Experiential Leadership
Enabling Personalized Customer Journeys Through
Technology
Annual Report 2017-18
HIGHLIGHTS
Net Profit
17,487 crore
An increase of 20.2% compared to the previous year.
Balance Sheet Size
1,063,934 crore
An increase of 23.2% compared to the previous year.
Total Deposits
788,771 crore
An increase of 22.5% compared to the previous year.
Total Advances
658,333 crore
An increase of 18.7% compared to the previous year.
Capital Adequacy Ratio
14.8%
Tier I Capital Ratio
13.2%
Gross Non-performing Assets
1.30% of Gross Advances
Network
Banking outlets: 4,787
ATMs: 12,635
Cities/Towns: 2,691
TABLE OF CONTENTS
Board and Management
AGM and Record Date Details
Evolving into an Experience Business, Digitally
Parivartan – A Step towards Progress
Working with the Government
Graphical Highlights
Financial Highlights
Directors’ Report
Independent Auditors’ Report
Financial Statements
2
5
6
10
12
14
18
20
77
80
Basel III- Pillar 3 Disclosures
155
Independent Auditors’ Report for
156
Consolidated Financial Statements
Consolidated Financial Statements
160
Secretarial Auditor’s Certificate
209
on Corporate Governance
Corporate Governance
210
Shareholder Information
234
BOARD AND MANAGEMENT
BOARD OF DIRECTORS
Shyamala Gopinath
Chairperson
Bobby Parikh
Partho Datta
Malay Patel
Umesh Chandra
Sarangi
Srikanth Nadhamuni
Keki Mistry
Aditya Puri
Managing Director
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
KEY MANAGERIAL PERSONS
Aditya Puri
Managing Director
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sashidhar Jagdishan
Chief Financial Officer
Sanjay Dongre
Executive Vice-President (Legal) & Company Secretary
2
BOARD AND MANAGEMENT
SENIOR MANAGEMENT TEAM
Abhay Aima
Arvind Kapil
Ashima Bhat
Ashish Parthasarthy
Ashok Khanna
Bhavesh Zaveri
Chakrapani Venkatachari
Jimmy M Tata
Munish Mittal
Navin Puri
Neil Francisco
Nirav Shah
Nitin Chugh
Parag Rao
Philip Mathew
Rahul Shukla
Rajesh Kumar R
Rakesh K Singh
Ravi Narayanan
Sashidhar Jagdishan
02
Smita Bhagat
3
BOARD AND MANAGEMENT
STATUTORY AUDITORS
Deloitte Haskins & Sells
Chartered Accountants
REGISTERED OFFICE
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel, Mumbai 400 013
Tel: + 91 22 6652 1000
Fax: + 91 22 2496 0737
CORPORATE IDENTIFICATION NO.
L65920MH1994PLC080618
REGISTRARS & TRANSFER AGENTS
Datamatics Business Solutions Limited (Formerly Datamatics Financial Services Limited)
Plot No. B 5, Part B,
Crosslane, MIDC, Marol,
Andheri (East), Mumbai- 400 093
Tel: + 91 22 6671 2213/14
Fax: + 91 22 6671 2011
e-mail: hdinvestors@datamaticsbpm.com
4
24TH ANNUAL GENERAL MEETING
DATE
June 29, 2018
DAY
Friday
TIME
2.30 p.m.
PLACE
Birla Matushri Sabhagar, 19, New Marine Lines,
Mumbai 400 020
RECORD DATE FOR DETERMINING
ELIGIBILITY OF DIVIDEND
June 1, 2018 (both physical and electronic)
5
EVOLVING INTO AN EXPERIENCE BUSINESS,
DIGITALLY
At HDFC Bank, customers are at the core of our digital evolution. Our suite of personalised products, services and
digital experiences, redefine our commitment to provide an enhanced experience for our customers. Intuitive
products, platform agnostic solutions and a holistic sophistication across devices enable us to create unique
experiences for our customers. Importantly, they are for everyone - both customers who have a relationship with us
as well as those who do not.
Shifting from transactional optimisation to experience differentiation
We believe that shifting our focus from transactional interactions to experience differentiation will give us a competitive
advantage.
In today’s age of multiple devices, it is imperative that we provide a cohesive and seamless experience to our
customers. It is also important that we anticipate customer requirements and provide solutions with a first-time-right
approach. Integrating existing systems with newer technology platforms can help us design more satisfying customer
experiences. With these objectives in mind, we are well on our way to revamping all our digital solutions – our website,
including the NetBanking experience, the MobileBanking app, our digital wallet PayZapp and our compare-and-shop
portal SmartBuy, to offer a consistent, seamless, intuitive and contextual journey across all platforms.
For customers who prefer to explore by themselves, we have designed experiences, which enable them to select and
purchase our most relevant solutions with ease. Our customers can select products ranging from loans to forex
cards, and everything else that the bank can offer them, in an effortless and intuitive manner.
Creating a conversational experience
We endeavor to humanize conversations and transform how customers
interact with us. Through meaningful exchanges with over four crore
customers, we take every opportunity to improve the quality of interactions
across
touch-points and enhance customer experience by making
interactions more friendly, familiar and relevant.
Our AI-based chatbot EVA (Electronic Virtual Assistant) is available on all digital
platforms including the website, mobile site, and SmartBuy. EVA helps customers find
information in a matter of seconds, eliminating the need to talk to a customer service
agent. EVA amiably responds to both audio and text queries with élan. Today, EVA works
in tandem with Google Assistant and Alexa. Our customers can simply say, "Ok Google,
talk to HDFC Bank" or, “Alexa, what is the interest rate on an FD for a year?” to let EVA
answer queries. Voice-activated banking automation is another key innovation that
reiterates our commitment to high quality customer experience 24X7.
6
EVOLVING INTO AN EXPERIENCE BUSINESS, DIGITALLY
HDFC Bank is the first bank to provide bot-based social media banking services to its customers. The country’s
first social media banking bot, OnChat, helps customers transact on Facebook Messenger. Fast, easy and secure,
OnChat enables our customers to search, discover, confirm, and pay for services, all within the same chat box.
Using OnChat, customers can pay bills, check stock prices, recharge, book cabs, hotels, movie tickets and more.
Our DCC (Digital Command Centre) helps understand our customers better by learning from their preferences and
concerns. Whether it is a complaint, a grievance, or an acknowledgement for our services, we respond immediately
through our traditional and social media channels to ensure we are with and for our customers on a real time basis.
Experience differentiation through personalisation
Hyper-personalisation is another major step towards facilitating an enhanced customer experience and creating
customized consumer journeys. This is done by offering customers the option to create a Customer ID of their own
choice and real-time expense tracking. We were the first to offer customers the ability to personalize their most
frequent transactions on an ATM over a decade ago.
We collaborate with leading technology
providers to enable us to understand our
customer requirements. As a result, our
customer conversations are now more
relevant and contextual. Using a
combination of personalised interfaces
like intelligent notifications, personalised
banner displays etc., and digital apps, we
are able
to customize experiences
through our virtual channels as well as
offer it to more customers. Our Insta
Alerts enable customers to remain aware
of every account-related activity, anytime,
anywhere. Each innovation is an attempt
at enhancing our customers’ experience.
Our mission
is
to script bespoke
customer
journeys
in
this age of
experience. Our approach of ‘Experience
differentiation’ aims to fulfil the needs of
our customers, at every life stage, so that
when they think about money, they think
of HDFC Bank.
7
EVOLVING INTO AN EXPERIENCE BUSINESS, DIGITALLY
Setting the benchmark for effortless banking
It is our aim to customize our products and services to meet the unique needs and preferences of every HDFC
Bank customer. We are aware of the need for a completely effortless interface and experience, which customers
can navigate with ease, in an unassisted manner.
Our 10 Second Loans have redefined the rules of the game. Forget cumbersome loan processes; today, when a
pre-approved HDFC Bank customer requires a loan he enjoys the benefit of having the funds in his account within
seconds. This paperless service is available to him 24X7, at the touch of a button. Similarly, when a bank customer
applies for a Credit Card, he has the option of receiving a virtual InstaCard that is instantly activated and ready for
immediate use.
PayZapp – our digital wallet has empowered customers to make instant
digital payments through more convenient options like Scan-to-Pay.
Using an industry-first approach, we have implemented a self-sustained accelerated rewards program. Our
SmartBuy platform leverages the power of the bank to bring the best merchant offers to customers. It provides
those searching online for products and services with a list of options, including offers from the most preferred
retailers, as well as the cheapest deals available. Over 1.5 million users visit SmartBuy, every month.
To help customers unlock the value of their investments, without liquidating them during exigencies, we have
created Digital Loans against Securities and Mutual Funds. Customers can now pledge their securities and
mutual fund assets online and get an overdraft limit set in under three minutes. All of this happens in three easy
steps through the HDFC Bank website.
8
EVOLVING INTO AN EXPERIENCE BUSINESS, DIGITALLY
HDFC Bank SmartHub solutions provide existing and prospective customers with assistance to manage a host of
activities like payments, admissions, appointments, donations and more. Over 8,000 educational institutions and
2,500 government departments are active users on this platform. The SmartHub Merchant App, a counterpart of
our smart banking solution, is a single merchant platform that customers use to make payments, monitor services
and related servicing needs.
Innovating our way to the future
HDFC Bank is a trusted name in the banking sector today only because of the trust that our customers place in us.
The passion to excel is in our DNA and every innovation intends to deliver an excellent digital banking experience to
our customers. We ensure that we are truly the pioneers of experiential leadership in the banking sector, bringing
the bank closer to the customer every day.
9
HDFC BANK PARIVARTAN – A STEP TOWARDS
PROGRESS
At HDFC Bank, we believe the real development of a
country is possible only when its communities are
empowered. It is this belief that drives us to encourage
the holistic growth of communities through our CSR
Promotion of Education
Create a conducive
learning environment
in
communities across the country and promote learning.
initiative, HDFC Bank Parivartan.
Learning made fun
HDFC Bank Parivartan addresses
the need
for
socioeconomic
distinct areas of intervention:....................................
empowerment
through
five
its
Rural Development
Promotion of Education
Skill Development and Livelihood Enhancement
Healthcare and Hygiene
Financial Literacy and Inclusion
Rural Development
Promoting holistic growth and development of rural
communities.
Fighting the Maharashtra drought, one drop at a time
The continuing urbanization of
India has
indeed
expanded opportunities
for people..However, one
cannot overlook the great decline that our agricultural
sector has suffered. One of the many millions that had
fallen victim to this hardship is Tukojirao Patil, a farmer
from Jalgaon, Maharashtra. The lack of rainfall was
plaguing his village with acute water shortage. The soil,
deprived of moisture, caused
crop failure year after year
thereby plummeting Patil to
extreme poverty. Determined
to bring about change, HDFC
Bank Parivartan along with a
local NGO partner, KVGPS, developed the village under its
Holistic Rural Development Program (HRDP). Measures to
tackle the drought by constructing 31 ground water recharge
structures were implemented, improving the water levels and
helping the village get back the water it was once rich with.
Total impact in the area of Rural Development
Households covered: 2,98,066
Villages impacted: 870
10
Learning is as much a
matter of the heart as it is
of the mind. While our
education system strives to
impart the right knowledge
to the young minds of our country, at times, the
individual needs of some are ignored. Shamshad
Qureshi, a class 7 student, was one of these
individuals. He lacked interest in studies and this was
apparent from his poor attendance. This disinterest
was largely because he lacked understanding of what
was being taught in school. Project Disha, supported
by HDFC Bank, helped teachers start using innovative
methods and activity-based teaching to address this
challenge. Equipped with these new ways to learn,
Shamshad and his friends have now started looking
forward to school and we hope in time, these
innovative techniques will usher in a new perspective
on education in India...............................................
Total impact in the area of Promotion of Education
Teachers oriented: 10,47,250
Schools covered: 1,47,021
Skill Development and Livelihood
Enhancement
To up-skill people in their occupations and train them
for placements.
Ponsara girls create history
India has experienced rapid growth and development
in
the past years across various domains.
Unfortunately, gender equality is not one of them. No
nation can progress unless its women are given equal
access to opportunities. HDFC Bank Parivartan is
devoting its energies to overcome this hurdle by
initiating skill development programmes across the
nation. Under this initiative, the SWADHAAR Computer
Training Course at Ponsara Centre equips women to
join the workforce with core skill training development.
PARIVARTAN STORY
The programme
recently
succeeded in helping three
women secure a job. Mamta
Bhargav, Pavita Bijore and
Radhika Yadav cleared the
written test and interview
of most women in rural
India. Sulochana’s story
is no different. Her
journey began in a small
tailoring institute in Tamil
Nadu where she used
conducted at a campus selection organized by
SWADHAAR. They are now all set to take up their first
Tele-calling job at Raipur.
Total impact in the area of Skill Development and
Livelihood Enhancement
Farmers up-skilled and youth trained: 82,121
Women empowered: 7,45,127
Healthcare and Hygiene
Focuses on improving sanitation facilities, and promoting
good and safe hygiene practices across several
communities.
Raswanti brings open defecation to a close
As India enters a new
era of leadership on
the world stage, the
nation, as a whole, has
realized that change at
home has a significant
impact
on
this
progress. Raswanti Rai, having followed the age-old
practice of open defecation, was no longer willing to risk the
safety and dignity of her daughter or herself. Facilitated by
HDFC Bank’s construction of Individual Household Latrines
(IHHL) under the Swachh Bharat Mission, Raswanti
pledged to use and maintain the toilet. She is now a key
open
village
motivator
defecation....................................................................
eradicate
the
to
in
Total impact in the area of Healthcare and Hygiene
Sanitation units constructed: 23,254
Health camps conducted: 5,669
Financial Literacy and Inclusion
to attend sewing classes regularly. She was one of
the brightest students in her class and was always
willing to teach her peers who needed help. Soon,
she mastered the art of dressmaking and started her
own sewing institution with just two machines. HDFC
Bank Parivartan enabled her to buy more machines
that helped her grow her business. From the money
earned, she renovated her house and is currently
supporting her family of four. Today, Sulochana is a
source of inspiration to many and is on a mission to
empower women in her locality with just two
machines. ......................................................
Total impact in the area of Financial Literacy and
Inclusion
Participants covered under FLPs: 59,17,272
Financial Literacy Programmes (FLPs)
conducted: 6,83,319
With such efforts, we hope for HDFC Bank Parivartan
to inspire communities to be self-reliant and make
them equal partners in the growth of our nation.
We are realizing this dream through our core value of
sustainability—that enables families to break out of
the vicious cycle of poverty and draws them into a
cycle of growth, development and empowerment,
while simultaneously maintaining
the ecological
balance. These small steps will pave the way for a
giant transformation.
HDFC Bank’s Parivartan has impacted 8 million
lives, nationwide...
With HDFC Bank Parivartan, we aim to inspire people
and empower communities by working with them and
walking with them - one step at a time, towards a
Educate people to make informed financial decisions.
brighter future.
Sulochana empowers herself, inspires others
Women all over the world have proved that they can do
great things if they are given a chance. Unfortunately,
opportunities don’t always come knocking at the doors
11
WORKING WITH THE GOVERNMENT
We, at HDFC Bank, have always believed that the role of
any corporate/company is to assist in furthering the
government’s developmental agenda for the country. We
understand and acknowledge that it is not merely our role
but also our responsibility as corporate citizens. Over the
years, we have collaborated with the government to
deliver key changes that are critical to India’s growth.
Here are some of the more recent initiatives that HDFC
Bank has worked on in conjunction with the Government
of India.
Digital India Initiative
The Ministry of Electronics & Information Technology
(MeitY) has ranked HDFC Bank as the Number 1 bank for
supporting several initiatives executed by the Ministry. We
are proud to be one of the few banks that achieved the
targets to install Point of Sale (PoS) units, integrate the
Bharat QR payment system and promote the BHIM
mobile app based on the Unified Payment Interface (UPI)
following demonetization. ...............................................
Banking on Bharat
Our vision is aligned to that of our government’s to
provide world-class services to everyone. We are actively
working with panchayats across the country to provide
them all banking solutions and have already opened over
60,000 panchayat accounts. .........................
Startup India
with various state governments and accelerators and
promote entrepreneurship:
MoUs signed with three state governments to
enable proper execution of their start-up policy. We
provide start-ups with an opportunity to work with
us and evaluate their need for funding.
We collaborate with seven incubators certified by
the Department of Science and Technology,
including various IITs and IIMs, to identify social
start-ups that require financial and advisory support.
Partnering on PFMS (Public Fund
Management System) and
e-Governance projects
HDFC Bank also plays an active role in the development
of large projects like GeM and PFMS. Dedicated teams
from the bank work closely with government authorities
and play a critical role by providing real-time, on-ground
feedback for refinement of project architectures. In
addition, the bank enables automation and digitization
for various government departments to help generate
time and cost efficiencies. For example, we are
developing end to end technology solutions for state
governments to manage large impact schemes like
National Health Mission, PMAY, MGNREGA, etc. more
efficiently. The bank has been working on various
e-Governance
initiatives by
running projects
like
MahaOnline (Maharashtra), Mee Seva (Andhra Pradesh)
HDFC Bank has created its own start-up fund to work
and currently evaluating a project for West Bengal.
12
WORKING WITH THE GOVERNMENT
Smart City and Urban Mobility
projects
Government e-Marketplace
(GeM)
HDFC Bank has collaborated with Thane city to launch the
first ‘One-City-One-Card’ solution as a part of the Smart
City initiative. A similar solution has also been created for
Panaji Smart City. A customized mobile app is in service in
Kanpur to further support the Smart City initiative.
To promote the government’s agenda to address the need
to improve urban mobility, HDFC Bank has collaborated
with various state governments including Rajasthan and
U.P. to provide Transit Cards and payment solutions.
Customized Banking Solution for
Government Employees
HDFC Bank has designed a customized banking package
for government employees at both the state and central
levels. This includes an overdraft secured by their salary
account, complimentary
insurance covers, zero-cost
HDFC Bank has collaborated with the Government
for its e-Marketplace (GeM) platform to provide
banking solutions for online buyers and sellers on the
e-Procurement platform. ......................
Customized Collection and
Payment Services
HDFC Bank has designed a customized Collection
and Payment Services solution that conforms to
various departments and
schemes of
the
Government of India. For instance, the Uttar Pradesh
State Industrial Development Corporation (UPSIDC),
the Naya Raipur Development Authority (NRDA)
Scheme and the National Health Mission (NHM)
currently use made-to-order solutions from HDFC
consumer durable offers on premium brands and the best
Bank................
pricing on loans. ..............................................................
HDFC Bank has signed an MoU with the Indian
Army to offer them salary accounts and a host of
banking products and services.
HDFC Bank has signed an MoU with the
Government of Maharashtra in their endeavour to
make Mumbai a Fintech hub. Smita Bhagat,
Group Head - Branch Banking, Government and
Institutional Business, E-commerce with Shri
Devendra Fadnavis, Hon'ble CM of Maharashtra.
13
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(cid:25)(cid:23)(cid:20)(cid:13)(cid:25)(cid:21)(cid:17)
(cid:24)(cid:21)(cid:17)(cid:13)(cid:24)(cid:26)(cid:23)
(cid:23)(cid:22)(cid:25)(cid:13)(cid:20)(cid:20)(cid:20)
(cid:22)(cid:22)(cid:21)(cid:13)(cid:22)(cid:23)(cid:25)
(cid:21)(cid:23)(cid:21)(cid:13)(cid:22)(cid:26)(cid:21)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:37)(cid:38)(cid:49)(cid:48)(cid:52)(cid:42)(cid:53)(cid:52)(cid:1)(cid:9)(cid:67)(cid:3)(cid:68)(cid:83)(cid:80)(cid:83)(cid:70)(cid:10)
(cid:52)(cid:34)(cid:55)(cid:42)(cid:47)(cid:40)(cid:1)(cid:37)(cid:38)(cid:49)(cid:48)(cid:52)(cid:42)(cid:53)(cid:52)(cid:1)(cid:9)(cid:67)(cid:1)(cid:68)(cid:83)(cid:80)(cid:83)(cid:70)(cid:10)
(cid:24)(cid:25)(cid:25)(cid:13)(cid:24)(cid:24)(cid:18)
(cid:23)(cid:21)(cid:20)(cid:13)(cid:23)(cid:21)(cid:17)
(cid:22)(cid:21)(cid:23)(cid:13)(cid:21)(cid:19)(cid:21)
(cid:19)(cid:19)(cid:20)(cid:13)(cid:25)(cid:18)(cid:17)
(cid:18)(cid:26)(cid:20)(cid:13)(cid:22)(cid:24)(cid:26)
(cid:18)(cid:21)(cid:24)(cid:13)(cid:25)(cid:25)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:51)(cid:38)(cid:53)(cid:34)(cid:42)(cid:45)(cid:1)(cid:34)(cid:52)(cid:52)(cid:38)(cid:53)(cid:52)(cid:1)(cid:9)(cid:67)(cid:1)(cid:68)(cid:83)(cid:80)(cid:83)(cid:70)(cid:10)
(cid:47)(cid:38)(cid:53)(cid:1)(cid:42)(cid:47)(cid:53)(cid:38)(cid:51)(cid:38)(cid:52)(cid:53)(cid:1)(cid:46)(cid:34)(cid:51)(cid:40)(cid:42)(cid:47)
(cid:20)(cid:24)(cid:23)(cid:13)(cid:18)(cid:23)(cid:24)
(cid:21)(cid:15)(cid:19)(cid:6)
(cid:21)(cid:15)(cid:20)(cid:6)
(cid:21)(cid:15)(cid:20)(cid:6)
(cid:19)(cid:26)(cid:22)(cid:13)(cid:18)(cid:23)(cid:18)
(cid:19)(cid:21)(cid:25)(cid:13)(cid:20)(cid:18)(cid:26)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:23)
(cid:40)(cid:51)(cid:34)(cid:49)(cid:41)(cid:42)(cid:36)(cid:34)(cid:45)(cid:1)(cid:41)(cid:42)(cid:40)(cid:41)(cid:45)(cid:42)(cid:40)(cid:41)(cid:53)(cid:52)
(cid:51)(cid:38)(cid:53)(cid:54)(cid:51)(cid:47)(cid:1)(cid:48)(cid:47)(cid:1)(cid:36)(cid:34)(cid:49)(cid:42)(cid:53)(cid:34)(cid:45)
(cid:36)(cid:34)(cid:49)(cid:42)(cid:53)(cid:34)(cid:45)(cid:1)(cid:34)(cid:37)(cid:38)(cid:50)(cid:54)(cid:34)(cid:36)(cid:58)
(cid:18)(cid:25)(cid:15)(cid:17)(cid:6)
(cid:18)(cid:25)(cid:15)(cid:17)(cid:6)
(cid:18)(cid:25)(cid:15)(cid:19)(cid:6)
(cid:18)(cid:22)(cid:15)(cid:22)(cid:6)
(cid:18)(cid:21)(cid:15)(cid:23)(cid:6)
(cid:18)(cid:21)(cid:15)(cid:25)(cid:6)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:35)(cid:34)(cid:47)(cid:44)(cid:42)(cid:47)(cid:40)(cid:1)(cid:48)(cid:54)(cid:53)(cid:45)(cid:38)(cid:53)(cid:52)(cid:1)(cid:9)(cid:47)(cid:80)(cid:84)(cid:15)(cid:10)
(cid:34)(cid:53)(cid:46)(cid:84)(cid:1)(cid:9)(cid:47)(cid:80)(cid:84)(cid:15)(cid:10)
(cid:21)(cid:13)(cid:22)(cid:19)(cid:17)
(cid:21)(cid:13)(cid:24)(cid:18)(cid:22)
(cid:21)(cid:13)(cid:24)(cid:25)(cid:24)
(cid:18)(cid:19)(cid:13)(cid:17)(cid:17)(cid:17)
(cid:18)(cid:19)(cid:13)(cid:19)(cid:23)(cid:17)
(cid:18)(cid:19)(cid:13)(cid:23)(cid:20)(cid:22)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:36)(cid:42)(cid:53)(cid:42)(cid:38)(cid:52)(cid:1)(cid:16)(cid:1)(cid:53)(cid:48)(cid:56)(cid:47)(cid:52)(cid:1)(cid:9)(cid:47)(cid:80)(cid:84)(cid:15)(cid:10)
(cid:49)(cid:48)(cid:52)(cid:1)(cid:53)(cid:38)(cid:51)(cid:46)(cid:42)(cid:47)(cid:34)(cid:45)(cid:52)(cid:1)(cid:42)(cid:47)(cid:52)(cid:53)(cid:34)(cid:45)(cid:45)(cid:38)(cid:37)(cid:1)(cid:9)(cid:47)(cid:80)(cid:84)(cid:15)(cid:1)(cid:74)(cid:79)(cid:1)(cid:77)(cid:66)(cid:68)(cid:10)
(cid:19)(cid:13)(cid:22)(cid:25)(cid:24)
(cid:19)(cid:13)(cid:23)(cid:22)(cid:24)
(cid:19)(cid:13)(cid:23)(cid:26)(cid:18)
(cid:21)(cid:15)(cid:20)(cid:17)
(cid:21)(cid:15)(cid:17)(cid:21)
(cid:19)(cid:15)(cid:25)(cid:20)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:24)
(cid:40)(cid:51)(cid:34)(cid:49)(cid:41)(cid:42)(cid:36)(cid:34)(cid:45)(cid:1)(cid:41)(cid:42)(cid:40)(cid:41)(cid:45)(cid:42)(cid:40)(cid:41)(cid:53)(cid:52)
(cid:37)(cid:38)(cid:35)(cid:42)(cid:53)(cid:1)(cid:36)(cid:34)(cid:51)(cid:37)(cid:52)(cid:1)(cid:9)(cid:47)(cid:80)(cid:84)(cid:15)(cid:1)(cid:74)(cid:79)(cid:1)(cid:77)(cid:66)(cid:68)(cid:10)
(cid:36)(cid:51)(cid:38)(cid:37)(cid:42)(cid:53)(cid:1)(cid:36)(cid:34)(cid:51)(cid:37)(cid:52)(cid:1)(cid:9)(cid:47)(cid:80)(cid:84)(cid:15)(cid:1)(cid:74)(cid:79)(cid:1)(cid:77)(cid:66)(cid:68)(cid:10)
(cid:19)(cid:20)(cid:17)(cid:15)(cid:20)
(cid:19)(cid:20)(cid:22)(cid:15)(cid:24)
(cid:19)(cid:21)(cid:20)(cid:15)(cid:19)
(cid:18)(cid:17)(cid:23)(cid:15)(cid:26)
(cid:25)(cid:22)(cid:15)(cid:22)
(cid:24)(cid:19)(cid:15)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:19)(cid:17)(cid:18)(cid:23)
(cid:19)(cid:17)(cid:18)(cid:24)
(cid:19)(cid:17)(cid:18)(cid:25)
(cid:51)(cid:54)(cid:49)(cid:38)(cid:38)(cid:1)(cid:38)(cid:34)(cid:51)(cid:47)(cid:38)(cid:37)
(cid:51)(cid:54)(cid:49)(cid:38)(cid:38)(cid:1)(cid:52)(cid:49)(cid:38)(cid:47)(cid:53)
(cid:23)(cid:22)(cid:15)(cid:23)(cid:6)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:34)(cid:69)(cid:87)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)
(cid:18)(cid:25)(cid:15)(cid:17)(cid:6)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:71)(cid:83)(cid:80)(cid:78)(cid:1)(cid:42)(cid:79)(cid:87)(cid:70)(cid:84)(cid:85)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)
(cid:18)(cid:18)(cid:15)(cid:26)(cid:6)
(cid:36)(cid:80)(cid:78)(cid:78)(cid:74)(cid:84)(cid:84)(cid:74)(cid:80)(cid:79)(cid:13)(cid:1)(cid:38)(cid:89)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:13)(cid:1)(cid:35)(cid:83)(cid:80)(cid:76)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)
(cid:18)(cid:15)(cid:23)(cid:6)
(cid:18)(cid:15)(cid:21)(cid:6)
(cid:18)(cid:15)(cid:21)(cid:6)
(cid:39)(cid:57)(cid:1)(cid:7)(cid:1)(cid:37)(cid:70)(cid:83)(cid:74)(cid:87)(cid:66)(cid:85)(cid:74)(cid:87)(cid:70)(cid:1)(cid:42)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)
(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:42)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)
(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:84)
(cid:21)(cid:22)(cid:15)(cid:25)(cid:6)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:83)(cid:70)(cid:84)(cid:85)(cid:1)(cid:38)(cid:89)(cid:81)(cid:70)(cid:79)(cid:84)(cid:70)
(cid:19)(cid:22)(cid:15)(cid:26)(cid:6)
(cid:48)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:38)(cid:89)(cid:81)(cid:70)(cid:79)(cid:84)(cid:70)
(cid:18)(cid:17)(cid:15)(cid:22)(cid:6)
(cid:53)(cid:66)(cid:89)
(cid:24)(cid:15)(cid:19)(cid:6)
(cid:23)(cid:15)(cid:25)(cid:6)
(cid:20)(cid:15)(cid:26)(cid:6)
(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:85)(cid:80)(cid:1)(cid:51)(cid:70)(cid:84)(cid:70)(cid:83)(cid:87)(cid:70)(cid:84)
(cid:49)(cid:83)(cid:80)(cid:87)(cid:74)(cid:84)(cid:74)(cid:80)(cid:79)(cid:84)
(cid:49)(cid:83)(cid:80)(cid:81)(cid:80)(cid:84)(cid:70)(cid:69)(cid:1)(cid:37)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:7)(cid:1)(cid:53)(cid:66)(cid:89)(cid:1)(cid:85)(cid:73)(cid:70)(cid:83)(cid:70)(cid:80)(cid:79)
(cid:19)(cid:25)
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 1 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
2008-2009
2009-2010
2010-2011
16,584.01
16,467.92
20,380.77
8,911.10
7,786.30
9,385.08
7,672.91
8,681.62
10,995.69
3,700.65
4,573.63
4,945.23
11,373.56
13,255.25
15,940.92
5,950.54
5,423.02
2,123.78
1,970.35
153.43
3,299.24
1,054.31
2,244.93
6,475.71
6,779.54
2,490.40
2,288.74
201.66
4,289.14
1,340.44
2,948.70
7,780.02
8,160.90
2,342.24
1,198.55
1,143.69
5,818.66
1,892.26
3,926.40
142,811.58
167,404.44
208,586.41
8,738.58
6,353.10
7,393.05
14,646.33
21,519.58
25,376.35
183,270.77
222,458.57
283,634.24
98,883.05
125,830.59
159,982.67
53,309.31
51,013.32
67,952.59
10.57
16.12%
10.58%
15.69%
2.00
22.17%
68.86
194.68
18.42
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
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
HDFC Bank Limited Annual Report 2017-18
18
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
(` crore)
2017-2018
27,874.19
35,064.87
41,135.53
48,469.91
60,221.45
69,305.96
80,241.35
14,989.58
19,253.75
22,652.90
26,074.23
32,629.93
36,166.74
40,146.49
12,884.61
15,811.12
18,482.63
22,395.68
27,591.52
33,139.22
40,094.86
5,783.62
6,852.62
7,919.64
8,996.34
10,751.72
12,296.49
18,668.23
22,663.74
26,402.28
31,392.02
38,343.24
45,435.71
9,277.64
11,236.11
12,042.20
13,987.55
16,979.69
19,703.32
9,390.59
11,427.63
14,360.08
17,404.47
21,363.55
25,732.39
1,877.44
1,091.77
785.67
7,513.15
2,346.08
5,167.07
1,677.01
1,234.21
442.80
1,588.03
1,632.58
(44.56)
2,075.75
1,723.58
352.17
2,725.61
2,133.63
591.98
3,593.30
3,145.30
448.00
9,750.62
12,772.05
15,328.72
18,637.94
22,139.09
3,024.34
6,726.28
4,293.67
5,112.80
6,341.71
7,589.43
8,478.38
10,215.92
12,296.23
14,549.66
15,220.31
55,315.17
22,690.36
32,624.81
5,927.49
4,910.43
1,017.06
26,697.32
9,210.57
17,486.75
246,706.45
296,246.98
367,337.48
450,795.65
546,424.19
643,639.66
788,770.64
11,105.65
16,586.75
16,643.05
16,254.90
15,090.45
13,182.00
21,107.00
29,924.37
36,214.15
43,478.63
62,009.42
72,677.77
89,462.38
106,295.03
345,248.26
421,327.31
491,599.50
595,695.13
740,796.07
863,840.19
1,063,934.32
195,420.03
239,720.64
303,000.27
365,495.04
464,593.96
554,568.20
658,333.09
89,967.10
111,303.21
100,111.88
156,833.82
195,836.29
214,463.34
242,200.24
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
48.84
17.97%
13.22%
15.53%
9.50
23.51%
287.47
57.18
18.04%
12.79%
14.55%
11.00
23.32%
349.12
1,022.70
1,071.15
1,442.55
24.26
21.93
25.23
67.76
18.22%
13.25%
14.82%
13.00
***
23.26%
409.60
1,929.00
28.47
HDFC Bank Limited Annual Report 2017-18
19
19
Directors' Report
Dear Shareholders,
Your Directors take great pleasure in presenting the 24th Annual
Report on the business and operations of your Bank, together
with the audited accounts for the year ended March 31, 2018.
It has been a challenging but historic year for India’s economy,
especially for the banking sector, with heightened asset
quality stress levels and operating risks. While the effects of
demonetisation spilled over into the first quarter, the second
quarter marked the rollout of the much awaited Goods and
Services Tax (GST). The introduction of this composite tax saw
many levies being done away with and marked a huge step
towards transforming India into a giant common market. In the
long run, GST is expected to give a fillip to the economy as a
whole; in the short term, however, this led to initial growth pangs,
particularly in the cash-dependent sectors of the industry such
as Small and Medium Enterprises (SMEs).
In the year under review, your Bank:
(cid:115)(cid:0) (cid:55)(cid:73)(cid:84)(cid:78)(cid:69)(cid:83)(cid:83)(cid:69)(cid:68)(cid:0) (cid:67)(cid:79)(cid:78)(cid:83)(cid:73)(cid:83)(cid:84)(cid:69)(cid:78)(cid:84)(cid:0) (cid:73)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:73)(cid:78)(cid:0) (cid:65)(cid:0) (cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0) (cid:79)(cid:70)(cid:0) (cid:73)(cid:84)(cid:83)(cid:0) (cid:75)(cid:69)(cid:89)(cid:0)
end, your Bank has chosen to bring about a holistic change in
the lives of people. You will be happy to know that for the second
consecutive year it met the mandatory 2 per cent Corporate Social
Responsibility (CSR) expenditure with a spend of ` 374 crore.
Parivartan, the new umbrella CSR brand, is expected to lend
a sharper focus to these efforts. To put matters in perspective,
(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:7)(cid:83)(cid:0)(cid:83)(cid:79)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:74)(cid:79)(cid:85)(cid:82)(cid:78)(cid:69)(cid:89)(cid:0)(cid:66)(cid:69)(cid:71)(cid:65)(cid:78)(cid:0)(cid:65)(cid:66)(cid:79)(cid:85)(cid:84)(cid:0)(cid:65)(cid:0)(cid:68)(cid:69)(cid:67)(cid:65)(cid:68)(cid:69)(cid:0)(cid:65)(cid:71)(cid:79)(cid:0)(cid:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)
board mandated Sustainable Livelihood Initiative (SLI) to make
a difference to the lives of 1 crore households. SLI helps people
improve their lives by upgrading their skillsets and, thus, enabling
them to break out of the cycle of poverty. Under its Holistic Rural
Development Programme (HRDP), the Bank transforms lives in
rural India and thus helps bridge the gap with urban India.
Awards and Recognition
The Bank continues to be awarded and win laurels. Notably, it
was named India’s most valuable brand for the fourth year in a
row in the BrandZ survey of Top 50 Most Valuable Indian Brands.
(cid:38)(cid:79)(cid:82)(cid:66)(cid:69)(cid:83)(cid:0)(cid:33)(cid:83)(cid:73)(cid:65)(cid:0)(cid:83)(cid:65)(cid:73)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:82)(cid:84)(cid:73)(cid:67)(cid:76)(cid:69)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:89)(cid:79)(cid:85)(cid:82)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:87)(cid:65)(cid:83)(cid:0)(cid:65)(cid:77)(cid:79)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:86)(cid:69)(cid:0)
companies that shaped Asia and the world.
financial parameters
(cid:115)(cid:0) (cid:51)(cid:65)(cid:87)(cid:0)(cid:73)(cid:78)(cid:67)(cid:82)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:68)(cid:73)(cid:71)(cid:73)(cid:84)(cid:73)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
(cid:115)(cid:0) (cid:51)(cid:84)(cid:69)(cid:80)(cid:80)(cid:69)(cid:68)(cid:0)(cid:85)(cid:80)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)(cid:83)(cid:79)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:65)(cid:67)(cid:84)(cid:73)(cid:86)(cid:73)(cid:84)(cid:73)(cid:69)(cid:83)
(cid:115)(cid:0) (cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:69)(cid:68)(cid:0)(cid:77)(cid:79)(cid:82)(cid:69)(cid:0)(cid:65)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(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:84)(cid:73)(cid:79)(cid:78)(cid:0)
(cid:115)(cid:0) (cid:38)(cid:73)(cid:82)(cid:77)(cid:69)(cid:68)(cid:0)(cid:85)(cid:80)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)(cid:70)(cid:85)(cid:78)(cid:68)(cid:0)(cid:82)(cid:65)(cid:73)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)
Financial Parameters
(cid:57)(cid:79)(cid:85)(cid:82)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:82)(cid:69)(cid:67)(cid:79)(cid:82)(cid:68)(cid:69)(cid:68)(cid:0) (cid:65)(cid:78)(cid:0) (cid:73)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:73)(cid:78)(cid:0) (cid:65)(cid:0) (cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0) (cid:79)(cid:70)(cid:0) (cid:73)(cid:84)(cid:83)(cid:0) (cid:75)(cid:69)(cid:89)(cid:0)
financial parameters. At ` 17,486.8 crore, Net Profit went up by
20.2 per cent. Similarly, at ` 40,094.9 crore, Net Interest Income
rose by almost 21 per cent. Core Net Interest Margin remained
stable at 4.3 per cent. Net Non-Performing Assets (NPAs) at 0.4
per cent is among the lowest in the industry. This was largely due
to the Bank’s prudent credit evaluation of the targeted customer
profile and having a diversified loan book spread across customer
segments, products, sectors and managing risk-return decisions
with discipline.
Fund Raising
The Bank is awaiting the receipt of relevant approvals for raising
of additional capital up to an aggregate sum of ` 24,000 crore, of
which such number of equity shares of face value of ` 2/- each
aggregating up to ` 8,500 crore are proposed to be allotted to
(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:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:7)(cid:83)(cid:0)
promoter, on a preferential basis and the balance amount by
issue of equity shares and / or convertible securities / depository
receipts pursuant to a Qualified Institutions Placement / American
Depository Receipts / Global Depository Receipts program.
This additional capital proposed to be raised is intended to support
growth over the next few years. Notably, your Bank has been
(cid:68)(cid:73)(cid:86)(cid:69)(cid:82)(cid:83)(cid:73)(cid:70)(cid:89)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)(cid:70)(cid:85)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:66)(cid:65)(cid:83)(cid:69)(cid:14)(cid:0)(cid:38)(cid:79)(cid:82)(cid:0)(cid:69)(cid:88)(cid:65)(cid:77)(cid:80)(cid:76)(cid:69)(cid:12)(cid:0)(cid:73)(cid:84)(cid:0)(cid:87)(cid:65)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:82)(cid:83)(cid:84)(cid:0)(cid:66)(cid:65)(cid:78)(cid:75)(cid:0)
in the country to issue ` 2,300 crore worth of masala bonds in
the international markets. It also raised Additional Tier I capital
by issuing Perpetual bonds of ` 8,000 crore and Tier II capital of
` 2,000 crore.
Increased Digitisation
Summary
Your Bank today caters to more than 4.36 crore customers.
Although it has 4,787 banking outlets, what is noteworthy is that
an overwhelming 85 per cent of transactions are through digital
channels. This has led to a larger distribution footprint and a
superior customer experience resulting in higher market share
at lower cost.
Greater Social Commitment
The Bank’s guiding force is the belief that businesses cannot
prosper if the communities in which they operate fail. Towards this
In another development in the year under review, the Reserve Bank
of India (RBI) has identified your Bank as a Domestic Systemically
Important Bank (D-SIB). This means that its continued functioning
is critical for the uninterrupted availability of essential banking
services to the economy. To sum up, your Bank is geared up for
the next phase of growth, given the looming market opportunities
(cid:65)(cid:78)(cid:68)(cid:0) (cid:73)(cid:84)(cid:83)(cid:0) (cid:83)(cid:84)(cid:82)(cid:79)(cid:78)(cid:71)(cid:0) (cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0) (cid:73)(cid:78)(cid:0) (cid:69)(cid:65)(cid:67)(cid:72)(cid:0) (cid:79)(cid:70)(cid:0) (cid:73)(cid:84)(cid:83)(cid:0) (cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:0) (cid:70)(cid:82)(cid:65)(cid:78)(cid:67)(cid:72)(cid:73)(cid:83)(cid:69)(cid:83)(cid:14)(cid:0)
This, of course, would not have been possible without the
contribution of over 88,000 employees across the country, who
represent the brand and take it forward every day.
HDFC Bank Limited Annual Report 2017-18
20
Directors' Report
Summary of Financial Performance
Particulars
(` crore)
For the year ended / As on
March 31, 2018
March 31, 2017
Deposits and Other Borrowings
9,11,875.6
7,17,668.5
Advances
6,58,333.1
5,54,568.2
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
Dividend (including tax / cess thereon) pertaining to previous year paid during the year,
net of dividend tax credits *
95,461.7
27,603.6
17,486.8
32,668.9
50,155.7
4,371.7
1,748.7
235.5
(44.2)
3,390.6
81,602.5
22,972.2
14,549.7
23,527.7
38,077.3
3,637.4
1,455.0
313.4
4.3
(1.7)
Balance carried over to Balance Sheet
40,453.4
32,668.9
* In terms of revised Accounting Standard (AS) 4-Contingencies and Events Occurring after the Balance Sheet date as notified by
the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, the Bank
had not appropriated the proposed dividend from the Statement of Profit and Loss for the year ended March 31, 2017. Hence, the
same has been appropriated basis actual payout.
The Bank’s Total Income rose to ` 95,461.7 crore for the year under review from ` 81,602.5 crore in the previous year. Net Profit
increased by 20.2 per cent to ` 17,486.8 crore from ` 14,549.7 crore.
Appropriations from Net Profit have been effected as per the table given above.
Dividend
Your Bank has a dividend policy that, inter alia, balances
the objectives of appropriately rewarding shareholders and
retaining capital in order to fund future growth. It has a consistent
track record of steady increase in dividend distribution, with
the Dividend Payout Ratio ranging between 20 per cent and
25 per cent - a range that the Board endeavours to maintain.
The dividend policy of your Bank is available on the Bank’s website
at the following link: http://www.hdfcbank.com/htdocs/common/
pdf/corporate/Dividend-Distribution-Policy.pdf
Consistent with this policy and in recognition of the overall
performance during the year under review, your Directors are
pleased to recommend a dividend of ` 13 per equity share of ` 2
as against ` 11 per equity share in the previous year. As you are
aware, this dividend will be subject to tax to be paid by the Bank. In
terms of revised Accounting Standard (AS) 4 ‘Contingencies and
Events occurring after the Balance sheet date’ as notified by the
Ministry of Corporate Affairs through amendments to Companies
(Accounting Standards) Amendment Rules, 2016, the Bank has
not appropriated proposed dividend from Statement of Profit and
Loss for the year ended March 31, 2018. However, the effect of
the proposed dividend, including tax on dividend aggregating to
` 4,067.07 crore, has been reckoned in determining capital funds
in the computation of capital adequacy ratio as at March 31, 2018.
HDFC Bank Limited Annual Report 2017-18
21
Directors' Report
Ratings
Instrument
Fixed Deposit
Programme
Rating
(cid:35)(cid:33)(cid:50)(cid:37)(cid:0)(cid:33)(cid:33)(cid:33)(cid:0)(cid:8)(cid:38)(cid:36)(cid:9) CARE Ratings
Rating Agency Comments
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 I 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
Additional Tier I Bonds
(Under Basel III)
CARE AA+
CARE Ratings
CRISIL AA+
CRISIL
IND AA+
India Ratings
Tier II Bonds
(Under Basel III)
CARE AAA
CARE Ratings
CRISIL AAA
CRISIL
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry the 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 the lowest credit risk.
Instruments with this rating are considered to have very strong
degree of safety regarding timely servicing of financial obligations.
Such instruments carry the lowest credit risk.
Instruments with this rating are considered to have very strong
degree of safety regarding timely servicing of financial obligations.
Such instruments carry the 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 the 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 the 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 the 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 the 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 the 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 the 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 the 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 the lowest credit risk.
Instruments with this rating are considered to have high degree
of safety regarding timely servicing of financial obligations. Such
instruments carry very low credit risk.
Instruments with this rating are considered to have high degree
of safety regarding timely servicing of financial obligations.
Such instruments carry very low credit risk.
Instruments with this rating are considered to have high degree
of safety regarding timely servicing of financial obligations.
Such instruments carry very low credit risk.
Instruments with this rating are considered to have the highest
degree of safety regarding timely servicing of financial obligations.
Such instruments carry the 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 the lowest credit risk.
HDFC Bank Limited Annual Report 2017-18
22
Directors' Report
Issuance of Equity Shares and Employee Stock Options
(ESOP)
As on March 31, 2018, the issued, subscribed and paid up
capital of your Bank stood at ` 519,01,80,534 comprising
259,50,90,267 equity shares of ` 2 each. During the year under
review, 3,25,44,550 equity shares were allotted to employees in
respect of the equity stock options. The information pertaining to
ESOPs is given in ANNEXURE 1 to this report.
Capital Adequacy Ratio (CAR)
As on March 31, 2018 your Bank’s total CAR, calculated in line
with Basel III capital regulations, stood at 14.8 per cent, well
above the regulatory minimum of 10.875 per cent including the
Capital Conservation Buffer of 1.875 per cent. Of this, Tier I CAR
was 13.2 per cent. The effect of the proposed dividend has been
taken into account in computing these ratios.
MANAGEMENT DISCUSSION AND ANALYSIS
Macroeconomic and Industry Developments
Over the last two years, the Government has taken some key
policy decisions including a recapitalisation plan of ` 2,10,000
crore for public sector banks and introduction of the GST.
As mentioned earlier, the growth pangs are only short-term and
in the long run, GST is expected to give a fillip to the economy
as a whole.
The slowdown in growth witnessed during 2016-17 (compared
with 2015-16) intensified in the first quarter of 2017-18; GDP
growth slowed to a 13-quarter low of 5.7 per cent, sharply
lower than 7.9 per cent expansion in the same quarter of the
preceding year. But, as the transitory impact of both GST and
the demonetisation shock is on the wane, the economy appears
to be gradually regaining momentum. GDP growth rebounded
to 6.5 per cent in the second quarter of 2017-18, and further to
7.2 per cent in the third quarter of 2017-18 after slowing down
in the past five quarters. Going by the 2018 Union Budget, the
focus of fiscal policy in the coming year will be on revival of the
rural economy and infrastructure expenditure.
Notwithstanding some positive uptake in private investment
growth in the second quarter, we believe incremental pick-up in
private capital expenditure is likely to be sector and sub-sector
specific and gradual. We expect a more formidable recovery
in private capital expenditure cycle by the first half of the year
ending March 31, 2019. Overall, on the back of the assumption
of a pick-up in private consumption, gradual recovery in private
capital expenditure and continued support from Government-led
capital spending we expect the real GDP growth for 2018-19 to
rise to 7.3 per cent from 6.6 per cent in 2017-18.
The moderation in inflation which was seen in 2016-17 continued
in the early part of 2017-18 as well, with the CPI falling to a series
low of 1.5 per cent in June 2017 driven by both lower food and
core inflation. Having averaged 2.6 per cent in the first half of
2017-18, inflation inched up slightly in the second half (average
close to 4.4 per cent in second half of 2017-18). Going ahead in
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(cid:79)(cid:70)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:68)(cid:86)(cid:69)(cid:82)(cid:83)(cid:69)(cid:0)(cid:66)(cid:65)(cid:83)(cid:69)(cid:14)(cid:0)(cid:52)(cid:72)(cid:69)(cid:82)(cid:69)(cid:65)(cid:70)(cid:84)(cid:69)(cid:82)(cid:12)(cid:0)(cid:73)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:69)(cid:67)(cid:79)(cid:78)(cid:68)(cid:0)(cid:72)(cid:65)(cid:76)(cid:70)(cid:0)(cid:79)(cid:70)(cid:0)(cid:38)(cid:57)(cid:17)(cid:25)(cid:12)(cid:0)(cid:87)(cid:72)(cid:73)(cid:76)(cid:69)(cid:0)
the base effect could be favourable and lead to some moderation
in inflation, a lot would depend on how other risks like rising oil
prices, higher minimum support prices impact of housing rent
allowance increase by several state governments pan out.
Given the recent softer inflation prints while the RBI can afford
to wait longer and maintain status quo, eventually, we believe,
that elevation of some of the upside risks along with the revival
in rural demand could lead to a rate hike by the last quarter of
2018-19.
(cid:39)(cid:79)(cid:73)(cid:78)(cid:71)(cid:0) (cid:70)(cid:79)(cid:82)(cid:87)(cid:65)(cid:82)(cid:68)(cid:12)(cid:0) (cid:65)(cid:0) (cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:0) (cid:82)(cid:73)(cid:83)(cid:75)(cid:0) (cid:84)(cid:79)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:69)(cid:67)(cid:79)(cid:78)(cid:79)(cid:77)(cid:89)(cid:0) (cid:67)(cid:79)(cid:85)(cid:76)(cid:68)(cid:0) (cid:66)(cid:69)(cid:0) (cid:65)(cid:0) (cid:83)(cid:72)(cid:65)(cid:82)(cid:80)(cid:0)
increase in oil prices, which could adversely affect inflation, fiscal
deficit and the current account deficit. Risks on the external front
continue to loom on account of monetary policy uncertainty in
the developed nations (particularly on rate hikes’ side), Brexit
related uncertainty in the UK and rising protectionist tendencies,
especially in the US.
Mission and Strategic Focus
Your Bank’s mission is to be a ‘World-Class Indian Bank.’
Its business philosophy is based on five core values: Customer
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(cid:65)(cid:78)(cid:68)(cid:0)(cid:51)(cid:85)(cid:83)(cid:84)(cid:65)(cid:73)(cid:78)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:14)(cid:0)(cid:52)(cid:72)(cid:73)(cid:83)(cid:0)(cid:89)(cid:69)(cid:65)(cid:82)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:79)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:66)(cid:69)(cid:69)(cid:78)(cid:0)(cid:84)(cid:79)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:0)
building sound customer franchises across distinct businesses
so as to be a preferred banking services provider to achieve
healthy growth in profitability consistent with the Bank’s risk
appetite.
In line with the above, your Bank’s business strategy was to take
digitisation to the next level to achieve the following:
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customers
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financial services industry
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(cid:115)(cid:0) (cid:51)(cid:85)(cid:83)(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
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Your Bank is committed to do this while ensuring the highest
levels of ethical standards, professional integrity, corporate
governance and regulatory compliance. This is articulated
through a well-documented Code of Conduct that every
employee has to affirm annually that he / she will abide by.
HDFC Bank Limited Annual Report 2017-18
23
Directors' Report
Financial Performance
The financial performance of your Bank during the year ended
March 31, 2018, remained healthy with Total Net Revenue
(Net Interest Income Plus Other Income) rising by 21.7 per cent
to ` 55,315.2 crore from ` 45,435.7 crore in the previous year.
Revenue growth was driven by an increase in both Net Interest
Income and Other Income. Net Interest Income grew by 21
per cent to ` 40,094.9 crore due to acceleration in loan growth
coupled with Core Net Interest Margin (CNIM) of 4.3 per cent.
Other Income grew by 23.8 per cent to ` 15,220.3 crore.
The largest component was Fees and Commissions, which
increased by 29.3 per cent to ` 11,393.9 crore. Foreign Exchange
and Derivatives revenue was ` 1,523.5 crore, gain on revaluation
and sale of investments was ` 924.7 crore and recoveries from
written-off accounts was ` 1,093.8 crore.
Operating (Non-Interest) Expenses rose to ` 22,690.4 crore
from ` 19,703.3 crore. During the year, your Bank has set up
72 new banking outlets and 375 ATMs. This, along with strong
growth in retail asset and card products, resulted in higher
infrastructure and staffing expenses. Staff expenses also went
up due to annual wage revisions. Despite higher infrastructure
expenses, the Cost to Income Ratio improved to 41 per cent
from 43.4 per cent.
Total Provisions and Contingencies were ` 5,927.5 crore as
compared to ` 3,593.3 crore the preceding year. Your Bank’s
provisioning policies remain more stringent than regulatory
requirements.
The Coverage Ratio based on specific provisions alone
excluding Write-offs is 70 per cent; including General and
Floating provisions, it is 121 per cent. Your Bank made General
Provisions of ` 597.4 crore during the year.
Profit Before Tax grew by 20.6 per cent to ` 26,697.3 crore.
After providing for Income Tax of ` 9,210.6 crore, Net
Profit increased by 20.2 per cent to ` 17,486.8 crore from
` 14,549.7 crore. The Return on Average Net Worth was 18 per
cent while the Basic Earnings Per Share was ` 67.8, up from
` 57.2.
As on March 31, 2018, your Bank’s Total Balance Sheet
stood at ` 1,063,934 crore, an increase of 23.2 per cent over
` 8,63,840 crore on March 31, 2017. Total Deposits rose
by 22.5 per cent to ` 7,88,771 crore from ` 6,43,640 crore.
The Current Account and Savings Account (CASA) Deposit
growth also increased.
Savings Account Deposits grew by 15.6 per cent to ` 2,23,810
crore while Current Account Deposits rose by 3.2 per cent to
` 1,19,283 crore. Time Deposits stood at ` 4,45,678 crore,
representing an increase of 33.2 per cent. CASA Deposits
accounted for 43.5 per cent of Total Deposits. Advances stood
at ` 6,58,333 crore, an increase of 18.7 per cent. The Bank’s
domestic loan portfolio of ` 6,43,794 crore grew by 19.5
per cent over March 31, 2017. The Bank had a share of
approximately 6.7 per cent in Total Domestic Deposits and
7.4 per cent in Total Domestic Advances. Its Credit Deposit (CD)
Ratio stood at 83 per cent on March 31, 2018.
BUSINESS OPERATIONS
Our Bank’s operations are split into domestic and international,
albeit small.
DOMESTIC BUSINESS
Our domestic business comprises the following:
A) Retail Banking
Your Bank’s Retail Banking Business registered robust
growth in the year under review. Total Retail Deposits grew by
14.4 per cent to ` 5,80,006 crore from ` 5,06,843 crore in the
preceding year while Retail Advances rose by 27.4 per cent to
` 3,76,167 crore from ` 2,95,161 crore.
Growth in Retail Assets was led by Personal Loans, Auto
Loans and, Credit Cards.
The Bank is a leader in the Auto Loans Segment with a
strong presence in commercial vehicle and two-wheeler
financing. Four-wheeler financing registered a strong
22.8 per cent growth.
In Two-Wheeler Financing, your Bank is the first in the country
to cross the 10 lakh vehicles milestone. In the Commercial
Vehicle Segment, your Bank was able to ward off intense
competition and log robust profitable growth using its strong
brand equity and service. It chose not to compete on price.
The Personal Loan Business also surged to ` 71,876 crore on
the back of strong product offerings and speedy disbursals.
The Bank is a pioneer in various digital loans. Your Bank’s
10 second Personal Loan and Digital Loan Against Shares
were industry firsts.
In the credit card business, your Bank achieved yet another
milestone during the fiscal by becoming the first bank in
the country to issue one crore cards. Existing customers
accounted for 82 per cent of the new cards issued.
In addition to this, the Bank operates in the Home Loan
business in conjunction with HDFC Limited. As per this
arrangement, the Bank sells HDFC Home Loans while
HDFC Ltd approves and disburses them. The Bank receives
sourcing fee for these loans and has the option to purchase
up to 70 per cent of the fully disbursed loans 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. Your Bank originated, on an
average, ` 2,000 crore of Home Loans every month in the
year under review.
The Bank also distributes Life Insurance, General Insurance
and Mutual Funds, often referred to as Third-Party Products.
HDFC Bank Limited Annual Report 2017-18
24
Directors' Report
Income from this business grew by 51 percent from
` 1,381 crore to ` 2,091 crore and accounted for
18 per cent of total fee income in the year ended March 31,
2018 , compared with 16 per cent in the preceding year. This
was primarily on account of distribution of mutual funds of
the top asset management companies in the country. Mutual
Fund industry saw an unprecedented flow of household
savings into the mutual funds. In the system the AUM of the
individual investors grew by 36.8 per cent to about ` 11.7
lakh crore* as of March 31, 2018.
Your bank has adopted an open architecture model by
entering into multiple corporate agency agreements in life,
general and health insurance distribution. During the year
under review your Bank tied up with two life insurance,
two general insurance and three health insurance service
providers in addition to the existing tie-ups.
*Source for Industry numbers (AMFI India)
As regards physical distribution network the Bank also
added 72 banking outlets during the year taking the total
to 4,787 spread across 2,691 cities / towns. The share of
semi-urban and rural outlets in the total network is
53 per cent, reflecting our continued focus on them.
The number of ATMs also increased, to 12,635 from
12,260. The number of customers your Bank catered to
as on March 31, 2018 was over 4.36 crore from 4.05 crore
in the previous year.
The Payments Business where your Bank has a dominant
presence merits a special mention. With 2.43 crore debit
cards, 1.07 crore credit cards and 4.04 lakh POS terminals
and m-PoS installations, it is among the largest facilitators of
cashless payments using plastic in the country.
The Bank has made rapid strides in adopting other aspects
of digitisation as well. The Bank’s payments business has
launched digital offerings such as Bharat QR Code, UPI,
Aadhaar and SMS pay solutions. It has also pioneered
path-breaking products such as the SmartHub app for
small merchants and DigiPos, which enables traditional
PoS machines to accept digital payments. Merchants and
customers alike have found these solutions useful.
review,
the year under
In
the Virtual Relationship
Management (VRM) programmme gained substantial
traction. Through this, relationship managers reach out to
customers through remote and digital platforms, leading
to deeper engagement in a cost-effective manner. These
managers are a single point of contact for customers
banking and financial needs. This programme which offers
tailor-made solutions, using carefully drawn customer level
plans has been well received in the 18 months since its
launch. The number of customers has trebled during this
period.
B) Wholesale Banking
This business focuses on institutional customers such as
the Government, Large and Emerging Corporates, and
SMEs. Your Bank’s offerings in this segment include Working
Capital and Term Loans as well as Trade Credit, Cash
Management, Supply Chain Financing, Foreign Exchange,
and Investment Banking services. The Wholesale Banking
business recorded healthy growth, ending the year with a
loan book size of approximately ` 2,88,000 crore constituting
about 43 per cent of the Bank’s total book.
This was an
increase of about 9.5 per cent over
approximately ` 2,63,000 crore recorded in the previous year.
The performance in this segment must be seen in the wider
context of an otherwise subdued credit environment and
excess liquidity in the banking system, which exercised a
downward pressure on interest rates for much of the year.
The Bank was able to expand its share of the customer wallet,
primarily using sharper customisation and cross-selling.
Corporate Banking, which focuses on large, well-rated
companies, continued to remain the biggest contributor
to Wholesale Banking in terms of asset size. Despite a
subdued credit environment, the Emerging Corporates
Group, which focuses on the mid-market segment, too
witnessed significant growth.
Your Bank leveraged its vast geographical reach, technology
backbone, automated processes, suite of financial products
and quick turnaround times to offer a differentiated service,
which has resulted in new customer acquisition as well
as a higher share of the wallet from existing customers.
The business continues to have a diversified portfolio in
terms of both industry and geography.
The year under review has been a challenging but defining
one for Micro, Small and Medium Enterprises (MSMEs).
The sector faced temporary challenges arising from clarity
and compliance issues in the implementation of GST.
Your Bank fine-tuned its strategy and capitalised on new
opportunities to grow the business. The Bank’s advances to
MSMEs amounted to ` 89,042.1 crore as on March 31, 2018.
The Investment Banking business cemented its already
prominent position in the Debt Capital Markets. For three
consecutive years now, your Bank has been ranked 2nd in
the Bloomberg rankings of Rupee Bond book runners.
In the Government business, the Bank sustained its focus
on tax collections, collecting direct tax of ` 2.61 lakh
crore and indirect tax of ` 0.85 lakh crore during the year.
In addition to the taxes / duties collected on behalf of several
state governments, the Bank also collected ` 1.01 lakh
crore in the form of GST. We continue to enjoy a pre-eminent
position among the country’s major stock and commodity
exchanges in both Cash Management Services and Cash
Settlement Services.
HDFC Bank Limited Annual Report 2017-18
25
Directors' Report
The Bank has, as part of its digitisation drive, ensured a larger
conversion of cash payments into electronic ones. The ‘Trade-
on-Net’ offering, which gives clients access to a host of services
such as Remittances, Letters of Credit and Guarantees, has
gained acceptance. SM@Bank, our online solution for SME
customers, also continued to gather momentum.
Your Bank’s pre-eminent position in the Wholesale Business
was recognised in a survey conducted by Greenwich
Associates, a leading global provider of market and
intelligence services. It rated your Bank as number one
in India in the middle market segment in terms of market
penetration and number two in the large corporate segment.
C) Treasury
The Treasury is the custodian of the Bank’s cash / liquid
assets and handles its investments in securities, foreign
exchange and cash instruments. It manages the liquidity
and interest rate risks on the balance sheet and is also
responsible for meeting reserve requirements. The vertical
also helps manage the treasury needs of customers and
earns a substantial part of its revenues through fee income
generated from transactions customers undertake with the
Bank while managing their foreign exchange and interest
rate risks.
Revenue accrues from spreads on customer transactions
based on trade and remittance flows and demonstrated
hedging needs. The Bank recorded revenue of ` 1,523.5
crore from foreign exchange and derivative transactions in
the year under review. While plain vanilla forex products were
in demand across all customer segments, the demand for
derivative products came mostly from large and emerging
corporates.
As a part of prudent risk management, the Bank enters into
foreign exchange and derivative deals with counterparties
after it has set up appropriate credit limits based on its
evaluation of the ability of the counterparty to meet its
obligations. Where the Bank enters into foreign currency
derivative contracts not involving the Indian Rupee with its
customers, it typically lays them off in the inter-bank market
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the Bank primarily carries the counterparty credit risk (where
the customer has crystallised payables or mark-to-market
losses) and may carry only residual market risk if any.
The Bank also deals in derivatives on its own account,
including for the purpose of its own balance sheet risk
management.
The Bank maintains a portfolio of Government Securities, in
line with regulatory norms governing the Statutory Liquidity
Ratio (SLR). A significant portion of these SLR securities
are held in the ‘Held-to-Maturity’ (HTM) category, while
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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
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The Bank is in the process of implementing a new Treasury
solution provided by Murex. The first phase of implementation
went live this year and full implementation will be completed
in the next 12-18 months. This will be an integrated solution
for front-office, mid-office and back-office and will replace
many existing software / systems.
D) Partnering with the Government
You will be happy to know that your Bank has been closely
working with the Government both at the Central and State
levels primarily in the following three areas:
1) Digitisation and Digital India
a) Ministry of Electronics & Information Technology
(MeitY) has ranked your Bank as the Number 1
Bank for supporting many of its initiatives. Your
Bank is proud to be one of the few banks that was
able to meet the targets in installing Point of Sale
(PoS) units, Bharat QR and BHIM app following
demonetisation.
b) The Bank partnered with Thane city to launch the
first one-city-one-card as part of the Smart City
initiative. A similar solution has also been created
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mobile app has been created to further support the
Smart City initiative. To further the government’s
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and Uttar Pradesh to provide transit cards and
payment solutions.
c) Your Bank is working to ensure that funds under a
host of schemes including Direct Benefit Transfer
(DBT) and Mahatma Gandhi National Rural
Employee Guarantee Act reach the intended
beneficiaries. Towards this end, it has partnered
with various Panchayats across the country for
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Dedicated teams from the Bank work closely with
government authorities and play a critical role by
providing real-time, on-ground feedback for refining
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automation and digitisation in various government
departments to help improve both time and cost
(cid:69)(cid:70)(cid:108)(cid:67)(cid:73)(cid:69)(cid:78)(cid:67)(cid:73)(cid:69)(cid:83)(cid:14)(cid:0)(cid:38)(cid:79)(cid:82)(cid:0)(cid:69)(cid:88)(cid:65)(cid:77)(cid:80)(cid:76)(cid:69)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:73)(cid:83)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:0)
technology solution in partnership with a software
company to manage the National Health Mission
(Madhya Pradesh scheme) more efficiently. It has
also been working on various on e-Governance
initiatives such as MahaOnline (Maharashtra) and
Mee Seva (Andhra Pradesh).
HDFC Bank Limited Annual Report 2017-18
26
Directors' Report
2) Customised Banking Solution for Government
Employees
Your Bank has designed a banking package to suit the
needs of government employees, at the state and central
levels. The offering includes an overdraft secured by
their salary account, complimentary insurance covers
and fine pricing on loans.
3) Start-Up Fund and SmartUp Banking
Through its SmartUp Programme for Start-ups and
Start-Up Fund, your Bank is working with various state
governments and incubators / accelerators to promote
entrepreneurship. Memoranda of Understanding have
already been signed with three state governments to
enable execution of varied aspects of their respective
start-up policies. Your Bank also works with seven
incubators certified by the Department of Science
and Technology, including various Indian Institutes
of Technology and Indian Institutes of Management,
to identify Social Start-ups that require financial and
advisory support.
E) Rural
1) Agriculture and Allied Activities
Your Bank’s credit to Agriculture and Allied activities stood
at ` 1,13,160.6 crore on March 31, 2018, representing
an increase of 45.2 per cent over ` 77,921.0 crore in the
previous year.
Over half of India’s population depends on agriculture for
livelihood. The key to the Bank’s success here has been its
ability to tap the opportunities herein through the following:
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(cid:115)(cid:0)
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(cid:115)(cid:0) (cid:36)(cid:73)(cid:71)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0)(cid:83)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)
Our product range includes Pre and Post-Harvest Crop
Loans, Two-Wheeler and Auto Loans and Loans against
Gold Jewellery, Personal Loans and other mortgage loans.
Consequently, the Bank has established a strong footprint in
the rural hinterland with Crop Loans. Apart from advising the
farmers on their financial needs, your Bank is increasingly
focusing on
them on benefits of various
government / regulatory schemes such as crop insurance
and interest subvention.
facilitating
The Bank has also designed a range of crop and geography-
specific products keeping in mind the harvest cycles and the
local needs of farmers spread across diverse agro climatic
zones.
Using technology, we are able to disburse some loans
within three working days (in select geographies) and loan
enhancements in a few seconds through ATMs and mobile
HDFC Bank Limited Annual Report 2017-18
27
phones. Our products such as Post-Harvest Cash Credit
and Warehouse Receipt Financing enable faster cash flows
to the farmer. Credit is also disbursed to allied agricultural
activities such as Dairy, Pisciculture, and Sericulture.
Twelve farmer centres or Kisan Dhan Vikas Kendras have
been rolled out in Punjab, Maharashtra, Uttar Pradesh
and Madhya Pradesh. At these centres, farmers secure
information on soil health, mandi prices, various government
initiatives and expert advice. These services are also
available on the Bank’s website in vernacular languages.
The Bank also provides advisory on weather, cropping, and
harvesting through SMS.
Digitising Payments, Easing Cash Flow: This is our
effort to facilitate transparency in the milk procurement
and payment process. Under this initiative, Multi-function
Terminals (MFTs), popularly known as Milk-to-Money
ATMs, are deployed in dairy societies. The MFTs link
the milk procurement system of the dairy society to
the farmers’ account to enable faster payments. MFTs
have cash dispensers that function as standard ATMs.
The transparency in the milk collection process, including the
quality of milk, benefits both farmers and society. Payments
are credited without the difficulties associated with the cash
distribution process. What is more, this creates a credit
history that can then be used as the basis for accessing
bank credit. Apart from Dairy and Cattle Loans, customers
gain access to all bank products including digital offerings
such as 10 Second Personal Loans, Kisan Credit Card, Bill
Pay, and Missed Call Mobile Recharge.
Replacing the Moneylender: Loans against Gold Jewellery
grew to over ` 5,500 crore from over ` 4,800 crore the
preceding year. Your Bank is slowly making inroads into a
market traditionally dominated by the unorganised sector
and pawn brokers. The entry of organised players into the
sector has increased both awareness and transparency.
The Bank has been able to serve the section of people who
would traditionally rely on the moneylender through faster
turnaround times.
Helping Farmers: Farm yield and income are subject to the
vagaries of the weather. Factors like soil health, input quality
(seeds and fertilizers), availability of water and government
policy also impact this. So do price realisation and storage
facilities. Your Bank has launched a variety of products to
ease the stress on farm income and rural households.
Over the last few years, several parts of the country
have been severely impacted by natural calamities such
as drought, unseasonal rains, hailstorms, and floods.
Within regulatory guidelines, the Bank has been providing
relief to impacted farmers. It also has systems designed to
enable Direct Benefit Transfers in a time-bound manner.
Directors' Report
Lending to the agriculture sector, including to the small and
marginal farmers is a regulatory mandate as part of priority
sector lending requirements. This has inherent credit risks.
Your Bank has built policies and product programmes and
engages closely with farmers to mitigate risks and protect
portfolio quality. The Bank is also exploring the use of remote
sensing technologies and analytics to strengthen crop and
farm level assessment.
2) Micro, Small and Medium Enterprises (MSME)
Advances to the MSME segment as on March 31, 2018
stood at ` 89,042.1 crore as against ` 85,166.6 crore a year
ago. Its advances to the Micro Enterprises alone stood at
` 40,644.7 crore. The Emerging Enterprises and Business
Banking Groups cater to the Micro Enterprises and SME
segments respectively.
The MSME sector serves as an important engine for
economic growth. It contributes 33 per cent to India’s
to exports.
manufacturing output and 45 per cent
With 12 crore people employed across five crore MSME units,
it is the second largest employer after agriculture accounting
for 40 per cent of the workforce. This is the fastest growing
segment in the commercial lending space and constituted
23 per cent of credit outstanding in the year under
review. Credit to Micro Enterprises grew at a faster clip of
20 per cent as against nine per cent for SMEs.
The year ended March 31, 2018 was a challenging one
for the MSME business due to the introduction of GST in
terms of clarity and compliance. It also led to temporary
increase in working capital requirement for customers.
GST implementation is seen as a positive in the long run as
it is expected to lead to further formalisation of the informal
sector and thus open up new and safer opportunities for
bank financing. Needless to say, in the case of existing firms
too, greater transparency will lead to better credit quality.
Implementation of GST, demonetisation, the Government
push and the advent of the next-generation of entrepreneurs
have all driven a steady shift towards digital transactions.
In what could be a potential game changer for the business,
Your Bank’s complete online solution the SM@Bank for
SME customers, is seeing greater customer adoption
across geographies. Through this, customers can access
credit facility information, request temporary overdraft
facilities, ask for new facilities and submit documents to
the Bank for straight through processing on a 24*7 basis.
This is now poised to gain further momentum. Like in every
other business unit, increasing use of analytics is giving
your Bank an edge.
3) Taking Banking to the Unbanked
Your Bank is fully committed to taking banking to the
remotest parts of the country through the combination of
an extensive physical network and a robust digital suite of
products and services. Today, over 53 per cent of the Bank’s
outlets are located in rural and semi-urban areas. The Bank
also offers last mile access through mobile applications
such as BHIM, UPI, USSD, Scan and Pay, Aadhaar, and
RuPay enabled Micro-ATMs.
To bring more under-banked sections of the population into
formal financial channels, your Bank has opened over 17.72
lakh accounts under the Pradhan Mantri Jan Dhan Yojana
(PMJDY) and enrolled over 29.37 lakh customers in social
security schemes since their inception. We now rank among
the leading private sector banks in this regard. In the year
under review, loans to the tune of ` 6,621.41 crore were
extended under the Pradhan Mantri Mudra Yojana (PMMY)
and nearly ` 134.24 crore under the ‘Stand Up India’
scheme to Scheduled Caste / Scheduled Tribe and women
borrowers.
4) Sustainable Livelihood Initiative
This is primarily a social initiative with elements of business.
It entails skill training, livelihood financing, and creating
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below on Parivartan.
INTERNATIONAL BUSINESS
As on March 31, 2018, the balance sheet size of this business
was US $ 4.13 billion. Advances constituted close to 3.1 per cent
of the Bank’s gross advances. The total income of the overseas
branches constituted 0.86 per cent of the Bank’s total income for
the year. Though the number is small, what is significant is that
your Bank is able to cater to a large and growing Indian diaspora.
As you would know, your Bank has overseas branches in Bahrain,
(cid:40)(cid:79)(cid:78)(cid:71)(cid:0)(cid:43)(cid:79)(cid:78)(cid:71)(cid:12)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:36)(cid:85)(cid:66)(cid:65)(cid:73)(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:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:35)(cid:69)(cid:78)(cid:84)(cid:82)(cid:69)(cid:0)(cid:8)(cid:36)(cid:41)(cid:38)(cid:35)(cid:9)(cid:14)(cid:0)
These branches cater to the needs of our overseas clients both
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and Wealth Management (primarily for non-resident individual
customers). In addition, the Bank has Representative Offices in
Abu Dhabi, Dubai and Nairobi.
You will be happy to know that your Bank now has a presence
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(cid:39)(cid:65)(cid:78)(cid:68)(cid:72)(cid:73)(cid:78)(cid:65)(cid:71)(cid:65)(cid:82)(cid:12)(cid:0)(cid:39)(cid:85)(cid:74)(cid:65)(cid:82)(cid:65)(cid:84)(cid:14)(cid:0)(cid:52)(cid:72)(cid:73)(cid:83)(cid:0)(cid:85)(cid:78)(cid:73)(cid:84)(cid:12)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:79)(cid:80)(cid:69)(cid:78)(cid:69)(cid:68)(cid:0)(cid:73)(cid:78)(cid:0)(cid:42)(cid:85)(cid:78)(cid:69)(cid:0)(cid:18)(cid:16)(cid:17)(cid:23)(cid:12)(cid:0)(cid:73)(cid:83)(cid:0)
akin to a foreign branch. Customers can avail of products such as
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Commercial Borrowings (ECB), and derivatives to hedge loans.
NON -BUSINESS OPERATIONS / SOCIAL COMMITMENT
Parivartan - A Step Towards Progress
Parivartan is your Bank’s umbrella brand for all its social
initiatives. Parivartan or ‘Change’ as it means in English seeks
to bring about change in the lives of people making them
self-reliant and part of the national mainstream. Working largely
through communities, Parivartan focuses on the following
HDFC Bank Limited Annual Report 2017-18
28
Directors' Report
fundamental areas:
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(cid:115)(cid:0) (cid:48)(cid:82)(cid:79)(cid:77)(cid:79)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:37)(cid:68)(cid:85)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
(cid:115)(cid:0) (cid:40)(cid:69)(cid:65)(cid:76)(cid:84)(cid:72)(cid:67)(cid:65)(cid:82)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:40)(cid:89)(cid:71)(cid:73)(cid:69)(cid:78)(cid:69)(cid:0)
(cid:115)(cid:0)
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As noted before, Sustainability is one of your Bank’s core
values. Your Bank’s belief is that businesses should support the
communities in which they operate. We are happy to report that
your Bank, through its several social initiatives (including SLI)
has made a difference to the lives of over 3.5 crore Indians.
Rural Development
The Holistic Rural Development Programme (HRDP) is born out
of the conviction that the nation will progress only when rural
India grows. Over half the country’s population lives in rural areas
and is primarily dependent on agriculture for their livelihood.
Our efforts here are focused on areas of soil, water and natural
resource management and sanitation, issues that rural India is
often plagued by. These are often multi-pronged interventions.
Soil conservation for instance will typically cover educating
people about use of organic fertilisers. Water management
will entail construction, renovation and maintenance of water
harvesting structures for improving surface and ground water
availability. Likewise educating people on renewable energy
often forms part of our natural resource management efforts.
Spread over 16 states, the programme covers over 2.9 lakh
households across 870 villages. Over 18,000 acres of arable
land have been treated to enhance productivity. Umpathaw in
Meghalaya, became the 750th village to be covered under the
programme in the year under review.
Promoting Education
There is no better gift to humanity than education. Improving
the quality of education is a focus area under Parivartan.
Your Bank’s efforts in this area include teacher training,
scholarships and career guidance. It also includes providing
infrastructure support, such as building toilets in schools and
improving classrooms. At the community level, this entails
educating people on the importance of Water, Sanitation and
Hygiene (WaSH) and creating awareness on issues related to
road safety and healthy financial practices.
The flagship programme here is Zero Investment Innovations
for Education Initiatives (ZIIEI). This ‘Teaching The Teacher’
programme (3T) seeks to transform education in government
schools across India. This is a unique programme which is
committed to improving the skills of teachers, which in turn
benefits the pupils.
of (cid:65)(cid:0) (cid:80)(cid:73)(cid:76)(cid:79)(cid:84)(cid:0) (cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:0) (cid:73)(cid:78)(cid:0) (cid:53)(cid:84)(cid:84)(cid:65)(cid:82)(cid:0) (cid:48)(cid:82)(cid:65)(cid:68)(cid:69)(cid:83)(cid:72)(cid:14)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:73)(cid:83)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:68)(cid:0) (cid:84)(cid:79)(cid:0)
train 15 lakh teachers in 6.2 lakh government schools across
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Skills Training and Livelihood Enhancement
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Your Bank under Skills Training and Livelihood Enhancement
targets people in this section of society in rural India and imparts
income generating skills, primarily in agriculture and allied areas
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migration.
The nationwide programme has benefitted over 51,000
individuals.
The programme also has another leg where placement-linked
training is provided to youth and career counselling is provided
to young school students. So far over 3,000 have received skill
development training.
The flagship programme under Skills Training and Livelihood
Enhancement is the Sustainable Livelihood Initiative (SLI).
Sustainable Livelihood Initiative
This initiative aims at ‘Creating Sustainable Communities’.
It does so by empowering women and helping them break the
vicious circle of poverty. Empowering women, we believe, means
empowering families. Women form Self Help Groups (SHGs) or
Joint Liability Groups (JLGs). The women under the programme
are given occupational skills training, financial literacy, credit
counselling and livelihood finance and market linkage. The Bank
is mandated by its Board to cover 1 crore households and so far
81.8 lakh have been covered.
It’s a unique programme with perhaps no parallel globally.
What makes it so are the following:
1)
It’s an all-women programme
2)
It covers womenfolk across the length and breadth of a
country as vast as India. It is present in 27 states and over
400 districts
3) With 81 lakh women or households (81.8 X 4 = 3.27 crore
individuals) impacted, this is one of the world’s largest such
programmes
4) Over 9,000 dedicated, passionate Bank employees are
running the programme
Healthcare and Hygiene
Your Bank’s initiatives in the area of Healthcare and Hygiene,
focusing on both schools as well as the community, have made a
substantial difference to the lives of students in rural India.
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during the year under review, after the successful completion
At the heart of these programmes are community-led sanitation
campaigns that promote hygienic conditions in rural areas
HDFC Bank Limited Annual Report 2017-18
29
Directors' Report
through appropriate wastewater disposal. These initiatives are
supplemented by construction of toilets and provision of clean
drinking water. Over 16,521 households and 924 schools in rural
India have been covered under the toilet programme so far.
Your Bank also organises health camps, nutrition programmes,
and vaccination drives. The flagship programme under this pillar
is the Annual Blood Donation Drive.
In the 11th edition in 2017, your Bank collected 2.2 lakh units of
blood in a single day. This was almost 30 per cent higher than
the previous year.
What started off as a small initiative in 2007 with the participation
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2.5 lakh people from all walks of life participated. This included
those from schools, colleges, employees of private and public
sector, both State and Central Governments and the defence
establishment.
While bank employees are central to this effort, of the 3,045
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Almost 1,100 camps in colleges and 475 in companies.
Financial Literacy
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Lakhs of people have learnt about the fundamentals of savings,
investment and organised finance from financial literacy camps
conducted by the Bank at its banking outlets as well as financial
literacy centres across the country.
This is a multi-pronged programme where literacy is imparted
at branches, through business units as well as through its NGO
partners. Over 19 lakh participants have benefitted in the year
under review.
The flagship scheme under this pillar is Digidhan.
Modelled on the Bank’s financial literacy-on-wheels programme
- Dhanchayat, Digidhan, criss-crosses the length and breadth of
the country’s hinterland explaining the benefits of digital banking.
The medium is through film and the location is often high-footfall
pockets such as bazaars, mandis and bus-stands.
The Bank is fully compliant with the requirements of the
Companies Act 2013, having spent ` 374 crore on CSR and
emerging as one of the highest spenders in this space in India.
The disclosures pertaining to CSR as required under Rule 8
of the Companies (Accounts) Rules, 2014 have been given in
ANNEXURE 2 to this report.
Environmental Sustainability
Maintaining a balance between natural capital and communities
is now integral to our functioning.
Towards this end, our ATMs have gone paperless, enabling a
reduction of the carbon footprint. The Bank has given this effort
a further fillip by ensuring multi-channel delivery through Net
Banking, Phone Banking, and Mobile Banking. This results in
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reduced customer travel. Another source for reducing the
environmental footprint is solar ATMs, which use rechargeable
lithium ion batteries that reduce power consumption.
BUSINESS ENABLERS
1) People, Culture, Integrity and Ethics
‘People’ is one of your Bank’s Core Values. It is extremely
proud of them, the integrity and ethics that they demonstrate
and, indeed, the culture that promotes these values.
This culture ensures that the people with the right values
are hired, groomed and encouraged. The Bank has an
institutionalised, well-documented code of conduct, which
every employee has to affirm annually.
The five pillars of our People strategy are as follows:
Recruitment: Recruiting the right talent isn’t enough
anymore in an industry like banking. What is critical is
recruiting and deploying them fast. Your Bank has an agile
hiring mechanism that ensures this. This often entails
leveraging online portals and new age channels like social
media. Campus hiring and internship programs enable us to
expand the hiring base further.
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model to attain scale and quality. The Bank also has a
battery of assessment tools, like AMCAT, Assesshub and
Talview to strengthen its selection process.
Career Management: Core to your Bank’s career philosophy
is to 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 Gurukul our
in-house programme, are also aimed at achieving that result.
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to employees to help them stay motivated, productive and
happy.
Employee Engagement: Employee engagement has two
planks, namely events and fun learning. The events are
conducted at both local and national levels. While most of
these events are open to employees, some are meant for
families as well.
These are some of the popular events:
1. Josh Unlimited: Pan-India sports event conducted in
29 cities, covering a population of more than 60,000
employees
2. Stepathlon: An Employee wellness initiative which
witnessed participation of more than 550 employees
3. Hunar: Pan-India in-house talent competition
4. HDFC Bank Voice Hunt Contest: Talent search in
association with Shankar Mahadevan Academy
HDFC Bank Limited Annual Report 2017-18
30
Directors' Report
5. Corporate Photography Contest: An inter-corporate
2) Digital Innovation
event.
6. Xpressions: Pan-India in-house drawing competition
for the employees and their children
7. Corporate Online Library: A knowledge resource
available to all employees for accessing nearly 1.5 lakh
books
On the learning side, ‘Kwiz Kat’, is a Banking quiz
competition open to all employees. ‘There is also the
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Team Building. Each of these work on the tenet that
“If you manage your team at home, you can manage
your team at the office.” This is, of course, backed up by
formal training.
Training and Development: Training plans
for
businesses are developed based on needs identified
in consultation with the business leaders. 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
trained comprehensively and equipped with
are
functional and
necessary know-how, as well as
behavioural skills required for the role.
The product training and advanced programmes enable
skill development, regular updates and build expertise.
The training methodology has evolved to application
based training including simulations, case studies,
and games. Leveraging technology, many of the class
room programmes are now being delivered online.
The role-specific learning plan ensures effective use of
blended learning method. The accent has now shifted
to online training supplemented by offline support. In
addition to this, to ensure that employees are assisted
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responds to any clarification on a banking query within
24 hours of its initiation.
Rewards and Recognition: The Rewards and
Recognition programs of the Bank is based on a
sound performance management system. Your
Bank has a pay-for-performance culture based on
meritocracy. There is equal emphasis on recognition
as well. Extraordinary commitment towards work is
rewarded. So is at times going beyond the call of duty.
ICON Awards was launched this year to recognise
employees for demonstrating individual, leadership and
collaborative excellence in driving customer focus and
operational excellence.
Innovation is the common thread that runs through the
multiple businesses and functions in the Bank. Besides
products, it manifests itself at levels of concepts and
ideas. A testament to this is the fact that more than
85 per cent of the transactions in the year under review
occurred over the Internet and Mobile. The Bank’s
engagement with start-ups and fintechs moved to the
next level through the ‘Industry Academia Initiative’,
which helps in mentoring them. The annual Digital
Innovation Summit, continues to generate interest
among the start-up community and benefits the Bank
through useful solutions.
The Bank’s focus on leveraging Artificial Intelligence
(AI) and Machine Learning (ML) has started yielding
results. Eva, the virtual assistant on the Bank’s website;
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chat bot, have elicited encouraging response from
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queries on the website with an accuracy ratio of over
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garnered over three lakh users, who used it for making
bill payments, movie / travel bookings and mobile
recharges.
To encourage digital payments, your Bank has
launched all-in-one DigiPoS machines that enable UPI,
Bharat QR, SMS, and PayZapp transactions on a single
machine.
Another innovative product the Bank has launched is
the SmartHub, an umbrella digital platform for online
payments to government departments, educational
institutions and small merchants.
Your Bank also introduced an Instant credit card, which
is issued electronically within an hour and can be used
by the customer to make purchases online. Over three
lakh Instant credit cards were issued during the year.
In the unsecured loan segment, the Bank’s digital
acquisition solution, 10 seconds loans, continued to
delight customers. To further enhance the customer
experience and improve cost management, the Bank
is now developing a platform for end-to-end digital
acquisition of business.
Your Bank has the distinction of being the first bank in
the country to introduce Digital Loan Against Shares
(LAS). In the automobile segment customers continued
to buy cars and two-wheelers through online services
such as Zip Drive and Quick Money.
To sum up, the year under review has seen ample
demonstration of ‘Go Digital, Bank Aapki Muththi Mein’
strategy. Innovation is now embedded in the DNA of
your Bank with digital innovation emerging as the prime
driver across businesses.
HDFC Bank Limited Annual Report 2017-18
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Directors' Report
3) Information Technology
In the technology space, your Bank is considered a
leader. Both in terms of being able to identify the right
technology solutions for the business and deploying
them in a timely manner to create customer experience.
The 10-second Personal Loan is a case in point.
Missed call banking is another. These products were
not only industry firsts but have also gone on to become
extremely popular with customers.
In the year under review, your Bank has gone further
with the implementation of an Open API based Service
Oriented Architecture Middleware platform. This
enables different systems to talk to each other and thus
ensures a seamless flow of information. In the Bank’s
context it facilitates over 2.5 crore digital banking
transactions from its mobility and online platforms such
as PayZapp Wallet, SmartBuy market place, enhanced
Mobile Banking App and a dedicated Retail Lending
App named LoanAssist.
Another important development in the year under
review has been the Digital Application (DAP) Platform
which brings together process, digital technologies and
lifecycle management efficiencies to deliver a better
customer experience. This has seen a huge shift to
digital channels be it applying for loans, credit cards
or overdraft facilities. Over 95 per cent of the branch
retail origination is now powered by DAP. Linkages for
this have been established with search engines and
fintechs.
This has been further supplemented with an assisted
Savings Bank account opening App in the branch which
relationship managers use to open digital savings
accounts. The volumes have been doubling every
month since the launch in the third quarter of the year
under review.
The other important innovations in the year under
review have been:
1) A four click process for ‘Do Your Own Loan Against
Shares’
2) Creating a real time overdraft with Digital Loan
(cid:33)(cid:71)(cid:65)(cid:73)(cid:78)(cid:83)(cid:84)(cid:0)(cid:45)(cid:85)(cid:84)(cid:85)(cid:65)(cid:76)(cid:0)(cid:38)(cid:85)(cid:78)(cid:68)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:65)(cid:0)(cid:18)(cid:20)(cid:10)(cid:23)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)(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)
bank’s website
3) Offering digital consumer loans
4) Tying up with social media platforms, e-commerce
portals, and traditional retail stores to facilitate
ordering products online.
5) Reducing turnaround time for first time borrowers
6) Lowering transaction costs in Trade On Net / Trade
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filling process
7) Using Artificial Intelligence and Neural Networks
based deep learning ability to give stronger teeth to
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8)
Implementing a state-of-the-art Core Banking
System for both Retail and Wholesale Banking to
process 4.5 crore transactions daily in an accurate,
speedy and secure manner.
4) Cyber Security
Your Bank has an effective framework in place to
manage cyber security. This encompasses requisite
manpower, machine and training. The Chief Information
Security Officer (CISO) is the person who is overall
responsible for this. There is also a committee of the
Board which dedicatedly looks into cyber security
issues and preparedness.
In the year under review, the Bank has enhanced its
cyber security protocol by constituting a RED Team.
The RED team is a designated group of individuals that
test the security posture of the organisation. The Bank
also widened coverage of Security Incident and Event
Management (SIEM), which provides a comprehensive
and centralised view of the security scenario of IT
infrastructure. Deception Technology Solution was
deployed
to detect, analyse and defend against
advanced attacks often in real-time. In the case of your
Bank, it also covers emails and endpoints, besides the
network.
(cid:0)
(cid:38)(cid:73)(cid:82)(cid:69)(cid:87)(cid:65)(cid:76)(cid:76)(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:85)(cid:80)(cid:71)(cid:82)(cid:65)(cid:68)(cid:69)(cid:68)(cid:0) (cid:84)(cid:79)(cid:0) (cid:46)(cid:69)(cid:88)(cid:84)(cid:0) (cid:39)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
with deep packet inspection (DPI) ability. DPI analyses
‘packets’ which are nothing but parcels of digital
information transmitted across the web in a formatted
piece of structured data. Protection against malware,
ransomware and denial of service attacks have been
strengthened further.
Regular tests to assess the vulnerability of the IT
infrastructure and applications and remedy where
necessary are routine. As are anti-phishing services
that help in shutting down phishing sites and protecting
the customers from fraud. Risk engine and transaction
monitoring systems monitor suspicious transactions on
Internet Banking, ATM and e-commerce channels.
The Bank has PCI DSS 3.0 and ISO 27001 certifications.
PCI DSS is a proprietary information security standard
for organisations that handle credit card information
and transactions. It is meant to increase controls
around cardholder data to reduce fraud. In layman’s
terms the certification is an assurance that your Bank’s
(cid:67)(cid:65)(cid:82)(cid:68)(cid:0)(cid:67)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:83)(cid:0)(cid:69)(cid:78)(cid:74)(cid:79)(cid:89)(cid:0)(cid:65)(cid:0)(cid:86)(cid:69)(cid:82)(cid:89)(cid:0)(cid:72)(cid:73)(cid:71)(cid:72)(cid:0)(cid:76)(cid:69)(cid:86)(cid:69)(cid:76)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:65)(cid:70)(cid:69)(cid:84)(cid:89)(cid:0)(cid:87)(cid:72)(cid:73)(cid:76)(cid:69)(cid:0)
transacting with it. The ISO 27001 certification pertains
to best practices with respect to information security.
HDFC Bank Limited Annual Report 2017-18
32
Directors' Report
On building awareness your bank has a regular
programme for both employees and customers.
5) Service Quality Initiatives and Grievance Redressal
Your Bank has various lines of businesses. In a highly
competitive environment, ensuring product quality, and
service delivery is vital for business growth. The Bank
seeks to achieve this by regularly reviewing service
levels and capturing feedback from customers.
Moreover, in line with regulatory norms, the Bank
has constituted three committees at different levels to
monitor customer service - Branch Level Customer
Service Committees, Standing Committee on Customer
Service and Customer Service Committee of the Board.
Against the backdrop of increasing digital frauds, RBI
issued a circular during the year on ‘Customer Protection
- Limiting Liability of Customers in Unauthorised
Electronic Banking Transactions.’ In it, RBI defined
customer liability clearly so that customers feel secure
while conducting digital transactions. The regulator
also mandated banks to formulate a Board Approved
Customer Protection Policy. Accordingly, your Bank has
fortified its existing processes. It is also augmenting its
training and skill development mechanism to empower
employees to boost service quality.
As a part of its efforts to enhance service quality, the
Bank undertakes mystery shopping across branches
and retail asset centres to continuously evaluate
regulatory compliance, process adherence and quality
of service delivery. The effectiveness is reviewed
periodically at different levels including the Customer
Service Committee of the Board. Lean and Six Sigma
methodologies are used to improve processes.
to
the aforementioned measures,
In addition
in
compliance with regulatory guidelines, your Bank
has appointed a senior retired banker as Internal
Ombudsman. Our sustained efforts to improve service
delivery have been noted and the Bank has received
written appreciation from many Banking Ombudsmen
appointed by RBI across locations such as Andhra
(cid:48)(cid:82)(cid:65)(cid:68)(cid:69)(cid:83)(cid:72)(cid:12)(cid:0) (cid:39)(cid:85)(cid:74)(cid:65)(cid:82)(cid:65)(cid:84)(cid:12)(cid:0) (cid:43)(cid:69)(cid:82)(cid:65)(cid:76)(cid:65)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:44)(cid:65)(cid:75)(cid:83)(cid:72)(cid:65)(cid:68)(cid:87)(cid:69)(cid:69)(cid:80)(cid:12)(cid:0) (cid:48)(cid:85)(cid:78)(cid:74)(cid:65)(cid:66)(cid:12)(cid:0)
(cid:50)(cid:65)(cid:74)(cid:65)(cid:83)(cid:84)(cid:72)(cid:65)(cid:78)(cid:12)(cid:0)(cid:52)(cid:65)(cid:77)(cid:73)(cid:76)(cid:0)(cid:46)(cid:65)(cid:68)(cid:85)(cid:12)(cid:0)(cid:48)(cid:85)(cid:68)(cid:85)(cid:67)(cid:72)(cid:69)(cid:82)(cid:82)(cid:89)(cid:12)(cid:0)(cid:55)(cid:69)(cid:83)(cid:84)(cid:0)(cid:34)(cid:69)(cid:78)(cid:71)(cid:65)(cid:76)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
Sikkim.
CHECKS, BALANCES AND REPORTING
I. Risk Management and Portfolio Quality
The Bank is exposed to risk by the very nature of its business.
The key risks are Credit Risk, Market Risk, Liquidity Risk
and Operational Risk. These risks not only have a bearing
on the Bank’s financial strength and operations but also
its reputation. Keeping this in mind, your Bank has put in
place a Board approved risk strategy and policy whose
implementation is supervised by the Board’s Risk Policy and
Monitoring Committee (RPMC). The committee periodically
reviews risk levels and direction, portfolio composition,
status of impaired credits and limits for treasury operations.
The hallmark of the Bank’s risk management process
function is its independence, with credit decisions being
made by a credit underwriting vertical.
The gamut of risks faced by the Bank which are dimensioned
and managed include
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(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:47)(cid:85)(cid:84)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0)(cid:50)(cid:73)(cid:83)(cid:75)
Credit Risk
This is the risk of loss arising from a default and is, therefore,
also known as default risk. Your Bank has distinct policies
and processes for managing credit risk in both its retail and
wholesale businesses. Wholesale lending is managed on an
individual as well as portfolio basis. By contrast, retail lending,
given the granularity of individual exposures, is managed largely
on a portfolio basis across various products and customer
(cid:83)(cid:69)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:14)(cid:0) (cid:38)(cid:79)(cid:82)(cid:0) (cid:66)(cid:79)(cid:84)(cid:72)(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:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0) (cid:82)(cid:79)(cid:66)(cid:85)(cid:83)(cid:84)(cid:0) (cid:70)(cid:82)(cid:79)(cid:78)(cid:84)(cid:13)(cid:69)(cid:78)(cid:68)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0)
back-end systems in place to ensure credit quality and minimise
loss from default.
The factors considered while sanctioning retail loans include
income, demographics, previous credit history of the borrower
and the tenor of the loan. In wholesale loans, credit risk is
managed by capping exposures on the basis of borrower group
/ industry / credit rating grades and country. This is backed by
portfolio diversification, stringent credit approval processes and
periodic post-disbursement monitoring / remedial measures.
Your Bank has been able to ensure strong asset quality even in
an otherwise challenging business environment by stringently
adhering to the aforementioned norms and institutionalising
processes.
HDFC Bank Limited Annual Report 2017-18
33
Directors' Report
ratio of Gross
As on March 31, 2018, your Bank’s
Non-Performing Assets (GNPAs) to gross advances was 1.30
per cent. Net Non-Performing Assets (Gross Non-Performing
Assets Less Specific Loan Loss provisions) was 0.4 per cent of
Net Advances. Total restructured assets (including applications
under process for restructuring) was 0.24 per cent of gross
advances.
The Bank has a conservative and prudent policy for specific
provisions on NPAs. It provides more towards NPAs than the
minimum regulatory requirements even while adhering to
regulatory norms for the provision of Standard Assets.
Digital Lending and Credit Risk
Driven by rapid advances in technology, digitisation is increasingly
becoming a key differentiator of customer retention and service
delivery in the banking sector. Digital lending enables customers
to secure loans at the click of a button in a matter of minutes, if
not seconds. However, there are also attendant risks associated
with it and your Bank has put in place appropriate checks and
balances to manage these risks. Such loans are sanctioned
primarily to the Bank’s pre-existing customers. Often, these
clients are customers across multiple products so their credit
history and risk profile is already known. This makes it possible to
evaluate and decide on their fresh requirements almost instantly.
Besides, most of the credit checks and scores used by the Bank
in traditional process underwriting are replicated in digital loans.
(cid:38)(cid:73)(cid:78)(cid:65)(cid:76)(cid:76)(cid:89)(cid:12)(cid:0) (cid:84)(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:65)(cid:78)(cid:0) (cid:73)(cid:78)(cid:68)(cid:69)(cid:80)(cid:69)(cid:78)(cid:68)(cid:69)(cid:78)(cid:84)(cid:0) (cid:77)(cid:79)(cid:68)(cid:69)(cid:76)(cid:0) (cid:86)(cid:65)(cid:76)(cid:73)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:85)(cid:78)(cid:73)(cid:84)(cid:0)
that minutely assesses the models used to generate the credit
scores for such loans. These models are monitored, reviewed
periodically and back-tested; and corrective action is taken
whenever needed.
Market Risk
Market risk arises largely from the Bank’s statutory reserve
management and trading activity and is managed through a
well-defined Board-approved Investment Policy and Market
Risk Policy that caps risk in different trading desks or various
securities through trading risk limits / triggers. These include
position limits, gap limits, tenor restrictions, sensitivity limits,
namely, PV01, Modified Duration of Hold To Maturity Portfolio
and Option Greeks, Value-at-Risk (VaR) Limit, Stop Loss Trigger
Level (SLTL) and Potential Loss Trigger Level (PLTL). This is
supplemented by a Board approved stress testing policy and
framework that simulates various market risk scenarios to
measure losses and initiate remedial measures.
Liquidity Risk
Liquidity Risk is the risk that a bank may not be able to meet
its short term financial obligations due to an asset–liability
mismatch or interest rate fluctuations.
Your Bank’s framework for liquidity and interest rate risk
management is spelt out in its Asset Liquidity-Management policy
that is implemented, monitored and periodically reviewed by the
Asset Liability Committee (ALCO). As a part of this process, the
Bank has established various Board approved limits to mitigate
both liquidity and interest risks. While the maturity gap and stock
ratio limits help manage liquidity risk, the income and market
value impacts help mitigate interest rate risk. This is reinforced
by a comprehensive Board approved stress testing programme
covering both liquidity and interest rate risk.
The Liquidity Coverage Ratio (LCR) is a global minimum
standard used to measure a bank’s liquidity position. LCR seeks
to ensure that the 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 under
a 30-day calendar liquidity stress scenario. Based on Basel
III norms, RBI has mandated a minimum LCR of 80 per cent
on January 1, 2017; that limit progressively increases by 10
percentage points each year to 100 per cent on January 1, 2019.
Your Bank’s LCR stood at 104.5 per cent on a consolidated basis
for the year ended March 31, 2018.
Operational Risk
This is the risk of loss resulting from inadequate or failed
internal processes, people and systems or from external events.
Given below is a detailed explanation under four different
(cid:72)(cid:69)(cid:65)(cid:68)(cid:83)(cid:26)(cid:0) (cid:38)(cid:82)(cid:65)(cid:77)(cid:69)(cid:87)(cid:79)(cid:82)(cid:75)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:48)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:12)(cid:0) (cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0) (cid:35)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:12)(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:52)(cid:69)(cid:67)(cid:72)(cid:78)(cid:79)(cid:76)(cid:79)(cid:71)(cid:89)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:51)(cid:69)(cid:67)(cid:85)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0) (cid:48)(cid:82)(cid:65)(cid:67)(cid:84)(cid:73)(cid:67)(cid:69)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:38)(cid:82)(cid:65)(cid:85)(cid:68)(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:65)(cid:78)(cid:68)(cid:0)
Control.
1) Framework and Process
To manage operational risks, the Bank has in place
a comprehensive and operational
risk management
framework, whose implementation is supervised by the
Operational Risk Management Committee (ORMC) and
reviewed by the RPMC of the Board. An independent
Operational Risk Management Department
(ORMD)
implements the framework.
Under the framework, the Bank has three lines of defence.
The first layer of protection is provided by the Business line
(including support and operations) management. These
managers are primarily responsible for not only managing
operational risk on a daily basis, but also for maintaining
strict internal controls, designing and implementing internal
control-related policies and procedures.
The second line of defence is the ORMD, which develops
and implements policies, procedures, tools and techniques
to assess and monitor the adequacy and effectiveness of
the Bank’s internal controls.
Internal Audit is the last line of defence. The team reviews
the effectiveness of governance, risk management, and
internal controls within the Bank.
2) Internal Control
Your Bank has implemented sound internal control practices
across all processes, units and functions. The Bank has
HDFC Bank Limited Annual Report 2017-18
34
Directors' Report
well laid down policies and processes for management
of its day-to-day activities. The Bank follows established,
well-designed controls, which include traditional four eye
principles, effective separation of functions, segregation
of duties, call back processes, reconciliation, exception
reporting and periodic MIS. Specialised risk control units
function in risk prone products / functions to minimise
operational risk. Controls are tested as part of the SOX
control testing framework.
3) Information Technology and Security Practices
The Bank operates in a highly automated environment and
makes use of the latest technologies to support various
operations. This throws up operational risks such as
business disruption, risks related to information assets, data
security, integrity, reliability and availability amongst others.
The Bank has put in a governance framework, information
security practices and business continuity plan to mitigate
independent
technology related risks. An
information
assurance team within Internal Audit provides assurance on
the management of information technology related risks.
The Bank has a robust Business Continuity and Disaster
Recovery plan that is periodically tested to ensure that
it can meet any operational contingencies. There is an
independent Information Security Group that addresses
information security related risks. A well-documented
Board approved information security policy is put in place.
In addition, employees mandatorily periodically undergo
information security training and sensitisation exercises.
4) Fraud Monitoring and Control
The Bank has put in a whistle blower policy, and a central
vigilance team oversees implementation of fraud prevention
(cid:77)(cid:69)(cid:65)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)(cid:14)(cid:0)(cid:38)(cid:82)(cid:65)(cid:85)(cid:68)(cid:83)(cid:0)(cid:65)(cid:82)(cid:69)(cid:0)(cid:73)(cid:78)(cid:86)(cid:69)(cid:83)(cid:84)(cid:73)(cid:71)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:84)(cid:79)(cid:0)(cid:73)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:70)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:79)(cid:79)(cid:84)(cid:0)(cid:67)(cid:65)(cid:85)(cid:83)(cid:69)(cid:0)
and relevant corrective steps are taken to prevent recurrence.
(cid:38)(cid:82)(cid:65)(cid:85)(cid:68)(cid:0) (cid:80)(cid:82)(cid:69)(cid:86)(cid:69)(cid:78)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:69)(cid:83)(cid:0) (cid:65)(cid:84)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:83)(cid:69)(cid:78)(cid:73)(cid:79)(cid:82)(cid:0) (cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)
and board level also deliberate on material fraud events and
initiate preventive action. Periodic reports are submitted to
the Board and senior management committees.
Compliance Risk
Compliance Risk is defined as the risk of impairment of your
Bank’s integrity, leading to damage to its reputation, legal or
regulatory sanctions, or financial loss, as a result of a failure
(or perceived failure) to comply with applicable laws, regulations
and standards. The Bank has a Compliance Policy to ensure
(cid:72)(cid:73)(cid:71)(cid:72)(cid:69)(cid:83)(cid:84)(cid:0) (cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:14)(cid:0) (cid:33)(cid:0) (cid:68)(cid:69)(cid:68)(cid:73)(cid:67)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0) (cid:84)(cid:69)(cid:65)(cid:77)(cid:0) (cid:79)(cid:70)(cid:0) (cid:83)(cid:85)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:0)
matter experts in the Compliance department work with
Business and Operations Teams to ensure active compliance
risk management and monitoring. They also provide advisory
services on regulatory matters. The focus is on identifying and
reducing risk by rigorously testing products and also putting in
place robust internal policies. Products that adhere to regulatory
norms are tested after rollout, and shortcomings, if any, are fully
addressed till the product stabilises on its own. Internal policies
are reviewed regularly and updated as and when regulators
issue fresh instructions. The Compliance team also seeks regular
feedback on regulatory compliance from Product, Business and
Operation teams through self-certifications and monitoring.
ICAAP
The Bank has a structured management framework in the Internal
Capital Adequacy Assessment Process (ICAAP) to identify,
assess and manage all risks that may have a material adverse
impact on its business / financial position / capital adequacy.
The ICAAP framework is guided by the Bank’s Board approved
ICAAP Policy. Additionally, the Board approved Stress Testing
(cid:48)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:38)(cid:82)(cid:65)(cid:77)(cid:69)(cid:87)(cid:79)(cid:82)(cid:75)(cid:0)(cid:69)(cid:78)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:85)(cid:83)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:84)(cid:69)(cid:67)(cid:72)(cid:78)(cid:73)(cid:81)(cid:85)(cid:69)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)
assess potential vulnerability to extreme but plausible stressed
business conditions. Changes in the Bank’s risk levels and in
the on / off balance sheet positions are assessed under such
assumed scenarios using sensitivity factors that generally relate
to their impact on profitability and capital adequacy.
Group Risk
(cid:57)(cid:79)(cid:85)(cid:82)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0) (cid:84)(cid:87)(cid:79)(cid:0) (cid:83)(cid:85)(cid:66)(cid:83)(cid:73)(cid:68)(cid:73)(cid:65)(cid:82)(cid:73)(cid:69)(cid:83)(cid:12)(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) (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:84)(cid:68)(cid:14)(cid:0) (cid:52)(cid:72)(cid:69)(cid:0) (cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:69)(cid:65)(cid:67)(cid:72)(cid:0) (cid:83)(cid:85)(cid:66)(cid:83)(cid:73)(cid:68)(cid:73)(cid:65)(cid:82)(cid:89)(cid:0) (cid:73)(cid:83)(cid:0)
responsible for managing their respective risks (credit risk,
market risk, operational risk, liquidity risk, reputation risk etc.)
within the ICAAP framework. Stress testing for the group
as a whole is carried out by integrating the stress tests of
(cid:84)(cid:72)(cid:69)(cid:0) (cid:83)(cid:85)(cid:66)(cid:83)(cid:73)(cid:68)(cid:73)(cid:65)(cid:82)(cid:73)(cid:69)(cid:83)(cid:14)(cid:0) (cid:51)(cid:73)(cid:77)(cid:73)(cid:76)(cid:65)(cid:82)(cid:76)(cid:89)(cid:12)(cid:0) (cid:67)(cid:65)(cid:80)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0) (cid:65)(cid:68)(cid:69)(cid:81)(cid:85)(cid:65)(cid:67)(cid:89)(cid:0) (cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0)
formulated for the group after incorporating the business / capital
plans of the subsidiaries.
II.
Implementation of
(IND-AS)
Indian Accounting Standards
The Ministry of Corporate Affairs, in its press release dated
January 18, 2016, had issued a roadmap for implementation
of Indian Accounting Standards (IND-AS) for scheduled
commercial banks, insurers / insurance companies and
non-banking financial companies. This roadmap required
these institutions to prepare IND-AS based financial
statements for the accounting periods beginning from
April 1, 2018 onwards with comparatives for the periods
beginning April 1, 2017 and thereafter. The Reserve Bank
(cid:79)(cid:70)(cid:0) (cid:41)(cid:78)(cid:68)(cid:73)(cid:65)(cid:0) (cid:8)(cid:50)(cid:34)(cid:41)(cid:9)(cid:12)(cid:0) (cid:86)(cid:73)(cid:68)(cid:69)(cid:0) (cid:73)(cid:84)(cid:83)(cid:0) (cid:67)(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:38)(cid:69)(cid:66)(cid:82)(cid:85)(cid:65)(cid:82)(cid:89)(cid:0) (cid:17)(cid:17)(cid:12)(cid:0) (cid:18)(cid:16)(cid:17)(cid:22)(cid:0)
required all scheduled commercial banks to comply with
the Indian Accounting Standards (IND-AS) for financial
statements for the periods stated above. The RBI did not
permit banks to adopt IND-AS earlier than the timelines
stated above. The said guidelines also state that RBI shall
issue necessary instructions / guidance / clarifications on
the relevant aspects for implementation of IND-AS as and
when required.
Your Bank
formed a steering committee comprising
members from cross-functional areas for the purpose of
implementation oversight. Under the guidance of the steering
HDFC Bank Limited Annual Report 2017-18
35
Directors' Report
committee, the Bank formed working groups, including
external consultants, dedicated to specific functional areas.
The objective of these working groups was to undertake a
review of the diagnostic analysis of the differences between
the current accounting framework and IND-AS, review the
accounting policy options provided under IND-AS 101-First
Time Adoption, determine the methodologies for each
accounting treatment, finalise process and system changes,
review and update policies and incorporate in business
planning any specific action points over the transition period.
In addition, the Audit Committee of the Board of Directors
oversees the progress of the IND-AS implementation
process.
IND-AS,
including
the disclosure
The Bank has undertaken a diagnostic analysis of the
differences between the current accounting framework
and
requirements.
Your Bank has reviewed the accounting policy options
provided under IND-AS including the preparation of draft
accounting policies under IND-AS subject to any RBI
guidelines in this regard. The Bank has evaluated the systems
requiring significant changes and identified additional
system and process requirements for implementation of
IND-AS. The Bank is engaging with vendors for technology
solutions for implementation of IND-AS. The Bank has also
undertaken training programs for its personnel in business
and support functions.
The implementation of IND-AS is expected to result in
significant changes to the way the Bank prepares and
presents its financial statements. The areas that are
expected to have significant accounting impact on the
application of IND-AS are summarised below:
1) Financial assets
(which
include advances and
investments) shall be classified under amortised
cost, fair value through other comprehensive income
(a component of Reserves and Surplus) or fair value
through profit / loss categories on the basis of the
nature of the cash flows and the intention of holding the
financial assets.
2)
Interest will be recognised in the income statement
using the effective interest method, whereby the coupon,
fees net of transaction costs and all other premiums or
discounts will be amortised over the life of the financial
instrument.
3) Stock options will be required to be fair valued on the
date of grant and be recognised as staff expense in the
income statement over the vesting period of the stock
options.
4) The impairment requirements of IND-AS 109, Financial
Instruments, are based on an Expected Credit
Loss (ECL) model that replaces the incurred loss
model under the extant framework. The Bank will be
generally required to recognize either a 12-Month or
Lifetime ECL, depending on whether there has been a
significant increase in credit risk since initial recognition.
IND-AS 109 will change the Bank’s current methodology
for calculating the provision for standard assets and
non-performing assets (NPAs). The Bank will be
required to apply a three-stage approach to measure
ECL on financial instruments accounted for at amortised
cost or fair value through other comprehensive income.
Financial assets will migrate through the following three
stages based on the changes in credit quality since
initial recognition:
Stage 1: 12 Months ECL
For exposures which have not been assessed as
credit-impaired or where there has not been a significant
increase in credit risk since initial recognition, the
portion of the ECL associated with the probability of
default events occurring within the next twelve months
will need to be recognised.
Stage 2: Lifetime ECL - Not Credit Impaired
For credit exposures where there has been a significant
increase in credit risk since initial recognition but are
not credit-impaired, a lifetime ECL will need to be
recognised.
Stage 3: Lifetime ECL - Credit Impaired
Financial assets will be assessed as credit impaired
when one or more events having a detrimental impact
on the estimated future cash flows of that asset have
occurred. For financial assets that have become credit
impaired, a lifetime ECL will need to be recognised.
Interest revenue will be recognised at the original effective
interest rate applied on the gross carrying amount for assets
falling under stages 1 and 2 and on written down amount for
the assets falling under stage 3.
5) Accounting impact on the application of IND-AS at the
transition date shall be recognised in Equity (Reserves
and Surplus).
The implementation of IND-AS by banks requires certain
legislative changes in the format of financial statements to
comply with disclosures required by IND-AS. The change
in format requires an amendment to the third schedule of
the Banking Regulation Act, 1949 to make it compatible
with
the presentation of financial statements under
IND-AS. The RBI would issue necessary instructions /
guidelines and clarifications to facilitate the implementation
the
the new accounting standards. Considering
of
amendments needed to the Banking Regulation Act, 1949,
as well as the level of preparedness of several banks, the
RBI vide its Statement on Developmental and Regulatory
HDFC Bank Limited Annual Report 2017-18
36
Directors' Report
Policies dated April 5, 2018 deferred the implementation
of IND-AS by one year by when the necessary legislative
amendments are expected. Scheduled commercial banks
in India will now be required to prepare IND-AS based
financial statements for the accounting periods beginning
from April 1, 2019 onwards with comparatives for the periods
beginning April 1, 2018.
III. Internal Controls, Audit and Compliance
The Bank has put in place extensive internal controls
and processes to mitigate operational risks, including
centralised operations and ‘segregation of duty’ between the
front office, mid-office and back office. The front-office units
usually act as customer touch-points and sales and service
outlets. The entire processing, accounting and settlement of
transactions is carried out by the back-office in the bank’s
Core banking system. The policy framework, definition and
monitoring of limits is carried out by various mid-office and
risk management functions. The credit sanctioning and debt
management units are also segregated and do not have any
sales and operations responsibilities.
The Bank has set up various executive-level committees,
having participation from various business and control
functions, that are designed to review and oversee matters
pertaining to capital, assets and liabilities, business practices
and customer service, operational risk, information security,
internal risk-based
business continuity planning and
supervision amongst others. The control functions set
standards and lay down policies and procedures by which
the business functions manage risks including compliance
with applicable laws, compliance with regulatory guidelines,
adherence to operational controls and relevant standards of
conduct.
implemented
At the ground-level, the Bank has a mix of preventive and
through systems and
detective controls
processes ensuring a robust framework in the Bank to
enable correct and complete accounting, identification of
outliers (if any) by the Management on a timely basis for
corrective action and mitigate operational risks.
The Bank has various Preventive controls viz, (a) Limited and
need-based access to systems by users, (b) Dual custody
over cash and near-cash items (c) Segregation of duty in
processing of transactions vis-a-vis creation of user IDs
(d) Segregation of duty in processing of transactions
vis-a-vis monitoring and review of transactions / reconciliation
(cid:8)(cid:69)(cid:9)(cid:0)(cid:38)(cid:79)(cid:85)(cid:82)(cid:0)(cid:69)(cid:89)(cid:69)(cid:13)(cid:80)(cid:82)(cid:73)(cid:78)(cid:67)(cid:73)(cid:80)(cid:76)(cid:69)(cid:0)(cid:8)(cid:77)(cid:65)(cid:75)(cid:69)(cid:82)(cid:13)(cid:67)(cid:72)(cid:69)(cid:67)(cid:75)(cid:69)(cid:82)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:9)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)
of transactions (f) Stringent password policy (g) Booking
of transactions in Core Banking system mandates the
earmarking of line / limit (fund as well as non-fund based)
assigned to the customer (h) STP processes between
Core Banking system and payment interface systems for
HDFC Bank Limited Annual Report 2017-18
37
transmission of messages (h) Additional authorisation leg
in payment interface systems in applicable cases (i) Audit
(cid:76)(cid:79)(cid:71)(cid:83)(cid:0)(cid:68)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:76)(cid:89)(cid:0)(cid:69)(cid:88)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:69)(cid:68)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:8)(cid:74)(cid:9)(cid:0)(cid:37)(cid:77)(cid:80)(cid:79)(cid:87)(cid:69)(cid:82)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:71)(cid:82)(cid:73)(cid:68)(cid:14)(cid:0)(cid:0)
The Bank also has detective controls in place viz,
(a) Periodic review of user IDs (b) Post transaction monitoring
at the back-end by way of call back process (through daily
log reports) by an independent person i.e.to ascertain
that entries in the core-banking system / messages in
payment interface systems are based on valid / authorised
transactions and customer requests. (c) Daily tally of cash
and near-cash items at End of day. (d) Reconciliation of
Nostro accounts (by an independent team) to ascertain and
match-off the Nostro credits and debits (External or Internal)
regularly to avoid / identify any unreconciled / unmatched
entries passing through the system (e) Reconciliation of all
Suspense accounts and establishment of responsibility in
case of outstandings (f) Independent and surprise checks
periodically by Supervisors.
Your Bank has an Internal Audit department which is
responsible for independently evaluating the adequacy
and effectiveness of all internal controls, risk management,
governance systems and processes and is manned by
appropriately qualified personnel.
This department adopts a risk based audit approach and
carries out audits across various businesses that is Retail,
Wholesale and Treasury (for India and Overseas books),
audit of Operations units, Management Audits, Information
Security Audit, Revenue Audit and Concurrent Audit in order
to independently evaluate the adequacy and effectiveness
of internal controls on an ongoing basis and pro-actively
recommending enhancements thereof. The Internal Audit
department during the course of audit also ascertains
the extent of adherence to regulatory guidelines, legal
requirements and operational processes and provides
timely feedback to the Management for corrective action.
A strong oversight on the operations is also kept through
off-site monitoring.
The Internal Audit department also independently reviews
the Bank’s implementation of Internal Rating Based (IRB)
approach for calculation of capital charge for Credit Risk,
the appropriateness of Bank’s Internal Capital Adequacy
Assessment Process (ICAAP), as well as evaluates the
quality and comprehensiveness of the Bank’s disaster
recovery and business continuity plans and 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.
Any new product / process introduced in the Bank is reviewed
by Compliance function in order to ensure adherence to
regulatory guidelines and also by Internal Audit from the
perspective of existence of internal controls. The Audit function
Directors' Report
also pro-actively recommends improvements in operational
processes and service quality wherever deemed fit.
Bank’s muster in terms of the EHS risk it entails, potential
impact and mitigation measures in place or proposed.
To ensure independence, the Internal Audit function has a
reporting line to the Chairman of the Audit Committee of the
Board and a dotted line reporting to the Managing Director.
The Compliance function independently tracks, reviews and
ensures compliance to regulatory guidelines and promotes
a compliance culture in the Bank.
The Bank has a comprehensive Know Your Customer,
(cid:33)(cid:78)(cid:84)(cid:73)(cid:0) (cid:45)(cid:79)(cid:78)(cid:69)(cid:89)(cid:0) (cid:44)(cid:65)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:8)(cid:33)(cid:45)(cid:44)(cid:9)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:35)(cid:79)(cid:77)(cid:66)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0) (cid:38)(cid:73)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0)
(cid:79)(cid:70)(cid:0) (cid:52)(cid:69)(cid:82)(cid:82)(cid:79)(cid:82)(cid:73)(cid:83)(cid:77)(cid:0) (cid:8)(cid:35)(cid:38)(cid:52)(cid:9)(cid:0) (cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:0) (cid:8)(cid:66)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0) (cid:79)(cid:78)(cid:0) (cid:84)(cid:72)(cid:69)(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:0) (cid:15)(cid:0)
provisions of the Prevention of Money Laundering Act, 2002)
incorporating the key elements of Customer Acceptance
policy, Risk Management, Customer
Identification
Procedures and Monitoring of Transactions. The policy, duly
(cid:65)(cid:80)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:73)(cid:83)(cid:0)(cid:83)(cid:85)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:69)(cid:68)(cid:0)(cid:84)(cid:79)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:65)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:76)(cid:89)(cid:14)(cid:0)
The Bank has taken significant measures in developing and
(cid:69)(cid:78)(cid:72)(cid:65)(cid:78)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:0)(cid:69)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:85)(cid:83)(cid:84)(cid:65)(cid:73)(cid:78)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:43)(cid:57)(cid:35)(cid:0)(cid:33)(cid:45)(cid:44)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:35)(cid:38)(cid:52)(cid:0)
Compliance Programme. The adherence to the guidelines
prescribed in the policy is monitored by the Bank at various
stages of the customer life-cycle. Bank has robust controls
in place to ensure adherence to the KYC guidelines at the
time of account opening. The Bank also has a continuous
review process in the form of transaction monitoring
(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0) (cid:65)(cid:0) (cid:68)(cid:69)(cid:68)(cid:73)(cid:67)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0) (cid:33)(cid:45)(cid:44)(cid:0) (cid:35)(cid:38)(cid:52)(cid:0) (cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:69)(cid:65)(cid:77)(cid:12)(cid:0) (cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)
carries out extensive transaction reviews for identification of
suspicious patterns / trends which acts as an early warning
signal for the Bank to carry out enhanced due diligence and
appropriate action thereafter. The status of adherence to
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Audit Committee of the Board for their review at quarterly
intervals.
The AML team undergoes regular training both in-house
and external on a continuous basis in order to equip the
team with the necessary know-how and expertise to carry
out the function.
The Audit Committee of the Board reviews the effectiveness
of controls, compliance to regulatory guidelines as also the
performance of the Audit and Compliance functions in the
Bank and provides direction wherever deemed fit.
Your Bank has always adhered to the highest standards of
compliance and has put in place appropriate controls and
risk measurement and risk management tools in order to
ensure a robust compliance and governance structure.
IV. Responsible Financing
(cid:0)
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(cid:82)(cid:69)(cid:70)(cid:82)(cid:65)(cid:73)(cid:78)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:70)(cid:85)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:83)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:72)(cid:65)(cid:86)(cid:69)(cid:0)(cid:65)(cid:78)(cid:0)(cid:65)(cid:68)(cid:86)(cid:69)(cid:82)(cid:83)(cid:69)(cid:0)(cid:73)(cid:77)(cid:80)(cid:65)(cid:67)(cid:84)(cid:0)
on Environment, Health and Safety (EHS). EHS is an
integral part of the bank’s overall credit risk assessment and
(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:83)(cid:83)(cid:14)(cid:0) (cid:37)(cid:86)(cid:69)(cid:82)(cid:89)(cid:0) (cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:0) (cid:70)(cid:85)(cid:78)(cid:68)(cid:69)(cid:68)(cid:0) (cid:72)(cid:65)(cid:83)(cid:0) (cid:84)(cid:79)(cid:0) (cid:80)(cid:65)(cid:83)(cid:83)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0)
The key aspects of the assessment process are:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:38)(cid:79)(cid:82)(cid:0)(cid:65)(cid:76)(cid:76)(cid:0)(cid:76)(cid:79)(cid:65)(cid:78)(cid:83)(cid:0)(cid:69)(cid:88)(cid:67)(cid:69)(cid:69)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)` 10 crore in amount and five
years in tenure, borrowers have to submit a declaration
of compliance with EHS norms.
(cid:41)(cid:78)(cid:0) (cid:83)(cid:69)(cid:76)(cid:69)(cid:67)(cid:84)(cid:0) (cid:76)(cid:65)(cid:82)(cid:71)(cid:69)(cid:13)(cid:84)(cid:73)(cid:67)(cid:75)(cid:69)(cid:84)(cid:0) (cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:83)(cid:12)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:83)(cid:0) (cid:65)(cid:0)
Lender’s Independent Engineer (LIE) who conducts
due diligence across several parameters including EHS.
The findings of the LIE’s assessment report are then
discussed with the client to ensure compliance.
(cid:52)(cid:72)(cid:69)(cid:0) (cid:44)(cid:41)(cid:37)(cid:0) (cid:82)(cid:69)(cid:71)(cid:85)(cid:76)(cid:65)(cid:82)(cid:76)(cid:89)(cid:0) (cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0) (cid:83)(cid:85)(cid:67)(cid:72)(cid:0) (cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:83)(cid:0) (cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0)
construction period through site visits and reports
progress which includes status of approvals and relief
and rehabilitation measures undertaken. Your Bank
officials also conduct independent site inspections from
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the Bank’s satisfaction.
(cid:115)(cid:0) (cid:33)(cid:70)(cid:84)(cid:69)(cid:82)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:0) (cid:66)(cid:69)(cid:67)(cid:79)(cid:77)(cid:69)(cid:83)(cid:0) (cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:12)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:66)(cid:79)(cid:82)(cid:82)(cid:79)(cid:87)(cid:69)(cid:82)(cid:0)
has to submit an annual declaration of compliance
with various national laws including those related to
EHS. This is also followed up by onsite visits of bank
executives.
The Bank deals with the client primarily through its
Relationship Manager (RM). The RM has to report
compliance with EHS norms in the Credit Assessment
Memorandum (CAM) both at the time of initial sanction
and during the monitoring process. Such certification
is based on information / disclosures provided by the
borrower at the time of initial appraisal and during
periodic review of the facilities.
The RM records outstanding EHS issues if any and
follows them up with the client for prompt resolution.
The Bank levies penal interest in case of deviations
and, thus, ensures compliance with the agreed EHS
norms. If there are significant deviations that could
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the right to either reduce its exposure or recall the
loan. Most significantly, your Bank, as part of its credit
(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:89)(cid:12)(cid:0)(cid:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:83)(cid:0)(cid:65)(cid:76)(cid:76)(cid:0)(cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:83)(cid:0)(cid:80)(cid:69)(cid:82)(cid:67)(cid:69)(cid:73)(cid:86)(cid:69)(cid:68)(cid:0)(cid:65)(cid:83)(cid:0)(cid:67)(cid:65)(cid:82)(cid:82)(cid:89)(cid:73)(cid:78)(cid:71)(cid:0)(cid:72)(cid:73)(cid:71)(cid:72)(cid:0)
or unusual EHS risk to be approved by an authority no
less than the Head - Wholesale Credit Risk or Chief
Risk Officer or the Deputy Managing Director or the
Managing Director as the case may be.
V.
Integrated Reporting (IR)
Your Bank has been releasing Sustainability Reports in
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the current year, your Bank has started work on Integrated
Reporting (IR).
HDFC Bank Limited Annual Report 2017-18
38
Directors' Report
IR aims at providing investors a compact communication
about how strategy, governance, performance and prospect
create value over time. IR today is a growing trend globally
providing investors and interested stakeholders relevant
information that an investor will find useful in making his
investment decision.
As a leading responsible Indian corporation, it was only
appropriate that we took the lead in this regard. Towards
this end, the Bank has identified its value created for its
stakeholders. Aspects identified as relevant for the Bank,
under the capital heads are discussed below.
Financial Capital: This capital refers to the pool of funds
used by the Bank for providing its services. This also covers
funds received through financing or generated through
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Tax, Earnings Per Share, Lending Portfolio and CSR Spend
amongst others.
Manufactured Capital: This capital is an aggregation
of all physical assets used by the Bank for delivering its
products and services or are created by it. This includes
Branch Network, IT Infrastructure, IT Security, Infrastructure
Infrastructure
through Portfolio
Development
(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:84)(cid:72)(cid:82)(cid:79)(cid:85)(cid:71)(cid:72)(cid:0)(cid:35)(cid:51)(cid:50)(cid:0)(cid:48)(cid:82)(cid:79)(cid:74)(cid:69)(cid:67)(cid:84)(cid:83)(cid:14)
and
Intellectual Capital: This capital covers the knowledge-
based intangibles of the Bank, which help it gain competitive
advantage. This capital also includes the initiatives of the
Bank for improving financial inclusion. This capital can be
substantiated by products for every section of the society,
service orientation, risk management, innovation and
digitisation approach, skilling communities through CSR,
financial inclusion initiatives, etc.
Human Capital: This capital refers to the motivation,
commitment and competency of the Bank’s employees.
This reflects in employee retention rates, employee diversity,
training, appraisals and career guidance, compensation and
benefits, grievance redressal, community skilling through
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empowerment of communities.
Social and Relationship Capital: This capital covers
the approach adopted by the Bank for developing and
maintaining its relationship with multiple institutions and
stakeholders. The Bank’s performance on this capital
can be understood through the processes of stakeholder
engagement, employee satisfaction, customer satisfaction,
compliance, CSR engagements, etc.
Natural Capital: This capital refers to the environmental
resources used by the Bank for delivering its products and
services. The impact of this capital can be understood through
energy consumption (fuel / electricity), energy efficiency /
conservation, CO2 emissions, paper consumption, waste
(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:12)(cid:0)(cid:69)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:0)(cid:73)(cid:77)(cid:80)(cid:65)(cid:67)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:82)(cid:79)(cid:74)(cid:69)(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:14)
The elaborate discussion on the process and outcomes
of Integrated Reporting will be discussed in the upcoming
Sustainability Report. In the coming years, the Bank will
endeavour to augment its integrated approach towards
delivering value to stakeholders.
Subsidiary Companies
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(cid:8)(cid:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:9)(cid:0) (cid:65)(cid:78)(cid:68)(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) (cid:8)(cid:40)(cid:51)(cid:44)(cid:9)(cid:14)(cid:0) (cid:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:0) (cid:73)(cid:83)(cid:0) (cid:65)(cid:0)
(cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:0) (cid:46)(cid:34)(cid:38)(cid:35)(cid:0) (cid:84)(cid:72)(cid:65)(cid:84)(cid:0) (cid:67)(cid:65)(cid:84)(cid:69)(cid:82)(cid:83)(cid:0) (cid:80)(cid:82)(cid:73)(cid:77)(cid:65)(cid:82)(cid:73)(cid:76)(cid:89)(cid:0) (cid:84)(cid:79)(cid:0) (cid:83)(cid:69)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0) (cid:78)(cid:79)(cid:84)(cid:0) (cid:67)(cid:79)(cid:86)(cid:69)(cid:82)(cid:69)(cid:68)(cid:0) (cid:66)(cid:89)(cid:0)
the Bank while HSL is among India’s largest retail broking firms.
The detailed financial performance of the companies is given
below.
1) HDB Financial Services Limited
- Reimagining
Opportunities
(cid:0)
(cid:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:7)(cid:83)(cid:0) (cid:46)(cid:69)(cid:84)(cid:0) (cid:41)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:0) (cid:41)(cid:78)(cid:67)(cid:79)(cid:77)(cid:69)(cid:0) (cid:71)(cid:82)(cid:69)(cid:87)(cid:0) (cid:66)(cid:89)(cid:0) (cid:19)(cid:22)(cid:14)(cid:25)(cid:0) (cid:80)(cid:69)(cid:82)(cid:0) (cid:67)(cid:69)(cid:78)(cid:84)(cid:0) (cid:84)(cid:79)(cid:0)
` 2,788.9 crore for the year ended March 31, 2018 from
` 2,037.2 crore in the previous year. Net Profit rose 39.1
per cent to ` 951.7 crore from ` 684.2 crore. Net NPA levels
stood at about one per cent.
The company caters to the growing needs of an aspirational
India, serving both retail and commercial clients through a
network of 1,165 branches across 831 cities / towns. Using
a convergence of physical and digital channels enabled by
a digital backbone, it offers financial solutions to individuals,
micro enterprises and emerging businesses across
manufacturing, trading and services sectors.
With a robust risk management framework backed by
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in simplicity and efficiency in delivering financial solutions to
its customers.
The underwriting process at HDB is customised to the needs
of the customer segment, ranging from instant workflow-
based loan approvals for consumer loans to personalised
credit appraisal for large business loans.
Additionally, the company provides Business Process
(cid:47)(cid:85)(cid:84)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0) (cid:8)(cid:34)(cid:48)(cid:47)(cid:9)(cid:0) (cid:83)(cid:79)(cid:76)(cid:85)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0) (cid:84)(cid:79)(cid:0) (cid:40)(cid:36)(cid:38)(cid:35)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:14)(cid:0) (cid:41)(cid:84)(cid:83)(cid:0) (cid:34)(cid:48)(cid:47)(cid:0)
services division delivers back office services such as forms
processing, documents verification, finance and accounting
services and correspondence management. HDB also
delivers front office services such as contact centre
management, outbound marketing and collection services.
(cid:0)
(cid:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:7)(cid:83)(cid:0) (cid:76)(cid:79)(cid:78)(cid:71)(cid:13)(cid:84)(cid:69)(cid:82)(cid:77)(cid:0) (cid:68)(cid:69)(cid:66)(cid:84)(cid:0) (cid:73)(cid:83)(cid:0) (cid:82)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0) (cid:33)(cid:33)(cid:33)(cid:0) (cid:66)(cid:89)(cid:0) (cid:35)(cid:33)(cid:50)(cid:37)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:73)(cid:84)(cid:83)(cid:0)
short-term debt is rated A1+ by CRISIL, indicating the
highest degree of safety regarding timely servicing of
financial obligations. As on March 31, 2018, your Bank held
95.9 per cent stake in the company.
2) HDFC Securities Limited
HSL’s Total Income rose by 42.5 per cent to ` 788.3 crore
from ` 553.2 crore in the previous year. Net Profit grew by
59.5 per cent to ` 344.4 crore from ` 215.9 crore.
HDFC Bank Limited Annual Report 2017-18
39
Directors' Report
The surge in capital markets (led by higher foreign institutional
investor inflows and improved corporate performance) and
focus on quality acquisition and activation boosted HSL’s
performance.
The company has a customer base of 19.35 lakh to whom
it offers a large bouquet of financial services. In the year
under review, HSL had 6.87 lakh transacting customers, the
second highest number of active (transacting) customers
among all broking houses.
In line with the thrust on digital channels within the bank, the
percentage of customers accessing HSL’s services digitally
increased to 70 per cent from 63 per cent in the previous
year. In particular the percentage accessing it through the
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In a conscious effort to rationalise the distribution network
with greater emphasis on digital offerings, HSL consolidated
its existing branches to end with 259 branches at the end of
the year.
(cid:41)(cid:84)(cid:0)(cid:65)(cid:76)(cid:83)(cid:79)(cid:0)(cid:83)(cid:69)(cid:67)(cid:85)(cid:82)(cid:69)(cid:68)(cid:0)(cid:77)(cid:65)(cid:78)(cid:89)(cid:0)(cid:65)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:14)(cid:0)(cid:41)(cid:84)(cid:0)(cid:87)(cid:65)(cid:83)(cid:0)(cid:65)(cid:68)(cid:74)(cid:85)(cid:68)(cid:71)(cid:69)(cid:68)(cid:0)(cid:34)(cid:69)(cid:83)(cid:84)(cid:0)(cid:34)(cid:82)(cid:79)(cid:75)(cid:69)(cid:82)(cid:0)
in the Assocham Capital Market Intermediaries Excellence
Awards 2017 and was also a winner in the Best Retail
Broker category, at the Outlook Money Awards 2017.
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:78)(cid:79)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:65)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0)(cid:48)(cid:38)(cid:50)(cid:36)(cid:33)(cid:0)(cid:33)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:46)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0)
Pension Scheme (NPS) namely, Best Point of Presence
(POP) All Citizen, Best POP NPS Corporate and Best POP
NPS Private Sector. HSL has been consistently improving
its IT infrastructure and platforms. This has resulted it in
being, recognised in the Enterprise Mobility and Enterprise
(cid:33)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(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:65)(cid:84)(cid:0) (cid:84)(cid:72)(cid:69)(cid:0) (cid:34)(cid:38)(cid:51)(cid:41)(cid:0) (cid:36)(cid:73)(cid:71)(cid:73)(cid:84)(cid:65)(cid:76)(cid:0) (cid:41)(cid:78)(cid:78)(cid:79)(cid:86)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
Awards, Express Computers 2017.
As on March 31, 2018, your Bank held 97.7 per cent stake
in HSL.
During the year, pursuant to approval received from the
Reserve Bank of India, the Bank made an offer to acquire
(cid:84)(cid:72)(cid:69)(cid:0)(cid:82)(cid:69)(cid:83)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(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:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:40)(cid:51)(cid:44)(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:73)(cid:82)(cid:0)
respective shareholders (“Offer”), at a price per share of
` 261/- and ` 4,818/- respectively, determined on the
basis of the valuation report submitted by two independent
valuers engaged for this purpose. Pursuant to the Offer, the
Bank acquired 29,749 equity shares of HSL from the eligible
shareholders who had tendered equity shares in the Offer.
(cid:46)(cid:79)(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:87)(cid:69)(cid:82)(cid:69)(cid:0) (cid:79)(cid:70)(cid:70)(cid:69)(cid:82)(cid:69)(cid:68)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:65)(cid:67)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:68)(cid:0) (cid:73)(cid:78)(cid:0) (cid:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:0)
pursuant to the Offer.
(cid:52)(cid:72)(cid:69)(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:83)(cid:0) (cid:79)(cid:70)(cid:0) (cid:40)(cid:36)(cid:34)(cid:38)(cid:51)(cid:44)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:40)(cid:51)(cid:44)(cid:0) (cid:65)(cid:82)(cid:69)(cid:0) (cid:65)(cid:86)(cid:65)(cid:73)(cid:76)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0) (cid:79)(cid:78)(cid:0)
the website of the Bank (www.hdfcbank.com). Shareholders
who wish to have a copy of the annual accounts and detailed
(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:77)(cid:65)(cid:89)(cid:0) (cid:87)(cid:82)(cid:73)(cid:84)(cid:69)(cid:0) (cid:84)(cid:79)(cid:0) (cid:40)(cid:36)(cid:38)(cid:35)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:14)(cid:0) (cid:52)(cid:72)(cid:69)(cid:83)(cid:69)(cid:0) (cid:68)(cid:79)(cid:67)(cid:85)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)
will also be available for inspection by shareholders at the
registered offices of the Bank and its two subsidiaries.
Other Statutory Disclosures
Number of Meetings of the Board
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.
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 to this report.
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: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
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(cid:84)(cid:72)(cid:69)(cid:77)(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)(cid:65)(cid:78)(cid:68)(cid:0)(cid:77)(cid:65)(cid:68)(cid:69)(cid:0)(cid:74)(cid:85)(cid:68)(cid:71)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:83)(cid:84)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:83)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)
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, 2018 and
of the profit of the Bank for the year ended on that date
(cid:115)(cid:0)(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 preventing and detecting fraud and
other irregularities
(cid:115)(cid:0)(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: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)
by the Bank and ensure that such internal financial controls
were adequate and operating effectively
(cid:115)(cid:0)(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, have been the Statutory Auditors of the Bank
since the year ended March 31, 2015. As per regulations of
the Reserve Bank of India (RBI), the same auditors cannot be
re-appointed for a period beyond four years. It is proposed to appoint
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Registration No. 301003E/E300005) as the new Statutory Auditors
(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:14)(cid:0)(cid:38)(cid:69)(cid:69)(cid:0)(cid:80)(cid:65)(cid:89)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:85)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:0)(cid:73)(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:0) (cid:17)(cid:14)(cid:25)(cid:0) (cid:67)(cid:82)(cid:79)(cid:82)(cid:69)(cid:0) (cid:80)(cid:76)(cid:85)(cid:83)(cid:0) (cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(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:79)(cid:85)(cid:84)(cid:76)(cid:65)(cid:89)(cid:83)(cid:12)(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:84)(cid:72)(cid:69)(cid:0)
approval of the members and the RBI. Members are requested
to consider the appointment of M/s. S. R. Batliboi & Co, LLP as
the Statutory Auditors of the Bank for financial year 2018-19.
(cid:0)
(cid:0)
HDFC Bank Limited Annual Report 2017-18
40
Directors' Report
Your Directors place on record their sincere appreciation of the
professional services rendered by M/s. Deloitte Haskins & Sells,
Chartered Accountants, as Statutory Auditors of the Bank.
During the year under review, fees paid to the auditors viz.
M/s. Deloitte Haskins & Sells were as follows:
(cid:38)(cid:69)(cid:69)(cid:83)(cid:0)(cid:8)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:65)(cid:88)(cid:69)(cid:83)(cid:9)(cid:0)
Statutory audit
Certification & other attest services
Non-audit services
Outlays and Taxes
Total
(` in crore)
1.90
0.41
-
0.32
2.63
Disclosure under Foreign Exchange Management Act, 1999
(cid:52)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:73)(cid:83)(cid:0) (cid:73)(cid:78)(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) (cid:84)(cid:72)(cid:69)(cid:0) (cid:38)(cid:79)(cid:82)(cid:69)(cid:73)(cid:71)(cid:78)(cid:0) (cid:37)(cid:88)(cid:67)(cid:72)(cid:65)(cid:78)(cid:71)(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:33)(cid:67)(cid:84)(cid:12)(cid:0)(cid:17)(cid:25)(cid:25)(cid:25)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(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:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:8)(cid:104)(cid:38)(cid:37)(cid:45)(cid:33)(cid:0)
provisions”) with respect to downstream investments made in its
(cid:83)(cid:85)(cid:66)(cid:83)(cid:73)(cid:68)(cid:73)(cid:65)(cid:82)(cid:73)(cid:69)(cid:83)(cid:14)(cid:0)(cid:38)(cid:85)(cid:82)(cid:84)(cid:72)(cid:69)(cid:82)(cid:12)(cid:0)(cid:84)(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:79)(cid:66)(cid:84)(cid:65)(cid:73)(cid:78)(cid:69)(cid:68)(cid:0)(cid:65)(cid:0)(cid:67)(cid:69)(cid:82)(cid:84)(cid:73)(cid:108)(cid:67)(cid:65)(cid:84)(cid:69)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)
statutory auditors certifying that the Bank is in compliance with
(cid:84)(cid:72)(cid:69)(cid:0) (cid:38)(cid:37)(cid:45)(cid:33)(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:87)(cid:73)(cid:84)(cid:72)(cid:0) (cid:82)(cid:69)(cid:83)(cid:80)(cid:69)(cid:67)(cid:84)(cid:0) (cid:84)(cid:79)(cid:0) (cid:68)(cid:79)(cid:87)(cid:78)(cid:83)(cid:84)(cid:82)(cid:69)(cid:65)(cid:77)(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)
made in its subsidiary in the year under review.
Related Party Transactions
Particulars of transactions with related parties referred to in
(cid:51)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:17)(cid:24)(cid:24)(cid:0) (cid:8)(cid:17)(cid:9)(cid:12)(cid:0) (cid:65)(cid:83)(cid:0) (cid:80)(cid:82)(cid:69)(cid:83)(cid:67)(cid:82)(cid:73)(cid:66)(cid:69)(cid:68)(cid:0) (cid:73)(cid:78)(cid:0) (cid:38)(cid:79)(cid:82)(cid:77)(cid:0) (cid:33)(cid:47)(cid:35)(cid:13)(cid:18)(cid:0) (cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0) (cid:50)(cid:85)(cid:76)(cid:69)(cid:0) (cid:24)(cid:0)
(2) of the Companies (Accounts) Rules, 2014 is enclosed as
ANNEXURE 4.
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 or any investment made by a banking
company in the ordinary course of business. The particulars
of investments made by the Bank are disclosed in Schedule 8
(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(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:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:80)(cid:69)(cid:82)(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)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)
Banking Regulation Act, 1949.
Whistle Blower Policy / Vigil Mechanism
The Bank encourages an open and transparent system of
working and dealing amongst its stake holders. While the Bank’s
“Code of Conduct & Ethics Policy” directs employees to uphold
company values and conduct business with integrity and highest
ethical standards, the Bank has also adopted a “Whistle Blower
Policy” which encourages its employees and various stake
holders to bring to the notice of the Bank any issue involving
compromise / violation of ethical norms, legal or regulatory
provisions, actual or suspected fraud etc., without any fear of
reprisal, discrimination, harassment or victimization of any kind.
All such concerns / complaints are received by the Chief of
Internal Vigilance of the Bank and / or by the Whistle Blower
Committee through a dedicated email ID or by way of letters etc.
All such complaints are enquired into by the appropriate authority
within the Bank while ensuring confidentiality of the identity of
such complainants. On the basis of their investigation, if the
allegations are proved be correct, then the Competent Authority
shall recommend to the appropriate Disciplinary Authority to
take suitable action against the responsible official. The decision
of the Whistle Blower Committee is final and binding on all.
Preventive measures or any other action considered necessary
is also taken by the Competent Authority.
Details of Whistle Blower complaints received and subsequent
action taken and the functioning of the Whistle Blower mechanism
are reviewed periodically by the Audit Committee of the Board.
During the financial year 2017-18, a total of 46 such complaints
were received and taken up for investigation.
Declaration by Independent Directors
Mrs. Shyamala Gopinath, Mr. Partho Datta, Mr. Bobby Parikh,
Mr. Malay Patel and Mr. Umesh Chandra Sarangi are
Independent Directors on the Board of the Bank as on March 31,
2018. 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.
Financial Statements of Subsidiaries and Associates
Board Performance Evaluation
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.
During the year, International Asset Reconstruction Company
Private Limited (“IARC”) ceased to be an associate of the Bank
since the percentage of paid-up equity capital held by the Bank
in IARC has been diluted to less than 20 per cent due to further
issue of equity shares made by IARC during the financial year,
in which the Bank did not participate. As of March 31, 2018, the
Bank held 19.22 per cent of the share capital of IARC.
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 (including the Chairperson), which is reviewed annually
by the NRC. A questionnaire for the evaluation of the Board, its
Committees and the individual members of the Board (including
the Chairperson), 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
HDFC Bank Limited Annual Report 2017-18
41
Directors' Report
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 Independent
Directors on the performance of the Board and its Committees
was subsequently discussed by the Board at its meeting.
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 RBI guidelines.
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 NRC recommends the appointment of Directors to the
Board.
It 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 the persons
identified before recommending their appointment to the Board.
The remuneration of whole time Directors is governed by
the compensation policy of the Bank. The same is available
at the weblink https://www.hdfcbank.com/aboutus/cg/codes-
and-policies.htm. The compensation policy of the Bank, duly
reviewed and recommended by the NRC has been articulated in
line with the relevant 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
(cid:79)(cid:66)(cid:74)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:73)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:69)(cid:0)(cid:65)(cid:0)(cid:70)(cid:65)(cid:73)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:82)(cid:65)(cid:78)(cid:83)(cid:80)(cid:65)(cid:82)(cid:69)(cid:78)(cid:84)(cid:0)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:69)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:72)(cid:69)(cid:76)(cid:80)(cid:83)(cid:0)
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 such as 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. 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 on applicable regulatory prescriptions.
(cid:38)(cid:85)(cid:82)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:69)(cid:88)(cid:80)(cid:69)(cid:78)(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:66)(cid:89)(cid:0)(cid:84)(cid:72)(cid:69)(cid:77)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:65)(cid:84)(cid:84)(cid:69)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
Board and Committees are reimbursed at actuals. Pursuant to
the relevant RBI guidelines and approval of the shareholders,
the Non-Executive Directors, other than the Chairperson, are
paid profit-related commission of ` 10,00,000 (Rupees Ten Lakh
Only) per annum for each Non-Executive Director.
(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:0)(cid:73)(cid:83)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:46)(cid:79)(cid:78)(cid:13)(cid:37)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:35)(cid:72)(cid:65)(cid:73)(cid:82)(cid:77)(cid:65)(cid:78)(cid:0)(cid:79)(cid:70)(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)
Services Limited, subsidiary of the Bank. Mr. Puri does not
receive any remuneration from the subsidiary. None of the
Directors of your Bank other than Mr. Puri is a director of the
Bank’s subsidiaries as on March 31, 2018.
Succession Planning
The Bank’s Nomination and Remuneration Committee (NRC)
also oversees matters of succession planning of its Directors,
Senior Management and Key executives of the Bank. With
respect to the tenure of the current Managing Director ending
in October 2020, the Board will identify a successor and work to
ensure that this is done in a manner that will allow appropriate
time for an effective transition of responsibilities.
Significant and Material Orders Passed By Regulators
During the current financial year 2017-18, pursuant to the
media reports, SEBI has issued directions to the Bank
(“SEBI Directions”) in relation to leakage of unpublished
price sensitive information (“UPSI”) pertaining to the financial
results of the Bank for the quarter ended December 31,
2015 and the quarter ended June 30, 2017 in various private
WhatsApp groups ahead of Bank’s official announcement to
the relevant stock exchanges. SEBI has directed the Bank to
observe the following: (i) to strengthen its processes / systems
/ controls forthwith to ensure that such instances of leakage of
unpublished price sensitive information do not recur in future,
(ii) to submit a report on: (a) the present systems and controls and
how the present systems and controls have been strengthened,
(b) details of persons who are responsible for monitoring such
(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:8)(cid:67)(cid:9)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:73)(cid:67)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:77)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:73)(cid:78)(cid:71)(cid:14)(cid:0)(cid:38)(cid:85)(cid:82)(cid:84)(cid:72)(cid:69)(cid:82)(cid:12)(cid:0)(cid:51)(cid:37)(cid:34)(cid:41)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)
directed the Bank to conduct an internal inquiry into the leakage
of UPSI relating to its financial figures including Non-Performing
Assets (NPAs) results and take appropriate action against those
responsible for the same, in accordance with the applicable law.
The scope of such inquiry will need to include determination of
the possible role of following persons in relation to the aforesaid
leakage of UPSI: (i) persons / members of committees involved
in generation of the original data for the purpose of determination
of key figures pertaining to financial figures including gross NPAs,
(ii) persons involved in the consolidation of the figures for the
financial results, (iii) persons involved in the preparation of board
notes and presentations, (iv) persons involved in dissemination
of information relating to financial results in the public domain
and (v) any other persons who had access to the information.
HDFC Bank Limited Annual Report 2017-18
42
Directors' Report
SEBI has directed the Bank to complete the inquiry within a
period of three months from the date of the SEBI Directions and
thereafter, file a report with SEBI in this regard within a further
period of seven days.
Directors and Key Managerial Personnel
In compliance with Section 152 of the Companies Act, 2013,
Mr. Keki Mistry will retire by rotation at the ensuing Annual
General Meeting and is eligible for re-appointment.
the year, after serving as Board members
for
During
close
to seven years each, Mrs. Renu Karnad and
Mr. A. N. Roy resigned from the Board of the Bank with effect
from January 20, 2018 and January 31, 2018 respectively.
Mrs. Karnad and Mr. Roy resigned due to other commitments
and personal considerations respectively. The Board places
on record its sincere appreciation of the contribution made by
Mrs. Karnad and Mr. Roy during their tenure with the Bank and
wishes them well in future endeavours.
The brief resume / details regarding the Director proposed to be
re-appointed as above is 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.
Particulars of Employees
The information in terms of Rule 5 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
given in ANNEXURE 6 and ANNEXURE 7 to this report.
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:115)(cid:0)
(cid:41)(cid:78)(cid:83)(cid:84)(cid:65)(cid:76)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:71)(cid:82)(cid:69)(cid:69)(cid:78)(cid:0) (cid:76)(cid:79)(cid:67)(cid:75)(cid:83)(cid:0) (cid:65)(cid:78)(cid:68)(cid:0) (cid:33)(cid:35)(cid:0) (cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:76)(cid:69)(cid:82)(cid:83)(cid:0) (cid:73)(cid:78)(cid:0) (cid:65)(cid:73)(cid:82)(cid:0)
conditioning machines in order to save energy and
support go-green initiative
(cid:41)(cid:78)(cid:83)(cid:84)(cid:65)(cid:76)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(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: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)
offices to control the power factor and to reduce energy
consumption
(cid:115)(cid:0) (cid:33)(cid:76)(cid:76)(cid:0) (cid:77)(cid:65)(cid:73)(cid:78)(cid:0) (cid:83)(cid:73)(cid:71)(cid:78)(cid:66)(cid:79)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0) (cid:73)(cid:78)(cid:0) (cid:66)(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:80)(cid:79)(cid:83)(cid:84)(cid:0)
10 p. m.
(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:76)(cid:73)(cid:70)(cid:84)(cid:83)(cid:12)(cid:0) (cid:33)(cid:35)(cid:83)(cid:12)(cid:0) (cid:67)(cid:79)(cid:77)(cid:77)(cid:79)(cid:78)(cid:0) (cid:80)(cid:65)(cid:83)(cid:83)(cid:65)(cid:71)(cid:69)(cid:0)
lights and other electrical equipment
(cid:115)(cid:0) (cid:50)(cid:69)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0) (cid:79)(cid:70)(cid:0) (cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:0) (cid:68)(cid:69)(cid:77)(cid:65)(cid:78)(cid:68)(cid:0) (cid:65)(cid:84)(cid:0) (cid:43)(cid:65)(cid:78)(cid:74)(cid:85)(cid:82)(cid:77)(cid:65)(cid:82)(cid:71)(cid:0) (cid:40)(cid:85)(cid:66)(cid:12)(cid:0)
resulting in energy savings
(cid:115)(cid:0) (cid:50)(cid:69)(cid:80)(cid:76)(cid:65)(cid:67)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0) (cid:79)(cid:70)(cid:0) (cid:35)(cid:38)(cid:44)(cid:0) (cid:44)(cid:65)(cid:77)(cid:80)(cid:83)(cid:0) (cid:87)(cid:73)(cid:84)(cid:72)(cid:0) (cid:44)(cid:37)(cid:36)(cid:0) (cid:108)(cid:88)(cid:84)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0) (cid:65)(cid:84)(cid:0)
(cid:43)(cid:65)(cid:78)(cid:74)(cid:85)(cid:82)(cid:77)(cid:65)(cid:82)(cid:71)(cid:0)(cid:40)(cid:85)(cid:66)
(cid:115)(cid:0) (cid:48)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:44)(cid:37)(cid:36)(cid:0)(cid:76)(cid:65)(cid:77)(cid:80)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:66)(cid:82)(cid:65)(cid:78)(cid:67)(cid:72)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:79)(cid:70)(cid:108)(cid:67)(cid:69)(cid:83)
(cid:115)(cid:0) (cid:48)(cid:82)(cid:79)(cid:86)(cid:73)(cid:83)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:83)(cid:79)(cid:76)(cid:65)(cid:82)(cid:0)(cid:80)(cid:65)(cid:78)(cid:69)(cid:76)(cid:83)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:67)(cid:65)(cid:80)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:80)(cid:79)(cid:87)(cid:69)(cid:82)(cid:0)(cid:71)(cid:69)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
at our offices in Pune and Bhubaneswar
Monitoring and energy saving initiative for 100 branches
resulting in power saving of over 10 per cent. The Bank won
an award in National Energy Efficiency Circle Competition
2017 - Winner Best Energy Efficient Case study held by
CII in May 2017. Considering the benefits accrued, we have
further extended the monitoring programme to an additional
500 branches across the country
(B) Technology Absorption
innovative
Your Bank has been at the forefront of using technology
absorption and evaluates
technology with
multiple fintech partners. It has launched a formal Consumer
Durable Loans portfolio and product with on-line real-time
Digital API based collaboration with third party and fintech
application sourcing platforms. Your Bank is leveraging
API based Service Oriented Architecture and Middleware
for enabling digital initiatives and empowering relationship
managers at branches with digital products and services
platforms. Your Bank has also begun using robotics and
artificial intelligence in digital commerce, corporate supply
chain and payment settlement systems to reduce time to
market and turnaround time.
(C) Foreign Exchange Earnings and Outgo
During the year, the total foreign exchange earned by the
Bank was ` 1,523.5 crore (on account of net gains arising on
all exchange /derivative transactions) and the total foreign
exchange outgo was ` 192.9 crore towards the operating
and capital expenditure requirements.
Secretarial Audit
In terms of Section 204 of the Companies Act, 2013 and the Rules
made thereunder, M/s. BNP & Associates, Practising Company
Secretaries have been appointed as Secretarial Auditors of
the Bank for the financial year 2017-18. The report of the
Secretarial Auditors is enclosed as ANNEXURE 8 to this Report.
With regard to the observation made by the Secretarial Auditors
in the Secretarial Audit Report in connection with the directions
(cid:73)(cid:83)(cid:83)(cid:85)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:51)(cid:37)(cid:34)(cid:41)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:79)(cid:78)(cid:0)(cid:38)(cid:69)(cid:66)(cid:82)(cid:85)(cid:65)(cid:82)(cid:89)(cid:0)(cid:18)(cid:19)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:24)(cid:0)(cid:84)(cid:79)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:0)(cid:65)(cid:76)(cid:73)(cid:65)(cid:12)(cid:0)
(a) strengthen the Bank’s processes / systems / controls
forthwith to ensure that instances of leakage of unpublished
price sensitive information (“UPSI”) does not recur in future,
and submit a report to SEBI on inter alia, the present systems
and controls and how they have been strengthened (“Report”);
and (b) conduct an internal inquiry into the leakage of UPSI
relating to its financial figures including non-performing assets
during the quarter ended December 2015 and June 2017, and
submit a report to SEBI (“Internal Inquiry Report”), the Bank
has appointed:
1. Cyril Amarchand Mangaldas to assist the Bank in inter alia
reviewing and conducting an assessment of the policies,
systems and processes of the Bank in relation to storing,
handling and communication of UPSI in terms of the
SEBI (Prohibition of Insider Trading) Regulations, 2015,
HDFC Bank Limited Annual Report 2017-18
43
Directors' Report
specifically, the information flow and process steps involved
in preparation and finalization of financial results by the
Bank, and in preparation of the Report; and
2. Haribhakti & Co., LLP for the purposes of preparing the
Internal Inquiry Report.
The preparation of the aforementioned reports is underway
and the same will be submitted to SEBI within the timelines
specified in its directions.
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 web site www.hdfcbank.com
Information under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act,
2013
The relevant information is included in Section E-Principle 3 of
the Business Responsibility Report for 2017-18.
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
It has been a challenging year for the global as well as Indian
economy. The global economy is facing risks from the increasing
tide of protectionism, uncertainty regarding Brexit and the
forthcoming elections in Italy. The US-North Korea relationship,
notwithstanding recent signs of a rapprochement, will continue
to cast a shadow on the geopolitical situation till it settles down
one way or the other.
On the positive side, India continues to remain among the two
fastest growing economies in the world. The transitory impact of
the GST too appears to be over. Private capital expenditure is
expected to pick up in the first half of the current financial year.
Your Bank has continued to grow faster than the system.
It now plans to raise capital of ` 24,000 crore to fund growth for
the next few years.
(cid:33)(cid:83)(cid:0)(cid:65)(cid:76)(cid:87)(cid:65)(cid:89)(cid:83)(cid:12)(cid:0)(cid:89)(cid:79)(cid:85)(cid:82)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:87)(cid:73)(cid:76)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:0)(cid:84)(cid:79)(cid:0)(cid:66)(cid:69)(cid:0)(cid:74)(cid:85)(cid:68)(cid:73)(cid:67)(cid:73)(cid:79)(cid:85)(cid:83)(cid:14)(cid:0)(cid:41)(cid:84)(cid:0)(cid:87)(cid:73)(cid:76)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:0)
to leverage its distribution strength and digital platforms to offer
a similar experience to customers across urban, semi-urban and
rural India.
Needless to say, the Bank will continue to focus on its five core
(cid:86)(cid:65)(cid:76)(cid:85)(cid:69)(cid:83)(cid:12)(cid:0) (cid:78)(cid:65)(cid:77)(cid:69)(cid:76)(cid:89)(cid:12)(cid:0) (cid:35)(cid:85)(cid:83)(cid:84)(cid:79)(cid:77)(cid:69)(cid:82)(cid:0) (cid:38)(cid:79)(cid:67)(cid:85)(cid:83)(cid:12)(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:37)(cid:88)(cid:67)(cid:69)(cid:76)(cid:76)(cid:69)(cid:78)(cid:67)(cid:69)(cid:12)(cid:0)
Product Leadership, People and Sustainability. Its commitment to
the highest possible standards of corporate governance remains
unwavering even as it embarks on the next stage of its evolution,
increasingly leveraging artificial intelligence and analytics, to
continue delivering sustainable growth to all stakeholders.
On behalf of the Board of Directors
Mrs. Shyamala Gopinath
Chairperson
Mumbai, May 22, 2018
HDFC Bank Limited Annual Report 2017-18
44
Directors' Report
ANNEXURE 1 to the 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, 2018
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 XVIII
30th June, 2010 100,000,000
468.40
2,139,400
Plan E-ESOS XIX
30th June, 2010 100,000,000
680.00
12,955,200
Plan D-ESOS XX
16th June, 2007
75,000,000
680.00
3,334,300
Plan C-ESOS XXI
17th June, 2005
50,000,000
680.00
4,318,400
Plan C-ESOS XXIII
17th June, 2005
50,000,000
835.50
326,000
-
-
-
-
-
-
-
-
-
2,136,000
6,730,300
1,698,600
1,176,900
-
-
-
-
3,400
-
-
-
-
6,224,900
1,635,700
3,141,500
126,300
196,100
5,100
4,800
120,000
Plan F-ESOS XXIV
27th June, 2013 100,000,000
835.50
28,671,900
- 10,581,900
11,483,750
137,100
18,700 17,032,350
Plan F ESOS XXV
27th June, 2013 100,000,000 1,092.65
40,408,100
- 12,396,400
9,122,900
844,600
36,300 30,404,300
Plan F -ESOS XXVI 27th June, 2013 100,000,000 1,097.80
3,000
-
900
Plan F -ESOS XXVII 27th June, 2013 100,000,000 1,433.20
Plan F -ESOS XXVIII 27th June, 2013 100,000,000 1,462.15
-
-
16,865,850
16,200
-
-
-
-
-
-
-
-
-
3,000
- 16,865,850
-
16,200
TOTAL
92,156,300
16,882,050
23,105,500
32,544,550
986,800
63,200 75,443,800
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 (`)
Note:
32,544,550
65,089,100
27,194,008,660
10,383,882,817
37,642,980,577
One (1) share of the face value of ` 2/- each would arise on exercise of One (1) Equity Stock Option.
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
HDFC Bank Limited Annual Report 2017-18
45
Directors' Report
i.
DETAILS OF OPTIONS GRANTED TO CURRENT DIRECTORS AND SENIOR MANAGERIAL PERSONNEL
Sr. No. Employee Name
Grade
No. of options
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
Bhavesh Zaveri
Chakrapani Venkatachari
Dhiraj Relli (on deputation to HDFC Securities Limited, the
Bank’s subsidiary)
Jimmy Tata
Munish Mittal
Navin Puri
Neil Francisco
Nitin Chugh
Nirav Shah
Parag Rao
Philip Mathew
Rahul Shukla
Rakesh K Singh
Rajesh Kumar R
Ravi Narayanan
Smita Bhagat
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
701,600
319,000
232,000
180,000
180,000
126,000
126,000
126,000
180,000
153,000
126,000
180,000
126,000
180,000
126,000
126,000
126,000
126,000
126,000
-
153,000
126,000
126,000
67,500
180,000
11,900
ii. Other employees who receive a grant in any one year of
options amounting to 5 % 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 percent of the issued capital
(excluding outstanding warrants and conversions)
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 ` 66.8
HDFC Bank Limited Annual Report 2017-18
46
Directors' Report
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
Had the Bank followed fair value method for accounting, the
stock option compensation expense would have been higher
by ` 650.4 crore. Consequently profit after tax would have
been lower by ` 650.4 crore and the basic EPS of the Bank
would have been ` 65.2 per share (lower by ` 2.5 per share)
and the diluted EPS would have been ` 64.4 per share (lower
by ` 2.4 per share)
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
grant including the following weighted average information:
The weighted average price of the stock options exercised is
` 837.6 and the weighted average fair value is ` 299.5
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
I. Risk-free interest rate
6.73 percent to 7.20 percent
II. Expected life
III. Expected volatility
IV. Expected dividends
1 to 7.25 years
19.94 per cent to 21.65 percent
0.65 percent to 0.66 percent
V. The price of the underlying share in the market at the time of
option grant
The market price per share was ` 1433.20 and ` 1462.15 at
the time of grant of options under ESOS XXVII and ESOS
XXVIII respectively.
vi. The weighted average market price of Bank’s shares on NSE
at the time of option grant
` 1433.35 and ` 1461.72 at the time of grant of options under
ESOS XXVII and ESOS XXVIII respectively.
Method used and assumptions made to incorporate effects of
expected early exercise
The exercise multiple, which is based on historical data of early
option exercise decisions of the employees, incorporates early
exercise price 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.
How expected volatility was determined, including explanation
of the extent to which expected volatility was based on historical
volatility
Stock expected volatility is completely based on GARCH
volatility forecasting model using historical stock prices from
the market.
Whether and how any other features of the option grant were
incorporated into the measurement of fair value, such as a market
condition
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 2017-18
47
Directors' Report
ANNEXURE 2 to the Directors’ Report
1. Brief outline of the CSR Policy
HDFC Bank Annual CSR Report 2017–2018
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, 2013 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 2017-18, the Bank has undertaken CSR Programmes aligned to the CSR Policy in the below
focus areas -
1. Promoting Education
2. Skill Training and Livelihood Enhancement
3. Health Care
4. Environmental Sustainability
5. Eradicating Poverty
6. Rural Development
The Bank’s CSR Policy can be found on the corporate Website at https://www.hdfcbank.com/csr/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 present composition
of the Committee is as follows:
(cid:115)(cid:0) (cid:45)(cid:82)(cid:14)(cid:0)(cid:53)(cid:77)(cid:69)(cid:83)(cid:72)(cid:0)(cid:35)(cid:72)(cid:65)(cid:78)(cid:68)(cid:82)(cid:65)(cid:0)(cid:51)(cid:65)(cid:82)(cid:65)(cid:78)(cid:71)(cid:73)(cid:12)(cid:0)(cid:35)(cid:72)(cid:65)(cid:73)(cid:82)(cid:77)(cid:65)(cid:78)(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: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)
(cid:115)(cid:0) (cid:45)(cid:82)(cid:14)(cid:0)(cid:45)(cid:65)(cid:76)(cid:65)(cid:89)(cid:0)(cid:48)(cid:65)(cid:84)(cid:69)(cid:76)(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:0)(cid:13)(cid:0)(cid:41)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:0)(cid:77)(cid:69)(cid:77)(cid:66)(cid:69)(cid:82)(cid:0)(cid:69)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:45)(cid:65)(cid:82)(cid:67)(cid:72)(cid:0)(cid:18)(cid:23)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:24)
(Mrs. Renu Karnad ceased to be the Chairperson and member of the Committee pursuant to her resignation as Director of
the Bank with effect from January 20, 2018)
3. Average net profit of the company for last three financial years
INR 18,246 CR
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above)
INR 365 CR
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:0)(cid:26)(cid:0)(cid:41)(cid:46)(cid:50)(cid:0)(cid:0)(cid:19)(cid:23)(cid:20)(cid:0)(cid:35)(cid:50)
(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)(cid:0)(cid:46)(cid:41)(cid:44)
HDFC Bank Limited Annual Report 2017-18
48
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
Amount outlay
(project-wise)
(INR Cr)
Promoting Education
Promotion of Education
others
2. State and district
Pan India
Skill Training and Livelihood
Enhancement
Skill development and
Vocational Training
Health Care
Preventive and Curative
Healthcare
Environmental Sustainability Environment
Pan India
Pan India
Pan India
Eradicating Poverty
Eradicating poverty
Pan India
41.29
17.31
15.19
0.73
4.18
Rural Development
Rural Development
Projects
Pan India
295.85
1
2
3
4
5
6
Amount spent
(INR Cr)
1.Direct
expenditure
2.Overheads
7.56
0.33
1.
2.
1.
2.
1.
2.
1.
2.
4.41
0.14
15.07
0.12
0.72
0.01
1.
2.
0.00
0.03
1.
2.
174.79
2.34
Cumulative
expenditure
up to reporting
period (INR Cr)*
Amount spent:
Direct or through
*implementing
agency (INR Cr)
99.92
78.24
54.29
3.41
11.00
737.80
Implementing
Agency – 33.40
Implementing
Agency – 12.76
Direct
Direct
Implementing
Agency – 4.15
Implementing
Agency – 118.71
*Details of the implementing agencies are listed below:
Promotion of Education: Banasthali Vidyapith, Bangalore Oniyavara Seva Coota, Bodh Shiksha Samiti , Isha Education,
K.C. Mahindra Education Trust, Katha, Magic Bus India Foundation, Meljol, Moinee Foundation, Participatory Action for Community
Empowerment, Pratham Education Foundation, Shree Shantadurga Shikshan Samiti, Society for Action in Community Health,
Sri Aurobindo Society, Sri Sathya Sai Trust, Teach To Lead, United way of Mumbai; Rural Development : Abhinav, Abhyuday
Sanstha, Action For Food Production, Action for Social Advancement, Aga Khan Rural Support Programme (India), Ambuja Cement
Foundation, Anarde Foundation, Aroh Foundation, BAIF Development Research Foundation, Centre for Advance Research and
Development, Community Advancement & Rural Development Society, Family Health India, FXB India Suraksha, Gram Vikas,
Gramalaya Trust, Gram Vikas Trust, Gramya Vikash Mancha, Haritika, Indo Global Social Service Society, Integrated Development
Foundation, Kalptaru Vikas Samiti, KGVK, Krushi Vikas Va Gramin Prashikshan Sanstha, MYRADA, Nav Bharat Jagriti Kendra,
Navrachna Mahila Vikas Trust, Network for Enterprise Enhancement and Development Support (NEEDS), Participatory Action
for Community Empowerment, Peoples Action for National Integration, S.M. Sehgal Foundation, Sahbagi Shikshan Kendra,
Sai Jyoti Gramodoyog Samaj Seva Samiti, Sanjeevani Institute for Empowerment & Development, Share Society to Heal Aid
Restore Educate, Shikhar Yuva Manch, Shramik Bharti, Society for Action in Community Health, Vikalp, Voluntary Association for
People Service, Vrutti, Watershed Organisation Trust, Yuva Rural Association, Yuva Unstoppable; Skills Training & Livelihood
Enhancement: Access Development Services, Antarang Foundation, Aroh Foundation, Dr M L Dhawale Memorial Trust, End
Poverty, Friends Union for Energizing Lives, FXB India Suraksha, Incubation Centres, Indo Global Social Service Society, Jan
Jagran Sanstha, Pune City Connect Development Foundation, SIFE India, Tata Institute of Social Sciences, Voluntary Association
for People Service; Eradicating poverty / Other Donations: Chetana Foundation, Commissioner of Municipal Administration,
CSC Academy, GiveIndia, Mandya Institute of Medical Sciences, National Sports Development Fund, Rotary Club of Panaji,
Sneha Society for Nutrition Education and Health Action, The Aagan Trust
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.
NA
7. A responsibility statement of CSR committee:
The CSR Committee confirms that the implementation and monitoring of the CSR activities of the Bank are in compliance with
the CSR objectives and CSR Policy of the Company
Mr. Aditya Puri
Managing Director
Date: April 18, 2018
Mr. Umesh Chandra Sarangi
Chairman - CSR Committee
HDFC Bank Limited Annual Report 2017-18
49
Directors' Report
ANNEXURE 3 to the Directors’ Report
Form No. MGT-9
Extract of the Annual Return as on the financial year ended March 31, 2018
[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 3976 0000
vi. Whether listed: Yes
vii. Name, Address and contact details of Registrar and Transfer Agent:
Datamatics Business Solutions Limited (Formerly known as Datamatics Financial Services Limited)
Plot No. B5, Part B, Cross Lane, MIDC, Marol, Andheri East, Mumbai 400 093.
Tel: 022- 6671 2213/14, E-mail: hdinvestors@datamaticsbpm.com
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:
All the business activities contributing 10 percent or more of the total turnover of the Company shall be stated:
Name and Description of the main products / services
NIC Code
Percent 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 Limited
U65993GJ2007PLC051028
Subsidiary
95.87
Radhika, 2nd Floor, Law Garden Road,
Navrangpura, Ahmedabad - 380 009.
2 HDFC Securities Limited
U67120MH2000PLC152193
Subsidiary
97.67
I Think, Techno Campus, Building-B,
“Alpha” office, 8th Floor, opposite
Crompton Greaves, Kanjurmarg (East),
Mumbai - 400 042.
Sec 2(87) of
Companies Act,
2013
Sec 2(87) of
Companies Act,
2013
* During the year, International Asset Reconstruction Company Limited (“IARC”) ceased to be an associate company of the Bank
since the percentage of paid-up equity capital held by the Bank in IARC has been diluted to less than 20% due to further issue
of equity shares made by IARC during the financial year in which the Bank did not participate. As of March 31, 2018, the Bank
held 19.22% of the share capital of IARC.
HDFC Bank Limited Annual Report 2017-18
50
Directors' Report
IV. SHAREHOLDING PATTERN: (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)
(i) Category-wise Share Holding
Category
code
Category of shareholder
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
(II)
Demat
Physical
Total
Percentage of
total shares
Demat
Physical
Total
Percentage of
total shares
Percentage
Change
during the
year
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0
0
0
543,216,100
21.20#
543,216,100
0
0
0.00
0.00
0
0
543,216,100
21.20#
543,216,100
0
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0
0
0
0
0
0
0
543,216,100
21.20#
543,216,100
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
543,216,100
20.93#
(0.27)
0
0
0.00
0.00
0.00
0.00
543,216,100
20.93#
(0.27)
0
0
0
0
0
0
0
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
543,216,100
20.93#
(0.27)
206,150,669
33,185
206,183,854
8.05
256,405,086
2,000
256,407,086
2,308,514
17,390
2,325,904
Central Government
2,767,437
State Government(s)
Venture Capital Funds
0
0
Insurance Companies
61,511,040
0
0
0
0
2,767,437
0
0
61,511,040
0.09
0.11
0.00
0.00
2.40
2,965,413
2,784,112
0
0
56,983,145
8,115
2,973,528
0
0
0
0
2,784,112
0
0
56,983,145
FIIs
880,321,745
15,170
880,336,915
34.35
857,886,518
2,000
857,888,518
Foreign Venture Capital
Funds
Qualified Foreign Investor
0
0
Alternate Investment Funds
313,796
Other (specify)
0
0
0
0
0
0
0
313,796
0
0.00
0.00
0.01
0.00
0
0
1,443,123
0
0
0
0
0
0
0
1,443,123
0
9.88
0.11
0.11
0.00
0.00
2.20
33.06
0.00
0.00
0.06
0.00
1.83
0.02
0.00
0.00
0.00
(0.20)
(1.30)
0.00
0.00
0.04
0.00
0.40
Sub Total (B)(1)
1,153,373,201
65,745 1,153,438,946
45.01 1,178,467,397
12,115 1,178,479,512
45.41
HDFC Bank Limited Annual Report 2017-18
51
Promoters
Individuals/HUF
Central Government
State Government(s)
0
0
0
Bodies Corporate ( # )
543,216,100
Banks / FI
Any Other (specify)
0
0
Sub Total (A)(1)
543,216,100
0
0
0
0
0
0
0
543,216,100
Foreign
NRIs - Individuals
Other - Individuals
Bodies Corporate
Banks / FI
Qualified Foreign Investor
Any Other (specify)
Sub Total (A)(2)
Total Shareholding of
Promoter and Promoter
Group (A)=(A)(1)+(A)(2)
Public shareholding
Institutions
Mutual Funds
Banks / FI
(I)
(A)
(a)
(b)
(c)
(d)
(e)
(f)
2
(a)
(b)
(c)
(d)
(e)
(f)
(B)
1
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
Directors' Report
Category
code
(I)
2
(a)
Non-institutions
Bodies Corporate
(a)(i)
Indian
(a)(ii)
Overseas
(b)
Individuals
(b)(i)
(b)(ii)
(c)
(d)
d-i
d-ii
d-iii
d-iv
Individuals - shareholders
holding nominal share
capital up to ` 1 Lakh
Individual shareholders
holding nominal share
capital in excess of
` 1 Lakh
Qualified Foreign Investor
Other (specify)
NRI Rep
NRI Non -Rept
Foreign Bodies
Foreign National
Sub Total (B)(2)
Total Public Shareholding
(B)=(B)(1)+(B)(2)
Category of shareholder
No. of Shares held at the beginning of the year
No. of Shares held at the end of the year
(II)
Demat
Physical
Total
Percentage of
total shares
Demat
Physical
Total
Percentage of
total shares
Percentage
Change
during the
year
0
0
0
165,798,090
181,005
165,979,095
1,248
0
10,075
11,323
0
0
147,394,271
16,210,855
163,605,126
0.00
6.48
0.00
0.00
6.38
0
0
0
152,990,372
121,430
153,111,802
0
0
270
0
270
0
158,476,509
13,810,769
172,287,278
0.00
5.90
0.00
0.00
6.64
0.00
(0.58)
0.00
0.00
0.25
56,969,465
191,000
57,160,465
2.23
61,550,251
191,000
61,741,251
2.38
0.15
0
0
2,308,878
3,756,747
21,000
1,068
0
0
0
0
41,295
2,350,173
2,265
3,759,012
0
0
21,000
1,068
0.00
0.00
0.09
0.15
0.00
0.00
0
2,762,224
1,990,585
8,471,200
0
1,588
0
0
0
2,762,224
38,385
2,028,970
1,925
8,473,125
0
0
0
1588
376,250,767
16,636,495
392,887,262
15.33
386,242,729
14,163,779
400,406,508
15,296,23,968
16,702,240 1,546,326,208
60.34 1,564,710,126
14,175,894 1,578,886,020
0.00
0.11
0.08
0.33
0.00
0.00
15.43
60.84
81.77
18.23
0.00
0.11
(0.01)
0.18
0.00
0.00
0.10
0.50
0.23
(0.23)
Total (A+B)
2,072,840,068
16,702,240 2,089,542,308
81.54 2,107,926,226
14,175,894 2,122,102,120
(C)
Custodians for GDRs and
ADRs
473,003,409
0
473,003,409
18.46
472,988,147
0
472,988,147
GRAND TOTAL (A)+(B)+(C) 2,545,843,477
16,702,240 2,562,545,717
100.00 2,580,914,373
14,175,894 2,595,090,267
100.00
0.00
# Promoters are Indian Companies incorporated under the Indian Companies Act 1956 and are managed 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 percentage of share capital held by the promoters has been calculated after including the equity shares underlying the depository receipts
of the Bank in the total number of equity shares. Pursuant to the Circular No. CIR/CFD/CMD/13/2015 dated November 30, 2015 issued by
the Securities and Exchange Board of India (“SEBI”), the percentage of promoter shareholding after excluding the equity shares underlying
depository receipts from the total number of shares would be 25.60% of Bank’s share capital.
(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
Percentage of
Shares
Pledged /
encumbered to
total shares
No.of
Shares
Percentage of
total
Shares
Percentage of
Shares
Pledged /
encumbered to
total shares
Percentage
change in
shareholding
during the
year**
1 HOUSING DEVELOPMENT FINANCE
393,211,100
15.35
0.00
393,211,100
15.15
CORPORATION LIMITED
2 HDFC INVESTMENTS LIMITED
150,000,000
3 HDFC HOLDINGS LIMITED
Total
5,000
543,216,100
5.85
0.00
21.20
0.00
0.00
150,000,000
5,000
0.00
543,216,100
5.78
0.00
20.93
0.00
0.00
0.00
0.00
(0.20)
(0.07)
0.00
(0.27)
HDFC Bank Limited Annual Report 2017-18
52
Directors' Report
(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
No.of Shares
Percentage of total Shares
At the beginning of the year
543,216,100
21.20
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
20.93
** During the year under review, there was 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 2017-18.
(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
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
No. of
shares
Percentage of
total shares
1
Europacific Growth Fund
At the beginning of the Year
31-MAR-2017 100,311,759
3.92
Increase
Increase
Decrease
Decrease
12-MAY-2017
23-JUN-2017
676,700
240,000
0.03 100,988,459
0.01 101,228,459
06-OCT-2017
(1,839,189)
(0.07)
99,389,270
13-OCT-2017
(523,396)
(0.02)
98,865,874
At the END of the Year
31-MAR-2018
-
-
98,865,874
2
Life Insurance Corporation Of India
At the beginning of the Year
31-MAR-2017
55,457,815
2.16
Decrease
07-APR-2017
(302,533)
(0.01)
55,155,282
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
14-APR-2017
(476,098)
(0.02)
54,679,184
21-APR-2017
(1,080,747)
(0.04)
53,598,437
28-APR-2017
(1,266,569)
(0.05)
52,331,868
05-MAY-2017
(384,084)
(0.02)
51,947,784
12-MAY-2017
(117,000)
(0.01)
51,830,784
19-MAY-2017
(19,090)
02-JUN-2017
09-JUN-2017
09-MAR-2018
16-MAR-2018
23-MAR-2018
30-MAR-2018
(500)
(800)
(58,000)
(93,890)
(71,986)
(51,500)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
51,811,694
51,811,194
51,810,394
51,752,394
51,658,504
51,586,518
51,535,018
At the END of the Year
31-MAR-2018
-
-
51,535,018
3 SBI-Etf Nifty 50
At the beginning of the Year
31-MAR-2017
30,660,186
Increase
Increase
Increase
Increase
Increase
Decrease
07-APR-2017
1,184,347
14-APR-2017
21-APR-2017
228,371
50,754
28-APR-2017
2,163,001
05-MAY-2017
536,490
12-MAY-2017
(77,339)
1.20
0.05
0.01
0.00
0.08
0.02
0.00
31,844,533
32,072,904
32,123,658
34,286,659
34,823,149
34,745,810
HDFC Bank Limited Annual Report 2017-18
53
3.94
3.94
3.85
3.83
3.81
2.15
2.13
2.09
2.04
2.03
2.02
2.02
2.02
2.02
2.00
1.99
1.99
1.99
1.99
1.24
1.25
1.25
1.34
1.36
1.35
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Increase
19-MAY-2017
26-MAY-2017
02-JUN-2017
153,998
44,365
378,917
0.01
0.00
0.02
34,899,808
34,944,173
35,323,090
09-JUN-2017
(140,755)
(0.01)
35,182,335
16-JUN-2017
23-JUN-2017
30-JUN-2017
07-JUL-2017
14-JUL-2017
17-JUL-2017
21-JUL-2017
28-JUL-2017
139,607
(115,023)
(197,221)
211,139
281,763
28,759
118,439
354,574
04-AUG-2017
1,222,500
11-AUG-2017
18-AUG-2017
25-AUG-2017
01-SEP-2017
08-SEP-2017
15-SEP-2017
22-SEP-2017
29-SEP-2017
06-OCT-2017
13-OCT-2017
20-OCT-2017
27-OCT-2017
31-OCT-2017
332,122
(14,098)
211,410
(5,031)
152,392
(97,064)
252,058
148,541
838,061
41,307
224,969
214,071
56,163
03-NOV-2017
(115,452)
10-NOV-2017
(109,662)
17-NOV-2017
24-NOV-2017
01-DEC-2017
08-DEC-2017
15-DEC-2017
22-DEC-2017
639,432
716,636
657,782
832,787
277,746
248,136
29-DEC-2017
(11,264)
05-JAN-2018
12-JAN-2018
19-JAN-2018
26-JAN-2018
02-FEB-2018
09-FEB-2018
16-FEB-2018
23-FEB-2018
02-MAR-2018
243,407
421,655
684,767
(236,736)
(256,140)
(159,102)
335,480
(81,209)
192,055
0.01
0.00
35,321,942
35,206,919
(0.01)
35,009,698
0.01
0.01
0.00
0.01
0.01
0.05
0.01
0.00
0.01
0.00
0.01
0.00
0.01
0.01
0.03
0.00
0.01
0.01
0.00
0.00
0.00
0.03
0.03
0.03
0.03
0.01
0.01
0.00
0.01
0.02
0.03
(0.01)
(0.01)
(0.01)
0.01
0.00
0.01
35,220,837
35,502,600
35,531,359
35,649,798
36,004,372
37,226,872
37,558,994
37,544,896
37,756,306
37,751,275
37,903,667
37,806,603
38,058,661
38,207,202
39,045,263
39,086,570
39,311,539
39,525,610
39,581,773
39,466,321
39,356,659
39,996,091
40,712,727
41,370,509
42,203,296
42,481,042
42,729,178
42,717,914
42,961,321
43,382,976
44,067,743
43,831,007
43,574,867
43,415,765
43,751,245
43,670,036
43,862,091
1.36
1.36
1.38
1.37
1.38
1.37
1.36
1.37
1.38
1.38
1.39
1.40
1.45
1.46
1.46
1.47
1.46
1.47
1.47
1.47
1.48
1.51
1.51
1.52
1.53
1.53
1.53
1.52
1.55
1.57
1.60
1.63
1.64
1.65
1.65
1.66
1.68
1.70
1.69
1.68
1.68
1.69
1.68
1.69
HDFC Bank Limited Annual Report 2017-18
54
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Increase
Increase
Increase
Decrease
09-MAR-2018
16-MAR-2018
23-MAR-2018
240,745
248,224
690,340
30-MAR-2018
(47,397)
0.01
0.01
0.03
0.00
44,102,836
44,351,060
45,041,400
44,994,003
At the END of the Year
31-MAR-2018
-
-
44,994,003
4 HDFC Trustee Company Limited A/C
At the beginning of the Year
31-MAR-2017
20,125,387
HDFC Balanced Fund
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Increase
07-APR-2017
3,445,051
14-APR-2017
21-APR-2017
28-APR-2017
05-MAY-2017
12-MAY-2017
19-MAY-2017
26-MAY-2017
02-JUN-2017
(709)
(13,887)
(18,250)
2,173
(3,167)
49,408
298,610
401,614
0.79
0.13
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.02
23,570,438
23,569,729
23,555,842
23,537,592
23,539,765
23,536,598
23,586,006
23,884,616
24,286,230
09-JUN-2017
(120,610)
(0.01)
24,165,620
16-JUN-2017
23-JUN-2017
30-JUN-2017
07-JUL-2017
14-JUL-2017
17-JUL-2017
21-JUL-2017
28-JUL-2017
849,625
275,726
353,156
15,571
54,083
(136)
244,001
230,331
04-AUG-2017
1,227,119
11-AUG-2017
(125,730)
18-AUG-2017
(228,485)
25-AUG-2017
01-SEP-2017
08-SEP-2017
15-SEP-2017
22-SEP-2017
216,398
349,040
214,909
486,072
114,055
0.03
0.01
0.01
0.00
0.00
0.00
0.01
0.01
0.05
(0.01)
(0.01)
0.01
0.01
0.01
0.02
0.00
25,015,245
25,290,971
25,644,127
25,659,698
25,713,781
25,713,645
25,957,646
26,187,977
27,415,096
27,289,366
27,060,881
27,277,279
27,626,319
27,841,228
28,327,300
28,441,355
29-SEP-2017
(151,670)
(0.01)
28,289,685
06-OCT-2017
1,929,259
13-OCT-2017
20-OCT-2017
49,950
(295)
0.08
0.00
0.00
30,218,944
30,268,894
30,268,599
27-OCT-2017
(186,002)
(0.01)
30,082,597
31-OCT-2017
03-NOV-2017
10-NOV-2017
17-NOV-2017
24-NOV-2017
01-DEC-2017
08-DEC-2017
91,816
(1,038)
(89,302)
(96,809)
637,492
338,128
281,986
0.00
0.00
0.00
0.00
0.03
0.01
0.01
30,174,413
30,173,375
30,084,073
29,987,264
30,624,756
30,962,884
31,244,870
1.70
1.71
1.74
1.73
1.73
0.92
0.92
0.92
0.92
0.92
0.92
0.92
0.93
0.95
0.94
0.97
0.99
1.00
1.00
1.00
1.00
1.01
1.02
1.07
1.06
1.05
1.06
1.07
1.08
1.10
1.10
1.10
1.17
1.17
1.17
1.16
1.17
1.17
1.16
1.16
1.18
1.20
1.21
HDFC Bank Limited Annual Report 2017-18
55
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Increase
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Increase
Decrease
15-DEC-2017
22-DEC-2017
29-DEC-2017
05-JAN-2018
12-JAN-2018
19-JAN-2018
26-JAN-2018
02-FEB-2018
09-FEB-2018
16-FEB-2018
23-FEB-2018
02-MAR-2018
09-MAR-2018
411,178
(4,553)
(3,535)
705,717
1,536
296,119
(10,919)
(11,663)
(329,177)
(184,463)
(62,967)
6,841
54,049
16-MAR-2018
449,850
23-MAR-2018
30-MAR-2018
4,940
(9,970)
-
0.02
0.00
0.00
0.03
0.00
0.01
0.00
0.00
(0.01)
(0.01)
0.00
0.00
0.00
0.02
0.00
0.00
31,656,048
31,651,495
31,647,960
32,353,677
32,355,213
32,651,332
32,640,413
32,628,750
32,299,573
32,115,110
32,052,143
32,058,984
32,113,033
32,562,883
32,567,823
32,557,853
-
32,557,853
At the END of the Year
31-MAR-2018
5
ICICI Prudential Life Insurance
Company Limited
At the beginning of the Year
31-MAR-2017
35,864,792
1.40
Decrease
Increase
Decrease
Increase
Increase
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
07-APR-2017
(224,277)
(0.01)
35,640,515
14-APR-2017
100,134
0.00
35,740,649
21-APR-2017
(503,387)
(0.02)
35,237,262
28-APR-2017
05-MAY-2017
12-MAY-2017
644,429
194,099
125,112
19-MAY-2017
(122,105)
26-MAY-2017
(630,703)
02-JUN-2017
09-JUN-2017
16-JUN-2017
23-JUN-2017
30-JUN-2017
07-JUL-2017
14-JUL-2017
17-JUL-2017
21-JUL-2017
3,127
(621)
(586,657)
(178,752)
(709,274)
(72,243)
450,189
78
(58,593)
28-JUL-2017
(523,190)
04-AUG-2017
(410,475)
11-AUG-2017
(216,394)
18-AUG-2017
(152,330)
25-AUG-2017
(230,243)
01-SEP-2017
(336,456)
0.03
0.01
0.01
(0.01)
(0.03)
0.00
0.00
(0.02)
(0.01)
(0.03)
0.00
0.02
0.00
0.00
(0.02)
(0.02)
(0.01)
(0.01)
(0.01)
(0.01)
35,881,691
36,075,790
36,200,902
36,078,797
35,448,094
35,451,221
35,450,600
34,863,943
34,685,191
33,975,917
33,903,674
34,353,863
34,353,941
34,295,348
33,772,158
33,361,683
33,145,289
32,992,959
32,762,716
32,426,260
08-SEP-2017
(33,144)
0.00
32,393,116
15-SEP-2017
(295,604)
(0.01)
32,097,512
22-SEP-2017
(88,542)
0.00
32,008,970
HDFC Bank Limited Annual Report 2017-18
56
1.22
1.22
1.22
1.25
1.25
1.26
1.26
1.26
1.25
1.24
1.24
1.24
1.24
1.25
1.25
1.25
1.25
1.39
1.40
1.38
1.40
1.41
1.41
1.41
1.38
1.38
1.38
1.36
1.35
1.32
1.32
1.34
1.34
1.33
1.31
1.30
1.29
1.28
1.27
1.26
1.26
1.24
1.24
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Decrease
Increase
Decrease
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
29-SEP-2017
(722,967)
(0.03)
31,286,003
06-OCT-2017
13-OCT-2017
20-OCT-2017
27-OCT-2017
31-OCT-2017
03-NOV-2017
10-NOV-2017
211,821
(57,147)
18,441
(12,647)
(52,941)
37,231
(5,744)
0.01
0.00
0.00
0.00
0.00
0.00
0.00
31,497,824
31,440,677
31,459,118
31,446,471
31,393,530
31,430,761
31,425,017
17-NOV-2017
(145,162)
(0.01)
31,279,855
24-NOV-2017
(48,496)
0.00
31,231,359
01-DEC-2017
(125,823)
(0.01)
31,105,536
08-DEC-2017
15-DEC-2017
22-DEC-2017
29-DEC-2017
05-JAN-2018
12-JAN-2018
19-JAN-2018
26-JAN-2018
02-FEB-2018
09-FEB-2018
16-FEB-2018
23-FEB-2018
02-MAR-2018
09-MAR-2018
228,340
360,721
240,097
233,826
(82,820)
344,060
(282,314)
(105,107)
(330,710)
1,806
27,066
(22,144)
95,559
21,716
16-MAR-2018
(21,890)
23-MAR-2018
30-MAR-2018
229,432
119,200
-
0.01
0.01
0.01
0.01
0.00
0.01
31,333,876
31,694,597
31,934,694
32,168,520
32,085,700
32,429,760
(0.01)
32,147,446
0.00
32,042,339
(0.01)
31,711,629
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.01
31,713,435
31,740,501
31,718,357
31,813,916
31,835,632
31,813,742
32,043,174
32,162,374
-
32,162,374
1.18
(0.01)
(0.02)
(0.03)
0.00
0.00
0.00
0.00
0.00
0.01
0.00
0.00
0.00
0.00
0.00
29,977,572
29,451,924
28,689,394
28,696,684
28,701,688
28,673,766
28,709,117
28,758,951
28,896,974
28,894,897
28,919,962
28,967,897
29,012,099
29,067,070
1.21
1.22
1.22
1.22
1.22
1.21
1.22
1.22
1.21
1.21
1.20
1.21
1.23
1.23
1.24
1.24
1.25
1.24
1.24
1.22
1.22
1.23
1.22
1.23
1.23
1.23
1.24
1.24
1.24
1.17
1.15
1.12
1.12
1.12
1.11
1.12
1.12
1.12
1.12
1.12
1.12
1.12
1.13
At the END of the Year
31-MAR-2018
6 Government Of Singapore
At the beginning of the Year
31-MAR-2017
30,115,330
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
07-APR-2017
(137,758)
14-APR-2017
(525,648)
21-APR-2017
(762,530)
26-MAY-2017
09-JUN-2017
07-JUL-2017
14-JUL-2017
17-JUL-2017
08-SEP-2017
15-SEP-2017
29-SEP-2017
06-OCT-2017
13-OCT-2017
20-OCT-2017
7,290
5,004
(27,922)
35,351
49,834
138,023
(2,077)
25,065
47,935
44,202
54,971
HDFC Bank Limited Annual Report 2017-18
57
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Decrease
Increase
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Increase
Decrease
Decrease
27-OCT-2017
(158,935)
(0.01)
28,908,135
31-OCT-2017
10-NOV-2017
24-NOV-2017
01-DEC-2017
184,369
424,968
21,467
19,570
0.01
0.02
0.00
0.00
29,092,504
29,517,472
29,538,939
29,558,509
08-DEC-2017
(193,845)
(0.01)
29,364,664
15-DEC-2017
29-DEC-2017
(22,009)
(7,272)
0.00
0.00
29,342,655
29,335,383
05-JAN-2018
(274,846)
(0.01)
29,060,537
12-JAN-2018
19-JAN-2018
77,850
10,418
16-FEB-2018
(20,802)
02-MAR-2018
28,385
0.00
0.00
0.00
0.00
29,138,387
29,148,805
29,128,003
29,156,388
09-MAR-2018
(497,540)
(0.02)
28,658,848
23-MAR-2018
(33,544)
0.00
28,625,304
At the END of the Year
31-MAR-2018
-
-
28,625,304
7 Capital World Growth And Income
At the beginning of the Year
31-MAR-2017
37,636,610
Fund
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
A/C-Reliance Regular Savings Fund-
Balanced Option
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
05-MAY-2017
(865,000)
26-MAY-2017
(1,005,000)
16-JUN-2017
14-JUL-2017
17-JUL-2017
21-JUL-2017
(690,000)
(699,740)
(428,260)
(563,000)
04-AUG-2017
(133,010)
11-AUG-2017
(431,892)
18-AUG-2017
(527,784)
1.47
(0.03)
(0.04)
(0.03)
(0.03)
(0.02)
(0.02)
(0.01)
(0.02)
(0.02)
36,771,610
35,766,610
35,076,610
34,376,870
33,948,610
33,385,610
33,252,600
32,820,708
32,292,924
25-AUG-2017
(49,495)
0.00
32,243,429
01-SEP-2017
(1,437,507)
(0.06)
30,805,922
08-SEP-2017
(36,687)
0.00
30,769,235
15-SEP-2017
(1,179,625)
22-SEP-2017
29-SEP-2017
01-DEC-2017
08-DEC-2017
(348,290)
(171,710)
(173,000)
(520,000)
09-MAR-2018
(3,038,000)
(0.05)
(0.01)
(0.01)
(0.01)
(0.02)
(0.12)
29,589,610
29,241,320
29,069,610
28,896,610
28,376,610
25,338,610
07-APR-2017
1,145,032
14-APR-2017
21-APR-2017
411,316
437,569
0.83
0.05
0.02
0.02
22,502,492
22,913,808
23,351,377
28-APR-2017
(2,160,487)
(0.08)
21,190,890
05-MAY-2017
(42,037)
12-MAY-2017
19-MAY-2017
126,484
473,649
0.00
0.01
0.02
21,148,853
21,275,337
21,748,986
8 Reliance Capital Trustee Co Ltd
At the beginning of the Year
31-MAR-2017
21,357,460
At the END of the Year
31-MAR-2018
-
-
25,338,610
1.12
1.13
1.14
1.14
1.14
1.14
1.13
1.13
1.12
1.13
1.13
1.12
1.12
1.11
1.10
1.10
1.43
1.39
1.37
1.34
1.32
1.30
1.29
1.28
1.25
1.25
1.19
1.19
1.15
1.13
1.13
1.12
1.10
0.98
0.98
0.88
0.89
0.91
0.83
0.83
0.83
0.85
HDFC Bank Limited Annual Report 2017-18
58
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Increase
Increase
Increase
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Increase
Increase
26-MAY-2017
02-JUN-2017
09-JUN-2017
16-JUN-2017
23-JUN-2017
30-JUN-2017
07-JUL-2017
14-JUL-2017
17-JUL-2017
21-JUL-2017
28-JUL-2017
04-AUG-2017
539,104
869,157
266,411
(581,500)
(443,168)
(273,934)
774,887
12,058
(39,287)
(83,692)
192,039
440,766
0.02
0.03
0.01
(0.02)
(0.02)
(0.01)
0.03
0.00
0.00
0.00
0.01
0.02
22,288,090
23,157,247
23,423,658
22,842,158
22,398,990
22,125,056
22,899,943
22,912,001
22,872,714
22,789,022
22,981,061
23,421,827
11-AUG-2017
(230,418)
(0.01)
23,191,409
18-AUG-2017
(29,186)
25-AUG-2017
01-SEP-2017
08-SEP-2017
15-SEP-2017
22-SEP-2017
29-SEP-2017
06-OCT-2017
13-OCT-2017
85,394
323,100
220,072
(18,502)
(390,296)
(439,042)
(258,229)
(52,243)
20-OCT-2017
(102,764)
27-OCT-2017
31-OCT-2017
03-NOV-2017
177,336
166,007
155,691
10-NOV-2017
(50,981)
0.00
0.00
0.01
0.01
0.00
(0.02)
(0.02)
(0.01)
0.00
0.00
0.01
0.01
0.01
0.00
23,162,223
23,247,617
23,570,717
23,790,789
23,772,287
23,381,991
22,942,949
22,684,720
22,632,477
22,529,713
22,707,049
22,873,056
23,028,747
22,977,766
17-NOV-2017
(240,754)
(0.01)
22,737,012
24-NOV-2017
01-DEC-2017
08-DEC-2017
15-DEC-2017
(62,628)
(68,231)
54,726
82,429
0.00
0.00
0.00
0.00
22,674,384
22,606,153
22,660,879
22,743,308
22-DEC-2017
(130,223)
(0.01)
22,613,085
29-DEC-2017
(61,522)
05-JAN-2018
12-JAN-2018
19-JAN-2018
26-JAN-2018
02-FEB-2018
208,156
117,441
(556,086)
(106,690)
602,300
0.00
0.01
0.01
22,551,563
22,759,719
22,877,160
(0.02)
22,321,074
0.00
0.02
22,214,384
22,816,684
09-FEB-2018
(129,419)
(0.01)
22,687,265
16-FEB-2018
23-FEB-2018
02-MAR-2018
09-MAR-2018
(77,323)
73,916
764,524
156,083
0.00
0.00
0.03
0.01
22,609,942
22,683,858
23,448,382
23,604,465
0.87
0.90
0.91
0.89
0.87
0.86
0.89
0.89
0.89
0.89
0.89
0.91
0.90
0.90
0.90
0.91
0.92
0.92
0.91
0.89
0.88
0.88
0.87
0.88
0.88
0.89
0.89
0.88
0.88
0.87
0.88
0.88
0.87
0.87
0.88
0.88
0.86
0.86
0.88
0.88
0.87
0.88
0.90
0.91
HDFC Bank Limited Annual Report 2017-18
59
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
9
ICICI Prudential Balanced Advantage
Fund
Increase
Increase
Increase
16-MAR-2018
23-MAR-2018
30-MAR-2018
At the END of the Year
31-MAR-2018
79,354
731,626
657,021
-
0.00
0.03
0.03
23,683,819
24,415,445
25,072,466
-
25,072,466
At the beginning of the Year
31-MAR-2017
29,700,967
1.16
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Decrease
Increase
Increase
Increase
07-APR-2017
(705,796)
(0.03)
28,995,171
14-APR-2017
21-APR-2017
(16,435)
(83,910)
28-APR-2017
(403,146)
05-MAY-2017
(374,481)
0.00
0.00
(0.02)
(0.02)
28,978,736
28,894,826
28,491,680
28,117,199
12-MAY-2017
61,599
0.00
28,178,798
19-MAY-2017
(859,558)
26-MAY-2017
(389,892)
02-JUN-2017
09-JUN-2017
16-JUN-2017
(498,496)
(733,554)
195,489
(0.03)
(0.02)
(0.02)
(0.03)
27,319,240
26,929,348
26,430,852
25,697,298
0.01
25,892,787
23-JUN-2017
(202,518)
(0.01)
25,690,269
30-JUN-2017
07-JUL-2017
14-JUL-2017
17-JUL-2017
21-JUL-2017
(11,038)
(905,836)
(471,906)
217,383
(75,313)
28-JUL-2017
(523,527)
04-AUG-2017
(648,357)
11-AUG-2017
(296,657)
0.00
25,679,231
(0.04)
(0.02)
0.01
0.00
(0.02)
(0.03)
(0.01)
24,773,395
24,301,489
24,518,872
24,443,559
23,920,032
23,271,675
22,975,018
18-AUG-2017
(10,190)
0.00
22,964,828
25-AUG-2017
(761,447)
01-SEP-2017
(303,941)
08-SEP-2017
15-SEP-2017
22-SEP-2017
29-SEP-2017
06-OCT-2017
13-OCT-2017
20-OCT-2017
(83,896)
(131,702)
(398,720)
(33,836)
(88,207)
175,208
(2,281)
27-OCT-2017
1,064,247
31-OCT-2017
1,664,956
03-NOV-2017
10-NOV-2017
17-NOV-2017
367,903
974,895
888,721
(0.03)
(0.01)
22,203,381
21,899,440
0.00
21,815,544
(0.01)
(0.02)
0.00
0.00
0.01
0.00
0.04
0.06
0.01
0.04
0.03
21,683,842
21,285,122
21,251,286
21,163,079
21,338,287
21,336,006
22,400,253
24,065,209
24,433,112
25,408,007
26,296,728
24-NOV-2017
(418,363)
(0.02)
25,878,365
01-DEC-2017
08-DEC-2017
15-DEC-2017
82,137
586,157
213,925
0.00
0.02
0.01
25,960,502
26,546,659
26,760,584
0.91
0.94
0.97
0.97
1.13
1.13
1.13
1.11
1.10
1.10
1.07
1.05
1.03
1.00
1.01
1.00
1.00
0.96
0.94
0.95
0.95
0.93
0.90
0.89
0.89
0.86
0.85
0.85
0.84
0.83
0.82
0.82
0.83
0.83
0.87
0.93
0.95
0.98
1.02
1.00
1.00
1.03
1.03
HDFC Bank Limited Annual Report 2017-18
60
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
10 Aditya Birla Sun Life Trustee Private
Limited A/C Aditya Birla Sun Life
Frontline Equity Fund
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Increase
Increase
Increase
Decrease
Increase
Decrease
Decrease
Decrease
Increase
22-DEC-2017
(965,932)
29-DEC-2017
(90,811)
05-JAN-2018
(369,638)
12-JAN-2018
19-JAN-2018
26-JAN-2018
02-FEB-2018
09-FEB-2018
16-FEB-2018
636,817
(538,553)
(746,219)
648,691
107,041
37,712
(0.04)
(0.00)
(0.01)
25,794,652
25,703,841
25,334,203
0.03
25,971,020
(0.02)
(0.03)
0.03
0.00
0.00
25,432,467
24,686,248
25,334,939
25,441,980
25,479,692
23-FEB-2018
(354,946)
(0.01)
25,124,746
02-MAR-2018
172,816
0.01
25,297,562
09-MAR-2018
(1,339,691)
16-MAR-2018
(869,127)
23-MAR-2018
(631,212)
(0.05)
(0.03)
(0.02)
23,957,871
23,088,744
22,457,532
30-MAR-2018
274,417
0.01
22,731,949
At the END of the Year
31-MAR-2018
-
-
22,731,949
At the beginning of the Year
31-MAR-2017
12,774,852
Increase
Increase
Decrease
Decrease
Decrease
Increase
Increase
Increase
Decrease
Increase
Increase
Decrease
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Increase
Decrease
28-APR-2017
441,995
05-MAY-2017
1,147,500
0.50
0.02
0.05
13,216,847
14,364,347
12-MAY-2017
(190,000)
(0.01)
14,174,347
19-MAY-2017
26-MAY-2017
02-JUN-2017
16-JUN-2017
23-JUN-2017
(15,000)
(57,342)
103,266
75,000
28,143
30-JUN-2017
(30,000)
28-JUL-2017
04-AUG-2017
11-AUG-2017
18-AUG-2017
25-AUG-2017
01-SEP-2017
08-SEP-2017
15-SEP-2017
964,524
558,572
(650)
3,061
84,547
50,381
496,822
779,400
22-SEP-2017
1,046,187
29-SEP-2017
1,205,878
06-OCT-2017
13-OCT-2017
20-OCT-2017
27-OCT-2017
31-OCT-2017
224,500
(20,500)
(20,000)
65,790
995,000
0.00
0.00
0.00
0.00
0.00
0.00
0.04
0.02
0.00
0.00
0.00
0.00
0.02
0.03
0.04
0.05
0.01
0.00
0.00
0.00
0.04
14,159,347
14,102,005
14,205,271
14,280,271
14,308,414
14,278,414
15,242,938
15,801,510
15,800,860
15,803,921
15,888,468
15,938,849
16,435,671
17,215,071
18,261,258
19,467,136
19,691,636
19,671,136
19,651,136
19,716,926
20,711,926
10-NOV-2017
(231,000)
(0.01)
20,480,926
17-NOV-2017
01-DEC-2017
4,803
(265)
0.00
0.00
20,485,729
20,485,464
1.00
0.99
0.98
1.00
0.98
0.95
0.98
0.98
0.98
0.97
0.98
0.92
0.89
0.87
0.88
0.88
0.52
0.56
0.55
0.55
0.55
0.55
0.56
0.56
0.56
0.59
0.61
0.61
0.61
0.62
0.62
0.64
0.67
0.71
0.75
0.76
0.76
0.76
0.76
0.80
0.79
0.79
0.79
HDFC Bank Limited Annual Report 2017-18
61
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding
during the year
No. of
shares
Percentage of
total shares
Decrease
Decrease
Decrease
Decrease
Increase
Increase
Increase
Decrease
Decrease
Increase
Increase
Decrease
Decrease
Decrease
15-DEC-2017
29-DEC-2017
05-JAN-2018
(49,257)
(80,280)
(34,000)
0.00
0.00
0.00
20,436,207
20,355,927
20,321,927
12-JAN-2018
(150,177)
(0.01)
20,171,750
19-JAN-2018
26-JAN-2018
02-FEB-2018
09-FEB-2018
16-FEB-2018
02-MAR-2018
09-MAR-2018
562
554,600
378,900
(1,715)
(46,082)
265,231
135,660
0.00
0.02
0.02
0.00
0.00
0.01
0.01
20,172,312
20,726,912
21,105,812
21,104,097
21,058,015
21,323,246
21,458,906
16-MAR-2018
(252,218)
(0.01)
21,206,688
23-MAR-2018
30-MAR-2018
(11,842)
(61,655)
0.00
0.00
21,194,846
21,133,191
-
21,133,191
0.79
0.79
0.79
0.78
0.78
0.80
0.81
0.81
0.81
0.82
0.83
0.82
0.82
0.81
0.81
At the END of the Year
31-MAR-2018
-
*** 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
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding during
the year
No. of
shares
Percentage of
total shares
1
Aditya Puri
At the beginning of the Year
31-MAR-2017
Decrease
Increase
At the END of the Year
29-DEC-2017
26-JAN-2018
31-MAR-2018
2
Bobby Kanubhai Parikh
At the beginning of the Year
31-MAR-2017
Increase $
Increase $
At the END of the Year
12-MAY-2017
29-SEP-2017
31-MAR-2018
Jointly With Relatives
At the beginning of the Year
31-MAR-2017
At the END of the Year
31-MAR-2018
3
Kaizad Maneck Bharucha
At the beginning of the Year
31-MAR-2017
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
At the END of the Year
23-JUN-2017
28-JUL-2017
01-SEP-2017
15-SEP-2017
27-OCT-2017
02-FEB-2018
23-MAR-2018
31-MAR-2018
Jointly With Relatives
At the beginning of the Year
31-MAR-2017
At the END of the Year
31-MAR-2018
3,441,544
(100,000)
225,000
-
6,263
950
445
-
3,538
-
938,051
(10,000)
(10,000)
22,000
(20,000)
20,000
(10,000)
20,000
-
500
-
0.13
0.00
0.01
3,341,544
3,566,544
-
3,566,544
0.00
0.00
0.00
-
0.00
-
0.04
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-
0.00
-
7,213
7,658
7,658
3,538
928,051
918,051
940,051
920,051
940,051
930,051
950,051
950,051
500
0.13
0.14
0.14
0.00
0.00
0.00
0.00
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.04
0.00
HDFC Bank Limited Annual Report 2017-18
62
Directors' Report
Name
Sl.
No.
Remarks
Date ***
Shareholding at the
beginning of the year
No. of
shares
Percentage of
total shares
Cumulative shareholding during
the year
No. of
shares
Percentage of
total shares
4
Keki Minoo Mistry
At the beginning of the Year
31-MAR-2017
291,915
Jointly With Relatives
At the beginning of the Year
31-MAR-2017
At the END of the Year
31-MAR-2018
At the END of the Year
31-MAR-2018
-
4,215
-
5
Paresh D Sukthankar
At the beginning of the Year
31-MAR-2017
811,155
Decrease
Decrease
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
Increase
19-MAY-2017
16-JUN-2017
23-JUN-2017
30-JUN-2017
04-AUG-2017
11-AUG-2017
(15,000)
(15,000)
(15,000)
17,500
(7,000)
(8,000)
15-SEP-2017
(10,000)
22-SEP-2017
29-SEP-2017
22-DEC-2017
(8,000)
(2,000)
20,000
29-DEC-2017
(40,000)
26-JAN-2018
69,000
02-FEB-2018
(19,000)
23-FEB-2018
23-MAR-2018
25,000
20,000
-
3,250
-
651,594
(24,000)
46,000
-
Jointly With Relatives
At the beginning of the Year
31-MAR-2017
At the END of the Year
31-MAR-2018
At the END of the Year
31-MAR-2018
6
Sashidhar Jagdishan
At the beginning of the Year
31-MAR-2017
Decrease
Increase
29-DEC-2017
26-JAN-2018
At the END of the Year
31-MAR-2018
7
Sanjay Dongre
At the beginning of the Year
31-MAR-2017
130,750
Decrease
Increase
Decrease
Decrease
Decrease
Decrease
15-DEC-2017
22-DEC-2017
29-DEC-2017
30-DEC-2017
26-JAN-2018
02-FEB-2018
At the END of the Year
31-MAR-2018
(1,000)
65,000
(2,500)
(1,000)
(15,886)
(9,114)
-
0.01
-
0.00
-
0.03
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
-
0.00
-
0.03
0.00
0.00
-
0.01
0.00
0.00
0.00
0.00
0.00
0.00
-
291,915
4,215
4,215
796,155
781,155
766,155
783,655
776,655
768,655
758,655
750,655
748,655
768,655
728,655
797,655
778,655
803,655
823,655
823,655
3,250
627,594
673,594
673,594
129,750
194,750
192,250
191,250
175,364
166,250
166,250
0.01
0.00
0.00
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.00
0.02
0.03
0.03
0.01
0.01
0.01
0.01
0.01
0.01
0.01
*** 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
$ Market purchase
HDFC Bank Limited Annual Report 2017-18
63
Directors' Report
V. INDEBTEDNESS
Indebtedness of the Bank including interest outstanding / accrued but not due for payment:
(` crore)
Secured Loans
excluding
deposits (1)
Unsecured
Loans (2)
Deposits (3)
Total
Indebtedness
-
-
-
-
14,242.4
-
14,242.4
74,028.9
-
918.8
74,947.7
37,830.0
(2,075.0)
35,755.0
74,028.9
-
918.8
74,947.7
52,072.4
(2,075.0)
49,997.4
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)
123,105.0
-
1,840.1
124,945.1
(1) Secured borrowings represent borrowings under collateralized borrowing and lending obligations and transactions under liquidity
108,865.0
-
1,837.7
110,702.7
14,240.0
-
2.4
14,242.4
adjustment facility and marginal standing facility.
(2) Movement in long-term subordinated debt is shown on a gross basis.
(3) 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 preparation and presentation of the financial
statements of the Bank.
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
Paresh Sukthankar Kaizad Bharucha
(Deputy Managing
Director)
Aditya Puri
(Managing
Director)
(Executive
Director)
(`)
Total
Amount
72,655,583
42,136,068
34,533,068 149,324,719
18,254,678
7,777,620
6,681,521
32,713,819
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
314,122,500
-
-
206,087,825
-
-
78,095,100 598,305,425
-
-
-
-
- as per cent of profits
- others, specify
5 Others *
Total (A) **
Ceiling as per the Act^
5,589,360
96,499,621
3,097,223
53,010,911
2,125,680
10,812,263
43,340,269 192,850,801
^ 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 2017-18
64
Directors' Report
*
Includes Provident Fund and tax exempted portion of Superannuation.
** Does not include the value of the stock options exercised during the year.
*** This includes stock options granted and vested over several previous years, but exercised during the last financial 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
Particulars of Remuneration
Fees for attending
Board / committee
meetings
Commission#
Others
(`)
Total
Amount
2,350,000
-
3,123,662
5,473,662
1,950,000
1,000,000
2,250,000
1,000,000
4 Mr. A.N. Roy (resigned w.e.f. January 31, 2018)
1,950,000
1,000,000
5 Mr. Malay Patel
6 Mr. Umesh Chandra Sarangi
1,650,000
1,000,000
1,450,000
1,000,000
Sub total (i)
11,600,000
5,000,000
3,123,662
19,723,662
Other Non-Executive Directors
1 Mrs. Renu Karnad (resigned w.e.f. January 20, 2018)
1,400,000
1,000,000
2 Mr. Keki Mistry
3 Mr. Srikanth Nadhamuni
Sub total (ii)
Total (i+ii)
Ceiling as per the Act^
1,450,000
1,000,000
1,350,000
1,000,000
4,200,000
3,000,000
15,800,000
8,000,000
3,123,662
26,923,662
-
-
-
-
-
2,950,000
3,250,000
2,950,000
2,650,000
2,450,000
-
-
-
-
2,400,000
2,450,000
2,350,000
7,200,000
# Pursuant to RBI Guidelines on Compensation To Non-Executive Directors of Private Sector Banks dated June 1, 2015 and
the resolution passed by the shareholders at the 22nd Annual General Meeting of the Bank held on July 21, 2016, the non-
executive directors, including the independent directors, other than the Chairperson, were paid profit-related commission of
` 10,00,000/- each. The commission paid during FY 2017-18 pertains to the FY 2016-17.
Total Managerial Remuneration = (A)+(B) = ` 219,774,463
^ 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 2017-18
65
Directors' Report
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MANAGING DIRECTOR / WHOLE TIME DIRECTOR
(`)
/ MANAGER
Sr.
no.
Particulars of Remuneration
1 Gross salary
Key Managerial Personnel
Mr. Sanjay
Dongre
Mr. Sashidhar
Jagdishan
(Company
Secretary)
(Chief Financial
Officer)
Total
(a) Salary as per provisions contained in section 17(1) of
10,036,774
19,878,305
2,99,15,079
the Income-tax Act, 1961
(b) Value of perquisites u/s 17(2) of Income-tax Act, 1961
211,042
1,586,613
1,797,655
except stock options
(c) Profits in lieu of salary under section 17(3) of Income-tax
-
-
-
Act, 1961
2 Stock options exercised during the year***
73,370,700
64,153,900
137,524,600
3 Sweat Equity
4 Commission
- as percent of profits
- others, specify
5 Others*
Total**
-
-
-
-
-
-
339,312
519,588
858,900
10,587,128
21,984,506
32,571,634
* Includes Provident Fund and tax exempted portion of superannuation.
** Does not include the value of stock options exercised during the year.
*** This includes stock options granted and vested over several previous years, but exercised during the last financial 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 2017-18
66
Directors' Report
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HDFC Bank Limited Annual Report 2017-18
67
Directors' Report
ANNEXURE 5 to the Directors’ Report
Performance and financial position of subsidiaries and associates of the Bank as on March 31, 2018
(` crore)
Name of entity
Parent:
HDFC Bank Limited
Subsidiaries*:
Net assets
as of March 31, 2018
Profit or loss for the
year ended March 31, 2018
As % of
consolidated net
assets**
Amount***
As % of
consolidated
profit or loss
Amount***
96.99%
106,295.03
94.47%
17,486.75
1. HDFC Securities Limited
2. HDB Financial Services Limited
Minority Interest in all subsidiaries
0.91%
5.66%
0.33%
1,000.78
6,202.23
356.33
1.86%
5.14%
0.28%
344.42
952.00
51.34
*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, 2018
Share of profit or loss for the year
ended March 31, 2018
As % of
consolidated net
assets
Amount
As % of
consolidated
profit or loss
Amount
19.20%
Refer Note
0.003%
0.52
Associate*:
International Asset Reconstruction
Company Private Limited **
*The associate is a domestic entity
**During the year ended March 31, 2018, the Bank’s stake in IARC, hitherto at 29.4%, reduced to 19.2% due to further issue of equity shares
made by IARC in which the Bank did not participate. Accordingly, IARC ceased to be an associate company of the Bank with effect from March
9, 2018.
HDFC Bank Limited Annual Report 2017-18
68
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
209:1
118:1
98:1
a. We have considered fixed pay for the computation of ratios as the performance bonus for the previous year for Whole Time Directors is
subject to RBI approval.
b.
c.
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.
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
15.00
12.00
12.00
3.50
2.00
*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 median remuneration of employees in the financial year was 11.17 per cent.
4.
The number of permanent employees on the rolls of the Bank
As of March 31, 2018 the number of permanent employees on the rolls of the Bank was 88,253.
5.
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 : 8.90 per cent
The average percentage increase for Non Managerial Staff : 8.97 per cent
6.
Affirmation that the remuneration is as per the remuneration policy of the company: YES
HDFC Bank Limited Annual Report 2017-18
69
Directors' Report
ANNEXURE 7 to the Directors’ Report
Statement under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for
year ended March 31, 2018
Sr.
No.
Name of the
Employee
Designation
Date of
joining
the Bank
Qualifications
Age Exp.
Total (`)
Last Employment
Persons in service for the whole year and drawing emoluments more than ` 1,02,00,000/- per annum
Details of top ten employees in terms of remuneration drawn
1 Aditya Puri
Managing Director
12-Sep-94 B.Com, CA.
67 45.0 96,499,621 Citibank
2 Paresh Sukthankar
Deputy Managing
Director
1-Sep-94 B.Com, M.M.S, A.M.P (Harvard
55 32.9 53,010,911 Citibank
Business School)
3 Kaizad M. Bharucha
Executive Director
4-Oct-95 B.Com
53 32.3 43,340,269 SBI Commercial & Intl. Bank Ltd.
4 Abhay Aima
Group Head
2-Jan-95 Grad. from National Defence
56 31.2 26,269,979 INDSEC Securities & Finance Ltd.
Academy
5 Roli Jamthe*
Dy. Vice President
5-Apr-11 MBA, B.Sc, PGDSM
41 16.8 25,957,720 Royal Bank Of Scotland
6 Rakesh Singh
Group Head
11-Apr-11 MBA, B.Sc
49 25.0 23,747,990 Roth Child
7 Ashish Parthasarthy
Group Head
1-Nov-94 B.E, PGDM
50 28.8 22,878,088 INDSEC Investments Ltd.
8 Navin Puri
Group Head
1-Feb-99 B.Com, MBA, CA.
60 35.3 22,437,897 ANZ Grindlays Bank
9 Sashidhar Jagdishan
Group Head
5-Feb-96 B.Sc, ACA., M.A. (Economics)
53 28.6 21,984,506 Deutsche Bank
10 Bhavesh Zaveri
Group Head
13-Apr-98 M.Com, CAIIB
52 29.0 21,797,245 Barclays Bank
Persons in service for the whole year and drawing emoluments more than ` 1,02,00,000/- per annum, other than above
1 Abhishek Bhuwalka
Sr Vice President-I
10-Jun-99 MBA, CWA, B.Com
41 22.5 13,398,871 Matchless Packaging Industries (P) Ltd.
2 Aditya Dhananjai Kumat
Senior Manager
1-Jun-12 MBA, B.Tech
29 5.9 10,722,540 Fresher
3 Ajay Kumar Kapoor
Sr Exe Vice President 9-Oct-95 M.Sc.
54 32.1 13,420,136 Times Bank Ltd.
4 Ajit Cherian Kuruvilla
Sr Vice President-II
23-Aug-99 Diploma, CA, B.Com
51 24.7 12,090,266 Global Trust Bank
5 Akshat Lakhera
Sr Vice President-I
9-Sep-10 PGDM, B.Sc
41 16.7 16,766,987 BNP Paribas
6 Ameya Shekhar Shenoy
Sr Vice President-I
20-Mar-06 MBA, CA, B.Com
39 13.8 10,831,509 Tionale Enterprises Pvt Ltd
7 Amit Dayal
Exe. Vice President
19-Dec-94 B.Sc, DBM
51 26.9 17,054,750 SBI Commercial & Intl. Bank Ltd
8 Amit Prakash Kapadia
Dy. Vice President
6-Sep-06 PGDBM, M.Com
39 12.7 12,026,855 Citibank N A
9 Anand Dusane
Exe. Vice President
1-Jan-96 CAIIB, M.Com
46 25.3 10,311,744 State Bank Of Travancore
10 Anil L. Bhavnani
Exe. Vice President
16-Jun-03 CS, B.Com
45 23.9 12,213,324 CitiCorp Finance I Ltd.
11 Ankush Pitale
Exe. Vice President
28-Jul-14 MMS
46 22.4 11,797,299 Religare Capital Markets Pvt. Limited
12 Anupama Rajesh Munagekar Sr Vice President-I
14-Feb-07 LLB, B.Com
50 26.4 17,774,821 Strategic Capital Corporation Pvt Ltd
13 Arun Mohanty
Sr Exe Vice President 9-Nov-05 BA
60 35.6 16,789,065 Reserve Bank Of India
14 Arup Kumar Rakshit
Sr Exe Vice President 1-Aug-06 PGDM, BE
49 25.8 21,572,908 ABN Amro Bank
15 Arvind Kapil
Group Head
18-Dec-98 MMS, B.E
47 24.1 14,581,309 GE Countrywide Consumer Financial
Services Ltd.
16 Ashima Khanna Bhat
Group Head
7-Nov-94 B. Bus, MMS
47 25.3 16,181,625 A F Ferguson & Co
17 Ashok Khanna
Group Head
19-Jun-02 MA
61 36.8 16,534,435 Centurion Bank
18 Ashtosh Raina
Sr Vice President-I
3-Sep-07 CAIIB, B.Sc.
50 27.5 12,601,001 State Bank Of India
19 Atul Sadashiv Barve
Sr Exe Vice President 28-Feb-07 MMS, MA, B.Sc
55 33.6 11,562,195 IDBI Ltd
20 Bardan Sharma
Sr Vice President-II
23-Nov-11 Master's Degree / Dip, B.Com
44 18.5 10,402,830 Diageo India Pvt Ltd
HDFC Bank Limited Annual Report 2017-18
70
Directors' Report
Sr.
No.
Name of the
Employee
Designation
Date of
joining
the Bank
Qualifications
Age Exp.
Total (`)
Last Employment
21 Beena Shah
Dy. Vice President
26-May-15 MBA, B.Com
40 14.0 17,122,400 Kotak Mahindra Bank
22 Benjamin Frank
Sr Exe Vice President 5-Apr-04 MBA, B.Sc
54 31.9 13,763,821 IDBI Bank Ltd.
23 Benson Benadict
Dy. Vice President
27-Nov-13 MBA, B.Tech
39 13.5 12,282,119 Standard Chartered Bank
24 Bharat Badhwar
Sr Vice President-II
28-Sep-02 BA
45 23.7 10,285,665 Bharti Telenet Ltd
25 Bhaskar C. Panda
Sr Vice President-II
21-Nov-97 BA
56 32.7 15,972,742 Times Bank Ltd.
26 Charmaine Pereira
Sr Vice President-II
1-Nov-94 DBM, BA
45 23.4 14,146,458 Fresher
27 Cheshta Chopra Sharma
Vice President
22-Aug-00 PGDBA, BA
45 18.7 10,274,140 N S E of India Ltd
28 Debajeet Das
Exe. Vice President
6-Aug-96 MA
46 22.6 18,214,557 Texport syndicate
29 Deepak Kumar Mohanty
Sr Exe Vice President 24-Dec-03 M.Sc, MBA
55 24.6 10,593,359 ICICI Bank Ltd
30 Dolreich D'Mello*
Dy. Vice President
9-Jan-97 B.Com
42 21.5 11,998,920 ANZ Grindlays Bank
31 Fayaz Ainodin Patel*
Asst. Vice President
2-Aug-10 MBA, B.Com
39 11.3 11,613,706 Sharekhan Ltd
32 Gourab Roy
Exe. Vice President
1-Mar-96 M.Com
51 25.2 11,881,467 UTI Bank Ltd
33 Harrish Mahadevan
Dy. Vice President
6-Apr-11 BCA
34 13.1 14,533,128 Citibank
34 Harsh S Gupta*
Sr Vice President-II
4-Sep-00 PGDBA, B.Sc
42 20.1 18,385,111 ICICI Cap Ltd
35 Jay Prakash Chandrashekar* Dy. Vice President
5-Jul-04 MBA, B.Com
40 16.8 14,565,480 Global Trust Bank
36 Jay Sonawala
Sr Vice President-II
12-Aug-99 MMS, B.Com
42 18.6 13,104,168 Fresher
37 Jimmy Tata
Group Head
15-Dec-94 B.Com., M.F.M., CFA
52 30.2 19,601,483 Apple Industries Ltd.
38 K. Manohara Raj
Sr Exe Vice President 6-Dec-96 CAIIB, B.Com
60 38.1 12,062,687 Times Bank Ltd.
39 Kapil Bansal
Sr Vice President-I
30-Sep-04 PGPM, B.Com
40 18.8 12,907,772 ICICI Bank Ltd.
40 Kartik Hirachand Nagda
Sr Vice President-II
29-Nov-04 MBA, B.Sc
42 16.4 10,507,796 GE Countrywide Consumer Financial
Services Ltd
41 Kinjul Sharma*
Asst. Vice President
22-Sep-08 Master's Degree/Dip, B.Com
37 13.1 10,933,376 Citifinancial
42 Madhusoodan Hegde
Sr Exe Vice President 11-Feb-97 CAIIB, B.Sc.
57 33.3 12,775,234 Times Bank Ltd.
43 Mahesh Kumar Jugal
Sr Vice President-I
11-Jun-05 LLB, CS, CA, B.Com
41 16.1 10,913,216 UTI Bank Ltd
Kishoretaparia
44 Maheswara P Reddy
Sr Vice President-II
6-May-02 MBA, BA
47 22.2 14,269,272 American Express Bank
45 Manu Joseph*
Dy. Vice President
13-Nov-11 MMS, BE
41 15.6 13,550,155 Citibank
46 Mathew Varghese*
Asst. Vice President
15-Jul-10 MMS, BE
39 15.9 10,353,503 Citibank
47 Mayuresh Vasant Apte
Sr Vice President-II
6-Nov-00 MMS, B.Tech
49 24.8 11,770,418 Centurion Bank Ltd
48 Meghna Atul Vaidya
Sr Vice President-II
1-Aug-08 MMS, B.Com
44 20.8 10,502,253 Barclays Bank PLC
49 Mohammed Hannan Abdul * Asst. Vice President
1-Jul-09 MBA, B.Sc
39 15.3 16,130,352 Barclays Bank PLC
50 Mohammed Mansoor Azher* Dy. Vice President
10-Feb-03 MBA, B.Com
39 15.2 10,727,031 Fresher
51 Munish Mittal
Group Head
17-Aug-96 PGDM, B.Sc.
50 30.7 14,632,802 Bank Of Punjab
52 N. Srinivasan
Sr Exe Vice President 11-Nov-96 CA, CWA, CS., B.Com
50 27.7 12,959,878 Credential Finance
53 Neil Percy Francisco
Group Head
20-May-02 MBA, M.Sc, BE
56 27.3 13,235,464 Standard Chartered bank
54 Niloy Dey
Dy. Vice President
1-Apr-05 CFA, MBA, B.Com
42 14.1 12,024,702 ING Vysya Financial Services Ltd
55 Nirav Shah
Group Head
15-Jul-99 MMS, B.Com
46 22.8 21,542,762 Global Trust Bank
56 Nitin Chugh
Group Head
16-Apr-01 PGDM, B.Tech
47 23.1 17,064,842 Standard Chartered Bank
HDFC Bank Limited Annual Report 2017-18
71
Directors' Report
Sr.
No.
Name of the
Employee
Designation
Date of
joining
the Bank
Qualifications
Age Exp.
Total (`)
Last Employment
57 Nitish Nagori
Exe. Vice President
1-Jun-10 PG Diploma, B.Sc
47 15.2 11,028,563 ICICI Bank Ltd
58 Pallava Rathore*
Vice President
27-Jun-08 B.Sc
42 17.2 15,826,571 IDBI Bank Ltd
59 Parag Rao
Group Head
15-Apr-02 MMS, B.E.
53 28.6 14,791,387 IBM Global Services
60 Payal Mandhyan*
Vice President
18-Jan-05 PGDBM
40 14.5 18,761,708 India Bulls Securities Ltd.
61 Philip Mathew
Group Head
3-Apr-02 MA, B.Sc.
55 28.6 12,107,445 SSKI Investor Services
62 Pranav Bharat Shah
Dy. Vice President
21-Jul-11 PGDBM, B.Com
37 11.8 11,294,161 Citibank N A
63 Pratap Luthra
Dy. Vice President
13-Aug-05 MBA, BA
36 15.1 13,747,206 ABN Amro Bank Ltd
64 Prem Chand
Exe. Vice President
13-Aug-07 BA
59 40.5 10,206,461 UTI Bank Ltd
65 Pushkar Raghavan Surendran Dy. Vice President
11-Jan-11 MBA, B.Com
39 15.4 13,965,721 HSBC
66 Rahul Bhandari*
Vice President
5-Feb-02 PGDBM, B.Com
40 16.2 13,901,833 Fresher
67 Rajeev Sengupta
Sr Exe Vice President 21-Sep-07 PG (Gen Mgmt), BE
57 34.7 11,291,157 Hutchison Essar Ltd
68 Rajeev Wariar*
Vice President
15-Apr-10 PGDBA, BE
43 18.8 15,677,840 Citi Bank
69 Rajesh Kumar Rathanchand Group Head
22-May-00 PGDM, B.Sc.
47 28.7 13,937,695 Trans America Apple Finance Ltd.
70 Rajesh Sharma
Sr Vice President-II
15-Nov-00 CA, CS, B.Com
42 23.6 12,661,663 LCC Infotech Ltd
71 Rajinder Babbar
Exe. Vice President
16-Jan-01 LLB, B.Sc
51 30.5 14,707,546 Centurion Bank Ltd
72 Rashmi Singh
Dy. Vice President
29-Mar-10 MBA, B.Sc
34 10.1 11,528,932 Religare Macquarie Wealth
Management Ltd
73 Raveesh Kumar Bhatia
Sr Exe Vice President 3-May-10 PGDM, B.Com
52 27.4 14,762,920 Fore Consultants Pvt Ltd
74 Ravi Narayan
Group Head
3-May-99 MBA, B.Tech
49 24.8 15,004,158 Bank Of America
75 Ravi Santhanam
Exe. Vice President
1-Mar-17 PG Diploma, BE
48 25.0 13,881,196 Vodafone India
76 Ravi Ssn
77 Reji John*
Sr Vice President-II
26-Nov-10 B.Com
50 25.3 11,987,760 Deutsche Bank
Senior Manager
30-Aug-10 PG Diploma, MA
37 13.7 11,571,927 Aviva India Life Insurance Co Ltd
78 Resham A. Mahtani
Sr Vice President-I
1-May-01 PGPIM, PGDBM, BA
42 19.9 13,207,273 Mecklai Financial & Commercial
Services Ltd.
79 Rheetu Karthik*
Vice President
15-Mar-05 MBA, MA
47 19.5 12,257,331 MetLife India Insurance Co Ltd
80 Ritesh Sampat
Sr Vice President-II
3-Jan-12 CA, B.Com
42 17.9 16,996,885 Standard Chartered Bank
81 Roopesh H. Patil
Sr Vice President-I
28-Feb-00 MBA, B.Com
44 22.2 14,980,550 Dalal & Broacha Stock Broking Pvt Ltd
82 Samrat Bose
Sr Vice President-II
17-May-02 Master's Degree/Dip - Others,
42 18.0 15,030,397 Parasmoney Investments
B.Com
83 Sanjay Dongre
Exe. Vice President
2-May-95 B.Com, ACS, CWAINT, LLB.
60 35.8 10,587,128 Boehringer Mannheim Ltd.
84 Sanjay K.Singla
Sr Vice President-II
10-Nov-07 PGDM, B.Com
59 36.3 14,703,083 State Bank of India
85 Sanmoy Chakrabarti
Sr Exe Vice President 15-Jun-10 MS, B.Sc
43 19.2 14,491,077 Bank Danamon
86 Saroj Kumar Swain
Sr Vice President-I
25-Aug-04 MBA, B.Com
41 16.8 14,882,797 Jaquar& Co Ltd
87 Sathyamurthy Sampath Kumar Sr Exe Vice President 7-Aug-00 B.Com
46 27.6 15,987,458 Integrated Finance Co. Ltd.
88 Satish Chandra
Sr Vice President-I
16-Dec-04 B.Com
51 28.4 10,415,407 Global Trust Bank (Merged into Oriental
Bank of Commerce)
89 Sharad Kourani*
Senior Manager
10-Aug-08 B.Com
39 21.8 13,732,483 HDFC Bank Ltd
90 Sharad Rungta
Sr Vice President-II
2-Jun-12 CFA, CA, B.Com
41 17.4 18,726,875 Credit Suisse AG
91 Sharad Vijay Goenka
Sr Vice President-I
27-Jan-11 CA, B.Com
39 15.3 10,821,247 HSBC
HDFC Bank Limited Annual Report 2017-18
72
Directors' Report
Sr.
No.
Name of the
Employee
Designation
Date of
joining
the Bank
Qualifications
Age Exp.
Total (`)
Last Employment
92 Sheetal Garg
Dy. Vice President
5-Sep-11 MMS, B.Com
39 12.7 10,269,397 DBS Bank Ltd
93 Sheetal Kapadia*
Dy. Vice President
6-May-09 PGDMS, B.Com
41 18.0 14,466,555 ICICI Bank Ltd
94 Silvestre Anthony Pereira
Vice President
15-Sep-06 MBA, PG Diploma, B.Com
40 15.8 12,013,317 UTI Bank Ltd
95 Sitanshu Mitra
Sr Exe Vice President 1-Sep-95 MBA, B.Sc
50 30.2 10,247,031 ABN Amro Bank Ltd.
96 Smita Bhagat
Group Head
12-Jul-99 M.Com, MBA
53 29.8 12,192,885 PDCOR Ltd.
97 Steven Noronha*
Dy. Vice President
19-Jul-11 B.Com
42 10.8 10,953,694 Al Maha Financial Services Ltd
98 Sudesh Puthran
Exe. Vice President
28-Dec-15 Master's Degree/Dip-Others, BE 49 25.3 13,214,215 CIBIL
99 Sukarm Bali*
Sr Vice President-I
23-Jul-99 CA, B.Com
51 25.9 16,225,128 Times Bank Ltd.
100 Sumant Rampal
Exe. Vice President
10-Aug-99 MBA, B.Com
43 20.8 13,099,459 Walchand Capital Ltd.
101 Sundaresan M.
Exe. Vice President
2-May-02 BE (Mechanical), PSG, MBA
47 24.0 10,809,507 GE Countrywide Consumer Financial
Services Ltd.
102 Umashankar Gopalan*
Dy. Vice President
13-Dec-12 B.Com
50 24.0 18,622,028 ICICI Bank
103 V S Unnikrishnan*
Vice President
12-Apr-03 MBA, B.Sc, PUC
43 20.2 12,889,601 Global Trust Bank Ltd
104 V. Chakrapani
Group Head
24-Nov-94 B.Com, CAIIB, ACS
54 33.9 16,857,723 Standard Chartered Bank
105 Veeresh Hiremath*
Asst. Vice President
28-Apr-08 B.Com
37 12.0 11,854,058 RAK Bank
106 Vijay Krishna Mulbagal
Exe. Vice President
2-Jan-07 PGPM, B.Sc
47 23.1 14,569,441 Diamond Management & Technology
Consultants
107 Vikas Rathore
Dy. Vice President
16-Jun-08 MMS, B.Tech
34 9.9 16,890,785 Fresher
108 Vitthal Mangesh Kulkarni
Sr Vice President-II
22-Sep-07 M.Sc, BE
47 24.1 11,863,078 Barclays Capital
Employed for part of the year
109 Aseem Dhru
Group Head
2-May-15 CA,CWA, B.Com
48 22.5 11,613,839 HDFC Securities Ltd
110 Deepak Dnyandeo Koyande
Vice President
27-Sep-10 LLB, M.Com
61 36.7 5,985,949 SPA Securities Ltd
111 Deepam Sanghi
Sr Vice President-II
10-Jul-17 PGDBM, B.Tech
43 20.9 8,987,922 Rothschild (India) Private Limited
112 Govind Pandey
Sr Exe Vice President 5-Aug-98 M.Sc
61 35.3 4,547,115 State Bank of Saurashtra
113 K Balasubramanian
Group Head
3-May-16 CA, ICWA, B.Com
47 21.6 15,985,965 Citibank
114 Nishikant Das
Exe. Vice President
23-Apr-12 PGDM, B.Tech
46 20.0 18,318,036 Standard Chartered Bank
115 Nitin Subramanya Rao
Group Head
25-Jul-02 BE, MBA
51 27.0 17,838,796 BNP Paribas
116 Rahul Shukla
Group Head
1-Mar-18 MBA, B.Tech
49 26.2 1,620,891 Citibank NA
117 Rajender Sehgal
Group Head
23-Feb-98 B.Sc., MBA
63 40.4 4,543,755 Times Bank Ltd.
118 Sonit Singh
Sr Vice President-I
5-Mar-18 PG Diploma, MBA, B.Com
40 14.2
757,587 Standard Chartered Bank
119 Unmesh Sharma
Sr Vice President-I
4-Dec-17 CFA, MBA, BE
38 14.4 3,395,109 Macquarie Capital Securities
120 Vivek Nigam
Sr Vice President-II
3-Apr-17 MBA, B.Tech
49 27.0 10,739,975 ICICI BANK
Notes:
1. Remuneration shown above includes basic salary, allowances, performance bonus, cash allowances in lieu of perquisites or taxable value of perquisites, if availed as
computed as per Income-tax rules but excludes gratuity, PF settlement, super annuation settlement, perquisite on ESOP & super annuation perquisite
2. All appointments are terminable by one / three months’ notice as the case may be on either side.
3. The above list does not include Employees sent on Deputation whose salary is reimbursed by the other company.
4. *Employee in overseas location.
5. None of the employees listed above hold 2% or more of the paid-up share capital of the Bank as at March 31, 2018.
6. Other than Mr. Aditya Puri, Managing Director who holds 0.14% of the paid up share capital of the Bank, the shareholding of the employees listed above does not
exceed 0.05% of the paid up share capital of the Bank as at March 31, 2018.
7. None of the employees listed above is a relative of any director of the Bank.
HDFC Bank Limited Annual Report 2017-18
73
Directors' Report
ANNEXURE 8 to the Directors’ Report
Form No. MR-3
SECRETARIAL AUDIT REPORT
For the financial year ended 31st March 2018
[Pursuant to section 204 (1) of the Companies Act, 2013 and Rule No.9 of the Companies
(Appointment and Remuneration of Managerial 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 from
01st April 2017 to 31st March 2018 (‘the audit period’). 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 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,
we hereby report that in our opinion, the Bank has, during the audit period 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, 2018 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 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 thereunder to the extent of Overseas Direct
Investment and External Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992:
(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 except that SEBI has vide
its Directions dated 23rd February,2018 came to prima facie inference that the Unpublished Price Sensitive Information
relating to financials of the Bank for the first quarter of 2017-18 was leaked due to inadequacy of the processes, controls,
systems put in place by the Bank to prohibit Insider Trading and hence, inter alia, directed the Bank to strengthen the
same so that the same do not recur in the future and to conduct an internal inquiry into the said leakage and take action
against those responsible for the same;
(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(f)
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;
(g) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015;
(h) The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992;
(i)
(j)
The Securities and Exchange Board of India (Bankers to an Issue) Regulation, 1994;
The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014;
(k) The Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996.
(vi) The Banking Regulation Act, 1949 as specifically applicable to the Bank.
HDFC Bank Limited Annual Report 2017-18
74
Directors' Report
We have also examined compliance with the applicable clauses of the Secretarial Standards issued by The Institute of Company
Secretaries of India related to Board meetings and General Meetings;
During the period under review, the Bank has 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 (Delisting of Equity Shares) Regulations, 2009;
(ii) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
(iii) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct
Investment;
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 sent at least seven days in advance and where the same were
given at shorter notice than 7 (seven) days, proper consent thereof were obtained 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 following specific events:
a)
b)
c)
d)
The Bank has issued and allotted on May 12, 2017 on a private placement basis 8.85% Unsecured, Subordinated, Fully
Paid-Up, Non-Convertible, Basel III compliant, Perpetual Debt Instruments in the nature of debentures for inclusion in Additional
Tier I Capital amounting to ` 8,000 Crores (80000 Bonds of face value ` 10,00,000/- each.
The Bank has issued and allotted on June 29, 2017 on a private placement basis 7.56% Unsecured, Subordinated, Fully
Paid-Up, Non-Convertible, Basel III compliant, Tier 2 Bonds for inclusion in Tier 2 Capital for capital adequacy purpose
amounting to ` 2,000 Crores (20000 Bonds of face value ` 10,00,000/- each.
The Bank has obtained the consent of the members on July 24, 2017 for borrowing/raising funds in Indian currency by issue of
perpetual Debt Instruments (parts of Additional Tier I capital), Tier II Capital Bonds and Senior Long Term Infrastructure Bonds
in domestic market on a private placement basis in one or more tranches of an amount not exceeding Rs 50,000 crore.
The Bank has obtained the consent of the Members at Extraordinary General Meeting dated January 19, 2018 to raise
additional funds aggregating up to ` 24,000 Crores, of which such number of Equity Shares aggregating upto ` 8,500 Crores
by way of preferential issue of equity shares of face value of ` 2/- each are proposed to be issued to Housing Development
Finance Corporation Limited (the Bank’s promoters) and the balance shall be through the issuance of equity shares / convertible
securities / depository receipts pursuant to a Qualified Institutions Placement (QIP) / American Depository Receipts (ADR) /
Global Depository Receipt (GDR) program.
e)
The Bank has issued INR 23 billion rupee denominated bonds on 15th March, 2018, which are in the nature of external
commercial borrowings and the Reserve Bank of India approval received for the same.
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.: 1303
C P No.: 10440
Place: Mumbai
Date: May 22, 2018
Note: This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.
HDFC Bank Limited Annual Report 2017-18
75
Directors' Report
To
The Members
HDFC Bank Limited
HDFC Bank House,
Senapati Bapat Marg,
Lower Parel (West),
Mumbai - 400 013
Annexure A
Secretarial Audit Report of even date is to be read along with this letter.
1. The compliance of provisions of all laws, rules, regulations, standards applicable to HDFC Bank Limited (hereinafter called
‘the Bank’) is the responsibility of the management of the Bank. Our examination was limited to the verification of records and
procedures on test check basis for the purpose of issue of the Secretarial Audit Report.
2. Maintenance of secretarial and other records of applicable laws is the responsibility of the management of the Bank. Our
responsibility is to issue Secretarial Audit Report, based on the audit of the relevant records maintained and furnished to us by
the Bank, along with explanations where so required.
3. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of
the contents of the secretarial and other legal records, legal compliance mechanism and corporate conduct. The verification was
done on test check basis to ensure that correct facts as reflected in secretarial and other records produced to us. We believe that
the processes and practices we followed, provides a reasonable basis for our opinion for the purpose of issue of the Secretarial
Audit Report.
4. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Bank.
5. Wherever required, we have obtained the management representation about list of applicable laws, compliance of laws, rules and
regulations and major events during the audit period.
6. The Secretarial Audit Report is neither an assurance as to the future viability of the Bank nor of the efficacy or effectiveness with
which the management has conducted the affairs of the Bank.
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.: 1303
C P No.: 10440
Place: Mumbai
Date: May 22, 2018
HDFC Bank Limited Annual Report 2017-18
76
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, 2018, 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 Standards prescribed under
section 133 of the Act read with the Companies (Accounting
Standards) Rules, 2006, as amended, in so far as applicable to
banks (“Accounting Standards”), other accounting principles
generally accepted in India 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
irregularities; selection
and detecting
and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent;
and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the
standalone 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.
In conducting 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 standalone financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and the disclosures in the
standalone financial statements. The procedures selected
depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the standalone financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls
relevant to the Bank’s preparation of the standalone 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 standalone financial statements.
We believe that the audit evidence obtained by us 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 Standards and other accounting principles
generally accepted in India, of the state of affairs of the Bank
as at 31st March, 2018, 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, based on our audit,
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
and found them to be satisfactory.
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 2017-18
77
f)
g)
h)
i)
In our opinion, the aforesaid standalone financial
statements comply with the Accounting Standards
prescribed under section 133 of the Act, as
applicable to Banks.
On the basis of the written representations received
from the Directors of the Bank as at 31st March,
2018 taken on record by the Board of Directors,
none of the Directors is disqualified as at 31st
March, 2018 from being appointed as a Director in
terms of Section 164 (2) of the Act.
With respect to the adequacy of the internal financial
controls over financial reporting of the Bank and
the operating effectiveness of such controls, refer
to our separate report in “Annexure A”. Our report
expresses an unmodified opinion on the adequacy
and operating effectiveness of the Bank’s internal
financial controls over financial reporting.
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,
as amended, in our opinion and to the best of our
information and according to the explanations given
to us:
The Bank has disclosed the impact of pending
its
litigations on
standalone financial statements;
its financial position
in
i.
ii.
any, on long-term contracts including derivative
contracts;
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 performed
select relevant procedures at 111 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 being made available to us.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Porus B. Pardiwalla
Partner
(Membership No. 40005)
The Bank has made provision, as required
under
law or accounting
standards, for material foreseeable losses, if
the applicable
Mumbai
April 21, 2018
HDFC Bank Limited Annual Report 2017-18
78
ANNEXURE “A” TO THE
REPORT
INDEPENDENT AUDITOR’S
(Referred to in paragraph 1.h under ‘Report on Other
Legal and Regulatory Requirements’ section 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”)
for
Internal Financial
We have audited the internal financial controls over financial
reporting of HDFC BANK LIMITED (“the Bank”) as at 31st
March, 2018 in conjunction with our audit of the standalone
financial statements of the Bank for the year ended on that
date.
Management’s Responsibility
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
were established and maintained and if such controls operated
effectively in all material respects.
An audit involves performing procedures to obtain audit
internal financial
evidence about
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,
the adequacy of
the
the reliability of financial reporting and
whether due to fraud or error.
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
the
regarding
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,
2018, 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 21, 2018
Porus B. Pardiwalla
Partner
(Membership No. 40005)
HDFC Bank Limited Annual Report 2017-18
79
Balance Sheet
As at March 31, 2018
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-18
` in ‘000
As at
31-Mar-17
1
2
3
4
5
5,190,181
5,125,091
1,057,759,776
889,498,416
7,887,706,396
6,436,396,563
1,231,049,700
740,288,666
457,637,181
567,093,181
Total
10,639,343,234
8,638,401,917
6
7
8
9
10
11
1,046,704,730
378,968,755
182,446,097
110,552,196
2,422,002,416
2,144,633,366
6,583,330,908
5,545,682,021
36,072,045
36,267,379
368,787,038
422,298,200
Total
10,639,343,234
8,638,401,917
12
8,754,882,292
8,178,695,893
427,538,250
308,480,352
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 21, 2018
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2017-18
80
Statement of Profit and Loss
For the year ended March 31, 2018
I
II
INCOME
Interest earned
Other income
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 [Refer Schedule 18(1)]
Tax (including cess) on dividend [Refer Schedule 18(1)]
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
Schedule
Year ended
31-Mar-18
` in ‘000
Year ended
31-Mar-17
13
14
Total
15
16
802,413,550
152,203,042
954,616,592
693,059,578
122,964,990
816,024,568
401,464,913
226,903,821
151,380,575
361,667,334
197,033,442
111,827,380
Total
779,749,309
670,528,156
174,867,283
326,689,434
501,556,717
145,496,412
235,276,891
380,773,303
Total
43,716,821
-
-
36,374,103
-
-
33,905,804
(16,909)
17,486,728
2,355,227
(442,018)
404,534,155
501,556,717
`
14,549,641
3,134,100
42,934
326,689,434
380,773,303
`
67.76
66.84
57.18
56.43
V EARNINGS PER EQUITY SHARE (Face value ` 2 per share)
Basic
Diluted
Significant accounting policies and notes to the financial statements
The schedules referred to above form an integral part of the
Statement of Profit and Loss.
Total
17 & 18
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 21, 2018
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2017-18
81
Cash Flow Statement
For the year ended March 31, 2018
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
Year ended
31-Mar-18
` in ‘000
Year ended
31-Mar-17
266,972,951
221,390,750
9,063,418
8,331,247
1,570,448
(87,543)
3,599,102
1,756,569
3,102
14,735
51,784,408
33,443,592
304,543
-
(76,417)
250,000
5,974,259
3,921,811
Dividend from subsidiaries / associates / joint ventures
(2,416,454)
(1,628,640)
Contingency provisions
Adjustments for:
(Increase) / decrease in investments
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
3,891,829
384,640
340,747,606
267,700,744
(282,699,813)
(177,259,533)
(1,089,405,183)
(933,161,021)
1,451,309,833
972,154,643
63,297,493
(38,752,713)
Increase / (decrease) in other liabilities and provisions
(120,347,372)
223,763,890
Direct taxes paid (net of refunds)
Net cash flow from operating activities
Cash flows used in investing activities
Purchase of fixed assets
Proceeds from sale of fixed assets
Investment in subsidiaries / associates / joint ventures
Dividend from subsidiaries / associates / joint ventures
Net cash used in investing activities
HDFC Bank Limited Annual Report 2017-18
82
362,902,564
314,446,010
(102,161,907)
(78,591,989)
260,740,657
235,854,020
(7,699,194)
(10,681,751)
95,089
94,269
(143,331)
(10,603,674)
2,416,454
1,628,640
(5,330,982)
(19,562,516)
Cash Flow Statement
For the year ended March 31, 2018
Cash flows from financing activities
Money received on exercise of stock options by employees
Increase / (decrease) in borrowings (excluding subordinate debt,
perpetual debt and upper Tier II instruments)
` in ‘000
Year ended
31-Mar-18
Year ended
31-Mar-17
27,259,099
22,615,161
411,511,034
(90,316,657)
Proceeds from issue of Additional Tier I and Tier II Capital Bonds
100,000,000
-
Redemption of subordinated debt
Dividend paid during the year
Tax on dividend
Net cash (used in) / from financing activities
Effect of exchange fluctuation on translation reserve
Net increase in cash and cash equivalents
Cash and cash equivalents as at April 1st
Cash and cash equivalents as at March 31st
(20,750,000)
(19,084,500)
(28,312,716)
(24,083,093)
(5,593,088)
(4,807,223)
484,114,329
(115,676,312)
105,872
(282,622)
739,629,876
100,332,571
489,520,951
389,188,380
1,229,150,827
489,520,951
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 21, 2018
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2017-18
83
Schedules to the Financial Statements
As at March 31, 2018
SCHEDULE 1 - CAPITAL
Authorised capital
3,25,00,00,000 (31 March, 2017: 3,25,00,00,000) Equity Shares of ` 2/- each
Issued, subscribed and paid-up capital
2,59,50,90,267 (31 March, 2017: 2,56,25,45,717) 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
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
6,500,000
6,500,000
Total
5,190,181
5,190,181
5,125,091
5,125,091
183,758,858
147,384,755
43,716,821
36,374,103
Total
227,475,679
183,758,858
71,669,150
57,119,509
17,486,728
14,549,641
Total
89,155,878
71,669,150
III Balance in profit and loss account
404,534,155
326,689,434
IV Share premium account
Opening balance
Additions during the year
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
VIII Foreign currency translation account
Opening balance
Additions / (deductions) during the year
HDFC Bank Limited Annual Report 2017-18
84
284,263,301
261,716,858
27,194,009
22,546,443
Total
311,457,310
284,263,301
10,635,564
10,635,564
-
-
Total
10,635,564
10,635,564
12,000,683
8,866,583
2,355,227
3,134,100
Total
14,355,910
12,000,683
442,018
45,086
(487,104)
-
39,408
105,872
145,280
399,084
109,506
(66,572)
442,018
322,030
(282,622)
39,408
1,057,759,776
889,498,416
Total
Total
Total
Schedules to the Financial Statements
As at March 31, 2018
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
(v) Bonds and Debentures (excluding subordinated debt)
II Borrowings outside India
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
27,237,788
20,806,377
1,165,587,962
1,134,932,192
Total
1,192,825,750
1,155,738,569
2,238,102,098
1,935,786,335
72,775,645
53,520,609
4,384,002,903
3,291,351,050
Total
4,456,778,548
3,344,871,659
Total
7,887,706,396
6,436,396,563
7,847,886,299
6,396,405,854
39,820,097
39,990,709
Total
7,887,706,396
6,436,396,563
138,000,000
-
47,848,399
21,202,156
342,299,500
224,500,000
211,070,000
131,820,000
126,750,000
126,750,000
Total
865,967,899
504,272,156
365,081,801
236,016,510
Total
1,231,049,700
740,288,666
Secured borrowings included in I and II above: Nil (March 31, 2017: Nil) except borrowings of ` 14,239.95
crore (March 31, 2017: Nil) under Collateralised Borrowing and Lending Obligation and transactions under
Liquidity Adjustment Facility and Marginal Standing Facility.
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I Bills payable
II
Interest accrued
III Others (including provisions)
IV Contingent provisions against standard assets
82,217,908
166,670,863
56,278,541
38,488,877
289,244,562
338,011,290
29,896,170
23,922,151
Total
457,637,181
567,093,181
HDFC Bank Limited Annual Report 2017-18
85
Schedules to the Financial Statements
As at March 31, 2018
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
As at
` in ‘000
As at
31-Mar-18
31-Mar-17
75,323,281
42,635,945
364,381,449
284,332,810
607,000,000
52,000,000
971,381,449
336,332,810
1,046,704,730
378,968,755
Total
Total
Total
Total
Total
8,369,114
1,169,512
9,538,626
5,107,980
6,686,831
11,794,811
-
45,018,623
45,018,623
-
-
-
54,557,249
11,794,811
26,124,304
36,772,777
6,191,625
2,529,150
95,572,919
59,455,458
Total
Total
127,888,848
98,757,385
182,446,097
110,552,196
1,883,648,036
1,624,186,994
-
-
1,197,947
1,113,742
347,873,284
194,698,472
38,264,875
38,433,239
135,541,438
275,020,773
Total
2,406,525,580
2,133,453,220
(i) Government securities (including Local Authorities)
4,218,786
-
(ii) Other investments
(a) Shares
(b) Debentures and bonds
28,375
28,375
11,229,675
11,151,771
15,476,836
11,180,146
2,422,002,416
2,144,633,366
Total
Total
HDFC Bank Limited Annual Report 2017-18
86
Schedules to the Financial Statements
As at March 31, 2018
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 2017-18
87
As at
` in ‘000
As at
31-Mar-18
31-Mar-17
2,408,997,713
2,134,071,702
15,606,451
11,206,487
Total
2,424,604,164
2,145,278,189
2,472,133
129,615
Total
2,601,748
618,482
26,341
644,823
2,406,525,580
2,133,453,220
15,476,836
11,180,146
Total
2,422,002,416
2,144,633,366
216,592,055
287,159,641
1,681,643,640
1,336,174,162
4,685,095,213
3,922,348,218
Total
6,583,330,908
5,545,682,021
4,712,405,892
3,988,893,240
191,682,760
227,526,268
1,679,242,256
1,329,262,513
Total
6,583,330,908
5,545,682,021
1,728,666,886
1,625,180,583
137,708,318
157,741,065
8,357,208
9,092,668
4,505,343,473
3,555,635,492
Total
6,380,075,885
5,347,649,808
33,046,352
6,500,391
1,052,278
2,560,707
18,265,990
17,845,564
150,890,403
171,125,551
203,255,023
198,032,213
6,583,330,908
5,545,682,021
Total
Total
Schedules to the Financial Statements
As at March 31, 2018
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 2017-18
88
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
16,110,799
15,511,704
978,572
669,442
(77,395)
(70,347)
Total
17,011,976
16,110,799
4,778,473
4,246,842
592,562
590,691
(74,579)
(59,060)
Total
5,296,456
4,778,473
11,715,520
11,332,326
80,918,907
72,467,567
7,988,185
10,604,552
(1,140,239)
(2,153,212)
Total
87,766,853
80,918,907
55,983,854
50,300,856
8,471,338
7,738,599
(1,044,864)
(2,055,601)
Total
63,410,328
55,983,854
24,356,525
24,935,053
4,546,923
4,546,923
-
-
Total
4,546,923
4,546,923
Schedules to the Financial Statements
As at March 31, 2018
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
Security deposit for commercial and residential property
Others*
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
4,104,467
4,104,467
-
-
Total
4,104,467
4,104,467
442,456
442,456
-
-
Total
442,456
442,456
-
-
Total
36,072,045
36,267,379
90,737,523
83,095,335
18,456,556
17,442,504
333,306
267,871
-
-
5,004,128
4,934,536
254,255,525
316,557,954
Total
368,787,038
422,298,200
*Includes deferred tax asset (net) of ` 3,344.02 crore (previous year: ` 2,447.34 crore) and deposits
placed with NABARD / SIDBI / NHB on account of shortfall in lending to priority sector of ` 13,357.25
crore (previous year: ` 11,882.37 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
I
II
Claims against the bank not acknowledged as debts - taxation
Claims against the bank not acknowledged as debts - others
11,359,333
10,721,500
1,042,772
1,081,701
III
Liability on account of outstanding forward exchange contracts
4,344,675,713
4,699,301,366
IV
Liability on account of outstanding derivative contracts
3,482,687,822
2,723,068,634
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
448,741,092
366,232,012
557,296
953,405
395,452,699
359,613,744
70,365,565
17,723,531
Total
8,754,882,292
8,178,695,893
HDFC Bank Limited Annual Report 2017-18
89
Schedules to the Financial Statements
For the year ended March 31, 2018
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*
Year ended
` in ‘000
Year ended
31-Mar-18
31-Mar-17
626,617,888
520,552,624
162,223,679
159,443,391
5,238,842
8,333,141
5,320,205
7,743,358
Total
802,413,550
693,059,578
113,938,744
88,115,530
10,817,025
11,306,936
(1,570,448)
(3,102)
87,543
(14,735)
15,234,978
12,633,895
2,416,454
1,628,640
11,369,391
9,207,181
Total
152,203,042
122,964,990
327,713,471
313,314,571
72,903,298
46,727,790
848,144
1,624,973
Total
401,464,913
361,667,334
68,057,439
64,836,646
14,197,682
13,373,647
4,803,103
1,652,205
9,063,418
29,596
26,301
1,648,413
4,456,040
4,757,998
1,475,165
8,331,247
32,021
25,758
1,249,095
4,149,947
12,933,744
12,562,041
8,273,244
6,906,612
101,762,636
79,333,265
Total
226,903,821
197,033,442
*Includes professional fees, commission to sales agents, card and merchant acquiring expenses and
system management fees.
HDFC Bank Limited Annual Report 2017-18
90
Schedules to the Financial Statements
For the year ended March 31, 2018
SCHEDULE 17 - Significant accounting policies appended to and forming part of the financial statements for the year
ended March 31, 2018
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, Dubai and Offshore Banking Unit at International Financial Service Centre (IFSC), at GIFT
City, Gandhinagar in Gujarat. 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.
Use of estimates
The preparation of financial statements in conformity with GAAP requires the management to make estimates and necessary
assumptions 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:
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.
HDFC Bank Limited Annual Report 2017-18
91
Schedules to the Financial Statements
For the year ended March 31, 2018
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 the 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
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.
Investment in unquoted Venture Capital Fund (VCF) are categorised under HTM category for the initial period of three years
and valued at cost. Such investment are required to be transferred to AFS thereafter.
Pass Through Certificates (PTC) including Priority Sector-PTCs are valued by using FIMMDA credit spread as applicable for
the NBFC category, based on the credit rating of the respective PTC over the YTM rates for government securities published
by FIMMDA.
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.
HDFC Bank Limited Annual Report 2017-18
92
Schedules to the Financial Statements
For the year ended March 31, 2018
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, repurchase and reverse repurchase transactions in government securities and
corporate debt securities 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 is
accounted for as interest income.
2
Advances
Classification:
Advances are classified as performing and non-performing based on the RBI guidelines and are stated net of bills rediscounted,
inter-bank participation with risk, 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.
Non-performing advances 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. Provision for standard assets is
included under other liabilities.
Provisions made in addition to 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 are included under
other liabilities.
HDFC Bank Limited Annual Report 2017-18
93
Schedules to the Financial Statements
For the year ended March 31, 2018
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. Provision for country risk is included under other
liabilities.
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, of a 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.
3
Securitisation and transfer of assets
The Bank securitises out its receivables 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 in line
with RBI guidelines. The Bank also acts as a servicing agent for receivable pools securitised-out.
The Bank 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’).
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 Bank amortises any profit received for every individual securitisation or direct assignment transaction
based on the method prescribed in these guidelines.
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.
The Bank enters into transactions for the sale or purchase of Priority Sector Lending Certificates (PSLCs). In the case of a
sale transaction, the Bank sells the fulfillment of priority sector obligation and in the case of a purchase transaction the Bank
buys the fulfillment of priority sector obligation through the RBI trading platform. There is no transfer of risks or loan assets.
The fee received for the sale of PSLCs is recorded as ‘Miscellaneous Income’ and the fee paid for purchase of the PSLCs is
recorded as ‘Other Expenditure’ in the Statement of Profit and Loss. These are amortised over the period of the Certificate.
HDFC Bank Limited Annual Report 2017-18
94
Schedules to the Financial Statements
For the year ended March 31, 2018
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 and 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 over the tenor of the loans.
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 management believes
that the useful life of assets assessed by the Bank, pursuant to the Companies Act, 2013, taking into account changes in
environment, changes in technology, the utility and efficacy of the asset in use, fairly reflects its estimate of useful lives of the
fixed assets. 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.
HDFC Bank Limited Annual Report 2017-18
95
Schedules to the Financial Statements
For the year ended March 31, 2018
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.
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.
HDFC Bank Limited Annual Report 2017-18
96
Schedules to the Financial Statements
For the year ended March 31, 2018
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. Also in case of domestic advances, where interest is collected on rear end basis, such interest is accounted on receipt
basis in accordance with the RBI guidelines.
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, where the
Bank is reasonably certain of ultimate collection.
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.
HDFC Bank Limited Annual Report 2017-18
97
Schedules to the Financial Statements
For the year ended March 31, 2018
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 make 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.
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 the outstanding 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. The imports are typically on a back-to-back
basis and are priced to the customer based on the price quoted by the supplier. The difference between the price recovered
from customers and cost of bullion is classified 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.
HDFC Bank Limited Annual Report 2017-18
98
Schedules to the Financial Statements
For the year ended March 31, 2018
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.
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:0)
(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:0)(cid:78)(cid:79)(cid:78)(cid:13)(cid:79)(cid:67)(cid:67)(cid:85)(cid:82)(cid:82)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)
of one or more uncertain future events not within the control of the Bank; or
(cid:115)(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: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:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(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:83)(cid:0)(cid:73)(cid:84)(cid:0)(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:80)(cid:82)(cid:79)(cid:66)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:65)(cid:78)(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:87)(cid:73)(cid:76)(cid:76)(cid:0)
be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
HDFC Bank Limited Annual Report 2017-18
99
Schedules to the Financial Statements
For the year ended March 31, 2018
(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 and gold 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 2017-18
100
Schedules to the Financial Statements
For the year ended March 31, 2018
SCHEDULE 18 - Notes forming part of the financial statements for the year ended March 31, 2018
Amounts in notes forming part of the financial statements for the year ended March 31, 2018 are denominated in rupee crore to
conform to extant RBI guidelines, except where stated otherwise.
1
Proposed dividend
The Board of Directors, at their meeting held on April 21, 2018 have proposed a dividend of ` 13.00 per equity share (previous
year: ` 11.00) aggregating ` 4,067.07 crore (previous year: ` 3,392.71 crore) inclusive of tax on dividend. The proposal is
subject to the approval of shareholders at the Annual General Meeting. In terms of the revised Accounting Standard (AS) 4
‘Contingencies and Events Occurring After the Balance Sheet Date’ as notified by the Ministry of Corporate Affairs through
amendments to Companies (Accounting Standards) Amendment Rules, 2016, the Bank has not appropriated the proposed
dividend from the Statement of Profit and Loss. However, the effect of the proposed dividend has been reckoned in determining
capital funds in the computation of the capital adequacy ratios.
2
Capital adequacy
The Bank’s capital to risk-weighted asset ratio (‘Capital Adequacy Ratio’) as at March 31, 2018 is calculated in accordance with
the RBI guidelines on Basel III capital regulations (‘Basel III’). The phasing-in of the minimum capital ratio requirement under
Basel III is as follows:
Minimum ratio of capital to risk-weighted assets
Common equity tier 1 (CET1)
Tier I capital
Total capital
(% of RWAs)
As at March 31,
2017
6.750
8.250
2018
7.375
8.875
2019
8.000
9.500
10.250
10.875
11.500
The above minimum CET1, tier I and total capital ratio requirements include the capital conservation buffer. During the year,
the RBI identified the Bank as a Domestic-Systemically Important Bank (D-SIB) under the bucketing structure as provided
in the D-SIB framework. As an identified D-SIB, the Bank will be required to maintain additional CET1 of 0.15% effective
April 1, 2018 and 0.20% effective April 1, 2019.
The Bank’s capital adequacy ratio computed under Basel III is given below:
Particulars
Tier I capital
Of which CET1 capital
Tier II capital
Total capital
Total risk weighted assets
Capital adequacy ratios under Basel lII
Tier I
Of which CET1
Tier II
March 31, 2018
106,004.90
98,004.90
12,535.47
118,540.37
800,125.98
13.25%
12.25%
1.57%
14.82%
(` crore)
March 31, 2017
81,829.30
81,829.30
11,302.66
93,131.96
640,029.93
12.79%
12.79%
1.76%
14.55%
Total
During the year ended March 31, 2018, the Bank raised debt capital instruments eligible for inclusion in Additional Tier I capital
and Tier II capital under the Basel III capital regulations amounting to ` 8,000.00 crore (previous year: Nil) and ` 2,000.00 crore
(previous year: Nil) respectively.
As on March 31, 2018, the Bank’s subordinated and perpetual debt capital instruments amounted to ` 13,107.00 crore (previous
year: ` 13,182.00 crore) and ` 8,000.00 crore (previous year: Nil) respectively.
HDFC Bank Limited Annual Report 2017-18
101
Schedules to the Financial Statements
For the year ended March 31, 2018
In accordance with RBI guidelines, banks are required to make Pillar 3 disclosures under the Basel III capital regulations.
The Bank’s Pillar 3 disclosures are available on its website at the following link: http://www.hdfcbank.com/aboutus/
basel_disclosures/default.htm. These Pillar 3 disclosures have not been subjected to audit or review by the statutory auditors.
Capital infusion
During the year ended March 31, 2018, the Bank allotted 3,25,44,550 equity shares (previous year: 3,43,59,200 equity shares)
aggregating to face value ` 6.51 crore (previous year: ` 6.87 crore) in respect of stock options exercised. Accordingly, the share
capital increased by ` 6.51 crore (previous year: ` 6.87 crore) and the share premium increased by ` 2,719.40 crore (previous
year: ` 2,254.64 crore).
The Board of Directors of the Bank, at their meeting held on December 20, 2017 approved the raising of funds aggregating up
to ` 24,000.00 crore, of which an amount up to a maximum of ` 8,500.00 crore shall be through the issuance of equity shares
of face value of ` 2/- each pursuant to a preferential issue to Housing Development Finance Corporation Limited (the Bank’s
promoters) and the balance shall be through the issuance of equity shares/ convertible securities/ depository receipts pursuant
to a Qualified Institutions Placement (QIP)/ American Depository Receipts (ADR)/ Global Depository Receipt (GDR) program.
The said raising of funds was approved by the shareholders of the Bank at its Extra Ordinary General meeting held on January
19, 2018 and is subject to the receipt of all relevant regulatory approvals.
The details of the movement in the paid-up equity share capital of the Bank are given below:
(` crore)
Particulars
Opening balance
Addition pursuant to stock options exercised
Closing balance
3
Earnings per equity share
March 31, 2018
March 31, 2017
512.51
6.51
519.02
505.64
6.87
512.51
Basic and diluted earnings per equity share of the Bank have been calculated based on the net profit after tax of ` 17,486.75
crore (previous year: ` 14,549.66 crore) and the weighted average number of equity shares outstanding during the year of
2,58,05,38,505 (previous year: 2,54,43,33,609).
Following is the reconciliation between the 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, 2018
March 31, 2017
2.00
67.76
(0.92)
66.84
2.00
57.18
(0.75)
56.43
Basic earnings per equity share of the Bank has been computed by dividing the net profit for the year attributable to the
equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per
equity share has 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, 2018
March 31, 2017
2,58,05,38,505
2,54,43,33,609
3,55,30,885
3,40,55,428
2,61,60,69,390
2,57,83,89,037
HDFC Bank Limited Annual Report 2017-18
102
Schedules to the Financial Statements
For the year ended March 31, 2018
4
Reserves and Surplus
Draw down from reserves
Share Premium
The Bank has not undertaken any drawdown from share premium during the years ended March 31, 2018 and March 31, 2017.
Statutory Reserve
The Bank has made an appropriation of ` 4,371.68 crore (previous year: ` 3,637.41 crore) out of profits for the year ended
March 31, 2018 to the 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, 2018, the Bank appropriated ` 235.52 crore (previous year: ` 313.41 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 the Profit and Loss Account to the Capital Reserve.
General Reserve
The Bank has made an appropriation of ` 1,748.67 crore (previous year: ` 1,454.96 crore) out of profits for the year ended
March 31, 2018 to the General Reserve.
Investment Reserve Account
During the year ended March 31, 2018, the Bank has transferred ` 44.20 crore (net) from the Investment Reserve Account to
the Profit and Loss Account as per the RBI guidelines. In the previous year, the Bank had appropriated ` 4.29 crore (net) from
the Profit and Loss Account to the 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, 2018, if approved at
the ensuing Annual General Meeting.
6
Accounting for employee share based payments
The shareholders of the Bank approved the grant of equity share options under Plan “C” in June 2005, Plan “D” in June 2007,
Plan “E” in June 2010, Plan “F” in June 2013 and Plan “G” in July 2016. Under the terms of each of these Plans, the Bank
may issue to its employees and Whole Time Directors, Equity Stock Options (‘ESOPs’) 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 the grant. The 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, F and G provide for the issuance of options at the recommendation of the Nomination and Remuneration
Committee of the Board (‘NRC’) at the closing price on the working day immediately preceding the date when options are
granted. This closing price is the closing price of the Bank’s equity share on an Indian stock exchange with the highest trading
volume as of the working day preceding the date of grant.
The vesting conditions applicable to the options are at the discretion of the NRC. These options are exercisable on vesting,
for a period as set forth by the NRC at the time of grant. The period in which the options may be exercised cannot exceed five
years. During the years ended March 31, 2018 and March 31, 2017, no modifications were made to the terms and conditions
of ESOPs as approved by the NRC.
HDFC Bank Limited Annual Report 2017-18
103
Schedules to the Financial Statements
For the year ended March 31, 2018
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:24)(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
Number
of options
Weighted average
exercise price (`)
9,21,56,300
1,68,82,050
3,25,44,550
10,50,000
7,54,43,800
4,68,10,250
904.97
1,433.23
837.59
1,050.05
1,050.22
901.44
(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:23)(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
Number
of options
Weighted average
exercise price (`)
12,86,54,300
-
3,43,59,200
21,38,800
9,21,56,300
5,63,14,000
840.19
-
658.20
972.97
904.97
835.06
(cid:115)(cid:0)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:24)(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
680.00
835.50 to 1,462.15
32,61,500
16,35,700
62,24,900
6,43,21,700
1.32
1.43
1.51
3.59
685.72
680.00
680.00
1,113.95
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:23)(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
468.40 to 680.00
835.50 to 1,097.80
46,44,400
33,34,300
1,50,94,600
6,90,83,000
2.34
2.33
2.18
3.90
690.91
680.00
650.01
985.92
HDFC Bank Limited Annual Report 2017-18
104
Schedules to the Financial Statements
For the year ended March 31, 2018
Fair value methodology
The fair value of options used to compute the proforma net profit 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 prices of
its equity shares. The Bank granted 1,68,82,050 options during the year ended March 31, 2018 (previous year: Nil). The various
assumptions considered in the pricing model for the ESOPs granted during the year ended March 31, 2018 are:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the options
March 31, 2018
0.65% to 0.66%
19.94% to 21.65%
6.73% to 7.20%
1 to 7.25 years
Impact of the fair value method on the net profit and earnings per share
Had the compensation cost for the Bank’s stock option plans been determined based on the fair value approach, the Bank’s
(` crore)
net profit for the year 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)
7
Other liabilities
March 31, 2018
March 31, 2017
17,486.75
14,549.66
-
650.41
16,836.34
(`)
67.76
65.24
66.84
64.36
-
812.75
13,736.91
(`)
57.18
53.99
56.43
53.28
(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) ` 2,989.62 crore as at March 31, 2018
(previous year: ` 2,392.22 crore). These are included under other liabilities.
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
Provision for standard assets is made @ 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, @ 5% on restructured standard advances, @ 2% until after one year from the
date on which the rates are reset at higher rates for housing loans offered at a comparatively lower rate of interest
in the first few years and @ 2% on all exposures to the wholly owned step down subsidiaries of the overseas
subsidiaries of Indian companies, sanctioned / renewed after December 31, 2015.
Provision is maintained at rates higher than the regulatory minimum, on standard advances based on evaluation of
the risk and stress in various sectors as per the policy approved by the Board of the Bank.
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.
Provision for standard assets of overseas branches is made at higher of rates prescribed by the overseas regulator
or RBI.
For all other loans and advances including credit exposures computed as per the current marked to market values
of interest rate and foreign exchange derivative contracts, provision for standard assets is made @ 0.40%.
HDFC Bank Limited Annual Report 2017-18
105
Schedules to the Financial Statements
For the year ended March 31, 2018
(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
at March 31, 2018 include unrealised loss on foreign exchange and derivative contracts of ` 5,093.04 crore (previous
year: ` 13,880.38 crore).
8
Unhedged foreign currency exposure
The Bank has in place a policy and process for managing currency induced credit risk. The credit appraisal memorandum
prepared at the time of origination and review of a credit facility 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 is encouraged to
enter into appropriate risk hedging mechanisms with the Bank. Alternatively, the Bank satisfies 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 Earnings Before Interest and Depreciation (‘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.
In accordance with RBI guidelines, as at March 31, 2018 the Bank holds standard asset provisions of ` 180.30 crore (previous
year: ` 108.31 crore) and maintains capital (including capital conservation buffer) of ` 723.08 crore (previous year: ` 396.86
crore) in respect of the unhedged foreign currency exposure of its customers.
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
(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)
Particulars
Opening balance
Add: Provision made during the year
Less: Write-off, write back of excess provision during the year
Closing balance
(cid:8)` crore)
March 31, 2018
March 31, 2017
240,899.77
213,407.17
1,560.65
1,120.65
247.21
12.96
61.85
2.63
240,652.56
213,345.32
1,547.69
1,118.02
(` crore)
March 31, 2018
March 31, 2017
64.48
204.91
9.22
260.17
119.54
37.33
92.39
64.48
Movement in provisions held towards depreciation on investments has been reckoned on a yearly basis.
HDFC Bank Limited Annual Report 2017-18
106
Schedules to the Financial Statements
For the year ended March 31, 2018
(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)
(cid:23) Details of repo / reverse repo deals (in face value terms) done during the year ended March 31, 2018:
(` crore)
(cid:23) Details of repo / reverse repo deals (in face value terms) done during the year ended March 31, 2017:
Particulars
Securities sold under repo
1. Government securities
2. Corporate debt securities
Securities purchased under reverse repo
1. Government securities
2. Corporate debt securities
Particulars
Securities sold under repo
1. Government securities
2. Corporate debt securities
Securities purchased under reverse repo
1. Government securities
2. Corporate debt securities
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily average
outstanding
during the year
Outstanding
as at
March 31, 2018
-
-
-
-
20,557.80
-
1,433.97
-
13,454.44
-
62,745.05
-
8,672.06
-
62,745.05
-
(` crore)
Minimum
outstanding
during the year
Maximum
outstanding
during the year
Daily average
outstanding
during the year
Outstanding
as at
March 31, 2017
-
-
-
-
32,620.54
-
31,413.37
132.00
7,445.30
-
6,900.12
30.74
-
-
4,690.56
-
(` crore)
(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, 2018:
Sr.
No.
Issuer
1 Public sector undertakings
Financial institutions
2
3 Banks
4 Private corporate
5 Subsidiaries / Joint ventures
6 Others
7 Provision held towards depreciation
Total
Extent of
private
placement#
100.00
1,414.21
80.00
29,475.13
3,826.49
2,113.15
Extent of
“below
investment
grade”
securities#
-
-
-
-
-
-
Extent of
“unrated”
securities# (2)
Extent of
“unlisted”
securities# (3)
-
-
270.94
39.46
-
-
-
-
270.94
5,106.35
-
-
37,008.98
-
310.40
5,377.29
Amount(1)
225.31
4,723.31
839.15
33,929.42
3,826.49
10,128.88
(258.99)
53,413.57
#
Amounts reported under these columns above are not mutually exclusive.
(1) Excludes investments in non-Indian government securities by overseas branches amounting to ` 421.88
crore.
(2) Excludes investments in equity shares and units of equity oriented mutual funds and venture capital funds in
line with extant RBI guidelines.
(3) Excludes investments in equity shares, units of equity oriented mutual funds and venture capital funds, pass
through certificates, security receipts, commercial paper, certificate of deposits and convertible debentures in
line with extant RBI guidelines.
HDFC Bank Limited Annual Report 2017-18
107
Schedules to the Financial Statements
For the year ended March 31, 2018
(cid:23)
Issuer-wise composition of non-SLR investments as at March 31, 2017:
(` crore)
Sr.
No.
Issuer
1 Public sector undertakings
2
Financial institutions
3 Banks
4 Private corporate
Amount
Extent of
private
placement#
2,225.18
2,174.65
1,400.31
1,360.00
700.36
-
41,069.41
39,337.27
5 Subsidiaries / Joint ventures
3,843.32
3,843.32
6 Others
2,870.54
2,860.53
7 Provision held towards depreciation
(64.48)
Total
52,044.64
49,575.77
#
Amounts reported under these columns above are not mutually exclusive.
Extent of
“below
investment
grade”
securities#
Extent of
“unrated”
securities# (1)
Extent of
“unlisted”
securities# (2)
-
-
-
-
-
-
-
-
-
-
-
-
-
33.51
3,793.61
-
-
-
-
33.51
3,793.61
(1) Excludes investments in equity shares and units of equity oriented mutual funds in line with extant
RBI guidelines.
(2) 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)(cid:3) Non-performing non-SLR investments:
(` crore)
Particulars
Opening balance
Additions during the year
Reductions during the year
Closing balance
Total provisions held
March 31, 2018
March 31, 2017
51.57
41.00
0.50
92.07
76.67
87.02
34.61
70.06
51.57
38.02
(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)(cid:0)
The details of investments held under the three categories viz. Held for Trading (HFT), Available for Sale (AFS) and
(` crore)
Held to Maturity (HTM) are as under:
Particulars
As at March 31, 2018
As at March 31, 2017
HFT
AFS
HTM
Total
HFT
AFS
HTM
Total
Government securities
2,471.38
49,272.32
137,042.98
188,786.68
1,736.34
35,614.27
125,068.09
162,418.70
Other approved securities
Shares
-
-
-
122.63
-
-
-
122.63
-
-
-
114.21
-
-
-
114.21
Debentures and bonds
5,023.15
29,466.48
1,420.67
35,910.30
1,734.61
17,550.42
1,300.00
20,585.03
Subsidiary / Joint ventures
-
-
3,826.49
3,826.49
Others
8,005.72
5,544.68
3.75
13,554.15
-
-
-
3,843.32
3,843.32
27,502.08
-
27,502.08
Total
15,500.25
84,406.11
142,293.89
242,200.25
3,470.95
80,780.98
130,211.41
214,463.34
HDFC Bank Limited Annual Report 2017-18
108
Schedules to the Financial Statements
For the year ended March 31, 2018
(cid:115)(cid:0)
Securities kept as margin
The details of securities that are kept as margin are as under:
(` crore)
Sr.
No.
Particulars
Face value as at March 31,
2018
2017
I.
Securities kept as margin with Clearing Corporation of India towards:
a) Collateral and funds management - Securities segment
b) Collateral and funds management - Collateralised Borrowing
1,520.00
25,770.78
1,520.00
24,488.31
and Lending Obligation (CBLO) segment
c) Default fund - Forex Forward segment
d) Default fund - Forex Settlement segment
e) Default fund - Rupee Derivatives (Guaranteed Settlement)
segment
f)
Default fund - Securities segment
g) Default fund - CBLO segment
II.
Securities kept as margin with the RBI towards:
a) Real Time Gross Settlement (RTGS)
b) Repo transactions
c) Reverse repo transactions
III.
IV.
V.
Securities kept as margin with National Securities Clearing
Corporation of India (NSCCIL) towards NSE Currency Derivatives
segment.
Securities kept as margin with Indian Clearing Corporation Limited
towards BSE Currency Derivatives segment.
Securities kept as margin with Metropolitan Clearing Corporation of
India towards MCX Currency Derivatives segment.
100.00
41.05
41.00
65.00
25.00
90,130.65
16,307.49
58,341.00
16.00
241.00
13.00
100.00
11.05
41.00
65.00
25.00
42,730.27
41,473.92
4,690.56
16.00
5.00
13.00
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:47)(cid:84)(cid:72)(cid:69)(cid:82)(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:65)(cid:83)(cid:0)(cid:65)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(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:68)(cid:65)(cid:84)(cid:69)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:68)(cid:69)(cid:0)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:82)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:80)(cid:65)(cid:80)(cid:69)(cid:82)(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)` 3,357.99 crore (previous year:
` 24,494.53 crore).
(cid:52)(cid:72)(cid:69)(cid:0)(cid:50)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:0)(cid:34)(cid:65)(cid:78)(cid:75)(cid:0)(cid:79)(cid:70)(cid:0)(cid:41)(cid:78)(cid:68)(cid:73)(cid:65)(cid:12)(cid:0)(cid:86)(cid:73)(cid:68)(cid:69)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)(cid:67)(cid:73)(cid:82)(cid:67)(cid:85)(cid:76)(cid:65)(cid:82)(cid:0)(cid:85)(cid:78)(cid:68)(cid:69)(cid:82)(cid:0)(cid:82)(cid:69)(cid:70)(cid:69)(cid:82)(cid:69)(cid:78)(cid:67)(cid:69)(cid:0)(cid:36)(cid:34)(cid:50)(cid:14)(cid:46)(cid:79)(cid:14)(cid:34)(cid:48)(cid:14)(cid:34)(cid:35)(cid:14)(cid:17)(cid:16)(cid:18)(cid:15)(cid:18)(cid:17)(cid:14)(cid:16)(cid:20)(cid:14)(cid:16)(cid:20)(cid:24)(cid:15)(cid:18)(cid:16)(cid:17)(cid:23)(cid:13)(cid:17)(cid:24)(cid:0)(cid:68)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:33)(cid:80)(cid:82)(cid:73)(cid:76)(cid:0)(cid:18)(cid:12)(cid:0)(cid:18)(cid:16)(cid:17)(cid:24)(cid:0)
granted banks an option to spread provisioning for mark to market losses on investments held in AFS and HFT for the
quarters ended December 31, 2017 and March 31, 2018. The circular states that the provisioning for each of these quarters
may be spread equally over up to four quarters, commencing with the quarter in which the loss was incurred. The Bank has
recognised the entire net mark to market loss on investments in the year ended March 31, 2018 and has not availed of the
said option.
(cid:52)(cid:72)(cid:69)(cid:0) (cid:34)(cid:65)(cid:78)(cid:75)(cid:0) (cid:72)(cid:65)(cid:68)(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:69)(cid:76)(cid:68)(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 did 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 was thus not applicable. However, pursuant to RBI guidelines, the Bank
had classified and disclosed these investments as joint ventures as of March 31, 2017. There were no such investments
outstanding as of March 31, 2018.
(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:24)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:82)(cid:69)(cid:0)(cid:72)(cid:65)(cid:83)(cid:0)(cid:66)(cid:69)(cid:69)(cid:78)(cid:0)(cid:78)(cid:79)(cid:0)(cid:83)(cid:65)(cid:76)(cid:69)(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:0)(cid:84)(cid:79)(cid:0)(cid:15)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:40)(cid:52)(cid:45)(cid:0)(cid:67)(cid:65)(cid:84)(cid:69)(cid:71)(cid:79)(cid:82)(cid:89)(cid:0)(cid:73)(cid:78)(cid:0)(cid:69)(cid:88)(cid:67)(cid:69)(cid:83)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)
5% of the book value of investments held in the HTM category at the beginning of the year.
During the year ended March 31, 2017, the aggregate book value of investment sold from, and transferred to / from, HTM
category was in excess of 5% of the book value of investments held in the HTM category at the beginning of the year. The
market value of investments (excluding investments in subsidiaries / joint ventures) under HTM category as at March 31,
2017 was ` 130,187.42 crore and was higher than the book value thereof as at that date.
HDFC Bank Limited Annual Report 2017-18
109
Schedules to the Financial Statements
For the year ended March 31, 2018
In accordance with the RBI guidelines, sales from, and transfers to / from, HTM category exclude the following from the
5% cap:
(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:3) sales to the RBI under pre-announced open market operation auctions;
(cid:57)(cid:3) repurchase of Government securities by Government of India from banks.
(cid:57)
additional shifting of securities explicitly permitted by the RBI from time to time; and
(cid:57)(cid:3) direct sales from HTM for bringing down SLR holdings in the HTM category.
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:26)(cid:0)
(cid:0)
(cid:0)(cid:8)` crore)
Sr.
No.
i)
ii)
Particulars
March 31, 2018 March 31, 2017
The total notional principal of swap agreements
308,463.47
238,644.16
Total losses which would be incurred if counter parties failed to fulfill
their obligations under the agreements
iii) Collateral required by the Bank upon entering into swaps
iv) Concentration of credit risk arising from swaps**
v)
The fair value of the swap book
1,063.13
-
60.62%
113.36
917.35
-
69.96%
45.32
* Interest Rate Swaps are comprised of INR Interest Rate Swaps and FCY Interest Rate Swaps.
** Concentration of credit risk arising from swaps is with banks as at March 31, 2018 and March 31, 2017.
The nature and terms of Rupee IRS outstanding as at March 31, 2018 are set out below:
(` crore, except numbers)
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Nos.
Notional principal
Benchmark
Terms
6
5
4
1,764
1,737
272
200
225.00
INBMK
275.00
INBMK
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
1,250.00
INCMT
Floating receivable v/s fixed payable
119,743.42
119,993.50
OIS
OIS
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
18,590.00 MIFOR
Fixed receivable v/s floating payable
11,499.00 MIFOR
Floating receivable v/s fixed payable
Total
271,575.92
The nature and terms of foreign currency IRS as on March 31, 2018 are set out below:
(` crore, except numbers)
Nature
Trading
Trading
Trading
Trading
Nos.
Notional principal Benchmark
Terms
2
2
92
191
808.08 EURIBOR
Fixed receivable v/s floating payable
808.10 EURIBOR
Floating receivable v/s fixed payable
13,236.99 USD Libor
Fixed receivable v/s floating payable
21,827.06 USD Libor
Floating receivable v/s fixed payable
Total
36,680.23
HDFC Bank Limited Annual Report 2017-18
110
Schedules to the Financial Statements
For the year ended March 31, 2018
The nature and terms of foreign currency FRA as on March 31, 2018 are set out below:
(` crore, except numbers)
Nature
Trading
Trading
Nos.
Notional principal
Benchmark
Terms
6
6
103.66
USD Libor
Payable FRA
103.66
USD Libor
Receivable FRA
Total
207.32
The nature and terms of rupee IRS as on March 31, 2017 are set out below:
(` crore, except numbers)
Nature
Nos.
Notional principal
Benchmark
Terms
Trading
Trading
Trading
Trading
Trading
Trading
Trading
Trading
6
6
4
1,179
1,167
292
218
7
225.00
INBMK
375.00
INBMK
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
1,250.00
INCMT
Floating receivable v/s fixed payable
78,502.69
76,008.42
OIS
OIS
21,019.00 MIFOR
12,959.00 MIFOR
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
Fixed receivable v/s floating payable
Floating receivable v/s fixed payable
450.00 MIOIS
Floating receivable v/s fixed payable
Total
190,789.11
The nature and terms of foreign currency IRS as on March 31, 2017 are set out below:
(` crore, except numbers)
Nature
Trading
Trading
Trading
Trading
Trading
Trading
Hedging
Nos.
Notional principal
Benchmark
Terms
1
1
2
2
110
194
3
17.80
GBP Libor
Fixed receivable v/s floating payable
17.80
GBP Libor
Floating receivable v/s fixed payable
692.93
EURIBOR
Fixed receivable v/s floating payable
692.93
EURIBOR
Floating receivable v/s fixed payable
18,404.28
USD Libor
Fixed receivable v/s floating payable
24,786.81
USD Libor
Floating receivable v/s fixed payable
3,242.50
USD Libor
Fixed receivable v/s floating payable
Total
47,855.05
There were no foreign currencies FRA outstanding as at March 31, 2017.
(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, 2018 March 31, 2017
Sr.
No.
i)
ii)
iii)
The total notional principal amount of exchange traded interest rate
derivatives undertaken during the years reported
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’
HDFC Bank Limited Annual Report 2017-18
111
Nil
Nil
N.A.
N.A.
Nil
Nil
N.A.
N.A.
Schedules to the Financial Statements
For the year ended March 31, 2018
(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
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 the 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.
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. These instruments are carried at fair value, determined based on either FEDAI rates or 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.
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 applicable 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 or 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 2017-18
112
Schedules to the Financial Statements
For the year ended March 31, 2018
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,
GAP limit, scenario based profit and loss limit for option portfolio and value-at-risk limits that are recommended by the
Risk Policy and Monitoring Committee (‘RPMC’) to the Board of Directors for approval. All methodologies used to assess
market and credit risks for derivative transactions are specified by the credit and 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 and the Board of Directors.
Hedging policy
For derivative contracts designated as hedging instruments, the Bank documents, at inception of the hedge, 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, is 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 2017-18
113
Schedules to the Financial Statements
For the year ended March 31, 2018
(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, 2018 March 31, 2017 March 31, 2018 March 31, 2017
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
-
156.95
-
3,242.50
39,591.46
32,999.13
308,677.32
235,908.28
684.79
(722.09)
2,740.20
649.32
(571.42)
2,487.65
1,064.77
(951.41)
3,509.79
918.74
(857.33)
2,941.53
-
7.62
0.24
31.32
-
0.88
0.08
25.70
0.09
35.47
0.02
21.27
-
33.94
15.93
80.86
-
26.92
15.79
19.11
43.06
79.70
15.79
19.11
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
As at March 31, 2018, the notional principal amount of outstanding foreign exchange contracts classified as hedging
and trading amounted to ` 14,070.60 crore (previous year: ` 6,302.40 crore) and ` 420,396.97 crore (previous year:
` 463,627.74 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 swaps.
Interest rate derivatives include interest rate swaps, forward rate agreements and interest rate caps and floors.
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 2017-18
114
Schedules to the Financial Statements
For the year ended March 31, 2018
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)
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
(cid:0)(cid:8)` crore)
March 31, 2018 March 31, 2017
0.33%
0.40%
5,885.66
12,958.99
10,237.68
4,163.60
2,808.25
3,265.83
8,606.97
1,843.99
4,917.84
4,160.81
2,601.02
4,041.67
8,041.15
3,265.83
2,811.04
6,005.95
4,392.83
7,126.17
5,633.34
1,519.42
1,727.98
2,385.94
5,885.66
1,320.37
2,357.87
1,834.25
1,843.99
3,072.46
4,768.30
2,385.94
1,413.15
4,041.67
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 is 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, 2018 March 31, 2017
-
-
-
-
-
-
-
-
(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 provision of ` 1,451.28 crore (previous year: ` 1,248.01 crore) have been included under “Other Liabilities”.
(` crore)
Movement in floating provision is given below:
Particulars
Opening balance
Provisions made / reinstated during the year
Draw down made during the year
Closing balance
March 31, 2018 March 31, 2017
1,335.64
25.00
(112.63)
1,248.01
1,248.01
523.99
(320.72)
1,451.28
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 2017-18
115
Schedules to the Financial Statements
For the year ended March 31, 2018
(cid:0)(cid:115)(cid:0)
Divergence in the asset classification and provisioning
As part of its supervisory process for the year ended March 31, 2017, the RBI had pointed out certain modifications in
(` crore)
respect of the Bank’s asset classification of three accounts as on March 31, 2017, as per the table below:
Sr. No. Particulars
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Gross NPAs as at March 31, 2017 as reported by the bank
Gross NPAs as at March 31, 2017 as assessed by RBI
Divergence in Gross NPAs (2-1)
Net NPAs as at March 31, 2017, as reported by the bank
Net NPAs as at March 31, 2017, as assessed by RBI
Divergence in Net NPAs (5-4)
Provisions for NPAs as at March 31, 2017, as reported by the bank
Provisions for NPAs as at March 31, 2017, as assessed by RBI
Divergence in provisioning (8-7)
(10)
Reported Net Profit after Tax (PAT) for the year ended March 31, 2017
(11)
Adjusted (notional) Net Profit after Tax (PAT) for the year ended March 31, 2017 after
taking into account the divergence in provisioning
Amount
5,885.66
7,937.42
2,051.76
1,843.99
3,102.36
1,258.37
4,041.67
4,835.06
793.39
14,549.66
14,028.24
In respect of each of these accounts, the Bank was a member of the Joint Lenders’ Forum (JLF) formed under the then
prevailing regulatory framework for revitalizing distressed assets in the economy. The Bank classified these accounts as
NPAs during the year ended March 31, 2018 and made adequate provisions for the said accounts.
In relation to one of the above accounts, the Bank had participated in a project loan which underwent flexible structuring
under the then prevailing regulatory framework as approved by the JLF in February 2016. Pursuant to a regulatory
communication, in October 2017 the said customer account was classified by the Bank as non-performing with effect
from March 2016. The JLF in its meeting on December 30, 2017 received confirmations from all lenders, including the
Bank, regarding satisfactory performance of the account during the specified period (post February 2016) including
confirmation of nil overdues as on December 30, 2017. Hence, in terms of para 17.2.3 of the RBI Master Circular DBR.
No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015, the JLF decided to upgrade the account classification to ‘standard’.
The Bank accordingly upgraded the account classification to ‘standard’ in its books. The account continues to remain
standard at March 31, 2018.
The position as at March 31, 2018 in relation to the divergence is as follows:
Sr. No. Particulars
1.
2.
3.
4.
5.
6.
Gross NPAs as at March 31, 2017
Upgraded based on JLF decision
Net reductions
Balance Gross NPAs as at March 31, 2018
Specific provisions held for balance Gross NPAs as at March 31, 2018
Net NPAs as at March 31, 2018 (4-5)
(` crore)
Amount
2,051.76
(1,707.18)
(45.61)
298.97
269.07
29.90
HDFC Bank Limited Annual Report 2017-18
116
Schedules to the Financial Statements
For the year ended March 31, 2018
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117
Schedules to the Financial Statements
For the year ended March 31, 2018
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118
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(` crore)
Total
March 31,
2018
Schedules to the Financial Statements
For the year ended March 31, 2018
(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)
March 31, 2018 March 31, 2017
Particulars
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
Provision made to meet shortfall in sale of NPA
Amount of unamortised provision debited to ‘other reserve’
(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:8)(cid:51)(cid:50)(cid:83)(cid:9)(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)
Particulars
(i) Backed by NPAs sold by the Bank as underlying*
Provision held against (i)
(ii) Backed by NPAs sold by other banks / financial institutions
/ non-banking financial companies as underlying
Provision held against (ii)
SRs
issued
within
past
5 years
190.90
-
9.72
-
Total
200.62
SRs issued
more than
5 years ago
but within
past 8 years
SRs
issued
more than
8 years
ago
-
-
3.15
-
3.15
-
-
-
-
-
190.90
-
12.87
-
203.77
* During the year ended March 31, 2018, contingent provision of ` 76.36 crore was made towards investment in security
receipts backed by NPAs sold by the Bank.
Particulars
(i) Backed by NPAs sold by the Bank as underlying
Provision held against (i)
(ii) Backed by NPAs sold by other banks / financial institutions
/ non-banking financial companies as underlying
Provision held against (ii)
SRs
issued
within
past
5 years
195.34
-
17.17
-
Total
212.51
SRs issued
more than
5 years ago
but within
past 8 years
SRs
issued
more than
8 years
ago
Total
March 31,
2017
0.52
-
10.12
-
10.64
-
-
-
-
-
195.86
-
27.29
-
223.15
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(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: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:24)(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:23)(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:83)(cid:79)(cid:76)(cid:68)(cid:12)(cid:0)(cid:69)(cid:88)(cid:67)(cid:76)(cid:85)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)
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:24)(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:23)(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)(cid:84)(cid:72)(cid:69)(cid:0)
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, 2018 and as at March 31, 2017.
(cid:33)(cid:67)(cid:67)(cid:79)(cid:85)(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:51)(cid:67)(cid:72)(cid:69)(cid:77)(cid:69)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:51)(cid:85)(cid:83)(cid:84)(cid:65)(cid:73)(cid:78)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:51)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:79)(cid:70)(cid:0)(cid:51)(cid:84)(cid:82)(cid:69)(cid:83)(cid:83)(cid:69)(cid:68)(cid:0)(cid:33)(cid:83)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:8)(cid:51)(cid:20)(cid:33)(cid:9)(cid:12)(cid:0)(cid:65)(cid:83)(cid:0)(cid:79)(cid:78)(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:24)(cid:26)(cid:0)(cid:46)(cid:73)(cid:76)(cid:0)(cid:8)(cid:80)(cid:82)(cid:69)(cid:86)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)
year: Nil).
HDFC Bank Limited Annual Report 2017-18
119
Schedules to the Financial Statements
For the year ended March 31, 2018
(cid:115)(cid:0)
Disclosure on Stressed Assets
(i) Disclosures on Flexible Structuring of Existing Loans
(` crore, except numbers)
Financial year
ended
No. of borrowers
taken up for
flexible
structuring
March 31, 2018
March 31, 2017
-
1
Amount of loans taken up
for flexible structuring
Classified as
Standard
-
39.12
Classified
as NPA
-
-
Exposure weighted average duration of
loans taken up for flexible structuring
Before applying
flexible structuring
-
8 years
After applying
flexible structuring
-
9.5 years
(ii) Disclosures on Strategic Debt Restructuring Scheme (accounts which are currently under the stand-still period)
Financial year
ended
No. of
accounts
where
SDR has
been
invoked
March 31, 2018
March 31, 2017
-
1
Amount outstanding
Amount outstanding with
respect to accounts where
conversion of debt to
equity is pending
Classified
as standard
-
73.06
Classified
as NPA
-
-
Classified
as standard
-
-
Classified
as NPA
-
-
*of which ` 32.87 crore of loans where conversion to equity has taken place.
(` crore, except numbers)
Amount outstanding with
respect to accounts where
conversion of debt to
equity has taken place
Classified
as standard
-
73.06*
Classified
as NPA
-
-
(iii) Change in Ownership outside SDR Scheme (accounts which are currently under the stand-still period) as at
March 31, 2018: Nil (previous year: Nil).
(iv) Change in Ownership of Projects Under Implementation (accounts which are currently under the stand-still period) as at
March 31, 2018 : Nil (previous year: Nil).
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, 2018 March 31, 2017
73,654.38
41,460.65
65,289.89
42,401.22
(of which housing loans eligible for inclusion in priority sector advances)
(16,475.22)
(18,951.24)
(ii) Commercial real estate
32,185.51
22,877.26
(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)
8.21
-
22,249.51
22,249.51
11.41
-
17,832.36
17,832.36
*includes loans purchased under the direct loan assignment route
Of the above, exposure to real estate developers as at March 31, 2018 is 0.6% (previous year: 0.5%) of total advances.
Total exposure to real estate sector
95,903.89
83,122.25
HDFC Bank Limited Annual Report 2017-18
120
Schedules to the Financial Statements
For the year ended March 31, 2018
(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, 2018
March 31, 2017
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
90.61
90.97
158.96
186.94
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
5,421.51
3,604.58
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
232.66
169.59
Secured and unsecured advances to stock brokers and guarantees issued on
behalf of stock brokers and market makers
10,915.99
8,165.08
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
2,262.75
1,390.31
(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)
4.10
0.25
Total exposure to capital market
19,086.58
13,607.72
(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, 2018
March 31, 2017
Exposure (net) Provision held Exposure (net) Provision held
18,538.08
9,103.81
486.54
350.17
37.20
-
0.18
Total
28,515.98
-
-
-
-
-
-
-
-
17,177.70
9,653.78
247.75
164.44
9.48
-
-
27,253.15
-
-
-
-
-
-
-
-
HDFC Bank Limited Annual Report 2017-18
121
•
•
Details of factoring exposure
The factoring exposure of the Bank as at March 31, 2018 is ` 2,334.53 crore (previous year: ` 2,036.11 crore).
Details of Single Borrower Limit (SGL), Group Borrower Limit (GBL) exceeded by the Bank
The RBI has prescribed single and group borrower exposure limits linked to a bank’s capital funds. These 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, 2018 and March 31, 2017 the Bank was within the limits prescribed by the RBI.
•
Unsecured advances
Advances for which intangible collaterals such as rights, licenses, authority, trademarks, patents, 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 at March 31, 2018
(previous year: Nil).
•
Inter-bank Participation with risk sharing
The aggregate amount of participation issued by the Bank and reduced from advances as per regulatory guidelines as
at March 31, 2018 was ` 24,454.84 crore (previous year: ` 7,500.00 crore).
•
Concentration of deposits, advances, exposures and NPAs
a) Concentration of deposits
(` crore, except percentages)
Particulars
Total deposits of twenty largest depositors
Percentage of deposits of twenty largest depositors to total deposits
of the Bank
March 31, 2018 March 31, 2017
50,066.89
35,562.76
6.3%
5.5%
b) Concentration of advances
(` crore, except percentages)
Particulars
Total advances to twenty largest borrowers
Percentage of advances of twenty largest borrowers to total
advances of the Bank
March 31, 2018 March 31, 2017
92,114.45
83,962.09
9.0%
9.4%
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, except percentages)
Particulars
March 31, 2018 March 31, 2017
Total exposure to twenty largest borrowers / customers
1,04,796.59
90,046.09
Percentage of exposure of twenty largest borrowers / customers to
total exposure of the Bank on borrowers / customers
9.7%
9.5%
Exposures comprise credit exposure (funded and non-funded credit limits) including derivative transactions and
investment exposure in accordance with RBI guidelines.
d) Concentration of NPAs
(` crore)
Particulars
March 31, 2018 March 31, 2017
Total gross exposure to top four NPA accounts
708.09
588.99
122
HDFC Bank Limited Annual Report 2017-18Schedules to the Financial StatementsFor the year ended March 31, 2018
Schedules to the Financial Statements
For the year ended March 31, 2018
e)
Sector-wise advances
Sector
Sr.
No.
(` crore)
March 31, 2018
March 31, 2017
Gross
advances
Gross non-
performing
loans
Gross
advances
% of gross
non-performing
loans to gross
advances in
that sector
Gross
non-
performing
loans
% of gross
non-performing
loans to gross
advances in
that sector
A Priority sector
1 Agriculture and allied activities
73,513.50
2,514.60
3.42% 63,186.16
1,279.98
2 Advances to industries eligible
28,405.11
483.71
1.70% 26,209.92
480.78
as priority sector lending
3 Services
52,995.58
990.26
1.87% 52,361.67
678.46
4 Personal loans
20,514.50
19.26
0.09% 22,350.27
14.43
Sub-total (A) 175,428.69
4,007.83
2.28% 164,108.02
2,453.65
B Non Priority sector
1 Agriculture and allied activities
14,131.18
149.41
1.06% 6,905.78
74.89
2
Industry
3 Services
141,126.81
1,783.60
1.26% 127,366.08
1,243.07
155,844.46
1,114.86
0.72% 127,937.51
1,037.87
4 Personal loans
177,723.19
1,451.16
0.82% 132,249.25
1,016.40
Sub-total (B) 488,825.65
4,499.03
0.92% 394,458.62
3,372.23
Total (A) + (B) 664,254.34
8,506.86
1.28% 558,566.64
5,825.88
(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:48)(cid:82)(cid:73)(cid:79)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:51)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0)(cid:44)(cid:69)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:35)(cid:69)(cid:82)(cid:84)(cid:73)(cid:108)(cid:67)(cid:65)(cid:84)(cid:69)(cid:83)(cid:0)(cid:8)(cid:48)(cid:51)(cid:44)(cid:35)(cid:83)(cid:9)(cid:0)
(cid:0)
2.03%
1.83%
1.30%
0.06%
1.50%
1.08%
0.98%
0.81%
0.77%
0.85%
1.04%
(cid:8)` crore)
Type of PSLCs
For the year ended March 31, 2018
For the year ended March 31, 2017
PSLC bought
during the year
PSLC sold during
the year
PSLC bought
during the year
PSLC sold during
the year
Agriculture
Small and Marginal farmers
Micro Enterprises
General
-
22,251.00
5,520.00
-
Total
27,771.00
-
-
-
730.75
730.75
-
3,269.50
-
-
3,269.50
500.00
21.25
-
1,000.00
1,521.25
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, 2018
March 31, 2017
2,139.70
251.89
-
1,737.09
402.61
-
Total (a)
2,391.59
2,139.70
HDFC Bank Limited Annual Report 2017-18
123
Schedules to the Financial Statements
For the year ended March 31, 2018
Particulars
Depreciation
As at March 31 of the previous year
Charge for the year
On deductions during the year
March 31, 2018
March 31, 2017
(` crore)
1,473.76
274.85
-
1,748.61
642.98
1,218.53
255.23
-
1,473.76
665.94
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)` 3,344.02 crore (previous year: ` 2,447.34 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, 2018
March 31, 2017
2,780.22
2,079.97
177.65
439.88
167.38
321.47
Total (a)
3,397.75
2,568.82
Total (b)
(53.73)
(53.73)
Deferred tax asset (net) (a-b)
3,344.02
(121.48)
(121.48)
2,447.34
(cid:0)(cid:0)(cid:0)(cid:0)(` crore)
(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)
Particulars
March 31, 2018
March 31, 2017
Deposit with NABARD / SIDBI / NHB - PSL shortfall
Unrealised gain on foreign exchange and derivative contracts*
Deferred tax assets
Deposits & amounts paid in advance
Accounts receivable
Residual items
13,357.25
5,091.67
3,344.02
1,802.24
1,827.87
2.50
11,882.37
14,014.05
2,447.34
1,740.75
1,568.79
2.50
*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
25,425.55
31,655.80
HDFC Bank Limited Annual Report 2017-18
124
Schedules to the Financial Statements
For the year ended March 31, 2018
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HDFC Bank Limited Annual Report 2017-18
125
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M
Schedules to the Financial Statements
For the year ended March 31, 2018
16 Provisions and contingent liabilities
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)
Provision pertaining to fraud accounts
Particulars
No. of frauds reported during the year
Amount involved in fraud (` crore)
Amount involved in fraud net of recoveries / write-offs as at the end of the
year (` crore)
Provisions held as at the end of the year (` crore)
Amount of unamortised provision debited from “other reserves” as at the
end of the year (` crore)
d) Description of contingent liabilities
March 31, 2018
March 31, 2017
431.24
261.95
(222.07)
471.12
306.36
334.24
(209.36)
431.24
(` crore)
March 31, 2018
March 31, 2017
311.90
2.11
314.01
344.56
(32.66)
311.90
March 31, 2018
March 31, 2017
3,612
146.55
119.02
119.02
-
2,319
165.20
20.83
20.83
-
Sr. No. (cid:35)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:71)(cid:69)(cid:78)(cid:84)(cid:0)(cid:76)(cid:73)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:10)
1
2
3
4
5
Claims against the Bank
not acknowledged as
debts - taxation
Claims against the Bank
not acknowledged as
debts - others
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
Bank is contingently liable
Brief description
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 taxation laws.
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.
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; e) Investment purchases pending
settlement; f) Amount transferred to the RBI under the Depositor Education and Awareness Fund (DEAF).
*Also refer Schedule 12 - Contingent liabilities
HDFC Bank Limited Annual Report 2017-18
126
Schedules to the Financial Statements
For the year ended March 31, 2018
(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, 2018
March 31, 2017
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
8.86%
4.43%
1.68%
3.60%
1.93%
15.08
0.20
1.30%
1.28%
0.40%
8.95%
4.28%
1.59%
3.32%
1.88%
12.36
0.16
1.05%
1.04%
0.33%
Provision coverage ratio8
69.78%
68.67%
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 and profit / (loss) on sale of building and
other assets (net).
3.
4.
“Business” is the total of average 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 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 on units of mutual funds and equity and
preference shares received during the year ended March 31, 2018 amounting to ` 160.59 crore (previous year: ` 256.64 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, 2018 and March 31, 2017, 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 in 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, 2018 was ` 223.25 crore (previous year:
` 224.31 crore) and outstanding servicing liability was ` 0.05 crore (previous year: ` 0.07 crore).
HDFC Bank Limited Annual Report 2017-18
127
Schedules to the Financial Statements
For the year ended March 31, 2018
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, 2018 includes fees of ` 1,192.34 crore (previous year: ` 798.35
crore) in respect of life insurance business, of which ` 406.77 crore (previous year: ` 228.63 crore) is for displaying
publicity materials at the Bank’s branches / ATMs and ` 203.43 crore (previous year: ` 157.58 crore) is 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 ` 1,093.84 crore (previous year:
` 864.31 crore).
21 Other expenditure
Other expenditure includes commission paid to sales agents amounting to ` 2,427.96 crore (previous year: ` 1,906.80 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 NPAs
Provision for diminution in value of non-performing investments
Provision for standard assets
Other provisions and contingencies*
March 31, 2018
March 31, 2017
10,107.25
(896.68)
4,910.43
30.45
597.43
389.18
7,916.97
(327.54)
3,145.30
(7.64)
392.18
63.46
Total
15,138.06
11,182.73
*Includes provisions for tax, legal and other contingencies ` 390.04 crore (previous year: ` 38.34 crore), floating provisions Nil
(previous year: ` 25.00 crore), provisions / (write-back) for securitised-out assets ` 2.14 crore (previous year: ` 2.62 crore) and
standard restructured assets ` (3.00) crore (previous year: ` (2.50) crore).
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
(` crore)
March 31, 2018
March 31, 2017
488.00
35.12
65.19
(39.53)
390.47
26.36
62.57
(38.49)
HDFC Bank Limited Annual Report 2017-18
128
Schedules to the Financial Statements
For the year ended March 31, 2018
Particulars
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
March 31, 2018
March 31, 2017
10.44
(16.25)
542.97
355.57
27.02
73.21
(39.53)
0.13
-
416.40
416.40
(542.97)
(126.57)
35.12
65.19
(27.02)
(5.94)
67.35
27.15
88.29
35.48
11.61
488.00
287.93
22.52
47.95
(38.49)
32.44
3.22
355.57
355.57
(488.00)
(132.43)
26.36
62.57
(22.52)
11.42
77.83
58.18
73.21
7.5% per annum
7.1% per annum
7.0% per annum
7.0% per annum
8.0% per annum
8.0% per annum
(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)
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
0.13
Experience adjustment (gain) / loss on plan liabilities
10.44
32.44
35.48
(13.69)
16.24
HDFC Bank Limited Annual Report 2017-18
129
Years ended March 31,
2018
416.40
542.97
2017
355.57
488.00
2016
287.93
390.47
(126.57)
(132.43)
(102.54)
(cid:8)` crore)
2014
172.60
237.43
(64.83)
1.87
5.87
2015
242.88
310.59
(67.71)
21.35
4.59
Schedules to the Financial Statements
For the year ended March 31, 2018
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, 2018 are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
Pension
Particulars
% of fair value to total plan assets
as at March 31, 2018
25.2%
28.9%
43.1%
2.8%
100.0%
Total
March 31, 2018
March 31, 2017
(` 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
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
73.55
5.19
0.74
(8.75)
3.95
(1.62)
73.06
36.16
2.36
0.94
(8.75)
0.59
-
31.30
31.30
(73.06)
(41.76)
5.19
0.74
(2.36)
70.88
4.80
1.23
(6.62)
4.65
(1.39)
73.55
38.38
2.61
1.03
(6.62)
0.39
0.37
36.16
36.16
(73.55)
(37.39)
4.80
1.23
(2.61)
HDFC Bank Limited Annual Report 2017-18
130
Schedules to the Financial Statements
For the year ended March 31, 2018
Particulars
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
March 31, 2018
March 31, 2017
(` crore)
1.74
5.31
2.95
13.79
2.50
5.92
3.37
7.18
7.5% per annum
7.1% per annum
7.0% per annum
7.0% per annum
8.0% per annum
8.0% per annum
(cid:0)(cid:0)(cid:0)(cid:0)(cid:8)` crore)
(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)
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Years ended March 31,
2018
2017
2016
2015
2014
31.30
73.06
36.16
73.55
38.38
70.88
41.91
57.45
47.99
58.89
(41.76)
(37.39)
(32.50)
(15.54)
(10.90)
Experience adjustment gain / (loss) on plan assets
0.59
Experience adjustment (gain) / loss on plan liabilities
3.95
0.39
4.65
1.43
17.35
(2.38)
(0.19)
3.45
3.62
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, 2018 are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
Provident fund
% of fair value to total plan assets
as at March 31, 2018
5.9%
78.9%
15.2%
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 at March 31, 2018 (previous year: Nil), towards the present value of the
guaranteed interest benefit obligation. The actuary has followed the deterministic approach as prescribed by the guidance note.
Assumptions
Particulars
Discount rate (GOI security yield)
Expected guaranteed interest rate
March 31, 2018
March 31, 2017
7.5% per annum
7.1% per annum
8.6% per annum
8.7% per annum
The Bank does not have any unfunded defined benefit plan. The Bank contributed ` 222.84 crore (previous year: ` 216.86
crore) to the provident fund and ` 67.68 crore (previous year: ` 78.67 crore) to the superannuation plan.
HDFC Bank Limited Annual Report 2017-18
131
Schedules to the Financial Statements
For the year ended March 31, 2018
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
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)(cid:36)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:83)
March 31, 2018
March 31, 2017
259.46
61.91
321.37
237.24
52.95
290.19
7.5% per annum
7.1% per annum
8.0% per annum
8.0% per annum
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 three independent
directors as of March 31, 2018. 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 Mrs. Shyamala Gopinath, Mr. Partho Datta and Mr. Bobby Parikh. Further, Mrs. Shyamala
Gopinath and Mr. Partho Datta are also members of the RPMC. Mr. Bobby Parikh is the chairperson of the NRC. During
the year ended March 31, 2018, Mr. A. N. Roy ceased to be a member of the NRC pursuant to his resignation from the
Board of Directors of the Bank.
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
The Bank employed the services of the following consulting firms in the area of compensation and benefits and human
resources:
AON: 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.
Cedar Consulting: The Bank employed the services of Cedar Consulting to review and recommend key scorecard
measures for the Whole Time Directors.
(cid:0)
(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 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 87,983 as at
March 31, 2018 (previous year: 84,041).
HDFC Bank Limited Annual Report 2017-18
132
Schedules to the Financial Statements
For the year ended March 31, 2018
(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)
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.
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.
HDFC Bank Limited Annual Report 2017-18
133
Schedules to the Financial Statements
For the year ended March 31, 2018
(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 does 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. The deferred bonus is paid out post review and approval by the NRC.
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:
(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.
HDFC Bank Limited Annual Report 2017-18
134
Schedules to the Financial Statements
For the year ended March 31, 2018
(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 which factors not just quantitative, but also qualitative measures, such
as quality of business sourced, customer complaints etc., 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.
Review of Remuneration Policy of the Bank
The Compensation Policy of the Bank was reviewed by the NRC during the year ended March 31, 2018
and the following material changes were incorporated therein:
(cid:57)
Inclusion of definition of inadequacy of profits as per section 197 of the Companies Act, 2013
(cid:57) With effect from April 1, 2017, the Bank has amended its policy for grant of ESOPs. Under this policy,
ESOPs granted to eligible employees vest over three tranches spread over a period of 39 months
vis-à-vis 36 months for the earlier grants. The first tranche will vest after fifteen months from the
date of grant vis-à-vis twelve months for earlier grants. Vesting for all ESOPs granted subsequent to
April 1, 2017 shall be based on the assessment of performance of the employee at the time of vesting.
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. 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 NRC grants options after considering
parameters such as the incumbent’s grade and performance rating, and such other 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. With effect from April 1, 2017, the Bank has amended its policy for grant
of ESOPs. Under this policy, ESOPs granted to eligible employees vest over three tranches spread over a
period of 39 months vis-à-vis 36 months for the earlier grants. The first tranche will vest after fifteen months
from the date of grant vis-à-vis twelve months for earlier grants. Vesting for all ESOPs granted subsequent to
April 1, 2017 shall be based on the assessment of performance of the employee at the time of vesting.
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.
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.
HDFC Bank Limited Annual Report 2017-18
135
Schedules to the Financial Statements
For the year ended March 31, 2018
g) Statutory Bonus
Some section of employees are also paid statutory bonus as per the Payment of Bonus Act (1965) as
amended from time to time.
III. Remuneration Processes
Fitment at the time of Hire
Pay scales 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
The Bank takes into account various types of risks in its remuneration processes. The Bank follows a comprehensive
framework that includes within its ambit the key dimensions of remuneration such as fixed pay, variable pay and long term
incentives (i.e. Employee Stock Options).
Fixed pay: The Bank conducts a comprehensive market benchmarking study to ensure that employees are competitively
positioned in terms of fixed pay. The Bank follows a robust salary review process wherein revisions in fixed compensation
are based on performance. The Bank also makes salary adjustments taking into consideration pay positioning of
employees vis-à-vis market reference points. Through this approach the Bank endeavors to ensure that the talent risk
due to attrition is mitigated as much as possible. Fixed pay could be revised downwards as well in the event of certain
proven cases of misconduct by an employee.
HDFC Bank Limited Annual Report 2017-18
136
Schedules to the Financial Statements
For the year ended March 31, 2018
Variable pay: The Bank has distinct types of variable pay plans as given below:
(a) Quarterly / monthly performance-linked pay (PLP) plans:
All quarterly / monthly PLP plans are based on the principle of balanced scorecard framework that includes within its
ambit both quantitative and qualitative factors including key strategic objectives that ensure future competitive advantage
for the Bank. PLP plans, by design, have deterrents that play a role of moderating payouts based on the non-fulfillment
of established quantitative / qualitative risk factors. Deterrents also include risks arising out of non-compliance, mis-sell
etc. Further, a portion of all payouts under the PLP plans is deferred till the end of the year to provide for any unforeseen
performance risks.
(b) Annual bonus plan:
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 framework developed by the Bank in order to arrive at the quantum of bonus pool is based on the performance
of the Bank and profitability. The annual bonus is distributed based on business unit and individual performance.
The business unit performance is based on factors such as growth in revenue, growth in profit, cost to income ratio and
achievement vis-à-vis plans and key objectives. Bonus pay out for an individual employee in a particular grade is linked
to the performance rating of the employee and subject to meeting the Bank’s standards of ethical conduct.
The Bank has 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 for Whole Time Directors. 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 bonus payout pertaining to the reference performance year. The deferred bonus is paid out
post review and approval by the NRC.
The bonus for Whole Time Directors is capped at 70% of the fixed pay in a year. The variable pay for Whole Time
Directors is approved by the NRC as well as the Board of Directors of the Bank and is subject to the approval of the RBI.
The variable pay component is paid out subject to the following conditions:
Where the variable pay constitutes 50% or more of the fixed pay, a portion of the same would be 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.
(c)
Long term incentives (employee stock options):
The Bank also grants employee stock options to employees in certain job bands. The grant is based on performance
rating of the individual.
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.
B.
Business Growth - This includes growth in advances and deposits;
Profitability - This includes growth in profit after tax;
C. Asset Quality - Gross NPA, Net NPA and % of Restructured assets to net advances;
HDFC Bank Limited Annual Report 2017-18
137
Schedules to the Financial Statements
For the year ended March 31, 2018
D.
E.
F.
Financial Soundness - Capital Adequacy Ratio Position and Tier I capital;
Shareholder value creation - Return on equity; and
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:
A.
B.
Increase in plan over the previous year;
Actual growth in revenue over previous year;
C. Growth in net revenue (%);
D.
E.
F.
Achievement of net revenue against plan (%);
Actual profit before tax;
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 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.
HDFC Bank Limited Annual Report 2017-18
138
Schedules to the Financial Statements
For the year ended March 31, 2018
(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. All PLP plans are based on balanced scorecard framework.
(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
Whole Time Directors
The bonus for Whole Time Directors does 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%
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)(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.
The deferred bonus is paid out post review and approval by the NRC.
(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 bonus payout
received 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:
HDFC Bank Limited Annual Report 2017-18
139
Schedules to the Financial Statements
For the year ended March 31, 2018
(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.
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 2017-18
140
Schedules to the Financial Statements
For the year ended March 31, 2018
(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)
Number of meetings held by the
NRC during the financial year and
remuneration paid to its members
(b) (i) Number of employees having
received a variable remuneration
award during the financial year
March 31, 2018
March 31, 2017
Number of meetings: 7
Number of meetings: 10
Remuneration paid: ` 0.13 crore
Remuneration paid: ` 0.20 crore
34 employees
33 employees
(b) (ii) Number and
total amount of
sign-on awards made during the
financial year
(b) (iii) Number and
total amount of
guaranteed bonuses awarded
during the financial year
(b) (iv) Details of severance pay,
in
addition to accrued benefits, if any
(c) (i) Total amount of outstanding
deferred remuneration, split into
cash, shares and share-linked
instruments and other forms
(c) (ii) Total
of
deferred
the
in
amount
remuneration paid out
financial year
of
Breakdown
the
remuneration awards
financial year
to show fixed
and variable, deferred and non-
deferred
amount
for
of
(d)
(e) (i) Total amount of outstanding
and
deferred
retained
remuneration exposed
to ex-post explicit and / or implicit
adjustments
remuneration
(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
None
None
None
None
None
None
Total amount of outstanding deferred
remuneration (cash bonus) was ` 2.80
crore.
Total amount of outstanding deferred
remuneration (cash bonus) was ` 4.62
crore.
` 1.82 crore
` 1.45 crore
` 55.43 crore (Fixed*)
` 11.76 crore (variable pay pertaining
to financial year ended March 31,
2017, in relation to employees where
there was no deferment of pay).
the RBI on
The approval of
the
variable pay of the Bank’s Whole Time
Directors for the year ended March 31,
2017 is awaited. There were no other
employees where there was deferment
of pay.
Number of stock options granted
during the financial year: 47,11,100
Total amount of outstanding deferred
remuneration (cash bonus) was ` 2.80
crore.
` 54.75 crore (Fixed*)
` 12.90 crore (variable pay pertaining
to financial year ended March 31,
2016, in relation to employees where
there was no deferment of pay).
` 7.34 crore (variable pay pertaining to
financial year ended March 31, 2016,
in relation to employees where there
was a deferment of pay), of which
` 4.41 crore was non-deferred variable
pay and ` 2.93 crore was deferred
variable pay.
Number of stock options granted
during the financial year: Nil
Total amount of outstanding deferred
remuneration (cash bonus) was ` 4.62
crore.
Nil
Nil
Nil
Nil
* Excludes gratuity benefits, since the same is computed at Bank level.
HDFC Bank Limited Annual Report 2017-18
141
Schedules to the Financial Statements
For the year ended March 31, 2018
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.
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.
HDFC Bank Limited Annual Report 2017-18
142
Schedules to the Financial Statements
For the year ended March 31, 2018
Segment reporting for the year ended March 31, 2018 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
19,841.37
73,843.05
41,504.13
12,259.14 147,447.69
-
51,986.03
95,461.66
1,540.00
9,971.72
11,720.51
5,487.90
28,720.13
2,022.81
9,210.57
17,486.75
350,894.38 371,906.59
297,040.57
37,595.49 1,057,437.03
55,349.70 598,785.46 270,287.20
4,081.50 928,503.86
6,497.28
1,063,934.31
29,135.42
957,639.28
15 Capital employed (9) - (12)
295,544.68 (226,878.87)
26,753.37
33,513.99 128,933.17
(Segment assets - Segment liabilities)
Unallocated (10) - (13)
Total (15) + (16)
Capital expenditure
Depreciation
(22,638.14)
106,295.03
5.77
729.47
11.58
723.91
73.05
92.36
88.39
78.49
896.68
906.34
Provisions for non - performing assets / others*
35.36
3,539.06
1,565.79
773.10
5,913.31
16
17
18
19
20
21 Unallocated other provisions*
*Represents material non-cash charge other than depreciation and taxation.
(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)
14.18
(cid:8)` crore)
Particulars
Revenue
Assets
Capital expenditure
Domestic
International
94,643.54
818.12
1,036,987.78
26,946.53
896.33
0.35
HDFC Bank Limited Annual Report 2017-18
143
Schedules to the Financial Statements
For the year ended March 31, 2018
Segment reporting for the year ended March 31, 2017 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)
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
(cid:8)` crore)
Total
20,326.18
66,147.50
32,587.85
9,046.69
128,108.22
-
46,505.77
81,602.45
1,659.11
8,432.16
10,123.04
3,365.33
23,579.64
1,440.55
7,589.43
14,549.66
263,356.40
295,828.92
272,148.83
27,205.88
858,540.03
5,300.18
863,840.21
38,732.49
525,792.90
191,254.90
3,142.74
758,923.03
15,454.80
774,377.83
15 Capital employed (9) - (12)
224,623.91 (229,963.98)
80,893.93
24,063.14
99,617.00
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
(10,154.62)
89,462.38
32.85
10.15
846.56
659.66
150.30
90.78
97.69
1,127.40
72.53
833.12
20 Provisions for non - performing assets / others*
(7.64)
2,159.35
841.13
605.17
3,598.01
21 Unallocated other provisions*
*Represents material non-cash charge other than depreciation and taxation.
(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
(4.71)
(cid:8)` crore)
Domestic
International
80,578.80
1,023.65
839,928.73
23,911.48
1,125.94
1.46
HDFC Bank Limited Annual Report 2017-18
144
Schedules to the Financial Statements
For the year ended March 31, 2018
26 Liquidity coverage ratio
Quantitative information on Liquidity Coverage Ratio (LCR) for year ended March 31, 2018 is given below:
(` crore)
Particulars
1 Total High Quality Liquid
Assets (HQLA)
(cid:0)(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
March 31, 2018
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
December 31, 2017
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
September 30, 2017
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
June 30, 2017
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
159,124.53
144,640.70
139,746.99
129,486.04
2 Retail deposits and deposits
451,439.43
41,543.33 437,781.88
40,242.17 424,604.50
39,008.20 416,803.77
38,258.84
from small business
customers, of which:
(i) Stable deposits
72,012.25
3,600.61
70,720.40
3,536.02
69,044.92
3,452.25
68,430.67
3,421.53
(ii) Less stable deposits
379,427.18
37,942.72 367,061.48
36,706.15 355,559.58
35,555.95 348,373.10
34,837.31
3 Unsecured wholesale
funding, of which:
217,228.50 108,512.17 218,185.05 108,548.59 208,551.94 103,584.62 193,071.47
97,650.85
(i) Operational deposits (all
30,439.14
7,531.20
32,391.28
8,019.39
27,759.15
6,860.56
26,283.04
6,494.60
counterparties)
(ii) Non-operational deposits (all
177,618.56
91,810.17 176,441.84
91,177.28 172,534.99
88,466.26 156,271.16
80,638.98
counterparties)
(iii) Unsecured debt
9,170.80
9,170.80
9,351.92
9,351.92
8,257.80
8,257.80
10,517.27
10,517.27
4 Secured wholesale funding
8,812.39
4,075.92
2,629.35
1,109.89
5 Additional requirements, of
100,425.78
66,017.10
89,779.68
61,816.62
97,874.66
65,983.77
86,528.11
56,903.77
which:
(i) Outflows related to derivative
55,868.70
55,868.70
52,671.96
52,671.96
57,282.24
57,282.24
48,362.71
48,362.71
exposures and other
collateral requirement
(ii) Outflows related to loss of
funding on debt products
-
-
-
-
-
-
-
-
(iii) Credit and liquidity facilities
44,557.08
10,148.40
37,107.72
9,144.66
40,592.42
8,701.53
38,165.40
8,541.06
6 Other contractual funding
18,406.90
18,406.90
16,645.61
16,645.61
16,735.66
16,735.66
22,232.29
22,232.29
obligation
7 Other contingent funding
59,074.58
1,772.24
57,544.60
1,726.34
53,170.78
1,595.12
55,532.12
1,870.86
obligations
8 Total Cash Outflows
245,064.13
233,055.25
229,536.72
218,026.50
9 Secured lending (e.g. reverse
repo)
60.11
-
685.87
-
457.78
-
1,158.69
-
10 Inflows from fully performing
51,397.30
27,229.36
48,750.21
25,705.12
42,881.46
22,698.40
41,246.92
21,944.76
exposures
11 Other cash inflows
72,083.27
66,513.09
66,728.00
61,994.69
69,006.74
63,779.42
59,786.42
55,149.29
12 Total Cash Inflows
123,540.68
93,742.45 116,164.08
87,699.81 112,345.98
86,477.82 102,192.03
77,094.05
13 (cid:52)(cid:47)(cid:52)(cid:33)(cid:44)(cid:0)(cid:40)(cid:49)(cid:44)(cid:33)
14 Total Net Cash Outflows
15 Liquidity Coverage Ratio (%)
Total
Adjusted
Value
159,124.53
151,321.68
105.16%
Total
Adjusted
Value
144,640.70
145,355.44
99.51%
Total
Adjusted
Value
139,746.99
143,058.90
97.68%
Total
Adjusted
Value
129,486.04
140,932.45
91.88%
* The average weighted and unweighted amounts are calculated taking simple average based on daily observation for the respective quarters.
HDFC Bank Limited Annual Report 2017-18
145
Schedules to the Financial Statements
For the year ended March 31, 2018
Quantitative information on Liquidity Coverage Ratio (LCR) for year ended March 31, 2017 is given below:
(` crore)
Particulars
1 Total High Quality Liquid
Assets (HQLA)
(cid:0)(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
March 31, 2017
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
December 31, 2016
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
September 30, 2016
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
June 30, 2016
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
unweighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
Total
weighted
value
(cid:8)(cid:65)(cid:86)(cid:69)(cid:82)(cid:65)(cid:71)(cid:69)(cid:9)(cid:10)
137,711.74
149,957.35
128,702.05
109,539.23
2 Retail deposits and deposits
417,330.77
38,198.75 415,071.84
37,863.08 373,552.53
34,159.65 359,804.34
32,862.93
from small business
customers, of which:
(i) Stable deposits
70,686.63
3,534.33
72,882.13
3,644.11
63,912.08
3,195.60
62,350.08
3,117.50
(ii) Less stable deposits
346,644.14
34,664.42 342,189.71
34,218.97 309,640.45
30,964.05 297,454.26
29,745.43
3 Unsecured wholesale
funding, of which:
184,624.84
91,871.70 184,555.12
93,303.55 173,841.76
87,591.52 157,036.26
80,630.67
(i) Operational deposits (all
27,567.30
6,814.73
26,530.40
6,556.63
24,314.59
6,008.20
21,290.21
5,262.08
counterparties)
(ii) Non-operational deposits (all
147,686.64
75,686.06 148,806.54
77,528.74 142,196.70
74,252.85 130,159.94
69,782.48
counterparties)
(iii) Unsecured debt
9,370.90
9,370.91
9,218.18
9,218.18
7,330.47
7,330.47
5,586.11
5,586.11
4 Secured wholesale funding
161.11
-
2,150.00
-
5 Additional requirements, of
85,739.97
54,644.47
94,703.09
61,891.19
90,930.14
57,181.27
93,163.68
57,797.70
which:
(i) Outflows related to derivative
44,943.06
44,943.06
51,903.36
51,903.36
47,316.91
47,316.91
46,907.18
46,907.18
exposures and other
collateral requirement
(ii) Outflows related to loss of
funding on debt products
-
-
-
-
-
-
-
-
(iii) Credit and liquidity facilities
40,796.91
9,701.41
42,799.73
9,987.83
43,613.23
9,864.36
46,256.50
10,890.52
6 Other contractual funding
24,420.02
24,420.02
20,914.62
20,914.62
17,944.34
17,944.34
15,940.48
15,940.48
obligation
7 Other contingent funding
52,591.16
2,596.66
50,409.16
1,512.27
49,183.26
1,475.50
47,915.37
1,437.46
obligations
8 Total Cash Outflows
211,892.71
215,484.71
200,502.28
188,669.24
9 Secured lending (e.g. reverse
repo)
-
-
1,333.33
-
5,033.33
-
1,355.17
3.28
10 Inflows from fully performing
39,276.52
21,397.60
36,889.88
19,466.20
35,305.32
18,815.99
33,897.47
18,070.68
exposures
11 Other cash inflows
58,695.96
53,161.71
65,066.62
59,505.52
66,471.65
61,083.74
62,858.78
57,290.61
12 Total Cash Inflows
97,972.48
74,559.31 103,289.83
78,971.72 106,810.30
79,899.73
98,111.42
75,364.57
13 (cid:52)(cid:47)(cid:52)(cid:33)(cid:44)(cid:0)(cid:40)(cid:49)(cid:44)(cid:33)
14 Total Net Cash Outflows
15 Liquidity Coverage Ratio (%)
Total
Adjusted
Value
137,711.74
137,333.40
100.28%
Total
Adjusted
Value
149,957.35
136,512.99
109.85%
Total
Adjusted
Value
128,702.05
120,602.55
106.72%
Total
Adjusted
Value
109,539.23
113,304.67
96.68%
* In accordance with RBI guidelines, average weighted and unweighted amounts are calculated taking simple daily average for the quarter
ended March 31, 2017 and simple average for the months in respective previous quarters in the financial year ended March 31, 2017.
HDFC Bank Limited Annual Report 2017-18
146
Schedules to the Financial Statements
For the year ended March 31, 2018
(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:0)(cid:79)(cid:78)(cid:0)(cid:44)(cid:35)(cid:50)
The Liquidity Coverage Ratio (LCR) is one of the Basel Committee’s key reforms to develop a more resilient banking sector.
The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks. It does this by ensuring that
banks have an adequate stock of unencumbered High Quality Liquid Assets (HQLA) that can be converted easily and immediately
into cash to meet their liquidity needs for a 30 calendar day liquidity stress scenario. The LCR is expected to improve the banking
sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the risk of spillover
from the financial sector to the real economy.
The LCR is calculated by dividing a bank’s stock of HQLA by its total net cash outflows over a 30-day stress period. The guidelines for
LCR were effective January 1, 2015, with the minimum requirement at 60%, which would rise in equal annual steps to reach 100%
on January 1, 2019. This graduated approach was designed to ensure that the LCR could be introduced without material disruption
to the orderly strengthening of banking systems or the ongoing financing of economic activity. The present requirement, as on
March 31, 2018 is 90%.
In the Indian context, the run-off factors for the stressed scenarios are prescribed by the RBI, for various categories of liabilities (viz.,
deposits, unsecured and secured wholesale borrowings), as well as for undrawn commitments and derivative-related exposures,
and which partially offset with inflows emanating from assets maturing within the same time period. Given below is the average LCR
maintained by the Bank quarter-wise over the past two years:
(cid:49)(cid:85)(cid:65)(cid:82)(cid:84)(cid:69)(cid:82)(cid:0)(cid:69)(cid:78)(cid:68)(cid:69)(cid:68)
March 31, 2018
December 31, 2017
September 30, 2017
June 30, 2017
March 31, 2017
December 31, 2016
September 30, 2016
June 30, 2016
LCR Maintained (Average)
LCR Required
105.16%
99.51%
97.67%
91.88%
100.28%
109.85%
106.72%
96.68%
90.00%
80.00%
80.00%
80.00%
80.00%
70.00%
70.00%
70.00%
The average LCR for the quarter ended March 31, 2018 was at 105.16% as against 100.28% for the quarter ended March 31, 2017,
and well above the present prescribed minimum requirement of 90%. The average HQLA for the quarter ended March 31, 2018 was
` 159,124.53 crore, as against ` 137,711.74 crore for the quarter ended March 31, 2017. During the same period the composition of
government securities and treasury bills in the HQLA increased from 75% to 87%.
For the quarter ended March 31, 2018, derivative exposures (net of cash inflows) / collateral requirements and undrawn commitments
constituted just about 0.3% and 4% respectively of average cash outflow, in line earlier periods. A strong and diversified liabilities
profile has been at the helm of the Bank’s growth strategy. The Bank has consistently maintained a robust funding profile with a
significant portion of funding through deposits. As of March 31, 2018 the top 20 depositors comprised of 6% of total deposits, as
against 5% as of March 31, 2017.
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
Associate
International Asset Reconstruction Company Private Limited (ceased to be an associate with effect from March 9, 2018)
HDFC Bank Limited Annual Report 2017-18
147
Schedules to the Financial Statements
For the year ended March 31, 2018
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, Akuri by Puri, 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, 2018 are given below. A specific
related party transaction is disclosed as a significant 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: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) ` 11.65 crore (previous year: ` 25.03 crore); HDB Financial Services Limited
` 2.47 crore (previous year: ` 7.17 crore); Housing Development Finance Corporation Limited ` 5.96 crore (previous year:
` 5.57 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)` 136.61 crore (previous year: ` 139.21 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) ` 264.27 crore (previous year: ` 207.45
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: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) ` 1,759.67 crore (previous year: ` 1,453.54 crore); Housing
Development Finance Corporation Limited ` 405.17 crore (previous year: ` 343.10 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)` 432.53 crore (previous year: ` 373.55 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) ` 112.59 crore (previous year: ` 102.22 crore); HDFC Securities
Limited ` 129.06 crore (previous year: ` 60.64 crore).
The Bank’s related party balances and transactions for the year ended March 31, 2018 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
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
3,250.77
(3,250.77)
0.47
(0.47)
-
-
-
-
5.96
13.28
264.27
405.17
-
-
365.55
(811.29)
10.62
(10.62)
1,590.92
(1,590.92)
-
-
14.12
136.62
28.96
1,768.09
3,826.49
(3,826.49)
-
-
-
-
-
-
-
-
1.70
-
-
-
-
-
14.10
(37.45)
2.51
(2.51)
3.16
(3.45)
-
-
1.05
0.12
-
0.76
-
-
Total
3,630.42
(4,099.51)
13.60
(13.60)
1,594.08
(1,594.37)
-
-
22.83
150.02
293.23
2,174.02
3,826.49
(3,826.49)
HDFC Bank Limited Annual Report 2017-18
148
Schedules to the Financial Statements
For the year ended March 31, 2018
(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
Other investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
1,603.88
(1,603.88)
432.53
-
28.34
(60.79)
32.78
(36.17)
0.25
(0.27)
-
5,623.94
1,120.04
(1,165.58)
-
241.65
1.40
(7.74)
72.04
(175.20)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Key management
personnel
(` crore)
Total
-
-
2,723.92
(2,769.46)
5.67
-
-
-
-
-
-
-
19.29
-
438.20
241.65
29.74
(68.53)
104.82
(211.37)
0.25
(0.27)
19.29
5,623.94
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 at March 31, 2018
is ` 5,972.14 crore (previous year: ` 665.77 crore). The contingent credit exposure pertaining to these contracts computed in
line with the extant RBI guidelines on exposure norms is ` 80.76 crore (previous year: ` 40.18 crore).
During the year ended March 31, 2018, the Bank purchased debt securities from Housing Development Finance Corporation
Limited ` 2,105.00 crore (previous year: ` 2,320.00 crore) and from HDB Financial Services Limited `1,885.00 crore (previous
year: ` 1,427.00 crore) issued by these entities.
During the year ended March 31, 2018, the Bank paid rent of ` 0.66 crore (previous year: ` 0.66 crore) to party related to
the Bank’s key management personnel in relation to residential accommodation. As at March 31, 2018, the security deposit
outstanding was ` 3.50 crore (previous year: ` 3.50 crore).
The deposit outstanding from HDB Employees Welfare Trust as at March 31, 2018 was ` 49.26 crore (previous year: ` 48.52
crore). The Bank also paid interest on deposit from HDB Employees Welfare Trust aggregating to ` 3.21 crore (previous year:
` 3.68 crore).
The Bank’s related party balances and transactions for the year ended March 31, 2017 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
2,500.25
(2,500.25)
0.15
(0.15)
-
-
-
-
5.57
-
207.45
343.10
597.93
(816.14)
10.62
(10.65)
1,180.15
(1,588.18)
0.23
-
32.20
139.21
28.37
1,456.69
25.05
(25.05)
-
-
0.05
(0.05)
-
-
0.51
-
-
-
13.61
(60.14)
2.51
(2.51)
3.44
(3.44)
-
-
1.02
0.03
-
0.76
3,136.84
(3,401.58)
13.28
(13.31)
1,183.64
(1,591.67)
0.23
-
39.30
139.24
235.82
1,800.55
HDFC Bank Limited Annual Report 2017-18
149
Schedules to the Financial Statements
For the year ended March 31, 2018
(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
Equity investments
Other Investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
-
-
-
(126.48)
373.55
-
23.16
(23.16)
33.67
(33.67)
0.12
(0.14)
-
13,845.65
3,812.15
(3,812.15)
675.00
(675.00)
-
162.86
2.05
(2.38)
103.25
(137.18)
-
(0.05)
-
-
31.17
(31.17)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.49
-
-
-
-
-
-
-
20.79
-
(` crore)
Total
3,843.32
(3,843.32)
675.00
(801.48)
378.04
162.86
25.21
(25.54)
136.92
(170.85)
0.12
(0.19)
20.79
13,845.65
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
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
Details of breach of limits on intra-group exposures and regulatory action
thereon, if any
March 31, 2018
March 31, 2017
7,137.13
7,137.13
0.67%
4,502.47
4,502.47
0.48%
Nil
Nil
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
March 31, 2018
March 31, 2017
(` crore)
958.85
3,107.95
3,540.07
7,606.87
1,166.50
6.33
7.77
174.87
939.53
2,980.22
3,043.98
6,963.73
1,094.86
25.33
11.31
138.79
HDFC Bank Limited Annual Report 2017-18
150
Schedules to the Financial Statements
For the year ended March 31, 2018
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.
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, 2018
March 31, 2017
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
230.50
139.93
(2.75)
367.68
136.85
95.10
(1.45)
230.50
During the year ended March 31, 2018, RBI did not impose any penalty on the Bank (previous year ` 2.00 crore).
(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, 2018
March 31, 2017
(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
2,349
1,20,439
1,18,724
4,064
651
96,454
94,756
2,349
(B) ATM transaction disputes relating to the Bank’s customers on the Bank’s ATMs
Particulars
March 31, 2018
March 31, 2017
(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
145
19,105
19,025
225
1.00
101
12,703
12,659
145
0.62
(C) ATM transaction disputes relating to the Bank’s customers on other banks’ ATMs
Particulars
March 31, 2018
March 31, 2017
(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
1,464
1,27,307
1,26,218
2,553
4.98
1,118
95,415
95,069
1,464
3.69
HDFC Bank Limited Annual Report 2017-18
151
Schedules to the Financial Statements
For the year ended March 31, 2018
(D) Total customer complaints and ATM transaction disputes [total of tables (A), (B) and (C) above]
Particulars
March 31, 2018
March 31, 2017
(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
3,958
2,66,851
2,63,967
6,842
1,870
2,04,572
2,02,484
3,958
Note: ATM transaction disputes reported in the above tables are in accordance with RBI guidelines on disclosure of
customer complaints.
(cid:115)(cid:0)
(cid:33)(cid:87)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:80)(cid:65)(cid:83)(cid:83)(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: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:0)(cid:8)(cid:34)(cid:47)(cid:9)
Particulars
March 31, 2018
March 31, 2017
(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)
-
-
-
-
-
-
-
-
The average number of customer complaints per branch, including ATM transaction disputes, was 4.7 per month during
the year ended March 31, 2018 (previous year: 3.7 per month). For the year ended March 31, 2018, retail liability segment
accounted for 76.46% of the total complaints (previous year: 74.61%), followed by credit cards at 17.14% of the total
complaints (previous year: 18.15%), retail assets at 5.57% of the total complaints (previous year: 6.08%), while other
segments accounted for 0.83% of total complaints (previous year: 1.16%). The top 10 areas of customer complaints
for the year ended March 31, 2018, including ATM transaction disputes, aggregated 2,03,045 complaints (previous
year: 1,48,462 complaints) and accounted for 76.09% of total complaints (previous year: 72.57%). 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’, phishing / unauthorized usage through debit card online, transaction dispute related
- credit cards, phishing / unauthorized usage through debit card done at other bank’s ATM’s and Sales 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, 2017, the number of BO complaints per branch for the
Bank was 2.07 (previous year: 1.68). The number of BO complaints other than credit cards per 1,000 accounts was at
0.14 (previous year: 0.13).The number of BO complaints (credit card related) per 1,000 cards was at 0.08 (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, 2018 and March 31, 2017.
HDFC Bank Limited Annual Report 2017-18
152
Schedules to the Financial Statements
For the year ended March 31, 2018
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 during the years
ended March 31, 2018 and March 31, 2017. The above is based on the information available with the Bank which has been
relied upon by the auditors.
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, 2018
March 31, 2017
26,946.53
23,911.48
134.64
818.12
121.59
1,023.65
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, 2018 (previous year: Nil).
38 Corporate social responsibility
Operating expenses include ` 374.54 crore (previous year: ` 305.42 crore) for the year ended March 31, 2018 towards
Corporate Social Responsibility (CSR), in accordance with Companies Act, 2013.
The Bank has spent 2.04 % (previous year: 2.01%) of its average net profit for the last three financial years as part of its CSR
for the year ended March 31, 2018. 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, 2018
March 31, 2017
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
(ii) On purpose other than (i) above
-
374.54
-
-
-
-
374.54
305.42
-
-
-
305.42
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 during the years ended March 31, 2018 and March 31, 2017.
HDFC Bank Limited Annual Report 2017-18
153
Schedules to the Financial Statements
For the year ended March 31, 2018
40 Disclosure on remuneration to Non-Executive Directors
Remuneration by way of sitting fees to the Non-Executive Directors for attending meetings of the Board and its committees
during the year ended March 31, 2018 amounted to ` 1.58 crore (previous year: ` 1.67 crore).
Further, in accordance with RBI guidelines, profit related commission to all Non-Executive Directors other than the Chairperson
for the year ended March 31, 2018 amounted to ` 0.80 crore (previous year: ` 0.80 crore).
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
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
Mumbai, April 21, 2018
HDFC Bank Limited Annual Report 2017-18
154
Basel III - Pillar 3 Disclosures
As at March 31, 2018
The Reserve Bank of India (RBI) vide its circular under reference DBR.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 given below:
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 2017-18
155
Independent Auditor’s Report
To the Members of HDFC Bank Limited
Report on the Consolidated Financial Statements
1. We have audited the accompanying consolidated
financial statements of HDFC BANK LIMITED
(hereinafter referred to as “the Holding Company”)
and its subsidiaries (the Holding Company and its
subsidiaries together referred to as “the Group”) which
includes the Group’s share of profit in its associate,
comprising the Consolidated Balance Sheet as at 31st
March, 2018, 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”) - [See paragraph 5 below]
2. Management’s Responsibility for the Consolidated
Financial Statements
The Holding Company’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 and its associate in accordance with provisions
of Section 29 of the Banking Regulation Act, 1949,
Accounting Standards prescribed under Section 133
of the Act read with the Companies (Accounting
Standards) Rules, 2006, as amended (“Accounting
Standards”), the other accounting principles generally
accepted in India, 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 the associate are
responsible for maintenance of adequate accounting
records in accordance with the provisions of the Act
for safeguarding the assets of the Group and the
associate and for preventing and detecting frauds and
other irregularities; the selection and application of
appropriate accounting policies; making judgments 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 consolidated 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
Holding Company, as aforesaid.
Auditor’s Responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
In conducting 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.
3.
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 disclosures in
the consolidated financial statements. The procedures
selected depend on the auditor’s judgment, 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 controls relevant to
the Holding Company’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 Holding Company’s Board of Directors, and
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 report referred to in sub-paragraph (a)
of paragraph 5 below, is sufficient and appropriate to
provide a basis for our audit opinion on the consolidated
financial statements.
4. Opinion
In our opinion and to the best of our information and
according to the explanations given to us and based
on the matters referred to in paragraph 5 below, 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 applicable Accounting Standards and other
accounting principles generally accepted in India, of
the consolidated state of affairs of the Group as at
31st March, 2018, and the consolidated profit and
consolidated cash flows for the year ended on that date.
5. Other Matters
a) We did not audit the financial statements of
two subsidiaries whose financial statements
reflect total assets of ` 46,391.72 crores as at
31st March, 2018, total revenues of ` 7,829.17
crores and net cash (outflows) amounting to
` 63.52 crores for the year ended on that date,
as considered in the consolidated financial
statements. 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
HDFC Bank Limited Annual Report 2017-18
156
b)
included in respect of these subsidiaries, and our
report in terms of subsection (3) of Section 143
of the Act, in so far as it relates to the aforesaid
subsidiaries is based solely on the reports of the
other auditors.
The consolidated financial statements also include
the Group’s share of net profit of ` 0.52 crores
for the period from 1st April 2017 to 9th March
2018, 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 Holding Company’s
Management, these financial statements are not
material to the Group.
Our opinion on the consolidated financial
statements above 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 of the
associate.
6.
Report on Other Legal and Regulatory Requirements
As required by Section 143(3) of the Act, based on our
audit and on the consideration of the reports of the other
auditors on separate financial statements of subsidiaries
referred to in paragraph 5 above 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)
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.
(c) 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 at 31st March, 2018 taken on
record by the Board of Directors of the Holding
Company and the reports of the statutory auditors
of the subsidiary companies not audited by us,
none of the directors of the Group companies is
disqualified as at 31st March, 2018 from being
appointed as a director in terms of Section 164 (2)
of the Act.
(f) With respect to the adequacy of the internal
financial controls over financial reporting and the
operating effectiveness of such controls, refer
to our separate report in “Annexure A” which is
based on the auditor’s report of the Bank and
its subsidiary companies incorporated in India.
Our report expresses an unmodified opinion on
the adequacy and operating effectiveness of the
Group’s internal financial controls over financial
reporting of those companies, for the reasons
stated therein.
(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,
as amended, 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;
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 Holding Company and its subsidiary
companies.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Mumbai
April 21, 2018
Porus B. Pardiwalla
Partner
(Membership No. 40005)
HDFC Bank Limited Annual Report 2017-18
157
ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S
REPORT
and maintained and if such controls operated effectively in all
material respects.
(Referred to in paragraph 6.f under ‘Report on Other
Legal and Regulatory Requirements’ section 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”)
In conjunction with our audit of the consolidated financial
statements of the Holding Company as of and for the year
ended 31st March, 2018 we have audited the internal
financial controls over financial reporting of the Group [See
paragraphs 1 and 5 of our Report on the Consolidated
Financial Statements].
Management’s Responsibility for Internal Financial
Controls
The respective Board of Directors of the Holding company,
its subsidiary companies and its associate company, which
are companies incorporated in India, are responsible for
establishing and maintaining internal financial controls
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 on Audit of Internal Financial Controls Over
Financial Reporting (“the Guidance Note”) issued by the
Institute of Chartered Accountants of India (“ICAI”). 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, as
applicable.
Auditor’s Responsibility
Our responsibility is to express an opinion on the internal
financial controls over financial reporting, 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 were established
An 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 audit evidence obtained by the other auditors, in terms
of their reports referred to in paragraph 5 of our Report on
the Consolidated Financial Statements, is sufficient and
appropriate to provide a basis for our audit opinion on the
internal financial controls system over financial reporting of
the Holding Company and its subsidiary companies, which are
companies incorporated in India.
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
HDFC Bank Limited Annual Report 2017-18
158
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 and based on the matters
referred to in paragraph 5 of our Report on the Consolidated
Financial Statements, the Group 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, 2018,
based on 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.
Our opinion is not modified in respect of the matters referred
to in paragraph 5 of our Report on the Consolidated Financial
Statements.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm’s Registration No. 117365W)
Porus B. Pardiwalla
Partner
(Membership No. 40005)
Mumbai
April 21, 2018
HDFC Bank Limited Annual Report 2017-18
159
Consolidated Balance Sheet
As at March 31, 2018
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
As at
` in ‘000
As at
Schedule
31-Mar-18
31-Mar-17
1
2
2A
3
4
5
5,190,181
5,125,091
1,090,801,062
912,814,397
3,563,322
2,914,389
7,883,751,419
6,431,342,479
1,564,420,848
984,156,439
484,134,863
587,088,812
Total
11,031,861,695
8,923,441,607
6
7
8
9
10
11
1,046,882,074
379,105,485
183,733,488
114,005,711
2,384,609,240
2,107,771,120
7,000,338,363
5,854,809,871
38,105,583
38,146,997
378,192,947
429,602,423
Total
11,031,861,695
8,923,441,607
12
8,757,769,674
8,182,842,892
427,538,250
308,480,352
Significant accounting policies and notes to the Consolidated financial
statements
17 & 18
The schedules referred to above form an integral part of the
Consolidated 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 21, 2018
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2017-18
160
Consolidated Statement of Profit and Loss
For the year ended March 31, 2018
Schedule
Year ended
31-Mar-18
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
Impact on amalgamation [Refer Schedule 18(1)]
Balance in Profit and Loss account brought forward
13
14
Total
15
16
Total
Total
IV APPROPRIATIONS
Transfer to Statutory Reserve
Proposed dividend [Refer Schedule 18(2)]
Tax (including cess) on interim / proposed 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
As per our report of even date.
For and on behalf of the Board
Total
17 & 18
852,878,437
160,566,041
1,013,444,478
423,814,803
239,272,220
164,749,045
827,836,068
185,608,410
513,389
5,221
185,100,242
-
345,323,284
530,423,526
45,620,310
-
507,653
33,905,804
17,486,728
2,355,227
(442,018)
430,989,822
530,423,526
`
71.73
70.76
` in ‘000
Year ended
31-Mar-17
732,713,529
128,776,329
861,489,858
380,415,844
207,510,707
120,689,285
708,615,836
152,874,022
367,165
23,393
152,530,250
274,507
248,255,886
401,060,643
37,771,634
-
255,959
(16,909)
14,549,641
3,134,100
42,934
345,323,284
401,060,643
`
59.95
59.16
For Deloitte Haskins & Sells
Chartered Accountants
Shyamala Gopinath
Chairperson
Aditya Puri
Managing Director
P. B. Pardiwalla
Partner
Membership No.: 40005
Mumbai, April 21, 2018
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2017-18
161
Consolidated Cash Flow Statement
For the year ended March 31, 2018
Cash flows from operating activities
Consolidated profit before income tax
284,131,068
233,311,478
` in ‘000
Year ended
Year ended
31-Mar-18
31-Mar-17
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
Contingency provisions
Share in current year's profits of associates
Adjustments for:
9,667,819
8,861,876
1,570,448
(87,543)
3,599,102
1,756,569
11,833
16,229
57,553,339
37,024,296
308,075
-
(76,417)
250,000
6,575,746
4,312,322
3,961,191
(5,221)
388,440
(23,393)
367,373,400
285,733,857
(Increase) / decrease in investments (excluding investments in subsidiaries)
(282,310,524)
(173,257,700)
(Increase) / decrease in advances
Increase / (decrease) in deposits
(Increase) / decrease in other assets
(1,203,053,719)
(1,018,904,990)
1,452,408,940
972,609,590
52,336,433
(44,855,329)
Increase / (decrease) in other liabilities and provisions
(114,511,772)
228,337,692
Direct taxes paid (net of refunds)
Net cash 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 2017-18
162
272,242,758
249,663,120
(100,098,994)
(76,847,189)
172,143,764
172,815,931
(8,477,746)
(11,577,570)
99,204
100,768
(143,331)
-
(8,521,873)
(11,476,802)
Consolidated Cash Flow Statement
For the year ended March 31, 2018
Cash flows from financing activities
Increase in minority interest
` in ‘000
Year ended
Year ended
31-Mar-18
31-Mar-17
666,553
818,605
Money received on exercise of stock options by employees
27,259,098
22,615,161
Increase / (decrease) in borrowings (excluding subordinate debt,
perpetual debt and upper Tier II instruments)
501,014,409
(33,898,658)
Proceeds from issue of Additional Tier I and Tier II Capital Bonds
100,000,000
-
Redemption of subordinated debt
Dividend paid during the year
Tax on dividend
Net cash (used in) / from financing activities
(20,750,000)
(19,084,500)
(28,312,716)
(24,083,093)
(6,100,741)
(5,297,258)
573,776,603
(58,929,743)
Effect of exchange fluctuation on translation reserve
105,872
(282,622)
Cash and cash equivalents on amalgamation [Refer Schedule 18(1)]
-
295,617
Net increase in cash and cash equivalents
Cash and cash equivalents as at April 1st
737,504,366
102,422,381
493,111,196
390,688,815
Cash and cash equivalents as at March 31st
1,230,615,562
493,111,196
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 21, 2018
Paresh Sukthankar
Deputy Managing Director
Kaizad Bharucha
Executive Director
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
HDFC Bank Limited Annual Report 2017-18
163
Schedules to the Consolidated Financial Statements
As at March 31, 2018
SCHEDULE 1 - CAPITAL
Authorised capital
3,25,00,00,000 (31 March, 2017: 3,25,00,00,000) Equity Shares of ` 2/- each
Issued, subscribed and paid-up capital
2,59,50,90,267 (31 March, 2017: 2,56,25,45,717) 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
As at
` in ‘000
As at
31-Mar-18
31-Mar-17
6,500,000
6,500,000
Total
5,190,181
5,190,181
5,125,091
5,125,091
187,703,201
149,931,567
45,620,310
37,771,634
Total
233,323,511
187,703,201
71,919,150
17,486,728
89,405,878
57,369,509
14,549,641
71,919,150
Total
III
Balance in profit and loss account
430,989,822
345,323,284
IV
Share premium account
Opening balance
Additions during the year
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
VIII
Foreign currency translation account
Opening balance
Additions / (deductions) during the year
HDFC Bank Limited Annual Report 2017-18
164
284,751,089
262,204,646
27,194,008
22,546,443
Total
311,945,097
284,751,089
10,635,564
10,635,564
-
-
Total
10,635,564
10,635,564
12,000,683
2,355,227
8,866,583
3,134,100
Total
14,355,910
12,000,683
442,018
45,086
(487,104)
-
39,408
105,872
145,280
399,084
109,506
(66,572)
442,018
322,030
(282,622)
39,408
1,090,801,062
912,814,397
Total
Total
Total
Schedules to the Consolidated Financial Statements
As at March 31, 2018
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 ` 76.78 crore (previous year ` 70.83 crore)
SCHEDULE 3 - DEPOSITS
A
I
Demand deposits
From banks
(i)
From others
(ii)
II
III
Savings bank deposits
Term deposits
(i)
(ii)
From banks
From others
B
I
II
Deposits of branches in India
Deposits of branches outside India
Reserve Bank of India
SCHEDULE 4 - BORROWINGS
Borrowings in India
I
(i)
(ii) Other banks
(iii) Other institutions and agencies
(iv) Upper and lower Tier II capital and innovative perpetual debts
(v)
Bonds and Debentures (excluding subordinated debt)
II
Borrowings outside India
Secured borrowings included in I & II above: ` 27,269.82 crore (previous year: ` 20,606.90
crore) except borrowings of ` 14,239.95 crore (March 31, 2017: Nil) under Collateralised
Borrowing and Lending Obligation and transactions under Liquidity Adjustment Facility and
Marginal Standing Facility.
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I
II
III
IV
Bills payable
Interest accrued
Others (including provisions)
Contingent provisions against standard assets
HDFC Bank Limited Annual Report 2017-18
165
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
276,029
276,029
Total
3,287,293
3,563,322
2,638,360
2,914,389
27,237,788
1,162,864,325
1,190,102,113
2,237,968,679
20,806,377
1,132,892,089
1,153,698,466
1,935,786,271
72,775,645
4,382,904,982
4,455,680,627
7,883,751,419
53,520,609
3,288,337,133
3,341,857,742
6,431,342,479
7,843,931,322
39,820,097
7,883,751,419
6,391,351,770
39,990,709
6,431,342,479
Total
Total
Total
Total
138,000,000
168,280,179
371,460,868
231,070,000
290,528,000
Total
1,199,339,047
365,081,801
1,564,420,848
Total
-
97,371,546
249,710,383
149,020,000
252,038,000
748,139,929
236,016,510
984,156,439
82,217,908
66,759,768
303,545,722
31,611,465
484,134,863
166,670,863
45,914,476
349,467,514
25,035,959
587,088,812
Total
Schedules to the Consolidated Financial Statements
As at March 31, 2018
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)
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)
(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)
In current accounts
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)
Investment in associates
(vi) Others (Units, CDs / CPs, PTCs and security receipts)
As at
` in ‘000
As at
31-Mar-18
31-Mar-17
75,500,625
42,772,675
364,381,449
284,332,810
607,000,000
52,000,000
971,381,449
336,332,810
1,046,882,074
379,105,485
Total
Total
8,734,805
2,091,212
5,531,745
9,716,581
Total
10,826,017
15,248,326
Total
Total
-
45,018,623
45,018,623
-
-
-
55,844,640
15,248,326
26,124,304
36,772,777
6,191,625
2,529,150
95,572,919
59,455,458
Total
Total
127,888,848
98,757,385
183,733,488
114,005,711
1,883,648,036
-
1,396,772
1,624,186,994
-
1,219,538
336,681,684
187,965,272
-
402,955
147,405,912
282,816,215
Total
2,369,132,404
2,096,590,974
B
Investments outside India in
(i) Government securities (including Local Authorities)
4,218,786
-
(ii) Other investments
(a) Shares
(b) Debentures and bonds
28,375
28,375
11,229,675
11,151,771
15,476,836
11,180,146
2,384,609,240
2,107,771,120
Total
Total
HDFC Bank Limited Annual Report 2017-18
166
Schedules to the Consolidated Financial Statements
As at March 31, 2018
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 2017-18
167
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
2,371,618,039
2,097,219,426
15,606,451
11,206,487
Total
2,387,224,490
2,108,425,913
2,485,635
129,615
Total
2,615,250
628,452
26,341
654,793
2,369,132,404
2,096,590,974
15,476,836
11,180,146
Total
2,384,609,240
2,107,771,120
216,592,055
287,159,641
1,681,643,640
1,336,174,162
5,102,102,668
4,231,476,068
Total
7,000,338,363
5,854,809,871
5,042,641,201
4,232,238,514
191,682,760
227,526,268
1,766,014,402
1,395,045,089
Total
7,000,338,363
5,854,809,871
1,765,302,486
1,646,022,483
137,708,318
157,741,065
8,357,208
9,092,668
4,885,715,328
3,843,921,442
Total
6,797,083,340
5,656,777,658
33,046,352
6,500,391
1,052,278
2,560,707
18,265,990
17,845,564
150,890,403
171,125,551
203,255,023
198,032,213
7,000,338,363
5,854,809,871
Total
Total
Schedules to the Consolidated Financial Statements
As at March 31, 2018
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 on amalgamation
Additions during the year
Deductions during the year
Depreciation
As at 31 March of the preceding year
Additions on amalgamation
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 2017-18
168
As at
31-Mar-18
` in ‘000
As at
31-Mar-17
16,384,648
15,785,543
978,572
669,452
(77,395)
(70,347)
Total
17,285,825
16,384,648
4,798,856
4,262,700
597,187
595,216
(74,579)
(59,060)
Total
5,321,464
4,798,856
11,964,361
11,585,792
84,574,310
74,900,241
-
377,694
8,752,421
11,525,792
(1,216,788)
(2,229,417)
Total
92,109,943
84,574,310
58,013,105
51,626,108
-
245,859
9,071,123
8,264,659
(1,115,507)
(2,123,521)
Total
65,968,721
58,013,105
26,141,222
26,561,205
4,546,923
4,546,923
-
-
Total
4,546,923
4,546,923
Schedules to the Consolidated Financial Statements
As at March 31, 2018
As at
` in ‘000
As at
31-Mar-18
31-Mar-17
4,104,467
4,104,467
-
-
Total
4,104,467
4,104,467
442,456
442,456
-
-
Total
442,456
442,456
-
-
Total
38,105,583
38,146,997
90,775,781
83,177,119
18,304,321
17,270,130
333,306
267,871
-
-
5,167,669
5,095,162
263,611,870
323,792,141
Total
378,192,947
429,602,423
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
Security deposit for commercial and residential property
Others *
*Includes deferred tax asset (net) of ` 3,532.07 crore (previous year: ` 2,587.06 crore), goodwill
of ` 197.57 crore (previous year: ` 185.00 crore) and deposits placed with NABARD / SIDBI
/ NHB on account of shortfall in lending to priority sector of ` 13,357.25 crore (previous year:
` 11,882.37 crore)
SCHEDULE 12 - CONTINGENT LIABILITIES
Claims against the bank not acknowledged as debts - taxation
Claims against the bank not acknowledged as debts - others
11,359,710
10,724,100
1,985,622
2,010,238
Liability on account of outstanding forward exchange contracts
4,344,675,713
4,699,301,366
Liability on account of outstanding derivative contracts
3,482,687,822
2,723,068,634
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 2017-18
169
448,741,092
366,232,012
557,296
953,405
395,452,699
359,613,744
72,309,720
20,939,393
Total
8,757,769,674
8,182,842,892
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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-18
31-Mar-17
676,589,047
559,861,841
162,297,863
159,515,563
5,406,186
5,448,567
8,585,341
7,887,558
Total
852,878,437
732,713,529
122,935,083
94,767,987
11,005,345
11,447,093
(1,570,448)
87,543
(11,833)
(16,229)
15,234,978
12,633,895
12,972,916
9,856,040
Total
160,566,041
128,776,329
327,540,435
312,955,921
95,426,124
65,834,950
848,244
1,624,973
Total
423,814,803
380,415,844
91,939,035
85,047,014
15,231,599
14,305,273
4,821,103
4,773,398
1,719,205
1,523,765
9,667,819
8,861,876
32,496
26,301
35,221
25,758
1,648,413
1,249,095
4,850,740
4,491,632
13,149,745
12,717,968
8,286,960
6,914,913
87,898,804
67,564,794
Total
239,272,220
207,510,707
*Includes professional fees, commission to sales agents, card and merchant acquiring expenses and
system management fees.
HDFC Bank Limited Annual Report 2017-18
170
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
SCHEDULE 17 - Significant accounting policies appended to and forming part of the consolidated financial statements for
the year ended March 31, 2018
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, Dubai and Offshore Banking Unit at International Financial Service Centre (IFSC), at GIFT
City, Gandhinagar in Gujarat. The financial accounting systems of the Bank are centralised and, therefore, accounting returns
are not required to be submitted by branches of the Bank.
HDB Financial Services Limited (HDBFSL) and HDFC Securities Limited (HSL) are subsidiaries of the Bank. HDBFSL is a
non-deposit taking non-banking finance company. HSL is a financial services provider along with broking as a core product.
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 in an associate.
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.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires the management to make estimates
and necessary assumptions 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.
Basis of consolidation
The consolidated financial statements present the accounts of HDFC Bank Limited with its following subsidiaries and associate:
Name
HDFC Securities Limited
HDB Financial Services Limited
International Asset Reconstruction Company Private Limited***
HDB Employee Welfare Trust
Relation
Subsidiary
Subsidiary
Associate
*
Country of
incorporation
Ownership
interest**
India
India
India
India
97.7%
95.9%
19.2%
*
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 2017-18
171
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
*** The un-audited financial statements of an associate have been drawn for the period ended December 31, 2017.
International Asset Reconstruction Company Private limited ceased to be an associate with effect from March 9, 2018
on account of reduction in ownership interest from 29.4% to 19.2%.
During the year ended March 31, 2018 the Bank’s shareholding in HDB Financial Services Limited decreased from
96.2% to 95.9% on account of the stock options exercised by minority stakeholders.
During the year ended March 31, 2018 the Bank’s shareholding in HDFC Securities Limited decreased from 97.9% to
97.7% on account of the stock options exercised by minority stakeholders and additional stake purchased from minority.
During the year ended March 31, 2017, Atlas Documentary Facilitators Company Private Limited and HBL Global Private
Limited, associates of the Bank as at March 31, 2016, amalgamated with HDB Financial Services Limited, pursuant to the
approval of the Honourable High courts of Gujarat and Bombay with effect from December 1, 2016. The appointed date of
the merger as per the scheme of amalgamation was April 1, 2014. Accordingly, the consolidated financial statements include
the effect of the said amalgamation.
The audited financial statements of the subsidiary companies, entity controlled by the Bank have been drawn up to the same
reporting date as that of the Bank, i.e. March 31, 2018.
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 the 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.
HDFC Bank Limited Annual Report 2017-18
172
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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.
Investment in unquoted Venture Capital Fund (VCF) are categorised under HTM category for the initial period of three years
and valued at cost. Such investment are required to be transferred to AFS thereafter.
Pass Through Certificates (PTC) including Priority Sector-PTCs are valued by using FIMMDA credit spread as applicable for
the NBFC category, based on the credit rating of the respective PTC over the YTM rates for government securities published
by FIMMDA.
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, repurchase and reverse repurchase transactions in government securities and
corporate debt securities 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 is
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,
HDFC Bank Limited Annual Report 2017-18
173
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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 investments are recognised as short term / current investments and are valued at lower of cost and net realisable
value.
Interest on borrowings is recognised in the 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.
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, inter-bank participation with risk, 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.
Non-performing advances 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. Provision for standard assets
is included under other liabilities.
Provisions made in addition to 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 are 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. Provision for country risk is included under other liabilities.
HDFC Bank Limited Annual Report 2017-18
174
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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, of a 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.
HDB Financial Services Limited
Classification:
Advances are classified as standard, sub-standard 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 0.40% on standard assets as stipulated by RBI master direction (RBI/DNBR/2016-17/45 Master
Direction DNBR PD 008/03.10.119/2016-17) issued on September 1, 2016 Non-Banking Financial Company – Systematically
Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions 2016 as amended.
Loan origination costs:
Brokerage, commission, incentive to employee, etc. paid at the time of acquisition of loans are charged to expenses.
3
Securitisation and transfer of assets
HDFC Bank Limited
The Bank securitises out its receivables 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 in
line with RBI guidelines. The Bank also acts as a servicing agent for receivable pools securitised-out.
The Bank 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’).
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 Bank amortises any profit received for every individual securitisation or direct assignment transaction
based on the method prescribed in these guidelines.
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.
HDFC Bank Limited Annual Report 2017-18
175
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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.
The Bank enters into transactions for the sale or purchase of Priority Sector Lending Certificates (PSLCs). In the case of a
sale transaction, the Bank sells the fulfillment of priority sector obligation and in the case of a purchase transaction the Bank
buys the fulfillment of priority sector obligation through the RBI trading platform. There is no transfer of risks or loan assets.
The fee received for the sale of PSLCs is recorded as ‘Miscellaneous Income’ and the fee paid for purchase of the PSLCs
is recorded as ‘Other Expenditure’ in Statement of Profit and Loss. These are amortised over the period of the Certificate.
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 and 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 over the tenor of the loans.
HDB Financial Services Limited
(cid:0)(cid:0)
(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 for more than 90 days. 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 management believes
that the useful life of assets assessed by the Bank, pursuant to the Companies Act, 2013, taking into account changes in
environment, changes in technology, the utility and efficacy of the asset in use, fairly reflects its estimate of useful lives of
the fixed assets. The estimated useful lives of key fixed assets are given below:
HDFC Bank Limited Annual Report 2017-18
176
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Asset
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
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
3 to 6 years
4 years
16 years
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 2017-18
177
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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 estimate 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: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:115)(cid:0)(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: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:82)(cid:69)(cid:81)(cid:85)(cid:73)(cid:82)(cid:69)(cid:68)(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:52)(cid:72)(cid:69)(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:80)(cid:69)(cid:82)(cid:73)(cid:79)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
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
4 years
Estimated useful life
under Schedule II of
Companies Act, 2013
8 years
(cid:115)(cid:0)(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: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:0)(cid:79)(cid:82)(cid:0)(cid:73)(cid:84)(cid:83)(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:12)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:69)(cid:86)(cid:69)(cid:82)(cid:0)(cid:73)(cid:83)(cid:0)
lower.
(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)
HDFC Bank Limited Annual Report 2017-18
178
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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 at 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 Securities Limited
Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. Exchange
differences, if any, arising out of transactions settled during the year are recognized in the Statement of Profit and Loss.
Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at the closing
exchange rate on that date. The exchange differences, if any, are recognised in the Statement of Profit and Loss and related
assets and liabilities are accordingly restated in the Balance Sheet.
HDFC Bank Limited Annual Report 2017-18
179
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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: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. Also in case of domestic advances, where interest is collected on rear end basis, such interest is
accounted on receipt basis in accordance with the RBI guidelines.
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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.
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recognised on a straight-line basis over the period of contract. Other fees and commission income are recognised when
due, where the Bank is reasonably certain of ultimate collection.
HDFC Securities Limited
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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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tax, stamp duties and 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 2017-18
180
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
HDB Financial Services Limited
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(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: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 2017-18
181
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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 make 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 target based incentives 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
re-ported as expenses during the period in which the employees perform the services that the payment covers.
HDFC Bank Limited Annual Report 2017-18
182
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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.
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, 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 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 recognized in the Statement of Profit and Loss.
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 The Institute of Chartered Accountants of India. The provision is based on an independent
external actuarial valuation at the Balance Sheet date.
HDFC Bank Limited Annual Report 2017-18
183
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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 the outstanding 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. The imports are typically on a back-to-back
basis and are priced to the customer based on the price quoted by the supplier. The difference between the price recovered
from customers and cost of bullion is classified 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.
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.
HDFC Bank Limited Annual Report 2017-18
184
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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:0)(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 Group; or
(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: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:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(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:83)(cid:0)(cid:73)(cid:84)(cid:0)(cid:73)(cid:83)(cid:0)(cid:78)(cid:79)(cid:84)(cid:0)(cid:80)(cid:82)(cid:79)(cid:66)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:65)(cid:78)(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)
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 and gold 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 2017-18
185
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
SCHEDULE 18 - Notes forming part of the consolidated financial statements for the year ended March 31, 2018
Amounts in notes forming part of the consolidated financial statements for the year ended March 31, 2018 are denominated in
rupee crore to conform to extant RBI guidelines, except where stated otherwise.
1
Amalgamation of Atlas Documentary Facilitators Company Private Limited and HBL Global Private Limited with
HDB Financial Services Limited
During the year ended March 31, 2017, Atlas Documentary Facilitators Company Private Limited and HBL Global Private
Limited, associates of the Bank as at March 31, 2016, amalgamated with HDB Financial Services Limited, pursuant to the
approval of the Honourable High courts of Gujarat and Bombay with effect from December 1, 2016. The appointed date of
the merger as per the scheme of amalgamation was April 1, 2014. Accordingly, the consolidated financial statements include
the effect of the said amalgamation.
2
Proposed dividend
The Board of Directors of the Bank, at their meeting held on April 21, 2018, have proposed a dividend of ` 13.00 per equity
share (previous year: ` 11.00) aggregating ` 4,067.07 crore (previous year: ` 3,392.71 crore), inclusive of tax on dividend.
The proposal is subject to the approval of shareholders at the Annual General Meeting. In terms of the revised Accounting
Standard (AS) 4 ‘Contingencies and Events Occurring After the Balance Sheet Date’ as notified by the Ministry of Corporate
Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, the Bank has not appropriated
the proposed dividend from the Statement of Profit and Loss. However, the effect of the proposed dividend has been reckoned
in determining consolidated capital funds in the computation of the capital adequacy ratios.
3
Capital infusion
During the year ended March 31, 2018, the Bank allotted 3,25,44,550 equity shares (previous year: 3,43,59,200 equity shares)
aggregating to face value ` 6.51 crore (previous year: ` 6.87 crore) in respect of stock options exercised. Accordingly, the
share capital increased by ` 6.51 crore (previous year: ` 6.87 crore) and the share premium increased by ` 2,719.40 crore
(previous year: ` 2,254.64 crore).
The Board of Directors of the Bank, at their meeting held on December 20, 2017 approved the raising of funds aggregating
up to ` 24,000 crore, of which an amount up to a maximum of ` 8,500 crore shall be through the issuance of equity shares
of face value of ` 2/- each pursuant to a preferential issue to Housing Development Finance Corporation Limited (the Bank’s
promoters) and the balance shall be through the issuance of equity shares / convertible securities / depository receipts
pursuant to a Qualified Institutions Placement (QIP) / American Depository Receipts (ADR) / Global Depository Receipt (GDR)
program. The said raising of funds was approved by the shareholders of the Bank at its Extra Ordinary General meeting held
on January 19, 2018 and is subject to the receipt of all relevant regulatory approvals.
The details of the movement in the paid-up equity share capital of the Bank are given below:
(` crore)
Particulars
Opening balance
Addition pursuant to stock options exercised
Closing balance
4
Earnings per equity share
March 31, 2018
March 31, 2017
512.51
6.51
519.02
505.64
6.87
512.51
Basic and diluted earnings per equity share have been calculated based on the consolidated net profit after tax attributable
to the Group of ` 18,510.02 crore (previous year: ` 15,253.03 crore) and the weighted average number of equity shares
outstanding during the year of 2,58,05,38,505 (previous year: 2,54,43,33,609).
Following is the reconciliation between the 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, 2018
March 31, 2017
2.00
71.73
(0.97)
70.76
2.00
59.95
(0.79)
59.16
HDFC Bank Limited Annual Report 2017-18
186
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Basic earnings per equity share has been computed by dividing the net profit for the year attributable to the equity
shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share
has 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 the 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, 2018
March 31, 2017
2,58,05,38,505
2,54,43,33,609
3,55,30,885
3,40,55,428
2,61,60,69,390
2,57,83,89,037
5
Reserves and Surplus
Drawdown from reserves
Share Premium
The Bank has not undertaken any drawdown from share premium during the years ended March 31, 2018 and
March 31, 2017.
Statutory Reserve
The Bank and a subsidiary has made an appropriation of ` 4,562.03 crore (previous year: ` 3,777.16 crore) out of profits
for the year ended March 31, 2018 to the 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, 2018, the Bank appropriated ` 235.52 crore (previous year: ` 313.41 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 the Profit and Loss Account to the Capital Reserve.
General Reserve
The Bank has made an appropriation of ` 1,748.67 crore (previous year: ` 1,454.96 crore) out of profits for the year ended
March 31, 2018 to the General Reserve.
Investment Reserve Account
During the year ended March 31, 2018, the Bank has transferred ` 44.20 crore (net) from the Investment Reserve Account
to the Profit and Loss Account as per the RBI guidelines. In the previous year, the Bank had appropriated ` 4.29 crore (net)
from the Profit and Loss Account to the Investment Reserve Account as per RBI guidelines.
6
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, 2018,
if approved at the ensuing Annual General Meeting.
7
Accounting for employee share based payments
HDFC Bank Limited
The shareholders of the Bank approved the grant of equity share options under Plan “C” in June 2005, Plan “D” in June
2007, Plan “E” in June 2010, Plan “F” in June 2013 and Plan “G” in July 2016. Under the terms of each of these Plans, the
Bank may issue to its employees and Whole Time Directors, Equity Stock Options (‘ESOPs’) 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 the grant.
The 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 2017-18
187
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Plans C, D, E, F and G provide for the issuance of options at the recommendation of the Nomination and Remuneration
Committee of the Board (‘NRC’) at the closing price on the working day immediately preceding the date when options are
granted. This closing price is the closing price of the Bank’s equity share on an Indian stock exchange with the highest trading
volume as of the working day preceding the date of grant.
The vesting conditions applicable to the options are at the discretion of the NRC. These options are exercisable on vesting, for
a period as set forth by the NRC at the time of grant. The period in which the options may be exercised cannot exceed five
years. During the years ended March 31, 2018 and March 31, 2017, no modifications were made to the terms and conditions
of ESOPs as approved by the NRC.
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:24)(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
Number of
Options
9,21,56,300
1,68,82,050
3,25,44,550
10,50,000
7,54,43,800
4,68,10,250
Weighted average
exercise price (`)
904.97
1,433.23
837.59
1,050.05
1,050.22
901.44
(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:23)(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
Number of
Options
12,86,54,300
Weighted average
exercise price (`)
840.19
-
3,43,59,200
21,38,800
9,21,56,300
5,63,14,000
-
658.20
972.97
904.97
835.06
(cid:0)
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:24)(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
680.00
32,61,500
16,35,700
62,24,900
835.50 to 1,462.15
6,43,21,700
1.32
1.43
1.51
3.59
685.72
680.00
680.00
1,113.95
(cid:0)
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:23)(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
468.40 to 680.00
835.50 to 1,097.80
46,44,400
33,34,300
1,50,94,600
6,90,83,000
2.34
2.33
2.18
3.90
690.91
680.00
650.01
985.92
HDFC Bank Limited Annual Report 2017-18
188
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Fair value methodology
The fair value of options used to compute the proforma net profit 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
prices of its equity shares. The Bank granted 1,68,82,050 options during the year ended March 31, 2018 (previous year: Nil).
The various assumptions considered in the pricing model for the ESOPs granted during the year ended March 31, 2018 are:
Particulars
Dividend yield
Expected volatility
Risk - free interest rate
Expected life of the options
March 31, 2018
0.65% to 0.66%
19.94% to 21.65%
6.73% to 7.20%
1 - 7.25 years
Impact of the fair value method on the 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
(` crore)
net profit for the year 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)
HDFC Securities Limited
March 31, 2018
March 31, 2017
17,486.75
14,549.66
-
650.41
-
812.75
16,836.34
13,736.91
(`)
67.76
65.24
66.84
64.36
(`)
57.18
53.99
56.43
53.28
The Shareholders of the Company approved a stock option scheme (viz. ESOS - II) in February 2017 (“Company Options”).
Under the terms of the scheme, the Company issues stock options to employees, whole time director, managing director and
directors (excluding Independent Directors) of the Company, each of which is convertible into one equity share.
Scheme ESOS - II 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 ` 1,136/- per share, being the fair market value of the share arrived
by considering the average price of the two independent valuation reports. Method of settlement of this options are equity
shares of the Company. Weighted average remaining contractual life of these options is 22 months.
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.
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 2017-18
189
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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: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:24)(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 (`)
2,80,000
-
69,550
9,000
2,01,450
2,01,450
1,136
-
1,136
1,136
1,136
1,136
(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:23)(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 (`)
-
2,80,000
-
-
2,80,000
-
-
1,136
-
-
1,136
-
(cid:0)
(cid:0)
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:24)(cid:26)
Plan
Range of
exercise price (`)
Number of shares
arising out of options
Weighted average remaining
contractual life of options (in years)
Weighted average
exercise price (`)
Company Options
1,136
201,450
1.8 Years
1,136
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:23)(cid:26)
Plan
Range of
exercise price (`)
Number of shares
arising out of options
Weighted average remaining
contractual life of options (in years)
Weighted average
exercise price (`)
Company Options
1,136
2,80,000
4.1 years
1,136
Fair value methodology
The fair value of options used to compute proforma net income and earnings per equity share have been estimated on
dates of each grant using the Black and Scholes model. The shares of the Company are not listed on any stock exchange.
Accordingly, the Company has considered the volatility of its stock price as an average of the historical volatility of similar
listed enterprises for the purpose of calculating the fair value to reduce any company specific variations. The various
assumptions considered in the pricing model for the stock options granted by the Company.
Particulars
Dividend yield
Expected volatility
Risk - free interest rate
Expected life of the options
March 31, 2017
3.52%
43.53% to 42.48%
6.60% to 6.90%
3 to 5 years
HDFC Bank Limited Annual Report 2017-18
190
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Impact of the fair value method on the net profit and earning per share
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)
HDB Financial Services Limited
March 31, 2018
March 31, 2017
(` crore)
344.42
-
2.64
341.78
(`)
222.40
220.69
221.84
220.14
215.90
-
0.78
215.12
(`)
139.45
138.95
139.45
138.95
In accordance with resolution approved by the shareholders, the Company has reserved shares, for issue to employees
through ESOS Scheme. On the approval of Nomination and Remuneration Committee (NRC), each ESOS scheme is issued.
The NRC has approved stock option schemes ESOS-5 on July 27, 2011, ESOS-6 on June 11, 2012, ESOS-7 on July 19,
2013, ESOS-8 on July 14, 2015, ESOS-9 on October 18, 2016 and ESOS-10 on October 13, 2017. 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 for ESOS-5, ESOS-6, ESOS-7 and ESOS-8 and maximum of four years from the date of vesting for
ESOS-9 and ESOS-10.
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:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(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:24)(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
58,78,660
33,40,250
26,91,960
2,57,000
62,69,950
Weighted average
exercise price (`)
112.46
213.00
106.74
114.01
168.41
(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:86)(cid:65)(cid:82)(cid:73)(cid:79)(cid:85)(cid:83)(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:23)(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
48,42,950
31,17,500
15,79,440
5,02,350
58,78,660
Weighted average
exercise price (`)
88.41
137.00
77.86
93.46
112.46
HDFC Bank Limited Annual Report 2017-18
191
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:24)(cid:26)
Plan
ESOS - 8
ESOS - 9
ESOS- 10
Range of
exercise price
(`)
Number of shares
arising out
of options
Weighted average
remaining contractual life
of options (in years)
Weighted average
exercise
price (`)
88.00
137.00
213.00
11,15,000
18,44,200
33,10,750
2.47
5.02
5.69
88.00
137.00
213.00
(cid:115)(cid:0)
(cid:52)(cid:72)(cid:69)(cid:0)(cid:70)(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:23)(cid:26)
Plan
ESOS - 6
ESOS - 7
ESOS - 8
ESOS - 9
Range of
exercise price
(`)
Number of shares
arising out
of options
Weighted average
remaining contractual life
of options (in years)
Weighted average
exercise
price (`)
31.00
56.00
88.00
137.00
1,200
1,02,700
27,71,260
30,03,500
0.50
0.50
2.74
5.49
31.00
56.00
88.00
137.00
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 Black-Scholes model. The shares of Company are not listed on any stock exchange.
Accordingly, the Company has considered the volatility of its 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, 2018 are:
Particulars
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of the option
March 31, 2018
March 31, 2017
0.70%
Nil
6.44%
3.05 years
0.88%
Nil
6.54%
3 years
Impact of the fair value method on the net profit and earning per share
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)
March 31, 2018
March 31, 2017
(` crore)
951.74
-
12.03
939.71
(`)
12.18
12.03
12.16
12.01
684.21
-
8.36
675.85
(`)
9.64
9.52
9.64
9.52
HDFC Bank Limited Annual Report 2017-18
192
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Group
Impact of the fair value method on the net profit and earning per share of the Group
Had compensation cost for the stock option plans outstanding been determined based on the fair value approach, the Group’s
(` crore)
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)
8
Other liabilities
March 31, 2018
March 31, 2017
18,510.02
665.08
17,844.94
(`)
71.73
69.15
70.76
68.21
15,253.03
821.89
14,431.14
(`)
59.95
56.72
59.16
55.97
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. Accordingly, other liabilities as at
March 31, 2018 include unrealised loss on foreign exchange and derivative contracts of ` 5,093.04 crore (previous year:
` 13,880.38 crore).
9
Investments
HDFC Bank Limited
The details of securities that are kept as margin are as under:
(` crore)
Sr.
No.
I.
II.
III.
IV.
V.
Particulars
Face value as at March 31,
2018
2017
Securities kept as margin with Clearing Corporation of India towards:
a) Collateral and funds management - Securities segment
b) Collateral and funds management - Collateralised Borrowing and Lending
1,520.00
25,770.78
1,520.00
24,488.31
Obligation (CBLO) segment
c) Default fund - Forex Forward segment
d) Default fund - Forex Settlement segment
e) Default fund - Rupee Derivatives (Guaranteed Settlement) segment
f) Default fund - Securities segment
g) Default fund - CBLO segment
Securities kept as margin with the RBI towards:
a) Real Time Gross Settlement (RTGS)
b) Repo transactions
c) Reverse repo transactions
Securities kept as margin with National Securities Clearing Corporation of
India (NSCCIL) towards NSE Currency Derivatives segment.
Securities kept as margin with Indian Clearing Corporation Limited towards
BSE Currency Derivatives segment.
Securities kept as margin with Metropolitan Clearing Corporation of India
towards MCX Currency Derivatives segment.
100.00
41.05
41.00
65.00
25.00
90,130.65
16,307.49
58,341.00
16.00
241.00
13.00
100.00
11.05
41.00
65.00
25.00
42,730.27
41,473.92
4,690.56
16.00
5.00
13.00
HDFC Bank Limited Annual Report 2017-18
193
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
HDFC Securities Limited
(` crore)
Sr. No. Particulars
March 31, 2018 March 31, 2017
I.
Mutual funds marked as lien with stock exchange for margin requirement
599.06
182.56
10 Other fixed assets
Other fixed assets includes amount capitalised relating to software, Bombay Stock Exchange card and electronic trading
(` crore)
platform. Details regarding the same are 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, 2018 March 31, 2017
2,188.08
266.40
-
1,774.82
413.26
-
Total (a)
2,454.48
2,188.08
1,509.12
282.61
-
1,791.73
662.75
1,248.71
260.41
-
1,509.12
678.96
Total (b)
Net value (a-b)
11 Other assets
Other assets include deferred tax asset (net) of ` 3,532.07 crore (previous year: ` 2,587.06 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)
12 Provisions and contingent liabilities
March 31, 2018 March 31, 2017
(` crore)
2,945.98
2,207.53
186.11
446.58
175.39
322.66
Total (a)
3,578.67
2,705.58
Total (b)
(46.60)
(46.60)
3,532.07
(118.52)
(118.52)
2,587.06
Given below is the movement in provisions and a brief description of the nature of contingent liabilities recognised by the Bank.
HDFC Bank Limited Annual Report 2017-18
194
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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)
Provision pertaining to fraud accounts
Particulars
No. of frauds reported during the year
Amount involved in fraud (` crore)
Amount involved in fraud net of recoveries / write-offs as at the end of the
year (` crore)
Provisions held as at the end of the year (` crore)
March 31, 2018 March 31, 2017
431.24
261.95
(222.07)
471.12
306.36
334.24
(209.36)
431.24
(` crore)
March 31, 2018 March 31, 2017
311.90
2.11
314.01
344.56
(32.66)
311.90
March 31, 2018 March 31, 2017
3,612
146.55
119.02
119.02
2,319
165.20
20.83
20.83
-
Amount of unamortised provision debited from “other reserves” as at the
end of the year (` crore)
-
d) Description of contingent liabilities
Contingent liability*
Brief description
Sr.
No.
1
Claims against the Group
The Group is a party to various taxation matters in respect of which appeals are
not acknowledged as
pending. The Group expects the outcome of the appeals to be favourable based on
debts - taxation
decisions on similar issues in the previous years by the appellate authorities, based
on the facts of the case and taxation laws.
2
Claims against the Group
The Group is a party to various legal proceedings in the normal course of business.
not acknowledged as
The Group does not expect the outcome of these proceedings to have a material
debts - others
adverse effect on the Group’s financial conditions, results of operations or cash
flows.
HDFC Bank Limited Annual Report 2017-18
195
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Sr.No. Contingent liability*
Brief description
3
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.
4
5
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 Group 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;
e) Investment purchases pending settlement; f) Amount transferred to the RBI
under the Depositor Education and Awareness Fund (DEAF).
*Also refer Schedule 12 - Contingent Liabilities
13 Commission, exchange and brokerage income
Commission, exchange and brokerage income is net of correspondent bank charges.
14 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 NPAs
Provision for diminution in value of non-performing investments
Provision for standard assets
Other provisions and contingencies*
March 31, 2018 March 31, 2017
10,848.11
(945.03)
5,487.32
30.80
657.58
396.12
8,424.16
(346.04)
3,503.37
(7.64)
431.23
63.85
Total
16,474.90
12,068.93
*Includes provisions for tax, legal and other contingencies ` 396.98 crore (previous year: ` 38.72 crore), floating provisions
Nil (previous year: ` 25.00 crore), provisions / (write back) for securitised-out assets ` 2.14 crore (previous year: ` 2.62 crore)
and standard restructured assets ` (3.00) crore (previous year: ` (2.50) crore).
HDFC Bank Limited Annual Report 2017-18
196
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
15 Employee benefits
Gratuity
Particulars
Reconciliation of opening and closing balance of the present value of the
defined benefit obligation
March 31, 2018
March 31, 2017
(` crore)
Present value of obligation as at April 1
Addition due to amalgamation
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
Addition due to amalgamation
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 (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)
Discount rate
Expected return on plan assets
Salary escalation rate
548.50
-
39.12
78.58
(48.11)
13.69
(17.72)
614.06
390.23
-
29.87
87.71
(48.11)
(2.35)
-
457.35
457.35
(614.06)
(156.71)
39.12
78.58
(29.87)
(1.68)
86.15
27.52
114.31
401.93
33.48
29.11
74.76
(45.47)
39.69
15.00
548.50
295.46
20.76
24.83
60.10
(45.47)
31.19
3.36
390.23
390.23
(548.50)
(158.27)
29.11
74.76
(24.83)
20.13
99.17
59.38
94.73
7.5% per annum
7.0% per annum
8.0% per annum
7.1% per annum
7.0% per annum
8.0% per annum
7.4% per annum
8.0% per annum
6.8% per annum
7.6% per annum
11.0% per annum
12.0% per annum
7.2% per annum 6.4% - 6.5% per annum
7.5 % per annum
7.5% per annum
5.0% - 7.0% per annum 5.0% - 7.5% per annum
HDFC Bank Limited Annual Report 2017-18
197
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
Experience adjustment gain / (loss) on plan assets
Experience adjustment (gain) / loss on plan liabilities
2018
457.35
614.06
(156.71)
(2.35)
13.69
Years ended March 31,
2016
2015
2017
390.23
548.50
(158.27)
31.19
39.69
295.46
401.93
(106.47)
(13.61)
16.27
248.13
318.37
(70.24)
21.27
4.84
(` crore)
2014
176.20
242.71
(66.51)
1.82
6.30
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
at March 31, 2018 are given below:
Category of plan assets
Government securities
Debenture and bonds
Equity shares
Others
Pension
HDFC Bank
Limited
HDFC Securities
Limited
25.2%
28.9%
43.1%
2.8%
100.0%
43.0%
43.0%
11.0%
3.0%
100.0%
HDB Financial
Services Limited
93.1%
4.1%
-
2.8%
100.0%
(` crore)
Total
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
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
March 31, 2018
March 31, 2017
73.55
5.19
0.74
(8.75)
3.95
(1.62)
73.06
36.16
2.36
0.94
(8.75)
0.59
-
31.30
31.30
(73.06)
(41.76)
70.88
4.80
1.23
(6.62)
4.65
(1.39)
73.55
38.38
2.61
1.03
(6.62)
0.39
0.37
36.16
36.16
(73.55)
(37.39)
HDFC Bank Limited Annual Report 2017-18
198
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Particulars
Expenses recognised in Statement of Profit and Loss
March 31, 2018
March 31, 2017
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
Experience adjustment
Particulars
Plan assets
Defined benefit obligation
Surplus / (deficit)
5.19
0.74
(2.36)
1.74
5.31
2.95
13.79
4.80
1.23
(2.61)
2.50
5.92
3.37
7.18
7.5% per annum
7.0% per annum
8.0% per annum
7.1% per annum
7.0% per annum
8.0% per annum
(` crore)
Years ended March 31,
2018
2017
2016
2015
2014
31.30
73.06
(41.76)
36.16
73.55
38.38
70.88
(37.39)
(32.50)
0.39
4.65
1.43
17.35
41.91
57.45
(15.54)
(2.38)
(0.19)
47.99
58.89
(10.90)
3.45
3.62
Experience adjustment gain / (loss) on plan assets
0.59
Experience adjustment (gain) / loss on plan liabilities
3.95
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
at March 31, 2018 are given below:
Category of plan assets
Government securities
Debenture and bonds
Others
Total
Provident fund
% of fair value to total plan assets
as at March 31, 2018
5.9%
78.9%
15.2%
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 at March 31, 2018 (previous year: Nil) towards the
present value of the guaranteed interest benefit obligation. The actuary has followed the deterministic approach as prescribed
by the guidance note.
Assumptions:
Particulars
Discount rate (GOI security yield)
Expected guaranteed interest rate
March 31, 2018
March 31, 2017
7.5% per annum
7.1% per annum
8.6% per annum
8.7% per annum
The Bank does not have any unfunded defined benefit plan. The Group contributed ` 308.21 crore (previous year: ` 292.00
crore) to the provident fund. The Bank contributed ` 67.68 crore (previous year: ` 78.67 crore) to the superannuation
plan.
HDFC Bank Limited Annual Report 2017-18
199
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Compensated absences
The actuarial liability of compensated absences of accumulated privileged and sick leaves of the employees of the Group is
(` crore)
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
16 Segment Reporting
Business segments
March 31, 2018
March 31, 2017
283.08
62.67
345.75
254.28
56.12
310.40
7.5% per annum
8.0% per annum
7.1% per annum
8.0% per annum
7.4% per annum
6.8% per annum
11.0% per annum
12.0% per annum
7.2% per annum 6.4% - 6.5% per annum
5.0% - 7.0% per annum 5.0% - 7.5% per annum
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 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 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.
HDFC Bank Limited Annual Report 2017-18
200
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
(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.
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, 2018 is given below:
Less: Inter-segment revenue
Income from operations (1) + (2) - (3)
Income tax expense (including deferred tax)
Business segments:
Sr.
No.
Particulars
1 Segment revenue
2 Unallocated revenue
3
4
5 Segment results
6 Unallocated expenses
7
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)
15 Capital employed (9) - (12)
(Segment assets - Segment liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
20 Provisions for non - performing assets / others*
21 Unallocated other provisions*
Treasury
Retail
banking
Wholesale
banking
19,841.37 73,843.05 41,504.13
1,540.00 9,971.72 11,720.51
350,894.38 371,906.59 297,040.57
55,349.70 598,785.46 270,287.20
295,544.68 (226,878.87)
26,753.37
5.77 729.47 73.05
11.58 723.91 92.36
1,565.79
3,539.06
35.36
(` crore)
Total
Other
banking
operations
18,141.93 153,330.48
-
51,986.03
101,344.45
7,254.51 30,486.74
2,022.81
9,903.08
18,560.85
76,847.35 1,096,688.89
6,497.28
1,103,186.17
39,672.93 964,095.29
29,135.42
993,230.71
37,174.42 132,593.60
(22,638.14)
109,955.46
164.81 973.10
138.93 966.78
6,557.64
14.18
1,417.43
*Represents material non-cash charge other than depreciation and taxation
HDFC Bank Limited Annual Report 2017-18
201
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
(` crore)
Domestic
International
100,526.33
818.12
1,076,239.64
26,946.53
972.75
0.35
Segment reporting for the year ended March 31, 2017 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)
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
(` crore)
Total
20,326.18 66,147.50 32,587.85 13,593.23 132,654.76
1,659.11 8,432.16 10,123.04 4,591.77 24,806.08
-
46,505.77
86,148.99
1,440.55
8,078.12
15,287.41
263,356.40 295,828.92 272,148.83 55,709.83 887,043.98
5,300.18
892,344.16
38,732.49 525,792.90 191,254.90 29,023.68 784,803.97
15,454.80
800,258.77
15 Capital Employed (9) - (12)
224,623.91 (229,963.98)
80,893.93 26,686.15 102,240.01
(Segment Assets - Segment Liabilities)
16 Unallocated (10) - (13)
17 Total (15) + (16)
18 Capital expenditure
19 Depreciation
32.85 846.56 150.30 227.58 1,257.29
10.15 659.66 90.78 125.60 886.19
(10,154.62)
92,085.39
20 Provisions for non - performing assets / others*
(7.64)
2,159.35
841.13
1,002.68
3,995.52
21 Unallocated other provisions*
* Represents material non-cash charge other than depreciation and taxation
Geographic segments:
Particulars
Revenue
Assets
Capital expenditure
(4.71)
(` crore)
Domestic
International
85,125.34
1,023.65
868,432.68
23,911.48
1,255.83
1.46
HDFC Bank Limited Annual Report 2017-18
202
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
17 Related party disclosures
As per AS-18 Related Party Disclosures, the Group’s related parties are disclosed below:
Promoter
Housing Development Finance Corporation Limited
Associates
International Asset Reconstruction Company Private Limited (ceased to be an associate with effect from March 9, 2018)
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, Akuri by Puri, 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.
A specific related party transaction is a significant transaction wherever it exceeds 10% of all related party transactions in that
category. Transactions between the Bank and Housing Development Finance Corporation Limited exceed 10% of all related
party transactions in that category.
The Group’s related party balances and transactions for the year ended March 31, 2018 are summarised as follows: (` crore)
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
3,250.77
(3,250.77)
0.47
(0.47)
-
-
-
-
5.96
13.28
-
-
-
-
-
-
-
-
1.70
-
Key management
personnel
Total
14.10
3,264.87
(37.45)
(3,288.22)
2.51
(2.51)
3.16
(3.45)
-
-
1.05
0.12
2.98
(2.98)
3.16
(3.45)
-
-
8.71
13.40
HDFC Bank Limited Annual Report 2017-18
203
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Items / related party
Promoter
Associates
Key management
personnel
Total
Income from services rendered to
Expenses for receiving services from
Equity investments
Other investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
264.27
405.17
-
-
-
-
-
-
1,603.88
-
(1,603.88)
-
432.53
-
-
-
-
-
28.34
(60.79)
32.78
(36.17)
0.25
(0.27)
-
5,623.94
-
-
-
-
-
-
-
-
-
19.29
-
0.76
-
-
-
-
5.67
-
-
-
264.27
405.93
-
-
1,603.88
(1,603.88)
438.20
-
28.34
(60.79)
32.78
(36.17)
0.25
(0.27)
19.29
-
-
5,623.94
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 at March 31, 2018 is ` 5,972.14
crore (previous year: ` 665.77 crore). The contingent credit exposure pertaining to these contracts computed in line with the extant
RBI guidelines on exposure norms is ` 80.76 crore (previous year: ` 40.18 crore).
During the year ended March 31, 2018, the Bank purchased debt securities from Housing Development Finance Corporation Limited
` 2,105.00 crore (previous year: ` 2,320.00 crore) issued by it.
During the year ended March 31, 2018, the Bank paid rent of ` 0.66 crore (previous year: ` 0.66 crore) to party related to the
Bank’s key management personnel in relation to residential accommodation. As at March 31, 2018, 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, 2017 are summarised as follows:
(` crore)
Items / related party
Promoter
Associates
Key management
personnel
Deposits taken
Deposits placed
Advances given
Fixed assets purchased from
Fixed assets sold to
Interest paid to
2,500.25
(2,500.25)
0.15
(0.15)
-
-
-
-
5.57
25.05
(25.05)
-
-
0.05
(0.05)
-
-
0.51
13.61
(60.14)
2.51
(2.51)
3.44
(3.44)
-
-
1.02
Total
2,538.91
(2,585.44)
2.66
(2.66)
3.49
(3.49)
-
-
7.10
HDFC Bank Limited Annual Report 2017-18
204
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
Items / related party
Promoter
Associates
Key management
personnel
Total
Interest received from
Income from services rendered to
Expenses for receiving services from
Equity investments
Other investments
Dividend paid to
Dividend received from
Receivable from
Payable to
Guarantees given
Remuneration paid
Loans purchased from
-
207.45
343.10
-
-
-
(126.48)
373.55
-
23.16
(23.16)
33.67
(33.67)
0.12
(0.14)
-
13,845.65
-
-
-
31.17
(31.17)
-
-
-
-
-
-
-
-
-
-
-
-
0.03
-
0.76
-
-
-
-
4.49
-
-
-
-
-
-
-
20.79
-
0.03
207.45
343.86
31.17
(31.17)
-
(126.48)
378.04
-
23.16
(23.16)
33.67
(33.67)
0.12
(0.14)
20.79
13,845.65
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.
18 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, 2018 March 31, 2017
1,016.13
3,303.45
3,626.31
7,945.89
1,231.87
995.56
3,185.49
3,154.93
7,335.98
1,150.97
7.08
25.33
8.06
174.87
11.31
138.79
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.
19 Penalties levied by the RBI
During the year ended March 31, 2018, RBI did not impose any penalty on the Bank (previous year: ` 2.00 crore).
HDFC Bank Limited Annual Report 2017-18
205
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
20 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 during the years
ended March 31, 2018 and March 31, 2017. The above is based on the information available with the Bank which has been
relied upon by the auditors.
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, 2018 was
` 0.03 crore (previous year: ` 0.02 crore).
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, 2018 was Nil (previous year: Nil).
21 Corporate social responsibility
Operating expenses include ` 391.92 crore (previous year: ` 313.31 crore) for the year ended March 31, 2018 towards
Corporate Social Responsibility (CSR), in accordance with Companies Act, 2013.
The details of amount spent by the Group during the respective years towards CSR are as under:
(` crore)
Sr.
No
Particulars
March 31, 2018
March 31, 2017
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
391.92
-
-
-
-
391.92
313.31
-
-
-
313.31
22 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 such items which
are not material have not been disclosed in the Consolidated Financial Statements.
23 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
Sanjay Dongre
Executive Vice President
(Legal) & Company Secretary
Sashidhar Jagdishan
Chief Financial Officer
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
Mumbai, April 21, 2018
HDFC Bank Limited Annual Report 2017-18
206
Statement pursuant to Section 129 of the Companies Act, 2013
Schedules to the Consolidated Financial Statements
For the year ended March 31, 2018
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 and Companies (Accounts) Amendment Rules, 2016
Statement containing salient features of the financial statements of subsidiaries, associate companies and joint ventures
Part A: Subsidiaries
Sr.
No.
Name of the subsidiary
HDFC Securities Limited
(` crore)
HDB Financial Services
Limited
1.
The date since when subsidiary was acquired
September 28, 2005
August 31, 2007
2. 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, 2017 to
March 31, 2018
Reporting period of the
subsidiary is the same as
that of the holding company
i.e. April 1, 2017 to
March 31, 2018
3. 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
4. Share capital
5. Reserves & surplus
6.
7.
8.
9.
Total assets
Total liabilities
Investments
Turnover
10. Profit before taxation
11. Provision for taxation
12. Profit after taxation
13. Proposed dividend (including tax thereon)*
14. Extent of shareholding (in percentage)
15.55
985.24
1,637.80
637.01
743.95
788.25
524.16
179.74
344.42
205.91
97.7%
782.94
5,419.29
44,753.92
38,551.69
430.71
7,061.99
1,464.52
512.78
951.74
150.78
95.9%
* Includes interim dividend on equity shares paid during the year. In terms of revised Accounting Standard (AS) 4 ‘Contingencies
and Events occurring after the Balance sheet date’ as notified by the Ministry of Corporate Affairs through amendments to
Companies (Accounting Standards) Amendment Rules, 2016, the subsidiaries have not appropriated their proposed dividend
(including tax) from Statement of Profit and Loss for the year ended March 31, 2018.
Notes:
1.
2.
There are no subsidiaries that are yet to commence operations.
No subsidiaries were liquidated or sold during the year.
HDFC Bank Limited Annual Report 2017-18
207
Schedules to the Consolidated Financial Statements
Statement pursuant to Section 129 of the Companies Act, 2013
For the year ended March 31, 2018
Part B: Associate Companies and Joint Ventures
(` crore)
Sr.
No.
Name of Associates or Joint Ventures
International Asset Reconstruction
Company Private Limited (‘IARC’)
1.
Latest audited Balance Sheet Date
2. Date on which the Associate or Joint venture was associated or acquired
3. Shares of Associate or Joint Ventures held by the company on the year end:
Number of shares
Amount of investment in associates or joint venture
Extent of holding (in percentage)
4. Description of how there is significant influence
5. Reason why the associate or joint venture is not consolidated
6. Net worth attributable to the Bank’s shareholding
7. Profit / Loss for the period:
i. Considered in consolidated financial statements
ii. Not considered in consolidated financial statements
March 31, 2017*
May 23, 2008
16,175,507
31.17
19.2%
Not Applicable (Refer Note 4)
Not Applicable (Refer Note 4)
39.58*
0.52*
3.07*
* Unaudited financial statements drawn up to December 31, 2017 have been considered for the purpose of the Consolidated
Financial Statements for the year ended March 31, 2018.
Notes:
1.
2.
3.
4.
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.
During the year ended March 31, 2018, the Bank’s stake in IARC, hitherto at 29.4%, reduced to 19.2% due to further issue
of equity shares made by IARC in which the Bank did not participate. Accordingly, IARC ceased to be an associate company
of the Bank with effect from March 9, 2018.
For and on behalf of the Board
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
Bobby Parikh
Keki Mistry
Malay Patel
Partho Datta
Umesh Sarangi
Directors
Mumbai, April 21, 2018
HDFC Bank Limited Annual Report 2017-18
208
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 ‘Company’) for the year
ended March 31, 2018, as prescribed in Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of regulation 46 and Para C,
D and E of Schedule V to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (‘LODR’).
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 Company 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 Company.
In our opinion, and to the best of our information and according to the explanations given to us, we certify that the Company has
complied with the conditions of Corporate Governance as stipulated in the aforesaid provisions of LODR.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
For BNP & Associates
Company Secretaries
[Firm Regn. No. P2014MH037400]
B Narasimhan
Partner
FCS No.: 1303
COP No.: 10440
Place: Mumbai
Date: May 22, 2018
HDFC Bank Limited Annual Report 2017-18
209
Corporate Governance
[Report on Corporate Governance pursuant to the 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]
CORPORATE GOVERNANCE FRAMEWORK
Shareholders
Regulators
Board of
Directors
Audit
Committee
Stakeholders’
Relationship
Committee
Nomination &
Remuneration
Committee
Risk Policy and
Monitoring
Committee
Other
Committees
External and Internal
Auditors
Managing
Director
Deputy Managing
Director
Executive
Director
The Board of Directors of the Bank are
the ultimate custodians of governance.
The Board of Directors are accountable
to various stakeholders such as-
shareholders and regulatory authorities
such as Reserve Bank of
India,
Securities and Exchange Board of India,
Ministry of Corporate Affairs, etc.
The Board of Directors has constituted
various committees under it, each with
defined roles and responsibilities - such
as Audit Committee, Stakeholders’
Relationship Committee, Nomination
and Remuneration Committee, Risk
Policy and Monitoring Committee,
and other committees. The Statutory
Auditors have a reporting responsibility
to the Audit Committee.
The Managing Director is responsible for
the overall affairs of the Bank, under the
superintendence, guidance and control
of the Board of Directors.
The Deputy Managing Director and the
Executive Director, under the guidance
of the Managing Director, have over-sight
over important functions such as credit,
risk management, finance, wholesale
banking, etc.
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, responsibility, transparency, fair and timely disclosures, credibility, sustainability, etc. serve as the means for
implementing the philosophy of corporate governance in letter and in spirit.
HDFC Bank Limited Annual Report 2017-18
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Corporate Governance
BOARD OF DIRECTORS
LENGTH OF SERVICE OF DIRECTORS - No. of years (Y)
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 ten (10) Directors as on March 31, 2018.
Composition of the Board of Directors of the Bank as on March 31,
2018: Executive Directors: Mr. Aditya Puri (Managing Director),
Mr. Paresh Sukthankar (Deputy Managing Director) and Mr. Kaizad
Bharucha (Executive Director)
Non-Executive Directors: Mr. Keki Mistry and Mr. Srikanth Nadhamuni
Mr. Keki Mistry represents Housing Development Finance Corporation
Limited (HDFC Limited) on the Board of the Bank.
Independent Directors: Mrs. Shyamala Gopinath (Part-time Non
Executive Chairperson), Mr. Partho Datta, Mr. Bobby Parikh,
Mr. Malay Patel and Mr. Umesh Chandra Sarangi.
None of the Directors on the Board is a member of more than ten (10)
Committees and Chairperson of more than five (5) Committees across
all public companies in which he / she is a Director. All the Directors
have made necessary disclosures regarding Committee positions
occupied by them in other companies.
None of the Directors are related to each other.
Mrs. Renu Karnad and Mr. A. N. Roy resigned as directors of the Bank
with effect from January 20, 2018 and January 31, 2018 respectively.
BOARD COMPOSITION
Independent Directors
Executive Directors
Non-Independent, Non-Executive Directors
*Pursuant to Banking Regulation Act, 1949, only the Chairperson
and Wholetime directors may hold office for a period exceeding
eight years.
AGE GROUP OF DIRECTORS
Details of directorships, memberships and chairpersonships of the
committees of other companies for the current Directors of the Bank
are as follows:
Name of Director
Directorships on the Board of
other companies*
Memberships of Committees of
other companies *
Mrs. Shyamala Gopinath
Mr. Partho Datta
Mr. Bobby Parikh
Mr. Malay Patel
Mr. Keki Mistry
Mr. Aditya Puri
Mr. Paresh Sukthankar
Mr. Kaizad Bharucha
Mr. Umesh Chandra
Sarangi
Mr. Srikanth Nadhamuni
5
2
5
-
8 (1)
(1)
-
-
-
-
4 (1)
2 (1)
4 (1)
-
8 (4)
-
-
-
-
-
* The figures in brackets indicate Chairpersonships.
Note: For the purpose of considering the limit of the Directorships and
limits of Committees on which the directors are members / Chairperson,
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, Chairpersonships/
Memberships of only the Audit Committee and the Stakeholders’
Relationship Committee have been considered.
HDFC Bank Limited Annual Report 2017-18
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Corporate Governance
PROFILE OF BOARD OF DIRECTORS
The profile of the Directors of the Bank as on March 31, 2018
is as under:
Mrs. Shyamala Gopinath
Mrs. Shyamala Gopinath, aged 68 years, holds a Master’s
Degree in Commerce and is a CAIIB. Mrs. Shyamala 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, and a member of the RBI’s Board of
Directors, she guided and influenced national policies in diverse
areas such as regulation and supervision, development of
financial markets, capital account management, management
of government borrowings, forex reserves management and
payment and settlement system. She has served on several
Committees while with the RBI. During 2001-03, she worked
as senior financial sector expert in the then Monetary Affairs
and Exchange Department of the International Monetary Fund
(Financial Institutions Division). She was on the Corporate
Bonds and Securitisation Advisory Committee (CoBoSAC), a
Sub-Committee of SEBI. She served as the Chairperson on the
Advisory Board on Bank, Commercial and Financial Frauds for
two years from 2012 to 2014. She was an Independent Director
on the Boards of Clearing Corporation of India Limited, Indian Oil
Corporation Limited and GAIL (India) Limited. Apart from HDFC
Bank, she is an Independent Director on few other companies
including not for profit entities. She is also Chairperson of the
Board of Governors of Indian Institute of Management, Raipur.
Mrs. Gopinath does not hold any shares in the Bank as on
March 31, 2018.
Mr. Aditya Puri
Mr. Aditya Puri, aged 67 years, holds a Bachelor’s degree in
Commerce from Punjab University and is an Associate Member
of the Institute of Chartered Accountants of India.
Prior to joining the Bank, Mr. Puri was the Chief Executive
Officer of Citibank, Malaysia from 1992 to 1994. Mr. Puri has
been the Managing Director of the Bank since September 1994.
Mr. Puri has over four decades 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 awarded the Lifetime Achievement Award
by Businessworld magazine for his contribution to banking.
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.
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 EVA Webchat
Bot, UPI, 10 - second loans, PayZapp, Chillr, etc.
Mr. Puri, along with his relatives, holds 3,566,544 equity shares
in the Bank as on March 31, 2018.
Mr. Keki Mistry
Mr. Keki Mistry, aged 63 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 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. As a part
of the management team, Mr. Mistry has played a critical role in
the successful transformation of HDFC Ltd. into India’s leading
Financial Services Conglomerate by facilitating formation of
companies including HDFC Bank Ltd., HDFC Asset Management
Company Ltd., HDFC Standard Life Insurance Company Ltd.
and HDFC Ergo General Insurance Company Ltd.
Mr. Mistry, along with his relatives, holds 296,130 equity shares
in the Bank as on March 31, 2018.
Mr. Partho Datta
Mr. Partho Datta, aged 69 years, is an Associate Member of
the Institute of Chartered Accountants of India. Mr. Datta joined
Indian Aluminium Company Limited (INDAL) and was with
INDAL and 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
HDFC Bank Limited Annual Report 2017-18
212
Corporate Governance
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, 2018.
Mr. Bobby Parikh
Mr. Bobby Parikh, aged 54 years, holds a Bachelor’s degree
in Commerce from the Mumbai University and has qualified
as a Chartered Accountant in 1987. Mr. Parikh was a Senior
Partner with BMR & Associates LLP and led its financial
services practice. Mr. Parikh was also 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, along with his relatives, holds 11,196 equity shares
in the Bank as on March 31, 2018.
Mr. Paresh Sukthankar
Mr. Paresh Sukthankar, aged 55 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.
Mr. Sukthankar has been associated with the Bank since its
inception in 1994 and has total banking experience of over
three decades. At the Bank, he has contributed in various key
areas including Credit, Risk Management, Finance, Human
Resources, Investor Relations, Corporate Communications,
Corporate Social Responsibility and Information Security. He
was appointed as Executive Director on the Bank’s Board in
October 2007. In June 2014, Mr. Sukthankar was elevated to
the post of Deputy Managing Director.
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.
Mr. Sukthankar, along with his relatives, holds 826,905 equity
shares in the Bank as on March 31, 2018.
Mr. Kaizad Bharucha
Mr. Kaizad Bharucha, aged 53 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, Healthcare Finance, Agri Lending
and Department for Special Operations. He has driven growth
and profitability in the aforesaid areas of the Wholesale Banking
segment of the Bank.
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 three
decades 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.
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.
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.
HDFC Bank Limited Annual Report 2017-18
213
Corporate Governance
Mr. Bharucha, along with his relatives, holds 950,551 equity
shares in the Bank as on March 31, 2018.
Mr. Malay Patel
Mr. Malay Patel, aged 41 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, 2018.
Mr. Umesh Chandra Sarangi
incubator. He has also been a co-founder of
start-up
e-Governments Foundation with Mr. Nandan Nilekani which
work on the objectives to improve governance in Indian cities,
creation of Municipal ERP suite which improves service delivery
of cities.
Mr. Nadhamuni was the Chief Technology Officer of Aadhaar
(UID Authority of India) during 2009-2012 where he participated
in design and development of the world’s largest biometric based
ID system. He was instrumental in development of Aadhaar
technology, several banking and financial protocols including
MicroATM, Aadhaar Enabled Payment System (AEPS) and
Aadhaar Payment Bridge (APB).
Mr. Nadhamuni spent 14 years in the Silicon Valley (California, US)
working for several global companies such as Sun Microsystems
(CPU design), Intel Corporation (CPU design), Silicon Graphics
(Interactive TV) and WebMD (Internet Healthcare).
Mr. Nadhamuni has been appointed as a Director having
expertise in the field of Information Technology.
Mr. Umesh Chandra Sarangi, aged 66 years, holds a Master’s
Degree in Science (Botany) from the Utkal University (gold
medalist).
Mr. Nadhamuni does not hold any shares in the Bank as on
March 31, 2018.
in
the
Mr. Sarangi has 35 years of experience
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 Agriculture
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, 2018.
Mr. Srikanth Nadhamuni
Mr. Srikanth Nadhamuni, aged 54 years, holds a Bachelor’s
degree in Electronics and Communications from National
Institute of Engineering and a Master’s degree in Electrical
Engineering from Louisiana State University. Mr. Nadhamuni is
a technologist and an entrepreneur with 28 years of experience
in the areas of CPU design, Healthcare, e-Governance, National
ID, Biometrics, Financial Technology and Banking sectors.
Mr. Nadhamuni presently is the Chairman of Novopay Solutions
Private Limited, a company involved in the area of mobile
payments and is the CEO of Khosla Labs Private Limited, a
ATTENDANCE AT BOARD MEETINGS & LAST ANNUAL
GENERAL MEETING (AGM)
The Board/Committee Meetings are convened by giving
appropriate notice well in advance of the meetings. The Directors
/ Members are provided with appropriate information in the form
of agenda items in a timely manner, to enable them to deliberate
on each agenda item and make informed decisions and provide
appropriate directions to the Management in this regard.
Video-conferencing facility is also provided at the Board /
Committee meetings in case any director is unable to attend but
wishes to participate in the meetings.
the Board/Committee meetings, presentations and
At
deep-dive sessions are made covering important areas of the
Bank such as annual plans and strategies, investment banking,
financial inclusion, Basel framework, digital banking, cyber
security, etc. The Managing Director gives a commentary on
the current state of affairs of the Bank and macro-economic
outlook, so as to give an insight to the Board of Directors on
industry trends and developments.
During the financial year under review, eight (8) Board Meetings
were held. The meetings were held on April 21, 2017, May
29, 2017, July 24, 2017, September 8, 2017, October 24, 2017,
December 20, 2017, January 19, 2018 and March 7, 2018.
HDFC Bank Limited Annual Report 2017-18
214
Corporate Governance
Details of attendance at the Board Meetings held during the financial year under review and attendance at the last AGM are as follows:
Name of the Director
Independent Directors
Mrs. Shyamala Gopinath
Mr. A.N. Roy*
Mr. Partho Datta
Mr. Bobby Parikh
Mr. Malay Patel
Mr. Umesh Chandra Sarangi
Non-executive Directors
Mr. Keki Mistry#
Mrs. Renu Karnad*
Mr. Srikanth Nadhamuni
Executive Directors
Mr. Aditya Puri
Mr. Paresh Sukthankar
Mr. Kaizad Bharucha
Board Meetings attended during the year Attendance at last AGM (July 24, 2017)
7
7
7
7
8
8
6
7
8
8
7
8
Present
Present
Present
Present
Present
Present
Absent
Present
Present
Present
Present
Present
*Mrs. Renu Karnad and Mr. A.N. Roy resigned as Directors of the Bank with effect from January 20, 2018 and January 31, 2018
respectively.
# Mr. Mistry could not attend 2 board meetings held in the FY 2017-18 i.e. on January 19, 2018 and March 7, 2018. Mr. Mistry had
prior commitments on January 19, 2018 and he was travelling abroad on March 7, 2018. Further, he could not attend the last AGM
of the Bank held on July 24, 2017 since he was not well. (Mr. Mistry has attended all the Board meetings of the Bank held during
FY 2016-17, as well as the AGM of the Bank held for FY 2016-17.)
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
(Amount in `)
Mr. Kaizad Bharucha, Executive Director during the financial year 2017-18 are as under:
Particulars
Basic
Allowances and Perquisites
Provident Fund
Superannuation
Performance Bonus (refers to the deferred bonus
tranches for earlier financial years)
# Bonus pertaining to FY 2016-17 paid out in
FY 2017-18
Number of stock options granted *
Mr. Aditya Puri
45,328,032
29,701,519
5,439,360
6,799,205
9,231,505
Mr. Paresh Sukthankar Mr. Kaizad Bharucha
16,464,000
18,952,529
1,975,680
2,469,600
3,478,460
24,560,202
16,315,495
2,947,223
3,684,031
5,503,960
-
-
-
701,600
319,000
232,000
# At present, the bonus pertaining to the year 2016-17 proposed to be paid out in FY 2017-18 is pending RBI approval. Therefore,
after RBI approval is obtained, the approved amounts, if any, will be paid and disclosed in the Corporate Governance Report for the
next financial year.
* The stock options granted to Mr. Aditya Puri, Mr. Paresh Sukthankar and Mr. Kaizad Bharucha have not been issued at discount
and the same have been granted at the closing market price prevailing on the day prior to the date of grant on the National Stock
Exchange of India Ltd. The Bank follows a method of conditional vesting, i.e. vesting of each tranche is subject to performance.
The vesting schedule for the stock options is - 40% of options after expiry of fifteen months from date of grant, 30% options after
expiry of twenty seven months from the date of grant and the balance options after expiry of thirty nine months from date of grant,
subject to performance. The options so vested are to be exercised within 4 years from the respective dates of vesting.
HDFC Bank Limited Annual Report 2017-18
215
Corporate Governance
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 (3) years each. The notice period for each
of them, as specified in their respective terms of appointments,
is three months.
The remuneration of Mr. Aditya Puri, Mr. Paresh Sukthankar and
Mr. Kaizad Bharucha as above has been approved by the 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.
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.
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
NON-EXECUTIVE DIRECTORS
All the non-executive directors including the independent
directors and the Chairperson receive remuneration by way
of sitting fees for each meeting of the Board and its various
committees. Non-Executive directors including independent
directors other than the Chairperson also receive profit related
commission as per the limits prescribed in the RBI guidelines.
No stock options are granted to any of the non-executive
directors.
During the year, Mrs. Shyamala Gopinath was paid remuneration
of ` 3,123,662. The remuneration of the Chairperson has
been approved by the Reserve Bank of India. Pursuant to the
provisions of Companies Act, 2013, the Directors are paid
sitting fees of ` 50,000 and ` 100,000 per meeting for attending
Committee & Board meetings respectively.
Pursuant to RBI guidelines dated June 1, 2015 on Compensation
to Non-executive Directors of Private Sector Banks and read
with the relevant shareholders’ resolution in this regard, non-
executive directors, including the independent directors, other
than the Chairperson, also receive profit related commission
as per the limits prescribed in the RBI guidelines. Pursuant to
these guidelines and shareholders’ resolution passed at the
22nd Annual General Meeting of the Bank held on July 21, 2016,
the Non-executive directors were paid profit related commission
of ` 1,000,000 each during the financial year 2017-18 pertaining
to financial year 2016-17. This is in addition to the sitting fees
paid to them for attending Committee & Board Meetings.
The details of sitting fees and commission paid to non-executive
directors during the financial year 2017-18 is as under:
Name of the Director
Mrs. Shyamala Gopinath
Mr. Partho Datta
Mr. Bobby Parikh
Mr. A. N. Roy*
Mr. Malay Patel
Mr. Keki Mistry
Mrs. Renu Karnad*
Mr. Umesh Chandra Sarangi
Mr. Srikanth Nadhamuni
Sitting Fees
Commission #
2,350,000
1,950,000
2,250,000
1,950,000
1,650,000
1,450,000
1,400,000
1,450,000
1,350,000
(Amount in `)
-
10,00,000
10,00,000
10,00,000
10,00,000
10,00,000
10,00,000
10,00,000
10,00,000
* Mrs. Renu Karnad and Mr. A.N. Roy resigned as Directors of the Bank with effect from January 20, 2018 and January 31, 2018
respectively.
# Refers to commission for FY 2016-17, paid out in FY 2017-18.
There were no other pecuniary relationships or transactions of Non-executive Directors vis-a-vis the Bank (except banking
transactions in the ordinary course of business and on arm’s length basis) during FY 2017-18.
HDFC Bank Limited Annual Report 2017-18
216
Corporate Governance
COMPOSITION OF COMMITTEES OF DIRECTORS, TERMS OF REFERENCE 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:
Classification
Director's
Name
Audit
Nomination
&
Remuneration
Stakeholders'
Relationship
Corporate
Social
Responsibility
Risk &
Policy
Monitoring
Fraud
Monitoring
Customer
Service
Credit
Approval
Premises
Review:
Wilful
Defaulters'
Identification
Review: Non
Cooperative
Borrowers
Digital
Transactions
Monitoring
IT
Strategy*
Non Executive
Directors
Executive
Directors
Mrs.
Shyamala
Gopinath
Mr. Bobby
Parikh
Mr. Partho
Datta
Mr. Malay
Patel
Mr. Srikanth
Nadhamuni
Mr. Keki
Mistry
Mr. Umesh
Chandra
Sarangi
Mr. Aditya
Puri
Mr. Paresh
Sukthankar
Mr. Kaizad
Bharucha
* Not a Board level Committee
Audit Committee:
Chairperson
Member
Brief Terms of Reference / Roles
and responsibilities:
a. Overseeing the Bank’s financial reporting process and disclosure of financial information
to ensure that the financial statement is correct, sufficient and credible;
b. Recommending appointment and removal of external auditors and fixing of their fees;
c. Reviewing with management the annual financial statements and auditor’s report before
submission to the Board with special emphasis on accounting policies and practices,
compliance with accounting standards, disclosure of related party transactions and other
legal requirements relating to 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 time to time in the Companies Act,
2013, SEBI Listing Regulations, 2015, including any amendments / re-enactments thereof
from time to time.
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.
HDFC Bank Limited Annual Report 2017-18
217
Corporate Governance
Composition:
Mr. Bobby Parikh (Chairman), Mrs. Shyamala Gopinath, Mr. Partho Datta and Mr. Umesh
Chandra Sarangi. All members are independent directors. Mr. Bobby Parikh and Mr. Partho
Datta are the members of Audit Committee having financial expertise.
(During the year, Mr. A. N. Roy ceased to be a member of the Committee pursuant to his
resignation as director of the Bank.)
Mr. Sanjay Dongre, Company Secretary of the Bank, acts as the Secretary of the Committee.
Meetings:
The Committee met eight (8) times during the year on April 20, 2017; July 21, 2017; August
7, 2017; September 8, 2017, October 23, 2017; December 20, 2017; January 18, 2018 and
March 6, 2018.
Nomination and Remuneration Committee:
Brief Terms of Reference / Roles
and responsibilities:
a. 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.
b. The Committee also formulates criteria for evaluation of performance of individual directors
including independent directors, the Board of Directors and its Committees. The criteria for
evaluation of performance of directors (including independent 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.
Composition:
Mr. Bobby Parikh (Chairman), Mrs. Shyamala Gopinath and Mr. Partho Datta.
(During the year, Mr. A. N. Roy ceased to be a member of the Committee pursuant to his
resignation as director of the Bank.)
All the members are independent directors.
Meetings:
The Committee met seven (7) times during the year on April 20, 2017; May 11, 2017; July 21,
2017; August 7, 2017; October 23, 2017; February 15, 2018 and March 27, 2018.
HDFC Bank Limited Annual Report 2017-18
218
Corporate Governance
Stakeholders’ Relationship Committee:
Brief Terms of Reference / Roles
and responsibilities:
Composition:
The 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
grievances from shareholders relating to transfer of shares, non-receipt of Annual Report,
dividends, etc.
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) & Company Secretary
of the Bank is the Compliance Officer responsible for expediting the share transfer formalities.
As on March 31, 2018, five (5) instruments of transfer for 1535 equity shares were pending
for transfer, which have since been processed. The details of the transfers are reported to the
Board from time to time.
During the year ended March 31, 2018, the Bank received 2620 complaints from the
shareholders. The Bank attended to all the complaints. 12 complaints remained pending
and 2 complaints have not been solved to the satisfaction of the shareholders as on March
31, 2018. Besides, 7082 letters were received from the shareholders relating to change of
address, nomination requests, email id and contact details updation, IFSC / MICR code
updation, National Automated Clearing House (NACH) 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 re-validation of dividend
warrants and other investor related matters. These letters have also been responded to.
Mr. Umesh Chandra Sarangi (Chairman), Mr. Aditya Puri, Mr. Malay Patel and Mr. Paresh
Sukthankar.
(During the year, Mr. A. N. Roy and Mrs. Renu Karnad ceased to be members of the Committee
pursuant to their resignation as directors of the Bank and Mr. Umesh Chandra Sarangi and
Mr. Malay Patel were appointed as members of the Committee.)
Meetings:
The Committee met four (4) times during the year on April 21, 2017; May 29, 2017; October
24, 2017 and January 19, 2018.
Risk Policy and Monitoring Committee:
Brief Terms of Reference / Roles
and responsibilities:
Composition:
Meetings:
The 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 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.
Mr. Srikanth Nadhamuni (Chairman), Mrs. Shyamala Gopinath, Mr. Partho Datta, Mr. Aditya
Puri and Mr. Paresh Sukthankar. (During the year, Mrs. Renu Karnad ceased to be a member
of the Committee pursuant to her resignation from the Bank and Mr. Srikanth Nadhamuni was
appointed as a member of the Committee.)
The Committee met five (5) times during the year on April 13, 2017; June 28, 2017; July 14,
2017; October 12, 2017 and January 12, 2018.
HDFC Bank Limited Annual Report 2017-18
219
Corporate Governance
Credit Approval Committee:
Brief Terms of Reference / Roles
and responsibilities:
Composition:
Meetings:
Premises Committee:
Brief Terms of Reference / Roles
and responsibilities:
Composition:
Meetings:
Fraud Monitoring Committee:
Brief Terms of Reference / Roles
and responsibilities:
Composition:
Meetings:
The Committee evaluates and 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 timely disbursement of loans.
Mr. Keki Mistry, Mr. Malay Patel, Mr. Aditya Puri and Mr. Kaizad Bharucha.
(Mr. Bobby Parikh ceased to be a member of the Committee and Mr. Malay Patel was
appointed as a member of the Committee with effect from May 22, 2018.)
The Committee met nine (9) times during the year on April 21, 2017; May 29, 2017;
July 24, 2017; August 29, 2017; October 24, 2017; November 21, 2017; December 12, 2017;
January 12, 2018 and March 1, 2018.
The 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.
Mr. Keki Mistry, Mr. Aditya Puri and Mr. Malay Patel.
(During the year, Mrs. Renu Karnad ceased to be a member of the Committee pursuant to her
resignation from the Bank and Mr. Keki Mistry was appointed as a member of the Committee.)
The Committee met five (5) times during the year on April 21, 2017; May 29, 2017;
July 24, 2017; October 17, 2017; and January 19, 2018.
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 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;
c. Monitor progress of Central Bureau of Investigation / Police Investigation and recovery
position;
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.
Mrs. Shyamala Gopinath (Chairperson), Mr. Partho Datta, Mr. Keki Mistry, Mr. Malay Patel,
Mr. Umesh Chandra Sarangi and Mr. Aditya Puri.
(During the year, Mr. A. N. Roy ceased to be a member of the Committee pursuant to his
resignation from the Bank and Mr. Umesh Chandra Sarangi was appointed as a member of
the Committee.)
The Committee met four (4) times during the year on April 21, 2017; July 21, 2017; October
24, 2017 and January 12, 2018.
HDFC Bank Limited Annual Report 2017-18
220
Corporate Governance
Customer Service Committee:
Brief Terms of Reference / Roles
and responsibilities:
Composition:
The 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.
Mrs. Shyamala Gopinath (Chairperson), Mr. Keki Mistry, Mr. Malay Patel, Mr. Srikanth
Nadhamuni and Mr. Aditya Puri.
(During the year, Mr. A. N. Roy ceased to be a member of the Committee pursuant to his
resignation from the Bank.)
Meetings:
The Committee met five (5) times during the year on April 21, 2017; July 21, 2017; August 7,
2017, October 24, 2017 and January 12, 2018.
Corporate Social Responsibility Committee:
Brief Terms of Reference / Roles
and responsibilities:
The Board has constituted a Corporate Social Responsibility (CSR) Committee with the
following terms of reference:
Composition:
(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)
(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)(cid:86)(cid:73)(cid:69)(cid:87)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)
(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)(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)
Mr. Umesh Chandra Sarangi (Chairman), Mr. Partho Datta, Mr. Bobby Parikh, Mr. Malay
Patel, Mr. Aditya Puri and Mr. Paresh Sukthankar.
(During the year, Mrs. Renu Karnad ceased to be a member of the Committee pursuant
to her resignation from the Bank and Mr. Malay Patel was appointed as a member of the
Committee.)
Meetings:
The Committee met four (4) times during the year on April 13, 2017; July 14, 2017; October
17, 2017; and January 12, 2018.
Review Committee for Wilful Defaulters’ Identification:
Brief Terms of Reference / Roles
and responsibilities:
The Board has constituted a Review Committee for Wilful Defaulters’ Identification to review
the orders passed by the Committee of Executives for Identification of Wilful Defaulters and
provide the final decision with regard to identified Wilful defaulters.
Composition:
Mrs. Shyamala Gopinath, Mr. Aditya Puri, Mr. Bobby Parikh and Mr. Partho Datta.
The Committee is chaired by Mrs. Shyamala Gopinath or Mr. Aditya Puri in her absence.
(During the year, Mr. A. N. Roy ceased to be a member of the Committee pursuant to his
resignation from the Bank.)
Meetings:
No meetings of the Committee were held during the year.
HDFC Bank Limited Annual Report 2017-18
221
Corporate Governance
Review Committee for Non-Cooperative Borrowers:
Brief Terms of Reference / Roles
and responsibilities:
The Board has constituted a Review Committee
to
Non-Co-operative Borrowers which are handled by the Internal Committee of Executives
appointed for this purpose.
to review matters related
Composition:
Mrs. Shyamala Gopinath, Mr. Aditya Puri, Mr. Bobby Parikh and Mr. Partho Datta.
The Committee is chaired by Mrs. Shyamala Gopinath or Mr. Aditya Puri in her absence.
(During the year, Mr. A. N. Roy ceased to be a member of the Committee pursuant to his
resignation from the Bank.)
Meetings:
No meetings of the Committee were held during the year.
Digital Transaction Monitoring Committee:
Brief Terms of Reference / Roles
and responsibilities:
In order to promote digital transactions of the Bank and to provide directions in terms of
strategy and action plans including monitoring the progress of achievement in the digital
transactions space, the Bank has constituted the Digital Transaction Monitoring Committee
during the year. The terms of reference to the Committee, inter-alia include the following:
a. Framing of the Bank-level strategy and action plans for achieving the target of digital
transactions in an organized manner, as may be set by the Government, regulatory
authorities, IBA, etc. from time to time.
b. Monitoring the progress of achievement in digital transactions in line with the Bank’s
strategy and action plans.
c. To review and explore new opportunities for increasing the digital transactions of the
Bank from time to time and give the necessary directions in implementing and improving
high level of digitalization in Bank.
d. Any other terms of reference as may be specified by the Government, regulatory
authorities, IBA, etc. from time to time.
Composition:
Mr. Srikanth Nadhamuni, Mr. Malay Patel, Mr. Aditya Puri and Mr. Paresh Sukthankar.
Meetings:
The Committee met two (2) times during the year on September 8, 2017 and March 7, 2018.
IT Strategy Committee:
Brief Terms of Reference / Roles
and responsibilities:
The Bank has in place, an IT Strategy Committee to look into various technology related
aspects.
Composition:
Meetings:
This Committee is not a Board level Committee. However, Mr. Srikanth Nadhamuni,
Mr. Bobby Parikh, Mrs. Shyamala Gopinath and Mr. Paresh Sukthankar are members of the
Committee along with other executives of the Bank and an external expert.
The Committee met four (4) times during the year on April 13, 2017; July 14, 2017; October
17, 2017 and February 26, 2018.
Meeting of the Independent Directors:
The Independent Directors of the Bank held a meeting on March 6, 2018 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 2017-18
222
Corporate Governance
ATTENDANCE AT THE COMMITTEE MEETINGS HELD DURING FINANCIAL YEAR 2017-18
Audit Committee
[Total eight meetings held]
Credit Approval Committee
[Total nine meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mrs. Shyamala Gopinath
Mr. Bobby Parikh
Mr. A. N. Roy #
Mr. Partho Datta
Mr. Umesh Chandra Sarangi
Mr. Bobby Parikh
Mr. Keki Mistry
Mr. Aditya Puri
Mr. Kaizad Bharucha
8
8
7
6
8
Stakeholders’ Relationship Committee
[Total four meetings held]
Customer Service Committee
[Total five meetings held]
Name
Mr. A. N. Roy #
Mrs. Renu Karnad*
Mr. Aditya Puri
Mr. Paresh Sukthankar
Mr. Umesh Chandra Sarangi**
Mr. Malay Patel***
No. of meetings attended
Name
No. of meetings attended
4
4
4
4
-
-
Mrs. Shyamala Gopinath
Mr. Aditya Puri
Mr. A. N. Roy #
Mr. Keki Mistry
Mr. Malay Patel
Mr. Srikanth Nadhamuni
Nomination and Remuneration Committee
[Total seven meetings held]
Premises Committee
[Total five meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mrs. Shyamala Gopinath
Mr. Partho Datta
Mr. A. N. Roy #
Mr. Bobby Parikh
7
7
5
7
Mrs. Renu Karnad*
Mr. Malay Patel
Mr. Aditya Puri
Mr. Keki Mistry$
Fraud Monitoring Committee
[Total four meetings held]
Risk Policy & Monitoring Committee
[Total five meetings held]
Name
No. of meetings attended
Name
No. of meetings attended
Mrs.Shyamala Gopinath
Mr. Aditya Puri
Mr. Partho Datta
Mr. A. N. Roy #
Mr. Keki Mistry
Mr. Malay Patel
Mr. Umesh Chandra Sarangi **
Mrs. Renu Karnad*
Mrs. Shyamala Gopinath
Mr. Paresh Sukthankar
Mr. Partho Datta
Mr. Aditya Puri
Mr. Srikanth Nadhamuni@
4
4
4
4
4
4
-
7
8
8
9
5
5
5
5
5
5
4
5
5
-
3
4
5
4
5
-
HDFC Bank Limited Annual Report 2017-18
223
Corporate Governance
Corporate Social Responsibility Committee
Digital Transactions Monitoring Committee
[Total four meetings held]
[Total two meetings held]
Name
Mrs. Renu Karnad*
Mr. Partho Datta
Mr. Bobby Parikh
Mr. Aditya Puri
Mr. Paresh Sukthankar
Mr. Umesh Chandra Sarangi
No. of meetings attended
Name
No. of meetings attended
Mr. Srikanth Nadhamuni
Mr. Malay Patel
Mr. Aditya Puri
Mr. Paresh Sukthankar
3
4
4
4
4
4
2
2
2
2
# Mr. A. N. Roy resigned as director of the Bank with effect from January 31, 2018.
* Mrs. Renu Karnad resigned as director of the Bank with effect from January 20, 2018.
** Mr. Umesh Chandra Sarangi was appointed as a member with effect from March 27, 2018.
*** Mr. Malay Patel was appointed as a member with effect from March 27, 2018.
$ Mr. Keki Mistry was appointed as member with effect from March 27, 2018
@ Mr. Srikanth Nadhamuni was appointed as a member with effect from March 27, 2018.
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.
(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 auditor’s
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 percent 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)
by 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)
of 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: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:12)(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)
the 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.
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.
HDFC Bank Limited Annual Report 2017-18
224
Corporate Governance
GENERAL BODY MEETINGS
(Following are the details of general body meetings for the previous three financial years held at Birla Matushri Sabhagar, 19, New
Marine Lines, Mumbai 400020 at 2.30 p. m.)
Sr.
No.
Particulars of
meeting
Day & Date
Number of Special
Resolutions
passed, if any
Nature of Special Resolutions
1
21st Annual
General Meeting
Tuesday,
July 21, 2015
3 (Three)
1. Increase in approved borrowing limits under Section
180 (1)(c) of Companies Act, 2013
2
22nd Annual
General Meeting
Thursday,
July 21, 2016
3 (Three)
1. Alternation of Memorandum of Association on account
of increase in authorized share capital
2. Approval of related party transactions with Housing
Development Finance Corporation Limited
3. Approval of related party
Financial Services Limited
transactions with HDB
2. Issue of perpetual debt instruments, Tier II capital
bonds and senior long-term infrastructure bonds on
private placement basis
3. Grant of equity stock options
3
4
23rd Annual
General Meeting
Monday,
July 24, 2017
2 (Two)
1. Re-appointment of Mrs. Shyamala Gopinath as Part-
Time Non-Executive Chairperson of the Bank
Extra-Ordinary
General Meeting
Friday,
January 19, 2018
2. Issue of perpetual debt instruments, Tier II capital
bonds and senior long-term infrastructure bonds on
private placement basis
1. Raising of funds through issue of equity shares and/
or equity shares through depository receipts and/ or
convertible securities
2. Preferential
issue of equity shares
to Housing
Development Finance Corporation Limited
Total 3 (Three)
special businesses
transacted, out of
which 2 (Two) were
special resolutions
POSTAL BALLOT
During the financial year 2017-18, 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
During the year the Bank has entered into transactions with the
related parties in the ordinary course of business. The Bank
has not entered into any materially significant transactions
with the related parties including promoters, directors, the
management, subsidiaries or relatives of the Directors, which
could lead to a potential conflict of interest between the Bank
and these parties. Transactions with related parties were placed
before the Audit Committee/Board for approval. There were
no material transactions with related parties, which were not
in the normal course of business, nor were there any material
transactions, which were not at an arm’s length basis. Details
of related party transactions entered into during the year ended
March 31, 2018 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
HDFC Bank Limited Annual Report 2017-18
225
Corporate Governance
Commodity Price Risks and Foreign Exchange Risks and
hedging activities
Being in the banking business, currently 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.
The Bank being an authorized dealer, deals in foreign exchange
including Gold 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 and interest rate
securities. 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 Option
Greeks (viz. Delta / Gamma / Vega) 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. Also, the Bank has initiated acceptance of gold
through gold monetization scheme and any exposures arising
are accordingly hedged through the normal course of business
or forward transactions.
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’
Association 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 spot
and 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 recognized 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 provided by the exchange 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 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 amortized as
expense or income over the life of the contract.
Contingent liabilities on account of foreign exchange contracts,
derivative transactions, currency future contracts, guarantees,
letters of credit, acceptances and endorsements are reported
at closing rates of exchange as notified by FEDAI as on the
Balance Sheet date.
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
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 and Accounting
Standards (‘AS’) specified under Section 133 of the Companies
Act, 2013, in so far as they apply to banks.
in
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 which may
be referred to. 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,
which may be referred to.
Appointment / Resignation of Director
the year, after serving as Board members
for
During
to seven years each, Mrs. Renu Karnad and
close
Mr. A. N. Roy resigned from the Board of the Bank with effect
from January 20, 2018 and January 31, 2018 respectively.
Mrs. Karnad and Mr. Roy resigned due to other commitments
and personal considerations respectively. The Board places
on record its sincere appreciation of the contribution made by
Mrs. Karnad and Mr. Roy during their tenure with the Bank and
wishes them well in future endeavours.
Familiarization of Independent Directors
The details of
to
Independent Directors are available on the website of the Bank
at http://www.hdfcbank.com/aboutus/cg/Familiarization.htm
familiarization programmes
imparted
HDFC Bank Limited Annual Report 2017-18
226
Corporate Governance
Strictures and Penalties for last three financial years:
During the current financial year 2017-18, pursuant to the
media reports, SEBI has issued directions to the Bank (“SEBI
Directions”) in relation to leakage of unpublished price sensitive
information (“UPSI”) pertaining to the financial results of the
Bank for the quarter ended December 31, 2015 and the quarter
ended June 30, 2017 in various private WhatsApp groups
ahead of Bank’s official announcement to the relevant stock
exchanges. SEBI has directed the Bank to observe the following:
(i) to strengthen its processes / systems / controls forthwith to
ensure that such instances of leakage of unpublished price
sensitive information do not recur in future, (ii) to submit a report
on: (a) the present systems and controls and how the present
systems and controls have been strengthened, (b) details of
persons who are responsible for monitoring such systems, and
(c) the periodicity of monitoring. Further, SEBI has directed
HDFC Bank Limited to conduct an internal inquiry into the
leakage of UPSI relating to its financial figures including Non-
Performing Assets (NPAs) results and take appropriate action
against those responsible for the same, in accordance with the
applicable law. The scope of such inquiry will need to include
determination of the possible role of following persons in
relation to the aforesaid leakage of UPSI: (i) persons / members
of committees involved in generation of the original data for the
purpose of determination of key figures pertaining to financial
figures including gross NPAs, (ii) persons involved in the
consolidation of the figures for the financial results, (iii) persons
involved in the preparation of board notes and presentations,
(iv) persons involved in dissemination of information relating to
financial results in the public domain, and (v) any other persons
who had access to the information. SEBI has directed the Bank
to complete the inquiry within a period of three months from
the date of the SEBI Directions and thereafter, file a report with
SEBI in this regard within a further period of seven days.
During the financial year 2016-17, further to the media reports in
October 2015 about irregularities in advance import remittances
in various banks, the Reserve Bank of India (RBI) had conducted
a scrutiny of the transactions carried out by the Bank under
Section 35(1A) of the Banking Regulation Act, 1949. The RBI
issued a Show Cause Notice to which the Bank had submitted
its detailed response. After considering the Bank’s submission,
the RBI imposed a penalty of ` 2.00 crore on the Bank vide its
letter dated July 19, 2016 on account of pendency in receipt of
bill of entry relating to advance import remittances made and
lapses in adhering to KYC / AML guidelines in this respect. The
penalty has since been paid. The Bank has implemented a
comprehensive corrective action plan, to strengthen its internal
control mechanisms so as to ensure that such incidents do not
recur.
During the financial year 2015-16, there were no penalties
imposed on the Bank.
During the financial year 2014-15, FIU had imposed a penalty
of ` 26 lakhs in 26 cases reported by Cobrapost.com, stating
that there was a failure in the Bank’s internal mechanism for
detecting and reporting attempted suspicious transactions.
The Bank has filed an appeal before the Appellate Tribunal,
Prevention of Money Laundering Act (“PMLA”) 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.
On June 28, 2017, Appellate Tribunal, Prevention of Money
Laundering Act passed the judgment that the prescribed matter
was covered u/s 13(2)(a) and not u/s 13(2)(d) of the PMLA,
2002 and accordingly, the penalty of ` 26 lakhs in 26 cases
was not sustainable as on merit. The Appellate Tribunal further
ordered that the Fixed Deposit Receipt (“FDR”) deposited by
the Bank as per the interim order of the Appellate Tribunal be
released forthwith and the appeal was disposed of accordingly.
The Bank had communicated to FIU-IND requesting their
consent for liquidation of the FDR of ` 26 lakhs. FIU-IND,
in response, has informed the Bank that the FIU-IND has
challenged the order of the Appellate Tribunal before the Hon’ble
High Court of Delhi, with regard to the direction to release the
FDR u/s 42 of the PMLA. The FIU-IND further advised that the
appeal, including application for stay, is to be listed before the
Hon’ble High Court of Delhi in due course and accordingly, at
this stage the Bank’s request to liquidate the FDR is premature.
The Bank has received notice of summons in this regard and
the matter is pending before the Hon’ble High Court of Delhi as
on date.
Other than the above, no penalties or strictures were imposed
on the Bank by any of the Stock Exchanges or SEBI or any
statutory authority on any matter relating to capital markets,
during the last three (3) years.
COMPLIANCE WITH MANDATORY REQUIREMENTS
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 Chairperson and/or
whole-time directors, is permitted to hold office continuously
for a period exceeding eight (8) years.
All the independent directors of the Bank possess requisite
to
qualifications and experience which enable
contribute effectively to the Bank.
them
HDFC Bank Limited Annual Report 2017-18
227
Corporate Governance
b) Shareholder’s Rights
c) Audit Qualifications
The Bank publishes its results on 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.
During the period under review, there is no audit qualification
in the Bank’s financial statements. The Bank continues to
adopt best practices to ensure regime of unqualified financial
statements.
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.
d) Separate posts of Chairperson 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.
GENERAL SHAREHOLDER INFORMATION:
SHAREHOLDERS HOLDING MORE THAN 1% OF THE SHARE CAPITAL OF THE BANK AS AT MARCH 31, 2018
Sr No.
Name of the Shareholder
No. of Shares held
% to share capital
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
SBI- ETF Nifty 50
HDFC Trustee Company Limited A/c HDFC Balanced Fund
ICICI Prudential Life Insurance Company Ltd
Government of Singapore
472988147*
393211100
150000000
98865874
51535018
44994003
32557853
32162374
28625304
18.23
15.15
5.78
3.81
1.99
1.73
1.25
1.24
1.10
* One (1) American Depository Share (ADS) represents three (3) underlying equity shares of the Bank. Two (2) GDRs represent
one (1) underlying equity share of the Bank.
DISTRIBUTION OF SHAREHOLDING AS AT MARCH 31, 2018
Share Range From
1
2501
5001
10001
15001
20001
25001
50001
100001
TOTAL :-
Share Range To
2500
5000
10000
15000
20000
25000
50000
100000
and above
No. of Shares
100919731
19305672
18830285
11118315
8486116
9319220
29271496
38777714
2359061718
2595090267
% To Capital
3.89
0.74
0.73
0.43
0.33
0.36
1.13
1.49
90.91
100.00
No. of Holders % To No. Of Holders
97.68
1.01
0.50
0.17
0.09
0.08
0.16
0.10
0.22
100.00
520007
5397
2656
890
486
412
824
549
1147
532368
481,259 Folios comprising of 2,580,914,373 equity shares forming 99.45 % of the share capital are in demat form.
51,109 Folios comprising of 14,175,894 equity shares forming 0.55 % of the share capital are in physical form.
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, 2018 which could have an impact on the equity capital of the Bank.
HDFC Bank Limited Annual Report 2017-18
228
Corporate Governance
SHARE PRICE / CHART
The monthly high and low quotation of Bank’s equity shares traded on BSE Ltd (BSE) and
The National Stock Exchange of India Ltd (NSE) during FY 2017-18 and its performance vis-à-vis
BSE SENSEX and S&P CNX NIFTY respectively is as under:
BSE Ltd
MONTH
HIGH
LOW
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
1572.30
1648.00
1715.60
1797.85
1810.00
1868.00
1876.95
1875.00
1905.00
2011.90
2014.00
1910.30
1425.00
1524.35
1623.00
1646.00
1732.80
1740.00
1685.00
1791.30
1797.45
1832.95
1837.00
1830.00
SENSEX
Closing
29918.40
31145.80
30921.61
32514.94
31730.49
31283.72
33213.13
33149.35
34056.83
35965.02
34184.04
32968.68
LOW
HIGH
MONTH
The National Stock Exchange of India Ltd
NIFTY
closing
9304.05
9621.25
9520.90
10077.10
9917.90
9788.60
10335.30
10226.55
10530.70
11027.70
10492.85
10113.70
1573.95
1648.00
1716.00
1798.80
1809.15
1868.00
1879.60
1875.50
1903.10
2013.50
2015.00
1900.00
1425.05
1522.60
1620.55
1645.00
1731.15
1738.00
1757.85
1788.00
1799.00
1850.50
1836.30
1828.50
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
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 2017-18
New York Stock Exchange
MONTH
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
HIGHEST
(US$)
81.69
87.85
89.84
97.20
99.77
100.26
99.29
98.81
101.98
109.68
110.16
100.11
LOWEST
(US$)
75.03
79.30
85.90
87.10
92.84
92.08
89.07
92.41
92.69
100.28
96.27
95.05
MONTHLY
VOLUME
15604624
15270303
17214400
10185046
13308000
10621668
17211742
8465100
10811200
12892200
12651300
14749700
Share Price (`)
HDFC BankÊs share price on BSE
2000
1900
1800
1700
1600
1500
1400
1300
Apr Ê17 May Ê17 Jun Ê17
Jul Ê17 Aug Ê17 Sep Ê17 Oct Ê17 Nov Ê17 Dec Ê17 Jan Ê18
FebÊ18 Mar Ê18
High
Low
Sensex
Sensex
35000
30000
25000
20000
15000
10000
5000
0
Share Price (`)
HDFC BankÊs share price on NSE
S&P CNX Nifty
2000
1900
1800
1700
1600
1500
1400
1300
Apr Ê17 May Ê17 Jun Ê17
Jul Ê17 Aug Ê17 Sep Ê17 Oct Ê17 Nov Ê17 Dec Ê17 Jan Ê18
FebÊ18 Mar Ê18
High
Low
S&P CNX Nifty
10000
8000
6000
4000
2000
0
ADS Price (US$)
HDFC BankÊs ADS price on NYSE
Volume (No. of ADS)
100
80
60
40
20
0
20000000
15000000
10000000
5000000
0
Apr Ê17 May Ê17 Jun Ê17
Jul Ê17 Aug Ê17 Sep Ê17 Oct Ê17 Nov Ê17 Dec Ê17 Jan Ê18
FebÊ18 Mar Ê18
High
Low
Volume
HDFC Bank Limited Annual Report 2017-18
229
Corporate Governance
CATEGORIES OF SHAREHOLDERS AS AT MARCH 31, 2018
No of shares
% to Capital
Promoters (*)
ADS and GDRs (#)
Foreign Institutional Investors
Overseas Corporate Bodies, Foreign Bodies, Foreign National and Non Resident Indians
Financial Institutions, Banks, Mutual Funds and Central Government
Life Insurance Corporation and its subsidiaries
Other Insurance Corporations
Indian Companies
Others
TOTAL
Categories of shareholders as on March 31, 2018
9.18%
Details of Shareholding
0.21%
5.90%
20.93%
Promoters*
ADS & GDRs#
543216100
472988147
857888518
10503953
262164726
51535018
5448127
153111802
238233876
20.93
18.23
33.06
0.40
10.10
1.99
0.21
5.90
9.18
2595090267
100.00
10.10%
1.99%
0.40%
Foreign Institutional Investors
Overseas Corporate Bodies, NRIs, Foreign Bodies
LIC of India and its Subsiidaries
Banks, Mutual Funds, Financial Institutions and Central
Government
18.23%
Indian Companies
Other Insurance Corporations
33.06%
(*) None of the equity shares held by the Promoter Group are under pledge.
Others
(#) JP Morgan Chase Bank is the Depository for both the ADS (461557764 underlying equity shares) & GDRs (11430383 underlying equity shares).
GLOBAL DEPOSITORY RECEIPTS (“GDRs”)*
The monthly high and low quotation of the Bank’s GDRs traded on Luxembourg Stock Exchange are as under:
(in US$)
Month
Apr-17 May-17 Jun-17
Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18
High
Low
12.27
11.02
12.67
11.86
13.17
12.62
13.94
12.69
14.09
13.60
14.49
13.51
14.36
13.73
14.57
13.76
14.74
13.95
15.70
14.63
15.60
14.30
14.60
14.10
* 2 GDRs represent one underlying equity share of the Bank
MONTHLY VOLUMES OF THE BANK’S SHARES TRADED ON NSE AND BSE
Month
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
NSE
BSE
33404392 25075665 23376096 31346795 25634365 39056437 33680354 25459963 29716571 35760436 27602788 28352209
3024629
1789092
1482822
2280179
1110570
1567786 1908447
3203117 5687868 2938260
1404268 2027874
HDFC Bank Limited Annual Report 2017-18
230
Corporate Governance
FINANCIAL CALENDAR
[April 1, 2018 to March 31, 2019]
Board Meeting for consideration of accounts
April 21, 2018
Dispatch of Annual Reports
May 28, 2018 to June 2, 2018
Record date for purpose of determining eligibility of dividend
Electronic and physical: June 1, 2018
Last date for receipt of proxy forms
June 27, 2018 (up to 2.30 p.m.)
Date, Time and Venue of the 24th AGM
Dividend declaration date
Probable date of payment of dividend
June 29, 2018 at 2.30 p.m.
Birla Matushri Sabhagar, 19, New Marine Lines, Mumbai 400020
June 29, 2018
Electronic: July 2, 2018
Physical: July 3, 2018
Board Meeting for considering unaudited results for first three
quarters of FY 2018-19
Within 25 days from the end of each quarter
CODE OF CONDUCT
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 2018-19 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,
Bandra (East), Mumbai 400 051.
Names of Depositories in India for dematerialization 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. Security description
Name & Address of the International Stock Exchange Name & Address of Depository
1
2
The American Depository
Shares (ADS)
(CUSIP No. 40415F101)
Global Depository Receipts
(GDRs)
(ISIN/ Trading Code :
US40415F2002)
The New York Stock Exchange (Ticker - HDB)
11, Wall Street, New York, NY 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
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.
HDFC Bank Limited Annual Report 2017-18
231
Corporate Governance
SHARE TRANSFER PROCESS AND SYSTEM
The Bank’s shares which are in compulsory dematerialized (demat) list are transferable through the depository system. Shares in
physical form are processed by the Registrar and Share Transfer Agents, Datamatics Business Solutions Limited (Formerly known as
Datamatics Financial Services Limited) and approved by the Stakeholders’ Relationship Committee of the Bank or authorized 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 Business Solutions Limited.
MEANS OF COMMUNICATION
The quarterly and half-yearly unaudited / audited financial results are normally published in the newspapers, viz., the 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, shareholding information, dividend 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.
The information relating to the Bank’s financial results and shareholding pattern are displayed on the websites of the Stock Exchanges
on which the Bank’s shares are listed.
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.
DEBENTURE TRUSTEES
The SEBI Listing Regulations require 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:
1. IDBI Trusteeship Services Ltd, Asian Building, Ground Floor, 17 R Kamani Marg, Ballard Estate, Mumbai 400001.
Tel : 022-40807000
2. Axis Trustee Services Limited, Axis House, Ground Floor, Wadia International Centre, Pandurang Budhkar Marg, Worli,
Mumbai 400025. Tel : 022-62260054/50
3. Vistra ITCL (India) Limited (Formerly known as IL&FS Trust Company Limited), The IL&FS Financial Centre, Plot C-22/G Block,
7th Floor, Bandra Kurla Complex, Bandra (East) Mumbai 400051. Tel: 022-26593535.
SHAREHOLDERS’ HELPDESK
Share transfers, dividend payments and all other investor related activities are attended to and processed at the office of Registrar
and Transfer Agents.
For lodgment of transfer deeds and any other documents or for any grievances / complaints, shareholders / investors may contact
at the following address:
Mr. Sunny Abraham / Ms. Manisha Parkar / Mr. Tukaram Thore
Datamatics Business Solutions Ltd, (Formerly known as 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@datamaticsbpm.com
Counter Timings : 10:00 a. m. to 4:30 p. m.
(Monday to Friday except public holidays)
HDFC Bank Limited Annual Report 2017-18
232
Corporate Governance
For the convenience of investors, transfers up to 500 shares and complaints from investors are accepted at the Bank’s Office at
2nd Floor, Zenith House, Keshavrao Khadye Marg, opposite Race Course Gate no. 5 & 6, Mahalaxmi (West), Mumbai 400 034.
Shareholders’ Helpdesk Timings : 10:30 a.m. to 3:30 p.m.
Between Monday to Friday (except on Bank holidays)
Telephone : +91-022-3976 0000 Extn : 0012 & 0556
Email : shareholder.grievances@hdfcbank.com
Queries relating to the Bank’s operational and financial performance may be addressed to:
shareholder.grievances@hdfcbank.com
Name of the Compliance Officer of the Bank: Mr. Sanjay Dongre, Executive Vice President (Legal) & Company Secretary
Telephone : +91-022-3976 0000
BANKING CUSTOMER 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.
Location wise list of customer care numbers are available at:
http://www.hdfcbank.com/personal/find-your-nearest/find-phone-banking
Write to:
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_new.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
4) Credit Cards : customerservices.cards@hdfcbank.com
PLANT LOCATIONS
Being in the banking business, the Bank does not have plants. However, the Bank has 4787 branches in 2691 cities / towns as on
March 31, 2018. 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 22, 2018
DECLARATION
On behalf of the Board of Directors
Shyamala Gopinath
Chairperson
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.
Mumbai, May 22, 2018
Aditya Puri
Managing Director
HDFC Bank Limited Annual Report 2017-18
233
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 01, 2018, their correct core banking 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 Business
Solutions Limited (formerly Datamatics Financial Services Limited,) having address at Plot No. B 5, Part B Crosslane,
MIDC, Marol, Andheri (E), Mumbai - 400 093, before June 01, 2018 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 and a utility payment
(not more than six month old) / Bank Pass Book / Passport to validate the present address of the shareholder.
Various modes for making payment of Dividends under Electronic mode:
In case the shareholder has updated the complete and correct core banking account details (including 9 digit MICR Code
and 11 digit IFSC code) before the record date, i.e. June 01, 2018, which is 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.
2.
3.
National Automated Clearing House (NACH)
National Electronic Fund Transfer (NEFT)
Direct credit in case the bank account is with HDFC Bank Limited.
In case dividend paid by electronic mode is returned or rejected by the corresponding bank due to any 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.
Transfer of Shares to Investors Education and Protection Fund (IEPF) account
Pursuant to the applicable provisions of Section 124 (6) of the Companies Act, 2013 all shares in respect of which dividend
has / have remained unpaid or unclaimed for consecutive seven years the corresponding shares have to be transferred
in the name of IEPF Account which is being notified by the Ministry of Corporate Affairs, Government of India (MCA).
The MCA has also notified the applicability of Section 124 (6) along with the Investor Education and Protection Fund
Authority (Accounting, Audit, Transfer and Refund ) Rules, 2016 with effect from September 7, 2016 and Notification dated
28.02.2017 issued in this regard (Collectively the “IEPF Rules”). As per said IEPF Rules, Companies are required to
transfer the shares in IEPF Account where seven years as provided under Section 124 (5) have been completed and upon
completion of 3 months from the date of the notification as stated hereinabove.
In compliance with the aforesaid provision your Bank on 30th November, 2017 has transferred, 2762224 shares to the
INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY MINISTRY OF CORPORATE AFFAIRS account (IEPF)
bearing demat account no 12047200 13676780 which is opened with Central Depository Services Limited (CDSL) with
Depository Participant at SBI CAP Securities Ltd. As required under the said provisions all subsequent corporate benefits
that will be accrue in relation to the above shares will also be credited to the said IEPF Account.
As per the terms of Section 124(6) of the Companies Act, 2013 the Rule 7 of the IEPF Rules the share holders can claim
the shares from IEPF Account by making an online application in Form IEPF 5 which is available at http://www.iepf.gov.in.
Guidelines to file your claim:
Download the IEPF - 5 form from the website of IEPF (http://www.iepf.gov.in) for filing the claim for refund of shares
Read the instructions provided on the website / instructions kit along with the e-form carefully before filling the form.
After filling the form save it on your computer and submit the duly filled form by following the instructions given in the upload
link on the website. On successful uploading the acknowledgment will be generated indicating the SRN. This SRN is to be
used for future tracking of the form.
HDFC Bank Limited Annual Report 2017-18
234
Shareholder Information
Printout of the duly filled IEPF - 5 and the acknowledgment issued after uploading the form will have to be submitted.
together with an Indemnity Bond in original, Copy of acknowledgment and self attested copy of e-Form along with the other
documents as mentioned in the Form IEPF-5 to Nodal Officer (IEPF) of the Bank in a envelope marked “Claim for refund
from IEPF Authority”. In the process general information about the Bank which have to be provided are as under.
(a) Corporate Identification Number (CIN) of company:- L65920MH1994PLC080618
(b) Name of the company:- HDFC Bank Limited
(c) Address of registered office of the company:- HDFC Bank House, Senapati Bapat Marg, Lower Parel (W), Mumbai 400013
(d) email ID of the company:- shareholder.grievances@hdfcbank.com
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. Dividends for and up to the financial year ended March 31, 2010 have already been transferred to the IEPF
and the dividend for the financial year ended March 31, 2011 will be transferred to IEPF after July 05, 2018. The details of
unclaimed dividends for the financial year 2011-12 onwards and the last date for claiming such dividends are given below:
Dividend for the year ended
Date of Declaration of dividend
Last date for claiming dividend
March 31, 2011
March 31, 2012
March 31, 2013
March 31, 2014
March 31, 2015
March 31, 2016
March 31, 2017
July 6, 2011
July 13, 2012
June 27, 2013
June 25, 2014
July 21, 2015
July 21, 2016
July 24, 2017
B)
SHARES LYING IN UNCLAIMED SUSPENSE ACCOUNT
July 5, 2018
July 12, 2019
June 26, 2020
June 24, 2021
July 20, 2022
July 20, 2023
July 23, 2024
Particulars
Opening Balance as on April 1, 2017
Add: Transfer during the year 2017-18
Less: Claims received and shares transferred*
Less: Shares transferred to IEPF account**
Closing Balance as on March 31, 2018***
Records /
No of shareholders
Shares
12861
2116465
0
179
10759
1923
0
61870
1652815
401780
*Number of shareholders who approached the Bank for the transfer of shares from the suspense account.
**This shares are transferred pursuant to the applicable provisions of Section 124 (6) of the Companies Act, 2013
***Voting rights on these shares shall remain frozen till the rightful owners of such shares claim these shares.
HDFC Bank Limited Annual Report 2017-18
235
Nomination Form (applicable for the shareholders holding shares in physical mode)
Nomination Form
[Pursuant to section 72 of the Companies Act, 2013 and rule 19(1)
of the Companies (Share Capital and Debentures) Rules 2014J
To
Datamatics Business Solutions Limited
Unit HDFC Bank Limited,
Plot No B-5, Part B Crosslane, MIDC,
Andheri (East), Mumbai 400093
Dear Sir
I/We......................................................................................................................... the holder(s) of the ……………. Shares against
Folio No HB ………………………….. bearing share certificate no …………………………………………. and having distinctive nos
from ……………………… to ……………………… wish to make nomination and do hereby nominate the persons whose details are
as under in whom shall vest all my / our rights in respect of the aforesaid shares in the event of my / our death.
My email address is ………………………..……………………………………......................................................................................
my contact no is …………………………………………………………………………………… my active bank account particulars is as
per the copy of the unsigned cheque leaf attached herewith and I am also attaching the self attested copy(ies) of my / our PAN Card
Name, address and signatures of all the shareholder(s)
1
2
3
Name, address, signature and contact number of the Witness
1
2
Name
Date of Birth
Father / Mother / Spouse Name
Occupation
Nationality
Address of the Nominee
Email Id of the Nominee
Relationship with the shareholder
Date of attending majority
Name of the Guardian
Address of the Guardian
Email Id of the Guardian
Contact details of the Guardian
PARTICULARS OF NOMINEE
Applicable only if the Nominee is minor
HDFC Bank Limited Annual Report 2017-18
236
Nomination Form (applicable for the shareholders holding shares in physical mode)
Shareholders holding shares in Physical mode are requested to submit
the Nomination Form (in duplicate), duly filled and signed after attaching
the required documents, at the address provided in the form, so that the
shares would get transferred in the name of the person nominated upon
the demise of the holder of shares.
Nomination Form is provided for your convenience at page no 236.
HDFC Bank Limited Annual Report 2017-18
237
Mandate Form (applicable for the shareholders holding shares 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 / Contact details / Bank Account details for receipt of communication in electronic mode and for crediting the dividend
amount directly in my Bank account.
E-mail ID
1. Folio No.
2. Name of the Bank
3. Name of the Branch
: …......….……………...............………………………………………………………....
4. Account No.
: …......….……………...............………………………………………………………....
5. Account Type (Saving / Current)
: …......….……………...............………………………………………………………....
: …......….……………...............………………………………………………………....
: …......….……………...............………………………………………………………....
: …......….……………...............………………………………………………………....
s
a t a m a ti c
a r e
a l S
s i c
h
s
9 digit Code No.
: …......….……………...............………………………………………………………....
11 digit IFSC Code
: …......….……………...............………………………………………………………....
d t o D
n
y
h
o r P
9. My Telephone No. (Incl. STD Code)
: …......….……………...............………………………………………………………....
8. My Mobile No.
: …......….……………...............………………………………………………………....
6.
7.
S
e
F
I / We shall keep the Bank’s Registrar and Transfer Agent Viz Datamatics Business Solutions Ltd. informed as and when there is
a change in my e-mail address. I am also enclosing the unsigned photocopy of a cheque / blank cancelled cheque issued by the
Bank for verifying the accuracy of the details furnished above and the self attested copy of my PAN Card.
MAIL TO (cid:40)
Datamatics Business Solutions Ltd,
Unit: HDFC Bank, Plot No. B 5,
Part B Crosslane, MIDC, Marol,
Andheri (East), Mumbai 400 093.
E-mail : hdinvestors@datamaticsbpm.com
……….………………….……………
Signature of the Shareholder
HDFC Bank Limited Annual Report 2017-18
238
Mandate Form (applicable for the shareholders holding shares in physical mode)
Shareholders holding shares in Physical form and whose complete
active bank account details are not updated on the Registrars records,
are requested to submit the Mandate Form duly filled and signed after
attaching the required documents, to take advantage of getting the dividend
amount directly credited in their bank account. This can avoid interception
of dividend warrant during its postal transit and can also avoid fraudulent
encashment of dividend warrant.
Bank Mandate Form is provided for your convenience at page no 238.
HDFC Bank Limited Annual Report 2017-18
239
NOTES
240
ACCOLADES
Asiamoney Best Brands in Finance Survey 2017
Best Banking Brand in India
10th BW Businessworld-PwC Best Banks' 2017
Survey
Fastest Growing Large Bank
Best Large Bank
Lifetime Achievement Award - Aditya Puri
Euromoney Private Banking and Wealth
Management Survey 2018
Net-worth-specific services (High - Net Worth Clients
US$ 5-30 MN)
Asset Management
SRI/Social Impact Investing
International Clients
BrandZ Top 50 Most Valuable Indian Brands
India's Most Valuable Brand for the 4th year in a row
Forbes Asia 13th Fab 50 Companies List
HDFC Bank in Forbes Asia's Top 50 List for 10 years
Businessworld Digital Leadership and CIO
Awards 2017
Best Analytics Implementation
Fortune
Aditya Puri on ‘Businessperson of the Year’ list
Business India 19th Best Bank Survey
Best Bank of the Year
Business Today Best Bank Awards 2017
Bank of the Year
Best Large Bank
Best in Innovation
Fastest Growing Large Bank
CNBC-TV18 Financial Advisor Awards 2016-17
Best Performing Bank - Private Sector
Euromoney Awards for Excellence 2017
India's Best Bank
Forbes' List of 5 Companies that have shaped
Asia, and the world
Greenwich Associates Survey
No. 1 in large corporate relationships, mid-market penetration
IDRBT Banking Technology Excellence
Awards 2016-17
Best Bank - Cyber Security and Defense (Large Banks)
Best Bank - Innovative Use of Technology (Large Banks)
Best Bank - Use of Technology for Fraud Prevention
(Large Banks)
The Asian Banker Technology Innovation
Awards 2017
Best HR System Project
Best Lending Systems Project
HDFC Bank in Top 5 companies that have shaped Asia,
and the world
Best Bank of the Year
The Financial Express India's Best Banks 2017
800 trees were saved by using recycled paper
for printing the HDFC Bank Annual Report 2017-18.