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Oriental Bank of Commerce के अकाउंट के लिये नोट

Mar 31, 2019

1.1 Capital

1.1.1 Capital Ratio (Capital adequacy under Basel III)

1.1.2 Share Capital

1. The Bank, has allotted 2,61,31,493 equity shares of face value of RS.10.00 each to its eligible employees under “Oriental Bank of Commerce - Employee Share Purchase Scheme” [OBC-ESPS] at an issue price of R 71.76 per share on 16th February, 2019. The Issue price was fixed by the Remuneration Committee of the Board (designated as Compensation Committee for ESPS) at a discount of 25% on the floor price of R 95.67 per share. The Bank has received Rs. 187.52 crores under the ESPS scheme.

Pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014 and as per the Guidance Note issued by the Institute of Chartered Accountants of India, the element of the discount allowed per share amounting to RS.23.91 aggregating to RS.62.48 crore has been debited to “Payment to and Provision for employee.

2. The Bank has received capital infusion from the Government of India in two tranches viz. RS.5500 crore on 31st December 2018 and RS.1186 crore on 31st January 2019. Accordingly, upon receipt of all requisite approvals, the following shares were allotted to the Government of India on Preferential basis:

(i) 57,23,20,499 equity shares at an Issue price of RS.96.10 (including premium of RS.86.10) per share aggregating to RS.5500 crore

(ii) 13,89,89,804 equity shares at an Issue price of RS.85.33 (including premium of RS.75.33) per share aggregating to RS.1186 crore

Subsequent to the aforesaid allotments, the shareholding of Government of India has increased froRs.77.23% as at 31st March 2018 to 87.58% as at 31st March 2019.

[In the previous year, the Bank had allotted 28,65,97,110 equity shares to Government of India on preferential basis at an Issue price of RS.124.60 (including premium of RS.114.60) per share aggregating to RS.3571 crore]

*During the year, the Bank redeemed 8.75% Upper Tier II Bonds aggregating to RS.500.00 Crore on exercise of Call Option with the prior approval of RBI.

1.2 Investments

1.2.1 The detail of investments and the Movement of Provisions held towards Depreciation on Investments of the bank are given below:

Note: -

1) * Others include Investment in Mutual Funds, Venture Funds, Security Receipts, State Govt. Special Bonds and Recapitalisation Bonds.

2) ** Out of total investment of RS.13942.84 Crore in Unrated securities, RS.13245.35 Crore is in exempted investment consisting of equity shares R 1721.91 Crore, venture fund RS.164.24 Crore, JV-INS RS.218.50 Crore, NCDs RS.545.62 Crore, Preference Shares RS.330.80 Crore and Special Government Bonds R 10264.28 Crore.

Hence, unrated un-exempted investment is RS.697.49 Crore (RS.18.82 Crore Preference Share, RS.672.56 Crore in Bonds & Debenture and RS.6.11 Crore in Security Receipts)

3) *** Out of total investment in unlisted securities RS.15797.96 Crore, RS.15166.58 Crore is in exempted investments consisting of CD RS.1777.95 Crore, CP RS.617.15 Crore, NCDs RS.549.25 Crore, PSU Bonds RS.427.48 Crore, JV RS.218.50 Crore, VCF RS.164.24 Crore, Mutual Fund RS.35.00 Crore, SR RS.374.06 Crore, Special Bond RS.10257.00 Crore and Shares RS.745.95 Crore (RS.415.15 Crore in Equity shares and RS.330.80 Crore in Pref. Shares)

Hence, investment in unlisted securities is RS.631.38 Crore (RS.8.82 Crore Preference Share & RS.622.56 Crore in Bonds & Debenture)

1.2.2 Sale and Transfers to/from HTM category:

The value of sales and transfers of securities to /from HTM category during period froRs.1st April 2018 to 31st March 2019 has exceeded 5 % of book value of investments held in HTM category at the beginning of the year.

Disclosure in terms of extant RBI guidelines to the extent the provision equivalent to excess of book value over market value is not made is as under:

The 5 per cent threshold referred to above excludes the following:

a) One time transfer of securities to / from HTM category with the approval of Board of Directors permitted to be undertaken by banks at the beginning of the accounting year.

b) Sales to the Reserve Bank of India under pre announced OMO auctions.

c) Repurchase of Government Securities by Government of India from banks

d) Sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM, in addition to the shifting permitted at the beginning of the accounting year.

1.3.1 Disclosure on Risk Exposure in Derivatives

i) Qualitative Disclosure:

(a) Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defined.

(b) The Treasury Policy of the Bank lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy specifies the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

(c) The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to market (MTM) of positions. The Mid Office is monitored and controlled by Risk Management Department.

(d) The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures.

(e) The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

(f) The Bank is Trading Member of National Stock Exchange (NSE). The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations, wherever required, are settled with the exchanges as per guidelines issued by the regulators.

Treasury Policy has been drawn up in accordance with RBI guidelines.

Bank’s net funded exposure for risk category-wise country exposures for each country is less than 1% of bank’s total assets as on 31.03.2019 and as such no provision is required in terms of RBI guidelines.

(ii) The Provisioning Coverage Ratio (PCR) for the Bank as on 31.03.2019 is 75.84% (previous year 64.07%), which is calculated taking into account the total technical write offs.

1.3.2 Divergence in assets Classification and provisioning for NPAs.

As part of Risk Based Supervision (RBS) exercise for the year ended 31st March, 2018, the Reserve Bank of India had pointed out divergence in respect of Bank’s assets classification and provisioning in certain accounts. However, as the divergence pointed out was below the threshold limits specified by RBI, the same is not required to be disclosed. The Bank has duly accounted for the impact of the above in its financial statements for the year ended 31st March, 2019.

* Gross NPAs as per iteRs.2 of Annex to DBOD Circular DBOD. BP.BC.No.46/21.04.048/2009-10 dated September 24, 2009 which specified a uniform method to compute Gross Advances, Net Advances, Gross NPAs and Net NPAs.

** Technical or prudential write off is the amount of non-performing loans which are outstanding in the books of the respective branches, but have been written off (fully or partially) at Head office level. (DBOD No. BP.BC.6421.04.048/2009-10 dated 1st December 2009 on Provisioning coverage for advances)

1.3.3 Details of non-performing financial assets purchased / sold

Banks which purchase non-performing financial assets from other banks shall be required to make the following disclosures in the Notes to Accounts to their Balance sheet:

a) Details of non-performing financial assets purchased:

The cumulative provision towards Standard Assets held by the Bank as at the year-end amounting to RS.642.46 Crore (previous year RS.548.96 Crore) is included under the head Other Liabilities and Provisions in Schedule 5 to the Balance Sheet.

1.4.1 Strategic Debt Restructuring (SDR) Scheme

During the year, Bank has invoked Strategic Debt Restructuring (SDR) as per RBI guidelines in the following companies and acquired shares pursuant to invocation of SDR. The details of shares acquired are as under:-

Bank’s net funded exposure for risk category-wise country exposures for each country is less than 1% of Bank’s total assets and as such no provision is required in terms of RBI guidelines.

1.4.2 (i) Unhedged Foreign Currency Exposure

Bank has laid down Board approved policy for managing and monitoring Un-hedged Foreign Currency Exposure of corporate including SMEs. Based on the available data and financial statements and the declaration from borrowers, the Bank has estimated the liability of Rs. 25.18 Crore (Previous Year Rs. 22.64 Crore) as on 31st March, 2019 on unhedged Foreign Currency Exposure to their constituents in terms of RBI circular DBOD. NO. BP.BC.85/21.06.200/2013-14 dated 15th January 2014 and subsequent clarification vide circular no. DBOD.No. BP.BC.116/21.06.200/2013-14 dated 3rd June 2014. The outstanding provision on Unhedged Exposure as on 31.03.2019 is Rs. 25.18 Crore (Previous Year Rs. 22.64 Crore).

(ii) Spreading of MTM Losses

Reserve Bank of India circularDBR No. BP.BC. 113/21.04.048/2017-18 dated June 15, 2018 grants banks an option to spread provisioning for mark to market (MTM) losses on investments held in AFS and HFT categories for the quarter ended June 30, 2018 equally over up to four quarters, commencing with the quarter ending June 30, 2018. Accordingly, RS.577.36 Crore have been charged to the profit and loss account during the financial year ended March 31, 2019 towards such MTM losses and the balance unamortized amount is NIL as on March 31, 2019.

(As compiled and certified by the management and relied upon by the Auditors).

1.5 Miscellaneous Disclosures

1.5.1 Penalties imposed by RBI under Banking Regulation Act, 1949:

Reserve Bank of India has imposed penalty of Rs. 3.50 crore (Rs. Three crore fifty lakh only) on the Bank during the year ending 31st March 2019, under the provision of Section 47(A) (1) (c) read with section 46 (4) (i) of the Banking Regulation Act 1949.

1.5.2 In compliance of RBI letter no.DBR No.BP.13018/21.04.048/2015-16 dated 12.04.2016 and further in compliance with RBI letter No.3992/21.04.048/2016-17 and further to RBI letter No.DBR.BP.7201/21.04.132/2017-18 dated 08.02.2018, Bank has retained provision of Rs.29.29 Crore being 5% of the existing outstanding of Rs.585.88 Crore as on 31st March, 2019 under food credit availed by State Government of Punjab.

1.5.3 In respect of one premises costing RS.0.25 Crore (Previous year RS.0.25 Crore), registration/sale/title deeds in favour of the Bank are pending.

1.6 Disclosure in terms of Accounting Standards issued by the Institute of Chartered Accountants of India.

1.6.1 Accounting Standard AS-5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

There are no material prior period items. There is no change in the Accounting Policy as compared to the previous year.

1.6.2 Accounting Standard AS- 10 - Property Plant and Equipment/Fixed Assets

Subsequent to the revised Accounting Standards- 10 applicable from April 1, 2018, depreciation of RS.17.73 Crore for the year on the revalued portion of the fixed assets has been transferred from the Revaluation Reserve to Revenue and Other reserve.

1.6.3 Accounting Standard AS-12 Accounting for Government Grants

During the year 2018-19 the Bank has received a sum of Rs.1.64 crore as Grant Assistance under the Scheme “Support for setting up of Aadhaar Enrolment and update Centers (AECs)” and Rs.0.43 crore as “Incentive for installation of BHIM Aadhaar Pay devices”. The Bank has treated the grant as deferred income which is recognised in the profit and loss statement on a systematic and rational basis over the useful life of the asset. Accordingly, the Bank has booked a sum of Rs.0.69 crore as income in the Profit & Loss account during the year 2018-19.

1.6.4 Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (revised 2005) ‘Employee Benefits’. The defined employee contribution/ benefit schemes are as under:-

a. Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

b. Gratuity

The officers who had joined the service or became officer before 1st January, 1983 are entitled for Gratuity under Rules subject to MaximuRs.20 months.

The Officers who had joined the service on or after 1st January, 1983 are entitled for Gratuity under The Payment of Gratuity Act or Officer’s Service Regulation, whichever is higher.

The workmen are entitled for gratuity under The Payment of Gratuity Act or Bipartitle Settlement, whichever is higher.

The Officers / Workmen who had rendered continuous services of five years or more are eligible for gratuity on superannuation, resignation and termination. Further, in case of death, the minimum service required is one year. The gratuity fund is managed by separate trust and is funded by the Bank. The liability of the same is recognized on the basis of actuarial valuation.

c. Pension

The Bank has a defined benefit pension scheme. The scheme applies to existing employees of the Bank as on 29.09.1995 who have opted for the pension scheme and to all the employees joining, thereafter but before 01.04.2010. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

d. Sick leave

In compliance to RBI observations, the Bank has provided for RS.4.49 Crore towards sick leaves during the year ended 31st March, 2019 (RS.11.87 Crore during the previous year).

e. Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include leave encashment, settlement at home town for employees and dependents and post-retirement medical benefit for MD, CEO and ED. These are unfunded and are recognized on the basis of actuarial valuation.

The summarized position of various defined benefits recognized in the profit and loss account and balance sheet along with the funded status are as under:

Note:

- The estimates of future salary increases considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

- The provision for LFC is at RS.46.96 Crore (previous year RS.45.19 Crore) and Staff settlement expenses at RS.4.47 Crore (previous year RS.4.27 Crore) which are as per Actuarial Certificate.

1.6.5 Accounting Standard AS-17 - Segment Reporting:

a) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business Operations

b) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under “Retail Banking”

- Retail Banking: The exposure up to RS.5.00 Crore to individual, HUF, Partnership firm,Trust, Private Ltd. Companies, Public ltd. Companies , Co-operative societies etc. or to a small business is covered under retail Banking. Small business is one where average of last three years’ annual turnover (Actual for existing & projected for new entities) is less than RS.50 Crore.

- Other Banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail Banking Segments. Other Banking business is the residual category.

c) The segment revenue is shown after interest on average intersegment funds used in Treasury Operations. The interest on inter segment funds has been charged at the rate based on the movements in Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

Allocation of Expenses, Assets and Liabilities: Expenses incurred at Head office/ Controlling Office directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of outstanding advances in each segment except the provision for sacrifice interest (bifurcated on the basis of outstanding restructured advances) and provision for FITL & Standard restructured standard advances (bifurcated on the basis of outstanding standard restructured advances).The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

1.6.6 Accounting Standard AS-18 - Related Party:

Details pertaining to Related Party Transactions in respect of key managerial personnel of the Bank are as follows:-

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited - Joint Venture. The transactions with joint venture have not been disclosed in view of para 9 of the AS -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises.

Further, in terms of Paragraph 5 of AS 18, transactions in the nature of Banker-Customer relationship have not been disclosed including those with Key Management Personnel.

1.6.7 Accounting Standard AS-19 - Leases:

The Bank has not entered into any transaction of Financial Lease. Operating lease primarily comprises of office premises, which are renewable at the option of the Bank. Lease payment for assets taken on operating lease are recognized as an expense in the Profit and Loss Account.

1.6.8 Accounting Standard 22 - Accounting for Taxes on income:

i. Current Tax

a. In view of taxable losses, the Bank is not required to make any provision for income tax.

b. The disputed tax demands of R 3,300.77 Crore outstanding as on 31st March, 2019 (previous year RS.1,297.82 Crore) have been shown in Schedule No 12 - Contingent Liabilities under the head “Claims against the Bank not acknowledged as debt”.

c. Other assets {Schedule 11 (iii)} include RS.3,210.94 Crore (previous year R 2,656.86 Crore) towards disputed Income Tax paid by the Bank / adjusted by the authorities and also include MAT Credit Entitlement of RS.136.89 Crore (previous year RS.136.89). Provision is not considered necessary in respect of aforesaid disputed demands based on several judicial pronouncements / counsels opinions.

ii. Deferred Tax

The Bank has recognized deferred tax assets and liabilities. The breakup of deferred tax assets and liabilities into major items is given below:

* Based on the review and certainity of availability of future taxable income, the Bank has recognized Deferred Tax Assets during the current year of R 2,917 Crores, on account of unabsorbed depreciation and carry forward losses, and an amount of R 675 Crores on account of regulatory provisions for non performing loan assets (NPA).

1.6.9 Accounting Standard - 28 - Impairment of Assets:

The Bank’s assets substantially comprise of financial assets, which are not covered by AS-28 ‘Impairment of Assets’. In the opinion of Bank’s management there is no impairment in the value of its non-financial assets in terms of said Accounting Standard.

1.6.10 Accounting Standard - 29 - Provisions, Contingent Liabilities and Contingent Assets:

The Contingent Liabilities as stated in schedule 12 [clause (I) and (VI)] to the accounts mentioned above are dependent upon the outcome of Court/ arbitration/out of Court settlements, disposal of appeals, and the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No liability is expected in respect of clause (I) and (VI) of the said schedule.

1.7.1 Letter of Comforts

The Bank issues Letter of Comforts (LOCs) on behalf of its various constituents against the credit limits sanctioned to them. RBI vide its circular A.P. (DIR Series) Circular No. 20 dated 13.03.2018, has discontinued the issuance of Letter of Comfort for raising buyer’s credit. Bank has complied with the circular and has discontinued the issuance of Letter of Comfort. 4 LOCs for Rs.9.00 Crore are outstanding as on 31st March 2019, since these pertains to Capital Account transactions, which have not fallen due as on 31.03.2019.

Brief details of LOCs are as under:-

1.7.2 Off Balance Sheet SPVs sponsored (domestic & overseas) - Nil

1.7.3 Credit Default Swaps (CDS): Bank has policy in place for Credit default Swaps. However, no CDS transaction has been under taken by the Bank during the F.Y. 2018-19.

1.7.4 Transfer to Depositor Education and Awareness Fund (DEAF)

As complied and certified by the management and replied upon the auditors.

Qualitative Disclosure around LCR

Liquidity Coverage Ratio (LCR) standard has been introduced with the objective that a Bank maintains an adequate level of unencumbered High Quality Liquid Assets (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. 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. Minimum LCR has to be maintained at 100% with effect from January 01, 2019. LCR has been defined as Stock of high quality liquid assets (HQLAs) over Total net cash outflows over the next 30 calendar days. Liquid assets comprise of high quality assets that can be readily sold or used as collateral to obtain funds in a range of stress scenarios. There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets. Level 1 assets are with 0% haircut while Level 2A assets are with a minimuRs.15% haircut and Level 2B Assets, with a minimuRs.50% haircut.

The total net cash outflows is the total expected cash outflows minus total expected cash inflows for the subsequent 30 calendar days. Total expected cash inflows and outflows are calculated by multiplying the outstanding balances of various categories of contractual receivables and types of liabilities and off-balance sheet commitments by the rates at which they are expected to flow in or drawn down.

The main drivers of LCR results and the evolution of the contribution of inputs to the LCR calculation over time:

i. The main drivers of LCR results are High Quality liquid assets (HQLA) in the form of excess SLR over mandatory SLR requirement, MSF eligible SLR securities (presently upto 2% of NDTL) and providing additional liquidity facility in the form of Facility to Avail Liquidity for LCR (FALLCR) upto 13 % of NDTL. RBI vide circular dated September 27, 2018 has increased the FALLCR to 13% of NDTL froRs.11% earlier.

ii. Intra-period changes as well as changes over time: The LCR for the 1st quarter of FY 2018-19 stood at 100.03%. The same increased to 122.14% for the 2nd Quarter of FY 2018-19 due to increase in HQLA. The LCR for the 3rd Quarter further increased to 126.43% and the same decreased to 116.45% for the 4th quarter of FY 2018-19 due to increase in Outflow. The average LCR for the FY 2018-19 stood at 119.13%.

iii. The composition of HQLA : HQLA Mainly consists of Cash including excess CRR, excess SLR, Govt. securities upto 2% of NDTL within the mandatory SLR requirement (MSF), Govt. Securities upto 13% of NDTL within the mandatory SLR requirement (FALLCR), Marketable securities representing claims on or claims guaranteed by sovereigns, Public Sector Entities (PSEs) or multilateral development Banks that are assigned a 20% risk weight, Corporate bonds not issued by a Bank/financial institution/NBFC or any of its affiliated entities, which have been rated AA- or above by an Eligible Credit Rating Agency, Commercial Papers not issued by a Bank/ PD/ financial institution or any of its Affiliated entities etc.

iv. Concentration of funding sources: The Bank has well diversified deposit base, three depositors had aggregate deposits in excess of 1% of the total liabilities of the Bank as on 31st March, 2019. The deposit by the largest depositor contributed 1.82% of the total liabilities and 2.12% of the total deposits as on 31st March, 2019.

v. Derivative exposures and potential collateral calls: - NIL

vi. Currency mismatch in the LCR: - NIL

vii. A description of the degree of centralization of liquidity management and interaction between the group’s units: The Bank is not having any subsidiary. The Liquidity Management is undertaken at Corporate Office by Treasury Department.

viii. Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile. - NIL

1.7.5 Break up of provisions and contingencies shown

under the head expenditure in profit and loss account

1.7.6 During the year 2018-19, no draw drawn from reserves has been made.

1.7.7 Fraud reported and provision made during the year 2018-19

During the year, 319 cases of fraud amounting to R 2410.89 Crore were reported and provision of R 2288.24 Crore (excluding recovery made & amount Written off) has been made.

1.7.8 Inter Office Accounts

Inter Office Accounts between branches, controlling offices and head office are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

1.7.9 Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006

As on date the categorization of MSME vendor is being done manually and not captured in the system. Further the Bank has not received any claim from any MSME vendor for interest on account of delayed payment and/or for the principal during Financial Year 2018-19.

1.7.10 Priority Sector Lending Certificate (PSLC)

The Bank purchased PSLCs amounting to RS.9000/- Crore (Previous Year: RS.11484.50Crore) during the year ended March 31, 2019 under following categories:

The Bank did not sell any PSLC during the year ended March 31, 2019 (Previous Year: Nil)

1.7.11 Previous year figures have been regrouped/ reclassified, wherever necessary, to conform to current year classification. In cases where disclosures have been made for the first time in terms of RBI guidelines / Accounting Standards, previous year’s figures have not been mentioned.

1.7.12 Contingent liabilities

Movement of provisions against contingent liabilities as on 31st March, 2019.

Note: Data shown here is as on 25 March’19 as the MIS was closed earlier due to FY-18-19 closing activities.

1.7.13 As per RBI circular no DBR.NO.BPBC.18/21.04.048/2018-19 dated 01.01.2019 the details of MSME Borrower accounts restructured during quarter ended 31.03.2019 is as under.

1.7.14 As per RBI Circular no RBI/2017-18/186 DBR No. BP.BC.108/21.04.048/2017-18 dated 06.06.2018, MSME borrower get benefitted in assets classification as on 31.03.2019 is as under.

1.7.15 During the year, the Bank has revalued the premises forming part of its fixed assets schedule. These premises are revalued based on the reports of external independent valuers as per premises policy of the Bank approved by the Board. The surplus arising from the revaluation amounting to R 127.99 crores is shown as “Revaluation Reserves” under “Reserves and Surplus”.

1.7.16 Categorization of Investments

In accordance with Reserve Bank of India guidelines and as stated in Accounting Policy No. 4, investment portfolio has been categorized as under:

HTM - Held to Maturity; HFT - Held for Trading; AFS - Available for Sale

1.7.18 In respect of investments under Held to Maturity category, the premium amount amortized during the year is RS.106.35 Crore (previous year RS.135.36 Crore) and the same has been accounted for in Schedule No.13 under the head ‘Interest Earned’ as deduction from ‘Income on Investments’.

1.7.19 The Bank has transferred Securities amounting to RS.6022.38 Crore (Previous year RS.23582.96 Crore), from ‘Held to Maturity’ category to ‘Available for Sale’ category and RS.4703.23 Crore (Previous year RS.3202.99 Crore) from ‘Available for Sale’ to ‘Held to Maturity’ category, during the year which is in accordance with RBI guidelines. The total Mark to Market depreciation on shifting of above mentioned securities was RS.86.05 Crore (previous year RS.35.65 Crore), and the same has been charged to Profit and Loss Account.

1.7.20 Investment towards capital contribution in Joint Venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of “Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited” as on 31.03.2019 is RS.218.50 Crore, which amounts to 23% capital contribution by the bank. Further there is no investment in the current year as well as in previous year. The said investment has been classified under "Held to Maturity’ category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. The Bank has obtained permission of RBI to classify the same under HTM category. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.


Mar 31, 2018

1.1.1 Share Capital/ Share Application Money

The Bank had received Rs.3571.00 Crore on 27th March 2018 from the Government of India as capital infusion for Financial Year 2017-18 in terms of the PSBs Reforms Agenda. The Bank on receipt of all the requisite approvals allotted 28,65,97,110 equity shares to Government of India on Preferential basis on 28th March 2018 at an Issue price of Rs.124.60 (including premium of Rs.114.60) per share aggregating to Rs.3,57,099,99,906.00. (In the previous year the Bank on 6th May, 2016 allotted 2,47,72,914 Crore equity shares of Rs.10 each amounting to Rs.24.77 Crore out of share application money of Rs.300 Crore received on 30th March, 2016 at an issue price of Rs.121.10 per share, including premium of Rs.111.10 per share, to Government of India on preferential basis.) The residual amount of Rs.94.00 is kept in the ‘Share Application Money Pending Allotment’ Account for which the Bank has already written to the Government of India for providing the details of account for remittance.

1.2 Investments

1.2.1 The detail of investments and the Movement of Provisions held towards Depreciation on Investments of the Bank are given below:

* Depreciation amounting to Rs.35.65 Crore was booked on inter-portfolio shifting of various securities during 2017-18 of which Rs.35.51 Crore was booked on shifting from AFS to HTM category and Rs.0.14 Crore was booked on shifting from HTM to AFS category, has been appropriated in Book Value of respective securities.

# RBI vide its circular No DBR. NO. BP. BC.102/21.04.048/2017-18 dated April 2, 2018 grants an option to spread mark to market loss on AFS and HFT investments for quarters ended December 31, 2017 and March 31, 2018, equally over the four quarters commencing with the quarter in which the loss is incurred. Accordingly, the Bank has charged Rs.194.75 Crore related to quarters ended December 31, 2017 and March 31, 2018 and spread MTM losses to tune of Rs.188.89 Crore to the subsequent quarters of ensuing financial year.

Valuation of Non-performing Investments and Investments made in Equity / Preference shares & Bonds / Debentures allotted under restructuring of advances, is being done separately without clubbing MTM gain / loss with standard investment portfolio as per RBI directions. On account of this Bank has to provide depreciation to the extent of Rs.630.80 Crore on Non-performing Investments and Rs.90.72 Crore on Investments allotted under restructuring of advances

** The Bank holds 2950 Number of shares of Master Card Incorporation at Rs.1/- in its books. The shares are listed on New York Stock Exchange (NYSE). As on 31st March, 2018, the market value of these shares is assessed at Rs.3.37 Crore i.e. $175.16 per share with dollar exchange rate at Rs.65.1750 per dollar.

1.2.2 Repo Transactions

The details of securities sold and purchased under Repo and Reverse Repo and Term Repo at Face Value are given below:-(Figures in brackets are for the previous year)

Notes: -

i. 2Total under column 3 should tally with the total of investments included under the following categories in Schedule 8 to the Balance Sheet:

a) Shares

b) Debentures & Bonds

c) Subsidiaries/ Joint Ventures

d) Others

ii. Amounts reported under columns 4, 5, 6 and 7 are not mutually exclusive.

iii. **Out of total investment of Rs.7121.29 Crore in Unrated securities, Rs.6398.27 Crore is in exempted investment consisting of equity shares Rs.1712.21 Crore, venture fund Rs.188.74 Crore, Security Receipt (SR) Rs.56.31 Crore, JV-INS Rs.218.50 Crore, NCDs Rs.505.04 Crore, Preference Shares Rs.139.19 Crore and Special Government Bonds Rs.3578.28 Crore.

Hence, unrated un-exempted investment is Rs.723.02 Crore (Rs.28.82 Crore Preference Share, Rs.687.56 Crore in Bonds & Debenture and Rs.6.64 Crore in Security Receipts)

iv. ***Out of total investment in unlisted securities Rs.7714.51 Crore, Rs.7083.13 includes exempted investments in CD Rs.283.24 Crore, CP Rs.679.14 Crore, NCDs Rs.518.67 Crore, PSU Bonds Rs.631.78 Crore, JV Rs.218.50 Crore, VCF Rs.188.74 Crore, SR Rs.429.73 Crore, special bond 3578.28 and Shares Rs.555.05 Crore. (Rs.434.69 Crore in Equity shares and Rs.139.19 Crore in Pref. Shares).

Hence, investment in unlisted securities is Rs.631.38 Crore (Rs.18.82 Crore Preference Share and Rs.612.56 Crore in Bonds & Debenture)

v. # Others include Investment in Mutual Fund, Venture Fund, Security Receipt, State Govt. Special Bonds.

1.2.3 Categorization of Investments

In accordance with Reserve Bank of India guidelines and as stated in Accounting Policy No. 4, investment portfolio has been categorized as under:

i. In respect of investments under Held to Maturity category, the premium amount amortized during the year is Rs.135.36 Crore (previous year Rs.91.64 Crore) and the same has been accounted for in Schedule No.13 under the head ‘Interest Earned’ as deduction from ‘Income on Investments’

ii. Provision for Depreciation on Investments: (Refer to 18.2.1).

iii. The Bank has transferred Securities amounting to Rs.23,582.96 Crore (Previous year Rs.14,792.18 Crore), from ‘Held to Maturity’ category to ‘Available for Sale’ category and Rs.3202.99 Crore (Previous year 1388.413) from ‘Available for Sale’ to ‘Held to Maturity’ category during the year which is in accordance with RBI guidelines. The total Mark to Market depreciation on shifting of above mentioned securities was Rs.35.65 Crore (previous year Rs.6.04 Crore), and the same has been debited to Profit and Loss Account.

iv. Investment towards capital contribution in Joint Venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of “Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited” as on 31st March, 2018 is Rs.218.50 Crore, which amounts to 23% capital contribution by the Bank. Further there is no investment in the current year as well as in previous year.

The said investment made by the Bank has been classified under ‘Held to Maturity’ category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. The Bank has obtained permission of RBI to classify the same under HTM category. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

1.3 Derivatives

The Bank has not undertaken any Derivative Transactions in Currency Futures during the Financial Year 2017-18. The outstanding position in Currency Future as on 31st March, 2018 is NIL. No transaction is undertaken in Currency Options, Interest Rate Swap/OIS and Credit Default Swap. Transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and total outstanding Forward Contracts as on 31st March, 2018 is Rs.10182.52 Crore (previous year Rs.11944.08 Crore).The Bank has undertaken Interest Rate Futures (IRF) transactions amounting to NIL (Notional Principal) during the current Year (Previous Year Rs.571.84). The outstanding position of IRF as on 31st March, 2018 is NIL.

14 Risk exposure in Derivatives

1.4.1 Qualitative Disclosure

i) Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defined.

ii) The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy specifies the internal control limits like open position limits, deal size limits, stop-loss limits and deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

iii) The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to market (MTM) of positions. The Mid Office is monitored and controlled by Risk Management Department.

iv) The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures.

v) The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

vi) The Bank is Trading Member of National Stock Exchange (NSE). The Bank undertakes proprietary trading in currency futures/ IRF. The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators.

The Provisioning Coverage Ratio (PCR) for the Bank as on 31st March, 2018 is 64.07% (previous year 62.09%), which is calculated taking into account the total technical write offs.

1.5.1 Divergence in Asset Classification and Provisioning for NPAs

As part of Risk Based Supervision (RBS) exercise for the year ended 31st March, 2017 the Reserve Bank of India had pointed out divergence in respect of Bank’s asset classification and provisioning in certain accounts. In conformity with the RBI circular DBR.BP.BC.No. 63/21.04.018/2016-17 dated 18th April, 2017, the below table outlines divergences in asset classification and provisioning :

* Gross NPAs as per item 2 of Annex to DBOD Circular DBOD.BP.BC. No.46/21.04.048/2009-10 dated September 24, 2009 which specified a uniform method to compute Gross Advances, Net Advances, Gross NPAs and Net NPAs.

** Technical or prudential write-off is the amount of non-performing loans which are outstanding in the books of the respective branches, but have been written-off (fully or partially) at Head Office level. (DBOD No. BP.BC.6421.04.048/2009-10 dated 1st December, 2009 on Provisioning Coverage for Advances)

The cumulative provision towards Standard Assets including held by the Bank as at the year-end amounting to Rs.548.96 Crore (previous year Rs.945.78 Crore) is included under the head Other Liabilities and Provisions in Schedule 5 to the Balance Sheet.

1.6.1 Strategic Debt Restructuring (SDR) Scheme

During the year, Bank has invoked Strategic Debt Restructuring (SDR) as per RBI guidelines in the following companies and acquired shares pursuant to invocation of SDR. The details of shares acquired are as under:-

Bank’s net funded exposure for risk category-wise country exposures for each country is less than 1% of Bank’s total assets and as such no provision is required in terms of RBI guidelines.

1.6.2 Unhedged Foreign Currency Exposure

Bank has laid down Board approved policy for managing and monitoring Un-hedged Foreign Currency Exposure of corporate including SMEs. Based on the available data and financial statements and the declaration from borrowers, the Bank has estimated the liability of Rs.22.64 Crore as on 31st March, 2018 on unhedged Foreign Currency Exposure to their constituents in terms of RBI circular DBOD. NO. BP.BC.85/21.06.200/2013-14 dated 15th January 2014 and subsequent clarification vide circular no. DBOD.No. BP.BC.116/21.06.200/2013-14 dated 3rd June 2014. The outstanding provision on Unhedged Exposure as on 31/03/2018 is Rs.22.64 Crore (Previous Year Rs.25.81 Crore).

(As compiled and certified by the management and relied upon by the Auditors).

1.7 Miscellaneous Disclosures

1.7.1 Penalties imposed by RBI under Banking Regulation Act, 1949:

During the year 2017-18, no penalty has been imposed by the RBI on the Bank under the provisions of Section 47(A) (1) (C) read with section 46(4) (i) of the Banking Regulation Act 1949.

1.7.2 In compliance of RBI letter no. DBR.No. BP. 13018/21.04.048 / 2015-16 dated 12.04.2016 and further in compliance with RBI letter No.3992/21.04.048/2016-17 and further to RBI letter No.DBR. BP.7201/21.04.132/2017-18 dated 08.02.2018, Bank has retained provision of Rs.30.27 Crore being 5% of the existing outstanding of Rs.605.43 Crore as on 31st March, 2018 under food credit availed by State Government of Punjab. Also, in compliance of letter dated 25.01.2018 received from SBI (Lead Bank), Bank has retained provision of Rs.10.61 Crore being 15% of the existing outstanding of Rs.70.72 Crore as on 31.03.2018 under food credit availed by State Government of Telengana.

1.7.3 In respect of two premises costing Rs.0.25 Crore (Previous year Rs.0.25 Crore), registration/sale/title deeds in favour of the Bank are pending.

1.8 Disclosure in terms of Accounting Standards issued by the Institute of Chartered Accountants of India.

1.8.1 Accounting Standard AS-5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

There are no material Prior period item.

Due to change in accounting policy in respect of Software not forming part of computer hardware, Software has been amortised systematically over a period of useful life not exceeding three years or the period of validity of software whichever is lower. As a result of which software amounting to Rs.14.56 Crore (Gross) has been shown as Intangible assets instead of charging to Profit and Loss Account and resultant amortisation of Rs.5.78 Crore and the loss for the year is lower by Rs.8.79 Crore.

1.8.2 Accounting Standard AS- 10 - Property Plant and Equipment

Subsequent to the revised Accounting Standards- 10 applicable from April 1, 2017, depreciation of Rs.9.94 Crore for the year on the revalued portion of the fixed assets has been transferred from the Revaluation Reserve to Revenue and Other reserve.

1.8.3 Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (revised 2005) ‘Employee Benefits’. The defined employee contribution/ benefit schemes are as under:-

a) Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

b) Gratuity

The officers who had joined the service or became officer before 1st January, 1983 are entitled for Gratuity under Rules subject to Maximum 20 months.

The Officers who had joined the service on or after 1st January, 1983 are entitled for Gratuity under The Payment of Gratuity Act or Officer’s Service Regulation, as the case may be.

The workmen are entitled for gratuity under The Payment of Gratuity Act or Bipartitle Settlement, as the case may be.

The Officers / Workmen who had rendered continuous services of five years or more are eligible for gratuity on superannuation, resignation and termination. Further, in case of death, the minimum service required is one year. The gratuity fund is managed by separate trust and is funded by the Bank. The liability of the same is recognized on the basis of actuarial valuation.

c) Pension

The Bank has a defined benefit pension scheme. The scheme applies to existing employees of the Bank as on 29.09.1995 who have opted for the pension scheme and to all the employees joining, thereafter but before 01.04.2010. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

d) Sick leave

In compliance to RBI observations, the Bank has provided for Rs.11.87 Crore towards sick leaves during the year ended 31st March, 2018 (Rs.6.45 Crore reversed during the previous year).

e) Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include leave encashment, settlement at home town for employees and dependents and postretirement medical benefit for MD, CEO and ED. These are unfunded and are recognized on the basis of actuarial valuation.

The summarized position of various defined benefits recognized in the profit and loss account and balance sheet along with the funded status are as under:

* RBI vide its letter no. DBR.BP.9730/21.04.018/2017-18 dated 27.04.2018 has given the option to Banks to spread additional liability on account of the enhancement in gratuity limits from Rs.10 Lakh to Rs.20 Lakh from 29.03.2018 under the payment of Gratuity Act, 1972, over four quarters beginning with the quarter ended March 31, 2018. The Bank has exercised the option and has charged Rs.39.42 Crore during the year and deferred Rs.59.95 Crore to subsequent three quarters of the ensuing Financial Year.

Note:

- The estimates of future salary increases considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

- The provision for LFC is at Rs.45.19 Crore (previous year Rs.40.64 Crore) and Staff settlement expenses at Rs.4.27 Crore (previous year Rs.3.33 Crore) which are as per Actuarial Certificate.

- Plan Assets of the Gratuity fund include amount of Rs.35.00 Crore respectively invested by the trust in the Bank’s own Tier 2 Bonds which were issued in earlier years and subscribed by trusts and others on same terms and conditions.

1.8.4 Accounting Standard AS-17 - Segment Reporting:

a) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business Operations

b) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under “Retail Banking”

- Retail Banking: The exposure up to Rs.5.00 Crore to individual , HUF, Partnership firm ,Trust, Private Ltd. Companies, public ltd. Companies, Co-operative societies etc. or to a small business is covered under retail Banking. Small business is one where average of last three years’ annual turnover (Actual for existing & projected for new entities) is less than Rs.50 Crore.

- Other Banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail Banking Segments. Other Banking business is the residual category.

c) The segment revenue is shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate based on the movements in Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

Allocation of Expenses, Assets and Liabilities: Expenses incurred at Head office / Controlling Office directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of outstanding advances in each segment except the provision for sacrifice interest (bifurcated on the basis of outstanding restructured advances) and provision for FITL & Standard restructured standard advances (bifurcated on the basis of outstanding standard restructured advances).The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are

Details pertaining to Related Party Transactions in respect of key managerial personnel of the Bank are as follows:-

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited - Joint Venture. The transactions with joint venture have not been disclosed in view of para 9 of the AS -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises.

Further, in terms of Paragraph 5 of AS 18, transactions in the nature of Banker- Customer relationship have not been disclosed including those with Key Management Personnel.

1.8.5 Accounting Standard AS-19 - Leases:

The Bank has not entered into any transaction of Financial Lease. Operating lease primarily comprises of office premises, which are renewable at the option of the Bank. Lease payment for assets taken on operating lease are recognized as an expense in the Profit and Loss Account.

i. Current Tax

a. In view of taxable losses, the Bank is not required to make any provision for income tax.

b. The disputed tax demands of Rs.1332.65 Crore outstanding as on 31st March, 2018 (previous year Rs.1287.03 Crore) have been shown in Schedule No 12 - Contingent Liabilities under the head “Claims against the Bank not acknowledged as debt”.

c. Other assets {Schedule 11 (ii)} include Rs.2656.86 Crore (previous year Rs.2573.81 Crore) towards disputed Income Tax paid by the Bank / adjusted by the authorities and also include MAT Credit Entitlement of Rs.136.89 Crore (previous year Rs.136.89). Provision is not considered necessary in respect of aforesaid disputed demands based on several judicial pronouncements / counsels opinions.

ii. Deferred Tax

The Bank has recognized deferred tax assets and liabilities. The breakup of deferred tax assets and liabilities into major items is given below:

*During the current year, the Bank has recognized Deferred Tax Asset, on regulatory provision for performing loan assets i.e. provision for Standard assets, provision for S4A and provision for interest sacrifice which was hitherto not considered for Deferred Tax Asset.

1.8.6 Accounting Standard - 28 - Impairment of Assets:

The Bank’s assets substantially comprise of financial assets, which are not covered by AS-28 ‘Impairment of Assets’. In the opinion of Bank’s management there is no impairment in the value of its non-financial assets in terms of said Accounting Standard.

1.8.7 Accounting Standard - 29 - Provisions, Contingent Liabilities and Contingent Assets:

The Contingent Liabilities as stated in schedule 12 [clause (I) and (VI)] to the accounts mentioned above are dependent upon the outcome of Court/ arbitration/out of Court settlements, disposal of appeals, and the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No liability is expected in respect of clause (I) and (VI) of the said schedule.

1.9 Additional Disclosures

1.9.1 Fee/Commission earned in respect of insurance and other third party products

1.9.2 Letter of Comforts

The Bank issues Letter of Comforts (LOCs) on behalf of its various constituents against the credit limits sanctioned to them. In the opinion of Management, no significant financial impact and cumulative financial obligations have been assessed under LOCs issued by the Bank in the past, during the current year and still outstanding. Brief details of LOCs issued by the Bank are as follows:

1.9.3 Off Balance Sheet SPVs sponsored (domestic & overseas) - Nil

1.9.4 Credit Default Swaps (CDS):

Bank has policy in place for Credit default Swaps. However, no CDS transaction has been under taken by the Bank during the FY 2017-18.

As Compiled and certified by the management and relied upon by the Auditors

Qualitative Disclosure around LCR

Liquidity Coverage Ratio (LCR) standard has been introduced with the objective that a Bank maintains an adequate level of unencumbered High Quality Liquid Assets (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. 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. Beginning January 2015, LCR has been mandated at 60% which is to rise in equal steps of 10% to reach 100% by January 2019. Accordingly, the LCR has increased to 90% with effect from January 01, 2018. LCR has been defined as Stock of high quality liquid assets (HQLAs) over Total net cash outflows over the next 30 calendar days. Liquid assets comprise of high quality assets that can be readily sold or used as collateral to obtain funds in a range of stress scenarios. There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets. Level 1 assets are with 0% haircut while Level 2A assets are with a minimum 15% haircut and Level 2B Assets, with a minimum 50% haircut.

The total net cash outflows is the total expected cash outflows minus total expected cash inflows for the subsequent 30 calendar days. Total expected cash inflows and outflows are calculated by multiplying the outstanding balances of various categories of contractual receivables and types of liabilities and off-balance sheet commitments by the rates at which they are expected to flow in or drawn down.

The main drivers of LCR results and the evolution of the contribution of inputs to the LCR’s calculation over time;

i) The main drivers of LCR results are High Quality liquid assets (HQLA) in the form of excess SLR over mandatory SLR requirement, MSF eligible SLR securities (presently upto 2% of NDTL) and providing additional liquidity facility in the form of Facility to Avail Liquidity for LCR (FALLCR) upto 9% of NDTL. RBI vide circular dated July 21, 2016 has increased the FALLCR to 9% of NDTL from 8% earlier.

ii) Intra-period changes as well as changes over time; The LCR for the 1st quarter of FY 2017-18 stood at 100.13%. The same decreased to 99.11% for the 2nd Quarter of FY 2017-18 due to decrease in HQLA. The LCR for the 3rd Quarter further decreased to 98.07% and the same increased to 107.03% for the 4th quarter of FY 2017-18. The increase in LCR in 4th quarter can mainly be attributed to higher HQLA. The average LCR for the FY 2017-18 stood at 100.09%.

iii) The composition of HQLA : HQLA Mainly consists of Cash including excess CRR, excess SLR, Govt. securities upto 2% of NDTL within the mandatory SLR requirement (MSF), Govt. Securities upto 9% of NDTL within the mandatory SLR requirement (FALLCR), Marketable securities representing claims on or claims guaranteed by sovereigns, Public Sector Entities (PSEs) or multilateral development Banks that are assigned a 20% risk weight, Corporate bonds not issued by a Bank/financial institution/NBFC or any of its affiliated entities, which have been rated AA- or above by an Eligible Credit Rating Agency, Commercial Papers not issued by a Bank/ PD/financial institution or any of its Affiliated entities etc.

iv) Concentration of funding sources; The Bank has well diversified deposit base, four depositors had aggregate deposits in excess of 1% of the total liabilities of the Bank as on 31st March, 2018. The deposit by the largest depositor contributed 1.99% of the total liabilities and 2.24% of the total deposits as on 31st March, 2018.

v) Derivative exposures and potential collateral calls; - NIL

vi) Currency mismatch in the LCR;- NIL

vii) A description of the degree of centralization of liquidity management and interaction between the group’s units: - The Bank is not having any subsidiary. The Liquidity Management is undertaken at Corporate Office by Treasury Department.

viii) Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile.—NIL

1.9.5 Break up of provisions and contingencies shown under the head expenditure in profit and loss account

1.9.5 During the year, no draw drawn has been made from reserves.

1.9.7 Fraud reported and provision made during the year

During the year, 274 cases of fraud amounting to Rs.656.01 Crore were reported and provision of Rs.648.82 Crore (excluding recovery made) has been made.

1.9.8 Inter Office Accounts

Inter Office Accounts between branches, controlling offices and head office are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

1.9.9 Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006

As per the information available with the Bank, there has been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

1.9.10 Priority Sector Lending Certificate (PSLC)

The Bank purchased PSLCs amounting to Rs.11484.50 Crore (Previous Year: Nil) during the year ended March 31, 2018 under following categories:

The Bank did not sell any PSLC during the year ended March 31, 2018 (Previous Year: Nil)

1.9.11 Sale and Transfers to /from HTM category:

The total value of sales and transfers of securities to /from HTM category during the 1st April 2017 to 31st March 2018 has exceeded 5 % of book value of investments held in HTM category as on 31st March, 2017 (excluding following Transactions).

The 5 per cent threshold referred to above will exclude:

(a) One time transfer of securities to / from HTM category with the approval of Board of Directors permitted to be undertaken by Banks at the beginning of the accounting year.

(b) Sales to the Reserve Bank of India under pre announced OMO auctions

(c) Repurchase of Government Securities by Government of India from Banks

(d) Sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM, in addition to the shifting permitted at the beginning of the accounting year.

Disclosure in terms of extant RBI guidelines (excess of book value over market value for which provision is not made) is as follows:

1.9.12 In terms of RBI Circular DBR.No. BP.BC.101/21.04.048/2017-18 dated 12th February 2018, shares acquired due to conversion of debt to equity during restructuring process are exempted from regulatory ceilings/ restrictions on capital market exposures, investment in Para-Banking activities and intra-group exposure. The Bank is holding investment in 24 such cases with a sum aggregating Rs.1052.02 Crore. The Bank has complied with the provisions of Section 19(2) of the Banking Regulation Act, 1949.

1.9.13 RBI vide its letter no. DBR.BP.9730/21.04.018/2017-18 dated 27.04.2018 has given the option to Banks to spread additional liability on account of the enhancement in gratuity limits from Rs.10 Lakh to Rs.20 Lakh from 29.03.2018 under the payment of Gratuity Act, 1972, over four quarters beginning with the quarter ended March 31, 2018. The Bank has exercised the option and has charged Rs.39.42 Crore during the year and deferred Rs.59.95 Crore to subsequent three quarters of the ensuing Financial Year.

1.9.14 As per RBI directions for initiating Insolvency Process -Provisioning Norms vide l etter No DBR.No.BP:15199/21.04.048/2016-17 dated June 23, 2017 in respect of nine borrower accounts covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank was required to make additional provision. Similarly, as per RBI direction vide letter No DBR.No.BP.1906/21.04.048/2017-18 dated August 28, 2017 in respect of sixteen borrower accounts covered under the process of Insolvency and Bankruptcy Code (IBC), the Bank was required to make additional provision. Further, as per RBI communication DBR.BP.8756/21.04.048/2017-18 dated April 2, 2018 with respect to spreading of provision in accounts covered in 1 & 2 list covered under the provisions of Insolvency and Bankruptcy Code (IBC), the Bank has availed the option of dispensation available and as result the provision of Rs.484.36 Crore has been reduced in such accounts.

1.9.15 In respect of two Gems and Jewelry borrower group, where fraud was declared by some Banks, the Bank has fully provided for the entire funded exposure.

1.9.16 Previous year figures have been regrouped/ reclassified, wherever necessary, to conform to current year classification. In cases where disclosures have been made for the first time in terms of RBI guidelines /Accounting Standards, previous year’s figures have not been mentioned.


Mar 31, 2017

Note:

- The estimated future salary increases considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

- The provision for LFC is at Rs, 40.64 Crore (previous year Rs, 37.38 Crore) and Staff settlement expenses at Rs, 3.33 Crore (previous year Rs, 3.15 Crore) which are as per Actuarial Certificate.

- Plan Assets of the Pension & Gratuity fund include amount of Rs, 13.00 Crore and Rs, 45.20 Crore respectively invested by the trust in the Bank''s own Tier 2 Bonds which were issued in earlier years and subscribed by trusts and others on same terms and conditions.

1 Accounting Standard AS-17 - Segment Reporting:

a) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail Banking

- Other Banking Business Operations

b) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations.

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under “Retail Banking”

- Retail Banking: The exposure up to Rs, 5.00 Crore to individual , HUF, Partnership firm ,Trust, Private Ltd. Companies, Public ltd. Companies , Co-operative societies etc. or to a small business is covered under retail Banking. Small business is one where average of last three years'' annual turnover (Actual for existing & projected for new entities) is less than Rs, 50.00 Crore.

- Other Banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail Banking Segments. Other Banking business is the residual category.

c) The segment revenue is shown after interest on average intersegment funds used in Treasury Operations. The interest has been charged at the rate based on the movements in Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

d) Allocation of Expenses, Assets and Liabilities Expenses incurred at Head office/ Controlling Office directly attributable either to Corporate / Wholesale and Retail Banking Operations or to Treasury Operations segment, are allocated accordingly. Expenses not directly attributable are allocated on the basis of the ratio of outstanding advances in each segment except the provision for sacrifice interest (bifurcated on the basis of outstanding restructured advances) and provision for FITL & Standard restructured standard advances (bifurcated on the basis of outstanding standard restructured advances).The Bank has certain common assets and liabilities, which cannot be attributed to any segment, and the same are treated as unallocated.

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited - Joint Venture. The transactions with joint venture have not been disclosed in view of para 9 of the AS -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises. Further, in terms of Paragraph 5 of AS 18, transactions in the nature of Banker- Customer relationship have not been disclosed including those with Key Management Personnel.

2. Accounting Standard AS-19 - Leases:

The Bank has not entered into any transaction of Financial Lease. Operating lease primarily comprises of office premises, which are renewable at the option of the Bank.

3. Accounting Standard 22 - Accounting for Taxes on Income:

i. Current Tax

a) In view of taxable losses, the Bank is not required to make any provision for income tax. The Bank, based on legal opinion, has written back a sum of Rs, 177.96 Crore being excess provision of Income tax pertaining to the period up to which the appeals have been decided by the Appellate Authorities in favor of the Bank.

b) The disputed tax demands of Rs,1287.03 Crore outstanding as on 31.03.2017 (previous year Rs, 2344.49 Crore) have been shown in Schedule No 12 - Contingent Liabilities under the head “Claims against the Bank not acknowledged as debt”.

c) Other assets {Schedule 11 (ii)} include Rs, 2573.81Crore (previous year Rs, 2145.52 Crore) towards disputed Income Tax paid by the Bank / adjusted by the authorities and also include MAT Credit Entitlement of Rs, 136.89 Crore (previous year Rs, 198.42 Crore) after utilizing Rs, 61.53 Crore by revising Income Tax return for Assessment year 2015-16. Provision is not considered necessary in respect of aforesaid disputed demands based on several judicial pronouncements / counsels opinions.

d) Income Computation and Disclosure Standards (ICDS) as notified u/s 145(2) of the Income Tax Act, 1961 on 29th September, 2016 are applicable for financial year ended on 31st March 2017 and accordingly tax provisions and deferred tax for the financial year 2016-17 have been computed after considering their impact.

ii. Deferred Tax

*In view of applicability of Income Computation and Disclosure Standards (ICDS) w.e.f. AY 2017-18, the Bank has offered interest accrued but not due on investments outstanding on 01st April, 2016 for tax and accordingly, corresponding Deferred Tax Liability has been reversed.

4. Accounting Standard - 28 - Impairment of Assets:

The Bank''s assets substantially comprise of financial assets, which are not covered by AS-28 ''Impairment of Assets''. In the opinion of Bank''s management there is no impairment in the value of its non-financial assets in terms of said Accounting Standard.

5.Accounting Standard - 29 - Provisions, Contingent Liabilities and Contingent Assets:

The Contingent Liabilities as stated in schedule 12 [clause (i) and (vi)] to the accounts mentioned above are dependent upon the outcome of Court/ arbitration/out of Court settlements, disposal of appeals, and the amount being called up, terms of contractual obligations, devolvement and raising of demand by concerned parties, as the case may be. No liability is expected in respect of clause (i) and (vi) of the said schedule.

6. Additional Disclosures

7. Fee/Commission earned in respect of insurance and other third party products :-

8. Off Balance Sheet SPVs sponsored (domestic & overseas) - Nil

9. In terms of RBI Master Circular No. DBR No. BP.BC.6 /21.04.141/2015-16 dated, 1st July 2015, during the current Financial Year, the Bank has withdrawn Rs, 11.54 Crore from Investment Reserve Account having balance of Rs, 11.54 Crore (as on 31st March, 2016) to the extent of provision made during the year towards depreciation in Investment in AFS & HFT categories (net of taxes, and net of transfer to Statutory Reserve as applicable to such excess provision).

10.Credit Default Swaps (CDS): Bank has policy in place for Credit default Swaps. However, no CDS transaction has been undertaken by the Bank during the Financial Year 2016-17.

11. Transfer to Depositor Education and Awareness Fund (DEAF)

Qualitative Disclosure around LCR

Liquidity Coverage Ratio (LCR) standard has been introduced with the objective that a Bank maintains an adequate level of unencumbered High Quality Liquid Assets (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. 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. Beginning January 2015, LCR has been mandated at 60% which is to rise in equal steps of 10% to reach 100% by January 2019. Accordingly, the LCR has increased to 80% with effect from January 01, 2017. LCR has been defined as Stock of high quality liquid assets (HQLAs) over Total net cash outflows over the next 30 calendar days. Liquid assets comprise of high quality assets that can be readily sold or used as collateral to obtain funds in a range of stress scenarios. There are two categories of assets included in the stock of HQLAs, viz. Level 1 and Level 2 assets. Level 1 assets are with 0% haircut while Level 2A assets are with a minimum 15% haircut and Level 2B Assets, with a minimum 50% haircut.

The total net cash outflows is the total expected cash outflows minus total expected cash inflows for the subsequent 30 calendar days. Total expected cash inflows and outflows are calculated by multiplying the outstanding balances of various categories of contractual receivables and types of liabilities and off-balance sheet commitments by the rates at which they are expected to flow in or drawn down.

The main drivers of LCR results and the evolution of the contribution of inputs to the LCR''s calculation over time;

i. The main drivers of LCR results are High Quality liquid assets (HQLA) in the form of excess SLR over mandatory SLR requirement, MSF eligible SLR securities (presently up to 2% of NDTL) and providing additional liquidity facility in the form of Facility to Avail Liquidity for LCR (FALLCR) up to 9% of NDTL. RBI vide circular dated July 21, 2016 has increased the FALLCR to 9% of NDTL from 8% earlier.

ii. Intra-period changes as well as changes over time;

The LCR for the 1st quarter of FY 2016-17 stood at 95.47%. The same increased to 98.49% for the 2nd Quarter of FY 2016-17 due to increase in HQLA. The LCR for the 3rd Quarter further improved to 115.62% and the same remained almost on the same level of 115.32% for the 4th quarter of FY 2016-17. The increase in LCR in 3rd and 4th quarter can mainly be attributed to higher HQLA and favorable changes in LCR guidelines by RBI. The average LCR for the FY 2016-17 stood at 106.05%.

iii. The composition of HQLA :

HQLA Mainly consists of Cash including excess CRR, excess SLR, Govt. securities up to 2% of NDTL within the mandatory SLR requirement (MSF), Govt. Securities up to 9% of NDTL within the mandatory SLR requirement (FALLCR), Marketable securities representing claims on or claims guaranteed by sovereigns, Public Sector Entities (PSEs) or multilateral development Banks that are assigned a 20% risk weight, Corporate bonds not issued by a Bank/ financial institution/NBFC or any of its affiliated entities, which have been rated AA- or above by an Eligible Credit Rating Agency, Commercial Papers not issued by a Bank/ PD/financial institution or any of its Affiliated entities etc.

iv. Concentration of funding sources;

The Bank has well diversified deposit base, only one depositors had aggregate deposits in excess of 1% of the total liabilities of the Bank as on 31st March, 2017. The deposit by the largest depositor contributed 1.03% of the total liabilities and 1.19% of the total deposits as on 31st March, 2017.

v. Derivative exposures and potential collateral calls; - NIL

vi. Currency mismatch in the LCR;- NIL

vii. A description of the degree of centralization of liquidity management and interaction between the group''s units:-

The Bank is not having any subsidiary. The Liquidity Management is undertaken at Corporate Office by Treasury Department.

viii. Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile.—NIL

12. Amalgamation of erstwhile Global Trust Bank Ltd. with Oriental Bank of Commerce:

The erstwhile Global Trust Bank (e-GTB) was amalgamated with the Bank as per the scheme of amalgamation notified by the Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division) “the scheme”. As per the scheme, the business, properties, asset and liabilities of e-GTB stand transferred to the Bank with effect from 14th August, 2004, the prescribed date.

The Bank incorporated gross “Not Readily Realizable” Advances of Rs, 1285.26 Crore ,and provision of Rs,821.16 Crore there against and “Not Readily Realizable” Assets comprising of Income-tax paid amounting to Rs, 41.21 Crore against disputed demands, in the books of the Bank along with assets and liabilities of e-GTB as valued and determined in terms of the Scheme .

The “Not Readily Realizable Assets” as on date of closure of Amalgamation scheme viz 13th August 2016 are Rs, 9.76 Crore (previous year Rs, 9.76 Crore). The outstanding NRRAs are fully provided for by the Bank. The net deficit under the scheme as on 13th August 2016 is Rs, 548.27 Crore after adjusting Rs, 9.76 Crore of NRRAs (Previous Year 549.50 Crore) The Bank has submitted to Reserve Bank of India to close the scheme.

13. Break up of provisions and contingencies shown under the head expenditure in profit and loss account

14. Disclosures in terms of RBI Circular No. DBR. No.B.P.BC.92/21.04.048/2015-16 dated 18.04.2016. The required detail is as under:-

Draw Down from Reserves

Pursuant to RBI Circular No. RBI / 2014-15 / 535 DBR.NO.BP BC.83 /21.04.048 /2014-15 dated 01st April, 2015, there is no draw down from Reserves during the year. However in respect of frauds / suspected frauds pertaining to previous year, an amount of Rs, 31.27 Crore lying in liability has been reversed and debited to Profit & Loss Account during the year.

15. Pursuant to RBI Circular No. DBR.No.BP BC.34/21.04.132/2016-17 dated 10 November, 2016, “Schemes for Stressed Assets-Revisions”, during the year ended 31st March 2017, in respect of Standard Facilities under Strategic Debt Restructuring (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A), the Bank has not recognized unrealized interest of Rs, 138.54 Crore on accrual basis for the year ending 31st March, 2017

16. In compliance with RBI directives, accounts shown under Annex III of Asset Quality Review (AQR) wherein restructuring was failed due to performance issues or non-fulfillment of certain conditions and necessary provision was held in those accounts in terms of RBI directives, have been reviewed as on 31st March 2017 and has now being classified and provision has been made as per the IRAC norms. Incremental provision of Rs, 299.22 Crore which was made in terms of RBI directives have been reversed on 31st March 2017 considering those accounts which remained standard as on 31st March 2017.

17. Pursuant to RBI Circular No. DBR.No.BP BC.34/21.04.132/2016-17 dated 10November, 2016, “Schemes for Stressed Assets-Revisions”, during the year ended 31st March 2017, in respect of Standard Facilities under Strategic Debt Restructuring (SDR) and Scheme for Sustainable Structuring of Stressed Assets (S4A), the Bank has not recognized unrealized interest of Rs, 138.54 Crore on accrual basis for the year ending 31st March 2017.

18. Inter Office Accounts

Inter Office Accounts between branches, controlling offices and head office are being reconciled on an ongoing basis and no material effect is expected on the profit and loss account of the current year.

19. Payment to Micro, Small & Medium Enterprises under the Micro, Small & Medium Enterprises Development Act, 2006

As per the information available with the Bank, there has been no reported cases of delayed payments of the principal amount or interest due thereon to Micro, Small & Medium Enterprises.

20. Previous year figures have been regrouped/ reclassified, wherever necessary, to conform to current year classification. In cases where disclosures have been made for the first time in terms of RBI guidelines / Accounting Standards, previous year''s figures have not been mentioned


Mar 31, 2015

1) In respect of two premises costing Rs.0.26 crores (previous year Rs.3.05 crores for 4 premises), Registration / Execution of documents, in favour of the Bank is pending. Further, sale deeds/title deeds have not yet been executed and registered in respect of 2 properties costing Rs 1.98 crores (previous year Rs.1.98 crore).

2) In the absence of information as to the realizable value of securities in certain advances, the value as per records has been considered.

3) Interest accrued but not due on term deposits and saving deposits has been included under the relevant deposits.

4) PROPOSED DIVIDEND

Proposed Dividend @ 33% on the paid up capital has been provided for.

5) PROVISION FOR TAXATION

A) The disputed income tax demands outstanding as at 31.03.2015 amount to Rs 1543.99 crore (previous year Rs 1588.34 crore) has been shown in Schedule No 12 – under Contingent Liabilities.

Other assets {Schedule 11 (ii)} includes Rs 1712.77 crores (previous year Rs 1481.99 crore) towards disputed Income Tax paid by the bank / adjusted by the authorities. Provision is not considered necessary by bank in respect of above disputed demands based on various judicial decisions/counsel''s opinion on such disputed issue.

B) Provision for Income Tax of Rs.137.70 crore has been made after due consideration of favorable decisions of Appellate authorities / opinion of counsels and is net of reversal of Rs.388.30 crore relating to earlier years. The said reversal of Rs 388.30 crore consists of Rs 173.33 crore being provision for tax made in earlier years considered as no longer required and MAT credit entitlement of Rs 214.97 crore relating to earlier years recognized during the current year.

NOTE: -

(1) * Total under column 3 should tally with the total of investments included under the following categories in Schedule 8 to the Balance Sheet:

a) Shares

b) Debentures and Bonds

c) Subsidiaries/ Joint Ventures

d) Others

(2) Amounts reported under columns 4, 5, 6 and 7 are not mutually exclusive.

(3) ** Out of total investment of Rs. 10844.35 crore in Unrated securities, Rs. 10759.13 crore is in exempted investment consisting of equity shares Rs. 673.52 crores, venture fund of Rs. 239.24 crore, security receipt of Rs. 143.96 crore, JV- INS Rs.218.50 crore, NCDs Rs. 39.62 cr, preference shares Rs. 16.19 crore, investment in PSU bonds Rs. 1326.36 crore, Securities under Rev. repo Rs. 1700.00 crore and RIDF of Rs.6401.74 crore.

Hence unrated investment is Rs. 85.22 crore (Rs. 38.22 crore preference share and Rs. 47.00 crore in Bonds and debenture)

(4) *** Total unlisted includes exempted investments in CD Rs. 2931.91 crore, CP Rs. 61.88 crore, NCDs Rs. 1929.82 crore and JV Rs. 218.50 crore and RIDF of Rs. 6401.74 crore, VCF Rs. 239.24 crore, SR Rs.143.96 crore, Securities under reverse repo Rs.1700.00 crore and Shares Rs. 288.70 crore.( Rs. 272.51 crore in Equity shares and Rs.16.19 crore in Pref. shares)

Hence unlisted investment is Rs. 95.22 crore (Rs. 48.22 crore preference share and Rs. 47.00 crore in Bonds and debenture)

(5) @ Includes RIDF Investment (Rs. 6401.74 crore in current year and Rs. 6833.73 crore in previous year respectively)

(6) Others include Investment in Mutual Fund, Venture Fund, Security Receipt, State Government Special Bonds and Reverse repo.

d) In respect of investments under Held to Maturity category, the premium amount amortized during the year is Rs.71.45 crores (previous year Rs.66.49 crores) and the same has been accounted for in Schedule No.13 under the head ''Interest Earned'' as deduction from ''Income on Investments''

e) Provision for Depreciation on Investments:

Provision for depreciation on investments under ''Available for Sale'' and ''Held for Trading'' categories as on March 31, 2015, is Rs.34.18 crore (previous year Rs.152.76 crore).

f) The Bank has transferred Securities amounting to Rs. 4387.55 crores (Previous year Rs. 10881.12 crores), from ''Held to Maturity'' category to ''Available for Sale'' category, transferred Rs.59.12 crores(Previous year Rs. 689.69) from ''Held for Trade'' category to ''Available for Sale'' category and Rs.736.72 crore (Previous year Nil) from ''Available for Sale'' to ''Held to Maturity'' category during the year which is in accordance with RBI guidelines. The total Mark to Market depreciation on shifting of above mentioned securities was Rs.9.90 crore (previous year Rs. 109.75 crores), and the same has been debited to Profit and Loss Account.

g) Investment towards capital contribution in Joint Venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of "Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited" during the fnancial year 2014-15 is Nil. (previous year investment also Nil). The total outstanding as on 31.03.2015 is Rs. 218.50 crores, which amounts to 23% capital contribution by the bank.

The said investment made by the Bank has been classifed under Rs.Held to Maturity'' category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. We have obtained permission of RBI to classify the same under HTM category. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

h) Unquoted and unrated NCDs created out of restructuring of advances, carrying ballooning rate of interest and staggered redemption schedule, redeemable at premium, have been valued using FIMMDA valuation methodology, as per RBI Guidelines, by taking into account the IRR of the security.

8) DERIVATIVES

The Bank has undertaken Derivative Transactions in Currency Futures. No transaction is undertaken in Currency Options, Interest Rate Swap (OIS) and Credit Default Swap. There is an outstanding position of Rs.95.13 Cr in currency future which is covered in interbank market back to back as on 31- 03-2015. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and outstanding as on date is Rs..19804.26 crores (previous year Rs.34754.68 crores).

c) QUALITATIVE DISCLOSURE:

Operations in the Treasury Department are segregated into three functional areas, i.e. Front office, Mid office and Back office equipped with necessary infrastructure and trained officers, whose responsibilities are well defned.

The Treasury Policy of the Bank clearly lays down the types of fnancial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy specifes the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

The mid office monitors the transactions in the trading books and also measures the fnancial risks for the transactions in the trading book on a daily basis by way of calculating Mark to market (MTM) of positions. The Mid office is monitored and controlled by Risk Management Department. Daily MTM position is reported to the Investment Committee.

The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures.

The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

The Bank is Trading and Clearing Member of two exchanges viz. National Stock Exchange (NSE) and MCX Stock Exchange (MCX-SX).The Bank was undertaking proprietary trading in currency futures. The Bank has set up the necessary infrastructure for Front, Mid and Back office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators. RBI vide its circular RBI/2013-14/649 A.P (DIR Series) Circular No.147 dated 20.06.2014 now allowed AD category-I banks to undertake proprietary trading in the Exchange Traded Currency Derivatives. It has also been permitted to offset the position undertaken in Currency Future market in OTC Market and vice-versa.In order to take the advantage of arbitrage benefit, we have started trading in Currency Future from 18.07.2014.

Treasury Policy has been drawn up in accordance with RBI guidelines

e) UNHEDGED FOREIGN CURRENCY EXPOSURE

Bank has laid down Board approved policy for managing and monitoring Un-hedged Foreign Currency Exposure of corporate including SMEs. Based on the available data and fnancial statements and the declaration from borrowers, the bank has estimated the liability of Rs. 11.13 crores on unhedged Foreign Currency Exposure to their constituents in terms of RBI circular DBOD. NO. BP.BC.85/21.06.200/2013-14 dated 15th January 2014 and subsequent clarifcation vide circular no. DBOD.No. BP.BC.116/21.06.200/2013-14 dated 3rd June 2014. Provision of Rs. 11.13 crores have been made as per RBI guidelines for year ended 31.03.2015.

The incremental capital requirement towards Un-hedged Foreign Currency Exposure of corporate including SMEs Rs.17.47 crore for the year ended 31/03/2015.

(The Movement of Provisions for NPAs includes the effect of foating provision of Rs.48.24 Crore made by the Bank towards NPA portfolio of the Bank as on 31.03.2014 and Rs.24.12 Crore as on 31.03.2015.)

The Provisioning Coverage Ratio (PCR) for the Bank as on 31.03.2015 is 60.59% (previous year 60.15%), which is calculated taking into account the total technical write offs.

* The Bank had sold Financial Assets for a consideration of Rs. 395.22 crore to Asset Reconstruction Companies, in 2013- 14 at an aggregate gain of Rs. 292.73 crore, the difference between aggregate consideration and aggregate value (net of provisions).

As per Risk Assessment Report 2013-14, the Reserve Bank of India (RBI) has observed that only cash component of the sale consideration is eligible to be booked as Profit. Based on observation of RBI, Bank has reduced the Book Value of Security Receipts by Rs.280.43 crore by debiting to Profit and Loss Account during the quarter ended March 2015.

f. UNSECURED ADVANCES:

The advances amounting to Rs.249.67 crores as on 31.03.2015 (previous year Rs.237.29 crores) are secured by way of charge of intangible securities such as rights, licenses, authority etc. In the views of the management, the estimated values of such intangible securities charged to the bank as collateral are at least equal to the outstanding amount.

i. In terms of RBI circular DBOD. BP. BC.80/21.04.018/2010- 11 dated 09.02.2011, the Bank has opted to amortise pension liability with respect to second pension optees for a period of 5 years commencing from FY 2010-11. Accordingly, out of the balance unamortized amount of Rs.170.90 Crore as on 01.04.2014, the bank has amortised the balance amount of Rs.170.90 crore (Rs.42.725 Crore per quarter) during the fnancial year ended 31.03.2015.

j. SPVs sponsored (domestic and overseas) - Nil

k. RIDF deposits placed by the Bank with NABARD/SIDBI/ NHB has been grouped under Schedule 8- Investments in the Balance Sheet at item I (vi)- "Others" amounting to Rs.6401.74 (Previous Year Rs.6833.73 crore) in accordance with extant RBI guidelines. Income on said deposits has been grouped under Schedule 13 Interest Earned at item 13(ii)- " Income on Investment", amounting Rs.354.28 crores (Previous Year Rs.379.08 crores).

l. Investment Reserve Account has been created in the current fnancial year amounting to Rs.53.80 crore where as Rs.5.22 crore, was drawn from it, in the previous fnancial year, in accordance with RBI guidelines.

m. Credit Default Swaps: Bank has policy in place for Credit default Swaps. However, no CDS transaction has been under taken by the Bank during the FY 2014-15.

p. The miscellaneous income shown under schedule 14 includes Rs.149.02 crores (previous year Rs.292.73 crores) towards aggregate gain over net book value on sale of Financial Assets on cash and security basis to Asset Reconstruction Companies. The bank has reduced the book value of Security Receipts by Rs.137.38 crores and Rs.280.43 crore and corresponding provision has been shown as part of provisions and contingencies and exceptional items respectively.

Note- The disclosure requirement of Liquidity Coverage Ratio is applicable from fnancial year 2014-15 only. Accordingly, previous year figures are not applicable.

r. qUALITATIVE DISCLOSURE AROUND LCR

Suffcient qualitative discussion around the LCR to facilitate understanding of the results and data provided are as under:

a. The main drivers of LCR results and the evolution of the contribution of inputs to the LCR''s calculation over time;

The Main drivers of LCR results are High Quality liquid assets (HQLA) in the form of excess SLR over mandatory SLR requirement owing to reduction in the mandatory SLR requirement by RBI to 21.5% and providing additional liquidity facility in the form of Facility to Avail Liquidity for LCR (FALLCR) upto 5% of NDTL.

b. INTRA-PERIOD CHANGES AS WELL AS CHANGES OVER TIME;

In the month of January 2015 LCR was 101.68% and the same improved to 108.55% in the month of February 2015 with increase in the HQLA mainly in the form of increase in Excess SLR. The LCR for the month of March 2015 stood at 96.44% and the average LCR for the quarter ending 31st March 2015 works out to 102.06%.

c. THE COMPOSITION OF HqLA;

HQLA Mainly consists of Cash including excess CRR, excess SLR, Government securities upto 2% of NDTL within the mandatory SLR requirement (MSF), Government Securities upto 5% of NDTL within the mandatory SLR requirement (FALLCR), Marketable securities representing claims on or claims guaranteed by sovereigns, Public Sector Entities (PSEs) or multilateral development banks that are assigned a 20% risk weight, Corporate bonds not issued by a bank/ fnancial institution/NBFC or any of its affliated entities, which have been rated AA- or above by an Eligible Credit Rating Agency, Commercial Papers not issued by a bank/PD/fnancial institution or any of its Affliated entities ETC.

d. CONCENTRATION OF FUNDING SOURCES;

The bank has well diversifed deposit base, only two depositors are maintaining aggregate deposits (1.24% and 1.03% respectively) in excess of 1% of the total liabilities of the bank as on 31.03.2015.

e. DERIVATIVE EXPOSURES AND POTENTIAL COLLATERAL CALLS; - NIL

f. CURRENCY MISMATCH IN THE LCR;- NIL

g. A description of the degree of centralisation of liquidity management and interaction between the group''s units;

The Bank is not having any subsidiary. The Liquidity Management is undertaken at Corporate office by Treasury Department.

h. other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profle.- -NIL

14. DISCLOSURE OF PENALTIES IMPOSED BY RBI UNDER BANKING REGULATION ACT,1949:

During the year, no penalty has been imposed by the RBI on the bank. However, previous year a penalty of Rs.2.00 crore (Rupees Two Crore Only) was imposed on the bank in terms of section 47A(1)(c ) read with section 46(4)(i) of the Banking Regulation Act,1949 for non-compliance of the RBI instructions with respect to KYC norms.

15. DISCLOSURE IN TERMS OF ACCOUNTING STANDARDS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA.

a. Accounting Standard AS-5 – Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

Prior period expenses included in "Other Expenditure" under schedule 16 is Rs.3.26 crore (previous year 3.31 Crores).

b. Accounting Standard AS-6 – Depreciation Accounting Breakup of Total Depreciation for the year for each class of assets

c. Accounting Standard AS-9 – Revenue Recognition:

As per Accounting Policy No. 1(b), certain items of income are recognized on Realization basis on account of statutory requirements or materiality.

d. Accounting Standard AS-15 – Employee benefits:

The Bank is following AS-15 (revised 2005) ''Employee benefits''. The defned employee contribution/ benefit schemes are as under:- I. PROVIDENT FUND

The Bank pays fxed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the Profit and loss account. The obligation of the Bank is limited to such fxed contribution.

II. GRATUITY

The Bank has defned benefit gratuity plans for officers who have joined / became officer before 01/01/1983, Other officers and Workman. Every officer / workman who have rendered continuous services of fve years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

III. PENSION.

The Bank has a defned benefit pension Plan. The plan applies to existing employees of the bank as on 29/09/1995 who have opted for the pension scheme and to all employees joining, thereafter. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

IV. SICK LEAVE

The bank had provided for Rs.67.52 crores towards sick leave up to the previous year ended 31.03.2014. The Sick Leave being non-encashable , the bank has written back Rs.67.52 crores , as provision no longer required and credited to employees cost.

V. OTHER DEFINED RETIREMENT BENEFITS (ODRB)

Other Defned Retirement benefits (ODRB) include settlement at home town for employees and dependents and post retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

The summarized position of various defned benefits recognized in the Profit and loss account and balance sheet along with the funded status are as under:

NOTE:

The estimates of future salary increases considered in actuarial valuation, takes into account of infation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The provision for LFC is at Rs.33.48 crore (previous year Rs.30.70 crore) and Staff settlement expenses at Rs.2.81crore (previous year Rs.2.52 crore) which are as per Actuarial certificate.

Plan Assets of the Pension and Gratuity fund include amounts of Rs.58.00 crore and Rs.59.20 crore respectively invested by the trust in the Bank''s own Bonds/Deposits.

e. PENSION

During the Financial Year 2010-11, the Bank had reopened the pension option for its employees who had not opted for the pension scheme (II Pension option). As a result of exercise of which the bank has incurred a liability of Rs.854.50 Crores in respect of the existing employees.

The Reserve Bank of India has issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits – Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank may amortise the amount of pension over a period of fve years for second pension optees who are existing employees of the Bank. Accordingly, the Bank has charged the following to the Profit and loss account with respect to II pension liability of the existing employees:

f. ACCOUNTING STANDARD AS-17 – SEGMENT REPORTING:

I. The Business Segments, Which is the Primary Segment Include:

Treasury Operations

Corporate / Wholesale Banking

Retail banking

Other banking business operations

II The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

Corporate / Wholesale Banking: Includes all advances to trusts, partnership frms, companies and statutory bodies which are not included under "Retail Banking"

Retail Banking: The exposure up to Rs.5.00 Crores to individual , HUF, Partnership frm ,Trust, Private Ltd. Companies, public ltd. Companies , Co- operative societies etc. or to a small business is covered under retail banking. Small business is one where average of last three years'' annual turnover (Actual for existing and projected for new entities) is less than Rs. 50 crores.

Other banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail banking Segments. Other banking business is the residual category.

III. The segment revenue is shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate based on the movements in Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

k. Accounting Standard – 28 Impairment of Assets:

The bank''s assets substantially comprise of fnancial assets, which are not covered by AS-28 ''Impairment of Assets''. In the opinion of bank''s management there is no impairment in the value of its non fnancial assets in terms of said Accounting Standard.

l. Accounting Standard – 29 on Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities as stated in Schedule 12 [clause (i) and

(vi) ]to the accounts are dependent on the outcome of court cases / disposal of appeals fled before various authorities / out of court settlement and other development if any. No reimbursement is expected in respect of items Nos. (i) and (vi) of said schedule.

(50% of countercyclical provisioning buffer/foating provisions held by bank at the end of December 31, 2014, utilized for making specific provisions for non-performing assets as per RBI circular no. RBI/2014-15/522 DBR.No.BP. BC.79/21.04.048/2014-15 dated March 30, 2015)

16. The Bank has made fnancing to farmers under tie-up arrangements with a sugar mill at one of its branch with outstanding of Rs.97.85 Crore as on 31.03.2015. The Bank has made a provision of Rs.24.46 Crores being 1/4th of the outstanding during the quarter ended 31st March, 2015 and balance provision of Rs.73.39 Crores will be made in the next three quarters in terms of RBI Circular No. RBI/2014-15/535 DBR.NO.BP.BC.83/21.04.048/2014- 15 dated 01.04.2015.

17. Fees/ Remuneration received in respect of Bancassurance business undertaken by the Bank is Rs.17.25 Crores. (Previous year Rs.14.64).

18. Amalgamation of erstwhile Global Trust Bank Ltd. with Oriental Bank of Commerce:

The erstwhile Global Trust Bank Ltd. (eGTB) was amalgamated with the Bank as per the scheme of amalgamation notifed by the Government of India, Ministry of Finance, Dept. of Economic Affairs (Banking Division) "the Scheme". As per the Scheme, the business, properties, assets and liabilities of eGTB stand transferred to the Bank with effect from August 14, 2004, the prescribed date.

The Bank has incorporated gross "Not Readily Realisable" Advances of Rs.1,285.26 crores, a provision of Rs.821.16 crores there against and "Not Readily Realisable" Assets comprising of Income-tax paid amounting to Rs.41.21 crores against disputed demands, in the books of the Bank along with assets and liabilities of eGTB as valued and determined in terms of the Scheme.

"Not Readily Realizable Assets" as on 31.03.15 is Rs.9.76 crores (Advances Rs.0.68 crores, other Assets Rs.9.08 crores), previous year figures Rs.9.76 Crores (Advances Rs.0.68 crores, other Assets Rs.9.08 crores). The outstanding NRRAs are fully provided for by the Bank. Net Defcit under the scheme of amalgamation as on 31.03.15 is Rs.555.42 crores previous year figures Rs 615.31 Crores.

The Bank has decided to maintain memorandum records for ascertaining the ultimate realization against the Not Readily Realizable Assets taken over. In the event of the ultimate realization from the Not Readily Realizable Assets, over and above the value at which they are taken over, exceeding the Excess of liabilities over assets taken over, the surplus after adjustment of expenses, etc. will be distributed to the erstwhile shareholders of eGTB after a period of twelve years or earlier as prescribed under the scheme.

22) Previous year''s figures have been re-grouped/re- arranged/recast wherever considered necessary.


Mar 31, 2014

1. In respect of four premises costing Rs.3.05 crores (previous year Rs.9.14 crores for 6 premises), Registration / Execution of documents, in favor of the Bank are yet to be completed. However, adequate steps have been initiated to complete the formalities. Title deeds in respect of 2 properties costing Rs.1.98 crores (previous year Rs.1.98 crore) are yet to be executed and collected from Registrar office.

2. In the absence of information as to the realizable value of securities in certain advances, the value as per records has been considered.

3. Interest accrued but not due on term deposits and saving deposits has been included under the relevant deposits.

4. PROPOSED DIVIDEND

Proposed Dividend @ 76% on the paid up capital has been provided for.

5. PROVISION FOR TAXATION

A) The disputed income tax demands outstanding as at 31.03.2014 amount to Rs.1588.34 crore (previous year Rs.1141.43 crore) has been shown in Schedule No 12 – under Contingent Liabilities.

Other assets {Schedule 11 (ii)} includes Rs.1481.99 crores (previous year Rs.1084.05 crore) towards disputed Income Tax paid by the bank / adjusted by the authorities.

Provision is not considered necessary by bank in respect of above disputed demands based on various judicial decisions/counsel''s opinion on such disputed issued.

B) Provision for Income Tax has been made after due consideration of favorable decisions of Appellate authorities / opinion of counsels and is net of reversal of Rs.91.74 crore being provision made in earlier years considered as no longer required.

Note: -

1. *Total under column 3 should tally with the total of investments included under the following categories in Schedule 8 to the Balance Sheet:

a) Shares b) Debentures & Bonds

c) Subsidiaries/ Joint Ventures d) Others

2. Amounts reported under columns 4, 5, 6 and 7 are not mutually exclusive.

3. ** Out of total investment of Rs.5728.16 crore in Unrated securities, Rs. 5684.50 crore is in exempted investment consisting of equity shares Rs.709.49 crores, mutual fund of Rs.79.40 crores, Rs.2622.93 crore in certificate of Deposit, venture fund of Rs.244.93 crore, security receipt of Rs.123.95 crore, JV-INS Rs.218.50 crore exempted NCDs Rs.39.62 cr, exempted preference shares Rs.14.75 crore, exempted investment in PSU bonds Rs.1630.93 crore.

Hence unrated investment is Rs.43.66 crore (Rs.33.66 crore preference share & Rs.10.00 crore in Bonds & debenture)

4. *** Total unlisted includes CD Rs.2622.93 crore, CP Rs.97.32 crore, exempted investment NCDs Rs.2313.84 crore and JV Rs.218.50 crore and RIDF of Rs.6833.73 crore, VCF Rs.244.94 crore, MF Rs.79.40 crore, SR Rs.123.95 crore and Shares Rs.91.93 crore.

5. @Includes RIDF Investment (Rs.6833.73 crore in current year and Rs.7489.06 crore in previous year respectively)

6. Others include Investment in Mutual Fund, Venture Fund, Security Receipt and Reverse repo.

d. In respect of investments under Held to Maturity category, the premium amount amortized during the year is Rs.66.49 crores (previous year Rs.55.99 crores) and the same has been accounted for in Schedule No.13 under the head ''Interest Earned'' as deduction from ''Income on Investments''

e. Provision for Depreciation on Investments:

Provision for depreciation on investments under ''Available for Sale'' and ''Held for Trading'' categories as on March 31, 2014, is Rs.152.76 crore (previous year Rs.164.54 crore).

f. The Bank has transferred Securities amounting to Rs.10881.12 crores (Previous year Rs.18.30 crores), from ''Held to Maturity'' category to ''Available for Sale'' category, transferred Rs.689.69 crores(Previous year NIL) from ''Held for Trade'' category to ''Available for Sale'' category and transferred NIL (Previous year Rs.4970.51 crore) from ''Available for Sale'' to ''Held to Maturity'' category during the year which is in accordance with RBI guidelines. Apart from above, the bank has transferred SLR securities with book value of Rs.13521.36 crore from ''Available for Sale'' category to ''Held to Maturity'' category in accordance with RBI Circular DBOD.DP.BC.No.41 / 21.04.141 / 2013-14 dated August 23, 2013 on "Investment Portfolio of Banks – Classification, Valuation and Provisioning". The total Mark to Market depreciation on shifting of above mentioned securities was Rs.109.75 crore (previous year Rs.185.74 crores), and the same has been debited to Profit and Loss Account.

g. During the financial year 2013-14 Bank has not invested (previous year Rs.34.50 crores) towards capital contribution in joint venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of "Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited". The total capital outstanding as on 31.03.2014 is Rs.218.50 crores (previous year Rs.218.50 crores), which amounts to 23% capital contribution by the bank.

The said investment made by the Bank has been classified under Rs. Held to Maturity'' category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. We have obtained permission of RBI to classify the same under HTM category. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

h. Unquoted and unrated NCDs created out of restructuring of advances, carrying ballooning rate of interest and staggered redemption schedule, redeemable at premium, have been valued using FIMMDA valuation methodology, as per RBI Guidelines, by taking into account the IRR of the security.

8. DERIVATIVES

The Bank has undertaken proprietary trading in Exchange Traded Currency Future during the year. However, in view of the restrictions imposed by RBI (Vide its circular dated 08/07/2013) to restrict banks from participating in proprietary trading in Exchange Traded Currency Derivatives, bank has discontinued trading in Exchange Traded Currency Future and option. There is no outstanding in respect of currency future as on 31-3-2014. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and outstanding as on date is Rs.34754.68 crores (previous year Rs.49,528.83 crores).

C. Qualitative Disclosure:

Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defend.

The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy clearly specifies the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to market (MTM) of positions. The Mid Office is monitored and controlled by Risk Management Department. Daily MTM position is reported to the Investment Committee.

The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures. The hedged transactions are monitored on a regular basis.

The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

The Bank is Trading & Clearing Member of three exchanges viz. National Stock Exchange (NSE), MCX Stock Exchange (MCX-SX), United Stock Exchange (USE) for currency futures /interest rate futures. The Bank was undertaking proprietary trading in currency futures. However, in view of the restrictions imposed by RBI (Vide its circular dated 08/07/2013) to restrict banks from participating in proprietary trading in Currency Future, bank has discontinued trading in Exchange Traded Currency Future and option. The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulator.

Treasury Policy has been drawn up in accordance with RBI guidelines

The Provisioning Coverage Ratio (PCR) for the Bank as on 31.03.2014 is 60.15% (previous year 63.00%), which is calculated taking into account the total technical write offs.

Provision includes provisions made above the prescribed rates wherever necessary.

f) Provision outstanding in respect of sale of Non- Performing Assets to the Asset Reconstruction Companies:

In terms of RBI guidelines issued vide circular dated 26/02/2014 and recommendation for earlier implementation of the framework/guidelines, provision outstanding on sale of non-performing assets to ARCIL has been reversed to the extent of Rs.21.73 crore, and after utilizing to meet the shortfall/loss on account of sale of non performing assets to ARCs, taken to P&L account during the year.

The cumulative provision towards Standard Assets held by the Bank as at the yearend amounting to Rs.852.80 crores (previous year Rs.693.80 crores) is included under Other Liabilities and Provisions in Schedule 5 to the Balance Sheet.

f. Unsecured Advances:

The advances amounting to Rs.237.29 crores as on 31.03.2014 (previous year Rs.630.01 crores) are secured by way of charge of intangible securities such as rights, licenses, authority etc. In the views of the management, the estimated values of such intangible securities charged to the bank as collateral are at least equal to the outstanding amount.

9. ADDITIONAL DISCLOSURE:

h. In terms of RBI circular DBOD. BP. BC.80/21.04.018/ 2010-11 dated 09.02.2011, the Bank has opted to amortized pension liability with respect to second pension opted for a period of 5 years commencing from FY 2010-11. Accordingly, out of the balance unamortized amount of Rs.341.80 crore as on 01.04.2013, the Bank has amortised Rs.170.90 crore being amount for the year ended 31.03.2014.

i. SPVs sponsored (domestic & overseas) - Nil

j. RIDF deposits placed by the Bank with NABARD/ SIDBI/NHB has been grouped under Schedule 8- Investments in the Balance Sheet at item I (vi)- "Others" amounting to Rs.6833.73 crore (Previous Year Rs. 7489.06 crore) in accordance with extant RBI guidelines. Income on said deposits has been grouped under Schedule 13 Interest Earned at item 13(ii)- " Income on Investment", amounting Rs.379.08 crores (Previous Year Rs.391.04 crores).

k. Investment Reserve Account that had been created in the previous year(2012-13) amounting to Rs.5.22 crore, has been drawn in the current financial year, in accordance with RBI guidelines.

l. Credit Default Swaps: Bank has policy in place for Credit default Swaps. However, no CDS transaction has been under taken by the Bank during the FY 2013-14.

10. Disclosure of Penalties imposed by RBI under Banking Regulation Act,1949:

During the year, the RBI imposed the penalty of Rs.2.00 crore (Rupees Two Crore Only) on the bank in terms of section 47A(1)(c) read with section 46(4)(i) of the Banking Regulation Act,1949 for non-compliance of the RBI instructions with respect to KYC norms. The penalty amount was paid by the bank to RBI on 24.07.2013.

11. DISCLOSURE IN TERMS OF ACCOUNTING STANDARDS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA.

a) Accounting Standard AS-5 – Net Proft or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

Prior period expenses included in "Other Expenditure" under schedule 16 is Rs.3.31 crore (previous year Rs.7.88 Crores).

b) Accounting Standard AS-6 – Depreciation Accounting

Breakup of Total Depreciation for the year for each class of assets

c) Accounting Standard AS-9 – Revenue Recognition:

As per Accounting Policy No. 1(b), certain items of income are recognized on Realization basis on account of statutory requirements or materiality.

d) Accounting Standard AS-15 – Employee Benefits:

The Bank is following AS-15 (revised 2005) ''Employee Benefits''. The defend employee contribution/ benefit schemes are as under:- I. Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

II. Gratuity

The Bank has defend benefit gratuity plans for Officers who have joined / became Officer before 01/01/1983, Other Officers and Workman. Every Officer / workman who have rendered continuous services of five years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

III. Pension.

The Bank has a defend benefit pension Plan. The plan applies to existing employees of the bank as on 29/09/1995 who have opted for the pension scheme and to all employees joining, thereafter. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

IV. Other Defend Retirement Benefits (ODRB)

Other Defend Retirement Benefits (ODRB) include settlement at home town for employees and dependents and post retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

NOTE:

- The estimates of future salary increases considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

- The provision for LFC is at Rs.30.70 crore (previous year Rs.28.35 crore) and Staff settlement expenses at Rs.2.52crore (previous year Rs.2.55 crore) which are as per Actuarial Certificate.

- Plan Assets of the Pension & Gratuity fund include amounts of Rs.58.00 crore and Rs.59.20 crore respectively invested by the trust in the Bank''s own Bonds/ Deposits.

e) PENSION

During the Financial Year 2010-11, the Bank had reopened the pension option for its employees who had not opted for the pension scheme (II Pension option). As a result of exercise of which the bank has incurred a liability of Rs.854.50 Crores in respect of the existing employees.

The Reserve Bank of India has issued a circular no. DBOD.BPBC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank may amortise the amount of pension over a period of five years for second pension opted who are existing employees of the Bank. Accordingly, the Bank has charged the following to the profit and

f) Accounting Standard AS-17 - Segment Reporting:

i) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail banking

- Other banking business operations

ii) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership forms, companies and statutory bodies which are not included under "Retail Banking"

- Retail Banking: The exposure up to Rs.5.00 Crores to individual , HUF, Partnership form ,Trust, Private Ltd. Companies, public ltd. Companies , Co-operative societies etc. or to a small business is covered under retail banking. Small business is one where average of last three years'' annual turnover (Actual for existing & projected for new entities) is less than Rs.50 crores.

- Other banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail banking Segments. Other banking business is the residual category.

iii) The segment revenue is shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate based on the movements in Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

h) Accounting Standard AS-19 – Leases:

The Bank has not entered into any transaction of Financial Lease, Operating lease primarily comprises of office premises, which are renewable at the option of the bank.

There are no potential equity shares (convertible bonds) outstanding and as such the Diluted Earnings per Share is same as Basic Earnings per share.

k) Accounting Standard – 28 Impairment of Assets:

The bank''s assets substantially comprise of financial assets, which are not covered by AS-28 ''Impairment of Assets''. In the opinion of bank''s management there is no impairment in the value of its non financial assets in terms of said Accounting Standard.

l) Accounting Standard – 29 on Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities as stated in Schedule 12 [clause (i) and (vi)] to the accounts are dependent on the outcome of court cases / disposal of appeals fled before various authorities / out of court settlement and other development if any. No reimbursement is expected in respect of items Nos. (i) and (vi) of said schedule.

Surreptitious Transfer of Funds from Our Malwani, Mumbai Branch:

M/s Jawahar Lal Nehru Port Trust (JNPT) had placed funds aggregating Rs.180 crore with the Bank initially for the purpose of term deposit in two tranches in February 2014. These funds were surreptitiously transferred out of the Bank upon instructions of the same signatory/ constituent. Later on M/s JNPT complained about non-receipt of Term Deposit Receipt to which the Bank has replied that the funds have been transferred on their instructions only. M/s JNPT has fled a case with Central Bureau of Investigation and the matter is under investigation. Out of the above, Rs.110.12 crore lying with other banks has been seized under instructions of CBI, Rs.64.31 crore is untraced as on date and the balance Rs.5.57 crore which was lying with us has been remitted back to M/s JNPT. In the light of the above, the Bank treats the above as a Contingent Liability – Claim against the Bank not acknowledged as debt and, therefore, no provision has been considered necessary.

12. Fees/ Remuneration received in respect of Bancassurance business undertaken by the Bank is Rs.14.64 Crores. (Previous year Rs.19.59).

13. Amalgamation of erstwhile Global Trust Bank Ltd. with Oriental Bank of Commerce:

The erstwhile Global Trust Bank Ltd. (eGTB) was amalgamated with the Bank as per the scheme of amalgamation notifed by the Government of India, Ministry of Finance, Dept. of Economic Affairs (Banking Division) "the Scheme". As per the Scheme, the business, properties, assets and liabilities of eGTB stand transferred to the Bank with effect from August 14, 2004, the prescribed date.

The Bank has incorporated gross "Not Readily Realisable" Advances of Rs.1,285.26 crores, a provision of Rs.821.16 crores there against and "Not Readily Realisable" Assets comprising of Income-tax paid amounting to Rs 41.21 crores against disputed demands, in the books of the Bank along with assets and liabilities of eGTB as valued and determined in terms of the Scheme.

"Not Readily Realizable Assets" as on 31.03.14 is Rs.9.76 crores (Advances Rs.0.68 crores, other Assets Rs.9.08 crores), previous year fgures Rs.9.92 Crores (Advances Rs.0.84 crores, other Assets Rs.9.08 crores).

The outstanding NRRAs are fully provided for by the Bank. Net Deficit under the scheme of amalgamation as on 31.03.14 is Rs.615.31 crores previous year figures Rs.644.60 Crores

The Bank has decided to maintain memorandum records for ascertaining the ultimate realization against the Not Readily Realizable Assets taken over. In the event of the ultimate realization from the Not Readily Realizable Assets, over and above the value at which they are taken over, exceeding the Excess of liabilities over assets taken over, the surplus after adjustment of expenses, etc. will be distributed to the erstwhile shareholders of eGTB after a period of twelve years or earlier as prescribed under the scheme.

14. Disclosure of Letter of Comforts

The Bank issues Letter of Comforts (LOCs) on behalf of its various constituents against the credit limits sanctioned to them. In the opinion of Management, no significant financial impact and cumulative financial obligations have been assessed under LOCs issued by the Bank in the past, during the current year and still outstanding. Brief details of LOCs issued by the Bank are as follows:

15. Previous year''s figures have been re-grouped/re- arranged/recast wherever considered necessary.


Mar 31, 2013

1. In respect of certain premises costing Rs. 9.14 crores (previous year Rs. 10.91 crores), Registration / Execution of documents, in favour of the Bank are yet to be completed. However, adequate steps have been initiated to complete the formalities. Title deeds in respect of 2 properties costing Rs. 1.98 crores (previous year Rs.2.10 crore) are yet to be executed and collected from Registrar office.

2. In the absence of information as to the realizable value of securities in certain advances, the value as per records has been considered.

3. Interest accrued but not due on term deposits and saving has been included under the relevant deposits.

4. PROPOSED DIVIDEND

Proposed Dividend @ 92% on the paid up capital has been provided for.

5. PROVISION FOR TAXATION

A. The provision for Income tax is made as per the provisions of Income Tax Act, 1961. The provision for current Income Tax for the year ended March 31, 2013 is Rs.418.00 crore (previous year Rs.389.67 crore) has been made considering applicable enactments, judicial pronouncements and legal opinions.

B. The bank during the year filed additional grounds for claims before the Appellate authorities based on the judicial pronouncement for the financial year 2005-06 to 2008-09. The appellate authorities admitted the claim and adjudicated in favour of the bank for the FY 2005-06. In view of this favourable pronouncement, the bank has written-back during the current year excess provision of Rs. 180.78 crores for all the above years.

C. The claims against the bank in respect of disputed tax liabilities for various assessment years has increased to Rs.1141.43 crore (previous year Rs.389.59 Crore) which has not been provided for since the bank believes that these demands are largely unsustainable and will eventually be set aside. However, payments made against these demands are included in Schedule 11 under "Other Assets".

Claims for disputed tax increased during the year mainly due to the following :

a. During the year, the Income Tax Department re-opened the bank''s case for the Financial Year 2004-05 and made additional demand of Rs 259.31 crore. The bank filed writ petition before Hon''ble High court and obtained stay of demand.

b. Income Tax Department passed order for assessment for the financial year 2009-10 raising demand of Rs 283.84 crore which in the bank''s opinion is unsustainable and Bank has filed appeal before Appellate authorities.

Note: -

1. *Total under column 3 should tally with the total of investment included under the following categories in Schedule 8 to the Balance Sheet:

a. Shares

b. Debentures & Bonds

c. Subsidiaries/Joint Ventures

d. Others

2. Amounts reported under columns 4, 5, 6 and 7 are not mutually exclusive.

3. * *Out of total investment of Rs. 3599.68 crore in Unrated securities, Rs.3525.75 crore is in exempted investment consisting of equity shares Rs. 725.95 crores, equity oriented mutual fund of Rs. 35.00 crores, Rs. 2255.69 crore in Certificate of Deposit, Venture Fund of Rs. 220.26 crore, Security Receipt of Rs. 30.72 crore, JV- INS Rs.218.50 crore, Exempted NCDs Rs. 39.63 crore, hence unrated investment is Rs. 73.93 crore (Rs. 48.93 crore Preference share & Rs. 25.00 crore in Bonds & Debentures)

4. ***Total unlisted includes CD Rs. 2255.69 crore, CP Rs.24.27 crore, exempted investment (NCDs of Quadrant Televentures Ltd.) Rs. 39.63 crore and JV Rs. 218.50 crore and RIDF of Rs. 7489.06 crore.

5. @ Includes RIDF Investment (Rs. 7489.06 crore in current year and Rs. 7964.05 crore in previous year respectively)

6. Others include Investment in Mutual Fund, Venture Fund, Security Receipt and Reverse Repo

d. In respect of investments under Held to Maturity category, the premium amount amortized during the year is Rs. 55.99 crores (previous year Rs. 67.66 crores) and the same has been accounted for in Schedule No.13 under the head ''Interest Earned'' as deduction from ''Income on Investments''.

e. Provision for Depreciation on Investments:

Provision for depreciation on investments under ''Available for Sale'' and ''Held for Trading'' categories as on March 31, 2013, is Rs. 164.54 crore (previous year Rs. 358.89 crore).

f. The Bank has transferred Securities amounting to Rs. 4970.51 crore (previous year NIL), from ''Available for Sale'' category to ''Held to Maturity'' category and transferred Rs. 18.30 crores from ''Held to Maturity'' category to'' Available for Sale'' category (previous year Rs. 2263.84 crores) during the year which is in accordance with the RBI guidelines. The Mark to Market depreciation on shifting of above mentioned securities was Rs. 185.74 crores (previous year Rs. 4.53 crores) and the same has been debited to Profit and Loss Account. Bank has not transferred any security (previous year Rs. 0.85 crores by booking depreciation of Rs. 0.20 crore) from ''Held for Trading'' to ''Available for Sale'' category.

g. During the financial year 2012-13 Bank has invested Rs. 34.50 crores (previous year Rs. 23.00 crores) towards capital contribution in Joint Venture company for Life Insurance Business with Canara Bank and HSBC under the name and style of "Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited". The total capital outstanding as on 31.03.2013 is Rs. 218.50 crores (previous year Rs. 184.00 crores), which amounts to 23% capital contribution by the bank.

The said investment made by the Bank has been classified under ''Held to Maturity'' category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. We have obtained permission of RBI to classify the same under HTM category. In the opinion of the management, the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

h. Unquoted and unrated NCDs created out of restructuring of advances, carrying ballooning rate of interest and staggered redemption schedule, redeemable at premium, have been valued using FIMMDA valuation methodology, as per RBI Guidelines, by taking into account the IRR of the security.

6. DERIVATIVES

The Bank has undertaken Derivative Transactions viz. Currency Futures, Currency options and Interest Rate Swap (OIS) during the year. There is no outstanding in respect of Interest Rate Swap (OIS) as on 31-03-2013. However, there is an outstanding position in currency future which is covered in interbank market as on 31-03-2013. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and outstanding as on date is Rs. 49,528.83 crores (previous year Rs. 38,138.88 crores).

c. Qualitative Disclosure:

Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defined. The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy clearly specify the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to Market (MTM) of positions. The Mid Office is monitored and controlled by Risk Management Department. Daily MTM position is reported to the Investment Committee.

The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures. The hedged transactions are monitored on a regular basis.

The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

The Bank is Trading & Clearing Member of three exchanges viz. National Stock Exchange (NSE), MCX Stock Exchange (MCX-SX), United Stock Exchange (USE) for currency futures /interest rate futures. The Bank undertakes proprietary trading in currency futures, interest rate futures & interest rate swaps. The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators.

Treasury Policy has been drawn up in accordance with RBI guidelines.

The above figures include the effect of floating provisions of Rs. 72.00 crore made by the bank towards NPA portfolio of the bank as on 31.03.2009 and the same is retained as on 31.03.2013.

Net provision is arrived at after adjusting ECGC/DICGC claims settled.

The Provisioning Coverage Ratio (PCR) for the Bank as on 31.03.2013 is 63.00% (previous year 61.52%), which is calculated taking into account the total technical write offs.

Provision includes provisions made above the prescribed rates wherever necessary.

The cumulative provision towards Standard Assets held by the Bank as at the year end amounting to Rs. 693.80 crores (previous year Rs. 530.80 crores is included under Other Liabilities and Provisions in Schedule 5 to the Balance Sheet.

f. Unsecured Advances:

The advances amounting to Rs.630.01 crores as on 31.03.2013 (previous year Rs. 1667.66 crores) are secured by way of charge of intangible securities such as rights, licenses, authority etc. In the views of the management, the estimated values of such intangible securities charged to the bank as collateral are at least equal to the outstanding amount.

h. SPVs sponsored (domestic & overseas) - Nil.

i. In terms of RBI circular DBOD. BP. BC.80/21.04.018/ 2010-11 dated 09.02.2011, the Bank has opted to amortise pension liability with respect to second pension optees for a period of 5 years commencing from FY 2010-11. Accordingly, out of the balance unamortized amount of Rs 512.70 crore as on 01.04.2012, the Bank has amortised Rs 170.90 crore being amount for the year ended 31.03.2013.

j. RIDF deposits placed by the Bank with NABARD/SIDBI/ NHB has been grouped under Schedule 8- Investments in the Balance Sheet at item I (vi)- "Others" amounting to Rs. 7489.06 crore (Previous Year Rs. 7964.05 crore) in accordance with extant RBI guidelines. Income on said deposits has been grouped under Schedule 13 Interest Earned at item 13(ii)- " Income on Investment", amounting Rs. 391.04 crores (Previous Year Rs. 378.46 crores).

k. As per RBI Guidelines, Investment Reserve Account has been created amounting to Rs. 5.22 crore, in the current Financial Year.

l. Credit Default Swaps: Bank is in the process of formulating a policy on Credit default Swaps. Accordingly, no CDS transaction has been under taken by the Bank during the FY 2012-13.

7. Disclosure of Penalties imposed by RBI under Banking Regulation Act,1949: During the year, No penalty was imposed by RBI under the provisions of Banking Regulation Act,1949 for disclosure.

8. Disclosure in terms of accounting standards issued by the Institute of Chartered Accountants of India.

a. Accounting Standard AS-5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies: Prior period expenses included in "Other Expenditure" under Schedule 16 is Rs.7.88 crore (previous year 2.47 Crores). Prior period income included in "Other Income" under Schedule 14 is Rs. 0.61crore (previous year Rs. 0.49 Crores).

c. Accounting Standard AS-9 - Revenue Recognition:

As per Accounting Policy No. 1(b), certain items of income are recognized on Realization basis on account of statutory requirements or materiality.

d. Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (revised 2005) ''Employee Benefits''. The defined employee contribution/ benefit schemes are as under:-

i. Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

ii. Gratuity

The Bank has defined benefit gratuity plans for Officers who have joined / became Officer before 01/01/1983, Other Officers and Workman. Every Officer / workman who have rendered continuous services of five years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

iii. Pension.

The Bank has a defined benefit pension Plan. The plan applies to existing employees of the bank as on 29/09/1995 who have opted for the pension scheme and to all employees joining, thereafter. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

iv. Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include settlement at home town for employees and dependents and post retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

The summarized position of various defined benefits recognized in the profit and loss account and balance sheet along with the funded status are as under:

NOTE:

- The estimates of future salary increases considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

- During the year provision has been made for LFC at Rs.5.63 crore (previous year Rs. 1.76 Crore) and Staff settlement expenses at Rs. 0.11 crore (previous year 0.67 crore), which are as per Actuarial Certificate. However, outstanding for LFC is at Rs.28.35 crore (previous year Rs.22.73 crore) and Staff settlement expenses at Rs.2.55 crore (previous year Rs. 2.44 crore)

- Plan Assets of the Pension & Gratuity fund include amounts of Rs. 251.48 crore and Rs.64.20 crore respectively invested by the trust in the Bank''s own Bonds/Deposits.

e. PENSION

During the Financial Year 2010-11, the Bank had reopened the pension option for its employees who had not opted for the pension scheme (II Pension option). As a result of exercise of which the bank has incurred a liability of Rs. 854.50 Crores in respect of the existing employees.

The Reserve Bank of India has issued a circular no. DBOD.BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank may amortise the amount of pension over a period of five years for second pension optees who are existing employees of the Bank. Accordingly, the Bank has charged the following to the profit and loss account with respect to II pension liability of the existing employees:

f. Accounting Standard AS-17 - Segment Reporting:

i. The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail banking

- Other banking business operations

ii. The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under "Retail Banking"

- Retail Banking: The exposure up to Rs.5.00 Crores to individual, HUF, Partnership firm,Trust, Private Ltd. Companies, public ltd. Companies, Co-operative societies etc. or to a small business is covered under retail banking. Small business is one where average of last three years'' annual turnover (Actual for existing & projected for new entities) is less than Rs.50 crores.

- Other banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail banking Segments. Other banking business is the residual category.

iii. The segment revenue from treasury operations is shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate of Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

h. Accounting Standard AS-19 - Leases:

The Bank has not entered into any transaction of Financial Lease, Operating lease primarily comprises of office premises, which are renewable at the option of the bank.

There are no potential equity shares (convertible bonds) outstanding and as such the Diluted Earning per Share is same as Basic Earning per share.

j. Accounting Standard AS-22 - Accounting for Taxes on Income:

The bank has recognized deferred tax assets and liabilities. The break up of deferred tax assets and liabilities in to major items is given below:

j. Accounting Standard AS-28 Impairment of Assets:

The bank''s assets substantially comprise of financial assets, which are not covered by AS-28 ''Impairment of Assets''. In the opinion of bank''s management there is no impairment in the value of its non financial assets in terms of said Accounting Standard.

k. Accounting Standard AS-29 on Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities as stated in Schedule 12 [clause (i) and (vi) ]to the accounts are dependent on the outcome of court cases / disposal of appeals filed before various authorities / out of court settlement and other development if any. No reimbursement is expected in respect of items Nos. (i) and (vi) of said schedule.

10. Fees/ Remuneration received in respect of Bancassurance business undertaken by the Bank is Rs.19.59 Crores. (Previous year Rs. 18.14 crore).

11. Amalgamation of erstwhile Global Trust Bank Ltd. with Oriental Bank of Commerce:

The erstwhile Global Trust Bank Ltd. (eGTB) was amalgamated with the Bank as per the scheme of amalgamation notified by the Government of India, Ministry of Finance, Dept. of Economic Affairs (Banking Division) "the Scheme". As per the Scheme, the business, properties, assets and liabilities of eGTB stand transferred to the Bank with effect from August 14, 2004, the prescribed date.

The Bank has incorporated gross "Not Readily Realisable" Advances of Rs. 1,285.26 crores, a provision of Rs. 821.16 crores there against and "Not Readily Realisable" Assets comprising of Income-tax paid amounting to Rs 41.21 crores against disputed demands, in the books of the Bank along with assets and liabilities of eGTB as valued and determined in terms of the Scheme.

"Not Readily Realizable Assets" as on 31.03.13 is Rs 9.92 crores (Advances Rs 0.84 crores, other Assets Rs 9.08 crores), previous year figures Rs 10.11 Crores (Advances Rs 1.03 crores, other Assets Rs 9.08 crores). The outstanding NRRAs are fully provided for by the Bank. Net Deficit under the scheme of amalgamation as on 31.03.13 is Rs 644.60 crores previous year figures Rs 829.59 Crores

The Bank has decided to maintain memorandum records for ascertaining the ultimate realization against the Not Readily Realizable Assets taken over. In the event of the ultimate realization from the Not Readily Realizable Assets, over and above the value at which they are taken over, exceeding the Excess of liabilities over assets taken over, the surplus after adjustment of expenses, etc. will be distributed to the erstwhile shareholders of eGTB after a period of twelve years or earlier as prescribed under the scheme.

12. Disclosure of Letter of Comforts

The Bank issues Letter of Comforts (LOCs) on behalf of its various constituents against the credit limits sanctioned to them. In the opinion of Management, no significant financial impact and cumulative financial obligations have been assessed under LOCs issued by the Bank in the past, during the current year and still outstanding. Brief details of LOCs issued by the Bank are as follows:

13. Previous year''s figures have been re-grouped/ re-arranged/recast wherever considered necessary.


Mar 31, 2012

1) In respect of certain premises costing Rs. 10.91 crores (previous year Rs. 11.71 crores), Registration / Execution of documents, in favour of the Bank are yet to be completed. However, adequate steps have been initiated to complete the formalities. Title deeds in respect of 3 properties costing Rs. 2.10 crores (previous year Rs2.10 crore) are yet to be collected from Registration office.

2) In the absence of information as to the realizable value of securities in certain advances, the value as per records has been considered.

3) Interest accrued but not due on term deposits and saving has been included under the relevant deposits.

4) PROPOSED DIVIDEND

Proposed Dividend @79% on the paid up capital has been provided for. This is subject to approval from Regulatory Authorities in pursuance of section 15 & 17 of Banking Regualation Act 1949.

5) PROVISION FOR TAXATION

The provision for current income tax for the year is made on the basis of Minimum Alternate Tax (MAT) in accordance with section 115JB of the Income tax Act, 1961. Considering the future profitability and taxable position in subsequent years, the Bank has recognized MAT credit entitlement of Rs. 118 crores (Previous Year: Rs. Nil) as an asset by crediting Profit & Loss Account and disclosed under 'Other Assets'. The provision for current income tax for the year ended March 31, 2012 Rs.389.67 crores (previous year Rs. 550.94 crores) has been made considering applicable enactments, judicial pronouncements and legal opinions.

Pending final outcome of the appeals filed by the bank/income tax authorities, disputed tax liabilities (including interest), for various assessment years, amounting to Rs. 389.59 crores (previous year Rs. 203.14 crores) are shown in Schedule 12 under "Contingent Liabilities". The bank believes that these demands are largely unsustainable and will eventually be set aside. Accordingly, no provision has been made against the said disputed liabilities and payments/adjustments to the extent made against these demands have been included in Schedule 11 under "Other Assets" as Income Tax Recoverable.

Note: -

(1) Amounts reported under columns 4, 5, 6 and 7 are not mutually exclusive.

(2) * Out of total investment of Rs. 2601.37 crore in Unrated securities, Rs.2514.51 crore is in exempted investment consisting of equity shares Rs. 548.51 crores, mutual fund of Rs. 37.00 crores, Rs. 1504.60 crore in certificate of Deposit, venture fund of Rs. 206.78 crore, security receipt of Rs. 33.62 crore & JV-INS Rs.184.00 crore, hence unrated investment is Rs. 86.86 crore (Rs. 71.86 crore preference share & Rs. 15.00 crore in Bonds & debenture)

(3)**Total unlisted includes CD Rs. 1504.06 crore, CP Rs.72.92 crore, exempted investment (HFCL Bonds) Rs. 67.03 crore and JV Rs. 184 crore and RIDF of Rs. 7964.05 crore.

(4)@ Includes RIDF Investment (Rs. 7964.05 crore in current year and Rs. 7470.64 crore in previous year respectively)

d) In respect of investments under Held to Maturity category, the premium amount amortized during the year is Rs. 67.66 crores (previous year Rs. 92.97 crores) and the same has been accounted for in Schedule No.13 under the head 'Interest Earned' as deduction from 'Income on Investments'.

e) Provision for Depreciation on Investments:

Provision for depreciation on investments under 'Available for Sale' and 'Held for Trading' categories as on March 31, 2012, is Rs. 358.89 crore (previous year Rs. 78.28 crore).

f) The Bank has not transferred any Securities (previous year Rs. 1720.17 crores), from 'Available for Sale' category to 'Held to Maturity' category and transferred Rs. 2263.84 crores from 'Held to Maturity' category to' Available for Sale' category (previous year Rs. 962.34 crores) during the year which is in accordance with the RBI guidelines. The Mark to Market depreciation on shifting of above mentioned securities was Rs. 4.53 crores (previous year Rs. 64.05 crores), and the same has been debited to Profit and Loss Account. Bank also transferred securities amounting to Rs. 0.85 crores (previous year Rs. 0.95 crores) from 'Held for Trading' to 'Available for Sale' category by booking depreciation of Rs. 0.20 crores (previous year Rs. 0.16 crores).

g) During the financial year 2011-12 Bank has invested Rs. 23.00 crores (previous year Rs. 46.00 crores) towards capital contribution in joint venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of "Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited". The total capital outstanding as on 31.03.2012 is Rs. 184.00 crores (previous year Rs. 161.00 crores), which amounts to 23% capital contribution by the bank.

The said investment made by the Bank has been classified under 'Held to Maturity' category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

6) DERIVATIVES

The Bank has undertaken Derivative Transactions viz. Interest Rate Future, Currency Futures, Currency options and Interest Rate Swap (OIS) during the year. There is no outstanding in respect of Interest Rate Future and Interest Rate Swap (OIS) as on 31-3-2012. However, there is an outstanding position in currency future which is covered in interbank market as on 31-3-2012. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and outstanding as on date is Rs. 38,138.88 crores (previous year Rs. 31,603.66 crores).

c) Qualitative disclosure:

Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defined.

The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy clearly specify the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to market (MTM) of positions. Daily MTM position is reported to the Investment Committee.

The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures. The hedged transactions are monitored on a regular basis.

The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are market to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

The Bank is Trading & Clearing Member of three exchanges viz. National Stock Exchange (NSE), MCX-SX Stock Exchange (MCX-SX), United Stock Exchange (USE) for currency futures /interest rate futures. The Bank undertakes proprietary trading in currency futures, interest rate futures & interest rate swaps. The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators.

Treasury Policy has been drawn up in accordance with RBI guidelines.

The above figures include the effect of floating provisions of Rs. 72.00 crore made by the bank towards NPA portfolio of the Bank as on 31.03.2009 and the same is retained as on 31.03.2012.

Net provision is arrived at after adjusting ECGC/DICGC claims setteled.

The Provisioning Coverage Ratio (PCR) for the Bank as on 31.03.2012 is 61.52% (previous year 76.79%), which is calculated taking into account the total technical write offs .

Provision includes provisions made above the prescribed rates where ever necessary.

The cumulative provision towards Standard Assets held by the Bank as at the year end amounting to Rs.530.80 crores (previous year Rs. 372.80 croresj is included under Other Liabilities And Provisions in Schedule 5 to the Balance Sheet.

f) Unsecured Advances: The advances amounting to Rs.1667.66 Crores as on 31.03.2012 (previous year Rs.1976.66 crores) are secured by way of charge of intangible securities such as rights, licenses, authority etc. In the views of the management, the estimated values of such intangible securities charged to the bank as collateral are at least equal to the outstanding amount.

h) Off-Balance Sheet SPVs sponsored (domestic & overseas) - Nil

i) In terms of RBI circular DBOD. BP. BC.80/21.04.018/ 2010- 11 dated 09.02.2011, the Bank has opted to amortise pension liability with respect to second pension optees for a period of 5 years commencing from FY 2010-11. Accordingly, out of the balance unamortized amount of Rs 683.60 crore as on 01.04.2011, the Bank has amortised Rs 170.90 crore being amount for the year ended 31.03.2012.

j) RIDF deposits placed by the Bank with NABARD/SIDBI/NHB which were hitherto being grouped under " Deposits with Banks (schedule 7- Balance with banks and Money at call & Short Notice at item (i)(b)) has now been regrouped under Schedule 8- Investments in the Balance Sheet at item I (vi)- "Others" amounting to Rs. 7964.05 crore (Previous Year Rs. 7470.64 crore) in accordance with extant RBI guidelines. Accordingly, income on said deposits which was hitherto being grouped under Schedule 13 Interest Earned at item 13(iii)- "Interest on Balance with RBI & Inter Banks funds", has now been regrouped under Schedule 13 Interest Earned at item 13(ii)- " Income on Investment", amounting Rs. 378.46 crores (Previous Year Rs. 322.93 crores).

7) Disclosure of Penalties imposed by RBI:

During the year a sum of Rs.63,359/- has been imposed on the Bank as penalty by RBI.

8) COMPLIANCE WITH ACCOUNTING STANDARDS (AS) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA.

a) Accounting Standard AS-5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

Prior period expenses included in "Other Expenditure" under schedule 16 is Rs.2.47 crore (previous year 7.14 Crores). Prior period income included in "Other Income" under schedule 14 is Rs.0.49 crore (previous year Rs.3.30 Crores).

b) Accounting Standard AS-9 - Revenue Recognition:

As per Accounting Policy No. 1(b), certain items of income are recognized on cash basis on account of statutory requirements or materiality.

c) Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (revised 2005) 'Employee Benefits'. The defined employee benefit schemes are as under:-

I. Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

II. Gratuity

The Bank has a defined benefit gratuity plans for Officers who have joined / become Officer before 01/01/1983, Other Officers and Workman. Every Officer / workman who have rendered continuous services of five years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

III. Pension.

The Bank has a defined benefit pension Plan. The plan applies to existing employees of the bank as on 29/09/1995 who have opted for the pension scheme and to all employees joining, thereafter. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

IV. Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include settlement at home town for employees and dependents and post retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

The summarized position of various defined benefits recognized in the profit and loss account and balance sheet along with the funded status are as under:

NOTE:

The estimates of future salary increases considered in actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

During the year provision has been made for LFC at Rs.1.43 crore (previous year Rs. 1.17 Crore) and Staff settlement expenses at Rs. 0.13 crore (previous year NIL), which are as per Actuarial Certificate. However, outstanding for LFC is at Rs.22.73 crore (previous year Rs. 20.96 Crore) and Staff settlement expenses at Rs.2.44 crore (previous year Rs. 1.77 crore)

Plan Assets of the Pension & Gratuity fund include amounts of Rs. 591.24 crore and Rs.126.63 crore respectively invested by the trust in the Bank's own Bonds/Deposits.

d) PENSION

During the Financial Year 2010-11, the Bank has reopened the pension option for its employees who had not opted for the pension scheme (II Pension option). As a result of exercise of which the bank has incurred a liability of Rs. 854.50 Crores in respect of the existing employees.

The Reserve Bank of India has issued a circular no. DBOD.BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank may amortise the amount of pension over a period of five years for second pension optees who are existing employees of the Bank. Accordingly, the Bank has charged the following to the profit and loss account with respect to II pension liability of the existing employees:

e) Accounting Standard AS-17 - Segment Reporting:

i) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail banking

- Other banking business operations

ii) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under "Retail Banking"

- Retail Banking: The exposure up to Rs. 5.00 Crores to individual , HUF, Partnership firm ,Trust, Private Ltd. Companies, public ltd. Companies , Co-operative societies etc. or to a small business is covered under retail banking. Small business is one where average of last three years' annual turnover (Actual for existing & projected for new entities) is less than Rs.50 crores.

- Other banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail banking Segments. Other banking business is the residual category.

iii) The segment revenue from treasury operations is shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate of Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

g) Accounting Standard AS-19 - Leases:

The Bank has taken various premises under operating lease with varying lease periods.

There are no potential equity shares (convertible bonds) outstanding and as such the Diluted Earning per Share is same as Basic Earning per share.

i) Accounting Standard 22 -Accounting for Taxes on Income:

The bank has complied with the requirements of AS 22 on "Accounting for Taxes on Income" issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax asset as on 31.03.2012 amounting to Rs 34.00 crores (Previous year Deferred tax asset Rs. 41.00 crores) consists of following:

j) Accounting Standard - 28 Impairment of Assets:

The bank's assets substantially comprise of financial assets, which are not covered by AS-28 'Impairment of Assets'. In the opinion of bank's management there is no impairment in the value of its non financial assets in terms of said Accounting Standard.

k) Accounting Standard - 29 on Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities as stated in Schedule 12 [clause (i) and (vi) ]to the accounts are dependent on the outcome of court cases / disposal of appeals filed before various authorities / out of court settlement and other development if any. No reimbursement is expected in respect of items Nos. (i) and (vi) of said schedule.

9) Fees/ Remuneration received in respect of bancassurance business undertaken by the Bank is Rs.18.14 Crores. (previous year Rs.36.99 Crore)

10) Amalgamation of erstwhile Global Trust Bank Ltd. with Oriental Bank of Commerce:

The erstwhile Global Trust Bank Ltd. (eGTB) was amalgamated with the Bank as per the scheme of amalgamation notified by the Government of India, Ministry of Finance, Dept. of Economic Affairs (Banking Division) "the Scheme". As per the Scheme, the business, properties, assets and liabilities of eGTB stand transferred to the Bank with effect from August 14, 2004, the prescribed date.

The Bank has incorporated gross "Not Readily Realisable" Advances of Rs. 1,285.26 crores, a provision of Rs. 821.16 crores there against and "Not Readily Realisable" Assets comprising of Income-tax paid amounting to Rs 41.21 crores against disputed demands, in the books of the Bank along with assets and liabilities of eGTB as valued and determined in terms of the Scheme.

"Not Readily Realizable Assets" as on 31.03.12 is Rs 10.11 crores (Advances Rs 1.03 crores, other Assets Rs 9.08 crores), previous year figures Rs 16.69 Crores (Advances Rs 7.61 crores, other Assets Rs 9.08 crores). The outstanding NRRAs are fully provided for by the Bank. Net Deficit under the scheme of amalgamation as on 31.03.12 is Rs 829.59 crores previous year figures Rs 858.70 Crores The Bank has decided to maintain memorandum records for ascertaining the ultimate realization against the Not Readily Realizable Assets taken over. In the event of the ultimate realization from the Not Readily Realizable Assets, over and above the value at which they are taken over, exceeding the Excess of liabilities over assets taken over, the surplus after adjustment of expenses, etc. will be distributed to the erstwhile shareholders of eGTB after a period of twelve years or earlier as prescribed under the scheme.

11) Previous year's figures have been re-grouped/re- arranged/recast wherever considered necessary.


Mar 31, 2011

1) Registration / Execution of documents, in favour of the Bank is yet to be completed, in respect of certain premises costing Rs. 11.71 crores (previous year Rs. 12.33 crores) for which adequate steps have been initiated and title deeds of properties costing Rs. 2.10 crores (previous year Rs7.24 crore) is yet to be collected from Registration office.

2) In the absence of information as to the realizable value of securities in certain advances, the value as per records has been considered.

3) Interest accrued but not due on term deposits has been included underthe relevant deposits.

4) PROPOSED DIVIDEND

Proposed Dividend @104% on the paid up capital has been provided for. This is subject to approval from Regulatory Authorities in pursuance of section 15 & 17 of Banking Regualation Act 1949.

5) PROVISION FOR TAXATION

The provision for current income tax for the year ended March 31, 2011 Rs. 550.94 crores (previous year Rs. 537.20 crores) has been made as per the applicable enactments, judicial pronouncements and legal opinions.

Pending final outcome of the appeals filed by the bank/income tax authorities, disputed tax liabilities (including interest), for various assessment years, amounting to Rs. 203.14 crores (previous year Rs. 212.63 crores) are shown in Schedule 12 under "Contingent Liabilities". The bank believes that these demands are largely unsustainable and will eventually be set aside. Accordingly, no provision has been made against the said disputed liabilities and payments/adjustments to the extent made against these demands have been included in Schedule 11 under "Other Assets" as Income Tax Recoverable.

6) Balancing of books, confirmation /reconciliation and clearance of outstanding entries in Suspense, Sundries, Clearing Adjustment, Demand Drafts, Bills for Collection, Accounts with other Banks including NOSTRO accounts, Exchange Houses Accounts and Inter Branch accounts are in progress. Impact, if any, shall be accounted / adjusted on balancing/reconciliation thereof. However, Inter-branch accounts have been reconciled up to the period specified by Reserve Bank of India.

d) In respect of investments under Held to Maturity category; the premium amount amortized during the year is Rs. 92.97 crores (previous year Rs. 83.21 crores) and the same has been accounted for in Schedule No. 13 under the head Interest Earned as deduction from income on investments.

e) Provision for Depreciation on investments:

Provision for depreciation on investments under Available for Sale and Held for Trading categories as on March 31, 2011, is Rs. 78.28 crore (previous year nil).

f) The Bank has transferred Securities aggregating to Rs. 1720.17 crores (previous year Rs. 1271.48 crores), from Available for Sale category to Held to Maturity category and Rs. 962.34 crores from Held to Maturity category to Available for Sale category (previous year 979.59 crores) during the year in accordance with the RBI guidelines. The Mark to Market depreciation on shifting of above mentioned securities was Rs. 64.05 crores (previous year Rs. 137.76 crores), and the same has been debited to Profit and Loss Account.

g) During the financial year 2010-11 Bank has invested Rs. 46.00 crores (previous year Rs. 23.00 crores) towards capital contribution in joint venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of "Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited". The total capital outstanding as on 31.03.2011 is Rs. 161.00 crores (previous year Rs. 115.00 crores), which amounts to 23% capital contribution by the bank.

The said investment made by the Bank has been classified under Held to Maturity category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary. 9) DERIVATIVES

The Bank has undertaken Derivative Transactions viz. Interest Rate Future, Currency Futures and Interest Rate Swap (OIS) during the year. There is no outstanding in respect of Interest Rate Future and Interest Rate Swap (OIS) as on 31-3-2011. However, there is an outstanding position in currency future which is covered in interbank market as on 31-3-2011. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and outstanding as on date is Rs. 31,603.66 crores (previous year Rs26128.96 crores).

c) Qualitative disclosure:

Operations in the Treasury Department are segregated into three functional areas, i.e. Front Office, Mid Office and Back Office equipped with necessary infrastructure and trained Officers, whose responsibilities are well defined.

The Treasury Policy of the Bank clearly lays down the types of financial derivative instruments, scope of usage, approval process. Derivative transactions contain interest rate risk, counterparty risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy clearly specify the internal control limits like open position limits, deal size limits, stop-loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize return on the derivative transactions.

The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily basis by way of calculating Mark to market (MTM) of positions. Daily MTM position is reported to the Investment Committee.

The Bank also has a policy for hedging its balance sheet exposures. The treasury policy of the Bank spells out the approval process for hedging the exposures. The hedged transactions are monitored on a regular basis.

The hedging/trading transactions are recorded separately. The hedge transactions are accounted for on accrual basis. All trading contracts are market to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

The Bank is Trading & Clearing Member of three exchanges viz. National Stock Exchange (NSE), MCX-SX Stock Exchange (MCX-SX), United Stock Exchange (USE) for currency futures . /interest rate futures. The Bank undertakes proprietary trading in currency futures, interest rate futures & interest rate swaps. The Bank has set up the necessary infrastructure for Front, Mid and Back Office operations, daily mark to market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators.

Treasury Policy has been drawn up in accordance with RBI guidelines

*The above figures include the effect of floating provisions of Rs. 72.00 crores, made by the bank towards NPA portfolio of the bank as on 31.3.2009 and the same is retained as on 31.03.2011 also. Net NPA is arrived at after adjusting ECGC/DICGC claims settled and provisions on NPAs.

The Provisioning Coverage Ratio (PCR) for the Bank as on 31.03.2011 is Rs 76.79% (previous year 76.74%), which is calculated taking into account the total technical write offs.

Provision includes provisions made above the prescribed rates where ever necessary.

11) Government of India notified "Agriculture Debt Waiver & Debt Relief Scheme, 2008"(Scheme) for giving debt waiver to marginal & small farmers and relief to other farmers who have availed direct agriculture loans. Out of the total claim lodged for Rs.370.08 crores in respect of Debt Waiver, the

Bank has received Rs.243.39 crores till last year & the balance amount of Rs. 126.69 crores has been received during the current financial year as full and final settlement from the Government of India.

In respect of Debt Relief, the Bank has received a sum of Rs.82.81 crores during the current financial year on account of one time settlement scheme under Debt Relief. A separate claim of Rs. 11.17 Crore in respect of debt relief cases settled during the period 01.01.2010 to 30.06.2010 (including cases settled through grievances redressal mechanism operating from 01.02.2010 to 31.07.2010) under "Additional Final Claims-Debt Relief- Not eligible for interest", duly certified by Central Statutory Auditors has been lodged to Reserve Bank of India on 02.02.2011 which is pending to be received from Government of India.

17) COMPLIANCE WITH ACCOUNTING STANDARDS (AS) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA.

a) Accounting Standard AS-5 - Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies:

Prior period expenses included in "Other Expenditure" under schedule 16 is Rs.7.14 crore(previous year 2.67 Crores). Prior period income included in "Other Income" under schedule 14 is Rs.3.30crore (previous year Rs.0.68 Crores).

b) Accounting Standard AS-9-Revenue Recognition:

As per Accounting Policy No. 1(b), certain items of income are recognized on cash basis on account of statutory requirements or materiality.

c) Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (revised 2005) Employee Benefits. The defined employee benefit schemes are as under:-

I. Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

II. Gratuity

The Bank has a defined benefit gratuity plans for Officers who have joined / become Officer before 01/01/1983, Other Officers and Workman. Every Officer / workman who have rendered continuous services of five years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

III. Pension.

The Bank has a defined benefit pension Plan. The plan applies to existing employees of the bank as on 29/09/1995 who have opted for the pension scheme and to all employees joining, thereafter. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

IV Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include settlement at home town for employees and dependents and post retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

PENSION

During the year, the Bank has reopened the pension option for its employees who had not opted for the pension scheme (II Pension option). As a result of exercise of which by 7888 employees the bank has incurred a liability of Rs. 1005.35 Crores. In terms of the requirements of the Accounting Standard (AS) 15, Employee Benefits, the entire amount of Rs.1005.35 Crores is required to be charged to the Profit and Loss Account. However, the Reserve Bank of India has issued a circular no. DBOD.BP.BC.80/21.04.018/2010-11) on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank may amortise the amount of pension over a period of five years for second pension optees who are existing employees of the Bank and charge the full amount of pension with respect to II Pension optees who have retired/separated from the Bank. Accordingly, the Bank has charged the following to the profit and loss account with respect to II pension liability:

In terms of requirements of the aforesaid RBI circular, the balance amount carried forward i.e Rs. 683.60 crore (Rs. 854.50 crore minus Rs. 170.90 crore ) does not include pension liability for any employees who have retired/separated from the bank. Had such a circular not been issued by the RBI, the profit of the bank would have been lower by Rs. 683.60 Crores pursuant to application of the requirements of AS 15."

Gratuity

During the yearthe limit of gratuity payable to the employees of the bank was enhanced pursuant to the amendment to Payment of Gratuity Act, 1972. As a result the gratuity liability of the bank increased by Rs. 137.56 Crores. The said increased liability has been charged to the profit and loss account in terms of the requirements of the Accounting Standard (AS) 15, Employees Benefits.

d) Accounting Standard AS-17 - Segment Reporting: i) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate/Wholesale Banking

- Retail banking

- Other banking business operations

ii) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under "Retail Banking"

- Retail Banking: The exposure up to Rs. 5.00 Crores to

individual , HUF, Partnership firm .Trust, Private Ltd. Companies, public ltd. Companies , Co-operative societies etc. or to a small business is covered under retail banking. Small business is one where average of last three years annual turnover (Actual for existing & projected for new entities) is less than Rs.50 crores.

- Other banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail banking Segments. Other banking business is the residual category.

iii) The segment revenue from treasury operations is shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate of Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

e) Accounting Standard AS-18 - Related Party disclosures:

i) Details pertaining to Related Party Transactions in respect of key managerial personnel of the Bank are as follows:-

1. Shri. Nagesh Pydah - Chairman & Managing Director (forthe period 01.01.2011 to 31.03.2011).

2. Shri S. C. Sinha - Executive Director.

3. Shri V. Kannan - Executive Director (for the period 01.12.2010to31.03.2011).

4. Shri T. Y. Prabhu- Ex. Chairman & Managing Director (forthe period 01.04.2010 to 31.12.2010).

5. Shri H. Rathnakara Hegde - Ex. Executive Director (for the period 01.04.2010 to 30.11.2010).

6. Canara HSBC

ii) Remuneration paid to Chairman & Managing Director and Executive Directors is Rs.0.17 crores and Rs 0.34 crores respectively (previous year Rs.0.22 crores and Rs 0.31 crores respectively). -

iii) Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited -(Associate)

f) Accounting Standard AS-19-Leases:

The Bank has taken various premises under operating lease with varying lease periods.

h) Accounting Standard 22-Accounting for Taxes on Income:

The bank has complied with the requirements of AS 22 on "Accounting for Taxes on Income" issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax asset as on 31.03.2011 amounting to Rs 41.00 crores (Previous year Deferred tax asset Rs. 24.00 crores) consists of following:

i) Accounting Standard-28 Impairment of Assets:

The banks assets substantially comprise of financial assets, which are not covered by AS-28 Impairment of Assets. In the opinion of banks management there is no impairment in the value of its non financial assets in terms of said Accounting Standard.

j) Accounting Standard - 29 on Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities as stated in Schedule 12 [clause (i) and (vi) ]to the accounts are dependent on the outcome of court cases / disposal of appeals filed before various authorities / out of court settlement and other development if any. No reimbursement is expected in respect of items Nos. (i)and (vi)of said schedule.

18) Fees/ Remuneration received in respect of bancassurance business undertaken by the Bank is Rs.36.99 Crores.(previous year Rs.34.82 Crore)

19) Amalgamation of erstwhile Global Trust Bank Ltd. with Oriental Bank of Commerce:

The erstwhile Global Trust Bank Ltd. (eGTB) was amalgamated with the Bank as per the scheme of amalgamation notified by the Government of India, Ministry of Finance, Dept. of Economic Affairs (Banking Division) "the Scheme". As per the Scheme, the business, properties, assets and liabilities of eGTB stand transferred to the Bank with effect from August 14,2004, the prescribed date. The Bank has incorporated gross "Not Readily Realisable" Advances of Rs. 1,285.26 crores, a provision of Rs. 821.16 crores there against and "Not Readily Realisable" Assets comprising of Income-tax paid amounting to Rs 41.21 crores against disputed demands, in the books of the Bank along with assets and liabilities of eGTB as valued and determined in terms of the Scheme. The Bank has decided to maintain memorandum records for ascertaining the ultimate realization against the Not Readily Realizable Assets taken over. In the event of the ultimate realization from the Not Readily Realizable Assets, over and above the value at which they are taken over, exceeding the Excess of liabilities over assets taken over, the surplus after adjustment of expenses, etc. will be distributed to the erstwhile shareholders of eGTB after a period of twelve years or earlier as prescribed under the scheme.

23) Previous years figures have been re-grouped/re- arranged/recast wherever considered necessary.


Mar 31, 2010

1) Registration / Execution of documents, in favour of the bank is yet to be completed, in respect of certain premises costing Rs. 12.33 crores (previous year Rs. 14.79 crores) for which adequate steps have been initiated and title deeds of properties costing Rs. 7.24 crores are yet to be collected from Registration Authorities.

2) In the absence of information as to the realizable value of securities in certain advances, the value as per records has been considered.

3) Interest accrued but not due on term deposits has been included under the relevant deposits.

4) PROPOSED DIVIDEND

Proposed Dividend for the year ended March 31, 2010 has been accounted for on declaration.

5) PROVISION FOR TAXATION

The provision for current income tax for the year ended March 31, 2010 Rs. 537.20 crores (previous year Rs. 91.03 crores) has been made as per the applicable enactments, judicial pronouncements and legal opinions.

Pending final outcome of the appeals filed by the bank/ income tax authorities, disputed tax liabilities (including interest), for various assessment years, amounting to Rs. 212.63 crores (previous year Rs. 97.53 crores) are shown in Schedule 12 under "Contingent Liabilities". The bank believes that these demands are largely unsustainable and will eventually be set aside. Accordingly, no provision has been made against the said disputed liabilities and payments/adjustments to the extent made against these demands have been included in Schedule 11 under "Other Assets" as Income Tax Recoverable.

6) Balancing of books, confirmation /reconciliation and clearance of outstanding entries in Suspense, Sundries, Clearing Adjustment, Demand Drafts, Bills for Collection, Accounts with other Banks including NOSTRO accounts, Exchange Houses Accounts and Inter Branch accounts are in progress. Impact, if any, shall be accounted / adjusted on balancing/reconciliation thereof. However, Inter-branch accounts have been reconciled up to the period specified by Reserve Bank of India.

d) The amount amortized during the year is Rs. 83.21 crores (previous year Rs. 14.70 crores) and the same has been accounted for in Schedule No.13 under the head Interest Earned as deduction from Income on Investments.

e) Provision for Depreciation on Investments:

Provision for depreciation on investments under Available for Sale category as on March 31,2010, is Rs. Nil (previous year Rs. 169.44 crores).

f) The Bank has transferred SLR Securities aggregating to Rs. 1271.48 crores (previous year Rs. 1958.02 crores), from Available for Sale category to Held to Maturity category and Rs. 979.59 crores from Held to Maturity category to Available for Sale category (previous year Nil) during the year in accordance with the RBI guidelines. The Mark to Market depreciation on shifting of above mentioned securities of Rs. 137.76 crores (previous year Rs. 122.07 crores), has been debited to Profit and Loss Account.

g) During the financial year 2009-10 Bank has invested Rs. 23.00 crores (previous year Rs. 46.00 crores) towards capital contribution in joint venture Company for Life Insurance Business with Canara Bank and HSBC under the name and style of "Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited". The total capital outstanding as on 31.03.2010 is Rs. 115.00 crores (previous year Rs. 92.00 crores), which amounts to 23% capital contribution by the bank.

The said investment made by the Bank has been classified under Held to Maturity category under the head investment in joint ventures, as the intention is to hold as joint venture investment although the holding is less than 25% as required under RBI norms. In the opinion of the management the impact in the value of the said investment on account of initial losses is not permanent in nature and hence no provision is considered necessary.

9) DERIVATIVES

The Bank has undertaken Derivative Transactions viz. Interest Rate Future and Currency Futures during the year. However, there is no outstanding in respect of seid transactions as on 31.03.2010. Also, transactions under Foreign Exchange Forward Contracts have been undertaken on behalf of various clients and outstanding as on date is Rs. 26,128.96 crores.

c) Quantitative disclosure:

i) Risk Management Policy:

Operations in the Treasury Department are- segregated into three functional areas, i.e. Front Office, Mid Office and Back office equipped with necessary infrastructure and trained officers, whose responsibilities are well defined.

The Treasury Policy of the bank clearly lays down the types of financial derivative instruments, scope of usages, approval process. Derivative transactions contain interest rate risk, counter party risk, market risk, currency risk, settlement risk, open position risk and operational risk. Treasury Policy clearly specify the internal control limits like open position limits, deal size limits, stop loss limits, deal initiating authority for trading/hedging in approved instruments to contain the risk and maximize the return on derivative transactions.

The mid office monitors the transactions in the trading books and also measures the financial risks for the transactions in the trading book on a daily book by way of calculating Mark to Market (MTM) positions. Daily MTM position is reported to the Investment Committee.

The Bank also has a policy for hedging its On and Off Balance sheet exposures. The treasury policy of the bank spells out the approval process for hedging the exposures. The hedged transaction are monitored on a regular basis and the notional profit/losses are calculated on MTM basis. Value At Risk (VAR) on these deals are reported to Risk Management and Asset Liability Committee (ALCO) on daily/monthly basis respectively.

The hedged/non-hedged transactions are recorded separately. The hedged transactions are accounted for on accrual basis. All trading contracts are marked to market and resultant gross loss is accounted for ignoring the gain on a prudence basis.

During the year, the bank has become trading and clearing member of two currency future exchanges viz. National Stock Exchange (NSE), MCXSX Stock Exchange (MCX-SX) and the Trading and Clearing member of one interest rate future exchange viz., National Stock Exchange (NSE) as permitted by Reserve Bank of India. The Bank has started proprietary trading in currency futures and interest rate futures. The bank has set up the necessary infrastructure for Front, Mid and Back office operations, daily Mark to Market (MTM) and margin obligations are settled with the exchanges as per guidelines issued by the regulators.

Treasury Policy has been drawn up in accordance with RBI guidelines.

11) Government of India has notified "Agricultural Debt Waiver and Debt Relief Scheme, 2008" (scheme) for giving debt waiver to marginal and small farmers and relief to other farmers who have availed direct agricultural loans. Bank has made full provision for inadmissible interest, expenses and differential amount of eligible claim based on the certification by Statutory Central Auditors in respect of Debt Waiver Scheme. Bank has received Rs. 243.39 Crores as against the certified claim of Rs. 370.08 crores. An amount of Rs. 126.69 Crores is to be received by the bank from Government of India in this regard.

As on 31.03.2010 an amount of Rs. 82.76 Crores is due from Government on account of one time settlement scheme under Agricultural Debt Waiver & Debt relief scheme, 2008 towards relief granted to eligible other farmers. As Government has extended the period of payment of 75% of overdue portion upto 30.06.2010, the bank will lodge final claim after certification by Statutory Central Auditors.

f) Unsecured Advances: The advances amounting to Rs.911.35 Crores as on 31.03.2010 are secured by way of charge of intangible securities such as rights, licenses, authority etc. In the views of the management, the estimated values of such intangible securities charged to the bank as collateral are at least equal to the outstanding amount.

17) Pending determination of final liability on account of Wage revision an ad hoc provision of Rs. 304 Crores (P.Y 150 Crores) has been made for the year ended 31.03.2010.

18) Staff welfare fund of Rs. 15.00 crores has been charged to the profit and loss account for the current year, whereas it was appropriated out of profit and loss account in the previous year.

19) COMPLIANCE WITH ACCOUNTING STANDARDS (AS) ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA.

a) AccountingStandardAS-5-NetProfitorLossforthePeriod, Prior Period Items and Changes in Accounting Policies:

Prior period expenses included in "Other Expenditure" under schedule 16 is Rs 2.67 Crores. Prior period income included in "Other Income" under schedule 14 is Rs 0.68 Crores.

b) Accounting Standard AS-9 - Revenue Recognition:

As per Accounting Policy No. 1(b), certain items of income are recognized on cash basis on account of statutory requirements or materiality.

c) Accounting Standard AS-15 - Employee Benefits:

The Bank is following AS-15 (revised 2005) Employee Benefits. The defined employee benefit schemes are as under:-

I. Provident Fund

The Bank pays fixed contribution to Provident Fund at predetermined rates to a separate Trust, which invests the funds in permitted securities. The contribution to the fund for the period is recognized as expense and is charged to the profit & loss account. The obligation of the Bank is limited to such fixed contribution.

II. Gratuity

The Bank has a defined benefit gratuity plan for Officers who have joined / become Officer before 01/01/1983, Other Officers and Workman. Every Officer / workman who have rendered continuous services of five years or more is eligible for Gratuity, subject to a maximum of 20 months on superannuation, resignation, termination, disablement or on death. The scheme is funded by the bank and is managed by a separate Trust. The liability for the same is recognized on the basis of actuarial valuation.

III. Pension.

The bank has a defined benefit pension Plan. The plan applies to existing employees of the bank as on 29/09/1995 who have opted for the pension scheme and to all employees joining, thereafter. The scheme is managed by a separate Trust and the liability for the same is recognized on the basis of actuarial valuation.

IV) Other Defined Retirement Benefits (ODRB)

Other Defined Retirement Benefits (ODRB) include settlement at home town for employees and dependents and post retirement medical benefit for CMD & ED. These are unfunded and are recognized on the basis of actuarial valuation.

d) Accounting Standard AS-17 - Segment Reporting:

i) The Business Segments, which is the Primary Segment include:

- Treasury Operations

- Corporate / Wholesale Banking

- Retail banking

- Other banking business operations

ii) The Geographical segments are recognized as the Secondary Segment. As the Bank is not carrying on any foreign operations, the only reportable geographical segment is of Domestic operations.

- Treasury Operations: Treasury operations consist of dealing in securities and Money Market Operations

- Corporate / Wholesale Banking: Includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under "Retail Banking"

- Retail Banking: The exposure up to Rs. 5.00 Crores to individual, HUF, Partnership firm, Trust, Private Ltd. Companies, Public Ltd. Companies, Co-operative societies etc. or to a small business is covered under retail banking. Small business is one where average of last three years annual turnover (Actual for existing & projected for new entities) is less than Rs.50 crores.

- Other banking business operations: Includes all other Banking operations not covered under Treasury, Wholesale Banking and Retail banking Segments. Other banking business is the residual category.

iii) The segment revenue from treasury operations are shown after interest on average inter-segment funds used in Treasury Operations. The interest has been charged at the rate of Cost of Funds i.e. percentage of total interest expended to average working funds for the year.

iv) The method of pricing inter-segment transfer has been changed during the year to cost of Funds, which is more reasonable, as compared to Transfer price rate considered during earlier years and as such segment profit in treasury operations are more by Rs.798.59 crores as compared to last year.

e) Accounting Standard AS-18 - Related Party disclosures:

i) Details pertaining to Related Party Transactions in respect of key managerial personnel of the Bank are as follows:-

1. Shri. Alok K. Misra - Chairman & Managing Director (for the period 01.04.2009 to 04.08.2009)

2. Shri T.Y.Prabhu- Chairman & Managing Director (since 27.08.2009)

3. Shri H.Rathnakara Hegde - [Executive Director]

4. Shri S.C. Sinha- [Executive Director]

5. Canara HSBC

ii) Remuneration paid to Chairman & Managing Director and Executive Directors is Rs.0.22 crores and Rs 0.31 crores respectively (previous year Rs. 0.18 crores and Rs. 0.17 crores respectively).

iii) Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited - (Associate)

f) Accounting Standard AS-19 - Leases:

The bank has taken various premises under operating lease with varying lease periods.

i) Accounting Standard - 28 Impairment of Assets:

The banks assets substantially comprise of financial assets, which are not covered by AS-28 Impairment of Assets. In the opinion of banks management there is no impairment in the value of its non financial assets in terms of said Accounting Standard.

j) Accounting Standard - 29 on Provisions, Contingent Liabilities and Contingent Assets:

Contingent Liabilities as stated in Schedule 12 [clause (i) and (vi) ]to the accounts are dependent on the outcome of court cases / disposal of appeals filed before various authorities / out of court settlement and other development if any. No reimbursement is expected in resp ect of items Nos. (i) and (vi) of said schedule.

20) Fees/ Remuneration received in respect of bancassurance business undertaken by the Bank is Rs.34.82 Crores.

21) . Amalgamation of erstwhile Global Trust Bank Ltd. with

Oriental Bank of Commerce:

The erstwhile Global Trust Bank Ltd. (eGTB) was amalgamated with the Bank as per the scheme of amalgamation notified by the Government of India, Ministry of Finance, Dept. of Economic Affairs (Banking Division) "the Scheme". As per the Scheme, the business, properties, assets and liabilities of eGTB stand transferred to the Bank with effect from August 14, 2004, the prescribed date.

The Bank has incorporated gross "Not Readily Realisable" Advances of Rs. 1,285.26 crores, a provision of Rs. 821.16 crores there against and "Not Readily Realisable" Assets comprising of Income-tax paid amounting to Rs 41.21 crores against disputed demands, in the books of the Bank along with assets and liabilities of eGTB as valued and determined in terms of the Scheme. The Bank has decided to maintain memorandum records for ascertaining the ultimate realization against the Not Readily Realizable Assets taken over. In the event of the ultimate realization from the Not Readily Realizable Assets, over and above the value at which they are taken over, exceeding the Excess of liabilities over assets taken over, the surplus after adjustment of expenses, etc. will be distributed to the erstwhile shareholders of eGTB after a period of twelve years or earlier as prescribed under the scheme.

24) Disclosure of Letter of Comforts

The Bank issues Letter of Comforts (LOCs) on behalf of its various constituents against the credit limits sanctioned to them. In the opinion of Management, no significant financial impact and

25) Previous years figures have been re-grouped/re-arranged/ recast wherever considered necessary.

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