Bank of India - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021
Auditor and Management Disclosures and Notes for the quarterly results dated 31 Mar 2021
Notes are attached to our Standalone and Consolidated Balance Sheet for Q4 / Annual financial results for FY 2020-21 submitted to the Stock Exchanges on 04.06.2021. Notes are attached to our Standalone and Consolidated Balance Sheet for Q4 / Annual financial results for FY 2020-21 submitted to the Stock Exchanges on 04.06.2021.
1. The above Standalone and Consolidated Financial Results have been reviewed by the Audit Committee of Board and approved by the Board of Directors at their respective meetings held on June 4, 2021. The same have been subjected to Audit 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 SEBl (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Amended).
2. The above financial results for the quarter and year ended March 31, 2021 have been arrived at after considering provisions for Non-Performing Assets, Standard Assets, Restructured Assets and Investment Depreciation in accordance with extant guidelines of Reserve Bank of India (RBI) on Prudential norms for ‘Income Recognition, Asset Classification and Provisioning’, provision for Employee Benefits, and other Provisions and Contingencies as per RBI’s specific directions, judicial pronouncements and applicable Accounting Standards.
3. There is no change in the Significant Accounting Policies adopted during the quarter / year ended March 31, 2021 as compared to those followed in the previous financial quarter/year ended March 31, 2020.
4. The Consolidated Financial Results have been prepared in accordance with the Accounting Standard - 21 “Consolidated Financial Statements”, Accounting Standard -23 “Accounting for Investments in Associates in Consolidated Financial Statements”, and Accounting Standard - 27 “Financial Reporting of Interest in Joint Venture” issued by The Institute of Chartered Accountants of India.
5. In accordance with SEBl Regulations, for the purpose of Consolidated Financial Results for the quarter / year ended March 31, 2021, minimum eighty percent of each of consolidated revenue, assets and profits have been subject to audit.
6. The Consolidated Financial Results comprise the financial results of 4 Domestic Subsidiaries, 4 Overseas Subsidiaries, 1 Joint venture and 6 Associates as under: Subsidiaries:
a. BOI Shareholding Limited
b. BOI AXA Investment Managers Private Limited
c. BOI AXA Trustee Services Private Limited
d. BOI Merchant Bankers Limited
e. PT Bank of India Indonesia TBK
f. Bank of India (Tanzania) Limited
g. Bank of India (New Zealand) Limited
h. Bank of India (Uganda) Limited Joint Venture:
a. Star Union Dai-ichi Life Insurance Company Limited Associates:
a. Madhya Pradesh Gramin Bank
b. Vidharbha Konkan Gramin Bank
c. Aryavart Bank
d. Indo Zambia Bank Limited
e. STCI Finance Limited
f. ASREC (India) Limited
7. During the quarter ended March 31, 2021, Bank has issued Basel-III Compliant Additional Tier-1 Bonds Series VI and Series VII of Rs 750 crore & 602 crore, respectively, through private placement.
8. During the quarter ended March 31, 2021, Government of India has infused ? 3,000 crore towards preferential allotment of equity shares. The same is kept in Share Application Money, pending allotment and considered as part of CET 1 Capital in terms of RBI communication reference no. DOR.CAP.S82/21.01.002/2021-22 dated April 30, 2021.
9. The spread of COVID-19 across the globe has resulted in significant decline in Indian as well as global economic activities and increase in volatility in financial markets. The current ‘second wave’ of COVID-19 pandemic, in which number of cases has increased significantly, has resulted in re-imposition of lockdown measures in various parts of the country. Major challenges for the Bank would arise from extended working capital cycles and probability of increase in customer defaults. The extent to which, including the current ‘second wave’ will continue to impact Bank’s results will depend on ongoing as well as future developments, which are highly uncertain.
In this situation, though the challenges continue to unfold, the Bank is evaluating the same on an ongoing basis and gearing up itself at all fronts to meet the same. The management, however, believes that no adjustments are required for these challenges as they may not significantly impact the financial results of the Bank.
10. In accordance with RBI guidelines relating to “COVID 19 Regulatory Package” on Asset Classification and Provisioning, dated March 27, 2020, April 17, 2020 and May 23, 2020, Bank has granted a moratorium on payment of installments and / or interest as applicable, falling due between March 1, 2020 and August 31, 2020 to eligible borrowers classified as Standard, even if overdue as on February 29, 2020 without considering the same as restructuring. The moratorium period, wherever granted, is excluded by the Bank from the number of days the account is past due for the purpose of Asset Classification under RBI’s Income Recognition and Assets Classification norms. The disclosures as required by RBI Circular DOR.No.BP.BC.63/21.04.048/2019-20 dated April 17, 2020 is given below: For Table, kindly refer Corporate Announcements on www.bseindia.com.
11. The Honorable Supreme Court of India, in a public interest litigation case of Gajendra ; Sharma Vs. Union of India & Another, vide an Interim order dated September 3, 2020 had directed that the accounts which were not declared as Non-Performing Assets (NPA) till August 31, 2020 shall not be declared as NPA till further orders. Accordingly the bank had not declared any domestic loan accounts as NPA which were Standard as on August 31, 2020. Pending disposal of the case, the Bank had made additional provision of U 864 crore till December 31,2020 for such borrower accounts not classified as non-performing.
Pursuant to the Honorable Supreme Court’s final order dated March 23, 2021, vacating the above Interim order dated September 3, 2020, and the related RBI notification issued on April 7, 2021, Bank has classified these borrower accounts as per the extant IRAC norms with effect from September 1, 2020 and utilised the said above-mentioned additional provision towards provision for these accounts.
12. In accordance with the instructions of RBI circular dated April 7, 2021 on “Asset Classification and Income Recognition following the expiry of COVID-19 Regulatory package”, the Bank has refunded “interest on interest” charged to all borrowers including those who had availed of working capital facilities during the moratorium period i.e. March 1, 2020 to August 31, 2020, irrespective of whether moratorium had been fully or partially availed, or not availed. As required by the RBI notification, the methodology for calculation of such interest on interest was circulated by the Indian Bank’s Association. Accordingly, a liability of ? 128.43 crore towards the same has been created and reduced from interest income for the year ended March 31, 2021.
13. As per RBI Circular No.DBR.No.BP.BC.45/21.04.048/2018-19 dated June 7, 2019 on Prudential Framework for Resolution of Stressed Assets, as on March 31, 2021 Bank holds additional Provision of ? 976.21 Cr (Current quarter ? 156.22 Cr) in respect of 8 borrower accounts, where the viable Resolution Plan has not been implemented within 180 days/365 days of review period.
14. Details of the resolution plan implemented under the Resolution Framework for COVID-19 Stress as per RBI circular dated August 6, 2020 are given below: For Table, kindly refer Corporate Announcements on www.bseindia.com.
15. In terms of RBI Cir No DOR.No.BP.BC.62/21.04.048/2019-20 dated April 17, 2020 and DOR.No.BP.BC.72/21.04.048/2019-20 dated May 23, 2020, extended timelines for resolution from the date where review period of 30 days are over but the 180 days of resolution period had not expired as on March 1, 2021, are as under: For Table, kindly refer Corporate Announcements on www.bseindia.com.
16. In accordance with RBI circular no.DBRNo.BP.BC.18/21.04.048/2018-19 dated January 1, 2019 “Micro, Small and Medium Enterprises (MSME) sector - Restructuring of Advances” For Table, kindly refer Corporate Announcements on www.bseindia.com.
17. Bank was holding 100% provision in a particular account, recovery of which is under dispute with another PSU Bank. The account has been reported as fraud to RBI. As both the Banks were holding 100% provision, RBI vide its communication (Ref. DoS.Co.SSM(BOI)/6557/13.37.007/2019-20) dated April 13, 2020 permitted the Bank to maintain a provision of 50% of the disputed amount on an ongoing basis (i.e. 50% of ? 291.63 crore) subject to certain conditions. Accordingly, the Bank now holds provision of ? 145.81 crore for the disputed amount.
18. As per RBI circular No.DBR.BPBC.No.32.21.04.018.2018-19 dated April 1, 2019, in case the additional provisioning for NPAs assessed by the RBI exceeds 10% of the reported profit before provisions and contingencies and for additional gross NPAs identified by RBI exceeds 15% of published incremental gross NPAs for the reference period, then the Banks are required to disclose divergence from prudential norms on income recognition, assets classification and provisioning. In view of the above, details of divergence of our Bank is as under: For Table, kindly refer Corporate Announcements on www.bseindia.com.
(*) Total provision as per RBI report was 930 crore, which include divergence in provision for NPA of u 394 crore, provision for Investments of u 23 crore and shortfall in standard assets of ? 513 crore. The entire provision of u 930 crore was provided by the Bank as on December 31, 2020.
19. In terms of Supreme Court Order and necessary guidelines issued by Reserve Bank of India the Bank has kept Delhi Airport Metro Express Pvt. Ltd as ‘Standard’. However, necessary provisions as per IRAC Norms have been made which are detailed as under:- For Table, kindly refer Corporate Announcements on www.bseindia.com.
20. In accordance with the RBI guidelines, during the year ended March 31, 2021, Bank has shifted the Central Government securities with a book value of ? 7,485.60 Crore and State Government securities with a book value of ? 7,715.20 Crore from HTM to AFS category. Venture Capital Fund for an amount of K 14.08 Crore has been shifted from HTM to AFS category.
21. In respect of RBI referred NCLT accounts (List 1 & 2) as on March 31, 2021, Bank holds 100% provision of the outstanding value of ? 4,227.96 crore.
22. Bank has redeemed Upper Tier-ll Bonds Series VI for an amount of ? 1,000 Crore by exercising call option on June 11, 2020 and has also exercised call option to repay IPDI Bond (Series-VI) of ? 300 Cr. on September 9, 2020.
23. Bank has invested additional D5.79 crore in its subsidiary - ‘BOI AXA Investment Managers Private Limited’. As a result, the stake of the Bank has increased from 51% as on 31.03.2020 to 52.29% as on March 31,2021.
24. During the year ended March 31, 2021, Bank has infused additional proportionate capital in the following associate Regional Rural Banks:
a. D23.79 crore in Madhya Pradesh Gramin Bank
b. D27.45 crore in Vidharbha Konkan Gramin Bank
25. The Bank has purchased Priority Sector Lending Certificate (PSLCs) for Agriculture portfolio amounting to Rs.2,000 crore during the year ended March 31, 2021 costing ?44.80 crore to bridge the gap in Agriculture, portfolio.
26. Provision Coverage Ratio of the Bank as on March 31, 2021 is 86.24% (Previous year 83.74%).
27. During FY 2020-21, Bank has made provision of ? 460.92 crore towards the 11th Bipartite Wage Settlement effective November 1, 2017.
28. In terms of Gazette notification No. CG-DL-E-23032020-218862 dated March 23, 2020 issued by Ministry of Finance (Department of Financial Services) containing amendment in Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970, after complying with the regulatory requirements and after getting approval from Reserve Bank of India vide their letter dated October 29, 2020. Bank has appropriated accumulated losses of Rs 2378239 Crore from its share premium account on November 3, 2020. The said appropriation has no impact on Bank’s Paid-up Capital, Capital Adequacy, Leverage Ratio and Net Worth.
29. Government of India has pronounced section 115BAA of Income Tax Act 1961 through Taxation Laws (Amendment) Act, 2019. The Bank has evaluated the options available under section 115BAA of the Act and opted to continue to recognise the taxes on income for the year ended March 31, 2021 as per the earlier provisions of Income-tax Act.
30. In terms of RBI Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015, on ‘Basel III Capital Adequacy’ and RBI Circular DBR.No.BP.BC.80/21.06.201/2014-15 dated March 31, 2015 on 'Prudential Guidelines on Capital Adequacy and Liquidity Standard Amendments’, Banks are required to make Pillar 3 disclosures including leverage ratio and liquidity coverage ratio under Basel III framework. The bank has made such disclosures which are available on Banks’ website at the link http://www.bankofindia.co.in/english/Regdisclosuresec.aspx. These disclosures have not been subjected to audit by the Statutory Central Auditors of the Bank.
31. In terms of RBI circular DBOD.No.BP.BC. 85 /21.06.200/2013-14 dated January 15, 2014 pertaining to Capital and Provisioning Requirements for Exposures to entities with Unhedged Foreign Currency Exposure, Bank is holding a provision of ? 62.03 crore (Previous year ? 76.75 crore ) as on March 31,2021.
32. A penalty of ? 5.12 crore has been imposed on the Bank by Reserve Bank of India and of Li 0.01 crore by overseas regulator during the year ended March 31, 2021.
33. The figures for quarter ended March 31, 2021 are the balancing figures between the figures as per the audited financial statements for FY2020-21 and the published figures for nine months ended December 31, 2020.
34. The Bank has received four Investor complaints during the quarter ended March 31, 2021 and the all the four complaints have been resolved during the quarter. There are no pending investor complaints at the beginning or end of the quarter.
35. Figures of the previous period have been regrouped / reclassified, wherever considered necessary to conform to the current period’s classification.