DISCLOSURES UNDER THE NEW CAPITAL ADEQUACY FRAMEWORK (BASEL II GUIDELINES) I. Scope of Application IndusInd Bank Limited ( the Bank ) is a commercial bank, which was incorporated on 31 st January 1994. The Bank has only one subsidiary - Alfin Insurance Services Ltd. The financials of the subsidiary are not consolidated with the Bank s financials as the said company could not commence business and CRAR is computed on the financial position of the Bank alone. The amount of capital held in this subsidiary is deducted from Capital funds, i.e. 50% Tier I and 50% Tier II. II. Capital Structure Composition of the Capital Tier I and Tier II as on September 30, 2009 Tier I Capital Paid up Share Capital 410.09 Reserves 1,662.62 Innovative Instruments - Other Capital Instruments - Gross Tier I Capital 2,072.71 Deductions Investments in Subsidiaries and Associates 0.55 Credit enhancements under Securitisation 0.01 Other intangible assets (DTA)/QIP Exps kept in OA 10.17 Net Tier I Capital 2,061.98 Tier II Capital Upper Tier II Bonds 308.90 Sub-ordinated debts 345.08 General Provisions / IRA and Revaluation Reserves 176.34 Gross Tier II Capital 830.32 Deductions Investments in Subsidiaries and Associates 0.55 Credit enhancements under Securitisation 0.01 Net Tier II Capital 829.76 Total eligible capital 2,891.74 1
Debt Capital instruments eligible for inclusion in Upper Tier 2 308.90 Capital Total amount outstanding 308.90 Of which amount raised during the current year - Amount eligible to be reckoned as Capital funds 308.90 Subordinated debt eligible for inclusion in Lower Tier 2 Capital Total amount outstanding 585.10 Of which amount raised during the current year - Amount eligible to be reckoned as Capital funds 345.08 Tier I Capital Funds 2,061.98 Tier II Capital Funds 829.76 Total Eligible Capital Funds 2,891.74 III. Capital Adequacy Capital requirements for Credit Risk, Market Risk and Operational Risk as on September 30, 2009 Risk Type Capital Required Capital requirements for Credit Risk 1621.39 Portfolio Subject to Standardised approach 1621.33 Securitisation exposures 0.06 Capital requirements for Market Risk 25.19 Standardised Duration Approach Interest Rate Risk 9.23 Foreign Exchange Risk (including gold) 9.00 Equity Risk 6.96 Capital requirements for Operational Risk 98.53 Basic Indicator Approach 98.53 Total Capital requirements at 9% 1745.11 Total Capital Funds 2891.54 CRAR 14.91 Under Basel II, Bank s CRAR works out to be 14.91% as on September 30, 2009, which is higher by 1.40% as compared to 13.51% under Basel I. 2
IV. Credit Risks: General disclosures (i) Total Gross Credit Risk Exposure Fund Based* 29,282 Non Fund Based** 5,394 Total Exposures 34676 * Includes all exposures such as Cash Credit, Overdrafts, Term Loan, Cash, SLR securities etc which are held in banking book **Off-Balance items such as LC, BG and credit exposure equivalent of Inter-bank forwards, merchant forward contracts and derivatives etc (ii) Geographical Distribution of Exposures Domestic Overseas Fund Based 29,282 - Non Fund Based 5,394 - Total Exposures 34676 - Industry-Wise Distribution of Exposures () Industry Name FB Non Fund Based Steel Steel-Long Products 230 100 Steel - Alloy 169 15 Sponge Iron 24 28 Iron and Steel Rolling Mills 2 0 Steel Flats-CR,GP/GC 339 134 Stainless Steel 7 0 Construction Project Construction (Turnkey) 110 295 Other Infrastructure 224 50 Contract Construction 75 48 Textiles Textiles - Readymade Garments 165 15 Textiles -Cotton fibre / yarn 92 8 Textiles - Synthetic Fabrics 30 0 Textiles - Cotton fabrics 73 16 Textile - Jute 0 0 Cotton ginning,cleaning,baling 5 0 Textile Machinery 5 1 Textiles - Manmade fibres / yarn 15 1 Pharmaceuticals Pharmaceuticals - Bulk Drugs 439 17 Pharmaceuticals - Formulations 159 10 Telecom 3
Telecom Equipments 85 57 Telecom Cables 4 2 Telecom - Cellular 30 31 Chemicals Chemicals - Organic 40 3 Chemicals - Inorganic 13 23 Trading - Wholesale 686 267 NBFCs(other than HFCs) 744 4 Food Credit 349 0 Gems and Jewellery 225 87 Trading - Retail 298 1 Real Estate Developers 196 29 Engineering & Machinery 177 40 Capital Market Brokers 28 158 Petroleum & Products 175 2 Lease Rental Discounting 176 0 Fertilizers - Nitrogenous 1 164 Paper - Industrial 149 0 Services 125 20 Auto Ancillaries 116 21 Tyres 85 33 Microfinance Institution 107 0 Construction Equipments 101 1 Plastic & Plastic Products 70 30 Electronic componets 67 30 Housing Finance Companies 88 0 Electric Equipment 49 37 Computers - Software 81 1 Real Estate-Commercial Const 81 0 Mining,Quarrying & Minerals 56 11 Sugar 50 10 Coal 26 33 Glass & Glass Products 56 0 Tea 55 0 Shipping 50 5 Paper - Writing and Printing 49 5 Fertilisers - Phosphatic 0 54 Beverage,Breweries,Distileries 51 0 Edible Oils 23 25 SME - Miscellaneous-Mfng 36 9 Other Food processing 39 5 Power 37 1 Aluminium 38 0 Electrical fittings 31 0 Hospital & Medical Services 21 6 Petrochemicals 2 24 Real estate - Residential 25 0 IT Enabled Services 9 15 Leather & leather Products 22 0 Organised Retailing 20 0 4
Automobiles-2/3 wheelers 14 1 Automobiles-Passenger Cars 8 0 Automobiles-Commercial Vehicle 5 0 Consumer Finance Division 7576 0 Other Industries 2774 3383 Residual Assets 11698 28 Total Exposure 29282 5394 Residual Contractual Maturity break down of assets Next Day 2-7 days 8-14 days 15-28 days 29 days - 3 mths 3-6 mths 6 mths - 1 year 1-3 year 3-5 years Above 5 years () Cash 243.07 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 243.07 Balances with RBI 0.00 0.00 0.00 28.63 71.56 42.94 42.94 386.44 243.31 615.44 1431.26 Balances with other 235.41 34.35 39.15 73.39 134.65 0.00 0.00 7.99 0.00 0.00 524.93 Banks Investments 0.00 0.00 99.93 0.00 0.00 94.60 609.53 489.24 1035.42 5966.32 8295.03 Advances (excl 635.94 638.32 398.47 1019.61 3203.59 1677.92 4120.84 4337.82 1179.32 371.18 17583.00 NPAs) Fixed Assets 624.33 624.33 Other Assets 22.61 0.00 6.53 6.53 20.93 113.15 140.57 83.27 0.00 766.85 1160.44 Total 1137.03 672.67 544.08 1128.16 3430.72 1928.60 4913.87 5304.75 2458.05 8344.12 29862.06 Movement of NPAs and Provision for NPAs as on 30.09.09 Rs in crores A Amount of NPAs (Gross) 265.11 Sub-standard 151.36 Doubtful 1 67.50 Doubtful 2 34.91 Doubtful 3 10.54 Loss 0.80 B Net NPAs 171.77 C NPA ratios Gross NPA to Gross advances (%) 1.50% Net NPA to Net advances (%) 0.98% Total 5
D Movement of NPAs (Gross) Opening Balance as on 01.04.09 255.02 Additions during the year 133.31 Reductions during the year 123.22 Closing Balance as on 30.09.09 265.11 E Movement of provision for NPAs Opening as on 01.04.09 75.90 Provision made in year 60.44 Write off / Write back of excess provisions 43.00 Closing as on 30.09.09 93.34 Non Performing Investments and Movement of provision for depreciation on Non Performing Investments (Rs, in crores) A Amount of Non-Performing Investments 0 B Amount of provision held for non-performing investments 0 C Movement of provision for depreciation on investments Opening as on 01.04.09 4.93 Add: Provision made in 2009-10 - Less: Write-off/ write-back of excess provision (0.92) Closing Balance as on 30.09.09 4.01 V. Credit risk : Risk Weight-wise distribution of Credit Exposures Category Below 100% Risk Weights 22213 100% Risk Weights 10849 More than 100% Risk Weights 1,614 Deducted - Investments in subsidiaries (1.10) VI. Credit risk mitigation: Eligible financial asset collateral and guarantor For the purpose of credit risk mitigation, i.e. offsetting the amount of collateral against the individual/ pool of exposures to which the collaterals are assigned, financial asset collateral types are defined by the Bank as per the New Capital Adequacy Framework to include Fixed deposits, KVP, IVP, NSC, Life Insurance Policies, Gold, Securities issued by Central and State Governments and units of Mutual Fund. On a similar note, the eligible guarantors are classified into the following categories: Sovereigns, Sovereign entities, Banks and Primary Dealers with lower risk weights than the counterparty Other entities rated AA(-) or better including guarantee cover provided by parent, subsidiary and affiliate companies when they have lower risk weight than the obligor. Particulars Exposure before applying eligible mitigants 2368.69 Exposure after applying eligible mitigants 480.43 6
VII. Securitisation: Disclosure for standardised approach (i) Break up of Exposures securitised by the Bank () Amount (O/s Principal amount) Commercial Vehicles 0.05 Utility Vehicles 0.00 Four Wheeler 0.17 Construction Equipments 0.00 Personal Loan 0.00 Home Loan 0.00 Total Securitised Exposure 0.22 (ii) Amount of impaired or past due assets securitised Commercial Vehicles Utility Vehicles Four Wheeler Construction Equipments Personal Loan Home Loan (iii) Break up of aggregate amount of securitisation exposure purchased by exposure type Commercial Vehicles - Utility Vehicles - Four Wheeler - Used Cars 1.86 Personal Loan 0.65 Two Wheelers 0.03 Others 0.65 Liquidity Facilities - Credit Enhancements - Other Commitments - Total 3.19 (iv) Risk Weight wise break up of amount of securitisation exposure retained or purchased by exposure type Risk Weight Category Less than 100% 3.19 100% - More than 100% - Deductions - Liquidity Facilities - Credit Enhancements 0.22 Other Commitments - Total 3.41 7
(v) Break up of securitised exposures deducted by exposure type Deducted from Tier I Credit Enhancement deducted from Tier I and Tier II capital () Other deductions Commercial Vehicles - 0.05 - Utility Vehicles - 0.00 - Four Wheeler - 0.17 - Construction Equipments - 0.00 - Personal Loan - 0.00 - Home Loan - 0.00 - Total - 0.22 - (vi) Total number and book value of loans asset securitised- by type of underlying assets Commercial Vehicles Utility Vehicles Four Wheeler Construction Equipments Personal Loan Home Loan FY 2008-09 FY 2007-08 Total no, of assets securitised Amount Total no, of assets securitised Amount (vii) Summary of Securitised activity Particulars FY 2008-09 FY 2007-08 Sale consideration received for securitised assets Net gain/loss on account of securitisation (viii) Summary of form and quantum of services provided Particulars FY 2008-09 FY 2007-08 Outstanding Credit enhancements Funded Non Funded Outstanding Liquidity Facility Net outstanding servicing assets/liabilities Outstanding subordinate contributions 8
VIII. Market risk in Trading book : Capital requirements for Market risks @ 9% () Amount of Market Risk elements capital required Interest Rate Risk 9.23 Foreign Exchange Risk (including gold) 9.00 Equity Risk 6.96 IX. Interest rate risk in the banking book (IRRBB) Stress Testing: The Bank measures the impact on net interest margin (NIM) / EaR after taking into account various possible movement in interest rates across tenor and their impact on the earnings and economic value of the Bank is calculated for each of these scenarios. These reports are prepared on a monthly basis for measurement of interest rate risk With an upward rate shock of 1% across the curve, as per Rate Sensitive Gaps in INR as on 30.09.2009, the earning shows a decline of Rs 24.73 crores. The impact of change in interest rate by 100 bps and 50 bps has been computed on open positions (as on Sept 30, 2009) and shown hereunder against the respective currencies. Change in interest rates (in bps) Currency Impact on NII (Rupees in crores) (100) (50) 50 100 INR 24.77 12.39-12.39-24.77 USD -0.09-0.04 0.04 0.09 JPY 0.00 0.00 0.00 0.00 GBP 0.00 0.00 0.00 0.00 EUR 0.00 0.00 0.00 0.00 Others 0.05 0.03-0.03-0.05 Total 24.73 12.38-12.38-24.73 9