1 Emirates NBD Bank (PJSC), India Branch (Scheduled Commercial Bank) AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS [Under Section 30 of the Banking Regulation Act, 1949] To The Chief Executive Officer Emirates NBD Bank (P.J.S.C) - India Branch Report on the Financial Statements 1 We have audited the accompanying financial statements of the Emirates NBD Bank (P.J.S.C) - India Branch (‘the Bank’), which comprise the Balance Sheet as at March 31, 2018 and the Profit and Loss Account and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements 2 The Bank’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Bank in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949, accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of the Companies (Accounts) Rules, 2014 and the circulars, guidelines and directions issued by Reserve Bank of India (‘RBI’) from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility 3 Our responsibility is to express an opinion on these financial statements based on our audit. 4 We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. 5 We conducted our audit of the Bank in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. 6 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Bank’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 7 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on financial statements. Opinion 8 In our opinion and to the best of our information and according to the explanations given, the said financials statements together with notes thereon give full information required by the Banking Regulation Act, 1949 as well as the Companies Act, 2013, in the manner so required for banking companies and give true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2018; (b) in case of the Profit and Loss Account, of the loss of the Bank for the year ended on that date; (c) in the case of the Cash Flow Statement, of the cash flows of the Bank for the year ended on that date. Report on Other Legal and Regulatory Requirements 9 The Balance Sheet and Profit and Loss Account and the Cash Flow Statement have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. 10 As required by Section 30(3) of the Banking Regulation Act, 1949, we report that: I. we have obtained all the information and explanation which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory; II. the transactions of the Bank, which have come to our notice have been within the powers of the Bank; and III. Since the bank is having only one branch, the question on reporting the number of branches audited by us and the manner of audit thereon does not arise. 11 As required by Section 143 (3) of the Act, we report that: (a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion proper books of account as required by law have been kept by the Bank so far as it appears from our examination of those books; except that the backup of the books of accounts and other books and papers maintained in electronic mode has been maintained on servers physically located outside of India, Refer note 1 of Schedule 17 of the financial statements; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Report are in agreement with the books of account; (d) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 in so far as they apply to the Bank; (e) reporting requirement pursuant to provision of Section 164 (2) of the Companies Act, 2013 are not applicable considering the Bank is a branch of Emirates NBD Bank PJSC, Dubai which is incorporated in United Arab Emirates with limited liability; (f) With respect to the adequacy of the internal financial controls over financial reporting of the Bank and the operating effectiveness of such controls, refer to our separate report in “Annexure A” to this report; and (g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i the Bank has disclosed the impact, if any, of pending litigations on its financial positions in its financial statements as at March 31, 2018; Refer Schedule 12 and Note 1(XIX) of Schedule 18 to the financial statements; ii the Bank has made adequate provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts- Refer Note 2(XIX) of Schedule 18 to the financial statements; iii the Bank is currently not liable to transfer any amount to the Investor Education and Protection Fund; iv the disclosure requirements as envisaged in Notification G.S.R 308(E) dated March 30, 2017 is not applicable to the Bank. For Khimji Kunverji & Co Chartered Accountants FRN: 105146W Vinit K Jain Partner (F-145911) Mumbai June 26, 2018
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Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
AuDItor’S rEPort oN thE FINANCIAl StAtEmENtS [under Section 30 of the Banking regulation Act, 1949]
toThe Chief Executive Officer Emirates NBD Bank (P.J.S.C) - India Branchreport on the Financial Statements
report on other legal and regulatory requirements9 TheBalanceSheetandProfitandLossAccountandtheCashFlowStatementhavebeendrawnupinaccordancewiththeprovisionsofSection29oftheBankingRegulationAct,
I. wehaveobtainedalltheinformationandexplanationwhich,tothebestofourknowledgeandbelief,werenecessaryforthepurposeofourauditandhavefoundthemtobesatisfactory;
II. thetransactionsoftheBank,whichhavecometoournoticehavebeenwithinthepowersoftheBank;andIII. Sincethebankishavingonlyonebranch,thequestiononreportingthenumberofbranchesauditedbyusandthemannerofauditthereondoesnotarise.
ForKhimji Kunverji & Co CharteredAccountants FRN:105146W
Vinit K Jain Partner(F-145911)
Mumbai June26,2018
2
Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
ANNExurE - A to thE AuDItorS’ rEPortreport on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)WehaveauditedtheinternalfinancialcontrolsoverfinancialreportingofEmiratesNBDBank(P.J.S.C)-IndiaBranch(‘theBank’),asatMarch31,2018inconjunctionwithourauditofthefinancialstatementsoftheBankfortheyearendedonthatdate.
management’s responsibility for Internal Financial ControlsTheBank’smanagementisresponsibleforestablishingandmaintaininginternalfinancialcontrolsbasedontheinternalcontroloverfinancialreportingcriteriaestablishedbytheBankconsideringtheessentialcomponentsofinternalcontrolstatedintheGuidanceNoteonAuditofInternalFinancialControlsoverFinancialReportingissuedbytheInstituteofCharteredAccountantsofIndia(‘ICAI’).Theseresponsibilitiesincludethedesign,implementationandmaintenanceofadequateinternalfinancialcontrolsthatwereoperatingeffectivelyforensuringtheorderlyandefficientconductofitsbusiness,includingadherencetoBank’spolicies,thesafeguardingofitsassets,thepreventionanddetectionoffraudsanderrors,theaccuracyandcompletenessoftheaccountingrecords,andthetimelypreparationofreliablefinancialinformation,asrequiredundertheCompaniesAct,2013.
meaning of Internal Financial Controls over Financial reportingABank’sinternalfinancialcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.ABank’sinternalfinancialcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsoftheBank;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresoftheBankarebeingmadeonlyinaccordancewithauthorisationsofmanagementanddirectorsoftheBank;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorisedacquisition,use,ordispositionoftheBank’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.
Inherent limitations of Internal Financial Controls over Financial reportingBecauseof the inherent limitationsof internalfinancialcontrolsoverfinancialreporting, includingthepossibilityofcollusionor impropermanagementoverrideofcontrols,materialmisstatementsduetoerrororfraudmayoccurandnotbedetected.Also,projectionsofanyevaluationoftheinternalfinancialcontrolsoverfinancialreportingtofutureperiodsaresubjecttotheriskthattheinternalfinancialcontroloverfinancialreportingmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.
Note 1Details of Balances transferred from India Representative Office INr in '000sCapital 103,658FixedAssets(netofaccumulateddepreciation) 10,032OtherAssets 76,265Cash&BankBalances 17,361
III term Deposits (i) FromBanks - (ii) FromOthers 312,043
312,043total (I + II + III) 913,461 (i) DepositsofBranchesinIndia 913,461 (ii) DepositsofBranchesoutsideIndia -
total 913,461
SChEDulE 4 - BorroWINGSI Borrowings in India (i) ReserveBankofIndia 1,160,000 (ii) OtherBanks - (ii) Otherinstitutionandagencies -
1,160,000
II Borrowings outside India (i) SubordinatedDebtfromHeadOffice - (ii) OtherBanks* 1,807,303
*includesBAFborrowingfromHeadOffice 1,807,303
total (I + II) 2,967,303
SecuredborrowingsincludedinI&IIabove -
As at 31 march 2018
(INr '000s)
SChEDulE 5 - othEr lIABIlItIES AND ProVISIoNSI BillsPayable -II Inter-OfficeAdjustment(Net) -III InterestAccrued 6,249IV DeferredTaxLiability(Net) 2,546V Others(includingprovisions) 311,645
total 320,440
SChEDulE 6 - CASh AND BAlANCES WIth rESErVE BANK oF INDIAI Cash in hand 1,893 (includingforeigncurrencynotes)II Balances with reserve Bank of India (i) InCurrentAccount 172,120 (i) InOtherAccount -
total (I + II) 174,013
SChEDulE 7 - BAlANCES WIth BANKS & moNEY At CAll AND Short NotICE
I In India (i) BalanceswithBanks (a) InCurrentAccount 16,167 (b) InOtherDepositAccount 980,000 (ii) MoneyatCallandShortNotice (a) WithBanks - (b) WithOtherInstitutions -
996,167II outside India (i) InCurrentAccount 10,406 (ii) InOtherDepositAccounts - (iii) MoneyatCallandShortNotice -
10,406
total (I + II) 1,006,573
SChEDulE 8 - INVEStmENtSI Investments in India in (i) Governmentsecurities(*) 2,386,302 (ii) Otherapprovedsecurities - (iii) Shares - (iv) Debenturesandbonds - (v) Subsidiaries/JointVentures - (vi) Others 580,686
2,966,988II Investments outside India -total (I + II) 2,966,988III Investments in IndiaGrossValue 2,974,248Less:-ProvisionfordepreciationonInvestments (7,260)Net Value 2,966,988
* includesSecurities keptwithCCILasmargin for securities segmentofbookvalueofRs.84,124(in000s);forCBLOsegmentbookvalueofRs.NIL;forForexsegmentbookvalueofRs.19,096(in000s)&withRBIundersection11(2)(b)(ii)ofBankingRegulationAct,1949ofFaceValueofRs.NIL
SChEDulE 9 - ADVANCES
A (i) BillsPurchasedanddiscounted 5,713,725 (ii) Cashcredits,Overdrafts&Loans - (iii) TermLoans 69,000
total 5,782,725
B (i) Securedbytangibleassets* 69,000 (ii) CoveredbyBank/GovernmentGuarantees - (iii) Unsecured 5,713,725 *includesadvancesagainstbookdebts
total 5,782,725
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Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
As at 31 march 2018
(INr '000s)
C I Advances in India (i) PrioritySector 1,881,102 (ii) PublicSector - (iii) Banks - (iv) Others 3,901,623
total (I + II + III) 329,597*representsassetstransferredfromIndiaRepresentativeoffice
SChEDulE 11 - othEr ASSEtS
I Inter-OfficeAdjustment(Net) -II Interestaccrued 118,147III Taxpaidinadvance/taxdeductedatsource(netofprovisions)
-
IV DeferredTaxAssets(Net) -V Stationeryandstamps -VI Others 192,212
total 310,359
SChEDulE 12 - CoNtINGENt lIABIlItIES
I Claimsagainstthebanknotacknowledgedasdebts -II Liabilityforpartlypaidinvestments -III Liabilitiesonaccountofoutstandingforwardexchangecontracts
6,051,301
IV Liabilitiesonaccountofoutstandingderivativecontracts -V Guaranteesgivenonbehalfofconstituents: a) InIndia 1,740,220 b) OutsideIndia 655VI Acceptances,endorsementsandotherobligations 88,579VII OtheritemsforwhichtheBankiscontingentlyliable -
Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
3. uSE oF EStImAtES The preparation of the financial statements requires themanagement tomake
estimates and assumptions that affect the reported amounts of assets, liabilities,(includingcontingentliabilities)asatthedateofthefinancialstatements,revenueandexpenseduringtheperiod.Althoughtheseestimatesarebaseduponmanagementbestknowledgeofcurrenteventsandactions,actualresultscoulddifferfromthoseestimatesandthesedifferencesarerecognisedprospectively incurrentandfutureperiods.
periodically at the price as declared byPrimaryDealersAssociation ofIndia jointlywithFixedIncomeMoneyMarketandDerivativesAssociation(“FIMMDA”).Securitiesarevaluedscrip-wiseanddepreciation/appreciationisaggregatedforeachsub-category.Netdepreciation,ifany,isprovidedforandnetappreciation,ifany,isignored.Netdepreciationrequiredtobeprovidedforinanyonesub-categoryisnotreducedonaccountofnetappreciationinanyothersub-category.Consequenttorevaluation,thebookvalueoftheindividualsecurityisnotchanged.
● Treasury Bills, Certificate of Deposits andCommercial Papers beingdiscountedinstrumentsarevaluedatcarryingcost.
● TheBankundertakesshortsaletransactionsinCentralGovernmentdatedsecuritiesinaccordancewithRBIguidelines.Theshortpositionismarkedtomarketandloss,ifany,ischargedtotheProfitandLossaccountwhilegain, ifany, is ignored.Profit/Lossonsettlementof theshortposition isrecognizedintheProfitandLossaccount.
● Non-performing investments are identified and depreciation/provisionaremade thereonbasedon theRBIguidelines.Basedonmanagementassessmentofimpairment,theBankmayadditionallycreateprovisionoverandabove theRBIguidelines.Thedepreciation/provisiononsuchnon-performinginvestmentsarenotsetoffagainsttheappreciationinrespectofotherperformingsecurities.Interestonnon-performinginvestmentsisnotrecognizedintheProfitandLossaccountuntilreceived.
Disposal of Investments Profit/Lossonsaleofinvestmentsundertheaforesaidthreecategoriesaretaken
to theProfit&Lossaccount.Theprofit fromsaleof investmentsunderHTMcategoryifany,netoftaxesandtransferstostatutoryreserveissubsequentlyappropriatedto“CapitalReserve”.
repurchase (repo) and reverse repurchase transactions RepoandReverseRepo transactions, includingLiquidityAdjustmentFacility
TheBankmaintains general provision for standard assets including creditexposurescomputedusingtheCurrentExposureMethodoninterestrateandforeignexchangederivativecontractsasstipulatedbyRBI.Theprovision forstandardassetsisincludedinSchedule5underOtherLiabilities.
Inadditiontotheprovisionsrequiredaccordingtotheassetclassificationstatus,provisioningisdoneforindividualcountryexposures(otherthanforhomecountryexposure).Countries are classified into risk categories as perExportCreditGuaranteeCorporationguidelinesandprovisioningisdoneasperRBIguidelinesinrespectofcountries’wherethenetfundedexposureisonepercentormoreoftheBank’stotalassetsandincludedunder‘OtherLiabilitiesandProvisions’.
The useful lifemarkedwith *beloware different than those specified underScheduleIIoftheCompaniesAct,2013.Themanagementbelievesthatusefullife of FixedAsset currently considered for thepurposeof depreciation fairlyreflectsitsestimateofusefullivesandresidualvalueoffixedassets.
OutstandingforwardexchangecontractsandspotexchangecontractsarerevaluedatyearendexchangeratesnotifiedbyFEDAIforspecifiedmaturitiesand at interpolated rates for contract of interimmaturities. The resultinggainsorlossesonrevaluationareincludedintheProfit&LossAccountinaccordancewithRBI/FEDAIguidelines.ThenetunrealisedprofitsorlossesarereflectedintheBalanceSheetunderOtherAssetsorOtherLiabilitiesrespectively.
Contingent liabilities on account of foreign exchange contracts, guarantees,acceptances, endorsements and other obligations denominated in foreigncurrenciesaredisclosedinIndianRupeesatspotratesofexchangenotifiedbyFEDAIasatthereportingdate.
timeof separation of an eligible employee.TheBankmakes a provision foraccruedcompensatedabsencesbasedonactuarialvaluationascarriedoutbyanindependentactuary,usingtheProjectedUnitCreditMethodattheyear-end.Actuarialgains/lossesareimmediatelytakentotheprofitandlossaccountandarenotdeferred.
Deferredtaxassetsandliabilitiesarisingonaccountoftimingdifferencesarerecognised in theProfit&LossAccount and the cumulativeeffect thereof isreflectedintheBalanceSheet.Deferredtaxassetsandliabilitiesaremeasuredusingtheenactedorsubstantiallyenactedtaxratesatthebalancesheetdate.TheeffectondeferredtaxassetsandliabilitiesofachangeintaxratesisrecognisedintheProfit&LossAccountintheperiodofchange.
● there is a possible obligation thatmay arise frompast events and theexistence of whichwill be confirmed only by the occurrence or non-occurrenceofoneormoreuncertain futureeventswhicharenotwhollywithinthecontroloftheBank;or
● anypresentobligationthatarisesfrompasteventswhereitisnotprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationorareliableestimateoftheamountoftheobligationcannot bemade. Such obligations are assessed continually and onlythat part of theobligation forwhichanoutflowof resourcesembodyingeconomicbenefitsisprobableisprovidedforexceptintheextremelyrarecircumstanceswherenoreliableestimatecanbemade.
SChEDulE 18: NotES FormING PArt oF thE FINANCIAl StAtEmENtS For thE YEAr ENDED 31 mArCh 2018
1. StAtutorY DISCloSurES IN tErmS oF rBI GuIDElINES ArE AS uNDEr:I. CAPItAl:Additiontothecapitalincludesstart-up(assigned)capitalbroughtinasperReserveBankofIndiaMasterCircularRBI/2013-14/77DBOD.No.BAPD.BC.7/22.01.001/2014-15datedJuly1,2014andamounttakenoverfromerstwhileRepresentativeOfficeofEmiratesNBDBank(PJSC)inIndiaINR.103,658(‘000s).
total 57,82,725 29,74,248 9,13,461 29,67,303 18,95,188 18,12,597
Classification of assets and liabilities under the different maturity buckets are compiled by management (on gross basis) based on the guidelines issued by the RBI and are based on the same assumptions as used by the Bank for compiling the returns submitted by RBI and which have been relied upon by the auditors.
X. ExPoSurE - a. lending to Sensitive Sectors: (Amountin‘000s)
Business Segment reporting as of 31 march 2018 (Amountin‘000s)
Business Segments treasuryCorporate/Wholesale Banking
other Banking
operationstotal
Revenue 2,48,994 82,799 (16) 3,31,777
Results 1,95,719 29,871 (1,39,870) 85,720
Unallocatedexpense (2,24,490)
Operatingprofit/(loss) (1,38,770)
Provisions (30,391)
Incometaxes (2,546)
Extraordinaryprofit/(loss) -
Net profit/(loss) (1,71,707)Segmentassets 42,96,048 59,08,395 1,66,094 1,03,70,537
Unallocatedassets 1,99,718
total assets 1,05,70,255Segmentliabilities 29,93,957 40,431 11,51,216 41,85,604
Unallocatedliabilities 15,600
CapitalandReserves&Surplus
63,69,051
total liabilities 1,05,70,255Note:Inallocationofsomeitemsofexpenses/incomeandasset/liabilities,certainestimatesandassumptionshavebeenmadebythemanagement,whichhasbeenrelieduponbytheauditors
TheBankdoesnot haveanyoverseasoperationsandhence there is nogeographicalsegmentreporting.
XIV. rElAtED PArtY trANSACtIoNS (ACCouNtING StANDArD -18) TheinformationrequiredinthisregardinaccordancewithAccountingStandard18
on“RelatedPartydisclosures”,issuedbyICAIandRBIguidelines,isprovidedbelow: a. Name and nature of relationship of related parties
InlinewiththeReserveBankofIndiaCircularNo.DBR.BP.BCNo.23/21.04.018/2015-16dated1July2015;theBankhasnotdiscloseddetailspertainingtorelatedpartieswhereunderacategorythereisonlyoneentity.Similarly,therehasbeenonlyoneentityunderKeyManagementpersonnelatanygivenpointof time,and therefore, thosedetailsarealsonotdisclosed.*RelatedpartiesareidentifiedbytheManagementandrelieduponbytheauditors. b. Disclosure in respect of transactions with subsidiaries of Head Office
XIX. ProVISIoNS, CoNtINGENt lIABIlItIES AND ASSEtS (ACCouNtING StANDArD-29)
Description of Contingent liabilities Claims against the Bank not acknowledged as debt ThisrepresentslegalclaimsfiledagainsttheBankinitsnormalcourseofbusiness
*excludinginterbankexposuresandbasedonactualfundedutilisation**AdvancesarecomputedasperdefinitionofCreditExposureincludingderivativesfurnishedinMasterCircularofExposurenorms. c. Concentration of Exposures@ (Amountin‘000s)
XIII. oFF-BAlANCE ShEEt SPVs SPoNSorED (WhICh ArE rEQuIrED to BE CoNSolIDAtED AS PEr ACCouNtING NormS) For F.Y. 2017-18
Name of the SPV sponsored
Domestic overseas
- -
XIV. Thebankhasnotundertakenanyfactoringbusinessduringthefinancialyear2017-18
XV. uNAmortISED PENSIoN AND GrAtuItY lIABIlItIES TheBankdoesnothaveanyunamortisedPension/GratuityLiabilitiesasat31March
2018.
XVI. DISCloSurE oN rEmuNErAtIoN IntermsofguidelinesissuedbyRBIvidecircularno.DBOD.NO.BC.72/29.67.001/2011-12
dated13January2012on“CompensationofWholeTimeDirectors/ChiefExecutiveOfficers/Risk takers andControl function staff, etc.”, the bank has submitted adeclarationtoRBItotheeffect that thecompensationstructure inIndia, includingthatofCEO’s,followsthebasicprinciplesandstandardsofFinancialStabilityBoard(FSB).
XVII. DISCloSurES rElAtING to SECurItIZAtIoN Therewerenosecuritizedassetsoutstandingason31March2018.
TheBank has a processwhereby periodically all long term contracts (includingderivativecontracts)areassessedformaterialforeseeablelosses.Attheyearend,theBankhasreviewedandrecordedadequateprovisionasrequiredunderanylaw/accountingstandardsformaterial foreseeable lossesonsuchlongtermcontracts(includingderivativecontracts)inthebooksofaccountanddisclosedthesameundertherelevantnotesinthefinancialstatements.
XX. INtrA GrouP ExPoSurE Intra-GroupExposuresason31March2018is26,232(in000s).
XXI.trANSFEr to DEPoSItor EDuCAtIoN AND AWArENESS FuND (DEAF)(Amountin‘000s)
ThefollowingtablesetsforthmonthlyaverageunweightedandweightedvalueoftheLCRoftheBankforquartersended30 September 2017, 31 December 2017 and 31 March 2018.
Sr. No. Particulars
30-Sep-17 31-Dec-17 31-mar-18total unweighted Value (Average)
total Weighted Value (Average)
total unweighted Value (Average)
total Weighted Value (Average)
total unweighted Value (Average)
total Weighted Value (Average)
high Quality liquid Assets1 TotalHighQualityLiquidAssets(HQLA) 4,253 28,85,533 25,67,781
12 Total Cash Inflows 29,68,300 29,68,300 22,48,333 22,48,333 6,76,562 6,76,562
21 total hQlA 4,253 28,85,533 25,67,78122 Total Net Cash Outflows 1,615 23,768 44,35723 liquidity Coverage ratio (%) 263.37% 12,140.61% 5,788.87%
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Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
Qualitative disclosure around lCr:Refer LCR Circular for Disclosure Requirements hereunder
(a) Drivers of LCR results and Composition of HQLA:The LCR standard aims to ensure that a bank maintains adequate level of unencumbered HQLA that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under significantly severe liquidity stress scenario as specified by supervisors.The Bank’s High Quality Liquid Assets (HQLA) primarily consist of excess SLR securities in the form of Government securities,9% of NDTL under FALLCR (as permissible by RBI),2% MSF (as permissible by RBI),balance maintained with RBI in excess of CRR requirement which are considered as Level 1 High Quality Liquid Assets (HQLA).Bank also has investments in Commercial paper issued by a Financial Institution (FI).Commercial Paper issued by FI are considered as HQLA Level 2 Asset for LCR computation.
(b) Intra-period changes:As per RBI guidelines,the LCR maintenance limit is 80% for 2017 and 90% for 2018.The LCR maintained has always been above the RBI limit.The intra period changes mainly on account of change in un-encumbered excess SLR positions.
For Khimji & Kunverji & Co.Chartered AccountantsFirmRegistrationNo.105146W
For Emirates NBD Bank PJSC, India Branch
Vinit K JainPartnerMembershipNo.F-145911
Sharad Agarwal ChiefExecutiveOfficer
Place:MumbaiDate:26Jun2018
Place:MumbaiDate:26Jun2018
BASEl III DISCloSurES oF thE INDIA BrANCh For thE YEAr ENDED 31 mArCh 2018
All amts. in INr. ’000s, unless otherwise statedDF 1. Scope of application1. Qualitative and Quantitative Disclosures: TheBankissubjecttothecapitaladequacyguidelinesstipulatedbyRBI,whichare
basedontheframeworkoftheBaselCommitteeonBankingSupervision.AsperBaselIIIguidelines,theBankisrequiredtoachieveaminimumCapitaltoRiskWeightedAssetsRatio (CRAR)of 9% {11.5% includingCapitalConservationBuffer (CCB)},withminimumCommonEquityTier I (CET1)of5.5% (8% includingCCB)by31stMarch2019.TheseguidelinesonBaselIIIweretobeimplementedbybanksfrom1stApril2013inaphasedmanner.TheminimumcapitalrequiredtobemaintainedbytheBankfortheyearended31stMarch2018is9%(10.875%includingCCB)withminimumCommonEquityTier1(CET1)of5.5%(7.375%includingCCB).Theriskmanagementframeworkof Indianoperations is integratedwiththeBank’sstrategyand business planning processes at global level. The Bank has comprehensiverisk management framework to monitor, evaluate and manage the principal risksassumed in conducting its activities.The riskmanagement function in India is asperdirectivesandframeworksetoutatHeadOfficelevel.Asat31March2018,theBankdoesnothaveany investment insubsidiaries/JointVenturesandAssociates,significantminorityequityinvestmentininsurance,financialandcommercialentities.
2. Capital structure Qualitative Disclosures Bankregulatorycapitalconsistsoftwocomponents–Tier1capitalandTier2capital.
Both components of capital provide support for banking operations and protectdepositors.AsperReserveBankofIndia(RBI)guidelines,thecompositionofcapitalinstrumentsforforeignbanksinIndiawouldincludethefollowingelements:
percentofthetotalCreditrisk-weightedassets.Suchprovisionsandreservesinclude provisions on StandardAssets, Country Risk Exposures, UnhedgedForeignCurrencyExposuresandInvestmentReserveAccount.
DF -3: Credit risk : General DisclosuresQualitative DisclosuresCredit risk isdefinedasriskoffinancial lossarisingfromthefailureof thecustomerorcounterparty,tomeetitscontractualobligationstotheBank.Itcanarisefrombothfundedandnon-fundedtransactionsthatarecontingentinnature.Credit risk management approach is based on the foundation of independence andintegrityof thecreditriskassessment,managementandreportingprocessescombinedwith clear policies, limits and approval structures. Standard procedures specific tobusinesses are set up to manage various risks across different business segments,productsandportfolios.Thecreditpolicyfocusesonthecorecreditprinciplesanddetails,specificpolicyguidelines,lending parameters, control and monitoring requirements, problem loan identification,managementofhighriskcustomersandprovisioning.Credit facilities are granted based on the detailed credit risk assessment of thecounterparty. The assessment considers amongst other things the purpose of thefacility,sourcesofre-payment,prevailingandpotentialmacro-economicfactors,industrytrends,customers’creditworthinessandstandingwithin the industry.Thecredit facilityadministration process is undertaken by an independent function to ensure properexecutionofallcreditapprovals,maintenance,lodgmentofdocumentationandproactivecontrolsovermaturities,expiryoflimitsandcollaterals.Operationsaremanagedbyindependentunitsresponsibleforprocessingtransactionsinlinewithcreditapprovalsandstandardoperatingguidelines.The internal rating models measure counterparty risk (expressed as a probability ofdefault within one year). The risk on counterparty exposure onmarket transactions ismeasuredby theguidanceprovidedby theRBI.TheBankhasawell-definedprocessfor identification ofweaker credit risk exposures [classified asEarlyAlert (EA),WatchList(WL)&Non-Performing(NPA)Accounts]anddealingwiththemeffectively.TherearepolicieswhichgoverncreditgradingofEA,WL&NPAsaswellasinterestsuspensionandprovisioning,inlinewithRBIguidelines.ExposuresareclassifiedasNPAs(sub-standard,doubtfulorloss)inlinewithRBIguidelinesattheearlierofassessmentofinabilitytorepayorwhen interest or loan instalments, overdrafts and bills are overdue, out of order orremainunpaidrespectivelyfor90days.Thereareinternalcapsoninvestmentexposures,exposuretosensitivesectors,exposuretosingleobligorsandgroups.Therearealsospecificcontrolsonexposurestobanksandfinancialinstitutions,designedtoensureagainstexcessiveriskconcentration.ThereisaspecializedandcentralizeddepartmentattheGroupHeadOfficeformanagingfinancial
Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
DF 4. Credit risk: disclosures for portfolios subject to the standardised approachQualitative DisclosuresTheBank follows theRBIguidelineson theuseofexternal credit ratings forassigningriskweightsunderthestandardisedapproach.RatingsofthefollowingIndiancreditratingagencies are used for domestic non-bank entities – Brickworks Ratings India Pvt Ltd,CreditAnalysisandResearchLtd,CRISILLtd,ICRALtd,IndiaRatingsandResearchLtd,SMERatingAgencyofIndiaLtd,whileratingsfrominternationalratingagencies-Fitch,Moody’sandStandard&Poor’s–areconsideredforassigningriskweightsforexposurestointernationalbanksandnon-residententities.Amountoutstandingundervariousriskbuckets: (Rs.000’s)
Particulars As at 31 march 2018Below100%riskweight 10,047,126
100%riskweight 280,840
Morethan100%riskweight -
Deducted -
total ** 10,327,966**TheamountoutstandingundervariousriskbucketsexcludesexposurestoQCCPandarepriortocreditriskmitigants.
DF 5. Credit risk mitigation: disclosures for standardised approaches:Qualitative DisclosuresCollaterals and guarantees are effectively used as mitigating tools by the Bank. Thequality of collateral is continuously monitored and assessed and the Bank seeks toensure enforceability of the collateral. Major categories of collaterals include lien overcash /fixeddeposits,pledgeoversecurities,guarantees(corporate,bankandpersonalguarantees), mortgage over immovable properties, hypothecation of current assets,includingreceivablesandinventory,andvehicles.CollateralsarerevaluedregularlyaspertheGroup’screditpolicy.Inaddition,adhocvaluationsarealsocarriedoutdependingonthenatureofcollateralandgeneraleconomiccondition.ThisenablestheBanktoassessthe fairmarket value of the collateral and ensure that risks are appropriately covered.Securitystructuresandlegalcovenantsarealsosubjecttoregularreview.Eligible collateral formitigation isasperRBIguidelines–cash,government securities,KisanVikasPatraandNationalSavingsCertificates,lifeinsurancepolicies,liquid/rateddebtsecurities,andmutualfundunits.Quantitative Disclosures:AsonMarch31,2018,thetotalexposurecoveredbyeligiblefinancialcollateralwasRs.1,189,456thousand.
DF 6. Securitisation: disclosure for standardised approachTheBankhasnotundertakenanysecuritizationtransactionsorhaveanyexposures.
DF 7. market risk in trading bookQualitative DisclosuresMarket risk is therisk that thevalueoffinancial instruments in theBank’sbooks–withtheinclusionofsomeotherfinancialassetsandliabilities-willproducealossbecauseofchangesinfuturemarketconditions.TheBanktakesonrisksinthepursuitofitsstrategicand business objectives. The Bankmonitors andmanages the following categories ofmarketrisk:● InterestRateRisk:lossesinvalueduetochangesinthelevel,slopeandcurvatureof
andvolatilitiesofcurrencyrates.TheBank’sriskexposurestomarketriskaresegregatedintoTradingandBankingBooks.TheTradingBookincludethosefinancialinstrumentsheldwithtradingintentarisingfrommarket-making,position-takingandothersodesignatedfinancial instrumentsaccountedforat fairvaluedaily.Capitalcharge formarket riskexposures in theTradingBookareconsideredundertheStandardisedDurationApproach.MarketRiskOversightandManagementProcessAs part of the enterprise-wide risk management framework, a governance process isappliedtothemarketrisktakingactivitieswhichincludes,interalia.● risk limits with appropriate monitoring, reporting and limits excesses’ escalation
-suchasrisksensitivities,NetOpenPositionsandValue-at-Risk(VaR).Experienced portfolio managers are accountable for managing market risk within theapprovedlimits.TheBankusesappropriateandindependentlyvalidatedmarketstandardmodels for the revaluation and risk measurement of its linear financial products andreceives regularmarket information from independentmarketdataproviders inorder tomeasureandmonitormarketrisk.Value-at-Risk(VaR)iscalculateddaily,currentlyforFXandinduecourseforrates,usingthefollowingparameters● Statisticallevelofconfidence:99%;● Holdingperiod:1businessday;● Methodology:FullRevaluation,HistoricalSimulationusingover2yearsofhistorical
DF 8. operational risk:Qualitative disclosuresOperationalriskisdefinedastheriskoflossesresultingfrominadequateorfailedinternalprocesses,peopleandsystems,orfromexternalevents.TheBank’sobjectiveistopreventmajoroperationalrisklossesandtoprotecttheBankagainstanymaterialdamage.The Bank uses the Basic Indicator Approach to estimate operational risk RWAs andcapital requirements.A framework for pro-activelymanaging operational risk has beenestablished. The Bank has a holistic approach to systematically identify, assess andmanageoperationalrisksacrossdifferentproducts,processes,andclientsegments.Keytools/methodologiesforthemanagementofoperationalriskinclude:● operationalriskandcontrolassessments;● settingandmonitoringofkeyriskindicators;● reportingandremediationofoperationalriskincidents;● issuesandactiontracking;and● newproductandprocessapprovals.Acomprehensiveinformationsecurityframeworkhasbeenimplementedtosafeguarddataandsystems.Requisitepoliciesandprocessesareinplacetoreportandmonitorfraud.TheBankobtainscomprehensiveandtailoredinsurancecovertoprotecttheBankagainstunexpectedandsubstantialunforeseeablelosses.Business Continuity Management is defined as a holistic management process thatidentifies potential threats to an organisation and the impacts to business operationsthatthosethreats, ifrealised,mightcause,andwhichprovidesaframeworkforbuildingorganisational resilience with the capability for an effective response that safeguardsthe interestsof itskeystakeholders,reputation,brandandvalue-creatingactivities.Thebusiness continuity process across the Group is based on the international standardISO22301:2012(E).TheBankhasdevelopedabusinesscontinuityplanandthealternatesiteisnowoperationalandhasbeenrecentlytested.
DF 9. Interest rate risk in the banking book (IrrBB)InterestRateRiskintheBankingBook(‘IRRBB’)isdefinedastheexposureofthenon-tradingproductsof theBank to interest rates.Non-tradingportfolios includeallbankingbookpositionsthatarisefromtheinterestrateontheBank’sconsumerandcommercialbankingassetsand liabilities,andfinancial investmentsdesignatedasheld tomaturity.IRRBBarisesprincipallyfrommismatchesbetweenthefutureyieldsonassetsandtheirfundingcosts,asaresultofinterestratechanges.Inordertomanagethisriskoptimally,IRRBBistransferredtoGroupMarkets&Treasury(GM&T)underthesupervisionoftheALCO.ALCOisrequiredtoregularlymonitorallsuchinterestrateriskpositionstoensuretheycomplywithinterestraterisklimits.Formeasuringoverall interestsensitivity in thebankingbook, theBankconsidersgapsininterestratesensitiveassetsandliabilitiesinvariousbucketsaswellastheimpactonMarketValueofEquityonamonthlybasis.
DF 10. General Disclosure for exposures related to Counterparty Credit riskQualitative disclosuresCounterpartyCreditRisk (CCR) is the risk that thepersonor institutionwithwhom theBankhasenteredintoafinancialmarketcontract–whoisacounterpartytothecontract–couldeitherdefaultordeteriorateincreditworthinessleadingtoafailuretoperformonitscontractualobligations,causinglossestotheBank.Thefuturemarketvalueoftheexposureandthecounterparty’screditqualityareuncertainandmayvaryovertimeasunderlyingmarketvariableschange.CCRisamultidimensionalformof risk,affectedbyboth theexposure tocounterpartyand thecreditqualityof thecounterparty,bothofwhicharesensitivetomarket-inducedchanges.
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Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
Forlocalregulatoryandcapitalpurposes,thecreditequivalentamountofamarketrelatedoff-balance sheet transaction is calculatedusing the current exposuremethodwhich isthe sumof current credit exposure (positivemark-to-market) andpotential future creditexposure(determinedbymultiplyingthenotionalprincipalamountbytherelevantadd-onfactor).SettlementRisk ariseswhen theGroup, acting as a principal, exchanges securities orcashpaymentstoacounterpartyonavaluedateandisunabletoverifythatpaymentorsecuritieshavebeenreceived inexchangeuntilafter ithaspaidordelivered itssideoftransaction.
Counter-party credit risk exposures are required to be assessed and limits are to beapprovedaspartoftheusualcreditsubmissionandapprovalprocess.WrongWayRisk (WWR)ariseswhen there isadverse (positive) correlationbetweenaclient’s credit worthiness (probability of default) and the Bank’s credit exposure to thatclient.WWRisgenerallydiscouragedandisrequiredtobeidentifiedandspecificapprovalobtained.Quantitative disclosuresAson31March2018,thebankhadnoexposuretoFXcontractsbeyondspotmaturity.
DF 11. Composition of capital (Rs.in‘000s)
Particulars AmountAmounts Subject
to Pre-Basel III treatment
ref No.
Common Equity tier 1 capital: instruments and reserves1 Directlyissuedqualifyingcommonsharecapitalplusrelatedstocksurplus(sharepremium)(FundsfromHeadOffice) 6,540,758 - a
40 Significant investments in the capital of banking, financial and insurance entities that are outside the scope of regulatoryconsolidation(netofeligibleshortpositions) - -
55 Significant investments 13 in the capital banking, financial and insurance entities that are outside the scope of regulatoryconsolidation(netofeligibleshortpositions) - -
64 Institution specific buffer requirement (minimum CET1 requirement plus capital conservation and countercyclical bufferrequirements,expressedasapercentageofriskweightedassets) 1.875% -
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Emirates NBD Bank (PJSC), India Branch(Scheduled Commercial Bank)
DF -14: Full terms and Conditions of regulatory Capital Instruments:Theregulatorycapitalconsistsofcapitalfundsreceivedfromheadofficewithoutanytermsandconditions.
DF-15: Disclosure requirements for remuneration:TheBank’scompensationpoliciesareinconformitywiththebasicprinciplesandstandardsofFinancialStabilityBoard.InaccordancewiththerequirementsoftheRBICircularNo.DBODNo.BC.72/29.67.001/2011-12dated13January2012,theBankhassubmittedadeclarationtoRBIconfirmingtheaforesaidmatter.Accordinglynodisclosureisrequiredtobemadeinthisregard.
DF-16: Equities – Disclosure for Banking Book Positions: