Bank of Maharashtra - 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 for the quarter/nine months ended December 31, 2018 have been reviewed by the Audit Committee of the Board and approved by the Board of Directors of the Bank in its meeting held on January 23, 2019. The results have been subjected to Limited Review by the Statutory Central Auditors, and are in compliance as per the Listing Agreement with Stock Exchanges.
2. The financial results for the quarter/nine months ended December 31, 2018 have been arrived at after considering provision for non-performing assets, standard assets, restructured accounts, loss on sale of assets to ARCs, provision on advances under SDR, Insolvency & Bankruptcy Code, depreciation/provision on investments, provision for exposure to entities with unhedged foreign currencies, depreciation on fixed assets, taxes and other usual and necessary provisions on the basis of prudential norms and specific guidelines issued by RBI and on the basis of the accounting policies as those followed in the preceding financial year ended March 31, 2018 except in respect of provisioning for Non-Performing Assets as per Note No. 10 and for the treatment of depreciation on revalued portion of fixed assets as per Note No. 14 below.
3. During the nine months ended December 31, 2018 loans and advances amounting to Rs. 1036.09 crore (Rs. 96.50 Crore during the quarter) have been classified as fraud in terms of RBI Circular DBR.No.BP.BC.83/21.04.048/2014-15 dated April 1, 2015 and DBR.No.BP.BC.92/21.04.048/2015-16 dated April 18, 2016 and the entire amount has been provided for.
4. RBI vide Circular no. DBR.No.BP.BC.108/21.04.048/2017-18 dated June 6, 2018 permitted banks to continue the exposures 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. 409.25 crore as standard asset as on December 31, 2018. In accordance with the provisions of the circular, the Bank has not recognized interest income of Rs. 4.49 crore and maintained provision on standard asset of Rs. 20.46 crore as on December 31, 2018 in respect of such borrowers.
5. Pending Bipartite agreement on wage revision, a sum of Rs. 82.12 crore (Rs.27.96 crore during the current quarter) has been provided during the nine months ended December 31, 2018 towards wage arrears (Cumulative provision held as on December 31, 2018 for wage arrears is Rs. 126.71 crore) since November 2017.
6. The Bank has opted to spread provisioning for mark to market (MTM) losses on investments held in AFS for the quarters ended December 31, 2017, March 31, 2018 and June 30, 2018. The provisioning has been spread equally over four quarters, commencing with the quarter in which loss is incurred. The amount of Rs. 31.46 crore shall be made in quarter ending March 31, 2019 in line with RBI directives vide its circular no. DBR.No.BP.BC.102/21.04.048/2017-18, dated April 2, 2018 and circular no. DBR. No. BP. BC.113/21.04.048/2017-18 dated June 15, 2018.
7. Based on the available financial statements and the declaration from borrowers, the Bank has estimated the liability towards unhedged foreign currency exposure to their constituents in terms of RBI circular DBOD.No.BP.BC.85/21.06.200/2013-14 dated January_15 2014 and holds a provision of Rs. 3.29 crore as of December 31, 2018
8. The Government of India vide its letter no. 7/38/2014-BOA dated December 26, 2018 infused Rs.4498.00 crore for preferential allotment of equity shares and the amount was accounted for as share application money pending for allotment as on December 31, 2018. In terms of Reserve Bank of India letter DBR.CO.BP NO.6020/21.01.002/2018-19 dated January 21, 2019 the Bank has considered such amount received from Government of India as a part of Common Equity Tier 1 (CET 1) capital as on December 31, 2018
9. During the quarter ended December 31, 2018, Bank has transferred an amount of Rs. 79.01 crore from the old outstanding/unadjusted credit entries from various nominal account heads to Profit & Loss Account.
10. During the quarter ended 31st December 2018, the Bank has made accelerated provision in respect of Sub Standard Accounts from 15% to 20% and in respect of Doubtful II accounts from 40% to 50% as per the approved Board Policy in line with RBI guidelines. The accelerated/ additional provision made during the quarter ended 31st December 2018 is Rs. 154.61 crore in respect of Sub Standard accounts and Rs.417.10 crore in respect of Doubtful II accounts.
11. In respect of 17 RBI referred NCLT accounts, the Bank has made provision of Rs. 1156.49 crore during the quarter ended 31st December 2018 looking at the uncertainty in recovery. The total provision in respect of such accounts stood at Rs.4855.06 crore as on 31.12.2018 representing 100% of the outstanding value as on 31.12.2018. In respect of 40 accounts under NPA Category, Bank has made provision of Rs.l988.40 crore during the quarter ended 31.12.2018 in view of uncertainty of recovery and deterioration in value of underlying assets in such accounts. The provision in such accounts stood at Rs. 676.20 crore as on 31.12.2018 representing 100% of outstanding amount as on 31.12.2018.
12. In accordance with Accounting Standard - 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India and the extant guidelines, Bank has recognized net Deferred Tax Assets of Rs. 225.52 crore during the quarter ended December 31, 2018 and of Rs. 359.45 crore during the nine month ended December 31, 2018 on timing differences. Deferred Tax Asset has not been recognized on losses incurred during the nine months ended December 31, 2018, which will be reviewed at the year ending March 31, 2019.
13. In accordance with RBI circular No DBOD.NO.BP.BC.2/21.06.201/2013-14 dated July 1, 2013 Banks are required to make Pillar III disclosures under Basel III capital requirements w.e.f. September 30, 2013.
14. In accordance with Accounting Standard -10 'Property, Plant & Equipment', depreciation of Rs. 48.84 crore for the nine months on revalued portion of fixed assets has been charged to profit and loss account. Equivalent amount of Rs. 48.84 crore has been transferred from Revaluation Reserve to Revenue Reserve.
15. Non-performing Loans Provision Coverage Ratio (PCR) as on December 31, 2018 is 81.08% (58.71% as on March 31, 2018). Non-performing Loans Provision Coverage Ratio (PCR) as on December 31, 2018 excluding TWO is 70.17% (47.81% as on March 31, 2018). Net Non-Performing Asset of the Bank as on December 31, 2018 is 5.91 % (11.24% as on March 31, 2018).
16. Figures of the earlier periods have been regrouped / reclassified / rearranged, wherever necessary.