Valuation of collaterals is also addressed in the said policy. The Policy adopts the Comprehensive Approach which allows full offset of collateral (after appropriate haircuts) against exposures by effectively reducing the exposure amount by the value ascribed to the collateral. Description of the main types of collateral taken by the bank: The main types of Collaterals usually recognized as Credit Risk Mitigants by the Bank under the Standardized Approach are (i) Bank Deposits (ii) NSCs/KVP (iii)life Insurance Policies. Main types of guarantor counterparty and their creditworthiness: For computation of CRAR the types of guarantees recognized for taking mitigation by the Bank are as follows: Central Government Guarantee State Government Guarantee CGTMSE ECGC Page 13 of 48
Information about (market or credit) risk concentrations within the mitigation taken: The types of collaterals used by the Bank for mitigation purpose are easily realizable financial securities and are not affected by market volatility. As such presently no limit/ceiling has been prescribed to address the concentration risk in credit risk mitigants recognized by the Bank. Quantitative Disclosures: (Rs /crore) (a) For each separately disclosed credit risk portfolio the 60153.76 total exposure (after where applicable on- or off-balance sheet netting) that is covered by eligible financial collateral after the application of haircuts. (b) For each separately disclosed portfolio the total exposure (after where applicable on- or off-balance sheet netting) that is covered by guarantees/ credit derivatives (whenever specifically permitted by RBI) 4180.97 Table DF-6 Securitization Exposures: Disclosure for Standardized Approach Qualitative Disclosures: The Bank has not undertaken any securitization activity Quantitative Disclosures: NIL Table DF-7 Market Risk in Trading Book Qualitative disclosures (a) Market Risk is defined as the potential loss that the Bank may incur due to changes/movements in the market variables such as interest rates foreign currency exchange rates equity prices and commodity prices. Bank s exposure to market risk arises from investments (interest rate related instruments and equity related instruments) in trading book (both AFS and HFT categories) and the Foreign Exchange positions. The objective of the Market Risk management is to minimize the impact of losses on earnings and equity. The Bank has put in place Board approved Asset Liability Management Policy and Investment Policy for effective management of Market Risk in the Bank. Risk Management and reporting is based on parameters such as a Modified Duration Maximum permissible Exposures Net Open Position limits Gap limits Value at Risk (VaR) etc in line with the industry best practices. Page 14 of 48
Quantitative disclosures (b) The capital requirements for: Interest Rate Risk: Equity Position Risk: Foreign Exchange Risk: (Rs /crore) 453.55 144.02 6.75 Table DF-8 Operational Risk Qualitative disclosures Operational Risk is the risk of loss resulting from inadequate or failed internal processes people and systems or from external events. Operational risk includes legal risk but excludes strategic and reputation risks. The Bank has formulated Operational Risk Management Policy duly approved by the Board. Supporting policies adopted by the Board which deal with management of various areas of operational risk are (a) Information System Security; (b) Know Your Customers (KYC) (c) Anti Money Laundering (AML) and (d) IT Business Continuity and Disaster Recovery Policy etc. The Operational Risk Management Policy adopted by the Bank outlines organization structure and detailed processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk management system into the day-to-day risk management processes of the Bank by clearly assigning roles for effectively identifying assessing monitoring and controlling/ mitigating operational risks and by timely reporting of operational risk exposures including material operational risk losses. Operational risks in the Bank are managed through comprehensive and well articulated internal control frameworks. Calculation of Capital Charge In line with RBI Guidelines the Bank has adopted the Basic Indicator Approach for computing capital charge for Operational Risk. Under this approach average of previous 3 years positive gross income is taken into consideration for arriving at capital charge for Operational Risk. Operational Risk Capital Charge (Rs /Cr) Capital requirement for Operational Risk as on 30.09.2018 567.48 Page 15 of 48
Qualitative Disclosures: Table DF-9 Interest rate risk in the Banking Book (IRRBB) (a) Interest rate risk refers to fluctuations in Bank s Net Interest Income and the value of its Assets and Liabilities arising from internal and external factors. Internal factors include the composition of the Bank s assets and liabilities quality maturity interest rate and re-pricing period of deposits borrowings loans and investments. External factors cover general economic conditions. Rising or falling interest rates impact the Bank depending on Balance Sheet composition. Interest rate risk is prevalent on both the asset as well as the liability sides of the Bank s Balance Sheet. The Asset-Liability Management Committee (ALCO) periodically monitors and controls the risks and returns funding and deployment setting Bank s lending and deposit rates and directing the investment activities of the Bank. The Bank identifies the risks associated with the changing interest rates through Earnings at Risk approach and Duration Gap approach. Quantitative Disclosures (b) The increase (decline) in earnings and economic value (or relevant measure used by management) for upward and downward rate shocks according to management s method for measuring IRRBB is provided below: INTEREST RATE RISK IN THE BANKING BOOK: (Rs /cr) Particulars Condition Total 1. Earnings At Risk (EAR) Increase by 200 bps -530 Decrease by 200 bps 530 2. Economic Value of Equity at Risk Increase by 200 bps -356 Decrease by 200 bps 356 Page 16 of 48
Table DF-10 General Disclosure for Exposures Related to Counterparty Credit Risk Qualitative Disclosures Counterparty Credit Risk is defined as the risk that the counterparty to a transaction could default before the final settlement of the transaction s cash flows and is the primary source of risk for derivatives and securities financing transactions. Unlike a Bank s exposure to credit risk through a loan where the exposure to credit risk is unilateral and only the lending bank faces the risk of loss the counterparty credit risk is bilateral in nature i.e. the market value of the transaction can be positive or negative to either counterparty to the transaction and varying over time with the movement of underlying market factors. The Banks exposure to counterparty credit Risk is covered under its Counterparty Credit Risk Policy. Banks ensures all the due diligence are to be adhered to viz. KYC norms satisfactory dealing credit worthiness of the party before extending any derivative products to the party and accordingly decides the level of credit risk mitigation required in the transaction. Quantitative Disclosures (Rs/Cr) Particulars Notional Amount Current Credit Exposure Forward Contracts 7596.49 98.71 Page 17 of 48
Table DF-11 Composition of Capital- As on 30.09.2018 Basel-III common disclosure template (Rs /Cr) Amount Ref No Common EquityTier1capital: Instruments and Reserves 1 Directly issued qualifying common share capital plus related stock surplus(share premium) 7214.51 A1+ A4+ B1 2 Retained earnings 0.00 3 Accumulated other comprehensive income (and other reserves) (129.26) B2+ B3+ B5 4 Directly issued capital subject to phase out from CET1 (only 0.00 applicable to non-joint stock companies)- Public sector capital injections grandfathered until 1 Jan 2018-0.00 5 Common share capital issued by subsidiaries and held by third parties (amount allowed in group CET1)- - 6 CET 1 capital before regulatory adjustments 7085.25 Common Equity Tier1 capital: Regulatory adjustments 7 Prudential valuation adjustments 0.00 8 Goodwill(net of related tax liability) 0.00 9 Intangibles other than mortgage-servicing rights (net of related 8.00 L2 tax liability) 10 Deferred tax assets 3379.46 M3 11 Cash-flow hedge reserve 0.00 12 Shortfall of provisions to expected losses 0.00 13 Securitization gain on sale 0.00 14 Gains and losses due to changes in own credit risk on fair 0.00 valued liabilities 15 Defined-benefit pension fund net assets 0.00 16. Investments in own shares (if not already netted-off paid-in 0.00 capital on reported balance sheet) 17. Reciprocal cross-holdings in common equity 0.00 18 Investments in the capital of banking financial and insurance entities that are outside the scope of regulatory consolidation net of eligible short positions where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) Page 18 of 48
Basel-III common disclosure template Amount 19 Significant investments in the common stock of banking 0.00 financial and insurance entities that are outside the scope of regulatory consolidation net of eligible short positions (amount above 10% threshold) 20 Mortgage servicing rights (amount above 10% threshold) 0.00 21 Deferred tax assets arising from temporary differences 0.00 (amount above 10% threshold net of related tax liability) 22 Amount exceeding the 15% threshold 0.00 23 of which: significant investments in the common stock of 0.00 financial entities 24 of which: mortgage servicing rights 0.00 25 of which: deferred tax assets arising from temporary differences 0.00 26. National specific regulatory adjustments 291.04 (26a+26b+26c+26d+26e) 26.a Of which: Investments in the equity capital of unconsolidated non- financial subsidiaries 0.00 26.b Of which: Shortfall in the equity capital of majority owned 0.00 financial Entities which have not been consolidated with the bank 26.c Of which: Investments in the equity capital of the 0.00 unconsolidated Insurance Subsidiaries 26.d Of which: Un-amortized pension funds expenditures 0.00 Regulatory Adjustments Applied To Common Equity Tier 1 In Respect of amounts subject to Pre-Basel III Treatment 0.00 Ref No Of Which : Operating loss in the current period 0.00 26.e Regulatory Adjustment due to recognition of DTA and 291.04 significant investments in CET1 27 Regulatory adjustments applied to Common Equity Tier 1 due 0.00 to insufficient Additional Tier 1 and Tier 2 to cover deductions 28 Total regulatory adjustments to CET-1 3678.50 29 Common Equity Tier1 capital(cet1) (6-28) 3406.75 Additional Tier1 Capital: Instruments 30 Directly issued qualifying Additional Tier 1 instruments plus related stock surplus (31+32) 0.00 D4 31 Of which: classified as equity under applicable accounting standards(perpetual Non-Cumulative Preference Shares) 0.00 Page 19 of 48
Basel-III common disclosure template Amount Ref No 32 Of which: classified as liabilities under applicable accounting 0.00 D4 standards(perpetual debt Instruments) 33 Directly issued capital instruments subject to phase out from 0.00 Additional Tier1 Additional Tier1 instruments (and CET1 instruments not 0.00 34 included in row5) issued by subsidiaries and held by third parties (amount allowed in group AT1) 35 Of which :instruments issued by subsidiaries subject to phase 0.00 out 36. Additional Tier1 capital before regulatory adjustments 0.00 Additional Tier-1 Capital: Regulatory adjustments: 37 InvestmentsinownAdditionalTier1instruments 0.00 38 Reciprocal cross-holdings in AdditionalTier1 instruments 0.00 J1 39 Investments in the capital of banking financial and insurance 0.00 entities that are outside the scope of regulatory consolidation net of eligible short positions where the bank does not own more than 10% of the issued common share capital of the entity (amountabove10%threshold) 40 Significant investments in the capital of banking financial and 0.00 insurance entities that are outside the scope of regulatory consolidation (net of eligible short positions) 41 National specific regulatory adjustments(41a+41b) 0.00 41a Investments in the Additional Tier 1 capital of unconsolidated 0.00 insurance subsidiaries 41b Shortfall in the Additional Tier 1 capital of majority owned 0.00 financial entities which have not been consolidated with the bank Regulatory Adjustments Applied To Additional Tier1 In Respect of Amounts Subject To Pre-Basel 3 treatment 0.00 Of Which: Intangibles other than mortgage-servicing rights 0.00 L3 (net of related tax liability) Of Which: Deferred Tax Assets 0.00 Of Which: Unamortized Expenses for Pension Fund 0.00 Expenditure Of Which: Operating Loss in the current period 0.00 Of Which: Phasing out of PNCPS 0.00 Of Which: Investment in Non common equity capital 0.00 instrument of associates (RRBs) Page 20 of 48
Basel-III common disclosure template Amount Ref No 42 RegulatoryadjustmentsappliedtoAdditionalTier1due to 0.00 insufficient Tier2 to cover deductions 43 Total regulatory adjustments to AT1 Capital 0.00 44 Additional Tier1 capital(at1) 0.00 44a Additional Tier 1 capital reckoned for capital adequacy 0.00 45 Tier 1 capital (T1=CET1+AT1) (row29+row44a) 3406.75 Tier 2 Capital: Instruments and Provisions 46 Directly issued qualifying Tier 2 instruments plus related stock surplus 1490.00 D5 47 Directly issued capital instruments subject to phase out from 120.00 D5 Tier 2 48 Tier2 instruments(and CET1 and AT1 instruments not included 0.00 in rows 5 or 34) issued by subsidiaries and held by third parties (amount allowed in group Tier 2) 49 Of which: instruments issued by subsidiaries subject to phase out 0.00 50 Provisions & Revaluation Reserves 338.28 Templ ate ref. no-50 51 Tier 2 capital before regulatory adjustments 1948.28 Tier-2 Capital: Regulatory Adjustments: 52 InvestmentsinownTier2 instruments 0.00 53 Reciprocal cross-holdings in Tier 2 instruments 0.00 J2 54 Investments in the capital of banking financial and insurance 0.00 entities that are outside the scope of regulatory consolidation net of eligible short positions where the bank does not own more than 10% of the issued common share capital of the entity (amount above the 10% threshold) 55 Significant investments in the capital banking financial and insurance entities that are outside the scope of regulatory consolidation (net of eligible short positions) 0.00 Page 21 of 48
Basel-III common disclosure template Amount Ref No 56 National specific regulatory adjustments (56a+56b) 191.12 56a Of Which : Investments in the Tier 2 capital of associates 51.12 J3 56b Of Which: Short fall in the Tier2 capital of majority owned 0.00 financial entities which have not been consolidated with the bank Regulatory Adjustments Applied To Tier2 in Respect of 140.00 Amounts Subject To Pre-Basel III Treatment. Of which: Phase out of Tier-2 Bonds 140.00 57 Total regulatory adjustments to Tier2 capital 191.12 58 Tier2 capital (T2) 1757.16 58a Tier2 capital reckoned for capital adequacy 1169.86 58b Excess Additional Tier1 capital reckonedastier2capital 0.00 58c Total Tier2 capital admissible for capital adequacy 1169.86 row(58a+row58b) 59 Total capital(tc=t1+t2)(row45+row58c) 4576.61 60 Total risk weighted assets (60a+60b+60c) 58493.23 60a Of which :total credit risk weighted assets 43845.60 60b Of which: total market risk weighted assets 7554.02 60c Of which :total operational risk weighted assets 7093.61 Capital Ratios 61 Common EquityTier1 (as a percentage of risk weighted assets) 5.82 62 Tier1 (as a percentage of risk weighted assets) 5.82 63 Total Capital (as a percentage of risk weighted assets) 7.82 64 Institution specific buffer requirement (minimum CET1 7.375 requirement plus capital conservation and countercyclical buffer requirements expressed as a percentage of risk weighted assets) 65 Of which :Capital Conservation Buffer requirement 1.875 66 Of which :Bank specific Counter Cyclical Buffer requirement 0.00 67 Of which: G-SIB buffer requirement 0.00 68 Common Equity Tier1 available to meet buffers (as a percentage of risk weighted assets) 0.30 National minima (if different from Basel III) including CCB requirement 69 National Common Equity Tier 1 minimum ratio 7.375 (if different from Basel III minimum) including CCB 70 National Tier 1 minimum ratio (if different from Basel III minimum) 7.00 Page 22 of 48
Basel-III common disclosure template Amount Ref No 71 National total capital minimum ratio including CCB (if different from Basel III minimum) 10.875 Amounts below the thresholds for deduction (before risk weighting) 72 Non-significant investments in the capital of other financial 0.00 entities 73 Significant investments in the common stock of financial entities 0.00 74 Mortgage servicing rights (net of related tax liability) 0.00 75 Deferred tax assets arising from temporary differences (net of related tax liability) 0.00 Applicable caps on the inclusion of provisions in Tier2 76 Provisions eligible for inclusion in Tier2 in respect of exposures subject to standardized approach (prior to application of cap) 267.61 Template ref. no-50 77 Cap on inclusion of provisions in Tier 2 under standardized 267.61 approach 78 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap) 0.00 79 Cap for inclusion of provisions in Tier2 under internal ratingsbased approach 0.00 80 Current cap on CET1 instruments subject to phase out NA arrangements Capital instruments subject to phase-out arrangements (only applicable between April1,2018 and March 31, 2022) 81 Amount excluded from CET1 due to cap(excess over cap after NA redemptions and maturities) 82 Current cap on AT1 instruments subject to phase out NA arrangements 83 Amount excluded from AT1 due to cap (excess over cap after NA redemptions and maturities) 84 Current cap on T2 instruments subject to phase out NA arrangements 85 Amount excluded from T2 due to cap (excess over cap after redemptions and maturities) 587.30 Page 23 of 48
Notes to the Template: Row No of the Template 10 19 26b 44a 50 58a Particular Rs/ Cr Deferred tax assets associated with accumulated losses net of deferred 2314.34 tax liability Deferred tax assets (excluding those associated with accumulated 1065.12 losses) net of deferred tax liability Total as indicated in row 10 3379.46 If investments in insurance subsidiaries are not deducted fully from 0.00 capital and instead considered under 10% threshold for deduction the resultant increase in the capital of bank of which: Increase in Common Equity Tier 1 capital 0.00 of which: Increase in Additional Tier 1 capital 0.00 of which: Increase in Tier 2 capital 0.00 If investments in the equity capital of unconsolidated non-financial 0.00 subsidiaries are not deducted and hence risk weighted then: (i) Increase in Common Equity Tier 1 capital 0.00 (ii) Increase in risk weighted assets 0.00 Excess Additional Tier 1 capital not reckoned for capital adequacy 0.00 (difference between Additional Tier 1 capital as reported in row 44 and admissible Additional Tier 1 capital as reported in 44a) of which: Excess Additional Tier 1 capital which is considered as 0.00 Tier 2 capital under row 58b Eligible provisions included in Tier 2 capital 338.28 Eligible revaluation reserves included in Tier 2 capital 0.00 Total of row 50 338.28 Excess Tier2 capital not reckoned for capital adequacy (difference 587.30 between Tier2 capital as reported in row 58 and T2 as reported in 58a) Page 24 of 48
Table- DF 12 Composition of Capital- Reconciliation Requirements (Step-1) (Rs/Cr) Sl Particulars Balance sheet as in financial statements Balance sheet under regulatory scope of consolidation As on 30.09.2018 As on 30.09.2018 There is no difference between the regulatory consolidation and accounting A Capital &Liabilities i Paid-up Capital 3036.69 3036.69 Share Application Money pending allotment - - Reserves &Surplus 4562.98 4562.98 Minority Interest - - Total Capital 7599.67 7599.67 ii Deposits 129976.76 129976.76 Of which Deposits from Banks 1393.10 1393.10 Customer Deposits 128583.66 128583.66 Other Deposits 0.00 0.00 iii Borrowings 2309.32 2309.32 Of which From RBI - - From Banks 0.82 0.82 From other institutions & 2308.50 2308.50 agencies Others - - Capital instruments - - iv Other liabilities & Provisions 2781.31 2781.31 Total 142667.06 142667.06 B Assets i) Cash and balances with RBI 6139.22 6139.22 Balance with Banks and Money at Call and Short notice 4175.99 4175.99 Page 25 of 48
Sl Particulars Balance sheet as in financial statements Balance sheet under regulatory scope of consolidation As on 30.09.2018 As on 30.09.2018 ii) Investments: 59769.75 59769.75 Of which Government Securities 37112.96 37112.96 Other Approved Securities - - Shares 689.25 689.25 Debentures & Bonds 6655.30 6655.30 Subsidiaries / Joint Ventures / Associates - - Others (Commercial Papers 15312.24 15312.24 Mutual Funds etc.) iii) Loans and advances 60358.15 60358.15 of which Loans and advances to 176.91 176.91 Banks Loans and advances to 60181.24 60181.24 customers iv) Fixed Assets 1253.58 1253.58 v) Other Assets 10970.37 10970.37 Of which - - Goodwill and intangible assets - - and Deferred intangible tax assets assets (net) 3791.54 3791.54 vi) Goodwill on consolidation - - vii) Debit balance in Profit & Loss account - - Total Assets 142667.06 142667.06 Page 26 of 48
DF-12: Composition of Capital- Reconciliation Requirements-STEP 2 (Rs/cr) Sl Particulars Balance sheet Balance sheet Ref No. as in financial under regulatory statements scope of As on 30.09.2018 consolidation As on 30.09.2018 A Capital & Liabilities i) Paid-up Equity Capital 3036.69 3036.69 A a) of which amount eligible for 3036.69 3036.69 A1 CET1 b) of which amount eligible for AT1 - - A2 of which amount deducted from - - A3 AT1 Share Application Money - - of which amount eligible for CET1 - - A4 Reserves and Surplus 4562.98 4562.98 B of which amount eligible for CET1: 4177.82 4177.82 B1 Share premium of which amount eligible for CET1: 721.70 721.70 B2 Statutory Reserve, Revenue Reserve, Special Reserves and Capital Reserves of which amount eligible for CET 1: Revaluation Reserves discounted @ 55% 420.88 420.88 B3 of which Capital that is not qualified 514.43 514.43 B4 as Balance in Profit & Loss account (1271.85) (1271.85) - of which : deduction from CET-1 (1271.85) (1271.85) B5 of which : deduction from AT1 - - - Total Capital 7599.67 7599.67 ii) Deposits 129976.76 129976.76 of which Deposits from Banks 1393.10 1393.10 Customer Deposits 128583.66 128583.66 Other Deposits 0.00 0.00 Page 27 of 48
Sl Particulars Balance sheet as in financial statements Balance sheet under regulatory scope of consolidation Ref No. As on 30.09.2018 As on 30.09.2018 iii) Borrowings: 2309.32 2309.32 D Of which From RBI - - D 1 From Banks 0.82 0.82 From other institutions & 2308.50 2308.50 D 2 agencies of which Capital instruments 2240.00 2240.00 D 3 Amount eligible for AT 1 0.00 0.00 D 4 Amount eligible for Tier 2 1610.00 1610.00 D 5 Capital that is not 630.00 6300.00 D 6 qualified as Regulatory Capital as per Basel-III Of which Others 0.00 0.00 D 7 Other Borrowings 0.00 0.00 D8 iv) Other liabilities & 2781.31 2781.31 E provisions Of which - - DTLs related to goodwill - - DTLs related to - - intangible assets Total Capital & Liabilities 142667.06 142667.06 B Assets i) Cash and balances with 6139.23 6139.23 RBI Balance with banks 4175.99 4175.99 and money at call short notice Total 10315.22 10315.22 Page 28 of 48
Sl Particulars Balance sheet as in Balance sheet Ref No. financial under regulatory statements scope of As on 30.09.2018 consolidation As 30.09.2018 ii) Investments: 59769.75 59769.75 F Of which Government Securities 37112.96 37112.96 G Other Approved Securities - - H Shares 689.25 689.25 I Debentures & Bonds 6655.30 6655.30 J Of Which: Reciprocal Cross 0.00 0.00 J1 Holding of AT1 Of Which: Reciprocal Cross 0.00 0.00 J2 Holding of Tier2 Of Which: Investment in Non 51.12 51.12 J3 Common Equity Capital instruments of other Banks Subsidiaries / Joint Ventures / 0.00 0.00 Associates Others (Commercial Papers 15312.24 15312.24 K Mutual Funds etc.) iii) Loans and advances 60358.15 60358.15 Of which Loans and advances to banks 176.91 176.91 Loans and advances to 60181.24 60181.24 customers iv) Fixed Assets 1253.58 1253.58 L Of which Intangible assets 8.00 8.00 L 1 Of Which deduction from CET1 8.00 8.00 L 2 Of Which deduction from AT1 0.00 0.00 L 3 v) Other Assets 10970.36 10970.36 M Of which a) Goodwill and intangible assets 0 0 M 1 b) Deferred Tax Assets (Net of 3791.51 3791.51 M 2 DTL) Of Which deduction from CET1 3379.46 3379.46 M 3 Of Which deduction from AT1 - - M 4 vi) Goodwill on consolidation - - M 5 Total Assets 142667.06 142667.06 Page 29 of 48
Extract of Basel III common disclosure template (with added column) Table on Composition of Capital- DF 11 Common Equity Tier1 Capital: Instruments and Reserves Sl Particulars Component of Source based on regulatory capital reference numbers/ reported by Bank letters of the balance sheet under the regulatory scope of consolidation from Step-2 1 Directly issued qualifying common share 7214.51 A1+A4+B1 (and equivalent for non-joint stock companies) capital plus related stock surplus 2 Retained earning 3 Accumulated other comprehensive (129.26) B2+B3+B5 income (and other reserves) 4 Directly issued capital subject to phase out from CET1 (only applicable to nonjoint stock companies) 5 Common share capital issued by subsidiaries and held by third parties (amount allowed in group CET1) 6 Common Equity Tier 1 capital before 7085.25 regulatory adjustments 7 Prudential valuation adjustments 0.00 8 Goodwill (net of related tax liability) 0.00 Page 30 of 48
TABLE-DF-13: Main Features Template for Regulatory Capital Series-I: IPDI (BASEL-II) of Rs 300 Cr 1 Issuer United Bank of India 2 Unique identifier (e.g. CUSIP ISIN or Bloomberg identifier for private INE695A09095 placement) 3 Governing law(s) of the instrument Indian Laws Regulatory treatment Capital Instrument 4 Transitional Basel III rules Ineligible 5 Post-transitional Basel III rules Ineligible 6 Eligible at solo/group/ group & solo Solo 7 Instrument type Tier 1 Capital Instruments 8 Amount recognized in regulatory capital (Rs in Cr as of 30.09.2018) 0.00 9 Par value of instrument Rs 10.00 lakh per Bond 10 Accounting classification Borrowings 11 Original date of issuance 05.12.2012 12 Perpetual or dated Perpetual 13 Original maturity date 05.12.2022 with prior RBI approval. 14 Issuer call subject to prior supervisory approval Yes 15 Optional call date contingent call dates and redemption amount 05.12.2022 with prior RBI approval. 16 Subsequent call dates if applicable Not Applicable Coupons / dividends Coupon 17 Fixed or floating dividend/coupon Fixed 18 Coupon rate and any related index 9.27% (annual) Page 31 of 48