HIGHLIGHTS
• Net Profit:
` 12,296 crore. An increase of 20.4%
compared to the previous year
• Balance Sheet Size:
` 708,846 crore. An increase of 20.0%
compared to the previous year
• Total Deposits:
` 546,424 crore. An increase of 21.2%
compared to the previous year
• Total Advances:
` 464,594 crore. An increase of 27.1%
compared to the previous year
• Capital Adequacy Ratio:
15.5%
• Tier I Capital Ratio:
13.2%
• Gross Non-Performing Assets:
0.94% of Gross Advances
• Network:
- Branches: 4,520
- ATMs: 12,000
- Cities/Towns: 2,587
Do more,
Live more!
B A N K I NG
BHARAT
Financial Highlights
Interest income
Interest expense
Net interest income
Other income
Net revenues
Operating costs
Operating result
Provisions and contingencies
Loan loss provisions
Others
Profit before tax
Provision for taxation
Profit after tax
Funds :
Deposits
Subordinated debt
Stockholders’ equity
Working funds
Loans
Investments #
Key Ratios :
Earnings per share (`) *
Return on average networth
Tier I capital ratio
Total capital ratio
Dividend per share (`) *
Dividend payout ratio
Book value per share as at March 31 (`) *
Market price per share as at March 31 (`) **
Price to earnings ratio
2006-2007
2007-2008
2008-2009
7,055.35
10,530.43
16,584.01
3,179.45
4,887.12
8,911.10
3,875.90
5,643.31
7,672.91
1,679.21
2,495.94
3,700.65
5,555.11
8,139.25
11,373.56
2,975.08
4,311.03
5,950.54
2,580.03
3,828.22
5,423.02
941.28
877.13
64.15
1,547.59
2,123.78
1,278.84
1,970.35
268.75
153.43
1,638.75
2,280.63
3,299.24
497.30
690.45
1,054.31
1,141.45
1,590.18
2,244.93
68,297.94
100,768.60
142,811.58
3,282.60
3,249.10
8,738.58
6,433.15
11,497.23
14,646.33
91,235.61
133,176.60
183,270.77
46,944.78
63,426.90
98,883.05
30,281.96
48,908.96
55,784.95
7.26
19.40%
8.58%
13.08%
1.40
22.92%
40.28
190.83
26.29
9.24
16.05%
10.30%
13.60%
1.70
22.17%
64.88
266.25
28.80
10.57
16.12%
10.58%
15.69%
2.00
22.17%
68.86
194.68
18.42
` 1 Crore = ` 10 Million
* Figures for the years prior to 2011-2012 have been adjusted to reflect the effect of split of equity shares from nominal value of ` 10 each into
five equity shares of nominal value of ` 2 each.
** Source : NSE (prices for years prior to 2011-2012 have been divided by five to reflect the sub-division of shares)
*** Proposed
# Figures for the previous years have been adjusted to reflect the effect of reclassification as mentioned in Schedule 18, Note no. 1 forming
part of ‘Notes to Accounts’.
HDFC Bank Limited Annual Report 2015-16
12
(` crore)
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
16,467.92
20,380.77
27,874.19
35,064.87
41,135.53
48,469.91
7,786.30
9,385.08
14,989.58
19,253.75
22,652.90
26,074.23
8,681.62
10,995.69
12,884.61
15,811.12
18,482.63
22,395.68
4,573.63
4,945.23
5,783.62
6,852.62
7,919.64
8,996.34
13,255.25
15,940.92
18,668.23
22,663.74
26,402.28
31,392.02
6,475.71
7,780.02
9,277.64
11,236.11
12,042.20
13,987.55
6,779.54
8,160.90
9,390.59
11,427.63
14,360.08
17,404.47
2,490.40
2,342.24
1,877.44
1,677.01
1,588.03
2,075.75
2,288.74
1,198.55
1,091.77
1,234.21
1,632.58
1,723.58
201.66
1,143.69
785.67
442.80
(44.56)
352.17
60,221.45
32,629.93
27,591.52
10,751.72
38,343.24
16,979.69
21,363.55
2,725.61
2,133.63
591.98
4,289.14
5,818.66
7,513.15
9,750.62
12,772.05
15,328.72
18,637.94
1,340.44
1,892.26
2,346.08
3,024.34
4,293.67
5,112.80
6,341.71
2,948.70
3,926.40
5,167.07
6,726.28
8,478.38
10,215.92
12,296.23
167,404.44
208,586.41
246,706.45
296,246.98
367,337.48
450,795.65
546,424.19
6,353.10
7,393.05
11,105.65
16,586.75
16,643.05
16,254.90
21,519.58
25,376.35
29,924.37
36,214.15
43,478.63
62,009.42
15,090.45
72,677.77
222,458.57
277,352.59
337,909.50
400,331.90
491,599.50
590,503.08
708,845.57
125,830.59
159,982.67
195,420.03
239,720.64
303,000.27
365,495.04
464,593.96
53,113.32
61,670.94
84,728.34
97,342.80
105,831.88
151,641.77
163,885.78
13.51
16.80%
13.26%
17.44%
2.40
21.72%
94.02
386.70
28.62
17.00
16.52%
12.23%
16.22%
3.30
22.72%
109.09
469.17
27.59
22.11
18.37%
11.60%
16.52%
4.30
22.70%
127.52
519.85
23.51
28.49
20.07%
11.08%
16.80%
5.50
22.77%
152.20
625.35
21.95
35.47
20.88%
11.77%
16.07%
6.85
22.68%
181.23
748.80
21.11
42.15
20.36%
13.66%
16.79%
8.00
23.62%
247.39
1,022.70
24.26
48.84
17.97%
13.22%
15.53%
9.50
***
23.51%
287.47
1,071.15
21.93
HDFC Bank Limited Annual Report 2015-16
13
BOARD OF DIRECTORS
STATUTORY AUDITORS
Mrs. Shyamala Gopinath, Chairperson
Mr. A. N. Roy
Mr. Bobby Parikh
Mr. Keki Mistry
Dr. Pandit Palande
(Retired as Director w.e.f. close of business hours on April 23, 2015)
Mr. Partho Datta
Mrs. Renu Karnad
Mr. Malay Patel
Mr. Umesh Chandra Sarangi
(Appointed as Additional Director w.e.f. March 1, 2016)
Mr. Aditya Puri, Managing Director
Mr. Paresh Sukthankar, Deputy Managing Director
Mr. Kaizad Bharucha, Executive Director
Deloitte Haskins & Sells
Chartered Accountants
REGISTERED OFFICE
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai 400 013.
Tel: + 91 22 66521000
Fax: + 91 22 24960737
Website: www.hdfcbank.com
CORPORATE IDENTIFICATION NO
CIN - L65920MH1994PLC080618
REGISTRARS & TRANSFER AGENTS
Datamatics Financial Services Ltd
Plot No. B 5,
Part B Crosslane,
MIDC, Marol, Andheri (East),
Mumbai 400 093.
Tel: + 91 22 66712213-14
Fax: + 91 22 66712011
E-mail: hdinvestors@dfssl.com
KEY MANAGERIAL PERSONS
Mr. Aditya Puri, Managing Director
Mr. Paresh Sukthankar, Deputy Managing Director
Mr. Kaizad Bharucha, Executive Director
Mr. Sashidhar Jagdishan, Chief Financial Officer
Mr. Sanjay Dongre, Executive Vice President (Legal) &
Company Secretary
SENIOR MANAGEMENT TEAM
Mr. Abhay Aima
Mr. Ashish Parthasarthy
Mrs. Ashima Bhat
Mr. Ashok Khanna
Mr. Arvind Kapil
Mr. Aseem Dhru
Mr. Bhavesh Zaveri
Mr. Chakrapani Venkatachari
Mr. Deepak Maheshwari
Mr. Dhiraj Relli (on deputation to HDFC Securities Limited,
the Bank’s subsidiary)
Mr. Jimmy M Tata
Mr. Munish Mittal
Mr. Navin Puri
Mr. Nitin Chugh
Mr. Nitin Rao
Mr. Nirav Shah
Mr. Parag Rao
Mr. Rajender Sehgal
Mr. Rakesh K. Singh
Mr. Rajesh Rathanchand
Mr. Ravi Narayanan
HDFC Bank Limited Annual Report 2015-16
14
22nd ANNUAL GENERAL MEETING
Date
Day
Time
Place
July 21, 2016
Thursday
2.30 p.m.
:
:
:
: Birla Matushri Sabhagar,
19, New Marine Lines,
Mumbai 400 020
Record date for determining
eligibility of dividend
:
June 30, 2016 (both physical and electronic)
Contents
Directors’ Report
Independent Auditor's Report
Financial Statements
Basel III - Pillar 3 Disclosures
16 - 62
65 - 67
68 - 140
141
Independent Auditor's Report for Consolidated Financial Statements
142 - 145
Consolidated Financial Statements
146 - 194
Independent Auditor's Certificate on Corporate Governance
195
Corporate Governance
Shareholder Information
196 - 212
213 - 215
HDFC Bank Limited Annual Report 2015-16
15
Directors' Report
To the Members,
Introduction:
Your Directors take great pleasure in presenting the 22nd Annual Report on the business and operations of your Bank, together with
the audited accounts for the year ended March 31, 2016.
It’s been a transformational year for your Bank in more ways than one. Led by a slew of digital innovations, many of them pioneering
and several initiatives in rural India, your Bank was able to cement its position as a premier Bank across markets, from metros
to the hinterland. The Bank’s singular endeavour to offer an agnostic customer experience across all its geographies has enabled
it to garner not just substantial mindshare but also market share.
Your Bank has also contributed as a corporate citizen substantially through its Sustainable Livelihood Initiative, which skills those
at the Bottom of the Pyramid and enables them to earn a livelihood by providing captial and in the process substituting usurious
lending by the unorganized financial sector. Through its CSR programme, your Bank is helping create sustainable communities.
These initiatives helped the larger society bond better with the Bank. They were also instrumental in establishing your Bank
as India’s Most Valuable Brand for the 2nd consecutive year in a study conducted by Millward Brown, a leading global research agency
specializing in media and brand equity research and a part of communications group WPP.
While the Bank’s operations complemented by new initiatives during the year led to higher revenues and profitability, its traditional
prudence ensured that it did not come at the cost of asset quality.
Summary of Financial Performance
Particulars
Deposits and Other Borrowings
Advances
Total Income
Profit Before Depreciation and Tax
Profit After Tax
Profit Brought Forward
Total Profit Available for Appropriation
Appropriations
Transfer to Statutory Reserve
Transfer to General Reserve
Transfer to Capital Reserve
Transfer to / (from) Investment Reserve
Proposed Dividend
Tax Including Surcharge and Education cess on Dividend
Dividend (including tax / cess thereon) pertaining to previous year paid during the year,
net of dividend tax credits
(` crore)
For the year ended / As on
March 31, 2016
March 31, 2015
599,442.7
464,594.0
70,973.2
19,343.8
12,296.2
18,627.8
30,924.0
3,074.1
1,229.6
222.2
(8.5)
2,401.8
488.9
(11.7)
496,009.2
365,495.0
57,466.3
15,985.0
10,215.9
14,654.2
24,870.1
2,554.0
1,021.6
224.9
27.5
2,005.2
408.2
0.8
Balance carried over to Balance Sheet
23,527.6
18,627.8
The Bank posted total income and net profit of ` 70,973.2 crore and ` 12,296.2 crore respectively for the year ended
March 31, 2016 as against ` 57,466.3 crore and ` 10,215.9 crore respectively for the year ended March 31, 2015.
Appropriations from net profit have been effected as per the table given above.
HDFC Bank Limited Annual Report 2015-16
16
Directors' Report
Dividend
Your Bank has had a dividend policy that balances the dual objectives of appropriately rewarding shareholders through dividends
and retaining capital in order to maintain a healthy capital adequacy ratio to support future growth. It has had a consistent track record
of steady increase in dividend distribution over its history with the dividend pay-out ratio ranging between 20-25 per cent. Consistent
with this policy and in recognition of the overall performance during this financial year, your Directors are pleased to recommend
a dividend of ` 9.50 per equity share of ` 2 for the year ended March 31, 2016 as against ` 8 per equity share of ` 2 for the year
ended March 31, 2015. This dividend shall be subject to tax on dividend to be paid by the Bank.
Ratings
Instrument
Fixed Deposit
Programme
Rating
Rating Agency Comments
CARE AAA (FD) CARE Ratings
IND Taaa
India Ratings
Certificate of Deposits
Programme
CARE A1+
CARE Ratings
IND A1+
India Ratings
Long term unsecured,
subordinated
(Lower Tier 2) Bonds
CARE AAA
CARE Ratings
IND AAA
India Ratings
Tier 1 Perpetual Bonds CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Upper Tier 2 Bonds
CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Infrastructure Bonds
CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Instruments with this rating are considered to have very strong
degree of safety regarding timely payment of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have very strong
degree of safety regarding timely payment of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have very strong
degree of safety regarding timely payment of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have very strong
degree of safety regarding timely payment of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry lowest credit risk.
HDFC Bank Limited Annual Report 2015-16
17
Directors' Report
Issuance of Equity Shares
HDFC Securities Limited
During the year under review, 2,16,91,200 equity shares were
allotted to the employees of your Bank in respect of the equity stock
options exercised under the Employee Stock Option schemes.
As on March 31, 2016, the issued, subscribed and paid-up capital
of your Bank stood at ` 5,056,373,034 comprising 2,52,81,86,517
equity shares of ` 2 each.
Employee Stock Options
The information pertaining to Employee Stock Options is given in
ANNEXURE 1 to this report.
HDFC Securities Limited (HSL) is among India’s largest retail
broking firms and offers a large bouquet of financial services.
As on March 31, 2016, your Bank continued to hold 97.9
per cent stake in HSL.
HSL increased its physical distribution network by a further
12 branches during the year, taking the total to 262 branches
across 189 cities in the country. During the year under review,
HSL’s total income amounted to ` 401.6 crore as against
` 417 crore in the previous year. During the same period, the
net profit after tax was ` 133.3 crore compared to ` 165 crore
in the previous year.
Capital Adequacy Ratio
Your Bank’s total Capital Adequacy Ratio (CAR) calculated in line
with Basel III capital regulations stood at 15.5 per cent, well above
the regulatory minimum of 9 per cent. Of this, Tier I CAR was
13.2 per cent.
Subsidiary Companies
Your Bank has two subsidiaries, HDB Financial Services Limited
(‘HDBFS’) and HDFC Securities Limited (‘HSL’).
HDB Financial Services Limited
HDBFS is a non-deposit taking non-bank finance company
(‘NBFC’). The customer segments being addressed by HDBFS
are typically underserviced by larger commercial banks, and thus
create a profitable niche for the company. Apart from lending
to individuals, the company grants loans to micro, small and
medium business enterprises. It also operates call centres for
collection services to the Bank’s retail loan products.
During the year ended March 31, 2016, the company’s total
income increased by 31 per cent to ` 3,302 crore as compared
to ` 2,527.3 crore in the previous year. During the same
period, the company’s net profit after tax grew by 52.9 per cent
to ` 534.4 crore compared to ` 349.5 crore in the previous year.
HDBFS offers its loan and asset finance products through its
branches and digital and assisted channels. It has 929 branches
in 623 cities. As on March 31, 2016, your Bank held 97.1 per cent
stake in HDBFS.
A Scheme of Amalgamation has been proposed for the
amalgamation of Atlas Documentary Facilitators Company Private
Limited and HBL Global Private Limited (associates of the Bank)
with HDBFS. Necessary procedures have been initiated in this
regard and are pending as on the date of this Report.
Insights Award 2015
During the year under review, HSL won the prestigious
IDC
in Customer
Experience in the BFSI category and the Digital Business
Leader Award for Best CRM Implementation. It was adjudged
runner up in the Best e-Brokerage category at the Outlook
Money Awards 2015.
for Excellence
The annual reports of HDBFS and HSL are available on the
website of the Bank. Shareholders who wish to have a copy of the
annual accounts and detailed information on HDBFS and HSL
may write to the Bank. These documents shall also be available for
inspection by shareholders at the registered offices of the Bank,
HDBFS and HSL.
MANAGEMENT DISCUSSION AND ANALYSIS
Macroeconomic and Industry Developments
India’s economy recorded a growth rate of 7.6 per cent in
terms of real Gross Domestic Product (GDP) in 2015-16.
This was the highest in five years despite the continued
slowdown in global growth and two consecutive years of deficient
monsoons in India. Inflation moderated, with the average level
of Consumer Price Inflation declining to 5 per cent in 2015-16
from 6 per cent in 2014-15. Domestic manufacturing growth
improved to a robust 9.5 per cent compared to 5.5 per cent
in financial year 2014-15. It reflects stronger value addition
due to subdued input prices, which was a result of the declining
global commodity cycle. Foreign Direct Investment inflows
(FDI) increased by 40 per cent in the April–December period
of 2015 over the corresponding period of the previous year.
A range of supply side measures, including prudent food
stock management, appropriate monetary policy action and
subdued global commodity prices aided the decline in inflation.
Meanwhile, initiatives such as ‘Make in India’, power sector
reforms, the liberalization of FDI rules and higher government
capital expenditure spending indicate an incipient revival
in domestic investment activity.
HDFC Bank Limited Annual Report 2015-16
18
Directors' Report
Going forward, weakness in private investment cycle and asset
quality strain in the banking sector could prevent a full-fledged
recovery, though some improvement in the growth rate is quite
likely. Risks on the external front continue to loom in the form
of a wider emerging market slowdown, especially on account
of China and the likely volatility in global financial markets.
improve
inflation mix should
The growth
for 2016-17
as the Government is expected to undertake more structural
reforms and the RBI is likely to be more accommodative in its
monetary policy. Going by the Union Budget, the focus of fiscal
policy in the coming year will be the revival of rural economy
and sustained increase in capital expenditure. Besides, higher
outlay on various social sector programmes and implementation
of Seventh Central Pay Commission recommendations
should boost consumption spending. Going forward, headline
GDP growth should increase to 7.8 per cent in 2016-17 from
7.6 per cent in 2015-16.
Mission, Business Strategy and Approach to Business
Your Bank’s mission is to be a “World Class Indian Bank”
benchmarking itself against international standards and best
practices in terms of product offerings, technology, customer
service levels, risk management, audit and compliance.
The objective is to continue building sound customer franchises
across distinct businesses so as to be a preferred provider
of banking services for its target retail and wholesale customer
segments and to achieve a healthy growth in profitability,
consistent with the Bank’s risk appetite.
Your Bank’s business philosophy is based on five core values:
Customer Focus, Operational Excellence, Product Leadership,
People and Sustainability. Based on these cornerstones,
it is your Bank’s aim to meet the financial needs of customers
while ensuring service of the highest quality.
Your Bank is committed to do this while ensuring the highest
levels of ethical standards, professional integrity, corporate
governance and regulatory compliance. The Bank understands
and respects its fiduciary role and responsibility to all stakeholders
and strives to meet their expectations. The cardinal principles
of independence, accountability, responsibility, transparency,
fair and timely disclosures serve as the basis of your Bank’s
approach to corporate governance.
Your Bank believes that diversity and independence of the
Board, transparent disclosures, shareholder communication
and effective regulatory compliance are necessary for creating
and sustaining shareholder value. Your Bank has infused these
principles into all its activities.
Your Bank also has a well-documented Code of Ethics /
Conduct which defines the high business responsibility and
ethical standards to be adhered to while conducting the business
of the Bank and mandates compliance with legal and regulatory
requirements. All employees, including senior management have
to affirm annually that they have adhered to the Code of Conduct
rules.
Consistent with the mission and approach, your Bank’s business
strategy emphasises the following:
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:0)(cid:83)(cid:85)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:0)(cid:84)(cid:79)(cid:0)(cid:83)(cid:84)(cid:82)(cid:73)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:77)(cid:65)(cid:76)(cid:0)(cid:66)(cid:65)(cid:76)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)
between risk and margin, in India’s expanding banking and
financial services industry
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:71)(cid:69)(cid:79)(cid:71)(cid:82)(cid:65)(cid:80)(cid:72)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:82)(cid:69)(cid:65)(cid:67)(cid:72)
(cid:115)(cid:0) (cid:35)(cid:82)(cid:79)(cid:83)(cid:83)(cid:13)(cid:83)(cid:69)(cid:76)(cid:76)(cid:0) (cid:66)(cid:82)(cid:79)(cid:65)(cid:68)(cid:0) (cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0) (cid:80)(cid:82)(cid:79)(cid:68)(cid:85)(cid:67)(cid:84)(cid:0) (cid:80)(cid:79)(cid:82)(cid:84)(cid:70)(cid:79)(cid:76)(cid:73)(cid:79)(cid:0) (cid:65)(cid:67)(cid:82)(cid:79)(cid:83)(cid:83)(cid:0) (cid:67)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:0)
base
(cid:115)(cid:0) (cid:35)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:69)(cid:67)(cid:72)(cid:78)(cid:79)(cid:76)(cid:79)(cid:71)(cid:89)(cid:0)(cid:84)(cid:79)(cid:0)(cid:83)(cid:85)(cid:80)(cid:80)(cid:79)(cid:82)(cid:84)(cid:0)(cid:68)(cid:73)(cid:71)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:89)
(cid:115)(cid:0) (cid:45)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:0) (cid:83)(cid:84)(cid:82)(cid:79)(cid:78)(cid:71)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0) (cid:81)(cid:85)(cid:65)(cid:76)(cid:73)(cid:84)(cid:89)(cid:0) (cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0) (cid:68)(cid:73)(cid:83)(cid:67)(cid:73)(cid:80)(cid:76)(cid:73)(cid:78)(cid:69)(cid:68)(cid:0) (cid:67)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0) (cid:82)(cid:73)(cid:83)(cid:75)(cid:0)
management
(cid:115)(cid:0) (cid:45)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:0)(cid:65)(cid:0)(cid:76)(cid:79)(cid:87)(cid:0)(cid:67)(cid:79)(cid:83)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:70)(cid:85)(cid:78)(cid:68)(cid:83)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:71)(cid:82)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:65)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0)
(cid:73)(cid:78)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:84)(cid:89)(cid:0) (cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:12)(cid:0) (cid:83)(cid:79)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)
responsibility and environmental responsibility with business
practices and operations
Financial Performance
The financial performance of your Bank during the year ended
March 31, 2016 remained healthy with
total net revenues
(net interest income plus other income) increasing by 22.1 per cent
to ` 38,343.2 crore from ` 31,392 crore in the previous financial
year. Revenue growth was driven by an increase in both Net Interest
Income and Other Income. Net Interest Income grew by 23.2
per cent due to acceleration in loan growth coupled with a Net Interest
Margin (NIM) of 4.3 per cent for the year ended March 31, 2016.
Income was
largest component of Other
Other Income grew 19.5 per cent over that of the previous year
to ` 10,751.7 crore during the year ended March 31, 2016.
The
fees
and commissions, which increased by 17.8 per cent to ` 7,759
crore with the primary drivers being commissions on debit
and credit cards, transactional charges, fees on deposit accounts,
fees on retail assets and commission on distribution of mutual
funds and insurance products. Foreign exchange and derivatives
revenue was ` 1,227.7 crore, gain on revaluation and sale
of investments was ` 731.8 crore and recoveries from written-off
accounts were ` 808 crore in the year ended March 31, 2016.
Operating (Non-Interest) expenses increased to ` 16,979.7 crore
for the year under review from ` 13,987.6 crore in the previous
year. During the year, your Bank opened 506 new branches
and 234 ATMs coupled with strong growth in retail asset and
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
card products, which resulted in higher infrastructure and
staffing expenses. Staff expenses also increased on account
of annual wage revisions. Despite the addition to the infrastructure,
your Bank maintained its Cost to Income ratio at 44.3 per cent
for the year ended March 31, 2016, as against 44.6 per cent
for the previous year.
Total Provisions and Contingencies were ` 2,725.6 crore
for the year ended March 31, 2016 as compared to ` 2,075.8 crore
during the previous year. Your Bank’s provisioning policies remain
higher than regulatory requirements. The coverage ratio based
on specific provisions alone excluding write-offs was around 70
per cent and including general and floating provisions was around
146 per cent as on March 31, 2016. Your Bank made General
Provisions of ` 440 crore during the year ended March 31, 2016.
Your Bank’s Profit before Tax was ` 18,637.9 crore, an increase
of 21.6 per cent over the year ended March 31, 2015.
After providing for Income Tax of ` 6,341.7 crore, the Net Profit for
year ended March 31, 2016 was ` 12,296.2 crore, up 20.4 per cent
over the year ended March 31, 2015. Return on Average Net worth
was 18 per cent while the Basic Earnings per Share increased from
` 42.1 to ` 48.8 per equity share.
As on March 31, 2016, your Bank’s total balance sheet stood
at ` 708,846 crore, an increase of 20 per cent over ` 590,503
crore in the previous year. Total Deposits increased by 21.2
per cent to ` 546,424 crore as on March 31, 2016 from ` 450,796
crore as on March 31, 2015.
Savings Account Deposits grew by 18.4 per cent to ` 147,886
crore while Current Account Deposits grew by 20.2 per cent
to ` 88,425 crore as on March 31, 2016. The proportion of Current
and Savings Deposits to total deposits was at 43 per cent as on
March 31, 2016.
During the financial year under review, Net Advances grew
by 27.1 per cent to ` 464,594 crore. The Bank had a market share
of approximately 5.4 per cent and 5.8 per cent in total Domestic
System Deposits and Advances respectively. Your Bank’s Credit
Deposit (CD) Ratio was 85 per cent as on March 31, 2016.
Business Segments’ Update
Consistent with its past performance, your Bank has achieved
healthy growth across various operating and financial parameters
in the last financial year. This performance reflected the strength
and diversity of three primary business franchises - retail banking,
wholesale banking and treasury and of its disciplined approach
to risk-reward management.
Retail Banking
ended March 31, 2016, driven by Retail Term Deposits which
grew faster at 23.4 per cent during the same period.
The Bank’s Retail Advances grew by 28.6 per cent to ` 248,319
crore during the year ended March 31, 2016 driven primarily
by growth in Personal Loans, Auto Loans, Home Loans,
and Credit Cards. Retail Advances include loans which fulfil
the criteria of orientation, nature of product, granularity and low
value of individual exposures for retail exposures as laid down
by the Basel Committee.
The growth in Retail Advances has been primarily due to
two factors. First is the extensive network of branches across
the length and breadth of the country which allows the Bank
to reach out to different customer segments. Second is the
emphasis on innovation across multiple channels, which offers
customers choice, convenience and a superior experience.
Faster and more efficient platform deliveries across ATMs,
Internet, Phones and Mobiles have been the cornerstone
of the growth in Retail Advances. Focus on cutting edge
analytics and Customer Relationship Management (CRM)
has helped the Bank to understand the customers’ life cycle
better and offer them products appropriate to their profile
and needs. Further, analytics also allow the Bank to target
potential customers in a cost effective manner. This enables
your Bank to strengthen its relationship with existing customers,
as well as forge new relationships. Focus on analytics
and CRM also helps in understanding the risk profile
of customers and helps improve fraud control and collections.
During the year under review, your Bank added 506 branches
taking its physical distribution network to 4,520 branches
in 2,587 cities / towns from 4,014 branches in 2,464 cities /
towns as on March 31, 2015. Number of ATMs increased to
12,000 from 11,766 during the same period. The Bank’s focus
on semi-urban and under-banked markets continued with 55
per cent of its branches in such areas. The Bank’s customer
base has grown to 3.77 crore.
In order to provide its customers greater choice, flexibility
and convenience, your Bank continued to make significant
headway (investments) in its multichannel servicing strategy,
offering its customers the use of ATMs, Internet, Phones
and MobileBanking in addition to its expanded branch network
to serve their banking needs. PhoneBanking services are
available even for Non Resident Indian (NRI) customers across
the globe.
The growth in your Bank’s retail banking business was robust
during the year ended March 31, 2016. Your Bank’s total Retail
Deposits grew by 20.9 per cent to ` 436,383 crore in the year
The Bank continued its focus on existing customers for its
credit cards portfolio, with over 75 per cent of new cards
issued to this segment. As part of its strategy to drive usage
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
of its credit cards, the Bank also has a significant presence
in the ‘merchant acquiring’ business, with the total number
of point-of-sale (POS) terminals installed crossing 2.8 lakh.
In addition to the aforementioned products, the Bank operates
in the home loan business in conjunction with HDFC Limited.
Under this arrangement, the Bank sells loans provided
by HDFC Limited through its branches. HDFC Limited approves
and disburses the loans, with the Bank receiving a sourcing fee
for these loans. The Bank has the option to purchase up to 70
per cent of the fully disbursed home loans sourced under this
arrangement either through the issue of mortgage backed pass
through certificates (PTCs) or by a direct assignment of loans.
The balance is retained by HDFC Limited. A fee is paid to HDFC
Limited for the administration and servicing of the loans. Your
Bank originated, on an average, approximately ` 1,300 crore of
home loans every month in the year under review. During the
same period, the Bank purchased from HDFC Limited home
loans worth ` 12,773 crore under the “loan assignment” route.
Your Bank also distributes Life Insurance, General Insurance
and Mutual Fund products through its tie-ups with insurance
companies and mutual fund houses. Third Party Distribution
Income contributed approximately 14 per cent of total fee
income for the year ended March 31, 2016, compared
to 15 per cent of the total fee income for the previous year.
customer
The Bank’s data warehouse,
relationship
management (CRM) and analytics solutions have helped
it target existing and potential customers in a cost effective
manner and offer them products appropriate to their profile
and needs. Apart from reducing costs of acquisition, this has
also helped in deepening customer relationships and greater
efficiency in fraud control and collection activities resulting
in lower credit losses. The Bank is committed to investing in
advanced technology in this area which will provide a cutting
edge to its product and service offerings.
Wholesale Banking
Your Bank provides its corporate and institutional clients
a wide range of commercial and transactional banking products,
backed by high quality service and relationship management.
The Bank’s Wholesale Banking business covers not only
the top end of the corporate sector but also the Emerging
Corporate Segment and SMEs. It has a number of business
groups catering to various segments with a wide range of
banking services covering their Working Capital, Term Finance,
Trade Services, Cash Management, Investment Banking
services, Foreign Exchange and Electronic Banking
requirements.
Your Bank provides its customers’ access to both Working Capital
and Term Financing. Working Capital Loans and Short Tenor Term
Loans continued to account for a large share of its Wholesale
Advances. During the year ended March 31, 2016, growth
in the Wholesale Banking business continued to be driven by new
customer acquisition and securing a higher share of the wallet
of existing customers by cross-selling with a focus on optimizing
yields and increasing product penetration.
for
focus
Your Bank’s Financial Institutions and Government Business
Group (FIG) offers commercial and transaction banking products
to financial institutions, mutual funds, insurance companies,
public sector undertakings, central and state government
this segment remained
departments. The main
the offering of various deposit and transaction banking products
besides deepening these relationships by offering Funded,
Non-Funded, Treasury and Foreign Exchange products. Your
Bank is authorised to collect Direct Taxes. It made a total collection
of nearly ` 1,90,000 crore during the year and was ranked
second in terms of total collections made by any Bank. Your Bank
is also authorised to collect Excise as well as Service Tax and
collected over ` 97,000 crore, during the year. Governments of 13
States have authorised your Bank to collect State Taxes / Duties.
These mandates enable a greater convenience to customers and
help the exchequer in mobilizing resources in a seamless manner.
The Bank continues to be the market leader in cash settlement
services for major stock and commodity exchanges in the country.
Your Bank’s Investment Banking Group has established itself
as a leading player in Debt Capital Markets and Project Finance.
In recognition of the strong position enjoyed by the Bank in the
Debt Capital Market, Bloomberg ranked it No. 2 amongst book
runners in INR bonds for Calendar Year 2015.
Your Bank has executed a well thought out strategy of offering
a full range of banking products under one roof to the commercial
vehicle and infrastructure equipment market. It has, in a short
span of time, established itself as one of the preferred and
trusted brands in this segment with an enviable list of MoUs and
Programmes with the leading commercial vehicles and Original
Equipment Manufacturers (OEMs). Your Bank offers under one
roof, Commercial Vehicle and Equipment Working Capital Loans,
Bank Guarantee, Tax Payments, Cash Management Services and
other banking services enabling it to cut down on transaction time
and costs for customers.
Your Bank’s Cash Management Business (CMS) (including all
outstation collection, disbursement and electronic fund transfer
products across its various customer segments) registered
volumes of over ` 39 lakh crore. The Bank is one of the front
runners in making significant progress in web-enabling its CMS
business. In line with the Bank’s overall drive towards digitization,
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
it has further ensured a larger conversion of physical payments
into electronic in the Cash Management Business.
The Bank has succeeded in leveraging its market position,
expertise and technology to create a competitive advantage
and build market share by offering customised solutions. From
customised ERP integrations to high-end SAP certified solutions,
the Bank has been a leading proponent of adopting innovative
technology.
As part of the Bank’s on-going digital transformation, the Bank
extended its “Trade on Net” offering on mobile. This product
enables customers to avail of Remittances, Letters of Credit,
and Guarantees through the net platform. It gained enormous
acceptance with customers due to the savings and convenience
it offers.
International Operations
Your Bank currently has three overseas branches: a Wholesale
Banking branch in Bahrain, a branch in Hong Kong and
a branch at Dubai International Finance Centre (DIFC) in Dubai.
The overseas branches offer multiple banking services including
Treasury Products, Trade Finance and Loans to customers.
The DIFC branch offers advisory services to High Net Worth
Individuals and Corporates. Your Bank also has Representative
Offices
in Abu Dhabi and Nairobi which are engaged
in promotional and marketing activities of the Bank’s brand
name among the Non-Resident Indians. As of March 31, 2016,
the combined balance sheet size of overseas branches was over
$ 5 billion. Advances at overseas branches constituted close to
7 per cent of the Bank’s gross advances as on March 31, 2016.
The total income of the overseas branches constituted over
1.5 per cent of the Bank’s total income for the year.
Your Bank mobilized $ 3.4 billion in special FCNR (B) deposits
from NRI clients under RBI swap window in 2013. This was
the highest among all Banks. NRI clients had availed of loans
amounting to $ 1.8 billion from the Bahrain branch towards
booking these deposits. As a major portion of these deposits
was for a 3 year tenor, this would come up for maturity during
September - November 2016.
Treasury
The Treasury Group is responsible for compliance with reserve
requirements and management of liquidity and interest rate risk on
the Bank’s balance sheet. On the foreign exchange and derivatives
front, revenues were driven primarily by spreads on customer
transactions based on trade flows and customers’ demonstrated
hedging needs. The year ended March 31, 2016 recorded ` 1,227.7
crore in revenues from foreign exchange and derivative transactions.
These revenues were distributed across large and emerging
corporates, business banking and retail customer segments for
plain vanilla foreign exchange products and across primarily large
and emerging corporate segments for derivatives. The Bank
offers Indian Rupee and foreign exchange derivative products
to its customers, who use them to hedge their market risks.
The Bank enters into foreign exchange and derivative deals with
counterparties after it has set up appropriate counterparty credit
limits based on its evaluation of the ability of the counterparty
to meet its obligations in the event of crystallization of the
exposure. Appropriate credit covenants may be stipulated
where required as trigger events to call for collaterals or
terminate a transaction and contain the risk. Where the Bank
enters into foreign currency derivative contracts, not involving
the Indian Rupee, with its customers it lays them off in the inter-
Bank market on a matched basis. For such foreign currency
derivatives, the Bank primarily carries the counterparty
credit risk (where the customer has crystallized payables or
mark-to-market losses). The Bank also deals in derivatives
on its own account, including for the purpose of its own balance
sheet risk management.
to meet
Given the regulatory requirement of holding government
securities
the Statutory Liquidity Ratio (SLR)
requirement, your Bank maintains a portfolio of Government
Securities. While a significant portion of these SLR securities
are held in the “Held-to-Maturity” (HTM) category, some of
these are held in the “Available for Sale” (AFS) category. The
Bank is also a Primary Dealer for Government Securities. As
a part of this business, as well as otherwise, the Bank holds
fixed income securities in the ‘Held for Trading’ (HFT) category.
Information Technology
Technology is a key enabler and facilitator to the critical goals
of your Bank allowing it to make systems and processes even
more efficient. Since inception, your Bank continued to invest
heavily in technology to provide better products and superior
customer experience.
Your Bank continues to spread its electronically linked branch
network with state-of-the-art IT enabled core banking platform
to ensure customers have access to 24*7 banking services.
limitations
infrastructure
Your Bank now has a large branch network in rural India.
There are
in deep geography.
Your Bank has taken steps to address these issues, so that
the Bank can offer various products and seamless services
to clients across the length and breadth of the country. Your Bank
also implemented Desktop Virtualisation, a cloud technology
solution, to ensure that your Bank is able to overcome
telecom networks. Bandwidth acceleration
limitations of
and compression
implemented
to empower rural / semi urban branches to improve the speed
of the telecommunication network. QuickBanking, a mobile
app catering to the off-line Internet has been launched by your
Bank.
technology has been
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
Your Bank has a large presence in the transactional processing
space in most products including RTGS, NEFT and other
electronic payments, Retail Assets and Direct Banking.
Your Bank has made significant investments in technology
re-engineering, system design and architecture and smart
storage capacity. Your Bank maintains state-of-the-art IT
Infrastructure, Products and Services to meet growing business
needs. It’s imperative that these services are provided without
any disruption. Your Bank has sophisticated architecture and
well-rehearsed Disaster Recovery set-up, so as to ensure 99.5
per cent up-time of important applications.
initiatives
These
reaffirmed your Bank’s commitment
to a significantly enhanced customer experience across all
channels including Digital Banking.
Your Bank is glad to share that technology initiatives of your
Bank have also been recognized in the form of many awards
and accolades including from Institute for Development and
Research in Banking Technology (IDRBT) and Indian Banks’
Association (IBA).
Cyber Security
Your Bank has setup an effective governance framework
to manage cyber security. A suitable organizational structure
has been put in place to ensure that your Bank monitors
various cyber security threats and minimizes them.
Your Bank conducts the cyber security threat assessment and
mitigation requirements on a continuous basis and is committed
to implement necessary improvements in an on-going manner.
The Bank has
to counter these:
implemented various security
initiatives
(cid:115)(cid:0) (cid:50)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:82)(cid:0)(cid:54)(cid:85)(cid:76)(cid:78)(cid:69)(cid:82)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:0) (cid:33)(cid:83)(cid:83)(cid:69)(cid:83)(cid:83)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:48)(cid:69)(cid:78)(cid:69)(cid:84)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:52)(cid:69)(cid:83)(cid:84)(cid:83)(cid:0)
are carried out to assess and remedy the vulnerabilities
in applications and IT Infrastructure
(cid:115)(cid:0) (cid:33)(cid:78)(cid:84)(cid:73)(cid:13)(cid:48)(cid:72)(cid:73)(cid:83)(cid:72)(cid:73)(cid:78)(cid:71)(cid:0) (cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0) (cid:72)(cid:65)(cid:86)(cid:69)(cid:0) (cid:66)(cid:69)(cid:69)(cid:78)(cid:0) (cid:83)(cid:85)(cid:66)(cid:83)(cid:67)(cid:82)(cid:73)(cid:66)(cid:69)(cid:68)(cid:0) (cid:84)(cid:79)(cid:0) (cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)
that the phishing sites are shutdown in a timely manner.
This ensures that customers are not lured to fraudulent
sites
(cid:115)(cid:0) (cid:50)(cid:73)(cid:83)(cid:75)(cid:0) (cid:37)(cid:78)(cid:71)(cid:73)(cid:78)(cid:69)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:52)(cid:82)(cid:65)(cid:78)(cid:83)(cid:65)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:45)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0)
implemented to monitor suspicious transactions on Internet
Banking, ATM and e-commerce channel
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0) (cid:67)(cid:89)(cid:66)(cid:69)(cid:82)(cid:13)(cid:65)(cid:84)(cid:84)(cid:65)(cid:67)(cid:75)(cid:83)(cid:0) (cid:84)(cid:65)(cid:82)(cid:71)(cid:69)(cid:84)(cid:69)(cid:68)(cid:0) (cid:65)(cid:84)(cid:0) (cid:67)(cid:82)(cid:73)(cid:84)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0) (cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
assets, the Bank has setup 24*7 Cyber Security Command
Centre
(cid:115)(cid:0) (cid:40)(cid:85)(cid:77)(cid:65)(cid:78)(cid:83)(cid:0) (cid:66)(cid:69)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:87)(cid:69)(cid:65)(cid:75)(cid:69)(cid:83)(cid:84)(cid:0) (cid:76)(cid:73)(cid:78)(cid:75)(cid:0) (cid:73)(cid:78)(cid:0) (cid:35)(cid:89)(cid:66)(cid:69)(cid:82)(cid:0) (cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:89)(cid:12)(cid:0) (cid:89)(cid:79)(cid:85)(cid:82)(cid:0)
Bank has been carrying out continuous awareness among
employees and customers
(cid:115)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0)(cid:67)(cid:82)(cid:73)(cid:84)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:87)(cid:69)(cid:66)(cid:83)(cid:73)(cid:84)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:83)(cid:67)(cid:65)(cid:78)(cid:78)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:69)(cid:68)(cid:0)
continuously for early detection of any malware
A testimony to the Bank’s crisis preparedness is that it has
secured PCI DSS and ISO 27001 certification for its critical
information assets. Its efforts have been further recognized
through awards
IDRBT, Data Security Council of
India-National Association of Software and Services Companies
(NASSCOM) for various cyber security initiatives.
from
Service Quality Initiatives
is undertaken
from customers
in product, processes and service
A regular process of reviewing the service levels and capturing
feedback
for continuous
levels.
improvement
This has gained even more criticality as the customer can now
access the Bank’s services across traditional touch points like
branches, ATMs as well as the digital ones like the Internet and
Mobile. Thanks to the new digital products on offer from the
Bank - constantly monitoring the customer experience, securing
feedback and acting on it becomes even more imperative. Your
Bank has therefore augmented the training and skill development
mechanism to empower and equip employees to deliver improved
quality of Customer Service, as well as put in place a more
stringent grievance monitoring and redressal mechanism across
different delivery channels. The effectiveness of these measures
is reviewed periodically at different levels including the Board of
Directors. All these initiatives have helped in consistent reduction
in total number of customer complaints. It is also a testimony to
the Bank’s strong and objective review mechanism. These are
done by an independent cross functional team of senior staff to
ensure unbiased resolution. In addition to the aforementioned
measures, in compliance with Regulatory guidelines, your Bank
has appointed a senior retired banker as Chief Customer Service
Officer (Internal Ombudsman) who heads the review mechanism.
As a result of the continued focus on customer service, your
Bank has received written appreciation from many of the Banking
Ombudsmen appointed by Reserve Bank of India across locations
such as Andhra Pradesh, Chhattisgarh, Goa, Gujarat, Haryana,
Madhya Pradesh, Maharashtra, Punjab, Sikkim, Uttarakhand,
Uttar Pradesh and West Bengal.
Risk Management and Portfolio Quality
Integral to its business, the Bank takes on various types of risk,
the most important of which are credit risk, market risk, liquidity
risk and operational risk. The identification, measurement,
monitoring and management of risks remain a key focus
area for the Bank. Sound risk management and balancing
risk-reward trade-offs are critical to the Bank’s success. Business
and revenue growth are therefore to be weighed in the context
of the risks implicit in the Bank’s business strategy. The Board
of Directors of your Bank endorses the risk strategy and approves
HDFC Bank Limited Annual Report 2015-16
23
Directors' Report
the risk policies. The Risk Policy and Monitoring Committee of the
Board supervises implementation of the risk strategy. It guides the
development of policies, procedures and systems for managing
risk. The committee periodically reviews risk level and direction,
portfolio composition, status of impaired credits as well as limits
for treasury operations.
To manage credit risk, the Bank has a comprehensive centralized
risk management function, independent from the operations and
business units of the Bank. Distinct policies, processes and systems
are in place for the retail and wholesale lending businesses.
In the retail loan businesses, the credit cycle is managed through
appropriate front-end credit, operational and collection processes.
For each product, programmes defining customer segments,
underwriting standards and security structure are specified to
ensure consistency of credit buying patterns. Given the granularity
of individual exposures, retail credit risk is monitored largely on a
portfolio basis, across various products and customer segments.
For wholesale credit exposures, management of credit risk is
done through target market definition, appropriate credit approval
processes, ongoing post-disbursement monitoring and remedial
management procedures. Overall portfolio diversification,
prudential ceilings across various dimensions
(individual/
borrower group, industry, credit risk rating grades, and country),
product mix, security structures and periodic as well as proactive
reviews facilitate risk mitigation and management.
The asset quality of the Indian banking industry came under
severe pressure during the year due to broader macroeconomic
factors as well as issues specific to certain sectors in the
economy. The banking industry on a collective basis saw
a sharp spike in non-performing assets as also flexible structuring
of loans under the RBI framework. Your Bank did not witness any
significant deterioration in overall asset quality and continues
to maintain the highest standards of governance in respect
of recognition and provisioning of non-performing loans.
During the year ended March 31, 2016, your Bank’s ratio
of gross non-performing assets (NPAs) to gross advances was
0.9 per cent. Net non-performing assets (gross non-performing
assets less specific loan loss provisions) were 0.3 per cent of
net advances as of March 31, 2016. Total restructured assets
(including applications under process
restructuring)
were 0.1 per cent of gross advances as of March 31, 2016.
The specific loan loss provisions that the Bank has made for its
non-performing assets continue to be more conservative than
the regulatory requirements. In addition, the Bank has made
general provisions for standard assets which are as per the
regulatory prescription. The coverage ratio taking into account
specific, general and floating provisions was 146 per cent as of
March 31, 2016.
for
A dedicated team within the risk management function
is responsible for assessment, monitoring and reporting
of operational risk exposures across the Bank. A Board
approved Operational Risk Management Framework
has been put in place. A bottom up risk control self-assessment
process identifies high risk areas so that the Bank can initiate
timely remedial measures. Key Operational Risk Indicators are
employed to alert the Bank on impending problems in a timely
manner to ensure risk mitigation actions. Material operational
risk
identify areas
of risk exposures and gaps in controls on the basis of which
appropriate risk mitigating actions are initiated.
losses are examined
thoroughly
to
Market Risk in the trading portfolio of your Bank has been
adequately managed through a well-defined Board approved
market risk policy and stringent trading risk limits such as
positions limits, gap limits, tenor restrictions, sensitivity limits
viz. PV01, Modified Duration and Option Greeks, Value-at-Risk
(VaR) limit and Stop Loss Trigger Level (SLTL). The Bank also
has an approved investment policy which is adhered to while
investing or trading. Additionally, the Bank has a Board approved
stress testing policy and framework which encompasses
the market risk stress test scenarios and simulations so that
stress losses can be measured and adequate control measures
can be initiated.
losses.
Liquidity risk is the risk that the Bank may not be able
to fund increases in assets or meet obligations as they
fall due without
Interest
incurring unacceptable
rate risk is the risk where changes in market interest
rates affect the Bank’s earnings through changes in its
net interest income (NII) and the market value of equity
through changes in the economic value of its interest rate
sensitive assets, liabilities and off-balance sheet positions.
The policy framework for liquidity and interest rate risk
management is established in the Bank’s ALM policy which is
guided by regulatory instructions. Your Bank has established
various Board approved limits viz., maturity gap limits and limits
on stock ratios for liquidity risk and limits on income impact
and market value impact for interest rate risk. Your Bank’s
Asset Liability Committee (ALCO) is responsible for adherence
to liquidity risk and interest rate risk limits. Additionally,
your Bank has a comprehensive Board approved stress testing
programme covering liquidity and interest rate risk which
is aligned with the regulatory guidelines. The Liquidity
Coverage Ratio (LCR) is a global minimum standard for Bank
liquidity. The ratio aims to ensure that a bank has an adequate
stock of unencumbered High - Quality Liquid Assets (HQLA)
that can be converted into cash easily and immediately
to meet its liquidity needs for a 30 calendar day liquidity stress
scenario. In June 2014, RBI released Basel III Framework
on Liquidity Standards - Liquidity Coverage Ratio (LCR), Liquidity
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
Risk Monitoring Tools and LCR Disclosure Standards. Based
on the guidelines, LCR became effective on January 1, 2015.
The minimum requirement for the ratio was 70 per cent on
January 1, 2016, increasing in equal annual increments to reach
100 per cent on January 1, 2019. As per the prevailing guidelines,
your Bank’s monthly average LCR, for the quarter ended
March 31, 2016 was 80 per cent.
In accordance with RBI’s guidelines, the Bank is currently
on the Standardized Approach for Credit Risk, the Basic
Indicator Approach for Operational Risk and the Standardized
Approach for Market Risk. Parallely, the Bank is progressing
with its initiatives for migrating to the advanced approaches
for these risks. The framework of the advanced approaches
is in harmony with the Bank’s objective of adopting best
practices in risk management.
The Bank has a structured management framework in the
Internal Capital Adequacy Assessment Process (ICAAP) for
the identification and evaluation of the significance of all risks
that the Bank faces, which may have a material adverse impact
on its business and financial position. The Bank considers
the following as material risks it is exposed to in the course
of its business and therefore, factors these while assessing /
planning capital:
(cid:115)(cid:0) (cid:35)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:12)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:50)(cid:69)(cid:83)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:83)(cid:0)
(cid:115)(cid:0) (cid:35)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0)(cid:35)(cid:79)(cid:78)(cid:67)(cid:69)(cid:78)(cid:84)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:45)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:0)
(cid:115)(cid:0) (cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:47)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:0)
(cid:115)(cid:0) (cid:51)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:73)(cid:67)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:50)(cid:65)(cid:84)(cid:69)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:34)(cid:79)(cid:79)(cid:75)(cid:0)
(cid:115)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:44)(cid:73)(cid:81)(cid:85)(cid:73)(cid:68)(cid:73)(cid:84)(cid:89)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:0)
(cid:115)(cid:0) (cid:50)(cid:69)(cid:80)(cid:85)(cid:84)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:82)(cid:65)(cid:68)(cid:65)(cid:89)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:45)(cid:79)(cid:68)(cid:69)(cid:76)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:52)(cid:69)(cid:67)(cid:72)(cid:78)(cid:79)(cid:76)(cid:79)(cid:71)(cid:89)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:35)(cid:79)(cid:85)(cid:78)(cid:84)(cid:69)(cid:82)(cid:80)(cid:65)(cid:82)(cid:84)(cid:89)(cid:0)(cid:35)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
(cid:115)(cid:0) (cid:39)(cid:82)(cid:79)(cid:85)(cid:80)(cid:0) (cid:50)(cid:73)(cid:83)(cid:75)(cid:0) (cid:8)(cid:67)(cid:79)(cid:86)(cid:69)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:40)(cid:36)(cid:34)(cid:0) (cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0) (cid:51)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0) (cid:44)(cid:84)(cid:68)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0)
HDFC Securities Ltd)
The Bank has a Board approved Stress Testing Policy and
Framework which forms an integral part of the Bank’s ICAAP.
Stress Testing involves the use of various techniques to assess
the Bank’s potential vulnerability to extreme but plausible stressed
business conditions. The changes in the levels of various risks
and the changes in the on and off balance sheet positions
of the Bank are assessed under assumed stress scenarios
and sensitivity factors. Typically, these relate, inter alia, to the
impact on the Bank’s profitability and capital adequacy.
Internal Controls, Audit and Compliance
Your Bank has Internal Audit and Compliance functions which
are responsible for independently evaluating the adequacy of all
internal controls and ensuring operating and business units adhere
to internal processes and procedures as well as to regulatory
and legal requirements. The audit function also proactively
recommends improvements in operational processes and service
quality. To mitigate operational risks, the Bank has put in place
extensive internal controls including audit trails, appropriate
segregation of front and back office operations, post transaction
monitoring processes at the back end to ensure independent
checks and balances, adherence to the laid down policies
and procedures of the Bank and to all applicable regulatory
guidelines. The
function also carries out
management self-assessment of adequacy of the Bank’s internal
financial controls and operating effectiveness of such controls
in terms of Sarbanes Oxley (SOX) Act and Companies Act,
2013. Your Bank has always adhered to the highest standards
of compliance and governance and has put in place controls and
an appropriate structure to ensure this. To ensure independence,
the internal audit function has a reporting line to the Chairman
of the Audit Committee of the Board and only a dotted line reporting
to the Managing Director. The Audit Committee of the Board also
reviews the performance of the audit and compliance functions
and reviews the effectiveness of controls and compliance with
regulatory guidelines.
internal audit
Corporate Social Responsibility - Building Sustainable
Communities
Building sustainable communities especially in rural India is a core
CSR objective of the Bank. Your Bank has identified Integrated
Rural Development as a vehicle for socio-economic change
and community building. This encompasses Education, Sanitation,
Skill Development and Livelihood Creation. Within these broad
areas, particular focus is to impart financial literacy / inclusion
and sanitation. The recipients of these interventions are primarily
women from the marginal sections of society.
The Integrated Rural Development Programme (IRDP) is spread
across diverse geographies ranging from the arid regions
of Marathwada in Maharashtra to the wet lands of Meghalaya.
HDFC Bank Limited Annual Report 2015-16
25
Directors' Report
In the endeavour to create sustainable livelihood, the Bank
promotes activities that are economically empowering while
keeping in mind the socio-economic context and the ecology of
the region. These include providing assistance to villages in soil
and water conservation, water management, construction,
renovation and maintenance of water harvesting structures
for improving surface and ground water availability, in partnership
with the Village Development Committees. Soil and water
conservation work has been initiated in 550 acres of land (covering
over 140 farmer families) with 65 acres brought under irrigation
for the first time and 45 acres brought under assured irrigation.
In one such intervention in Madhya Pradesh, the development of
a cluster of seven villages situated in Mandla district has been
undertaken. This region is home to a significant tribal population,
which is largely cut off from mainstream development.
Similar programmes are
in progress at Maharashtra and
Chhattisgarh. Raigarh in Maharashtra is a case in point, where
ESR (Elevated Storage Reservoir) has been provided which
ensures that every house has a water connection. Your Bank
has also installed solar street lights which benefit the entire
community especially women / girls as they face difficulties
in venturing out after sunset.
Since economic and social empowerment are the end objective
of the development interventions, the Bank’s CSR efforts are
reinforced by its direct intervention on financial inclusion and
literacy, thereby creating economically sustainable communities.
The disclosures as required under Rule 8 of the Companies Act
(Accounts) Rules, 2014 have been given at ANNEXURE 2 to this
report.
Skill Development and Livelihood
skill-oriented
The livelihood initiatives of the Bank centre around providing
training and capacity development to youth and women from
sections of society that have no access to formal education.
The support programmes are aimed at providing competency-
based,
training.
technical and
With various combinations of initiatives based on agriculture
and allied businesses, your Bank has supported more than
4,000 households, trained more than 500 youth on different
trades enabling
to be entrepreneurs. Another 600
have been trained to become employable. In 2015-16 alone,
the Bank trained over 85,000 people through the Sustainable
Livelihood Initiative.
vocational
them
initiated a pilot programme
In 2015-16, your Bank
in
skill development: The National University Students Skill
Development Programme in association with the Tata Institute
of Social Sciences which focuses on increasing employability
of university students by imparting knowledge and skills that
make them job ready. The students are trained and certified
in vocational skills in addition to their university graduate
degree. There is also a need to ensure that a minimum 80
per cent of the students secure jobs on completion of graduation.
About 4,200 students have undergone such training.
Your Bank has also initiated entrepreneurship and youth skills
development programme in the villages around Bilaspur and
Ponsara in Chhattisgarh which provide training in the fields of
IT enabled Skills (ITeS), Industrial Electrician and Agriculture.
Education is the key to initiating change. Keeping this in
mind, programmes are structured to ensure that the children
are provided with basic infrastructure to create a conducive
learning environment to acquire quality education. Continuing
with its mission to provide clean sanitation in schools, your
Bank has covered over 850 such institutions in more than 500
villages across Chhattisgarh, Gujarat, Haryana, Maharashtra,
Madhya Pradesh, Meghalaya, Punjab and Rajasthan.
In addition to construction of toilets, the Bank has tied up with
over 10 NGO partners to implement a behavioural change
programme which is oriented towards hygiene. The School
Management Committee is encouraged to take ownership of
maintaining the units. The interventions under WASH (Water
Sanitation and Hygiene) have also addressed the need for
clean drinking water in schools.
In addition to this, 30,000 students have benefited from
an on-going programme of financial literacy, offered with a
partner NGO in 300 schools of Chhattisgarh and Bihar. Some
other key initiatives under education are teachers training,
learning camps and career guidance programmes. In one such
programme, your Bank has undertaken the challenging task
of implementing an innovative programme ‘Zero Investment
Innovation in Education Initiative’ across schools in Uttar
Pradesh to encourage low cost innovation. The first phase
has seen over 2 lakh teachers oriented on this concept with
over 1 lakh innovative ideas submitted. Twenty five shortlisted
ideas will be recognized and implemented across the state run
schools in Uttar Pradesh.
Environment Sustainability
Maintaining a balance between
the natural capital
and communities is now integral to the Bank’s functioning.
Towards this end, Bank’s ATMs have gone paperless, enabling
reduction of carbon footprint. The Bank has given this effort
a further fillip by ensuring multichannel delivery through
NetBanking, PhoneBanking and MobileBanking. This reduces
carbon emission from operations as well as on account of
reduced customer travel requirements. Another source for
reducing the environmental footprint is solar ATMs. These
use rechargeable Lithium Ion batteries that bring down the
consumption of power generated using conventional sources.
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
Blood Donation Campaign
The ninth year of Blood Donation campaign witnessed
unprecedented participation with more
than 1.75
lakh
lakh units of blood.
individuals contributing nearly 1.5
The campaign recorded highest participation in terms of
number of cities, number of camps and number of colleges
in the year under review. Apart from branch and college level
camps, the Bank also tied up with Corporate and Defence
establishments
their premises,
to organize camps on
thus increasing the reach and spread of this social campaign.
Financial Inclusion
It is well accepted that increased financial inclusion leads to
enhanced GDP growth. The potential in India is especially
enormous as 40 per cent of the country’s total population
does not have access to formal banking services. Your Bank’s
financial inclusion initiatives are integrated across its various
businesses and product groups.
Your Bank is committed to furthering financial inclusion under
the Pradhan Mantri Jan Dhan Yojana (PMJDY) and social
security schemes. In line with the Government’s philosophy of
“Digital India” it has implemented customer friendly technology
solutions to make basic banking available to the common man
through Aadhaar and Rupay Card enabled micro-ATMs (compliant
to Unique Identification Authority of India) at every Bank Mitra
or Business Correspondent location.
the Government’s efforts, your Bank
Complementing
the “J-A-M”
has aggressively advocated and pursued
(Jandhan, Aadhaar, Mobile) trinity to ensure a holistic coverage
of customers and easy access through digital channels as well
as Aadhaar seeding to ensure Government benefits reach the
end-customer. The Bank has opened 15.8 lakh PMJDY
accounts since the launch of the scheme.
Prior to the launch of PMJDY, the Bank had been mobilising
Basic Banking Savings Deposit Accounts (BBSDA) with the
specific objective of providing customers a platform to inculcate
savings habit. The Bank periodically tracks the behaviour in
these accounts to ensure that the accounts opened are active.
The total number of BBSDA was 73.8 lakh (including those
opened under PMJDY umbrella) as on March 31, 2016 as
against 49.35 lakh as on March 31, 2015.
The Government launched social security schemes in May
2015 with an objective of providing risk cover at minimal cost.
The Bank offers all three schemes i.e. Pradhan Mantri Jeevan
Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima
Yojana (PMSBY) and Atal Pension Yojana (APY) through
its branches, business correspondents and digital channels.
The Bank is among the leading Private Sector Banks in PMJJBY
and PMSBY and is a leader in APY, enrolling a total of 24.5 lakh
customers in these three social security schemes.
As on March 31, 2016, your Bank has brought over one crore
households into the banking fold, which were hitherto excluded
from basic banking services. Of these, over 55 lakh households
are in over 5,000 villages with a population less than 2,000.
These have been largely excluded from the formal banking sector.
Your Bank firmly believes that financial literacy is the first step
towards financial inclusion. In order to educate people who do
not have access to formal banking channels and bring them
within this fold, various training programmes for customers
and even intermediaries like Business Correspondents have been
put in place.
Dhanchayat and Other Financial Literacy Initiatives
In the period under review, your Bank rolled out its programme
“Dhanchayat: Financial Literacy on Wheels”. Dhanchayat is an
educational film to raise awareness on the perils of unorganised
finance and how the malpractices associated with it hurt the
dignity of the individual. Launched under the aegis of Swachch
Banking - the Bank’s CSR initiative for rural India, HDFC Bank-
branded Dhanchayat video vans travelled to villages to educate
the rural populace. The initiative covered nearly 4,900 villages
thus benefiting nearly 10 lakh people.
Your Bank regularly undertakes training programmes on credit
counselling and inculcating the savings habit. Besides, it also
provides information on asset creation, insurance, and income
generation programmes. During the year almost over 1.4
lakh financial awareness programmes covering over 22 lakh
households were conducted.
As on the year ended March 31, 2016, your Bank had 1,025
branches in rural areas and 1,439 branches in semi urban areas.
Agriculture and Allied Activities
A large portion of India’s un-banked population relies on agriculture
as its main source of livelihood. It is imperative that banks
replace the traditional unorganized money lending channels by
providing transparent credit to farmers through various methods,
while simultaneously enabling income generating activities.
Your Bank provides various loans to farmers through its suite
of specifically designed products such as the Kisan Gold Card,
Tractor and Cattle Loans. In addition, the Bank offers post-harvest
cash credit, warehouse receipt financing and bill discounting
facilities to Mandi (markets for grain and other agricultural
produce) participants and farmers. These facilities enable the
Mandi participants to make timely payments to farmers. The Bank
carries out this business through branches that are located in
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
close proximity to Mandis. For the year ended March 31, 2016,
the Bank’s credit to agriculture and allied activities was about
` 65,250 crore as against approximately ` 49,085 crore in the
previous year.
The Bank targets specific sectors to capture supply chain of
certain crops from the production to the sales stages. On the basis
of these cash flows, your Bank is able to finance specific needs
of the farmers. This model has currently been implemented with
sugar, fruit, vegetable, and tea crops, as well as dairy farmers.
The initiative currently underway with dairy farmers includes
the appointment of dairy societies as business correspondents,
through whom the Bank opens accounts of individual farmers
attached to these societies. The societies route payments through
these accounts.
A number of retail credit products such as two-wheeler loans,
car loans, mortgages that are consumption products in urban
centres are also means of income generation for rural consumers.
Apart from loans directly linked to agriculture, your Bank is
one of the few to offer many other credit products under one
roof to aid financial betterment in rural locations. Your Bank has
extended provision of its retail loans to large segments of the
rural population, where the end use of the products acquired
(by availing Bank loans) is used for income generating activities.
For example, loans for tractors, commercial vehicles, two wheelers
improving productivity
supplement
and reducing expenses.
income by
farmer’s
the
Milk-to-Money
The use of appropriate technology is necessary to bring
about efficiency in the agri-value chain, reducing the time
taken between delivery of produce by the farmer to his final
payment. One such innovative technology initiative is the
Milk-to-Money for dairy supply chain. Under the initiative, your
Bank has deployed Multifunction Terminals (MFTs), also known
as Milk-to-Money ATMs, in dairy societies at the villages.
The MFTs link to the milk procurement system of the dairy society
to facilitate payment of milk proceeds into farmers’ accounts on
payment day. The entire process is done by the society without
any intervention by the Bank at the front-end. MFTs have
cash dispensers that function as standard ATMs enabling the
farmer to withdraw the amount from his account immediately.
the milk collection process benefits
The
both farmers and the society as they get payments quickly
without the hassle of cash distribution. Based on the payment
data, the Bank is able to lend to the farmers which improves
the collection of the society and ultimately milk production.
transparency
in
farmers. These centres also enable rural customers to receive
the direct benefit transfers from the Government in the same
account. Apart from dairy and cattle loans, customers gain
access to all bank products such as Vehicle Loans, 10 Second
Personal Loans and Kisan Credit Card. The farmers also avail
other digital facilities such as Bill Pay, Missed Call Banking and
Mobile Recharge. They are also enabled to transact digitally
with local merchants using products like PayZapp. This also
provides a transacting point for other customers in the village,
thus creating a complete rural ecosystem.
Loans against Gold Jewellery
Loans against gold jewellery have traditionally been an
important source of credit, dominated by the unorganized sector
and pawn brokers. Banks and other organized institutions have
expanded their product suite and reach to offer gold loans.
The entry of such players has resulted in increased awareness,
and at the same time provided greater transparency, substituting
the money lenders. The availability of the asset and the ease of
securing a loan has made this a convenient and viable credit
option. For the year ended March 31, 2016, loans against gold
jewellery stood at over ` 4,500 crore as against above ` 4,000
crore as on March 31, 2015.
Small and Micro Enterprises
The Micro, Small and Medium Enterprises (MSME) segment
is a vital component of the Indian economy. It contributes
45 per cent to the country’s total manufacturing output
and 30 per cent to exports. Your Bank has been a very active
participant in this segment and in order to engage better
with businesses of different sizes, the Bank has created
specialized verticals. It offers complete banking solutions
to micro, small and medium scale enterprises across industry
segments including manufacturing, retailing, wholesale, trading
and services. The entire suite of financial products including
Cash Credit, Overdrafts, Term Loans, Bill Discounting,
Export Packing Credit, Letter of Credit, Bank Guarantees,
Cash Management Services and other structured products
are available to these customers.
To drive the growth in MSME segment, your Bank organized
outreach programmes for SME customers. The programmes
were also used to create awareness among customers about
the new digital offerings of the Bank to improve efficiencies.
In the year 2015-16, your Bank conducted 27 loan meets
across 17 cities including Guntur, Guwahati, Kanpur, Kutch,
Lucknow, Nagpur, Vijayawada, and Visakhapatnam.
The Bank’s MFT
footprint now encompasses Gujarat,
Maharashtra, Punjab and Rajasthan with over 800
Milk-to-Money ATMs and Micro ATMs, servicing about 2.5 lakh
The Bank’s advances to Micro, Small and Medium Enterprises
has grown by 35.8 per cent in the year ended March 31, 2016
to touch more than ` 74,500 crore from close to ` 55,000 crore
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
for the year ended March 31, 2015. The Bank exceeded the
overall priority sector lending requirement of net Bank credit.
Sustainable Livelihood Initiative (SLI)
SLI is a board mandated programme to financially include
and uplift one crore households at the Bottom of the Pyramid
through a holistic approach to empowering people and
making a difference to their lives. It entails occupational
training, financial literacy, credit counselling, livelihood finance,
and market linkages.
Over the last six years, your Bank has accelerated its direct
linkage programme to people at the Bottom of the Pyramid
through Self-Help Groups and Joint Liability Groups. The Bank
engages with women in villages to conduct financial literacy
and credit counselling programmes, form groups, and then funds
these groups for income generating activities. This enables the
delivery of viable credit to the rural poor in a sustainable manner
and at the same time inculcates saving and banking habits.
As on March 31, 2016, your Bank has covered approximately
over 55 lakh households in villages spread over 360 districts
in more than 25 states including Assam, Bihar, Chhattisgarh,
Meghalaya, Madhya Pradesh, Odisha, Rajasthan, Sikkim,
Tripura, Uttar Pradesh and Uttarakhand.
In keeping with your Bank’s commitment to this initiative, SLI
has about 6,900 dedicated employees, who are trained to identify
and cater to diverse customer needs. They recognize that villages
are not homogeneous, but have their unique socio-economic
and cultural characteristics. This leads to formulation of village
specific strategies for customer acquisition and retention. Given the
profile of the clientele, the transactions are often low in value but high
in volume.
In keeping with the Bank’s “GoDigital” focus, it has leveraged
technology to reduce transaction costs and enhanced ease
of doing business. The “GoDigital” drive has resulted in reduced
response time in processing customer requests. Lengthy forms
have been shortened for greater convenience to customers.
These initiatives have reduced turnaround time for customers
by as much as 30 per cent. e-KYC and Credit bureau check
without PAN have addressed the issue of data validation to a
great extent. Transaction based on mobile Apps / platforms to
move villages towards cashless economies are in the offing.
The success of the SLI programme has been validated
by various awards and recognitions. One such accolade has
come from National Bank for Agriculture and Rural Development.
In its annual publication, ‘The Status of Microfinance in India
2014-15’ the status of micro finance initiatives in the country
is illustrated and gives a glimpse of interventions by various
banks across geographies. The publication serves as
a reference point for people in policy making functions,
researchers and others involved in developmental finance.
A special mention commending the SLI programme of the bank
has been made in the publication. It recognizes that the SLI
model of HDFC Bank may be studied for adoption by other Banks.
It is interesting to note that SLI is a relatively new model that has
been in operation since 2010.
Innovation
Innovation is now embedded in the DNA of HDFC Bank.
Employees are encouraged across functions to continuously
come up with new ideas and act as digital evangelists.
in
Innovation
the Bank has been driven by digitization,
the building block for which was laid two decades ago by investing
in technology. Digitization has been a theme for the Bank in the last
two years and it gained substantial momentum in the year under
review. The Bank is happy to share that it has a Digital Innovation
team, perhaps the only such group in the Indian banking context,
to scout for and experiment with technology both contemporary
and even futuristic.
Your Bank hosted a Digital Innovation Summit in March 2016
to tap into emerging technological trends that are shaping the
financial technology space. We are happy to report that five
companies have been chosen as potential partners in its journey.
These companies have been drawn from the domains of Artificial
Intelligence, Marketing, Mobile Payments, Quality Assurance and
Biometric Payments.
Some of the major digital innovations introduced this year are:
Innovations in Retail Business
(cid:115)(cid:0) PayZapp with SmartBuy: A comprehensive, convenient
and secure payment solution which allows customers to link
their cards once and then pay through one click. Smart Buy
within PayZapp brings the best deals and discounts offered
by merchant partners exclusively for HDFC Bank customers.
PayZapp offers the unique combination of the convenience
of 1-click payments and security. PayZapp for business allows
merchants to bill their customers and receive payments
instantly over the mobile, thereby making it easier for them
to collect cash remotely and expand their business.
(cid:115)(cid:0) 10 second Personal Loan: A pre-approved instant loan
on NetBanking which is offered to select customers and
is disbursed within 10 seconds of applying.
(cid:115)(cid:0) ZipDrive: An instant auto loan approval, which allows
customers to generate an online approval with reference
number, walk into a dealership and drive out with the car
of their choice. This approval, valid for 30 days, enables the
dealer to request HDFC Bank for the already pre-approved
loan sanctioned to the customer.
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
(cid:115) Virtual Relationship Manager: Offered to High Net Worth
customers by invitation, this is a 24*7 access to a relationship
manager through a safe and secure video interface on the
mobile banking app.
(cid:115)(cid:0) Chillr: Your Bank’s partner app, which allows customers
to send and receive money using phone book contacts.
The app also allows customers
to recharge mobiles,
DTH, data cards and make merchant payments.
(cid:115)(cid:0) Design Your Own Loan Against Securities
(LAS):
This combines the power of a loan and a bank account.
LAS can be availed against securities ranging from equity
to mutual funds to Kisan Vikas Patra. What’s more, customers
can design the loan on the basis of these securities.
(cid:115)(cid:0) Loans on ATMs: Your Bank offers 10 second personal loans on
ATMs. Various consumer loans and top-up of existing loans to
customers through ATMs will also be made available in the future.
(cid:115)(cid:0) Missed Called Recharge: A simple and innovative way
of recharging pre-paid mobile phones. It requires one-time
activation of the service. The mobile number gets recharged
for the selected amount, every time the customer gives
a missed call to a particular number.
(cid:115)(cid:0) MobileBanking Liteapp: A mobile banking app, offering
several basic transactions in Hindi and English targeted
at semi-urban as well as rural customers. This app caters
to the off-line internet customers.
Innovations in Wholesale Business
(cid:115)(cid:0) Trade on Net and E Net on Mobile for corporate
customers: For cash management, trade finance, treasury
and supply chain services, dynamic digital platforms like
‘Enet’ and ‘Trade on Net’ offer value additions at every stage
of the financial value chain. With Trade Finance Mobile,
the services are now accessible anytime, anywhere, allowing
customers to authorize transactions on-the-go with OTP-
based security.
People
People are a core value of the Bank and they constitute Human
Capital. Your Bank firmly believes that a well-trained and motivated
workforce is critical to achieving its strategic goals. The Bank’s HR
strategy is closely allied to its business strategy as enunciated
in the section on ‘Mission, Business Strategy and Approach to
Business’.
The five broad pillars of HDFC Bank’s People strategy are:
(cid:115)(cid:0) Resourcing and Staffing: In an industry where agility in
talent acquisition and deployment is key to geographic
expansion and growth, your Bank has leveraged online
recruitment along with other channels like job ready model
to develop reach and quality of hires. It has created a strong
leadership pipeline across levels by identifying the right
talent internally and grooming them for challenging roles.
This has resulted in an 85,000 plus strong work force that is
well motivated, and trained to deliver value to the customer.
(cid:115)(cid:0) Career Management: Your Bank’s talent management
processes create opportunities for employees to develop
and grow. The systematic investment of time in career
discussion with employees, competency assessment,
and intensive functional and behavioural training through
the Gurukul programmes sends a strong message of the
Bank’s commitment to employees on career progression.
(cid:115)(cid:0) Employee Engagement: The Bank has nurtured
an enabling performance culture in line with its vision to be a
“World Class Indian Bank”. The performance management
system aligns organization goals with key objectives for each
business which drives individuals to strive for excellence.
In addition, your Bank strives to strengthen its connect with
employees and has created employee engagement events,
conducted both at local and national levels.
o Josh Unlimited: Pan-India Sports event conducted
in 26 cities
o Stepathlon: Almost 2500 employees participated in the
employee wellness initiative
o Hunar:
In-house Talent competition conducted
in 9 cities
o Corporate Online Library: Inculcates reading habit.
Almost 1.5 lakh books made available
o Kwiz Kat: National Banking Quiz with participation
by 200 teams
In addition to the aforementioned programmes, employees
can participate in the “HDFC Bank Voice Hunt Contest”
in association with Shankar Mahadevan Academy and “STILLS”
which is an inter-corporate photography contest.
The Bank encourages employees to participate in community
and social work. Through your Bank’s “Employee Payroll
Giving” programme, employees can choose to donate a certain
amount from their salary each month for specific causes.
The other flagship programmes are the Blood Donation
Drive and the Bank’s volunteering programme which involves
employees imparting financial literacy as well as relief efforts
like the J&K flood relief.
HDFC Bank Limited Annual Report 2015-16
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Directors' Report
“HDFC Bank Cares” is an initiative to address healthcare
needs of employees. Activities under this programme include
Health mailers, Doctor on Call, Health check-up camps
and Health Talks by experts. The Bank runs an on-site crèche
at Kanjurmarg, Mumbai.
These initiatives help create a connect among employees
and also helps them forge an emotional bond with the
organization. Further, a strong feedback mechanism helps
shape the programmes and aligns them with people’s
expectations and organization policies.
(cid:115)(cid:0) Training and Development: Training plans are
developed based on analysis of training needs done
in consultation with various businesses. An extensive bouquet
of training programmes are delivered covering on-boarding,
product and process training, advanced programmes
and behavioural training. The on-boarding training
ensures that new employees are trained comprehensively
and equipped with necessary know-how, as well as
functional and behavioural skills required for the role. The
product training and advanced programmes enable skill
development, regular updates and build expertise in staff.
The training methodology has evolved to application based
training to include simulations, case studies and games.
Today, over 100 courses can be availed on e-learning
platforms.
(cid:115)(cid:0) Rewards: Merit is the driving force in the organization.
The distinctive part of the milieu of rewards both financial
and non-financial is the objectivity and transparency with
which it is done. This fair and equitable approach encourages
staff to give off their best. The compensation policy ensures
that remuneration is not only competitive but also includes
wealth creation opportunities through long term rewards
like ESOPs. The Bank has a comprehensive compensation
policy that has been articulated in line with the Reserve Bank
of India’s guidelines. The “Star Awards” is an institutionalized
recognition programme
recognizes
performers. The “Tejaswini Awards” is a special category
to recognize women achievers.
that periodically
Other Statutory Disclosures
Board and Board Committees
Extract of Annual Return
Pursuant to section 92 (3) of the Companies Act, 2013 and Rule
12 (1) of the Companies (Management and Administration)
Rules, 2014, the extract of the Annual Return is annexed as
ANNEXURE 3.
Directors’ Responsibility Statement
Pursuant to Section 134 (3)(c) read with Section 134 (5) of the
Companies Act, 2013, the Board of Directors hereby state that:
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:80)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0) (cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:83)(cid:12)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)
accounting standards have been followed along with proper
explanation relating to material departures, if any
(cid:115)(cid:0) (cid:55)(cid:69)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:83)(cid:69)(cid:76)(cid:69)(cid:67)(cid:84)(cid:69)(cid:68)(cid:0)(cid:83)(cid:85)(cid:67)(cid:72)(cid:0)(cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:73)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:69)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:77)(cid:0)
consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view
of the state of affairs of the Bank as on March 31, 2016 and
of the profit of the Bank for the year ended on that date
(cid:115)(cid:0) (cid:55)(cid:69)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:84)(cid:65)(cid:75)(cid:69)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:85)(cid:70)(cid:108)(cid:67)(cid:73)(cid:69)(cid:78)(cid:84)(cid:0)(cid:67)(cid:65)(cid:82)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:69)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)
of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the
assets of the Bank and for preventing and detecting fraud and
other irregularities
(cid:115)(cid:0) (cid:55)(cid:69)(cid:0) (cid:72)(cid:65)(cid:86)(cid:69)(cid:0) (cid:80)(cid:82)(cid:69)(cid:80)(cid:65)(cid:82)(cid:69)(cid:68)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0) (cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:83)(cid:0) (cid:79)(cid:78)(cid:0) (cid:65)(cid:0) (cid:71)(cid:79)(cid:73)(cid:78)(cid:71)(cid:0) (cid:67)(cid:79)(cid:78)(cid:67)(cid:69)(cid:82)(cid:78)(cid:0)
basis
(cid:115)(cid:0) (cid:55)(cid:69)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:76)(cid:65)(cid:73)(cid:68)(cid:0)(cid:68)(cid:79)(cid:87)(cid:78)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:66)(cid:69)(cid:0)(cid:70)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)
the Bank and that such internal financial controls are adequate
and were operating effectively
(cid:115)(cid:0) (cid:55)(cid:69)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:68)(cid:69)(cid:86)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)
the provisions of all applicable laws and that such systems
were adequate and were operating effectively
Auditors
The Auditors, M/s. Deloitte Haskins & Sells, Chartered
Accountants, will retire at the conclusion of the forthcoming Annual
General Meeting and are eligible for re-appointment. Members
are requested to consider their re-appointment for financial year
2016-17 on an annual remuneration of ` 1,90,00,000 (previous
year ` 1,10,00,000 and additional fees, proposed for ratification
by the members, of ` 40,00,000 for reporting on internal
financial controls for financial year 2015-16) plus service taxes
as applicable, which has been approved by the Audit Committee
of the Board.
Disclosure under Foreign Exchange Management Act, 1999
The details of Board meetings held during the year, attendance
of Directors at the meetings and constitution of various
Committees of the Board are included separately in the
Corporate Governance Report.
The Bank is in compliance with the Foreign Exchange Management
Act, 1999 (“FEMA”) provisions with respect to downstream
investments made in its subsidiaries. Further the Bank has
obtianed a certificate from its statutory auditors certifying that
HDFC Bank Limited Annual Report 2015-16
31
Directors' Report
the Bank is in compliance with the FEMA provisions with respect
to the downstream investments made in its subsidiaries during
the year.
Related Party Transactions
The details of transactions entered into with related parties are
enclosed as ANNEXURE 4 to this report.
Particulars of Loans, Guarantees or Investments
Pursuant to Section 186 (11) of the Companies Act, 2013,
the provisions of Section 186 of Companies Act, 2013, except
sub-section (1), do not apply to a loan made, guarantee given or
security provided by a banking company in the ordinary course
of business. Further, in terms of the Companies (Removal
of Difficulties) Order, 2015, nothing in Section 186 except
sub section (1) shall apply to any acquisition made by a banking
company in the ordinary course of business. The particulars
of investments made by the Bank are disclosed in Schedule 8
of the Financial Statements as per the applicable provisions of
Banking Regulation Act, 1949.
Financial Statements of Subsidiaries and Associates
In terms of Section 134 of the Companies Act, 2013 and read
with Rule 8(1) of the Companies (Accounts) Rules, 2014
the performance and financial position of the Bank’s subsidiaries
and associates are enclosed as ANNEXURE 5 to this report.
There were no entities which became or ceased to be the Bank’s
subsidiaries, associates or joint ventures during the year.
Whistle Blower Policy / Vigil Mechanism
The Bank has adopted a Whistle Blower Policy pursuant to which
employees of the Bank can raise their concerns relating to fraud,
malpractice or any other activity or event which is against the
interest of the Bank or society as a whole. Details of complaints
received and the action taken are reviewed by the Audit Committee.
The functioning of the Whistle Blower mechanism is reviewed
by the Audit Committee from time to time. None of the Bank’s
personnel have been denied access to the Audit Committee.
Declaration by Independent Directors
Board Performance Evaluation
The Nomination and Remuneration Committee (NRC) has
approved a framework / policy for evaluation of the Board,
Committees of the Board and the individual members of the
Board. The said framework / policy was duly reviewed during
the year. A questionnaire for the evaluation of the Board
and its Committees, designed in accordance with the said
framework and covering various aspects of the performance
of the Board and its Committees, including composition and
quality, roles and responsibilities, processes and functioning,
adherence to Code of Conduct and Ethics and best practices
in Corporate Governance was sent out to the directors.
The responses received to the questionnaires on evaluation
of the Board and its Committees were placed before the
meeting of the Independent Directors for consideration.
The assessment of
the
performance of the Board and its Committees was subsequently
discussed by the Board at its meeting.
Independent Directors on
the
Your Bank has in place a process wherein declarations
are obtained from the directors regarding fulfilment of the
“fit and proper” criteria in accordance with the guidelines
of the Reserve Bank of India. The declarations from the Directors
other than members of the NRC are placed before the NRC
and the declarations of the members of the NRC are placed
before the Board. Assessment on whether the Directors fulfil the
said criteria is made by the NRC and the Board on an annual
basis. In addition, the framework / policy approved by the NRC
provides for a performance evaluation of the Non-Independent
Directors by the Independent Directors on key personal and
professional attributes and a similar performance evaluation
of the Independent Directors by the Board, excluding the Director
being evaluated. Such performance evaluation has been duly
completed as above.
Policy on Appointment and Remuneration of Directors and
Key Managerial Personnel
The Nomination and Remuneration Committee
(NRC)
recommends the appointment of Directors to the Board.
The NRC identifies persons who are qualified to become
Directors on the Board and evaluates criteria such as academic
qualifications, previous experience, track record and integrity
of
their
appointment to the Board.
identified before
recommending
the persons
Mrs. Shyamala Gopinath, Mr. Partho Datta, Mr. Bobby Parikh,
Mr. A. N. Roy and Mr. Malay Patel are Independent Directors
on the Board of the Bank as on March 31, 2016. All the Independent
Directors have given their respective declarations under Section
149 (6) and (7) of the Companies Act, 2013 and the Rules made
thereunder. In the opinion of the Board, the Independent Directors
fulfil the conditions relating to their status as Independent Directors
as specified in Section 149 of the Companies Act, 2013 and the
Rules made thereunder.
The remuneration of whole time Directors is governed by
the compensation policy of the Bank. The compensation policy
of the Bank, duly reviewed and recommended by the NRC has
been articulated in line with the Reserve Bank of India guidelines.
Your Bank’s compensation policy is aimed to attract, retain,
reward and motivate talented individuals critical for achieving
strategic goals and long term success. Compensation policy
is aligned to business strategy, market dynamics, internal
characteristics and complexities within the Bank. The ultimate
HDFC Bank Limited Annual Report 2015-16
32
Directors' Report
objective is to provide a fair and transparent structure that helps
the Bank to retain and acquire the talent pool critical to building
competitive advantage and brand equity.
Your Bank’s approach is to have a pay for performance culture
based on the belief that the performance management system
provides a sound basis for assessing performance holistically.
The compensation system should also take into account factors
like roles, skills / competencies, experience and grade / seniority
to differentiate pay appropriately on the basis of contribution,
skill and availability of talent on account of competitive market
forces. The details of the compensation policy are also
included in Schedule 18 - Notes forming part of the Accounts -
Note no. 24.
expenses
Independent Directors
Non-Executive Directors are paid remuneration by way
of sitting fees for attending meetings of the Board and its
Committees, which are determined by the Board based
regulatory prescriptions. Non-Executive
on applicable
Directors
incurred
reimbursed
also
are
by them for attending meetings of the Board and its
Committees at actuals. The remuneration payable to the
is
Non-Executive Directors and
governed by the provisions of the Banking Regulation Act, 1949,
RBI guidelines issued from time to time and the provisions of
the Companies Act, 2013 and related rules to the extent it is
not inconsistent with the provisions of the Banking Regulation
Act, 1949 and RBI guidelines. The Companies Act, 2013,
the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, and dynamic business environment have
placed more onerous responsibilities on the Non-Executive
Directors, particularly the Independent Directors. These require
the Directors to play a more pro-active role, along with greater
involvement in Board’s decision making process. In order
to enable the Bank to attract and retain professional directors,
that such Directors are appropriately
it
compensated. In terms of the guidelines issued by RBI for
compensation of Non-Executive Directors of private sector
banks dated June 1, 2015, the Board has, subject to the approval
of the members at the ensuing Annual General Meeting
of the Bank, approved payment of profit-related commission to its
non-executive directors, other than the Chairperson, not
exceeding ` 10,00,000/- (Rupees Ten Lakh only) per annum
for each Non-Executive Director.
is essential
None of the Directors of your Bank other than Mr. Kaizad
Bharucha is a director of the Bank’s subsidiaries as on
March 31, 2016. Mr. Bharucha is paid sitting fees by the
subsidiary for attending meetings of the Board and Committees
of the subsidiary. During the year, Mr. Bharucha was paid
sitting fees of ` 4,50,000 by the subsidiary. Mr. Bharucha has
not received any commission from the subsidiary.
The Board of Directors of HDB Financial Services Limited,
the Bank’s subsidiary, has appointed Mr. Aditya Puri as the
Non-Executive Chairman on
their company
with effect from May 1, 2016.
the Board of
Significant and Material Orders Passed By Regulators
During the year under review no significant or material Orders
were passed by any regulators or courts or tribunals against
the Bank other than those disclosed separately in the financial
statements and in the Corporate Governance Report.
Directors and Key Managerial Personnel
Mrs. Renu Karnad and Mr. Keki Mistry will retire by rotation at
the ensuing Annual General Meeting of the Bank and are eligible
for re-appointment. During the year, Dr. Pandit Palande ceased
to be a Director on the Bank from the close of business hours on
April 23, 2015, on completing the maximum permitted tenure of
eight years as per Banking Regulation Act, 1949. Your Directors
wish to place on record their sincere appreciation of the
contribution made by Dr. Palande during his tenure with the Bank.
Mr. Umesh Chandra Sarangi was appointed as Additional Director
with effect from March 1, 2016 to hold office till the conclusion
of the ensuing Annual General Meeting. Mr. Sarangi has been
appointed as a director having specialized knowledge and
practical experience in agriculture and rural economy as per
the provisions of Section 10-A (2)(a) of the Banking Regulation
Act, 1949. In terms of Section 149 of the Companies Act, 2013,
it is proposed to appoint Mr. Sarangi as an Independent Director
for a tenure of five (5) years, determined in accordance with the
applicable provisions of the Banking Regulation Act, 1949 and
the guidelines of RBI in this regard. The Bank has received a
notice from a member proposing the candidature of Mr. Sarangi
as Director of the Bank at the ensuing Annual General Meeting.
The brief resume / details regarding the Directors proposed
to be appointed / re-appointed as above are furnished in the
report on Corporate Governance. There have been no changes
in the Directors and Key Managerial Personnel of the Bank other
than the above.
Familiarization Programme for Independent Directors
The various programmes undertaken for familiarizing Independent
Directors with the functions and procedures of the Bank are
disclosed in the Corporate Governance Report.
Particulars of Employees
The information in terms of Rule 5 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is given
in the ANNEXURE 6 to this report.
HDFC Bank Limited Annual Report 2015-16
33
Directors' Report
The Bank had 87,555 employees as on March 31, 2016.
There were 311 employees employed throughout the year who
were in receipt of remuneration of more than ` 60 lakh per
annum and 23 employees employed for part of the year who
were in receipt of remuneration of more than ` 5 lakh per month.
The details of such employees in terms of Rule 5 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules,
2014 are appended separately and form part of this report.
The Report and Accounts are being sent to the shareholders
excluding these particulars and any shareholder interested
in obtaining the said details may write to the Company Secretary
at the Registered Office of the Bank.
Conservation Of Energy, Technology Absorption, Foreign
Exchange Earnings and Outgo
(A) Conservation of Energy
Your Bank has undertaken several initiatives in this area such as:
(cid:115)(cid:0) (cid:50)(cid:69)(cid:80)(cid:76)(cid:65)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0) (cid:79)(cid:66)(cid:83)(cid:79)(cid:76)(cid:69)(cid:84)(cid:69)(cid:0) (cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:82)(cid:0) (cid:73)(cid:78)(cid:70)(cid:82)(cid:65)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0) (cid:87)(cid:73)(cid:84)(cid:72)(cid:0) (cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:82)(cid:83)(cid:0) (cid:87)(cid:73)(cid:84)(cid:72)(cid:0)
virtualization thus saving on Data Centre power and cooling
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:83)(cid:84)(cid:65)(cid:76)(cid:76)(cid:73)(cid:78)(cid:71)(cid:0)(cid:69)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:0)(cid:67)(cid:65)(cid:80)(cid:65)(cid:67)(cid:73)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)(cid:72)(cid:73)(cid:71)(cid:72)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:85)(cid:77)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:108)(cid:67)(cid:69)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)
reduce energy consumption
(cid:41)(cid:78)(cid:83)(cid:84)(cid:65)(cid:76)(cid:76)(cid:73)(cid:78)(cid:71)(cid:0) (cid:69)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:0) (cid:83)(cid:65)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0) (cid:69)(cid:76)(cid:69)(cid:67)(cid:84)(cid:82)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0) (cid:68)(cid:69)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:83)(cid:65)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0) (cid:69)(cid:78)(cid:69)(cid:82)(cid:71)(cid:89)(cid:0)
and supporting go-green initiative. (Device in ACs)
(cid:115)(cid:0) (cid:33)(cid:68)(cid:86)(cid:79)(cid:67)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0) (cid:83)(cid:87)(cid:73)(cid:84)(cid:67)(cid:72)(cid:73)(cid:78)(cid:71)(cid:0) (cid:79)(cid:70)(cid:70)(cid:0) (cid:76)(cid:73)(cid:71)(cid:72)(cid:84)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:33)(cid:35)(cid:83)(cid:0) (cid:87)(cid:72)(cid:69)(cid:78)(cid:0) (cid:78)(cid:79)(cid:84)(cid:0) (cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:68)(cid:12)(cid:0)
turning off PCs when not in use (post 10 PM through remote
control) setting higher temperatures on ACs to reduce
consumption
(cid:115)(cid:0) (cid:33)(cid:76)(cid:76)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:0)(cid:51)(cid:73)(cid:71)(cid:78)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:34)(cid:82)(cid:65)(cid:78)(cid:67)(cid:72)(cid:69)(cid:83)(cid:0)(cid:83)(cid:87)(cid:73)(cid:84)(cid:67)(cid:72)(cid:69)(cid:68)(cid:0)(cid:79)(cid:70)(cid:70)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:73)(cid:71)(cid:72)(cid:84)(cid:0)
post 10 pm
(cid:115)(cid:0) (cid:48)(cid:85)(cid:84)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:85)(cid:83)(cid:65)(cid:71)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:44)(cid:73)(cid:70)(cid:84)(cid:83)(cid:12)(cid:0)(cid:33)(cid:35)(cid:83)(cid:12)(cid:0)(cid:35)(cid:79)(cid:77)(cid:77)(cid:79)(cid:78)(cid:0)(cid:48)(cid:65)(cid:83)(cid:83)(cid:65)(cid:71)(cid:69)(cid:0)(cid:76)(cid:73)(cid:71)(cid:72)(cid:84)(cid:83)(cid:0)
and other electrical equipment
(B) Technology Absorption
Your Bank has been at the forefront of technology absorption.
Technology has continued to provide business and customers
with state-of-the-art products and services. Through adoption
of carefully evaluated technology solutions, the Bank has been
able to offer an enhanced customer experience at optimal costs.
This is made possible by using advanced analytics to create
a 360 degree view of all 3.7 crore customers. The analytics
engine uses machine learning to analyse structured and
unstructured data - transactional, behavioural, demographics,
system logs, click streams, bureau data and more - for
insights. This helps in offering relevant recommendations
using a mix of advanced algorithms, behavioural
micro-segments, real time action and event triggers built
on the backbone of cutting edge big data technologies.
These recommendations are served via personalised
campaigns, delivered through an Omni channel approach.
The Bank’s Technology Absorption is illustrated further
by:
(cid:115)(cid:0) (cid:51)(cid:85)(cid:67)(cid:67)(cid:69)(cid:83)(cid:83)(cid:70)(cid:85)(cid:76)(cid:76)(cid:89)(cid:0)(cid:77)(cid:73)(cid:71)(cid:82)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:79)(cid:0)(cid:45)(cid:48)(cid:44)(cid:51)(cid:0)(cid:84)(cid:69)(cid:67)(cid:72)(cid:78)(cid:79)(cid:76)(cid:79)(cid:71)(cid:89)
(cid:115)(cid:0) (cid:45)(cid:65)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0) (cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:69)(cid:84)(cid:0) (cid:70)(cid:65)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0) (cid:73)(cid:78)(cid:70)(cid:82)(cid:65)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)
IPV6 compliant
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:77)(cid:80)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:67)(cid:85)(cid:84)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:69)(cid:68)(cid:71)(cid:69)(cid:0) (cid:48)(cid:18)(cid:48)(cid:0) (cid:80)(cid:65)(cid:89)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:83)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:73)(cid:78)(cid:0)
partnership with relevant industry players
(cid:41)(cid:77)(cid:80)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:83)(cid:84)(cid:82)(cid:65)(cid:73)(cid:71)(cid:72)(cid:84)(cid:0) (cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0) (cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:73)(cid:78)(cid:71)(cid:12)(cid:0) (cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0) (cid:51)(cid:47)(cid:33)(cid:0)
(services oriented architecture) enabled bio-metric
authorization for 30 minutes Vehicle Loan Approval
(cid:41)(cid:77)(cid:80)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:76)(cid:76)(cid:73)(cid:71)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:51)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:0)
for Retail Assets to enable monitoring from loan
pre-disbursement to repayment / closure
(cid:115)(cid:0) (cid:37)(cid:77)(cid:66)(cid:65)(cid:82)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:0)(cid:80)(cid:82)(cid:79)(cid:71)(cid:82)(cid:65)(cid:77)(cid:77)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:41)(cid:77)(cid:80)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:50)(cid:34)(cid:41)(cid:0)
guidelines on Information Security, Electronic Banking,
Technology Risk Management and Cyber Frauds
(cid:115)(cid:0) (cid:51)(cid:84)(cid:82)(cid:69)(cid:78)(cid:71)(cid:84)(cid:72)(cid:69)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)
(cid:84)(cid:69)(cid:67)(cid:72)(cid:78)(cid:79)(cid:76)(cid:79)(cid:71)(cid:89)(cid:0)
(cid:73)(cid:78)(cid:70)(cid:82)(cid:65)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)
(cid:84)(cid:79)(cid:0) (cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)
uninterrupted service to customers
expenditure
The
Development
incurred on Research
and
Being in the Financial Services Space, your Bank evaluates
innovative technology solutions that are readily available
or near-ready for deployment and broadly fit its business
requirements. Solutions that are commercially viable are
then tested in collaboration with the relevant technology
partners. Once proven, the technology solutions are then
procured and commissioned for active business use.
(C) Foreign Exchange Earnings and Outgo
During the year the total foreign exchange earned by the
Bank was ` 1,227.7 crore (on account of net gains arising
on all exchange / derivative transactions) and the total
foreign exchange outgo was about ` 151.12 crore towards
the operating and capital expenditure requirements.
Secretarial Audit
In terms of Section 204 of the Companies Act, 2013 and the
Rules made there under, M/s. BNP & Associates, Practising
Company Secretaries have been appointed as Secretarial
HDFC Bank Limited Annual Report 2015-16
34
Directors' Report
Auditors of the Bank for the financial year 2015-16. The report
of the Secretarial Auditors is enclosed as ANNEXURE 7 to this
Report. The observations in the said report are self-explanatory
and no further comments / explanations are called for.
Corporate Governance
In compliance with Regulation 34 and other applicable
provisions of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations,
2015, a separate report on Corporate Governance along with
a certificate of compliance from the Secretarial Auditors, forms
an integral part of this Report.
Business Responsibility Report
The Bank’s Business Responsibility Report containing
a report on its Corporate Social Responsibility Activities and
Initiatives in the format adopted by companies in India as per
the guidelines of the Securities and Exchange Board of India
in this regard is available on its website www.hdfcbank.com.
Information under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act,
2013
Acknowledgement
Your Directors would like to place on record their gratitude for
all the guidance and co-operation received from the Reserve
Bank of India and other government and regulatory agencies.
Your Directors would also like to take this opportunity to express
their appreciation for the hard work and dedicated efforts put
in by the Bank’s employees and look forward to their continued
contribution in building a “World Class Indian Bank.”
Conclusion
Your Bank believes that the Indian economy is expected to grow
faster in 2016-17. The Bank is well positioned to continue to
grow faster than the banking system both in retail and wholesale
segments. A good monsoon holds the key to accelerated
GDP growth and consequently to that of the banking industry.
Over the next couple of years, the Bank will leverage on its
distribution strength and digital platforms especially in the rural and
semi-urban parts of the country for a more sustained growth.
Your Bank will continue its focus on five core values of Customer
Focus, Operational Excellence, Product Leadership, People and
Sustainability. Needless to say, your Bank will continue to operate
with the strongest possible commitment to Corporate Governance.
All of this will help the Bank on its onward growth journey and help
create long term shareholder value.
On behalf of the Board of Directors
Mrs. Shyamala Gopinath
Chairperson
The relevant information is included in Section E - Principle 3 of
the Business Responsibility Report for 2015-16.
Mumbai, May 19, 2016
HDFC Bank Limited Annual Report 2015-16
35
Directors' Report
ANNEXURE 1 to Directors’ Report
The ESOP Schemes of the Bank are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 (“the Regulations”)
and the details as per the Regulations are as under:
EMPLOYEES’ STOCK OPTIONS AS ON MARCH 31, 2016
Plan/ Schemes
Date of
Shareholders’
Approval
Total No.
of Options
Approved
Grant
Price
(`)
Number
of Options
Outstanding at
the beginning
of the year
Number
of Options
Granted /
Options
Re-instated
Options
Vested
Number
of Options
Exercised &
Shares Allotted
during the year
Number
of Options
Forfeited
during the
year
Number
of Options
Lapsed
during the
year
Number of
Options in
Force at the
end of the
year
Plan E- ESOS XVI
30th June, 2010 100,000,000
440.16
9,219,200
Plan E- ESOS XVII
30th June, 2010 100,000,000
508.23
180,100
Plan E- ESOS XVIII
30th June, 2010 100,000,000
468.40
17,504,400
-
-
-
-
-
-
7,521,200
68,500
4,937,400
-
-
-
24,000
1,674,000
-
111,600
14,500 12,552,500
Plan E- ESOS XIX
30th June, 2010 100,000,000
680.00
29,014,200
- 9,364,000
5,081,100
410,600
10,400 23,512,100
-
-
-
5,133,900
5,260,800
-
Plan D- ESOS XX
16th June, 2007 75,000,000
680.00
6,402,300
- 2,002,200
1,078,200
190,200
Plan C- ESOS XXI
17th June, 2005 50,000,000
680.00
6,233,000
- 2,013,300
798,200
174,000
Plan E- ESOS XXII
30th June, 2010 100,000,000
664.45
21,800
Plan C- ESOS XXIII
17th June, 2005 50,000,000
835.50
545,000
-
-
-
21,800
-
212,400
28,400
35,000
1,600
480,000
Plan F- ESOS XXIV
27th June, 2013 100,000,000
835.50
39,913,000
- 15,965,800
2,156,400
1,308,000
6,400 36,442,200
Plan F- ESOS XXV
27th June, 2013 100,000,000 1092.65
Plan F- ESOS XXVI
27th June, 2013 100,000,000 1097.80
-
-
44,833,200
3,000
-
-
-
-
1,349,000
- 43,484,200
-
-
3,000
Total :-
109,033,000
44,836,200 29,557,700
21,691,200 3,466,800
56,900 128,654,300
Options Exercised during the aforesaid period
Share Capital Money received during the above period (`)
Share Premium Money received during the above period (`)
Perquisite Tax Amount collected during the aforesaid period (`)
Total Amount collected during the aforesaid period (`)
21,691,200
43,382,400
12,185,626,317
3,645,181,338
15,874,190,055
Note: One (1) share of the face value of ` 2/- each would arise on exercise of One (1) Equity Stock Option.
HDFC Bank Limited Annual Report 2015-16
36
Directors' Report
Vesting Requirements
Except for the death / permanent disablement or retirement of the employee, the options will vest only
if the employee is in the continuous employment of the Bank as on the date of vesting
Maximum Term of Options
Provided the employee is in the continuous employment of the Bank, the options vested will lapse
in case the same are not exercised by the employee within 4 years from the date of vesting. Except
in the case of death/ permanent disablement or retirement of the employee, all unvested options get
forfeited on the employee’s last working date in the Bank.
Source of shares
Primary
Variation in terms of ESOS Nil
i. Directors & Senior Managerial Personnel
DETAILS OF OPTIONS GRANTED TO DIRECTORS AND SENIOR MANAGERIAL PERSONNEL
Sl No
Employee Name
Grade
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
Aditya Puri
Paresh Sukthankar
Kaizad Bharucha
Abhay Aima
Ashish Parthasarthy
Ashima Bhat
Ashok Khanna
Arvind Kapil
Aseem Dhru
Bhavesh Zaveri
Chakrapani Venkatachari
Deepak Maheshwari
Dhiraj Relli (on deputation to HDFC Securities
Limited, the Bank’s subsidiary)
Jimmy M Tata
Munish Mittal
Navin Puri
Nitin Chugh
Nitin Rao
Nirav Shah
Parag Rao
Rajender Sehgal
Rakesh K. Singh
Rajesh Rathanchand
Ravi Narayanan
Sashidhar Jagdishan
Sanjay Dongre
Managing Director
Deputy Managing Director
Executive Director
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
Group Head
CFO (KMP)
Executive Vice President - Legal & Company
Secretary (KMP)
HDFC Bank Limited Annual Report 2015-16
37
No. of
Options
639,000
390,000
335,000
200,000
200,000
108,000
41,700
108,000
140,000
170,000
140,000
42,800
75,000
170,000
108,000
200,000
108,000
75,000
75,000
108,000
40,400
140,000
108,000
108,000
170,000
39,700
Directors' Report
ii. Other employee who receives a grant in any one year of
options amounting to 5 per cent or more of options granted
during that year
None
iii. Identified employees who were granted options, during any
one year, equal to or exceeding 1 per cent of the issued
capital (excluding outstanding warrants and conversions) of
the company at the time of the grant
None
Diluted Earnings Per Share (EPS) pursuant to the issue of
shares on exercise of option calculated in accordance with
Accounting Standard (AS) - 20 (Earnings Per Share)
The diluted EPS of the Bank calculated after considering the
effect of potential equity shares arising on account of exercise
of options is ` 48.3
Where
the company has calculated
the employee
compensation cost using the intrinsic value of the stock
options, the difference between the employee compensation
cost so computed and the employee compensation cost that
shall have been recognized if it had used the fair value of the
options, shall be disclosed. The impact of this difference on
profits and on EPS of the company shall also be disclosed
Weighted average exercise prices and weighted average fair
values of options shall be disclosed separately for options
whose exercise price either equals or exceeds or is less than
the market price of the stock options
A description of the method and significant assumptions used
during the year to estimate the fair value of options, at the
time of the grant including the following weighted average
information:
i. Risk-free interest rate
ii. Expected life
iii. Expected volatility
iv. Expected dividends
v. The price of the underlying share in the market at the time of
option grant
vi. Weighted average market price of Bank’s shares on NSE at
the time of option grant
Method used and assumptions made to incorporate effects of
expected early exercise
How expected volatility was determined, including explanation of
the extent to which expected volatility was based on historical
volatility
Whether and how any other features of the option grant were
incorporated into the measurement of fair value, such as a
market condition
Had the Bank followed fair value method for accounting, the
stock option compensation expense would have been higher by
` 1,265.9 crore. Consequently profit after tax would have been
lower by ` 1,265.9 crore and the basic EPS of the Bank would
have been ` 43.8 per share (lower by ` 5.0 per share) and the
diluted EPS would have been ` 43.3 per share (lower by ` 5.0
per share)
The weighted average price of the stock options exercised is
` 563.8 and the weighted average fair value is ` 191.4
The Securities and Exchange Board of India (SEBI) has
prescribed two methods to account for stock grants; (i) the
intrinsic value method; (ii) the fair value method. The Bank adopts
the intrinsic value method to account for the stock options it
grants to the employees. The Bank also calculates the fair value
of options at the time of grant, using internally developed and
tested model with the following assumptions:
7.71 per cent to 8.07 per cent
1 to 7 years
23.29 per cent to 26.46 per cent
0.73 per cent
The per share market price was ` 1,092.65 and ` 1,097.80 at
the time of grant of options under ESOS XXV and ESOS XXVI
respectively.
` 1,091.82 and ` 1,098.11 at the time of grant of options under
ESOS XXV and ESOS XXVI respectively.
The exercise multiple, which is based on historical data of early
option exercise decisions of the employees, incorporates early
exercise effect in the valuation of ESOPs. The exercise multiple
indicates that option holders tend to exercise their options when
the share price reaches a particular multiple of the exercise
price.
Stock expected volatility is completely based on GARCH volatility
forecasting model using historical stock prices from the market.
Stock Price and risk free interest rate are variables based on
actual market data at the time of ESOP valuation.
HDFC Bank Limited Annual Report 2015-16
38
Directors' Report
ANNEXURE 2 to Directors’ Report
1. Brief outline of the CSR Policy
HDFC Bank Annual CSR Report 2015-2016
HDFC Bank, has worked towards the vision of “Creating Sustainable Communities” through its CSR Programmes. In line with the
requirements of Section 135 of the Companies Act, the Bank has instituted the CSR Policy, duly approved by the Board. HDFC
Bank’s CSR policy outlines the Bank’s mission to contribute to social and economic development of the communities at large.
During the financial year 2015-16, the Bank has undertaken CSR Programmes aligned to the CSR Policy in the following focus
areas:
1. Financial Literacy and Empowerment
2. Promoting Education
3. Skill Training and Livelihood Enhancement
4. Health Care
5. Environmental Sustainability
6. Eradicating Poverty
7. Rural Development
The Bank’s CSR Policy can be found on the corporate website at http://www.hdfcbank.com/assets/pdf/CSR_Policy.pdf
2. Composition of CSR Committee
The Bank has also constituted a Board-level CSR Committee to govern the implementation of the policy. The composition of the
Committee is as follows:
(cid:115)(cid:0) (cid:45)(cid:82)(cid:83)(cid:14)(cid:0)(cid:50)(cid:69)(cid:78)(cid:85)(cid:0)(cid:43)(cid:65)(cid:82)(cid:78)(cid:65)(cid:68)
(cid:115)(cid:0) (cid:45)(cid:82)(cid:14)(cid:0)(cid:34)(cid:79)(cid:66)(cid:66)(cid:89)(cid:0)(cid:48)(cid:65)(cid:82)(cid:73)(cid:75)(cid:72)(cid:0)(cid:8)(cid:41)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:9)
(cid:115)(cid:0) (cid:45)(cid:82)(cid:14)(cid:0)(cid:48)(cid:65)(cid:82)(cid:84)(cid:72)(cid:79)(cid:0)(cid:36)(cid:65)(cid:84)(cid:84)(cid:65)(cid:0)(cid:8)(cid:41)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:9)
(cid:115)(cid:0) (cid:45)(cid:82)(cid:14)(cid:0)(cid:33)(cid:68)(cid:73)(cid:84)(cid:89)(cid:65)(cid:0)(cid:48)(cid:85)(cid:82)(cid:73)
(cid:115)(cid:0) (cid:45)(cid:82)(cid:14)(cid:0)(cid:48)(cid:65)(cid:82)(cid:69)(cid:83)(cid:72)(cid:0)(cid:51)(cid:85)(cid:75)(cid:84)(cid:72)(cid:65)(cid:78)(cid:75)(cid:65)(cid:82)
3. Average net profit of the company for last three financial years
` 12,385 crore
4. Prescribed CSR Expenditure (two percent of the amount as in item 4 above)
` 248 crore
5. Details of CSR spent during the financial year
(cid:115)(cid:0) (cid:52)(cid:79)(cid:84)(cid:65)(cid:76)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:83)(cid:80)(cid:69)(cid:78)(cid:84)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:26)(cid:0)` 194.81 crore
(cid:115)(cid:0) (cid:33)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:85)(cid:78)(cid:83)(cid:80)(cid:69)(cid:78)(cid:84)(cid:12)(cid:0)(cid:73)(cid:70)(cid:0)(cid:65)(cid:78)(cid:89)(cid:26)(cid:0)` 53.19 crore
HDFC Bank Limited Annual Report 2015-16
39
Directors' Report
(cid:115)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0)(cid:77)(cid:65)(cid:78)(cid:78)(cid:69)(cid:82)(cid:0)(cid:73)(cid:78)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:73)(cid:83)(cid:0)(cid:83)(cid:80)(cid:69)(cid:78)(cid:84)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:73)(cid:83)(cid:0)(cid:68)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:69)(cid:68)(cid:0)(cid:66)(cid:69)(cid:76)(cid:79)(cid:87)
Sr.
no
CSR project /
Activity
Sector
(Schedule VII)
Projects or
programs
1. Local area or
others
2. State and district
Pan India
Amount outlay
(project-wise)
(` crore)
(Budget)
Amount spent
(` crore)
1. Direct
expenditure
Financial Literacy and
Empowerment
Promoting Education
Promotion of Education
Promotion of Education
Pan India
Skill Training and Livelihood
Enhancement
Health Care
Skill development and
Vocational Training
Preventive and Curative
Healthcare
Environmental Sustainability Environment
Pan India
Pan India
Pan India
Eradicating Poverty
Eradicating poverty
Pan India
1.
2.
3.
4.
5.
6.
7.
Rural Development
Rural Development
Projects
Pan India
140.89
1.00
24.59
17.99
8.26
0.72
1.36
2. Overheads
1. 0.74
2. 0.26
1. 9.41
2. 0.26
1. 14.33
2. 0.26
1. 8.00
2. 0.26
1. 0.72
2. 0.00
1. 0.00
2. 0.00
1. 92.78
2. 0.26
Cumulative
expenditure
up to reporting
period
(` crore)*
8.67
33.15
30.52
15.54
1.67
2.36
221.45
Amount spent:
Direct or through
*implementing
agency
(` crore)
Direct
Implementing
Agency - 14.92
Implementing
Agency - 3.40
Direct
Direct
Implementing
Agency - 1.36
Implementing
Agency - 47.85
*Details of the implementing agencies are listed below:
Promotion of Education: KC Mahindra Education Trust, Nisvartha Foundation, Tomorrows Foundation, Friends Union For
Energising Lives, Katha, Parivaar Education Society, Meljol, Nabha Foundation, Bodh Shiksha Samiti, Navjyoti India Foundation,
Kasturi Shiksha Samiti, Pratham Education Foundation, Shri Aurobindo Society, Teach to Lead, Isha Education, Bombay Scottish
Orphanage Society, Magic Bus India Foundation. Skills Training & Livelihood Enhancement: Dr M.L. Dhawale Trust, Aide-et-
Action India, HOPE Foundation, Nav Bharat Jagriti Kendra, SGBS Trust, Quest Alliance, Gram Unnati Foundation, Tata Institute
of Social Sciences, BAIF Development Research Foundation, Aroh Foundation, Indo Global Social Service Society, Voluntary
Association for People Service, Enactus, FXB Suraksha India, The Leprosy Mission Trust India, Navrachana Mahila Vikas Trust;
Rural Development Programme: Watershed Organisation Trust, Share Society to Heal, Aid, Restore, Educate, Action for Food
Production, Sanjeevani Institute for Empowerment and Development, Mysore Resettlement And Development Agency, Krushi
Vikas Va Gramin Prashikshan Sanstha, Indo Global Social Service Society, Professional Assistance for Development Action,
Society for Action in Community Health, Navrachana Mahila Vikas Trust, Shaktishali Mahila Sanghatan Samithi, Aroh Foundation,
Shikhar Yuva Manch, Community Advancement & Rural Development Society, SAKSHI - Centre for Information, Education and
Communication; Eradicating Poverty: Give India, HelpAge India
6. In case company has failed to spend the two percent of the average net profit for the last three financial years or any
part thereof, the reasons for not spending the amount.
Building upon and scaling up on various interventions initiated in areas prescribed in our CSR policy, we increased our overall
CSR spend by 64 per cent from ` 118.55 crore last year to ` 194.81 crore this year, i.e. to 1.6 per cent of the average net profit
for the last three financial years.
Given the absolute size and the substantial increase in the magnitude of our CSR spend, it was important that we identify appropriate
implementation partners and further strengthen our resources and systems to ensure that projects are executed effectively and
have the desired impact. With the strong foundations that we laid towards this end in this year, and the proposed scaling up of a
number of our CSR Projects, we believe we have made meaningful progress towards reaching the target in the coming financial
year.
7. A responsibility statement of CSR committee:
Our CSR activities are guided by the vision and objectives as provided in our CSR Policy. We have also put in place a robust
monitoring and reporting mechanism to ensure effective implementation of our CSR activities, in line with the requirements of
Companies Act, 2013.
A description of our current projects is included in the Directors’ report.
Mr. Aditya Puri
Managing Director
Date: April 21, 2016
Mrs. Renu Karnad
Chairperson, CSR Committee
HDFC Bank Limited Annual Report 2015-16
40
Directors' Report
ANNEXURE 3 to Directors’ Report
Form No. MGT-9
Extract of the Annual Return as on the financial year ended March 31, 2016
[Pursuant to section 92(3) of the Companies Act, 2013 and Rule 12(1) of the
Companies (Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS:
i. CIN: L65920MH1994PLC080618
ii. Registration Date: August 30, 1994
iii. Name of the Company: HDFC Bank Limited
iv. Category / Sub-Category of the Company: Company Limited by Shares / Indian Non-Government Company
v. Address of the Registered office and contact details:
HDFC Bank Limited
HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai- 400 013. Tel: 022 2498 8484
vi. Whether listed: Yes
vii. Name, Address and Contact Details of Registrar and Transfer Agent:
Datamatics Financial Services Ltd.,
Plot No. B 5, Part B, Cross Lane, MIDC, Marol, Andheri East, Mumbai- 400 093
Tel: 022- 6671 2213/14, Email: hdinvestors@dfssl.com
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:
All the business activities contributing 10 per cent or more of the total turnover of the Company shall be stated-
Name and Description of the main products / services
NIC Code
Per cent to Total Turnover of the Bank
Banking and Financial Services
64191
100 per cent
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:
Name and Address of the Company
CIN/ GLN
Sr.
no.
Holding / Subsidiary
/ Associate
Percentage of
shares held
Applicable section
1 HDB Financial Services Ltd.
U65993GJ2007PLC051028 Subsidiary
Radhika, 2nd Floor, Law Garden Road,
Navrangpura, Ahmedabad- 380 009.
2 HDFC Securities Ltd.
U67120MH2000PLC152193 Subsidiary
97.12
97.91
I Think, Techno Campus, Building-B,
“Alpha” office, 8th Floor, opposite
Crompton Greaves, Kanjurmarg (East),
Mumbai- 400 042.
3 Atlas Documentary Facilitators
U74999MH1997PTC107143 Associate
28.99
Company Pvt. Ltd
29A, Narayan Properties, 1st Floor, Bldg
A, Chandivali, Off Saki Naka, Andheri
(East), Mumbai- 400 072
4 HBL Global Pvt. Ltd
U74140MH2000PTC129812 Associate
NIL
Kamala Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai- 400 013
5
International Asset Reconstruction
Company Pvt. Ltd.
709, 7th Floor, Ansal Bhavan,
16, Kasturba Gandhi Marg,
New Delhi-110 001
U74999DL2002PTC117357 Associate
29.41
Sec 2(87) of
Companies Act,
2013
Sec 2(87) of
Companies Act,
2013
Sec 2(6) of
Companies Act,
2013
Sec 2(6) of
Companies Act,
2013
Sec 2(6) of
Companies Act,
2013
HDFC Bank Limited Annual Report 2015-16
41
Directors' Report
IV. SHAREHOLDING PATTERN: (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)
(i) Category-wise Share Holding
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
Percentage
of
Total shares
Demat
Physical
Total
Percentage
of
Total shares
Percentage
change
during
the year
543,216,100
0 543,216,100
21.67 543,216,100
0 543,216,100
21.49
(0.19)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
543,216,100
0 543,216,100
21.67 543,216,100
0 543,216,100
21.49
(0.19)
Category of
Shareholders
A. Promoters
(1) Indian
a) Individual/HUF
b) Central Govt
c) State Govt (s)
d) Bodies Corp#
e) Banks / FI
f) Any Other
Sub Total (A)(1)
(2) Foreign
a) NRIs -Individuals
b) Other-Individuals
c) Bodies Corp.
d) Banks / FI’s
e) Any Other
Sub Total (A)(2)
0
0
0
0
0
0
0
0
0
543,216,100
0 543,216,100
21.67 543,216,100
0 543,216,100
21.49
(0.19)
Total shareholding of Promoter
(A)=(A)(1)+(A)(2)
B. Public Shareholding
1. Institutions
a) Mutual Funds
b) Banks / FI’s
g) Foreign Venture Capital
Funds
h) Others (specify) Qualified
Foreign Investors
Sub Total (B)(1)
2. Non-Institutions
168,641,437
33,185 168,674,622
6.73 211,659,875
33,185 211,693,060
4,342,137
17,390
4,359,527
c) Central Govt / State Govt(s)
1,505,225
d) Venture Capital Funds
0
0
0
1,505,225
0
0.17
0.06
0
2,822,510
17,390
2,839,900
2,676,950
0
0
0
2,676,950
0
e) Insurance Companies
69,215,256
0 69,215,256
2.76 68,146,983
0 68,146,983
f) FIIs
816,373,592
15,170 816,388,762
32.57 814,448,518
15,170 814,463,688
0
0
0
0
0
0
0
0
0
0
0
0
0
0
8.37
0.11
0.11
0
2.70
32.21
0
0
1.64
(0.06)
0.05
0
(0.06)
(0.36)
0
0
1,060,077,647
65,745 1,060,143,392
42.30 1,099,754,836
65,745 1,099,820,581
43.50
1.21
a) Bodies Corporate
216,171,947
224,880 216,396,827
8.63 185,438,125
183,245 185,621,370
7.34
(1.29)
b) Individuals
i) Individual shareholders
140,615,965 18,492,186 159,108,151
6.35 146,520,140 17,200,720 163,720,860
6.47
0.12
holding nominal share capital
upto ` 1 lakh
ii) Individual shareholders
47,024,976
259,500 47,284,476
1.89 55,330,724
191,000 55,521,724
2.20
0.31
holding nominal share capital
in excess of
` 1 lakh
HDFC Bank Limited Annual Report 2015-16
42
Directors' Report
Category of
Shareholders
c) Others (specify)
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
Demat
Physical
Total
Percentage
of
Total shares
Demat
Physical
Total
Percentage
of
Total shares
i. Non Resident Indians (Repat)
2,532,721
48,320
2,581,041
ii. Non Resident Indians
4,705,498
2,765
4,708,263
(Non- Repat)
iii. Overseas Corporate Bodies
0
10,075
iv. Foreign Corporate Bodies
v. Foreign Nationals
41,000
1,335
0
0
10,075
41,000
1,335
0.10
0.19
0.00
0
0
2,360,398
41,720
2,402,118
4,833,762
2,765
4,836,527
1,248
31,000
1,505
10,075
0
0
11,323
31,000
1,505
0.10
0.19
0
0
0
Percentage
change
during
the year
(0.00)
0
0
0
0
Sub Total (B)(2)
411,093,442 19,037,726 430,131,168
17.16 394,516,902 17,629,525 412,146,427
Total Public Shareholding
(B)=(B)(1) + (B)(2)
1,471,171,089 19,103,471 1,490,274,560
59.46 1,494,271,738 17,695,270 1,511,967,008
16.30
59.80
(0.86)
0.34
C. Shares held by Custodian for
473,004,657
0 473,004,657
18.87 473,003,409
0 473,003,409
18.71
(0.16)
GDRs & ADRs
Grand Total (A+B+C)
2,487,391,846 19,103,471 2,506,495,317
100 2,510,491,247 17,695,270 2,528,186,517
100
0
# Promoters are Indian Companies incorporated under the Indian Companies Act 1956 and are controlled by Indian management. Foreign
shareholding in the principal promoter company exceeds 51 per cent of their paid up share capital and accordingly the shareholding of the
company in the Bank may be deemed as indirect foreign shareholding in terms of the extant FDI Policy. The Bank has made a representation
to the Ministry of Finance stating that the shareholding of the Indian Promoters should not be treated as foreign shareholding. Confirmation
is awaited from the Ministry of Finance in this regard.
(ii) Shareholding of Promoters
Sr.
No.
Shareholder’s Name
Shareholding at the beginning of the year
Shareholding at the end of the year
No.of
Shares
Percentage
of total
Shares of the
company
Percentage of
Shares
Pledged /
encumbered to
total shares
No.of
Shares
Percentage of
total
Shares of the
company
Percentage of
Shares
Pledged /
encumbered to
total shares
Percentage
change in
shareholding
during the
year**
1 Housing Development Finance
Corporation Ltd
393,211,100
15.69
2 HDFC Investments Ltd
3 HDFC Holdings Ltd
150,000,000
5,000
5.98
0
Total
543,216,100
21.67
0
0
0
0
393,211,100
15.55
150,000,000
5,000
5.93
0
543,216,100
21.49
0
0
0
0
0
0
0
0
(iii) Change in Promoters’ Shareholding:
Shareholder’s Name
Shareholding at the beginning of the year
Cumulative Shareholding during the year
No. of shares
Percentage of total Shares
of the company
No.of Shares
Percentage of total Shares
of the company
At the beginning of the year
543,216,100
21.67
543,216,100
21.49
(**)
Date wise Increase / Decrease in Promoters
shareholding during the year specifying the reasons
for increase/ decrease (e.g. allotment / transfer /
bonus/ sweat/ equity etc.) **
At the end of the year
543,216,100
21.49
(**)
** During the year under review, there is no change with respect to the shares held by the promoters. However, there is a change in the
percentage to capital because of issuance and allotment of additional equity shares by the Bank upon exercise of equity stock options by
the employees during the FY 2015-16.
HDFC Bank Limited Annual Report 2015-16
43
Directors' Report
(iv) Shareholding Pattern of top ten shareholders (other than directors, promoters and holders of GDRs and ADRs):
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Percentage of
total shares of
the company
Cumulative shareholding
during the year
No.
of
shares
Percentage of
total shares of
the company
1
EUROPACIFIC GROWTH FUND
At the beginning of the Year 31-MAR-2015
96,200,435
2
LIFE INSURANCE CORPORATION
OF INDIA
Increase
Increase
Increase
Increase
Increase
10-APR-2015
17-APR-2015
25-DEC-2015
29-JAN-2016
19-FEB-2016
At the END of the Year
31-MAR-2016
324,964
729,360
20,274
350,000
413,431
0
At the beginning of the Year 31-MAR-2015
64,087,196
Decrease
Decrease
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
24-APR-2015
01-MAY-2015
(80,000)
(60,000)
15-MAY-2015
1,759,576
22-MAY-2015
12-JUN-2015
19-JUN-2015
14-JUL-2015
17-JUL-2015
409,006
2,588
584,551
(260,000)
(861,471)
24-JUL-2015
(2,303,102)
31-JUL-2015
(1,860,174)
07-AUG-2015
14-AUG-2015
21-AUG-2015
28-AUG-2015
04-SEP-2015
(863,871)
(292,039)
(47,951)
45,000
10,000
09-OCT-2015
(1,131,724)
16-OCT-2015
(904,923)
23-OCT-2015
(1,470,489)
30-OCT-2015
(1,954,286)
06-NOV-2015
(325,665)
15-JAN-2016
752,772
22-JAN-2016
1,465,705
29-JAN-2016
05-FEB-2016
12-FEB-2016
19-FEB-2016
26-FEB-2016
04-MAR-2016
11-MAR-2016
724,226
200,000
350,000
1,420,353
1,244,374
642,520
20,853
At the END of the Year
31-MAR-2016
0
3.84
0.01
0.03
0.00
0.01
0.02
0.00
2.56
(0.00)
(0.00)
0.07
0.02
0.00
0.02
(0.01)
(0.03)
(0.09)
(0.07)
(0.03)
(0.01)
(0.00)
0.00
0.00
(0.05)
(0.04)
(0.06)
(0.08)
(0.01)
0.03
0.06
0.03
0.01
0.01
0.06
0.05
0.03
0.00
0.00
96,525,399
97,254,759
97,275,033
97,625,033
98,038,464
98,038,464
64,007,196
63,947,196
65,706,772
66,115,778
66,118,366
66,702,917
66,442,917
65,581,446
63,278,344
61,418,170
60,554,299
60,262,260
60,214,309
60,259,309
60,269,309
59,137,585
58,232,662
56,762,173
54,807,887
54,482,222
55,234,994
56,700,699
57,424,925
57,624,925
57,974,925
59,395,278
60,639,652
61,282,172
61,303,025
61,303,025
3.85
3.88
3.85
3.87
3.88
3.88
2.55
2.55
2.62
2.64
2.64
2.66
2.65
2.61
2.52
2.44
2.41
2.40
2.40
2.40
2.39
2.35
2.31
2.25
2.17
2.16
2.19
2.25
2.27
2.28
2.30
2.35
2.40
2.42
2.43
2.43
HDFC Bank Limited Annual Report 2015-16
44
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Percentage of
total shares of
the company
Cumulative shareholding
during the year
No.
of
shares
Percentage of
total shares of
the company
3
ICICI PRUDENTIAL LIFE
INSURANCE COMPANY LTD
At the beginning of the Year 31-MAR-2015
41,029,927
1.64
0.01
0.01
0.00
0.00
0.00
0.01
0.00
(0.01)
(0.01)
0.01
0.00
(0.00)
(0.01)
(0.01)
41,214,323
41,387,943
41,393,527
41,397,370
41,506,215
41,636,952
41,701,876
41,502,043
41,232,852
41,349,387
41,386,455
41,361,772
41,172,753
41,023,391
0.01
41,175,010
(0.03)
(0.01)
40,444,892
40,309,257
0.01
40,424,554
(0.01)
40,276,454
0.00
0.00
0.00
0.01
0.00
0.01
40,317,120
40,330,920
40,333,161
40,675,215
40,714,488
41,056,906
(0.01)
40,891,248
0.01
41,068,230
(0.02)
(0.02)
40,659,617
40,219,775
0.00
40,299,148
(0.00)
(0.00)
(0.00)
(0.00)
40,188,679
40,168,030
40,161,438
40,150,518
0.01
40,350,244
(0.00)
40,308,287
0.01
0.01
40,449,375
40,746,503
184,396
173,620
5,584
3,843
108,845
130,737
64,924
(199,833)
(269,191)
116,535
37,068
(24,683)
(189,019)
(149,362)
151,619
(730,118)
(135,635)
115,297
(148,100)
40,666
13,800
2,241
342,054
39,273
342,418
(165,658)
176,982
(408,613)
(439,842)
79,373
(110,469)
(20,649)
(6,592)
(10,920)
199,726
(41,957)
141,088
297,128
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Increase
Decrease
Increase
Decrease
Increase
Decrease
10-APR-2015
17-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
15-MAY-2015
22-MAY-2015
29-MAY-2015
05-JUN-2015
12-JUN-2015
19-JUN-2015
26-JUN-2015
30-JUN-2015
03-JUL-2015
10-JUL-2015
14-JUL-2015
17-JUL-2015
24-JUL-2015
31-JUL-2015
07-AUG-2015
14-AUG-2015
21-AUG-2015
28-AUG-2015
04-SEP-2015
11-SEP-2015
18-SEP-2015
25-SEP-2015
30-SEP-2015
02-OCT-2015
09-OCT-2015
16-OCT-2015
23-OCT-2015
30-OCT-2015
06-NOV-2015
13-NOV-2015
20-NOV-2015
27-NOV-2015
04-DEC-2015
11-DEC-2015
18-DEC-2015
25-DEC-2015
31-DEC-2015
08-JAN-2016
(121,662)
(0.01)
40,624,841
202,489
(17,223)
181,289
0.01
40,827,330
(0.00)
40,810,107
0.01
40,991,396
(135,885)
(0.01)
40,855,511
1.64
1.65
1.65
1.65
1.66
1.66
1.66
1.65
1.64
1.65
1.65
1.65
1.64
1.63
1.64
1.61
1.61
1.61
1.60
1.60
1.60
1.60
1.62
1.62
1.63
1.63
1.63
1.62
1.60
1.60
1.60
1.60
1.59
1.59
1.60
1.60
1.61
1.62
1.61
1.62
1.62
1.62
1.62
HDFC Bank Limited Annual Report 2015-16
45
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
Cumulative shareholding
during the year
No.
of
shares
Percentage of
total shares of
the company
No.
of
shares
Percentage of
total shares of
the company
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
15-JAN-2016
22-JAN-2016
29-JAN-2016
05-FEB-2016
12-FEB-2016
19-FEB-2016
26-FEB-2016
04-MAR-2016
11-MAR-2016
18-MAR-2016
25-MAR-2016
31-MAR-2016
At the END of the Year
31-MAR-2016
(59,368)
112,549
(3,721)
2,513
1,091
185,671
132,442
27,254
197,524
728
168,574
(96,966)
0
4 CAPITAL WORLD GROWTH AND
At the beginning of the Year 31-MAR-2015
22,191,303
INCOME FUND
5 ICICI PRUDENTIAL FOCUSED
BLUECHIP EQUITY FUND
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
10-APR-2015
17-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
30-JUN-2015
03-JUL-2015
10-JUL-2015
14-JUL-2015
17-JUL-2015
24-JUL-2015
31-JUL-2015
16-OCT-2015
23-OCT-2015
12-FEB-2016
19-FEB-2016
26-FEB-2016
At the END of the Year
31-MAR-2016
380,800
3,066,149
3,242,386
1,494,430
505,614
164,661
796,498
705,156
725,266
564,504
143,766
405,149
515,000
159,444
600,000
100,000
825,000
0
At the beginning of the Year 31-MAR-2015
29,828,619
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
10-APR-2015
17-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
372,453
90,317
465,547
170,199
863,024
15-MAY-2015
1,232,676
22-MAY-2015
29-MAY-2015
175,099
31,341
(0.00)
40,796,143
0.00
40,908,692
(0.00)
40,904,971
0.00
0.00
0.01
0.01
0.00
0.01
0.00
0.01
40,907,484
40,908,575
41,094,246
41,226,688
41,253,942
41,451,466
41,452,194
41,620,768
(0.00)
41,523,802
0.00
0.89
0.02
0.12
0.13
0.06
0.02
0.01
0.03
0.03
0.03
0.02
0.01
0.02
0.02
0.01
0.02
0.00
0.03
0.00
1.19
0.02
0.00
0.02
0.01
0.03
0.05
0.01
0.00
41,523,802
22,572,103
25,638,252
28,880,638
30,375,068
30,880,682
31,045,343
31,841,841
32,546,997
33,272,263
33,836,767
33,980,533
34,385,682
34,900,682
35,060,126
35,660,126
35,760,126
36,585,126
36,585,126
30, 201,072
30,291,389
30,756,936
30,927,135
31,790,159
33,022,835
33,197,934
33,229,275
Decrease
05-JUN-2015
(320,975)
(0.01)
32,908,300
HDFC Bank Limited Annual Report 2015-16
46
1.62
1.62
1.62
1.62
1.62
1.63
1.63
1.63
1.64
1.64
1.65
1.64
1.64
0.90
1.02
1.15
1.21
1.23
1.24
1.27
1.30
1.33
1.35
1.35
1.37
1.39
1.39
1.41
1.42
1.45
1.45
1.21
1.21
1.23
1.23
1.27
1.32
1.32
1.32
1.31
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Percentage of
total shares of
the company
Cumulative shareholding
during the year
No.
of
shares
Percentage of
total shares of
the company
Increase
Increase
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
12-JUN-2015
19-JUN-2015
26-JUN-2015
30-JUN-2015
03-JUL-2015
14-JUL-2015
17-JUL-2015
24-JUL-2015
31-JUL-2015
07-AUG-2015
14-AUG-2015
21-AUG-2015
28-AUG-2015
04-SEP-2015
11-SEP-2015
25-SEP-2015
30-SEP-2015
09-OCT-2015
16-OCT-2015
23-OCT-2015
30-OCT-2015
06-NOV-2015
13-NOV-2015
20-NOV-2015
27-NOV-2015
04-DEC-2015
11-DEC-2015
18-DEC-2015
25-DEC-2015
31-DEC-2015
08-JAN-2016
15-JAN-2016
22-JAN-2016
29-JAN-2016
803,348
3,065,970
(142,090)
(250,000)
233,638
(145,865)
8,814
(583,859)
50,519
141,948
385,907
55,330
965,631
778,847
156,527
(23,879)
2,121
12,272
(17,778)
(30,533)
(659,275)
(365,251)
(586,838)
9,690
230,531
390,511
(351,517)
(256,011)
(131,774)
(137,848)
228,726
150,745
(212,119)
(63,717)
05-FEB-2016
(2,646,146)
12-FEB-2016
(1,801,876)
19-FEB-2016
(1,318,753)
26-FEB-2016
(1,068,871)
04-MAR-2016
11-MAR-2016
18-MAR-2016
25-MAR-2016
31-MAR-2016
(413,600)
(594,623)
(33,481)
2,102
(37,610)
0.03
0.12
(0.01)
(0.01)
33,711,648
36,777,618
36,635,528
36,385,528
0.01
36,619,166
(0.01)
36,473,301
0.00
36,482,115
(0.02)
35,898,256
0.00
0.01
0.02
0.00
0.04
0.03
0.01
35,948,775
36,090,723
36,476,630
36,531,960
37,497,591
38,276,438
38,432,965
(0.00)
38,409,086
0.00
0.00
(0.00)
(0.00)
(0.03)
(0.01)
(0.02)
0.00
0.01
0.02
(0.01)
(0.01)
(0.01)
(0.01)
0.01
0.01
(0.01)
(0.00)
(0.11)
(0.07)
(0.05)
(0.04)
(0.02)
(0.02)
(0.00)
38,411,207
38,423,479
38,405,701
38,375,168
37,715,893
37,350,642
36,763,804
36,773,494
37,004,025
37,394,536
37,043,019
36,787,008
36,655,234
36,517,386
36,746,112
36,896,857
36,684,738
36,621,021
33,974,875
32,172,999
30,854,246
29,785,375
29,371,775
28,777,152
28,743,671
0.00
28,745,773
(0.00)
28,708,163
At the END of the Year
31-MAR-2016
0
0.00
28,708,163
1.34
1.47
1.46
1.45
1.46
1.45
1.45
1.43
1.43
1.44
1.45
1.45
1.49
1.52
1.53
1.53
1.53
1.53
1.53
1.52
1.50
1.48
1.46
1.46
1.47
1.48
1.47
1.46
1.45
1.45
1.46
1.46
1.45
1.45
1.35
1.27
1.22
1.18
1.16
1.14
1.14
1.14
1.14
1.14
HDFC Bank Limited Annual Report 2015-16
47
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Percentage of
total shares of
the company
Cumulative shareholding
during the year
No.
of
shares
Percentage of
total shares of
the company
6 GOVERNMENT OF SINGAPORE
7 RELIANCE CAPITAL TRUSTEE CO.
LTD A/C RELIANCE VISION FUND
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
At the END of the Year
At the beginning of the Year 31-MAR-2015
10-APR-2015
17-APR-2015
01-MAY-2015
15-MAY-2015
12-JUN-2015
26-JUN-2015
14-JUL-2015
17-JUL-2015
14-AUG-2015
04-SEP-2015
11-SEP-2015
25-SEP-2015
09-OCT-2015
30-OCT-2015
13-NOV-2015
20-NOV-2015
04-DEC-2015
15-JAN-2016
22-JAN-2016
29-JAN-2016
12-FEB-2016
19-FEB-2016
26-FEB-2016
04-MAR-2016
11-MAR-2016
31-MAR-2016
At the beginning of the Year 31-MAR-2015
10-APR-2015
17-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
15-MAY-2015
22-MAY-2015
29-MAY-2015
05-JUN-2015
12-JUN-2015
19-JUN-2015
26-JUN-2015
30-JUN-2015
03-JUL-2015
10-JUL-2015
14-JUL-2015
17-JUL-2015
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
29,581,912
(39,981)
(13,582)
(121,659)
(315,919)
6,214
75,760
(9,702)
(4,288)
4,239
22,074
5,594
86,259
20,166
(186,653)
101,916
116,500
(330,214)
15,662
66,883
165,000
(25,166)
(244,309)
(25,440)
(473,744)
(2,831)
0
20,061,322
(174,431)
(98,787)
(296,202)
(98,656)
198,719
(608,829)
259,074
310,552
532,106
(270,744)
(153,807)
1,521,179
965,740
493,324
280,485
4,032
25,850
1.18
(0.00)
(0.00)
(0.01)
(0.01)
0.00
0.00
(0.00)
(0.00)
0.00
0.00
0.00
0.00
0.00
(0.01)
0.00
0.01
(0.01)
0.00
0.00
0.01
(0.00)
(0.01)
(0.00)
(0.02)
(0.00)
0.00
0.80
(0.01)
(0.00)
(0.01)
(0.00)
0.01
(0.02)
0.01
0.01
0.02
(0.01)
(0.01)
0.06
0.04
0.02
0.01
0.00
0.00
29,541,931
29,528,349
29,406,690
29,090,771
29,096,985
29,172,745
29,163,043
29,158,755
29,162,994
29,185,068
29,190,662
29,276,921
29,297,087
29,110,434
29,212,350
29,328,850
28,998,636
29,014,298
29,081,181
29,246,181
29,221,015
28,976,706
28,951,266
28,477,522
28,474,691
28,474,691
19,886,891
19,788,104
19,491,902
19,393,246
19,591,965
18,983,136
19,242,210
19,552,762
20,084,868
19,814,124
19,660,317
21,181,496
22,147,236
22,640,560
22,921,045
22,925,077
22,950,927
1.18
1.18
1.17
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.15
1.15
1.15
1.16
1.16
1.15
1.15
1.13
1.13
1.13
0.79
0.79
0.78
0.77
0.78
0.76
0.77
0.78
0.80
0.79
0.78
0.84
0.88
0.90
0.91
0.91
0.91
HDFC Bank Limited Annual Report 2015-16
48
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Increase
Increase
Decrease
Increase
Decrease
At the END of the Year
24-JUL-2015
31-JUL-2015
07-AUG-2015
14-AUG-2015
21-AUG-2015
28-AUG-2015
04-SEP-2015
11-SEP-2015
18-SEP-2015
25-SEP-2015
30-SEP-2015
02-OCT-2015
09-OCT-2015
16-OCT-2015
23-OCT-2015
30-OCT-2015
06-NOV-2015
13-NOV-2015
20-NOV-2015
27-NOV-2015
04-DEC-2015
11-DEC-2015
18-DEC-2015
25-DEC-2015
31-DEC-2015
08-JAN-2016
15-JAN-2016
22-JAN-2016
29-JAN-2016
05-FEB-2016
12-FEB-2016
19-FEB-2016
26-FEB-2016
04-MAR-2016
11-MAR-2016
18-MAR-2016
25-MAR-2016
31-MAR-2016
31-MAR-2016
At the beginning of the Year 31-MAR-2015
10-APR-2015
17-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
15-MAY-2015
22-MAY-2015
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
32,680
565,554
(4,465)
270,209
235,255
163,313
575,929
(13,085)
28,152
(282,314)
(283,995)
48,817
(67,522)
(118,226)
(122,827)
366,897
398,099
131,830
243,191
44,360
212,950
88,958
(287,071)
(168,431)
627,488
569,361
(6,546)
(584,784)
(496,060)
95,369
(195,504)
(25,721)
641,436
307,449
96,956
(297,220)
199,346
(855,382)
0
13,815,526
257,000
(100,000)
(244,855)
51,408
221,200
355,000
52,546
8 HDFC TRUSTEE COMPANY
LIMITED - HDFC TOP 200 FUND
HDFC Bank Limited Annual Report 2015-16
49
Cumulative shareholding
during the year
No.
of
shares
22,983,607
23,549,161
23,544,696
23,814,905
24,050,160
24,213,473
24,789,402
24,776,317
24,804,469
24,522,155
24,238,160
24,286,977
24,219,455
24,101,229
23,978,402
24,345,299
24,743,398
24,875,228
25,118,419
25,162,779
25,375,729
25,464,687
25,177,616
25,009,185
25,636,673
26,206,034
26,199,488
25,614,704
25,118,644
25,214,013
25,018,509
24,992,788
25,634,224
25,941,673
26,038,629
25,741,409
25,940,755
25,085,373
25,085,373
14,072,526
13,972,526
13,727,671
13,779,079
14,000,279
14,355,279
14,407,825
Percentage of
total shares of
the company
0.92
0.94
0.94
0.95
0.96
0.96
0.99
0.98
0.99
0.97
0.96
0.96
0.96
0.96
0.95
0.97
0.98
0.99
1.00
1.00
1.01
1.01
1.00
0.99
1.02
1.04
1.04
1.01
0.99
1.00
0.99
0.99
1.01
1.03
1.03
1.02
1.03
0.99
0.99
0.56
0.56
0.55
0.55
0.56
0.57
0.58
Percentage of
total shares of
the company
0.00
0.02
(0.00)
0.01
0.01
0.01
0.02
(0.00)
0.00
(0.01)
(0.01)
0.00
(0.00)
(0.01)
(0.01)
0.02
0.02
0.01
0.01
0.00
0.01
0.00
(0.01)
(0.01)
0.03
0.02
(0.00)
(0.02)
(0.02)
0.00
(0.01)
(0.00)
0.03
0.01
0.00
(0.01)
0.01
(0.03)
0.00
0.55
0.01
(0.00)
(0.01)
0.00
0.01
0.01
0.00
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Decrease
Increase
At the END of the Year
29-MAY-2015
05-JUN-2015
12-JUN-2015
19-JUN-2015
26-JUN-2015
30-JUN-2015
03-JUL-2015
10-JUL-2015
17-JUL-2015
24-JUL-2015
31-JUL-2015
07-AUG-2015
14-AUG-2015
21-AUG-2015
28-AUG-2015
04-SEP-2015
11-SEP-2015
18-SEP-2015
25-SEP-2015
30-SEP-2015
09-OCT-2015
16-OCT-2015
23-OCT-2015
30-OCT-2015
06-NOV-2015
13-NOV-2015
20-NOV-2015
27-NOV-2015
04-DEC-2015
11-DEC-2015
18-DEC-2015
25-DEC-2015
31-DEC-2015
01-JAN-2016
08-JAN-2016
15-JAN-2016
22-JAN-2016
29-JAN-2016
05-FEB-2016
12-FEB-2016
19-FEB-2016
26-FEB-2016
04-MAR-2016
11-MAR-2016
18-MAR-2016
25-MAR-2016
31-MAR-2016
31-MAR-2016
264,516
15,066
683,078
216,179
199,673
128,750
(45,538)
(436)
101,500
83,656
22,000
80,226
37,750
182,500
300,723
161,696
147,559
550,466
250,086
278,250
177,630
28,929
203,338
282,695
(100,000)
503,480
205,421
108,213
21,330
284,509
243,749
17,931
116,771
50,000
(39,834)
42,307
330,318
337,635
225,171
737,843
726,457
(198,080)
154,248
279,504
(35,474)
(56,285)
3,379
0
HDFC Bank Limited Annual Report 2015-16
50
Cumulative shareholding
during the year
No.
of
shares
14,672,341
14,687,407
15,370,485
15,586,664
15,786,337
15,915,087
15,869,549
15,869,113
15,970,613
16,054,269
16,076,269
16,156,495
16,194,245
16,376,745
16,677,468
16,839,164
16,986,723
17,537,189
17,787,275
18,065,525
18,243,155
18,272,084
18,475,422
18,758,117
18,658,117
19,161,597
19,367,018
19,475,231
19,496,561
19,781,070
20,024,819
20,042,750
20,159,521
20,209,521
20,169,687
20,211,994
20,542,312
20,879,947
21,105,118
21,842,961
22,569,418
22,371,338
22,525,586
22,805,090
22,769,616
22,713,331
22,716,710
22,716,710
Percentage of
total shares of
the company
0.59
0.59
0.61
0.62
0.63
0.63
0.63
0.63
0.64
0.64
0.64
0.64
0.64
0.65
0.66
0.67
0.68
0.70
0.71
0.72
0.72
0.73
0.73
0.74
0.74
0.76
0.77
0.77
0.77
0.78
0.79
0.79
0.80
0.80
0.80
0.80
0.81
0.83
0.84
0.87
0.89
0.89
0.89
0.90
0.90
0.90
0.90
0.90
Percentage of
total shares of
the company
0.01
0.00
0.03
0.01
0.01
0.01
(0.00)
(0.00)
0.00
0.00
0.00
0.00
0.00
0.01
0.01
0.01
0.01
0.02
0.01
0.01
0.01
0.00
0.01
0.01
(0.00)
0.02
0.01
0.00
0.00
0.01
0.01
0.00
0.01
0.00
(0.00)
0.00
0.01
0.01
0.01
0.03
0.03
(0.01)
0.01
0.01
(0.00)
(0.00)
0.00
0.00
Directors' Report
Name
Sl.
No.
Remarks
Date ***
9 HDFCSL SHAREHOLDERS
SOLVENCY MARGIN ACCOUNT
At the beginning of the Year 31-MAR-2015
10-APR-2015
17-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
15-MAY-2015
22-MAY-2015
29-MAY-2015
05-JUN-2015
12-JUN-2015
19-JUN-2015
26-JUN-2015
30-JUN-2015
03-JUL-2015
10-JUL-2015
24-JUL-2015
14-AUG-2015
28-AUG-2015
04-SEP-2015
11-SEP-2015
18-SEP-2015
25-SEP-2015
30-SEP-2015
02-OCT-2015
09-OCT-2015
16-OCT-2015
23-OCT-2015
30-OCT-2015
06-NOV-2015
13-NOV-2015
20-NOV-2015
04-DEC-2015
11-DEC-2015
18-DEC-2015
01-JAN-2016
08-JAN-2016
15-JAN-2016
22-JAN-2016
29-JAN-2016
05-FEB-2016
12-FEB-2016
19-FEB-2016
26-FEB-2016
04-MAR-2016
11-MAR-2016
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
HDFC Bank Limited Annual Report 2015-16
51
Shareholding at the
beginning of the year
No.
of
shares
17,694,392
412,098
564,323
591,334
284,870
(11,637)
329,900
209,310
32,344
234,700
159,410
21,319
10,295
142,140
(200,000)
(39,809)
(12,762)
(14,403)
(39,560)
234,343
838,505
(15,696)
10,000
110,119
(249,999)
190,000
25,277
310,131
120,097
191
113,192
72,396
46,836
(95,590)
87,164
(100,000)
(126,017)
72,000
(103,321)
99,995
50,308
28,053
41,514
25,383
65,235
1,169
Percentage of
total shares of
the company
0.71
0.02
0.02
0.02
0.01
(0.00)
0.01
0.01
0.00
0.01
0.01
0.00
0.00
0.01
(0.01)
(0.00)
(0.00)
(0.00)
(0.00)
0.01
0.03
(0.00)
0.00
0.00
(0.01)
0.01
0.00
0.01
0.01
0.00
0.00
0.00
0.00
(0.00)
0.00
(0.00)
(0.01)
0.00
(0.00)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Cumulative shareholding
during the year
No.
of
shares
Percentage of
total shares of
the company
18,106,490
18,670,813
19,262,147
19,547,017
19,535,380
19,865,280
20,074,590
20,106,934
20,341,634
20,501,044
20,522,363
20,532,658
20,674,798
20,474,798
20,434,989
20,422,227
20,407,824
20,368,264
20,602,607
21,441,112
21,425,416
21,435,416
21,545,535
21,295,536
21,485,536
21,510,813
21,820,944
21,941,041
21,941,232
22,054,424
22,126,820
22,173,656
22,078,066
22,165,230
22,065,230
21,939,213
22,011,213
21,907,892
22,007,887
22,058,195
22,086,248
22,127,762
22,153,145
22,218,380
22,219,549
0.72
0.75
0.77
0.78
0.78
0.79
0.80
0.80
0.81
0.82
0.82
0.82
0.82
0.82
0.81
0.81
0.81
0.81
0.82
0.85
0.85
0.85
0.86
0.85
0.85
0.85
0.87
0.87
0.87
0.88
0.88
0.88
0.88
0.88
0.87
0.87
0.87
0.87
0.87
0.87
0.87
0.88
0.88
0.88
0.88
Directors' Report
Name
Sl.
No.
Remarks
Date ***
10 VIRTUS EMERGING MARKETS
OPPORTUNITIES FUND
Increase
Increase
Decrease
At the END of the Year
18-MAR-2016
25-MAR-2016
31-MAR-2016
31-MAR-2016
At the beginning of the Year 31-MAR-2015
10-APR-2015
24-APR-2015
01-MAY-2015
08-MAY-2015
31-JUL-2015
07-AUG-2015
22-JAN-2016
29-JAN-2016
18-MAR-2016
31-MAR-2016
31-MAR-2016
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
At the END of the Year
26,783
80,362
(299,000)
0
19,225,805
236,803
175,979
2,359,860
1,629,494
(459,821)
(135,079)
(105,534)
(1,121,466)
(311,500)
(347,100)
0
Shareholding at the
beginning of the year
No.
of
shares
Cumulative shareholding
during the year
No.
of
shares
22,246,332
22,326,694
22,027,694
22,027,694
Percentage of
total shares of
the company
0.88
0.88
0.87
0.87
19,462,608
19,638,587
21,998,447
23,627,941
23,168,120
23,033,041
22,927,507
21,806,041
21,494,541
21,147,441
21,147,441
0.78
0.78
0.88
0.94
0.92
0.92
0.91
0.86
0.85
0.84
0.84
Percentage of
total shares of
the company
0.00
0.00
(0.01)
0.00
0.77
0.01
0.01
0.09
0.07
(0.02)
(0.01)
(0.00)
(0.04)
(0.01)
(0.01)
0.00
*** Date of transfer has been considered as the date on which the beneficiary position was provided by the Depositories to the Bank.
Increase = Purchase of shares of the Bank Decrease = Sale of shares of the Bank
(v) Shareholding of Directors and Key Managerial Personnel
Name
Sr.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No.
of
shares
Percentage of
total shares of
the company
Cumulative
shareholding during the year
No.
of
shares
Percentage of
total shares of
the company
1
Aditya Puri
At the beginning of the Year
Increase
At the END of the Year
2
Bobby Parikh
At the beginning of the Year
At the END of the Year
Jointly With Relatives At the beginning of the Year
At the END of the Year
3
Kaizad Bharucha
At the beginning of the Year
Decrease
Decrease
Increase
Increase
At the END of the Year
Jointly With Relatives At the beginning of the Year
At the END of the year
4
Keki Mistry
At the beginning of the year
At the END of the year
Jointly With Relatives At the beginning of the year
At the END of the year
5
Paresh Sukthankar
At the beginning of the year
Increase
31-MAR-2015
30-OCT-2015
31-MAR-2016
31-MAR-2015
31-MAR-2016
31-MAR-2015
31-MAR-2016
31-MAR-2015
30-OCT-2015
20-NOV-2015
04-DEC-2015
25-DEC-2015
31-MAR-2016
31-MAR-2015
31-MAR-2016
31-MAR-2015
31-MAR-2016
31-MAR-2015
31-MAR-2016
31-MAR-2015
29-MAY-2015
2,731,544
337,500
3,837
3,538
829,455
(15,000)
(80,000)
129,000
21,000
500
291,915
4,215
617,655
30,000
0.11
0.01
0.00
0.00
0.03
(0.00)
(0.00)
0.00
0.00
0.00
0.01
0.00
0.02
0.00
3,069,044
3,069,044
3,837
3,538
814,455
734,455
863,455
884,455
884,455
500
291,915
4,215
647,655
0.12
0.12
0.00
0.00
0.03
0.03
0.03
0.04
0.04
0.00
0.01
0.00
0.03
HDFC Bank Limited Annual Report 2015-16
52
Directors' Report
Name
Sr.
No.
Remarks
Date ***
Increase
Increase
Increase
At the End of the year
Jointly With Relatives At the beginning of the year
Renu Karnad
At the END of the year
At the beginning of the year
At the END of the year
Sashidhar Jagdishan At the beginning of the year
6
7
8
Sanjay Dongre
Increase
At the END of the year
At the beginning of the year
Decrease
Increase
Increase
Decrease
Decrease
Increase
Decrease
At the END of the year
26-JUN-2015
04-DEC-2015
25-DEC-2015
31-MAR-2016
31-MAR-2015
31-MAR-2016
31-MAR-2015
25-DEC-2015
31-MAR-2016
31-MAR-2015
22-MAY-2015
25-SEP-2015
30-OCT-2015
06-NOV-2015
20-NOV-2015
04-DEC-2015
05-FEB-2016
31-MAR-2016
5,000
20,000
170,000
3,250
294,620
575,194
7,400
60,750
(5,000)
12,000
12,500
(4,500)
(12,500)
28,000
(6,000)
Shareholding at the
beginning of the year
No.
of
shares
Percentage of
total shares of
the company
0.00
0.00
0.00
Cumulative
shareholding during the year
No.
of
shares
652,655
672,655
842,655
842,655
3,250
294,620
582,594
582,594
55,750
67,750
80,250
75,750
63,250
91,250
85,250
85,250
Percentage of
total shares of
the company
0.03
0.03
0.03
0.03
0.00
0.01
0.02
0.02
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.02
0.00
0.00
(0.00)
0.00
0.00
(0.00)
(0.00)
0.00
(0.00)
*** Date of transfer has been considered as the date on which the beneficiary position was provided by the Depositories to the Bank.
Increase= Allotment of equity shares on exercise of equity stock options
Decrease= Sale of shares of the Bank during the year
V. INDEBTEDNESS
Indebtedness of the Bank including interest outstanding / accrued but not due for payment:
(` crore)
Secured Loans
excluding
deposits
Unsecured
Loans (1)
Deposits (2)
Total
Indebtedness
Indebtedness at the beginning of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
Change in Indebtedness during the financial year
(cid:115)(cid:0)(cid:33)(cid:68)(cid:68)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)
(cid:115)(cid:0)(cid:50)(cid:69)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)
Net change
Indebtedness at the end of the financial year
i) Principal Amount
ii) Interest due but not paid
iii) Interest accrued but not due
Total (i+ii+iii)
(1) Movement in long-term subordinated debt is shown on a gross basis.
-
-
-
-
-
-
-
-
-
-
-
45,213.6
-
298.9
45,512.5
9,092.0
(1,202.0)
7,890.0
53,018.5
-
384.0
53,402.5
45,213.6
-
298.9
45,512.5
9,092.0
(1,202.0)
7,890.0
53,018.5
-
384.0
53,402.5
(2) Section 73 (1) of the Companies Act, 2013, states that the provisions of the said Act relating to acceptance of deposits by companies do not
apply to a Banking company as defined in the Reserve Bank of India Act, 1934. Accordingly, information relating to the Bank’s deposits is not
disclosed in the table above. As per the applicable provisions of the Banking Regulation Act, 1949, details of the Bank’s deposits have been
included under Schedule 3 - Deposits, in the financial statements of the Bank.
HDFC Bank Limited Annual Report 2015-16
53
Directors' Report
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:
A. Remuneration to Managing Director, Whole-time Directors and/or Manager:
(`)
Sr.
no.
Particulars of Remuneration
1 Gross Salary
a) Salary as per provisions contained in
Section 17(1) of the Income Tax Act, 1961
b) Value of perquisites u/s. 17(2) of Income
Tax Act, 1961 except stock options
Name of Managing Director / Whole Time Director / Manager
Aditya Puri
(Managing
Director)
Paresh Sukthankar Kaizad Bharucha
(Deputy Managing
Director)
(Executive
Director)
Total
Amount
79,869,230
42,338,451
27,921,726 150,129,407
13,393,447
6,828,293
5,329,498 25,551,238
c) Profits in lieu of salary under section 17(3)
-
-
-
-
of Income Tax Act, 1961.
2 Stock options exercised during the year
3 Sweat Equity
4 Commission
- as per cent of profits
- others, specify
5 Others *
Total (A) **
Ceiling as per the Act^
218,046,125
0
137,508,300
0
94,969,070 450,523,495
0
0
0
0
4,041,568
97,304,245
0
0
2,292,880
51,459,624
0
0
1,360,000
0
0
7,694,448
34,611,224 183,375,093
^ Section 198 of the Companies Act, 1956 (which corresponds to the now applicable section 197 of the Companies Act, 2013) does not by
virtue of section 35B (2A) of the Banking Regulation Act, 1949, apply to Banking companies.
*
Includes Provident Fund and tax exempted portion of Superannuation.
** Does not include the value of the stock options exercised during the year
B. Remuneration to other Directors:
Sr.
no.
Name of Director
Independent Directors
1 Mrs. Shyamala Gopinath
2 Mr. Partho Datta
3 Mr. Bobby Parikh
4 Mr. A.N. Roy
5 Mr. Malay Patel
6 Dr. Pandit Palande (retired w.e.f. April 23, 2015)
Sub total (i)
Other Non-Executive Directors
1 Mrs. Renu Karnad
2 Mr. Keki Mistry
3 Mr. Umesh Chandra Sarangi (appointed w.e.f
March 1, 2016)
Sub total (ii)
Total (i+ii)
Overall ceiling as per the Act ^
Particulars of Remuneration
Fees for attending
Board / committee
meetings
Commission
Others
30,00,000
25,00,000
20,00,000
24,00,000
21,00,000
13,00,000
3,50,000
11,00,000
16,00,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(`)
Total
Amount
55,00,000
20,00,000
24,00,000
21,00,000
13,00,000
3,50,000
1,36,50,000
11,00,000
16,00,000
-
-
27,00,000
1,63,50,000
Total Managerial Remuneration = (A)+(B) = ` 199,725,093
^ Section 198 of the Companies Act, 1956 (which corresponds to the now applicable section 197 of the Companies Act, 2013) does not, by
virtue of section 35B (2A) of the Banking Regulation Act, 1949, apply to Banking companies.
HDFC Bank Limited Annual Report 2015-16
54
Directors' Report
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MANAGING DIRECTOR/ WHOLE TIME DIRECTOR
(`)
/ MANAGER
Sr.
no.
Particulars of Remuneration
1 Gross salary
(a) Salary as per provisions contained in
section 17(1) of the Income-tax Act, 1961
Key Managerial Personnel
Mr. Sanjay Dongre
(Company Secretary)
Mr. Sashidhar Jagdishan
(Chief Financial Officer)
Total
8,956,421
17,076,921
26,033,342
(b) Value of perquisites u/s 17(2) of Income-tax
323,832
3,196,943
3,520,775
Act, 1961 except stock options
(c) Profits in lieu of salary under section 17(3)
0
0
0
of Income-tax Act, 1961
2 Stock options exercised during the year
32,346,755
4,541,158
36,887,913
3 Sweat Equity
4 Commission
-as per cent of profits
-others, specify
5 Others*
Total**
0
0
0
0
0
0
0
0
0
276,748
9,557,001
417,832
694,580
20,691,696
30,248,697
* Includes Provident Fund and tax exempted portion of superannuation.
** Does not include the value of stock options exercised during the year.
VII. PENALTIES / PUNISHMENT / COMPOUNDING OF OFFENCES:
Type
Section of the
Companies Act
Brief
description
Details of penalties
/ punishment /
compounding fees
imposed
Authority (RD /
NCLT / Court)
Appeal made,
if any
(give details)
A. COMPANY
Penalty
Punishment
Compounding
B. DIRECTORS
Penalty
Punishment
Compounding
C. OTHER OFFICERS IN DEFAULT
Penalty
Punishment
Compounding
NONE
NONE
NONE
HDFC Bank Limited Annual Report 2015-16
55
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1
HDFC Bank Limited Annual Report 2015-16
56
Directors' Report
ANNEXURE 5 to the Directors’ Report
Performance and financial position of subsidiaries and associates of the Bank as on March 31, 2016
(` crore)
Name of entity
Parent:
HDFC Bank Limited
Subsidiaries*:
Net assets as of
March 31, 2016
Profit or loss for the
year ended March 31, 2016
As percentage of
consolidated net
assets**
Amount***
As percentage
of consolidated
profit or loss
Amount***
97.81
72,677.77
96.05
12,296.23
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
0.90
4.79
0.24
666.04
3,561.80
180.62
1.04
4.17
0.15
133.34
534.41
19.72
*The subsidiaries are domestic entities
**Consolidated net assets are total assets minus total liabilities including minority interest
***Amounts are before inter-company adjustments.
(` crore)
Name of entity
Investment as per equity method as
of March 31, 2016
Share of profit or loss for the year
ended March 31, 2016
Associates*:
1. Atlas Documentary Facilitators
Company Private Limited (ADFC) **
2. International Asset Reconstruction
Company Private Limited
As percetage of
consolidated net
assets
Amount
As percentage
of consolidated
profit or loss
Amount
0.03
0.05
23.45
37.96
0.02
0.01
2.69
1.04
*The associates are domestic entities
**Includes proportionate share of profit / loss of HBL Global Private Limited, which is a subsidiary of ADFC
HDFC Bank Limited Annual Report 2015-16
57
Directors' Report
ANNEXURE 6 to the Directors’ Report
Disclosures on Remuneration
1.
Ratio of Remuneration of each director to the median employees remuneration for the year
Designation
Managing Director
Deputy Managing Director
Executive Director
Note:
Ratio
179:1
107:1
78:1
a. We have considered fixed pay for the computation of ratios as the performance bonus for the previous year for Whole time Directors is
b.
c.
d.
subject to RBI approval.
Fixed pay includes-Salary, Allowances, Retiral Benefits as well as value of perquisites excluding ESOPs
The above includes all employees of the Bank excluding overseas employees.
The ratios include all on-roll employees including 22,960 frontline sales staff, who got absorbed on the rolls of the Bank during FY 15-16.
The ratios excluding front line sales staff would have been MD-138:1, DMD-83:1, ED-60:1.
2.
Percentage increase in remuneration of each Director, CFO, CEO, CS or Manager, if any, in the FY
Designation
Managing Director
Deputy Managing Director
Executive Director *
Chief Financial Officer
Company Secretary
Percentage Increase
20.00
20.00
50.00
17.80
12.00
*The increase in the remuneration includes increase given for salary alignment with Whole Time Directors both internally and externally.
3.
Percentage Increase in the median remuneration of employees in the financial year
The percentage increase in the median remuneration of the employees in the financial year was 9.63 per cent.
4.
The number of permanent employees on the rolls of the Bank
As of March 31, 2016 the number of permanent employees on the rolls of the Bank was 87,555.
5.
Explanation on relationship between average increase in remuneration and the Bank’s performance
The remuneration for Bank employees is governed by an elaborate and comprehensive Compensation Policy that has been
articulated in alignment with the Reserve Bank of India guidelines. The Compensation Policy clearly lays down the principles
for determining remuneration.
The Bank’s approach is to have a pay for performance culture based on the belief that the performance management system
provides a sound basis for assessing performance holistically. The compensation system also takes into account factors like
roles, skills / competencies, experience and grade / seniority to differentiate pay appropriately on the basis of contribution, skill
and availability of talent. Further, in line with the philosophy of prudent risk taking, remuneration is subject to adjustment against
all types of risk.
The average increase in employee remuneration for the year has been 10.88 per cent. The growth of profit (PBT) during the
similar period has been 21.6 per cent.
Note:
Includes employees who were eligible for salary increase in the financial year 2014-2015 and 2015-2016
HDFC Bank Limited Annual Report 2015-16
58
Directors' Report
6.
Comparison of Remuneration of KMP against performance of the Bank :
For FY 15 - 16, KMPs were paid approximately 0.08 per cent of the PBT for the year.
Note:
We have considered the fixed annualised salary for Key Managerial Personnel vis-à-vis the profit of the Bank.
7.
Variations in the market capitalisation of the Bank, price earnings ratio as at the closing date of the current FY and
the previous FY and percentage increase or decrease in market quotations of the shares of the Bank in comparison
to the rate at which the Bank came out with the last public offer.
Market Capitalisation (in ` Billion )
Price / Earnings Ratio
Percentage Increase / Decrease in market quotations of the shares of the Bank in
comparison to the rate at which the Bank came out with last public offer *
March 31, 2016
March 31, 2015
2,708.1
21.9
2,563.4
24.3
6.7 per cent
2.0 per cent
Percentage Increase / Decrease in market quotations of the shares of the Bank in
comparison to the rate at which the Bank came out with last public offer. (Annualised)*
5.9 per cent
14.6 per cent
* Last public offer considered for the above was the ADR issue in Feb 2015.
8.
Average percentage increase already made in the salaries of employees other than the managerial personnel in the
last financial year and its comparison with the percentage increase in the managerial remuneration and justification
thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.
The average percentage increase for Key Managerial Personnel : 23.95 per cent
The average percentage increase for Non Managerial Staff : 10.88 per cent
9.
Comparison of each remuneration of the Key Managerial Personnel against the performance of the Bank
Particulars
Company Secretary
Chief Financial Officer
Managing Director
Deputy Managing Director
Executive Director
Percentage of PBT
0.005
0.009
0.034
0.020
0.015
The above is based on the ratio of Fixed Pay to Profit before tax.
10. Key Parameters for any variable component of remuneration availed by the Directors
The variable pay for Directors is based on a comprehensive framework governed by the compensation policy of the Bank
framed in accordance with the Reserve Bank of India Guidelines. The variable remuneration is based on multiple parameters:
Computation of Bonus Pool:
The Pool for Bonus is computed based on the profitability of the Bank. The bonus pool is computed as a per cent of the surplus
generated post adjustment for all types of risk as approved by the Nomination and Remuneration Committee of the Board.
The variable pay for Whole-time Directors too is part of the aforementioned pool.
HDFC Bank Limited Annual Report 2015-16
59
Directors' Report
Distribution of Variable Pay:
The distribution of Variable Pay is principally performance linked. This is based on a comprehensive evaluation of each of
the Directors as per the Performance Evaluation Framework. The framework takes into consideration performance against
set objectives, performance vis-à-vis peer group and adherence to compliance standards.
Capping and Deferment:
The variable pay of Whole Time Directors is capped at 70 per cent of Fixed Pay. Further in the event variable pay exceeds 50
per cent of fixed pay, 60 per cent would be paid on immediate approval by the Reserve Bank of India. 40 per cent of the Variable
Pay will be deferred over a period of 3 years
Malus and Clawback:
In the event there is a deferment of variable pay the deferred portion of variable pay shall be subject to Malus and Clawback
subject to the terms and conditions as defined in the Compensation policy of the Bank.
Malus: The Malus clause that governs variable pay is aimed at ensuring withdrawal of the deferred bonus subject to the
performance of the Bank in the future and as decided and approved by Nomination and Remuneration Committee of the Board.
Clawback: The clawback clause provides for the return of any bonus paid to the Director subject to terms and conditions as
may be decided and approved by the Nomination and Remuneration Committee of the Board.
11. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration
in excess of the highest paid director: NA
12. Affirmation that the remuneration is as per the remuneration policy of the company: YES
HDFC Bank Limited Annual Report 2015-16
60
Directors' Report
ANNEXURE 7 to the Directors’ Report
Form No. MR-3
SECRETARIAL AUDIT REPORT
For the financial year ended 31st March, 2016
[Pursuant to section 204 (1) of the Companies Act, 2013 and Rule No.9 of the Companies
(Appointment and Remuneration of Personnel) Rules, 2014]
To
The Members
HDFC Bank Limited
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel (West),
Mumbai - 400 013
We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to corporate
practices by HDFC Bank Limited (hereinafter called ‘the Bank’) for the audit period covering the financial year ended on 31st March,
2016. Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts /
statutory compliances and expressing our opinion thereon.
Based on our verification of the Bank’s books, papers, minute books, forms and returns filed and other records maintained by
the Bank and also the information provided by the Bank, its officers, agents and authorized representatives during the conduct of
Secretarial Audit; and subject to our separate letter attached as Annexure I; we hereby report that in our opinion, the Bank has, during
the audit period generally complied with the statutory provisions listed hereunder and also that the Bank has proper Board-processes
and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.
We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Bank for the
financial year ended on 31st March, 2016 according to the provisions of:
(i)
The Companies Act, 2013 (‘the Act’) and the Rules made there under;
(ii) The Securities Contracts (Regulation) Act, 1956 (SCRA) and the Rules made there under;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;
(iv) Foreign Exchange Management Act, 1999 and the Rules and Regulations made there under to the extent of Foreign Direct
Investment, Overseas Direct Investment and External Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
(c) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;
(d) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(e) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
regarding the Companies Act and dealing with client;
(f)
The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;
(g) The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992;
(h) The Securities and Exchange Board of India (Bankers to an Issue) Regulation, 1994
(vi) The Banking Regulation Act, 1949.
We have also examined compliance with the applicable clauses of the following:
1.
2.
Secretarial Standards issued by The Institute of Company Secretaries of India related to meetings and minutes
Listing Agreement entered into by the Bank with the Stock Exchanges(s)
During the period under review, the Bank has generally complied with the provisions of the Act, Rules, Regulations, Guidelines,
Standards etc. mentioned above.
During the period under review, provisions of the following regulations were not applicable to the Bank:
(i)
The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
HDFC Bank Limited Annual Report 2015-16
61
Directors' Report
(ii) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;
(iii) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998
We further report that-
The Board of Directors of the Bank is duly constituted with proper balance of Executive Directors, Non-Executive Directors and
Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were
carried out in compliance with the provisions of the Act.
Proper notice is given to all Directors to schedule the Board meetings in compliance with the provisions of Section 173(3) of the
Companies Act, 2013, agenda and detailed notes on agenda were generally sent at least seven days in advance and a system
exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful
participation at the meeting.
Decisions at the meetings of the Board of Directors of the Bank were carried through on the basis of majority. There were no
dissenting views by any member of the Board of Directors during the period under review.
We further report that-
There are adequate systems and processes in the Bank commensurate with the size and operations of the Bank to monitor and
ensure compliance with the applicable laws, rules, regulations and guidelines.
We further report that during the audit period, the Bank has-
1. Obtained approval of members by way of special resolution under section 180 (1) (c) of the Act to authorize the Board of
Directors to borrow money in excess of the aggregate of the paid up share capital and free reserves of the Bank, but not
exceeding a sum of `50,000 crore.
2.
Issued and allotted 29750 Senior Unsecured Redeemable Long Term Non-Convertible Bonds in nature of Debentures of face
value of ` 10,00,000/- each aggregating to ` 2975 crore on private placement basis.
Place: Mumbai
Date: May 19, 2016
For BNP & Associates
Company Secretaries
Keyoor Bakshi
Partner
FCS 1844 / CP No. 2720
Annexure I to the Secretarial Audit Report for the financial year ended 31st March, 2016
To,
The Members,
HDFC Bank Limited
Our secretarial audit report of even date is to be read along with this letter.
1. Maintenance of Secretarial records and compliance of the provisions of corporate and other applicable laws, rules, regulations,
standards are the responsibility of the management of the Bank. Our responsibility is to express an opinion on these secretarial
records and compliance based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness
of the contents of the Secretarial Records. The verification was done on the test basis to ensure that correct facts are reflected
in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Bank.
4. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and
happening of events etc.
Place: Mumbai
Date: May 19, 2016
HDFC Bank Limited Annual Report 2015-16
62
For BNP & Associates
Company Secretaries
Keyoor Bakshi
Partner
FCS 1844/ CP No. 2720
Independent Auditor's Report
To the Members of HDFC Bank Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial
statements of HDFC BANK LIMITED (“the Bank”), which
comprise the Balance Sheet as at 31st March, 2016, the
Statement of Profit and Loss and the Cash Flow Statement
for the year then ended, and a summary of the significant
accounting policies and other explanatory information.
Management’s Responsibility for the Standalone Financial
Statements
The Bank’s Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 (“the
Act”) with respect to the preparation of these standalone
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 prescribed under
Section 133 of the Act, in so far as applicable to banks, and the
guidelines issued by the Reserve Bank of India.
frauds and other
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
irregularities; selection
and application of appropriate accounting policies; making
judgements 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
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
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.
We conducted our audit of the standalone financial statements
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 misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the
financial statements. The procedures selected depend on the
auditor’s judgement, 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 the accounting policies used
and the reasonableness of the accounting estimates made by
the Bank’s Directors, and evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
standalone financial statements.
Opinion
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone
financial statements give the information required by the
Banking Regulation Act, 1949 and the Act in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state
of affairs of the Bank as at 31st March, 2016, and its profit and
its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act and Section 30
of the Banking Regulation Act, 1949, 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, the transactions of the Bank which
have come to our notice have been within the powers
of the Bank.
c) As explained in paragraph 2 below, the financial
accounting systems of the Bank are centralised and,
therefore, accounting returns are not required to be
submitted by the Branches.
d)
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.
e) The Balance Sheet, the Statement of Profit and Loss,
and the Cash Flow Statement dealt with by this
Report are in agreement with the books of account.
HDFC Bank Limited Annual Report 2015-16
65
f)
In our opinion, the aforesaid standalone financial
statements comply with the Accounting Standards
prescribed under Section 133 of the Act, as
applicable.
g) On the basis of the written representations received
from the directors as on 31st March, 2016 taken
on record by the Board of Directors, none of the
directors is disqualified as on 31st March, 2016 from
being appointed as a director in terms of Section
164 (2) of the Act.
h) 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
Report in “Annexure A”. Our report expresses an
unmodified opinion on the adequacy and operating
effectiveness of the Bank’s internal financial controls
over financial reporting.
i) 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:
iii. There has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by the
Bank.
2. We report that during the course of our audit we have
performed select relevant procedures at 54 branches.
Since the Bank considers its key operations to be
automated, with the key applications largely integrated
to the core banking systems, it does not require its
branches, to submit any financial returns. Accordingly
our audit is carried out centrally at the Head Office and
Central Processing Units based on the necessary records
and data required for the purposes of the audit and made
available to us.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Porus B. Pardiwalla
Partner
(Membership No. 40005)
i.
ii.
The Bank has disclosed the impact of pending
litigations on its financial position in its financial
statements - Refer Schedule 17/C-17 and
Schedule 18 Note 16(b) and Note 16(c) to the
financial statements;
Mumbai
April 22, 2016
the applicable
The Bank has made provision, as required
under
law or accounting
standards, for material foreseeable losses,
if any, on
including
derivative contracts-Refer Schedule 17/C
17 and Schedule 18 Note 16 to the financial
statements;
long-term contracts
HDFC Bank Limited Annual Report 2015-16
66
ANNEXURE “A” TO THE
REPORT
INDEPENDENT AUDITOR’S
(Referred to in paragraph 1.h under ‘Report on Other Legal
and Regulatory Requirements’ of our report of even date)
Report on the Internal Financial Controls Over Financial
Reporting under Clause (i) of Sub-section 3 of Section 143
of the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial
reporting of HDFC BANK LIMITED (“the Bank”) as at 31st
March, 2016 in conjunction with our audit of the standalone
financial statements of the Bank for the year ended on that date.
Management’s Responsibility for Internal Financial Controls
The Bank’s management is responsible for establishing and
maintaining internal financial controls based on the internal
control over financial reporting criteria established by the Bank
considering the essential components of internal control stated
in the Guidance Note on Audit of Internal Financial Controls
Over Financial Reporting issued by the Institute of Chartered
Accountants of India. These responsibilities include the
design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring
the orderly and efficient conduct of its business, including
adherence to Bank’s policies, the safeguarding of its assets,
the prevention and detection of frauds and errors, the accuracy
and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under
the Companies Act, 2013, the Banking Regulation Act, 1949
and the guidelines issued by the Reserve Bank of India.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Bank’s
internal financial controls over financial reporting based on our
audit. We conducted our audit in accordance with the Guidance
Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) issued by the Institute of
Chartered Accountants of India and the Standards on Auditing
prescribed under Section 143(10) of the Companies Act,
2013, to the extent applicable to an audit of internal financial
controls. Those Standards and the Guidance Note require that
we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether
adequate internal financial controls over financial reporting
was established and maintained and if such controls operated
effectively in all material respects.
the
the adequacy of
Our audit involves performing procedures to obtain audit
evidence about
internal financial
controls system over financial reporting and their operating
effectiveness. Our audit of internal financial controls over
financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing
the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal
control based on the assessed risk. The procedures selected
depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the financial statements,
whether due to fraud or error.
the
reporting and
reliability of financial
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion on the Bank’s internal financial controls system over
financial reporting.
Meaning of Internal Financial Controls Over Financial
Reporting
A company’s internal financial control over financial reporting
is a process designed to provide reasonable assurance
regarding
the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and
other applicable regulations. A company’s internal financial
control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made
only in accordance with authorisations of management and
directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorised
acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial
controls over financial reporting, including the possibility
of collusion or improper management override of controls,
material misstatements due to error or fraud may occur and
not be detected. Also, projections of any evaluation of the
internal financial controls over financial reporting to future
periods are subject to the risk that the internal financial control
over financial reporting may become inadequate because of
changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according
to the explanations given to us, the Bank has, in all material
respects, an adequate internal financial controls system over
financial reporting and such internal financial controls over
financial reporting were operating effectively as at 31st March,
2016, based on the internal control over financial reporting
criteria established by the Bank considering the essential
components of internal control stated in the Guidance Note on
Audit of Internal Financial Controls Over Financial Reporting
issued by the Institute of Chartered Accountants of India.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Mumbai
April 22, 2016
Porus B. Pardiwalla
Partner
(Membership No. 40005)
HDFC Bank Limited Annual Report 2015-16
67
Balance Sheet
As at March 31, 2016
CAPITAL AND LIABILITIES
Capital
Reserves and surplus
Deposits
Borrowings
Other liabilities and provisions
ASSETS
Cash and balances with Reserve Bank of India
Balances with banks and money at call and short notice
Investments
Advances
Fixed assets
Other assets
Contingent liabilities
Bills for collection
Schedule
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
1
2
3
4
5
5,056,373
5,012,991
721,721,274
615,081,174
5,464,241,920
4,507,956,425
530,184,746
452,135,582
367,251,338
324,844,559
Total
7,088,455,651
5,905,030,731
6
7
8
9
10
11
300,583,087
275,104,536
88,605,293
88,209,982
1,638,857,691
1,516,417,540
4,645,939,589
3,654,950,312
33,431,573
31,217,343
381,038,418
339,131,018
Total
7,088,455,651
5,905,030,731
12
8,533,181,145
9,752,339,539
234,899,997
223,049,263
Significant accounting policies and notes to the financial statements
17 & 18
The schedules referred to above form an integral part of the Balance Sheet.
As per our report of even date.
For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 22, 2016
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2015-16
68
Statement of Profit and Loss
For the year ended March 31, 2016
I
INCOME
Interest earned
Other income
II
EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
III PROFIT
Net profit for the year
Balance in Profit and Loss account brought forward
IV APPROPRIATIONS
Transfer to Statutory Reserve
Proposed dividend
Tax (including cess) on dividend
Dividend (including tax / cess thereon) pertaining to previous year paid
during the year, net of dividend tax credits
Transfer to General Reserve
Transfer to Capital Reserve
Transfer to / (from) Investment Reserve Account
Balance carried over to Balance Sheet
V EARNINGS PER EQUITY SHARE (Face value ` 2 per share)
Basic
Diluted
Schedule
Year ended
31-Mar-16
` in ‘000
Year ended
31-Mar-15
13
14
602,214,451
484,699,044
107,517,233
89,963,521
Total
709,731,684
574,662,565
15
16
326,299,330
260,742,352
169,797,000
139,875,416
90,673,223
71,885,608
Total
586,769,553
472,503,376
122,962,131
102,159,189
186,277,944
146,541,532
Total
309,240,075
248,700,721
30,740,533
25,539,798
24,017,772
20,051,963
4,889,453
4,082,107
(117,135)
8,411
12,296,213
10,215,919
2,221,532
2,249,166
(85,184)
275,413
235,276,891
186,277,944
Total
309,240,075
248,700,721
`
48.84
48.26
`
42.15
41.67
Significant accounting policies and notes to the financial statements
17 & 18
The schedules referred to above form an integral part of the
Statement of Profit and Loss.
As per our report of even date.
For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 22, 2016
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2015-16
69
Cash Flow Statement
For the year ended March 31, 2016
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation on fixed assets
(Profit) / loss on revaluation of investments
Amortisation of premia on held to maturity investments
(Profit) / loss on sale of fixed assets
Provision / charge for non performing assets
Provision for dimunition in value of investment
Floating provisions
Provision for standard assets
Provision for wealth tax
Contingency provisions
Adjustments for:
(Increase) / decrease in investments (excluding investments in subsidiaries and joint
ventures)
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
Increase / (decrease) in other liabilities and provisions
Direct taxes paid (net of refunds)
Year ended
31-Mar-16
` in ‘000
Year ended
31-Mar-15
186,379,247
153,287,238
7,058,390
6,562,963
173,689
(556,306)
1,002,801
805,534
626
(111,598)
22,963,803
18,794,809
151,722
(38,184)
1,150,000
-
4,399,962
2,962,495
-
7,500
218,102
589,904
223,498,342
182,304,355
(123,768,363)
(445,894,140)
(1,015,961,758)
(647,034,038)
956,285,495
834,581,648
(37,562,160)
66,122,651
32,720,884
(94,828,734)
35,212,440
(104,748,258)
(67,459,133)
(53,874,446)
Net cash flow (used in) / from operating activities
(32,246,693)
(158,622,704)
Cash flows used in investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Investment in subsidiaries and / or joint ventures
Net cash used in investing activities
(8,159,133)
(7,356,260)
111,518
329,189
-
(12,415,656)
(8,047,615)
(19,442,727)
HDFC Bank Limited Annual Report 2015-16
70
Cash Flow Statement
For the year ended March 31, 2016
` in ‘000
Year ended
31-Mar-16
Year ended
31-Mar-15
Cash flows from financing activities
Money received on exercise of stock options by employees
12,229,008
9,954,171
Increase / (decrease) in borrowings (excluding subordinate debt,
perpetual debt and upper Tier II instruments)
89,693,664
61,627,164
Proceeds from issue of shares under Qualified Institutions Placement and American
Depository Receipt offering (net of issue expenses)
-
97,227,855
Redemption of subordinated debt
Dividend paid during the year
Tax on dividend
Net cash generated from financing activities
Effect of exchange fluctuation on translation reserve
Net increase / (decrease) in cash and cash equivalents
(12,020,000)
(4,140,000)
(20,091,666)
(16,492,770)
(3,925,269)
(2,742,009)
65,885,737
145,434,411
282,433
109,160
25,873,862
(32,521,860)
Cash and cash equivalents as at April 1st (Schedules 6 and 7)
363,314,518
395,836,378
Cash and cash equivalents as at March 31st (Schedules 6 and 7)
389,188,380
363,314,518
As per our report of even date.
For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 22, 2016
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2015-16
71
Schedules to the Financial Statements
As at March 31, 2016
SCHEDULE 1 - CAPITAL
Authorised capital
2,75,00,00,000 ( 31 March, 2015 : 2,75,00,00,000) Equity Shares of ` 2/- each
Issued, subscribed and paid-up capital
2,52,81,86,517 (31 March, 2015 : 2,50,64,95,317) Equity Shares of ` 2/- each
SCHEDULE 2 - RESERVES AND SURPLUS
I
Statutory reserve
Opening balance
Additions during the year
II
General reserve
Opening balance
Additions during the year
III Balance in profit and loss account
IV Share premium account
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18(4)]
V
Amalgamation reserve
Opening balance
Additions during the year
VI Capital reserve
Opening balance
Additions during the year
VII
Investment reserve account
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18(4)]
VIII Foreign currency translation account
Opening balance
Additions during the year
HDFC Bank Limited Annual Report 2015-16
72
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
5,500,000
5,500,000
Total
5,056,373
5,056,373
5,012,991
5,012,991
Total
Total
116,644,222
30,740,533
147,384,755
91,104,424
25,539,798
116,644,222
44,823,296
12,296,213
57,119,509
34,607,377
10,215,919
44,823,296
235,276,891
186,277,944
249,531,232
142,564,095
12,185,626
108,477,413
-
(1,510,276)
Total
261,716,858
249,531,232
10,635,564
10,635,564
-
-
Total
10,635,564
10,635,564
6,645,051
4,395,885
2,221,532
2,249,166
Total
8,866,583
6,645,051
484,268
76
(85,260)
399,084
39,597
282,433
322,030
208,855
310,612
(35,199)
484,268
(69,563)
109,160
39,597
721,721,274
615,081,174
Total
Total
Total
Schedules to the Financial Statements
As at March 31, 2016
SCHEDULE 3 - DEPOSITS
A
I
Demand deposits
(i)
From banks
(ii) From others
II
Savings bank deposits
III Term deposits
(i)
From banks
(ii) From others
B
I
Deposits of branches in India
II Deposits of branches outside India
SCHEDULE 4 - BORROWINGS
I Borrowings in India
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
(iv) Upper and lower tier II capital and innovative perpetual debts
II Borrowings outside India*
*Includes Upper Tier II debt of ` 662.55 crore (previous year: ` 625.00 crore)
Secured borrowings included in I & II above: Nil (previous year: Nil)
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I Bills payable
II
Interest accrued
III Others (including provisions)
IV Contingent provisions against standard assets
V Proposed dividend (including tax on dividend)
HDFC Bank Limited Annual Report 2015-16
73
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
22,017,200
16,319,866
862,229,501
719,334,552
Total
884,246,701
735,654,418
1,478,861,798
1,249,266,089
25,095,540
18,405,279
3,076,037,881
2,504,630,639
Total
3,101,133,421
2,523,035,918
Total
5,464,241,920
4,507,956,425
5,397,071,812
4,449,045,841
67,170,108
58,910,584
Total
5,464,241,920
4,507,956,425
-
-
15,792,856
14,851,586
59,750,000
30,000,000
144,279,000
156,299,000
Total
219,821,856
201,150,586
310,362,890
250,984,996
Total
530,184,746
452,135,582
73,784,974
60,853,248
35,987,631
29,949,880
208,559,451
194,323,194
20,012,057
15,584,167
28,907,225
24,134,070
Total
367,251,338
324,844,559
Schedules to the Financial Statements
As at March 31, 2016
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I
Cash in hand (including foreign currency notes)
II Balances with Reserve Bank of India :
(a)
In current accounts
(b) In other accounts
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I
In India
(i) Balances with banks :
(a) In current accounts
(b) In other deposit accounts
(ii) Money at call and short notice :
(a) With banks
(b) With other institutions
II Outside India
(i)
In current accounts
(ii)
In deposit accounts
(iii) Money at call and short notice
SCHEDULE 8 - INVESTMENTS
A
Investments in India in
(i) Government securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and bonds
(v) Subsidiaries / joint ventures
(vi) Others (Units, CDs/CPs, PTCs and security receipts)
B
Investments outside India in
Other investments
(a) Shares
(b) Debentures and bonds
HDFC Bank Limited Annual Report 2015-16
74
As at
` in ‘000
As at
31-Mar-16
31-Mar-15
55,694,577
53,214,928
242,888,510
219,889,608
2,000,000
2,000,000
Total
Total
244,888,510
221,889,608
300,583,087
275,104,536
2,380,626
2,316,337
6,824,510
21,126,770
Total
9,205,136
23,443,107
-
1,359,867
1,359,867
2,500,000
2,238,499
4,738,499
10,565,003
28,181,606
23,909,955
16,465,876
3,776,535
625,000
50,353,800
42,937,500
78,040,290
60,028,376
88,605,293
88,209,982
Total
Total
Total
Total
1,257,105,578
1,203,902,956
-
-
739,032
1,284,423
48,873,774
11,254,750
27,829,565
27,829,565
290,582,987
261,087,214
Total
1,625,130,936
1,505,358,908
28,375
9,396
13,698,380
11,049,236
13,726,755
11,058,632
1,638,857,691
1,516,417,540
Total
Total
Schedules to the Financial Statements
As at March 31, 2016
C
Investments
(i) Gross value of investments
(a)
In India
(b) Outside India
(ii) Provision for depreciation
(a)
In India
(b) Outside India
(iii) Net value of investments
(a)
In India
(b) Outside India
SCHEDULE 9 - ADVANCES
A
(i)
Bills purchased and discounted
(ii) Cash credits, overdrafts and loans repayable on demand
(iii) Term loans
B
(i)
Secured by tangible assets*
(ii) Covered by bank / government guarantees
(iii) Unsecured
* Including advances against book debts
C
I
Advances in India
(i)
(ii)
Priority sector
Public sector
(iii) Banks
(iv) Others
C
II
Advances outside India
(i) Due from banks
(ii) Due from others
(a) Bills purchased and discounted
(b) Syndicated loans
(c) Others
(Advances are net of provisions)
HDFC Bank Limited Annual Report 2015-16
75
As at
` in ‘000
As at
31-Mar-16
31-Mar-15
1,626,326,344
1,506,498,794
13,726,755
11,058,632
Total
1,640,053,099
1,517,557,426
1,195,408
1,139,886
-
-
Total
1,195,408
1,139,886
1,625,130,936
1,505,358,908
13,726,755
11,058,632
Total
1,638,857,691
1,516,417,540
185,136,903
177,134,003
1,242,774,115
993,671,410
3,218,028,571
2,484,144,899
Total
4,645,939,589
3,654,950,312
3,458,703,399
2,735,499,707
114,128,823
63,453,979
1,073,107,367
855,996,626
Total
4,645,939,589
3,654,950,312
1,417,909,585
1,061,040,411
134,556,082
118,066,442
4,659,631
51,278
2,767,906,764
2,187,379,246
Total
4,325,032,062
3,366,537,377
6,879,777
16,094,350
1,245,263
1,849,427
38,624,247
14,652,002
274,158,240
255,817,156
320,907,527
288,412,935
4,645,939,589
3,654,950,312
Total
Total
Schedules to the Financial Statements
As at March 31, 2016
SCHEDULE 10 - FIXED ASSETS
A
Premises (including land)
Gross block
At cost on 31 March of the preceding year
Additions during the year
Deductions during the year
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Net block
B
Other fixed assets (including furniture and fixtures)
Gross block
At cost on 31 March of the preceding year
Additions during the year
Deductions during the year
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Net block
C
Assets on lease (plant and machinery)
Gross block
At cost on 31 March of the preceding year
Additions during the year
HDFC Bank Limited Annual Report 2015-16
76
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
14,756,943
14,169,660
839,927
793,539
(85,166)
(206,256)
Total
15,511,704
14,756,943
3,764,471
3,337,178
551,090
519,617
(68,719)
(92,324)
Total
4,246,842
3,764,471
11,264,862
10,992,472
65,329,178
58,341,584
8,548,465
7,807,332
(1,410,076)
(819,738)
Total
72,467,567
65,329,178
45,104,307
39,774,886
6,510,901
6,045,463
(1,314,352)
(716,042)
Total
50,300,856
45,104,307
22,166,711
20,224,871
4,546,923
4,546,923
-
-
Total
4,546,923
4,546,923
Schedules to the Financial Statements
As at March 31, 2016
Depreciation
As at 31 March of the preceding year
Charge for the year
Lease adjustment account
As at 31 March of the preceding year
Charge for the year
Unamortised cost of assets on lease
SCHEDULE 11 - OTHER ASSETS
I
II
III
IV
V
VI
Interest accrued
Advance tax / tax deducted at source (net of provisions)
Stationery and stamps
Non banking assets acquired in satisfaction of claims
Bond and share application money pending allotments
Security deposit for commercial and residential property
VII Others*
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
4,104,467
4,104,467
-
-
Total
4,104,467
4,104,467
442,456
442,456
-
-
Total
442,456
442,456
-
-
Total
33,431,573
31,217,343
75,482,713
56,319,984
17,646,013
14,935,373
220,786
168,394
-
-
-
-
4,626,811
4,232,087
283,062,095
263,475,180
Total
381,038,418
339,131,018
*Includes deferred tax asset (net) of ` 2,116.62 crore (previous year: ` 1,950.74 crore) and deposits
placed with NABARD / SIDBI / NHB on account of shortfall in lending to priority sector of ` 13,719.68
crore (previous year: ` 14,818.19 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
I
II
III
IV
V
Claims against the bank not acknowledged as debts - taxation
Claims against the bank not acknowledged as debts - others
Liability on account of outstanding forward exchange contracts
Liability on account of outstanding derivative contracts
Guarantees given on behalf of constituents :
- In India
- Outside India
VI Acceptances, endorsements and other obligations
VII Other items for which the Bank is contingently liable
HDFC Bank Limited Annual Report 2015-16
77
11,877,300
8,979,600
762,010
713,542
5,290,757,746
6,740,520,896
2,570,471,528
2,433,779,738
301,311,242
240,381,176
31,094,714
32,080,401
317,525,754
279,900,503
9,380,851
15,983,683
Total
8,533,181,145
9,752,339,539
Schedules to the Financial Statements
For the year ended March 31, 2016
SCHEDULE 13 - INTEREST EARNED
I
II
III
Interest / discount on advances / bills
Income from investments
Interest on balance with RBI and other inter-bank funds
IV Others
SCHEDULE 14 - OTHER INCOME
I
Commission, exchange and brokerage
II Profit / (loss) on sale of investments (net)
III Profit / (loss) on revaluation of investments (net)
IV Profit / (loss) on sale of building and other assets (net)
V Profit / (loss) on exchange / derivative transactions (net)
VI
Income earned by way of dividends from subsidiaries /
associates and / or joint ventures abroad / in India
VII Miscellaneous income
SCHEDULE 15 - INTEREST EXPENDED
I
Interest on deposits
II
Interest on RBI / inter-bank borrowings
III Other interest
SCHEDULE 16 - OPERATING EXPENSES
I
II
Payments to and provisions for employees
Rent, taxes and lighting
III Printing and stationery
IV Advertisement and publicity
V Depreciation on bank's property
VI Directors' fees / remuneration, allowances and expenses
VII Auditors' fees and expenses
VIII Law charges
IX Postage, telegram, telephone etc.
X
Repairs and maintenance
XI
Insurance
XII Other expenditure*
` in ‘000
Year ended
Year ended
31-Mar-16
31-Mar-15
448,278,559
371,807,856
141,200,321
98,584,846
3,616,100
9,119,471
5,170,990
9,135,352
Total
602,214,451
484,699,044
77,590,448
65,842,024
7,491,483
(173,689)
(626)
5,259,706
556,306
111,598
12,277,267
10,279,548
1,490,542
325,932
8,841,808
7,588,407
Total
107,517,233
89,963,521
291,782,889
235,138,320
33,664,532
24,785,390
851,909
818,642
Total
326,299,330
260,742,352
57,021,980
47,509,591
12,326,423
10,520,867
4,234,603
2,483,938
7,058,390
25,761
19,331
998,702
3,997,235
10,287,303
5,613,318
3,861,460
1,874,691
6,562,963
9,696
14,508
717,718
3,995,952
8,499,506
4,470,026
65,730,016
51,838,438
Total
169,797,000
139,875,416
*Includes professional fees, commission to sales agents, travel and hotel charges, card and merchant
acquiring expenses and system management fees.
HDFC Bank Limited Annual Report 2015-16
78
Schedules to the Financials Statements
For the year ended March 31, 2016
SCHEDULE 17 - Significant accounting policies appended to and forming part of the financial statements for the year
ended March 31, 2016
A
BACKGROUND
HDFC Bank Limited (‘HDFC Bank’ or ‘the Bank’), incorporated in Mumbai, India is a publicly held banking company engaged
in providing a range of banking and financial services including retail banking, wholesale banking and treasury operations.
The Bank is governed by the Banking Regulation Act, 1949 and the Companies Act, 2013. The Bank has overseas branch
operations in Bahrain, Hong Kong and Dubai. The financial accounting systems of the Bank are centralised and, therefore,
accounting returns are not required to be submitted by branches of the Bank.
B
BASIS OF PREPARATION
The financial statements have been prepared and presented under the historical cost convention and accrual basis of
accounting, unless otherwise stated and are in accordance with Generally Accepted Accounting Principles in India (‘GAAP’),
statutory requirements prescribed under the Banking Regulation Act, 1949, circulars and guidelines issued by the Reserve
Bank of India (‘RBI’) from time to time, Accounting Standards (‘AS’) specified under Section 133 of the Companies Act, 2013,
in so far as they apply to banks and current practices prevailing within the banking industry in India.
Use of estimates
The preparation of financial statements in conformity with GAAP requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial
statements and the reported income and expenses for the reporting period. Management believes that the estimates used
in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates.
Any revision in the accounting estimates is recognised prospectively in the current and future periods.
C
1
PRINCIPAL ACCOUNTING POLICIES
Investments
Classification:
In accordance with the RBI guidelines on investment classification and valuation, investments are classified on the date of
purchase into “Held for Trading” (‘HFT’), “Available for Sale” (‘AFS’) and “Held to Maturity” (‘HTM’) categories (hereinafter
called “categories”). Subsequent shifting amongst the categories is done in accordance with the RBI guidelines.
Under each of these categories, investments are further classified under six groups (hereinafter called “groups”) - Government
Securities, Other Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries / Joint Ventures and
Other Investments.
Purchase and sale transactions in securities are recorded under ‘Settlement Date’ of accounting, except in the case of equity
shares where ‘Trade Date’ accounting is followed.
Basis of classification:
Investments that are held principally for resale within 90 days from the date of purchase are classified under HFT category.
Investments which the Bank intends to hold till maturity are classified as HTM securities. Investments in the equity of
subsidiaries / joint ventures are categorised as HTM in accordance with the RBI guidelines. Investments which are not
classified in either of the above categories are classified under AFS category.
Acquisition cost:
(cid:115)(cid:0)
(cid:34)(cid:82)(cid:79)(cid:75)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:12)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:12)(cid:0)(cid:69)(cid:84)(cid:67)(cid:14)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:66)(cid:82)(cid:79)(cid:75)(cid:69)(cid:78)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:79)(cid:78)(cid:0)(cid:68)(cid:69)(cid:66)(cid:84)(cid:0)(cid:73)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)
and Loss and are not included in the cost of acquisition.
Disposal of investments:
(cid:115)(cid:0)
(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:15)(cid:0)(cid:44)(cid:79)(cid:83)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:83)(cid:65)(cid:76)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:70)(cid:79)(cid:82)(cid:69)(cid:83)(cid:65)(cid:73)(cid:68)(cid:0)(cid:84)(cid:72)(cid:82)(cid:69)(cid:69)(cid:0)(cid:67)(cid:65)(cid:84)(cid:69)(cid:71)(cid:79)(cid:82)(cid:73)(cid:69)(cid:83)(cid:0)(cid:73)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
Loss. Cost of investments is based on the weighted average cost method. The profit from sale of investment under
HTM category, net of taxes and transfer to statutory reserve is appropriated from Statement of Profit and Loss to
“Capital Reserve” in accordance with the RBI Guidelines.
HDFC Bank Limited Annual Report 2015-16
79
Schedules to the Financials Statements
For the year ended March 31, 2016
Short sale:
The Bank undertakes short sale transactions in Central Government dated securities in accordance with RBI guidelines.
The short position is reflected as the amount received on sale and is classified under ‘Other Liabilities’. The short position is
marked to market and loss, if any, is charged to the Statement of Profit and Loss while gain, if any, is ignored. Profit / Loss on
settlement of the short position is recognised in the Statement of Profit and Loss.
Valuation:
Investments classified under AFS and HFT categories are marked to market as per the RBI guidelines.
Traded investments are valued based on the trades / quotes on the recognised stock exchanges, price list of RBI or prices
declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives Association
(‘FIMMDA’), periodically.
The market value of unquoted government securities which qualify for determining the Statutory Liquidity Ratio (‘SLR’)
included in the AFS and HFT categories is computed as per the Yield-to-Maturity (‘YTM’) rates published by FIMMDA.
The valuation of other unquoted fixed income securities (viz. State Government securities, other approved securities, bonds
and debentures) and preference shares, is done with a mark-up (reflecting associated credit and liquidity risk) over the YTM
rates for government securities published by FIMMDA.
Special bonds such as oil bonds, fertilizer bonds etc. which are directly issued by Government of India (‘GOI’) that do not
qualify for SLR are also valued by applying the mark-up above the corresponding yield on GOI securities.
Unquoted equity shares are valued at the break-up value, if the latest balance sheet is available or at ` 1 as per the RBI
guidelines.
Units of mutual funds are valued at the latest repurchase price / net asset value declared by the mutual fund.
Treasury bills, commercial papers and certificate of deposits being discounted instruments, are valued at carrying cost and
stated at acquisition cost.
Security receipts are valued as per the net asset value provided by the issuing Asset Reconstruction Company from time to time.
Net depreciation in the value, if any, compared to the acquisition cost, in any of the six groups, is charged to the Statement
of Profit and Loss. The net appreciation, if any, in any of the six groups is not recognised except to the extent of depreciation
already provided. The valuation of investments includes securities under repo transactions. The book value of individual
securities is not changed after the valuation of investments.
Investments classified under HTM category are carried at their acquisition cost and not marked to market. Any premium
on acquisition is amortised over the remaining maturity period of the security on a constant yield-to-maturity basis.
Such amortisation of premium is adjusted against interest income under the head “Income from investments” as per the RBI
guidelines. Any diminution, other than temporary, in the value of investments in subsidiaries / joint ventures is provided for.
Non-performing investments are identified and depreciation / provision are made thereon based on the RBI guidelines.
The depreciation / provision on such non-performing investments are not set off against the appreciation in respect of other
performing securities. Interest on non-performing investments is not recognised in the Statement of Profit and Loss until
received.
Repo and reverse repo transactions:
In accordance with the RBI guidelines repo and reverse repo transactions in government securities and corporate debt
securities (excluding transactions conducted under Liquidity Adjustment Facility (‘LAF’) and Marginal Standby Facility (‘MSF’)
with RBI) are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions is accounted
for as interest expense and revenue on reverse repo transactions are accounted for as interest income.
In respect of repo transactions under LAF and MSF with RBI, amount borrowed from RBI is credited to investment account
and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect of reverse repo
transactions under LAF, amount lent to RBI is debited to investment account and reversed on maturity of the transaction.
Revenues thereon are accounted for as interest income.
HDFC Bank Limited Annual Report 2015-16
80
Schedules to the Financials Statements
For the year ended March 31, 2016
2
Advances
Classification:
Advances are classified as performing and non-performing based on the RBI guidelines and are stated net of bills
rediscounted, specific provisions, interest in suspense for non-performing advances, claims received from Export Credit
Guarantee Corporation, provisions for funded interest term loan classified as non-performing advances and provisions in
lieu of diminution in the fair value of restructured assets. Interest on non-performing advances is transferred to an interest
suspense account and not recognised in the Statement of Profit and Loss until received.
Provisioning:
Specific loan loss provisions in respect of non-performing advances are made based on management’s assessment of the
degree of impairment of wholesale and retail advances, subject to the minimum provisioning level prescribed by the RBI.
The specific provision levels for retail non-performing assets are also based on the nature of product and delinquency levels.
Specific loan loss provisions in respect of non-performing advances are charged to the Statement of Profit and Loss and
included under Provisions and Contingencies.
In accordance with RBI guidelines, accelerated provision is made on non-performing advances which were not earlier
reported by the Bank as Special Mention Account under “SMA-2” category to Central Repository of Information on Large
Credits (CRILC). Accelerated provision is also made on non-performing advances which are erstwhile SMA-2 accounts with
Aggregate Exposure (AE) ` 1,000 million or above and Joint Lenders’ Forum (JLF) is not formed or they fail to agree upon a
common Corrective Action Plan (CAP) within the stipulated time frame.
Accounts are written-off in accordance with the Bank’s policies. Recoveries from bad debts written-off are recognised in the
Statement of Profit and Loss and included under other income.
In relation to non-performing derivative contracts, as per the extant RBI guidelines, the Bank makes provision for the entire
amount of overdue and future receivables relating to positive marked to market value of the said derivative contracts.
The Bank maintains general provision for standard assets including credit exposures computed as per the current marked
to market values of interest rate and foreign exchange derivative contracts, and gold in accordance with the guidelines and
at levels stipulated by RBI from time to time. In the case of overseas branches, general provision on standard advances
is maintained at the higher of the levels stipulated by the respective overseas regulator or RBI. In accordance with RBI
guidelines, provision is made against standard assets representing all exposures to the wholly owned step down subsidiaries
of the overseas subsidiaries of Indian companies, sanctioned / renewed after December 31, 2015. Provision for standard
assets is included under other liabilities.
Provisions made in excess of the Bank’s policy for specific loan loss provisions for non-performing assets and regulatory
general provisions are categorised as floating provisions. Creation of floating provisions is considered by the Bank up to a
level approved by the Board of Directors. In accordance with the RBI guidelines, floating provisions are used up to a level
approved by the Board only for contingencies under extraordinary circumstances and for making specific provisions for
impaired accounts as per these guidelines or any regulatory guidance / instructions. Floating provisions have been included
under other liabilities.
Further to the provisions required to be held according to the asset classification status, provisions are held for individual
country exposures (other than for home country exposure). Countries are categorised into risk categories as per Export
Credit Guarantee Corporation of India Ltd. (‘ECGC’) guidelines and provisioning is done in respect of that country where the
net funded exposure is one percent or more of the Bank’s total assets.
In addition to the above, the Bank on a prudential basis makes provisions on advances or exposures which are not NPAs,
but has reasons to believe on the basis of the extant environment or specific information or basis regulatory guidance
/ instructions, the possible slippage of a specific advance or a group of advances or exposures or potential exposures.
These are classified as contingent provisions and included under other liabilities.
The Bank considers a restructured account as one where the Bank, for economic or legal reasons relating to the borrower’s
financial difficulty, grants to the borrower concessions that the Bank would not otherwise consider. Restructuring would
normally involve modification of terms of the advance / securities, which would generally include, among others, alteration
of repayment period / repayable amount / the amount of installments / rate of interest (due to reasons other than competitive
reasons). Restructured accounts are classified as such by the Bank only upon approval and implementation of the restructuring
package. Necessary provision for diminution in the fair value of a restructured account is made and classification thereof is
as per the extant RBI guidelines. Restructuring of an account is done at a borrower level.
HDFC Bank Limited Annual Report 2015-16
81
Schedules to the Financials Statements
For the year ended March 31, 2016
3
Securitisation and transfer of assets
The Bank securitises out its receivables, subject to the Minimum Holding Period (‘MHP’) criteria and the Minimum Retention
Requirements (‘MRR’) of RBI, to Special Purpose Vehicles (‘SPVs’) in securitisation transactions. Such securitised-out
receivables are de-recognised in the balance sheet when they are sold (true sale criteria being fully met with) and consideration
is received by the Bank. Sales / Transfers that do not meet these criteria for surrender of control are accounted for as secured
borrowings. In respect of receivable pools securitised-out, the Bank provides liquidity and credit enhancements, as specified
by the rating agencies, in the form of cash collaterals / guarantees and / or by subordination of cash flows, not exceeding 20%
of the total securitised instruments, in line with RBI guidelines. The Bank also acts as a servicing agent for receivable pools
securitised-out.
The Bank also enters into transactions for transfer of standard assets through the direct assignment of cash flows, which
are similar to asset-backed securitisation transactions through the SPV route, except that such portfolios of receivables
are assigned directly to the purchaser and are not represented by Pass Through Certificates (‘PTCs’), subject to the RBI
prescribed MHP criteria and the MRR. The RBI issued addendum guidelines on securitisation of standard assets vide its
circular dated May 7, 2012. Accordingly, the Bank does not provide liquidity or credit enhancements on the direct assignment
transactions undertaken subsequent to these guidelines.
Pursuant to these guidelines, the Bank amortises any profit received in cash for every individual securitisation or direct
assignment transaction. This amortisation is calculated as the maximum of either of the three parameters stated below:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:76)(cid:79)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:85)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:79)(cid:82)(cid:84)(cid:70)(cid:79)(cid:76)(cid:73)(cid:79)(cid:12)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:68)(cid:0)(cid:84)(cid:79)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:76)(cid:79)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:67)(cid:65)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:65)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:12)(cid:0)(cid:83)(cid:80)(cid:69)(cid:67)(cid:73)(cid:108)(cid:67)(cid:0)
provisions, if any, and direct write-offs made on the MRR and any other exposures to the securitisation transaction
(other than credit enhancing interest only strip); or
(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:85)(cid:78)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:67)(cid:65)(cid:83)(cid:72)(cid:0)(cid:80)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:69)(cid:71)(cid:73)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:77)(cid:85)(cid:76)(cid:84)(cid:73)(cid:80)(cid:76)(cid:73)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:82)(cid:73)(cid:78)(cid:67)(cid:73)(cid:80)(cid:65)(cid:76)(cid:0)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)
during the year as a proportion to the amount of unamortised principal at the beginning of the year; or
(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:85)(cid:78)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:67)(cid:65)(cid:83)(cid:72)(cid:0)(cid:80)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:69)(cid:71)(cid:73)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:82)(cid:69)(cid:83)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:0)(cid:77)(cid:65)(cid:84)(cid:85)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:82)(cid:0)
the direct assignment transaction.
In relation to securitisation transactions undertaken prior to the aforementioned RBI guidelines, including those undertaken
through the direct assignment route, the Bank continues to amortise the profit / premium that arose on account of sale of
receivables over the life of the securities sold, in accordance with the RBI guidelines on securitisation of standard assets
issued vide its circular dated February 1, 2006.
Any loss arising on account of sale of receivables is recognised in the Statement of Profit and Loss for the period in which the
sale occurs in accordance with the said RBI guidelines.
The Bank transfers advances through inter-bank participation with and without risk. In accordance with the RBI guidelines,
in the case of participation with risk, the aggregate amount of the participation issued by the Bank is reduced from advances
and where the Bank is participating, the aggregate amount of the participation is classified under advances. In the case of
participation without risk, the aggregate amount of participation issued by the Bank is classified under borrowings and where
the Bank is participating, the aggregate amount of participation is shown as due from banks under advances.
In accordance with RBI guidelines on sale of non-performing advances, if the sale is at a price below the net book value (i.e.,
book value less provisions held), the shortfall is charged to the Statement of Profit and Loss. If the sale is for a value higher
than the net book value, the excess provision is not reversed but is utilised to meet the shortfall / loss on account of sale of
other non-performing advances. The RBI issued new guidelines on sale of non-performing advances on February 26, 2014.
In accordance with these guidelines, if the sale of non-performing advances is at a price below the net book value, the
shortfall is charged to the Statement of Profit and Loss spread over a period of two years. If the sale is for a value higher than
the net book value, the excess provision is credited to the Statement of Profit and Loss in the year the amounts are received.
The Bank invests in PTCs issued by other SPVs. These are accounted for at the deal value and are classified as investments.
The Bank also buys loans through the direct assignment route which are classified as advances. These are carried at
acquisition cost unless it is more than the face value, in which case the premium is amortised based on Effective Interest Rate
(EIR) method.
HDFC Bank Limited Annual Report 2015-16
82
Schedules to the Financials Statements
For the year ended March 31, 2016
4
Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment, if any. Cost includes cost of
purchase and all expenditure like site preparation, installation costs and professional fees incurred on the asset before it is
ready to use. Subsequent expenditure incurred on assets put to use is capitalised only when it increases the future benefit /
functioning capability from / of such assets.
Depreciation is charged over the estimated useful life of the fixed asset on a straight-line basis. The Bank, pursuant to the
Companies Act, 2013, has carried out a technical assessment of the useful life of its assets taking into account changes in
environment, changes in technology, the utility and efficacy of the asset in use. The estimated useful lives of key fixed assets
are given below:
Asset
Owned Premises
Automated Teller Machines (‘ATMs’)
Electrical equipment and installations
Office equipment
Computers
Estimated useful
life as assessed
by the Bank
Estimated useful life
specified under Schedule II
of the Companies Act, 2013
61 years
10 years
6 to 10 years
3 to 6 years
3 years
60 years
15 years
10 years
5 years
3 years
6 years
8 years
10 years
Modems, routers, switches, servers, network and related IT equipment
3 to 6 years
Motor cars
Furniture and fittings
4 years
16 years
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:76)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:72)(cid:79)(cid:76)(cid:68)(cid:0)(cid:80)(cid:82)(cid:69)(cid:77)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:67)(cid:72)(cid:65)(cid:82)(cid:71)(cid:69)(cid:68)(cid:0)(cid:79)(cid:70)(cid:70)(cid:0)(cid:79)(cid:86)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:77)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:82)(cid:73)(cid:77)(cid:65)(cid:82)(cid:89)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:76)(cid:69)(cid:65)(cid:83)(cid:69)(cid:14)
(cid:51)(cid:79)(cid:70)(cid:84)(cid:87)(cid:65)(cid:82)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:78)(cid:68)(cid:73)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:79)(cid:86)(cid:69)(cid:82)(cid:0)(cid:65)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:21)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:83)(cid:14)
(cid:48)(cid:79)(cid:73)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:65)(cid:76)(cid:69)(cid:0)(cid:84)(cid:69)(cid:82)(cid:77)(cid:73)(cid:78)(cid:65)(cid:76)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:70)(cid:85)(cid:76)(cid:76)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:14)
(cid:38)(cid:79)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:79)(cid:76)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:12)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:83)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:13)(cid:82)(cid:65)(cid:84)(cid:65)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:14)
(cid:55)(cid:72)(cid:69)(cid:78)(cid:69)(cid:86)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:65)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:83)(cid:84)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:85)(cid:83)(cid:69)(cid:70)(cid:85)(cid:76)(cid:0)(cid:76)(cid:73)(cid:70)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:85)(cid:78)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:73)(cid:83)(cid:0)(cid:67)(cid:72)(cid:65)(cid:82)(cid:71)(cid:69)(cid:68)(cid:0)
over the revised remaining useful life of the said asset.
(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:79)(cid:78)(cid:0)(cid:83)(cid:65)(cid:76)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:77)(cid:77)(cid:79)(cid:86)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:89)(cid:0)(cid:78)(cid:69)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:65)(cid:88)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:70)(cid:69)(cid:82)(cid:0)(cid:84)(cid:79)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:85)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0)(cid:82)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:12)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:84)(cid:79)(cid:0)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:82)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:0)
account.
5
Impairment of assets
The Bank assesses at each balance sheet date whether there is any indication that an asset may be impaired. Impairment
loss, if any, is provided in the Statement of Profit and Loss to the extent the carrying amount of assets exceeds their estimated
recoverable amount.
6
Transactions involving foreign exchange
Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing on the
date of the transaction. Income and expenditure items of integral foreign operations (representative offices) are translated at the
weekly average closing rates and of non-integral foreign operations (foreign branches) at the monthly average closing rates.
Foreign currency monetary items of domestic and integral foreign operations are translated at the closing exchange rates
notified by Foreign Exchange Dealers’ Association of India (‘FEDAI’) as at the Balance Sheet date and the resulting net valuation
profit or loss arising due to a net open position in any foreign currency is recognised in the Statement of Profit and Loss.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated at
closing exchange rates notified by FEDAI at the Balance Sheet date and the resulting profit / loss arising from exchange
differences are accumulated in the Foreign Currency Translation Account until remittance or the disposal of the net investment
in the non-integral foreign operations in accordance with AS - 11, The Effects of Changes in Foreign Exchange Rates.
HDFC Bank Limited Annual Report 2015-16
83
Schedules to the Financials Statements
For the year ended March 31, 2016
Foreign exchange spot and forward contracts outstanding as at the Balance Sheet date and held for trading, are revalued at
the closing spot and forward rates respectively as notified by FEDAI and at interpolated rates for contracts of interim maturities.
The USD-INR rate for valuation of contracts having longer maturities i.e. greater than one year, is implied from MIFOR and
LIBOR curves. For other currency pairs, the forward points (for rates / tenors not published by FEDAI) are obtained from Reuters
for valuation of the FX deals. As directed by FEDAI to consider P&L on present value basis, the forward profit or loss on the deals
are discounted till the valuation date using the discounting yields. The resulting profit or loss on valuation is recognised in the
Statement of Profit and Loss. Foreign exchange contracts are classified as assets when the fair value is positive (positive marked
to market value) or as liabilities when the fair value is negative (negative marked to market value).
Foreign exchange forward contracts not intended for trading, that are entered into to establish the amount of reporting
currency required or available at the settlement date of a transaction, and are outstanding at the Balance Sheet date, are
effectively valued at the closing spot rate. The premia or discount arising at the inception of such forward exchange contract
is amortised as expense or income over the life of the contract.
Currency future contracts are marked to market daily using settlement price on a trading day, which is the closing price of
(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:83)(cid:80)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:70)(cid:85)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:68)(cid:65)(cid:89)(cid:14)(cid:0)(cid:55)(cid:72)(cid:73)(cid:76)(cid:69)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:65)(cid:73)(cid:76)(cid:89)(cid:0)(cid:83)(cid:69)(cid:84)(cid:84)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:80)(cid:82)(cid:73)(cid:67)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:85)(cid:84)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:76)(cid:65)(cid:83)(cid:84)(cid:0)(cid:72)(cid:65)(cid:76)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:72)(cid:79)(cid:85)(cid:82)(cid:0)
weighted average price of such contract, the final settlement price is taken as the RBI reference rate on the last trading day of
the future contract or as may be specified by the relevant authority from time to time. All open positions are marked to market
based on the settlement price and the resultant marked to market profit / loss is daily settled with the exchange.
Contingent liabilities on account of foreign exchange contracts, currency future contracts, guarantees, letters of credit,
acceptances and endorsements are reported at closing rates of exchange notified by FEDAI as at the Balance Sheet date.
7
Derivative contracts
The Bank recognises all derivative contracts (other than those designated as hedges) at fair value, on the date on which the
derivative contracts are entered into and are re-measured at fair value as at the Balance Sheet or reporting dates. Derivatives
are classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair value is
negative (negative marked to market value). Changes in the fair value of derivatives other than those designated as hedges
are recognised in the Statement of Profit and Loss.
Derivative contracts designated as hedges are not marked to market unless their underlying transaction is marked to market.
In respect of derivative contracts that are marked to market, changes in the market value are recognised in the Statement of
Profit and Loss in the relevant period. The Bank identifies the hedged item (asset or liability) at the inception of the transaction
itself. Hedge effectiveness is ascertained at the time of the inception of the hedge and periodically thereafter. Gains or losses
arising from hedge ineffectiveness, if any, are recognised in the Statement of Profit and Loss.
Contingent liabilities on account of derivative contracts denominated in foreign currencies are reported at closing rates of
exchange notified by FEDAI as at the Balance Sheet date.
8
Revenue recognition
Interest income is recognised in the Statement of Profit and Loss on an accrual basis, except in the case of non-performing
assets where it is recognised upon realisation as per RBI norms.
Interest income on investments in PTCs and loans bought out through the direct assignment route is recognised at their
effective interest rate.
Income on non-coupon bearing discounted instruments is recognised over the tenor of the instrument on a constant effective
yield basis.
Loan processing fee is recognised as income when due. Syndication / Arranger fee is recognised as income when a significant
act / milestone is completed.
Gain / loss on sell down of loans is recognised in line with the extant RBI guidelines.
Dividend on equity shares, preference shares and on mutual fund units is recognised as income when the right to receive the
dividend is established.
Guarantee commission, commission on letter of credit, annual locker rent fees and annual fees for credit cards are recognised
on a straight-line basis over the period of contract. Other fees and commission income are recognised when due, except in
cases where the Bank is uncertain of ultimate collection.
HDFC Bank Limited Annual Report 2015-16
84
Schedules to the Financials Statements
For the year ended March 31, 2016
9
Employee benefits
Employee Stock Option Scheme (‘ESOS’):
The Employee Stock Option Scheme (‘the Scheme’) provides for the grant of options to acquire equity shares of the Bank
to its employees. The options granted to employees vest in a graded manner and these may be exercised by the employees
within a specified period.
The Bank follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation cost
is measured by the excess, if any, of the market price of the underlying stock over the exercise price as determined under the
option plan. The market price is the closing price on the stock exchange where there is highest trading volume on the working
day immediately preceding the date of grant. Compensation cost, if any is amortised over the vesting period.
Gratuity:
The Bank provides for gratuity to all employees. The benefit vests upon completion of five years of service and is in the form
of lump sum payment to employees on resignation, retirement, death while in employment or on termination of employment
of an amount equivalent to 15 days basic salary payable for each completed year of service. The Bank makes contributions to
funds administered by trustees and managed by insurance companies for amounts notified by the said insurance companies.
In respect of erstwhile Lord Krishna Bank (‘eLKB’) employees, the Bank makes contribution to a fund set up by eLKB and
administered by the Board of Trustees.
The defined gratuity benefit plans are valued by an independent actuary as at the Balance Sheet date using the projected
unit credit method as per the requirement of AS-15, Employee Benefits, to determine the present value of the defined benefit
obligation and the related service costs. Under this method, the determination is based on actuarial calculations, which
include assumptions about demographics, early retirement, salary increases and interest rates. Actuarial gain or loss is
recognised in the Statement of Profit and Loss.
Superannuation:
Employees of the Bank, above a prescribed grade, are entitled to receive retirement benefits under the Bank’s Superannuation
Fund. The Bank contributes a sum equivalent to 13% of the employee’s eligible annual basic salary (15% for the whole time
directors and for certain eligible erstwhile Centurion Bank of Punjab (‘eCBoP’) staff) to insurance companies, which administer
the fund. The Bank has no liability for future superannuation fund benefits other than its contribution, and recognises such
contributions as an expense in the year incurred, as such contribution is in the nature of defined contribution.
Provident fund:
In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund. The Bank
contributes an amount, on a monthly basis, at a determined rate (currently 12% of employee’s basic salary). Of this, the Bank
contributes an amount equal to 8.33% of employee’s basic salary up to a maximum salary level of `15,000/- per month, to the
Pension Scheme administered by the Regional Provident Fund Commissioner (‘RPFC’). The balance amount is contributed
to a fund set up by the Bank and administered by a Board of Trustees. In respect of eCBoP employees, employer’s and
employee’s share of contribution to Provident Fund till March 2009, was administered by RPFC and from April 2009 onwards,
the same is transferred to the fund set up by the Bank and administered by the Board of Trustees. In respect of eLKB
employees, the Bank contributes to a fund set up by eLKB and administered by a Board of Trustees. The Bank recognises
such contributions as an expense in the year in which it is incurred. Interest payable to the members of the trust shall not
be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and
Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Bank.
The guidance note on implementing AS-15, Employee Benefits, states that benefits involving employer established provident
funds, which require interest shortfalls to be provided, are to be considered as defined benefit plans. Actuarial valuation of
this Provident Fund interest shortfall is done as per the guidance note issued in this respect by The Institute of Actuaries of
India (IAI) and provision towards this liability is made.
The overseas branches of the Bank makes contribution to the respective relevant government scheme calculated as a
percentage of the employees’ salaries. The Bank’s obligations are limited to these contributions, which are expensed when
due, as such contribution is in the nature of defined contribution.
HDFC Bank Limited Annual Report 2015-16
85
Schedules to the Financials Statements
For the year ended March 31, 2016
Leave encashment / Compensated absences:
The Bank does not have a policy of encashing unavailed leave for its employees, except for certain eLKB employees under
Indian Banks’ Association (‘IBA’) structure. The Bank provides for leave encashment / compensated absences based on an
independent actuarial valuation at the Balance Sheet date, which includes assumptions about demographics, early retirement,
salary increases, interest rates and leave utilisation.
Pension:
In respect of pension payable to certain eLKB employees under IBA structure, which is a defined benefit scheme, the Bank
contributes 10% of basic salary to a pension fund set up by the Bank and administered by the Board of Trustees and the
balance amount is provided based on actuarial valuation as at the Balance Sheet date conducted by an independent actuary.
In respect of certain eLKB employees who had moved to a Cost to Company (‘CTC’) driven compensation structure and
had completed less than 15 years of service, the contribution which was made until then, is maintained as a fund and will be
converted into annuity on separation after a lock-in-period of two years. For this category of employees, liability stands frozen
and no additional provision is required except for interest as applicable to Provident Fund, which is provided for.
In respect of certain eLKB employees who moved to a CTC structure and had completed service of more than 15 years,
pension would be paid on separation based on salary applicable as on the date of movement to CTC structure. Provision
thereto is made based on actuarial valuation as at the Balance Sheet date conducted by an independent actuary.
10
Debit and credit cards reward points
The Bank estimates the probable redemption of debit and credit card reward points and cost per point using an actuarial
method by employing an independent actuary, which includes assumptions such as mortality, redemption and spends.
Provisions for liabilities on said reward points are made based on the actuarial valuation report as furnished by the said
independent actuary and included in other liabilities.
11
Bullion
The Bank imports bullion including precious metal bars on a consignment basis for selling to its wholesale and retail customers.
The imports are typically on a back-to-back basis and are priced to the customer based on an estimated price quoted by the
supplier. The Bank earns a fee on such wholesale bullion transactions. The fee is classified under commission income.
The Bank also sells bullion to its retail customers. The difference between the sale price to customers and actual price paid
to the supplier is recorded under commission income.
The Bank also deals in bullion on a borrowing and lending basis and the interest paid / received thereon is classified as
interest expense / income respectively.
12
Lease accounting
Lease payments including cost escalation for assets taken on operating lease are recognised in the Statement of Profit and
Loss over the lease term on a straight-line basis in accordance with the AS-19, Leases.
13
Income tax
Income tax expense comprises current tax provision (i.e. the amount of tax for the period determined in accordance with the
Income Tax Act, 1961, the rules framed there under and considering the material principles set out in Income Computation
and Disclosure Standards) and the net change in the deferred tax asset or liability during the year. Deferred tax assets and
liabilities are recognised for the future tax consequences of timing differences between the carrying values of assets and
liabilities and their respective tax bases, and operating loss carried forward, if any. Deferred tax assets and liabilities are
measured using the enacted or substantively enacted tax rates as at the Balance Sheet date.
Current tax assets and liabilities and deferred tax assets and liabilities are off-set when they relate to income taxes levied by
the same taxation authority, when the Bank has a legal right to off-set and when the Bank intends to settle on a net basis.
Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future.
In case of unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if
there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each Balance Sheet date and
appropriately adjusted to reflect the amount that is reasonably / virtually certain to be realised.
HDFC Bank Limited Annual Report 2015-16
86
Schedules to the Financials Statements
For the year ended March 31, 2016
14 Earnings per share
The Bank reports basic and diluted earnings per equity share in accordance with AS-20, Earnings per Share. Basic earnings
per equity share has been computed by dividing net profit for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could
occur if securities or other contracts to issue equity shares were exercised or converted to equity during the year. Diluted
earnings per equity share are computed using the weighted average number of equity shares and the dilutive potential equity
shares outstanding during the period except where the results are anti-dilutive.
15
Share issue expenses
Share issue expenses are adjusted from Share Premium Account in terms of Section 52 of the Companies Act, 2013.
16
Segment information
The disclosure relating to segment information is in accordance with AS-17, Segment Reporting and as per guidelines issued
by RBI.
17
Accounting for provisions, contingent liabilities and contingent assets
In accordance with AS-29, Provisions, Contingent Liabilities and Contingent Assets, the Bank recognises provisions when it
has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.
Provisions are determined based on management estimate required to settle the obligation at the Balance Sheet date,
supplemented by experience of similar transactions. These are reviewed at each Balance Sheet date and adjusted to reflect
the current management estimates.
A disclosure of contingent liability is made when there is:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:65)(cid:0)(cid:80)(cid:79)(cid:83)(cid:83)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:79)(cid:66)(cid:76)(cid:73)(cid:71)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:82)(cid:73)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:65)(cid:0)(cid:80)(cid:65)(cid:83)(cid:84)(cid:0)(cid:69)(cid:86)(cid:69)(cid:78)(cid:84)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:88)(cid:73)(cid:83)(cid:84)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:87)(cid:73)(cid:76)(cid:76)(cid:0)(cid:66)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:108)(cid:82)(cid:77)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:67)(cid:67)(cid:85)(cid:82)(cid:82)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:82)(cid:0)(cid:78)(cid:79)(cid:78)(cid:13)
occurrence of one or more uncertain future events not within the control of the Bank; or
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will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
(cid:0)
(cid:55)(cid:72)(cid:69)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:65)(cid:0)(cid:80)(cid:79)(cid:83)(cid:83)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:79)(cid:66)(cid:76)(cid:73)(cid:71)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)(cid:80)(cid:82)(cid:69)(cid:83)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:66)(cid:76)(cid:73)(cid:71)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:78)(cid:0)(cid:82)(cid:69)(cid:83)(cid:80)(cid:69)(cid:67)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:76)(cid:73)(cid:75)(cid:69)(cid:76)(cid:73)(cid:72)(cid:79)(cid:79)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:79)(cid:85)(cid:84)(cid:109)(cid:79)(cid:87)(cid:0)(cid:79)(cid:70)(cid:0)(cid:82)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:83)(cid:0)(cid:73)(cid:83)(cid:0)(cid:82)(cid:69)(cid:77)(cid:79)(cid:84)(cid:69)(cid:12)(cid:0)
no provision or disclosure is made.
Contingent assets, if any, are not recognised in the financial statements since this may result in the recognition of income that
may never be realised.
Onerous contracts
Provisions for onerous contracts are recognised when the expected benefits to be derived by the Bank from a contract are
lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the
present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the
contract. Before a provision is established, the Bank recognises any impairment loss on the assets associated with that
contract.
18
Cash and cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short
notice.
19
Corporate social responsibility
Expenditure towards corporate social responsibility, in accordance with Companies Act, 2013, are recognised in the Statement
of Profit and Loss.
HDFC Bank Limited Annual Report 2015-16
87
Schedules to the Financial Statements
For the year ended March 31, 2016
SCHEDULE 18 - Notes forming part of the financial statements for the year ended March 31, 2016
Amounts in notes forming part of the financial statements for the year ended March 31, 2016 are denominated in rupee crore to
conform to extant RBI guidelines.
1
Change in classification
Pursuant to RBI circular dated July 16, 2015, deposits placed, with NABARD, SIDBI and NHB aggregating to ` 13,719.68 crore
(previous year: ` 14,818.19 crore), arising out of the shortfall in meeting the priority sector lending targets / sub-targets, have
been included under ‘Other Assets’ and interest thereon aggregating to ` 861.15 crore (previous year: ` 847.12 crore) under
‘Interest Earned - Others’. Hitherto, these were included under ‘Investments’ and ‘Interest Earned - Income on Investments’
respectively. Figures for the previous year have been regrouped / reclassified to conform to current year’s classification.
The above change in classification has no impact on the profit of the Bank for the years ended March 31, 2016 and March 31, 2015.
2
Capital adequacy
The Bank’s capital to risk-weighted asset ratio (‘Capital Adequacy Ratio’) as on March 31, 2016 is calculated in accordance
with the RBI’s guidelines on Basel III capital regulations (‘Basel III’). The phasing in of the minimum capital requirement under
Basel III is as follows:
(% of RWAs)
Minimum ratio of capital
to risk-weighted assets
Common equity tier I ratio
Capital conservation buffer
Tier I capital ratio
Total capital adequacy ratio
As on
April 1, 2013
4.5
-
6.0
9.0
2014
5.0
-
6.5
9.0
As on March 31,
2015
5.5
-
7.0
9.0
2016
5.5
0.625
7.0
9.0
2017
5.5
1.25
7.0
9.0
2018
5.5
1.875
7.0
9.0
2019
5.5
2.5
7.0
9.0
The Bank’s capital adequacy ratio computed under Basel III is given below:
Particulars
Tier I capital
Of which common equity tier I capital
Tier II capital
Total capital
Total risk weighted assets
Capital adequacy ratios under Basel lII
Tier I
Of which common equity tier I
Tier II
March 31, 2016
March 31, 2015
(` crore)
70,032.52
70,032.52
12,243.44
82,275.96
57,722.07
57,722.07
13,244.22
70,966.29
529,768.14
422,669.92
13.22%
13.22%
2.31%
15.53%
13.66%
13.66%
3.13%
16.79%
Total
The Bank has not raised any additional tier I and tier II capital during the year ended March 31, 2016 and March 31, 2015.
Subordinated debt (lower Tier II capital), upper Tier II capital and innovative perpetual debt instruments outstanding as at
March 31, 2016 are ` 10,812.00 crore (previous year: ` 12,014.00 crore), ` 4,078.45 crore (previous year: ` 4,040.90 crore)
and ` 200.00 crore (previous year: ` 200.00 crore) respectively.
III capital
In accordance with RBI guidelines, banks are required
regulations. The Bank has made
link:
these disclosures which are available on
http://www.hdfcbank.com/aboutus/basel_disclosures/default.htm. These Pillar 3 disclosures have not been subjected to audit.
to make Pillar 3 disclosures under Basel
its website at
following
the
HDFC Bank Limited Annual Report 2015-16
88
Schedules to the Financial Statements
For the year ended March 31, 2016
2
Capital Infusion
During the year ended March 31, 2016, the Bank allotted 2,16,91,200 equity shares (previous year: 2,27,00,740 equity shares)
aggregating to face value ` 4.34 crore (previous year: ` 4.54 crore) in respect of stock options exercised. Accordingly, share
capital increased by ` 4.34 crore (previous year: ` 4.54 crore) and share premium increased by ` 1,218.56 crore (previous year:
` 990.88 crore).
Pursuant to the shareholder and regulatory approvals, the Bank on February 10, 2015, concluded a Qualified Institutions
Placement (QIP) of 1,87,44,142 equity shares at a price of ` 1,067 per equity share aggregating ` 2,000 crore and an American
Depository Receipt (ADR) offering of 2,20,00,000 ADRs (representing 6,60,00,000 equity shares) at a price of USD 57.76 per
ADR, aggregating USD 1,271 million. Pursuant to these issuances, the Bank allotted 8,47,44,142 additional equity shares.
Accordingly, share capital increased by ` 16.95 crore and share premium increased by ` 9,705.84 crore, net of share issue
expenses of ` 151.03 crore.
Details of movement in the paid-up equity share capital of the Bank are given below:
(` crore)
Particulars
Opening balance
Addition pursuant to QIP / ADR offering
Addition pursuant to stock options exercised
Closing balance
3
Earnings per equity share
March 31, 2016
March 31, 2015
501.30
-
4.34
505.64
479.81
16.95
4.54
501.30
Basic and diluted earnings per equity share have been calculated based on the net profit after taxation of ` 12,296.23
crore (previous year: ` 10,215.92 crore) and the weighted average number of equity shares outstanding during the year of
2,51,74,29,120 (previous year: 2,42,37,77,245).
Following is the reconciliation between basic and diluted earnings per equity share:
Particulars
Nominal value per share
Basic earnings per share
Effect of potential equity shares (per share)
Diluted earnings per share
For the years ended (`)
March 31, 2016
March 31, 2015
2.00
48.84
(0.58)
48.26
2.00
42.15
(0.48)
41.67
Basic earnings per equity share have been computed by dividing net profit for the year attributable to the equity shareholders
by the weighted average number of equity shares outstanding for the year. Diluted earnings per equity share have been
computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number
of equity shares and dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive.
The dilutive impact is on account of stock options granted to employees by the Bank. There is no impact of dilution on the profits
in the current year and previous year.
Following is the reconciliation of weighted average number of equity shares used in the computation of basic and diluted
earnings per share:
Particulars
Weighted average number of equity shares used in computing basic earnings
per equity share
Effect of potential equity shares outstanding
Weighted average number of equity shares used in computing diluted earnings
per equity share
For the years ended
March 31, 2016
March 31, 2015
2,51,74,29,120
2,42,37,77,245
3,04,43,320
2,77,45,406
2,54,78,72,440
2,45,15,22,651
HDFC Bank Limited Annual Report 2015-16
89
Schedules to the Financial Statements
For the year ended March 31, 2016
4
Reserves and Surplus
Draw down from reserves
Share Premium
The Bank has not undertaken any drawdown from reserves during the years ended March 31, 2016 and March 31, 2015, except
towards share issue expenses of ` 151.03 crore, incurred for the equity raised through the Qualified Institutions Placement
(QIP) and American Depository Receipt (ADR) routes during the year ended March 31, 2015, which have been adjusted in that
year against the share premium account in terms of Section 52 of the Companies Act, 2013.
Statutory Reserve
The Bank has made an appropriation of ` 3,074.05 crore (previous year: ` 2,553.98 crore) out of profits for the year ended
March 31, 2016 to Statutory Reserve pursuant to the requirements of Section 17 of the Banking Regulation Act, 1949 and RBI
guidelines dated September 23, 2000.
Capital Reserve
During the year ended March 31, 2016, the Bank appropriated ` 222.15 crore (previous year: ` 224.92 crore), being the profit
from sale of investments under HTM category and profit on sale of immovable properties, net of taxes and transfer to statutory
reserve, from Profit and Loss Account to Capital Reserve Account.
General Reserve
The Bank has made an appropriation of ` 1,229.62 crore (previous year: ` 1,021.59 crore) out of profits for the year ended
March 31, 2016, to General Reserve pursuant to provisions of the Companies Act, 2013.
Investment Reserve Account
During the year ended March 31, 2016, the Bank has transferred ` 8.52 crore (net) from Investment Reserve Account to
Profit and Loss Account and in the previous year, the Bank appropriated ` 27.54 crore (net) from Profit and Loss Account to
Investment Reserve Account as per RBI guidelines.
5
Dividend on shares allotted pursuant to exercise of stock options
The Bank may allot equity shares after the Balance Sheet date but before the book closure date pursuant to the exercise of any
employee stock options. These equity shares will be eligible for full dividend for the year ended March 31, 2016, if approved at
the ensuing Annual General Meeting.
6
Accounting for employee share based payments
The shareholders of the Bank approved grant of equity share options under Plan “C” in June 2005, Plan “D” in June 2007,
Plan “E” in June 2010 and Plan “F” in June 2013. Under the terms of each of these Plans, the Bank may issue Equity Stock
Options (‘ESOPs’) to employees and Whole Time Directors of the Bank, each of which is convertible into one equity share.
All the plans were framed in accordance with the SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme)
Guidelines, 1999 as amended from time to time and as applicable at the time of grant. Accounting for the stock options has
been in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 to the extent applicable.
Plans C, D, E and F provide for the issuance of options at the recommendation of the Nomination & Remuneration Committee
at the closing price on the working day immediately preceding the date when options are granted. The price being the closing
price of the share on an Indian stock exchange with the highest trading volume as of the working day preceding the date of
grant.
Vesting conditions applicable to the options are at the discretion of the Nomination & Remuneration Committee. These
options are exercisable on vesting, for a period as set forth by the Nomination & Remuneration Committee at the time of
grant. The period in which options may be exercised cannot exceed five years. During the years ended March 31, 2016 and
March 31, 2015, no modifications were made to the terms and conditions of ESOPs as approved by the Nomination &
Remuneration Committee.
HDFC Bank Limited Annual Report 2015-16
90
Schedules to the Financial Statements
For the year ended March 31, 2016
Activity in the options outstanding under the Employee Stock Option Plans
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Options
Weighted average
exercise price (`)
10,90,33,000
4,48,36,200
2,16,91,200
35,23,700
12,86,54,300
4,96,81,000
683.16
1,092.65
563.78
895.09
840.19
661.84
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Options
Weighted average
exercise price (`)
9,24,76,600
556.06
4,16,59,000
835.50
2,27,00,740
438.50
24,01,860
744.09
10,90,33,000
683.16
4,18,71,400
537.99
(cid:115)(cid:0)(cid:0)
(cid:38)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Plan
Plan C
Plan D
Plan E
Plan F
Range of exercise price
(`)
Number of shares
arising
out of options
Weighted average
life of options
(in years)
Weighted average
exercise price
(`)
680.00 to 835.50
680.00
440.16 to 680.00
835.50 to 1,097.80
57,40,800
51,33,900
3,78,50,200
7,99,29,400
3.34
3.32
2.49
4.80
693.00
680.00
598.71
975.41
(cid:115)(cid:0)(cid:0)
(cid:38)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Plan
Plan C
Plan D
Plan E
Plan F
Range of exercise price
(`)
Number of shares
arising
out of options
Weighted average
life of options
(in years)
Weighted average
exercise price
(`)
680.00 to 835.50
680.00
440.16 to 680.00
835.50
67,78,000
64,02,300
5,59,39,700
3,99,13,000
4.32
4.26
3.05
5.22
692.50
680.00
573.70
835.50
HDFC Bank Limited Annual Report 2015-16
91
Schedules to the Financial Statements
For the year ended March 31, 2016
Fair value methodology
The fair value of options used to compute proforma net income and earnings per equity share have been estimated on
the dates of each grant using the binomial option-pricing model. The Bank estimates the volatility based on the historical
share prices. 4,48,36,200 options were granted during the year ended March 31, 2016 (previous year: 4,16,59,000).
The various assumptions considered in the pricing model for the ESOPs granted during the years ended March 31, 2016 and
March 31, 2015 were:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the options
March 31, 2016
March 31, 2015
0.73%
0.82%
23.29% to 26.46% 24.30% to 32.00%
7.71% to 8.07%
8.42 % to 8.63 %
1 to 7 years
1 to 7 years
Impact of fair value method on net profit and Earnings Per Share (‘EPS’)
Had the compensation cost for the Bank’s stock option plans been determined based on the fair value approach, the Bank’s
net profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net profit (as reported)
Add: Stock-based employee compensation expense included in net income
Less: Stock-based compensation expense determined under fair value based
method (proforma)
(` crore)
March 31, 2016
March 31, 2015
12,296.23
10,215.92
-
1,265.93
-
944.47
Net profit (proforma)
11,030.30
9,271.45
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
7
Other liabilities
(`)
48.84
43.82
48.26
43.29
(`)
42.15
38.25
41.67
37.82
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:72)(cid:69)(cid:76)(cid:68)(cid:0) (cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:69)(cid:78)(cid:84)(cid:0) (cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:84)(cid:79)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0) (cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0) (cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:79)(cid:0) ` 2,001.21 crore as on March 31, 2016
(previous year: ` 1,558.42 crore). These are included under other liabilities.
(cid:48)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0) (cid:73)(cid:83)(cid:0) (cid:77)(cid:65)(cid:68)(cid:69)(cid:0) (cid:73)(cid:78)(cid:0) (cid:65)(cid:67)(cid:67)(cid:79)(cid:82)(cid:68)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0) (cid:87)(cid:73)(cid:84)(cid:72)(cid:0) (cid:50)(cid:34)(cid:41)(cid:0) (cid:71)(cid:85)(cid:73)(cid:68)(cid:69)(cid:76)(cid:73)(cid:78)(cid:69)(cid:83)(cid:14)(cid:0) (cid:48)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0) (cid:73)(cid:83)(cid:0) (cid:77)(cid:65)(cid:68)(cid:69)(cid:0)
@ 0.25% for direct advances to agriculture and Small and Micro Enterprises (SMEs) sectors, @ 1% for advances to
commercial real estate sector, @ 0.75% for advances to commercial real estate - residential housing sector and @ 5%
on restructured standard advances. Provision for standard assets is made @ 2% on all exposures to the wholly owned
step down subsidiaries of the overseas subsidiaries of Indian companies, sanctioned / renewed after December 31, 2015.
For housing loans offered at a comparatively lower rate of interest in the first few years after which rates are reset at
higher rates (teaser rate loans), provision for standard assets is made @ 2% until after one year from the date on which
the rates are reset at higher rates. For accounts classified under special mention account “SMA-2” category, provision
for standard advances is made @ 5% where the Bank under consortium / multiple banking arrangement has the largest
Aggregate Exposure (AE) or second largest AE with aggregate exposure of ` 1,000 million or above and Joint Lenders’
Forum (JLF) is not formed or the JLF fails to agree upon a common corrective action plan within the stipulated time
frame. The Bank maintains general provision for standard assets including credit exposures computed as per the current
HDFC Bank Limited Annual Report 2015-16
92
Schedules to the Financial Statements
For the year ended March 31, 2016
marked to market values of interest rate and foreign exchange derivative contracts at levels stipulated by RBI from time
to time. In accordance with regulatory guidelines and based on the information made available by its customers to the
Bank, for exposures to customers who have not hedged their foreign currency exposures, provision for standard assets
is made at levels ranging up to 0.80% depending on the likely loss the entities could incur on account of exchange rate
movements. For all other loans and advances provision for standard assets is made @ 0.40%. Provision for standard
assets of overseas branches has been made at higher of rates prescribed by the overseas regulator or RBI.
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:80)(cid:82)(cid:69)(cid:83)(cid:69)(cid:78)(cid:84)(cid:69)(cid:68)(cid:0)(cid:71)(cid:82)(cid:79)(cid:83)(cid:83)(cid:0)(cid:85)(cid:78)(cid:82)(cid:69)(cid:65)(cid:76)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:71)(cid:65)(cid:73)(cid:78)(cid:0)(cid:79)(cid:78)(cid:0)(cid:70)(cid:79)(cid:82)(cid:69)(cid:73)(cid:71)(cid:78)(cid:0)(cid:69)(cid:88)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:68)(cid:69)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:83)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
gross unrealised loss on foreign exchange and derivative contracts under other liabilities. Accordingly, other liabilities as
on March 31, 2016 include unrealised loss on foreign exchange and derivative contracts of ` 7,524.88 crore (previous
year: ` 6,914.10 crore).
8
Unhedged foreign currency exposure
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:67)(cid:69)(cid:0)(cid:65)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:73)(cid:78)(cid:71)(cid:0)(cid:67)(cid:85)(cid:82)(cid:82)(cid:69)(cid:78)(cid:67)(cid:89)(cid:0)(cid:73)(cid:78)(cid:68)(cid:85)(cid:67)(cid:69)(cid:68)(cid:0)(cid:67)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:14)(cid:0)(cid:52)(cid:72)(cid:69)(cid:0)(cid:67)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:65)(cid:73)(cid:83)(cid:65)(cid:76)(cid:0)(cid:77)(cid:69)(cid:77)(cid:79)(cid:82)(cid:65)(cid:78)(cid:68)(cid:85)(cid:77)(cid:0)
prepared at the time of origination and review of a credit is required to discuss the exchange risk that the customer is
exposed to from all sources, including trade related, foreign currency borrowings and external commercial borrowings.
It could cover the natural hedge available to the customer as well as other hedging methods adopted by the customer
to mitigate exchange risk. For foreign currency loans granted by the Bank beyond a defined threshold the customer will
be encouraged to enter into appropriate risk hedging mechanisms with the Bank. Alternatively, the Bank will satisfy itself
that the customer has the financial capacity to bear the exchange risk in the normal course of its business and / or has
other mitigants to reduce the risk. On a monthly basis, the Bank reviews information on the unhedged portion of foreign
currency exposures of customers, whose total foreign currency exposure with the Bank exceeds a defined threshold.
Based on the monthly review, the Bank proposes suitable hedging techniques to the customer to contain the risk.
A Board approved credit risk rating linked limit on unhedged foreign currency position of customers is applicable when
extending credit facilities to a customer. The compliance with the limit is assessed by estimating the extent of drop in a
customer’s annual EBID due to a potentially large adverse movement in exchange rate impacting the unhedged foreign
currency exposure of the customer. Where a breach is observed in such a simulation, the customer is advised to reduce
its unhedged exposure.
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:0) (cid:65)(cid:67)(cid:67)(cid:79)(cid:82)(cid:68)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0) (cid:87)(cid:73)(cid:84)(cid:72)(cid:0) (cid:50)(cid:34)(cid:41)(cid:0) (cid:71)(cid:85)(cid:73)(cid:68)(cid:69)(cid:76)(cid:73)(cid:78)(cid:69)(cid:83)(cid:12)(cid:0) (cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:72)(cid:69)(cid:76)(cid:68)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0) (cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:69)(cid:68)(cid:0) (cid:66)(cid:89)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:65)(cid:83)(cid:0) (cid:65)(cid:84)(cid:0)
March 31, 2016 in respect of the unhedged foreign currency exposure of customers was ` 114.84 crore (previous year:
` 76.49 crore) and ` 275.44 crore (previous year: ` 199.59 crore) respectively.
9
Investments
(cid:0)(cid:115)(cid:0)
(cid:54)(cid:65)(cid:76)(cid:85)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:26)(cid:0)
Particulars
Gross value of investments
- In India
- Outside India
Provisions for depreciation on investments
- In India
- Outside India
Net value of investments
- In India
- Outside India
HDFC Bank Limited Annual Report 2015-16
93
(cid:8)` crore)
March 31, 2016
March 31, 2015
162,632.63
150,649.88
1,372.68
1,105.86
119.54
-
113.99
-
162,513.09
150,535.89
1,372.68
1,105.86
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:0)(cid:115)(cid:0)
(cid:45)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:73)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:72)(cid:69)(cid:76)(cid:68)(cid:0)(cid:84)(cid:79)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:78)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:26)
(` crore)
Particulars
Opening balance
Add: Provision made during the year
Less: Write-off, write back of excess provision during the year
Closing balance
March 31, 2016
March 31, 2015
113.99
36.51
30.96
119.54
173.44
7.55
67.00
113.99
Movement in provisions held towards depreciation on investments have been reckoned on a yearly basis.
(cid:115)(cid:0)
(cid:50)(cid:69)(cid:80)(cid:79)(cid:0)(cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:65)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)
In accordance with RBI’s guidelines, accounting of repo / reverse repo transactions excludes those done with the RBI.
Following are the details of the repo / reverse repo transactions deals done during the years ended March 31, 2016 and
March 31, 2015:
(cid:23) Details of repo / reverse repo deals (in face value terms) done during the year ended March 31, 2016:
(` crore)
Particulars
Securities sold under repo
1. Corporate debt securities
2. Government securities
Securities purchased under reverse repo
1. Corporate debt securities
2. Government securities
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily average
outstanding
during the year
Outstanding
as at
March 31, 2016
-
-
-
-
-
-
11,144.49
745.11
-
-
211.60
8,948.60
144.49
539.25
132.00
-
(cid:23) Details of repo / reverse repo deals (in face value terms) done during the year ended March 31, 2015:
(` crore)
Particulars
Securities sold under repo
1. Corporate debt securities
2. Government securities
Securities purchased under reverse repo
1. Corporate debt securities
2. Government securities
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily average
outstanding
during the year
Outstanding
as at
March 31, 2015
-
-
-
-
-
-
7,719.96
468.30
-
-
520.40
5,420.07
308.49
356.74
211.60
-
(cid:23) Outstanding repo and deals with RBI under liquidity adjustment facility / marginal standing facility as of March 31,
2016 were ` 31,830.24 crore (previous year: ` 5,200.00 crore). There were no outstanding reverse repo deals with
RBI under liquidity adjustment facility / marginal standing facility as of March 31, 2016 and as of March 31, 2015.
HDFC Bank Limited Annual Report 2015-16
94
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:0)
(cid:115)(cid:0)
(cid:46)(cid:79)(cid:78)(cid:13)(cid:51)(cid:44)(cid:50)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:80)(cid:79)(cid:82)(cid:84)(cid:70)(cid:79)(cid:76)(cid:73)(cid:79)
(cid:23)
Issuer-wise composition of non-SLR investments as at March 31, 2016:
(` crore)
Sr.
No.
Issuer
Amount
Extent of
private
placement#
Extent of
“below
investment
grade”
securities#
Extent of
“unrated”
securities#*
Extent of
“unlisted”
securities#**
1 Public sector undertakings
1,357.71
1,357.71
2
Financial institutions
4,875.28
4,775.38
3 Banks
873.92
1.00
4 Private corporate
24,911.15
23,242.35
5 Subsidiaries / Joint ventures
2,782.96
2,782.96
6 Others
3,493.73
3,490.73
7 Provision held towards depreciation
(119.54)
Total
38,175.21
35,650.13
-
-
-
-
-
-
-
-
-
-
-
-
-
83.80
431.21
-
-
-
-
83.80
431.21
#
*
Amounts reported under these columns above are not mutually exclusive.
Excludes investments in equity shares and units of equity oriented mutual funds in line with extant RBI
guidelines.
** Excludes investments in equity shares, units of equity oriented mutual funds, pass through certificates,
security receipts, commercial paper and certificate of deposits in line with extant RBI guidelines.
(cid:23)
Issuer-wise composition of non-SLR investments as at March 31, 2015:
(` crore)
Sr.
No.
Issuer
1 Public sector undertakings
2
Financial institutions
3 Banks
4 Private corporate
Amount
Extent of
private
placement#
596.92
100.00
596.92
100.00
6,240.26
5,604.09
19,136.11
18,200.81
5 Subsidiaries / Joint ventures
2,782.96
2,782.96
Extent of
“below
investment
grade”
securities#
Extent of
“unrated”
securities# *
Extent of
“unlisted”
securities# **
-
-
-
-
-
-
-
-
-
-
-
351.80
152.92
-
-
-
-
6 Others
2,509.18
2,506.18
36.68
7 Provision held towards depreciation
(113.97)
Total
31,251.46
29,790.96
36.68
351.80
152.92
#
*
Amounts reported under these columns above are not mutually exclusive.
Excludes investments in equity shares and units of equity oriented mutual funds and in line with extant RBI
guidelines.
** Excludes investments in equity shares, units of equity oriented mutual funds, pass through certificates,
security receipts, commercial paper and certificate of deposits in line with extant RBI guidelines.
HDFC Bank Limited Annual Report 2015-16
95
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:23)(cid:3) Non-performing non-SLR investments:
(` crore)
Particulars
Opening balance
Additions during the year
Reductions during the year
Closing balance
Total provisions held
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:67)(cid:65)(cid:84)(cid:69)(cid:71)(cid:79)(cid:82)(cid:89)(cid:13)(cid:87)(cid:73)(cid:83)(cid:69)
March 31, 2016
March 31, 2015
101.30
19.13
33.41
87.02
84.33
107.38
0.49
6.57
101.30
96.14
The details of investments held under the three categories viz. Held for Trading (HFT), Available for Sale (AFS) and Held
(` crore)
to Maturity (HTM) is as under:
Particulars
As at March 31, 2016
As at March 31, 2015
HFT
AFS
HTM
Total
HFT
AFS
HTM
Total
Government securities
5,444.11
46,212.83
74,053.62
125,710.56
5,913.40
32,362.64
82,114.26 120,390.30
Other approved securities
Shares
-
-
-
76.74
-
-
-
76.74
-
-
-
129.38
Debentures and bonds
1,474.90
4,282.31
500.00
6,257.21
100.00
2,130.40
-
-
-
-
129.38
2,230.40
Subsidiary / Joint ventures
Others
-
-
-
2,782.96
2,782.96
29,058.30
-
29,058.30
-
-
-
2,782.96
2,782.96
26,108.72
-
26,108.72
Total
6,919.01
79,630.18
77,336.58
163,885.77
6,013.40
60,731.14
84,897.22
151,641.76
(cid:115)(cid:0)
Other investments as at the Balance Sheet date include the following:
(` crore)
Other Investments
Certificate of deposits
Commercial paper
March 31, 2016 March 31, 2015
-
25,431.18
5,603.08
17,822.55
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0) (cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:38)(cid:65)(cid:67)(cid:69)(cid:0)(cid:54)(cid:65)(cid:76)(cid:85)(cid:69)(cid:0) (cid:8)(cid:38)(cid:54)(cid:9)(cid:0) (cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) ` 1,520.00 crore (previous year: FV ` 1,563.00 crore)
which are kept as margin for clearing of securities, of FV ` 13,729.30 crore (previous year: FV ` 16,249.30 crore) which
are kept as margin for Collateralised Borrowing and Lending Obligation (CBLO) and of FV aggregating ` 56.00 crore
(previous year: FV ` 63.25 crore) which are kept as margin for Forex Forward segment - Default Fund with the Clearing
Corporation of India Ltd.
(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0) (cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:38)(cid:54)(cid:0) (cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) ` 16.00 crore (previous year: FV ` 16.00 crore) which are kept as
margin with National Securities Clearing Corporation of India Ltd. (‘NSCCIL’), of FV aggregating ` 13.00 crore (previous
year: FV ` 13.00 crore) which are kept as margin with MCX - SX Clearing Corporation Ltd. and of FV aggregating ` 1.00
crore (previous year: ` 2.00 crore) which are kept as margin with Indian Clearing Corporation Limited in the BSE currency
derivatives segment.
(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:72)(cid:65)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)(cid:38)(cid:54)(cid:0)(cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)` 35,937.22 crore (previous year: FV ` 34,127.16 crore) are kept as margin towards
Real Time Gross Settlement (RTGS) and those having FV aggregating ` 13,091.46 crore (previous year: ` 19,077.83
crore) are kept as margin towards repo transactions with the RBI.
(cid:52)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:77)(cid:65)(cid:68)(cid:69)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:67)(cid:69)(cid:82)(cid:84)(cid:65)(cid:73)(cid:78)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:73)(cid:69)(cid:83)(cid:0)(cid:87)(cid:72)(cid:69)(cid:82)(cid:69)(cid:73)(cid:78)(cid:0)(cid:73)(cid:84)(cid:0)(cid:72)(cid:79)(cid:76)(cid:68)(cid:83)(cid:0)(cid:77)(cid:79)(cid:82)(cid:69)(cid:0)(cid:84)(cid:72)(cid:65)(cid:78)(cid:0)(cid:18)(cid:21)(cid:5)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:81)(cid:85)(cid:73)(cid:84)(cid:89)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:79)(cid:83)(cid:69)(cid:0)
companies. Such investments do not fall within the definition of a joint venture as per AS-27, Financial Reporting of
Interest in Joint Ventures and the said accounting standard is thus not applicable. However, pursuant to RBI guidelines,
the Bank has classified and disclosed these investments as joint ventures.
HDFC Bank Limited Annual Report 2015-16
96
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
(cid:36)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:89)(cid:69)(cid:65)(cid:82)(cid:0) (cid:69)(cid:78)(cid:68)(cid:69)(cid:68)(cid:0) (cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0) (cid:19)(cid:17)(cid:12)(cid:0) (cid:18)(cid:16)(cid:17)(cid:22)(cid:12)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:69)(cid:0) (cid:66)(cid:79)(cid:79)(cid:75)(cid:0) (cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:0) (cid:79)(cid:70)(cid:0) (cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:83)(cid:79)(cid:76)(cid:68)(cid:0) (cid:70)(cid:82)(cid:79)(cid:77)(cid:12)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0) (cid:84)(cid:79)(cid:0) (cid:15)(cid:0) (cid:70)(cid:82)(cid:79)(cid:77)(cid:12)(cid:0)
HTM category was in excess of 5% of the book value of investments held in HTM category at the beginning of the year.
The market value of investments (excluding investments in subsidiaries / joint ventures and Non SLR bonds) under HTM
category as on March 31, 2016 was ` 75,466.02 crore (previous year: ` 83,733.68 crore) and was higher than the book value
thereof as of that date. In accordance with the RBI guidelines, sale from, and transfer to / from, HTM category excludes:
(cid:57)(cid:3) one-time transfer of securities permitted to be undertaken by banks at the beginning of the accounting year with
approval of the Board of Directors;
(cid:57)
(cid:57)
(cid:57)
sales to the RBI under pre-announced open market operation auctions;
repurchase of Government securities by Government of India from banks; and
sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM at
the beginning of January, July and September 2015, in addition to the shifting permitted at the beginning of the
accounting year, i.e, April 2015.
10 Derivatives
(cid:115)(cid:0)
(cid:38)(cid:79)(cid:82)(cid:87)(cid:65)(cid:82)(cid:68)(cid:0)(cid:50)(cid:65)(cid:84)(cid:69)(cid:0)(cid:33)(cid:71)(cid:82)(cid:69)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:8)(cid:38)(cid:50)(cid:33)(cid:9)(cid:0)(cid:15)(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:50)(cid:65)(cid:84)(cid:69)(cid:0)(cid:51)(cid:87)(cid:65)(cid:80)(cid:83)(cid:0)(cid:8)(cid:41)(cid:50)(cid:51)(cid:9)(cid:10)(cid:10)(cid:26)(cid:0)
(cid:0)
(cid:0)(cid:8)` crore)
Sr.
No.
i)
ii)
Particulars
March 31, 2016 March 31, 2015
The total notional principal of swap agreements
220,137.21
221,218.07
Total losses which would be incurred if counter parties failed to fulfill
their obligations under the agreements
iii) Concentration of credit risk arising from swaps*
iv) Collateral required by the Bank upon entering into swaps
v)
The fair value of the swap book
912.36
701.72
83.02%
85.95%
-
-
(48.40)
(22.30)
* Concentration of credit risk arising from swaps is with banks as on March 31, 2016 and March 31, 2015.
** Interest Rate Swaps comprises of INR Interest Rate Swaps and FCY Interest Rate Swaps.
The nature and terms of rupee IRS as on March 31, 2016 are set out below:
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Nos.
Notional principal
(` crore)
Benchmark
Terms
7
8
4
944
901
323
239
8
275.00
INBMK
Fixed receivable v/s floating payable
450.00
INBMK
Floating receivable v/s fixed payable
1,250.00
INCMT
Floating receivable v/s fixed payable
67,667.84
OIS
61,759.95
OIS
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
23,437.00 MIFOR
Fixed receivable v/s floating payable
15,135.00 MIFOR
Floating receivable v/s fixed payable
620.00 MIOIS
Floating receivable v/s fixed payable
Total
170,594.79
HDFC Bank Limited Annual Report 2015-16
97
Schedules to the Financial Statements
For the year ended March 31, 2016
The nature and terms of foreign currency IRS as on March 31, 2016 are set out below:
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Hedging
Hedging
Nos.
Notional principal
(` crore)
Benchmark
Terms
1
1
2
2
90
184
3
6
29.41 GBP Libor
Fixed receivable v/s floating payable
29.41 GBP Libor
Floating receivable v/s fixed payable
753.95 EURIBOR
Fixed receivable v/s floating payable
753.95 EURIBOR
Floating receivable v/s fixed payable
14,568.32 USD Libor
Fixed receivable v/s floating payable
26,816.42 USD Libor
Floating receivable v/s fixed payable
3,312.75 USD Libor
Fixed receivable v/s floating payable
2,848.97 USD Libor
Floating receivable v/s fixed payable
Total
49,113.18
The nature and terms of foreign currency FRA as on March 31, 2016 are set out below:
Nature
Nos.
Notional principal
(` crore)
Benchmark
Terms
Trading
Trading
1
1
214.63 USD Libor
Payable FRA
214.63 USD Libor
Receivable FRA
Total
429.26
The nature and terms of rupee IRS as on March 31, 2015 are set out below:
Nature
Nos.
Notional principal
(` crore)
Benchmark
Terms
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
18
15
4
1
783
757
304
259
13
600.00
INBMK
Fixed receivable v/s floating payable
675.00
INBMK
Floating receivable v/s fixed payable
1,250.00
INCMT
Floating receivable v/s fixed payable
15.00
FIX TO FIX
Fixed receivable v/s fixed payable
69,773.34 OIS
Fixed receivable v/s floating payable
78,003.28 OIS
Floating receivable v/s fixed payable
18,939.00 MIFOR
Fixed receivable v/s floating payable
16,150.00 MIFOR
Floating receivable v/s fixed payable
600.00 MIOIS
Floating receivable v/s fixed payable
Total
186,005.62
HDFC Bank Limited Annual Report 2015-16
98
Schedules to the Financial Statements
For the year ended March 31, 2016
The nature and terms of foreign currency IRS as on March 31, 2015 are set out below:
Nature
Nos.
Notional principal
(` crore)
Benchmark
Terms
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
1
1
2
2
84
151
3
7
36.62 GBP Libor
Fixed receivable v/s floating payable
36.62 GBP Libor
Floating receivable v/s fixed payable
671.90 EURIBOR
Fixed receivable v/s floating payable
671.90 EURIBOR
Floating receivable v/s fixed payable
10,812.94 USD Libor
Fixed receivable v/s floating payable
16,047.63 USD Libor
Floating receivable v/s fixed payable
3,125.00 USD Libor
Fixed receivable v/s floating payable
3,000.00 USD Libor
Floating receivable v/s fixed payable
Total
34,402.61
The nature and terms of foreign currency FRA as on March 31, 2015 are set out below:
Nature
Trading
Trading
Nos.
Notional principal
(` crore)
Benchmark
Terms
2
2
404.92
USD Libor
Payable FRA
404.92 USD Libor
Receivable FRA
Total
809.84
(cid:115)(cid:0)
(cid:37)(cid:88)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(cid:69)(cid:0)(cid:84)(cid:82)(cid:65)(cid:68)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:82)(cid:65)(cid:84)(cid:69)(cid:0)(cid:68)(cid:69)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)
(cid:0)
(cid:0)(cid:8)` crore)
Particulars
March 31, 2016 March 31, 2015
Sr.
No.
i)
ii)
iii)
The total notional principal amount of exchange traded interest rate
derivatives undertaken during the year ended March 31, (instrument-
wise):
(a) 10 year Government Security Notional Bond
The total notional principal amount of exchange traded interest rate
derivatives outstanding
The notional principal amount of exchange traded interest rate
derivatives outstanding and not ‘highly effective’,
iv) Mark-to-market value of exchange traded interest rate derivatives
outstanding and not ‘highly effective’,
(cid:115)(cid:0)
(cid:49)(cid:85)(cid:65)(cid:76)(cid:73)(cid:84)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:73)(cid:78)(cid:0)(cid:68)(cid:69)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)
Overview of business and processes
Nil
Nil
N.A.
N.A.
0.40
Nil
N.A.
N.A.
Derivatives are financial instruments whose characteristics are derived from underlying assets, or from interest and
exchange rates or indices. These include forwards, swaps, futures and options. The notional amounts of financial
instruments such as foreign exchange contracts and derivatives provide a basis for comparison with instruments
recognised on the Balance Sheet but do not necessarily indicate the amounts of future cash flows involved or the current
fair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The following
sections outline the nature and terms of the derivative transactions generally undertaken by the Bank.
HDFC Bank Limited Annual Report 2015-16
99
Schedules to the Financial Statements
For the year ended March 31, 2016
Interest rate contracts
Forward rate agreements give the buyer the ability to determine the underlying rate of interest for a specified period
commencing on a specified future date (the settlement date). There is no exchange of principal and settlement is effected
on the settlement date. The settlement amount is the difference between the contracted rate and the market rate prevailing
on the settlement date.
Interest rate swaps involve the exchange of interest obligations with the counterparty for a specified period without
exchanging the underlying (or notional) principal.
Interest rate caps and floors give the buyer the ability to fix the maximum or minimum rate of interest. The writer of
the contract pays the amount by which the market rate exceeds or is less than the cap rate or the floor rate respectively.
A combination of interest rate caps and floors is known as an interest rate collar.
Interest rate futures are standardised interest rate derivative contracts traded on a recognised stock exchange to buy
or sell a notional security or any other interest bearing instrument or an index of such instruments or interest rates at a
specified future date, at a price determined at the time of the contract.
Exchange rate contracts
Forward foreign exchange contracts are agreements to buy or sell fixed amounts of currency at agreed rates of
exchange on future date. All such instruments are carried at fair value, determined based on either FEDAI rates or on
market quotations.
Cross currency swaps are agreements to exchange principal amounts denominated in different currencies. Cross
currency swaps may also involve the exchange of interest payments on one specified currency for interest payments in
another specified currency for a specified period.
Currency options give the buyer, on payment of a premium, the right but not an obligation, to buy or sell specified
amounts of currency at agreed rates of exchange on or before a specified future date. Option premia paid or received is
recorded in Statement of Profit and Loss for rupee options at the expiry of the option and for foreign currency options on
premium settlement date.
Currency futures contract is a standardised contract traded on an exchange, to buy or sell a certain underlying asset or
an instrument at a certain date in the future, at a specified price. The underlying instrument of a currency future contract
is the rate of exchange between one unit of foreign currency and the INR.
The Bank’s derivative transactions relate to sales and trading activities. Sale activities include the structuring and
marketing of derivatives to customers to enable them to hedge their market risks (both interest rate and exchange risks),
within the framework of regulations as may apply from time to time. The Bank deals in derivatives on its own account
(trading activity) principally for the purpose of generating a profit from short term fluctuations in price or yields. The Bank
also deals in derivatives to hedge the risk embedded in some of its Balance Sheet assets and liabilities.
Constituents involved in derivative business
The Treasury front-office enters into derivative transactions with customers and inter-bank counterparties. The Bank
has an independent back-office and mid-office as per regulatory guidelines. The Bank has a credit and market risk
department that assesses various counterparty risk and market risk limits, within the risk architecture and processes of
the Bank.
HDFC Bank Limited Annual Report 2015-16
100
Schedules to the Financial Statements
For the year ended March 31, 2016
Derivative policy
The Bank has in place a policy which covers various aspects that apply to the functioning of the derivative business.
The derivative business is administered by various market risk limits such as position limits, tenor limits, sensitivity
limits and value-at-risk limits that are approved by the Board and the Risk Policy and Monitoring Committee (‘RPMC’).
All methodologies used to assess credit and market risks for derivative transactions are specified by the market risk unit.
Limits are monitored on a daily basis by the mid-office.
The Bank has implemented a Board approved policy on Customer Suitability & Appropriateness to ensure that derivative
transactions entered into are appropriate and suitable to the customer’s nature of business / operations. Before entering
into a derivative deal with a customer, the Bank scores the customer on various risk parameters and based on the overall
score level it determines the kind of product that best suits its risk appetite and the customer’s requirements.
Classification of derivatives book
The derivative book is classified into trading and hedging book. Classification of the derivative book is made on the basis
of the definitions of the trading and hedging books specified in the RBI guidelines. The trading book is managed within
the trading limits approved by the RPMC.
Hedging policy
For derivative contracts designated as hedge the Bank documents, at inception, the relationship between the hedging
instrument and the hedged item, the risk management objective for undertaking the hedge and the methods used to
assess the hedge effectiveness. Hedge effectiveness is ascertained at the time of inception of the hedge and periodically
thereafter. Hedge effectiveness is measured by the degree to which changes in the fair value or cash flows of the hedged
item that are attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument.
The hedging book consists of transactions to hedge Balance Sheet assets or liabilities. The tenor of hedging instrument
may be less than or equal to the tenor of underlying hedged asset or liability. Derivative contracts designated as hedges
are not marked to market unless their underlying asset or liability is marked to market. In respect of derivative contracts
that are marked to market, changes in the market value are recognised in the Statement of Profit and Loss in the relevant
period. Gain or losses arising from hedge ineffectiveness, if any, are recognised in the Statement of Profit and Loss.
Foreign exchange forward contracts not intended for trading, that are entered into to establish the amount of reporting
currency required or available at the settlement date of a transaction, and are outstanding at the Balance Sheet date,
are effectively valued at the closing spot rate. The premia or discount arising at the inception of such forward exchange
contract is amortised as expense or income over the life of the contract.
(cid:115)(cid:0)
(cid:48)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:73)(cid:78)(cid:71)(cid:12)(cid:0)(cid:67)(cid:79)(cid:76)(cid:76)(cid:65)(cid:84)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:77)(cid:73)(cid:84)(cid:73)(cid:71)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)
The Bank enters into derivative transactions with counter parties based on their business ranking and financial position.
The Bank sets up appropriate limits upon evaluating the ability of the counterparty to honour its obligations in the event
of crystallisation of the exposure. Appropriate credit covenants are stipulated where required as trigger events to call for
collaterals or terminate a transaction and contain the risk.
The Bank, at the minimum, conforms to the RBI guidelines with regard to provisioning requirements. Overdue receivables
representing crystallised positive mark-to-market value of a derivative contract are transferred to the account of the
borrower and treated as non-performing assets, if these remain unpaid for 90 days or more. Full provision is made for the
entire amount of overdue and future receivables relating to positive marked to market value of non-performing derivative
contracts.
HDFC Bank Limited Annual Report 2015-16
101
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
(cid:49)(cid:85)(cid:65)(cid:78)(cid:84)(cid:73)(cid:84)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:79)(cid:78)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:73)(cid:78)(cid:0)(cid:68)(cid:69)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)
(` crore)
Sr.
No.
Particulars
Currency derivatives
Interest rate derivatives
March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015
1
Derivatives (notional principal amount)
a) Hedging
b) Trading
2 Marked to Market positions
3
4
a) Asset (+)
b) Liability (-)
Credit Exposure
Likely impact of one percentage change
in interest rate (100*PV01)
a) On hedging derivatives
b) On trading derivatives
5 Maximum of 100*PV01 observed during
the year
a) On hedging
b) On trading
6 Minimum of 100*PV01 observed during
the year
a) On hedging
b) On trading
160.35
151.26
6,161.72
6,125.00
36,149.17
21,383.65
214,575.93
215,718.07
740.09
(494.47)
2,114.96
533.77
(393.68)
1,411.84
911.43
(964.86)
2,355.78
706.49
(718.18)
2,460.14
0.09
35.06
0.21
39.41
0.02
0.21
0.03
0.36
6.87
13.94
Nil
0.36
32.24
30.84
44.04
116.25
30.02
30.84
28.13
152.12
40.08
152.12
1.18
77.60
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
The notional principal amount of foreign exchange contracts classified as hedging and trading outstanding as on
March 31, 2016 amounted to ` 23,182.85 crore (previous year: ` 21,868.96 crore) and ` 505,892.93 crore (previous
year: ` 652,183.13 crore) respectively.
The notional principal amounts of derivatives reflect the volume of transactions outstanding as at the Balance Sheet
date and do not represent the amounts at risk.
For the purpose of this disclosure, currency derivatives include currency options purchased and sold and cross
currency interest rate swaps.
Interest rate derivatives include interest rate swaps, forward rate agreements and interest rate caps.
The Bank has computed the maximum and minimum of PV01 for the year based on the balances as at the end of
every month.
In respect of derivative contracts, the Bank evaluates the credit exposure arising therefrom, in line with RBI
guidelines. Credit exposure has been computed using the current exposure method which is the sum of:
(a)
the current replacement cost (marked to market value including accruals) of the contract or zero whichever is
higher; and
(b)
the Potential Future Exposure (PFE) is a product of the notional principal amount of the contract and a factor
that is based on the grid of credit conversion factors prescribed in RBI guidelines, which is applied on the
basis of the residual maturity and the type of contract.
HDFC Bank Limited Annual Report 2015-16
102
Schedules to the Financial Statements
For the year ended March 31, 2016
11 Asset quality
(cid:115)(cid:0)
(cid:45)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:46)(cid:48)(cid:33)(cid:83)(cid:0)(cid:8)(cid:70)(cid:85)(cid:78)(cid:68)(cid:69)(cid:68)(cid:9)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)(cid:8)` crore)
Particulars
(i) Net NPAs to net advances
(ii) Movement of NPAs (Gross)
(a) Opening balance
(b) Additions (fresh NPAs) during the year
(c) Reductions during the year:
- Upgradation
- Recoveries (excluding recoveries made from upgraded accounts)
- Write-offs
(d) Closing balance
(iii) Movement of net NPAs
(a) Opening balance
(b) Additions during the year
(c) Reductions during the year
(d) Closing balance
(iv) Movement of provisions for NPAs (excluding provisions on standard assets)
(a) Opening balance
(b) Additions during the year
(c) Write-offs
(d) Write-back of excess provisions
(e) Closing balance
March 31, 2016 March 31, 2015
0.25%
0.28%
3,438.38
5,712.64
4,758.19
1,377.12
1,438.65
1,942.42
4,392.83
896.28
1,968.39
1,544.30
1,320.37
2,542.10
3,744.25
1,942.42
1,271.47
3,072.46
2,989.28
4,790.12
4,341.02
1,076.64
1,413.04
1,851.34
3,438.38
820.03
1,461.31
1,385.06
896.28
2,169.25
3,328.81
1,851.34
1,104.62
2,542.10
NPAs include all loans, investments and foreign exchange and derivatives that are classified as non-performing by the Bank.
(cid:115)(cid:0)
(cid:52)(cid:69)(cid:67)(cid:72)(cid:78)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:79)(cid:82)(cid:0)(cid:80)(cid:82)(cid:85)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:65)(cid:76)(cid:0)(cid:87)(cid:82)(cid:73)(cid:84)(cid:69)(cid:13)(cid:79)(cid:70)(cid:70)(cid:83)
Technical or prudential write-offs refer to the amount of non-performing assets which are outstanding in the books of the
branches, but have been written-off (fully or partially) at the head office level. The financial accounting systems of the
Bank are integrated and there are no write-offs done by the Bank which remain outstanding in the books of the branches.
(` crore)
Movement in the stock of technically or prudentially written-off accounts given below:
Particulars
Opening balance of technical / prudential write-offs
Technical / Prudential write-offs during the year
Recoveries made from previously technically / prudentially written-off
accounts during the year
Closing balance of technical / prudential write-offs
March 31, 2016 March 31, 2015
-
-
-
-
-
-
-
-
(cid:115)(cid:0)
(cid:38)(cid:76)(cid:79)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)
Floating provisions of ` 1,335.64 crore (previous year: ` 1,523.22 crore) have been included under “Other Liabilities”.
(` crore)
Movement in floating provision is given below:
Particulars
Opening balance
Provisions made during the year
Draw down made during the year
Closing balance
March 31, 2016 March 31, 2015
1,835.03
-
(311.81)
1,523.22
1,523.22
115.00
(302.58)
1,335.64
Floating provisions have been utilised as per the Board approved policy for contingencies under extraordinary
circumstances and for making specific provision for impaired accounts in accordance with the RBI guidelines / directives.
HDFC Bank Limited Annual Report 2015-16
103
Schedules to the Financial Statements
For the year ended March 31, 2016
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(cid:17)
(cid:19)
(cid:0)
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(cid:72)
(cid:67)
(cid:82)
(cid:65)
(cid:45)
(cid:68)
(cid:69)
(cid:68)
(cid:78)
(cid:69)
(cid:0)
(cid:82)
(cid:65)
(cid:69)
(cid:89)
(cid:0)
(cid:69)
(cid:72)
(cid:84)
(cid:0)
(cid:82)
(cid:79)
(cid:70)
(cid:0)
(cid:71)
(cid:78)
(cid:73)
(cid:82)
(cid:85)
(cid:84)
(cid:67)
(cid:85)
(cid:82)
(cid:84)
(cid:83)
(cid:69)
(cid:82)
(cid:0)
(cid:79)
(cid:84)
(cid:0)
(cid:68)
(cid:69)
(cid:84)
(cid:67)
(cid:69)
(cid:74)
(cid:66)
(cid:85)
(cid:83)
(cid:0)
(cid:83)
(cid:84)
(cid:78)
(cid:85)
(cid:79)
(cid:67)
(cid:67)
(cid:65)
(cid:0)
(cid:78)
(cid:79)
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HDFC Bank Limited Annual Report 2015-16
105
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:83)(cid:79)(cid:76)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:84)(cid:79)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:15)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:73)(cid:69)(cid:83)(cid:0)(cid:8)(cid:51)(cid:35)(cid:0)(cid:15)(cid:0)(cid:50)(cid:35)(cid:9)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)
(` crore)
(cid:82)(cid:69)(cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:65)(cid:83)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:26)
Particulars
March 31, 2016 March 31, 2015
Number of accounts
Aggregate value (net of provisions) of accounts sold to SC / RC
Aggregate considerations
Additional consideration realised in respect of accounts transferred in earlier
years
Aggregate gain / (loss) over net book value
1
3.96
2.95
-
(1.01)
(cid:115)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:66)(cid:79)(cid:79)(cid:75)(cid:0)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:73)(cid:78)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:80)(cid:84)(cid:83)(cid:0)(cid:66)(cid:65)(cid:67)(cid:75)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:46)(cid:48)(cid:33)(cid:83)(cid:26)
3
313.59
296.45
7.86
(17.14)
(` crore)
Particulars
March 31, 2016 March 31, 2015
(i) Backed by NPAs sold by the Bank as underlying
(ii) Backed by NPAs sold by other banks / financial institutions /
non-banking financial companies as underlying
Total
203.80
36.05
239.85
219.72
42.86
262.58
During the years ended March 31, 2016 and March 31, 2015, no non-performing financial assets were sold, excluding
those sold to SC / RC.
(cid:36)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:83)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:12)(cid:0)(cid:78)(cid:79)(cid:0)(cid:78)(cid:79)(cid:78)(cid:13)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:73)(cid:78)(cid:71)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:87)(cid:69)(cid:82)(cid:69)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)
the Bank.
(cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:80)(cid:69)(cid:82)(cid:0)(cid:66)(cid:79)(cid:79)(cid:75)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:51)(cid:48)(cid:54)(cid:83)(cid:0)(cid:83)(cid:80)(cid:79)(cid:78)(cid:83)(cid:79)(cid:82)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:26)
There are no SPVs sponsored by the Bank as at March 31, 2016 and as at March 31, 2015.
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
12 Details of exposures to real estate and capital market sectors, risk category-wise country exposures, factoring
(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:12)(cid:0) (cid:83)(cid:73)(cid:78)(cid:71)(cid:76)(cid:69)(cid:0) (cid:15)(cid:0) (cid:71)(cid:82)(cid:79)(cid:85)(cid:80)(cid:0) (cid:66)(cid:79)(cid:82)(cid:82)(cid:79)(cid:87)(cid:69)(cid:82)(cid:0) (cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:12)(cid:0) (cid:85)(cid:78)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:69)(cid:68)(cid:0) (cid:65)(cid:68)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:67)(cid:79)(cid:78)(cid:67)(cid:69)(cid:78)(cid:84)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:68)(cid:69)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:83)(cid:12)(cid:0) (cid:65)(cid:68)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:12)(cid:0)
exposures and NPAs
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:84)(cid:79)(cid:0)(cid:82)(cid:69)(cid:65)(cid:76)(cid:0)(cid:69)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:0)(cid:83)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
Exposure is higher of limits sanctioned or the amounts outstanding as at the year end.
(` crore)
Category
a) Direct exposure
(i) Residential mortgages*
March 31, 2016 March 31, 2015
49,428.76
32,245.03
36,278.61
24,678.61
(of which housing loans eligible for inclusion in priority sector advances)
(18,697.97)
(19,310.94)
(ii) Commercial real estate
17,118.59
11,471.80
(iii) Investments in Mortgage Backed Securities (MBS) and other securitised
exposures:
(a) Residential
(b) Commercial real estate
b) Indirect exposure
Fund based and non-fund based exposures on National Housing Bank
(NHB) and Housing Finance Companies (HFCs)
65.14
-
14,490.76
14,490.76
128.20
-
10,007.37
10,007.37
*includes loans purchased under the direct loan assignment route
Of the above, exposure to real estate developers as at March 31, 2016 is 0.5% (previous year: 0.3%) of total advances.
Total exposure to real estate sector
63,919.52
46,285.98
HDFC Bank Limited Annual Report 2015-16
106
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
Exposure is higher of limits sanctioned or the amount outstanding as at the year end.
(` crore)
Sr.
No.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Particulars
March 31, 2016
March 31, 2015
Direct investments made in equity shares, convertible bonds, convertible
debentures and units of equity oriented mutual funds the corpus of which is not
exclusively invested in corporate debt
Advances against shares, bonds, debentures or other securities or on clean basis
to individuals for investment in shares (including IPO’s / ESOP’s), convertible bonds,
convertible debentures and units of equity oriented mutual funds
86.50
72.61
158.75
166.37
Advances for any other purposes where shares or convertible bonds or convertible
debentures or units of equity oriented mutual funds are taken as primary security
3,133.85
1,636.51
Advances for any other purposes to the extent secured by collateral security of
shares or convertible bonds or convertible debentures or units of equity oriented
mutual funds i.e. where the primary security other than shares / convertible bonds
/ convertible debentures / units of equity oriented mutual funds does not fully cover
the advances
48.31
30.81
Secured and unsecured advances to stock brokers and guarantees issued on
behalf of stock brokers and market makers
6,881.17
6,462.82
Loans sanctioned to corporates against the security of shares / bonds /
debentures or other securities or on clean basis for meeting promoter’s
contribution to the equity of new companies in anticipation of raising resources
2,576.32
1,888.90
(vii)
Bridge loans to companies against expected equity flows / issues
(viii)
Underwriting commitments taken up in respect of primary issue of shares or
convertible bonds or convertible debentures or units of equity oriented mutual funds
(ix)
Financing to stock brokers for margin trading
-
-
-
-
-
-
(x)
All exposures to venture capital funds (both registered and unregistered)
0.20
1.70
Total exposure to capital market
12,885.10
10,259.72
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:67)(cid:65)(cid:84)(cid:69)(cid:71)(cid:79)(cid:82)(cid:89)(cid:0)(cid:87)(cid:73)(cid:83)(cid:69)(cid:0)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:82)(cid:89)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)(cid:0)(cid:0)(cid:8)` crore)
Risk Category
Insignificant
Low
Moderately low
Moderate
Moderately high
High
Very high
March 31, 2016
March 31, 2015
Exposure (net) Provision held Exposure (net) Provision held
13,857.28
8,222.23
370.13
143.82
20.23
5.25
-
Total
22,618.94
-
-
-
-
-
-
-
-
11,561.34
6,802.22
123.03
63.62
1.67
0.97
-
18,552.85
-
-
-
-
-
-
-
-
HDFC Bank Limited Annual Report 2015-16
107
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:70)(cid:65)(cid:67)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)
The factoring exposure of the Bank as on March 31, 2016 is ` 3,515.98 crore (previous year: ` 3,298.59 crore)
(cid:115)(cid:0)
(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:51)(cid:73)(cid:78)(cid:71)(cid:76)(cid:69)(cid:0)(cid:34)(cid:79)(cid:82)(cid:82)(cid:79)(cid:87)(cid:69)(cid:82)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:0)(cid:8)(cid:51)(cid:39)(cid:44)(cid:9)(cid:12)(cid:0)(cid:39)(cid:82)(cid:79)(cid:85)(cid:80)(cid:0)(cid:34)(cid:79)(cid:82)(cid:82)(cid:79)(cid:87)(cid:69)(cid:82)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:0)(cid:8)(cid:39)(cid:34)(cid:44)(cid:9)(cid:0)(cid:69)(cid:88)(cid:67)(cid:69)(cid:69)(cid:68)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)
The RBI has prescribed single and group borrower exposure limits linked to a Bank’s capital funds and such limits can be
enhanced by a further 5 percent thereof with the approval of the Board of Directors of the Bank. During the year ended
March 31, 2016 the Bank was within the limits prescribed by the RBI. During the year ended March 31, 2015 the Bank’s
exposure to single and group borrowers were within the limits prescribed by RBI except, with the prior approval of the
Board of the Bank, in respect of single borrower limits for Reliance Industries Limited.
(cid:115)(cid:0)
(cid:53)(cid:78)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:69)(cid:68)(cid:0)(cid:65)(cid:68)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)
Advances for which intangible collaterals such as rights, licenses, authority etc. are charged in favour of the Bank in
respect of projects financed by the Bank, are reckoned as unsecured advances under Schedule 9 of the Balance Sheet
in line with extant RBI guidelines. There are no such advances outstanding as on March 31, 2016 (previous year: Nil).
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:13)(cid:66)(cid:65)(cid:78)(cid:75)(cid:0)(cid:48)(cid:65)(cid:82)(cid:84)(cid:73)(cid:67)(cid:73)(cid:80)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:83)(cid:72)(cid:65)(cid:82)(cid:73)(cid:78)(cid:71)
The aggregate amount of participation issued by the Bank and reduced from advances as per regulatory guidelines as
of March 31, 2016 was ` 6,450.00 crore (previous year: ` 7,600.00 crore).
(cid:115)(cid:0)
(cid:35)(cid:79)(cid:78)(cid:67)(cid:69)(cid:78)(cid:84)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:68)(cid:69)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:83)(cid:12)(cid:0)(cid:65)(cid:68)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:12)(cid:0)(cid:69)(cid:88)(cid:80)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:46)(cid:48)(cid:33)(cid:83)
a) Concentration of deposits
(` crore)
Particulars
Total deposits of twenty largest depositors
Percentage of deposits of twenty largest depositors to total deposits
of the Bank
March 31, 2016 March 31, 2015
28,890.12
28,137.41
5.3%
6.2%
b) Concentration of advances
(` crore)
Particulars
Total advances to twenty largest borrowers
Percentage of advances of twenty largest borrowers to total
advances of the Bank
March 31, 2016 March 31, 2015
81,781.38
67,842.14
11.9%
12.5%
Advances comprise credit exposure (funded and non-funded credit limits) including derivative transactions
computed as per current exposure method in accordance with RBI guidelines.
c) Concentration of exposure
(` crore)
Particulars
March 31, 2016 March 31, 2015
Total exposure to twenty largest borrowers / customers
89,137.40
83,922.23
Percentage of exposure of twenty largest borrowers / customers to
total exposure of the Bank on borrowers / customers
12.3%
14.3%
Exposures comprise credit exposure (funded and non-funded credit limits) including derivative transactions and
investment exposure in accordance with RBI guidelines.
HDFC Bank Limited Annual Report 2015-16
108
Schedules to the Financial Statements
For the year ended March 31, 2016
d) Concentration of NPAs
(` crore)
Particulars
March 31, 2016 March 31, 2015
Total gross exposure to top four NPA accounts
497.16
348.83
e)
Sector-wise advances
(` crore)
Sector
Sr.
No.
A Priority sector
March 31, 2016
March 31, 2015
Outstanding
total
advances
Gross non-
performing
loans
Outstanding
total
advances
Gross non-
performing
loans
Percentage
of gross non-
performing
loans to total
advances in
that sector
Percentage
of gross non-
performing
loans to total
advances in
that sector
1 Agriculture and allied activities
52,867.24
764.18
1.45% 39,244.74
511.52
2 Advances to industries eligible
as priority sector lending
24,059.96
386.90
1.61% 18,426.43
280.00
3 Services
44,202.22
431.43
0.98% 27,045.25
293.85
4 Personal loans
21,730.26
79.58
0.37% 22,182.38
77.54
Sub-total (A) 142,859.68
1,662.09
1.16% 106,898.80
1,162.91
B Non Priority sector
1 Agriculture and allied activities
7,303.08
85.77
1.17%
360.25
8.81
2
Industry
3 Services
98,854.02
793.83
0.80% 74,595.34
649.16
104,002.56
967.17
0.93% 92,033.54
923.78
4 Personal loans
114,560.04
788.74
0.69% 93,999.91
521.15
Sub-total (B) 324,719.70
2,635.51
0.81% 260,989.04
2,102.90
Total (A) + (B) 467,579.38
4,297.60
0.92% 367,887.84
3,265.81
1.30%
1.52%
1.09%
0.35%
1.09%
2.45%
0.87%
1.00%
0.55%
0.81%
0.89%
13 Other fixed assets
Other fixed assets includes amount capitalised relating to software having useful life of five years. Details regarding the same
(` crore)
are tabulated below:
Particulars
Cost
As at March 31 of the previous year
Additions during the year
Deductions during the year
March 31, 2016
March 31, 2015
1,575.65
1,282.08
161.45
(0.01)
293.63
(0.06)
Total (a)
1,737.09
1,575.65
HDFC Bank Limited Annual Report 2015-16
109
Schedules to the Financial Statements
For the year ended March 31, 2016
Particulars
Depreciation
As at March 31 of the previous year
Charge for the year
On deductions during the year
March 31, 2016
March 31, 2015
1,022.83
195.71
(0.01)
1,218.53
518.56
857.49
165.40
(0.06)
1,022.83
552.82
Total (b)
Net value (a-b)
14 Other assets
(cid:115)(cid:0)
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0)(cid:68)(cid:69)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:84)(cid:65)(cid:88)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:8)(cid:78)(cid:69)(cid:84)(cid:9)(cid:0)(cid:79)(cid:70)(cid:0)` 2,116.62 crore (previous year: ` 1,950.74 crore). The break-up of the
(` crore)
same is as follows:
Particulars
(cid:36)(cid:69)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:84)(cid:65)(cid:88)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:65)(cid:82)(cid:73)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:85)(cid:84)(cid:0)(cid:79)(cid:70)(cid:26)
Loan loss provisions
Employee benefits
Others
(cid:36)(cid:69)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:84)(cid:65)(cid:88)(cid:0)(cid:76)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:0)(cid:65)(cid:82)(cid:73)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:85)(cid:84)(cid:0)(cid:79)(cid:70)(cid:26)
Depreciation
March 31, 2016
March 31, 2015
1,748.18
1,599.07
148.17
314.12
114.51
310.09
Total (a)
2,210.47
2,023.67
Total (b)
(93.85)
(93.85)
(72.93)
(72.93)
Deferred tax asset (net) (a-b)
2,116.62
1,950.74
(cid:115)(cid:0)
(cid:43)(cid:69)(cid:89)(cid:0)(cid:73)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:2)(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:83)(cid:2)(cid:0)(cid:73)(cid:78)(cid:0)(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:65)(cid:83)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:26)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)(cid:0)(cid:0)(cid:0)(` crore)
Particulars
March 31, 2016
March 31, 2015
Deposit with NABARD / SIDBI / NHB - PSL shortfall
13,719.68
14,818.19
Unrealised gain on foreign exchange and derivative contracts*
Deferred tax assets
Deposits & amounts paid in advance
Accounts receivable
Margin for LAF with RBI
Residual items
8,566.14
2,116.62
1,282.19
1,274.66
1,344.51
2.41
7,199.56
1,950.74
1,234.97
933.25
200.00
10.80
*The Bank has presented gross unrealised gain on foreign exchange and derivative contracts under other assets and
gross unrealised loss on foreign exchange and derivative contracts under other liabilities.
Total
28,306.21
26,347.51
HDFC Bank Limited Annual Report 2015-16
110
Schedules to the Financial Statements
For the year ended March 31, 2016
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HDFC Bank Limited Annual Report 2015-16
111
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Schedules to the Financial Statements
For the year ended March 31, 2016
16 Provisions, contingent liabilities and contingent assets
Given below is the movement in provisions and a brief description of the nature of contingent liabilities recognised by the Bank.
a)
Provision for credit card and debit card reward points
(` crore)
Particulars
Opening provision for reward points
Provision for reward points made during the year
Utilisation / write-back of provision for reward points
Closing provision for reward points
b) Provision for legal and other contingencies
Particulars
Opening provision
Movement during the year (net)
Closing provision
c) Description of contingent liabilities
Sr. No. Contingent liability*
Brief description
March 31, 2016
March 31, 2015
200.07
179.50
(73.21)
306.36
150.91
112.92
(63.76)
200.07
(` crore)
March 31, 2016
March 31, 2015
354.91
(10.35)
344.56
352.61
2.30
354.91
1
2
3
4
5
Claims against the Bank
not acknowledged as
debts - taxation
The Bank is a party to various taxation matters in respect of which appeals are pending. The Bank
expects the outcome of the appeals to be favorable based on decisions on similar issues in the
previous years by the appellate authorities, based on the facts of the case and the provisions of
Income Tax Act, 1961.
Claims against the Bank
not acknowledged as
debts - others
The Bank is a party to various legal proceedings in the normal course of business. The Bank does
not expect the outcome of these proceedings to have a material adverse effect on the Bank’s
financial conditions, results of operations or cash flows.
Liability on account of
forward exchange and
derivative contracts
The Bank enters into foreign exchange contracts, currency options, forward rate agreements,
currency swaps and interest rate swaps with inter-bank participants on its own account and for
customers. Forward exchange contracts are commitments to buy or sell foreign currency at a
future date at the contracted rate. Currency swaps are commitments to exchange cash flows by
way of interest / principal in one currency against another, based on predetermined rates. Interest
rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional
amounts of financial instruments such as foreign exchange contracts and derivatives provide a
basis for comparison with instruments recognised on the Balance Sheet but do not necessarily
indicate the amounts of future cash flows involved or the current fair value of the instruments and,
therefore, do not indicate the Bank’s exposure to credit or price risks. The derivative instruments
become favorable (assets) or unfavorable (liabilities) as a result of fluctuations in market rates or
prices relative to their terms.
Guarantees given on
behalf of constituents,
acceptances,
endorsements and
other obligations
As a part of its commercial banking activities, the Bank issues documentary credit and guarantees
on behalf of its customers. Documentary credits such as letters of credit enhance the credit
standing of the Bank’s customers. Guarantees generally represent irrevocable assurances that the
Bank will make payments in the event of the customer failing to fulfill its financial or performance
obligations.
Other items for which the
Bank is contingently liable
These include: a) Credit enhancements in respect of securitised-out loans; b) Bills rediscounted by
the Bank; c) Capital commitments; d) Underwriting commitments.
*Also refer Schedule 12 - Contingent liabilities
HDFC Bank Limited Annual Report 2015-16
112
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:17)(cid:23)(cid:0) (cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:83)(cid:0)(cid:15)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)
Particulars
March 31, 2016
March 31, 2015
Interest income as a percentage to working funds1
Net interest income as a percentage to working funds
Non-interest income as a percentage to working funds
Operating profit2 as a percentage to working funds
Return on assets (average)
Business3 per employee (` in crore)
Profit per employee4 (` in crore)
Gross non-performing assets to gross advances5
Gross non-performing advances to gross advances
Percentage of net non-performing assets6 to net advances7
9.40%
4.31%
1.68%
3.34%
1.92%
11.39
0.15
0.94%
0.92%
0.28%
9.59%
4.43%
1.78%
3.44%
2.02%
10.10
0.10
0.93%
0.89%
0.25%
Provision coverage ratio8
69.94%
73.93%
Definitions of certain items in Business ratios / information:
1. Working funds is the daily average of total assets during the year.
2. Operating profit is net profit for the year before provisions and contingencies.
3.
4.
“Business” is the total of net advances and deposits (net of inter-bank deposits).
Productivity ratios are based on average employee numbers.
5. Gross advances are net of bills rediscounted and interest in suspense.
6.
7.
Net NPAs are non-performing assets net of interest in suspense, specific provisions, ECGC claims received, provisions
for funded interest term loans classified as NPAs and provisions in lieu of diminution in the fair value of restructured
assets classified as NPAs.
Net advances are equivalent to gross advances net of specific loan loss provisions, ECGC claims received, provision for
funded interest term loans classified as NPA and provisions in lieu of diminution in the fair value of restructured assets.
8.
Provision coverage ratio does not include assets written off.
18
Interest income
Interest income under the sub-head Income from Investments includes dividend received during the year ended March 31,
2016 on units of mutual funds, equity and preference shares amounting to ` 182.03 crore (previous year: ` 192.58 crore).
19 Earnings from standard assets securitised-out
There are no Special Purpose Vehicles (‘SPV’s) sponsored by the Bank for securitisation transactions. During the years ended
March 31, 2016 and March 31, 2015, there were no standard assets securitised-out by the Bank.
Form and quantum of services and liquidity provided by way of credit enhancement
The Bank has provided credit and liquidity enhancements in the form of cash collaterals / guarantees / subordination of
cash flows etc., to the senior Pass Through Certificates (‘PTC’s) as well as on loan assignment transactions. The RBI issued
addendum guidelines on securitisation of standard assets vide its circular dated May 7, 2012. Accordingly, the Bank does not
provide liquidity or credit enhancements on the direct assignment transactions undertaken subsequent to these guidelines.
The total value of credit enhancement outstanding in the books as at March 31, 2016 was ` 225.65 crore (previous year:
` 345.79 crore), and liquidity enhancement was Nil (previous year: ` 8.10 crore). Outstanding servicing liability was
` 0.10 crore (previous year: ` 0.14 crore).
HDFC Bank Limited Annual Report 2015-16
113
Schedules to the Financial Statements
For the year ended March 31, 2016
20 Other income
(cid:115)(cid:0)
(cid:35)(cid:79)(cid:77)(cid:77)(cid:73)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:12)(cid:0)(cid:69)(cid:88)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:66)(cid:82)(cid:79)(cid:75)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:0)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)
(cid:57)
(cid:57)
Commission, exchange and brokerage income is net of correspondent bank charges.
Commission income for the year ended March 31, 2016 includes fees of ` 661.75 crore (previous year: ` 454.01
crore) in respect of life insurance business and ` 156.13 crore (previous year: ` 137.07 crore) in respect of general
insurance business.
(cid:115)(cid:0)
(cid:45)(cid:73)(cid:83)(cid:67)(cid:69)(cid:76)(cid:76)(cid:65)(cid:78)(cid:69)(cid:79)(cid:85)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)
Miscellaneous income includes recoveries from written-off accounts amounting to ` 807.99 crore (previous year: ` 716.33
crore).
21 Other expenditure
Other expenditure includes outsourcing fees amounting to ` 764.76 crore (previous year: ` 671.38 crore) and commission paid
to sales agents amounting to ` 1,671.88 crore (previous year: ` 1,305.11 crore), exceeding 1% of the total income of the Bank.
22 Provisions and contingencies
The break-up of provisions and contingencies included in the Statement of Profit and Loss is given below:
(` crore)
Particulars
Provision for income tax
- Current
- Deferred
Provision for wealth tax
Provision for NPAs
Provision for diminution in value of non-performing investments
Provision for standard assets
Other provisions and contingencies*
March 31, 2016
March 31, 2015
6,507.59
(165.88)
-
2,133.63
15.17
440.00
136.81
5,204.03
(91.23)
0.75
1,723.58
(3.82)
296.25
59.00
*Includes provisions for tax, legal and other contingencies ` 37.28 crore (previous year: ` 36.47 crore), floating provisions
` 115.00 crore (previous year: Nil), provisions / (write-back) for securitised-out assets ` (2.85) crore (previous year: ` 4.60
crore) and standard restructured assets ` (12.62) crore (previous year: ` 17.93 crore).
Total
9,067.32
7,188.56
23 Employee benefits
Gratuity
Particulars
Reconciliation of opening and closing balance of the present value of the
defined benefit obligation
Present value of obligation as at April 1
Interest cost
Current service cost
Benefits paid
Actuarial (gain) / loss on obligation:
Experience adjustment
Assumption change
Present value of obligation as at March 31
(` crore)
March 31, 2016
March 31, 2015
310.59
22.38
53.78
(24.30)
16.24
11.78
390.47
237.43
18.24
50.47
(15.99)
4.59
15.85
310.59
HDFC Bank Limited Annual Report 2015-16
114
Schedules to the Financial Statements
For the year ended March 31, 2016
Particulars
March 31, 2016
March 31, 2015
Reconciliation of opening and closing balance of the fair value of the plan assets
Fair value of plan assets as at April 1
Expected return on plan assets
Contributions
Benefits paid
Actuarial gain / (loss) on plan assets:
Experience adjustment
Assumption change
Fair value of plan assets as at March 31
Amount recognised in Balance Sheet
Fair value of plan assets as at March 31
Present value of obligation as at March 31
(cid:33)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:15)(cid:0)(cid:8)(cid:76)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:9)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:0)
Expenses recognised in Statement of Profit and Loss
Interest cost
Current service cost
Expected return on plan assets
Net actuarial (gain) / loss recognised in the year
Net cost
Actual return on plan assets
Estimated contribution for the next year
Assumptions
Discount rate
Expected return on plan assets
Salary escalation rate
242.88
21.23
61.81
(24.30)
(13.69)
-
287.93
287.93
(390.47)
(102.54)
22.38
53.78
(21.23)
41.71
96.64
7.54
47.95
172.60
16.62
48.30
(15.99)
21.35
-
242.88
242.88
(310.59)
(67.71)
18.24
50.47
(16.62)
(0.91)
51.18
37.97
61.64
7.5% per annum
7.9% per annum
8.0% per annum
8.0% per annum
8.0% per annum
8.0% per annum
(cid:37)(cid:88)(cid:80)(cid:69)(cid:82)(cid:73)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:65)(cid:68)(cid:74)(cid:85)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:8)` crore)
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Years ended March 31,
2016
2015
2014
2013
2012
287.93
390.47
242.88
310.59
172.60
237.43
130.22
206.28
(102.54)
(67.71)
(64.83)
(76.06)
91.86
166.30
(74.44)
(0.93)
1.25
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
(13.69)
16.24
21.35
4.59
1.87
5.87
2.00
2.72
HDFC Bank Limited Annual Report 2015-16
115
Schedules to the Financial Statements
For the year ended March 31, 2016
Expected rate of return on investments is determined based on the assessment made by the Bank at the beginning of the year with regard to
its existing portfolio. Major categories of plan assets as a percentage of fair value of total plan assets as of March 31, 2016 are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
Pension
Particulars
% of fair value to total plan assets
March 31, 2016
33.3%
23.1%
37.2%
6.4%
100.0%
March 31, 2016
March 31, 2015
(` crore)
Total
Reconciliation of opening and closing balance of the present value of the defined
benefit obligation
Present value of obligation as at April 1
Interest cost
Current service cost
Benefits paid
Actuarial (gain) / loss on obligation:
Experience adjustment
Assumption change
Present value of obligation as at March 31
Reconciliation of opening and closing balance of the fair value of the plan assets
Fair value of plan assets as at April 1
Expected return on plan assets
Contributions
Benefits paid
Actuarial gain / (loss) on plan assets:
Experience adjustment
Assumption change
Fair value of plan assets as at March 31
Amount recognised in Balance Sheet
Fair value of plan assets as at March 31
Present value of obligation as at March 31
(cid:33)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:15)(cid:0)(cid:8)(cid:76)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:9)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:0)
Expenses recognised in Statement of Profit and Loss
Interest cost
Current service cost
Expected return on plan assets
Net actuarial (gain) / loss recognised in the year
Net cost
Actual return on plan assets
Estimated contribution for the next year
Assumptions
Discount rate
Expected return on plan assets
Salary escalation rate
57.45
3.92
1.12
(10.18)
17.35
1.22
70.88
41.91
3.21
2.01
(10.18)
1.43
-
38.38
38.38
(70.88)
(32.50)
3.92
1.12
(3.21)
17.14
18.97
4.64
14.00
58.89
4.37
1.02
(7.94)
(0.19)
1.30
57.45
47.99
3.60
0.64
(7.94)
(2.38)
-
41.91
41.91
(57.45)
(15.54)
4.37
1.02
(3.60)
3.48
5.27
1.22
15.70
7.5% per annum
7.9% per annum
8.0% per annum
8.0% per annum
8.0% per annum
8.0% per annum
HDFC Bank Limited Annual Report 2015-16
116
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:0)
(cid:37)(cid:88)(cid:80)(cid:69)(cid:82)(cid:73)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:65)(cid:68)(cid:74)(cid:85)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)(cid:0)(cid:0)(cid:0)(cid:8)` crore)
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
Years ended March 31,
2016
2015
2014
2013
2012
38.38
70.88
41.91
57.45
47.99
58.89
(32.50)
(15.54)
(10.90)
1.43
17.35
(2.38)
(0.19)
3.45
3.62
48.88
58.19
(9.31)
(1.58)
6.12
51.14
56.85
(5.71)
(1.29)
1.36
Expected rate of return on investments is determined based on the assessment made by the Bank at the beginning of the year with regard to
its existing portfolio. Major categories of plan assets as a percentage of fair value of total plan assets as of March 31, 2016 are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
Provident fund
% of fair value to total plan assets
March 31, 2016
6.6%
83.3%
10.1%
100.0%
Total
The guidance note on AS-15, Employee Benefits, states that employer established provident funds, where interest is guaranteed
are to be considered as defined benefit plans and the liability has to be valued. The Institute of Actuaries of India (IAI) has
issued a guidance note on valuation of interest rate guarantees on exempt provident funds. The actuary has accordingly valued
the same and the Bank held a provision of Nil as on March 31, 2016 (previous year: ` 0.52 crore), towards the present value
of the guaranteed interest benefit obligation. The actuary has followed deterministic approach as prescribed by the guidance
note.
Assumptions
Assumptions
Discount rate (GOI security yield)
Expected guaranteed interest rate
March 31, 2016
March 31, 2015
7.5% per annum
7.9% per annum
9.0% per annum
9.0% per annum
The Bank does not have any unfunded defined benefit plan. The Bank contributed ` 188.94 crore (previous year: ` 160.02
crore) to the provident fund and ` 56.54 crore (previous year: ` 53.68 crore) to the superannuation plan.
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Bank is
(` crore)
given below:
Particulars
Privileged leave
Sick leave
Total actuarial liability
Assumptions
Discount rate
Salary escalation rate
March 31, 2016
March 31, 2015
222.07
47.40
269.47
185.75
38.26
224.01
7.5% per annum
7.9% per annum
8.0% per annum
8.0% per annum
HDFC Bank Limited Annual Report 2015-16
117
Schedules to the Financial Statements
For the year ended March 31, 2016
24 Disclosures on remuneration
(cid:49)(cid:85)(cid:65)(cid:76)(cid:73)(cid:84)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)Disclosures
A.
Information relating to the bodies that oversee remuneration
Name and composition
The Board of Directors of the Bank has constituted the Nomination and Remuneration Committee (hereinafter, the ‘NRC’)
for overseeing and governing the compensation policies of the Bank. The NRC is comprised of four independent directors
and is chaired by the Board of Directors of the Bank. Further, two members of the NRC are also members of the Risk
Policy and Monitoring Committee (hereinafter, the ‘RPMC’) of the Board.
The NRC is comprised of the Chairperson, Mrs. Shyamala Gopinath, Mr. A N Roy, Mr. Partho Datta and Mr. Bobby
Parikh. Further, Mrs. Shyamala Gopinath and Mr. Partho Dutta are also members of the RPMC. Mr. Bobby Parikh is the
chairperson of the NRC.
Mandate of the NRC
The primary mandate of the NRC is to oversee the implementation of compensation policies of the Bank.
The NRC periodically reviews the overall compensation policy of the Bank with a view to attract, retain and motivate
employees. In this capacity it is required to review and approve the design of the total compensation framework, including
compensation strategy programs and plans, on behalf of the Board of Directors. The compensation structure and pay
revision for Whole Time Directors is also approved by the NRC. The NRC co-ordinates with the RPMC to ensure that
compensation is aligned with prudent risk taking.
External Consultants
(cid:0)
(cid:0)
(cid:0)
The Bank employed the services of the following consulting firms in the area of compensation and benefits and human
resources.
(cid:33)(cid:47)(cid:46)(cid:26) The Bank employed the services of AON in the area of compensation market benchmarking, and executive
compensation. AON, apart from being a globally reputed consulting firm, has the longest running year on year banking
study in India and was found to be the most appropriate by the NRC.
(cid:37)(cid:82)(cid:78)(cid:83)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:57)(cid:79)(cid:85)(cid:78)(cid:71)(cid:26)(cid:0)The Bank employed the services of Ernst and Young to review the compensation policy of the Bank in
light of the best in class practices in the banking industry.
(cid:45)(cid:69)(cid:82)(cid:67)(cid:69)(cid:82)(cid:0) (cid:35)(cid:79)(cid:78)(cid:83)(cid:85)(cid:76)(cid:84)(cid:73)(cid:78)(cid:71)(cid:26) The Bank employed the services of Mercer Consulting in the area of job evaluation. Mercer’s
International Position Evaluation system is a globally reputed job evaluation tool.
(cid:51)(cid:67)(cid:79)(cid:80)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:7)(cid:83)(cid:0)(cid:50)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:48)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:26)
The Remuneration Policy of the Bank includes within its scope all business lines, all permanent staff in its domestic as
well as international offices. Further the principles articulated in the compensation policy are universal, however in the
event there are any statutory provisions in overseas locations the same shall take precedence over the remuneration
policy of the Bank.
All permanent employees of the Bank except those covered under the long term wage agreement are covered by the
said compensation policy. The number of employees covered under the compensation policy was 87,263 as of March 31,
2016 (previous year: 75,977).
(cid:34)(cid:14)(cid:0)
(cid:41)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:82)(cid:69)(cid:76)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:69)(cid:83)(cid:73)(cid:71)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:75)(cid:69)(cid:89)(cid:0)(cid:70)(cid:69)(cid:65)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:79)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)
of remuneration policy
(cid:41)(cid:14)(cid:0)
(cid:43)(cid:69)(cid:89)(cid:0)(cid:38)(cid:69)(cid:65)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:47)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:50)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:48)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)
HDFC Bank Limited Annual Report 2015-16
118
Schedules to the Financial Statements
For the year ended March 31, 2016
The Bank’s Compensation Policy (the ‘Policy’) is aligned to business strategy, market dynamics, internal
characteristics and complexities within the Bank. The ultimate objective of the Policy is to provide a fair and
transparent structure that helps in acquiring and retaining the talent pool critical to build competitive advantage and
brand equity. The Policy has been designed basis the principles for sound compensation practices in accordance
with regulatory requirements and provides a framework to create, modify and maintain appropriate compensation
programs and processes with adequate supervision and control.
The Bank’s performance management system provides a sound basis for assessing employee performance
holistically. The Bank’s compensation framework is aligned with the performance management system and
differentiates pay appropriately amongst its employees based on degree of contribution, skill and availability of talent
owing to competitive market forces by taking into account factors such as role, skills, competencies, experience and
grade / seniority.
The NRC reviews the following critical principles enunciated in the policy and ensures that:
(a)
the compensation is adjusted for all types of prudent risk taking;
(b)
compensation outcomes are symmetric with risk outcomes;
(c)
compensation payouts are sensitive to the time horizon of risk; and
(d)
the mix of cash, equity and other forms of compensation are aligned with risk.
II.
Design and Structure of Remuneration
a)
Fixed Pay
The NRC ensures that the fixed component of the compensation is reasonable, taking into account all relevant
factors including industry practice.
Elements of Fixed Pay
The fixed pay component of the Bank’s compensation structure typically consists of elements such as base
salary, allowances, perquisites, retirement and other employee benefits. Perquisites extended are in the nature
of company car, hard furnishing, company leased accommodation, club membership and such other benefits
or allowances in lieu of such perquisites / benefits. Retirement benefits include contributions to provident fund,
superannuation fund (for certain job bands) and gratuity. The Whole Time Directors of the Bank are entitled
to other post-retirement benefits such as car and medical facilities, in accordance with specified terms of
employment as per the policy of the Bank, subject to RBI approval. The Bank also provides pension to certain
employees of the erstwhile Lord Krishna Bank (eLKB) under the Indian Banks’ Association (‘IBA’) structure.
Determinants of Fixed Pay
The fixed pay is primarily determined by taking into account factors such as the job size, performance,
experience, location, market competitiveness of pay and is designed to meet the following key objectives of:
(a)
fair compensation given the role complexity and size;
(b)
fair compensation given the individual’s skill, competence, experience and market pay position;
(c)
sufficient contribution to post retirement benefits; and
(d)
compliance with all statutory obligations.
HDFC Bank Limited Annual Report 2015-16
119
Schedules to the Financial Statements
For the year ended March 31, 2016
For Whole Time Directors additional dimensions such as prominence of leadership among industry leaders,
consistency of the Bank’s performance over the years on key parameters such as profitability, growth and
asset quality in relation to its own past performance and that of its peer banks would be considered. The
quantum of fixed pay for Whole Time Directors is approved by the NRC as well as the Board and is subject to
the approval of the RBI.
(cid:66)(cid:9)(cid:0) (cid:54)(cid:65)(cid:82)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:48)(cid:65)(cid:89)
The performance management system forms the basis for variable pay allocation of the Bank. The Bank
ensures that the performance management system is comprehensive and considers both, quantitative and
qualitative performance measures.
Whole Time Directors
The bonus for Whole Time Directors will not exceed 70% of the fixed pay in a year, thereby ensuring that there
is a balance between the fixed and variable pays. The variable pay for Whole Time Directors is approved by
the NRC as well as the Board and is subject to the approval of the RBI. The variable pay component is paid
out subject to the following conditions:
(cid:115)(cid:0)
(cid:55)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:86)(cid:65)(cid:82)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0) (cid:80)(cid:65)(cid:89)(cid:0) (cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:73)(cid:84)(cid:85)(cid:84)(cid:69)(cid:83)(cid:0) (cid:21)(cid:16)(cid:5)(cid:0) (cid:79)(cid:82)(cid:0) (cid:77)(cid:79)(cid:82)(cid:69)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:108)(cid:88)(cid:69)(cid:68)(cid:0) (cid:80)(cid:65)(cid:89)(cid:12)(cid:0) (cid:65)(cid:0) (cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:83)(cid:65)(cid:77)(cid:69)(cid:0) (cid:87)(cid:79)(cid:85)(cid:76)(cid:68)(cid:0) (cid:66)(cid:69)(cid:0)
deferred as per the schedule mentioned in the table below:
(cid:48)(cid:79)(cid:82)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:54)(cid:65)(cid:82)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:48)(cid:65)(cid:89) Timelines
60%
13.33%
13.33%
13.33%
Payable effective April 1 of the financial year immediately following the
performance year.
Payable effective April 1 of the second financial year following the reference
performance year.
Payable effective April 1 of the third financial year following the reference
performance year.
Payable effective April 1 of the fourth financial year following the reference
performance year.
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0) (cid:68)(cid:69)(cid:86)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0) (cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:0) (cid:77)(cid:65)(cid:76)(cid:85)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:67)(cid:76)(cid:65)(cid:87)(cid:0) (cid:66)(cid:65)(cid:67)(cid:75)(cid:0) (cid:67)(cid:76)(cid:65)(cid:85)(cid:83)(cid:69)(cid:83)(cid:0) (cid:65)(cid:83)(cid:0) (cid:65)(cid:0) (cid:82)(cid:73)(cid:83)(cid:75)(cid:0) (cid:77)(cid:73)(cid:84)(cid:73)(cid:71)(cid:65)(cid:78)(cid:84)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:65)(cid:78)(cid:89)(cid:0) (cid:78)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)
contributions of the Bank and / or relevant line of business in any year. Under the malus clause the
incumbent foregoes the vesting of the deferred variable pay in full or in part. Under the claw back clause
the incumbent is obligated to return all the tranches of payout received of bonus amounts pertaining to
the relevant performance year.
Employees other than Whole Time Directors
The Bank has formulated the following variable pay plans:
(cid:115)(cid:0)
(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:79)(cid:78)(cid:85)(cid:83)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:0)
The quantum of variable payout is a function of the performance of the Bank, performance of the
business unit, performance of the individual employee, job band of the employee and the functional
category. Basis these key determinants and due adjustment for risk alignment, a payout matrix for
variable pay is developed. Market trends for specific businesses / functions along with inputs from
compensation surveys may also be used in finalising the payout.
Bonus pools are designed to meet specific business needs therefore resulting in differentiation in both
the quantum and the method of payout across functions. Typically higher levels of responsibility receive
a higher proportion of variable pay vis-à-vis fixed pay. The Bank ensures that the time horizon for risk is
assessed and the deferment period, if any, for bonus is set accordingly. Employees on the annual bonus
plan are not part of performance-linked plans. The following is taken into account while administering
the annual bonus:
HDFC Bank Limited Annual Report 2015-16
120
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:57)
(cid:57)
In the event the proportion of variable pay to fixed pay is substantially high (variable pay exceeding
50% of fixed pay), the Bank may devise an appropriate deferment schedule after taking into
consideration the nature of risk, time horizon of risk, and the materiality of risk.
In cases of deferment of variable pay the Bank makes an assessment prior to the due date for
payment of the deferred portion for any negative contribution. The criteria for negative contribution
are decided basis pre-defined financial benchmarks. The Bank has in place appropriate methods
for prevention of vesting of deferred variable pay or any part thereof, on account of negative
contribution. The Bank also has in place claw back arrangements in relation to amounts already
paid in the eventuality of a negative contribution.
(cid:115)(cid:0)
(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:13)(cid:76)(cid:73)(cid:78)(cid:75)(cid:69)(cid:68)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:8)(cid:48)(cid:44)(cid:48)(cid:83)(cid:9)(cid:0)
PLPs are formulated for sales personnel who are given sales targets but have limited impact on risk
since credit decisions are exercised independent of the sales function. All PLP payouts are based on a
balanced scorecard framework and are subject to achievement of individual targets enumerated in the
respective scorecards of the employees. A portion of the PLP payouts is deferred till the end of the year
to provide for any unforeseen performance risks.
(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:79)(cid:70)(cid:0)(cid:50)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:48)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:65)(cid:83)(cid:84)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:26)
The Compensation Policy of the Bank was reviewed by the NRC. The Bank has appointed Ernst and
Young a globally reputed consulting firm to assess the compensation policy of the Bank in light of best
in class practices. The study is currently underway.
c) Guaranteed Bonus
Guaranteed Bonuses may not be consistent with sound risk management or pay for performance principles
of the Bank and therefore do not form an integral part of the general compensation practice.
For critical hiring for some select strategic roles, the Bank may consider granting of a sign-on bonus as a
prudent way to avoid loading the entire cost of attraction into the fixed component of the compensation which
could have a long term cost implication for the Bank. For such hiring, the sign-on bonus is generally decided
by taking into account appropriate risk factors and market conditions.
For hiring at levels of Whole Time Directors / Managing Director a sign-on bonus, if any, is limited to the first
year only and is in the form of Employee Stock Options.
d) Employee Stock Option Plan (‘ESOP’s)
The Bank considers ESOPs as a vehicle to create a balance between short term rewards and long term
sustainable value creation. ESOPs play a key role in the attraction and retention of key talent. The Bank grants
equity share options to its Whole Time Directors and other employees above a certain grade. Options are also
granted to employees in the talent pool across all levels. All plans for grant of options are framed in accordance
with the SEBI guidelines, 1999 as amended from time to time and are approved by the shareholders of the
Bank. These plans provide for the grant of options post approval by the NRC.
The grant of options is reviewed and approved by the NRC. The number of options granted varies at the
discretion of the NRC after considering parameters such as the incumbent’s grade and performance rating,
and such other appropriate relevant factors as may be deemed appropriate by the NRC. Equity share options
granted to the Whole Time Directors are subject to the approval of the NRC, the Board and the RBI.
e)
Severance Pay
The Bank does not grant severance pay other than accrued benefits (such as gratuity, pension) except in
cases where it is mandated by any statute.
HDFC Bank Limited Annual Report 2015-16
121
Schedules to the Financial Statements
For the year ended March 31, 2016
f)
Hedging
The Bank does not provide any facility or fund or permit its Whole Time Directors and employees to insure
or hedge their compensation structure to offset the risk alignment effects embedded in their compensation
arrangement.
III. Remuneration Processes
Fitment at the time of Hire
Pay ranges of the Bank are set basis the job size, experience, location and the academic and professional
credentials of the incumbent.
The compensation of new hires is in line with the existing pay ranges and consistent with the compensation levels
of the existing employees of the Bank at similar profiles. The pay ranges are subject to change basis market
trends and the Bank’s talent management priorities. While the Bank believes in the internal equity and parity as a
key determinant of pay it does acknowledge the external competitive pressures of the talent market. Accordingly,
there could be certain key profiles with critical competencies which may be hired at a premium and treated as an
exception to the overall pay philosophy. Any deviation from the defined pay ranges is treated as a hiring exception
requiring approval with appropriate justification.
(cid:41)(cid:78)(cid:67)(cid:82)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:15)(cid:0)(cid:48)(cid:65)(cid:89)(cid:0)(cid:50)(cid:69)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)
It is the endeavor of the Bank to ensure external competitiveness as well as internal equity without diluting the overall
focus on optimising cost. In order to enhance our external competitiveness the Bank participates in an annual salary
survey of the banking sector to understand key market trends as well as get insights on relative market pay position
compared to peers. The Bank endeavors to ensure that most employees progress to the median of the market in terms
of fixed pay over time. This coupled with key internal data indicators like performance score, job family, experience, job
grade and salary budget form the basis of decision making on revisions in fixed pay.
Increments in fixed pay for majority of the employee population are generally undertaken effective April 1 every
year. However promotions, confirmations and change in job dimensions could also lead to a change in the fixed pay
during other times of the year.
The Bank also makes salary corrections and adjustments during the year for those employees whose compensation
is found to be below the market pay and who have a good performance track record. However such pay revisions
are done on an exception basis.
Risk, Control and Compliance Staff
The Bank has separated the Risk, Control and Compliance functions from the Business functions in order to create
a strong culture of checks and balances thereby ensuring good asset quality and to eliminate any possible conflict
of interest between revenue generation and risk management and control. Accordingly, the overall variable pay as
well as the annual salary increment of the employees in the Risk, Control and Compliance functions is based on
their performance, functional objectives and goals. The Bank ensures that the mix of fixed to variable compensation
for these functions is weighted in favour of fixed compensation.
C. Description of the ways in which current and future risks are taken into account in the remuneration processes.
It should include the nature and type of the key measures used to take account of these risks
An overview of the key risks that the Bank takes into account when implementing remuneration measures.
The Bank takes into account all types of risks in its remuneration processes. The Bank takes into consideration the fact that
a portion of the Bank’s profits are directly attributable to various types of risks the Bank is exposed to, such as credit risk,
market risk, operational risk and other quantifiable risks. The Bank uses the capital charge on these risks as a key measure to
HDFC Bank Limited Annual Report 2015-16
122
Schedules to the Financial Statements
For the year ended March 31, 2016
evaluate the quantum of risk. The Bank takes into consideration the surplus available post adjustment of the cost of capital to
cover all such risks and pre bonus profit as the basis for allocation of variable pay. Further the Bank also evaluates the impact
of such remuneration on the overall cost to income ratio of the Bank. The Bank takes into consideration both Ex-Ante as well
as Ex-Post risks. The above mentioned risks are Ex-Ante in their approach. The Bank also provides for deferment of bonus in
the event the proportion of variable pay as compared to fixed pay is substantially high. The Bank has also devised appropriate
malus and claw back clauses as a risk mitigant for any negative contributions of the Bank and / or relevant line of business in
any year. Under the malus clause, the incumbent foregoes the vesting of the deferred variable pay in full or in part. Under the
claw back clause, the incumbent is obligated to return all the tranches of payout received of bonus amounts pertaining to the
relevant performance year. This is an Ex-Post risk management provision.
The Bank also takes into consideration key steps to mitigate talent risk. The key measures here include attrition rate of
employees as well as key talent. In order to moderate talent risk the Bank conducts a comprehensive market benchmarking
exercise to ensure that employees are competitively positioned against market in terms of fixed, variable as well as long term
incentives (LTI).
The risk measures and the models for assessing risk were introduced for the first time in financial year ended March 31, 2013.
Post the introduction of the risk models the adjustment of risk for remuneration has become fundamentally more comprehensive
and robust in coverage both from an Ex-Ante as well as an Ex-Post approach. There have not been any changes to the Bank’s
risk adjustment model over the past year.
D. Description of the ways in which the Bank seeks to link performance during a performance measurement period
with levels of remuneration
The Bank has a very comprehensive multi-dimensional performance measurement metrics that takes into consideration
multiple factors that include qualitative as well as quantitative factors. The following are the key performance measurement
metrics for the Bank. These also form part of the key metrics for the measurement of the performance of Whole Time
Directors and impact the final remuneration:
A.
Business Growth - This includes growth in advances and deposits;
B.
Profitability - This includes growth in profit after tax;
C. Asset Quality - Gross NPA, Net NPA and % of Restructured assets to net advances;
D.
Financial Soundness - Capital Adequacy Ratio Position and Tier I capital;
E.
Shareholder value creation - Return on equity; and
F.
Financial Inclusion - Growth in number of households covered, growth in the value of loans disbursed under this
category and achievement against priority sector lending targets.
Most of the above parameters are evaluated in two steps:
A.
Achievement against the plans of the Bank; and
B.
Achievement against the performance of peers.
Apart from the factors related to business growth there is also a key qualitative factor such as regulatory compliance.
Compliance is the key qualitative factor that acts as the moderator in the entire organisation evaluation process. A low
score on compliance can significantly moderate the other performance measures and depending on severity may even
nullify their impact.
While the above parameters form the core evaluation parameters for the Bank each of the business units are measured
on the following from a remuneration standpoint:
HDFC Bank Limited Annual Report 2015-16
123
Schedules to the Financial Statements
For the year ended March 31, 2016
A.
Increase in plan over the previous year;
B.
Actual growth in revenue over previous year;
C. Growth in net revenue (%);
D.
Achievement of net revenue against plan (%);
E.
Actual profit before tax;
F.
Growth in profit before tax compared to the previous year;
G. Current cost to income; and
H.
Improvement in cost to income over the previous year.
Apart from the above the business units are also measured against certain key business objectives that are qualitative in
nature.
The process by which levels of remuneration in the Bank are aligned to the performance of the Bank, business unit and
individual employees is articulated below.
Fixed Pay
At the conclusion of every financial year the Bank reviews the fixed pay portion of the compensation structure basis
merit-based increments and market corrections. These are based on a combination of performance rating, job band
and the functional category of the individual employee. For a given job band, the merit increment is directly related to
the performance rating. The Bank strives to ensure that most employees progress to the median of the market in terms
of fixed pay over time. All other things remaining equal, the correction percentage is directly related to the performance
rating of the individual.
Variable Pay
Basis the performance of the business unit, individual performance and role, the Bank has formulated the following
variable pay plans:
(cid:115)(cid:0)
(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:34)(cid:79)(cid:78)(cid:85)(cid:83)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)
The Bank’s annual bonus is computed as a percentage of the gross salary for every job band. The bonus multiple is
based on performance of the business unit (based on the parameters above), performance rating, job band and the
functional category of the individual employee. The business performance re-categorised into different performance
levels. The performance level determines the multiplier for the bonus. All other things remaining equal, for a given job
band, the bonus is directly related to the performance rating. The proportion of variable pay to fixed pay increases with
job band. Employees on the annual bonus plan are not part of the PLPs.
(cid:115)(cid:0)
(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:13)(cid:76)(cid:73)(cid:78)(cid:75)(cid:69)(cid:68)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:8)(cid:48)(cid:44)(cid:48)(cid:83)(cid:9)
The Bank has formulated PLPs for its sales personnel who are given sales targets basis a balanced scorecard methodology.
All PLP payouts are subject to the achievement of individual targets enumerated in the respective scorecards of the
employees and moderated by qualitative parameters. A portion of the PLP payouts is deferred till the end of the year to
provide for any unforeseen performance risks.
(cid:37)(cid:14)(cid:0) (cid:36)(cid:69)(cid:83)(cid:67)(cid:82)(cid:73)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:87)(cid:65)(cid:89)(cid:83)(cid:0) (cid:73)(cid:78)(cid:0) (cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:83)(cid:69)(cid:69)(cid:75)(cid:83)(cid:0) (cid:84)(cid:79)(cid:0) (cid:65)(cid:68)(cid:74)(cid:85)(cid:83)(cid:84)(cid:0) (cid:82)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:84)(cid:79)(cid:0) (cid:84)(cid:65)(cid:75)(cid:69)(cid:0) (cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:76)(cid:79)(cid:78)(cid:71)(cid:69)(cid:82)(cid:0) (cid:84)(cid:69)(cid:82)(cid:77)(cid:0)
performance
A discussion of the Bank’s policy on deferral and vesting of variable remuneration and a discussion of the Bank’s policy
and criteria for adjusting deferred remuneration before vesting and after vesting
HDFC Bank Limited Annual Report 2015-16
124
Schedules to the Financial Statements
For the year ended March 31, 2016
Whole Time Directors
The bonus for Whole Time Directors will not exceed 70% of the fixed pay in a year, thereby ensuring that there is a
balance between the fixed and variable pay. The variable pay for Whole Time Directors is approved by the NRC as well
as the Board and is subject to the approval of the RBI. The variable pay component is paid out subject to the following
conditions:
(cid:115)(cid:0)
(cid:55)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:80)(cid:65)(cid:89)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:73)(cid:84)(cid:85)(cid:84)(cid:69)(cid:83)(cid:0)(cid:21)(cid:16)(cid:5)(cid:0)(cid:79)(cid:82)(cid:0)(cid:77)(cid:79)(cid:82)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:88)(cid:69)(cid:68)(cid:0)(cid:80)(cid:65)(cid:89)(cid:12)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:0)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:79)(cid:70)(cid:0)(cid:73)(cid:83)(cid:0)(cid:68)(cid:69)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
vests as per the schedule mentioned in the table below:
(cid:48)(cid:79)(cid:82)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:54)(cid:65)(cid:82)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:48)(cid:65)(cid:89) Timelines
60%
Payable effective April 1 of the financial year immediately following the performance year.
13.33%
13.33%
13.33%
Payable effective April 1 of the second financial year following the reference performance
year.
Payable effective April 1 of the third financial year following the reference performance year.
Payable effective April 1 of the fourth financial year following the reference performance
year.
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:68)(cid:69)(cid:86)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:0)(cid:77)(cid:65)(cid:76)(cid:85)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:76)(cid:65)(cid:87)(cid:0)(cid:66)(cid:65)(cid:67)(cid:75)(cid:0)(cid:67)(cid:76)(cid:65)(cid:85)(cid:83)(cid:69)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:0)(cid:82)(cid:73)(cid:83)(cid:75)(cid:0)(cid:77)(cid:73)(cid:84)(cid:73)(cid:71)(cid:65)(cid:78)(cid:84)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:78)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:73)(cid:66)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)
the Bank and / or relevant line of business in any year.
(cid:57) Malus clause
Under the malus clause the incumbent foregoes the vesting of the deferred variable pay in full or in part.
In the event there is a deterioration in specific performance criteria (such as criteria relating to profit or asset
quality) that are laid down by the NRC, then the NRC would review the deterioration in the performance taking
into consideration the macroeconomic environment as well as internal performance indicators and accordingly
decide whether any part of the deferred tranche pertaining to that financial year merits a withdrawal.
(cid:57)
Claw back clause
Under the claw back clause the incumbent is obligated to return all the tranches of payout received of bonus
amounts pertaining to the relevant performance year. In the event there is any act attributable to the concerned
Whole Time Director / Managing Director resulting in an incident of willful and deliberate misinterpretation /
misreporting of financial performance (inflating the financials) of the Bank, for a financial year, which comes
to light in the subsequent three years, the incumbent is obligated to return all the tranches of payout received
of bonus amounts pertaining to the relevant performance year.
The specific criteria on the applicability of malus and claw back arrangements are reviewed by the NRC annually.
Employees other than Whole Time Directors
The Bank has formulated the following variable pay plans:
(cid:115)(cid:0)
(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:79)(cid:78)(cid:85)(cid:83)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:0)
The quantum of variable payout is a function of the performance of the Bank, performance of the individual
employee, job band of the employee and the functional category. Basis these key determinants and due adjustment
for risk alignment, a payout matrix for variable pay is developed. Market trends for specific businesses / functions
along with inputs from compensation surveys may also be used in finalising the payout.
HDFC Bank Limited Annual Report 2015-16
125
Schedules to the Financial Statements
For the year ended March 31, 2016
Bonus pools are designed to meet specific business needs therefore resulting in differentiation in both the quantum
and the method of payout across functions. Typically higher levels of responsibility receive a higher proportion of
variable pay vis-à-vis fixed pay. The Bank ensures that the time horizon for risk is assessed and the deferment
period, if any, for bonus is set accordingly. Employees on the annual bonus plan are not part of the PLPs.
The following is taken into account while administering the annual bonus:
(cid:57)
(cid:57)
In the event the proportion of variable pay to fixed pay is substantially high (typically variable pay exceeding
50% of fixed pay), the Bank may devise an appropriate deferment schedule after taking into consideration the
nature of risk, time horizon of risk, and the materiality of risk.
In cases of deferment of variable pay the Bank makes an assessment prior to the due date for payment of
the deferred portion for any negative contribution. The criteria for negative contribution are decided basis
pre-defined financial benchmarks. The Bank has in place appropriate methods for prevention of vesting of
deferred variable pay or any part thereof, on account of negative contribution. The Bank also has in place claw
back arrangements in relation to amounts already paid in the eventuality of a negative contribution.
(cid:115)(cid:0)
(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:13)(cid:76)(cid:73)(cid:78)(cid:75)(cid:69)(cid:68)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:8)(cid:48)(cid:44)(cid:48)(cid:83)(cid:9)
PLPs are formulated for sales personnel who are given sales targets but have limited impact on risk since credit
decisions are exercised independent of the sales function. All PLP payouts are subject to the achievement of
individual targets enumerated in the respective scorecards of the employees. A portion of the PLP payouts is
deferred till the end of the year to provide for any unforeseen performance risks.
F.
Description of the different forms of variable remuneration (i.e. cash, shares, ESOPs and other forms) that the
Bank utilises and the rationale for using these different forms
The Bank recognises the importance of variable pay in reinforcing a pay for performance culture. Variable pay stimulates
employees to stretch their abilities to exceed expectations.
(cid:115)(cid:0)
(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:79)(cid:78)(cid:85)(cid:83)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)
These are paid to reward performance for a given financial year. This covers all employees and excludes employees
receiving PLP payouts. This is based on performance of the business unit, performance rating, job band and
functional category of the individual. For higher job bands the proportion of variable pay to total compensation tends
to be higher.
(cid:115)(cid:0)
(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:13)(cid:76)(cid:73)(cid:78)(cid:75)(cid:69)(cid:68)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:8)(cid:48)(cid:44)(cid:48)(cid:83)(cid:9)
These are paid to frontline sales staff for the achievement of specific sales targets but have limited impact on
risk as credit decisions are exercised independent of the sales function. Further, it has been the endeavor of
the Bank to ensure that the objectives set are based on the principles of a balanced scorecard that takes into
account quantitative and qualitative measures rather than just the achievement of financial numbers. Further all
PLPs have inherent risk adjustment mechanisms manifested in the form of deterrents. All PLP payouts are subject
to the achievement of parameters, both qualitative and quantitative enumerated in the respective scorecards of
the employees. A portion of the PLP payouts is deferred till the end of the year to provide for any unforeseen
performance risks.
(cid:115)(cid:0)
(cid:37)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)
This is to reward for contribution of employees in creating a long term, sustainable earnings and enhancing
shareholder value. Only employees in a certain job band and with a specific performance rating are eligible for
stock options. Performance is the key criteria for granting stock options.
HDFC Bank Limited Annual Report 2015-16
126
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:49)(cid:85)(cid:65)(cid:78)(cid:84)(cid:73)(cid:84)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)
The quantitative disclosures cover the Bank’s Whole Time Directors and Key Risk Takers. Key Risk Takers are individuals who
can materially set, commit or control significant amounts of the Bank’s resources, and / or exert significant influence over its
risk profile. The Bank’s Key Risk Takers include Whole Time Directors, Group Heads, Business Heads directly reporting to the
Managing Director and select roles in the Bank’s Treasury and Investment Banking functions.
Sr. No.
(a)
(cid:51)(cid:85)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)
March 31, 2016
March 31, 2015
Number of meetings held by the NRC
during the financial year and remuneration
paid to its members
Number of meetings: 9
Number of meetings: 5
Remuneration paid: ` 0.17 crore
Remuneration paid: ` 0.04 crore
(b) (i) Number of employees having received a
variable remuneration award during the
financial year
30 employees
23 employees
(b) (ii) Number and total amount of sign-on
None
awards made during the financial year
(b) (iii) Number and total amount of guaranteed
bonuses awarded during the financial
year
None
(b) (iv) Details of severance pay, in addition to
None
accrued benefits, if any
None
None
None
(c) (i)
Total amount of outstanding deferred
remuneration, split into cash, shares and
share-linked instruments and other forms
Total amount of outstanding deferred
remuneration (cash bonus) was ` 3.13
crore.
Total amount of outstanding deferred
remuneration (cash bonus) was ` 1.81
crore.
(c) (ii) Total amount of deferred remuneration
` 1.20 crore
` 1.20 crore
paid out in the financial year
(d)
Breakdown of amount of remuneration
awards for the financial year to show fixed
and variable, deferred and non-deferred
(e) (i)
Total amount of outstanding deferred
remuneration and retained remuneration
exposed to ex-post explicit and / or
implicit adjustments
` 46.04 crore (Fixed*)
` 34.58 crore (Fixed*)
` 9.75 crore (variable pay pertaining to
financial year ended March 31, 2015, in
relation to employees where there was no
deferment of pay).
` 10.48 crore (variable pay pertaining to
financial year ended March 31, 2014, in
relation to employees where there was no
deferment of pay).
` 6.32 crore (variable pay pertaining to
financial year ended March 31, 2015, in
relation to employees where there was
a deferment of pay), of which ` 3.79
crore was non-deferred variable pay and
` 2.53 crore was deferred variable pay.
Deferred variable pay pertaining
to
financial year ended March 31, 2014: Nil
Number of stock options granted during
the financial year: 40,86,600
Number of stock options granted during the
financial year: 30,42,000
Total amount of outstanding deferred
remuneration (cash bonus) was ` 3.13
crore.
Total amount of outstanding deferred
remuneration (cash bonus) was ` 1.81
crore.
(e) (ii) Total amount of reductions during the
financial year due to ex-post explicit
adjustments
(e) (iii) Total amount of reductions during the
financial year due to ex-post implicit
adjustments
Nil
Nil
Nil
Nil
*
Excludes gratuity benefits, since the same is computed at Bank level.
HDFC Bank Limited Annual Report 2015-16
127
Schedules to the Financial Statements
For the year ended March 31, 2016
25 Segment reporting
Business segments
Business segments have been identified and reported taking into account, the target customer profile, the nature of products
and services, the differing risks and returns, the organisation structure, the internal business reporting system and the
guidelines prescribed by RBI. The Bank operates in the following segments:
a)
Treasury
The treasury segment primarily consists of net interest earnings from the Bank’s investment portfolio, money market
borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and
derivative contracts.
b) Retail banking
The retail banking segment serves retail customers through a branch network and other delivery channels. This segment
raises deposits from customers and provides loans and other services to customers with the help of specialist product
groups. Exposures are classified under retail banking taking into account the status of the borrower (orientation criterion),
the nature of product, granularity of the exposure and the quantum thereof.
Revenues of the retail banking segment are derived from interest earned on retail loans, interest earned from other
segments for surplus funds placed with those segments, subvention received from dealers and manufacturers, fees
from services rendered, foreign exchange earnings on retail products etc. Expenses of this segment primarily comprise
interest expense on deposits, commission paid to retail assets sales agents, infrastructure and premises expenses
for operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated
expenses of specialist product groups, processing units and support groups.
c) Wholesale banking
The wholesale banking segment provides loans, non-fund facilities and transaction services to large corporates, emerging
corporates, public sector units, government bodies, financial institutions and medium scale enterprises. Revenues of the
wholesale banking segment consist of interest earned on loans made to customers, interest / fees earned on the cash
float arising from transaction services, earnings from trade services and other non-fund facilities and also earnings from
foreign exchange and derivative transactions on behalf of customers. The principal expenses of the segment consist of
interest expense on funds borrowed from external sources and other internal segments, premises expenses, personnel
costs, other direct overheads and allocated expenses of delivery channels, specialist product groups, processing units
and support groups.
d) Other banking business
This segment includes income from para banking activities such as credit cards, debit cards, third party product
distribution, primary dealership business and the associated costs.
e) Unallocated
All items which are reckoned at an enterprise level are classified under this segment. This includes capital and reserves,
debt classified as Tier I or Tier II capital and other unallocable assets and liabilities such as deferred tax, prepaid expenses,
etc.
Segment revenue includes earnings from external customers plus earnings from funds transferred to other segments.
Segment result includes revenue less interest expense less operating expense and provisions, if any, for that segment.
Segment-wise income and expenses include certain allocations. Interest income is charged by a segment that provides
funding to another segment, based on yields benchmarked to an internally approved yield curve or at a certain agreed
transfer price rate. Transaction charges are levied by the retail banking segment to the wholesale banking segment for the
use by its customers of the retail banking segment’s branch network or other delivery channels. Such transaction costs
are determined on a cost plus basis. Segment capital employed represents the net assets in that segment.
HDFC Bank Limited Annual Report 2015-16
128
Schedules to the Financial Statements
For the year ended March 31, 2016
Geographic segments
The geographic segments of the Bank are categorised as domestic operations and foreign operations. Domestic operations
comprise branches in India and foreign operations comprise branches outside India.
Segment reporting for the year ended March 31, 2016 is given below:
(cid:0)
(cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:83)(cid:69)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:26)(cid:0)
Particulars
Sr.
No.
1
2
3
4
5
6
7
8
9
Segment revenue
Unallocated revenue
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
Segment results
Unallocated expenses
Income tax expense (including deferred tax)
Net profit (5) - (6) - (7)
Segment assets
10 Unallocated assets
11
12
Total assets (9) + (10)
Segment liabilities
13 Unallocated liabilities
14
Total liabilities (12) + (13)
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
(cid:8)` crore)
Total
18,264.88
59,252.34
27,162.39
7,554.42
112,234.03
-
41,260.86
70,973.17
1,489.21
7,522.30
8,219.93
2,832.27
20,063.71
1,425.77
6,341.71
12,296.23
203,381.47
252,690.65
226,242.65
21,633.06
703,947.83
4,897.74
708,845.57
45,389.87
448,313.40
120,425.52
2,476.31
616,605.10
19,562.70
636,167.80
15 Capital employed (9) - (12)
157,991.60 (195,622.75)
105,817.13
19,156.75
87,342.73
(Segment assets - Segment liabilities)
16
17
18
19
Unallocated (10) - (13)
Total (15) + (16)
Capital expenditure
Depreciation
5.09
6.16
729.46
540.47
134.59
101.67
69.70
57.54
(cid:0)
(cid:39)(cid:69)(cid:79)(cid:71)(cid:82)(cid:65)(cid:80)(cid:72)(cid:73)(cid:67)(cid:0)(cid:83)(cid:69)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:26)(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(cid:0)
(14,664.96)
72,677.77
938.84
705.84
(cid:8)` crore)
Particulars
Revenue
Assets
Capital expenditure
Domestic
International
69,816.77
1,156.40
672,888.69
35,956.88
937.95
0.89
HDFC Bank Limited Annual Report 2015-16
129
Schedules to the Financial Statements
For the year ended March 31, 2016
Segment reporting for the year ended March 31, 2015 is given below:
(cid:0)
(cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:83)(cid:69)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:26)(cid:0)
(cid:0)
(cid:8)` crore)
Total
Particulars
Sr.
No.
1 Segment revenue
2 Unallocated revenue
3
4
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
5 Segment results
6 Unallocated expenses
7
Income tax expense (including deferred tax)
8 Net profit (5) - (6) - (7)
9 Segment assets
10 Unallocated assets
11 Total assets (9) + (10)
12 Segment liabilities
13 Unallocated liabilities
14 Total liabilities (12) + (13)
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
12,903.89
48,814.18
23,152.60
6,201.02
91,071.69
8.62
33,614.06
57,466.25
618.30
6,228.83
7,471.83
2,486.89
16,805.85
1,477.13
5,112.80
10,215.92
190,609.16
197,144.15
181,325.74
16,995.47
586,074.52
4,428.56
590,503.08
36,352.78
371,355.13
98,250.45
1,537.93
507,496.29
20,997.36
528,493.65
15 Capital employed (9) - (12)
154,256.38 (174,210.98)
83,075.29
15,457.54
78,578.23
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
(cid:0)
(cid:39)(cid:69)(cid:79)(cid:71)(cid:82)(cid:65)(cid:80)(cid:72)(cid:73)(cid:67)(cid:0)(cid:83)(cid:69)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:26)(cid:0)
Particulars
Revenue
Assets
Capital expenditure
6.02
5.91
587.72
214.09
521.71
79.44
52.26
49.24
(16,568.80)
62,009.43
860.09
656.30
(cid:8)` crore)
Domestic
International
56,493.08
973.17
558,753.03
31,750.05
857.85
2.24
HDFC Bank Limited Annual Report 2015-16
130
Schedules to the Financial Statements
For the year ended March 31, 2016
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2
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131
Schedules to the Financial Statements
For the year ended March 31, 2016
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6
2
HDFC Bank Limited Annual Report 2015-16
132
Schedules to the Financial Statements
For the year ended March 31, 2016
Qualitative disclosure on LCR
The Liquidity Coverage Ratio (LCR) is a global minimum standard for bank liquidity. It aims to ensure that a bank has an
adequate stock of unencumbered High Quality Liquid Assets (HQLA) that can be converted into cash easily and immediately
to meet its liquidity needs for a 30 calendar day liquidity stress scenario.
The LCR is calculated by dividing the amount of High Quality Liquid unencumbered Assets (HQLA) by the estimated net
outflows over a stressed 30 calendar day period. The net cash outflows are calculated by applying RBI prescribed outflow
factors to the various categories of liabilities (deposits, unsecured and secured wholesale borrowings), as well as to undrawn
commitments and derivative-related exposures, partially offset by inflows from assets maturing within 30 days. The average
LCR was at 80.61% for the quarter ended March 2016. The average HQLA was ` 87,390.70 crore of which government
securities constituted about 73%. The outflows related to derivative exposures (net of cash inflows) / collateral requirements
and undrawn commitments constituted about 2% and 6% respectively of average cash outflow of ` 185,910.04 crore. Average
inflows from assets were ` 77,496.07 crore.
Average LCR for the quarter ended March 2016 is 80.61%, which is comfortably above RBI prescribed minimum requirement
of 70%.
Major reasons for movement in average LCR as compared to the previous quarter ended December 2015 are as follows:
(cid:115)(cid:0)
(cid:40)(cid:49)(cid:44)(cid:33)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:81)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0) (cid:69)(cid:78)(cid:68)(cid:69)(cid:68)(cid:0) (cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0) (cid:18)(cid:16)(cid:17)(cid:22)(cid:0) (cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0) (cid:65)(cid:83)(cid:0) (cid:65)(cid:68)(cid:68)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0) (cid:38)(cid:33)(cid:44)(cid:44)(cid:35)(cid:50)(cid:0) (cid:8)(cid:19)(cid:5)(cid:0) (cid:79)(cid:70)(cid:0) (cid:46)(cid:36)(cid:52)(cid:44)(cid:9)(cid:0) (cid:73)(cid:83)(cid:0) (cid:80)(cid:69)(cid:82)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:68)(cid:0) (cid:66)(cid:89)(cid:0) (cid:50)(cid:34)(cid:41)(cid:0) (cid:84)(cid:79)(cid:0) (cid:66)(cid:69)(cid:0)
considered as HQLA from February 2016.
(cid:115)(cid:0)
(cid:55)(cid:73)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:85)(cid:78)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:69)(cid:68)(cid:0) (cid:87)(cid:72)(cid:79)(cid:76)(cid:69)(cid:83)(cid:65)(cid:76)(cid:69)(cid:0) (cid:70)(cid:85)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:12)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:80)(cid:82)(cid:79)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:85)(cid:78)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:69)(cid:68)(cid:0) (cid:68)(cid:69)(cid:66)(cid:84)(cid:0) (cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0) (cid:65)(cid:84)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:83)(cid:0) (cid:72)(cid:73)(cid:71)(cid:72)(cid:69)(cid:82)(cid:0) (cid:79)(cid:85)(cid:84)(cid:109)(cid:79)(cid:87)(cid:0) (cid:70)(cid:65)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0)
decreased.
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:55)(cid:73)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:0)(cid:68)(cid:69)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:83)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:82)(cid:79)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:76)(cid:69)(cid:83)(cid:83)(cid:0)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:70)(cid:85)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:65)(cid:84)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:0)(cid:72)(cid:73)(cid:71)(cid:72)(cid:69)(cid:82)(cid:0)(cid:79)(cid:85)(cid:84)(cid:109)(cid:79)(cid:87)(cid:0)(cid:70)(cid:65)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:12)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:14)
(cid:41)(cid:78)(cid:109)(cid:79)(cid:87)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:68)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:14)
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:67)(cid:65)(cid:83)(cid:72)(cid:0)(cid:73)(cid:78)(cid:109)(cid:79)(cid:87)(cid:83)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:77)(cid:65)(cid:73)(cid:78)(cid:76)(cid:89)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:73)(cid:78)(cid:0)(cid:73)(cid:78)(cid:109)(cid:79)(cid:87)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:83)(cid:72)(cid:79)(cid:82)(cid:84)(cid:0)(cid:84)(cid:69)(cid:82)(cid:77)(cid:0)(cid:76)(cid:69)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:14)
(cid:33)(cid:0) (cid:83)(cid:84)(cid:82)(cid:79)(cid:78)(cid:71)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:68)(cid:73)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:108)(cid:69)(cid:68)(cid:0) (cid:76)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:80)(cid:82)(cid:79)(cid:108)(cid:76)(cid:69)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0) (cid:66)(cid:69)(cid:69)(cid:78)(cid:0) (cid:65)(cid:84)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:72)(cid:69)(cid:76)(cid:77)(cid:0) (cid:79)(cid:78)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:7)(cid:83)(cid:0) (cid:71)(cid:82)(cid:79)(cid:87)(cid:84)(cid:72)(cid:0) (cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:89)(cid:14)(cid:0)(cid:52)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0) (cid:67)(cid:79)(cid:78)(cid:83)(cid:73)(cid:83)(cid:84)(cid:69)(cid:78)(cid:84)(cid:76)(cid:89)(cid:0)
maintained a robust funding profile with a significant portion of funding through deposits. As of March 2016 the top 20
depositors comprised of around 5% of total deposits.
Note:
1. CCIL guaranteed deals were netted for computing FX & Derivatives numbers from December 2015 quarter end. Hence,
the numbers for serial number 5(i) and 11 are not strictly comparable with previous quarter numbers.
2.
LCR for the quarter end March 2015 had been computed based on the guidelines applicable at that point in time.
Subsequently there have been amendments in the RBI guidelines w.e.f. April 2015. Hence, the previous year end
numbers are not comparable with current financial year.
HDFC Bank Limited Annual Report 2015-16
133
Schedules to the Financial Statements
For the year ended March 31, 2016
27 Related party disclosures
As per AS-18, Related Party Disclosure, the Bank’s related parties are disclosed below:
Promoter
Housing Development Finance Corporation Limited
Subsidiaries
HDFC Securities Limited
HDB Financial Services Limited
Associates
Atlas Documentary Facilitators Company Private Limited
HBL Global Private Limited
International Asset Reconstruction Company Private Limited
Welfare trust of the Bank
HDB Employees Welfare Trust
Key management personnel
Aditya Puri, Managing Director
Paresh Sukthankar, Deputy Managing Director
Kaizad Bharucha, Executive Director
Related parties to key management personnel
Salisbury Investments Private Limited, Tanaksh Innovations Private Limited, Anita Puri, Amit Puri, Amrita Puri, Adishwar Puri,
Aarti Sood, Sangeeta Sukthankar, Dattatraya Sukthankar, Shubhada Sukthankar, Akshay Sukthankar, Ankita Sukthankar,
Madhavi Lad, Havovi Bharucha, Huzaan Bharucha, Danesh Bharucha, Daraius Bharucha.
In accordance with paragraph 5 of AS - 18, the Bank has not disclosed certain transactions with relatives of key management
personnel as they are in the nature of banker-customer relationship.
The significant transactions between the Bank and related parties for year ended March 31, 2016 are given below. A specific
related party transaction is disclosed as a significant related party transaction wherever it exceeds 10% of all related party
transactions in that category:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0) (cid:80)(cid:65)(cid:73)(cid:68)(cid:26)(cid:0) (cid:40)(cid:36)(cid:38)(cid:35)(cid:0) (cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0) ` 18.96 crore (previous year: ` 2.89 crore); Housing Development Finance
Corporation Limited ` 7.25 crore (previous year: ` 7.60 crore); HDB Financial Services Limited ` 4.52 crore (previous
year: ` 1.99 crore); Atlas Documentary Facilitators Company Private Limited ` 3.84 crore (previous year: ` 4.25 crore).
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:26)(cid:0)(cid:40)(cid:36)(cid:34)(cid:0)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:51)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 100.06 crore (previous year: ` 117.17 crore).
(cid:50)(cid:69)(cid:78)(cid:68)(cid:69)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:79)(cid:70)(cid:0) (cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:26)(cid:0) (cid:40)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0) (cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0) (cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0) ` 178.83 crore (previous year: ` 144.37
crore); HDFC Securities Limited ` 21.07 crore (previous year: ` 13.94 crore).
(cid:50)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:26)(cid:0)(cid:40)(cid:34)(cid:44)(cid:0)(cid:39)(cid:76)(cid:79)(cid:66)(cid:65)(cid:76)(cid:0)(cid:48)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:69)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 702.20 crore (previous year: ` 589.50 crore); Atlas Documentary
Facilitators Company Private Limited ` 471.44 crore (previous year: ` 449.50 crore); Housing Development Finance
Corporation Limited ` 247.21 crore (previous year: ` 139.83 crore).
(cid:36)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:78)(cid:68)(cid:0)(cid:80)(cid:65)(cid:73)(cid:68)(cid:26)(cid:0)(cid:40)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 314.57 crore (previous year: ` 269.35 crore).
(cid:36)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:26)(cid:0)(cid:40)(cid:36)(cid:34)(cid:0)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:51)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 88.40 crore (previous year: ` 25.00 crore); HDFC Securities Limited
` 60.64 crore (previous year: ` 7.58 crore).
(cid:48)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:108)(cid:88)(cid:69)(cid:68)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:26)(cid:0)(cid:40)(cid:36)(cid:38)(cid:35)(cid:0)(cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 0.12 crore (previous year: Nil).
HDFC Bank Limited Annual Report 2015-16
134
Schedules to the Financial Statements
For the year ended March 31, 2016
The Bank’s related party balances and transactions for the year ended March 31, 2016 are summarised as follows: (` crore)
(cid:41)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:15)(cid:0)(cid:50)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:80)(cid:65)(cid:82)(cid:84)(cid:89)
Promoter
Subsidiaries Associates
Key
management
personnel
Total
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
Interest received from
Income from services rendered to
Expenses for receiving services from
Equity investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
4,405.56
(4,405.56)
0.15
(0.15)
-
-
-
-
7.25
-
178.83
247.21
-
-
314.57
-
16.30
(28.42)
26.93
(26.93)
0.14
(0.14)
-
12,773.37
509.86
(811.10)
10.51
(10.51)
1,590.12
(1,590.12)
0.12
-
23.48
100.06
24.12
81.77
2,751.77
(2,751.77)
-
149.04
0.08
(1.81)
21.57
(25.65)
0.05
(0.05)
-
-
100.02
(100.02)
0.10
(7.10)
0.22
(36.95)
-
-
3.89
2.27
6.07
1,173.64
31.19
(31.19)
-
0.01
-
(0.38)
39.85
(102.70)
-
-
-
-
10.12
(11.50)
2.51
(2.51)
0.95
(0.99)
-
-
0.84
0.02
-
0.76
-
-
3.37
-
5,025.56
(5,328.18)
13.27
(20.27)
1,591.29
(1,628.06)
0.12
-
35.46
102.35
209.02
1,503.38
2,782.96
(2,782.96)
317.94
149.05
-
16.38
-
-
-
-
-
18.34
-
(30.61)
88.35
(155.28)
0.19
(0.19)
18.34
12,773.37
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding
balances at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
The Bank being an authorised dealer, deals in foreign exchange and derivative transactions with parties which include its
promoter. The foreign exchange and derivative transactions are undertaken in line with the RBI guidelines. The notional principal
amount of foreign exchange and derivative contracts transacted with the promoter that were outstanding as on March 31, 2016
is ` 491.21 crore (previous year: ` 100.00 crore). The contingent credit exposure pertaining to these contracts computed in line
with the extant RBI guidelines on exposure norms is ` 18.90 crore (previous year: ` 2.80 crore).
During the year ended March 31, 2016, the Bank purchased debt securities from Housing Development Finance Corporation
Limited ` 1,415.00 crore (previous year: Nil) and from HDB Financial Services Limited ` 322.00 crore (previous year: ` 485.00
crore) issued by these entities.
During the year ended March 31, 2016, the Bank made investment of ` 1,748.66 crore (previous year: ` 204.05 crore) in pass
through certificates in respect of assets securitised out by HDB Financial Services Limited.
During the year ended March 31, 2016, the Bank paid rent of ` 0.66 crore (previous year: ` 0.66 crore) to parties related to
the Bank’s key management personnel in relation to residential accommodation. As at March 31, 2016, the security deposit
outstanding was ` 3.50 crore (previous year: ` 3.50 crore).
The deposit outstanding from HDB Employees Welfare Trust as of March 31, 2016 was ` 46.46 crore (previous year: ` 44.13
crore). The Bank also paid interest on deposit from HDB Employees Welfare Trust aggregating to ` 3.88 crore (previous year:
` 4.19 crore).
HDFC Bank Limited Annual Report 2015-16
135
Schedules to the Financial Statements
For the year ended March 31, 2016
The Bank’s related party balances and transactions for the year ended March 31, 2015 are summarised as follows:
(cid:41)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:15)(cid:0)(cid:50)(cid:69)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:80)(cid:65)(cid:82)(cid:84)(cid:89)
Promoter
Subsidiaries
Associates
Key
management
personnel
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
Interest received from
Income from services rendered to
Expenses for receiving services from
Equity investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
2,203.45
(2,203.45)
0.15
(0.15)
-
-
-
-
7.60
-
144.37
139.83
-
-
269.35
-
14.89
(14.89)
19.25
(19.25)
0.11
(0.11)
-
8,249.21
471.78
(471.78)
10.52
(10.52)
1,006.36
(1,259.54)
-
-
4.88
117.17
17.22
77.66
2,751.77
(2,751.77)
-
32.58
2.39
(2.39)
12.63
(20.09)
0.05
(0.05)
-
-
113.06
(113.06)
13.35
(33.45)
25.67
(46.55)
-
-
4.27
4.53
12.25
1,039.00
31.19
(31.19)
-
0.01
-
(1.30)
5.99
(92.45)
-
-
-
-
12.68
(12.68)
2.51
(2.51)
0.95
(0.95)
-
-
0.99
0.02
-
0.71
-
-
2.95
-
-
-
-
(0.03)
-
-
15.10
-
(` crore)
Total
2,800.97
(2,800.97)
26.53
(46.63)
1,032.98
(1,307.04)
-
-
17.74
121.72
173.84
1,257.20
2,782.96
(2,782.96)
272.30
32.59
17.28
(18.58)
37.87
(131.82)
0.16
(0.16)
15.10
8,249.21
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding
balances at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
28
Intra-Group exposure
Intra-Group exposures in accordance with RBI guidelines are as follows:
(` crore)
Particulars
March 31, 2016
March 31, 2015
Total amount of intra-group exposures
Total amount of top 20 intra-group exposures
Percentage of intra-group exposures to total exposure of the Bank on
borrowers / customers
2,413.58
2,413.58
0.33%
1,436.10
1,436.10
0.26%
Details of breach of limits on intra-group exposures and regulatory action
thereon, if any
Nil
Nil
HDFC Bank Limited Annual Report 2015-16
136
Schedules to the Financial Statements
For the year ended March 31, 2016
29 Leases
Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (‘ATM’s), which are
renewable at the option of the Bank. The details of maturity profile of future operating lease payments are given below:
Particulars
Not later than one year
Later than one year and not later than five years
Later than five years
Total
The total of minimum lease payments recognised in the Statement of Profit and
Loss for the year
Total of future minimum sub-lease payments expected to be received under
non-cancellable sub-leases
Sub-lease amounts recognised in the Statement of Profit and Loss for the year
Contingent (usage based) lease payments recognised in the Statement of
Profit and Loss for the year
The Bank has sub-leased certain of its properties taken on lease.
(` crore)
March 31, 2016
March 31, 2015
887.30
2,805.03
2,481.82
6,174.15
1,005.70
783.02
2,591.87
1,974.45
5,349.34
866.97
37.13
38.05
10.67
180.53
16.01
169.44
The terms of renewal and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions
or onerous clauses in the agreements.
30 Transfers to Depositor Education and Awareness Fund (DEAF)
The details of amount transferred during the respective year to DEAF are as under:
(` crore)
Particulars
March 31, 2016
March 31, 2015
Opening balance of amounts transferred to DEAF
Add : Amounts transferred to DEAF during the year
Less : Amounts reimbursed by DEAF towards claims
Closing balance of amounts transferred to DEAF
31 Penalties levied by the RBI
92.14
45.89
(1.18)
136.85
Nil
94.45
(2.31)
92.14
During the year ended March 31, 2016, RBI has not imposed any penalties on the Bank.
During the previous year ended March 31, 2015, RBI levied on the Bank a penalty of ` 0.05 crore on the grounds that the Bank
failed to exchange information about the conduct of a corporate borrower’s account with other banks at intervals as prescribed
in the RBI guidelines on ‘Lending under Consortium Arrangement / Multiple Banking Arrangements’ and the same was paid by
the Bank.
HDFC Bank Limited Annual Report 2015-16
137
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:19)(cid:18)(cid:0) (cid:36)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:67)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:65)(cid:73)(cid:78)(cid:84)(cid:83)(cid:0)(cid:15)(cid:0)(cid:85)(cid:78)(cid:73)(cid:77)(cid:80)(cid:76)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:47)(cid:77)(cid:66)(cid:85)(cid:68)(cid:83)(cid:77)(cid:65)(cid:78)
(cid:115)(cid:0)
(cid:35)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:65)(cid:73)(cid:78)(cid:84)(cid:83)
(A) Customer complaints other than ATM transaction disputes
Particulars
March 31, 2016
March 31, 2015
(a) No. of complaints pending at the beginning of the year
(b) No. of complaints received during the year
(c) No. of complaints redressed during the year
(d) No. of complaints pending at the end of the year
496
62,224
62,069
651
455
72,075
72,034
496
(B) ATM transaction disputes relating to the Bank’s customers on the Bank’s ATMs
Particulars
March 31, 2016
March 31, 2015
(a) No. of complaints pending at the beginning of the year
(b) No. of complaints received during the year
(c) No. of complaints redressed during the year
(d) No. of complaints pending at the end of the year
(e) Complaints per ten thousand transactions
71
13,170
13,140
101
0.50
159
11,300
11,388
71
0.42
(C) ATM transaction disputes relating to the Bank’s customers on other banks’ ATMs
Particulars
March 31, 2016
March 31, 2015
(a) No. of complaints pending at the beginning of the year
(b) No. of complaints received during the year
(c) No. of complaints redressed during the year
(d) No. of complaints pending at the end of the year
(e) Complaints per ten thousand transactions
1,334
89,975
90,191
1,118
3.86
1,601
82,572
82,839
1,334
3.91
(D) Total customer complaints and ATM transaction disputes [total of tables (A), (B) and (C) above]
Particulars
March 31, 2016
March 31, 2015
(a) No. of complaints pending at the beginning of the year
(b) No. of complaints received during the year
(c) No. of complaints redressed during the year
(d) No. of complaints pending at the end of the year
1,901
1,65,369
1,65,400
1,870
2,215
1,65,947
1,66,261
1,901
Note: ATM transaction disputes reported in the above tables are in accordance with RBI guidelines on disclosure of
customer complaints.
HDFC Bank Limited Annual Report 2015-16
138
Schedules to the Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
Awards passed by the Banking Ombudsman (BO)
Particulars
March 31, 2016
March 31, 2015
(a) No. of unimplemented awards at the beginning of the year
(b) No. of awards passed by the BO during the year
(c) No. of awards implemented during the year
(d) No. of unimplemented awards at the end of the year
(cid:115)(cid:0)
(cid:52)(cid:79)(cid:80)(cid:0)(cid:65)(cid:82)(cid:69)(cid:65)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:65)(cid:73)(cid:78)(cid:84)(cid:83)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
The average number of customer complaints per branch, including ATM transaction disputes, was 3.3 per month during
the year ended March 31, 2016 (previous year: 3.8 per month). For the year ended March 31, 2016, retail branch banking
segment accounted for 82.60% of the total complaints (an increase from 76.62% for the previous year) followed by credit
cards at 11.86% of the total complaints (a reduction from 14.09% for the previous year), retail assets at 3.68% of the total
complaints (a reduction from 4.52% for the previous year), while other segments accounted for 1.86% of total complaints
(as against 4.77% in the previous year). The top 10 areas of customer complaints for the year ended March 31, 2016,
including ATM transaction disputes, accounted for 1,23,323 complaints and were 74.57% of total complaints as against
1,16,708 complaints which were 70.33% of the total complaints for the year ended March 31, 2015. The top 5 areas of
customer complaints on which the Bank is working towards root cause remediation are - ‘cash not dispensed or less cash
dispensed in the Bank’s ATMs’, ‘instant account not activated - personal details not updated’, ‘statement related - credit
cards’, ‘delay in closure of account’ and ‘marketing related - credit cards’.
(cid:115)
Position of BO complaints as per RBI annual report
As per a report published by the RBI for the year ended June 30, 2015, the number of BO complaints per branch for the
Bank was 1.36 (previous year: 1.44). The number of BO complaints other than credit cards per 1,000 accounts was at
0.10 (previous year: 0.09).The number of BO complaints (credit card related) per 1,000 cards was at 0.06 (previous year:
0.08) for the Bank.
33 Disclosure of Letters of Comfort (LoC) issued by the Bank
The Bank has not issued any Letter of Comfort during the years ended March 31, 2016 and March 31, 2015.
34 Small and micro industries
Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain
disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been no reported cases of
delays in payments to micro and small enterprises or of interest payments due to delays in such payments.
35 Overseas assets, NPAs and revenue
(` crore)
Particulars
Total Assets
Total NPAs
Total Revenue
(cid:19)(cid:22)(cid:0) (cid:47)(cid:70)(cid:70)(cid:13)(cid:34)(cid:65)(cid:76)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:51)(cid:72)(cid:69)(cid:69)(cid:84)(cid:0)(cid:51)(cid:48)(cid:54)(cid:83)
March 31, 2016
March 31, 2015
35,956.88
31,750.05
124.23
1,156.39
157.44
973.17
There are no Off-Balance Sheet SPVs sponsored by the Bank, which need to be consolidated as per accounting norms.
37 Credit default swaps
The Bank has not transacted in credit default swaps during the year ended March 31, 2016 (previous year: Nil).
HDFC Bank Limited Annual Report 2015-16
139
Schedules to the Financial Statements
For the year ended March 31, 2016
38 Corporate social responsibility
Operating expenses include ` 194.81 crore (previous year: ` 118.55 crore) for the year ended March 31, 2016 towards
Corporate Social Responsibility (CSR), in accordance with Companies Act, 2013.
The Bank has spent 1.6% (previous year: 1.2%) of its average net profit for the last three financial years as part of its CSR
for the year ended March 31, 2016. As a responsible bank, it has approached the mandatory requirements of CSR spends
positively by laying a foundation on which it would build and scale future projects and partnerships. The Bank continues to
evaluate strategic avenues for CSR expenditure in order to deliver maximum impact. In the years to come, the Bank will further
strengthen its processes as per requirement.
The details of amount spent during the respective year towards CSR are as under:
(` crore)
Sr.
No.
Particulars
March 31, 2016
March 31, 2015
Amount
spent
Amount
(cid:85)(cid:78)(cid:80)(cid:65)(cid:73)(cid:68)(cid:0)(cid:15)
provision
Total
Amount
spent
Total
Amount
(cid:85)(cid:78)(cid:80)(cid:65)(cid:73)(cid:68)(cid:0)(cid:15)
provision
(i) Construction / acquisition of any asset
Nil
Nil
Nil
Nil
Nil
Nil
(ii) On purpose other than (i) above
186.46
8.35
194.81
111.54
7.01
118.55
39
Investor education and protection fund
There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by
the Bank.
40 Disclosure on remuneration to Non-Executive Directors
The Non-Executive Directors are paid remuneration by way of sitting fees for attending meetings of the Board and its
committees. Sitting fees are paid at the rate of ` 100,000 per Board meeting and at the rate of ` 50,000 per meeting of the
Board Committees. An amount of ` 1.33 crore was paid as sitting fees to the Non-Executive Directors during the year ended
March 31, 2016 (previous year: ` 0.76 crore).
In accordance with RBI guidelines, the Board of Directors has, subject to the approval of the shareholders at the ensuing
Annual General Meeting, approved payment of profit related commission to all Non-Executive Directors at the rate of ` 10 lacs
per annum per Director other than the Chairperson.
41 Comparative figures
Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the current year’s
presentation.
For and on behalf of the Board
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
(cid:51)(cid:65)(cid:78)(cid:74)(cid:65)(cid:89)(cid:0)(cid:36)(cid:79)(cid:78)(cid:71)(cid:82)(cid:69)
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
Mumbai, April 22, 2016
HDFC Bank Limited Annual Report 2015-16
140
Basel III - Pillar 3 Disclosures
As at March 31, 2016
The Reserve Bank of India (RBI) vide its circular under reference DBOD.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on
‘Basel III Capital Regulations’ (‘Basel III circular’) read together with the circular under reference DBR.No.BP.BC.80/21.06.201/2014-
15 dated March 31, 2015 on ‘Prudential Guidelines on Capital Adequacy and Liquidity Standards - Amendments’ requires
banks to make Pillar 3 disclosures including leverage ratio and liquidity coverage ratio under the Basel III Framework.
These disclosures are available on HDFC Bank’s website under the ‘Regulatory Disclosures’ section. The link to this section is
http://www.hdfcbank.com/aboutus/basel_disclosures/default.htm.
The Regulatory Disclosures section contains the following disclosures:
(cid:115)(cid:0)
(cid:49)(cid:85)(cid:65)(cid:76)(cid:73)(cid:84)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:81)(cid:85)(cid:65)(cid:78)(cid:84)(cid:73)(cid:84)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:48)(cid:73)(cid:76)(cid:76)(cid:65)(cid:82)(cid:0)(cid:19)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:26)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
(cid:131)
Scope of application
Capital adequacy
Credit risk
Credit risk: Portfolios subject to the standardised approach
Credit risk mitigation: Disclosures for standardised approach
Securitisation exposures
Market risk in trading book
Operational risk
Asset Liability Management (‘ALM’) risk management
General disclosures for exposures related to counterparty credit risk
Equities: Disclosure for banking book positions
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:35)(cid:79)(cid:77)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:78)(cid:67)(cid:73)(cid:76)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:14)
(cid:45)(cid:65)(cid:73)(cid:78)(cid:0)(cid:70)(cid:69)(cid:65)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:70)(cid:85)(cid:76)(cid:76)(cid:0)(cid:84)(cid:69)(cid:82)(cid:77)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:79)(cid:78)(cid:68)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:82)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0)(cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:73)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:14)
(cid:44)(cid:69)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:0)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:14)
(cid:44)(cid:73)(cid:81)(cid:85)(cid:73)(cid:68)(cid:73)(cid:84)(cid:89)(cid:0)(cid:67)(cid:79)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:0)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:14)
HDFC Bank Limited Annual Report 2015-16
141
Independent Auditor’s Report
To the Members of HDFC Bank Limited
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial
statements of HDFC BANK LIMITED (hereinafter referred to
as “the Bank” or “the Holding Company”) and its subsidiaries
(the Bank and its subsidiaries together referred to as “the
Group”) and its associates, comprising the Consolidated
Balance Sheet as at 31st March, 2016, the Consolidated
Statement of Profit and Loss, the Consolidated Cash Flow
Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory
information (hereinafter referred to as “the consolidated
financial statements”).
Management’s Responsibility for the Consolidated
Financial Statements
The Bank’s Board of Directors is responsible for the
preparation of these consolidated financial statements in
terms of the requirements of the Companies Act, 2013
(hereinafter referred to as “the Act”) that give a true and
fair view of the consolidated financial position, consolidated
financial performance and consolidated cash flows of the
Group including its Associates in accordance with the
accounting principles generally accepted in India, including
the Accounting Standards prescribed under Section 133 of
the Act, the Banking Regulation Act, 1949 and guidelines
issued by the Reserve Bank of India as applicable to the
respective entities. The respective Board of Directors of
the companies included in the Group and its associates
are responsible for maintenance of adequate accounting
records in accordance with the provisions of the Act, for
safeguarding the assets of the Group and for preventing
and detecting frauds and other irregularities, the selection
and application of appropriate accounting policies; making
judgements and estimates that are reasonable and prudent;
and the 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, which have been used for the purpose of preparation of
the consolidated financial statements by the Directors of the
Bank, as aforesaid.
Auditor’s Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
While conducting the audit, 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.
We conducted our audit 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 consolidated
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the consolidated
financial statements. The procedures selected depend on the
auditor’s judgement, including the assessment of the risks of
material misstatement of the consolidated 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 consolidated 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 the accounting policies used
and the reasonableness of the accounting estimates made by
the Bank’s Board of Directors, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence obtained by us and the audit
evidence obtained by the other auditors in terms of their reports
referred to in sub-paragraph (a) of the Other Matters paragraph
below, is sufficient and appropriate to provide a basis for our
audit opinion on the consolidated financial statements.
Opinion
In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid consolidated financial
statements give the information required by the Act in the
manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India, of
the consolidated state of affairs of the Group and its associates
as at 31st March, 2016, and their consolidated profit and their
consolidated cash flows for the year ended on that date.
Other Matters
a) We did not audit the financial statements of 2
subsidiaries whose financial statements reflect total
assets of ` 2,611,598 lacs as at 31st March, 2016,
total revenues of ` 371,041 lacs and net cash outflows
amounting to ` 4,140 lacs for the year ended on that
date, as considered in the consolidated financial
statements. The consolidated financial statements also
include the Group’s share of net profit of ` 267 lacs
for the year ended 31st March, 2016, as considered in
the consolidated financial statements, in respect of two
associates, whose financial statements have not been
audited by us. These financial statements have been
audited by other auditors whose reports have been
furnished to us by the Management and our opinion
on the consolidated financial statements, in so far as
it relates to the amounts and disclosures included in
respect of these subsidiaries and associates, is based
solely on the reports of the other auditors.
HDFC Bank Limited Annual Report 2015-16
142
f) With respect to the adequacy of the internal financial
controls over financial reporting and the operating
effectiveness of such controls, refer to our Report in
“Annexure A”, which is based on the auditors’ reports
of the Bank, subsidiary companies and associate
companies incorporated in India. Our report expresses
an unmodified opinion on the adequacy and operating
effectiveness of the Bank’s / subsidiary company’s
/ associate company’s incorporated in India internal
financial controls over financial reporting.
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 Auditor’s) Rules, 2014, in our
opinion and to the best of our information and according
to the explanations given to us:
i.
ii.
iii.
The consolidated financial statements disclose the
impact of pending litigations on the consolidated
financial position of the Group and its associates.
Provision has been made in the consolidated
financial statements, as required under the
applicable law or accounting standards, for
material foreseeable losses, if any, on long-term
contracts including derivative contracts.
There has been no delay in transferring amounts,
required to be transferred, to the Investor
Education and Protection Fund by the Bank
and its subsidiary companies and associate
companies.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Porus B. Pardiwalla
Partner
(Membership No. 40005)
Mumbai
April 22, 2016
b)
The consolidated financial statements also include
the Group’s share of net profit of ` 104 lacs for the
year ended 31st March, 2016, as considered in the
consolidated financial statements, in respect of an
associate, whose financial statements have not been
audited by us. These financial statements are unaudited
and have been furnished to us by the Management and
our opinion on the consolidated financial statements,
in so far as it relates to the amounts and disclosures
included in respect of this associate, is based solely
on such unaudited financial statements as certified by
the Management of that associate. In our opinion and
according to the information and explanations given to
us by the Management, these financial statements are
not material to the Group.
Our opinion on the consolidated financial statements, and
our report on Other Legal and Regulatory Requirements
below is not modified in respect of the above matters with
respect to our reliance on the work done and the reports of
the other auditors and the financial statements certified by the
Management.
Report on Other Legal and Regulatory Requirements
As required by Section143(3) of the Act, we report, to the
extent applicable, 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 of
the aforesaid consolidated financial statements.
b)
c)
In our opinion, proper books of account as required by
law relating to preparation of the aforesaid consolidated
financial statements have been kept so far as it appears
from our examination of those books and the reports of
the other auditors.
The Consolidated Balance Sheet, the Consolidated
Statement of Profit and Loss, and the Consolidated
Cash Flow Statement dealt with by this Report are
in agreement with the relevant books of account
maintained for the purpose of preparation of the
consolidated financial statements.
d)
In our opinion, the aforesaid consolidated financial
statements comply with the Accounting Standards
prescribed under Section 133 of the Act, as applicable.
e) On the basis of the written representations received
from the directors of the Holding Company as on 31st
March, 2016 taken on record by the Board of Directors
of the Bank and the reports of the statutory auditors
of its subsidiary companies and associate companies
incorporated in India, none of the directors of the Group
companies and its associate companies incorporated in
India is disqualified as on 31st March, 2016 from being
appointed as a director in terms of Section 164 (2) of the
Act.
HDFC Bank Limited Annual Report 2015-16
143
ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S
REPORT
(Referred to in paragraph 1.f under ‘Report on Other
Legal and Regulatory Requirements’ of our report of
even date)
Report on the Internal Financial Controls Over Financial
Reporting under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial
reporting of HDFC BANK LIMITED (hereinafter referred to
as “the Holding Company”), its subsidiary companies, and its
associate companies, which are companies incorporated in
India, as of 31st March, 2016 in conjunction with our audit of
the consolidated financial statements of the Holding Company
for the year then ended.
Management’s Responsibility for Internal Financial
Controls
The respective Board of Directors of the Holding Company,
its subsidiary companies and its associate companies, which
are companies incorporated in India, are responsible for
establishing and maintaining the internal control over financial
reporting criteria established by the respective companies
considering the essential components of internal control
stated in the Guidance Note on Audit of Internal Financial
Controls Over Financial Reporting (“the Guidance Note”)
issued by the Institute of Chartered Accountants of India.
These responsibilities include the design, implementation
and maintenance of adequate internal financial controls that
were operating effectively for ensuring the orderly and efficient
conduct of its business, including adherence to the respective
company’s policies, the safeguarding of its assets, the
prevention and detection of frauds and errors, the accuracy
and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under
the Companies Act, 2013, the Banking Regulation Act, 1949
and the guidelines issued by the Reserve Bank of India.
Auditor’s Responsibility
Our responsibility is to express an opinion on the internal
financial controls over financial reporting of the Holding
Company, its subsidiary companies, its associate companies
which are companies incorporated in India based on our audit.
We conducted our audit in accordance with the Guidance
Note issued by the Institute of Chartered Accountants of
India and the Standards on Auditing, prescribed under
Section 143(10) of the Companies Act, 2013, to the extent
applicable to an audit of internal financial controls. Those
Standards and the Guidance Note require that we comply
with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether adequate internal
financial controls over financial reporting was established
and maintained and if such controls operated effectively in all
material respects.
Our audit involves performing procedures to obtain audit
evidence about the adequacy of the internal financial
controls system over financial reporting and their operating
effectiveness. Our audit of internal financial controls over
financial reporting included obtaining an understanding of
internal financial controls over financial reporting, assessing
the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal
control based on the assessed risk. The procedures selected
depend on the auditor’s judgement, including the assessment
of the risks of material misstatement of the financial
statements, whether due to fraud or error.
We believe that the audit evidence we have obtained and
the other Auditors’ Report on the Internal Financial Controls
over Financial Reporting, furnished to us by management, in
relation to two subsidiaries and two associates which are not
audited by us, which are companies incorporated in India,
and as referred to in the Other Matters paragraph below, is
sufficient and appropriate to provide a basis for our audit
opinion on the internal financial controls system over financial
reporting of the aforesaid entities.
Meaning of Internal Financial Controls Over Financial
Reporting
A company’s internal financial control over financial reporting
is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A
company’s internal financial control over financial reporting
includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures
of the company are being made only in accordance with
authorisations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorised acquisition, use, or disposition
of the company’s assets that could have a material effect on
the financial statements.
Inherent Limitations of Internal Financial Controls Over
Financial Reporting
Because of the inherent limitations of internal financial
controls over financial reporting, including the possibility
of collusion or improper management override of controls,
material misstatements due to error or fraud may occur and
not be detected. Also, projections of any evaluation of the
internal financial controls over financial reporting to future
periods are subject to the risk that the internal financial control
HDFC Bank Limited Annual Report 2015-16
144
over financial reporting may become inadequate because of
changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
Opinion
In our opinion to the best of our information and according
to the explanations given to us, and taking into consideration
the reports of the other auditors referred to in the Other
Matters paragraph below the Holding Company, its subsidiary
companies and its associate companies, which are companies
incorporated in India, have, in all material respects, an
adequate internal financial controls system over financial
reporting and such internal financial controls over financial
reporting were operating effectively as at 31st March,
2016, based on the internal control over financial reporting
criteria established by the respective companies considering
the essential components of internal control stated in
the Guidance Note issued by the Institute of Chartered
Accountants of India.
Other Matters
Our aforesaid report under Section 143(3)(i) of the Act on
the adequacy and operating effectiveness of the internal
financial controls over financial reporting insofar as it relates
to two subsidiary companies and two associate companies,
which are companies incorporated in India, is based on the
corresponding reports of the auditors of such companies
incorporated in India.
The financial statements and internal financial controls over
financial reporting in relation to one associate company, which
is a company incorporated in India, is unaudited. Our opinion
on the internal financial controls over financial reporting of
the aforesaid entities excludes consideration of the internal
financial controls over financial reporting in respect of this
associate. In our opinion and according to the information
and explanations given to us by the Holding Company’s
management, the financial statements of the associate, and
the related internal financial controls over financial reporting
are not material to the consolidated financial statements, and
the related internal financial control over financial reporting of
the aforesaid entities.
Our opinion on the adequacy and operating effectiveness
of internal financial controls over financial reporting is not
modified in respect of the above matters with respect to
our reliance on the work done and the reports of the other
auditors and representation of the Board of Director and
management.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Porus B. Pardiwalla
Partner
(Membership No. 40005)
Mumbai
April 22, 2016
HDFC Bank Limited Annual Report 2015-16
145
Consolidated Balance Sheet
As at March 31, 2016
CAPITAL AND LIABILITIES
Capital
Reserves and surplus
Minority interest
Deposits
Borrowings
Other liabilities and provisions
ASSETS
Cash and balances with Reserve Bank of India
Balances with banks and money at call and short notice
Investments
Advances
Fixed assets
Other assets
Contingent liabilities
Bills for collection
Schedule
31-Mar-16
As at
` in ‘000
As at
31-Mar-15
1
2
2A
3
4
5
5,056,373
5,012,991
737,984,869
626,527,660
1,806,228
1,616,274
5,458,732,889
4,502,836,477
717,634,520
594,782,505
381,403,308
340,189,270
Total
7,302,618,187
6,070,965,177
6
7
8
9
10
11
300,765,846
275,222,870
89,922,969
90,041,344
1,616,833,398
1,494,544,156
4,872,904,174
3,834,079,720
34,796,976
32,249,444
387,394,824
344,827,643
Total
7,302,618,187
6,070,965,177
12
8,535,273,826
9,752,785,962
234,899,997
223,049,263
Significant accounting policies and notes to the Consolidated financial
statements
The schedules referred to above form an integral part of the
Consolidated Balance Sheet
17 & 18
As per our report of even date.
(cid:41)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:72)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 22, 2016
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2015-16
146
Consolidated Statement of Profit and Loss
For the year ended March 31, 2016
I
II
III
INCOME
Interest earned
Other income
EXPENDITURE
Interest expended
Operating expenses
Provisions and contingencies
PROFIT
Net profit for the year
Less : Minority interest
Add : Share in profits of associates
Consolidated profit for the year attributable to the Group
Balance in Profit and Loss account brought forward
IV APPROPRIATIONS
Transfer to Statutory Reserve
Proposed dividend
Tax (including cess) on dividend
Dividend (including tax / cess thereon) pertaining to previous year
paid during the year, net of dividend tax credits
Transfer to General Reserve
Transfer to Capital Reserve
Transfer to/(from) Investment Reserve Account
Balance carried over to Balance Sheet
V
EARNINGS PER EQUITY SHARE (Face value ` 2 per share)
Basic
Diluted
Significant accounting policies and notes to the
Consolidated financial statements
The schedules referred to above form an integral part of the
Consolidated Statement of Profit and Loss
Schedule
13
14
Total
15
16
Total
Total
Total
17 & 18
Year ended
31-Mar-16
631,615,614
112,116,541
743,732,155
340,695,748
178,318,808
96,544,349
615,558,905
128,173,250
197,212
37,278
128,013,316
195,508,642
323,521,958
31,809,345
24,017,772
5,123,529
(117,135)
12,296,213
2,221,532
(85,184)
248,255,886
323,521,958
`
50.85
50.24
` in ‘000
Year ended
31-Mar-15
506,664,925
95,456,835
602,121,760
272,884,553
145,775,249
76,461,474
495,121,276
107,000,484
144,068
32,494
106,888,910
152,074,676
258,963,586
26,238,698
20,051,963
4,245,374
8,411
10,385,919
2,249,166
275,413
195,508,642
258,963,586
`
44.10
43.60
As per our report of even date.
(cid:41)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:72)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 22, 2016
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2015-16
147
Consolidated Cash Flow Statement
For the year ended March 31, 2016
Cash flows from operating activities
Consolidated profit before income tax
194,949,948
160,682,894
` in ‘000
Year ended
Year ended
31-Mar-16
31-Mar-15
Adjustments for:
Depreciation on fixed assets
(Profit) / loss on revaluation of investments
Amortisation of premia on held to maturity investments
(Profit) / loss on sale of fixed assets
Provision / charge for non performing assets
Provision for dimunition in value of investments
Floating provisions
Provision for standard assets
Provision for wealth tax
Contingency provisions
Share in current year's profits of associates
Adjustments for:
(Increase) / decrease in investments (excluding investments in subsidiaries
and joint ventures)
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
Increase / (decrease) in other liabilities and provisions
Direct taxes paid (net of refunds)
Net cash flow (used in) / from operating activities
Cash flows used in investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Investment in subsidiaries and / or joint ventures
Net cash used in investing activities
HDFC Bank Limited Annual Report 2015-16
148
7,380,326
6,804,512
173,689
(556,306)
1,002,801
805,534
1,185
(111,264)
25,179,864
20,377,433
146,543
1,150,000
(38,184)
321,959
4,648,890
3,103,466
-
218,602
(37,278)
7,676
590,405
(32,494)
234,814,570
191,955,631
(123,574,997)
(450,203,993)
(1,066,012,996)
(703,560,180)
955,896,412
832,033,154
(38,485,747)
66,328,224
31,324,658
(92,889,220)
(6,038,100)
(156,336,384)
(70,730,944)
(56,473,398)
(76,769,044)
(212,809,782)
(8,771,635)
(7,723,564)
116,125
331,066
-
(715,656)
(8,655,510)
(8,108,154)
Consolidated Cash Flow Statement
For the year ended March 31, 2016
Cash flows from financing activities
Increase in minority interest
` in ‘000
Year ended
Year ended
31-Mar-16
31-Mar-15
189,954
491,482
Money received on exercise of stock options by employees
12,229,008
9,954,171
Increase / (decrease) in borrowings (excluding subordinate debt,
perpetual debt and upper tier II instruments)
Proceeds from issue of shares under Qualified Institutions Placement and
American Depository Receipt offering (net of issue expenses)
Proceeds from issue of upper and lower tier II capital instruments
Redemption of subordinated debt
Dividend paid during the year
Tax on dividend
Net cash generated from financing activities
134,496,515
97,696,829
-
-
97,227,855
5,000,000
(12,020,000)
(4,140,000)
(20,091,666)
(16,492,770)
(4,237,089)
(2,798,859)
110,566,722
186,938,708
Effect of exchange fluctuation on translation reserve
282,433
109,160
Net increase / (decrease) in cash and cash equivalents
25,424,601
(33,870,068)
Cash and cash equivalents as at April 1st (Schedules 6 and 7)
365,264,214
399,134,282
Cash and cash equivalents as at March 31st (Schedules 6 and 7)
390,688,815
365,264,214
As per our report of even date.
(cid:41)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:72)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 22, 2016
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2015-16
149
Schedules to the Consolidated Financial Statements
As at March 31, 2016
SCHEDULE 1 - CAPITAL
Authorised capital
2,75,00,00,000 (31 March, 2015 : 2,75,00,00,000) Equity Shares of ` 2/- each
Issued, subscribed and paid-up capital
2,52,81,86,517 (31 March, 2015 : 2,50,64,95,317) Equity Shares of ` 2/- each
SCHEDULE 2 - RESERVES AND SURPLUS
I
Statutory reserve
Opening balance
Additions during the year
II
General reserve
Opening balance
Additions during the year
III
Balance in profit and loss account
IV
Share premium account
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18 (4)]
V
Amalgamation reserve
Opening balance
Additions during the year
VI
Capital reserve
Opening balance
Additions during the year
VII
Investment reserve account
Opening balance
Additions during the year
Deductions during the year [Refer Schedule 18 (4)]
VIII
Foreign currency translation account
Opening balance
Additions during the year
HDFC Bank Limited Annual Report 2015-16
150
As at
` in ‘000
As at
31-Mar-16
31-Mar-15
5,500,000
5,500,000
Total
5,056,373
5,056,373
5,012,991
5,012,991
118,122,222
31,809,345
149,931,567
91,883,524
26,238,698
118,122,222
45,073,296
12,296,213
57,369,509
34,687,377
10,385,919
45,073,296
248,255,886
195,508,642
250,019,020
12,185,626
-
262,204,646
143,051,883
108,477,413
(1,510,276)
250,019,020
10,635,564
-
10,635,564
10,635,564
-
10,635,564
6,645,051
2,221,532
8,866,583
484,268
76
(85,260)
399,084
4,395,885
2,249,166
6,645,051
208,855
310,612
(35,199)
484,268
39,597
282,433
322,030
737,984,869
(69,563)
109,160
39,597
626,527,660
Total
Total
Total
Total
Total
Total
Total
Total
Schedules to the Consolidated Financial Statements
As at March 31, 2016
SCHEDULE 2A - MINORITY INTEREST
Minority interest at the date on which parent subsidiary relationship came into
existence
Subsequent increase
Includes reserves of Employee Welfare Trust of ` 63.85 crore (previous year: ` 61.68 crore)
SCHEDULE 3 - DEPOSITS
A
I
Demand deposits
(i)
(ii)
From banks
From others
II
III
I
II
B
Savings bank deposits
Term deposits
(i)
(ii)
From banks
From others
Deposits of branches in India
Deposits of branches outside India
SCHEDULE 4 - BORROWINGS
I
Borrowings in India
(i)
Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
` in ‘000
As at
As at
31-Mar-16
31-Mar-15
276,029
276,029
Total
1,530,199
1,806,228
1,340,245
1,616,274
22,017,200
16,319,866
860,725,166
717,067,581
Total
882,742,366
733,387,447
1,478,861,198
1,249,266,040
25,095,540
18,405,279
3,072,033,785
2,501,777,711
3,097,129,325
2,520,182,990
5,458,732,889
4,502,836,477
Total
Total
5,391,562,781
4,443,925,893
67,170,108
58,910,584
Total
5,458,732,889
4,502,836,477
-
-
98,174,819
86,817,617
151,517,811
87,380,892
(iv) Upper and lower Tier II capital and innovative perpetual debts
157,579,000
169,599,000
II
Borrowings outside India*
Total
407,271,630
343,797,509
310,362,890
250,984,996
Total
717,634,520
594,782,505
*Includes Upper Tier II debt of ` 662.55 crore (previous year: ` 625.00 crore)
Secured borrowings included in I & II above: ` 15,781.77 crore (previous year: ` 12,591.32 crore)
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I
II
III
IV
V
Bills payable
Interest accrued
Others (including provisions)
Contingent provisions against standard assets
Proposed dividend (including tax on dividend)
73,784,974
60,853,248
40,976,952
33,697,037
216,913,280
205,283,077
20,735,354
16,058,571
28,992,748
24,297,337
Total
381,403,308
340,189,270
HDFC Bank Limited Annual Report 2015-16
151
Schedules to the Consolidated Financial Statements
As at March 31, 2016
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I
II
Cash in hand (including foreign currency notes)
Balances with Reserve Bank of India:
(a)
(b)
In current accounts
In other accounts
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I
In India
(i)
Balances with banks:
(a)
(b)
In current accounts
In other deposit accounts
(ii) Money at call and short notice:
(a) With banks
(b) With other institutions
II
Outside India
(i)
(ii)
(iii) Money at call and short notice
In current accounts
In deposit accounts
SCHEDULE 8 - INVESTMENTS
A
Investments in India in
(i) Government securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and bonds
(v)
(vi) Others (Units, CDs/CPs, PTCs and security receipts)
Investment in associates*
*Includes goodwill of ` 0.70 crore (previous year: ` 0.70 crore) and capital reserve of ` 0.43
crore on account of investment in associates (previous year: ` 0.43 crore)
B
Investments outside India in
Other investments
(a) Shares
(b) Debentures and bonds
HDFC Bank Limited Annual Report 2015-16
152
As at
` in ‘000
As at
31-Mar-16
31-Mar-15
55,877,336
53,333,262
242,888,510
2,000,000
244,888,510
300,765,846
219,889,608
2,000,000
221,889,608
275,222,870
Total
Total
2,596,227
7,926,585
10,522,812
2,466,929
22,807,540
25,274,469
-
1,359,867
1,359,867
11,882,679
23,909,955
3,776,535
50,353,800
78,040,290
89,922,969
2,500,000
2,238,499
4,738,499
30,012,968
16,465,876
625,000
42,937,500
60,028,376
90,041,344
1,257,105,578
-
885,214
48,882,174
614,020
295,619,657
1,603,106,643
1,203,902,956
-
1,437,392
11,263,150
576,872
266,305,154
1,483,485,524
Total
Total
Total
Total
Total
Total
28,375
13,698,380
13,726,755
1,616,833,398
9,396
11,049,236
11,058,632
1,494,544,156
Total
Total
Schedules to the Consolidated Financial Statements
As at March 31, 2016
C
Investments
(i) Gross value of investments
(a)
In India
(b) Outside India
(ii) Provision for depreciation
(a)
In India
(b) Outside India
(iii) Net value of investments
(a)
In India
(b) Outside India
SCHEDULE 9 - ADVANCES
A
(i)
Bills purchased and discounted
(ii) Cash credits, overdrafts and loans repayable on demand
(iii)
Term loans
B
(i)
Secured by tangible assets*
(ii) Covered by bank / government guarantees
(iii) Unsecured
* Including advances against book debts
C
I
Advances in India
(i)
Priority sector
(ii) Public sector
(iii) Banks
(iv) Others
C
II
Advances outside India
(i)
Due from banks
(ii) Due from others
(a) Bills purchased and discounted
(b)
Syndicated loans
(c) Others
Advances are net of provisions
HDFC Bank Limited Annual Report 2015-16
153
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
1,604,312,021
1,484,640,559
13,726,755
11,058,632
Total
1,618,038,776
1,495,699,191
1,205,378
1,155,035
-
-
Total
1,205,378
1,155,035
1,603,106,643
1,483,485,524
13,726,755
11,058,632
Total
1,616,833,398
1,494,544,156
185,136,903
177,134,003
1,242,774,115
993,671,410
3,444,993,156
2,663,274,307
Total
4,872,904,174
3,834,079,720
3,648,290,355
2,894,274,719
114,128,823
63,453,979
1,110,484,996
876,351,022
Total
4,872,904,174
3,834,079,720
1,427,201,985
1,066,872,841
134,556,082
118,066,442
4,659,631
51,278
2,985,578,949
2,360,676,224
Total
4,551,996,647
3,545,666,785
6,879,777
16,094,350
1,245,263
1,849,427
38,624,247
14,652,002
274,158,240
255,817,156
320,907,527
288,412,935
4,872,904,174
3,834,079,720
Total
Total
Schedules to the Consolidated Financial Statements
As at March 31, 2016
SCHEDULE 10 - FIXED ASSETS
A
Premises (including land)
Gross block
At cost on 31 March of the preceding year
Additions during the year
Deductions during the year
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Net block
B
Other fixed assets (including furniture and fixtures)
Gross block
At cost on 31 March of the preceding year
Additions during the year
Deductions during the year
Depreciation
As at 31 March of the preceding year
Charge for the year
On deductions during the year
Net block
C
Assets on lease (plant and machinery)
Gross block
At cost on 31 March of the preceding year
Additions during the year
HDFC Bank Limited Annual Report 2015-16
154
As at
31-Mar-16
` in ‘000
As at
31-Mar-15
15,030,782
14,443,499
839,927
793,539
(85,166)
(206,256)
Total
15,785,543
15,030,782
3,775,762
3,343,891
555,657
524,195
(68,719)
(92,324)
Total
4,262,700
3,775,762
11,522,843
11,255,020
67,150,536
59,825,186
9,208,628
8,219,396
(1,458,923)
(894,046)
Total
74,900,241
67,150,536
46,156,112
40,662,007
6,828,000
6,282,551
(1,358,004)
(788,446)
Total
51,626,108
46,156,112
23,274,133
20,994,424
4,546,923
4,546,923
-
-
Total
4,546,923
4,546,923
Schedules to the Consolidated Financial Statements
As at March 31, 2016
Depreciation
As at 31 March of the preceding year
Charge for the year
Lease adjustment account
As at 31 March of the preceding year
Charge for the year
Unamortised cost of assets on lease
SCHEDULE 11 - OTHER ASSETS
I
II
III
IV
V
VI
Interest accrued
Advance tax / tax deducted at source (net of provisions)
Stationery and stamps
Non banking assets acquired in satisfaction of claims
Bond and share application money pending allotment
Security deposit for commercial and residential property
VII Others *
*Includes deferred tax asset (net) of ` 2,227.23 crore (previous year: ` 2,031.98 crore),
goodwill of ` 187.16 crore (previous year: ` 187.16 crore) and deposits placed with NABARD /
SIDBI / NHB on account of shortfall in lending to priority sector of ` 13,719.68 crore (previous
year: ` 14,818.19 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
As at
` in ‘000
As at
31-Mar-16
31-Mar-15
4,104,467
4,104,467
-
-
Total
4,104,467
4,104,467
442,456
442,456
-
-
Total
442,456
442,456
-
-
Total
34,796,976
32,249,444
75,547,122
56,365,672
17,625,441
15,138,242
220,786
168,394
-
-
-
-
4,791,869
4,339,629
289,209,606
268,815,706
Total
387,394,824
344,827,643
Claims against the bank not acknowledged as debts - taxation
Claims against the bank not acknowledged as debts - others
11,879,900
8,982,200
777,310
719,342
Liability on account of outstanding forward exchange contracts
5,290,757,746
6,740,520,896
Liability on account of outstanding derivative contracts
2,570,471,528
2,433,779,738
I
II
III
IV
V
Guarantees given on behalf of constituents
- in India
- outside India
VI
Acceptances, endorsements and other obligations
VII Other items for which the Bank is contingently liable
HDFC Bank Limited Annual Report 2015-16
155
301,310,742
240,818,699
31,094,714
32,080,401
317,525,754
279,900,503
11,456,132
15,984,183
Total
8,535,273,826
9,752,785,962
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
SCHEDULE 13 - INTEREST EARNED
I
II
III
IV
Interest / discount on advances / bills
Income from investments
Interest on balance with RBI and other inter-bank funds
Others
SCHEDULE 14 - OTHER INCOME
I
II
III
IV
V
VI
Commission, exchange and brokerage
Profit / (loss) on sale of investments (net)
Profit / (loss) on revaluation of investments (net)
Profit / (loss) on sale of building and other assets (net)
Profit / (loss) on exchange / derivative transactions (net)
Miscellaneous income
SCHEDULE 15 - INTEREST EXPENDED
I
II
III
Interest on deposits
Interest on RBI / inter-bank borrowings
Other interest
SCHEDULE 16 - OPERATING EXPENSES
I
Payments to and provisions for employees
II Rent, taxes and lighting
III
Printing and stationery
IV
V
VI
VII
VIII
IX
X
XI
XII
Advertisement and publicity
Depreciation on bank's property
Directors' fees / remuneration, allowances and expenses
Auditors' fees and expenses
Law charges
Postage, telegram, telephone etc.
Repairs and maintenance
Insurance
Other expenditure*
` in ‘000
Year ended
Year ended
31-Mar-16
31-Mar-15
477,361,879
393,346,623
141,254,962
98,627,289
3,751,556
5,429,360
9,247,217
9,261,653
Total
631,615,614
506,664,925
83,067,577
71,243,564
7,525,247
5,320,048
(173,689)
(1,185)
556,306
111,264
12,277,267
10,279,548
9,421,324
7,946,105
Total
112,116,541
95,456,835
291,509,468
235,047,802
33,664,532
24,785,390
15,521,748
13,051,361
Total
340,695,748
272,884,553
63,061,367
51,626,755
12,740,606
10,878,565
4,251,803
3,871,910
2,584,338
1,903,378
7,380,326
6,804,512
28,861
19,331
10,871
14,508
998,702
717,718
4,217,982
4,162,472
10,417,860
8,602,081
5,618,738
4,476,139
66,998,894
52,706,340
Total
178,318,808
145,775,249
*Includes professional fees, commission to sales agents, travel and hotel charges, card and merchant
acquiring expenses and system management fees.
HDFC Bank Limited Annual Report 2015-16
156
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
SCHEDULE 17 - Significant accounting policies appended to and forming part of the consolidated financial statements for
the year ended March 31, 2016
A
BACKGROUND
HDFC Bank Limited (‘HDFC Bank’ or ‘the Bank’), incorporated in Mumbai, India is a publicly held banking company engaged
in providing a range of banking and financial services including retail banking, wholesale banking and treasury operations.
The Bank is governed by the Banking Regulation Act, 1949 and the Companies Act, 2013. The Bank has overseas branch
operations in Bahrain, Hong Kong and Dubai. The financial accounting systems of the Bank are centralised and, therefore,
accounting returns are not required to be submitted by branches of the Bank.
B
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries constituting the
‘Group’ and ‘Group’s’ share of profits of associates.
The Bank consolidates its subsidiaries in accordance with Accounting Standard (‘AS’) 21, Consolidated Financial Statements,
specified under section 133 of the Companies Act, 2013, on a line-by-line basis by adding together the like items of assets,
liabilities, income and expenditure. Capital reserve / Goodwill on consolidation represent the difference between the Bank’s
share in the net worth of the subsidiary and the cost of acquisition at the time of making the investment in the subsidiary.
Further, the Bank accounts for investments in associates under equity method of accounting in accordance with AS-23,
Accounting for Investments in Associates in Consolidated Financial Statements, specified under section 133 of the Companies
Act, 2013.
C
BASIS OF PREPARATION
The consolidated financial statements have been prepared and presented under the historical cost convention and accrual
basis of accounting, unless otherwise stated and are in accordance with Generally Accepted Accounting Principles in India
(‘GAAP’), statutory requirements prescribed under the Banking Regulation Act, 1949, circulars and guidelines issued by the
Reserve Bank of India (‘RBI’) from time to time, Accounting Standards (‘AS’) specified under section 133 of the Companies
Act, 2013, in so far as they apply to banks and current practices prevailing within the banking industry in India.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires the management to make estimates
and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date
of the financial statements and the reported income and expenses for the reporting period. Management believes that the
estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these
estimates. Any revision in the accounting estimates is recognised prospectively in the current and future periods.
HDB Financial Services Limited is a non-banking financial company and a subsidiary of the Bank. HDFC Securities Limited is
a financial services provider along with broking as core product and a subsidiary of the Bank.
The consolidated financial statements present the accounts of HDFC Bank Limited with its following subsidiaries and associates:
Name
HDFC Securities Limited
HDB Financial Services Limited
Atlas Documentary Facilitators Company Private Limited
International Asset Reconstruction Company Private Limited
HBL Global Private Limited
HDB Employee Welfare Trust
Relation
Subsidiary
Subsidiary
Associate
Associate
Associate
*
Country of
incorporation
Ownership
interest**
India
India
India
India
India
India
97.9%
97.1%
29.0%
29.4%
Nil
*
The accounts of HDB Employee Welfare Trust, a trust established for providing general welfare measures such as
medical relief and educational assistance to the employees of the Bank and their dependents has been entirely
consolidated.
** Denotes HDFC Bank’s direct interest.
HDFC Bank Limited Annual Report 2015-16
157
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
During the year ended March 31, 2016 the shareholding in HDB Financial Services Limited decreased from 97.2% to 97.1%
on account of 7,02,550 stock options exercised by minority stakeholders.
The audited financial statements of the subsidiary companies, entity controlled by the Bank, associates and the un-audited
financial statements of an associate have been drawn up to the same reporting date as that of the Bank, i.e. March 31, 2016.
D
1
PRINCIPAL ACCOUNTING POLICIES
Investments
HDFC Bank Limited
Classification:
In accordance with the RBI guidelines on investment classification and valuation, investments are classified on the date of
purchase into “Held for Trading” (‘HFT’), “Available for Sale” (‘AFS’) and “Held to Maturity” (‘HTM’) categories (hereinafter called
“categories”). Subsequent shifting amongst the categories is done in accordance with the RBI guidelines. Under each of these
categories, investments are further classified under six groups (hereinafter called “groups”) - Government Securities, Other
Approved Securities, Shares, Debentures and Bonds, Investments in Subsidiaries / Joint Ventures and Other Investments.
Purchase and sale transactions in securities are recorded under ‘Settlement Date’ of accounting, except in the case of equity
shares where ‘Trade Date’ accounting is followed.
Basis of classification:
Investments that are held principally for resale within 90 days from the date of purchase are classified under HFT category.
Investments which the Bank intends to hold till maturity are classified as HTM securities. Investments in the equity of
subsidiaries / joint ventures are categorised as HTM in accordance with the RBI guidelines. Investments which are not
classified in either of the above categories are classified under AFS category.
Acquisition cost:
Brokerage, commission, etc. and broken period interest on debt instruments are recognised in the Statement of Profit and
Loss and are not included in the cost of acquisition.
Disposal of investments:
Profit / Loss on sale of investments under the aforesaid three categories is recognised in the Statement of Profit and Loss.
Cost of investments is based on the weighted average cost method. The profit from sale of investment under HTM category,
net of taxes and transfer to statutory reserve is appropriated from Statement of Profit and Loss to “Capital Reserve” in
accordance with the RBI Guidelines.
Short sale:
The Bank undertakes short sale transactions in Central Government dated securities in accordance with RBI guidelines.
The short position is reflected as the amount received on sale and is classified under ‘Other Liabilities’. The short position is
marked to market and loss, if any, is charged to the Statement of Profit and Loss while gain, if any, is ignored. Profit / Loss
on settlement of the short position is recognised in the Statement of Profit and Loss.
Valuation:
Investments classified under AFS and HFT categories are marked to market as per the RBI guidelines.
Traded investments are valued based on the trades / quotes on the recognised stock exchanges, price list of RBI or prices
declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives Association
(‘FIMMDA’), periodically.
The market value of unquoted government securities which qualify for determining the Statutory Liquidity Ratio (‘SLR’)
included in the AFS and HFT categories is computed as per the Yield-to-Maturity (‘YTM’) rates published by FIMMDA.
The valuation of other unquoted fixed income securities (viz. State Government securities, other approved securities, bonds
and debentures) and preference shares, is done with a mark-up (reflecting associated credit and liquidity risk) over the YTM
rates for government securities published by FIMMDA.
Special bonds such as oil bonds, fertilizer bonds etc. which are directly issued by Government of India (‘GOI’) that do not
HDFC Bank Limited Annual Report 2015-16
158
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
qualify for SLR are also valued by applying the mark-up above the corresponding yield on GOI securities.
Unquoted equity shares are valued at the break-up value, if the latest balance sheet is available or at ` 1 as per the RBI
guidelines.
Units of mutual funds are valued at the latest repurchase price / net asset value declared by the mutual fund.
Treasury bills, commercial papers and certificate of deposits being discounted instruments, are valued at carrying cost and
stated at acquisition cost.
Security receipts are valued as per the net asset value provided by the issuing Asset Reconstruction Company from time to
time.
Net depreciation in the value, if any, compared to the acquisition cost, in any of the six groups, is charged to the Statement
of Profit and Loss. The net appreciation, if any, in any of the six groups is not recognised except to the extent of depreciation
already provided. The valuation of investments includes securities under repo transactions. The book value of individual
securities is not changed after the valuation of investments.
Investments classified under HTM category are carried at their acquisition cost and not marked to market. Any premium
on acquisition is amortised over the remaining maturity period of the security on a constant yield to maturity basis. Such
amortisation of premium is adjusted against interest income under the head “Income from investments” as per the RBI
guidelines. Any diminution, other than temporary, in the value of investments in subsidiaries / joint ventures is provided for.
Non-performing investments are identified and depreciation / provision are made thereon based on the RBI guidelines. The
depreciation / provision on such non-performing investments are not set off against the appreciation in respect of other
performing securities. Interest on non-performing investments is not recognised in the Statement of Profit and Loss until
received.
Repo and reverse repo transactions:
In accordance with the RBI guidelines repo and reverse repo transactions in government securities and corporate debt
securities (excluding transactions conducted under Liquidity Adjustment Facility (‘LAF’) and Marginal Standby Facility (‘MSF’)
with RBI) are reflected as borrowing and lending transactions respectively. Borrowing cost on repo transactions is accounted
for as interest expense and revenue on reverse repo transactions are accounted for as interest income.
In respect of repo transactions under LAF and MSF with RBI, amount borrowed from RBI is credited to investment account
and reversed on maturity of the transaction. Costs thereon are accounted for as interest expense. In respect of reverse repo
transactions under LAF, amount lent to RBI is debited to investment account and reversed on maturity of the transaction.
Revenues thereon are accounted for as interest income.
HDFC Securities Limited
Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such
investments are made, are classified as current investments. All other investments are classified as long term investments.
Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However,
provision for diminution is made to recognise a decline, other than temporary, in the value of the investments, such reduction
being determined and made for each investment individually.
HDB Financial Services Limited
Investments expected to mature after twelve months are taken as long term / non-current investment and stated at cost. Provision
is recognised only in case of diminution, which is other than temporary in nature. Investments maturing within three months
from the date of acquisition are classified as cash equivalents if they are readily convertible into cash. All other investment are
recognised as short term / current investments and are valued at lower of cost and net realisable value.
Interest on borrowings is recognised in Statement of Profit and Loss on an accrual basis. Costs associated with borrowings
are grouped under financial charges along with the interest costs.
HDB Employees Welfare Trust
Long-term investments are stated at cost of acquisition. Provision for diminution is made if such diminution is considered as
being other than temporary in nature.
HDFC Bank Limited Annual Report 2015-16
159
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
2
Advances
HDFC Bank Limited
Classification:
Advances are classified as performing and non-performing based on the RBI guidelines and are stated net of bills
rediscounted, specific provisions, interest in suspense for non-performing advances, claims received from Export Credit
Guarantee Corporation, provisions for funded interest term loan classified as non-performing advances and provisions in
lieu of diminution in the fair value of restructured assets. Interest on non-performing advances is transferred to an interest
suspense account and not recognised in the Statement of Profit and Loss until received.
Provisioning:
Specific loan loss provisions in respect of non-performing advances are made based on management’s assessment of the
degree of impairment of wholesale and retail advances, subject to the minimum provisioning level prescribed by the RBI.
The specific provision levels for retail non-performing assets are also based on the nature of product and delinquency levels.
Specific loan loss provisions in respect of non-performing advances are charged to the Statement of Profit and Loss and
included under Provisions and Contingencies.
In accordance with RBI guidelines, accelerated provision is made on non-performing advances which were not earlier
reported by the Bank as Special Mention Account under “SMA-2” category to Central Repository of Information on Large
Credits (CRILC). Accelerated provision is also made on non-performing advances which are erstwhile SMA-2 accounts with
Aggregate Exposure (AE) ` 1,000 million or above and Joint Lenders’ Forum (JLF) is not formed or they fail to agree upon
a common Corrective Action Plan (CAP) within the stipulated time frame.
Accounts are written-off in accordance with the Bank’s policies. Recoveries from bad debts written-off are recognised in the
Statement of Profit and Loss and included under other income.
In relation to non-performing derivative contracts, as per the extant RBI guidelines, the Bank makes provision for the entire
amount of overdue and future receivables relating to positive marked to market value of the said derivative contracts.
The Bank maintains general provision for standard assets including credit exposures computed as per the current marked
to market values of interest rate and foreign exchange derivative contracts and gold in accordance with the guidelines and
at levels stipulated by RBI from time to time. In the case of overseas branches, general provision on standard advances
is maintained at the higher of the levels stipulated by the respective overseas regulator or RBI. In accordance with RBI
guidelines, provision is made against standard assets representing all exposures to the wholly owned step down subsidiaries
of the overseas subsidiaries of Indian companies, sanctioned / renewed after December 31, 2015. Provision for standard
assets is included under other liabilities.
Provisions made in excess of the Bank’s policy for specific loan loss provisions for non-performing assets and regulatory
general provisions are categorised as floating provisions. Creation of floating provisions is considered by the Bank up to a
level approved by the Board of Directors. In accordance with the RBI guidelines, floating provisions are used up to a level
approved by the Board only for contingencies under extraordinary circumstances and for making specific provisions for
impaired accounts as per these guidelines or any regulatory guidance / instructions. Floating provisions have been included
under other liabilities.
Further to the provisions required to be held according to the asset classification status, provisions are held for individual
country exposures (other than for home country exposure). Countries are categorised into risk categories as per Export Credit
Guarantee Corporation of India Ltd. (‘ECGC’) guidelines and provisioning is done in respect of that country where the net
funded exposure is one percent or more of the Bank’s total assets.
In addition to the above, the Bank on a prudential basis makes provisions on advances or exposures which are not NPAs,
but has reasons to believe on the basis of the extant environment or specific information or basis regulatory guidance
/ instructions, the possible slippage of a specific advance or a group of advances or exposures or potential exposures.
These are classified as contingent provisions and included under other liabilities.
The Bank considers a restructured account as one where the Bank, for economic or legal reasons relating to the borrower’s
financial difficulty, grants to the borrower concessions that the Bank would not otherwise consider. Restructuring would
HDFC Bank Limited Annual Report 2015-16
160
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
normally involve modification of terms of the advance / securities, which would generally include, among others, alteration of
repayment period / repayable amount / the amount of installments / rate of interest (due to reasons other than competitive
reasons). Restructured accounts are classified as such by the Bank only upon approval and implementation of the
restructuring package. Necessary provision for diminution in the fair value of a restructured account is made and classification
thereof is as per the extant RBI guidelines. Restructuring of an account is done at a borrower level.
HDB Financial Services Limited
Classification:
Advances are classified as standard, substandard and doubtful assets as per the Company policy approved by the Board.
The rates applied for making provisions on non-performing advances are higher than those required by the relevant RBI
guidelines. Interest on non-performing advances is transferred to an interest suspense account and not recognised in the
Statement of Profit and Loss until received. Loan assets are recognised on disbursement of loan and in case of new asset
financing on the transfer of ownership.
Provisioning:
The Company assesses all receivables for their recoverability and accordingly recognises provision for non-performing and
doubtful assets as per approved Company policies and guidelines. The Company ensures provisions made are not lower
than as stipulated by RBI guidelines.
The Company provides 0.30% on standard assets as stipulated by Circular No. DNBR (PD) CC.No.002/03.10.001/2014-15
dated November 10, 2014 issued by RBI under the head “Contingent Provision against Standard Assets”.
Loan origination costs:
Brokerage, commission, incentive to employee, etc. paid at the time of acquisition of loans are charged to revenue.
3
Securitisation and transfer of assets
HDFC Bank Limited
The Bank securitises out its receivables subject to the Minimum Holding Period (‘MHP’) criteria and the Minimum Retention
Requirements (‘MRR’) of RBI, to Special Purpose Vehicles (‘SPVs’) in securitisation transactions. Such securitised-
out receivables are de-recognised in the balance sheet when they are sold (true sale criteria being fully met with) and
consideration is received by the Bank. Sales / Transfers that do not meet these criteria for surrender of control are accounted
for as secured borrowings. In respect of receivable pools securitised-out, the Bank provides liquidity and credit enhancements,
as specified by the rating agencies, in the form of cash collaterals / guarantees and / or by subordination of cash flows, not
exceeding 20% of the total securitised instruments, in line with RBI guidelines. The Bank also acts as a servicing agent for
receivable pools securitised-out.
The Bank also enters into transactions for transfer of standard assets through the direct assignment of cash flows, which
are similar to asset-backed securitisation transactions through the SPV route, except that such portfolios of receivables
are assigned directly to the purchaser and are not represented by Pass Through Certificates (‘PTCs’), subject to the RBI
prescribed MHP criteria and the MRR. The RBI issued addendum guidelines on securitisation of standard assets vide its
circular dated May 7, 2012. Accordingly, the Bank does not provide liquidity or credit enhancements on the direct assignment
transactions undertaken subsequent to these guidelines.
Pursuant to these guidelines, the Bank amortises any profit received in cash for every individual securitisation or direct
assignment transaction. This amortisation is calculated as the maximum of either of the three parameters stated below:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:84)(cid:72)(cid:69)(cid:0)(cid:76)(cid:79)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:85)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:79)(cid:82)(cid:84)(cid:70)(cid:79)(cid:76)(cid:73)(cid:79)(cid:12)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:68)(cid:0)(cid:84)(cid:79)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:76)(cid:79)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:67)(cid:65)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:65)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:12)(cid:0)(cid:83)(cid:80)(cid:69)(cid:67)(cid:73)(cid:108)(cid:67)(cid:0)
provisions, if any, and direct write-offs made on the MRR and any other exposures to the securitisation transaction
(other than credit enhancing interest only strip); or
(cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:85)(cid:78)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0) (cid:67)(cid:65)(cid:83)(cid:72)(cid:0) (cid:80)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0) (cid:65)(cid:84)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:66)(cid:69)(cid:71)(cid:73)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:89)(cid:69)(cid:65)(cid:82)(cid:0) (cid:77)(cid:85)(cid:76)(cid:84)(cid:73)(cid:80)(cid:76)(cid:73)(cid:69)(cid:68)(cid:0) (cid:66)(cid:89)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:80)(cid:82)(cid:73)(cid:78)(cid:67)(cid:73)(cid:80)(cid:65)(cid:76)(cid:0) (cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)
during the year as a proportion to the amount of unamortised principal at the beginning of the year; or
(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:85)(cid:78)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:67)(cid:65)(cid:83)(cid:72)(cid:0)(cid:80)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:69)(cid:71)(cid:73)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:82)(cid:69)(cid:83)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:0)(cid:77)(cid:65)(cid:84)(cid:85)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:82)(cid:0)
the direct assignment transaction.
HDFC Bank Limited Annual Report 2015-16
161
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
In relation to securitisation transactions undertaken prior to the aforementioned RBI guidelines, including those undertaken
through the direct assignment route, the Bank continues to amortise the profit / premium that arose on account of sale of
receivables over the life of the securities sold, in accordance with the RBI guidelines on securitisation of standard assets
issued vide its circular dated February 1, 2006.
Any loss arising on account of sale of receivables is recognised in the Statement of Profit and Loss for the period in which
the sale occurs in accordance with the said RBI guidelines.
The Bank transfers advances through inter-bank participation with and without risk. In accordance with the RBI guidelines, in
the case of participation with risk, the aggregate amount of the participation issued by the Bank is reduced from advances
and where the Bank is participating, the aggregate amount of the participation is classified under advances. In the case of
participation without risk, the aggregate amount of participation issued by the Bank is classified under borrowings and where
the Bank is participating, the aggregate amount of participation is shown as due from banks under advances.
In accordance with RBI guidelines on sale of non-performing advances, if the sale is at a price below the net book value (i.e.,
book value less provisions held), the shortfall is charged to the Statement of Profit and Loss. If the sale is for a value higher
than the net book value, the excess provision is not reversed but is utilised to meet the shortfall / loss on account of sale of
other non-performing advances. The RBI issued new guidelines on sale of non-performing advances on February 26, 2014. In
accordance with these guidelines, if the sale of non-performing advances is at a price below the net book value, the shortfall
is charged to the Statement of Profit and Loss spread over a period of two years. If the sale is for a value higher than the
net book value, the excess provision is credited to the Statement of Profit and Loss in the year the amounts are received.
The Bank invests in PTCs issued by other SPVs. These are accounted for at the deal value and are classified as investments.
The Bank also buys loans through the direct assignment route which are classified as advances. These are carried at
acquisition cost unless it is more than the face value, in which case the premium is amortised based on Effective Interest
Rate (EIR) method.
HDB Financial Services Limited
(cid:115)(cid:0)
(cid:48)(cid:82)(cid:73)(cid:79)(cid:82)(cid:0)(cid:84)(cid:79)(cid:0)(cid:41)(cid:83)(cid:83)(cid:85)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:50)(cid:34)(cid:41)(cid:0)(cid:35)(cid:73)(cid:82)(cid:67)(cid:85)(cid:76)(cid:65)(cid:82)(cid:0)(cid:68)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:33)(cid:85)(cid:71)(cid:85)(cid:83)(cid:84)(cid:0)(cid:18)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:18)
a) On receivables being assigned / securtised, the assets are de-recognised as all the rights, title, future receivables
& interest thereof are assigned to the purchaser.
b) Gains arising on assignment of receivables will be recognised at the end of the tenure of assignment contract as
per the RBI guidelines, while loss, if any is recognised upfront.
(cid:115)(cid:0)
(cid:48)(cid:79)(cid:83)(cid:84)(cid:0)(cid:41)(cid:83)(cid:83)(cid:85)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:50)(cid:34)(cid:41)(cid:0)(cid:35)(cid:73)(cid:82)(cid:67)(cid:85)(cid:76)(cid:65)(cid:82)(cid:0)(cid:68)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:33)(cid:85)(cid:71)(cid:85)(cid:83)(cid:84)(cid:0)(cid:18)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:18)
a)
Securitised receivables are de-recognised in the balance sheet when they are sold i.e. they meet true sale criteria.
b) Gains arising out of securitisation of assets are recognised over the tenure of the securities issued by Special
Purpose Vehicle Trust (SPV).
c)
The excess interest spread on the securitisation transactions are recognised in the Statement of Profit and Loss
only when it is redeemed in cash by the SPV after adjusting for overdue receivable. Losses, if any, are recognised
upfront.
4
Fixed assets and depreciation
HDFC Bank Limited
Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment, if any. Cost includes cost of
purchase and all expenditure like site preparation, installation costs and professional fees incurred on the asset before it is
ready to use. Subsequent expenditure incurred on assets put to use is capitalised only when it increases the future benefit /
functioning capability from / of such assets.
Depreciation is charged over the estimated useful life of the fixed asset on a straight-line basis. The Bank, pursuant to the
Companies Act, 2013, has carried out a technical assessment of the useful life of its assets taking into account changes in
HDFC Bank Limited Annual Report 2015-16
162
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
environment, changes in technology, the utility and efficacy of the asset in use. The estimated useful lives of key fixed assets
are given below:
Asset
Estimated useful life
as assessed
by the Bank
Owned premises
Automated Teller Machines (‘ATMs’)
Electrical equipment and installations
Office equipment
Computers
Modems, routers, switches, servers, network and related IT equipment
Motor cars
Furniture and fittings
61 years
10 years
6 to 10 years
3 to 6 years
3 years
3 to 6 years
4 years
16 years
Estimated useful
life specified under
Schedule II of the
Companies Act, 2013
60 years
15 years
10 years
5 years
3 years
6 years
8 years
10 years
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:76)(cid:69)(cid:65)(cid:83)(cid:69)(cid:0)(cid:72)(cid:79)(cid:76)(cid:68)(cid:0)(cid:80)(cid:82)(cid:69)(cid:77)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:67)(cid:72)(cid:65)(cid:82)(cid:71)(cid:69)(cid:68)(cid:0)(cid:79)(cid:70)(cid:70)(cid:0)(cid:79)(cid:86)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:77)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:82)(cid:73)(cid:77)(cid:65)(cid:82)(cid:89)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:76)(cid:69)(cid:65)(cid:83)(cid:69)(cid:14)
(cid:51)(cid:79)(cid:70)(cid:84)(cid:87)(cid:65)(cid:82)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:78)(cid:68)(cid:73)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:79)(cid:86)(cid:69)(cid:82)(cid:0)(cid:65)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:21)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:83)(cid:14)
(cid:48)(cid:79)(cid:73)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:65)(cid:76)(cid:69)(cid:0)(cid:84)(cid:69)(cid:82)(cid:77)(cid:73)(cid:78)(cid:65)(cid:76)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:70)(cid:85)(cid:76)(cid:76)(cid:89)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:14)
(cid:38)(cid:79)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:79)(cid:76)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:12)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:83)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:13)(cid:82)(cid:65)(cid:84)(cid:65)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:14)
(cid:55)(cid:72)(cid:69)(cid:78)(cid:69)(cid:86)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:65)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:83)(cid:84)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:85)(cid:83)(cid:69)(cid:70)(cid:85)(cid:76)(cid:0)(cid:76)(cid:73)(cid:70)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:85)(cid:78)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:77)(cid:79)(cid:85)(cid:78)(cid:84)(cid:0)(cid:73)(cid:83)(cid:0)(cid:67)(cid:72)(cid:65)(cid:82)(cid:71)(cid:69)(cid:68)(cid:0)
over the revised remaining useful life of the said asset.
(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0) (cid:79)(cid:78)(cid:0) (cid:83)(cid:65)(cid:76)(cid:69)(cid:0) (cid:79)(cid:70)(cid:0) (cid:73)(cid:77)(cid:77)(cid:79)(cid:86)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0) (cid:80)(cid:82)(cid:79)(cid:80)(cid:69)(cid:82)(cid:84)(cid:89)(cid:0) (cid:78)(cid:69)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:84)(cid:65)(cid:88)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:70)(cid:69)(cid:82)(cid:0) (cid:84)(cid:79)(cid:0) (cid:83)(cid:84)(cid:65)(cid:84)(cid:85)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0) (cid:82)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:12)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0) (cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0) (cid:84)(cid:79)(cid:0) (cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0) (cid:82)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:0)
account.
HDFC Securities Limited
Tangible assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if
any. Cost comprises purchase price and expenses directly attributable to bringing the asset to its working condition for the
intended use. Subsequent expenditure related to an item of fixed asset are added to its book value only if it increases the
future benefits from the existing asset beyond its previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book
value and net realisable value and are shown separately in the financial statements.
Gains or losses arising from disposal or retirement of tangible fixed assets are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised net, within “Other Income” or “Other Expenses”,
as the case maybe, in the Statement of Profit and Loss in the year of disposal or retirement.
Capital work-in-progress are fixed assets which are not yet ready for their intended use. Such assets are carried at cost
comprising direct cost and related incidental expenses.
Depreciation is provided on a pro-rata basis to fully depreciate the assets using the straight-line method over the estimated
useful lives of the assets.
For the following categories of assets, depreciation on tangible fixed assets has been provided on the straight-line method
as per the useful life prescribed in Schedule II to the Companies Act, 2013:
Asset
Computer hardware
Office equipment
Furniture and fixtures
Leasehold improvements
Electricals
Office premises
Estimated useful life
3 years
5 years
10 years
Over the remaining period of the lease
10 years
60 years
HDFC Bank Limited Annual Report 2015-16
163
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
For the following categories of assets, the Company has assessed useful life based on technical advice, taking into account
the nature of the asset, the estimates usage of asset, the operating condition of asset, anticipated technological changes
and utility in the business, as below:
Asset
Vehicles
Network & servers
Estimated useful life
4 years
4 years
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:76)(cid:76)(cid:0)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:73)(cid:78)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:67)(cid:79)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:76)(cid:69)(cid:83)(cid:83)(cid:0)(cid:84)(cid:72)(cid:65)(cid:78)(cid:0)` 5,000 individually are fully depreciated in the year of purchase.
(cid:53)(cid:83)(cid:69)(cid:70)(cid:85)(cid:76)(cid:0)(cid:76)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:69)(cid:68)(cid:0)(cid:65)(cid:84)(cid:0)(cid:69)(cid:65)(cid:67)(cid:72)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:68)(cid:74)(cid:85)(cid:83)(cid:84)(cid:69)(cid:68)(cid:0)(cid:73)(cid:70)(cid:0)(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:80)(cid:82)(cid:73)(cid:65)(cid:84)(cid:69)(cid:14)
(cid:41)(cid:78)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:84)(cid:0)(cid:65)(cid:67)(cid:81)(cid:85)(cid:73)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:67)(cid:79)(cid:83)(cid:84)(cid:12)(cid:0)(cid:78)(cid:69)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:67)(cid:67)(cid:85)(cid:77)(cid:85)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:67)(cid:67)(cid:85)(cid:77)(cid:85)(cid:76)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:73)(cid:77)(cid:80)(cid:65)(cid:73)(cid:82)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:76)(cid:79)(cid:83)(cid:83)(cid:69)(cid:83)(cid:12)(cid:0)
if any.
(cid:35)(cid:79)(cid:83)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:73)(cid:78)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:83)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:0)(cid:80)(cid:82)(cid:73)(cid:67)(cid:69)(cid:12)(cid:0)(cid:78)(cid:79)(cid:78)(cid:13)(cid:82)(cid:69)(cid:70)(cid:85)(cid:78)(cid:68)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:84)(cid:65)(cid:88)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:68)(cid:85)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:78)(cid:89)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:76)(cid:89)(cid:0)(cid:65)(cid:84)(cid:84)(cid:82)(cid:73)(cid:66)(cid:85)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)
expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset is charged to the Statement of Profit and Loss as an expense unless it is probable
that such expenditure will enable the intangible asset increase the future benefits from the existing asset beyond its
previously assessed standard of performance and such expenditure can be measured and attributed to the intangible
asset reliably, in which case, such expenditure is capitalised.
(cid:37)(cid:88)(cid:80)(cid:69)(cid:78)(cid:68)(cid:73)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0) (cid:79)(cid:78)(cid:0) (cid:83)(cid:79)(cid:70)(cid:84)(cid:87)(cid:65)(cid:82)(cid:69)(cid:0) (cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:69)(cid:76)(cid:73)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0) (cid:67)(cid:65)(cid:82)(cid:82)(cid:73)(cid:69)(cid:68)(cid:0) (cid:65)(cid:83)(cid:0) (cid:73)(cid:78)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0) (cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0) (cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)
where such assets are not yet ready for their intended use.
(cid:41)(cid:78)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0) (cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0) (cid:65)(cid:77)(cid:79)(cid:82)(cid:84)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0) (cid:79)(cid:78)(cid:0) (cid:65)(cid:0) (cid:83)(cid:84)(cid:82)(cid:65)(cid:73)(cid:71)(cid:72)(cid:84)(cid:13)(cid:76)(cid:73)(cid:78)(cid:69)(cid:0) (cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:0) (cid:79)(cid:86)(cid:69)(cid:82)(cid:0) (cid:84)(cid:72)(cid:69)(cid:73)(cid:82)(cid:0) (cid:69)(cid:83)(cid:84)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0) (cid:85)(cid:83)(cid:69)(cid:70)(cid:85)(cid:76)(cid:0) (cid:76)(cid:73)(cid:86)(cid:69)(cid:83)(cid:14)(cid:0) (cid:33)(cid:0) (cid:82)(cid:69)(cid:66)(cid:85)(cid:84)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0) (cid:80)(cid:82)(cid:69)(cid:83)(cid:85)(cid:77)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use is
considered by the management. The amortisation period and the amortisation method are reviewed at least at each
reporting date. If the expected useful life of the asset is significantly different from previous estimates, the amortisation
period is changed accordingly.
(cid:39)(cid:65)(cid:73)(cid:78)(cid:83)(cid:0)(cid:79)(cid:82)(cid:0)(cid:76)(cid:79)(cid:83)(cid:83)(cid:69)(cid:83)(cid:0)(cid:65)(cid:82)(cid:73)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:84)(cid:73)(cid:82)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:82)(cid:0)(cid:68)(cid:73)(cid:83)(cid:80)(cid:79)(cid:83)(cid:65)(cid:76)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:73)(cid:78)(cid:84)(cid:65)(cid:78)(cid:71)(cid:73)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:68)(cid:69)(cid:84)(cid:69)(cid:82)(cid:77)(cid:73)(cid:78)(cid:69)(cid:68)(cid:0)(cid:65)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:73)(cid:70)(cid:70)(cid:69)(cid:82)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:66)(cid:69)(cid:84)(cid:87)(cid:69)(cid:69)(cid:78)(cid:0)
the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement
of Profit and Loss in the year of disposal.
The estimated useful lives of intangible assets used for amortisation are:
Asset
Computer software licenses
Electronic trading platform (Website)
Bombay Stock Exchange card
HDB Financial Services Limited
Estimated useful life
5 years
5 years
10 years
Fixed assets are stated at cost less accumulated depreciation and impairment, if any. The cost of fixed assets comprise
purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Subsequent
expenditure incurred on assets put to use is capitalised only when it increases the future benefit / functioning capability from
/ of such assets.
Depreciation is charged over the estimated useful life of the fixed assets on a straight-line basis in the manner prescribed in
Schedule II of the Companies Act, 2013, except for assets as under:
Asset
Motor cars
Estimated useful life
as assessed by the
Company
Estimated useful life
under Schedule II of
Companies Act, 2013
5 years
8 years
(cid:115)(cid:0)
Improvements to lease hold premises are charged off over the primary period of lease or its useful life, whichever is
lower.
HDFC Bank Limited Annual Report 2015-16
164
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:67)(cid:79)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:76)(cid:69)(cid:83)(cid:83)(cid:0)(cid:84)(cid:72)(cid:65)(cid:78)(cid:0)` 5,000 are fully depreciated in the year of purchase.
(cid:52)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:69)(cid:83)(cid:84)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:46)(cid:73)(cid:76)(cid:0)(cid:82)(cid:69)(cid:83)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:0)(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:78)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:85)(cid:83)(cid:69)(cid:70)(cid:85)(cid:76)(cid:0)(cid:76)(cid:73)(cid:70)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:65)(cid:76)(cid:76)(cid:0)(cid:66)(cid:76)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:14)
(cid:38)(cid:79)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:80)(cid:85)(cid:82)(cid:67)(cid:72)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:79)(cid:76)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:12)(cid:0)(cid:68)(cid:69)(cid:80)(cid:82)(cid:69)(cid:67)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:83)(cid:0)(cid:66)(cid:69)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:80)(cid:82)(cid:79)(cid:13)(cid:82)(cid:65)(cid:84)(cid:65)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:14)
Software and system development expenditure are capitalised at cost of acquisition including cost attributable to bring the same
in working condition and the useful life of the same is estimated of 3 years with zero residual value. Any expenses on such
software for support and maintenance payable annually are charged to the Statement of Profit and Loss.
5
Impairment of assets
Group
The Group assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. Impairment
loss, if any, is provided in the Statement of Profit and Loss to the extent the carrying amount of assets exceeds their estimated
recoverable amount.
6
Transactions involving foreign exchange
HDFC Bank Limited
Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing on
the date of the transaction. Income and expenditure items of integral foreign operations (representative offices) are translated
at the weekly average closing rates and of non-integral foreign operations (foreign branches) at the monthly average closing
rates.
Foreign currency monetary items of domestic and integral foreign operations are translated at the closing exchange rates
notified by Foreign Exchange Dealers’ Association of India (‘FEDAI’) as at the Balance Sheet date and the resulting net
valuation profit or loss arising due to a net open position in any foreign currency is recognised in the Statement of Profit and
Loss.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated at
closing exchange rates notified by FEDAI at the Balance Sheet date and the resulting profit / loss arising from exchange
differences are accumulated in the Foreign Currency Translation Account until remittance or the disposal of the net investment
in the non-integral foreign operations in accordance with AS - 11, The Effects of Changes in Foreign Exchange Rates.
Foreign exchange spot and forward contracts outstanding as at the Balance Sheet date and held for trading, are revalued at
the closing spot and forward rates respectively as notified by FEDAI and at interpolated rates for contracts of interim maturities.
The USD-INR rate for valuation of contracts having longer maturities i.e. greater than one year is implied from MIFOR and
LIBOR curves. For other currency pairs, the forward points (for rates / tenors not published by FEDAI) are obtained from
Reuters for valuation of the FX deals. As directed by FEDAI to consider P&L on present value basis, the forward profit or
loss on the deals are discounted till the valuation date using the discounting yields. The resulting profit or loss on valuation
is recognised in the Statement of Profit and Loss. Foreign exchange contracts are classified as assets when the fair value is
positive (positive marked to market value) or as liabilities when the fair value is negative (negative marked to market value).
Foreign exchange forward contracts not intended for trading, that are entered into to establish the amount of reporting currency
required or available at the settlement date of a transaction and are outstanding at the Balance Sheet date, are effectively
valued at the closing spot rate. The premia or discount arising at the inception of such forward exchange contract is amortised
as expense or income over the life of the contract.
Currency future contracts are marked to market daily using settlement price on a trading day, which is the closing price of
the respective future contracts on that day. While the daily settlement price is computed on the basis of the last half an hour
weighted average price of such contract, the final settlement price is taken as the RBI reference rate on the last trading day of
the future contract or as may be specified by the relevant authority from time to time. All open positions are marked to market
based on the settlement price and the resultant marked to market profit / loss is daily settled with the exchange.
Contingent liabilities on account of foreign exchange contracts, currency future contracts, guarantees, letters of credit,
acceptances and endorsements are reported at closing rates of exchange notified by FEDAI as at the Balance Sheet date.
HDFC Bank Limited Annual Report 2015-16
165
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
7
Derivative contracts
HDFC Bank Limited
The Bank recognises all derivative contracts (other than those designated as hedges) at fair value, on the date on which the
derivative contracts are entered into and are re-measured at fair value as at the Balance Sheet or reporting dates. Derivatives
are classified as assets when the fair value is positive (positive marked to market value) or as liabilities when the fair value is
negative (negative marked to market value). Changes in the fair value of derivatives other than those designated as hedges
are recognised in the Statement of Profit and Loss.
Derivative contracts designated as hedges are not marked to market unless their underlying transaction is marked to market.
In respect of derivative contracts that are marked to market, changes in the market value are recognised in the Statement of
Profit and Loss in the relevant period. The Bank identifies the hedged item (asset or liability) at the inception of the transaction
itself. Hedge effectiveness is ascertained at the time of the inception of the hedge and periodically thereafter. Gains or losses
arising from hedge ineffectiveness, if any, are recognised in the Statement of Profit and Loss.
Contingent liabilities on account of derivative contracts denominated in foreign currencies are reported at closing rates of
exchange notified by FEDAI as at the Balance Sheet date.
8
Revenue recognition
HDFC Bank Limited
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0) (cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0) (cid:73)(cid:83)(cid:0) (cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0) (cid:73)(cid:78)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:44)(cid:79)(cid:83)(cid:83)(cid:0) (cid:79)(cid:78)(cid:0) (cid:65)(cid:78)(cid:0) (cid:65)(cid:67)(cid:67)(cid:82)(cid:85)(cid:65)(cid:76)(cid:0) (cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:12)(cid:0) (cid:69)(cid:88)(cid:67)(cid:69)(cid:80)(cid:84)(cid:0) (cid:73)(cid:78)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:67)(cid:65)(cid:83)(cid:69)(cid:0) (cid:79)(cid:70)(cid:0) (cid:78)(cid:79)(cid:78)(cid:13)
performing assets where it is recognised upon realisation as per RBI norms.
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0)(cid:79)(cid:78)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:73)(cid:78)(cid:0)(cid:48)(cid:52)(cid:35)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:76)(cid:79)(cid:65)(cid:78)(cid:83)(cid:0)(cid:66)(cid:79)(cid:85)(cid:71)(cid:72)(cid:84)(cid:0)(cid:79)(cid:85)(cid:84)(cid:0)(cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:0)(cid:65)(cid:83)(cid:83)(cid:73)(cid:71)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:82)(cid:79)(cid:85)(cid:84)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:73)(cid:82)(cid:0)
effective interest rate.
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effective yield basis.
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significant act / milestone is completed.
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the dividend is established.
(cid:39)(cid:85)(cid:65)(cid:82)(cid:65)(cid:78)(cid:84)(cid:69)(cid:69)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:12)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:83)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:78)(cid:0) (cid:76)(cid:69)(cid:84)(cid:84)(cid:69)(cid:82)(cid:0) (cid:79)(cid:70)(cid:0) (cid:67)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:12)(cid:0) (cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0) (cid:76)(cid:79)(cid:67)(cid:75)(cid:69)(cid:82)(cid:0) (cid:82)(cid:69)(cid:78)(cid:84)(cid:0) (cid:70)(cid:69)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0) (cid:70)(cid:69)(cid:69)(cid:83)(cid:0) (cid:70)(cid:79)(cid:82)(cid:0) (cid:67)(cid:82)(cid:69)(cid:68)(cid:73)(cid:84)(cid:0) (cid:67)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0)
recognised on a straight-line basis over the period of contract. Other fees and commission income are recognised when
due, except in cases where the Bank is uncertain of ultimate collection.
HDFC Securities Limited
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
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term of the contract.
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the case may be, issue of the insurance policy to the applicant.
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other levies by SEBI and stock exchanges.
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on the financial instrument and the rate applicable.
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HDFC Bank Limited Annual Report 2015-16
166
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
HDB Financial Services Limited
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:73)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:44)(cid:79)(cid:83)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:67)(cid:67)(cid:82)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:14)(cid:0)(cid:41)(cid:78)(cid:0)(cid:67)(cid:65)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:46)(cid:79)(cid:78)(cid:0)(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:73)(cid:78)(cid:71)(cid:0)(cid:33)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)
(NPA) interest income is recognised upon realisation as per the RBI guidelines. Interest accrued and not realised before
the classification of the asset as an NPA is reversed and credited to the interest suspense account.
(cid:41)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:34)(cid:48)(cid:47)(cid:0)(cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:72)(cid:65)(cid:82)(cid:71)(cid:69)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:67)(cid:67)(cid:82)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:12)(cid:0)(cid:69)(cid:88)(cid:67)(cid:69)(cid:80)(cid:84)(cid:0)(cid:73)(cid:78)(cid:0)(cid:67)(cid:65)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:72)(cid:69)(cid:81)(cid:85)(cid:69)(cid:0)
bouncing charges, late payment charges, foreclosure charges and application money, which are accounted as and when
received.
(cid:53)(cid:80)(cid:70)(cid:82)(cid:79)(cid:78)(cid:84)(cid:0)(cid:15)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:70)(cid:69)(cid:69)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:86)(cid:69)(cid:82)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:84)(cid:73)(cid:77)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:68)(cid:73)(cid:83)(cid:66)(cid:85)(cid:82)(cid:83)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:76)(cid:79)(cid:65)(cid:78)(cid:14)
(cid:41)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:78)(cid:68)(cid:0)(cid:73)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:48)(cid:82)(cid:79)(cid:108)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:44)(cid:79)(cid:83)(cid:83)(cid:0)(cid:87)(cid:72)(cid:69)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:73)(cid:71)(cid:72)(cid:84)(cid:0)(cid:84)(cid:79)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:69)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:69)(cid:68)(cid:14)
HDB Employees Welfare Trust
(cid:115)(cid:0)
(cid:0)(cid:41)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:71)(cid:78)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:67)(cid:67)(cid:82)(cid:85)(cid:65)(cid:76)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(cid:14)
9
Employee benefits
HDFC Bank Limited
Employee Stock Option Scheme (‘ESOS’)
The Employee Stock Option Scheme (‘the Scheme’) provides for the grant of options to acquire equity shares of the Bank to its
employees. The options granted to employees vest in a graded manner and these may be exercised by the employees within
a specified period.
The Bank follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation cost
is measured by the excess, if any, of the market price of the underlying stock over the exercise price as determined under the
option plan. The market price is the closing price on the stock exchange where there is highest trading volume on the working
day immediately preceding the date of grant. Compensation cost, if any is amortised over the vesting period.
Gratuity
The Bank provides for gratuity to all employees. The benefit vests upon completion of five years of service and is in the form
of lump sum payment to employees on resignation, retirement, death while in employment or on termination of employment
of an amount equivalent to 15 days basic salary payable for each completed year of service. The Bank makes contributions to
funds administered by trustees and managed by insurance companies for amounts notified by the said insurance companies.
In respect of erstwhile Lord Krishna Bank (‘eLKB’) employees, the Bank makes contribution to a fund set up by eLKB and
administered by the Board of Trustees.
The defined gratuity benefit plans are valued by an independent actuary as at the Balance Sheet date using the projected
unit credit method as per the requirement of AS-15, Employee Benefits, to determine the present value of the defined benefit
obligation and the related service costs. Under this method, the determination is based on actuarial calculations, which include
assumptions about demographics, early retirement, salary increases and interest rates. Actuarial gain or loss is recognised in
the Statement of Profit and Loss.
Superannuation
Employees of the Bank, above a prescribed grade, are entitled to receive retirement benefits under the Bank’s Superannuation
Fund. The Bank contributes a sum equivalent to 13% of the employee’s eligible annual basic salary (15% for the Whole Time
Directors and for certain eligible erstwhile Centurion Bank of Punjab (‘eCBoP’) staff) to insurance companies, which administer
the fund. The Bank has no liability for future superannuation fund benefits other than its contribution, and recognises such
contributions as an expense in the year incurred, as such contribution is in the nature of defined contribution.
Provident fund
In accordance with law, all employees of the Bank are entitled to receive benefits under the provident fund. The Bank contributes
an amount, on a monthly basis, at a determined rate (currently 12% of employee’s basic salary). Of this, the Bank contributes
an amount equal to 8.33% of employee’s basic salary up to a maximum salary level of ` 15,000/- per month, to the Pension
Scheme administered by the Regional Provident Fund Commissioner (‘RPFC’). The balance amount is contributed to a fund
set up by the Bank and administered by a Board of Trustees. In respect of eCBoP employees, employer’s and employee’s
HDFC Bank Limited Annual Report 2015-16
167
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
share of contribution to Provident Fund till March 2009, was administered by RPFC and from April 2009 onwards, the same is
transferred to the fund set up by the Bank and administered by the Board of Trustees. In respect of eLKB employees, the Bank
contributes to a fund set up by eLKB and administered by a Board of Trustees. The Bank recognises such contributions as an
expense in the year in which it is incurred. Interest payable to the members of the trust shall not be lower than the statutory
rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions
Act, 1952 and shortfall, if any, shall be made good by the Bank.
The guidance note on implementing AS-15, Employee Benefits, states that benefits involving employer established provident
funds, which require interest shortfalls to be provided, are to be considered as defined benefit plans. Actuarial valuation of this
Provident Fund interest shortfall is done as per the guidance note issued in this respect by the The Institute of Actuaries of India
(IAI) and provision towards this liability is made.
The overseas branches of the Bank makes contribution to the respective relevant government scheme calculated as a
percentage of the employees’ salaries. The Bank’s obligations are limited to these contributions, which are expensed when
due, as such contribution is in the nature of defined contribution.
Leave encashment / Compensated absences
The Bank does not have a policy of encashing unavailed leave for its employees, except for certain eLKB employees under
Indian Banks’ Association (‘IBA’) structure. The Bank provides for leave encashment / compensated absences based on an
independent actuarial valuation at the Balance Sheet date, which includes assumptions about demographics, early retirement,
salary increases, interest rates and leave utilisation.
Pension
In respect of pension payable to certain eLKB employees under IBA structure, which is a defined benefit scheme, the Bank
contributes 10% of basic salary to a pension fund set up by the Bank and administered by the Board of Trustees and the
balance amount is provided based on actuarial valuation as at the Balance Sheet date conducted by an independent actuary.
In respect of certain eLKB employees who had moved to a Cost to Company (‘CTC’) driven compensation structure and
had completed less than 15 years of service, the contribution which was made until then, is maintained as a fund and will be
converted into annuity on separation after a lock-in-period of two years. For this category of employees, liability stands frozen
and no additional provision is required except for interest as applicable to Provident Fund, which is provided for.
In respect of certain eLKB employees who moved to a CTC structure and had completed service of more than 15 years,
pension would be paid on separation based on salary applicable as on the date of movement to CTC structure. Provision
thereto is made based on actuarial valuation as at the Balance Sheet date conducted by an independent actuary.
HDFC Securities Limited
Short term
Short term employee benefits include salaries and performance incentives. A liability is recognised for the amount expected to
be paid under short term cash bonus or profit sharing plans if the Company has a present legal or informal obligation to pay
this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. These costs are
recognised as an expense in the Statement of Profit and Loss at the undiscounted amount expected to be paid over the period
of services rendered by the employees to the Company.
Long term
The Company offers its employees long term benefits by way of defined-contribution and defined-benefit plans, of which some
have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution
plans by the Company along with its employees.
Defined-contribution plans
These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal
obligation to pay additional sums. These comprise of contributions to the National Pension Scheme, Employees’ Provident
Fund, Family Pension Fund and Superannuation Fund. The Company’s payments to the defined-contribution plans are reported
as expenses during the period in which the employees perform the services that the payment covers.
HDFC Bank Limited Annual Report 2015-16
168
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Defined-benefit plans
Expenses for defined-benefit gratuity plan are calculated as at the Balance Sheet date by an independent actuary in a manner
that distributes expenses over the employee’s working life. These commitments are valued at the present value of the expected
future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest
rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost
equivalent to the average balance working period of employees. The fair values of the plan assets are deducted in determining
the net liability. When the fair value of plan assets exceeds the commitments computed as aforesaid, the recognised asset is
limited to the net total of any cumulative past service costs and the present value of any economic benefits available in the form
of reductions in future contributions to the plan. Actuarial losses or gains are recognised in the Statement of Profit and Loss in
the year in which they arise.
Other employee benefits
Compensated absences which accrue to employees and which can be carried to future periods but are expected to be availed
in twelve months immediately following the year in which the employee has rendered service are reported as expenses during
the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted
amount of the benefits.
Where there are restrictions on availment of such accrued benefit or where the availment is otherwise not expected to wholly
occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit
method.
Share-based payment transactions
Equity settled stock options granted under the Company’s Employee Stock Option Schemes are accounted for as per the
accounting treatment prescribed by the Guidance Note on Employee Share-based Payments issued by the Institute of
Chartered Accountants of India. The intrinsic value of the option being excess of fair value of the underlying share immediately
prior to date of grant over its exercise price is recognised as deferred employee compensation with a credit to employee stock
option outstanding account. The deferred employee compensation is charged to Statement of Profit and Loss on straight line
basis over the vesting period of the option. The options that lapse are reversed by a credit to employee compensation expense,
equal to the amortised portion of value of lapsed portion and credit to deferred employee compensation expense equal to the
unamortised portion.
HDB Financial Services Limited
Long term employee benefits
Gratuity
The Company provides for gratuity to all employees. The benefit is in the form of lump sum payments to vested employees
on resignation, retirement or death while in employment or on termination of employment of an amount equivalent to 15
days basic salary payable for each completed year of service. Vesting occurs upon completion of five years of service.
The Company makes annual contributions to fund administered by trustees and managed by insurance companies for amounts
notified by the said insurance companies. The defined benefit plan are valued by an independent external actuary as at the
Balance Sheet date using the projected unit credit method to determine the present value of defined benefit obligation and
the related service costs. Under this method, the determination is based on actuarial calculations, which include assumptions
about demographics, early retirement, salary increases and interest rates. Actuarial gain or loss is recognised in the Statement
of Profit and Loss.
Provident fund
In accordance with the applicable law, all employees of the Company are entitled to receive benefits under the Provident
Fund Act, 1952. The Company contributes an amount, on a monthly basis, at a determined rate (currently 12% of employee’s
basic salary) to the Pension Scheme administered by the Regional Provident Fund Commissioner (RPFC) and the Company
has no liability for future provident fund benefits other than its annual contribution. Since it is a defined contribution plan, the
contributions are accounted for on an accrual basis and recognised in the Statement of Profit and Loss.
HDFC Bank Limited Annual Report 2015-16
169
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Compensated absences
The Company does not have a policy of encashment of unavailed leaves for its employees but are permitted to carry forward
subject to a prescribed maximum days. The Company provides for compensated absences in accordance with AS-15 (revised
2005) Employee Benefits issued by Insititute of Chartered Accountants of India. The provision is based on an independent
external actuarial valuation at the Balance Sheet date.
10 Debit and credit cards reward points
HDFC Bank Limited
The Bank estimates the probable redemption of debit and credit card reward points and cost per point using an actuarial method
by employing an independent actuary, which includes assumptions such as mortality, redemption and spends. Provisions for
liabilities on said reward points are made based on the actuarial valuation report as furnished by the said independent actuary
and included in other liabilities.
11 Bullion
HDFC Bank Limited
The Bank imports bullion including precious metal bars on a consignment basis for selling to its wholesale and retail customers.
The imports are typically on a back-to-back basis and are priced to the customer based on an estimated price quoted by the
supplier. The Bank earns a fee on such wholesale bullion transactions. The fee is classified under commission income.
The Bank also sells bullion to its retail customers. The difference between the sale price to customers and actual price paid to
the supplier is recorded under commission income.
The Bank also deals in bullion on a borrowing and lending basis and the interest paid / received thereon is classified as interest
expense / income respectively.
12 Lease accounting
Group
Lease payments including cost escalation for assets taken on operating lease are recognised in the Statement of Profit and
Loss over the lease term on a straight-line basis in accordance with the AS-19, Leases.
13
Income tax
Group
Income tax expense comprises current tax provision (i.e. the amount of tax for the period determined in accordance with the
Income Tax Act, 1961, the rules framed there under and considering the material principles set out in Income Computation and
Disclosure Standards) and the net change in the deferred tax asset or liability during the year. Deferred tax assets and liabilities
are recognised for the future tax consequences of timing differences between the carrying values of assets and liabilities and
their respective tax bases, and operating loss carried forward, if any. Deferred tax assets and liabilities are measured using the
enacted or substantively enacted tax rates as at the Balance Sheet date.
Current tax assets and liabilities and deferred tax assets and liabilities are off-set when they relate to income taxes levied by
the same taxation authority, when the Bank has a legal right to off-set and when the Bank intends to settle on a net basis.
Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future.
In case of unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there
is virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each Balance Sheet date and appropriately
adjusted to reflect the amount that is reasonably / virtually certain to be realised.
14 Earnings per share
Group
The Group reports basic and diluted earnings per equity share in accordance with AS-20, Earnings per Share. Basic earnings
per equity share has been computed by dividing net profit for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding for the period. Diluted earnings per share reflect the potential dilution that
could occur if securities or other contracts to issue equity shares were exercised or converted to equity during the year.
Diluted earnings per equity share are computed using the weighted average number of equity shares and the dilutive potential
equity shares outstanding during the period except where the results are anti-dilutive.
HDFC Bank Limited Annual Report 2015-16
170
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
15 Share issue expenses
HDFC Bank Limited
Share issue expenses are adjusted from Share Premium Account in terms of Section 52 of the Companies Act, 2013.
16 Segment information
Group
The disclosure relating to segment information is in accordance with AS-17, Segment Reporting and as per guidelines issued
by RBI.
17 Accounting for provisions, contingent liabilities and contingent assets
Group
In accordance with AS-29, Provisions, Contingent Liabilities and Contingent Assets, the Group recognises provisions when it
has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.
Provisions are determined based on management estimate required to settle the obligation at the Balance Sheet date,
supplemented by experience of similar transactions. These are reviewed at each Balance Sheet date and adjusted to reflect
the current management estimates.
A disclosure of contingent liability is made when there is:
(cid:115)
(cid:115)
a possible obligation arising from a past event, the existence of which will be confirmed by the occurrence or non-
occurrence of one or more uncertain future events not within the control of the Group; or
a present obligation arising from a past event which is not recognised as it is not probable that an outflow of resources
will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote,
no provision or disclosure is made.
Contingent assets, if any, are not recognised in the financial statements since this may result in the recognition of income that
may never be realised.
Onerous contracts
Provisions for onerous contracts are recognised when the expected benefits to be derived by the Bank from a contract are
lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present
value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
Before a provision is established, the Bank recognises any impairment loss on the assets associated with that contract.
18 Cash and cash equivalents
Group
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short
notice.
19 Corporate social responsibility
Group
Expenditure towards corporate social responsibility, in accordance with Companies Act, 2013, are recognised in the Statement
of Profit and Loss.
HDFC Bank Limited Annual Report 2015-16
171
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
SCHEDULE 18 - Notes forming part of the consolidated financial statements for the year ended March 31, 2016
Amounts in notes forming part of the financial statements for the year ended March 31, 2016 are denominated in rupee crore to
conform to extant RBI guidelines.
1
Change in classification
Pursuant to RBI circular dated July 16, 2015, deposits placed with NABARD, SIDBI and NHB aggregating to ` 13,719.68 crore
(previous year: ` 14,818.19 crore), arising out of the shortfall in meeting the priority sector lending targets / sub-targets, have
been included under ‘Other Assets’ and interest thereon aggregating to ` 861.15 crore (previous year: ` 847.12 crore) under
‘Interest Earned - Others’. Hitherto, these were included under ‘Investments’ and ‘Interest Earned - Income on Investments’
respectively. Figures for the previous year have been regrouped / reclassified to conform to current year’s classification.
The above change in classification has no impact on the profit of the Bank for the years ended March 31, 2016 and
March 31, 2015.
2
Capital Infusion
During the year ended March 31, 2016, the Bank allotted 2,16,91,200 equity shares (previous year: 2,27,00,740 equity shares)
aggregating to face value ` 4.34 crore (previous year: ` 4.54 crore) in respect of stock options exercised. Accordingly, share
capital increased by ` 4.34 crore (previous year: ` 4.54 crore) and share premium increased by ` 1,218.56 crore (previous
year: ` 990.88 crore).
Pursuant to the shareholder and regulatory approvals, the Bank on February 10, 2015, concluded a Qualified Institutions
Placement (QIP) of 1,87,44,142 equity shares at a price of ` 1,067 per equity share aggregating ` 2,000 crore and an
American Depository Receipt (ADR) offering of 2,20,00,000 ADRs (representing 6,60,00,000 equity shares) at a price of
USD 57.76 per ADR, aggregating USD 1,271 million. Pursuant to these issuances, the Bank allotted 8,47,44,142 additional
equity shares. Accordingly, share capital increased by ` 16.95 crore and share premium increased by ` 9,705.84 crore, net
of share issue expenses of ` 151.03 crore.
Details of movement in the paid-up equity share capital of the Bank are given below:
(` crore)
Particulars
Opening balance
Addition pursuant to QIP/ADR offering
Addition pursuant to stock options exercised
Closing balance
3
Earnings per equity share
March 31, 2016
March 31, 2015
501.30
-
4.34
505.64
479.81
16.95
4.54
501.30
Basic and diluted earnings per equity share have been calculated based on the consolidated profit attributable to the Group
of ` 12,801.33 crore (previous year: ` 10,688.89 crore) and the weighted average number of equity shares outstanding during
the year of 2,51,74,29,120 (previous year: 2,42,37,77,245).
Following is the reconciliation between basic and diluted earnings per equity share:
Particulars
Nominal value per share
Basic earnings per share
Effect of potential equity shares (per share)
Diluted earnings per share
For the year ended (`)
March 31, 2016
March 31, 2015
2.00
50.85
(0.61)
50.24
2.00
44.10
(0.50)
43.60
Basic earnings per equity share have been computed by dividing net profit for the year attributable to the equity shareholders
by the weighted average number of equity shares outstanding for the year. Diluted earnings per equity share have been
computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number of
equity shares and dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive.
The dilutive impact is on account of stock options granted to employees by the Bank. There is no impact of dilution on the
profits in the current year and previous year.
HDFC Bank Limited Annual Report 2015-16
172
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Following is the reconciliation of weighted average number of equity shares used in the computation of basic and diluted
earnings per share:
Particulars
Weighted average number of equity shares used in computing basic earnings
per equity share
Effect of potential equity shares outstanding
Weighted average number of equity shares used in computing diluted earnings
per equity share
For the year ended
March 31, 2016
March 31, 2015
2,51,74,29,120
2,42,37,77,245
3,04,43,320
2,54,78,72,440
2,77,45,406
2,45,15,22,651
4
Reserves and Surplus
Drawdown from reserves
Share Premium
The Bank has not undertaken any drawdown from reserves during the years ended March 31, 2016 and March 31, 2015,
except towards share issue expenses of ` 151.03 crore incurred for the equity raised through the Qualified Institutions
Placement (QIP) and American Depository Receipt (ADR) routes during the year ended March 31, 2015, which have been
adjusted in that year against the share premium account in terms of Section 52 of the Companies Act, 2013.
Statutory Reserve
The Group has made an appropriation of ` 3,180.93 crore (previous year: ` 2,623.87 crore) out of profits for the year ended
March 31, 2016 to Statutory Reserve pursuant to the requirements of Section 17 of the Banking Regulation Act, 1949 and
RBI guidelines dated September 23, 2000.
Capital Reserve
During the year ended March 31, 2016, the Bank appropriated ` 222.15 crore (previous year: ` 224.92 crore), being the
profit from sale of investments under HTM category and profit on sale of immovable properties, net of taxes and transfer to
statutory reserve, from Profit and Loss Account to Capital Reserve Account.
General Reserve
The Group has made an appropriation of ` 1,229.62 crore (previous year: ` 1,038.59 crore) out of profits for the year ended
March 31, 2016 to General Reserve pursuant to provisions of the Companies Act, 2013.
Investment Reserve Account
During the year ended March 31, 2016, the Bank has transferred ` 8.52 crore (net) from Investment Reserve Account to
Profit and Loss Account and in the previous year the Bank appropriated ` 27.54 crore (net) from Profit and Loss Account to
Investment Reserve Account as per RBI guidelines.
5
Dividend on shares allotted pursuant to exercise of stock options
The Bank may allot equity shares after the Balance Sheet date but before the book closure date pursuant to the exercise
of any employee stock options. These equity shares will be eligible for full dividend for the year ended March 31, 2016,
if approved at the ensuing Annual General Meeting.
6
Accounting for employee share based payments
HDFC Bank Limited
The shareholders of the Bank approved grant of equity share options under Plan “C” in June 2005, Plan “D” in June 2007,
Plan “E” in June 2010 and Plan “F” in June 2013. Under the terms of each of these Plans, the Bank may issue Equity Stock
Options (‘ESOPs’) to employees and Whole Time Directors of the Bank, each of which is convertible into one equity share.
All the plans were framed in accordance with the SEBI (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guidelines, 1999 as amended from time to time and as applicable at the time of grant. Accounting for the stock
options has been in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 to the extent applicable.
HDFC Bank Limited Annual Report 2015-16
173
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Plans C, D, E and F provide for the issuance of options at the recommendation of the Nomination & Remuneration Committee
at the closing price on the working day immediately preceding the date when options are granted. The price being the closing
price of the share on an Indian stock exchange with the highest trading volume as of the working day preceding the date of
grant.
Vesting conditions applicable to the options are at the discretion of the Nomination & Remuneration Committee. These options
are exercisable on vesting, for a period as set forth by the Nomination & Remuneration Committee at the time of grant.
The period in which options may be exercised cannot exceed five years. During the years ended March 31, 2016 and
March 31, 2015, no modifications were made to the terms and conditions of ESOPs as approved by the Nomination &
Remuneration Committee.
Activity in the options outstanding under the Employee Stock Options Plans
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Options
10,90,33,000
4,48,36,200
2,16,91,200
35,23,700
12,86,54,300
4,96,81,000
Weighted average
exercise price (`)
683.16
1,092.65
563.78
895.09
840.19
661.84
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Options
9,24,76,600
4,16,59,000
2,27,00,740
24,01,860
10,90,33,000
4,18,71,400
Weighted average
exercise price (`)
556.06
835.50
438.50
744.09
683.16
537.99
(cid:0)
(cid:115)(cid:0)
(cid:38)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Plan
Plan C
Plan D
Plan E
Plan F
Range of exercise price (`)
Number of
shares arising
out of options
Weighted average
life of options
(in years)
Weighted average
exercise price
(`)
680.00 to 835.50
680.00
440.16 to 680.00
835.50 to 1,097.80
57,40,800
51,33,900
3,78,50,200
7,99,29,400
3.34
3.32
2.49
4.80
693.00
680.00
598.71
975.41
(cid:0)
(cid:115)(cid:0)
(cid:38)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Plan
Plan C
Plan D
Plan E
Plan F
Range of exercise price (`)
Number of
shares arising
out of options
Weighted average
life of options
(in years)
Weighted average
exercise price
(`)
680.00 to 835.50
680.00
440.16 to 680.00
835.50
67,78,000
64,02,300
5,59,39,700
3,99,13,000
4.32
4.26
3.05
5.22
692.50
680.00
573.70
835.50
HDFC Bank Limited Annual Report 2015-16
174
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Fair value methodology
The fair value of options used to compute proforma net income and earnings per equity share have been estimated on the
dates of each grant using the binomial option-pricing model. The Bank estimates the volatility based on the historical share
prices. 4,48,36,200 options were granted during the year ended March 31, 2016 (previous year: 4,16,59,000). The various
assumptions considered in the pricing model for the ESOPs granted during the years ended March 31, 2016 and March 31,
2015 were:
Particulars
Dividend yield
Expected volatility
Risk - free interest rate
Expected life of the options
March 31, 2016
March 31, 2015
0.73%
0.82%
23.29% to 26.46% 24.30% to 32.00%
7.71% to 8.07% 8.42 % to 8.63 %
1 to 7 years
1 to 7 years
Impact of fair value method on net profit and earnings per share (‘EPS’)
Had the compensation cost for the Bank’s stock option plans been determined based on the fair value approach, the Bank’s
net profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net profit (as reported)
(` crore)
March 31, 2016
March 31, 2015
12,296.23
10,215.92
Add: Stock-based employee compensation expense included in net income
-
-
Less: Stock based compensation expense determined under fair value based
method (proforma)
Net profit (proforma)
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
HDFC Securities Limited
1,265.93
944.47
11,030.30
9,271.45
(`)
48.84
43.82
48.26
43.29
(`)
42.15
38.25
41.67
37.82
The Shareholders of the Company approved a stock option scheme (viz. ESOS-001) in February 2010 (“Company Options”).
Under the terms of the scheme, the Company issues stock options to employees, whole time director, managing director and
directors of the Company, each of which is convertible into one equity share.
Scheme ESOS-001 provides for the issuance of options at the recommendation of the Compensation Committee of the Board
of Directors (the “Compensation Committee”) at a price of ` 135/- per share, being the fair market value of the share arrived
by a category 1 merchant banker.
Such options vest at definitive dates, save for specific incidents, prescribed in the scheme as framed / approved by
the Compensation Committee. Such options are exercisable for a period following the vesting at the discretion of the
Compensation Committee, subject to a maximum of two years from the date of vesting.
Method used for accounting for shared based payment plan
The Company uses the Intrinsic Value method to account for the compensation cost of stock options to employees of the
Company.
HDFC Bank Limited Annual Report 2015-16
175
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Activity in the options outstanding under the Employee Stock Options Plan
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:37)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:83)(cid:0)(cid:51)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:47)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Company
options
Weighted average
exercise price (`)
-
-
-
-
-
-
-
-
-
-
-
-
There were no stock options outstanding as at March 31, 2016 as well as at March 31, 2015.
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:37)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:83)(cid:0)(cid:51)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:47)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options exercisable
Impact of fair value method on net profit and EPS
Company
options
8,700
-
8,000
700
-
-
Weighted average
exercise price (`)
135.00
-
135.00
135.00
-
-
Had compensation cost for the Company’s stock option plans been determined based on the fair value approach,
the Company’s net profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net Profit (as reported)
Add: Stock-based employee compensation expense included in net income
(Less) / Add: Stock-based compensation expense determined under fair value
based method (proforma)
Net Profit (proforma)
Basic and diluted earnings per share (as reported)
Basic and diluted earnings per share (proforma)
HDB Financial Services Limited
March 31, 2016
March 31, 2015
133.34
164.97
-
-
133.34
(`)
86.16
86.16
-
-
164.97
(`)
106.60
106.60
In accordance with resolution approved by the shareholders, the Company has reserved shares, for issue to employees
through ESOP Scheme. On the approval of Nomination and Remuneration Committee (NRC), each ESOP scheme is issued.
The NRC has approved stock option schemes ESOS-4 in October, 2010 and ESOS-5 on July 27, 2011 and ESOS-6 on
June 11, 2012, ESOS-7 on July 19, 2013 and ESOS-8 on July 14, 2015. Under the term of the schemes, the Company may
issue stock options to employees and directors of the Company, each of which is convertible into one equity share.
Such options vest at a definitive date, save for specific incidents, prescribed in the scheme as framed / approved by the NRC.
Such options are exercisable for a period following vesting at the discretion of the NRC, subject to a maximum of two years
from the date of vesting.
HDFC Bank Limited Annual Report 2015-16
176
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Method used for accounting for shared based payment plan
The Company uses intrinsic value to account for the compensation cost of stock options to employees of the Company.
Activity in the options outstanding under the Employee Stock Option Plans
(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:37)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:51)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:47)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options
14,37,250
44,13,000
7,02,550
3,04,750
48,42,950
Weighted average
exercise price (`)
50.62
88.00
48.25
76.22
88.41
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:37)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:51)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:47)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:48)(cid:76)(cid:65)(cid:78)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Particulars
Options outstanding, beginning of year
Granted during the year
Exercised during the year
Forfeited / Lapsed during the year
Options outstanding, end of year
Options
Weighted average
exercise price (`)
21,51,700
-
5,65,800
1,48,650
14,37,250
49.17
-
46.42
45.54
50.62
(cid:115)(cid:0)
(cid:38)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:22)(cid:26)
Plan
ESOS - 5
ESOS - 6
ESOS - 7
ESOS - 8
Range of
exercise price
(`)
Number of shares
arising out
of options
Weighted average
remaining contractual life
of options (in years)
Weighted average
exercise
price (`)
25.00
31.00
56.00
88.00
4,000
70,650
5,60,300
42,08,000
0.50
1.30
1.35
1.40
25.00
31.00
56.00
88.00
(cid:115)(cid:0)
(cid:38)(cid:79)(cid:76)(cid:76)(cid:79)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:77)(cid:77)(cid:65)(cid:82)(cid:73)(cid:83)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:83)(cid:84)(cid:79)(cid:67)(cid:75)(cid:0)(cid:79)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:19)(cid:17)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:21)(cid:26)
Plan
ESOS - 4
ESOS - 5
ESOS - 6
ESOS - 7
Fair Value methodology
Range of
exercise price
(`)
Number of shares
arising out
of options
Weighted average
remaining contractual life
of options (in years)
Weighted average
exercise
price (`)
17.50
25.00
31.00
56.00
6,400
7,000
2,90,650
11,33,200
0.50
1.07
2.16
2.28
17.50
25.00
31.00
56.00
The fair value of options used to compute proforma net income and earnings per equity share have been estimated on
the dates of each grant using the Black-Scholes model. The shares of Company are not listed on any stock exchange.
Accordingly, the Company has considered the volatility of the Company’s stock price as zero, since historical volatility of similar
listed enterprise was not available. The various assumptions considered in the pricing model for the stock options granted by
the Company during the year ended March 31, 2016 are:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the option
March 31, 2016
March 31, 2015
0.80%
Nil
7.70%
2.21 years
Nil
Nil
Nil
Nil
HDFC Bank Limited Annual Report 2015-16
177
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Impact of fair value method on net profit and EPS
Had compensation cost for the Company’s stock option plans been determined based on the fair value approach, the
Company’s net profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net Profit (as reported)
Add: Stock-based employee compensation expense included in net income
Less: Stock-based compensation expense determined under fair value based
method (proforma)
Net Profit (proforma)
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
Group
March 31, 2016
March 31, 2015
(` crore)
534.41
-
4.87
529.54
(`)
7.64
7.57
7.64
7.57
349.45
-
1.45
348.00
(`)
6.63
6.60
6.63
6.60
Impact of fair value method on net profit and EPS of the Group
Had compensation cost for the stock option plans outstanding been determined based on the fair value approach, the Group’s
net profit and earnings per share would have been as per the proforma amounts indicated below:
Particulars
Net Profit (as reported)
Less: Stock-based compensation expense determined under fair value based
method (proforma)
Net Profit (proforma)
Basic earnings per share (as reported)
Basic earnings per share (proforma)
Diluted earnings per share (as reported)
Diluted earnings per share (proforma)
7
Other liabilities
March 31, 2016
March 31, 2015
(` crore)
12,801.33
1,270.80
11,530.53
(`)
50.85
45.80
50.24
45.26
10,688.89
945.92
9,742.97
(`)
44.10
40.20
43.60
39.74
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:80)(cid:82)(cid:69)(cid:83)(cid:69)(cid:78)(cid:84)(cid:69)(cid:68)(cid:0)(cid:71)(cid:82)(cid:79)(cid:83)(cid:83)(cid:0)(cid:85)(cid:78)(cid:82)(cid:69)(cid:65)(cid:76)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:71)(cid:65)(cid:73)(cid:78)(cid:0)(cid:79)(cid:78)(cid:0)(cid:70)(cid:79)(cid:82)(cid:69)(cid:73)(cid:71)(cid:78)(cid:0)(cid:69)(cid:88)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:68)(cid:69)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:83)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
gross unrealised loss on foreign exchange and derivative contracts under other liabilities. Accordingly, other liabilities as
on March 31, 2016 include unrealised loss on foreign exchange and derivative contracts of ` 7,524.88 crore (previous
year: ` 6,914.10 crore).
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0) (cid:44)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0) (cid:68)(cid:69)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0) (cid:84)(cid:65)(cid:88)(cid:0) (cid:76)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:0) (cid:8)(cid:78)(cid:69)(cid:84)(cid:9)(cid:0) (cid:79)(cid:70)(cid:0) ` 0.45 crore as on March 31, 2015 relating to HDFC Securities
(` crore)
Limited. The breakup of the same is as follows:
Particulars
Deferred tax asset arising out of:
Employee Benefits
Others
Deferred tax liability arising out of:
Depreciation
Deferred tax (liability) / asset, net
March 31, 2015
1.04
0.17
1.21
(1.66)
(1.66)
(0.45)
Total (a)
Total (b)
HDFC Bank Limited Annual Report 2015-16
178
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
8
Investments
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0) (cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:38)(cid:65)(cid:67)(cid:69)(cid:0)(cid:54)(cid:65)(cid:76)(cid:85)(cid:69)(cid:0) (cid:8)(cid:38)(cid:54)(cid:9)(cid:0) (cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) ` 1,520.00 crore (previous year: FV ` 1,563.00 crore)
which are kept as margin for clearing of securities, of FV ` 13,729.30 crore (previous year: FV ` 16,249.30 crore) which
are kept as margin for Collateralised Borrowing and Lending Obligation (CBLO) and of FV aggregating ` 56.00 crore
(previous year: FV ` 63.25 crore) which are kept as margin for Forex Forward segment - Default Fund with the Clearing
Corporation of India Ltd.
(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0) (cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:38)(cid:54)(cid:0) (cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) ` 16.00 crore (previous year: FV ` 16.00 crore) which are kept as
margin with National Securities Clearing Corporation of India Ltd. (‘NSCCIL’), of FV aggregating ` 13.00 crore (previous
year: FV ` 13.00 crore) which are kept as margin with MCX - SX Clearing Corporation Ltd., and of FV aggregating
` 1.00 crore (previous year: ` 2.00 crore) which are kept as margin with Indian Clearing Corporation Limited in the BSE
currency derivatives segment.
(cid:41)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:72)(cid:65)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)(cid:38)(cid:54)(cid:0)(cid:65)(cid:71)(cid:71)(cid:82)(cid:69)(cid:71)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)` 35,937.22 crore (previous year: FV ` 34,127.16 crore) are kept as margin towards
Real Time Gross Settlement (RTGS) and those having FV aggregating ` 13,091.46 crore (previous year: ` 19,077.83
crore) are kept as margin towards repo transactions with the RBI.
9
Other fixed assets
Other fixed assets includes amount capitalised relating to software, Bombay Stock Exchange card and electronic trading
(` crore)
platform. Summary regarding the same is tabulated below:
Particulars
Cost
As at March 31 of the previous year
Additions during the year
Deductions during the year
Depreciation
As at March 31 of the previous year
Charge for the year
On deductions during the year
March 31, 2016 March 31, 2015
1,609.52
165.31
(0.01)
1,774.82
1,049.45
199.27
(0.01)
1,248.71
526.11
1,311.52
298.06
(0.06)
1,609.52
881.25
168.26
(0.06)
1,049.45
560.07
Total (a)
Total (b)
Net value (a-b)
10 Other assets
(cid:115)(cid:0)
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0)(cid:68)(cid:69)(cid:70)(cid:69)(cid:82)(cid:82)(cid:69)(cid:68)(cid:0)(cid:84)(cid:65)(cid:88)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:8)(cid:78)(cid:69)(cid:84)(cid:9)(cid:0)(cid:79)(cid:70)(cid:0)` 2,227.23 crore (previous year: ` 2,031.98 crore). Deferred tax asset
(net) also includes deferred tax asset (net) of ` 0.13 crore (previous year: Nil) relating to HDFC Securities Limited.
(` crore)
The break-up of the same is as follows:
Particulars
Deferred tax asset arising out of:
Loan loss provisions
Employee benefits
Others
Deferred tax liability arising out of:
Depreciation
Deferred tax asset (net) (a-b)
March 31, 2016 March 31, 2015
1,856.51
150.77
314.47
2,321.75
(94.52)
(94.52)
2,227.23
1,679.06
115.18
310.09
2,104.33
(72.35)
(72.35)
2,031.98
Total (a)
Total (b)
HDFC Bank Limited Annual Report 2015-16
179
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
11 Provisions, contingent liabilities and contingent assets
Given below is the movement in provisions and a brief description of the nature of contingent liabilities recognised by the
Bank.
a)
Provision for credit card and debit card reward points
(` crore)
Particulars
Opening provision for reward points
Provision for reward points made during the year
Utilisation / write back of provision for reward points
Closing provision for reward points
b) Provision for legal and other contingencies
Particulars
Opening provision
Movement during the year (net)
Closing provision
c) Description of contingent liabilities
Sr.
No.
Contingent liability*
Brief description
March 31, 2016 March 31, 2015
200.07
179.50
(73.21)
306.36
150.91
112.92
(63.76)
200.07
(` crore)
March 31, 2016 March 31, 2015
354.91
(10.35)
344.56
352.61
2.30
354.91
1
2
3
4
5
Claims against the Group
not acknowledged as
debts-taxation
The Group is a party to various taxation matters in respect of which appeals are pending.
The Group expects the outcome of the appeals to be favorable based on decisions on similar
issues in the previous years by the appellate authorities, based on the facts of the case and
the provisions of Income Tax Act, 1961.
Claims against the Group
not acknowledged as
debts-others
The Group is a party to various legal proceedings in the normal course of business.
The Group does not expect the outcome of these proceedings to have a material adverse
effect on the Group’s financial conditions, results of operations or cash flows.
Liability on account of
forward exchange and
derivative contracts
Guarantees given on
behalf of constituents,
acceptances,
endorsements and other
obligations
Other items for which
the Group is contingently
liable
The Bank enters into foreign exchange contracts, currency options, forward rate
agreements, currency swaps and interest rate swaps with inter-bank participants on
its own account and for customers. Forward exchange contracts are commitments to
buy or sell foreign currency at a future date at the contracted rate. Currency swaps
are commitments to exchange cash flows by way of interest / principal in one currency
against another, based on predetermined rates. Interest rate swaps are commitments to
exchange fixed and floating interest rate cash flows. The notional amounts of financial
instruments such as foreign exchange contracts and derivatives provide a basis for
comparison with instruments recognised on the Balance Sheet but do not necessarily
indicate the amounts of future cash flows involved or the current fair value of the
instruments and therefore, do not indicate the Bank’s exposure to credit or price risks.
The derivative instruments become favorable (assets) or unfavorable (liabilities) as a
result of fluctuations in market rates or prices relative to their terms.
As a part of its commercial banking activities the Bank issues documentary credit and
guarantees on behalf of its customers. Documentary credits such as letters of credit
enhance the credit standing of the Bank’s customers. Guarantees generally represent
irrevocable assurances that the Bank will make payments in the event of the customer
failing to fulfill its financial or performance obligations.
These include: a) Credit enhancements in respect of securitised-out loans; b) Bills
rediscounted by the Bank; c) Capital commitments; d) Underwriting commitments.
*Also refer Schedule 12 - Contingent Liabilities
HDFC Bank Limited Annual Report 2015-16
180
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
12 Commission, exchange and brokerage income
Commission, exchange and brokerage income is net of correspondent bank charges.
13 Provisions and contingencies
The break-up of ‘Provisions and Contingencies’ included in the Statement of Profit and Loss is given below:
Particulars
Provision for income tax
- Current
- Deferred
Provision for wealth tax
Provision for NPAs
Provision for diminution in value of non-performing investments
Provision for standard assets
Other provisions and contingencies*
(` crore)
March 31, 2016 March 31, 2015
5,492.37
(112.97)
0.77
1,868.20
(3.82)
310.35
91.25
7,646.15
6,889.36
(195.70)
-
2,344.37
14.65
464.89
136.86
9,654.43
Total
*Includes provisions for tax, legal and other contingencies ` 37.33 crore (previous year: ` 36.52 crore), floating provisions
` 115.00 crore (previous year: ` 32.20 crore), provisions / (write back) for securitised-out assets ` (2.85) crore (previous year:
` 4.60 crore) and standard restructured assets ` (12.62) crore (previous year: `17.93 crore).
14 Employee benefits
Gratuity
Particulars
March 31, 2016
March 31, 2015
(` crore)
Reconciliation of opening and closing balance of the present value of
the defined benefit obligation
Present value of obligation as at April 1
Interest cost
Current service cost
Benefits paid
Actuarial (gain) / loss on obligation:
Experience adjustment
Assumption change
Present value of obligation as at March 31
Reconciliation of opening and closing balance of the fair value of the
plan assets
Fair value of plan assets as at April 1
Expected return on plan assets
Contributions
Benefits paid
Actuarial gain / (loss) on plan assets:
Experience adjustment
Assumption change
Fair value of plan assets as at March 31
Amount recognised in Balance Sheet
Fair value of plan assets as at March 31
318.37
22.98
56.53
(24.88)
16.27
12.66
401.93
248.13
21.72
64.10
(24.88)
(13.61)
-
295.46
242.71
18.68
52.21
(16.31)
4.84
16.24
318.37
176.20
16.97
50.00
(16.31)
21.27
-
248.13
295.46
248.13
HDFC Bank Limited Annual Report 2015-16
181
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Particulars
Present value of obligation as at March 31
Asset / (liability) as at March 31
Expenses recognised in Statement of Profit and Loss
Interest cost
Current service cost
Expected return on plan assets
Net actuarial (gain) / loss recognised in the year
Net Cost
Actual return on plan assets
Estimated contribution for the next year
Assumptions (HDFC Bank Limited)
Discount rate
Expected return on plan assets
Salary escalation rate
Assumptions (HDFC Securities Limited)
Discount rate
Expected return on plan assets
Salary escalation rate
Assumptions (HDB Financial Services Limited)
March 31, 2016
March 31, 2015
(401.93)
(106.47)
22.98
56.53
(21.72)
42.54
100.33
8.11
53.08
(318.37)
(70.24)
18.68
52.21
(16.59)
(0.20)
54.10
38.25
66.17
7.5% per annum
7.9% per annum
8.0% per annum
8.0% per annum
8.0% per annum
8.0% per annum
7.6% per annum
8.0% per annum
7.6% per annum
8.0% per annum
9.0% per annum
7.0% per annum
7.8% per annum
7.8% per annum
8.0% per annum
8.0% per annum
6.0% per annum
5.0% per annum
(` crore)
Discount rate
Expected return on plan assets
Salary escalation rate
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
2016
295.46
401.93
(106.47)
(13.61)
16.27
Years ended March 31,
2015
2014
2013
2012
248.13
318.37
(70.24)
21.27
4.84
176.20
242.71
(66.51)
1.82
6.30
132.60
209.82
(77.22)
2.00
2.61
93.32
168.60
(75.28)
(0.95)
1.22
Expected rate of return on investments is determined based on the assessment made by the Group at the beginning of the
year with regard to its existing portfolio. Major categories of plan assets as a percentage of fair value of total plan assets as
of March 31, 2016 are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
HDFC Bank
Limited
HDFC Securities
Limited
HDB Financial
Services Limited
33.3%
23.1%
37.2%
6.4%
100.0%
54.0%
31.0%
9.0%
6.0%
100.0%
52.0%
39.6%
-
8.4%
100.0%
Total
HDFC Bank Limited Annual Report 2015-16
182
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Pension
Particulars
(` crore)
March 31, 2016
March 31, 2015
Reconciliation of opening and closing balance of the present value of the
defined benefit obligation
Present value of obligation as at April 1
Interest cost
Current service cost
Benefits paid
Actuarial (gain) / loss on obligation:
Experience adjustment
Assumption change
Present value of obligation as at March 31
Reconciliation of opening and closing balance of the fair value of the plan
assets
Fair value of plan assets as at April 1
Expected return on plan assets
Contributions
Benefits paid
Actuarial gain / (loss) on plan assets:
Experience adjustment
Assumption change
Fair value of plan assets as at March 31
Amount recognised in Balance Sheet
Fair value of plan assets as at March 31
Present value of obligation as at March 31
Asset / (liability) as at March 31
Expenses recognised in Statement of Profit and Loss
Interest cost
Current service cost
Expected return on plan assets
Net actuarial (gain) / loss recognised in the year
Net cost
Actual return on plan assets
Estimated contribution for the next year
Assumptions
Discount rate
Expected return on plan assets
Salary escalation rate
HDFC Bank Limited Annual Report 2015-16
183
57.45
3.92
1.12
(10.18)
17.35
1.22
70.88
41.91
3.21
2.01
(10.18)
1.43
-
38.38
38.38
(70.88)
(32.50)
3.92
1.12
(3.21)
17.14
18.97
4.64
14.00
58.89
4.37
1.02
(7.94)
(0.19)
1.30
57.45
47.99
3.60
0.64
(7.94)
(2.38)
-
41.91
41.91
(57.45)
(15.54)
4.37
1.02
(3.60)
3.48
5.27
1.22
15.70
7.5% per annum
7.9% per annum
8.0% per annum
8.0% per annum
8.0% per annum
8.0% per annum
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
2016
38.38
70.88
(32.50)
1.43
17.35
Years ended March 31,
2014
2013
2015
41.91
57.45
(15.54)
(2.38)
(0.19)
47.99
58.89
(10.90)
3.45
3.62
48.88
58.19
(9.31)
(1.58)
6.12
(` crore)
2012
51.14
56.85
(5.71)
(1.29)
1.36
Expected rate of return on investments is determined based on the assessment made by the Bank at the beginning of the
year with regard to its existing portfolio. Major categories of plan assets as a percentage of fair value of total plan assets as
of March 31, 2016 are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
Total
Provident fund
% of fair value to total plan assets
6.6%
83.3%
10.1%
100.0%
The guidance note on AS-15, Employee Benefits, states that employer established provident funds, where interest is
guaranteed are to be considered as defined benefit plans and the liability has to be valued. The Institute of Actuaries of
India (IAI) has issued a guidance note on valuation of interest rate guarantees on exempt provident funds. The actuary has
accordingly valued the same and the Bank held a provision of Nil as on March 31, 2016 (previous year: ` 0.52 crore) towards
the present value of the guaranteed interest benefit obligation. The actuary has followed deterministic approach as prescribed
by the guidance note.
Assumptions:
Particulars
Discount rate (GOI security yield)
Expected guaranteed interest rate
March 31, 2016
7.5% per annum
9.0% per annum
March 31, 2015
7.9% per annum
9.0% per annum
The Bank does not have any unfunded defined benefit plan. The Group contributed ` 206.93 crore (previous year: ` 172.49
crore) to the provident fund. The Bank contributed ` 56.54 crore (previous year: ` 53.68 crore) to the superannuation plan.
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Group as
(` crore)
of March 31, 2016 is given below:
Particulars
Privileged leave
Sick leave
Total actuarial liability
Assumptions (HDFC Bank Limited)
Discount rate
Salary escalation rate
Assumptions (HDFC Securities Limited)
Discount rate
Salary escalation rate
Assumptions (HDB Financial Services Limited)
Discount rate
Salary escalation rate
March 31, 2016
227.40
47.88
275.28
March 31, 2015
189.68
38.66
228.34
7.5% per annum
8.0% per annum
7.9% per annum
8.0% per annum
7.6% per annum
9.0% per annum
8.0% per annum
7.0% per annum
7.8% per annum
6.0% per annum
7.8% per annum
5.0% per annum
HDFC Bank Limited Annual Report 2015-16
184
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
15 Segment Reporting
Business segments
Business segments have been identified and reported taking into account, the target customer profile, the nature of products
and services, the differing risks and returns, the organisation structure, the internal business reporting system and the
guidelines prescribed by RBI. The Group operates in the following segments:
(a) Treasury
The treasury segment primarily consists of net interest earnings from the Bank’s investments portfolio, money market
borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and
derivative contracts.
(b) Retail banking
The retail banking segment of the Bank serves retail customers through a branch network and other delivery channels.
This segment raises deposits from customers and provides loans and other services to customers with the help of
specialist product groups. Exposures are classified under retail banking taking into account the status of the borrower
(orientation criterion), the nature of product, granularity of the exposure and the quantum thereof.
Revenues of the retail banking segment are derived from interest earned on retail loans, interest earned from other
segments for surplus funds placed with those segments, subvention received from dealers and manufacturers, fees
from services rendered, foreign exchange earnings on retail products etc. Expenses of this segment primarily comprise
interest expense on deposits, commission paid to retail assets sales agents, infrastructure and premises expenses
for operating the branch network and other delivery channels, personnel costs, other direct overheads and allocated
expenses of specialist product groups, processing units and support groups.
(c) Wholesale banking
The wholesale banking segment provides loans, non-fund facilities and transaction services to large corporates,
emerging corporates, public sector units, government bodies, financial institutions and medium scale enterprises.
Revenues of the wholesale banking segment consist of interest earned on loans made to customers, interest / fees
earned on the cash float arising from transaction services, earnings from trade services and other non-fund facilities
and also earnings from foreign exchange and derivative transactions on behalf of customers. The principal expenses
of the segment consist of interest expense on funds borrowed from external sources and other internal segments,
premises expenses, personnel costs, other direct overheads and allocated expenses of delivery channels, specialist
product groups, processing units and support groups.
(d) Other banking business
This segment includes income from para banking activities such as credit cards, debit cards, third party product
distribution, primary dealership business and the associated costs. This segment also includes Bank’s subsidiaries.
(e) Unallocated
All items which are reckoned at an enterprise level are classified under this segment. This includes capital and reserves,
debt classified as Tier I or Tier II capital and other unallocable assets and liabilities such as deferred tax, prepaid
expenses, etc.
Segment revenue includes earnings from external customers plus earnings from funds transferred to other segments.
Segment result includes revenue less interest expense less operating expense and provisions, if any, for that segment.
Segment-wise income and expenses include certain allocations. Interest income is charged by a segment that provides
funding to another segment, based on yields benchmarked to an internally approved yield curve or at a certain agreed
transfer price rate. Transaction charges are levied by the retail banking segment to the wholesale banking segment for
the use by its customers of the retail banking segment’s branch network or other delivery channels. Such transaction
costs are determined on a cost plus basis. Segment capital employed represents the net assets in that segment.
HDFC Bank Limited Annual Report 2015-16
185
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Geographic segments
The geographic segments of the Bank are categorised as domestic operations and foreign operations. Domestic operations
comprise branches in India and foreign operations comprise branches outside India.
Segment reporting for the year ended March 31, 2016 is given below:
Business segments:
Sr.
No.
Particulars
1 Segment revenue
2 Unallocated revenue
3
4
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
5 Segment results
6 Unallocated expenses
7
Income tax expense (including deferred tax)
8 Net profit (5) - (6) - (7) (net profit before
minority interest and earnings from associates)
(` crore)
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
Total
18,264.88
59,252.34
27,162.39
10,954.46
115,634.07
1,489.21
7,522.30
8,219.93
3,705.31
20,936.75
0.01
41,260.86
74,373.22
1,425.76
6,693.66
12,817.33
9 Segment assets
10 Unallocated assets
11 Total assets (9) + (10)
12 Segment liabilities
13 Unallocated liabilities
14 Total liabilities (12) + (13)
203,381.47
252,690.65
226,242.65
43,049.31
725,364.08
45,389.87
448,313.40
120,425.52
22,085.58
636,214.37
4,897.74
730,261.82
19,562.70
655,777.07
15 Capital employed (9) - (12)
157,991.60 (195,622.75)
105,817.13
20,963.73
89,149.71
(Segment Assets - Segment Liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
(14,664.96)
74,484.75
5.09
6.16
729.46
540.47
134.59
101.67
135.72
1,004.86
89.73
738.03
(` crore)
Domestic
International
73,216.82
1,156.40
694,304.94
35,956.88
1,003.97
0.89
HDFC Bank Limited Annual Report 2015-16
186
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Segment reporting for the year ended March 31, 2015 is given below:
Business segments:
Sr.
No.
Particulars
1 Segment revenue
2 Unallocated revenue
3
4
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
5 Segment results
6 Unallocated expenses
7
Income tax expense (including deferred tax)
8 Net profit (5) - (6) - (7) (net profit before minority
interest and earnings from associates)
(` crore)
Treasury
Retail
banking
Wholesale
banking
Other
banking
operations
Total
12,903.89
48,814.18
23,152.60
8,946.94
93,817.61
8.63
33,614.06
60,212.18
618.30
6,228.83
7,471.83
3,237.61
17,556.57
1,477.12
5,379.40
10,700.05
9 Segment assets
10 Unallocated assets
11 Total assets (9) + (10)
12 Segment liabilities
13 Unallocated liabilities
14 Total liabilities (12) + (13)
190,609.16
197,144.15
181,325.74
33,588.91
602,667.96
36,352.78
371,355.13
98,250.45
16,825.11
522,783.47
4,428.56
607,096.52
20,997.36
543,780.83
15 Capital employed (9) - (12)
154,256.38 (174,210.98)
83,075.29
16,763.80
79,884.49
(Segment Assets - Segment Liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
(16,568.80)
63,315.69
6.02
5.91
587.72
214.09
521.71
79.44
93.46
73.39
901.29
680.45
(` crore)
Domestic
International
59,239.01
973.17
575,346.47
31,750.05
899.05
2.24
HDFC Bank Limited Annual Report 2015-16
187
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
16 Related party disclosures
As per AS-18 on Related Party Disclosures, the Group’s related parties are disclosed below:
Promoter
Housing Development Finance Corporation Limited
Associates
Atlas Documentary Facilitators Company Private Limited
HBL Global Private Limited
International Asset Reconstruction Company Private Limited
Key management personnel
Aditya Puri, Managing Director
Paresh Sukthankar, Deputy Managing Director
Kaizad Bharucha, Executive Director
Related parties to key management personnel
Salisbury Investments Private Limited, Tanaksh Innovations Private Limited, Anita Puri, Amit Puri, Amrita Puri, Adishwar Puri,
Aarti Sood, Sangeeta Sukthankar, Dattatraya Sukthankar, Shubhada Sukthankar, Akshay Sukthankar, Ankita Sukthankar,
Madhavi Lad, Havovi Bharucha, Huzaan Bharucha, Danesh Bharucha, Daraius Bharucha.
In accordance with paragraph 5 of AS - 18, the Bank has not disclosed certain transactions with relatives of key management
personnel as they are in the nature of banker-customer relationship.
The significant transactions between the Bank and related parties for year ended March 31, 2016 are given below. A specific
related party transaction is disclosed as a significant related party transaction wherever it exceeds 10% of all related party
transactions in that category:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0) (cid:80)(cid:65)(cid:73)(cid:68)(cid:26)(cid:0) (cid:40)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0) (cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0) (cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0) ` 7.25 crore (previous year: ` 7.60 crore); Atlas
Documentary Facilitators Company Private Limited ` 3.84 crore (previous year: ` 4.25 crore).
(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0)(cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:26)(cid:0)(cid:0)(cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0)(cid:33)(cid:83)(cid:83)(cid:69)(cid:84)(cid:0)(cid:50)(cid:69)(cid:67)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:0)(cid:48)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:69)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 2.27 crore (previous year: ` 4.53 crore).
(cid:50)(cid:69)(cid:78)(cid:68)(cid:69)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:26)(cid:0)(cid:40)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 178.83 crore (previous year: ` 144.37 crore).
(cid:50)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:26)(cid:0)(cid:40)(cid:34)(cid:44)(cid:0)(cid:39)(cid:76)(cid:79)(cid:66)(cid:65)(cid:76)(cid:0)(cid:48)(cid:82)(cid:73)(cid:86)(cid:65)(cid:84)(cid:69)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 702.20 crore (previous year: ` 589.50 crore); Atlas Documentary
Facilitators Company Private Limited ` 471.44 crore (previous year: ` 449.50 crore); Housing Development Finance
Corporation Limited ` 247.21 crore (previous year: ` 139.83 crore).
(cid:115)(cid:0)
(cid:36)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:78)(cid:68)(cid:0)(cid:80)(cid:65)(cid:73)(cid:68)(cid:26)(cid:0)(cid:40)(cid:79)(cid:85)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:35)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)` 314.57 crore (previous year: ` 269.35 crore).
HDFC Bank Limited Annual Report 2015-16
188
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
The Group’s related party balances and transactions for the year ended March 31, 2016 are summarised as follows:
Items / related party
Promoter
Associates
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
Interest received from
Income from services rendered to
Expenses for receiving services from
Equity investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
4,405.56
(4,405.56)
0.15
(0.15)
-
-
-
-
7.25
-
178.83
247.21
-
-
314.57
-
16.30
(28.42)
26.93
(26.93)
0.14
(0.14)
-
12,773.37
100.02
(100.02)
0.10
(7.10)
0.22
(36.95)
-
-
3.89
2.27
6.07
1,173.64
31.19
(31.19)
-
0.01
-
(0.38)
39.85
(102.70)
-
-
-
-
(` crore)
Key management
personnel
Total
10.12
4,515.70
(11.50)
(4,517.08)
2.51
(2.51)
0.95
(0.99)
-
-
0.84
0.02
-
0.76
-
-
3.37
-
-
-
-
-
-
-
18.34
-
2.76
(9.76)
1.17
(37.94)
-
-
11.98
2.29
184.90
1,421.61
31.19
(31.19)
317.94
0.01
16.30
(28.80)
66.78
(129.63)
0.14
(0.14)
18.34
12,773.37
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding balances
at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
The Bank being an authorised dealer, deals in foreign exchange and derivative transactions with parties which include its promoter.
The foreign exchange and derivative transactions are undertaken in line with the RBI guidelines. The notional principal amount of
foreign exchange and derivative contracts transacted with the promoter that were outstanding as on March 31, 2016 is ` 491.21
HDFC Bank Limited Annual Report 2015-16
189
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
crore (previous year: ` 100.00 crore). The contingent credit exposure pertaining to these contracts computed in line with the extant
RBI guidelines on exposure norms is ` 18.90 crore (previous year: ` 2.80 crore).
During the year ended March 31, 2016, the Bank purchased debt securities from Housing Development Finance Corporation Limited
` 1,415.00 crore (previous year: Nil) issued by it.
During the year ended March 31, 2016, the Bank paid rent of ` 0.66 crore (previous year: ` 0.66 crore) to parties related to the
Bank’s key management personnel in relation to residential accommodation. As at March 31, 2016, the security deposit outstanding
was ` 3.50 crore (previous year: ` 3.50 crore).
The Group’s related party balances and transactions for the year ended March 31, 2015 are summarised as follows:
(` crore)
Items / related party
Promoter
Associates
Key management
personnel
Total
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
Interest received from
Income from services rendered to
Expenses for receiving services from
Equity investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
2,203.45
(2,203.45)
0.15
(0.15)
-
-
-
-
7.60
-
144.37
139.83
-
-
269.35
-
14.89
(14.89)
19.25
(19.25)
0.11
(0.11)
-
8,249.21
113.06
(113.06)
13.35
(33.45)
25.67
(46.55)
-
-
4.27
4.53
12.25
1,039.00
31.19
(31.19)
-
0.01
-
(1.30)
5.99
(92.45)
-
-
-
-
12.68
(12.68)
2.51
(2.51)
0.95
(0.95)
-
-
0.99
0.02
-
0.71
-
-
2.95
-
-
-
-
2,329.19
(2,329.19)
16.01
(36.11)
26.62
(47.50)
-
-
12.86
4.55
156.62
1,179.54
31.19
(31.19)
272.30
0.01
14.89
(16.19)
25.24
(0.03)
(111.73)
-
-
15.10
-
0.11
(0.11)
15.10
8,249.21
Figures in bracket indicate maximum balance outstanding during the year based on comparison of the total outstanding balances
at each quarter-end.
Remuneration paid excludes value of employee stock options exercised during the year.
HDFC Bank Limited Annual Report 2015-16
190
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
17 Leases
Operating leases primarily comprise office premises, staff residences and Automated Teller Machines (‘ATM’s), which are
renewable at the option of the Bank. The details of maturity profile of future operating lease payments are given below:
Particulars
Not later than one year
Later than one year and not later than five years
Later than five years
(` crore)
March 31, 2016 March 31, 2015
925.82
807.72
2,947.21
2,676.05
2,564.32
2,023.02
Total
6,437.35
5,506.79
The total of minimum lease payments recognised in the Statement of Profit and Loss
for the year
1,038.00
889.93
Total of future minimum sub-lease payments expected to be received under
non-cancellable subleases
Sub-lease amounts recognised in the Statement of Profit and Loss for the year
Contingent (usage based) lease payments recognised in the Statement of Profit and
Loss for the year
37.13
38.07
10.67
180.53
16.02
169.44
The Bank has sub-leased certain of its properties taken on lease.
The terms of renewal and escalation clauses are those normally prevalent in similar agreements. There are no undue
restrictions or onerous clauses in the agreements.
18 Penalties levied by the RBI
During the year ended March 31, 2016, RBI has not imposed any penalties on the Bank.
During the previous year ended March 31, 2015, RBI levied on the Bank a penalty of ` 0.05 crore on the grounds that the
Bank failed to exchange information about the conduct of a corporate borrower’s account with other banks at intervals as
prescribed in the RBI guidelines on ‘Lending under Consortium Arrangement / Multiple Banking Arrangements’ and the same
was paid by the Bank.
19 Small and micro industries
HDFC Bank Limited
Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain
disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been no reported cases
of delays in payments to micro and small enterprises or of interest payments due to delays in such payments.
HDFC Securities Limited
On the basis of the information available with the Company and the intimation received from ‘suppliers’ regarding their status
under the Micro, Small and Medium Enterprises Development Act, 2006 the amount unpaid as at March 31, 2016 was ` 0.02
crore (previous year: ` 0.02 crore).
HDFC Bank Limited Annual Report 2015-16
191
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
HDB Financial Services Limited
As per the confirmation received from the suppliers covered under the Micro, Small and Medium Enterprises Development
Act, 2006, the amount unpaid as at March 31, 2016 was Nil (previous year: Nil).
20 Corporate social responsibility
Operating expenses include ` 197.10 crore (previous year: ` 119.02 crore) for the year ended March 31, 2016 towards
Corporate Social Responsibility (CSR), in accordance with the Companies Act, 2013.
The details of amount spent during the respective years towards CSR are as under:
(` crore)
Sr.
No.
Particulars
March 31, 2016
March 31, 2015
Amount
spent
Amount
unpaid /
provision
Total
Amount
spent
Amount
unpaid /
provision
Total
(i) Construction / acquisition of any asset
-
-
-
-
-
-
(ii) On purpose other than (i) above
188.75
8.35
197.10
112.01
7.01
119.02
21 Additional disclosure
Additional statutory information disclosed in the separate financial statements of the Bank and subsidiaries have no material
bearing on the true and fair view of the Consolidated Financial Statements and the information pertaining to the items which
are not material have not been disclosed in the Consolidated Financial Statements.
22 Comparative figures
Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the current year’s
presentation.
(cid:41)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:72)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
Mumbai, April 22, 2016
HDFC Bank Limited Annual Report 2015-16
192
Statement pursuant to Section 129 of the Companies Act, 2013
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2016
Form AOC - 1: Pursuant to the first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 read with rule 5 of
Companies (Accounts) Rules, 2014
Statement containing salient features of the financial statements of subsidiaries, associate companies and joint ventures
Sr.
No.
Name of the subsidiary
HDFC Securities Limited
(` crore)
HDB Financial Services
Limited
Part A: Subsidiaries
1. Reporting period for the subsidiary concerned, if different
from the holding company’s reporting period
Reporting period of the
subsidiary is the same as
that of the holding company
i.e. April 1, 2015 to
March 31, 2016
Reporting period of the
subsidiary is the same as
that of the holding company
i.e. April 1, 2015 to
March 31, 2016
2. Reporting currency and exchange rate as on the last date of
the relevant financial year in the case of foreign subsidiaries
Not applicable as this is a
domestic subsidiary
Not applicable as this is a
domestic subsidiary
3. Share capital
4. Reserves & surplus
5.
6.
7.
8.
Total assets
Total liabilities
Investments
Turnover
9. Profit before taxation
10. Provision for taxation
11. Profit after taxation
12. Proposed dividend (including tax thereon)*
13. % of shareholding
* Includes interim dividend on equity shares paid during the year.
Notes:
1.
2.
There are no subsidiaries that are yet to commence operations.
No subsidiaries were liquidated or sold during the year.
15.48
650.56
1,054.52
388.48
149.79
401.60
201.89
68.55
133.34
37.27
97.9%
700.17
2,861.63
25,189.07
21,627.27
348.42
3,302.02
817.81
283.40
534.41
101.13
97.1%
HDFC Bank Limited Annual Report 2015-16
193
Schedules to the Consolidated Financial Statements
Statement pursuant to Section 129 of the Companies Act, 2013
For the year ended March 31, 2016
Part B: Associate Companies and Joint Ventures
(` crore)
Sr.
No.
Name of Associates / Joint Ventures
Atlas Documentary Facilitators
Company Private Limited
(ADFC)
International Asset
Reconstruction
Company Private Limited
1.
Latest audited Balance Sheet Date
March 31, 2016
March 31, 2015*
2. Shares of Associate / Joint Ventures held by the
company on the year end:
Number of shares
Amount of investment in associates / joint venture
Extent of holding %
3. Description of how there is significant influence
1,30,500
0.02
29.0%
1,61,75,507
31.17
29.4%
Extent of equity holding in the
associate company exceeds 20%
Extent of equity holding in the
associate company exceeds 20%
4. Reason why the associate / joint venture is not
Not applicable
Not applicable
consolidated
5. Net worth attributable to the Bank’s shareholding
6. Profit / Loss for the year:
i. Considered in consolidated financial statements
ii. Not considered in consolidated financial
statements
23.88**
2.69**
6.59**
36.72*
1.04*
3.55*
* Unaudited financial statements drawn up to March 31, 2016 have been considered for the purpose of the Consolidated Financial
Statements for the year ended March 31, 2016.
**Includes proportionate share in HBL Global Private Limited, which is a subsidiary of ADFC.
Notes:
1.
2.
3.
There are no joint ventures as per Accounting Standard 27 - Financial Reporting of Interests in Joint Ventures.
There are no Associates or Joint Ventures that are yet to commence operations.
No Associates or Joint Ventures were liquidated or sold during the year.
(cid:41)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:69)(cid:72)(cid:75)(cid:68)(cid:79)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Anami Roy
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Renu Karnad
Umesh Sarangi
Directors
Mumbai, April 22, 2016
HDFC Bank Limited Annual Report 2015-16
194
Corporate Governance
CERTIFICATE OF COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
To The Members of
HDFC Bank Limited
We have examined the compliance of conditions of corporate governance by HDFC Bank Limited (‘the Bank’) for the year ended
31 March 2016, as stipulated in Clause 49 of the Listing Agreement executed by the Bank with the BSE Limited (‘BSE’) and the
National Stock Exchange of India Limited (‘NSE’) for the period from 1st April 2015 to 30th November 2015; and as prescribed in
regulations 17 to 27, 46 (2) (b) to (i) and para C, D and E of Schedule V of Chapter IV of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (LODR) for the period from 1st December 2015 to 31st March 2016. We state that the compliance
of conditions of Corporate Governance is the responsibility of the management, and our examination was limited to procedures
and implementation thereof adopted by the Bank for ensuring the compliance of the conditions of the Corporate Governance.
It is neither an audit nor an expression of opinion on the financial statements of the Bank.
In our opinion, and to the best of our information and according to the explanations given to us, we certify that the Bank has
complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement / LODR.
We further state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or
effectiveness with which the management has conducted the affairs of the Bank.
This certificate is issued solely for the purposes of complying with the aforesaid Regulations and may not be suitable for any other
purpose.
Place: Mumbai
Date: May 19, 2016
For BNP Associates
Company Secretaries
Keyoor Bakshi
FCS 1844 / CP no. 2720
HDFC Bank Limited Annual Report 2015-16
195
Corporate Governance
the
[Report on Corporate Governance pursuant
Companies Act, 2013 and the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 {“the SEBI
Listing Regulations”} and forming a part of the report of the
Board of Directors]
to
PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE
The Bank believes in adopting and adhering to the best recognized
corporate governance practices and continuously benchmarking
itself against each such practice. The Bank understands
and respects its fiduciary role and responsibility towards its
shareholders and strives hard to meet their expectations.
The Bank believes that best board practices, transparent
disclosures and shareholder empowerment are necessary for
creating shareholder value.
The Bank has infused the philosophy of corporate governance
into all its activities. The philosophy on corporate governance is an
important tool for shareholder protection and maximization of their
long term values. The cardinal principles such as independence,
accountability,
timely
disclosures, credibility, sustainability etc. serve as the means for
implementing the philosophy of corporate governance in letter
and in spirit.
responsibility,
transparency,
fair and
BOARD OF DIRECTORS
The composition of the Board of Directors of the Bank (“Board”)
is governed by the provisions of the Companies Act, 2013, the Banking
Regulation Act, 1949 and the listing requirements of the Indian Stock
Exchanges where the securities issued by the Bank are listed.
The Board has eleven (11) Directors as on March 31, 2016.
Composition of the Board of Directors of the Bank as on March 31, 2016:
Executive Directors: Mr. Aditya Puri (Managing Director), Mr. Paresh
Sukthankar (Deputy Managing Director) and Mr. Kaizad Bharucha
(Executive Director)
None of the Directors is related to each other.
(* Only Audit Committee and Stakeholders’ Relationship Committee
are considered for the purpose of this limit)
Details of directorship, memberships and chairmanships of
the committees of other companies for each Director of the Bank
are as follows:
Name of Director
Directorships
on the Board
of other
companies *
Chairmanships
on the Board
of other
companies
Memberships
of Committees
of other
companies *
Chairmanships
of Committees
of other
companies
Mrs. Shyamala
Gopinath
Mr. Partho Datta
Mr. Bobby Parikh
Mr. A. N. Roy
Mr. Malay Patel
Mr. Keki Mistry
Mrs. Renu Karnad
Mr. Aditya Puri
Mr. Paresh
Sukthankar
Mr. Kaizad Bharucha
Mr. Umesh Chandra
Sarangi $
3
3
4
3
-
8
9
-
-
1
-
-
-
-
-
-
1
-
-
-
-
-
1
1
-
-
-
5
5
-
-
-
-
2
1
3
1
-
3
1
-
-
-
-
* Chairmanships not counted
$ Mr. Umesh Chandra Sarangi was appointed as an Additional
Director w.e.f March 1, 2016.
Note: For the purpose of considering the limit of the Directorships
and limits of Committees on which the directors are members /
Chairmanships, all public limited companies, whether listed or
not, are included. Private Limited companies, foreign companies
and companies under Section 8 of the Companies Act, 2013 are
excluded. Further , Chairmanships/ Memberships of only the Audit
Committee and the Stakeholders’ Relationship Committee have
been considered.
Non-Executive Directors: Mr. Keki Mistry and Mrs. Renu Karnad
PROFILE OF BOARD OF DIRECTORS
Independent Directors: Mrs. Shyamala Gopinath (Chairperson),
Mr. Partho Datta, Mr. Bobby Parikh, Mr. A. N. Roy and Mr. Malay Patel
The profiles of the Directors of the Bank as on March 31, 2016
are as under:
Mr. Umesh Chandra Sarangi has been appointed as an Additional
Director of the Bank with effect from March 1, 2016, to hold office till the
conclusion of the ensuing Annual General Meeting of the Bank.
Mr. Keki Mistry and Mrs. Renu Karnad represent Housing Development
Finance Corporation Limited (HDFC Limited) on the Board of the Bank.
None of the Directors on the Board is a member of more than ten (10)
Committees* and Chairman of more than five (5) Committees* across
all the companies in which he / she is a Director. All the Directors have
made necessary disclosures regarding Committee positions occupied
by them in other companies.
Mrs. Shyamala Gopinath
Mrs. Shyamala Gopinath, aged 66 years, holds a Master’s
Degree in Commerce and is a CAIIB. Mrs. Gopinath has over
40 years of experience in financial sector policy formulation
in different capacities at RBI. As Deputy Governor of RBI for
seven years, Mrs. Gopinath had been guiding and influencing
the national policies in the diverse areas of financial sector
regulation and supervision, development of financial markets,
capital account management, management of government
borrowings, forex reserves management and payment and
settlement systems.
HDFC Bank Limited Annual Report 2015-16
196
Corporate Governance
During 2001-03, Mrs. Gopinath worked as senior financial sector
expert in the then Monetary Affairs and Exchange Department
of the International Monetary Fund (Financial Institutions
Division). She was responsible for preparing the accompanying
document to the Guidelines on Foreign Exchange Reserve
Management detailing country practices. Mrs. Gopinath was
a member of the FSAP (Financial Sector Assessment Program)
missions to Tanzania, Nigeria, Hungary and Poland and the
Foreign Exchange and Reserve Management team to Turkey
and Kosovo.
Mrs. Gopinath was actively involved in managing India’s
balance of payments crisis in 1991, the fall out of the Asian
and the Russian crisis, nuclear sanctions against India, Kargil
war with Pakistan and the transmission of the recent financial
crisis to Indian financial system and the markets.
Mrs. Gopinath does not hold any shares in the Bank as on
March 31, 2016.
Mr. Aditya Puri
Mr. Aditya Puri, aged 65 years, holds a Bachelor’s degree
in Commerce from Punjab University and is an Associate
Member of the Institute of Chartered Accountants of India.
Mr. Puri’s vision and strategy have been the driving force behind
the Bank’s foray into the world of “Digital Banking” resulting in the
roll out of several digital banking products like 10 - second loans,
PayZapp, Chillr, etc.
Mr. Puri, along with his relatives, holds 30,69,044 equity shares in
the Bank as on March 31, 2016.
Mr. Keki Mistry
Mr. Keki Mistry, aged 61 years, holds a Bachelor’s Degree in
Commerce from the Mumbai University. Mr. Mistry is a Fellow
Member of the Institute of Chartered Accountants of India.
Mr. Mistry brings with him over three decades of varied experience
in banking and financial services domain.
Mr. Mistry started his career with AF Ferguson & Co, a renowned
Chartered Accountancy firm, followed by stints at Hindustan
Unilever Limited and Indian Hotels Company Limited.
In the year 1981, Mr. Mistry joined Housing Development Finance
Corporation Limited (HDFC Ltd). Mr. Mistry was inducted on to
the Board of Directors of HDFC Ltd as an Executive Director in
the year 1993 and was elevated to the post of Managing Director
in November 2000. In October 2007, Mr. Mistry was appointed as
Vice Chairman & Managing Director of HDFC Ltd and became the
Vice Chairman & CEO in January 2010.
Prior to joining the Bank, Mr. Puri was the Chief Executive
Officer of Citibank, Malaysia from 1992 to 1994.
Mr. Mistry, along with his relatives, holds 2,96,130 equity shares in
the Bank as on March 31, 2016.
Mr. Puri has been the Managing Director of the Bank since
September 1994. Mr. Puri has over 40 years of experience
in the banking sector in India and abroad.
Mr. Puri has provided outstanding leadership as the Managing
Director and has contributed significantly to enable the Bank
scale phenomenal heights under his stewardship. During
the year, Mr. Puri was named amongst the best 30 CEOs in
the world in the Barron’s list. The numerous awards won by Mr. Puri
and the Bank are a testimony to the tremendous credibility that
Mr. Puri has built for himself and the Bank over the years.
The Bank has made good and consistent progress on key
parameters like balance sheet size, total deposits, net revenues,
earnings per share and net profit during Mr. Puri’s tenure.
The rankings achieved by the Bank amongst all Indian banks
with regard to market capitalization, profit after tax and balance
sheet size remain amongst the top 10.
During his tenure Mr. Puri has led the Bank through two major
mergers in the Indian banking industry i.e. merger of Times
Bank Limited and Centurion Bank of Punjab Limited with
HDFC Bank Limited. The subsequent integrations have been
smooth and seamless under his inspired leadership.
Mrs. Renu Karnad
Mrs. Renu Karnad, aged 63 years, is a law graduate and also
holds a Master’s Degree in Economics from Delhi University.
Mrs. Karnad
is a Parvin Fellow-Woodrow Wilson School
of International Affairs, Princeton University, U.S.A.
Mrs. Karnad joined HDFC Ltd in 1978. After spending two decades
in various positions, Mrs. Karnad was inducted on to the Board
as Executive Director in 2000 and was further elevated to the post
of Managing Director with effect from January 1, 2010.
Over the years, Mrs. Karnad has to her credit, numerous awards
and accolades. Known for her wit and diplomacy, Mrs. Karnad has
always had a humane approach towards solving complex issues.
Mrs. Karnad firmly believes that people are key to an organization’s
success, especially in the service domain and propagates
self-belief as the strongest weapon in achieving excellence.
Mrs. Karnad, along with her relatives, holds 2,94,620 equity
shares in the Bank as on March 31, 2016.
Mr. Partho Datta
Mr. Partho Datta, aged 67 years, is an Associate Member of the
Institute of Chartered Accountants of India. Mr. Datta joined Indian
Aluminum Company Limited (INDAL) and was with INDAL and
HDFC Bank Limited Annual Report 2015-16
197
Corporate Governance
its parent company in Canada for 25 years and held positions
as Treasurer, Chief Financial Officer and Director Finance during
his tenure. Mr. Datta joined the Chennai based Murugappa Group
thereafter as the head of Group Finance and was a member
of the Management Board of the Group, as well as Director in
several Murugappa Group companies. Post retirement from
the Murugappa Group, Mr. Datta was an advisor to the Central
Government appointed Board of Directors of Satyam Computers
Services Limited during the restoration process and has also
been engaged in providing business / strategic and financial
consultancy on a selective basis.
Mr. Datta has rich and extensive experience in various financial
and accounting matters including financial management, mergers
and amalgamations and capital markets strategy.
Mr. Datta is one of the financial experts on the Audit Committee
of the Board.
Mr. Datta does not hold any equity shares in the Bank as on
March 31, 2016.
Mr. Bobby Parikh
Mr. Bobby Parikh, aged 52 years, holds a Bachelor’s degree
in Commerce from the Mumbai University and has qualified
as a Chartered Accountant in 1987. Mr. Parikh is a Senior Partner
with BMR & Associates LLP and leads its financial services
practice. Prior to joining BMR & Associates LLP, Mr. Parikh
was the Chief Executive Officer of Ernst & Young in India and held
that responsibility until December 2003. Mr. Parikh worked with
Arthur Andersen for over 17 years and was its Country Managing
Partner until the Andersen practice combined with that of Ernst &
Young in June 2002.
Over the years, Mr. Parikh has had extensive experience
in advising clients across a range of industries. India has witnessed
significant deregulation and a progressive transformation of its
policy framework. An area of focus for Mr. Parikh has been to work
with businesses, both Indian and multinational, in interpreting the
implications of the deregulation as well as the changes to India’s
policy framework, to help businesses better leverage opportunities
that have become available and to address challenges that resulted
from such changes. Mr. Parikh has led teams that have advised
clients in the areas of entry strategy (MNCs into India and Indian
companies into overseas markets), business model identification,
structuring a business presence, mergers, acquisitions and other
business reorganizations.
Mr. Parikh works closely with regulators and policy formulators, in
providing inputs to aid in the development of new regulations and
policies, and in assessing the implications and efficacy of these
and providing feedback for action. Mr. Parikh led the Financial
Services industry practice at Arthur Andersen and then also at
Ernst & Young and has advised a number of banking groups,
investment banks, brokerage houses, fund managers and other
financial services intermediaries in establishing operations in
India, mergers and acquisitions and in developing structured
financial products, besides providing tax and business advisory
and tax reporting services.
Mr. Parikh has been a member of a number of trade and
business associations and
their management or other
committees, as well as on the advisory or executive boards of
non-Governmental and not-for-profit organizations.
Mr. Parikh, along with his relatives, holds 7,375 equity shares
in the Bank as on March 31, 2016.
Mr. A. N. Roy
Mr. A. N. Roy, aged 66 years, is an M. A., M. Phil and is a
distinguished retired civil servant. During his long career of
38 years in the Indian Police Service (IPS), Mr. Roy held with
great distinction a range of assignments, including some of
the most prestigious, challenging and sensitive ones, both in
the state of Maharashtra and Government of India, including
Commissioner of Police, Mumbai and DGP, Maharashtra
before retiring in the year 2010.
Mr. Roy’s areas of specialization include policy planning, budget,
recruitment, training and other finance and administration
functions in addition to all operational matters.
A firm believer in technology in Police for providing solutions
to a variety of complex problems or citizen facilitation and
as ‘force-multiplier’, Mr. Roy brought in technology in a very
big way in the Police department with full co-operation and
support of the entire IT Industry. Mr. Roy also held the position
of Director General of the Anti-Corruption Bureau, in which
capacity Mr. Roy initiated a policy document on vigilance
matters for Government of Maharashtra.
Mr. Roy has wide knowledge and experience of security and
intelligence matters at the state and national level. Having
handled multifarious field and staff assignments, Mr. Roy has
a rich and extensive experience of functioning of the government
at various levels and of problem solving.
Mr. Roy does not hold equity shares in the Bank as on
March 31, 2016.
Mr. Paresh Sukthankar
Mr. Paresh Sukthankar, aged 53 years, completed his graduation
from Sydenham College, Mumbai and holds a Bachelor
of Commerce (B.Com) degree from University of Mumbai.
He has done his Masters in Management Studies (MMS) from
Jamnalal Bajaj Institute (Mumbai). Mr. Sukthankar has also
completed the Advanced Management Program (AMP) from
the Harvard Business School.
HDFC Bank Limited Annual Report 2015-16
198
Corporate Governance
Mr. Sukthankar has been associated with the Bank since its
inception in 1994 and has rich experience in areas such as
Risk Management, Finance, Human Resources, Investor
Relations and Corporate Communications, etc.
Prior to joining the Bank, Mr. Sukthankar worked in Citibank
for around 9 years, in various departments including corporate
banking, risk management, financial control and credit
administration. Mr. Sukthankar has been a member of various
Committees formed by Reserve Bank of India and Indian
Banks’ Association. At present, Mr. Sukthankar is the Deputy
Managing Director of the Bank.
Mr. Sukthankar, along with his relatives, holds 8,45,905 equity
shares in the Bank as on March 31, 2016.
Mr. Kaizad Bharucha
Mr. Kaizad Bharucha, aged 51 years, holds a Bachelor of
Commerce degree from University of Mumbai. He has been
associated with the Bank since 1995. In his current position
as Executive Director, he is responsible for Wholesale
Banking covering areas of Corporate Banking, Emerging
Corporate Group, Business Banking, Capital Markets &
Commodities Business, Agri Lending, Investment Banking,
Financial Institutions & Government Business and Department
for Special Operations.
In his previous position as Group Head - Credit & Market Risk,
he was responsible for the Risk Management activities in the
Bank viz., Credit Risk, Market Risk, Debt Management, Risk
Intelligence and Control functions.
Mr. Bharucha has been a career banker with over 29 years of
banking experience. Prior to joining the Bank, he worked in SBI
Commercial and International Bank in various areas including
Trade Finance and Corporate Banking.
He has represented HDFC Bank as a member of the working
group constituted by the Reserve Bank of India to examine the
role of Credit Information Bureau and on the sub-committee
with regard to adoption of the Basel II guidelines.
Mr. Bharucha, along with his relatives, holds 8,84,955 equity
shares in the Bank as on March 31, 2016.
Mr. Malay Patel
Mr. Malay Patel, aged 39 years, is a Major in Engineering
(Mechanical) from Rutgers University, Livingston, NJ, USA,
and an A.A.B.A. in business from Bergen County College,
Fairlawn, NJ, USA. He is a director on the Board of Eewa
Engineering Company Private Limited, a company in the
plastics / packaging industry with exports to more than 50
countries. He has been involved in varied roles such as
export/ import, procurement, sales and marketing, etc in Eewa
Engineering Company Private Limited. Mr. Malay Patel has
special knowledge and practical experience in matters relating
to small scale industries in terms of Section 10-A (2)(a) of the
Banking Regulation Act, 1949.
Mr. Malay Patel does not hold any shares in the Bank as on
March 31, 2016.
Mr. Umesh Chandra Sarangi
Mr. Umesh Chandra Sarangi, aged 64 years, has been appointed
as an Additional Director on the Board of the Bank with effect from
March 1, 2016 to hold office till the conclusion of the ensuing Annual
General Meeting of the Bank. Mr. Sarangi holds a Master’s Degree
in Science (Botany) from the Utkal University (gold medalist).
Mr. Sarangi has 35 years of experience in the Indian Administrative
Services and brought in significant reforms in modernization
of agriculture, focus on agro processing and export. As the
erstwhile Chairman of the National Bank for Agricultural and Rural
Development (NABARD) from December 2007 to December
2010, Mr. Sarangi focused on rural infrastructure, accelerated
initiatives such as microfinance, financial inclusion, watershed
development and tribal development.
Mr. Sarangi has been appointed as a Director having specialized
knowledge and experience in agriculture and rural economy
pursuant to Section 10-A (2)(a) of the Banking Regulation Act,
1949.
Mr. Sarangi does not hold any shares in the Bank as on
March 31, 2016.
BOARD MEETINGS
During the year under review, seven (7) Board Meetings were
held. The meetings were held on April 23, 2015, July 21, 2015,
August 27, 2015, September 29, 2015, October 21, 2015,
January 25, 2016 and February 17, 2016.
Details of attendance at the Board Meetings held during the year
under review, are as follows:
1. Mrs. Shyamala Gopinath, Mr. Bobby Parikh, Mr. Malay Patel,
Mr. Keki Mistry and Mr. Paresh Sukthankar attended 7 Board
meetings each
2. Mr. Partho Datta, Mr. A. N. Roy, Mr. Aditya Puri and Mr. Kaizad
Bharucha attended 6 Board meetings each.
3. Mrs. Renu Karnad attended 5 Board meetings.
4. Dr. Pandit Palande attended 1 Board meeting. (Dr. Palande
ceased to be a Director w.e.f close of business hours on
April 23, 2015)
5. Mr. Umesh Chandra Sarangi has not attended any Board
Meetings as he was appointed as an Additional Director w.e.f
March 1, 2016.
ATTENDANCE AT LAST AGM
All the directors of the Bank who were on the Board of the Bank
as on the date of previous Annual General Meeting held on
July 21, 2015 attended the meeting.
HDFC Bank Limited Annual Report 2015-16
199
Corporate Governance
REMUNERATION OF DIRECTORS
Managing Director and other Executive Directors:
The details of the remuneration paid to Mr. Aditya Puri, Managing
Director; Mr. Paresh Sukthankar, Deputy Managing Director and
Mr. Kaizad Bharucha, Executive Director during the year 2015-16
(Amount in `)
are as under:
Particulars
Basic
Mr. Aditya
Puri
Mr. Paresh
Sukthankar
Mr. Kaizad
Bharucha
32,846,400
18,273,960
10,500,000
Allowances and Perquisites
30,434,539
13,251,279
14,733,614
Provident Fund
Superannuation
3,941,568
2,192,880
1,260,000
4,926,960
2,741,094
1,575,000
Performance Bonus #
25,154,778
15,000,411
6,542,610
Number of Stock Options granted *
639,000
390,000
335,000
# Bonus belonging to FY 14-15
paid out in FY 2015-16
Deferred Bonus tranches for earlier
financial years
19,650,725
11,716,054
6,542,610
5,504,053
3,284,357
0
* The stock options granted to Mr. Aditya Puri, Mr. Paresh
Sukthankar and Mr. Kaizad Bharucha have not been issued at
discount. The vesting schedule for the stock options is - 40% of
options after expiry of 1 year from date of grant, 30% options after
expiry of 2 years from date of grant and 30% options after expiry
of 3 years from date of grant. The options so vested are to be
exercised within 4 years from the respective dates of vesting.
The criteria for evaluation of performance of Whole-Time Directors
include performance vis-à-vis business plans, performance
vis-à-vis banking system, and performance in relation to regulatory
and compliance requirements.
All the Whole-Time Directors of the Bank have been appointed for
a period of three years each. The notice period for each of them,
as specified in their terms of appointments, is three months.
The remuneration, including grant of stock options, of Mr. Aditya
Puri, Mr. Paresh Sukthankar and Mr. Kaizad Bharucha as above
has been approved by the Reserve Bank of India (RBI).
The Bank provides for gratuity in the form of lump-sum payment
on retirement or on death while in employment or on termination
of employment of an amount equivalent to 15 (Fifteen) days basic
salary payable for each completed year of service.
Perquisites (evaluated as per Income Tax Rules, 1962
wherever applicable and at actual cost to the Bank otherwise)
such as the benefit of the Bank’s furnished accommodation,
gas, electricity, water and furnishings, club fees, personal
accident insurance, use of car and telephone at residence,
medical reimbursement, leave and leave travel concession and
other benefits like provident fund, superannuation and gratuity
are provided in accordance with the rules of the Bank in this
regard.
No sitting fees are paid to Mr. Puri, Mr. Sukthankar and
Mr. Bharucha for attending meetings of the Board and / or its
Committees.
DETAILS OF REMUNERATION / SITTING FEES PAID TO
DIRECTORS
All the non-executive directors other than the Chairperson
receive remuneration only by way of sitting fees for each
meeting of the Board and its various committees. No stock
options are granted to any of the non-executive directors.
During
the year, Mrs. Shyamala Gopinath was paid
remuneration of ` 30,00,000. Mrs. Gopinath is also paid
sitting fees for attending Board and Committee meetings.
The remuneration of the Chairperson has been approved by
the Reserve Bank of India.
Pursuant to the provisions of Companies Act, 2013, Directors
are paid sitting fees @ ` 50,000 and ` 100,000 for attending
Committee & Board meetings respectively.
The details of sitting fees paid to non-executive directors during
the year for attending meetings of the Board and its various
Committees are as under:
Name of the Director
Sitting Fees (`)
Mrs. Shyamala Gopinath
Mr. Partho Datta
Mr. Bobby Parikh
Mr. A. N. Roy
Mr. Malay Patel
Mr. Keki Mistry
Mrs. Renu Karnad
Dr. Pandit Palande *
Mr. Umesh Chandra Sarangi $
25,00,000
20,00,000
24,00,000
21,00,000
13,00,000
16,00,000
11,00,000
3,50,000
NIL
The Bank makes annual contributions to funds administered
by trustees and managed by insurance companies for amounts
notified by the said insurance companies. The Bank accounts for
the liability for future gratuity benefits based on an independent
external actuarial valuation carried out annually.
* Dr. Pandit Palande ceased to be a director of the Bank w.e.f
close of business hours on April 23, 2015
$ Mr. Umesh Chandra Sarangi was appointed as Additional
Director of the Bank w.e.f March 1, 2016
HDFC Bank Limited Annual Report 2015-16
200
Corporate Governance
COMPOSITION OF COMMITTEES OF DIRECTORS AND
ATTENDANCE AT THE MEETINGS
The Board has constituted various Committees of Directors to
take informed decisions in the best interest of the Bank. These
Committees monitor the activities falling within their terms of
reference.
The Board’s Committees are as follows:
Audit Committee:
The Audit Committee of the Bank comprises Mrs. Shyamala
Gopinath, Mr. Bobby Parikh, Mr. Partho Datta and Mr. A. N. Roy.
During the year, Dr. Pandit Palande ceased to be a member of
the Audit Committee, pursuant to his cessation as Director, and
Mr. A. N. Roy was appointed as a member on the Committee during
the year. The Committee is chaired by Mrs. Shyamala Gopinath.
All the members of the Committee are independent directors.
Mr. Sanjay Dongre, Company Secretary of the Bank, acts as
the Secretary of the Committee.
The Committee met nine (9) times during the year on
April 22, 2015; May 6, 2015; July 20, 2015; August 28, 2015;
October 20, 2015; November 20, 2015; January 22, 2016;
February 26, 2016 and March 16, 2016.
The brief terms of reference of the Audit Committee include,
inter-alia, the following:
a) Overseeing the Bank’s financial reporting process and
ensuring correct, adequate and credible disclosure of
financial information;
b) Recommending appointment and removal of external
auditors and fixing of their fees;
c) Reviewing with management
the annual financial
statements before submission to the Board with special
emphasis on accounting policies and practices, compliance
with accounting standards and other legal requirements
concerning financial statements;
d) Reviewing the adequacy of the Audit and Compliance
functions, including their policies, procedures, techniques
and other regulatory requirements; and
e) Any other terms of reference as may be included
from
the Companies Act, 2013,
SEBI Listing Regulations, 2015, including any amendments/
re-enactments thereof from time to time.
time
time
to
in
Nomination and Remuneration Committee:
The brief terms of reference of the Nomination and Remuneration
Committee includes scrutinizing the nominations of the directors
with reference to their qualifications and experience, for identifying
‘Fit and Proper’ persons, assessing competency of the persons
and reviewing compensation levels of the Bank’s employees
vis-à-vis other banks and the banking industry in general.
The following are the criteria to assess competency of the persons
nominated:
(cid:115)(cid:0) (cid:65)(cid:67)(cid:65)(cid:68)(cid:69)(cid:77)(cid:73)(cid:67)(cid:0)(cid:81)(cid:85)(cid:65)(cid:76)(cid:73)(cid:108)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:12)(cid:0)
(cid:115)(cid:0) (cid:80)(cid:82)(cid:69)(cid:86)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:82)(cid:73)(cid:69)(cid:78)(cid:67)(cid:69)(cid:12)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:84)(cid:82)(cid:65)(cid:67)(cid:75)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:82)(cid:68)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
(cid:73)(cid:78)(cid:84)(cid:69)(cid:71)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:67)(cid:65)(cid:78)(cid:68)(cid:73)(cid:68)(cid:65)(cid:84)(cid:69)(cid:83)(cid:14)
For assessing the integrity and suitability, features like criminal
records, financial position, civil actions undertaken to pursue
personal debts, refusal of admission to and expulsion from
professional bodies, sanctions applied by regulators or similar
bodies and previous questionable business practices are
considered.
The Bank’s compensation policy provides a fair and consistent
basis for motivating and rewarding employees appropriately
according to their job profile / role size, performance, contribution,
skill and competence.
The Committee also formulates criteria for evaluation of performance
of individual directors, the Board of Directors and its Committees.
The criteria for evaluation of performance of directors include
personal attributes such as attendance at meetings, communication
skills, leadership skills and adaptability and professional attributes
such as understanding of the Bank’s core business and strategic
objectives, industry knowledge, independent judgment, adherence
to the Bank’s Code of Conduct, Ethics and Values, etc.
Mrs. Shyamala Gopinath, Mr. Partho Datta, Mr. Bobby Parikh and
Mr. A. N. Roy are the members of the Committee. During the year,
Dr. Pandit Palande ceased to be a member of the Committee,
pursuant to his cessation as Director. Mr. A. N. Roy was appointed
as a member of the Committee during the year. Mr. Bobby Parikh
is the Chairman of the Committee.
All the members of the Committee are independent directors.
The Board has also adopted a Charter for the Audit Committee
in accordance with certain United States regulatory standards
as the Bank’s securities are also listed on the New York Stock
Exchange.
the year on
The Committee met nine (9)
April 22, 2015; May 6, 2015; May 11, 2015; July 20, 2015;
August 1, 2015; October 20, 2015; November 20, 2015;
January 22, 2016 and March 16, 2016.
times during
HDFC Bank Limited Annual Report 2015-16
201
Corporate Governance
Stakeholders’ Relationship Committee:
The Stakeholders’ Relationship Committee approves and monitors
transfer, transmission, splitting and consolidation of shares and
considers requests for dematerialization of shares. Allotment of
shares to the employees on exercise of stock options granted
under the various Employees Stock Option Schemes which are
made in terms of the powers delegated by the Board in this regard,
are placed before the Committee for ratification. The Committee
also monitors redressal of complaints from shareholders relating
to transfer of shares, non-receipt of Annual Report, dividends etc.
The Committee is comprised of Mr. A. N. Roy, Mrs. Renu Karnad,
Mr. Aditya Puri and Mr. Paresh Sukthankar. The Committee
is chaired by Mr. A. N. Roy, who is an independent director.
The powers to approve share transfers and dematerialization
requests have been delegated to executives of the Bank to avoid
delays that may arise due to non-availability of the members of the
Committee. Mr. Sanjay Dongre, Executive Vice - President (Legal)
& the Company Secretary of the Bank is the Compliance Officer
responsible for expediting the share transfer formalities.
for treasury operations and reviews its risk monitoring system.
The Committee also ensures that the Bank’s credit exposure
to any one group or industry does not exceed the internally set
limits and that the risk is prudentially diversified.
The Committee consists of Mrs. Renu Karnad, Mrs. Shyamala
Gopinath, Mr. Partho Datta, Mr. Aditya Puri and Mr. Paresh
Sukthankar. The Committee is chaired by Mrs. Renu Karnad.
The Committee met five (5) times during the year on
April 23, 2015; June 25, 2015; July 21, 2015; October 21, 2015
and January 22, 2016.
Credit Approval Committee:
The Credit Approval Committee approves credit exposures,
which are beyond the powers delegated to executives of
the Bank. This facilitates quick response to the needs of the
customers and speedy disbursement of loans.
The Committee consists of Mr. Bobby Parikh, Mr. Keki Mistry,
Mr. Aditya Puri and Mr. Kaizad Bharucha.
As on March 31, 2016, seven (7) instruments of transfer for 3,300
equity shares were pending for transfer and these have since
been processed. The details of the transfers are reported to the
Board from time to time.
The Committee met eight (8) times during the year on
April 23, 2015; July 16, 2015; August 25, 2015;
September 19, 2015; October 14, 2015; December 1, 2015;
January 25, 2016 and March 22, 2016.
During the year ended March 31, 2016, 2668 complaints were
received from the shareholders. The Bank had attended to all the
complaints. 10 complaints remained pending and 4 complaints
have not been solved to the satisfaction of the shareholders as
on March 31, 2016. Besides, 5671 letters were received from the
shareholders relating to change of address, nomination requests,
email id and contact details updation, IFSC / MICR code updation,
ECS / NECS Mandates, claim of shares from Unclaimed
Suspense account, queries relating to the annual reports,
sub-division of shares of face value of ` 10/- each to ` 2/- each,
amalgamation, request for revalidation of dividend warrants and
other investor related matters. These letters have also been
responded to.
The Committee met four (4) times during the year on April 23, 2015;
July 21, 2015; October 19, 2015 and January 22, 2016.
Premises Committee:
The Premises Committee approves purchases and leasing
of premises for the use of Bank’s branches, back offices,
ATMs and residence of executives in accordance with the
guidelines laid down by the Board.
The Committee consists of Mrs. Renu Karnad, Mr. Aditya Puri
and Mr. Malay Patel. During the year, Dr. Pandit Palande ceased
to be a member of the Committee pursuant to his cessation as
Director. Mr. Malay Patel was appointed as a member of the
Committee during the year.
The Committee met four (4) times during the year on April 23,
2015; July 21, 2015; October 19, 2015 and January 25, 2016.
Fraud Monitoring Committee:
Risk Policy and Monitoring Committee:
The Risk Policy and Monitoring Committee has been formed as
per the guidelines of Reserve Bank of India on Asset Liability
Management / Risk Management Systems. The Committee
develops Bank’s credit and market risk policies and procedures,
verifies adherence to various risk parameters and prudential limits
Pursuant to the directions of the RBI, the Bank has constituted
a Fraud Monitoring Committee, exclusively dedicated to the
monitoring and following up of cases of fraud involving amounts
of ` 1 crore and above.
The objectives of this Committee are the effective detection of
frauds and immediate reporting of the frauds and actions taken
HDFC Bank Limited Annual Report 2015-16
202
Corporate Governance
against the perpetrators of frauds to the concerned regulatory
and enforcement agencies. The terms of reference of the
Committee are as under:
a. Identify the systemic lacunae, if any, that facilitated
perpetration of the fraud and put in place measures to plug
the same;
b.
Identify the reasons for delay in detection, if any and report
to top management of the Bank and RBI;
Corporate Social Responsibility Committee:
The Board has constituted a Corporate Social Responsibility
(CSR) Committee with the following terms of reference:
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:70)(cid:79)(cid:82)(cid:77)(cid:85)(cid:76)(cid:65)(cid:84)(cid:69)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:7)(cid:83)(cid:0)(cid:35)(cid:51)(cid:50)(cid:0)(cid:51)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:89)(cid:12)(cid:0)(cid:48)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:39)(cid:79)(cid:65)(cid:76)(cid:83)
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:7)(cid:83)(cid:0)(cid:35)(cid:51)(cid:50)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:51)(cid:50)(cid:0)(cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:83)(cid:0)(cid:15)(cid:0)(cid:73)(cid:78)(cid:73)(cid:84)(cid:73)(cid:65)(cid:84)(cid:73)(cid:86)(cid:69)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:84)(cid:73)(cid:77)(cid:69)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:73)(cid:77)(cid:69)
c. Monitor progress of Central Bureau of Investigation / Police
Investigation and recovery position;
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0) (cid:76)(cid:69)(cid:71)(cid:65)(cid:76)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:82)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0) (cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0) (cid:70)(cid:82)(cid:79)(cid:77)(cid:0) (cid:65)(cid:0) (cid:35)(cid:51)(cid:50)(cid:0)
viewpoint
d. Ensure that staff accountability is examined at all levels in
all the cases of frauds and staff side action, if required, is
completed quickly without loss of time;
e. Review the efficacy of the remedial action taken to prevent
recurrence of frauds, such as strengthening of internal
controls; and
f. Put in place other measures as may be considered relevant
to strengthen preventive measures against frauds.
The members of the Committee are Mrs. Shyamala Gopinath,
Mr. Partho Datta, Mr. A. N. Roy, Mr. Keki Mistry, Mr. Malay Patel
and Mr. Aditya Puri. During the year, Dr. Pandit Palande ceased
to be a member of the Committee pursuant to his cessation as
Director. Mr. Malay Patel was appointed as a member of the
Committee during the year.
The Committee met five (5) times during the year on
April 22, 2015; July 17, 2015; August 28, 2015; October 19, 2015
and January 25, 2016.
Customer Service Committee:
The Customer Service Committee monitors
the quality
of services rendered to the customers and also ensures
implementation of directives received from the RBI in this
regard. The terms of reference of the Committee are to
formulate comprehensive deposit policy incorporating the
issues arising out of the demise of a depositor for operation
of his account, the product approval process, annual survey of
depositor satisfaction and the triennial audit of such services.
The members of
the Committee are Mrs. Shyamala
Gopinath, Mr. A. N. Roy, Mr. Keki Mistry, Mr. Malay Patel and
Mr. Aditya Puri. During the year, Dr. Pandit Palande ceased to be a
member of the Committee pursuant to his cessation as Director.
Mr. Malay Patel was appointed as a member of the Committee
during the year.
The Committee met five (5) times during the year on
April 22, 2015; July 17, 2015; October 19, 2015;
January 25, 2016 and February 8, 2016.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0) (cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:84)(cid:79)(cid:0) (cid:83)(cid:84)(cid:65)(cid:75)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:0) (cid:79)(cid:78)(cid:0)
the Bank’s CSR
The members of the CSR Committee are Mrs. Renu Karnad,
Mr. Partho Datta, Mr. Bobby Parikh, Mr. Aditya Puri and Mr. Paresh
Sukthankar.
The Committee met three (3) times during the year on
July 21, 2015; October 19, 2015; and January 22, 2016
Review Committee for Willful Defaulters’ Identification:
The Board has constituted a Review Committee for Willful
Defaulters’ Identification to review the orders passed by the
Committee of Executives for Identification of Willful Defaulters
and provide the final decision with regard to identified willful
defaulters. Mrs. Shyamala Gopinath, Mr. Aditya Puri, Mr. Bobby
Parikh, Mr. Partho Datta and Mr. A. N. Roy are the members of the
Committee. The Committee is chaired by Mrs. Shyamala Gopinath
or Mr. Aditya Puri in her absence.
The Committee met twice during the year on August 28, 2015 and
January 25, 2016.
Review Committee for Non-Cooperative Borrowers:
The Board has constituted a Review Committee to review matters
related to Non-Co-operative Borrowers which are handled by
the Internal Committee of Executives appointed for this purpose.
Mrs. Shyamala Gopinath, Mr. Aditya Puri, Mr. Bobby Parikh,
Mr. Partho Datta and Mr. A. N. Roy are the members of the
Committee. The Committee is chaired by Mrs. Shyamala Gopinath
or Mr. Aditya Puri in her absence. No meetings of the Committee
were held during the year.
Meeting of the Independent Directors:
The Independent Directors of the Bank held a meeting on March
16, 2016 without the presence of the non-independent Directors
and Senior management team of the Bank. All the Independent
Directors attended the meeting. The Independent Directors
discussed matters as required under the relevant provisions of
the Companies Act, 2013 and the SEBI Listing Regulations, 2015.
HDFC Bank Limited Annual Report 2015-16
203
Corporate Governance
COMPOSITION OF COMMITTEES OF DIRECTORS AND ATTENDANCE AT THE COMMITTEE MEETINGS
Audit Committee
[Total nine meetings held]
Credit Approval Committee
[Total eight meetings held]
Name
Mrs. Shyamala Gopinath
Mr. Bobby Parikh
Mr. A. N. Roy #
Mr. Partho Datta
Dr. Pandit Palande *
No. of meetings attended
9
9
8
8
1
Name
Mr. Bobby Parikh
Mr. Keki Mistry
Mr. Aditya Puri
Mr. Kaizad Bharucha
No. of meetings attended
8
8
6
8
Stakeholders’ Relationship Committee
[Total four meetings held]
Nomination and Remuneration Committee
[Total nine meetings held]
Name
Mr. A. N. Roy
Mrs. Renu Karnad
Mr. Aditya Puri
Mr. Paresh Sukthankar
No. of meetings attended
3
3
4
4
Customer Service Committee
[Total five meetings held]
Name
Mrs. Shyamala Gopinath
Mr. Aditya Puri
Mr. A. N. Roy
Mr. Keki Mistry
Mr. Malay Patel $
Dr. Pandit Palande *
No. of meetings attended
5
5
4
5
4
1
Fraud Monitoring Committee
[Total five meetings held]
Name
Mrs.Shyamala Gopinath
Mr. Aditya Puri
Mr. Partho Datta
Mr. A. N. Roy
Mr. Keki Mistry
Mr. Malay Patel $
Dr. Pandit Palande *
No. of meetings attended
5
4
3
4
5
4
1
Risk Policy & Monitoring Committee
[Total five meetings held]
Name
No. of meetings attended
Mrs. Renu Karnad
Mrs. Shyamala Gopinath
Mr. Paresh Sukthankar
Mr. Partho Datta
Mr. Aditya Puri
3
4
5
4
5
Name
Mrs. Shyamala Gopinath
Mr. Partho Datta
Mr. A. N. Roy #
Mr. Bobby Parikh
Dr. Pandit Palande *
No. of meetings attended
9
8
8
9
1
Premises Committee
[Total four meetings held]
Name
Mrs. Renu Karnad
Mr. Malay Patel $
Mr. Aditya Puri
Dr. Pandit Palande *
No. of meetings attended
3
3
4
1
Corporate Social Responsibility Committee
[Total three meetings held]
Name
Mrs. Renu Karnad
Mr. Partho Datta
Mr. Bobby Parikh
Mr. Aditya Puri
Mr. Paresh Sukthankar
No. of meetings attended
3
2
3
3
3
Review Committee for Willful Defaulters’ Identification
[Total two meetings held]
Name
Mrs. Shyamala Gopinath
No. of meetings attended
2
Mr. Aditya Puri
Mr. Bobby Parikh
Mr. Partho Datta
Mr. A. N. Roy
0
0
2
2
# Mr. A. N. Roy was appointed as a member of the Committee w.e.f April 23, 2015.
* Dr. Pandit Palande ceased to be a member of the Committee, pursuant to his cessation as Director of the Bank w.e.f. close of business hours on
April 23, 2015.
$ Mr. Malay Patel was appointed as a member of the Committee w.e.f April 23, 2015.
HDFC Bank Limited Annual Report 2015-16
204
Corporate Governance
OWNERSHIP RIGHTS
Certain rights that a shareholder in a company enjoys:
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:70)(cid:69)(cid:82)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:0) (cid:67)(cid:69)(cid:82)(cid:84)(cid:73)(cid:108)(cid:67)(cid:65)(cid:84)(cid:69)(cid:83)(cid:0)
upon transfer within the period prescribed in the SEBI Listing
Regulations, as amended from time to time.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:0) (cid:78)(cid:79)(cid:84)(cid:73)(cid:67)(cid:69)(cid:0) (cid:79)(cid:70)(cid:0) (cid:71)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0) (cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:12)(cid:0) (cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0) (cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:12)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0)
balance sheet and profit and loss account and the auditors’
report. To attend and speak in person, at general meetings.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:0)(cid:80)(cid:82)(cid:79)(cid:88)(cid:89)(cid:0)(cid:84)(cid:79)(cid:0)(cid:65)(cid:84)(cid:84)(cid:69)(cid:78)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:86)(cid:79)(cid:84)(cid:69)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:71)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:14)(cid:0)
In case the member is a body corporate, to appoint
a representative to attend and vote at the general meetings
of the company on its behalf.
(cid:115)(cid:0) (cid:48)(cid:82)(cid:79)(cid:88)(cid:89)(cid:0)(cid:67)(cid:65)(cid:78)(cid:0)(cid:86)(cid:79)(cid:84)(cid:69)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:0)(cid:80)(cid:79)(cid:76)(cid:76)(cid:14)(cid:0)(cid:41)(cid:78)(cid:0)(cid:67)(cid:65)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:86)(cid:79)(cid:84)(cid:69)(cid:0)(cid:79)(cid:78)(cid:0)(cid:80)(cid:79)(cid:76)(cid:76)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:78)(cid:85)(cid:77)(cid:66)(cid:69)(cid:82)(cid:0)
of votes of a shareholder is proportionate to the number
of equity shares held by him.
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:0)(cid:84)(cid:69)(cid:82)(cid:77)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:51)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:17)(cid:18)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:50)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:33)(cid:67)(cid:84)(cid:12)(cid:0)(cid:17)(cid:25)(cid:20)(cid:25)(cid:0)(cid:65)(cid:83)(cid:0)
amended with effect from January 18, 2013 vide the Banking
Laws Amendment Act, 2012, no person holding shares in a
banking company shall, in respect of any shares held by him,
exercise voting rights on poll in excess of ten per cent of the total
voting rights of all the shareholders of the banking company,
provided that RBI may increase, in a phased manner, such
ceiling on voting rights from ten per cent to twenty-six per cent.
The Master Direction - Ownership in Private Sector Banks,
Directions, 2016 issued by RBI on May 12, 2016, states that
the current level of ceiling on voting rights is at fifteen per cent.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:88)(cid:84)(cid:82)(cid:65)(cid:79)(cid:82)(cid:68)(cid:73)(cid:78)(cid:65)(cid:82)(cid:89)(cid:0)(cid:71)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:66)(cid:89)(cid:0)
shareholders who collectively hold not less than 1/10th of the
total paid-up capital of the company.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:77)(cid:79)(cid:86)(cid:69)(cid:0) (cid:65)(cid:77)(cid:69)(cid:78)(cid:68)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:84)(cid:79)(cid:0) (cid:82)(cid:69)(cid:83)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:80)(cid:82)(cid:79)(cid:80)(cid:79)(cid:83)(cid:69)(cid:68)(cid:0) (cid:65)(cid:84)(cid:0) (cid:71)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)
meetings.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:82)(cid:69)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:0) (cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:69)(cid:78)(cid:68)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0) (cid:67)(cid:79)(cid:82)(cid:80)(cid:79)(cid:82)(cid:65)(cid:84)(cid:69)(cid:0) (cid:66)(cid:69)(cid:78)(cid:69)(cid:108)(cid:84)(cid:83)(cid:0) (cid:76)(cid:73)(cid:75)(cid:69)(cid:0) (cid:82)(cid:73)(cid:71)(cid:72)(cid:84)(cid:83)(cid:12)(cid:0)
bonus shares etc. as and when declared / announced.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:73)(cid:78)(cid:83)(cid:80)(cid:69)(cid:67)(cid:84)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:82)(cid:69)(cid:71)(cid:73)(cid:83)(cid:84)(cid:69)(cid:82)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:12)(cid:0)(cid:77)(cid:73)(cid:78)(cid:85)(cid:84)(cid:69)(cid:0)(cid:66)(cid:79)(cid:79)(cid:75)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)
general meetings and to receive copies thereof after complying
with the procedure prescribed in the Companies Act, 2013
as amended from time to time.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:77)(cid:65)(cid:75)(cid:69)(cid:0) (cid:78)(cid:79)(cid:77)(cid:73)(cid:78)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:73)(cid:78)(cid:0) (cid:82)(cid:69)(cid:83)(cid:80)(cid:69)(cid:67)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:83)(cid:0) (cid:72)(cid:69)(cid:76)(cid:68)(cid:0) (cid:66)(cid:89)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0)
shareholder.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:80)(cid:65)(cid:82)(cid:84)(cid:73)(cid:67)(cid:73)(cid:80)(cid:65)(cid:84)(cid:69)(cid:0)(cid:73)(cid:78)(cid:12)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:66)(cid:69)(cid:0)(cid:83)(cid:85)(cid:70)(cid:108)(cid:67)(cid:73)(cid:69)(cid:78)(cid:84)(cid:76)(cid:89)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:69)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:69)(cid:67)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)
concerning fundamental corporate changes.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:66)(cid:69)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:69)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:85)(cid:76)(cid:69)(cid:83)(cid:12)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:86)(cid:79)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:68)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)
govern general shareholder meetings.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:65)(cid:68)(cid:69)(cid:81)(cid:85)(cid:65)(cid:84)(cid:69)(cid:0)(cid:77)(cid:69)(cid:67)(cid:72)(cid:65)(cid:78)(cid:73)(cid:83)(cid:77)(cid:0)(cid:84)(cid:79)(cid:0)(cid:65)(cid:68)(cid:68)(cid:82)(cid:69)(cid:83)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:71)(cid:82)(cid:73)(cid:69)(cid:86)(cid:65)(cid:78)(cid:67)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
shareholders.
(cid:115)(cid:0) (cid:52)(cid:79)(cid:0) (cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0) (cid:80)(cid:82)(cid:79)(cid:84)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:77)(cid:73)(cid:78)(cid:79)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0) (cid:83)(cid:72)(cid:65)(cid:82)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:0) (cid:70)(cid:82)(cid:79)(cid:77)(cid:0) (cid:65)(cid:66)(cid:85)(cid:83)(cid:73)(cid:86)(cid:69)(cid:0)
actions by, or in the interest of, controlling shareholders acting
either directly or indirectly, and effective means of redress.
Special
Resolutions
passed, if
any
One special
resolution
passed
The rights mentioned above are prescribed in the Companies
Act, 2013,
the SEBI Listing Regulations and Banking
Regulation Act, 1949, wherever applicable, and should be
followed only after careful reading of the relevant sections.
These rights are not necessarily absolute.
GENERAL BODY MEETINGS
(During the previous three financial years)
Sr.
No.
Particulars of
meeting
Date, time and venue of
the meeting
1
2
3
19th Annual
General
Meeting
June 27, 2013 at 2.30 P.M.
Birla Matushri Sabhagar,
19, New Marine Lines,
Mumbai 400 020
20th Annual
General
Meeting
June 25, 2014 at 2.30 P.M.
Birla Matushri Sabhagar,
19, New Marine Lines,
Mumbai 400 020
Eight special
resolutions
passed
21st Annual
General
Meeting
July 21, 2015 at 2.30 P.M.
Birla Matushri Sabhagar,
19, New Marine Lines,
Mumbai 400 020
Three
special
resolutions
passed
POSTAL BALLOT
During the year, no resolutions were passed by means of
postal ballot.
DISCLOSURES
Material Subsidiary
The Bank has 2 subsidiaries namely- HDB Financial Services
Limited and HDFC Securities Limited, neither of which qualifies
to be a material subsidiary within the meaning of the SEBI Listing
Regulations. However, as a good corporate governance practice,
the Bank has formulated a policy for determining material
subsidiary. The policy is available on the Bank’s website at
http://www.hdfcbank.com/htdocs/common/pdf/Policy-for-
determining-material-subsidiary.pdf.
Related Party Transactions
transactions with
the promoters, directors,
During the year the Bank has not entered into any materially
significant
the
management, subsidiaries or relatives of the Directors, which
could lead to a potential conflict of interest between the Bank
and these parties, other than the transactions entered into in
the normal course of business. Transactions with related parties
entered into by the Bank in the normal course of business were
placed before the Audit Committee. There were no material
individual transactions with related parties, which were not in
HDFC Bank Limited Annual Report 2015-16
205
Corporate Governance
the normal course of business, nor were there any material
transactions with related parties or others, which were not at an
arm’s length basis. Details of related party transactions entered into
during the year ended March 31, 2016 are given in Schedule 18,
Note No. 27 forming part of ‘Notes to Accounts’. The Bank has
put in place a policy to deal with related party transactions and
the same has been uploaded on the Bank’s web-site at http://
www.hdfcbank.com/htdocs/common/pdf/policy_for_dealing_with_
related_party_transactions.pdf
Commodity Price Risks and Foreign Exchange Risks and
hedging activities
future contracts or as may be specified by the relevant authority from
time to time. All open positions are marked to market based on the
settlement price and the resultant marked to market profit / loss is
settled daily with the exchange.
Foreign exchange forward contracts outstanding on the balance
sheet date that are not intended for trading and are entered into
to establish the amount of reporting currency required or available
on the settlement date of a transaction, to meet a balance sheet
transaction, are effectively valued at the closing spot rate. The premia
or discount arising at the inception of such forward exchange contract
is amortised as expense or income over the life of the contract.
Being in the banking business, the Bank does not deal in
any “commodity”. The Bank may, however, be exposed to the
commodity price risks of its customers in its capacity as lender/
banker.
Contingent liabilities on account of foreign exchange contracts,
currency future contracts, guarantees, letters of credit, acceptances
and endorsements are reported at closing rates of exchange notified
by FEDAI as at the Balance Sheet date.
The Bank being an authorised dealer, deals in foreign exchange
and derivative transactions with various counterparties, both
interbank and customers, in accordance with the RBI guidelines.
Thus, as part of foreign exchange trading, the Bank enters into
foreign exchange contracts such as spot, outright forwards, forex
swaps, currency options, long term forwards, currency and interest
rate swaps and exchange traded products in specific currency
pairs. These contracts are managed in the trading portfolio within
the forex trading risk limits viz. Net overnight open position limit,
Intraday open position limit, Gap limits, Value-at-Risk limit, Stop
Loss Trigger Level, Sensitivity limit and Delta stipulated as part of
the Bank’s Treasury Limits Package. In addition, Bank also enters
into foreign exchange contracts to hedge the currency risk in the
balance sheet on account of foreign currency deposits and loans,
which are managed as hedge positions as per extant guidelines.
The Foreign exchange spot,
forward and swap contracts
outstanding as on the Balance Sheet date, that are held for trading,
are revalued at the closing spot and forward rates respectively as
notified by FEDAI (Foreign Exchange Dealers’ Assocation of India)
and at interpolated rates for contracts of interim maturities. The
USD-INR rate for valuation of contracts having longer maturities
i.e. greater than one year, is implied from MIFOR and LIBOR
curves. For other currency pairs, where the rates / tenors are not
published by FEDAI, the forward points are obtained from Reuters
for valuation of the Foreign Exchange deals. The forex profit or loss
is arrived on present value basis thereafter, as directed by FEDAI,
whereby the forward profits or losses on the deals, as computed
above, are discounted till the valuation date using the discounting
yields. The resulting profit or loss on valuation is recognised in the
Statement of Profit and Loss.
Currency future contracts are marked to market daily using
settlement price on a trading day, which is the closing price of
the respective futures contracts on that day. The daily settlement
price is computed on the basis of the last half an hour weighted
average price of such contract, while, the final settlement price
is taken as the RBI reference rate on the last trading day of the
Accounting Treatment
The financial statements have been prepared and presented under
the historical cost convention and accrual basis of accounting, unless
otherwise stated and are in accordance with Generally Accepted
Accounting Principles in India (‘GAAP’), statutory requirements
prescribed under the Banking Regulation Act 1949, circulars and
guidelines issued by the Reserve Bank of India (‘RBI’) from time to
time, Accounting Standards (‘AS’) specified under section 133 of the
Companies Act, 2013, in so far as they apply to banks and current
practices prevailing within the banking industry in India.
There are no deviations from the statutory provisions.
Whistle Blower Policy/ Vigil Mechanism
The details of establishment of whistle blower policy/ vigil mechanism
are furnished in the Directors’ Report. None of the Bank’s personnel
have been denied access to the Audit Committee.
Remuneration and Selection criteria for Directors
The relevant details are furnished in the Directors’ Report.
Appointment / Resignation of Director
During the year, Dr. Pandit Palande ceased to be a Director of the
Bank at the close of business hours on April 23, 2015, on completing
eight years as Director, the maximum term permitted for directorship
as per the Banking Regulation Act, 1949. Mr. Umesh Chandra
Sarangi was appointed as Additional Director with effect from March
1, 2016 to hold office till the conclusion of the ensuing Annual General
Meeting of the Bank. Mr. Sarangi has been appointed as Director
having specialized knowledge and experience in agriculture and rural
economy pursuant to the Banking Regulation Act, 1949.
Familiarization of Independent Directors
The details of familiarization programmes imparted to Independent
Directors are available on the website of the Bank at http://www.
hdfcbank.com/aboutus/cg/Familiarization.htm.
HDFC Bank Limited Annual Report 2015-16
206
Corporate Governance
Strictures and Penalties
COMPLIANCE WITH MANDATORY REQUIREMENTS
During the current year there were no penalties imposed on the Bank.
During the financial year 2014-15, the RBI carried out a scrutiny
of a corporate borrower’s accounts maintained with 12 banks,
including HDFC Bank. The RBI had issued show cause notices to
these banks in March 2014 and based on its assessment, the RBI
in its press release dated July 25, 2014, levied penalties totalling
` 1.5 crore on the 12 banks. The RBI levied a penalty of ` 0.05 crore on
HDFC Bank on the grounds that the Bank failed to exchange information
about the conduct of the corporate borrower’s account with other
banks at intervals as prescribed in the RBI guidelines on ‘Lending
under Consortium Arrangement / Multiple Banking Arrangements’.
The penalty has since been paid.
reporting attempted suspicious
During the previous year 2014-15, FIU had imposed a penalty of
Rs 26 lakhs in 26 cases reported by Cobrapost.com, stating that
there was a failure in the Bank’s internal mechanism for detecting
transactions. The Bank
and
has filed an appeal before the Appellate Tribunal, Prevention of Money
Laundering Act at New Delhi against the impugned order stating that
there were only roving enquiries made by the reporters of Cobrapost.
com and there were no instances of any attempted suspicious
transactions. The hearing of the appeal is still in progress.
During 2013-14 a www.Cobrapost.com release claimed to have
carried out a sting operation named “Operation Red Spider” on banks
over a period of several months. The allegations made in the release
indicated that banks including HDFC Bank could assist in channelizing
vast amounts of black money into the regular banking system as
laundered white money. The Bank had immediately engaged the
services of M/s Amarchand & Mangaldas and Suresh A. Shroff & Co.,
to coordinate and advise the Bank on legal issues in respect of the
potential allegations posted by Cobrapost.com. M/s Deloitte Touche
Tohmatsu India Pvt. Ltd was appointed by the said firm to carry out
an independent forensic investigation. Further, the RBI had also
conducted a special scrutiny into the matter. The scrutiny did not bring
out any incident of money laundering. However certain irregularities/
violations were found by the RBI with respect to adherence to KYC
for walk-in customers for sale of third party insurance products,
arrangement of at-par payments of cheques drawn by co-operative
banks, exceptions in risk profiling in some cases, sale of gold coins
against cash in excess of INR 50,000/- in few cases etc. Based on its
assessment, the RBI imposed a monetary penalty of INR 4.5 crore on
the Bank in June 2013, which has since been paid. In the light of the
observations / violations reported by RBI, the Bank has taken steps
to further strengthen its controls and processes in the said areas
including discontinuation of sale of third party products and gold to
non-customers and further tightening the process with respect to
arrangement with co-operative banks and risk profiling of customers.
Other than the above, no penalties or strictures were imposed on the
Bank by any of the Stock Exchanges or any statutory authority on
any matter relating to capital markets, during the last three (3) years.
The Bank has complied with all the applicable mandatory
requirements of the Code of Corporate Governance as
prescribed under the SEBI Listing Regulations.
PERFORMANCE EVALUATION
The Bank has put in place a mechanism for performance
evaluation of the Directors. The details of the same have been
included in the Directors’ Report.
COMPLIANCE WITH NON-MANDATORY REQUIREMENTS
a) Board of Directors
The Bank maintains the expenses relating to the office of
non-executive Chairperson of the Bank and reimburses
all the expenses incurred in performance of her duties.
Pursuant to Section 10-A (2)(a) of the Banking Regulation
Act, 1949, none of the directors, other than the Chairman
and/or whole-time directors, is permitted to hold office
continuously for a period exceeding 8 (eight) years.
All the independent directors of the Bank possess requisite
qualifications and experience which enable them to
contribute effectively to the Bank.
b) Shareholder’s Rights
its results on
The Bank publishes
its website at
www.hdfcbank.com which is accessible to the public at
large. The same are also available on the websites of the
Stock Exchanges on which the Bank’s shares are listed. A
half-yearly declaration of financial performance including
summary of the significant events is presently not being
sent separately to each household of shareholders. The
Bank’s results for each quarter are published in an English
newspaper having a wide circulation and in a Marathi
newspaper having a wide circulation in Maharashtra.
Hence, half-yearly results are not sent to the shareholders
individually.
c) Audit Qualifications
During
the period under review,
is no audit
qualification in the Bank’s financial statements. The Bank
continues to adopt best practices to ensure regime of
unqualified financial statements.
there
d) Separate posts of Chairman and Managing Director/
CEO
Mrs. Shyamala Gopinath is the Chairperson of the Bank
and Mr. Aditya Puri is the Managing Director of the Bank.
e) Reporting of Internal Auditor
The Internal Auditor of the Bank reports directly to the
Audit Committee of the Bank.
HDFC Bank Limited Annual Report 2015-16
207
Corporate Governance
SHAREHOLDERS HOLDING MORE THAN 1 % OF THE SHARE CAPITAL OF THE BANK AS AT MARCH 31, 2016
Sr No. Name of the Shareholder
1
2
3
4
5
6
7
8
9
JP Morgan Chase Bank, NA *
Housing Development Finance Corporation Limited
HDFC Investments Limited
Euro Pacific Growth Fund
Life Insurance Corporation of India
ICICI Prudential Life Insurance Company Ltd
Capital World Growth and Income Fund
ICICI Prudential Focused Bluechip Equity Fund
Government of Singapore
No. of Shares held
473003409
393211100
150000000
98038464
61303025
41523802
36585126
28708163
28474691
% to share capital
18.71
15.55
5.93
3.88
2.43
1.64
1.45
1.14
1.13
* One (1) American Depository Share (ADS) represents three (3) underlying equity shares of the Bank.
DISTRIBUTION OF SHAREHOLDING AS AT MARCH 31, 2016
Share Range From Share Range To
1
2501
5001
10001
15001
20001
25001
50001
100001
TOTAL
2500
5000
10000
15000
20000
25000
50000
100000
and above
No. of Shares
101873903
18383106
15914496
10342329
7853285
7466213
25377051
33137429
2307838705
2528186517
% To Capital
4.03
0.73
0.63
0.41
0.31
0.30
1.00
1.31
91.28
100.00
No. of Holders % To No. Of Holders
97.68
1.06
0.47
0.17
0.09
0.07
0.15
0.10
0.21
100.00
468716
5112
2242
832
446
331
713
460
1017
479869
416,010 Folios comprising of 251,04,91,247 equity shares forming 99.30 % of the share capital are in Demat Form.
63,859 Folios comprising of 1,76,95,270 equity shares forming 0.70 % of the share capital are in physical form.
CATEGORIES OF SHAREHOLDERS AS AT MARCH 31, 2016
Promoters (*)
ADS and GDRs (#)
Foreign Institutional Investors
Overseas Corporate Bodies, Foreign Bodies, Foreign National and Non Resident Indians
Financial Institutions, Banks, Mutual Funds and Central Government
Life Insurance Corporation and its subsidiaries
Other Insurance Corporations
Indian Companies
Others
TOTAL
(*) None of the equity shares held by the Promoter Group are under pledge.
No of shares
543216100
473003409
814463688
7282473
217209910
61303025
6843958
185621370
219242584
2528186517
% to capital
21.49
18.71
32.21
0.29
8.59
2.43
0.27
7.34
8.67
100.00
# JP Morgan Chase Bank is the Depository for both the ADS (461557764 underlying equity shares) & GDRs (11445645 underlying
equity shares).
GLOBAL DEPOSITORY RECEIPTS (“GDRs”)*
The monthly high and low quotation of the Bank’s GDRs traded on Luxembourg Stock Exchange are as under:
(in US$)
Month
High
Low
Apr-15 May-15 Jun-15
8.377
8.228
8.469
7.822
7.421
7.777
Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16
8.084
8.281
8.765
7.277
7.929
8.343
8.156
7.369
8.596
7.629
8.574
8.158
7.817
6.877
8.047
7.493
8.182
7.792
* 2 GDRs represent one underlying equity share of the Bank
HDFC Bank Limited Annual Report 2015-16
208
Corporate Governance
SHARE PRICE / CHART
The monthly high and low quotation of Bank’s equity shares traded on BSE Ltd (BSE) and National Stock Exchange of India Ltd (NSE)
during FY 2015-16 and its performance vis-à-vis BSE SENSEX and S&P CNX NIFTY respectively is as under:
BSE Limited
Month
High (`)
Low (`)
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015
October 2015
November 2015
December 2015
January 2016
February 2016
March 2016
1058.00
1054.50
1072.10
1127.90
1117.90
1074.00
1124.45
1097.90
1090.90
1090.00
1066.95
1078.70
979.35
944.70
990.25
1055.05
1007.05
977.60
1060.20
1040.50
1040.00
1008.35
928.80
972.50
National Stock Exchange of India Limited
Month
High (`)
Low (`)
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015
October 2015
November 2015
December 2015
January 2016
February 2016
March 2016
1059.00
1054.00
1072.00
1128.00
1117.50
1073.90
1124.00
1098.10
1092.70
1108.00
1067.00
1078.90
979.05
944.20
990.15
1054.05
1005.70
977.00
1059.35
1041.00
1040.10
1007.90
928.00
971.85
Sensex
Closing
27011.31
27828.44
27780.83
28114.56
26283.09
26154.83
26656.83
26145.67
26117.54
24870.69
23002.00
25341.86
Nifty
Closing
8181.50
8433.65
8368.50
8532.85
7971.30
7948.90
8065.80
7935.25
7946.35
7563.55
6987.05
7738.40
The monthly high and low quotation and the volume of Bank's American Depository Shares (ADS) traded on New York
Stock Exchange (NYSE) during FY 2015-16.
New York Stock Exchange Limited
Month
April 2015
May 2015
June 2015
July 2015
August 2015
September 2015
October 2015
November 2015
December 2015
January 2016
February 2016
March 2016
Highest
(US$)
Lowest
(US$)
60.92
59.91
61.79
64.12
64.13
61.44
65.44
62.24
61.91
60.86
60.48
61.95
56.09
54.20
56.03
59.58
51.64
55.51
60.42
56.57
56.12
53.13
51.11
53.14
Monthly
Volume
19247427
14218588
18023483
16943214
16757351
18394324
17977013
13000162
14002234
15224958
16376608
16100585
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Note: Other than the stock options granted to the employees of the Bank which will result in an addition to the equity capital of the Bank on the
exercise of the stock options and subsequent allotment of equity shares, the Bank has no outstanding warrants or other convertible instruments as
on March 31, 2016 which could have an impact on the equity capital of the Bank.
HDFC Bank Limited Annual Report 2015-16
209
Corporate Governance
FINANCIAL CALENDAR
[April 1, 2016 to March 31, 2017]
Board Meeting for Consideration of accounts
Dispatch of Annual Reports
Record date for purpose of determining eligibility of dividend
Last date for receipt of proxy forms
Date, Time and Venue of 22nd AGM
Dividend Declaration Date
Probable date of payment of dividend
Board Meeting for considering unaudited results for first three
quarters of FY 2016-17
CODE OF CONDUCT
April 22, 2016
June 22, 2016 to June 27, 2016
Electronic and physical: June 30, 2016
July 19, 2016
July 21, 2016 at 02:30 pm:
Birla Matushri Sabhagar 19, New Marine lines, Mumbai - 400020
July 22, 2016
Electronic : July 22, 2016 onwards
Physical: July 27, 2016 onwards
Within 25 days from the end of each quarter
The Bank has framed and adopted a Code of Conduct, which is approved by the Board. The Code is applicable to all directors and
senior management personnel of the Bank. This Code has been posted on the Bank’s website www.hdfcbank.com. All the Directors
and senior management personnel have affirmed compliance with the Code of Conduct/Ethics as approved and adopted by the
Board.
LISTING
Listing on Indian Stock Exchanges :
The equity shares of the Bank are listed at the following Stock Exchanges and the annual fees for 2016-17 have been paid :
Sr. No. NAME AND ADDRESS OF THE STOCK EXCHANGE
1.
2.
BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai 400 023.
The National Stock Exchange of India Limited, Exchange Plaza, 5th Floor, Bandra Kurla Complex,
Mumbai 400 051.
Names of Depositories in India for dematerialisation of equity shares (ISIN No. INE040A01026)
STOCK CODE
500180
HDFCBANK
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:46)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0)(cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)(cid:0)(cid:36)(cid:69)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)(cid:8)(cid:46)(cid:51)(cid:36)(cid:44)(cid:9)
(cid:35)(cid:69)(cid:78)(cid:84)(cid:82)(cid:65)(cid:76)(cid:0)(cid:36)(cid:69)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0)(cid:51)(cid:69)(cid:82)(cid:86)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0)(cid:8)(cid:41)(cid:78)(cid:68)(cid:73)(cid:65)(cid:9)(cid:0)(cid:44)(cid:73)(cid:77)(cid:73)(cid:84)(cid:69)(cid:68)(cid:0)(cid:8)(cid:35)(cid:36)(cid:51)(cid:44)(cid:9)
International Listing :
Sr.
No.
1
Security description
The American Depository
Shares (ADS)
(CUSIP No. 40415F101)
2 Global Depository Receipts (GDRs)
(ISIN/ Trading Code : US40415F2002)
Name & Address of the International Stock
Exchange
The New York Stock Exchange (Ticker - HDB)
11, Wall Street, New York, N.Y. 10005
Luxembourg Stock Exchange
Postal Address :
Societe De La Bourse De Luxembourg
Societe Anonyme, 35A Boulevard Joseph II
L-1840 Luxembourg.
Mailing Address :
B.P. 165, L - 2011, Luxembourg
Name & Address of
Depository
J P Morgan Chase Bank, N.A.
4, New York Plaza, 12th Floor,
New York, NY 10004
J P Morgan Chase Bank, N.A.
4, New York Plaza, 12th Floor,
New York, NY 10004
The Depository for ADS and GDRs is represented in India by: J. P. Morgan Chase Bank N.A., India Sub Custody, J P Morgan Chase
Bank NA, 6th Floor, Paradigm “B” Wing, Behind Toyota Showroom, Mindspace, Malad (West), Mumbai - 400 064.
SHARE TRANSFER PROCESS
The Bank’s shares which are in compulsory dematerialised (demat) list are transferable through the depository system. Shares in
physical form are processed by the Registrars and Share Transfer Agents, Datamatics Financial Services Limited and approved by
the Stakeholders’ Relationship Committee of the Bank or authorised officials of the Bank. The share transfers are generally processed
within a period of fifteen (15) days from the date of receipt of the transfer documents by Datamatics Financial Services Limited.
HDFC Bank Limited Annual Report 2015-16
210
Corporate Governance
MEANS OF COMMUNICATION
The quarterly and half-yearly unaudited / audited financial results
are published in Business Standard in English and Mumbai
Sakal / Navshakti in Marathi (regional language). The results are
also displayed on the Bank’s web-site at www.hdfcbank.com.
The shareholders can visit the Bank’s web-site for financial
information,
policy,
key shareholders’ agreements, if any, Memorandum and Articles
of Association of the Bank, etc. The web-site also gives a link to
www.sec.gov where the investors can view statutory filings of the
Bank with the Securities and Exchange Commission, USA.
shareholding
information,
dividend
information
results
The
and shareholding pattern are displayed on the websites of the
Stock Exchanges on which the Bank’s shares are listed.
the Bank’s financial
relating
to
Other information such as press releases, stock exchange
disclosures and presentations made to investors and analysts etc.
are regularly displayed on the Bank’s web-site.
CODE FOR PREVENTION OF INSIDER TRADING
The Bank has adopted a share dealing code for the prevention
of insider trading in the shares of the Bank as well as in other listed
companies. The share dealing code, inter-alia, prohibits purchase
/ sale of shares of the Bank by insiders while in possession
of unpublished price sensitive information in relation to the Bank.
For lodgement of transfer deeds and any other documents or
for any grievances / complaints, shareholders / investors may
contact at the following address :
Mr. C. R. Rao / Ms. Manisha Parkar / Mr. Tukaram Thore
Datamatics Financial Services Ltd,
Plot No. B 5, Part B Crosslane,
MIDC, Marol, Andheri (East),
Mumbai 400 093,
Tel : +91-022- 66712213-14
Fax : +91-022 - 66712011;
E-mail : hdinvestors@dfssl.com
Counter Timings : 10:00 a.m. to 4:30 p.m.
(Monday to Friday except public holidays)
For the convenience of investors, transfers up to 500 shares
and complaints from investors are accepted at the Bank’s Office
at 2nd Floor, Trade House, Senapati Bapat Marg, Kamala Mills
Compound, Lower Parel (West), Mumbai 400 013.
Shareholders’ Helpdesk Timings : 10:30 a.m. to 3.30 p.m.
Between Monday to Friday (except on Bank holidays)
Telephone : +91-022-2498 8484 Extn : 3458, 3463 & 3621
DEBENTURE TRUSTEES
Fax : +91-022-2496 5235
SEBI vide circular number CIR/IMD/CDF/18/2013 dated October
29, 2013 requires companies, which have listed their debt
securities, to disclose the names of their debenture trustees
with contact details in their Annual Report. The following are the
debenture trustees for the privately placed bonds of the Bank:
Email : shareholder.grievances@hdfcbank.com
Queries relating to the Bank’s operational and financial
performance may be addressed to :
shareholder.grievances@hdfcbank.com
1. IDBI Trusteeship Services Ltd, Asian Building, Ground
Floor, 17 R Kamani Marg, Ballard Estate, Mumbai 400001.
Tel : 022-40807000
Name of the Compliance Officer of the Bank : Mr. Sanjay
Dongre, Executive Vice President (Legal) & Company
Secretary
2. Axis Trustee Services Limited, Axis House, 2nd Floor,
Wadia International Centre, Pandurang Budhkar Marg, Worli
Mumbai 400025. Tel : 022-24255215/16
Telephone : +91-022-2498 8484 Extn : 3473
BANKING CUSTOMER HELPDESK
3. IL&FS Trust Company Limited, The IL&FS Financial Centre,
Plot C-22/G Block, Bandra Kurla Complex, Bandra East
Mumbai 400051. Tel : 022-26593112
SHAREHOLDERS’ HELPDESK
In the event of any queries / complaints, banking customers
can directly approach the Branch Manager or can call/write to
the Bank using the following contact details :
Call at: Our customer care (Phone Banking) numbers.
Share transfers, dividend payments and all other investor related
activities are attended to and processed at the office of Registrars
and Transfer Agents.
Location wise list of customer care numbers are available at:
http://www.hdfcbank.com/personal/find-your-nearest/
find-phone-banking
HDFC Bank Limited Annual Report 2015-16
211
Corporate Governance
Write to:
PLANT LOCATIONS
HDFC Bank Ltd., New Building,
“A” Wing, 2nd Floor,
26-A Narayan Property,
Chandivali Farm Road,
Off Saki Vihar Road, Chandivali,
Andheri (East), Mumbai - 400 072.
Email : support@hdfcbank.com
Contact us online:
Fill up the “Complaint Form” available at the following website
link :
https://leads.hdfcbank.com/applications/webforms/apply/
complaint_form.asp
For grievances other than Shareholder grievances please
send your communication to the following email addresses:
1) Depository Services: dphelp@hdfcbank.com
2) Retail Banking / ATM / Debit Cards / Mutual Fund:
support@hdfcbank.com
3) Loans, Advances
/ Advance against shares:
loansupport@hdfcbank.com
Being in the banking business, the Bank does not have plants.
However, the Bank has 4,520 branches in 2,587 cities / towns
as on March 31, 2016. The locations of the branches are also
displayed on the Bank’s website.
COMPLIANCE CERTIFICATE OF THE AUDITORS
The Secretarial Auditors have certified that the Bank has complied
with the conditions of Corporate Governance as stipulated in the
listing requirements of the Indian Stock Exchanges where the
Bank’s securities are listed. The same is annexed to the Annual
Report.
The Certificate from the Secretarial Auditors will be sent to the
Stock Exchanges along with the Annual Report of the Bank.
Mumbai, May 19, 2016
On behalf of the Board of Directors
Shyamala Gopinath
Chairperson
DECLARATION
I confirm that for the year under review, all directors and senior
management have affirmed their adherence to the provisions
of the Code of Conduct of Directors and senior management
personnel.
Aditya Puri
Managing Director
4) Credit Cards : customerservices.cards@hdfcbank.com
Mumbai, May 19, 2016
HDFC Bank Limited Annual Report 2015-16
212
Shareholder Information
A)
DIVIDENDS:
Receipt of Dividends through Electronic mode :
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have directed that listed companies shall
mandatorily make all payments to investors including dividend to shareholders, by using any RBI approved electronic mode
of payment viz. ECS, LECS (Local ECS), RECS (Regional ECS), NECS (National ECS), direct credit, RTGS, NEFT, etc.
In order to receive the dividend without loss of time, all the eligible shareholders holding shares in demat mode are
requested to update with their respective Depository Participants before June 30, 2016, their correct Bank Account Number,
including 9 Digit MICR Code and 11 digit IFSC Code, E- Mail ID and Mobile No(s). This will facilitate the remittance of the
dividend amount as directed by SEBI in the Bank Account electronically. Updation of E - Mail IDs and Mobile No(s) will
enable sending communication relating to credit of dividend, unencashed dividend etc.
Shareholders holding shares in physical form may communicate details relating to their Bank Account, 9 Digit MICR Code, 11
digit IFSC Code, E- Mail ID and Mobile No(s) to the Registrar and Share Transfer Agents viz. Datamatics Financial Services
Limited, having address at Plot No. B 5, Part B Crosslane, MIDC, Marol, Andheri (E), Mumbai-400 093, before June 30,
2016 by quoting the reference folio number and attaching a photocopy of the Cheque leaf of their Active Bank account and
a self attested copy of their PAN card.
Various modes for making payment of Dividends under Electronic mode:
In case the shareholder has updated the complete and correct Bank account details (including 9 digit MICR Code and 11
digit IFSC code) before the record date fixed for the purpose of payment of dividend, then the Bank shall make the payment
of dividend to such shareholder under any one of the following modes:
1. National Automated Clearing House (NACH)
2. National Electronic Fund Transfer (NEFT)
3. Direct credit in case the bank account is with HDFC Bank Limited.
In case dividend payment by electronic mode is returned or rejected by the corresponding bank due to some reason, then
the Bank will issue a dividend warrant and print the Bank account details available on its records on the said dividend
warrant to avoid fraudulent encashment of the warrants.
Unclaimed Dividends
As per the applicable provisions of the Companies Act, the Bank is statutorily required to transfer to the Investor Education
& Protection Fund (IEPF) all dividends remaining unclaimed for a period of 7 (Seven) years from the date they became
due for payment. Once such amounts are transferred to IEPF, no claim of the shareholder shall lie against the Bank or the
IEPF. Dividends for and up to the financial year ended March 31, 2008 have already been transferred to the IEPF and the
dividend for the financial year ended March 31, 2009 will be transferred to IEPF after July 13, 2016. The details of unclaimed
dividends for the financial year 2009-10 onwards and the last date for claiming such dividends are given below:
Dividend for the year ended
March 31, 2009
March 31, 2010
March 31, 2011
March 31, 2012
March 31, 2013
March 31, 2014
March 31, 2015
Date of Declaration of dividend
July 14, 2009
June 30, 2010
July 6, 2011
July 13, 2012
June 27, 2013
June 25, 2014
July 21, 2015
Last date for claiming dividend
July 13, 2016
June 29, 2017
July 5, 2018
July 12, 2019
June 26, 2020
June 24, 2021
July 20, 2022
B)
SHARES LYING IN UNCLAIMED SUSPENSE ACCOUNT
Particulars
Opening Balance as on April 1, 2015
Add: Transfer during the year 2015-16
Less: Claims received and shares transferred
Closing Balance as on March 31, 2016*
Records /
Shares
No of shareholders
13328
0
253
13075
2272015
0
83870
2188145
* Voting rights on these shares shall remain frozen till the rightful owners of such shares claim these shares.
HDFC Bank Limited Annual Report 2015-16
213
Route Map
Route Map to Venue of the 22nd AGM of HDFC Bank Limited
Venue : Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400020
Date : July 21, 2016
Day and Time : Thusday, 2.30 p.m.
Land Mark : Next to Bombay Hospital
Distance from Churchgate Station : 1 km
Distance from Chhatrapati Shivaji Terminas : 1.2 km
Distance from Marine Lines Station : 0.8 km
HDFC Bank Limited Annual Report 2015-16
214
Mandate for Electronic Communication and
Direct Credit of dividend in Bank account
Shares held in Physical mode
Mandate for Electronic Communication and
Direct Credit of dividend in Bank account
I / We ........................................................................................................................ hereby authorize you to update the following
e-mail ID for receipt of communication in electronic mode and for crediting the dividend amount directly in my Bank account.
E- mail ID : …......….………………...............………………………………………………………...................................................
1.
2.
3.
4.
5.
6.
7.
8.
Folio No against holding in HDFC Bank Ltd.
: ……….……….………........................…........…….........................
Name of the Bank
: ……….……….………........................…........…….........................
Name of the Branch
: ……….……….………........................…........…….........................
Account No.
: ……….……….………....................…........…….............................
Account Type (Saving / Current)
: ……….……….………........................…........…….........................
9 Digit Code No.
IFSC Code
: ……….……….………........................…........…….........................
: ……….……….………........................…........…….........................
STD Code & Phone No. of Branch
: ……….……….………........................…........…….........................
I / We shall keep the Bank's Registrar and Transfer Agent viz Datamatics Financial Services Ltd. informed as and when there is
a change in my e-mail address. I am also enclosing the photocopy of a cheque / blank cancelled cheque issued by the Bank for
verifying the accuracy of the details furnished hereinabove and a self-attested copy of PAN Card of the holder(s).
MAIL TO (cid:13)
Datamatics Financial Services Ltd,
Unit : HDFC Bank, Plot No. B 5,
Part B Crosslane, MIDC, Marol,
Andheri (East), Mumbai 400 093.
E-mail : hdinvestors@dfssl.com
……….………………….……………
Signature of all the Shareholder(s)
…......….………………...............………………………………………………………...........................................................................
Shares held in Demat mode
(cid:122) Shareholders to obtain form from their Depository Participant by providing original PAN card(s) for verification by all the holder(s).
(cid:122) Shareholders to submit required proof like cancelled cheque as advised by their Depository Participant along with duly signed
form and self attested copy of PAN card(s).
HDFC Bank Limited Annual Report 2015-16
215