Bank of India - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018

Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018


1. The above financial results have been reviewed by the Audit Committee of Board and approved by the Board of Directors at the meeting held on 28th January, 2019. The same have been subjected to limited review by the Statutory Central Auditors of the Bank, in line with the guidelines issued by Reserve Bank of India and as per the requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

2. The above reviewed financial results for the nine months ended 31st December, 2018 have been arrived at on the basis of the same accounting policies as those followed in the preceding financial year ended 31st March, 2018 except for the change in accounting policy in respect of appropriation of recovery in NPA Accounts.

3. The financial results for the nine months ended 31st December, 2018 have been arrived at after considering extant guidelines of Reserve Bank of India (RBI) on Prudential norms for Income Recognition and Asset Classification and Provisioning and providing for other usual and necessary provisions including Employee Benefits.

4. Bank has exercised the regulatory call option and redeemed Additional Tier-1 Bonds amounting Rs.5,500 Crore (Series 1 to 5) on April 21, 2018 and has also exercised the call option to redeem the Upper Tier II Bonds amounting Rs.500 Crore on 16.10.2018.

5. During the quarter the Bank has received Rs.10,086 crore from Government of India towards share application money for subscription to equity shares on preferential basis. The same is treated as CET 1 capital for CRAR purpose in accordance with RBI letter no. DBR.CO.BP.No.6019/21.01.002/2018-19 dated January 21, 2019.

6. RBI vide its circular DBR.No.BP.BC.102/21.04.048/2017-18 dated April 2, 2018 and DBR.No.BP.BC.113/21.04.048/2017-18 dated June 15, 2018 has permitted banks to spread provisioning for mark to market (MTM) losses on investments held in AFS and HFT for the quarters ended March 31, 2018 and June 30, 2018. The losses can be spread over four quarters, commencing from the quarter in which the loss has been incurred. Accordingly, Bank has charged depreciation on investments of Rs.1,042.65 crore related to quarter ended on March 31, 2018 and Rs.140.31 crore related to quarter ended on June 30, 2018 to Profit and Loss for the nine months ended December 31, 2018 and has spread MTM losses to the tune of Rs.41.77 crore to the subsequent quarter (Current Quarter Rs.378.70 crore).

7. In accordance with RBI guidelines, the Bank has shifted the securities from HTM to AFS category amounting to Rs.10,370.03 crore and from AFS to HTM category amounting to Rs.8,835.92 crore during the nine months ended 31st December, 2018 and the resultant depreciation of Rs.537.42 (Current Quarter Rs.NIL) on shifting from AFS to HTM category has been accounted for in the books.

8. RBI vide Circular no. DBR.No.BP.BC.108/21.04.048/2017-18 dated June 6, 2018 permitted banks to continue the exposure to MSME borrowers to be classified as standard assets where the dues between September 1, 2017 and December 31, 2018 are paid not later than 180 days from their respective original due dates. Accordingly, the Bank has retained advances of Rs.1,413.05 crores as 'standard assets' as on December 31, 2018. In accordance with the provisions of the circular, the Bank has not recognised interest income of Rs.52.06 crore and is maintaining a standard asset provision of Rs.70.65 crore as on December 31, 2018 in respect of such borrowers.

9. RBI vide communication DBR.No.BP.BC.9730/21.04.018/2017-18 dated April 27, 2018 has given the option to Banks to spread additional liability on account of enhancement in gratuity limits over four quarters commencing with quarter ended March 31, 2018. The Bank had exercised the option in March 2018 and deferred Rs.326.34 crore to subsequent Quarters. The amortised amount has been charged to P&L fully during the nine months ended 31st December, 2018 (Current Quarter Rs.108.78 crore).

10. During the nine months ended, bank has changed the method of appropriation of recovery in NPA accounts, where recoveries are now being adjusted against charges, Unrealised Interest (URI), Uncharged Interest (UCI) and lastly against principal as against the earlier method of adjusting recoveries against charges, URI, principal and lastly UCI. This has resulted in increase of interest income by Rs.522.01 crore (Current Quarter Rs.204 crore) and increase in provision by Rs.352.05 Crore (Current Quarter Rs.136 crore) resulting in losses before tax of Rs.169.96 crore (Current Quarter Rs.68 crore). The bank is further strengthening the system.

11. During the quarter ended December 31, 2018 bank has made additional provision of Rs.5098.74 crores in view of uncertainty of recovery and deterioration in value of underlying assets in respect of 331 NPA accounts.

12. In respect of RBI referred NCLT accounts (List 1 & 2), the bank has made a provision of Rs 572 crore during the quarter ended December 31, 2018 due to uncertainty of recovery. The provision held in respect of NCLT accounts stood at Rs.6939.02 crore as on 31st December, 2018 representing 100% of the outstanding value.

13. In compliance with the Risk Assessment Report (RAR) for the year ended 2017-18, non-performing assets as per report have duly been classified and additional provision has been made. In conformity with RBI Circular No. DBR.BP.BC.NO.63/21.04.018/2016-17 dated 18th April, 2017 and SEBI Circular No. CIR/CFD/CMD/80/2017 dated July 18, 2017 the required disclosure is detailed below:-

S.No Particulars Rs. In Crore

1 Gross NPA as on 31st March, 2018 as reported by the Bank 62,328.46

2 Gross NPA as on 31st March, 2018 as assessed by the RBI 62,573.46

3 Divergences in Gross NPA (2-1) 245.00

4 Net NPA as on 31st March, 2018 as reported by the Bank 28,207.27

5 Net NPA as on 31st March, 2018 as assessed by the RBI 27,033.37

6 Divergences in Net NPA (5-4) (1,173.90)

7 Provision for NPA as on 31st March, 2018 as reported by the Bank 15,095.30

8 Provision for NPA as on 31st March, 2018 as assessed by the RBI 16,514.20

9 Divergences in Provisioning (8-7) 1,418.90

10 Reported Net Profit after tax (PAT) for the year ended 31st March 2018 (6,043.7)

11 Adjusted (Notional) Profits after Tax (PAT) for the year ended 31st March 2018 after taking into account divergence in provisioning (7,533.5)

14. In terms of RBI Circular DBR.No.BP.BC.64/21.04.048/2016-17 dated April 18, 2017 regarding stressed sectors identified by Bank, the Board of Directors of the Bank has approved standard assets provision of 0.10%, over & above the regulatory minimum, in respect of the Bank’s advances pertaining to Textile, Commercial Real Estate, Iron, & Steel and Telecommunication sector. Accordingly, an additional provision of Rs.10.93 crore has been held as at December 31, 2018.

15. During the nine months ended 31st December, 2018, Reserve Bank of India (RBI) has levied a penalty of Rs.1 Crore on the bank (Current Quarter Rs.NIL), due to delay in reporting of fraud in respect of a borrowal account pertaining to previous period.

16. The Provision Coverage Ratio of the bank as on December 31, 2018 is 76.76% (69.12% as on September 30, 2018 and 56.96% as on December 31, 2017). Net NPA as on 31.03.2018 was 8.26% and it has come down to 5.87% as on 31.12.2018.

17. In terms of RBI Circular DBOD.BP.BC.2/21.06.201/2013-14 dated July 1, 2013, Banks are required to make disclosures related to the Composition of Capital with effect from 30th September, 2013. Accordingly, Pillar 3 disclosures under Basel III Capital Regulations are being made available on Banks’ website at the link These disclosures have not been subjected to limited review.

18. The Bank has received 11 Investor complaints during the nine months ended December 31, 2018 (6 during the quarter) which has been disposed-off. There are no pending investor complaints at the beginning or end of the quarter.

19. Figures of the previous period have been regrouped/rearranged, wherever considered necessary.

-Away on duty-

C.G.Chaitanya A. K. Das N. Damodharan Dinabandhu Mohapatra G. Padmanabhan

Executive Director MD & CEO Chairman

Place: Mumbai

Date: 28.01.2019