Pillar-3 Disclosure (As on 30.06.2015) Table: DF-2: CAPITAL ADEQUACY Qualitative Disclosures: Bank s approach to assess the adequacy of its capital to support its current and future activities. The Bank in order to effectively manage its capital requirements and to meet the regulatory norms stipulated by RBI 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. As per the norms stipulated by RBI, the Bank is required to maintain a minimum CRAR ratio of 9.0%, with a minimum Tier-1 CRAR 7.00% and CET1 ratio of 5.5% under Basel-III norms as on. Banks has complied with all the regulatory limits and minima as prescribed under Basel-III Capital regulations. Banks Capital Adequacy Ratio on standalone basis was computed at 10.02% as on 30.06.2015 with CET1 ratio of 7.14% and Tier -2 ratio of 2.88%. Bank maintains capital to cushion the risk of loss in value of exposure, businesses etc. so as to protect the depositors and general creditors against losses. To ensure smooth transition to Basel-III, appropriate transitional arrangements have been provided for meeting the minimum Basel-III capital ratios, full regulatory adjustments to the components of capital etc. Under Basel-III norms, Bank has adopted the following methods for computing its CRAR under: 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) policy 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 Page 1 of 11
assess the level of capital required, commensurate with the institutions risk profile. Bank in its Capital Planning exercise reviews the current capital position of the Bank, the targeted and future required capital in terms of business strategy and risk appetite and also the options available for raising capital along with the availability of headroom. On the basis of the business projection, Bank raises capital with the approval of Board of Directors of the Bank (i) Quantitative Disclosures: (` cr) a) Capital requirements for Credit risk @ 9% of RWA Portfolios subject to standardised approach: 4957.30 Securitization exposures: 0.00 b) Capital requirements for market risk: Standardized duration approach: - Interest rate risk: - Foreign exchange risk (including gold): - Equity risk: 637.35 4.00 40.92 c) Capital requirements for operational risk: Basic indicator approach: 577.19 d) Common Equity Tier-1 Ratio (CET) (%) 7.14% Tier 1 Capital Ratio (%): 7.14% Total Capital Ratio (%): 10.02% 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 advances portfolio of the banks. Non-Performing Assets In line with RBI guidelines, the Bank classifies its advances into performing and nonperforming assets 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), Page 2 of 11
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, 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 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 mutatis-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. Page 3 of 11
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. Policy and Procedures The Bank has put in place well-structured Credit Risk Management system and developed various risk management policies like Lending Policy, 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 studies the concentration risk by (a) fixing 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 Counterparty 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. Page 4 of 11
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. 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. Stress Testing Policy duly approved by the Board of Directors has been put in place. Stress Testing, as per the Policy, 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 with 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. (` crore) Fund Based Non Fund Based Total (b) Total gross credit exposures 68298.69 4742.10 73040.79 (c) Geographic distribution of exposure Overseas Nil Nil Nil Domestic 68298.69 4742.10 73040.79 (d) Industry Type Distribution of Exposures (` crore) Code Name of the Industry Fund Based Outstanding Non-Fund Based Outstanding 1 Coal - - 2 Mining including coal 37.15 12.15 3 Iron & Steel 5066.39 253.80 4 Metal Products 75.33 3.51 5 All Engineering 1554.18 132.10 5.1 Of which Electronics 322.09 4.98 5.2 Of which Others 1232.09 127.11 Page 5 of 11
Code Name of the Industry Fund Based Outstanding Non-Fund Based Outstanding 6 Electricity 0.00 0.00 7 Textile 1543.60 162.90 7.1 Of which Cotton Textiles 270.78 155.01 7.2 Of which Jute Textiles 42.23 1.94 7.3 Of which Other Textiles 1230.59 6.01 8 Food Processing 1397.28 61.37 8.1 Of which Sugar 24.01 0.30 8.2 Of Which Tea 206.32 1.06 8.3 Of which Vegetable Oil & Vanaspati 51.86 0.21 8.4 Of which others 1115.09 59.81 9 Tobacco & Tobacco Products 351.42 1.53 10 Paper & Paper Products 89.39 4.28 11 Rubber & Rubber Products 187.22 21.70 12 Infrastructure 14807.77 1171.29 12.1 Of which Power 9914.63 347.76 12.2 Of which Telecommunications 963.56 1.92 12.3 Of which Roads & Ports 2851.22 665.33 12.4 Of which other Infra 1078.36 156.28 13 Cement 603.35 16.42 14 Leather & Leather Products 200.20 2.56 15 Gems & Jewellery 408.83 72.03 16 Construction 1026.72 143.26 17 Petroleum 143.17 49.72 18 Automobiles including Trucks 608.18 0.29 19 Computer Software 28.31 0.34 20 Chemical, Dyes, Paints etc. 1059.18 57.87 20.1 Of which Fertilizers 240.17 0.00 20.2 Of which Petro-chemicals 512.81 49.02 20.3 Of which Drugs & pharmaceuticals 306.20 8.86 21 NBFC 5847.38 23.31 22 Other Industries 1025.47 2395.59 23 Residuary Other Advances 32238.17 156.02 (to balance with Gross Advances) 24 Total 68298.69 4742.10 Page 6 of 11
Quantitative Disclosures: 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 30.06.2015. Sl Fund Based (FB) Exposure Sl Non-Fund Based (NFB) Exposure Industry Name % of total FB % of total NFB 1 Power 14.52% 1 Roads & Port 14.03% 2 NBFC 8.56% 2 Power 7.33% 3 Iron & Steel 7.42% 3 Iron & Steel 5.35% (e) Residual contractual maturity break down of assets Day1 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 Ove r 1 year & up to 3 years Ove r 3 year s & up to 5 years Over 5 years (` crore) Advances 429 3961 63 1352 2702 1631 4076 26614 9489 15717 66035 Investments 3 157 75 59 1107 1192 4863 3080 7164 26854 44553 Foreign Currency Assets 800 75 14 80 1212 915 594 0 0 18 3708 (f) Amount of NPAs (Gross) (` crore) Category Amount Sub-Standard 2066.80 Doubtful 1 2130.78 Doubtful 2 2064.94 Doubtful 3 246.20 Loss 24.10 TOTAL 6532.82 (g) Net NPAs 4091.20 (h) NPA ratios (%) (a) Gross NPAs to Gross Advances 9.57 (b) Net NPAs to Net Advances 6.30 Total Page 7 of 11
(i) Movement of gross NPA a) Opening balance as on 1 st April, 2015 6552.91 b) Additions upto 30 th June, 2015 526.33 c) Reductions up to 30 th June,2015 546.42 d) Closing balance at the end of the June quarter,2015 (a+b-c) 6532.82 (j) Movement of Specific & General s Movement of General s Specific s a) Opening balance as on 1 st April, 2015 2430.68 1060.09 b) s made during the quarter 30 th June, 2015 175.85 18.76 c) Write-off/write-back of excess provisions - - d) Other Adjustments 173.06 - e) Closing balance at the end of June 2015 (a+b-c-d) 2433.47 1078.85 (k) Amount of write-offs and recoveries that have been booked directly to the income statement 20.09 (l) Amount of Non-Performing Investments 199.54 (m) Amount of provision held for Non-Performing Investment 120.47 (n) Movement of provisions for depreciation on investments i) Opening balance as on 1 st April, 2015 83.91 ii) s made during the quarter 30 th June, 2015 39.98 iii) Write-off/ write-back of excess provisions 0.00 iv) Closing balance at the end of the quarter ended June,2015 (i+ii-iii) 123.89 (o) Industry Type Distribution of Specific & General s As on June 30,2015 For quarter ended June 30,2015 S.No Name of the Gross Specific General Write Specific Industry NPA Off 1 Coal - - - - - 2 Mining including 0.50 0.07 0.15 11.11 - coal 3 Iron & Steel 738.04 352.15 17.04 58.63-4 Metal Products 75.33 0.77 0.25-0.26 5 All Engineering 273.80 65.96 6.08 7.16 4.41 Page 8 of 11
As on June 30,2015 For quarter ended S.No Name of the June 30,2015 Industry Gross NPA Specific General Write Off Specific 5.1 of which Electronics 14.79 2.99 1.21-0.43 5.2 of which Others 259.01 62.97 4.87 7.16 3.97 6 Electricity - - - - - 7 Textile 176.18 68.05 5.69 3.27 0.73 7.1 of which Cotton 31.74 11.96 0.86-0.54 Textiles 7.2 of which Jute 5.65 1.37 0.09-0.17 Textiles 7.3 of which Other 138.79 54.72 4.74 3.27 0.02 Textiles 8 Food Processing 253.94 82.48 4.04 1.65 9.07 8.1 of which Sugar 1.42 0.49 0.02 0.58-8.2 of Which Tea 0.90 0.11 0.68 - - 8.3 of which Vegetable 35.01 12.20 0.05-1.01 Oil & Vanaspati 8.4 of Which Others 216.61 69.68 3.29 1.07 8.05 9 Tobacco & 66.22 29.19 1.00-3.00 Tobacco Products 10 Paper & Paper 5.85 1.44 0.22 - - Products 11 Rubber & Rubber 42.63 12.19 0.39-0.33 Products 12 Infrastructure 761.60 232.26 53.17-11.31 12.1 of which Power - - 36.88 - - 12.2 of which 87.17 23.79 2.17 - - Telecommunications 12.3 Of which Roads & 465.57 93.99 10.67-7.52 Ports 12.4 Of which other Infra 208.86 114.48 3.45-3.79 13 Cement 149.52 41.78 1.61 28.57-14 Leather & Leather 53.85 16.01 0.37-3.26 Products 15 Gems & Jewellery 51.08 14.48 1.17-2.62 16 Construction 32.69 15.76 3.96 2.21-17 Petroleum 29.10 11.29 0.43-0.26 Page 9 of 11
S.No Name of the Industry As on June 30,2015 For quarter ended June 30,2015 Gross NPA Specific General Write Off Specific 18 Automobiles 223.98 77.32 1.48 - - including Trucks 19 Computer Software 18.99 8.92 0.02-1.69 20 Chemical, Dyes, 283.45 111.66 1.75-34.27 Paints etc. 20.1 of which Fertilizers 0.64 0.23 0.95-0.02 20.2 of which Petrochemicals 53.29 14.11 0.53-1.79 20.3 of which Drugs & 229.52 97.33 0.27-32.46 Pharmaceuticals 21 NBFC - - 21.91 - - 22 Other Industries 279.29 129.29 10.02 16.73 4.23 23 Residuary Other 3016.78 1039.95 100.93 43.73 39.26 Advances (to balance with Gross Advances) 24 Total 6532.82 2311.03 231.68 173.06 114.68 (p) Geographic wise distribution of Gross NPA, Specific & General Particulars Overseas Domestic Total Gross NPA - 6532.82 6532.82 Specific - 2433.47 2433.47 General - 1078.85 1078.85 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 and 6. SMERA. Ratings assigned by ECRA s is used for the following exposures: For Short Term Loan (STL), i.e for exposures with contractual maturity of Page 10 of 11
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 weights as per the new capital adequacy framework. Bank also rates its clients internally using an internal rating model. Quantitative Disclosures: The table below discloses the amount of the Bank s Net outstanding for credit exposures (both fund and non-fund) net of specific provision in three major risk buckets: 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: 33250.27 15757.85 14890.13 Table DF- Disclosure in respect of computation of Leverage Ratio S.N Particulars As on 30.06.2015 1 Capital Measure 5059 2 Exposure Measure 126365 3 Leverage Ratio 4.00% ******************************************************************************************* Page 11 of 11